Air Transport Services Group (ATSG), which provides medium widebody aircraft leasing, contracted air transportation and related services, has a 71% increase in customer revenues to $348.2 million during the first quarter of 2019.
Omni Air International, acquired in November 2018, contributed $135.8 million to external ATSG revenues, reflected in revenues of the ACMI Services segment.
GAAP Earnings from Continuing Operations were $22.6 million, $7.0 million higher than the prior period. GAAP Earnings per Share diluted were $0.25, down $0.01.
Offsetting the first quarter revenue gain were increases in interest expense, depreciation and amortization expense, and unrealized losses from derivative interest rate revaluations. Other factors were increases in non-cash unrealized losses related to warrants issued to Amazon, and non-cash increases in the non-service component of retiree benefit costs.
Adjusted Earnings from Continuing Operations (non-GAAP) increased 26% to $26.0 million. Adjusted Earnings Per Share (non-GAAP) were $0.37 diluted, up $0.07.
Adjusted EBITDA from Continuing Operations (non-GAAP) were $113.8 million, up $41.9 million, or 58%. Capital spending was $91.9 million, up 16%.
Capital expenditures in the first quarter of 2019 included $70.5 million for the purchase of four Boeing 767 aircraft and for freighter modification costs.
Joe Hete, President and Chief Executive Officer of ATSG, said that first quarter revenues and earnings benefited from additional flying for the Department of Defense and other customers, and from the deployment of freighter aircraft to lease customers during 2018.
Those results, he said, provide a solid basis for continued growth in 2019 as additional Boeing 767 aircraft are converted to freighters and deployed to customers in the second half. Accordingly, ATSG is raising its Adjusted EBITDA guidance for 2019 to $450 million.
“Our acquisition of Omni Air, and recent agreements with our largest commercial customers, Amazon and DHL, add years of contracted revenue streams from aircraft leasing and from operations by our airlines and related service businesses,” Hete said. “Our customers are focused on transport options that offer optimal combinations of reliability, flexibility, and cost-efficiency, with a particular emphasis on speed. In response, we continue to add aircraft options, including the Boeing 777 via Omni, and a converted freighter variant of the Airbus A321-200 aircraft we are developing through our joint venture with Precision.”