AIRCASTLE LIMITED STAMFORD, Conn., May 6, 2015 /PRNewswire/ --
Key Financial Metrics
-- Total revenues were $194.3 million for the first quarter of 2015, up 10%
versus the prior year
-- Net income was $43.3 million, or $0.53 per diluted common share versus
$0.07 the prior year
-- Adjusted net income was $50.5 million, or $0.62 per diluted common share
versus $0.16 the prior year
-- Adjusted EBITDA was $190.2 for the first quarter, up 12% versus the
prior year
-- Cash ROE was 13.5% and net cash interest margin was 9.0%
Highlights
-- Closed or committed to acquire 25 aircraft for $770 million during 2015
-- Raised $500 million of 5.50% senior, unsecured notes maturing in 2022
-- 36(th) consecutive quarterly dividend declared by Aircastle's Board of
Directors
Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter 2015 net income of $43.3 million, or $0.53 per diluted common share and adjusted net income of $50.5 million, or $0.62 per diluted common share. The first quarter results included total revenues of $194.3 million, an increase of 10%, versus $176.6 million in the first quarter of 2014.
Commenting on the results, Ron Wainshal, Aircastle's CEO, stated, "We're off to a strong start in 2015 as earnings and cash returns increased. We are finding attractive investments by delivering more unique and value-additive transactions to our customers, and so far this year we closed or committed to close $770 million in acquisitions. We continue to improve our portfolio quality, increased our average lease term to 5.6 years and secured new operators for all of the aircraft we removed from Russia over the past several months. During the first quarter, we further strengthened our funding capacity and flexibility by issuing $500 million of new unsecured notes and enlarging our revolving credit facility to $600 million."
Mr. Wainshal continued, "Market conditions remain solid and, as a consequence, more investors are being drawn to our sector. We are capitalizing on this through our asset sales and capital market initiatives, yet we also remain optimistic about our ability to grow profitably by leveraging our differentiated business approach and our team strengths."
Financial Results
(in thousands, except share data) Three Months Ended
March 31,
---------
2014 2015
---- ----
Total Revenues $176,603 $194,296
Adjusted EBITDA $170,013 $190,214
Net income $5,777 $43,269
Per common share - Diluted $0.07 $0.53
Adjusted net income $13,260 $50,457
Per common share - Diluted $0.16 $0.62
First Quarter Results
Total revenues were $194.3 million, an increase of $17.7 million, or 10%, from the previous year, driven by higher maintenance revenues of $15.0 million. During the first quarter of 2014, we recorded $16.4 million of contra maintenance revenue in connection with engine restoration work completed by a lessee prior to the scheduled return of three aircraft.
Adjusted EBITDA for the first quarter was $190.2 million, up $20.2 million, or 12% from the first quarter of 2014, due primarily to higher maintenance revenues of $15.0 million and higher gains from aircraft sales of $5.1 million.
Adjusted net income for the quarter was $50.5 million, up $37.2 million year over year. The increase was due primarily to higher total revenues of $17.7 million and lower non-cash aircraft impairment charges of $18.3 million.
Aviation Assets
During the first quarter of 2015, we acquired six aircraft for $254 million and are currently committed to acquire an additional 19 aircraft for $515 million. The aircraft acquired during the first quarter had a weighted average age of less than two years and are on long term leases.
Also during the first quarter of 2015, we completed the profitable sale of two aircraft leased to an airline based in India and other flight equipment for a total of $50.5 million.
As of March 31, 2015, Aircastle owned 152 aircraft having a net book value of $5.8 billion. We also manage five aircraft with a net book value of approximately $500 million dollars on behalf of our joint venture with Ontario Teachers' Pension Plan.
Owned Owned
Aircraft as of Aircraft as of
March 31, March 31,
2014(1) 2015(1)
Total Flight Equipment Held for
Lease ($ mils.) $5,822 $5,817
Unencumbered Flight Equipment
Held for Lease ($ mils.) $3,280 $3,497
Number of Aircraft 164 152
Number of Unencumbered
Aircraft 104 99
Passenger Aircraft (% of NBV) 84% 86%
Freighter Aircraft (% of NBV) 16% 14%
Weighted Average Fleet Age
(years)((2)) 9.1 8.3
Weighted Average Remaining
Lease Term (years)((3)) 4.8 5.6
Weighted Average Fleet
Utilization for the year
ended(4) 98.9% 98.7%
Portfolio Yield for the year
ended(5) 13.5% 12.6%
Net Cash Interest Margin(6) 9.5% 9.0%
(1) Calculated using net book value of flight equipment held for lease and net investment in finance leases at period end.
(2) Weighted average age by net book value.
(3) Weighted average remaining lease term by net book value.
(4) Aircraft on-lease days as a percent of total days in period weighted by net book value.
(5) 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.
(6) 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 Activity
During the first quarter of 2015, we issued $500 million in unsecured Senior Notes due 2022 bearing a coupon of 5.50% at par, and further increased the size of our unsecured revolving credit facility to $600 million. In doing so, we maintained the weighted average maturity of our debt at 4.4 years, enhanced our financial flexibility and obtained capital to fund recent acquisitions.
Common Dividend
On May 4, 2015, Aircastle's Board of Directors declared a second quarter 2015 cash dividend on its common shares of $0.22 per share, payable on June 15, 2015 to shareholders of record on May 29, 2015. This is our 36(th) consecutive dividend.
Conference Call
In connection with this earnings release, management will host an earnings conference call on Wednesday, May 6, 2015 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) 337-8198 (from within the U.S. and Canada) or (719) 325-2464 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "8126530".
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 Aircastle's website.
For those who are not available to listen to the live call, a replay will be available until 1:00 P.M. Eastern time on Friday, June 5, 2015 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 "8126530".
About Aircastle Limited
Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of March 31, 2015, Aircastle's aircraft portfolio consisted of 152 aircraft on lease with 54 customers located in 34 countries.
Safe Harbor
All statements included or incorporated by reference in this Press Release (this "Release"), other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are 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 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 our historical performance and that of our subsidiaries and on our current plans, estimates and expectations 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 can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this Release. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1 A of Aircastle's 2014 Annual Report on Form 10-K, and elsewhere in this Release. 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 Release. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.
(
)
Aircastle Limited and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)
December 31, March 31,
2014 2015
---- ----
(Unaudited)
ASSETS
Cash and cash equivalents $169,656 $329,992
Accounts receivable 3,334 2,386
Restricted cash and cash
equivalents 98,884 86,961
Restricted liquidity facility
collateral 65,000 65,000
Flight equipment held for lease,
net of accumulated depreciation
of $1,294,063 and $1,362,647 5,579,718 5,712,950
Net investment in finance leases 106,651 104,377
Unconsolidated equity method
investment 46,453 47,842
Other assets 157,317 174,858
------- -------
Total assets $6,227,013 $6,524,366
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Borrowings from secured
financings $1,396,454 $1,343,237
Borrowings from unsecured
financings 2,400,000 2,700,000
Accounts payable, accrued
expenses and other liabilities 140,863 157,175
Lease rentals received in
advance 53,216 53,300
Liquidity facility 65,000 65,000
Security deposits 117,689 107,016
Maintenance payments 333,456 345,086
------- -------
Total liabilities 4,506,678 4,770,814
--------- ---------
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,
80,983,249 shares issued and
outstanding at December 31,
2014; and 81,181,133 shares
issued and outstanding at March
31, 2015 810 812
Additional paid-in capital 1,565,180 1,564,881
Retained earnings 192,805 218,214
Accumulated other comprehensive
loss (38,460) (30,355)
------- -------
Total shareholders' equity 1,720,335 1,753,552
--------- ---------
Total liabilities and
shareholders' equity $6,227,013 $6,524,366
========== ==========
Aircastle Limited and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2015
---- ----
Revenues:
Lease
rental
revenue $174,335 $177,146
Finance
lease
revenue 3,987 1,607
Amortization
of lease
premiums,
discounts
and lease
incentives (6,591) (3,824)
Maintenance
revenue 3,042 18,073
----- ------
Total lease
revenue 174,773 193,002
Other
revenue 1,830 1,294
----- -----
Total
revenues 176,603 194,296
------- -------
Operating expenses:
Depreciation 73,927 74,846
Interest,
net 64,263 62,131
Selling,
general $1,170 for
and the three
administrative months
(including ended
non-cash March 31,
share 2014 and
based 2015,
payment respectively)
expense of
$990 and 13,944 13,932
Impairment
of
Aircraft 18,263 -
Maintenance
and other
costs 1,863 2,943
----- -----
Total
expenses 172,260 153,852
------- -------
Other income (expense):
Gain on
sale of
flight
equipment 1,110 6,253
Other 757 (6)
Total other
income
(expense) 1,867 6,247
----- -----
Income from
continuing
operations
before
income
taxes 6,210 46,691
Income tax
provision 883 4,863
Earnings of
unconsolidated
equity
method
investment,
net of tax 450 1,441
--- -----
Net income $5,777 $43,269
====== =======
Earnings per common share -
Basic:
Net income
per share $0.07 $0.53
===== =====
Earnings per common share -
Diluted:
Net income
per share $0.07 $0.53
===== =====
Dividends
declared
per share $0.200 $0.220
====== ======
Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
2014 2015
---- ----
Cash flows from operating activities:
Net income (loss) $5,777 $43,269
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 73,927 74,846
Amortization of deferred financing
costs 3,420 3,699
Amortization of net lease discounts
and lease incentives 6,591 3,824
Deferred income taxes 1,347 2,110
Non-cash share based payment
expense 990 1,170
Cash flow hedges reclassified into
earnings 9,327 8,233
Security deposits and maintenance
payments included in earnings (14,786) (4,481)
Gain on sale of flight equipment (1,110) (6,253)
Impairment of aircraft 18,263 -
Other (2,162) 209
Changes in certain assets and liabilities:
Accounts receivable (1,496) 948
Other assets (1,171) (7,176)
Accounts payable, accrued expenses
and other liabilities 2,907 12,874
Lease rentals received in advance 1,167 (344)
----- ----
Net cash provided by operating
activities 102,991 132,928
------- -------
Cash flows from investing activities:
Acquisition and improvement of
flight equipment and lease
incentives (663,038) (264,271)
Proceeds from sale of flight
equipment 28,018 50,525
Aircraft purchase deposits and
progress payments 3,280 (1,250)
Collections on finance leases 2,773 2,274
Other (19) (372)
--- ----
Net cash used in investing
activities (628,986) (213,094)
-------- --------
Cash flows from financing activities:
Issuance of shares net of
repurchases (2,091) (1,960)
Proceeds from notes and term debt
financings 803,200 500,000
Securitization and term debt
financing repayments (287,778) (253,681)
Deferred financing costs (14,755) (8,971)
Restricted liquidity facility
collateral 42,000 -
Liquidity facility (42,000) -
Restricted cash and cash
equivalents related to financing
activities 20,310 11,923
Security deposits and maintenance
payments received 41,901 33,365
Security deposits and maintenance
payments returned (25,681) (22,314)
Payments for terminated cash flow
hedges (33,427) -
Dividends paid (16,201) (17,860)
------- -------
Net cash provided by financing
activities 485,478 240,502
------- -------
Net increase (decrease) in cash and
cash equivalents (40,517) 160,336
Cash and cash equivalents at
beginning of period 654,613 169,656
------- -------
Cash and cash equivalents at end of
period $614,096 $329,992
======== ========
Aircastle Limited and Subsidiaries
Selected Financial Guidance Elements for the Second
Quarter of 2015
($ in millions, except for percentages)
(Unaudited)
Guidance Item Q2:15(1)
------------- -------
Lease rental revenue $180 - $184
Finance lease revenue $1 - $2
Maintenance revenue $3 - $4
Amortization of net lease
discounts and lease incentives ($4) - ($5)
SG&A $13 - $14
Depreciation $78 - $80
Interest, net (2) $62 - $64
Gain on sale $2 - $10
Full year effective tax rate 11% - 12%
---------------------------- --------
1. Excludes the impact of lease end part outs.
2. Includes non-cash hedge loss amortization
charges related to the payoff of Term Financing
No.1 and Securitization No.1 of $4.0 million.
Aircastle Limited and Subsidiaries
Supplemental Financial Information
(Amount in thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2015
---- ----
Revenues $176,603 $194,296
EBITDA $151,441 $188,933
Adjusted EBITDA $170,013 $190,214
Adjusted net income $13,260 $50,457
Adjusted net income allocable to common
shares $13,178 $50,136
Per common share - Basic $0.16 $0.62
Per common share - Diluted $0.16 $0.62
Basic common shares outstanding 80,387 80,564
Diluted common shares outstanding 80,387 80,564
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 and Adjusted EBITDA Reconciliation
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
---------
2014 2015
---- ----
(Dollars in thousands)
---------------------
Net income $5,777 $43,269
Depreciation 73,927 74,846
Amortization
of net lease
discounts
and lease
incentives 6,591 3,824
Interest,
net 64,263 62,131
Income tax
provision 883 4,863
--- -----
EBITDA $151,441 $188,933
Adjustments:
Impairment
of aircraft 18,263 -
Non-cash
share based
payment
expense 990 1,170
(Gain) loss
on mark to
market of
interest
rate
derivative
contracts (681) 111
Adjusted
EBITDA $170,013 $190,214
======== ========
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.
Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Adjusted Net Income Reconciliation
(Dollars in thousands)
(Unaudited)
Three Months Ended
March 31,
2014 2015
---- ----
(Dollars in thousands)
---------------------
Net income $5,777 $43,269
Ineffective
portion and
termination of
hedges(1) 53 -
(Gain) loss on
mark to market
of interest
rate derivative
contracts(2) (681) 111
Non-cash share
based payment
expense(3) 990 1,170
Term Financing
No. 1 hedge
loss
amortization
charges(1) 4,104 3,126
Securitization
No. 1 hedge
loss
amortization
charges (1) 3,017 2,781
-----
Adjusted net
income $13,260 $50,457
======= =======
(1) Included in Interest, net.
(2) Included in Other income (expense).
(3) Included in Selling, general and administrative expenses.
Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Cash Return on Equity Calculation
(Dollars in thousands)
(Unaudited)
CFFO Finance Lease Collections (Gain) Loss on Sale of
Eqt. Deprec. Dividends from JV Cash Earnings Average Shareholders' Equity 12 Month Cash ROE
---- ------------------------- ---------------------- ------- ----------------- ------------- ---------------------------- -----------------
2008 $333,626 $6,525 $201,759 $138,392 $1,242,635 11.1%
2009 $327,641 $1,162 $209,481 $119,322 $1,205,284 9.9%
2010 $356,530 $7,084 $220,476 $143,138 $1,300,953 11.0%
2011 $359,377 $39,092 $242,103 $156,366 $1,370,513 11.4%
2012 $427,277 $3,852 $5,747 $269,920 $166,956 $1,425,658 11.7%
2013 $424,037 $9,508 $37,220 $284,924 $185,841 $1,513,156 12.3%
2014 $458,786 $10,312 $23,146 $299,365 $667 $193,546 $1,661,228 11.7%
LTM $488,723 $9,813 $28,289 $300,284 $279 $226,820 $1,682,857 13.5%
Note: LTM Average Shareholders'
Equity is the average of the most
recent five quarters period end
Shareholders' Equity. Management
believes that the cash return on
equity metric (Cash ROE) when
viewed in conjunction with the
Company's results under US 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 impacts
related to non-cash revenue and
expense items and interest rate
derivative accounting, while
recognizing the depreciating
nature of our assets.
Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Net Cash Interest Margin Calculation
(Dollars in thousands)
(Unaudited)
Average NBV Quarterly Cash Interest(1) Annualized Net
of Flight Lease Rental Cash Interest
Equipment Revenue Margin
--------- ------- ------
Q1:11 $4,041,967 $141,116 $41,278 9.9%
Q2:11 $4,143,446 $143,356 $43,217 9.7%
Q3:11 $4,222,512 $145,890 $42,066 9.8%
Q4:11 $4,374,921 $149,848 $43,041 9.8%
Q1:12 $4,388,008 $152,242 $44,969 9.8%
Q2:12 $4,516,973 $153,624 $48,798 9.3%
Q3:12 $4,602,185 $159,546 $41,373 10.3%
Q4:12 $4,605,783 $158,090 $43,461 10.0%
Q1:13 $4,619,204 $156,590 $48,591 9.4%
Q2:13 $4,711,790 $157,918 $47,869 9.3%
Q3:13 $4,717,877 $161,148 $47,682 9.6%
Q4:13 $4,972,040 $169,274 $49,080 9.7%
Q1:14 $5,168,851 $174,335 $51,685 9.5%
Q2:14 $5,582,359 $183,231 $48,173 9.7%
Q3:14 $5,412,299 $178,886 $44,820 9.9%
Q4:14 $5,373,733 $178,202 $44,459 10.0%
Q1:15 $5,637,513 $177,146 $50,235 9.0%
1. Excludes loan termination payments of $3.2 million and $3.0 million in the second quarter of 2011 and 2013 respectively.
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
March 31, 2015
--------------
Weighted-average
shares: Shares Percent(2)
---------------- ------ ---------
Common shares
outstanding -
Basic 80,564 99.36%
Unvested
restricted
common shares 515 0.64%
--- ----
Total weighted-
average shares
outstanding 81,080 100.00%
====== ======
Net income allocation
---------------------
Net income $43,269 100.00%
Distributed and
undistributed
earnings
allocated to
unvested
restricted
shares (275) (0.64%)
---- ------
Earnings
available to
common shares $42,994 99.36%
======= =====
Adjusted net income allocation
------------------------------
Adjusted net
income $50,457 100.00%
Amounts allocated
to unvested
restricted
shares (321) (0.64%)
---- ------
Amounts allocated
to common shares $50,136 99.36%
======= =====
(1) For the three months ended March 31, 2015 the company had no dilutive shares.
(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
March 31, 2014
--------------
Weighted-average
shares: Shares Percent(2)
---------------- ------ ---------
Common shares
outstanding -
Basic 80,387 99.38%
Unvested
restricted
common shares 501 0.62%
--- ----
Total weighted-
average shares
outstanding 80,888 100.00%
====== ======
Net income allocation
---------------------
Net income $5,777 100.00%
Distributed and
undistributed
earnings
allocated to
unvested
restricted
shares (36) (0.62%)
--- ------
Earnings
available to
common shares $5,741 99.38%
====== =====
Adjusted net income allocation
------------------------------
Adjusted net
income $13,260 100.00%
Amounts allocated
to unvested
restricted
shares (82) (0.62%)
--- ------
Amounts allocated
to common shares $13,178 99.38%
======= =====
(1) For the three months ended March 31, 2014 the company had no dilutive shares.
(2) Percentages rounded to two decimal places.
Contact:
Frank Constantinople, SVP Investor Relations
Tel: +1-203-504-1063
fconstantinople@aircastle.com
The IGB Group
Leon Berman
Tel: +1-212-477-8438
lberman@igbir.com
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SOURCE Aircastle Limited
