Air T(US:AIRT)2026-02-13 21:56Revenue Performance - Consolidated revenue for the three-month period ended December 31, 2025 decreased by $6.7 million (8.7%) compared to the same quarter in the prior fiscal year[201]. - The ground support equipment segment reported revenues of $12.8 million for the quarter, an increase of $0.9 million (8%) from $11.8 million in the prior year, driven by higher sales of high-lift catering equipment[202]. - The commercial aircraft, engines, and parts segment saw a revenue decline of $13.9 million (42%), contributing $18.8 million compared to $32.7 million in the prior year, primarily due to aging component inventory[203]. - Digital solutions segment revenues increased by $0.5 million (25%) to $2.5 million, attributed to higher software subscriptions with monthly recurring revenues of $0.8 million[204]. - The newly acquired regional airline generated $5.2 million in revenues for the two weeks of operations post-acquisition, marking a significant addition to the company's portfolio[205]. - Consolidated segment revenue decreased by $19.4 million (9%) to $202.2 million for the nine months ended December 31, 2025 compared to the prior year[219]. - The digital solutions segment revenue increased by $1.3 million (23%) to $6.8 million for the nine months ended December 31, 2025, driven by higher software subscriptions[223]. - The commercial aircraft, engines, and parts segment revenue decreased by $30.2 million (33%) to $61.7 million for the nine months ended December 31, 2025, due to lower component sales[222]. - The ground support equipment segment revenue increased by $3.8 million (11%) to $37.5 million for the nine months ended December 31, 2025, led by higher sales of catering units and deicers[221]. Operating Expenses - Consolidated operating expenses decreased by $3.9 million (6%) for the three-month period ended December 31, 2025 compared to the same quarter in the prior fiscal year[206]. - The commercial aircraft, engines, and parts segment's operating expenses decreased by $9.6 million (41%) to $14.1 million, reflecting lower component sales[209]. - The ground support equipment segment's operating expenses decreased by $0.7 million (7%) to $9.6 million, driven by improved product mix and lower spending[208]. - The overnight air cargo segment's operating expenses increased by $0.4 million (2%) to $26.0 million, remaining consistent period-over-period[207]. - Operating expenses decreased by $16.9 million (10%) to $156.4 million for the nine months ended December 31, 2025 compared to the prior year[225]. - Regional airline operating expenses were $5.5 million for the nine months ended December 31, 2025, resulting from the acquisition of Rex on December 18, 2025[229]. - General and administrative expenses increased by $7.2 million (17%) to $49.8 million for the nine months ended December 31, 2025, primarily due to acquisition-related costs and higher payroll expenses[230]. Cash and Liquidity - As of December 31, 2025, the company held approximately $42.2 million in cash and cash equivalents and restricted cash, with $4.7 million reserved as collateral[239]. - The company's working capital, excluding the deferred bargain purchase gain of $95.8 million, amounted to $89.2 million, an increase of $58.4 million compared to March 31, 2025[240]. - The increase in working capital was primarily driven by a $26.9 million increase in inventory, a $31.4 million increase in cash and cash equivalents, and a $19.3 million increase in accounts receivable[240]. - The company entered into a $6.0 million term loan with Alerus on November 24, 2025, to repay a previous loan, with an interest rate of the greater of 5.00% or 1-month SOFR plus 1.90%[248]. - The company has a $15.0 million revolving loan facility with Alerus, carrying interest at 1-month SOFR plus 3.11%, to be used for engine purchases and working capital needs[249]. - The company has approximately $53.6 million in available funds under its lines of credit as of December 31, 2025[239]. - The Company believes it has sufficient cash and liquidity to meet its obligations for at least 12 months following the issuance of the financial statements[255]. Debt and Financing - The Company issued an 11.5% Senior Secured Note totaling $40.0 million, maturing on December 15, 2031, to two Institutional Investors[251]. - The Company assumed approximately A$107.8 million in liabilities related to the Commonwealth Facility Agreement during the acquisition of Rex[252]. - The New Facility Agreement has an interest rate of 12.0% per annum and matures on December 17, 2032, with varying availability periods for different facilities[254]. - The Multiple Advance Note issued by the company has an aggregate principal amount of up to $100.0 million, with an annual interest rate of 8.5%[243][244]. - The Company maintains compliance with all financial covenants under the Commonwealth Facilities as of December 31, 2025[254]. - The company was in compliance with all applicable covenants under the Multiple Advance Note and other loan agreements as of December 31, 2025[246][249]. Income and Tax - The company reported net non-operating income of $2.0 million for the nine months ended December 31, 2025, compared to a net non-operating loss of $2.0 million in the prior year[231]. - The effective tax rate for the nine-month period ended December 31, 2025 was 48.1%, with a recorded income tax expense of $2.2 million[232]. - The company experienced a $3.6 million increase in net income from equity method investments for the nine months ended December 31, 2025[231]. Market and Economic Conditions - The company experienced significant uncertainty and risk due to inflation and increased interest rates affecting its financial condition and results of operations[238]. - The company anticipates that economic and business issues will continue to impact its operations beyond the current fiscal year[238]. - Market risk exposures have not changed materially since March 31, 2025[273]. Trust Preferred Securities - The Trust Preferred Securities have an annual distribution rate of 8% on a stated liquidation amount of $25.00, payable quarterly[266]. - As of December 31, 2025, there are $48.6 million in Trust Preferred Securities outstanding, with $13.0 million held by wholly-owned subsidiaries of the Company[271]. - The Company has the right to defer interest payments on the Junior Subordinated Debentures for up to 20 consecutive quarters, which would also defer distributions on the Trust Preferred Securities[270]. - The Trust Preferred Securities are subject to mandatory redemption starting June 7, 2024, with proceeds from Junior Subordinated Debentures repayment applied to redeem Trust Preferred Securities[268]. - The Trust Agreement allows for the issuance of up to $100.0 million of Trust Preferred Securities, with the last amendment made on January 28, 2022[271]. - The Company guarantees the payment of distributions on the Trust Preferred Securities, subordinate to senior and subordinated debt payments[266]. - The Trust is classified as a "finance subsidiary" and does not file periodic reports with the SEC under the Securities Exchange Act of 1934[272]. - The Company has no current intention to exercise its right to defer interest payments on the Junior Subordinated Debentures[270]. - The rights of the Company as the holder of common securities are subordinated to the rights of Trust Preferred Securities holders in the event of default[267].