EPS of $-2.60 decreased by 326.2% from previous year
Gross margin of 14.6%
Net income of -7.03M
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Air T Inc (AIRTP) QQ4 2025 Earnings Analysis: Revenue Decline, Margin Compression, and Balance Sheet Leverage in Integrated Freight Logistics
Executive Summary
Air T Inc reported QQ4 2025 revenue of $66.315 million, down 8.8% year-over-year and 14.9% quarter-over-quarter, with a gross profit of $9.713 million and a gross margin of 14.65%. Operating income was negative $3.229 million and net income declined to a loss of $7.028 million, translating to an EPS of -$2.60 for the quarter. The company generated operating cash flow of $4.119 million and free cash flow of $3.97 million, supported by a working capital inflow (change in working capital of $6.12 million). However, investors should note a substantial financing drain: net cash used in financing activities totaled $12.788 million, primarily from debt repayments, leaving cash at the period end of $6.758 million. Balance sheet stress is evident: total debt stands at $129.115 million with long-term debt of $116.357 million, while stockholders’ equity is negative at -$3.216 million on total assets of $173.778 million, resulting in a net debt position of approximately $123.183 million. These dynamics highlight meaningful near-term liquidity and profitability challenges even as operating cash flow remains positive.
The QQ4 print reflects continued margin compression and earnings volatility, underscored by aggressive debt repayment and limited near-term profitability. Management commentary (not provided within the prompt) would be expected to address refinancing needs, cost containment, and portfolio optimization. In summary, Air T’s current trajectory shows a fragile earnings base and a tight balance sheet, with upside dependent on improved gross margins, stabilization or growth in core revenue streams, and favorable financing conditions. Investors should weigh the potential for a turnaround against persistent leverage risk and cyclicality in the aerospace and logistics markets.
Operating Profitability:
- Operating Income: -$3.229 million
- Operating Margin: -4.87%
- EBITDA: -$4.239 million
- EBITDA Margin: -6.39%
Net Profitability:
- Net Income: -$7.028 million
- Net Margin: -10.60%
- EPS: -$2.60
- YoY EPS change: -326.23%
- QoQ EPS change: -453.19%
Cash Flow & Liquidity:
- Operating Cash Flow: $4.119 million
- Free Cash Flow: $3.97 million
- Net Cash Used in Financing Activities: -$12.788 million
- Net Change in Cash: -$12.01 million
- Cash at End of Period: $6.757 million
Balance Sheet Snapshot:
- Total Assets: $173.778 million
- Total Liabilities: $168.242 million
- Total Stockholders’ Equity: -$3.216 million (negative)
- Cash & Equivalents: $5.932 million; Short-Term Investments: $0.422 million; Total Cash & Equivalents: $6.354 million
- Total Debt: $129.115 million; Net Debt: $123.183 million
- Long-Term Debt: $116.357 million; Short-Term Debt: $12.758 million
- Current Ratio (approx.): 1.65x; Quick Ratio (approx.): 0.84x; Cash Ratio (approx.): 0.14x
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
66.32M
-8.76%
-14.85%
Gross Profit
9.71M
-41.75%
-42.83%
Operating Income
-3.23M
-322.23%
-277.81%
Net Income
-7.03M
-313.41%
-441.87%
EPS
-2.60
-326.23%
-453.19%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Transcript highlights are not provided in the prompt. No direct management quotes or themes from an earnings call are available here to synthesize.
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Forward Guidance
No explicit forward guidance was included in the provided data for QQ4 2025. Given the results, the near-term outlook will hinge on three levers: (1) sustaining or expanding revenue streams with higher gross margins, (2) improving operating efficiency to move EBITDA and net income back toward breakeven, and (3) securing refinancing or more favorable debt terms to address the substantial leverage and negative equity. Investors should monitor management commentary for any updated guidance on revenue mix optimization (e.g., higher-margin ground equipment services or aerospace parts/maintenance), capital expenditure plans, working capital improvements, and potential debt refinancing actions. In the absence of concrete guidance, the key factors to watch are cash flow generation (operating cash flow in particular), debt maturities, and the trajectory of gross margins as the company realigns its product and service mix.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
AIRTP Focus
14.65%
N/A
N/A
N/A
CYRX
41.00%
-14.80%
-40.50%
-2.73%
FWRD
21.30%
-0.51%
-18.10%
-6.50%
HUBG
84.80%
3.24%
1.48%
27.52%
CHRW
7.89%
4.39%
8.67%
20.86%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Air T Inc presents a high-risk, high-uncertainty investment profile. The QQ4 2025 results show meaningful revenue decline and continued profitability stress, with negative equity and a heavy debt burden that necessitates refinancing and strategic cost optimization. The company generated positive operating cash flow, which provides a foundation for stabilization, but the net cash outflow from financing activities underscores liquidity fragility. An investment thesis would hinge on a credible plan to restore profitability (improve gross margins and control operating costs), secure refinancing on favorable terms, and demonstrate sustainable cash flow generation. For risk-tolerant investors, catalysts could include successful debt renegotiation, monetization of higher-margin service lines, or a faster-than-expected market rebound in air logistics and related equipment maintenance. Until then, Air T remains a speculative name within Industrials, with the primary drivers of upside being balance-sheet repair, margin expansion, and revenue stabilization.
Key Investment Factors
Growth Potential
Moderate potential from stabilization and expansion in core segments (overtime air cargo, ground equipment services, and engines/parts) if pricing power and utilization improve, coupled with disciplined capex and higher-margin services.
Profitability Risk
High risk due to negative stockholders’ equity, elevated leverage (total debt $129.1m; net debt $123.2m), ongoing net losses, and reliance on financing to fund operations. Cyclicality in aerospace demand and potential refinancing risk are material concerns.
Financial Position
Material leverage with negative equity. Positive operating cash flow in QQ4 2025 but financed by debt repayments, contributing to a fragile liquidity position. Balance sheet shows limited liquidity headroom (cash ~$6.4m) against current liabilities (~$47.7m) and long-term debt (~$116.4m).
SWOT Analysis
Strengths
Diversified business portfolio across Overnight Air Cargo, Ground Equipment Sales, and Commercial Aircraft Engines and Parts—all of which can provide cross-segment revenue opportunities if demand stabilizes.
Positive operating cash flow generation in QQ4 2025 ($4.119 million) despite net losses, indicating some working capital efficiency and cash conversion potential.
Narrow but meaningful free cash flow in the period ($3.97 million) suggests a potential platform for a turnaround if profitability improves.
Weaknesses
Negative net income and negative stockholders’ equity resulting in an overall balance-sheet weakness and higher perceived risk.
Heavy leverage with total debt of $129.1 million and long-term debt of $116.4 million, creating interest and refinancing risk.
Material earnings volatility and margin compression (gross margin 14.65%, operating margin -4.87%, net margin -10.60%), complicating profitability trajectory.
Current liquidity headroom is limited relative to near-term debt maturities and ongoing financing needs.
Opportunities
Potential to optimize mix toward higher-margin services (maintenance, parts, and ground equipment services) to lift gross margins.
Possible refinancing or restructuring opportunities to improve leverage profile and reduce interest burden.
Operational improvements and working-capital optimization could further convert operating cash flow into stronger liquidity support.
Threats
Aerospace cycle sensitivity and airline/ground-handling demand fluctuations can materially impact revenue and utilization.
Refinancing risk given high leverage and negative equity; adverse interest rate moves could raise carrying costs.
Competition in equipment sales and servicing, supply chain volatility, and regulatory changes could pressure margins.