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Air T, Inc. Reports Unaudited Second Quarter Fiscal 2017 Earnings

MAIDEN, N.C., Nov. 14, 2016 — Air T, Inc. (Air T) (NASDAQ: AIRT) today reported consolidated net earnings of $1,069,000($0.52 per diluted share) for fiscal 2017’s second quarter ended September 30, 2016 compared to consolidated net earnings of $3,794,000 ($1.58 per diluted share) for the similar fiscal 2016 period.

Consolidated revenues net of intercompany eliminations decreased by $6,131,000 (14%) to $38,523,000 for the quarter ended September 30, 2016 compared to $44,654,000 in the same quarter in the prior fiscal year. Consolidated operating income net of intercompany eliminations decreased by $4,483,000 (81%) to $1,022,000 for the quarter ended September 30, 2016, as compared to $5,505,000 the same quarter in the prior fiscal year.

Ground equipment sales segment revenue decreased by $10,194,000 (48%) this quarter compared to the prior year comparable quarter last year. The decrease in the segment’s revenue is attributable primarily to the large order of deicers from a major airline in the prior year quarter that did not reoccur this fiscal year. Operating income net of intercompany eliminations, for the ground equipment sales segment decreased by $3,120,000 as a result of the decrease in sales volumes compared to the prior year quarter. At September 30, 2016, ground equipment sales backlog was $9.8 million, as compared to $24.4 million at September 30, 2015. Revenues in the overnight air cargo segment decreased by $235,000 (1%). Administrative fee revenues decreased reflecting the lower administrative fee amount paid under an amendment to the new dry-lease agreements which became effective on June 1, 2016. In addition, the segment’s maintenance revenues decreased as a result of the lower billable hours compared to the prior year quarter. Operating income for the air cargo segment decreased by $1,038,000 resulting from the lower administrative fee amount paid under the new dry-lease agreements, as well as maintenance revenue decrease as a result of the lower maintenance billable hours, coupled with higher operating costs not passed through to the customer, principally increased flight crew costs, during the three-month period ended September 30, 2016. Revenues in the ground support services segment increased $1,053,000 (18%) primarily as a result of the company’s growth in new markets and services offered to new and existing customers. Operating results for the ground support services segment improved by $30,000 from the prior year quarter primarily as increased revenues began to offset the costs of infrastructure improvements made in prior periods to position the segment for growth.

FINANCIAL HIGHLIGHTS
(In thousands, except per share data)

Three Months Ended September 30,

Six Months Ended September 30,

2016

2015

2016

2015

Operating Revenues

$          38,523

$            44,654

$          69,016

$        67,012

Operating Income (Loss)

$            1,022

$              5,505

$          (6,052)

$          4,456

Net Income (Loss)

$            1,080

$              3,794

$          (6,910)

$          3,058

Net Income (Loss) Attributable to
Air T, Inc. Stockholders

$            1,069

$              3,794

$          (2,608)

$          3,058

Net Earnings (Loss) Per Share – Diluted

$              0.52

$                1.58

$            (1.18)

$            1.28

Weighted Average Shares Outstanding – Diluted

2,048

2,397

2,208

2,396

On November 24, 2015, Air T purchased from Delphax Technologies Inc. (“Delphax”) shares of its Series B Preferred Stock then convertible into approximately 38% of the shares of Delphax common stock outstanding after conversion and a warrant to purchase additional shares of Delphax Series B Preferred Stock and from Delphax’s Canadian subsidiary a $2.5 million five-year senior subordinated promissory note.  Air T has concluded that as a result of its acquisition of these interests, Delphax is required to be consolidated with Air T for financial reporting purposes since the November 24, 2015 acquisition date. The operating loss attributable to Delphax included in consolidated net income for the three months ended September 30, 2016 was approximately $12,000.

On July 18, 2016, Contrail Aviation Support, LLC (“Contrail Aviation”), a subsidiary of the Company, completed the purchase of substantially all of the assets of Contrail Aviation, Inc. The acquisition consideration consisted of (i) $4,033,368 in cash, $300,000 of which is being held in an escrow account to secure indemnification payments, (ii) equity membership units in Contrail Aviation representing 21% of the total equity membership units in Contrail Aviation, and (iii) certain contingent additional deferred consideration payments. The operating income attributable to Contrail Aviation included in consolidated net income for the three months ended September 30, 2016 was approximately $43,000.

For a more detailed presentation and discussion of the Company’s results of operations and financial condition, please read the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 filed today with the Securities and Exchange Commission.  Copies of the Form 10-Q may be accessed on the Internet at the SEC’s website: http://www.sec.gov.

About Air T, Inc.

Established in 1980, Air T, Inc. is a diversified holding company with four core industry segments: overnight air cargo, aviation ground support equipment manufacturing, aviation ground support maintenance services, and commercial jet engines. Our ownership interests consist of a broad set of operating and financial assets that are designed to expand, strengthen and diversify Air T’s cash earnings power.  Our goal is to build on Air T’s core businesses, to expand into adjacent industries, and when appropriate, to acquire companies that we believe fit into the Air T family.  For more information, visit www.airt.net.

Forward-looking Statements

Statements in this press release that contain more than historical information may be considered forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), which are subject to risks and uncertainties.  Actual results may differ materially from those expressed in the forward-looking statements because of important potential risks and uncertainties, including but not limited to, the risk that contracts with major customers will be terminated or not extended, future economic conditions and their impact on the Company’s customers, the Company’s ability to recover on its investments, including its investments in Delphax, the timing and amounts of future orders under the Company’s Global Ground Support subsidiary’s contract with the United States Air Force, inflation rates, competition, changes in technology or government regulation, information technology disruptions, and the impact of future terrorist activities in the United States and abroad. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. The Company is under no obligation, and it expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Air T, Inc.