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Air T Inc. Reports Operating Results (10-Q)

November 05, 2010 | About:
10qk

10qk

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Air T Inc. (AIRT) filed Quarterly Report for the period ended 2010-09-30.

Air T Inc. has a market cap of $21.6 million; its shares were traded at around $8.89 with a P/E ratio of 7.4 and P/S ratio of 0.3. The dividend yield of Air T Inc. stocks is 3.8%. Air T Inc. had an annual average earning growth of 14.3% over the past 10 years.AIRT is in the portfolios of Jim Simons of Renaissance Technologies LLC, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC.

Highlight of Business Operations:

GGS contributed approximately $10,944,000 and $16,196,000 to the Company s revenues for the six-month periods ended September 30, 2010 and 2009, respectively. The $5,252,000 (32%) decrease in revenues was due largely to no military deicing units being delivered in the current period. Revenues from sales to the USAF were down $7,058,000 (92%) for the current six-month period compared to the prior year comparable period, while commercial domestic sales were up $532,000 (12%) and commercial international sales were up $1,274,000 (31%) over the same periods. At September 30, 2010, GGS s total order backlog was $14.6 million compared to $8.8 million at June 30, 2010, $13.6 million at September 30, 2009 and $1.3 million at March 31, 2010.

Consolidated revenue increased $30,000 to $20,171,000 for the three-month period ended September 30, 2010 compared to its equivalent prior period. A number of offsetting factors made up this minimal increase. Revenues in the ground equipment segment decreased $1,075,000 (13%) to $7,018,000, principally resulting from the lack of deicer sales to the USAF during the second quarter of fiscal 2011, partially offset by increased sales in the commercial domestic markets. Revenues in the air cargo segment were up $510,000 (5%) largely as a result of increases in administrative fee revenue and maintenance labor revenue relating to the four ATR-72 aircraft that were delivered by FedEx during the quarter, as well as flight and maintenance operating costs passed through to our customer at cost. Heavy maintenance on one of the ATR-72 aircraft was completed during the second quarter and we expect heavy maintenance work on all four aircraft to be completed by the end of our current fiscal year. Finally, revenues in the ground support services segment were up $594,000 (27%) principally due to a one-time equipment sale for approximately $700,000.

Operating expenses increased $544,000 (3%) to $19,355,000 for the three-month period ended September 30, 2010 compared to its equivalent prior period. The increase was also due to a number of offsetting factors, as follows. Ground equipment sales segment operating costs decreased $445,000 (7%) driven primarily by the current quarter s decrease in military units and revenues. Gross margins on equipment sales are also down reflecting a very competitive commercial market both domestically and internationally, as well as changes in customer and product mix. Operating expenses in the air cargo segment were up $467,000 (6%), corresponding to the percentage increase in segment revenues. Operating expenses in the ground support services segment increased by $615,000 (39%) largely driven by the cost of the one-time equipment sale. General and administrative expenses decreased by $76,000 (3%). Compensation expense relating to stock options has declined and was $44,000 less in the current period and profit sharing expense was $62,000 less in the current period based on the decreased earnings.

Consolidated revenue decreased $3,896,000 (10%) to $35,195,000 for the six-month period ended September 30, 2010 compared to its equivalent prior period. The decrease in revenues resulted from a number of factors. Revenues in the ground equipment sales segment decreased $5,252,000 (32%) to $10,944,000 principally as a result of a decrease in military deicer units and revenues during the first six months of fiscal 2011. Revenues in the air cargo segment were up $642,000 (3%) primarily as a result of increased administrative fee and maintenance labor revenues generated by the additional four ATR-72 aircraft that were delivered during the second quarter as well as increased flight and maintenance operating costs passed through to the customer at cost. In addition, GAS provided revenues of $5,006,000 during the six-month period ended September 30, 2009, compared to revenue of $4,292,000 in the prior year comparable period, the increase principally due to a one-time equipment sale approximating $700,000 during the second quarter of the current fiscal year.

Operating expenses decreased $2,057,000 (6%) to $33,968,000 for the six-month period ended September 30, 2010 compared to its equivalent prior period. The decrease was due to a number of factors. Ground equipment sales segment operating costs decreased $2,998,000 (25%) driven primarily by the current period s decrease in military units and revenues. Operating expenses in the air cargo segment were up $674,000 (4%) tracking the increased revenues in the segment. The ground support services segment reported a $615,000 increase in operating expenses directly related to the increased revenue provided by GAS this period. General and administrative expenses decreased $323,000 (6%) to $4,889,000 for the six-month period ended September 30, 2010 compared to its equivalent prior period. There were a number of significant components comprising this decrease. Professional fee expense decreased by $146,000, compensation expense relating to stock options has declined and was $129,000 less in the current period and profit sharing expense was $224,000 less in the current period based on the decreased earnings. Offsetting these decreases was an increase in travel expense of $72,000 and lesser increases in salaries and benefits.

Cash used in operating activities was $2,343,000 more for the six-month period ended September 30, 2010 compared to the similar prior year period, resulting from a variety of offsetting factors. Inventories remained fairly constant in the prior period while increasing significantly during the current six-month period, accounting for a $3,585,000 increase in cash used in operating activities. Additionally, earnings were down significantly in the current period compared to the prior comparable period, reflecting $1,120,000 less cash from operating activities. Offsetting this, accounts payable also remained fairly constant in the prior period while also increasing significantly in the current six-month period, accounting for a $2,226,000 decrease in cash used.

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