Aircastle Limited
Feb 22, 2008
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Aircastle Announces Fourth Quarter and Full Year 2007 Results

STAMFORD, Conn., Feb. 22 /PRNewswire-FirstCall/ --

Fourth Quarter and Full Year 2007 Highlights

  • Fourth quarter net income of $35.3 million, or $0.46 per diluted share, up 78.2% and 17.9%, respectively, from fourth quarter of 2006. Net income for the fourth quarter included non-cash expenses of $43.4 million for depreciation and share-based payments and $1.3 million of income from discontinued operations.
  • Full year 2007 net income of $127.3 million, or $1.89 per diluted share, up 148.7% and 70.3%, respectively, compared to 2006. Net income for the year included non-cash expenses of $133.1 million for depreciation and share-based payments and $12.9 million of income from discontinued operations.
  • Total revenues of $120.7 million for fourth quarter 2007 and $381.1 million for the full year, up 102.7% and 108.4%, respectively, compared to 2006.
  • Total owned aviation assets having an aggregate purchase price of $4.1 billion as of December 31, 2007, up 134.9% from December 31, 2006. Acquired 65 aircraft for $2.3 billion in 2007, including the acquisition of 24 aircraft in the fourth quarter.
  • Declared fourth quarter dividend of $0.70 per common share; a 7.7% increase over third quarter 2007 dividend and a 60.0% increase year over year.

 

Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported fourth quarter net income of $35.3 million (including non-cash expenses of $43.4 million for depreciation and share based payment expense), or $0.46 per diluted share, representing a 78.2% and a 17.9% increase, respectively, over fourth quarter 2006. Income from continuing operations was $33.9 million for the fourth quarter 2007, or $0.44 per diluted share, up 77.9% and 15.8%, respectively, from fourth quarter 2006. Fourth quarter revenue of $120.7 million increased 102.7% over fourth quarter 2006.

Net income for the year ended December 31, 2007 was $127.3 million (including non-cash expenses of $133.1 million for depreciation and share based payment expense), or $1.89 per diluted share, up 148.7% and 70.3%, respectively, over 2006. Income from continuing operations was $114.4 million for the full year 2007, or $1.70 per diluted share, up 149.1% and 70.0%, respectively, over 2006 results. Total revenue for the year was $381.1 million, up 108.4% from 2006.

Investments in Aviation Assets

As of December 31, 2007, Aircastle owned aviation assets having an aggregate purchase price of $4.1 billion, including 133 aircraft leased to 58 lessees located in 31 countries. During 2007 Aircastle acquired $2.3 billion of aviation assets including 65 aircraft. During the fourth quarter, 24 aircraft were acquired for $820.1 million. In addition, Aircastle had outstanding commitments to acquire 23 aircraft for $1.6 billion as of December 31, 2007, of which 7 aircraft have been or will be acquired during 2008. As of December 31, 2007, all 133 of the Company's aircraft were either on lease or undergoing the conversion process from passenger to freighter configuration, with both aircraft in conversion having signed, ten-year leases that will commence upon completion of the conversion process.

On June 20, 2007, Aircastle entered into an acquisition agreement under which the Company agreed to acquire fifteen new A330-200 freighter aircraft from Airbus SAS, as a launch customer. The new A330-200 freighter aircraft are scheduled for delivery between June 2010 and November 2011, with five scheduled for delivery in 2010. Aircastle agreed to separate arrangements with Rolls-Royce PLC and Pratt & Whitney to acquire engines for these aircraft.

Aircastle's CEO, Ron Wainshal, commented, "We're very pleased with the results of our investment activities this year and have constructed a well diversified global portfolio of high utility assets. Moreover, we've capitalized on the continuing strength in aircraft demand by extending terms and signing and committing leases for nearly all of our placement needs for 2008 and have made significant progress on our 2009 placements."

Capital Markets Activity

On February 5, 2008, Aircastle announced that a subsidiary company entered into a $300.0 million senior secured credit agreement with JPMorgan Chase Bank, N.A. and Calyon New York Branch. This credit facility provides for loans to finance certain specified aircraft owned or to be acquired by affiliates of Aircastle.

During 2007, Aircastle successfully completed follow-on public equity offerings in February and October, raising gross proceeds of approximately $512.3 million and $349.3 million respectively. Aircastle also closed its second securitization encompassing fifty-nine aircraft, issuing $1.17 billion of ACS 2007-1 Class G-1 Certificates, in June 2007.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Friday, February 22, 2008 at 9:00 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 Fourth Quarter and Year End 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, March 7, 2008 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode "34057276."

About Aircastle Limited

Aircastle Limited is a global company that acquires, owns and leases high- utility commercial jet aircraft to airlines throughout the world. As of February 21, 2008 Aircastle had acquired and committed to acquire aviation assets having an aggregate purchase price equal to $4.2 billion and $1.5 billion, respectively, for a total of $5.7 billion.

Safe Harbor

Certain items in this press release 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, issue aircraft lease-backed securities or raise other long-term debt, pay and grow dividends, realize gains or income from our debt investments, obtain required licenses and governmental approvals, obtain favorable tax treatment, extend, modify or replace existing financing and increase revenues, earnings and EBITDA. Words such as "anticipate(s)", "expect(s)", "intend(s)", "plan(s)", "project(s)", "believe(s)", "will", "would", "should", "seek(s)", "estimate(s)" 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. Factors that could cause actual results to differ materially from Aircastle Limited's expectations include, but are not limited to, our customer concentration; our continued ability to obtain additional capital to finance our working capital needs and our growth and to refinance our short-term debt financings with longer-term debt financings; our ability to acquire aircraft at attractive prices; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay or maintain dividends; our ability to lease aircraft at favorable rates; an adverse change in the value of our aircraft; the possibility that conditions to closing of certain transactions will not be satisfied; our ability to realize gains or income from, and to continue to finance, our debt investments; general economic conditions and economic conditions in the markets in which we operate; competitive pressures within the industry and/or markets in which we operate; the creditworthiness of our airline customers; interest rate fluctuations; margin calls on our interest rate hedges; our ability to obtain certain required licenses and approvals; the impact of future terrorist attacks or wars on the airline industry; our concentration of leases in certain geographical regions; and other risks detailed from time to time in Aircastle's filings with the Securities and Exchange Commission ('SEC"), including as disclosed in our 2006 Annual Report on Form 10-K and updated in our Quarterly Report on Form 10-Q filed on August 14, 2007, and in our other filings with the SEC. Such forward-looking statements speak only as of the date of this press release. Aircastle expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's 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, December 31,
                                                         2006         2007
                                                                  (unaudited)
                                         ASSETS
    Cash and cash equivalents                           $58,118      $13,546
    Accounts receivable                                   7,696        4,957
    Debt investments                                    121,273      113,015
    Restricted cash and cash equivalents                106,069      161,317
    Flight equipment held for sale                       31,280           --
    Flight equipment held for lease, net of
     accumulated depreciation of $64,111 and
     $189,737                                         1,559,365    3,807,116
    Aircraft purchase deposits and progress
     payments                                             4,650      245,331
    Leasehold improvements, furnishings and
     equipment, net of accumulated depreciation
     of $694 and $1,335                                   1,506        1,391
    Fair value of derivative assets                         313           --
    Other assets                                         28,433       80,969
      Total assets                                   $1,918,703   $4,427,642

                           LIABILITIES AND SHAREHOLDERS' EQUITY
    Liabilities
    Borrowings under credit facilities                 $442,660     $798,186
    Borrowings from securitizations                     549,400    1,677,736
    Accounts payable, accrued expenses and other
     liabilities                                         31,384       65,967
    Dividends payable                                    22,584       55,004
    Lease rentals received in advance                    11,068       31,016
    Repurchase agreements                                83,694       67,744
    Security deposits                                    39,767       74,661
    Maintenance payments                                 82,914      208,363
    Fair value of derivative liabilities                 18,035      154,388
      Total liabilities                               1,281,506    3,133,065

    Commitments and Contingencies

    Shareholders' Equity
    Preference shares, $.01 par value, 50,000,000
     shares authorized, no shares issued and
     outstanding at December 31, 2006 and
     December 31, 2007                                       --           --
    Common shares, $.01 par value, 250,000,000
     shares authorized, 51,621,279 shares issued
     and outstanding at December 31, 2006; and
     78,574,657 shares issued and outstanding at
     December 31, 2007                                      516          786
    Additional paid-in capital                          630,154    1,468,140
    Dividends in excess of earnings                      (3,382)     (48,960)
    Accumulated other comprehensive income (loss)         9,909     (125,389)
      Total shareholders' equity                        637,197    1,294,577
      Total liabilities and shareholders' equity     $1,918,703   $4,427,642



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


                                   Three Months Ended        Years Ended
                                       December 31,          December 31,
                                     2006       2007       2006       2007
                                        (unaudited)                (unaudited)
    Revenues:
      Lease rentals                 $57,048   $117,729   $173,605   $369,876
      Interest income                 2,450      2,717      9,038     10,400
      Other revenue                      56        262        209        815
        Total revenues               59,554    120,708    182,852    381,091
    Expenses:
      Depreciation                   17,684     42,025     53,424    126,403
      Interest, net                  15,419     29,509     49,566     92,660
      Selling, general and
       administrative (including
       non-cash share based payment
       expense of $1,166 and $1,398
       for the three months ended
       and $8,895 and $6,674 for the
       years ended December 31, 2006
       and 2007, respectively)        6,860     11,716     27,836     39,040
      Other expenses                     61        817      1,261        927
        Total expenses               40,024     84,067    132,087    259,030
      Income from continuing
       operations before income
       taxes                         19,530     36,641     50,765    122,061
      Income tax provision              465      2,723      4,845      7,658
      Income from continuing
       operations                    19,065     33,918     45,920    114,403
      Earnings from discontinued
       operations, net of income
       taxes                            729      1,347      5,286     12,941
      Net income                    $19,794    $35,265    $51,206   $127,344

      Basic earnings per share:
        Income from continuing
         operations                   $0.38      $0.44      $1.00      $1.71
        Earnings from discontinued
         operations, net of
         income taxes                  0.01       0.02       0.12       0.19
        Net income per share          $0.39      $0.46      $1.12      $1.90

      Diluted earnings per share:
        Income from continuing
         operations                   $0.38      $0.44      $1.00      $1.70
        Earnings from discontinued
         operations, net of
         income taxes                  0.01       0.02       0.11       0.19
        Net income per share          $0.39      $0.46      $1.11      $1.89

      Dividends paid per share      $0.1940      $0.65      $0.70    $2.1875

      Weighted average shares
       used to compute basic
       earnings per share        50,802,537 76,514,226 45,758,242 67,177,528

      Weighted average shares
       used to compute diluted
       earnings per share        51,092,298 76,778,606 46,051,999 67,417,802



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


                                                            Years Ended
                                                            December 31,
                                                         2006         2007
                                                                  (unaudited)
    Cash flows from operating activities
    Net income                                          $51,206     $127,344
      Adjustments to reconcile net income to net cash
       provided by operating activities (inclusive of
       amounts related to discontinued operations):
        Depreciation                                     56,629      127,164
        Amortization of deferred financing costs          6,380        6,991
        Amortization of lease premiums and discounts,
         and other related lease items                   (3,705)      (7,379)
        Deferred income taxes                             2,341       (3,590)
        Accretion of purchase discounts on debt
         investments                                       (756)        (849)
        Non-cash share based payment expense              8,895        6,674
        Capitalized interest                                 --       (7,267)
        Cash flow hedges reclassified into earnings      (2,213)      (4,849)
        Realized gain on derivative contract                 --       (1,154)
        Ineffective portion of cash flow hedges            (814)         171
        Gain on the sale of flight equipment             (2,240)     (11,566)
        Changes in certain assets and liabilities:
          Accounts receivable                            (4,581)       2,739
          Restricted cash and cash equivalents          (65,417)     (55,248)
          Other assets                                     (634)      (4,867)
          Accounts payable, accrued expenses and other
           liabilities                                     (255)      12,896
          Payable to affiliates                              27           68
          Lease rentals received in advance               4,827       19,948
          Security deposits and maintenance payments     85,592      166,568
            Net cash provided by operating activities   135,282      373,794
    Cash flows from investing activities
      Acquisition and improvement of flight equipment  (882,920)  (2,321,237)
      Disposition of flight equipment held for sale      57,157       34,945
      Aircraft purchase deposits and progress payments   (1,186)    (163,433)
      Purchase of debt investments                      (92,726)     (15,251)
      Principal repayments on debt investments            3,606       20,801
      Margin call payments on derivatives and
       repurchase agreements                             (4,345)    (104,121)
      Margin call receipts on derivatives and
       repurchase agreements                                 --       72,586
      Leasehold improvements, furnishings and
       equipment                                           (506)        (526)
        Net cash used in investing activities          (920,920)  (2,476,236)
    Cash flows from financing activities
      Issuance of common shares in public offerings,
       net                                              219,595      830,809
      Issuance of common shares to Fortress, directors
       and employees                                     38,703        1,218
      Repurchase of shares from Fortress, directors
       and employees                                    (36,932)        (445)
      Proceeds from securitizations                     560,000    1,170,000
      Securitization repayments                         (10,600)     (41,664)
      Deferred financing costs                          (19,434)     (14,140)
      Credit facility borrowings                        751,736    2,059,741
      Credit facility repayments                       (799,664)  (1,800,141)
      Proceeds from repurchase agreements                76,007        1,967
      Principal repayments on repurchase agreements        (978)     (17,917)
      Proceeds from terminated cash flow hedges          16,142        8,944
      Dividends paid                                    (30,762)    (140,502)
        Net cash provided by financing activities       763,813    2,057,870
    Net decrease in cash and cash equivalents           (21,825)     (44,572)
    Cash and cash equivalents at beginning of period     79,943       58,118
    Cash and cash equivalents at end of period          $58,118      $13,546

For more information regarding Aircastle and to be added to our email distribution list, please visit www.aircastle.com.

SOURCE Aircastle Limited CONTACT: Julia Hallisey, Investor Relations of Aircastle Limited, +1-203-504-1063