Market Overview

767 Freighter Leases, Airlines Drive ATSG Growth in Second Quarter

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On Track Toward 2018 Targets As Demand for ATSG Services Drive
Earnings Momentum

Air Transport Services Group, Inc. (NASDAQ:ATSG), the leading provider
of medium wide-body aircraft leasing, air cargo transportation and
related services, today reported consolidated financial results for the
quarter ended June 30, 2018:

  • GAAP revenues were $203.6 million based on new revenue recognition
    standards adopted in 2018. 2Q 2018 revenues increased six percent
    after excluding $61.1 million in reimbursed expenses from 2Q 2017
    revenues.
  • GAAP Earnings from Continuing Operations were $24.5 million, $0.42
    per share basic, vs. a loss of $53.9 million, $0.91 per share basic in
    2Q 2017.
    • Provision for income tax was $5.4 million for 2Q18. Due to
      deferred tax assets, including loss carryforwards, ATSG does not
      expect to pay significant federal income taxes until 2023 or later.

  • Adjusted Earnings (non-GAAP) from Continuing Operations were $19.2
    million, $0.28 per share diluted, up 38 percent from $13.9 million,
    $0.21 per share diluted in 2Q 2017.
    • Adjusted Earnings from Continuing Operations exclude the net
      effects of warrants issued to Amazon.com Services, Inc., including
      a $63.4 million loss from mark-to-market warrant revaluation in 2Q
      2017, and a share of development costs for ATSG's Airbus A321
      freighter conversion venture.

  • Adjusted EBITDA (non-GAAP) from Continuing Operations was $69.7
    million, up 9 percent.
    • Adjusted Earnings and Adjusted EBITDA from continuing operations
      are non-GAAP measures. (See Revenue Recognition, Non-GAAP
      Financial Measures, also reconciliation tables at the end of this
      release)

  • First-half 2018 capital spending was $150.8 million vs. $144.3
    million in 1H 2017.
    • Capital expenditures in 2018 included $116.6 million for the
      acquisition of Boeing aircraft and freighter modification costs,
      up from $96.7 million in the first half of 2017.

Joe Hete, President and Chief Executive Officer of ATSG, said, "Growth
in our aircraft leasing and airline businesses led to another solid
quarter for ATSG. We added four more 767 freighters to our dry-leased
fleet, and expect to secure additional 767 aircraft for freighter
conversion to meet 2019 demand. We are uniquely positioned with our
assets and complementary services for another great year in 2018 and
even better results in 2019."

Segment Results

Cargo Aircraft Management (CAM)

         
CAM   Second Quarter   Six Months
($ in thousands) 2018   2017 2018   2017
Aircraft leasing and related revenues $ 58,603 $ 52,813 $ 115,205 $ 103,382
Lease incentive amortization (4,226 ) (3,283 ) (8,452 ) (5,874 )
Total CAM revenues

 

54,377  

 

49,530  

 

106,753  

 

97,508  
Pre-Tax Earnings  

 

15,394    

 

12,795    

 

30,858    

 

26,125  

Significant Developments:

  • CAM's revenues increased $4.8 million, or 10 percent, to $54.4
    million, net of warrant-related lease incentives.
  • CAM deployed five additional cargo aircraft in the second quarter.
    Four were 767-300s, including a six-year dry lease with Air Incheon in
    April, an eight-year dry-lease with Amerijet in May, and a seven-year
    dry lease with Northern Aviation Services in June. One 767 was leased
    internally to Air Transport International. One 737-400 was dry-leased
    to West Atlantic in April for five years. At June 30, two 767-200s
    returned from customers were being staged for redeployment.
  • CAM's pre-tax earnings increased 20 percent to $15.4 million,
    primarily due to the increase in leased freighters in service since
    June 2017. CAM had 73 cargo aircraft in service at June 30 this year,
    including seven more 767s and two 737s. Fifty-four of those cargo
    aircraft were under lease to external customers, and 19 were being
    operated by ATSG airlines on an ACMI basis.
  • Since it completed its 20-aircraft commitment to Amazon in August
    2017, CAM has delivered nine more freighters to dry-lease customers
    through June 2018.
  • CAM acquired one 767 aircraft during the second quarter, and four in
    total in the first half of 2018, for freighter conversion and
    redeployment in 2018.

ACMI Services

         
ACMI Services   Second Quarter   Six Months
($ in thousands) 2018   2017 2018   2017
Revenues

$

119,606

$

111,851

$

238,980

$

219,917

Pre-Tax Earnings (Loss)     991       258       4,932       (3,276 )

Significant Developments:

  • ACMI Services revenues, excluding revenues from reimbursed expenses in
    2017, increased 7 percent to $119.6 million in the second quarter.
    Pre-tax earnings improved by $0.7 million.
  • Additional flying for CMI customers was the principal contributor to
    higher ACMI Services earnings. ATSG's airlines were operating two more
    CAM-leased aircraft on a CMI basis at June 30 versus a year earlier.
    Billable block hours increased 5 percent from last year's quarter.
  • In March, ATI pilots represented by the Air Line Pilots Association
    ratified an amendment to the collective bargaining agreement with Air
    Transport International. The amendment set new compensation levels
    that increased costs by $2.2 million over the previous quarter for
    pilot compensation at ATI.

MRO Services

On January 1, 2018, ATSG segregated MRO Services as a new reporting
segment that includes the results of its aircraft maintenance services
and modification services businesses.

         
MRO Services   Second Quarter   Six Months
($ in thousands) 2018   2017 2018   2017
Revenues $ 45,794 $ 66,336 $ 98,517 $ 106,674
Pre-Tax Earnings (Loss)   1,321   11,103   5,783   14,291

Significant Developments:

  • Total revenues from MRO Services were $45.8 million, down 31 percent.
    Revenues decreased compared to 2017 which included the completion of
    more large, airframe maintenance projects.
  • The decline in revenues also reflects a 2018 change in accounting
    standards that affects the timing of revenue recognition. Revenues for
    aircraft modification and heavy maintenance are now recorded as work
    tasks are completed. In prior years, revenues were recorded in large
    amounts upon redelivery of an aircraft.
  • Pre-tax earnings decreased to $1.3 million. Second-quarter 2017
    results included more higher-margin aircraft maintenance services.
    PEMCO completed conversion work for one 737 in the second quarter this
    year as compared to three in the same period last year.

Other Activities

Other Activities include arranging logistics services, postal center
sorting services, equipment maintenance and other services.

         
Other   Second Quarter   Six Months
($ in thousands) 2018   2017 2018   2017
Revenues $ 19,730 $ 21,706 $ 39,013 $ 53,104
Pre-Tax Earnings   2,749   1,400   5,330   3,863

Significant Developments:

  • Total revenues from other activities, excluding 2017 revenues from
    reimbursed expenses, decreased by nine percent, reflecting the
    elimination of ground service at Amazon's former hub in Wilmington,
    Ohio, in May 2017.
  • Our LGSTX Services group began performing gateway services at Amazon's
    Tampa location in June, and is positioned to serve other Amazon
    locations when the opportunity arises.
  • Pre-tax earnings of $2.7 million nearly doubled from a year ago.
    Additional earnings were driven from ATSG's minority investment in a
    European airline and increased mail and package volumes at the USPS
    and Amazon locations it manages.

Outlook

ATSG continues to expect Adjusted EBITDA from Continuing Operations for
2018 of approximately $310 million, up 16 percent from 2017, as its
aircraft leasing, airline operations, and MRO services are expected to
deliver stronger results in the second half of 2018.

"At this point, our progress toward our 2018 targets is ahead of our
plan," Hete said. "Five of the ten additional 767s we originally
targeted for deployment this year are in service, and we expect two more
to be delivered in the third quarter and the rest in the fourth. We have
continued strong interest from customers for the five 767s we expect to
have in process as we enter 2019, including multi-aircraft placements."

ATSG also continues to project 2018 capital expenditures of about $300
million. In addition to capital expenditures for aircraft and related
freighter modification costs, 2018 outlays includes costs for the design
and certification of narrow-body freighter and combi variants of the
Next Gen Boeing 737-700. ATSG's earnings continue to reflect
non-operating charges for the development of a narrow-body freighter
version of the midsize Airbus A321-200 via a joint venture. The 737-700
project is due for completion and certification later this year. The
Airbus joint venture project is expected to be completed in late 2019.

Revenue Recognition

In accordance with new GAAP requirements, ATSG's 2018 revenues related
to costs that are directly reimbursed to ATSG and controlled by the
customer are reported net of the corresponding expenses. Corresponding
2017 GAAP consolidated revenues include such reimbursements. These are
principally costs for aircraft fuel, certain contracted aviation
services and airport related expenses. After application of the new GAAP
revenue rules, Amazon, DHL, and the U.S. Military accounted for 29
percent, 28 percent, and 11 percent, respectively, of ATSG's customer
revenues for the first half of 2018.

Non-GAAP financial measures

This release, including the attached tables, contains non-GAAP financial
measures that management uses to evaluate historical results. Management
believes that these non-GAAP measures assist in highlighting operational
trends, facilitate period-over-period comparisons, and provide
additional clarity about events and trends impacting core operating
performance. Disclosing these non-GAAP measures provides insight to
investors about additional metrics that management uses to evaluate past
performance and prospects for future performance. Non-GAAP measures are
not a substitute for GAAP. The non-GAAP financial measures are
reconciled to GAAP results in tables later in this release.

Conference Call

ATSG will host a conference call on August 7, 2018, at 10 a.m. Eastern
time to review its financial results for the second quarter of 2018.
Participants should dial (800) 708-4540 and international participants
should dial (847) 619-6397 ten minutes before the scheduled start of the
call and ask for conference pass code 47346263. The call will
also be webcast live (listen-only mode) via www.atsginc.com.
A replay of the conference call will be available by phone on August 7,
2018, beginning at 2 p.m. and continuing through August 14, 2018, at
(888) 843-7419 (international callers (630) 652-3042); use pass code 47346263#.
The webcast replay will remain available via www.atsginc.com
for 30 days.

About ATSG

ATSG is a leading provider of aircraft leasing and air cargo
transportation and related services to domestic and foreign air carriers
and other companies that outsource their air cargo lift requirements.
ATSG, through its leasing and airline subsidiaries, is the world's
largest owner and operator of converted Boeing 767 freighter aircraft.
Through its principal subsidiaries, including two airlines with separate
and distinct U.S. FAA Part 121 Air Carrier certificates, ATSG provides
aircraft leasing, air cargo lift, aircraft maintenance and conversion
services, and airport ground services. ATSG's subsidiaries include ABX
Air, Inc.; Airborne Global Solutions, Inc.; Air Transport International,
Inc.; Cargo Aircraft Management, Inc.; and Airborne Maintenance and
Engineering Services, Inc. including its subsidiary, Pemco World Air
Services, Inc. For more information, please see www.atsginc.com.

Except for historical information contained herein, the matters
discussed in this release contain forward-looking statements that
involve risks and uncertainties. There are a number of important factors
that could cause Air Transport Services Group's (ATSG's) actual results
to differ materially from those indicated by such forward-looking
statements. These factors include, but are not limited to, changes in
market demand for our assets and services; our operating airlines'
ability to maintain on-time service and control costs; the cost and
timing with respect to which we are able to purchase and modify aircraft
to a cargo configuration; fluctuations in ATSG's traded share price,
which may result in mark-to-market charges on certain financial
instruments; the number, timing and scheduled routes of our aircraft
deployments to customers; and other factors that are contained from time
to time in ATSG's filings with the U.S. Securities and Exchange
Commission, including its Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q. Readers should carefully review this release and
should not place undue reliance on ATSG's forward-looking statements.
These forward-looking statements were based on information, plans and
estimates as of the date of this release. ATSG undertakes no obligation
to update any forward-looking statements to reflect changes in
underlying assumptions or factors, new information, future events or
other changes.

   
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
REVENUES $ 203,607 $ 253,211 $ 406,647 $ 491,128
 
OPERATING EXPENSES
Salaries, wages and benefits 74,049 65,833 144,832 138,319
Depreciation and amortization 41,620 37,781 81,624 74,223
Maintenance, materials and repairs 36,817 37,588 73,683 67,870
Fuel 5,913 32,258 11,701 67,099
Contracted ground and aviation services 2,444 32,151 4,828 52,838
Travel 7,288 6,820 13,920 14,186
Landing and ramp 1,311 4,357 2,459 9,656
Rent 3,760 3,753 6,990 7,039
Insurance 1,420 955 2,777 2,217
Other operating expenses 5,087   8,590   12,292   16,626  
179,709 230,086 355,106 450,073
       
OPERATING INCOME 23,898 23,125 51,541 41,055
OTHER INCOME (EXPENSE)
Net gain (loss) on financial instruments 11,697 (67,649 ) 10,812 (65,780 )
Interest expense (5,366 ) (3,759 ) (10,728 ) (7,307 )
Non-service component of retiree benefit costs 2,045 (177 ) 4,090 (354 )
Loss from non-consolidated affiliate (2,417 ) (4,953 )
Interest income 54   16   77   48  
6,013 (71,569 ) (702 ) (73,393 )
       
EARNINGS (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 29,911 (48,444 ) 50,839 (32,338 )
INCOME TAX EXPENSE (5,447 ) (5,474 ) (10,693 ) (11,784 )
       
EARNINGS (LOSS) FROM CONTINUING OPERATIONS 24,464 (53,918 ) 40,146 (44,122 )
 
EARNINGS FROM DISCONTINUED OPERATIONS, NET OF TAX 170   192   366   384  
NET EARNINGS (LOSS) $ 24,634   $ (53,726 ) $ 40,512   $ (43,738 )
 
EARNINGS (LOSS) PER SHARE - CONTINUING OPERATIONS
Basic $ 0.42 $ (0.91 ) $ 0.68 $ (0.75 )
Diluted $ 0.21 $ (0.91 ) $ 0.48 $ (0.75 )
 
WEIGHTED AVERAGE SHARES - CONTINUING OPERATIONS
Basic 58,739   59,035   58,790   59,084  
Diluted 68,363   59,035   68,784   59,084  
 

Certain historical expenses have been reclassified to conform to the
presentation above.

   
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

 
June 30, December 31,
2018 2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 31,704 $ 32,699
Accounts receivable, net of allowance of $1,130 in 2018 and $2,445
in 2017
100,805 109,114
Inventory 24,147 22,169
Prepaid supplies and other 13,017   20,521  
TOTAL CURRENT ASSETS 169,673 184,503
 
Property and equipment, net 1,200,997 1,159,962
Lease incentive 72,232 80,684
Goodwill and acquired intangibles 43,999 44,577
Convertible note hedges 53,683
Other assets 30,573   25,435  
TOTAL ASSETS $ 1,517,474   $ 1,548,844  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 85,691 $ 99,728
Accrued salaries, wages and benefits 34,189 40,127
Accrued expenses 10,833 10,455
Current portion of debt obligations 14,860 18,512
Unearned revenue 15,022   15,850  
TOTAL CURRENT LIABILITIES 160,595 184,672
Long term debt 505,853 497,246
Convertible note obligations 54,359
Stock warrant obligations 203,426 211,136
Post-retirement obligations 53,032 61,355
Other liabilities 45,417 45,353
Deferred income taxes 113,571 99,444
 
STOCKHOLDERS' EQUITY:
Preferred stock, 20,000,000 shares authorized, including 75,000
Series A Junior Participating Preferred Stock
Common stock, par value $0.01 per share; 110,000,000 shares
authorized; 59,080,387 and 59,057,195 shares issued and outstanding
in 2018 and 2017, respectively
591 591
Additional paid-in capital 469,412 471,456
Retained earnings (accumulated deficit) 27,278 (13,748 )
Accumulated other comprehensive loss (61,701 ) (63,020 )
TOTAL STOCKHOLDERS' EQUITY 435,580   395,279  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,517,474   $ 1,548,844  
 
   
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

PRE-TAX EARNINGS AND ADJUSTED PRE-TAX EARNINGS SUMMARY

FROM CONTINUING OPERATIONS

NON-GAAP RECONCILIATION

(In thousands)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
Revenues
CAM
Aircraft leasing and related revenues $ 58,603 $ 52,813 $ 115,205 $ 103,382
Lease incentive amortization (4,226 ) (3,283 ) (8,452 ) (5,874 )
Total CAM 54,377 49,530 106,753 97,508
ACMI Services 119,606 111,851 238,980 219,917
MRO Services 45,794 66,336 98,517 106,674
Other Activities 19,730   21,706   39,013   53,104  
Total Revenues 239,507 249,423 483,263 477,203
Eliminate internal revenues (35,900 ) (57,326 ) (76,616 ) (101,542 )
Customer Revenues - non reimbursed 203,607 192,097 406,647 375,661
Revenues recorded for reimbursed expenses   61,114     115,467  
Customer Revenues (GAAP) $ 203,607   $ 253,211   $ 406,647   $ 491,128  
 
Pre-tax Earnings (Loss) from Continuing Operations
CAM, inclusive of interest expense 15,394 12,795 30,858 26,125
ACMI Services 991 258 4,932 (3,276 )
MRO Services 1,321 11,103 5,783 14,291
Other Activities 2,749 1,400 5,330 3,863
Inter-segment earnings eliminated (1,031 ) (5,958 ) (4,356 ) (6,820 )
Net, unallocated interest expense (838 ) (216 ) (1,657 ) (387 )
Net gain (loss) on financial instruments 11,697 (67,649 ) 10,812 (65,780 )
Other non-service components of retiree benefit costs, net 2,045 (177 ) 4,090 (354 )
Non-consolidated affiliate (2,417 )   (4,953 )  
Earnings (loss) from Continuing Operations before Income Taxes
(GAAP)
$ 29,911 $ (48,444 ) $ 50,839 $ (32,338 )
 
Adjustments to Pre-tax Earnings
Add non-service components of retiree benefit costs, net (gain) loss (2,045 ) 177 (4,090 ) 354
Add loss from non-consolidated affiliates 2,417 4,953
Add lease incentive amortization 4,226 3,283 8,452 5,874
Add net (gain) loss on financial instruments (11,697 ) 67,649   (10,812 ) 65,780  
Adjusted Pre-tax Earnings (non-GAAP) $ 22,812   $ 22,665   $ 49,342   $ 39,670  
 

Revenues recorded for reimbursed expenses reflect certain revenues that
were reported during 2017, prior to the adoption in 2018 of Accounting
Standards Update No. 2014-09, "Revenue from Contracts with Customers
(Topic 606)." The adoption of Topic 606 resulted in the netting of these
revenues with the directly reimbursed expenses for 2018 financial
reporting. This application of Topic 606 did not affect the Company's
earnings.

Adjusted Pre-tax Earnings excludes certain items included in GAAP based
pre-tax earnings (loss) from continuing operations because they are
distinctly different in their predictability among periods or not
closely related to our operations. Presenting this measure provides
investors with a comparative metric of fundamental operations, while
highlighting changes to certain items among periods. Adjusted Pre-tax
Earnings should not be considered an alternative to Earnings from
Continuing Operations Before Income Taxes or any other performance
measure derived in accordance with GAAP.

   
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

ADJUSTED EARNINGS FROM CONTINUING OPERATIONS BEFORE INTEREST,
TAXES, DEPRECIATION AND AMORTIZATION

NON-GAAP RECONCILIATION

(In thousands)

 
Three Months Ended Six Months Ended
June 30, June 30,
2018   2017 2018   2017
 
Earnings (loss) from Continuing Operations Before Income Taxes $ 29,911 $ (48,444 ) $ 50,839 $ (32,338 )
Interest Income (54 ) (16 ) (77 ) (48 )
Interest Expense 5,366 3,759 10,728 7,307
Depreciation and Amortization 41,620   37,781   81,624   74,223  
EBITDA from Continuing Operations $ 76,843 $ (6,920 ) $ 143,114 $ 49,144
Add non-service components of retiree benefit costs, net (gain) loss (2,045 ) 177 (4,090 ) 354
Add losses for non-consolidated affiliates 2,417 4,953
Add lease incentive amortization 4,226 3,283 8,452 5,874
Add net (gain) on financial instruments (11,697 ) 67,649 (10,812 ) 65,780
       
Adjusted EBITDA $ 69,744   $ 64,189   $ 141,617   $ 121,152  
 

Management uses Adjusted EBITDA to assess the performance of its
operating results among periods. It is a metric that facilitates the
comparison of financial results of underlying operations. Additionally,
these non-GAAP adjustments are similar to the adjustments used by
lenders in the Company's Senior Credit Agreement to assess financial
performance and determine the cost of borrowed funds. The adjustments
also exclude the non-service cost components of retiree benefit plans
because they are not closely related to ongoing operating activities.
Management presents EBITDA from Continuing Operations, a commonly
referenced metric, as a subtotal toward computing Adjusted EBITDA.

EBITDA from Continuing Operations is defined as Earnings (Loss) from
Continuing Operations Before Income Taxes plus net interest expense,
depreciation, and amortization expense. Adjusted EBITDA is defined as
EBITDA from Continuing Operations less financial instrument revaluation
gains or losses, non-service components of retiree benefit costs
including pension plan settlements, amortization of lease incentive
costs recorded in revenue, and costs from non-consolidated affiliates.

Adjusted EBITDA and EBITDA from Continuing Operations are non-GAAP
financial measures and should not be considered as alternatives to
Earnings from Continuing Operations Before Income Taxes or any other
performance measure derived in accordance with GAAP. Adjusted EBITDA and
EBITDA from Continuing Operations should not be considered in isolation
or as substitutes for analysis of the Company's results as reported
under GAAP, or as alternative measures of liquidity.

AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES
ADJUSTED
EARNINGS PER SHARE FROM CONTINUING OPERATIONS
NON-GAAP
RECONCILIATION
(In thousands)

Management presents Adjusted Earnings and Adjusted Earnings per Share
from Continuing Operations, non-GAAP calculations, to provide additional
information regarding earnings per share without the volatility
otherwise caused by the items below. Management uses Adjusted Earnings
and Adjusted Earnings per Share from Continuing Operations to compare
the performance of its operating results among periods.

   
Three Months Ended Six Months Ended
June 30, 2018   June 30, 2017 June 30, 2018   June 30, 2017
  $ Per   $ Per   $ Per   $ Per
$ Share $ Share $ Share $ Share
 
Earnings (loss) from Continuing Operations - basic (GAAP) $ 24,464 $ (53,918 ) $ 40,146 $ (44,122 )
Gain from warrant revaluation, net tax (10,448 )   (7,473 )  
Earnings (loss) from Continuing Operations - diluted (GAAP) 14,016 $ 0.21 (53,918 ) $ (0.91 ) 32,673 $ 0.48 (44,122 ) $ (0.75 )
Adjustments, net of tax

Loss from warrant revaluation1

63,396 1.05 61,857 1.01

Lease incentive amortization2

3,272 0.05 4,378 0.07 6,544 0.09 7,340 0.12

Loss from joint venture3

1,871   0.02       3,834   0.06      
Adjusted Earnings from Continuing Operations (non-GAAP) $ 19,159   $ 0.28   $ 13,856   $ 0.21   $ 43,051   $ 0.63   $ 25,075   $ 0.38  
 
Shares Shares Shares Shares
Weighted Average Shares - diluted 68,363 59,035 68,784 59,084

Additional weighted average shares1

  8,474     7,152  
Adjusted Shares (non-GAAP) 68,363   67,509   68,784   66,236  
 
Adjusted Earnings from Continuing Operations and Adjusted Earnings
per Share from Continuing Operations are non-GAAP financial measures
and should not be considered as alternatives to Earnings from
Continuing Operations, Weighted Average Shares - diluted or Earnings
per Share from Continuing Operations or any other performance
measure derived in accordance with GAAP. Adjusted Earnings and
Adjusted Earnings per Share from Continuing Operations should not be
considered in isolation or as a substitute for analysis of the
company's results as reported under GAAP.
 
1.   Adjustment removes the unrealized losses for a large grant of stock
warrants granted to a customer as a lease incentive. Under U.S.
GAAP, these warrants are reflected as a liability and unrealized
warrant gains are typically removed from diluted earnings per share
("EPS") calculations while unrealized warrant losses are not removed
because they are dilutive to EPS. As a result, the Company's EPS, as
calculated under U.S. GAAP, can vary significantly among periods due
to unrealized mark-to-market losses created by an increased trading
value for the Company's shares.
2. Adjustment removes the amortization of the customer lease incentive
which is recorded against revenue over the term of the related
aircraft leases.
3. Adjustment removes losses for the Company's share of development
costs for a joint venture accounted for under the equity method.
 
 
AIR TRANSPORT SERVICES GROUP, INC. AND SUBSIDIARIES

CARGO AIRCRAFT FLEET

 
Owned Aircraft Types
  December 31,   June 30,   December 31,
2017 2018 2018 Projected
               
B767-200 36 34 35
B767-300 25 29 34
B757-200 4 4 4
B757 Combi 4 4 4
B737-400 1 2 2
Total Aircraft in Service 70 73 79
 
B767-300 in or awaiting cargo conversion 6 5 5
B737-400 in or awaiting cargo conversion 1
B767-200 staging for lease 2 1
Total Aircraft 77 80 85
 

Aircraft in Service Deployments

December 31, June 30, December 31,
2017 2018 2018 Projected
 
Dry leased without CMI 18 22 31
Dry leased with CMI 33 32 30
ACMI/Charter 19 19 18
 

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