Air T, Inc. · NASDAQ:AIRT
Air T — Manual of Ideas Conference June 2022
35 slides from Air T's conference presentation, Jun 7, 2022
Slide 1: Manual of Ideas Conference Presentation June 2022
NASDAQ: AIRT MANUAL OF IDEAS CONFERENCE PRESENTATION JUNE 2022
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
3 ■ AIR T, INC. (NASDAQ: AIRT) is an industrious American company focused on generating after tax cash flow per share. ■ 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 shareholders have seats on th
Slide 4: Contents
1. Before Air T, Inc. 2. About AIR T, INC. 3. Performance 4. Our Growth Factors 5. Appendix - Risk Factors 4 CONTENTS
Slide 5: Before Air T, Inc.
Before Air T, Inc. 5 ■ Distressed debt analyst at Varde Partners. ■ Developed and implemented a Hedged High- Yield investment strategy for Whitebox Advisors. ■ Developed and implemented an Allocator Operator (A/O) investment strategy. ■ As part of the A/O strategy, gained board seats at Insignia Sys
Slide 6: About Air T, Inc.
6 ABOUT AIR T, INC.
Slide 7: We are an industrious American company established 40+ years and growing
We are an industrious American company established 40+ years and growing. 7 ■ 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 overc
Slide 8: Investor-Operator Partnership
“Investor-Operator Partnership” is designed to drive short and long-term value creation. 8 “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 resour
Slide 9: Flywheel
9 identify good ideas match with capital partners secure and empower dynamic management generate extremely attractive returns on capital build an investor brand and network FLYWHEEL
Slide 10: Revenue, Adj. EBITDA and Core Segments
$172M 10 TTM Q3 FY22 Revenue $1.9M TTM Q3 FY22 Adj. EBITDA* 3 CORE SEGMENTS 11 COMPANIES 400+ EMPLOYEES OVERNIGHT AIR CARGO COMMERCIAL AIRCRAFT & ENGINES AVIATION GROUND SUPPORT EQUIPMENT *See Adjusted EBITDA reconciliation on slide 12
Slide 11: Financial Highlights
AIR T, INC. Financial Highlights 11 FY Results TTM (12/31/21) FY21 FY20 Revenue $172.4M $175.1M $236.8M Operating Income ($5.6M) ($9.2M) $7.3M Adjusted EBITDA* $1.9M ($1.3M) $9.0M *See Adjusted EBITDA reconciliation on slide 12
Slide 12: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 12 FY Results TTM Q3 FY22 FY21 FY20 Operating Income (GAAP) ($5.6M) ($9.2M) 7.3M Depreciation (excluding leased engine depreciation) $1.3M $1.2M $1.3M Asset Impairment, write-downs, restructuring $5.9M $6.6M $0.0M Gain on sale of PP&E ($0.0M) ($0.0M) ($0.0M) Security I
Slide 13: Commercial Aircraft & Engines Segment
Commercial Aircraft & Engines 13 SEGMENT 1 ■ 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 include Contrail Aviation Support, JetYard, AirCo, and Worthington Aviatio
Slide 14: Overnight Air Cargo Segment
Overnight Air Cargo 14 SEGMENT 2 ■ We operate two of the seven FedEx feeder airlines. ■ Business units Mountain Air Cargo and CSA Air have a 40 year history with FedEx. ■ Air T Companies since 1982, 1983 An asset-light, predictable business. TTM Q3 FY22 FY21 Revenue $72.4M $66.3M Operating Income $2
Slide 15: Aviation Ground Support Equipment Segment
Aviation Ground Support Equipment 15 SEGMENT 3 ■ 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 Supp
Slide 16: Investments and Early Stage Ventures
16 INVESTMENTS 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 financial f
Slide 17: Non-Operating Assets
Non-Operating Assets 17 AIR T, Inc’s balance sheet includes $17.2 million of public and private securities, as of 12/31/21. OTHER AIR T, INC. Non-Operating Assets (In Millions) 12/31/21 Insignia Systems (ISIG) Stock – 0.5M Shares* $5.0 CCI Investment (18.98%) $2.8 Investments in BCCM Funds $0.8 Airc
Slide 18: News: GdW Beheer Acquisition, ERC Application, Wolfe Lake HQ
■ On February 10, 2022, we completed the acquisition of GdW Beheer B.V., a Dutch holding company in the business of providing global aviation data and information for EUR 12.5M. 18 GdW Beheer B.V. Acquisition NEWS ■ On January 24, 2022, we submitted an application to the IRS for an Employee Retentio
Slide 19: Financial Highlights: Revenue Growth and Diversification
FY14 FY21 Commercial Aircraft & Engines Overnight Air Cargo Ground Support Equipment FINANCIAL HIGHLIGHTS Over the last seven years, consolidated revenue has increased 107% and is more diversified. 19 +107% $174M* $84M SEGMENTS REVENUE 62% 38% 38% 35% 27% *Excludes revenue in FY21 earned outside of
Slide 20: Capitalization Table
20 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. AIR T, INC. DIRECT & GUARANTEED Interest Rate Maturity Date 12/
Slide 21: Calibrated Bets & Capitalization Structure
Calibrated Bets & Capitalization Structure 21 Risk Management: Downside Protection • Anti-fragile company • Islands of segregated assets and businesses • Market driven and savvy risk management program that oversees all of the company STRUCTURE Tailored, Limited, Convex Exposures • Convexity-promoti
Slide 22: Financial Highlights: Share Price Growth
FINANCIAL HIGHLIGHTS 22 Since 9/30/2013, the share price of AIRT has increased at 11.2% per annum*. *Reporting period 9/30/13 to 6/3/22, includes $4M Trust Preferred dividend to common shareholders
Slide 23: Financial Highlights: Long-Term Financial Health
FINANCIAL HIGHLIGHTS Since 1994, our company has had a history of long-term and sustained financial health. 23 Note: FY2017 contained large non-cash impairments and inventory write-downs tied to our investment in Delphax Technologies. FY21 results contained $6.6m of non-cash impairments and inventor
Slide 24: Growth Strategies
24 GROWTH STRATEGIES
Slide 25: Our Four Growth Strategies
GROWTH STRATEGIES Our four growth strategies are... 25 ■ 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 ca
Slide 26: Reinvest in High-Performing Businesses
GROWTH STRATEGY 1 We plan to reinvest in projects at our high-performing businesses by... 26 ■ Purchasing commercial aircraft for trading, leasing and part-out. ■ Purchasing engine parts inventory. ■ Funding deicer builds for Global Ground Support.
Slide 27: Acquire New Cash-Flow Generating Businesses
GROWTH STRATEGY 2 We seek to acquire new cash-flow generating businesses by... 27 ■ Identifying and acquiring high- performing businesses with edge in the marketplace, which either complement our current portfolio or diversify into industries beyond aviation.
Slide 28: Identify Marketable Securities or Alternative Assets
GROWTH STRATEGY 3 We plan to identify great marketable securities or alternative assets by... 28 ■ 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.
Slide 29: Create Unique Investment Products with Outside Capital
GROWTH STRATEGY 4 We plan to create unique investment products with outside capital partners by... 29 ■ Offering thoughtful and sustainable products with attractive return profiles ■ Attracting and retaining sophisticated investment professionals and creating space for talented asset managers.
Slide 30: Theoretical Toy Model: Public Company versus Private Equity Fund
Theoretical Toy Model Public Company versus Private Equity Fund 30 TOY MODEL ASSUMPTIONS Annual Return on Investment 5% Taxes Paid by PE Fund @ 7-year Intervals 30% Year Public Company $1 Private Equity Fund $1 Taxes Paid 0 $1.00 $1.00 $0.00 7 $1.34 $1.24 $0.10 14 $1.89 $1.59 $0.15 21 $2.65 $2.04 $0
Slide 31: Appendix: Risk Factors
APPENDIX Risk Factors 31
Slide 32: 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 the loss of their entire investment. Accordingly, in making an investment decision with respect to the Com
Slide 33: Risks Related to Our Segment Operations
Risks Related to Our Segment Operations ● The operating results of our four segments may fluctuate, particularly our commercial jet engine and parts segment. ● Our Air Cargo Segment is dependent on a significant customer. ● Our dry-lease agreements with FedEx subject us to operating risks. ● Because
Slide 34: Risks Related to Our Segment Operations (continued)
Risks Related to Our Segment Operations (continued) ● Interruptions in the capital markets could impair our lessees’ ability to finance their operations, which could prevent the lessees from complying with payment obligations to us. ● Our lessees may fail to adequately insure our aircraft or engines
Slide 35: Summary Risk Factors: Structure and Financing/Liquidity
Risks Related to Our Structure and Financing/Liquidity Risks (continued) ● Despite our substantial indebtedness, we might incur significantly more debt, and cash may not be available to meet our financial obligations when due or enable us to capitalize on investment opportunities when they arise. ●