Aircastle Announces First Quarter 2010 Results
STAMFORD, Conn., May 5 /PRNewswire-FirstCall/ — Aircastle Limited (the “Company” or “Aircastle”) (NYSE: AYR) reported first quarter net income of $18.9 million or $0.24 per diluted common share, and adjusted net income of $20.6 million or $0.26 per diluted common share.
Commenting on the results, Ron Wainshal, Aircastle’s CEO, stated: “Our fleet of modern aircraft continues to perform well. We achieved 98% fleet utilization again in the first quarter of 2010, generating higher lease rental revenues and cash flow compared to last year. Our strong results allow us to focus on exciting investment opportunities we see today that take advantage of our capital structure, world class origination and servicing capabilities and market knowledge. We are well positioned to convert those opportunities into accretive growth for Aircastle shareholders.”
First quarter total revenues were $130.6 million, a decrease of $1.6 million from the first quarter 2009, and reflect higher lease rental revenue of $4.1 million offset by lower end of lease maintenance revenue of $1.3 million and higher non-cash lease incentive amortization of $3.7 million.
Lease rental revenue for the first quarter 2010 was $130.1 million, up 3.3% year over year and includes increases of $3.8 million from aircraft transitions, mainly from aircraft that were out of service during first quarter of 2009, and $3.8 million of revenue from 2009 aircraft acquisitions net of dispositions. These increases were partially offset by the impact of lease extensions and floating rate lease adjustments of $3.5 million.
EBITDA was $121.2 million, up $4.7 million from the first quarter of 2009, due to higher lease rental revenue of $4.1 million and lower maintenance and other costs of $3.6 million which resulted from higher costs incurred in the first quarter of 2009 for repossessed aircraft. These increases to EBITDA were partially offset by lower end of lease maintenance revenue of $1.3 million, higher selling general and administrative expenses of $0.6 million and higher mark to market expense on our undesignated hedges of $0.5 million.
Adjusted net income plus depreciation and amortization for the quarter was $79.6 million, up $5.8 million year over year, due primarily to higher lease rental revenue of $4.1 million, lower maintenance and other expenses of $3.6 million offset by lower end of lease maintenance revenue $1.3 million.
Adjusted net income for the quarter was $20.6 million, down $0.5 million year over year, and reflects lower total revenues of $1.6 million and higher depreciation expense of $2.6 million, partially offset by lower maintenance and other costs of $3.6 million.
Aviation Assets
As of March 31, 2010, Aircastle owned 129 aircraft having a net book value of $3.8 billion.
Owned
Aircraft
--------
as of
-----
March 31,
---------
2010(A)
-------
108 Passenger Aircraft 71%
21 Freighter Aircraft 29%
Number of Lessees 59
Number of Countries 33
Weighted Average Remaining Lease Term (years) 4.8
Percentage of Aircraft Leased Outside U.S. 91%
Percentage of "Latest Generation" Aircraft 88%
Weighted Average Fleet Utilization during Q1 2010 98%
(A) Percentages calculated using net book value.
Conference Call
In connection with this earnings release, management will host an earnings conference call on Wednesday, May 5, 2010 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 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 Wednesday, May 12, 2010 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode “67163459 .”
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, 2010 Aircastle’s aircraft portfolio consisted of 129 aircraft and had 59 lessees located in 33 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 and lease aircraft, raise capital, pay dividends, and increase revenues, earnings and EBITDA 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, prolonged capital markets disruption and volatility, which may adversely affect our continued ability to obtain additional capital to finance our working capital needs, our pre-delivery payment obligations and other aircraft acquisition commitments, our ability to extend or replace our existing financings, and the demand for and value of aircraft; our exposure to increased bank and counterparty risk caused by credit and capital markets disruptions; 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 caused by volcanic activity 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 2009 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)
December
31, March 31,
2009 2010
---- ----
(unaudited)
ASSETS
Cash and cash equivalents $142,666 $121,600
Accounts receivable 2,941 3,196
Restricted cash and cash equivalents 207,834 230,019
Restricted liquidity facility collateral 81,000 80,000
Flight equipment held for lease, net of
accumulated depreciation of $586,537 and
$640,544 3,812,970 3,771,806
Aircraft purchase deposits and progress
payments 141,144 176,034
Leasehold improvements, furnishings and
equipment, net of accumulated depreciation of
$2,455 and $2,556 802 701
Other assets 65,155 71,111
------ ------
Total assets $4,454,512 $4,454,467
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Borrowings from securitizations and term debt
financings (including borrowings of ACS
Ireland VIEs of $331,856 and $327,701,
respectively) $2,464,560 $2,426,631
Accounts payable, accrued expenses and other
liabilities 60,392 57,422
Dividends payable 7,955 7,951
Lease rentals received in advance 34,381 30,167
Liquidity facility 81,000 80,000
Security deposits 82,533 81,255
Maintenance payments 253,175 285,118
Fair value of derivative liabilities 179,279 189,196
------- -------
Total liabilities 3,163,275 3,157,740
--------- ---------
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, 79,550,421 shares issued
and outstanding at December 31, 2009; and
79,503,885 shares issued and outstanding at
March 31, 2010 796 795
Additional paid-in capital 1,479,995 1,480,852
Retained earnings 70,294 81,222
Accumulated other comprehensive loss (259,848) (266,142)
-------- --------
Total shareholders' equity 1,291,237 1,296,727
--------- ---------
Total liabilities and shareholders' equity $4,454,512 $4,454,467
========== ==========
Aircastle Limited and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2009 2010
---- ----
Revenues:
Lease rental revenue $125,994 $130,122
Amortization of net lease discounts and
lease incentives (1,117) (4,845)
Maintenance revenue 6,603 5,254
----- -----
Total lease rentals 131,480 130,531
Interest income 633 -
Other revenue 25 30
--- ---
Total revenues 132,138 130,561
------- -------
Expenses:
Depreciation 51,561 54,145
Interest, net 43,411 40,959
Selling, general and administrative
(including non-cash share based payment
expense of $1,658, and $1,782,
respectively) 11,095 11,673
Maintenance and other costs 5,776 2,200
----- -----
Total expenses 111,843 108,977
------- -------
Other income (expense) 92 (370)
--- ----
Total other income (expense) 92 (370)
--- ----
Income from continuing operations before
income taxes 20,387 21,214
Income tax provision 1,916 2,335
----- -----
Net income $18,471 $18,879
======= =======
Earnings per common share - Basic $0.23 $0.24
===== =====
Earnings per common share - Diluted $0.23 $0.24
===== =====
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,
---------
2009 2010
---- ----
Cash flows from operating activities:
Net income $18,471 $18,879
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 51,561 54,145
Amortization of deferred financing costs 2,533 2,804
Amortization of net lease discounts and lease
incentives 1,117 4,845
Deferred income taxes 1,599 1,234
Accretion of purchase discounts on debt
investments (158) -
Non-cash share based payment expense 1,658 1,782
Cash flow hedges reclassified into earnings 4,949 2,304
Ineffective portion of cash flow hedges (129) 866
Security deposits and maintenance payments
included in earnings (3,451) (267)
Other (518) 370
Changes in certain assets and liabilities:
Accounts receivable (171) (346)
Restricted cash and cash equivalents 5,086 (22,185)
Other assets (1,548) (946)
Accounts payable, accrued expenses and other
liabilities (9,951) (9,309)
Lease rentals received in advance (1,674) (2,464)
------ ------
Net cash provided by operating activities 69,374 51,712
------ ------
Cash flows from investing activities:
Improvement of flight equipment and lease
incentives (17,268) (10,136)
Aircraft purchase deposits and progress payments (7,906) (39,551)
Principal repayments on debt investments 807 -
Leasehold improvements, furnishings and equipment (82) -
--- ---
Net cash used in investing activities (24,449) (49,687)
------- -------
Cash flows from financing activities:
Repurchase of shares from directors and employees (247) (926)
Securitization and term debt financing repayments (30,131) (37,929)
Deferred financing costs - (106)
Restricted secured liquidity facility collateral - 1,000
Secured liquidity facility collateral - (1,000)
Security deposits received 6,950 2,413
Security deposits returned (490) (3,868)
Maintenance payments received 15,584 31,186
Maintenance payments returned (7,277) (5,906)
Dividends paid (7,862) (7,955)
------ ------
Net cash used in financing activities (23,473) (23,091)
------- -------
Net increase (decrease) in cash and cash
equivalents 21,452 (21,066)
Cash and cash equivalents at beginning of period 80,947 142,666
------ -------
Cash and cash equivalents at end of period $102,399 $121,600
======== ========
Aircastle Limited and Subsidiaries
Supplemental Financial Information
(Amount in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2009 2010
---- ----
Total Revenues $132,138 $130,561
EBITDA $116,476 $121,163
Adjusted net income $21,125 $20,563
Adjusted net income allocable to common
shares $20,783 $20,243
Per common share - Basic $0.27 $0.26
Per common share - Diluted $0.27 $0.26
Adjusted net income plus depreciation and
amortization $73,803 $79,553
Adjusted net income plus depreciation and
amortization allocable to common shares $72,609 $78,317
Per common share - Basic $0.93 $1.00
Per common share - Diluted $0.93 $1.00
Basic common shares outstanding 77,941 78,416
Diluted common shares outstanding 77,941 78,416
Aircastle Limited and Subsidiaries
Supplemental Financial Information
(Amount in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2009 2010
---- ----
Total Revenues $132,138 $130,561
EBITDA $116,476 $121,163
Adjusted net income $21,125 $20,563
Adjusted net income allocable to common
shares $20,783 $20,243
Per common share - Basic $0.27 $0.26
Per common share - Diluted $0.27 $0.26
Adjusted net income plus depreciation and
amortization $73,803 $79,553
Adjusted net income plus depreciation and
amortization allocable to common shares $72,609 $78,317
Per common share - Basic $0.93 $1.00
Per common share - Diluted $0.93 $1.00
Basic common shares outstanding 77,941 78,416
Diluted common shares outstanding 77,941 78,416
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 Reconciliation
(Dollars in thousands)
(Unaudited)
Three Months Ended
------------------
March 31,
---------
2009 2010
---- ----
Net income $18,471 $18,879
Depreciation 51,561 54,145
Amortization of net lease discounts and
lease incentives 1,117 4,845
Interest, net 43,411 40,959
Income tax provision 1,916 2,335
----- -----
EBITDA $116,476 $121,163
======== ========
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
Reconciliation
(Dollars in thousands)
(Unaudited)
Three Months Ended
------------------
March 31,
---------
2009 2010
---- ----
Net income $18,471 $18,879
Ineffective portion and
termination of cash
flow hedges(1) 2,746 1,314
Mark to market
adjustment on
undesignated
derivatives(2) (92) 370
--- ---
Adjusted net income $21,125 $20,563
Depreciation 51,561 54,145
Amortization of net
lease discounts and
lease incentives 1,117 4,845
----- -----
Adjusted net income
plus depreciation and
amortization $73,803 $79,553
======= =======
__________________
(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 Three
Months Months
Ended Ended
------ ------
March 31, March 31,
2009 2010
--------- ---------
Shares Percent(2) Shares Percent(2)
Weighted
average shares
---------------
Common shares
outstanding -
Basic 77,941 98.38% 78,416 98.45%
Unvested
restricted
common shares
outstanding 1,282 1.62% 1,238 1.55%
----- ---- ----- ----
Total weighted
average shares
outstanding 79,223 100.00% 79,654 100.00%
====== ====== ====== ======
Common shares
outstanding -
Basic 77,941 100.00% 78,416 100.00%
Effect of
dilutive
shares(1) - - - -
--- --- --- ---
Common shares
outstanding -
Diluted 77,941 100.00% 78,416 100.00%
====== ====== ====== ======
Net income
allocation
-----------
Net income $18,471 100.00% $18,879 100.00%
Distributed and
undistributed
earnings
allocated to
unvested
restricted
shares (299) (1.62)% (293) (1.55)%
---- ------ ---- ------
Earnings
available to
common shares $18,172 98.38% $18,586 98.45%
======= ===== ======= =====
Adjusted net
income
allocation
------------
Adjusted net
income $21,125 100.00% $20,563 100.00%
Amounts allocated
to unvested
restricted
shares (342) (1.62)% (320) (1.55)%
---- ------ ---- ------
Amounts allocated
to common shares $20,783 98.38% $20,243 98.45%
======= ===== ======= =====
Adjusted net
income plus
depreciation
and
amortization
allocation
-------------
Adjusted net
income plus
depreciation and
amortization $73,803 100.00% $79,553 100.00%
Amounts allocated
to unvested
restricted
shares (1,194) (1.62)% (1,236) (1.55)%
------ ------ ------ ------
Amounts allocated
to common shares $72,609 98.38% $78,317 98.45%
======= ===== ======= =====
- The Company had no dilutive common share equivalents for the periods presented.
- Percentages rounded to two decimal places.
SOURCE Aircastle Limited