Air Transport Services Group (ATSG), which provides medium wide-body aircraft leasing, air cargo transportation and related services, has a 24 percent increase in revenues to $768.9 million for 2016, which increased by 22 percent to $221.7 million for the fourth quarter.
Excluding revenues from reimbursable airline expenses, revenues increased 18 percent for the year and 17 percent for the quarter. Principal contributors were ATSG's aircraft leasing, maintenance, and logistics businesses.
Earnings from Continuing Operations were $21.1 million, or $0.33 per share diluted, for 2016 and a $755 thousand loss, or a negative $0.01 per share diluted, for the fourth quarter. These results include the non-cash effects of warrants issued in March 2016 to Amazon Fulfillment Services, Inc. in connection with operating and lease agreements. Fourth quarter and full year earnings were also impacted by a $7.0 million reduction in revenue and pre-tax earnings from continuing operations, equating to $0.07 per share, resulting from a work stoppage by Teamsters-represented ABX Air pilots in November.
Adjusted Earnings from Continuing Operations, which exclude the non-cash warrant-related effects, were $37.5 million, or $0.58 per share for the year, and $12.0 million, or $0.19 per share for the fourth quarter. Adjusted Earnings and other adjusted amounts referenced below are non-GAAP financial measures. They are defined and reconciled to comparable GAAP results in tables at the end of this release.
Pre-tax earnings from continuing operations were $34.5 million for the year and $420 thousand for the fourth quarter of 2016. Adjusted Pre-tax Earnings, which exclude the warrant effects along with additional non-cash items, were $65.1 million, up seven percent for 2016, and $17.4 million, down 11 percent for the quarter. These adjustments to pretax earnings are defined and detailed in the earnings summary table later in this release, and include non-cash warrant-related effects, pension expense, and debt-issuance charges.
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization as defined, and adjusted, in a table later in this release) increased seven percent to $211.8 million for 2016. Fourth-quarter Adjusted EBITDA was $56.4 million, even with the prior year. Adjusted EBITDA and the other non-GAAP measures above do not exclude the effects of the work stoppage in the fourth quarter.
Operating cash flow increased 10 percent in 2016 to $193.1 million. 2016 capital expenditures were $264.5 million. Share repurchases were $63.6 million, or 4.8 million ATSG shares.
Joe Hete, President and Chief Executive Officer of ATSG, said, “In 2016, we completed a major set of long-term agreements with Amazon in support of its new dedicated air network, and by year-end began leasing 14 of the contracted 20 Boeing 767s for that network. A 15th Boeing 767 was leased to Amazon in early January 2017. Our aircraft leasing, maintenance, and logistics businesses met aggressive targets from Amazon and other customers while generating good margins. However, our airline operations, particularly those at ABX Air, incurred significant pilot training and premium pay related to expanded CMI operations, along with lower revenues due to a November ABX pilot work stoppage. Taken together, these factors reduced our second-half 2016 pre-tax earnings by approximately $20 million. After first quarter 2017, we anticipate costs at our airlines to be normalized. That, along with minimal non-cash pension expense in 2017, is projected to result in a profitable year for our ACMI Services segment.