Aircastle Announces Third Quarter 2015 Results

Quarterly Dividend Increased to $0.24 per Common Share

03 Nov, 2015, 07:30 ET from Aircastle Limited

STAMFORD, Conn., Nov. 3, 2015 /PRNewswire/ -- 

Key Third Quarter Developments

  • Lease rental and finance lease revenue was $189.9 million, up 5.3%
  • Net loss was $(14.0) million, or $(0.17) per diluted share
  • Excluding the $66.0 million earnings impact from Malaysian Airline System bankruptcy and older freighter exits, net income was $52.0 million, or $0.64 per share
  • Accelerated planned exit from freighters by agreeing or completing sale of four aircraft and declaring six remaining older units to be on last leases after which we expect to scrap them
  • Cash ROE was 14.5%, net cash interest margin was 9.2% and fleet utilization was 99.9%
  • Acquired seven aircraft for $233 million; year to date purchased 32 aircraft for $1.0 billion
  • Sold eight aircraft for a net gain of $15.7 million; year to date sold 20 aircraft for a total net pre-tax contribution of $38.3 million
  • Declared $0.24 dividend per common share; our 38th consecutive quarterly dividend

Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported a third quarter 2015 net loss of $(14.0) million, or $(0.17) per diluted common share, and an adjusted net loss of $(9.7) million, or $(0.12) per diluted common share.  The third quarter results included total revenues of $212.1 million, an increase of 19.4%, versus $177.6 million in the third quarter of 2014.    

Commenting on the results, Ron Wainshal, Aircastle's CEO, stated "During the third quarter we took decisive measures to address the challenge presented by the Malaysian bankruptcy and to accelerate our planned exit from freighter investments.  Notwithstanding the resulting impairments, our operating performance was excellent as evidenced by the 14.5% cash ROE and 99.9% utilization results."   

Mr. Wainshal added, "Increased asset sales have been a key driver for our results as we've seized on robust investor demand for aircraft both to enhance our financial performance and to improve our portfolio quality considerably."

Mr. Wainshal concluded, "We continue to demonstrate the value of the Aircastle franchise and our distinct competitive positioning by originating an attractive flow of investments we believe will have an accretive long-term earnings profile. This capability, together with the improving quality of our assets and strong operating cash flows, gave us confidence to increase our dividend once again." 

Note: Non-GAAP items reconciled in the Appendix.

 

Financial Results

(in thousands, except share data)

Three Months Ended

September 30,

Nine Months Ended

September 30,

2015

2014

2015

2014

Total Revenues

$  212,074

$ 177,596

$ 610,935

$  580,345

Lease Rental and Finance Lease Revenues

$  189,906

$ 180,349

$ 555,375

$  545,799

Adjusted EBITDA

$  216,311

$ 177,408

$ 621,133

$  559,083

Net income (loss)

$   (13,989 )

$   19,151

$   71,088

$    28,064

      Per common share - Diluted

$       (0.17 )

$       0.24

$       0.88

$        0.35

Adjusted net income (loss)

$     (9,679 )

$   26,545

$   88,007

$    87,497

      Per common share - Diluted

$       (0.12 )

$       0.33

$       1.08

$        1.08

 

Third Quarter Results

Total revenues were $212.1 million, an increase of $34.5 million, or 19.4%, from the previous year.  The increase was driven by higher maintenance revenues of $19.9 million and higher lease rental and finance lease revenues of $9.6 million.  

Lease rental and finance lease revenues during the third quarter were $189.9 million versus $180.3 million the prior year.  The 5.3% increase reflects net year over year growth in the fleet and the impact from aircraft acquisitions, dispositions and lease extensions.

Adjusted EBITDA for the third quarter was $216.3 million, up 21.9%, or $38.9 million, versus the prior year's quarter and primarily reflects higher lease rental, finance lease and maintenance revenues of $29.5 million, and higher gains from aircraft sales of $4.3 million.       

The net loss for the third quarter was $(14.0) million versus net income of $19.2 million the previous year.  Higher total revenues of $34.5 million were offset by higher non-cash impairment charges of $58.0 million and higher depreciation charges of $9.8 million associated with net fleet growth and accelerated depreciation on three MD-11 freighters, two of which were sold during the third quarter. 

The adjusted net loss for the quarter was $(9.7) million versus adjusted net income $26.5 million the prior year.  Higher revenues of $34.5 million and higher gains from aircraft sales of $4.3 million were offset by higher non-cash aircraft impairment charges of $58.0 million year over year.

Aviation Assets

During the third quarter of 2015, we acquired seven aircraft for $233 million.  We closed or committed to acquire five additional aircraft during the balance of 2015 for approximately $165 million.  Year-to-date, we acquired or committed to acquire a total of 37 aircraft that will close in 2015, for approximately $1.2 billion.  The 32 aircraft acquired during the first nine months of 2015 had a weighted average age of less than four years, an average lease term of more than nine years, and all but one were narrow-body aircraft. 

During the third quarter of 2015, we completed the sale of eight aircraft, including two MD-11 freighter aircraft, one A330 and five mid-aged narrow-body aircraft.  The total pre-tax impact from our third quarter sales activity was $15.7 million and gross proceeds were $111 million

During the first three quarters of 2015, we sold twenty aircraft that generated a total pre-tax impact of $38.3 million and gross proceeds of $341 million.  The weighted-average age of the aircraft sold was approximately 15 years. 

During October, we completed several additional sales, including one 747-400 converted freighter, one older A330 and our last 767.  These sales have been profitable, in aggregate.  In addition, we concluded an agreement to sell our last remaining MD-11 freighter in January 2016 for an amount approximately equal to break-even. 

 

2015 Aircraft Sales through September 30

($ in millions)

Aircraft Type

Weighted Average Age

(years)

 Number of Aircraft

 Maintenance Revenue

 Gain (Loss) on Sale of Flight Equipment

 Impairments

Pre-Tax Impact

Narrow-bodies

14.4

14

$       7.0

$      30.6

$      (5.3)

$      32.3

Wide-bodies

15.8

4

-

12.8

-

12.8

Freighters

17.7

2

11.4

(0.4)

(17.9)

(6.8)

 

Total

14.9

20

$    18.4

$      43.0

$   (23.2)

$      38.3

 

As of September 30, 2015, Aircastle owned 160 aircraft having a net book value of $6.0 billion. We also manage five aircraft with a net book value of nearly $500 million dollars on behalf of our joint venture with Ontario Teachers' Pension Plan.

Owned Aircraft as of September 30, 2015

Owned Aircraft as of September 30, 2014

Total Flight Equipment Held for Lease ($ mils.)

$

6,007

$

5,304

Unencumbered Flight Equipment Held for Lease ($ mils.)

$

3,722

$

2,924

Number of Aircraft

160

140

Number of Unencumbered Aircraft

109

85

Passenger Aircraft (% of NBV)

88%

84%

Weighted Average Fleet Age (years)(2)

7.7

8.6

Weighted Average Remaining Lease Term (years)(3)

5.9

5.0

Weighted Average Fleet Utilization for the quarter ended(4)

99.9%

100.0%

Portfolio Yield for the quarter ended(5)

12.7%

13.2%

Net Cash Interest Margin(6)

9.2%

9.9%

(1) Calculated using net book value of flight equipment held for lease and net investment in finance leases at period end. (2) Weighted average age by net book value. (3) Weighted average remaining lease term by net book value. (4) Aircraft on-lease days as a percent of total days in period weighted by net book value. (5) Lease rental revenue for the period as a percent of the average net book value of flight equipment held for lease for the period; quarterly information is annualized. (6) Net Cash Interest Margin = Lease rental yield minus interest on borrowings, net of settlements on interest rate derivatives, and other liabilities  / average NBV of flight equipment for the period calculated on a quarterly basis, annualized.

Annual Fleet Review & Impairments

During the third quarter of 2015, in connection with our annual fleet review, we determined each of our six remaining Boeing 747-400 converted freighter aircraft are now on last leases.  We reduced our residual value assumptions for these aircraft and expect to scrap them following lease expiry.  This resulted in an impairment of $34.6 million and $1.9 million of additional depreciation during Q3, partly offset by $6.0 million of maintenance and other revenues.  This determination reflects the persisting glut of supply in the air cargo market.  In addition, our older freighters were affected specifically by the imposition of age limits in certain countries and by lower utilization levels. 

In September 2015, Malaysian Airline System ("MAS") informed us that they were rejecting the lease on our Boeing 777-200ER aircraft as part of their restructuring.  Under the terms of our lease with MAS, we were due to receive $18 million in rent payments and another estimated $25 million in lease end return compensation.  We repossessed the aircraft in early October 2015 and are currently evaluating our deployment alternatives.  This aircraft, which was manufactured in 1998, is the only one of its type in our fleet and is the only aircraft we had on lease to MAS. 

We reduced the carrying value of this 777-200ER aircraft to an amount equal to our best estimate of scrap value.  While we haven't made a decision to dispose of the aircraft, this write-down was driven by weak overall demand for older wide-body aircraft, an increase in the supply of competing aircraft and the difficulty of recovering high redeployment costs given the proliferation of aircraft age limits across the world.  This write-down resulted in an impairment of $37.8 million, partly offset by a $1.2 million letter of credit we drew following the lease rejection.  We will pursue remedies to recover amounts due to us.

 

Breakdown of Third Quarter Results

($ in millions except per

 share amounts)

Q3:15 Results

747 Freighters

MAS  Bankruptcy

Adjusted Q3:15 Results

Revenues

  Lease Rentals

$        188.0

$           0.2

$

$       187.9

  Maintenance / Other Revenues

24.0

5.9

1.2

17.0

Total Revenues

212.1

6.0

1.2

204.8

Operating Expenses

  Depreciation

85.3

1.9

83.4

  Aircraft Impairment Charges

78.4

34.6

37.8

6.1

  All Other Expenses

76.9

76.9

Total Operating Expenses

240.7

36.5

37.8

166.4

Other Income (Expense)

  Gain on Sale of Flight Equipment

15.7

15.7

  All Other Income (Expense)

0.1

0.1

Total Other Income (Expense)

15.8

15.8

Pre-Tax Income

(12.8)

(30.4)

(36.6)

54.2

  Income Taxes

(2.7)

1.0

(3.7)

  Joint Venture Income

1.6

1.6

Net Income (Loss)

$     (14.0)

$     (29.4)

$    (36.6)

$        52.0

Per Share

$     (0.17)

$     (0.36)

$    (0.45)

$        0.64

 ANI Per Share

$     (0.12)

$     (0.36)

$    (0.45)

$        0.69

 

Common Dividend

On October 30, 2015, Aircastle's Board of Directors declared a fourth quarter 2015 cash dividend on its common shares of $0.24 per share, payable on December 15, 2015 to shareholders of record on November 30, 2015.  This is our 38th consecutive dividend and represents a 9% increase over the previous quarter's cash dividend.   Since 2010, Aircastle has increased the dividend six times. 

Conference Call

In connection with this earnings release, management will host an earnings conference call on Tuesday, November 3, 2015 at 10:00 A.M. Eastern time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (888) 417-8533 (from within the U.S. and Canada) or (719) 325-2354 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "9463401".

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.  A replay of the webcast will be available for one month following the call.  In addition to this earnings release an accompanying power point presentation has been posted to the Investor Relations section of Aircastle's website.

For those who are not available to listen to the live call, a replay will be available until 1:00 P.M. Eastern time on Thursday, December 3, 2015 by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820  (from outside of the U.S. and Canada); please reference passcode "9463401".

About Aircastle Limited

Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world.  As of September 30, 2015, Aircastle's aircraft portfolio consisted of 160 aircraft on lease with 51 customers located in 32 countries.

Safe Harbor

All statements included or incorporated by reference in this Press Release (this "Release"), other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995.  Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA and Adjusted Net Income and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this Release.  These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1 A of Aircastle's 2014 Annual Report on Form 10-K and our Form 10-Q filed for the quarter ended June 30, 2015, and elsewhere in this Release. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this Release. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

 

Aircastle Limited and Subsidiaries

Consolidated Balance Sheets

(Dollars in thousands, except share data)

September 30,  2015

December 31,  2014

(Unaudited)

ASSETS

Cash and cash equivalents

$

149,041

$

169,656

Accounts receivable

3,046

3,334

Restricted cash and cash equivalents

84,258

98,884

Restricted liquidity facility collateral

65,000

65,000

Flight equipment held for lease, net of accumulated depreciation of $1,403,443 and $1,294,063, respectively

5,885,807

5,579,718

Net investment in finance leases

120,882

106,651

Unconsolidated equity method investment

49,131

46,453

Other assets

131,231

105,450

Total assets

$

6,488,396

$

6,175,146

LIABILITIES AND SHAREHOLDERS' EQUITY

LIABILITIES

Borrowings from secured financings, net of debt issuance costs

$

1,277,361

$

1,373,131

Borrowings from unsecured financings, net of debt issuance costs

2,717,859

2,371,456

Accounts payable, accrued expenses and other liabilities

154,209

140,863

Lease rentals received in advance

60,447

53,216

Liquidity facility

65,000

65,000

Security deposits

114,594

117,689

Maintenance payments

338,515

333,456

Total liabilities

4,727,985

4,454,811

Commitments and Contingencies

SHAREHOLDERS' EQUITY

Preference shares, $.01 par value, 50,000,000 shares authorized, no shares issued and outstanding

Common shares, $.01 par value, 250,000,000 shares authorized, 81,181,495 shares issued and outstanding at September 30, 2015; and 80,983,249 shares issued and outstanding at December 31, 2014

812

810

Additional paid-in capital

1,567,692

1,565,180

Retained earnings

210,310

192,805

Accumulated other comprehensive loss

(18,403)

(38,460)

Total shareholders' equity

1,760,411

1,720,335

Total liabilities and shareholders' equity

$

6,488,396

$

6,175,146

 

Aircastle Limited and Subsidiaries

Consolidated Statements of Income

(Dollars in thousands, except per share amounts)

(Unaudited)

Three Months Ended

 September 30,

Nine Months Ended

 September 30,

2015

2014

2015

2014

Revenues:

Lease rental revenue

$

188,038

$

178,886

$

550,023

$

536,452

Finance lease revenue

1,868

1,463

5,352

9,347

Amortization of lease premiums, discounts and lease incentives

(2,113)

(1,075)

(10,288)

(7,252)

Maintenance revenue

15,726

(4,189)

55,148

35,035

Total lease revenue

203,519

175,085

600,235

573,582

Other revenue

8,555

2,511

10,700

6,763

Total revenues

212,074

177,596

610,935

580,345

Operating expenses:

Depreciation

85,324

75,519

237,538

225,230

Interest, net

60,381

56,794

184,063

181,551

Selling, general and administrative (including non-cash share based payment expense of $1,424 and $949 for the three months ended and $3,981 and $3,167 for the nine months ended September 30, 2015 and 2014, respectively)

14,032

13,817

42,663

41,818

Impairment of Aircraft

78,403

20,436

102,358

67,005

Maintenance and other costs

2,520

713

9,126

5,222

Total expenses

240,660

167,279

575,748

520,826

Other income (expense):

Gain on sale of flight equipment

15,679

11,390

43,034

13,384

Loss on extinguishment of debt

(36,570)

Other

70

1

341

758

Total other income (expense)

15,749

11,391

43,375

(22,428)

Income (loss) from continuing operations before income taxes

(12,837)

21,708

78,562

37,091

Income tax provision

2,709

3,484

12,037

10,925

Earnings of unconsolidated equity method investment, net of tax

1,557

927

4,563

1,898

Net income (loss)

$

(13,989)

$

19,151

$

71,088

$

28,064

Earnings (loss) per common share — Basic:

Net income (loss) per share

$

(0.17)

$

0.24

$

0.88

$

0.35

Earnings (loss) per common share — Diluted:

Net income (loss) per share

$

(0.17)

$

0.24

$

0.88

$

0.35

Dividends declared per share

$

0.22

$

0.20

$

0.66

$

0.60

 

Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited)

Nine Months Ended September 30,

2015

2014

Cash flows from operating activities:

Net income

$

71,088

$

28,064

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation

237,538

225,230

Amortization of deferred financing costs

11,211

10,493

Amortization of net lease discounts and lease incentives

10,288

7,252

Deferred income taxes

(1,455)

(2,623)

Non-cash share based payment expense

3,981

3,167

Cash flow hedges reclassified into earnings

19,349

26,730

Security deposits and maintenance payments included in earnings

(20,645)

(38,257)

Gain on sale of flight equipment

(43,034)

(13,384)

Loss on extinguishment of debt

36,570

Impairment of aircraft

102,358

67,005

Other

269

(2,278)

Changes in certain assets and liabilities:

Accounts receivable

253

(1,603)

Other assets

(4,382)

(1,691)

Accounts payable, accrued expenses and other liabilities

14,085

17,138

Lease rentals received in advance

7,566

4,162

Net cash provided by operating activities

408,470

365,975

Cash flows from investing activities:

Acquisition and improvement of flight equipment and lease incentives

(1,034,578)

(939,651)

Proceeds from sale of flight equipment

343,020

563,882

Restricted cash and cash equivalents related to sale of flight equipment

(24,606)

Aircraft purchase deposits and progress payments

(4,421)

1,315

Net investment in finance leases

(24,000)

(14,258)

Collections on finance leases

6,768

8,096

Unconsolidated equity method investment and associated costs

(8,592)

Distributions from unconsolidated equity method investment in excess of earnings

997

Other

(260)

(466)

Net cash used in investing activities

(713,471)

(413,283)

Cash flows from financing activities:

Issuance of shares net of repurchases

(1,960)

(2,092)

Proceeds from secured and unsecured debt financings

800,000

803,200

Repayments of secured and unsecured debt financings

(548,359)

(895,459)

Debt extinguishment costs

(32,835)

Deferred financing costs

(12,185)

(15,843)

Restricted liquidity facility collateral

42,000

Liquidity facility

(42,000)

Restricted cash and cash equivalents related to financing activities

14,626

32,987

Security deposits and maintenance payments received

114,644

131,136

Security deposits and maintenance payments returned

(28,797)

(72,030)

Payments for terminated cash flow hedges

(33,427)

Dividends paid

(53,583)

(48,604)

Net cash provided by (used in) financing activities

284,386

(132,967)

Net increase (decrease) in cash and cash equivalents

(20,615)

(180,275)

Cash and cash equivalents at beginning of period

169,656

654,613

Cash and cash equivalents at end of period

$

149,041

$

474,338

 

Aircastle Limited and Subsidiaries

Selected Financial Guidance Elements for the Fourth Quarter of 2015

($ in millions, except for percentages)

(Unaudited)

Guidance Item

Q4:15(1)

Lease rental revenue

$178 - $182

Finance lease revenue

$1 - $2

Maintenance revenue

$6 - $8

Amortization of net lease discounts and lease incentives

$(5) – $(6)

SG&A

$14 - $15

Depreciation

$79 - $81

Interest, net (2)

$59 - $60

Gain on sale

$5 - $10

Full year effective tax rate

13% - 14%

(1) Excludes the impact of lease end part outs. (2) Includes non-cash hedge loss amortization charges related to the payoff of Securitization No.1 of $2.7 million.

 

Aircastle Limited and Subsidiaries

Supplemental Financial Information

(Amount in thousands, except per share amounts)

(Unaudited)

Three Months Ended

Sept. 30,

Nine Months Ended

Sept. 30,

2015

2014

2015

2014

Revenues

$  212,074

$ 177,596

$ 610,935

$  580,345

EBITDA

$  136,538

$ 156,023

$ 515,014

$  453,022

Adjusted EBITDA

$  216,311

$ 177,408

$ 621,133

$  559,083

Adjusted net income (loss)

$    (9,679)

$   26,545

$   88,007

$    87,497

Adjusted net income (loss) allocable to common shares

$    (9,679)

$   26,348

$   87,352

$   86,868

Per common share - Basic

$      (0.12)

$       0.33

$       1.08

$       1.08

Per common share - Diluted

$      (0.12)

$       0.33

$       1.08

$       1.08

Basic common shares outstanding

80,566

80,390

80,566

80,389

Diluted common shares outstanding

80,566

80,390

80,566

80,389

Refer to the selected information accompanying this press release for a reconciliation of GAAP to Non-GAAP information.

 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

EBITDA and Adjusted EBITDA Reconciliation

(Dollars in thousands)

(Unaudited)

Three Months Ended

 September 30,

Nine Months Ended

 September 30,

2015

2014

2015

2014

(Dollars in thousands)

Net income (loss)

$

(13,989)

$

19,151

$

71,088

$

28,064

Depreciation

85,324

75,519

237,538

225,230

Amortization of net lease discounts and lease incentives

2,113

1,075

10,288

7,252

Interest, net

60,381

56,794

184,063

181,551

Income tax provision

2,709

3,484

12,037

10,925

     EBITDA

136,538

156,023

515,014

453,022

Adjustments:

  Impairment of aircraft

78,403

20,436

102,358

67,005

  Loss on extinguishment of debt

36,570

  Non-cash share based payment expense

1,424

949

3,981

3,167

  Gain on mark to market of interest rate derivative contracts

(54)

(220)

(681)

     Adjusted EBITDA

$

216,311

$

177,408

$

621,133

$

559,083

 

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-US GAAP measure is helpful in identifying trends in our performance.

This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.

EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the board of directors to review the consolidated financial performance of our business.

We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes.  Adjusted EBITDA is a material component of these covenants.

 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Adjusted Net Income Reconciliation

(Dollars in thousands)

(Unaudited)

Three Months Ended

 September 30,

Nine Months Ended

 September 30,

2015

2014

2015

2014

(Dollars in thousands)

Net income (loss)

$

(13,989)

$

19,151

$

71,088

$

28,064

Loss on extinguishment of debt(2)

36,570

Ineffective portion and termination of hedges(1)

215

(21)

509

41

Gain on mark to market of interest rate derivative contracts(2)

(54)

(220)

(681)

         Non-cash share based payment expense(3)

1,424

949

3,981

3,167

         Term Financing No. 1 hedge loss amortization charges(1)

3,601

4,401

11,544

         Securitization No. 1 hedge loss amortization charges (1)

2,725

2,865

8,248

8,792

Adjusted net income (loss)

$

(9,679)

$

26,545

$

88,007

$

87,497

(1)     Included in Interest, net. (2)     Included in Other income (expense). (3)     Included in Selling, general and administrative expenses.

 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Cash Return on Equity Calculation

(Dollars in thousands)

(Unaudited)  

Cash Flow from Operations

Collections on Finance Leases

Gain (Loss) on Sale of Eqt.

Depreciation

Distributions from JV

Cash Earnings

Average Shareholders' Equity

12 Month Cash ROE

2008

$333,626

$6,525

$201,759

$138,392

$1,242,635

11.1%

2009

$327,641

$1,162

$209,481

$119,322

$1,205,284

9.9%

2010

$356,530

$7,084

$220,476

$143,138

$1,300,953

11.0%

2011

$359,377

$39,092

$242,103

$156,366

$1,370,513

11.4%

2012

$427,277

$3,852

$5,747

$269,920

$166,956

$1,425,658

11.7%

2013

$424,037

$9,508

$37,220

$284,924

$185,841

$1,513,156

12.3%

2014

$458,786

$10,312

$23,146

$299,365

$667

$193,546

$1,661,228

11.7%

LTM

$501,281

$8,984

$52,796

$311,673

($14)

$251,374

$1,735,012

14.5%

Note:  LTM Average Shareholders' Equity is the average of the most recent five quarters period end Shareholders' Equity.  Management believes that the cash return on equity metric (Cash ROE) when viewed in conjunction  with the Company's results under US GAAP and the above reconciliation, provide useful information about operating and period-over-period performance, and provide additional information that is useful for evaluating the underlying operating performance of our business without regard to periodic reporting impacts related to non-cash revenue and expense items and interest rate derivative accounting, while recognizing the depreciating nature of our assets. 

 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Net Cash Interest Margin Calculation

(Dollars in thousands)

(Unaudited)

Average NBV of Flight Equipment

Quarterly Lease Rental Revenue

Cash Interest1

Annualized Net Cash Interest Margin

Q1:11

$        4,041,967

$           141,116

$                 41,278

9.9%

Q2:11

$        4,143,446

$           143,356

$                 43,217

9.7%

Q3:11

$        4,222,512

$           145,890

$                 42,066

9.8%

Q4:11

$        4,374,921

$           149,848

$                 43,041

9.8%

Q1:12

$        4,388,008

$           152,242

$                 44,969

9.8%

Q2:12

$        4,516,973

$           153,624

$                 48,798

9.3%

Q3:12

$        4,602,185

$           159,546

$                 41,373

10.3%

Q4:12

$        4,605,783

$           158,090

$                 43,461

10.0%

Q1:13

$        4,619,204

$           156,590

$                 48,591

9.4%

Q2:13

$        4,711,790

$           157,918

$                 47,869

9.3%

Q3:13

$        4,717,877

$           161,148

$                 47,682

9.6%

Q4:13

$        4,972,040

$           169,274

$                 49,080

9.7%

Q1:14

$        5,168,851

$           174,335

$                 51,685

9.5%

Q2:14

$        5,582,359

$           183,231

$                 48,172

9.7%

Q3:14

$        5,412,299

$           178,886

$                 44,820

9.9%

Q4:14

$        5,373,733

$           178,202

$                 44,459

10.0%

Q1:15

$        5,637,513

$           177,146

$                 50,235

9.0%

Q2:15

$        5,850,516

$           184,839

$                 51,413

9.1%

Q3:15

$        5,926,459

$           188,038

$                 51,428

9.2%

(1) Excludes loan termination payments of $3.2 million and $3.0 million in the second quarter of 2011 and 2013 respectively.

 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to Non-GAAP Measures

Reconciliation of Net Income Allocable to Common Shares

(In thousands)

(Unaudited)

Three Months Ended

September 30, 2015

Nine Months Ended

September 30, 2015

Weighted-average shares(1):

Shares

Percent(2)

Shares

Percent(2)

Common shares outstanding – Basic

80,566

99.21%

80,566

99.26%

Unvested restricted common shares

645

0.79%

604

0.74%

Total weighted-average shares outstanding

81,212

100.00%

81,170

100.00%

Net income (loss) allocation

Net income (loss)

$(13,989)

100.00%

$71,088

100.00%

Distributed and undistributed earnings allocated to unvested restricted shares

--

--

(529)

(0.74%)

Earnings (loss) available to common shares

$(13,989)

100.00%

$70,559

99.26%

Adjusted net income (loss) allocation

Adjusted net income (loss)

$(9,679)

100.00%

$88,007

100.00%

Amounts allocated to unvested restricted shares

--

--

(655)

(0.74%)

Amounts allocated to common shares

$(9,679)

100.00%

$87,352

99.26%

(1)     For the three and nine months ended September 30, 2015 the company had no dilutive shares. (2)     Percentages rounded to two decimal places.

 

Aircastle Limited and Subsidiaries 

Reconciliation of GAAP to Non-GAAP Measures

Reconciliation of Net Income Allocable to Common Shares

(In thousands)

(Unaudited)

Three Months Ended

September 30, 2014

Nine Months Ended

September 30, 2014

Weighted-average shares(1):

Shares

Percent(2)

Shares

Percent(2)

Common shares outstanding – Basic

80,390

99.26%

80,389

99.28%

Unvested restricted common shares

601

0.74%

582

0.72%

Total weighted-average shares outstanding

80,991

100.00%

80,971

100.00%

Net income allocation

Net income

$19,151

100.00%

$28,064

100.00%

Distributed and undistributed earnings allocated to unvested restricted shares

(142)

(0.74%)

(202)

(0.72%)

Earnings available to common shares

$19,009

99.26%

$27,862

99.28%

Adjusted net income allocation

Adjusted net income

$26,545

100.00%

$87,497

100.00%

Amounts allocated to unvested restricted shares

(197)

(0.74%)

(629)

(0.72%)

Amounts allocated to common shares

$26,348

99.26%

$86,868

99.28%

(1)     For the three and nine months ended September 30, 2014 the company had no dilutive shares. (2)     Percentages rounded to two decimal places.

 

Contact:   

Aircastle Advisor LLC

The IGB Group

Frank Constantinople, SVP Investor Relations 

Leon Berman

Tel: +1-203-504-1063 

Tel: +1-212-377-8483

fconstantinople@aircastle.com  

lberman@igbir.com

 

SOURCE Aircastle Limited



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