Aircastle Announces Second Quarter 2014 Results
Highlights
- Lease rental including finance lease revenues of
$187.1 million , and Adjusted EBITDA1 of$211.7 million - Net income of
$3.1 million , or$0.04 per diluted common share - Adjusted net income1 of
$47.7 million , or$0.59 per diluted common share - Invested
$916 million year-to-date in 2014; approximately$490 million in additional investment commitments outstanding - Sold 17 aircraft and designated for sale two 747-400 freighters; net pre-tax contribution of
$8.2 million - Refinanced
$450 million of 9.75% senior notes due in 2018, with 5.125% notes due in 2021 - Fleet utilization of almost 100% with an aircraft portfolio yield of 13.1% and net cash interest margin of 9.7%
- 33rd consecutive dividend declared by
Aircastle's Board of Directors
Commenting on the results,
Second Quarter Results
For the second quarter of 2014, operating and finance lease revenues were
Total revenues for the second quarter were
Adjusted EBITDA for the second quarter was
Net income for the second quarter was
Adjusted net income for the quarter was
Aviation Assets
During the first half of the year, we acquired 11 aircraft and two engines for
During the first half of the year, we sold 23 aircraft, including four freighter and eleven older aircraft, for
As of
Owned Aircraft as of 2013(1) |
Owned Aircraft as of June 30, 2014(1) | |||
Flight Equipment Held for Lease ($ mils.) |
$ 4,779 |
$ |
5,651 |
|
Unencumbered Flight Equipment ($ mils.) |
$ 2,346 |
$ |
3,187 |
|
Number of Aircraft(2) |
158 |
148 |
||
Number of Unencumbered Aircraft |
76 |
91 |
||
Passenger Aircraft (% of NBV) |
77% |
84% |
||
Freighter Aircraft (% of NBV) |
23% |
16% |
||
Weighted Average Fleet Age - Combined (years)(3) |
10.8 |
8.6 |
||
Weighted Average Remaining Combined Lease Term (years)(4) |
4.7 |
4.9 |
||
Weighted Average Fleet Utilization for the three months ended(5) |
98% |
100% |
||
Portfolio Yield for the three months ended(6) |
13.4% |
13.1% |
||
Net Cash Interest Margin(7) |
9.3% |
9.7% |
(1) |
Calculated using net book value of flight equipment held for lease and net investment in finance leases at period end. |
(2) |
At |
(3) |
Weighted average age by net book value. |
(4) |
Weighted average remaining lease term by net book value. |
(5) |
Aircraft on-lease days as a percent of total days in period weighted by net book value. |
(6) |
Lease rental revenue for the period as a percent of the average net book value of flight equipment held for lease for the period; quarterly information is annualized. |
(7) |
Net Cash Interest Margin = Lease rental yield minus interest on borrowings, net of settlements on interest rate derivatives, and other liabilities / average NBV of flight equipment for the period calculated on a quarterly basis, annualized. |
Financing Update
In late
Common Dividend and Share Repurchases
On
Conference Call
In connection with this earnings release, management will host an earnings conference call on
A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. A replay of the webcast will be available for one month following the call. In addition to this earnings release, an accompanying power point presentation has been posted to the Investor Relations section of
For those who are not available to listen to the live call, a replay will be available until
About
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 proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA, 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;
1. Refer to Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers. |
Consolidated Balance Sheets (Dollars in thousands, except share data) | |||||||
|
| ||||||
(Unaudited) | |||||||
ASSETS |
|||||||
Cash and cash equivalents |
$ |
654,613 |
$ |
187,532 |
|||
Accounts receivable |
2,825 |
6,041 |
|||||
Restricted cash and cash equivalents |
122,773 |
101,358 |
|||||
Restricted liquidity facility collateral |
107,000 |
65,000 |
|||||
Flight equipment held for lease, net of accumulated depreciation of |
5,044,410 |
5,577,966 |
|||||
Net investment in finance leases |
145,173 |
72,600 |
|||||
Unconsolidated equity method investment |
21,123 |
21,838 |
|||||
Other assets |
153,976 |
179,232 |
|||||
Total assets |
$ |
6,251,893 |
$ |
6,211,567 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
LIABILITIES |
|||||||
Borrowings from secured financings (including borrowings of ACS Ireland VIEs of |
$ |
1,586,835 |
$ |
1,552,493 |
|||
Borrowings from unsecured financings |
2,150,527 |
2,200,000 |
|||||
Accounts payable, accrued expenses and other liabilities |
111,661 |
131,675 |
|||||
Lease rentals received in advance |
49,235 |
52,215 |
|||||
Liquidity facility |
107,000 |
65,000 |
|||||
Security deposits |
118,804 |
130,611 |
|||||
Maintenance payments |
442,432 |
433,703 |
|||||
Fair value of derivative liabilities |
39,992 |
4,757 |
|||||
Total liabilities |
4,606,486 |
4,570,454 |
|||||
Commitments and Contingencies |
|||||||
SHAREHOLDERS' EQUITY |
|||||||
Preference shares, $.01 par value, 50,000,000 shares authorized, no shares issued and |
— |
— |
|||||
Common shares, $.01 par value, 250,000,000 shares authorized, 80,806,975 shares |
808 |
810 |
|||||
Additional paid-in capital |
1,562,106 |
1,562,736 |
|||||
Retained earnings |
158,398 |
134,909 |
|||||
Accumulated other comprehensive loss |
(75,905) |
(57,342) |
|||||
Total shareholders' equity |
1,645,407 |
1,641,113 |
|||||
Total liabilities and shareholders' equity |
$ |
6,251,893 |
$ |
6,211,567 |
Consolidated Statements of Income (Dollars in thousands, except per share amounts) (Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
2013 |
2014 |
2013 |
2014 | ||||||||||||
Revenues: |
|||||||||||||||
Lease rental revenue |
$ |
157,918 |
$ |
183,231 |
$ |
314,508 |
$ |
357,566 |
|||||||
Finance lease revenue |
4,114 |
3,897 |
7,998 |
7,884 |
|||||||||||
Amortization of lease premiums, discounts and lease incentives |
(8,709) |
414 |
(15,790) |
(6,177) |
|||||||||||
Maintenance revenue (including contra maintenance revenue of |
13,185 |
36,182 |
30,051 |
39,224 |
|||||||||||
Total lease revenue |
166,508 |
223,724 |
336,767 |
398,497 |
|||||||||||
Other revenue |
3,870 |
2,422 |
9,800 |
4,252 |
|||||||||||
Total revenues |
170,378 |
226,146 |
346,567 |
402,749 |
|||||||||||
Operating expenses: |
|||||||||||||||
Depreciation |
72,079 |
75,784 |
141,979 |
149,711 |
|||||||||||
Interest, net |
66,656 |
60,494 |
125,808 |
124,757 |
|||||||||||
Selling, general and administrative (including non-cash share based |
13,182 |
14,057 |
26,467 |
28,001 |
|||||||||||
Impairment of Aircraft |
— |
28,306 |
6,199 |
46,569 |
|||||||||||
Maintenance and other costs |
6,138 |
2,646 |
9,550 |
4,509 |
|||||||||||
Total expenses |
158,055 |
181,287 |
310,003 |
353,547 |
|||||||||||
Other income (expense): |
|||||||||||||||
Gain on sale of flight equipment |
21,317 |
884 |
22,509 |
1,994 |
|||||||||||
Loss on extinguishment of debt |
— |
(36,570) |
— |
(36,570) |
|||||||||||
Other |
2,946 |
— |
4,161 |
757 |
|||||||||||
Total other income (expense) |
24,263 |
(35,686) |
26,670 |
(33,819) |
|||||||||||
Income from continuing operations before income taxes |
36,586 |
9,173 |
63,234 |
15,383 |
|||||||||||
Income tax provision |
3,732 |
6,558 |
7,316 |
7,441 |
|||||||||||
Earnings of unconsolidated equity method investment, net of tax |
— |
521 |
— |
971 |
|||||||||||
Net income |
$ |
32,854 |
$ |
3,136 |
$ |
55,918 |
$ |
8,913 |
|||||||
Earnings per common share — Basic: |
|||||||||||||||
Net income per share |
$ |
0.48 |
$ |
0.04 |
$ |
0.82 |
$ |
0.11 |
|||||||
Earnings per common share — Diluted: |
|||||||||||||||
Net income per share |
$ |
0.48 |
$ |
0.04 |
$ |
0.82 |
$ |
0.11 |
|||||||
Dividends declared per share |
$ |
0.165 |
$ |
0.200 |
$ |
0.330 |
$ |
0.400 |
Consolidated Statements of Comprehensive Income (Dollars in thousands) (Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
2013 |
2014 |
2013 |
2014 | ||||||||||||
Net income |
$ |
32,854 |
$ |
3,136 |
$ |
55,918 |
$ |
8,913 |
|||||||
Other comprehensive income, net of tax: |
|||||||||||||||
Net change in fair value of derivatives, net of tax expense of |
8,127 |
12 |
11,953 |
382 |
|||||||||||
Net derivative loss reclassified into earnings |
9,711 |
8,854 |
17,985 |
18,181 |
|||||||||||
Other comprehensive income |
17,838 |
8,866 |
29,938 |
18,563 |
|||||||||||
Total comprehensive income |
$ |
50,692 |
$ |
12,002 |
$ |
85,856 |
$ |
27,476 |
Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) | |||||||
Six Months Ended | |||||||
2013 |
2014 | ||||||
Cash flows from operating activities: |
|||||||
Net income |
$ |
55,918 |
$ |
8,913 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation |
141,979 |
149,711 |
|||||
Amortization of deferred financing costs |
8,781 |
6,987 |
|||||
Amortization of net lease discounts and lease incentives |
15,790 |
6,177 |
|||||
Deferred income taxes |
3,237 |
3,999 |
|||||
Non-cash share based payment expense |
1,864 |
2,218 |
|||||
Cash flow hedges reclassified into earnings |
17,985 |
18,181 |
|||||
Security deposits and maintenance payments included in earnings |
(25,538) |
(40,006) |
|||||
Gain on sale of flight equipment |
(22,509) |
(1,994) |
|||||
Loss on extinguishment of debt |
— |
36,570 |
|||||
Impairment of aircraft |
6,199 |
46,569 |
|||||
Other |
(3,817) |
(91) |
|||||
Changes in certain assets and liabilities: |
|||||||
Accounts receivable |
(410) |
(3,619) |
|||||
Other assets |
4,834 |
(1,914) |
|||||
Accounts payable, accrued expenses and other liabilities |
(3,824) |
(20,438) |
|||||
Lease rentals received in advance |
(7,050) |
2,742 |
|||||
Net cash provided by operating activities |
193,439 |
214,005 |
|||||
Cash flows from investing activities: |
|||||||
Acquisition and improvement of flight equipment and lease incentives |
(331,067) |
(834,467) |
|||||
Proceeds from sale of flight equipment |
253,909 |
246,037 |
|||||
Restricted cash and cash equivalents related to sale of flight equipment |
— |
7,600 |
|||||
Aircraft purchase deposits and progress payments |
(1,869) |
(3,785) |
|||||
Net investment in finance leases |
(11,605) |
(14,258) |
|||||
Collections on finance leases |
4,052 |
6,219 |
|||||
Unconsolidated equity method investment and associated costs |
— |
(159) |
|||||
Distributions from unconsolidated equity method investment in excess of earnings |
— |
651 |
|||||
Principal repayments on debt investment |
42,001 |
— |
|||||
Other |
(829) |
(405) |
|||||
Net cash used in investing activities |
(45,408) |
(592,567) |
|||||
Cash flows from financing activities: |
|||||||
Issuance of shares net of repurchases |
(7,940) |
(2,091) |
|||||
Proceeds from notes and term debt financings |
— |
803,200 |
|||||
Securitization and term debt financing repayments |
(294,064) |
(827,512) |
|||||
Debt extinguishment costs |
— |
(32,835) |
|||||
Deferred financing costs |
(557) |
(15,834) |
|||||
Restricted secured liquidity facility collateral |
— |
42,000 |
|||||
Secured liquidity facility collateral |
— |
(42,000) |
|||||
Restricted cash and cash equivalents related to financing activities |
(81,664) |
13,815 |
|||||
Security deposits and maintenance payments received |
104,787 |
83,144 |
|||||
Security deposits and maintenance payments returned |
(33,975) |
(44,577) |
|||||
Payments for terminated cash flow hedges |
— |
(33,427) |
|||||
Dividends paid |
(22,565) |
(32,402) |
|||||
Net cash (used in) provided by financing activities |
(335,978) |
(88,519) |
|||||
Net increase (decrease) in cash and cash equivalents |
(187,947) |
(467,081) |
|||||
Cash and cash equivalents at beginning of period |
618,217 |
654,613 |
|||||
Cash and cash equivalents at end of period |
$ |
430,270 |
$ |
187,532 |
Supplemental Financial Information (Amount in thousands, except per share amounts) (Unaudited) | |||||||
Three Months Ended |
Six Months Ended | ||||||
2013 |
2014 |
2013 |
2014 | ||||
Revenues |
|
|
|
| |||
EBITDA |
|
|
|
| |||
Adjusted EBITDA |
|
|
|
| |||
Adjusted net income |
$ 46,040 |
$ 47,692 |
$ 73,452 |
$ 60,952 | |||
Adjusted net income allocable to common shares |
$ 45,615 |
$ 47,313 |
$ 72,906 |
$ 60,521 | |||
Per common share - Basic |
$ 0.67 |
$ 0.59 |
$ 1.07 |
$ 0.75 | |||
Per common share - Diluted |
$ 0.67 |
$ 0.59 |
$ 1.07 |
$ 0.75 | |||
Basic common shares outstanding |
67,829 |
80,390 |
67,863 |
80,389 | |||
Diluted common shares outstanding |
67,829 |
80,390 |
67,863 |
80,389 |
Refer to the selected information accompanying this press release for a reconciliation of GAAP to Non-GAAP information. |
Reconciliation of GAAP to Non-GAAP Measures EBITDA and Adjusted EBITDA Reconciliation (Dollars in thousands) (Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
2013 |
2014 |
2013 |
2014 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Net income |
$ |
32,854 |
$ |
3,136 |
$ |
55,918 |
$ |
8,913 |
|||||||
Depreciation |
72,079 |
75,784 |
141,979 |
149,711 |
|||||||||||
Amortization of net lease discounts and lease incentives |
8,709 |
(414) |
15,790 |
6,177 |
|||||||||||
Interest, net |
66,656 |
60,494 |
125,808 |
124,757 |
|||||||||||
Income tax provision |
3,732 |
6,558 |
7,316 |
7,441 |
|||||||||||
EBITDA |
$ |
184,030 |
$ |
145,558 |
$ |
346,811 |
$ |
296,999 |
|||||||
Adjustments: |
|||||||||||||||
Impairment of aircraft |
— |
28,306 |
6,199 |
46,569 |
|||||||||||
Loss on extinguishment of debt |
— |
36,570 |
— |
36,570 |
|||||||||||
Non-cash share based payment expense |
1,053 |
1,228 |
1,864 |
2,218 |
|||||||||||
Gain on mark to market of interest rate derivative contracts |
(1,657) |
— |
(2,872) |
(681) |
|||||||||||
Adjusted EBITDA |
$ |
183,426 |
$ |
211,662 |
$ |
352,002 |
$ |
381,675 |
We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-US GAAP measure is helpful in identifying trends in our performance. This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed. EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the board of directors to review the consolidated financial performance of our business. We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants. |
Reconciliation of GAAP to Non-GAAP Measures Adjusted Net Income Reconciliation (Dollars in thousands) (Unaudited) | |||||||||||||||
Three Months Ended |
Six Months Ended | ||||||||||||||
2013 |
2014 |
2013 |
2014 | ||||||||||||
(Dollars in thousands) | |||||||||||||||
Net income |
$ |
32,854 |
$ |
3,136 |
$ |
55,918 |
$ |
8,913 |
|||||||
Loss on extinguishment of debt(2) |
— |
36,570 |
— |
36,570 |
|||||||||||
Loan termination fee(1) |
2,954 |
— |
2,954 |
— |
|||||||||||
Ineffective portion and termination of hedges(1) |
2,003 |
9 |
2,131 |
62 |
|||||||||||
Gain on mark to market of interest rate derivative contracts(2) |
(1,657) |
— |
(2,872) |
(681) |
|||||||||||
Write-off of deferred financing fees(1) |
3,825 |
— |
3,825 |
— |
|||||||||||
Stock compensation expense(3) |
1,053 |
1,228 |
1,864 |
2,218 |
|||||||||||
Term Financing No. 1 hedge loss amortization charges(1) |
4,604 |
3,839 |
8,887 |
7,943 |
|||||||||||
Securitization No. 1 hedge loss amortization charges (1) |
404 |
2,910 |
745 |
5,927 |
|||||||||||
Adjusted net income |
$ |
46,040 |
$ |
47,692 |
$ |
73,452 |
$ |
60,952 |
(1) Included in Interest, net. |
Reconciliation of GAAP to Non-GAAP Measures Reconciliation of Net Income Allocable to Common Shares (In thousands) (Unaudited) | ||||||||||||
Three Months Ended |
Six Months Ended |
|||||||||||
Weighted-average shares: |
Shares |
Percent(2) |
Shares |
Percent(2) |
||||||||
Common shares outstanding - Basic |
80,390 |
99.21% |
80,389 |
99.29% |
||||||||
Unvested restricted common shares |
644 |
0.79% |
572 |
0.71% |
||||||||
Total weighted-average shares outstanding |
81,034 |
100.00% |
80,961 |
100.00% |
||||||||
Net income allocation |
||||||||||||
Net income |
|
100.00% |
|
100.00% |
||||||||
Distributed and undistributed earnings allocated to unvested restricted |
(25) |
(0.79%) |
(63) |
(0.71%) |
||||||||
Earnings available to common shares |
|
99.21% |
|
99.29% |
||||||||
Adjusted net income allocation |
||||||||||||
Adjusted net income |
|
100.00% |
|
100.00% |
||||||||
Amounts allocated to unvested restricted shares |
(379) |
(0.79%) |
(431) |
(0.71%) |
||||||||
Amounts allocated to common shares |
|
99.21% |
|
99.29% |
(1) For the three and six months ended |
Reconciliation of GAAP to Non-GAAP Measures Reconciliation of Net Income Allocable to Common Shares (In thousands) (Unaudited) | ||||||||||||
Three Months Ended |
Six Months Ended | |||||||||||
Weighted-average shares: |
Shares |
Percent(2) |
Shares |
Percent(2) | ||||||||
Common shares outstanding - Basic |
67,829 |
99.08% |
67,863 |
99.26% | ||||||||
Unvested restricted common shares |
631 |
0.92% |
508 |
0.74% | ||||||||
Total weighted-average shares outstanding |
68,460 |
100.00% |
68,371 |
100.00% | ||||||||
Net income allocation |
||||||||||||
Net income |
|
100.00% |
|
100.00% | ||||||||
Distributed and undistributed earnings allocated to unvested restricted |
(303) |
(0.92%) |
(416) |
(0.74%) | ||||||||
Earnings available to common shares |
|
99.08% |
|
99.26% | ||||||||
Adjusted net income allocation |
||||||||||||
Adjusted net income |
|
100.00% |
|
100.00% | ||||||||
Amounts allocated to unvested restricted shares |
(425) |
(0.92%) |
(546) |
(0.74%) | ||||||||
Amounts allocated to common shares |
|
99.08% |
|
99.26% |
(1) For the three and six months ended |
Contact:
Frank Constantinople, SVP Investor Relations
Tel: +1-203-504-1063
fconstantinople@aircastle.com
Tel: +1-212-477-8438
lberman@igbir.com
SOURCE
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