Aircastle Limited
May 5, 2010
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Aircastle Announces First Quarter 2010 Results

STAMFORD, Conn., May 5, 2010 /PRNewswire via COMTEX/ --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 http://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