Air T, Inc. · NASDAQ:AIRT
Air T — Q1 2024 Earnings Presentation
40 slides from Air T's earnings presentation, Sep 8, 2023
Slide 1: A Portfolio of Powerful Companies: FY24 Q1 Update
September 8, 2023 A PORTFOLIO OF POWERFUL COMPANIES FY24 Q1 Update NASDAQ: AIRT
Slide 2: Safe Harbor
Statements in this document, which contain more than historical information, may be considered forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which are subject to risks and uncertainties. Actual results may differ materially from those e
Slide 3: Executive Summary: Who We Are
WHO WE ARE ■ AIR T, INC. (NASDAQ: AIRT) is an industrious American company focusing on growing intrinsic value per share at a high rate. EXECUTIVE ■ Founded in 1980, our businesses have a history of growth and cash flow generation. ■ Current management has been in place since 2013. The two largest s
Slide 4: Contents
1. About AIR T, INC. CONTENTS 2. Performance 3. Our Growth Strategies 4. Appendix - Risk Factors 4
Slide 5: About Air T, Inc.
ABOUT AIR T, INC. EVSGATNTE A POR|FOLIO OF POWERFUL COMPANIES
Slide 6: We are an industrious American company established 40+ years and growing
We are an industrious American company established 40+ years and growing. ■ Our businesses have a history of growth and cash flow generation. ■ We seek to identify and empower individuals and teams who will operate businesses well, increasing value over time. ■ We work to activate growth and overcom
Slide 7: Investor-Operator Partnership
“Investor-Operator Partnership” is designed to drive short and long-term value creation. “We want our businesses to be managed by dynamic individuals within high-performance teams. We are set up to make space for dynamos and support their enterprises. The holding company team seeks to focus resource
Slide 8: Airting Flywheel
Identify good ideas Build a brand and industrious Match with network capital partners AIRTING FLYWHEEL Generate Secure and extremely empower attractive returns dynamic on capital management APOR[JFOLIO OF POWERFUL COMPANIES
Slide 9: FY23 Revenue and Adjusted EBITDA, core segments
$247M $6.0M 3 14 584 FY23 Revenue FY23 Adj. EBITDA* CORE SEGMENTS COMPANIES EMPLOYEES COMMERCIAL JET ENGINES AND PARTS GROUND EQUIPMENT SALES OVERNIGHT AIR CARGO *See Adjusted EBITDA reconciliation on slide 31 9
Slide 10: FY23 Financial Highlights
FY Results AIR T, INC. FY23 Financial Highlights (For the Twelve-Month Period Ended 3/31/23) FY23 FY22 FY21 FY20 Revenue $247.3M $177.1M $175.1M $236.8M Operating Income ($4.4M) $8.8M ($9.2M) $7.3M Adjusted EBITDA* $6.0M $11.4M ($1.3M) $9.0M *See Adjusted EBITDA reconciliation on slide 32 ■ FY23 saw
Slide 11: FY24 Q1 Financial Highlights
FY Results AIR T, INC. FY24 Q1 Financial Highlights (For the Three-Month Period Ended 6/30/23) FY24 FY23 FY22 FY21 Revenue $71.4M $50.8M $37.0M $37.0M Operating Income $0.7M $0.8M ($0.0M) ($0.3M) Adjusted EBITDA* $1.4M $1.5M $0.3M $0.1M *See Adjusted EBITDA reconciliation on slide 33 ■ FY24 Q1 saw a
Slide 12: Commercial Jet Engines and Parts
SEGMENT 1 Commercial Jet Engines and Parts As of Q1 FY24 FY23 Revenue $29.8M $22.9M Operating Income $1.5M $3.1M ■ We buy aircraft and engines, then either lease, trade, or send them to part out. ■ We supply parts to maintenance, repair, and overhaul facilities (MRO). ■ Companies in this segment inc
Slide 13: Overnight Air Cargo
SEGMENT 2 Overnight Air Cargo As of Q1 FY24 FY23 Revenue $27.7M $20.6M Operating Income $1.9M $1.1M ■ We operate two of the seven FedEx feeder airlines. ■ Business units Mountain Air Cargo and CSA Air have a 41-year history with FedEx. ■ Air T Companies since 1982, 1983 ■ Air T added Worldwide Aircr
Slide 14: Ground Equipment Sales
SEGMENT 3 Ground Equipment Sales As of Q1 FY24 FY23 Revenue $11.8M $5.8M Operating Income ($0.1M) $0.1M ■ We manufacture deicing equipment, scissor lift trucks, and other ground support equipment. ■ Sole-source deicer supplier to the US Air Force for 19 years. ■ Highly efficient light manufacturing
Slide 15: Investing For Growth
Investing For Growth Investment manager focused on unearthing fundamentally attractive small and mid-cap opportunities. Allows us to further expand upon our idea generation capabilities to identify, analyze, develop and execute innovative investment strategies that are aimed at building better finan
Slide 16: Air T Digital
Air T Digital As of 6/30/23 3/31/23 3/31/22 ARR1 $5.0M $4.7M $3.9M ■ We invest in companies that provide digital aviation business services which generate recurring subscription revenues. 1ARR, or Annual Recurring Revenue, is defined as the monthly recurring revenue as of June 30, 2023, March 31, 20
Slide 17: Air T Asset Management
Air T Asset Management As of 6/30/23 3/31/23 3/31/22 Assets Managed for $216M $183M $126M Investor Partners ■ We manage assets for our investor partners. The asset types include leased aircraft, consignments, teardowns as well as domestic and African equities. ■ Through 6/30/23, Air T’s asset manage
Slide 18: News: WASI Acquisition
WASI Acquisition ■ On January 31, 2023, we completed the acquisition of Worldwide Aircraft Services (“WASI”), an aircraft repair station that began operations in 1986 located in Springfield, MO, for $3.1M. NEWS 18
Slide 19: Ten-year revenue growth and diversification
FINANCIAL HIGHLIGHTS Over the last ten years, revenue has increased 187% and is more diversified. $240M* REVENUE 24% SEGMENTS Commercial Aircraft & Engines +187% Overnight Air Cargo Ground Support Equipment $84M 43% 62% 33% 38% FY14 FY23 *Excludes revenue in FY23 earned outside of our core segments.
Slide 20: Non-Operating Assets
OTHER Non-Operating Assets AIR T, Inc. owns the following public and private securities: AIR T, INC. Non-Operating Assets (In Millions) 6/30/23 3/31/23 3/31/22 3/31/21 3/31/20 Lendway, Inc. (LDWY) Stock – 0.5M Shares1,2 $3.0 $3.8 $4.6 $4.3 $2.6 CCI Investment (20.1% as of 6/30/23)3 $3.5 $3.1 $2.6 $3
Slide 21: Capitalization Table
CAPITALIZATION TABLE AIR T, INC.’s capital structure is designed to appropriately shape our bet sizes; in part by utilizing non-recourse leverage For example, AIR T guarantees Contrail’s bank loans to a maximum limit of $1.6 million. 1We entered interest rate swaps to provide a fixed rate of 5.09% a
Slide 22: Calibrated Bets & Capitalization Structure
STRUCTURE Calibrated Bets & Capitalization Structure Tailored, Limited, Convex Exposures • Convexity-promoting organizational design • Kelly-calibrated bets: sized to edge & bankroll • Limit downside: tailored exposures Risk Management: Downside Protection • Anti-fragile company • Islands of segrega
Slide 23: Share price increase since 9/30/2013
FINANCIAL HIGHLIGHTS Since 9/30/2013, the share price of AIRT has increased at 12.5% per annum*+. $22.50 + Compares to 10.5% return of the S&P 500 over the same period *Reporting period 9/30/13 to 8/30/23, includes $4M Trust 23 *Preferred dividend to common shareholders
Slide 24: Long-term history of sustained financial health
FINANCIAL HIGHLIGHTS Since 1994, our company has had a history of long-term and sustained financial health. Revenue ($ in Millions) Operating Income ($ in Millions) 300 15 250 10 200 5 150 - 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Slide 25: Growth Strategies
GROWTH STRATEGIES EVSGATNTE A POR|FOLIO OF POWERFUL COMPANIES
Slide 26: Our four growth strategies
GROWTH STRATEGIES Our four growth strategies are... ■ Invest to build our current high-performing businesses. ■ Seek to acquire new cash-flow generating businesses. ■ Identify great marketable securities or alternative assets. ■ Create unique investment products and fund alongside third- party capit
Slide 27: Reinvest in projects at high-performing businesses
GROWTH STRATEGY 1 We plan to reinvest in projects at our high-performing businesses by... ■ Purchasing commercial aircraft for trading, leasing and part-out. ■ Purchasing engine parts inventory. ■ Funding deicer builds for Global Ground Support. 27
Slide 28: Acquire new cash-flow generating businesses
GROWTH STRATEGY 2 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. 28
Slide 29: Identify marketable securities or alternative assets
GROWTH STRATEGY 3 We plan to identify great marketable securities or alternative assets by... ■ Searching for another committed activist opportunity. ■ Investing in distressed and high yield securities. ■ Investing in small cap securities. ■ Further investing in our current securities portfolio. 29
Slide 30: Create unique investment products with outside capital partners
GROWTH STRATEGY 4 We plan to create unique investment products with outside capital partners by... ■ Offering thoughtful and sustainable products with attractive return profiles ■ Attracting and retaining sophisticated investment professionals and creating space for talented asset managers. 30
Slide 31: Theoretical Toy Model: Public Company versus Private Equity Fund
TOY MODEL Theoretical Toy Model Public Company versus Private Equity Fund Question: Does a permanent capital vehicle like a ASSUMPTIONS public company have a structural advantage compared Annual Return on Investment 5% to a 7-year PE fund vehicle? Taxes Paid by PE Fund @ 7-year Intervals 30% Hypothe
Slide 32: Adjusted EBITDA Reconciliation
FY Results Adjusted EBITDA Reconciliation FY23 FY22 FY21 FY20 Operating Income (GAAP) ($4.4M) $8.8M* ($9.2M) 7.3M Depreciation (excluding leased $2.5M $1.6M $1.2M $1.3M engine depreciation) Asset Impairment, write-downs, $7.8M $0.8M $6.6M $0.0M restructuring Gain on sale of PP&E $0.0M $0.0M ($0.0M)
Slide 33: Adjusted EBITDA Reconciliation
FY Results Adjusted EBITDA Reconciliation FY24 Q1 FY23 Q1 FY22 Q1 FY21 Q1 Operating Income (GAAP) $0.7M $0.8M ($0.0M) ($0.3M) Depreciation (excluding leased $0.7M $0.6M $0.3M $0.4M engine depreciation) Asset Impairment, write-downs, $0.0M $0.0M $0.0M $0.0M restructuring Gain on sale of PP&E ($0.0M)
Slide 34: Q&A With Management
Q&A WITH MANAGEMENT 34
Slide 35: Interactive Q&A through Slido.com
Our interactive Q&A capability, through Slido.com, allows shareholders to ask questions of our management. Recently submitted questions have been answered below. To submit your own question, go to (https://app.sli.do/event/j8drfixw).1 No questions received in the current quarter Notes: 1. We plan to
Slide 36: Appendix: Risk Factors
APPENDIX Risk Factors APOR[JFOLIO OF POWERFUL COMPANIES
Slide 37: Summary Risk Factors
For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements 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 i
Slide 38: Summary Risk Factors
For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. SUMMARY RISK FACTORS Risks Related to Our Segment Operations ● The operating results of our four segments may fluctuate, particularly our commercial jet engi
Slide 39: Summary Risk Factors
For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. SUMMARY RISK FACTORS Risks Related to Our Segment Operations (continued) ● Our lessees may fail to adequately insure our aircraft or engines which could subj
Slide 40: Summary Risk Factors
For more detail and explanation, please see the Company’s public filings including its Form S-3 and prospectus supplements filed with the SEC. SUMMARY RISK FACTORS Risks Related to Our Structure and Financing/Liquidity Risks (continued) ● Our current financing arrangements require compliance with fi