Aircastle Announces First Quarter Results
Highlights
- Lease rental revenue of $141.1 million and EBITDA(1) of $154.3 million
- Net income of $42.7 million, or $0.54 per diluted common share, and Adjusted net income(1) of $32.9 million, or $0.41 per diluted common share
- Adjusted net income plus depreciation and amortization(1) of $95.6 million, or $1.20 per diluted common share
- Fleet utilization of 99%
- Portfolio yield of 14%
- Through April 29, repurchased 2.9 million shares at an average cost of $12.13 per share
STAMFORD, Conn., May 4, 2011 /PRNewswire/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter 2011 net income of $42.7 million, or $0.54 per diluted common share, and adjusted net income of $32.9 million, or $0.41 per diluted common share.
Commenting on the results, Ron Wainshal, Aircastle's CEO, stated: "During the first quarter, Aircastle sustained its consistently strong portfolio performance, and the company's financial results started to reflect more fully the positive impact of the $500 million we invested in 2010. We also made progress expanding our asset base to further enhance our future earnings prospects. Our new Airbus A330 deliveries are coming on line as planned and, so far this year, we acquired or signed letters of intent to acquire five additional aircraft, three of which are Boeing 747-400s which we intend to convert into freighter configuration. At the same time, we are continuing to pursue asset sales selectively to take advantage of the market recovery and support our long-term goal of generating strong risk adjusted returns."
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(1) Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.
First Quarter Results
Lease rental revenue for the first quarter was $141.1 million, up by $11.0 million, or 8%, year-over-year, due primarily to the impact of aircraft acquisitions net of dispositions of $14.9 million. The increase was partially offset by lower lease rentals due to lease terminations of $2.1 million and lease transitions and extensions of $1.8 million.
Total revenues for the first quarter were $157.9 million, up by $27.4 million year-over-year. The increase reflects higher lease rental revenue as discussed above, as well as higher maintenance and other revenue totaling $14.6 million, driven mainly by early lease terminations during the first quarter of 2011. As previously mentioned, during the first quarter of 2011, Aircastle executed early terminations for five leases – four Airbus A320-200 aircraft leased to an airline based in Egypt and one Airbus A319-100 aircraft leased to an airline in Jordan. Since the end of the first quarter, we have commitments to lease two of these A320s and the A319 aircraft to two different customers. We are remarketing the other aircraft actively.
EBITDA for the first quarter was $154.3 million, up by $33.1 million from the first quarter of 2010, reflecting higher lease rental revenue of $11.0 million as well as increases totaling $14.6 million in maintenance and other revenue. The increase in EBITDA also includes a gain of $9.7 million from the sale of four Boeing 737-400SF aircraft. These increases were partially offset by an increase in SG&A, maintenance and other costs totaling $2.2 million.
Adjusted net income plus depreciation and amortization for the quarter was $95.6 million, a year-over-year increase of $16.0 million. This was due primarily to an increase of $11.0 million in lease rental revenue as well as increases in maintenance and other revenues totaling $14.6 million, partially offset by an increase in adjusted interest expense of $6.4 million and an increase in SG&A and maintenance and other costs of $2.2 million.
Adjusted net income for the quarter was $32.9 million, up $12.3 million year-over-year, reflecting an increase of $27.4 million in total revenues, partially offset by an increase of $5.4 million in depreciation, $6.4 million in adjusted interest expense and $2.2 million in SG&A and maintenance and other costs.
Aviation Assets
In the first quarter of 2011, we completed the sale of four Boeing 737-400SF freighter aircraft for a net gain of $9.7 million and we took delivery of two Airbus A330-200 passenger aircraft, which are on lease to South African Airways.
As of March 31, 2011, Aircastle owned 134 aircraft having a net book value of $4.1 billion.
Owned Aircraft as of March 31, 2011(A) | ||
113 Passenger Aircraft | 69% | |
21 Freighter Aircraft | 31% | |
Number of Lessees | 63 | |
Number of Countries | 34 | |
Weighted Average Remaining Lease Term (years)(B) | 4.7 | |
Percentage of Aircraft Leased Outside U.S. | 92% | |
Percentage of "Latest Generation" Aircraft | 92% | |
Weighted Average Fleet Utilization during the three months ended March 31, 2011(C) | 99% | |
(A) Percentages calculated using net book value. (B) Weighted average remaining lease term (years) by net book value. (C) Aircraft on-lease days as a percent of total days in period weighted by net book value, excluding aircraft in freighter conversion. | ||
Financing Update
In February 2011, we entered into a $72.8 million 12-year term loan with Sumitomo Mitsui Banking Corporation. The loan is supported by a guarantee from COFACE for the financing of a new Airbus A330-200 passenger aircraft. This financing bears interest at a fixed rate of 3.7875%. In March 2011, we entered into a $72.9 million 12-year term loan with Sumitomo Mitsui Banking Corporation. The loan is supported by a guarantee from COFACE for the financing of a new Airbus A330-200 passenger aircraft. This financing bears interest at a fixed rate of 3.7344%.
Share Repurchase Program
As of March 31, 2011, Aircastle repurchased 1.3 million of its shares at a total cost of $15.0 million. As of April 29, we repurchased an additional 1.6 million common shares for a total cost of $19.9 million.
Conference Call
In connection with this earnings release, management will host an earnings conference call on Wednesday, May 4, 2011 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 (866) 510-4578 (from within the U.S.) or (706) 634-9537 (from outside of the U.S.) ten minutes prior to the scheduled start and referencing the "Aircastle First Quarter Earnings Call."
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 three months following the call. In addition to this earnings release an accompanying PowerPoint presentation has been posted to the Investor Relations section of Aircastle's website.
For those who are unable to listen to the live call, a replay will be available until 11:59 P.M. Eastern time on Saturday, June 4, 2011 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference pass code "60683997".
About Aircastle Limited
Aircastle Limited is a global company that acquires, leases and sells high-utility commercial jet aircraft to airlines throughout the world. As of March 31, 2011 Aircastle's aircraft portfolio consisted of 134 aircraft and had 63 lessees located in 34 countries.
Safe Harbor
Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but 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 Net Income and Adjusted Net Income plus Depreciation and Amortization 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 management's current expectations and beliefs 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 Limited can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle Limited's expectations include, but are not limited to, significant capital markets disruption and volatility, which may adversely affect our continued ability to obtain additional capital to finance our working capital needs; volatility in the value of our aircraft or in appraisals thereof, which may, among other things, result in increased principal payments under our term financings and reduce our cash flow available for investment or dividends; general economic conditions and business conditions affecting demand for aircraft and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and/or reduced yields, operational disruptions or unavailability of capital caused by political unrest in North Africa, the Middle East or elsewhere, and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases; termination payments on our interest rate hedges; and other risks detailed from time to time in Aircastle Limited's filings with the SEC, including "Risk Factors" as previously disclosed in Aircastle's 2010 Annual Report on Form 10-K, and in our other filings with the SEC, press releases and other communications. 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 press release. Aircastle Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
Aircastle Limited and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except share data) (Unaudited) | |||
December 31, | March 31, | ||
2010 | 2011 | ||
(Unaudited) | |||
ASSETS | |||
Cash and cash equivalents | $ 239,957 | $ 240,275 | |
Accounts receivable | 1,815 | 1,447 | |
Restricted cash and cash equivalents | 191,052 | 191,361 | |
Restricted liquidity facility collateral | 75,000 | 71,000 | |
Flight equipment held for lease, net of accumulated depreciation of $785,490 and $835,642 | 4,065,780 | 4,120,309 | |
Aircraft purchase deposits and progress payments | 219,898 | 186,009 | |
Other assets | 65,557 | 72,300 | |
Total assets | $4,859,059 | $4,882,701 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
LIABILITIES | |||
Borrowings from secured and unsecured financings (including borrowings of ACS Ireland VIEs of $314,877 and $310,573, respectively | $2,707,958 | $2,748,906 | |
Accounts payable, accrued expenses and other liabilities | 76,470 | 63,847 | |
Dividends payable | 7,964 | 7,857 | |
Lease rentals received in advance | 43,790 | 38,955 | |
Liquidity facility | 75,000 | 71,000 | |
Security deposits | 83,241 | 82,391 | |
Maintenance payments | 342,333 | 327,994 | |
Fair value of derivative liabilities | 179,585 | 155,363 | |
Total liabilities | 3,516,341 | 3,496,313 | |
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, 79,640,285 shares issued and outstanding at December 31, 2010; and 78,568,761 shares issued and outstanding at March 31, 2011 | 796 | 783 | |
Additional paid-in capital | 1,485,841 | 1,468,401 | |
Retained earnings | 104,301 | 139,121 | |
Accumulated other comprehensive loss | (248,220) | (221,917) | |
Total shareholders' equity | 1,342,718 | 1,386,388 | |
Total liabilities and shareholders' equity | $4,859,059 | $4,882,701 | |
Aircastle Limited and Subsidiaries Consolidated Statements of Income (Dollars in thousands, except per share amounts) (Unaudited) | |||
Three Months Ended March 31, | |||
2010 | 2011 | ||
Revenues: | |||
Lease rental revenue | $130,122 | $141,116 | |
Amortization of net lease discounts and lease incentives | (4,845) | (3,102) | |
Maintenance revenue | 5,254 | 16,844 | |
Total lease rentals | 130,531 | 154,858 | |
Other revenue | 30 | 3,056 | |
Total revenues | 130,561 | 157,914 | |
Expenses: | |||
Depreciation | 54,145 | 59,591 | |
Interest, net | 40,959 | 45,619 | |
Selling, general and administrative (including non-cash share based payment expense of $1,782, and $1,895, respectively) | 11,673 | 12,531 | |
Maintenance and other costs | 2,200 | 3,530 | |
Total expenses | 108,977 | 121,271 | |
Other income (expense): | |||
Gain on sale of flight equipment | — | 9,662 | |
Other | (370) | (359) | |
Total other income (expense) | (370) | 9,303 | |
Income from continuing operations before income taxes | 21,214 | 45,946 | |
Income tax provision | 2,335 | 3,269 | |
Net income | $ 18,879 | $ 42,677 | |
Earnings per common share - Basic | $ 0.24 | $ 0.54 | |
Earnings per common share - Diluted | $ 0.24 | $ 0.54 | |
Dividends declared per share | $ 0.10 | $ 0.10 | |
Aircastle Limited and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) | |||
Three Months Ended March 31, | |||
2010 | 2011 | ||
Cash flows from operating activities: | |||
Net income | $ 18,879 | $ 42,677 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation | 54,145 | 59,591 | |
Amortization of deferred financing costs | 2,804 | 3,528 | |
Amortization of net lease discounts and lease incentives | 4,845 | 3,102 | |
Deferred income taxes | 1,234 | 1,853 | |
Non-cash share based payment expense | 1,782 | 1,895 | |
Cash flow hedges reclassified into earnings | 2,304 | 2,835 | |
Ineffective portion of cash flow hedges | 866 | (475) | |
Security deposits and maintenance payments included in earnings | (267) | (18,534) | |
Gain on sale of flight equipment | — | (9,662) | |
Other | 370 | (57) | |
Changes in certain assets and liabilities: | |||
Accounts receivable | (346) | 1,288 | |
Restricted cash and cash equivalents | (22,185) | (309) | |
Other assets | (946) | (731) | |
Accounts payable, accrued expenses and other liabilities | (9,309) | (17,416) | |
Lease rentals received in advance | (2,464) | (5,381) | |
Net cash provided by operating activities | 51,712 | 64,204 | |
Cash flows from investing activities: | |||
Acquisition and improvement of flight equipment and lease incentives | (10,136) | (110,410) | |
Proceeds from sale of flight equipment | — | 75,200 | |
Aircraft purchase deposits and progress payments | (39,551) | (36,630) | |
Net cash used in investing activities | (49,687) | (71,840) | |
Cash flows from financing activities: | |||
Repurchase of shares from directors and employees | (926) | (16,367) | |
Proceeds from term debt financings | — | 157,161 | |
Securitization and term debt financing repayments | (37,929) | (116,340) | |
Deferred financing costs | (106) | (7,346) | |
Restricted secured liquidity facility collateral | 1,000 | 4,000 | |
Secured liquidity facility collateral | (1,000) | (4,000) | |
Security deposits received | 2,413 | 7,009 | |
Security deposits returned | (3,868) | (5,312) | |
Maintenance payments received | 31,186 | 27,487 | |
Maintenance payments returned | (5,906) | (30,374) | |
Dividends paid | (7,955) | (7,964) | |
Net cash (used in) provided by financing activities | (23,091) | 7,954 | |
Net increase (decrease) in cash and cash equivalents | (21,066) | 318 | |
Cash and cash equivalents at beginning of period | 142,666 | 239,957 | |
Cash and cash equivalents at end of period | $121,600 | $240,275 | |
Aircastle Limited and Subsidiaries Supplemental Financial Information (Amount in thousands, except per share amounts) (Unaudited) | |||||
Three Months Ended March 31, | |||||
2010 | 2010 | ||||
Revenues | $130,561 | $157,914 | |||
EBITDA | $121,163 | $154,258 | |||
Adjusted net income | $ 20,563 | $ 32,899 | |||
Adjusted net income allocable to common shares | $ 20,243 | $ 32,522 | |||
Per common share - Basic | $ 0.26 | $ 0.41 | |||
Per common share - Diluted | $ 0.26 | $ 0.41 | |||
Adjusted net income plus depreciation and amortization | $ 79,553 | $ 95,592 | |||
Adjusted net income plus depreciation and amortization allocable to common shares | $ 78,317 | $ 94,496 | |||
Per common share - Basic | $ 1.00 | $ 1.20 | |||
Per common share - Diluted | $ 1.00 | $ 1.20 | |||
Basic common shares outstanding | 78,416 | 78,786 | |||
Diluted common shares outstanding | 78,416 | 78,786 | |||
Refer to the selected financial 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 Reconciliation (Dollars in thousands) (Unaudited) | |||
Three Months Ended March 31, | |||
2010 | 2011 | ||
Net income | $ 18,879 | $ 42,677 | |
Depreciation | 54,145 | 59,591 | |
Amortization of net lease discounts and lease incentives | 4,845 | 3,102 | |
Interest, net | 40,959 | 45,619 | |
Income tax provision | 2,335 | 3,269 | |
EBITDA | $121,163 | $154,258 | |
We define EBITDA as income 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-GAAP measure is helpful in identifying trends in our performance. Using EBITDA assists us in comparing our operating performance on a consistent basis by removing the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results.
Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures Adjusted Net Income plus Depreciation and Amortization Reconciliation (Dollars in thousands) (Unaudited) | |||
Three Months Ended March 31, | |||
2010 | 2011 | ||
Net income | $18,879 | $42,677 | |
Ineffective portion of cash flow hedges(1) | 1,314 | (475) | |
Mark to market of interest rate derivative contracts(2) | 370 | 359 | |
Gain on sale of flight equipment(2) | — | (9,662) | |
Adjusted net income | 20,563 | 32,899 | |
Depreciation | 54,145 | 59,951 | |
Amortization of net lease discounts and lease incentives | 4,845 | 3,102 | |
Adjusted net income plus depreciation and amortization | $79,553 | $95,592 | |
__________________ (1) Included in Interest, net (2) Included in Other income (expense) | |||
Management believes that Adjusted Net Income ("ANI") and Adjusted Net Income plus Depreciation and Amortization ("ANIDA"), when viewed in conjunction with the Company's results under 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 elements related to interest rate derivative accounting as well as gains/(losses) related to flight equipment and debt investments. Additionally, management believes that ANIDA provides investors with an additional metric to enhance their understanding of the factors and trends affecting our ongoing cash earnings, from which capital investments are made, debt is serviced and dividends are paid. However, ANI and ANIDA are not measures of financial performance or liquidity under GAAP and, accordingly, should not be considered as alternatives to net income (loss) or cash flow from operating activities as indicators of operating performance or liquidity.
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 March 31, 2011 | |||||
Shares | Percent(2) | ||||
Weighted average shares | |||||
Common shares outstanding – Basic | 78,786 | 98.85 % | |||
Unvested restricted common shares outstanding | 913 | 1.15 % | |||
Total weighted average shares outstanding | 79,699 | 100.00 % | |||
Common shares outstanding – Basic | 78,786 | 100.00 % | |||
Effect of dilutive shares(1) | — | — | |||
Common shares outstanding – Diluted | 78,786 | 100.00 % | |||
Net income allocation | |||||
Net income | $42,677 | 100.00 % | |||
Distributed and undistributed earnings allocated to unvested restricted shares | (489) | (1.15)% | |||
Earnings available to common shares | $42,188 | 98.85 % | |||
Adjusted net income allocation | |||||
Adjusted net income | $32,899 | 100.00 % | |||
Amounts allocated to unvested restricted shares | (377) | (1.15)% | |||
Amounts allocated to common shares | $32,522 | 98.85 % | |||
Adjusted net income plus depreciation and amortization allocation | |||||
Adjusted net income plus depreciation and amortization | $95,592 | 100.00 % | |||
Amounts allocated to unvested restricted shares | (1,096) | (1.15)% | |||
Amounts allocated to common shares | $94,496 | 98.85 % | |||
(1) The Company had no dilutive common share equivalents for the periods presented. (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 March 31, 2010 | |||||
Shares | Percent(2) | ||||
Weighted average shares | |||||
Common shares outstanding – Basic | 78,416 | 98.45 % | |||
Unvested restricted common shares outstanding | 1,238 | 1.55 % | |||
Total weighted average shares outstanding | 79,654 | 100.00 % | |||
Common shares outstanding – Basic | 78,416 | 100.00 % | |||
Effect of dilutive shares(1) | — | — | |||
Common shares outstanding – Diluted | 78,416 | 100.00 % | |||
Net income allocation | |||||
Net income | $18,879 | 100.00 % | |||
Distributed and undistributed earnings allocated to unvested restricted shares | (293) | (1.55)% | |||
Earnings available to common shares | $18,586 | 98.45 % | |||
Adjusted net income allocation | |||||
Adjusted net income | $20,563 | 100.00 % | |||
Amounts allocated to unvested restricted shares | (320) | (1.55)% | |||
Amounts allocated to common shares | $20,243 | 98.45 % | |||
Adjusted net income plus depreciation and amortization allocation | |||||
Adjusted net income plus depreciation and amortization | $79,553 | 100.00 % | |||
Amounts allocated to unvested restricted shares | (1,236) | (1.55)% | |||
Amounts allocated to common shares | $78,317 | 98.45 % | |||
(1) The Company had no dilutive common share equivalents for the periods presented. (2) Percentages rounded to two decimal places. | |||||
Contact:
Michael Inglese – Chief Financial Officer
Tel: +1-203-504-1063
The IGB Group
Leon Berman
Tel: +1-212-477-8438
[email protected]
SOURCE Aircastle Limited
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