Aircastle Announces Third Quarter 2009 Results
STAMFORD, Conn.., Nov 06, 2009 /PRNewswire-FirstCall via COMTEX/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported third quarter net income of $33.5 million, or $0.42 per diluted common share and adjusted net income of $35.7 million, or $0.45 per diluted common share.
Aircastle CEO Ron Wainshal commented, "Operating performance during the third quarter was excellent with utilization at almost 100 percent and with unrestricted cash building to $132 million at September 30th. Combined with our strong operating performance and access to capital, we are poised for growth and are actively pursuing new opportunities."
Third quarter total revenues were $165.7 million, an increase of $21.3 million from the third quarter 2008. The increase was driven by higher maintenance revenue of $25.9 million and $9.4 million of lease termination revenue over the same period a year ago. These increases were offset by higher lease incentive amortization of $5.8 million and a reduction in lease rental revenue of $8.3 million.
Lease rental revenue of $128.3 million declined by $8.3 million from the third quarter 2008. An increase in revenues of $4.5 million related to aircraft acquisitions was offset by a decrease of $5.8 million related to aircraft sold, $2.2 million due to aircraft in freighter conversion and $4.1 million related to lease transitions and extensions.
EBITDA was $135.0 million, up $5.8 million from the third quarter of 2008 due primarily to higher maintenance and lease termination revenue totaling $35.3 million, offset by lower lease rental revenue of $8.3 million, higher maintenance and other costs of $3.9 million due mainly to transitions, and $18.2 million of impairment charges.
Adjusted net income plus depreciation and amortization was $92.8 million, an increase of $7.5 million compared to the third quarter of 2008. The year over year change was driven primarily by higher maintenance and lease termination revenue totaling $35.3 million, and lower adjusted interest, net of $2.2 million, offset by lower lease rental revenue of $8.3 million, higher maintenance and other costs of $3.9 million, and $18.2 million of impairment charges.
Adjusted net income was $35.7 million, up $0.7 million compared to the third quarter of 2008. The year over year change reflects higher maintenance and lease termination revenue totaling $35.3 million, and lower adjusted interest, net of $2.2 million, offset by lower lease rental revenue of $8.3 million, higher lease incentive amortization of $5.8 million, higher maintenance and other costs of $3.9 million, and $18.2 million of impairment charges.
In connection with the sale and early return of aircraft in the third quarter of 2009, Aircastle's results included maintenance revenue of $11.6 million and lease termination revenue of $9.4 million, which were offset by $18.2 million in aircraft impairment charges and a gain on the sale of the aircraft of $0.2 million, resulting in incremental pre-tax income of $3.0 million.
(1) Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.
Aviation Assets
As of September 30, 2009, Aircastle owned 128 aircraft having a net book
value of $3.8 billion.
Owned Aircraft
as of
September 30,
2009(A)
-----------
107 Passenger Aircraft 70%
21 Freighter Aircraft(B) 30%
Number of Lessees 60
Number of Countries 34
Weighted Average Remaining Lease Term (years) (B) 4.9
Percentage of Aircraft Leased Outside U.S. 90%
Percentage of "Latest Generation" Aircraft 88%
Weighted Average Fleet Utilization during Q3 2009 100%
(A) -Percentages calculated using net book value.
(B) -Four Boeing Model 737-400 aircraft which will be converted to
freighter configuration are included as "Freighter" aircraft; the
remaining lease terms for these aircraft, for which we have
executed leases post-conversion, are measured on the ten-year
terms of the post-conversion leases.
Aircastle entered into a commitment with Aerovias del Continente Americano ("Avianca") to purchase and lease back a new A330-200 delivering in December 2009. This new transaction would represent an advancement of one of Aircastle's new A330 aircraft order positions. We anticipate this transaction will be funded with ECA-supported financing along terms similar to the transaction we completed in May 2009.
Conference Call
In connection with this earnings release, management will host an earnings conference call on Friday, November 6, 2009 at 11:00 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 Third Quarter Earnings Call."
A 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.
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 Friday, November 13, 2009 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode "36526839."
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 September 30, 2009 Aircastle's aircraft portfolio consisted of 128 aircraft and had 60 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 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; 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 yields 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 2008 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)
Dec. 31, Sept. 30,
2008 2009
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $80,947 $132,408
Accounts receivable 3,161 4,065
Debt investments 14,349 7,136
Restricted cash and cash equivalents 182,623 218,079
Restricted liquidity facility collateral - 81,000
Flight equipment held for lease, net of
accumulated depreciation of
$371,591 and $521,251 3,837,543 3,767,314
Aircraft purchase deposits and progress
payments 68,923 109,454
Leasehold improvements, furnishings and
equipment, net of accumulated depreciation
of $1,999 and $2,349 1,174 907
Other assets 62,852 70,519
------ ------
Total assets $4,251,572 $4,390,882
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Borrowings from securitizations and term debt
financings $2,476,296 $2,435,593
Accounts payable, accrued expenses and other
liabilities 60,789 59,205
Dividends payable 7,862 7,923
Lease rentals received in advance 28,463 27,758
Liquidity facility - 81,000
Security deposits 65,307 73,131
Maintenance payments 224,288 250,018
Fair value of derivative liabilities 276,401 205,549
------- -------
Total liabilities 3,139,406 3,140,177
--------- ---------
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, 78,620,320 shares issued
and outstanding at December 31, 2008; and
79,234,663 shares issued and outstanding at
September 30, 2009 786 792
Additional paid-in capital 1,474,455 1,478,275
Retained earnings (deficit) (473) 55,256
Accumulated other comprehensive loss (362,602) (283,618)
--------- ---------
Total shareholders' equity 1,112,166 1,250,705
--------- ---------
Total liabilities and shareholders' equity $4,251,572 $4,390,882
========== ==========
Aircastle Limited and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2008 2009 2008 2009
---- ---- ---- ----
Revenues:
Lease rental revenue $136,578 $128,283 $405,206 $383,683
Amortization of net
lease discounts and
lease incentives 1,781 (3,992) 6,929 (7,919)
Maintenance revenue 5,433 31,376 9,575 47,616
----- ------ ----- ------
Total lease rentals 143,792 155,667 421,710 423,380
Interest income 628 556 2,533 1,783
Other revenue 34 9,517 562 9,628
-- ----- --- -----
Total revenues 144,454 165,740 424,805 434,791
------- ------- ------- -------
Expenses:
Depreciation 52,020 53,130 151,840 156,379
Interest, net 54,112 43,032 146,442 127,925
Selling, general and
administrative
(including non-cash
share based payment
expense of $1,659 and
$1,742 for the three
months ended, and
$4,872 and $5,129 for
the nine months ended
September 30, 2008 and
2009, respectively) 11,641 11,074 34,484 33,291
Impairment of aircraft - 18,211 - 18,211
Maintenance and other
costs 891 4,836 2,133 15,114
--- ----- ----- ------
Total expenses 118,664 130,283 334,899 350,920
------- ------- ------- -------
Other income (expense):
Gain on sale of
aircraft 772 162 5,898 162
Other (1,673) (738) (590) 855
------- ----- ----- ---
Total other income
(expense) (901) (576) 5,308 1,017
----- ----- ----- -----
Income from continuing
operations before
income taxes 24,889 34,881 95,214 84,888
Income tax provision 1,315 1,423 4,662 5,388
----- ----- ----- -----
Net income $23,574 $33,458 $90,552 $79,500
======= ======= ======= =======
Earnings per common
share - Basic $0.30 $0.42 $1.15 $1.00
===== ===== ===== =====
Earnings per common
share - Diluted $0.30 $0.42 $1.15 $1.00
===== ===== ===== =====
Dividends declared per
share $0.25 $0.10 $0.75 $0.30
===== ===== ===== =====
Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Nine Months Ended
September 30,
-------------
2008 2009
---- ----
Cash flows from operating activities:
Net income $90,552 $79,500
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 151,840 156,379
Amortization of deferred financing costs 9,773 8,808
Amortization of net lease discounts and
lease incentives (6,929) 7,919
Deferred income taxes 3,344 4,560
Accretion of purchase discounts on debt
investments (419) (430)
Non-cash share based payment expense 4,872 5,129
Cash flow hedges reclassified into earnings 10,740 13,690
Ineffective portion of cash flow hedges 7,977 (2,874)
Gain on sale of flight equipment (5,898) (162)
Security deposits and maintenance payments
included in earnings (9,171) (36,982)
Loss on sale of investments 245 131
Impairment of aircraft - 18,211
Other 943 (556)
Changes in certain assets and liabilities:
Accounts receivable 903 (909)
Restricted cash and cash equivalents (47,923) (35,456)
Other assets 1,797 (1,975)
Accounts payable, accrued expenses and other
liabilities 3,911 (8,397)
Payable to affiliates (200) -
Lease rentals received in advance (2,796) (537)
------- -----
Net cash provided by operating activities 213,561 206,049
------- -------
Cash flows from investing activities:
Acquisition and improvement of flight
equipment and lease incentives (228,934) (124,082)
Aircraft purchase deposits and progress
payments, net of returned deposits (2,154) (41,912)
Proceeds from sale of flight equipment 48,882 10,601
Restricted cash from disposition of flight
equipment (12,294) -
Proceeds from sale of debt investments 65,335 5,423
Principal repayments on debt investments 11,674 3,787
Collateral call payments on derivatives and
repurchase agreements (349,123) -
Collateral call receipts on derivatives and
repurchase agreements 375,066 -
Leasehold improvements, furnishings and
equipment (365) (82)
----- ----
Net cash used in investing activities (91,913) (146,265)
-------- ---------
Cash flows from financing activities:
Issuance, net of repurchases, of common
shares to directors and employees (1,263) (247)
Proceeds from term debt financings 992,715 70,916
Securitization and term debt financing
repayments (85,055) (111,619)
Restricted cash and cash equivalents related
to unreleased term debt financing
borrowings (87,462) -
Deferred financing costs (23,346) (3,588)
Credit facility borrowings 482,723 -
Credit facility repayments (1,167,578) -
Restricted secured liquidity facility
collateral - (81,000)
Secured liquidity facility collateral - 81,000
Principal repayments on repurchase
agreements (67,744) -
Security deposits and maintenance payments
received 83,966 96,162
Security deposits and maintenance payments
returned (22,493) (33,479)
Payments for terminated cash flow hedges (68,332) (2,758)
Dividends paid (94,291) (23,710)
-------- --------
Net cash (used in) provided by financing
activities (58,160) (8,323)
-------- -------
Net increase in cash and cash equivalents 63,488 51,461
Cash and cash equivalents at beginning of
period 13,546 80,947
------ ------
Cash and cash equivalents at end of period $77,034 $132,408
======= ========
Aircastle Limited and Subsidiaries
Supplemental Financial Information
(Amount in thousands, except per share amounts)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2008 2009 2008 2009
---- ---- ---- ----
Revenues $144,454 $165,740 $424,805 $434,791
EBITDA $129,240 $135,035 $386,567 $377,111
Adjusted net income $35,019 $35,668 $104,229 $83,677
Adjusted net income allocable to
common shares $34,602 $35,060 $103,056 $82,295
Per common share - Basic $0.44 $0.45 $1.33 $1.06
Per common share - Diluted $0.44 $0.45 $1.33 $1.06
Adjusted net income plus
depreciation and amortization $85,258 $92,790 $249,140 $247,975
Adjusted net income plus
depreciation and amortization
allocable to common shares $84,242 $91,208 $246,336 $243,880
Per common share - Basic $1.08 $1.17 $3.17 $3.13
Per common share - Diluted $1.08 $1.17 $3.17 $3.13
Basic common shares outstanding 77,768 78,013 77,744 77,977
Diluted common shares outstanding 77,768 78,013 77,744 77,977
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 Nine Months Ended
September 30, September 30,
------------- -------------
2008 2009 2008 2009
---- ---- ---- ----
Net income $23,574 $33,458 $90,552 $79,500
Depreciation 52,020 53,130 151,840 156,379
Amortization of net lease
discounts and lease incentives (1,781) 3,992 (6,929) 7,919
Interest, net 54,112 43,032 146,442 127,925
Income tax provision 1,315 1,423 4,662 5,388
----- ----- ----- -----
EBITDA $129,240 $135,035 $386,567 $377,111
======== ======== ======== ========
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 Nine Months Ended
September 30, September 30,
------------- -------------
2008 2009 2008 2009
---- ---- ---- ----
Net income $23,574 $33,458 $90,552 $79,500
Ineffective portion and
termination of cash
flow hedges(1) 10,545 1,633 17,575 4,764
Mark to market adjustment on
undesignated derivatives(2) 1,672 608 942 (556)
Write-off of deferred
financing fees - - 813 -
Gain on sale of aircraft (772) (162) (5,898) (162)
Loss on sale of
debt investments(2) - 131 245 131
--- --- --- ---
Adjusted net income $35,019 $35,668 $104,229 $83,677
Depreciation 52,020 53,130 151,840 156,379
Amortization of net
lease discounts and
lease incentives (1,781) 3,992 (6,929) 7,919
------ ----- ------ -----
Adjusted net income
plus depreciation
and amortization $85,258 $92,790 $249,140 $247,975
======= ======= ======== ========
(1) Included in Interest, net
(2) Included in Other income (expense)
We adjust net income for ineffective portion and termination of cash flow
hedges, write-off of deferred financing fees, mark to market and
termination of interest rate swaps, loss on sale of debt investments and
gain on sale of flight equipment. We use adjusted net income to assess our
consolidated financial and operating performance, and we believe this non-
GAAP measure is helpful in identifying long-term trends in our performance
net of non-recurring items.
We use adjusted net income plus depreciation and amortization to assess
our consolidated financial and operating performance, and we believe this
non-GAAP measure is helpful in identifying trends in our performance on an
operating cash flow basis after taking into account interest expense on
our outstanding indebtedness.
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 Nine Months Ended
September 30, 2009 September 30, 2009
------------------ ------------------
Shares Percent(2) Shares Percent(2)
Weighted average shares
-----------------------
Common shares
outstanding - Basic 78,013 98.30% 77,977 98.35%
Unvested restricted
common shares
outstanding 1,353 1.70% 1,309 1.65%
----- ----- ----- -----
Total weighted Average
shares outstanding 79,366 100.00% 79,286 100.00%
====== ====== ====== =======
Common shares
outstanding - Basic 78,013 100.00% 77,977 100.00%
Effect of dilutive
shares(1) - - - -
------ ------ ------ ------
Common shares
outstanding - Diluted 78,013 100.00% 77,977 100.00%
====== ====== ====== ======
Net income allocation
---------------------
Net income $33,458 100.00% $79,500 100.00%
Distributed and
Undistributed earnings
allocated to unvested
restricted shares (570) (1.70)% (1,313) (1.65)%
----- ----- ------ ----
Earnings available to
common shares $32,888 98.30% $78,187 98.35%
======= ===== ======= =====
Adjusted net income
allocation
-------------------
Adjusted net income $35,668 100.00% $83,677 100.00%
Amounts allocated to
unvested restricted
shares (608) (1.70)% (1,382) (1.65)%
----- ----- ------ -----
Amounts allocated
to common shares $35,060 98.30% $82,295 98.35%
======= ===== ======= =====
Adjusted net income plus
depreciation and
amortization allocation
------------------------
Adjusted net income plus
depreciation and
amortization $92,790 100.00% $247,975 100.00%
Amounts allocated to
unvested restricted
shares (1,582) (1.70)% (4,095) (1.65)%
------- ----- ------ ----
Amounts allocated
to common shares $91,208 98.30% $243,880 98.35%
======= ===== ======== =====
(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 Nine Months Ended
September 30, 2008 September 30, 2008
------------------ ------------------
Shares Percent(2) Shares Percent(2)
Weighted average
shares
----------------
Common shares
outstanding -
Basic 77,768 98.81% 77,744 98.87%
Unvested
restricted
common shares
outstanding 938 1.19% 885 1.13%
--- ----- --- ----
Total weighted
average shares
outstanding 78,706 100.00% 78,629 100.00%
====== ====== ====== ======
Common shares
outstanding -
Basic 77,768 100.00% 77,744 100.00%
Effect of dilutive
shares(1) - - - -
------ ------ ------ ------
Common shares
outstanding -
Diluted 77,768 100.00% 77,744 100.00%
====== ====== ====== ====
Net income
allocation
-----------
Net income $23,574 100.00% $90,552 100.00%
Distributed and
undistributed earnings
allocated to
unvested
restricted
shares (281) (1.19)% (1,019) (1.13)%
----- ----- ------ -----
Earnings Available
to common shares $23,293 98.81% $89,533 98.87%
======= ===== ======= =====
Adjusted net income
allocation
-------------------
Adjusted net
income $35,019 100.00% $104,229 100.00%
Amounts allocated
to unvested restricted
shares (417) (1.19)% (1,173) (1.13)%
----- ----- ------ -----
Amounts allocated
to common shares $34,602 98.81% $103,056 98.87%
======= ===== ======== ====
Adjusted net income plus
depreciation and
amortization allocation
------------------------
Adjusted net income plus
depreciation and
amortization $85,258 100.00% $249,140 100.00%
Amounts allocated
to unvested restricted
shares (1,016) (1.19)% (2,804) (1.13)%
------ ----- ------ ----
Amounts allocated
to common shares 84,242 98.81% $246,336 98.87%
====== ===== ======== =====
(1) The Company had no dilutive common share equivalents for the periods
presented.
(2) Percentages rounded to two decimal places.
SOURCE Aircastle Limited
www.aircastle.com
