Air Transport Services (ATSG) up 3.1% since third quarter earnings beat – November 7, 2022

Shares of Air transport services (ATSG Free Report) have gained 3.11% since the publication of their results on November 3. This increase is due to its earnings per share and higher-than-expected revenues announced for the third quarter of 2022.

Income report in detail

Air Transport Services’ third-quarter 2022 earnings (excluding 8 cents of one-time items) of 60 cents per share beat Zacks’ consensus estimate of 53 cents. Net income was stable year-on-year. Revenue not only grew 10.9% year-over-year to $517 million, but also topped Zacks’ consensus estimate of $499 million.

Revenue was driven by higher revenue from both segments, ACMI (aircraft, crew, maintenance and insurance) and Cargo Aircraft Management (CAM) services. ACMI services unit revenue increased 8% year-over-year to $357.4 million. Revenue from the CAM segment increased 17.9% to $109.5 million, while revenue from other businesses increased 20% to $108.4 million.

CAM segment revenues in the reported quarter were boosted by a larger fleet of externally leased Boeing 767s (seven have been leased since September 2021) compared to the prior year level. As of September 30, 2022, 89 CAM-owned 767 freighter aircraft were leased to external customers. Revenues from the ACMI services unit benefited from improved cargo operations. Revenue block hours were up 3% year-over-year in the quarter.

Air Transport Services’ total fleet included 124 aircraft (18 passenger and 106 freighter) in service at the end of the September 2022 quarter, compared to 117 at the end of the December 2021 quarter. ATSG plans to have a fleet (in service ) of 18 passenger aircraft and 112 cargo aircraft at the end of 2022.

Total operating expenses rose 21.3% in the September quarter to $444.2 million, with fuel expenses rising 36.6% as the price of oil rose. Adjusted EBITDA increased 6.3% year over year to $162.7 million due to a strong cargo leasing scenario. Cash flow from operations increased to $148 million from $122 million a year ago.

Adjusted free cash flow was $91.4 million, compared to $72.6 million a year ago. Capital expenditure for the quarter was $56.5 million, compared to $49.5 million a year ago.

Currently, ATSG carries a Zacks Rank #3 (Hold). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Management still expects its 2022 adjusted EBITDA to be $640 million (almost $100 million higher than actual 2021 numbers). The ATSG projects its capital expenditure for 2022 to be $625 million, including $195 million for maintaining investments and $430 million for growth.

Performance of other transport companies

Delta Airlines‘ (DAL Free Report) third-quarter 2022 earnings (excluding 42 cents of one-time items) of $1.51 per share were below Zacks’ consensus estimate of $1.56. The escalation of operating expenses led to the shortfall. Multiple flight cancellations and weak bookings due to Hurricane Ian also hurt results. DAL reported earnings of 30 cents per share a year ago, tepid compared to the current scenario, as air travel demand was not so optimistic at the time.

DAL reported revenue of $13,975 million, which is below Zacks’ consensus estimate of $14,157.2 million. Driven by strong demand for air travel, total revenue grew more than 52% year over year.

United Airlines‘ (LAU Free Report) third-quarter 2022 earnings (excluding 5 cents of one-time items) of $2.81 per share beat Zacks’ consensus estimate of $2.21 and our estimate of $2.17. A slight increase in demand for air travel contributed to the results.

In the prior year quarter, UAL suffered a loss of $1.02 per share as air travel demand was not as buoyant as in the current scenario. The third quarter of 2022 was the second consecutive profitable quarter at UAL since the start of the pandemic.

Operating revenue of $12,877 million exceeded Zacks consensus estimate of $12,709.5 million and our estimate of $12,631.6 million. UAL’s revenue grew more than 66% year-over-year due to rising demand for air travel. The optimistic scenario for air travel demand is also evident from the 13.2% increase in total operating revenue from levels in the third quarter of 2019 (pre-coronavirus).

JB Hunt Transport Services, Inc. (JBHT Free Report) reported better-than-expected third-quarter 2022 results, in which earnings and revenue beat Zacks’ consensus estimate. JBHT’s quarterly earnings of $2.57 per share beat Zacks’ consensus estimate of $2.45 and improved 36.7% year over year.

JBHT’s operating revenue of $3,838.3 million also topped Zacks’ consensus estimate of $3,803.4 million. Revenue jumped 22.1% year-over-year driven by strength in the Dedicated Contractual Services, Intermodal, Full Load and Last Mile segments. Total operating revenue, excluding fuel surcharges, increased 12.4% year over year.

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