Air T Inc 10-Q for FY2024 Q3

Air T Inc (AIRT)

10-Q 2024-02-12 For: 2023-12-31

Added on April 09, 2026

About this 10-Q

Air T Inc filed this 10-Q on February 12, 2024, covering the quarter ended December 31, 2023 (FY2024 Q3).

Headline figures

Quarter ended December 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $63.76M; up 3.8% from $61.4M a year earlier
Net loss: $2.98M; compared with a net loss of $590K a year earlier
Diluted EPS: -$1.06; compared with -$0.21 a year earlier

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☒			Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended December 31, 2023
☐			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _____to _____


Delaware			52-1206400
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AIRT	NASDAQ Global Market
Alpha Income Preferred Securities (also referred to as 8% Cumulative Capital Securities) (“AIP”)	AIRTP	NASDAQ Global Market


Common Stock			Common Shares, par value of $.25 per share
Outstanding Shares at January 31, 2024			2,821,504


		Page
	PART I

Item 1.	Financial Statements

	Condensed Consolidated Statements of Income (Loss) (Unaudited) For The Three and Nine Months Ended December 31, 2023 and 2022	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) For The Three and Nine Months Ended December 31, 2023 and 2022	4

	Condensed Consolidated Balance Sheets as of December 31, 2023 and March 31, 2023 (Unaudited)	5

	Condensed Consolidated Statements of Cash Flows (Unaudited) For The Nine Months Ended December 31, 2023 and 2022	6

	Condensed Consolidated Statements of Equity (Unaudited) For The Nine Months Ended December 31, 2023 and 2022	7

	Notes to Condensed Consolidated Financial Statements (Unaudited)	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34

Item 4.	Controls and Procedures	35

	PART II

Item 2.	Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities	36

Item 5.	Other Information	36

Item 6.	Exhibits	37
	Signatures	38
	Exhibit Index
	Certifications
	Interactive Data Files


(In thousands, except per share data)	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Operating Revenues:
Overnight air cargo	$	29,018	$	21,831	$	84,944	$	64,464
Ground equipment sales	8,441		16,147		32,474		39,981
Commercial jet engines and parts	24,139		21,736		90,463		63,577
Corporate and other	2,158		1,682		6,273		4,924
	63,756		61,396		214,154		172,946


Operating Expenses:
Overnight air cargo	24,504		19,174		71,841		56,696
Ground equipment sales	6,964		13,492		27,854		32,362
Commercial jet engines and parts	19,322		15,357		72,562		43,685
General and administrative	13,554		11,503		39,672		33,898
Depreciation and amortization	699		1,097		2,088		2,984
Inventory write-down	321		638		326		1,658
Asset impairment	—		—		—		516
	65,364		61,261		214,343		171,799

Operating (Loss) Income	(1,608)		135		(189)		1,147

Non-operating (Expense) Income:
Interest expense	(1,528)		(2,204)		(5,189)		(6,021)
Income from equity method investments	1,038		2,118		2,477		2,917
Other	142		(97)		8		(608)
	(348)		(183)		(2,704)		(3,712)

Loss before income taxes	(1,956)		(48)		(2,893)		(2,565)

Income Taxes Expense (Benefit)	153		(156)		851		(536)

Net (Loss) Income	(2,109)		108		(3,744)		(2,029)

Net Income Attributable to Non-controlling Interests	(870)		(698)		(1,375)		(1,226)

Net Loss Attributable to Air T, Inc. Stockholders	$	(2,979)	$	(590)	$	(5,119)	$	(3,255)

Loss per share (Note 6)
Basic	$	(1.06)	$	(0.21)	$	(1.82)	$	(1.14)
Diluted	$	(1.06)	$	(0.21)	$	(1.82)	$	(1.14)

Weighted Average Shares Outstanding:
Basic	2,822		2,836		2,820		2,855
Diluted	2,822		2,836		2,820		2,855


	Three Months Ended December 31,				Nine Months Ended December 31,
(In Thousands)	2023		2022		2023		2022
Net (Loss) Income	$	(2,109)	$	108	$	(3,744)	$	(2,029)
Foreign currency translation gain (loss)	216		775		(19)		(360)
Unrealized (loss) gain on interest rate swaps	(38)		(61)		2		1,371
Reclassification of interest rate swaps into earnings	(188)		18		(568)		52
Total Other Comprehensive (Loss) Income	(10)		732		(585)		1,063
Total Comprehensive (Loss) Income	(2,119)		840		(4,329)		(966)
Comprehensive Income Attributable to Non-controlling Interests	(870)		(698)		(1,375)		(1,226)
Comprehensive (Loss) Income Attributable to Air T, Inc. Stockholders	$	(2,989)	$	142	$	(5,704)	$	(2,192)


(In thousands, except share amounts)	December 31, 2023		March 31, 2023
ASSETS
Current Assets:
Cash and cash equivalents	$	4,480	$	5,806
Marketable securities	326		—
Restricted cash	707		1,284
Restricted investments	1,463		2,161
Accounts receivable, net of allowance for doubtful accounts of $1,371 and $1,160	18,141		27,218
Income tax receivable	354		536
Inventories, net	53,887		71,125
Employee retention credit receivable	—		940
Other current assets	9,971		7,487
Total Current Assets	89,329		116,557

Property and equipment, net of accumulated depreciation of $7,520 and $6,624	20,883		21,439
Intangible assets, net of accumulated amortization of $5,141 and $4,191	11,459		12,103
Right-of-use ("ROU") assets	11,893		11,666
Equity method investments	15,038		13,230
Goodwill	10,624		10,563
Other assets	3,556		4,004
Total Assets	162,782		189,562

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable	13,537		10,449
Income tax payable	36		304
Accrued expenses and other (Note 4)	12,029		13,133
Current portion of long-term debt	17,367		38,736
Short-term lease liability	1,832		1,664
Total Current Liabilities	44,801		64,286

Long-term debt	83,419		86,349
Deferred income tax liabilities, net	2,581		2,417
Long-term lease liability	10,941		10,771
Other non-current liabilities	—		47
Total Liabilities	141,742		163,870

Redeemable non-controlling interests	13,086		12,710

Commitments and contingencies (Note 15)

Equity:
Air T, Inc. Stockholders' Equity:
Preferred stock, $1.00 par value, 2,000,000 shares authorized	—		—
Common stock, $0.25 par value; 4,000,000 shares authorized, 3,030,245 and 3,026,495 shares issued, 2,821,504 and 2,818,374 shares outstanding	758		757
Treasury stock, 208,741 shares at $19.63 and 208,121 shares at $19.62	(4,098)		(4,083)
Additional paid-in capital	990		728
Retained earnings	9,014		13,686
Accumulated other comprehensive income	231		816
Total Air T, Inc. Stockholders' Equity	6,895		11,904
Non-controlling Interests	1,059		1,078
Total Equity	7,954		12,982
Total Liabilities and Equity	$	162,782	$	189,562


(In Thousands)	Common Stock			Treasury Stock			Additional Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Non-controlling Interests		Total Equity
	Shares	Amount		Shares	Amount
Balance, March 31, 2022	3,023	$	756	156	$	(3,002)	$	393	$	26,729	$	(263)	$	1,104	$	25,717

Net loss*	—	—		—	—		—		(1,433)		—		(6)		(1,439)

Stock compensation expense	—	—		—	—		79		—		—		—		79

Foreign currency translation loss	—	—		—	—		—		—		(529)		—		(529)

Adjustment to fair value of redeemable non-controlling interest	—	—		—	—		—		926		—		—		926

Unrealized gain on interest rate swaps, net of tax	—	—		—	—		—		—		475		—		475

Reclassification of interest rate swaps into earnings	—	—		—	—		—		—		17		—		17

Balance, June 30, 2022	3,023	756		156	(3,002)		472		26,222		(300)		1,098		25,246

Net loss*	—	—		—	—		—		(1,232)		—		(4)		(1,236)

Repurchase of common stock	—	—		19	(351)		—		—		—		—		(351)

Exercise of stock options	3	1		—	—		20		—		—		—		21

Stock compensation expense	—	—		—	—		79		—		—		—		79

Foreign currency translation loss	—	—		—	—		—		—		(606)		—		(606)

Adjustment to fair value of redeemable non-controlling interest	—	—		—	—		—		(188)		—		—		(188)

Unrealized gain on interest rate swaps, net of tax	—	—		—	—		—		—		957		—		957

Reclassification of interest rate swaps into earnings	—	—		—	—		—		—		17		—		17

Balance, September 30, 2022	3,026	757		175	(3,353)		571		24,802		68		1,094		23,939

Net loss*	—	—		—	—		—		(590)		—		(7)		(597)

Repurchase of common stock	—	—		29	(642)		—		—		—		—		(642)

Stock compensation expense	—	—		—	—		79		—		—		—		79

Foreign currency translation gain	—	—		—	—		—		—		775		—		775

Adjustment to fair value of redeemable non-controlling interest	—	—		—	—		—		(1,059)		—		—		(1,059)

Unrealized loss on interest rate swaps, net of tax	—	—		—	—		—		—		(61)		—		(61)

Reclassification of interest rate swaps into earnings	—	—		—	—		—		—		18		—		18

Balance, December 31, 2022	3,026	$	757	204	$	(3,995)	$	650	$	23,153	$	800	$	1,087	$	22,452


	January 31, 2023
Cash consideration	$	1,628
Seller's Note	1,370
Total consideration	$	2,998


	January 31, 2023
ASSETS
Accounts receivable	$	1,037
Inventory	517
Other current assets	97
Property, plant and equipment, net	403
Intangible -Trade Name	342
Intangible - Non-competition Agreement	19
Intangible - Customer Relationships	683
Other assets	20
Total assets	$	3,118

LIABILITIES
Accounts payable	61
Accrued expenses and deferred revenue	635
Total liabilities	$	696

Net assets acquired	$	2,422

Consideration paid	2,998
Less: Cash acquired	(500)
Less: Net assets acquired	(2,422)
Goodwill	$	76


	Income Statement Post-Acquisition
Revenue	$	929
Cost of Sales	676
Operating Expenses	425
Operating Loss	(172)
Non-operating expense	(22)
Net loss	$	(194)


Type of Revenue			Nature, Timing of Satisfaction of Performance Obligations, and Significant Payment Terms
Product Sales			The Company generates revenue from sales of various distinct products such as parts, aircraft equipment, jet engines, airframes, and scrap metal to its customers. A performance obligation is created when the Company accepts an order from a customer to provide a specified product. Each product ordered by a customer represents a performance obligation. The Company recognizes revenue when obligations under the terms of the contract are satisfied; generally, this occurs at a point-in-time upon shipment or when control is transferred to the customer. Transaction prices are based on contracted terms, which are at fixed amounts based on standalone selling prices. While the majority of the Company's contracts do not have variable consideration, for the limited number of contracts that do, the Company records revenue based on the standalone selling price less an estimate of variable consideration (such as rebates, discounts or prompt payment discounts). The Company estimates these amounts based on the expected incentive amount to be provided to customers and reduces revenue accordingly. Performance obligations are short-term in nature and customers are typically billed upon transfer of control. The Company records all shipping and handling fees billed to customers as revenue. The terms and conditions of the customer purchase orders or contracts are dictated by either the Company’s standard terms and conditions or by a master service agreement or by the contract.
Support Services			The Company provides a variety of support services such as aircraft maintenance and short-term repair services to its customers. Additionally, the Company operates certain aircraft routes on behalf of FedEx. A performance obligation is created when the Company agrees to provide a particular service to a customer. For each service, the Company recognizes revenues over time as the customer simultaneously receives the benefits provided by the Company's performance. This revenue recognition can vary from when the Company has a right to invoice to the output or input method depending on the structure of the contract and management’s analysis. For repair-type services, the Company records revenue over-time based on an input method of costs incurred to total estimated costs. The Company believes this is appropriate as the Company is performing labor hours and installing parts to enhance an asset that the customer controls. The vast majority of repair-services are short term in nature and are typically billed upon completion of the service. Some of the Company’s contracts contain a promise to stand ready as the Company is obligated to perform certain maintenance or administrative services. For most of these contracts, the Company applies the 'as invoiced' practical expedient as the Company has a right to consideration from the customer in an amount that corresponds directly with the value of the entity's performance completed to date. A small number of contracts are accounted for as a series and recognized equal to the amount of consideration the Company is entitled to less an estimate of variable consideration (typically rebates). These services are typically ongoing and are generally billed on a monthly basis.


	Three Months Ended December 31,				Nine Months Ended December 31,
	2023		2022		2023		2022
Product Sales
Air Cargo	$	10,050	$	6,416	$	28,428	$	20,303
Ground equipment sales	8,080		15,909		31,556		39,125
Commercial jet engines and parts	21,381		18,515		81,535		54,545
Corporate and other	153		112		775		247
Support Services
Air Cargo	18,929		15,399		56,378		43,979
Ground equipment sales	223		96		474		396
Commercial jet engines and parts	2,533		2,428		8,393		6,958
Corporate and other	1,478		1,157		3,967		3,155
Leasing Revenue

Ground equipment sales	24		42		58		115
Commercial jet engines and parts	12		729		35		1,939
Corporate and other	397		353		1,209		1,223
Other
Air Cargo	39		16		138		182
Ground equipment sales	114		100		386		345
Commercial jet engines and parts	213		64		500		135
Corporate and other	130		60		322		299

Total	$	63,756	$	61,396	$	214,154	$	172,946


	Outstanding contract liabilities		Outstanding contract liabilities as of April 1, 2023 Recognized as Revenue
As of December 31, 2023	$	3,389
As of April 1, 2023	$	5,000
For the nine months ended December 31, 2023			$	4,433


(In Thousands)	Nine Months Ended December 31,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$	(3,744)	$	(2,029)
Adjustments to reconcile Net Loss to net cash provided by (used in) operating activities:
Depreciation and amortization	2,088		2,984
Inventory write-down	326		1,658
Asset impairment	—		516
Income from equity method of investments	(2,477)		(2,917)
Other	1,132		614
Change in operating assets and liabilities:
Accounts receivable	8,865		4,936
Inventories	17,061		(12,469)
Accounts payable	3,087		(109)
Accrued expenses	(1,105)		1,447
Employee retention credit receivable	940		2,456
Other	(3,028)		(902)
Net cash provided by (used in) operating activities	23,145		(3,815)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in unconsolidated entities	(1,086)		(2,609)
Capital expenditures related to property & equipment	(678)		(1,008)
Capital expenditures related to assets on lease or held for lease	—		(29)
Other	1,983		556
Net cash provided by (used in) investing activities	219		(3,090)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lines of credit	84,735		102,015
Payments on lines of credit	(99,426)		(91,865)
Proceeds from term loan	—		8,177
Payments on term loan	(17,116)		(12,300)
Proceeds from issuance of Trust Preferred Securities ("TruPs")	7,285		—
Other	(629)		(1,161)
Net cash (used in) provided by financing activities	(25,151)		4,866
Effect of foreign currency exchange rates on cash and cash equivalents	(116)		181
NET DECREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH	(1,903)		(1,858)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD	7,090		8,368
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD	$	5,187	$	6,510


(In thousands)	December 31, 2023		March 31, 2023

Salaries, wages and related items	$	5,707	$	4,748
Profit sharing and bonus	1,379		1,672
Other Deposits	794		2,560
Other	4,149		4,153
Total	$	12,029	$	13,133


	December 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Purchased software	$	623	$	(484)	$	139
Internally developed software	3,711		(720)		2,991
In-place lease and other intangibles	1,094		(318)		776
Customer relationships	8,162		(1,302)		6,860
Patents	1,112		(1,108)		4
Other	1,768		(1,209)		559
	16,470		(5,141)		11,329
In-process software	130				130
Intangible assets, total	$	16,600	$	(5,141)	$	11,459


	March 31, 2023
	Gross Carrying Amount		Accumulated Amortization		Net Book Value
Purchased software	$	544	$	(433)	$	111
Internally developed software	3,672		(465)		3,207
In-place lease and other intangibles	1,094		(229)		865
Customer relationships	8,050		(851)		7,199
Patents	1,112		(1,105)		7
Other	1,782		(1,108)		674
	16,254		(4,191)		12,063
In-process software	40		—		40
Intangible assets, total	$	16,294	$	(4,191)	$	12,103


(In thousands)
Year ending March 31,	Amortization
2024 (excluding the nine months ended December 31, 2023)	$	310
2025	1,201
2026	1,118
2027	1,045
2028	990
2029	982
Thereafter	5,683
	$	11,329


	Three Months Ended				Nine Months Ended
	September 30, 2023		September 30, 2022		September 30, 2023		September 30, 2022
Revenue	$	34,365	$	37,532	$	133,427	$	111,522
Gross Profit	2,746		4,045		18,076		13,210
Operating (loss) income	(124)		13,382		9,100		17,172
Net income	2,050		13,375		10,439		16,180
Net income attributable to Air T, Inc. stockholders	$	499	$	2,183	$	2,295	$	2,926


	December 31, 2023		March 31, 2023
Overnight air cargo:
Finished goods	$	931	$	546
Ground equipment manufacturing:
Raw materials	5,921		4,589
Work in process	2,997		153
Finished goods	2,344		6,976
Corporate and other:
Raw materials	1,118		794
Finished goods	725		726
Commercial jet engines and parts:
Whole engines available for sale or tear-down	—		10,141
Parts	43,693		50,813
Total inventories	57,729		74,738
Reserves	(3,842)		(3,613)
Total inventories, net of reserves	$	53,887	$	71,125


	December 31, 2023			March 31, 2023
Operating leases
Operating lease ROU assets	$	11,893		$	11,666
Operating lease liabilities	$	12,773		$	12,435

Weighted-average remaining lease term
Operating leases	12 years			12 years, 10 months

Weighted-average discount rate
Operating leases	5.08		%	4.95		%


Due by	Amount
December 31, 2024	$	17,367
December 31, 2025	26,335
December 31, 2026	3,075
December 31, 2027	7,219
December 31, 2028	1,755
Thereafter	45,480
	101,231
Unamortized Premiums and Debt Issuance Costs	(445)
	$	100,786


	December 31, 2023		March 31, 2023
United States	$	20,845	$	21,433
Foreign	51		89
Total tangible long-lived assets, net	$	20,896	$	21,522


	December 31, 2023		March 31, 2023
The Netherlands	$	43	$	42
Other	8		47
Total tangible long-lived assets, net	$	51	$	89


	December 31, 2023		December 31, 2022
United States	$	182,334	$	143,433
Foreign	31,820		29,513
Total revenue	$	214,154	$	172,946


	Nine Months Ended December 31, 2023
		Total
Operating loss		$	(189)
Depreciation and amortization (excluding leased engines depreciation)		2,088
Asset impairment, restructuring or impairment charges		326
Gain on sale of property and equipment		(7)
TruPs issuance expenses		277
Adjusted EBITDA		$	2,495


	Nine Months Ended December 31, 2022
		Total
Operating income		$	1,147
Depreciation and amortization (excluding leased engines depreciation)		1,810
Asset impairment, restructuring or impairment charges		2,174
Gain on sale of property and equipment		(2)
TruPs issuance expenses		38
Adjusted EBITDA		$	5,167


	Shanwick RNCI
Beginning Balance as of April 1, 2023	$	4,738
Contribution from non-controlling members	—
Distribution to non-controlling members	(326)
Net income attributable to non-controlling interests	326
Redemption value adjustments	782
Ending Balance as of December 31, 2023	$	5,520


	Three Months Ended December 31,				Change
	2023		2022
Overnight Air Cargo	$	29,018	$	21,831	$	7,187	32.9	%
Ground Equipment Sales	8,441		16,147		(7,706)		(47.7)	%
Commercial Jet Engines and Parts	24,139		21,736		2,403		11.1	%
Corporate and Other	2,158		1,682		476		28.3	%
	$	63,756	$	61,396	$	2,360	3.8	%


	Three months ended				Nine months ended
	12/31/2023		12/31/2022		12/31/2023		12/31/2022
Operating (loss) income	$	(1,608)	$	135	$	(189)	$	1,147
Depreciation and amortization (excluding leased engines depreciation)	699		560		2,088		1,810
Asset impairment, restructuring or impairment charges	321		638		326		2,174
Loss (gain) on sale of property and equipment	1		—		(7)		(2)
TruPs issuance expenses	185		4		277		38
Adjusted EBITDA	$	(402)	$	1,337	$	2,495	$	5,167


No.			Description

10.1			Securities Purchase A greement , incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K f iled November 28, 2023 (Commission File No. 001-25476).

22.1			List of Issuers and Guarantors

31.1			Section 302 Certification of Chief Executive Officer and President

31.2			Section 302 Certification of Chief Financial Officer

32.1			Section 1350 Certifications

101			The following financial information from the Quarterly Report on Form 10-Q for the quarter ended December 31, 2023, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Income, (ii) the Condensed Consolidated Balance Sheets, (iii) the Condensed Consolidated Statements of Cash Flows, (iv) the Condensed Consolidated Statements of Stockholders Equity, and (v) the Notes to the Condensed Consolidated Financial Statements.


			AIR T, INC.


Date: February 12, 2024
			/s/ Nick Swenson
			Nick Swenson, Chief Executive Officer and Director



			/s/ Brian Ochocki
			Brian Ochocki, Chief Financial Officer


Date: February 12, 2024
						/s/ Nick Swenson
						Nick Swenson Chief Executive Officer


Date: February 12, 2024
						/s/ Brian Ochocki
						Brian Ochocki Chief Financial Officer


Date: February 12, 2024
						/s/ Nick Swenson
						Nick Swenson, Chief Executive Officer
						(Principal Executive Officer)

						/s/ Brian Ochocki
						Brian Ochocki, Chief Financial Officer
						(Principal Financial Officer and Principal Accounting Officer)