Air T (AIRT) Sidoti May Micro-Cap Virtual Conference summary

Business model and strategy

• Operates as a decentralized portfolio of aviation and non-aviation businesses, each with autonomous management and P&L responsibility.

• Focuses on long-term value creation through starting, acquiring, and investing in businesses, with a preference for holding investments indefinitely.

• Employs an allocator-operator partnership model, leveraging both centralized capital allocation and localized decision-making.

• Maintains an industry-agnostic, value-driven investment approach, though most opportunities arise in aviation due to existing expertise.

• Prioritizes disciplined capital allocation, balancing reinvestment, acquisitions, and shareholder returns.

Portfolio composition and performance

• Expanded from three to 14 businesses since 2013, with significant growth in revenue and EBITDA over the past decade.

• Portfolio includes consolidated operating companies and non-consolidated equity method investments, both contributing to cash flow.

• Notable equity investments include Cadillac Castings, Lendway (formerly Insignia Systems), and Crestone Asset Management.

• Aviation asset management platform offers full-service solutions from leasing to aircraft teardown and parts monetization.

• Digital aviation services are provided through World ACD and Ambry Hill Technologies, with growing recurring revenue.

Recent trends and market dynamics

• Overnight air cargo segment, partnered with FedEx, is adapting to cost consolidation initiatives and has increased its aircraft count.

• Jet engine replacement and aircraft parts businesses face high asset valuations and parts shortages due to older planes flying longer and fewer being scrapped.

• Contrail, a key parts business, is successfully deleveraging and focusing on smaller, overlooked deals to maintain supply.

• Acquisition of Royal Aircraft Services supports expanded FedEx routes and provides localized maintenance capabilities.