AIR TRANS SVCS GROUPINC COM (ATSG, Financial) filed Quarterly Report for the period ended 2010-06-30.
Air Trans Svcs Groupinc Com has a market cap of $342.6 million; its shares were traded at around $5.37 with a P/E ratio of 12 and P/S ratio of 0.4. Air Trans Svcs Groupinc Com had an annual average earning growth of 14.1% over the past 5 years.ATSG is in the portfolios of Mohnish Pabrai of Pabrai Mohnish, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.
ACMI Services revenues were $138.8 million and $285.5 million during the second quarter and first six months of 2010, respectively, declining $36.2 million and $89.0 million for the corresponding periods in 2009. Revenues generated from DHLs North American network declined $57.5 million and $122.5 million compared to the second quarter and first six months of 2009, when those revenues included the reimbursement of employee severance and retention benefits, the reimbursement of aircraft depreciation expense and compensation for a larger U.S. network capacity from DHL. Under a severance and retention agreement (S&R agreement) which was terminated on April 1, 2010, DHL was obligated to reimburse ABX for the cost of employee severance, retention, productivity bonuses and vacation benefits paid in accordance with the agreement. The reduction in revenues includes a reduction in the reimbursement of severance and retention benefits since 2009 when ABX experienced significant employee terminations. The decline in DHL revenues was partially offset by increased block hours flown for customers in Europe, Asia Pacific and the Caribbean. Block hours increased 12% and 8% to 22,776 hours and 44,085 hours during the second quarter and first six months of 2010 compared to 2009. Increased block hours reflect additional Boeing 767 and Boeing 757 aircraft placed into service since the beginning of 2009. ACMI Services results included revenues of $2.6 million and $8.1 million from bridging aircraft that ABX supplied to DHL during the second quarter and first six months of 2010, respectively, compared to $3.7 million and $6.1 million for aircraft supplied to DHL under short-term supplemental agreements during the corresponding periods in 2009.
The pre-tax earnings for ACMI Services was $4.1 million and $11.5 million for the second quarter and first six months of 2010, respectively, compared to pre-tax earnings of $4.3 million and $14.3 million during the corresponding periods of 2009. Lower pre-tax earnings for the second quarter of 2010 reflect the changes in the DHL contractual arrangements and increased operating expenses for the BAX/Schenker network, partially offset by improved results from ABXs transatlantic operation. In January 2010, ABX terminated the scheduled transatlantic service which generated losses during 2009, and replaced that block space agreement with a conventional ACMI agreement which contributed positively to the segments earnings during 2010. CCIAs Boeing 727 aircraft scheduled in the BAX/Schenker network have been assigned to operate on a greater number of multi-stop routes than during 2009, which negatively impacted reliability and increased the costs of operating those aircraft. Pretax earnings for the first six months of 2010 included $3.5 million related to vacation earned as a result of the S&R agreement with DHL compared to $4.5 million in the first six months of 2009. Further, CCIA experienced a premature engine failure in 2010, resulting in a charge of $0.4 million for first six months of 2010.
Pre-tax results from discontinued DHL operations were a $0.4 million loss and $0.3 million of earnings during the second quarter and first six months of 2010, respectively, compared to earnings of $2.0 million and $6.6 million for the corresponding periods of 2009. The declines reflect the discontinuance of sorting operations for DHL in the third quarter of 2009. Pre-tax earnings from the discontinued DHL operations for the second quarter and first six months of 2009 included $2.0 million and $4.0 million, respectively from contractual cost mark-ups and the first quarter of 2009 included $2.6 million for the reimbursement from DHL of employee vacation benefits that ABX paid to terminated employees under the S&R agreement. Discontinued operations continue to include pension expenses for former employees that supported the sorting operations. Pre-tax earnings from the discontinued DHL operations for the first six months of 2010 included $0.6 million from the reimbursement from DHL of employee vacation benefits.
Consolidated net earnings from continuing operations increased $3.1 million and $1.6 million for the second quarter and first six months of 2010, respectively, compared to the corresponding periods of 2009. Improved earnings were driven by CAM Leasing. CAM Leasings pre-tax earnings increased by $3.9 million and $5.7 million during the second quarter and first six months of 2010, respectively, compared to the corresponding 2009 periods, reflecting the lease of sixteen additional Boeing 767 aircraft since January 2009, including nine aircraft leases initiated with DHL during the second quarter of 2010. Pre-tax earnings from ACMI Services declined $0.2 million and $2.8 million for the second quarter and first six months of 2010, respectively, compared to the corresponding periods of 2009. The decline in ACMI Services reflects the shift of revenues to CAM for DHL aircraft leases starting April 1, 2010, higher operating costs for the BAX/Schenker network and a reduction of $1.0 million in earnings for the first quarter of 2010 from the S&R agreement.
Capital spending levels are primarily a result of aircraft modification costs for Boeing 767 aircraft. Cash payments for capital expenditures were $58.3 million in the first six months of 2010 compared to $31.4 million in the first six months of 2009. Capital expenditures in 2010 included cargo modification costs for seven aircraft compared to three aircraft during the first six months of 2009. Our capital expenditures for 2010 included $43.8 million for aircraft modifications, $11.0 million for required heavy maintenance and $3.5 million for other equipment costs. We estimate the total level of capital spending for all of 2010 will be approximately $114 million compared to $101 million in 2009. Our estimated 2010 capital spending has been increased from $102 million projected in our 2009 Form 10-K to reflect the Companys pending acquisition and partial freighter conversion of three Boeing 767-300 aircraft on which we placed refundable deposits in the second quarter of 2010. Actual capital spending for any future period will be impacted by progress in the aircraft modification process.
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Air Trans Svcs Groupinc Com has a market cap of $342.6 million; its shares were traded at around $5.37 with a P/E ratio of 12 and P/S ratio of 0.4. Air Trans Svcs Groupinc Com had an annual average earning growth of 14.1% over the past 5 years.ATSG is in the portfolios of Mohnish Pabrai of Pabrai Mohnish, Jim Simons of Renaissance Technologies LLC, George Soros of Soros Fund Management LLC.
Highlight of Business Operations:
Pre-tax segment earnings from CAM were $9.8 million and $16.3 million for the second quarter and first six months of 2010, respectively, compared to $5.8 million and $10.6 million for the corresponding periods of 2009. The increase in pre-tax earnings reflects eighteen additional aircraft that CAM has placed in service since the first quarter of 2009. CAMs results reflect an allocation of overhead expenses and interest expense based on the Companys external interest rates and the carrying value of its operating assets. CAMs interest expense was $2.4 million and $4.9 million for the second quarter and first six months of 2010, respectively, compared to $2.7 million and $5.6 million for the corresponding periods of 2009.ACMI Services revenues were $138.8 million and $285.5 million during the second quarter and first six months of 2010, respectively, declining $36.2 million and $89.0 million for the corresponding periods in 2009. Revenues generated from DHLs North American network declined $57.5 million and $122.5 million compared to the second quarter and first six months of 2009, when those revenues included the reimbursement of employee severance and retention benefits, the reimbursement of aircraft depreciation expense and compensation for a larger U.S. network capacity from DHL. Under a severance and retention agreement (S&R agreement) which was terminated on April 1, 2010, DHL was obligated to reimburse ABX for the cost of employee severance, retention, productivity bonuses and vacation benefits paid in accordance with the agreement. The reduction in revenues includes a reduction in the reimbursement of severance and retention benefits since 2009 when ABX experienced significant employee terminations. The decline in DHL revenues was partially offset by increased block hours flown for customers in Europe, Asia Pacific and the Caribbean. Block hours increased 12% and 8% to 22,776 hours and 44,085 hours during the second quarter and first six months of 2010 compared to 2009. Increased block hours reflect additional Boeing 767 and Boeing 757 aircraft placed into service since the beginning of 2009. ACMI Services results included revenues of $2.6 million and $8.1 million from bridging aircraft that ABX supplied to DHL during the second quarter and first six months of 2010, respectively, compared to $3.7 million and $6.1 million for aircraft supplied to DHL under short-term supplemental agreements during the corresponding periods in 2009.
The pre-tax earnings for ACMI Services was $4.1 million and $11.5 million for the second quarter and first six months of 2010, respectively, compared to pre-tax earnings of $4.3 million and $14.3 million during the corresponding periods of 2009. Lower pre-tax earnings for the second quarter of 2010 reflect the changes in the DHL contractual arrangements and increased operating expenses for the BAX/Schenker network, partially offset by improved results from ABXs transatlantic operation. In January 2010, ABX terminated the scheduled transatlantic service which generated losses during 2009, and replaced that block space agreement with a conventional ACMI agreement which contributed positively to the segments earnings during 2010. CCIAs Boeing 727 aircraft scheduled in the BAX/Schenker network have been assigned to operate on a greater number of multi-stop routes than during 2009, which negatively impacted reliability and increased the costs of operating those aircraft. Pretax earnings for the first six months of 2010 included $3.5 million related to vacation earned as a result of the S&R agreement with DHL compared to $4.5 million in the first six months of 2009. Further, CCIA experienced a premature engine failure in 2010, resulting in a charge of $0.4 million for first six months of 2010.
Pre-tax results from discontinued DHL operations were a $0.4 million loss and $0.3 million of earnings during the second quarter and first six months of 2010, respectively, compared to earnings of $2.0 million and $6.6 million for the corresponding periods of 2009. The declines reflect the discontinuance of sorting operations for DHL in the third quarter of 2009. Pre-tax earnings from the discontinued DHL operations for the second quarter and first six months of 2009 included $2.0 million and $4.0 million, respectively from contractual cost mark-ups and the first quarter of 2009 included $2.6 million for the reimbursement from DHL of employee vacation benefits that ABX paid to terminated employees under the S&R agreement. Discontinued operations continue to include pension expenses for former employees that supported the sorting operations. Pre-tax earnings from the discontinued DHL operations for the first six months of 2010 included $0.6 million from the reimbursement from DHL of employee vacation benefits.
Consolidated net earnings from continuing operations increased $3.1 million and $1.6 million for the second quarter and first six months of 2010, respectively, compared to the corresponding periods of 2009. Improved earnings were driven by CAM Leasing. CAM Leasings pre-tax earnings increased by $3.9 million and $5.7 million during the second quarter and first six months of 2010, respectively, compared to the corresponding 2009 periods, reflecting the lease of sixteen additional Boeing 767 aircraft since January 2009, including nine aircraft leases initiated with DHL during the second quarter of 2010. Pre-tax earnings from ACMI Services declined $0.2 million and $2.8 million for the second quarter and first six months of 2010, respectively, compared to the corresponding periods of 2009. The decline in ACMI Services reflects the shift of revenues to CAM for DHL aircraft leases starting April 1, 2010, higher operating costs for the BAX/Schenker network and a reduction of $1.0 million in earnings for the first quarter of 2010 from the S&R agreement.
Capital spending levels are primarily a result of aircraft modification costs for Boeing 767 aircraft. Cash payments for capital expenditures were $58.3 million in the first six months of 2010 compared to $31.4 million in the first six months of 2009. Capital expenditures in 2010 included cargo modification costs for seven aircraft compared to three aircraft during the first six months of 2009. Our capital expenditures for 2010 included $43.8 million for aircraft modifications, $11.0 million for required heavy maintenance and $3.5 million for other equipment costs. We estimate the total level of capital spending for all of 2010 will be approximately $114 million compared to $101 million in 2009. Our estimated 2010 capital spending has been increased from $102 million projected in our 2009 Form 10-K to reflect the Companys pending acquisition and partial freighter conversion of three Boeing 767-300 aircraft on which we placed refundable deposits in the second quarter of 2010. Actual capital spending for any future period will be impacted by progress in the aircraft modification process.
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