Air T, Inc. · NASDAQ:AIRT
Air T — Investor Presentation (July 2019)
42 slides from Air T's investor presentation, Jul 9, 2019
Slide 1: A Trust Preferred Security Offering "TruP"
AIRTINC APORTFOLIO OF POWERFUL COMPANIES A Trust Preferred Security Offering “TruP”
Slide 2: Safe Harbor
Statements in this document, which contain more than historical information, may be considered forward-looking statements (as such termis defined in the Private Securities Litigation Reform Act of 1995), which are subject to risks and uncertainties. Actual results may differ materially from those ex
Slide 3: Who We Are
WHO WE ARE AIR T, INC. (NASDAQ: AIRT) is an ind company f jon right. Founded in 1980, our businesses have a history of growth and cashflow generation. E xX E C U T IV E ment ovns a significant stake inthe company. purchased entirely with personal funds in the open market. 10f2 AIR T, INC. operates 1
Slide 4: Executive Summary
EXECUTIVE SUMMARY 20f2 AIR T, INC. is raising long-term capital to fund growth. ¢ Step 1: Existing shareholders were given a $4 million dividend in the form of a newly issued 8% fixed income trust preferred security, the Alpha Income Preferred (8% AIP) © Step 2: Existing shareholders were given trad
Slide 5: Contents
CONTENTS oa RF wn The Offering About AIR T, INC. Our Growth Factors The Trust Preferred “TruP” Offering Why Invest Now Appendix - Risk Factors
Slide 6: The 8% TruP Offering
|| ~~ Oe < 4 gu nme THE 8% TruP OFFERING
Slide 7: Get in on the ground floor
Get in on the ground floor of a new securities offering. = Through a subsidiary trust, we issued to existing equity shareholders $4 milion of a new 8% fixed income trust preferred security, Alpha Income Preferred (“AIP"). Ticker: AIRTP. =~ Wealso issued warrants (Ticker: AIRTW) to acquire $21 millio
Slide 8: About Air T, Inc.
Slide 9: We are an industrious American company
We are an industrious American company established 38 years and growing. m= Our businesseshave a history of growth and cash flow generation. = We support dynamic, talented individuals and teams that have demonstrated domain knowledge = Wework to activate growth and overcome challenges, ultimately bu
Slide 10: Key figures and core segments
$250M $13.9M 4 12 850+ FY 2019REVENUE FY 2019ADJEBITDA CORE SEGMENTS COMPANIES EMPLOYEES COMMERCIAL AIRCRAET: & ENGINES: 4 OVERNIGHTAIR CARGO AVIATION GROUND SUPPORT AVIATION GROUND SUPPORT EQUIPMENT SERVICES EXTRA A POREIFOLIO OF POWERFUL COMPANIES:
Slide 11: Investor-Operator Partnership
“Investor-Operator Partnership” is designed to drive short and long-term value creation. “Remember: The best businesses are managed by dynamic individuals within high-performance teams. We are set up to make space for dynamos and support their enterprises. My team seeks to focus resources, activate
Slide 12: Commercial Aircraft & Engines
Commercial Aircraft & Engines = We buy aircraft and engines, then either lease them or part them out = We supply parts to maintenance, repair and overhaul facilities (MRO) = Business units include Contrail Aviation Support, JetYard, AirCo and Worthington Aviation Parts, and Stratus Aero Partners. Re
Slide 13: Overnight Air Cargo
Overnight Air Cargo | = We operate two (2) of the seven (7) FedEx feeder airlines. = Business units Mountain Air Cargo and CSA Air have a 38-year history with FedEx. Revenue, 3/31/19 $73.0M Reported EBITDA*, 32.9% 3/31/19 AIR T Companies Since 1982, 1983 *ReportedEBITDA excludes intercompany and Cor
Slide 14: Aviation Ground Support Services
Aviation Ground Support Services = We provide ground support fleet and facility maintenance services at 85 North American airports. = The segment is comprised of Global Aviation Services. Revenue, 3/31/19 $34.3M Reported EBITDA, -$0.8M 3131/19 AIR T Company Since 2007 *ReportadEBITDA excludes interc
Slide 15: Aviation Ground Support Equipment
Aviation Ground Support Equipment = We manufacture deicing equipment, scissor lift trucks and other ground support equipment = Sole-source deicer supplier to the US Air Force for 18 years = Highly efficient light manufacturing facility = The segment is comprised of Global Ground Support. Revenue, 3/
Slide 16: Revenue Streams
REVENUE STREAMS Diversified Revenue Streams ‘APORIJFOLIO OF POWERFUL COMPANIES Overnight Commercial Ar Cargo Aircraft & Engines
Slide 17: Other Earnings Assets
Other Earnings Assets AIR T, INC’s balance sheet reflects $9.3 million of public and private securities, as of 3/31/19. AIRT, INC. Non-Operating Assets (In Millions) 3/31/19 Marketable Securities $1.8 ‘Stocks & Bonds Marketable securities held in captive insurance Restricted Investments $0.8 company
Slide 18: Capitalization Table
CAPITALIZATION TABLE AIR T, INC.’s capital structure is designedto appropriately shape our bet sizes. Forexample, AIRT supports Contrail’s bank loans to a limit of $1.6 million on $24.1m of term debtanda $20m revolving credit facility. EXTRA A POREIFOLIO OF POWERFUL COMPANIES: ‘AIR T, INC. DIRECT &
Slide 19: Financial Highlights
FINANCIAL HIGHLIGHTS Over the last 5 years, Revenue has more than doubled and is more diversified. pevewe a $101M 11% 3% 52% $250M 38% 14% 19% 29% FY14 ‘APORIJFOLIO OF POWERFUL COMPANIES SEGMENTS Overnight Air Cargo Ground Support Equipment Ground Support Services © Commercial Aircraft & Engines
Slide 20: Financial Highlights
FINANCIAL HIGHLIGHTS Year over year, Operating Income and Adjusted EBITDA* have grown by 90% and 87%, respectively. Operating Income (In Millions) Adjusted EBITDA (In Millions) $7.4M ‘APORIJFOLIO OF POWERFUL COMPANIES FY18 *Excludes DTI and the 21% of Contrailoperatingincome, hich sa business unitot
Slide 21: Reconciliation Table
RECONCILIATION TABLE OPERATING INCOME FY18 soam $0.0M $7.4M $2.4M $0.2M — ee | $1.0M $5.0M in $42m $0.1M $0.3M | FYI801 OT 21% Professional Agusted ArT O&A 21%0f 100%of Asset _——<Gainon Adjusted Loss Contrailol Operating Conall DTID&A Impairment Saleof EBITDA Income 8A Assets EVMi1iT A PORTIFOLIO OF
Slide 22: Reconciliation Table
RECONCILIATION TABLE OPERATING INCOME FY19 77M $1.2M z mm «(81M SO1M $13.9M $03M $22M $8iM ia siam 874M FY19 O1 om 21% Onedime Adjusted 100% of + 100%of __Asset_—<Gainon Adjusted Loss Contrail_—charges* Operating ArT D8A DTID&A Impairment Saleof EBITDA NCI Income Assets AIRTING BXga) “One-Time Charg
Slide 23: Financial Highlights
FINANCIAL HIGHLIGI Since 9/30/2013, the share price of AIRT has increased at 18.3% per annum*. (On June 11, 2019, AIRT executed a 3.for.2 stock split. Jauay oy January Jay Janay ty Janay ty January uy vanuary ty ae Ey 2018 Ea 218 ae “Reporting etod 8/30/13 0 1/089, includes Twst EUTETIG 4 Porifrouo
Slide 24: Financial Highlights
FINANCIAL HIGHLIGHTS Since 1994, our company has had a history of long-term and sustained financial health. Total Revenue (In Milions) EBITDA (In Milions) "PEPEEEEESEBEBSEBEEEEE EES —" ELESEEEESSESEBEESESSEEE SESS ‘APOR[JFOLIO OF POWERFUL COMPANIES El
Slide 25: Our Growth Factors
PORIJFOLIO OF PC
Slide 26: Growth Factors
GROWTH FACTORS Our 4 growth strategies are... = Invest to build our current high-performing businesses. m= Seek to acquire new cash-flow generating businesses. u_ Identify great marketable securities or alternative assets. m= Create unique investment products and fund through third-party capital par
Slide 27: Growth Factor 1
GROWTH FACTOR1 We plan to reinvest in projects at our high-performing businesses by... m= Purchasing commercial aircraft for trading, leasing and part-out. m= Purchasing engine parts inventory. m= Funding deicer builds for Global Ground Support. EVN A PoRLIFOLIO OF POWERFUL COMPANIES
Slide 28: Growth Factor 2
GROWTH FACTOR2 We seek to acquire new cash-flow generating businesses by... = Identifying and acquiring high- performing businesses with edge in the marketplace, which either complement our current portfolio or diversify into industries beyond aviation. EXTRA A POREIFOLIO OF POWERFUL COMPANIES:
Slide 29: Growth Factor 3
GROWTH FACTOR3 We plan to identify great marketable securities or alternative assets by... = Searching for another committed activist opportunity. = Investing in distressed and high yield securities. a Investing in small cap securities. a Further investing in our current portfolio securities. EVN A
Slide 30: Growth Factor 4
GROWTH FACTOR4 We plan to create unique investment products with outside capital partners by... = Offering thoughtful and sustainable products. = Attracting and retaining sophisticated investment professionals and creating space for talented asset managers. EVENING A POR{IFOLIO OF POWERFUL COMPANIES
Slide 31: The 8% TruP Offering
THE 8% TruP OFFERING
Slide 32: Get in on the ground floor.
Get in on the ground floor. Through a trust, we issued and distributed $4 million in face value of a new 8% fixed income TruP security, Alpha Income Preferred (AIP), pro rata to existing holders of AIRT common stock. Existing AIRT stockholders also received warrants to purchase up to an additional $
Slide 33: Why Invest Now
WHY INVEST NOW
Slide 34: Be part of this investment opportunity.
Be part of this investment opportunity. AIR T, INC. is a 38-year established yet growing company with hard assets. Our leadership has a long history of cash generation, and a strong track record of success in the asset management business. This offering is beneficial because it offers participants a
Slide 35: Appendix: Risk Factors
APPENDIX Risk Factors EXTRA A POREIFOLIO OF POWERFUL COMPANIES:
Slide 36: Summary Risk Factors
For more detail and explanation, please see the Company's S-1 filed with the SEC. SUMMARY RISK FACTORS ‘The purchase of securities of Air T, Inc.. the “Company,” is highly speculative and involves a very high degree of risk. An investment in the Company is suitable only for persons who can afford th
Slide 37: Summary Risk Factors: Other Business Risks
For more detail and explanation, please see the Company's S-1 filed with the SEC. SUMMARY RISK FACTORS Other Business Risks Our business, financial condition and results of operations are dependent upon those of our individual businesses, and our aggregate investment in particular industies. Sales o
Slide 38: Summary Risk Factors: Other Business Risks (continued)
For more detail and explanation, please see the Company's S-1 filed with the SEC. SUMMARY RISK FACTORS Continued - Other Business Risks Liens on our engines or aircraft could exceed the value of such assets, which could negatively affect our ability to repossess, lease or sell 2 particular engine or
Slide 39: Summary Risk Factors: Other Business Risks (continued)
For more detail and explanation, please see the Company's S-1 filed with the SEC. SUMMARY RISK FACTORS Continued - Other Business Risks Our business strategy includes acquisitions, and acquisitions entail numerous risks, including the risk of management diversion and increased costs and expenses, al
Slide 40: Summary Risk Factors: Other Business Risks (continued)
For more detail and explanation, please see the Company's S-1 filed with the SEC. SUMMARY RISK FACTORS Continued - Other Business Risks If our lessees fail to cooperate in returning our aircraft or engines following lease terminations, we may encounter obstacles and are likely to incur significant c
Slide 41: Summary Risk Factors: Risks Related to the Offering
For more detail and explanation, please see the Company's S-1 filed with the SEC. SUMMARY RISK FACTORS Continued - Risks Related to the Offering ‘+ Holders of the Capital Securities will generally have limited voting rights. ‘© There is no existing public market for the Capital Securities; market pr
Slide 42: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Non-GAAP Adjusted EBITDA Reconciliation 2019 2018 Growth % ‘Operating Income (GAAP, per 10-K) $ 8,064,705 $ 4,245,523, 90.0% ‘Add: Consolidated Operating Loss of Delphax Techologies 270,490 100,642 Less: 21% of Contrail Operating Income (Minority Interest) (2,207,123)