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Press release from PR Newswire

Aircastle Announces First Quarter 2012 Results

Thursday, May 03, 2012

Aircastle Announces First Quarter 2012 Results07:30 EDT Thursday, May 03, 2012Board Declares Second Quarter Dividend on Common Shares of $0.15 Highlights -- Lease rental revenue of $152.2 million and EBITDA(1) of $150.6 million -- Net income of $32.6 million, or $0.45 per diluted common share -- Adjusted net income(1) of $32.4 million, or $0.45 per diluted common share -- Fleet utilization of 99% with an aircraft portfolio yield of 14% -- Invested $170 million to date in 2012 and signed commitments for an additional $225 million in aircraft investments -- Issued $800 million of unsecured notes at par and repaid Term Financing No. 1 -- 24th consecutive quarterly dividend declared by Aircastle's Board of DirectorsSTAMFORD, Conn., May 3, 2012 /PRNewswire/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter 2012 net income of $32.6 million, or $0.45 per diluted common share, and adjusted net income of $32.4 million, or $0.45 per diluted common share.  The first quarter results included lease rental revenues of $152.2 million versus $141.1 million in the first quarter of 2011.  Commenting on the results, Ron Wainshal, Aircastle's CEO, stated: "Our first quarter financial results reflect the earnings power of $1 billion in investments we made last year as well as strong portfolio performance.   We see an increasingly attractive investment environment in 2012 and have been able to close or secure $400 million in acquisitions to date and believe these will further enhance our profitability.  Moreover, our new investment pipeline is robust."  Wainshal added, "Aircastle also recently completed the sale of $800 million of unsecured notes.  This financing strengthened the Company's capital structure, extending our debt maturity schedule and freeing up cash flow for high return investments, while also providing additional growth capital.  With no major capital commitments, our unrestricted cash coupled with solid cash flow positions us well to continue to execute our disciplined business plan and create value for our shareholders."  (1) Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers.First Quarter Results Lease rental revenues for the first quarter were $152.2 million, up $11.1 million or 8% year over year, due primarily to the impact of aircraft acquisitions of $26.1 million, partially offset by lower revenues from aircraft sold of $9.0 million and lease extensions, transitions and terminations of $6.0 million.Total revenues for the first quarter were $164.9 million, an increase of $7.0 million, or 4% versus the previous year, and reflects $11.1 million of higher lease rental revenues and $1.5 million of lower amortization of net lease discounts resulting from lower than expected incentives paid out to our lessees.  These increases were partially offset by lower maintenance revenues of $4.2 million, reflecting higher revenues from unscheduled transitions in the first quarter of 2011 of $13.0 million versus $9.9 million in the current period.EBITDA for the first quarter was $150.6 million, down $3.6 million or 2% from the first quarter of 2011, as higher lease rental revenues of $11.1 million were offset by lower maintenance and other revenues totaling $5.6 million, and lower gains from the sale of aircraft of $9.5 million.   Net income for the first quarter was $32.6 million, down $10.1 million, or 24% as the $7.0 million increase in total revenues was offset by higher depreciation of $4.9 million, higher interest, net of $3.4 million and lower gains on the sale of flight equipment of $9.5 million.  Adjusted net income for the quarter was $32.4 million, down $12.1 million year over year, and reflects higher total revenues of $7.0 million offset by higher depreciation of $4.9 million, higher adjusted interest expense of $4.4 million and lower gains on sale of flight equipment of $9.5 million.Aviation AssetsThus far in 2012, we acquired three aircraft including the last aircraft from our A330 program which we purchased in early April and placed on lease with Virgin Australia.  In addition, we recently entered into commitments to acquire five additional aircraft, which we expect to close during the second and third quarters of 2012. As of March 31, 2012, Aircastle owned 145 aircraft having a net book value of $4.4 billion. Owned Aircraftas ofMarch 31,2012(A)120 Passenger Aircraft69%25 Freighter Aircraft31%Number of Lessees65Number of Countries34Weighted Average Remaining Lease Term (years)(B)4.7Weighted Average Fleet Utilization during the three months ended March 31, 2012(C)99%Portfolio Yield for the First Quarter 2012(D)14%(A)    Percentages calculated using net book value as of March 31, 2012.(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.(D)    Lease rental revenue for the period as a percent of average net book value of flight equipment held for lease for the period; quarterly information is annualized.Financing UpdateIn April 2012, we closed an $800 million unsecured notes offering, consisting of $500 million of 6.75% senior notes due 2017 and $300 million of 7.625% senior notes due in 2020, both of which were issued at par.  Aircastle used the net proceeds from the offering to repay outstanding indebtedness under its Term Financing No. 1, with the balance used for general corporate purposes, including the purchase of aviation assets.Also in April, we delivered a new Airbus A330-200 aircraft on long-term lease to Virgin Australia Airlines, one of Australia's leading carriers.  Debt financing for this purchase was arranged and provided by The Bank of Tokyo ? Mitsubishi UFJ, Ltd. (BTMU) and supported by a guarantee from Compagnie Francaise d'Assurance pour le Commerce Exterieur (COFACE), the French export credit agency. This debt bears interest at a fixed rate of 3.81% per annum and will be repaid over twelve years.Common DividendOn May 2, 2012, Aircastle's Board of Directors declared a second quarter 2012 cash dividend on its common shares of $0.15 per share, payable on June 15, 2012 to shareholders of record on May 31, 2012.  Conference CallIn connection with this earnings release, management will host an earnings conference call on Thursday, May 3, 2012 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) 487-0361 (from within the U.S. and Canada) or (719) 325-2122 (from outside of the U.S. and Canada) 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 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 11:59 P.M. Eastern time on Thursday, May 31, 2012 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 "4711325."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, 2012, Aircastle's aircraft portfolio consisted of 145 aircraft and had 65 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 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 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, and the significant contraction in the availability of bank financing 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, uncertainties in the Eurozone arising from the sovereign debt crisis 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 Securities and Exchange Commission ("SEC"), including "Risk Factors" as previously disclosed in Aircastle's 2011 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.Contact: Frank Constantinople, SVP Investor RelationsTel: +1-203-504-1063fconstantinople@aircastle.com  The IGB GroupLeon BermanTel: +1-212-477-8438lberman@igbir.com  Aircastle Limited and SubsidiariesConsolidated Balance Sheets(Dollars in thousands, except share data)December 31,March 31,20112012(Unaudited)ASSETSCash and cash equivalents$  295,522$   256,670Accounts receivable3,6463,584Restricted cash and cash equivalents247,452185,306Restricted liquidity facility collateral110,000107,300Flight equipment held for lease, net of accumulated depreciation of $981,932and $1,034,7644,387,9864,386,010Aircraft purchase deposits and progress payments89,80678,102Other assets90,047129,566  Total assets$5,224,459$5,146,538LIABILITIES AND SHAREHOLDERS' EQUITYLIABILITIESBorrowings from secured and unsecured financings (including borrowings ofACS Ireland VIEs of $295,952 and $291,042, respectively$2,986,516$2,923,230Accounts payable, accrued expenses and other liabilities105,43286,996Lease rentals received in advance46,10545,565Liquidity facility110,000107,300Security deposits83,03780,421Maintenance payments347,122332,959Fair value of derivative liabilities141,639123,461  Total liabilities3,819,8513,699,932Commitments 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, 72,258,472 shares   issued and outstanding at December 31, 2011; and 72,272,366 shares issued and   outstanding at March 31, 2012723723Additional paid-in capital1,400,0901,399,797Retained earnings191,476213,213Accumulated other comprehensive loss(187,681)(167,127)  Total shareholders' equity1,404,6081,446,606  Total liabilities and shareholders' equity$5,224,459$5,146,538 Aircastle Limited and SubsidiariesConsolidated Statements of Income and Comprehensive Income (Dollars in thousands, except per share amounts) (Unaudited)Three Months EndedMarch 31,20112012Revenues:Lease rental revenue$141,116$152,242Amortization of lease premiums, discounts and lease incentives(3,102)(1,598)Maintenance revenue16,84412,647    Total lease rentals154,858163,291Other revenue3,0561,624     Total revenues          157,914164,915Expenses:Depreciation59,59164,514Interest, net45,61948,981Selling, general and administrative (including non-cash share based payment expense    of $1,895, and $1,176, respectively)12,53113,198Maintenance and other costs3,5302,774 Total expenses121,271129,467Other income (expense):Gain on sale of flight equipment9,662196Other(359)(113)  Total other income (expense)9,30383Income from continuing operations before income taxes45,94635,531Income tax provision3,2692,929Net income$ 42,677$ 32,602Earnings per common share ? Basic:   Net income per share$     0.54$     0.45Earnings per common share ? Diluted:   Net income per share$     0.54$     0.45Dividends declared per share$     0.10$     0.15 Three Months EndedMarch 31,20112012Net income$42,677$32,602Other comprehensive income, net of tax:Net change in fair value of derivatives, net of tax expense of $400 and $289, respectively23,46816,483Net derivative loss reclassified into earnings2,8354,071Other comprehensive income26,30320,554Total comprehensive income$68,980$53,156 Aircastle Limited and SubsidiariesConsolidated Statements of Cash Flows (Dollars in thousands) (Unaudited)Three Months EndedMarch 31,20112012Cash flows from operating activities:Net income$   42,677$   32,602Adjustments to reconcile net income to net cash provided by operating activities:Depreciation59,59164,514Amortization of deferred financing costs3,5282,716Amortization of net lease discounts and lease incentives3,1021,598Deferred income taxes1,8531,377Non-cash share based payment expense1,8951,176Cash flow hedges reclassified into earnings2,8354,071Ineffective portion of cash flow hedges(475)(1,519)Security deposits and maintenance payments included in earnings(18,534)(12,722)Gain on sale of flight equipment(9,662)(196)Other(57)57Changes in certain assets and liabilities:Accounts receivable1,288(3,396)Restricted cash and cash equivalents related to operating activities(1,006)700Other assets(731)(1,886)Accounts payable, accrued expenses and other liabilities17,416)15,338)Lease rentals received in advance(5,381)(788)Net cash provided by operating activities63,50772,966Cash flows from investing activities:Acquisition and improvement of flight equipment and lease incentives(110,410)(48,449)Proceeds from sale of flight equipment75,2002,500Restricted cash and cash equivalents related to sale of flight equipment?35,762Purchase of debt investment?(43,626)Aircraft purchase deposits and progress payments(36,630)(16,518)Other?(40)Net cash used in investing activities(71,840)(70,371)Cash flows from financing activities:Repurchase of shares(16,367)(1,469)Proceeds from term debt financings157,161?Securitization and term debt financing repayments(116,340)(63,257)Deferred financing costs(7,346)(271)Restricted secured liquidity facility collateral4,0002,700Secured liquidity facility collateral(4,000)(2,700)Restricted cash and cash equivalents related to security deposits and maintenance payments69725,684Security deposits received7,0091,985Security deposits returned(5,312)(1,495)Maintenance payments received27,48730,275Maintenance payments returned(30,374)(22,034)Dividends paid(7,964)(10,865)Net cash provided by (used in) financing activities8,651(41,447)Net increase (decrease) in cash and cash equivalents318(38,852)Cash and cash equivalents at beginning of period239,957295,522Cash and cash equivalents at end of period$240,275$256,670  Aircastle Limited and SubsidiariesSupplemental Financial Information(Amount in thousands, except per share amounts)(Unaudited)Three Months EndedMarch 31,20112012Revenues$157,914$164,915EBITDA$154,258$150,624Adjusted net income$  44,456$  32,372Adjusted net income allocable to common shares$  43,946$  32,090Per common share - Basic$      0.56$      0.45Per common share - Diluted$      0.56$      0.45Basic common shares outstanding78,78671,697Diluted common shares outstanding78,78671,697Refer to the selected 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 31,20112012Net income$  42,677$  32,602Depreciation59,59164,514Amortization of net lease discounts and lease incentives3,1021,598Interest, net45,61948,981Income tax provision3,2692,929EBITDA$154,258$150,624We 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 Reconciliation(Dollars in thousands)(Unaudited)Three Months EndedMarch 31,20112012(Dollars in thousands)Net income$42,677$32,602   Ineffective portion and termination of hedges(1)(475)(1,519)   Mark to market of interest rate derivative contracts(2)359113   Stock compensation expense(3)1,8951,176Adjusted net income$44,456$32,372 (1)Included in Interest, net.(2)Included in Other income (expense).(3)Included in Selling, general and administrative expenses. Beginning with this quarter ended March 31, 2012, management, to be more consistent with reporting practices of peer aircraft leasing companies, has revised the calculation of Adjusted Net Income ("ANI") to no longer exclude gains (losses) on sales of assets, and to exclude non-cash share based payment expense in the calculation of ANI. Beginning with our Quarterly Report for the quarter ended June 30, 2012, we will also exclude Term Financing No. 1 hedge loss amortization charges which will be reported in Interest, net on our consolidated statement of income from the calculation of ANI. The calculation of ANI for the three months ended March 31, 2011 has been revised to be comparable with the current period presentation. Management believes that ANI, 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 and non-cash share based compensation. However, ANI is not a measure 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, 2012SharesPercent(2)Weighted average sharesCommon shares outstanding ? Basic71,69799.13 %Unvested restricted common shares outstanding6300.87 %Total weighted average shares outstanding72,327100.00 %Common shares outstanding ? Basic71,697100.00 %Effect of dilutive shares(1) ??Common shares outstanding ? Diluted71,697100.00 %Net income allocationNet income$32,602100.00 %Distributed and undistributed earnings allocated to unvested     restricted shares(284)(0.87)%Earnings available to common shares$32,31899.13 %Adjusted net income allocationAdjusted net income$32,372100.00 %Amounts allocated to unvested restricted shares(282)(0.87)%Amounts allocated to common shares$32,09099.13 %(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, 2011SharesPercent(2)Weighted average sharesCommon shares outstanding ? Basic78,78698.85 %Unvested restricted common shares outstanding9131.15 %Total weighted average shares outstanding79,699100.00 %Common shares outstanding ? Basic78,786100.00 %Effect of dilutive shares(1) ??Common shares outstanding ? Diluted78,786100.00 %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$44,456100.00 %Amounts allocated to unvested restricted shares(510)(1.15)%Amounts allocated to common shares$43,94698.85 %(1)    The Company had no dilutive common share equivalents for the periods presented.(2)    Percentages rounded to two decimal places.SOURCE Aircastle Limited