Greetings, and welcome to Air T, Inc.'s 2023 Annual Meeting of Stockholders Call. At this time, all participants are on a listen-only mode. If you would like to ask a question during this presentation, please click on the Ask Question box on the left side of your screen, type in your question, and hit Submit. Please note, this conference is being recorded. I will now turn the conference over to your host, Nick Swenson, Chairman of the Board, President, and Chief Executive Officer. Nick, please go ahead.
Thank you. Good morning, ladies and gentlemen. I'm Nick Swenson, Chairman of the Board, President, and CEO of your company. This meeting is now called to order, and it is my pleasure to welcome you to the 2023 Annual Meeting of Stockholders. Under our company's bylaws, as chairman of the board, I will preside as chairman of today's meeting. Mark Jundt, who is our Corporate General Counsel, will act as secretary of the meeting. In addition, Brian Beglin and Scott Loveless of Deloitte & Touche are with us on the line today. Deloitte serves as the company's independent registered public accounting firm, and Messrs. Beglin and Loveless will be available during the Q&A portion of the meeting to respond to any questions you may have. I'd also like to introduce Craig Colosso on the phone today from Equiniti Trust Company, which is the company's stock transfer agent. Mr.
Colosso has been appointed to serve as voting inspector of this meeting. As voting inspector, he will determine the number of shares of common stock represented at the meeting, determine if the quorum is present, assist in the tabulation of votes, and perform other such duties as provided by the General Corporation Law of the State of Delaware if any such matters should arise. There are four items of business on the agenda for today's meeting, as listed in the notice of the annual meeting. As no other matters have been submitted to the company for a vote in accordance with the company's bylaws, only the items of business set forth in the notice of the annual meeting will be considered at today's meeting.
After the vote, votes have been taken on the matters for which today's meeting has been called, we will have an opportunity for stockholders to ask general questions or make comments about our company. Consistent with the rules to this meeting and in order to provide for the orderly conduct of this meeting, questions will only be addressed during the appropriate discussion period. The record date for determining the stockholders entitled to notice of, and to vote at this meeting is the close of business on June 27, 2023. Will Mr. Jundt please present the notice of annual meeting, the proxy statement, and the form of proxy card, and a list of stockholders entitled to vote at this meeting?
Mr. Chairman, I present the notice of the annual meeting of the stockholders to be held August 16th, 2023, the proxy statement of Air T, Inc., and form of proxy card, which were sent by United States Mail on or about July 24th, 2023, to each stockholder of record of Air T, Inc. at the close of business on June 27th, 2023. I also present a list of the holders of the shares of common stock of the company of record at the close of business on June 27th, 2023. This list is available upon stockholder request. This list shows the address and number of shares of record owned by each stockholder on the record date, and it has been available at the principal office of the company for more than 10 days prior to that meeting.
I now recognize Mr. Colosso for a report on the shares presented at this meeting.
Mr. Chairman, on the record date, the company held outstanding 2,817,754 shares of common stock, of which 2,619,417 shares, or 92.96%, are represented at this meeting.
Since more than the majority of the outstanding shares of the common stock of the company are represented either in person or by proxy, we have a quorum at this meeting, and I declare this meeting properly organized for the transaction of business. I now declare the polls open. Before we proceed, does anyone need a ballot, annual report, or proxy statement? If so, please raise your hand so that we can supply your needs. Stockholders who have already sent in proxies and who do not wish to change their vote do not need to vote by ballot today. First item of business of this meeting is the election of members of the board of directors. The number of directors constituting the board of directors has been set at seven by the resolution adopted by the board of directors pursuant to the company's bylaws.
The board of directors has nominated 7, 7 individuals for election at the annual meeting. This list of directors nominees, along with biographical summaries, is included in the company's proxy statement for this meeting. Each of these nominees has agreed to serve as a director if elected. The nominees are: myself, Nick Swenson, Raymond Cabillot, William Foudray, Gary Kohler, Peter McClung, Travis Swenson, and Jamie Thingelstad. On behalf of the board, each of them is hereby nominated for election as a director. Directors are elected by a plurality. In other words, the 7 nominees receiving the most votes will be elected as directors. The board of directors recommends that you vote for the election of each of these nominees. Second item of business is the approval, is the approval of the following resolution, which is now presented to stockholders.
Resolved that the stockholders hereby approve on an advisory basis, the compensation paid to the company's named executive officers as disclosed pursuant to Item 402 of Regulation S-K of the Securities and Exchange Commission and the company's proxy statement for the 2023 annual meeting of stockholders. The stockholders vote on this resolution, which is referred to as a Say on Pay vote, is advisory and non-binding on the company. The board of directors and the Compensation Committee expect to take the outcome of the Say on Pay vote into account when considering future executive compensation decisions. The board of directors recommends that we vote for adoption of this resolution. The third item of business is to approve an amendment of the company's Certificate of Incorporation to allow the exculpation of invest officers.
For the reasons laid out in the proxy statement, the board of directors recommends that you vote to approve this proposed amendment. The fourth and final item of business is the proposed ratification of the appointment of Deloitte & Touche as the independent registered public accounting firm for the company for the fiscal year ending March 31, 2024. Deloitte at first, was first appointed by the Audit Committee to serve as the company's independent registered public accounting firm on September 27, 2018. Deloitte has rendered its report with respect to the company's annual financial statements for the fiscal year ended March 31, 2023. As I mentioned earlier, representatives of Deloitte are on the line with us today, are available to respond to any questions you may have.
The Audit Committee has appointed Deloitte as the company's independent registered public accounting accountants for the fiscal year ended March 31st, 2024, and the board of directors requests the ratification of that appointment by the stockholders. Accordingly, the ratification and appointment of Deloitte as the company's independent registered public accountants for the fiscal year ended March 31st, 2024, is now presented for a vote at this meeting. This matter will be approved if more shares are voted in favor of ratification of the appointment of Deloitte than are cast against ratification. As set forth in the proxy statement, the board of directors recommends that you vote for the ratification of the appointment of Deloitte. Would anyone who needs to cast a ballot, please do so by delivering it to Mr. Jundt in the front of the room. I now declare the polls closed.
I will now ask the voting inspector to report the outcome of each of the votes at today's meeting.
Mr. Chairman, the ballots have been counted, the 7 nominees for director have received a plurality of the votes cast at the meeting, in person or by proxy. The number of votes that have been cast at the meeting, in person or by proxy, in favor of the advisory resolution, approving the compensation paid to the company's named executive officers, represents a majority of the shares entitled to vote. The number of votes that have been cast in favor of the amendment to the company's Certificate and Incorporation to add officer exculpation, represents a majority of the shares entitled to vote. The number of votes that have been cast in favor of the ratification, the appointment of Deloitte as the company's independent registered public accounting firm for the fiscal year ending March 31, 2024, represents a majority of the shares entitled to vote.
Thank you, Mr. Colosso. All items of business have been approved. A complete tally of the votes will be reported on the company's Form 8-K, to be filed with the SEC within the next four business days. With all official business completed, I adjourn the business portion of the meeting. Before we turn to Q&A from shareholders, we have a short presentation to share about Air T and the fiscal 2023 year results. If you have questions during the presentation, you can ask them at the end of the presentation, or if you are attending remotely, you may submit questions in our webcast under the Submit Question section. We will address those questions during the Q&A session. Right.
We are Brian Ochocki and I are here to walk you through the investor presentation for the 3/31/2023 period, and we're, at the present time, looking at slide 3 of that slide deck. We have a background section here describing who we are, and on this slide, I would highlight that the second-largest shareholder and I have committed significant stakes in the ownership in the company to align our interests with shareholders. We are fully focused on generating value for shareholders over time. We also would like to highlight that the shares outstanding have declined from 3.7 million 10 years ago, to 2.9 million today, which is about a 23% decrease in the number of shares outstanding. Slide 6.
We like to highlight that we are in the business of investing the excess cash flow of the Air T businesses, and we believe that we're, have a good track record over time of allocating capital. And it's an important function of the corporate office, and corporate overhead that we spend, is to, is to invest in companies and to invest in projects and initiatives, and to grow companies and incubate companies within the Air T system over time. I would note that we, at the time, 10 years ago, we had three companies within the Air T world. Since then, we've sold one of the three companies and acquired an additional 12 companies. We have an investor-operator partnership model. We are very clear in our own minds that we are not the best operators of the businesses that Air T owns.
From a perspective of vision and priority and day-to-day activity and so forth, we rely very much on the leadership teams. We call them the dynamos and the dynamic teams of each of our businesses. We are very, very happy with a lot of the people who are operating those businesses, if not all of them. We have, we're very grateful for the work and effort that they put into doing great things with their businesses, and we work hard to stay out of their way and give them what they need. I read a, yeah, slide number 8 is the flywheel. There's a strategic book out that Brian's getting uncomfortable.
There's a, there's a person who wrote a book about strategic management that said, "Whenever you see a flywheel, run away." We believe that our flywheel does a good job of encapsulating what we try to do at Air T. We try to generate ideas. They may come from our office, from the overall markets, from people we run into, from investors, from the businesses that we own and the leaders of those businesses, then we try to match capital with those ideas. That capital might come from our own balance sheet or might come from capital partners, then we work to secure and empower dynamic management teams. That's a really important part of what we do, and when we do it well, it creates great thing.
We work to then generate attractive returns on that capital that we invest, and as we do that, we're building an investor brand and network. This model is not an old model, it's not a new model, it's, it's an old model, and it's one that requires careful work and execution. I think we're getting better at it all the time. Page 9, Brian?
Yeah. This just highlights how we think about ourselves and present ourselves in, in our public filings. We are organized on 3 main business segments. Those are reportable segments in our Form 10-Q and Form 10-K filings, commercial jet engines and parts, ground equipment sales, and overnight air cargo. In those segments, we have 14 companies and close to 600 employees. Flipping to slide 10, if you look at the revenue and operating project recession from fiscal 20 to 23, you can see that in fiscal 23, revenues of $247 million and illustrate a recovery back to our pre-COVID levels, $236.8 million, fiscal 20, the last full year prior to the pandemic. Looking closer in, operating income declined about $13 million from fiscal 22 to 23.
Two major drivers of that change are, number one, fiscal 2022 Well, that operating income reflects a $9 million Employee Retention Credit that we received under the CARES Act, and fiscal 2023 had approximately $7 million of inventory write-downs in excess of fiscal 2022 levels, as we are working through the last of our assets that were affected by COVID. Taking those two major changes away, the other drivers of the change from 2022 to 2023 in op income. First of all, overnight air cargo, operating income increased $1.3 million as they continue to grow in revenue, operation, and profitability, and the commercial jet engines and parts, when you take away that inventory write-down I just mentioned, their core business operating income increased about $2 million.
Moving to slide 11 to look at segments in detail, a little more detail. Our largest segment is commercial jet engines and parts, you can see a significant revenue increase from $57.7 million to $101.7 million in fiscal 2023. Operating income, as I mentioned before, was heavily influenced by that inventory write-down, a $6.6 million increase in that write-down. Absent that, operating income would've shown a sequential improvement.
I would-- I wanted to just mention here that obviously, with the post-COVID reduction in the production of aircraft and parts, secondary market for commercial jet engines and parts have been strong. I think that's a trend that we would expect to continue. In addition, some of the OEMs have been raising prices significantly in the past couple of years. This segment sits between aircraft owners and operators and MRO shops. We think it's a part of the market that's has a lot of technical requirements, and, and we have a lot of folks with know-how that can grow these businesses over time.
Second segment is our oldest segment, Overnight Air Cargo. This contains the two businesses, Mountain Air Cargo and CSA Air, that are two of the seven FedEx feeder airlines. These businesses operate and maintain a fleet of aircraft, flagged under the FedEx delivery. You can see they've been Air T companies for over 40 years now, and they continue to show improvement as they add flying routes and aircraft from FedEx, significant revenue increase and corresponding op income increase. In addition, as an extension of that maintenance arm for FedEx, we acquired Worldwide Aircraft Services in the fourth quarter of fiscal 23. That's an MRO shop in Missouri that we look at as an extension to that maintenance business that we've built, maintaining FedEx aircraft.
Yeah. Good.
Third segment is our ground equipment sales. This is comprised of our Global Ground Support, LLC business based in Kansas. Revenue, up slightly year-over-year. Operating income, flat year-over-year. You can see on the lower right, the backlog, lower right of Slide 13, backlog is also holding steady, $13.6 million at the end of this fiscal year, compared to $14 million a year before. This business has been a consistent profitable business for us for many years.
Slide 14 highlights three of the companies that are we're incubating and investing in. They range from Delphax Solutions, a printing equipment manufacturer, to Ambry Hill Technologies, a software developer for aviation MROs and air aftermarket community, and BCCM Advisors, the investment manager that has domestic equities and African equities fund. These are examples of commitments to initiatives that we believe will bear fruit over time. Slide number 15 is a new slide for our investor deck. It breaks out what we call Air T Digital, and indicates the Annual Recurring Revenue level of Air T Digital, which is comprised of two businesses. One, the acquisition that we footnote in footnote 5 of our 10-K, we describe as providing global aviation and data information. From those disclosures, you can discern the approximate revenue of that business.
The other revenue is coming from our AHT subsidiary, Ambry Hill Technologies, both of which are focused on subscription-based revenues within the aviation world. Slide number 16 highlights what we call Air T Asset Management. It's also a new slide. We're breaking out on investors the outside capital that we're managing across different platforms, including our leased aircraft platforms, our consignment platforms, and teardown platforms, as well as domestic US equities through BCCM and African equities through BCCM. Slide 17 is a recent development which we disclose in our. Brian mentioned, we acquired Worldwide Aircraft Services, which is an MRO in Springfield, Missouri. It's very good tack-on acquisition to the MAX CSA world.
They have a lot of maintenance capability already, and this adds capacity at a time when, the world is, looking for more capacity in aircraft maintenance.
Slide 18 just shows how we've diversified over the years. I think what really pops here is the, how, how we've built that commercial aircraft and engine segment from nothing to being a big component of our business over the last 10 years and diversified, diversified our revenue base.
Slide number 19, non-operating assets. These are assets on our balance sheet that are not required to run the businesses that, that we own. These are separate investments. We have made an estimate of their value here, and the the valuation methodology that we're looking at here includes a mark-to-market mark for our Insignia stock, a at cost mark for the investment in Cadillac Casting, Inc., and our, our, NAV mark for our BCCM funds investments. The company, Air T itself, is invested as an LP in some of the BCCM funds as well. It's an NAV mark for the aircraft asset management investments.
This is an interesting one that you can see that in fiscal 2021, we had no investments in our own JV. Since then, we've invested $8.2 million of Air T cash as LP investments into the funds that we have through the Sunrise JV. That mark is at the NAV mark that our outside investors have. TFS Partners is a small investment, and then other investments. Those are sitting on our balance sheet. Slide 20, Brian, you want to go through that?
Yeah. This just shows the, the key takeaway here. This is also in, for the most part, in our 10-K footnote. We've split this a little differently, though. Top half is the amount of debt that's guaranteed, directly guaranteed by Air T, $51 million at the end of the fiscal year. Then it's the second half highlights our capital- our philosophy on the capital structure to tailor our bet sizes and and use non-recourse leverage. The Contrail debt, Air T acquisition $22.1 million, the mortgage on Wolfe Lake, the office building that we own, for example, all of those are non-recourse, non-guaranteed by Air T, except for $1.6 million of Contrail debt that we guarantee. $75 million of our debt is non-recourse.
That's, that's the takeaway from this slide on how we look at our capital structure.
I would note that the form of our debt, there's none, that we either have swaps on, on a significant chunk of the Term Loan G, or we have a fixed term debt at the Air T level, that's at a very attractive rate there at 3.42%. So we're very cognizant about how we manage our cost of capital on the liability side here. Slide 21 gets back to our operating approach. We, we do like to make, like everyone does, I think, convex bets. We try to do so in a way that is appropriately tailored to the opportunity and our own capital.
We try to separate out our businesses so that they exist and perform on their own in such a way that each of our bets is an independent bet of the other. Fortunately, in aviation, there are a lot of subsegments and markets and ways to to to build to build businesses that can be independent of one another. This is slide 22, shows important return on Air T stock from approximately the time when I became CEO until now. It shows the comparison versus the S&P 500 for them. Slide 23 gets a little bit of a long-term view of Air T's operating income and revenues.
Yep, we've had a long history of sustaining financial health. A couple of those, downward-pointing op income bars reflect either COVID or, in the case of last year, the, the inventory write-down that we mentioned. Besides those aberrations, we've got a history of, positive op income over the years.
Page 25, growth strategies. Investors will have seen this slide before. They looked at our debt, been here a while. We have 4 basic ideas about how we're going to grow Air T. Invest in our current businesses, acquire new cash flowing businesses, which we've been able to do consistently over time. If we can, invest in marketable securities or alternative assets, and also try to find third-party capital providers that want to invest alongside with us. Page 26, describes one of the growth strategies around bringing forward our capabilities in leasing and tearing down and managing parts within the aviation segment. Let's keep going through these, Brian. They're just expansions of the basic point.
On page 30, slide deck, page 30, we describe a bit of a arithmetic tech exercise about what the advantages of a public company are. Some people might wonder why we're public. We're, we're committed to being a public company, and we believe that the structure of owning assets in a public company has, has some mathematically advantageous aspects to it as compared to a private equity fund that unwinds every 7-11 years. Simply speaking, we don't have to pay the taxes that they do, and that helps us, over time, generate shareholder value in a way that we think is important to note.
Slide 31 just illustrates the adjusted EBITDA reconciliation, how we get from GAAP operating income to our invested EBITDA. This is also included in our Form 10-Q and Form 10-K disclosures.
All right, we would like to answer shareholder questions at this time, and we have several events submitted via Slido. Mark, do you want to take this one?
Yes. Question is, "Can I receive proxy statements online instead of via hard copy sent via snail mail?" The answer to that is yes, that is actually our standard practice, something we've done several of the past years, with the exception of this year. The reason being that this year we had an additional item on our up for vote on our proxy, which was the amendment of our Certificate of Incorporation, which requires an additional period of time for the SEC to review the proxy statement before it can become effective and then thereafter be mailed out. As a result of that, the window, which is typically longer for electronic delivery of the annual meeting materials, had closed. Any other year in which we do not have an additional item for both on our proxy statement, we will do electronically.
Thanks, Mark. Do we have any other questions?
The questions have been answered, previously in the slide deck. There are three on the next slide, and otherwise, there are no, no additional questions.
Yeah. I think we'll just leave those, slide deck questions where they are, and people can go out and read the answers to those. Thank you for your time today, and we'll, adjourn this portion of the meeting. There being no more questions or comments, the annual meeting of stockholders is adjourned. I would like to thank you for coming today, and this concludes our proceedings.
Thank you. This concludes today's conference, and you may disconnect at this time, and we thank you for your participation.