Aircastle Limited
Aug 7, 2009
PDF

Aircastle Announces Second Quarter 2009 Results

Second Quarter Highlights

STAMFORD, Conn.,. Aug. 7 /PRNewswire-FirstCall/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported second quarter net income of $27.6 million, or $0.35 per diluted common share and adjusted net income of $26.9 million, or $0.34 per diluted common share.

CEO Ron Wainshal commented, "Aircastle turned in another successful quarter, with utilization coming in at 98%, all of our aircraft being on lease and with the completion of our first new aircraft acquisition in over a year. However, we expect the lease market to remain challenging through the winter. We believe Aircastle's capital structure and servicing strengths will continue to serve us well not only in managing our existing portfolio but in sourcing new business. In fact, we believe the current market turmoil is now presenting some new and exciting growth opportunities for the company."

Second quarter total revenues were $136.9 million, a decrease of $8.5 million from the second quarter 2008. Lease rental revenue was $129.4 million, down $8.2 million year over year due mainly to $5.0 million of revenue downtime in connection with aircraft in freighter conversion and transition, the impact of aircraft dispositions net of acquisitions of $2.7 million and $0.7 million of floating rate lease adjustments. Amortization of net lease discounts and lease incentives was lower by $5.3 million versus the second quarter 2008, offset by higher end of lease maintenance revenue of $5.5 million.

EBITDA was $125.6 million, down $11.8 million from the second quarter of 2008 due primarily to lower lease rental revenue of $8.2 million, higher transition costs of $3.9 million, and $5.1 million of gains from aircraft sales recorded in the second quarter 2008, offset by higher maintenance revenue of $5.5 million.

Adjusted net income plus depreciation and amortization was $81.4 million, a decrease of $2.0 million compared to the second quarter of 2008. The year over year change was driven primarily by lower lease rental revenue of $8.2 million, and higher transitions costs of $3.9 million, offset by higher maintenance revenue of $5.5 million and lower interest expense, net of $5.4 million.

Adjusted net income was $26.9 million, down $7.4 million compared to the second quarter of 2008. The year over year change reflects lower total revenues of $8.5 million, higher transition costs of $3.9 million and higher income tax provision of $0.4 million, offset by lower interest expense, net of $5.4 million.

Aviation Assets

In June Aircastle took delivery of a new Airbus A330-200 aircraft on long-term lease to Aerovias del Continente Americano ("Avianca"), which represented an advancement of one of Aircastle's new A330 aircraft order positions and was funded with ECA - supported financing.

As of June 30, 2009, Aircastle owned 131 aircraft having a net book value of $3.8 billion and there were no aircraft off lease.

                                                        Owned
                                                       Aircraft
                                                        as of
                                                       June 30,
                                                        2009(A)
                                                      -----------
    110 Passenger Aircraft                                70%
    21 Freighter Aircraft(B)                              30%
    Number of Lessees                                     60
    Number of Countries                                   35
    Weighted Average Remaining Lease Term (years)(B)     5.0
    Percentage of Aircraft Leased Outside U.S.            90%
    Percentage of "Latest Generation" Aircraft            87%
    Weighted Average Fleet Utilization during Q2 2009     98%

(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.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Friday, August 7, 2009 at 12:00 P.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 Second 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, August 14, 2009 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode "18470034."

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 June 30, 2009 Aircastle's aircraft portfolio consisted of 131 aircraft and had 60 lessees located in 35 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

(1) Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.


                           Aircastle Limited and Subsidiaries
                              Consolidated Balance Sheets
                       (Dollars in thousands, except share data)

                                                    December 31,   June 30,
                                                        2008         2009
                                                    -----------  -----------
                                                                  (Unaudited)
    ASSETS
    Cash and cash equivalents                           $80,947      $95,785
    Accounts receivable                                   3,161        5,597
    Debt investments                                     14,349       13,691
    Restricted cash and cash equivalents                182,623      199,377
    Restricted liquidity facility collateral                  -       81,186
    Flight equipment held for lease, net of
     accumulated depreciation of
     $371,591 and $474,350                            3,837,543    3,832,039
    Aircraft purchase deposits and progress
     payments                                            68,923      107,357
    Leasehold improvements, furnishings and
     equipment, net of accumulated depreciation of
     $1,999 and $2,240                                    1,174        1,016
    Other assets                                         62,852       82,648
                                                         ------       ------
     Total assets                                    $4,251,572   $4,418,696
                                                     ==========   ==========

    LIABILITIES AND SHAREHOLDERS' EQUITY
    LIABILITIES
    Borrowings from securitizations and term debt
     financings                                      $2,476,296   $2,481,365
    Accounts payable, accrued expenses and other
     liabilities                                         60,789       62,269
    Dividends payable                                     7,862        7,923
    Lease rentals received in advance                    28,463       27,235
    Liquidity facility                                        -       81,186
    Security deposits                                    65,307       94,837
    Maintenance payments                                224,288      241,074
    Fair value of derivative liabilities                276,401      191,411
                                                        -------      -------
     Total liabilities                                3,139,406    3,187,300
                                                      ---------    ---------

    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
     June 30, 2009                                          786          792
    Additional paid-in capital                        1,474,455    1,476,533
    Retained earnings (deficit)                            (473)      29,723
    Accumulated other comprehensive loss               (362,602)    (275,652)
                                                      ---------    ---------
     Total shareholders' equity                       1,112,166    1,231,396
                                                      ---------    ---------
     Total liabilities and shareholders' equity      $4,251,572   $4,418,696
                                                     ==========   ==========




                         Aircastle Limited and Subsidiaries
                          Consolidated Statements of Income
                  (Dollars in thousands, except per share amounts)
                                  (Unaudited)


                             Three Months Ended           Six Months Ended
                                   June 30,                    June 30,
                             ------------------           ----------------
                               2008       2009              2008     2009
                               ----       ----              ----     ----
    Revenues:
    Lease rental revenue    $137,647   $129,406          $268,628 $255,400
    Amortization of net
     lease discounts and
     lease incentives          2,502     (2,810)            5,148   (3,927)
    Maintenance revenue        4,142      9,637             4,142   16,240
                               -----      -----             -----   ------
     Total lease rentals     144,291    136,233           277,918  267,713
    Interest income              614        594             1,905    1,227
    Other revenue                490         86               528      111
                                 ---         --               ---      ---
     Total revenues          145,395    136,913           280,351  269,051
                             -------    -------           -------  -------

    Expenses:
    Depreciation              51,605     51,688            99,820  103,249
    Interest, net             51,319     41,482            92,330   84,893
    Selling, general and
     administrative
     (including non-cash
     share based payment
     expense of $1,615 and
     $1,729 for the three
     months ended, and
     $3,213 and $3,387 for
     the six months ended
     June 30, 2008 and
     2009, respectively)      11,354     11,122            22,843   22,217
    Maintenance and other
     costs                       597      4,502             1,242   10,278
                                 ---      -----             -----   ------
     Total expenses          114,875    108,794           216,235  220,637
                             -------    -------           -------  -------

    Other income (expense):
     Gain on sale of
      aircraft                 5,126          -             5,126        -
     Other                     1,328      1,501             1,083    1,593
                               -----      -----             -----    -----
      Total other income
       (expense)               6,454      1,501             6,209    1,593
                               -----      -----             -----    -----

    Income from continuing
     operations before
     income taxes             36,974     29,620            70,325   50,007
    Income tax provision       1,633      2,049             3,347    3,965
                               -----      -----             -----    -----
    Net income               $35,341    $27,571           $66,978  $46,042
                             =======    =======           =======  =======


    Earnings per common
     share - Basic             $0.45      $0.35             $0.85    $0.58
                               =====      =====             =====    =====

    Earnings per common
     share - Diluted           $0.45      $0.35             $0.85    $0.58
                               =====      =====             =====    =====

    Dividends declared per
     share                     $0.25      $0.10             $0.50    $0.20
                               =====      =====             =====    =====




                       Aircastle Limited and Subsidiaries
                      Consolidated Statements of Cash Flows
                            (Dollars in thousands)
                                (Unaudited)


                                                         Six Months Ended
                                                              June 30,
                                                         -----------------

                                                          2008       2009
                                                          ----       ----
    Cash flows from operating activities:
    Net income                                          $66,978    $46,042
     Adjustments to reconcile net income to net cash
      provided by operating activities:
       Depreciation                                      99,820    103,249
       Amortization of deferred financing costs           6,787      5,731
       Amortization of net lease discounts and lease
        incentives                                       (5,148)     3,927
       Deferred income taxes                              2,604      3,348
       Accretion of purchase discounts on debt
        investments                                        (277)      (288)
       Non-cash share based payment expense               3,213      3,387
       Cash flow hedges reclassified into earnings          530     10,554
       Ineffective portion of cash flow hedges            5,905     (3,331)
       Gain on sale of flight equipment                  (5,126)         -
       Security deposits and maintenance payments
        included in earnings                             (3,322)   (10,506)
       Loss on sale of investments                          245          -
       Other                                               (731)    (1,164)
       Changes in certain assets and liabilities:
         Accounts receivable                             (1,731)    (2,281)
         Restricted cash and cash equivalents           (26,686)   (16,754)
         Other assets                                     1,210     (4,077)
         Accounts payable, accrued expenses and other
          liabilities                                    (2,773)   (10,118)
         Payable to affiliates                             (200)         -
         Lease rentals received in advance               (4,110)    (1,228)
                                                        -------    -------
           Net cash provided by operating activities    137,188    126,491
                                                        -------    -------

    Cash flows from investing activities:
     Acquisition and improvement of flight equipment
      and lease incentives                             (221,310)  (105,746)
     Aircraft purchase deposits and progress
      payments, net of returned deposits                  8,974    (39,715)
     Proceeds from sale of flight equipment              21,366          -
     Proceeds from sale of debt investments              65,335          -
     Principal repayments on debt investments            11,467        808
     Collateral call payments on derivatives and
      repurchase agreements                            (296,605)         -
     Collateral call receipts on derivatives and
      repurchase agreements                             330,943          -
     Leasehold improvements, furnishings and
      equipment                                            (334)       (82)
                                                          -----       ----
       Net cash used in investing activities            (80,164)  (144,735)
                                                       --------  ---------

    Cash flows from financing activities:
     Issuance, net of repurchases, of common shares
      to directors and employees                         (1,263)      (247)
     Proceeds from term debt financings                 786,135     70,916
     Securitization and term debt financing
      repayments                                        (49,504)   (65,847)
     Restricted cash and cash equivalents related to
      unreleased securitization and credit facility
      borrowings                                           (138)         -
     Deferred financing costs                           (17,568)    (3,098)
     Credit facility borrowings                         482,723          -
     Credit facility repayments                      (1,025,720)         -
     Principal repayments on repurchase agreements      (67,744)         -
     Security deposits and maintenance payments
      received                                           56,498     70,695
     Security deposits and maintenance payments
      returned                                          (14,066)   (20,794)
     Payments for terminated cash flow hedges           (68,332)    (2,758)
     Dividends paid                                     (74,644)   (15,785)
                                                       --------   --------
       Net cash provided by financing activities          6,377     33,082
                                                          -----     ------

    Net increase in cash and cash equivalents            63,401     14,838
    Cash and cash equivalents at beginning of period     13,546     80,947
                                                         ------     ------
    Cash and cash equivalents at end of period          $76,947    $95,785
                                                        =======    =======




                         Aircastle Limited and Subsidiaries
                         Supplemental Financial Information
                   (Amount in thousands, except per share amounts)
                                  (Unaudited)


                                        Three Months Ended   Six Months Ended
                                              June 30,            June 30,
                                        ------------------   -----------------
                                           2008      2009       2008     2009
                                           ----      ----       ----     ----

    Revenues                            $145,395  $136,913   $280,351 $269,051

    EBITDA                              $137,396  $125,600   $257,327 $242,076

    Adjusted net income                  $34,308   $26,884    $69,209  $48,009

    Adjusted net income allocable to
     common shares                       $33,917   $26,413    $68,442  $47,229
       Per common share - Basic            $0.44     $0.34      $0.88    $0.61
       Per common share - Diluted          $0.44     $0.34      $0.88    $0.61

    Adjusted net income plus
     depreciation and amortization       $83,411   $81,382   $163,881 $155,185

    Adjusted net income plus
     depreciation and amortization
     allocable to common shares          $82,460   $79,957   $162,065 $152,665
       Per common share - Basic            $1.06     $1.03      $2.08    $1.96
       Per common share - Diluted          $1.06     $1.03      $2.08    $1.96

    Basic common shares outstanding       77,743    77,977     77,732   77,959
    Diluted common shares outstanding     77,743    77,977     77,732   77,959


    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    Six Months Ended
                                           June 30,             June 30,
                                     ------------------    -----------------
                                       2008      2009        2008      2009
                                       ----      ----        ----      ----
    Net income                       $35,341   $27,571     $66,978   $46,042
    Depreciation                      51,605    51,688      99,820   103,249
    Amortization of net lease
     discounts and lease
     incentives                       (2,502)    2,810      (5,148)    3,927
    Interest, net                     51,319    41,482      92,330    84,893
    Income tax provision               1,633     2,049       3,347     3,965
                                       -----     -----       -----     -----
    EBITDA                          $137,396  $125,600    $257,327  $242,076
                                    ========  ========    ========  ========


    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         Six Months Ended
                                  June 30,                 June 30,
                            ------------------         ----------------
                              2008      2009            2008      2009
                              ----      ----            ----      ----
    Net income               $35,341   $27,571        $66,978   $46,042
    Ineffective portion
     and termination of
     cash flow hedges(1)       4,011       385          7,030     3,131
    Mark to market
     adjustment on
     undesignated
     derivatives(2)             (731)   (1,072)          (731)   (1,164)
    Write-off of deferred
     financing fees              813        -             813         -
    Gain on sale of
     aircraft                 (5,126)       -          (5,126)        -
    Loss on sale of
     debt investments(2)           -        -             245         -
                               -----    -----           -----     -----
    Adjusted net income       34,308   26,884          69,209    48,009

    Depreciation              51,605   51,688          99,820   103,249
    Amortization of net
     lease discounts and
     lease incentives         (2,502)   2,810          (5,148)    3,927
                              ------    -----          ------     -----
    Adjusted net income
     plus depreciation and
     amortization            $83,411  $81,382        $163,881  $155,185
                             =======  =======        ========  ========


    (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     Six Months Ended
                            June 30, 2009         June 30, 2009
                         ------------------    -------------------
                         Shares   Percent(2)    Shares   Percent(2)

    Weighted average
     shares
    ----------------
    Common shares
     outstanding -
     Basic                77,977       98.25%   77,959       98.38%
    Unvested restricted
     common shares         1,390        1.75%    1,287        1.62%
                           -----       -----     -----       -----
    Total weighted
     average shares
     outstanding          79,367      100.00%   79,246      100.00%
                          ======       =====    ======       =====

    Common shares
     outstanding -
     Basic                77,977      100.00%   77,959      100.00%
    Effect of
     dilutive shares(1)        -           -         -           -
                           -----       -----     -----       -----
    Common shares
     outstanding -
     Diluted              77,977      100.00%   77,959      100.00%
                          ======       =====    ======       =====

    Net income
     allocation
    -----------
    Net income           $27,571      100.00%  $46,042      100.00%
    Distributed and
     undistributed
     earnings allocated
     to unvested
     restricted shares      (483)     (1.75)%     (748)     (1.62)%
                           -----       -----     -----       -----
    Earnings available
     to common shares    $27,088       98.25%  $45,294       98.38%
                         =======       =====   =======       =====

    Adjusted net income
     allocation
    -------------------
    Adjusted net income  $26,884      100.00%  $48,009      100.00%
    Amounts allocated
     to unvested
     restricted shares      (471)     (1.75)%     (780)     (1.62)%
                           -----       -----     -----       -----
    Amounts allocated
     to common shares    $26,413       98.25%  $47,229       98.38%
                         =======       =====   =======       =====

    Adjusted net income
     plus depreciation
     and amortization
     allocation
    -------------------
    Adjusted net income
     plus depreciation
     and amortization    $81,382      100.00% $155,185      100.00%
    Amounts allocated
     to unvested
     restricted shares    (1,425)     (1.75)%   (2,520)     (1.62)%
                          ------       -----    ------       -----
    Amounts allocated
     to common shares    $79,957       98.25% $152,665       98.38%
                         =======       =====  ========       =====


    (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      Six Months Ended
                            June 30, 2008          June 30, 2008
                         ------------------     -------------------
                         Shares   Percent(2)    Shares    Percent(2)
    Weighted average
     shares
    ----------------
    Common shares
     outstanding -
     Basic                77,743       98.86%   77,732       98.89%
    Unvested restricted
     common shares           897        1.14%      871        1.11%
                             ---       -----       ---        -----
    Total weighted
     average shares
     outstanding          78,640      100.00%   78,603      100.00%
                          ======       =====    ======       =====

    Common shares
     outstanding -
     Basic                77,743      100.00%   77,732      100.00%
    Effect of
     dilutive shares(1)        -           -         -           -
                             ---       -----       ---       -----
    Common shares
     outstanding -
     Diluted              77,743      100.00%   77,732      100.00%
                          ======       =====    ======       =====

    Net income
     allocation
    -----------
    Net income           $35,341      100.00%  $66,978      100.00%
    Distributed and
     undistributed
     earnings allocated
     to unvested
     restricted shares      (403)     (1.14)%     (742)     (1.11)%
                           -----       -----     -----       -----
    Earnings available
     to common shares    $34,398       98.86%  $66,236       98.89%
                         =======       =====   =======       =====

    Adjusted net income
     allocation
    -------------------
    Adjusted net income  $34,308      100.00%  $69,209      100.00%
    Amounts allocated
     to unvested
     restricted shares      (391)     (1.14)%     (767)     (1.11)%
                           -----       -----     -----       -----
    Amounts allocated
     to common shares    $33,917       98.86%  $68,442       98.89%
                         =======       =====   =======       =====

    Adjusted net income
     plus depreciation
     and amortization
     allocation
    -------------------
    Adjusted net income
     plus depreciation
     and amortization    $83,411      100.00% $163,881      100.00%
    Amounts allocated
     to unvested
     restricted shares      (951)     (1.14)%   (1,816)     (1.11)%
                           -----       -----    ------       -----
    Amounts allocated
     to common shares    $82,460       98.86% $162,065       98.89%
                         =======       =====  ========       =====

    (1) The Company had no dilutive common share equivalents for
        the periods presented.
    (2) Percentages rounded to two decimal places.


 

SOURCE  Aircastle Limited

    -0-                           08/07/2009
    /CONTACT:  Julia Hallisey, Investor Relations of Aircastle Limited,
+1-203-504-1063/
    /Web Site:  www.aircastle.com /