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Press release from PR Newswire

Aircastle Announces First Quarter Results

Wednesday, May 04, 2011

Aircastle Announces First Quarter Results07:30 EDT Wednesday, May 04, 2011Highlights - 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 shareSTAMFORD, 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."__________________(1) Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.First Quarter ResultsLease 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 AssetsIn 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 Aircraftas ofMarch 31,2011(A)113 Passenger Aircraft                                                                  69%21 Freighter Aircraft                                                                     31%Number of Lessees                                                                     63Number of Countries                                                                     34Weighted Average Remaining Lease Term (years)(B)                                           4.7Percentage 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 UpdateIn 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 ProgramAs 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 CallIn 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 LimitedAircastle 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 HarborCertain 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 SubsidiariesConsolidated Balance Sheets(Dollars in thousands, except share data)(Unaudited)December 31,March 31,20102011(Unaudited)ASSETSCash and cash equivalents                                                         $  239,957$  240,275Accounts receivable                                                             1,8151,447Restricted cash and cash equivalents                                                191,052191,361Restricted liquidity facility collateral                                                   75,00071,000Flight equipment held for lease, net of accumulated depreciation of $785,490 and $835,642                                                                  4,065,7804,120,309Aircraft purchase deposits and progress payments                                     219,898186,009Other assets                                                                    65,55772,300  Total assets                                                                   $4,859,059$4,882,701LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIESBorrowings from secured and unsecured financings (including borrowings of ACS Ireland VIEs of $314,877 and $310,573, respectively                               $2,707,958$2,748,906Accounts payable, accrued expenses and other liabilities                                 76,47063,847Dividends payable                                                               7,9647,857Lease rentals received in advance                                                   43,79038,955Liquidity facility                                                                  75,00071,000Security deposits                                                                 83,24182,391Maintenance payments                                                            342,333327,994Fair value of derivative liabilities                                                     179,585155,363  Total liabilities                                                                  3,516,3413,496,313Commitments and ContingenciesSHAREHOLDERS' EQUITYPreference 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, 2011796783Additional paid-in capital                                                           1,485,8411,468,401Retained earnings                                                                104,301139,121Accumulated other comprehensive loss                                               (248,220)(221,917)  Total shareholders' equity                                                        1,342,7181,386,388  Total liabilities and shareholders' equity                                             $4,859,059$4,882,701Aircastle Limited and SubsidiariesConsolidated Statements of Income(Dollars in thousands, except per share amounts)(Unaudited)Three Months EndedMarch 31,20102011Revenues:Lease rental revenue                                                                $130,122$141,116Amortization of net lease discounts and lease incentives                                   (4,845)(3,102)Maintenance revenue                                                               5,25416,844    Total lease rentals                                                                 130,531154,858Other revenue                                                                     303,056  Total revenues                                                                   130,561157,914Expenses:Depreciation                                                                       54,14559,591Interest, net                                                                       40,95945,619Selling, general and administrative (including non-cash share based payment expense    of $1,782, and $1,895, respectively)                                                  11,67312,531Maintenance and other costs                                                         2,2003,530 Total expenses                                                                   108,977121,271Other income (expense):Gain on sale of flight equipment                                                        ?9,662Other                                                                             (370)(359)  Total other income (expense)                                                         (370)9,303Income from continuing operations before income taxes                                     21,21445,946Income tax provision                                                                 2,3353,269Net income                                                                         $ 18,879$ 42,677Earnings per common share - Basic                                                     $     0.24$     0.54Earnings per common share - Diluted                                                    $     0.24$     0.54Dividends declared per share                                                          $     0.10$     0.10Aircastle Limited and SubsidiariesConsolidated Statements of Cash Flows(Dollars in thousands)(Unaudited)Three Months EndedMarch 31,20102011Cash flows from operating activities:Net income$  18,879$   42,677Adjustments to reconcile net income to net cash provided by operating activities:Depreciation                                                                    54,14559,591Amortization of deferred financing costs                                             2,8043,528Amortization of net lease discounts and lease incentives                                 4,8453,102Deferred income taxes                                                            1,2341,853Non-cash share based payment expense                                             1,7821,895Cash flow hedges reclassified into earnings                                           2,3042,835Ineffective 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)1,288Restricted 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                                         51,71264,204Cash flows from investing activities:Acquisition and improvement of flight equipment and lease incentives                         (10,136)(110,410)Proceeds from sale of flight equipment                                                 ?75,200Aircraft 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                                                   ?157,161Securitization and term debt financing repayments                                        (37,929)(116,340)Deferred financing costs                                                            (106)(7,346)Restricted secured liquidity facility collateral                                             1,0004,000Secured liquidity facility collateral                                                     (1,000)(4,000)Security deposits received                                                           2,4137,009Security deposits returned                                                           (3,868)(5,312)Maintenance payments received                                                      31,18627,487Maintenance payments returned                                                      (5,906)(30,374)Dividends paid                                                                     (7,955)(7,964)Net cash (used in) provided by financing activities                                  (23,091)7,954Net increase (decrease) in cash and cash equivalents                                 (21,066)318Cash and cash equivalents at beginning of period                                           142,666239,957Cash and cash equivalents at end of period                                               $121,600$240,275Aircastle Limited and SubsidiariesSupplemental Financial Information(Amount in thousands, except per share amounts)(Unaudited)Three Months EndedMarch 31,20102010Revenues$130,561$157,914EBITDA$121,163$154,258Adjusted net income$  20,563$  32,899Adjusted net income allocable to common shares$  20,243$  32,522Per common share - Basic$      0.26$      0.41Per common share - Diluted$      0.26$      0.41Adjusted net income plus depreciation and amortization$  79,553$  95,592Adjusted net income plus depreciation and amortization allocable to common shares$  78,317$  94,496Per common share - Basic$      1.00$      1.20Per common share - Diluted$      1.00$      1.20Basic common shares outstanding78,41678,786Diluted common shares outstanding78,41678,786Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP information.Aircastle Limited and SubsidiariesReconciliation of GAAP to Non-GAAP MeasuresEBITDA Reconciliation(Dollars in thousands)(Unaudited)Three Months Ended March 31,20102011Net income                                                $  18,879$  42,677Depreciation                                               54,14559,591Amortization of net lease discounts and lease incentives            4,8453,102Interest, net                                               40,95945,619Income tax provision                                         2,3353,269EBITDA                                                   $121,163$154,258We 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 SubsidiariesReconciliation of GAAP to Non-GAAP MeasuresAdjusted Net Income plus Depreciation and Amortization Reconciliation(Dollars in thousands)(Unaudited)Three Months Ended March 31,20102011Net income                                                       $18,879$42,677   Ineffective portion of cash flow hedges(1)                            1,314(475)   Mark to market of interest rate derivative contracts(2)                   370359   Gain on sale of flight equipment(2)                                   ?(9,662)Adjusted net income                                               20,56332,899   Depreciation                                                    54,14559,951   Amortization of net lease discounts and lease incentives                 4,8453,102Adjusted 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 SubsidiariesReconciliation of GAAP to Non-GAAP MeasuresReconciliation of Net Income Allocable to Common Shares(In thousands)(Unaudited)Three Months EndedMarch 31, 2011SharesPercent(2)Weighted average sharesCommon shares outstanding ? Basic                              78,78698.85 %Unvested restricted common shares outstanding                     9131.15 %Total weighted average shares outstanding                         79,699100.00 %Common shares outstanding ? Basic                              78,786100.00 %Effect of dilutive shares(1)                                      ??Common shares outstanding ? Diluted                             78,786100.00 %Net income allocationNet income                                                  $42,677100.00 %Distributed and undistributed earnings allocated to unvested restricted shares(489)(1.15)%Earnings available to common shares                             $42,18898.85 %Adjusted net income allocationAdjusted net income                                           $32,899100.00 %Amounts allocated to unvested restricted shares                     (377)(1.15)%Amounts allocated to common shares                             $32,52298.85 %Adjusted net income plus depreciation and amortization allocationAdjusted net income plus depreciation and amortization               $95,592100.00 %Amounts allocated to unvested restricted shares                    (1,096)(1.15)%Amounts allocated to common shares                             $94,49698.85 %(1) The Company had no dilutive common share equivalents for the periods presented.(2) Percentages rounded to two decimal places.Aircastle Limited and SubsidiariesReconciliation of GAAP to Non-GAAP MeasuresReconciliation of Net Income Allocable to Common Shares(In thousands)(Unaudited)Three Months EndedMarch 31, 2010SharesPercent(2)Weighted average sharesCommon shares outstanding ? Basic                               78,41698.45 %Unvested restricted common shares outstanding                      1,2381.55 %Total weighted average shares outstanding                          79,654100.00 %Common shares outstanding ? Basic                               78,416100.00 %Effect of dilutive shares(1)                                        ??Common shares outstanding ? Diluted                               78,416100.00 %Net income allocationNet income                                                   $18,879100.00 %Distributed and undistributed earnings allocated to unvested restricted shares(293)     (1.55)%Earnings available to common shares                             $18,586    98.45 %Adjusted net income allocationAdjusted net income                                           $20,563100.00 %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 allocationAdjusted net income plus depreciation and amortization               $79,553100.00 %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 OfficerTel: +1-203-504-1063The IGB GroupLeon BermanTel: +1-212-477-8438lberman@igbir.comSOURCE Aircastle Limited