Aircastle Limited
May 9, 2008
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Aircastle Announces First Quarter 2008 Results

Highlights

  • Total revenues of $135.0 million and net income of $31.6 million increased by 92.8% and 46.9%, respectively, over Q1 2007
  • EBITDA(1) of $119.9 million increased by 101.7% over Q1 2007
  • Income from continuing operations of $31.6 million, or $0.41 per diluted share in Q1 2008 grew by 51.7% compared to Q1 2007 and included hedge and debt investment charges of $3.3 million, or $0.04 per diluted share
  • Adjusted income from continuing operations(1) of $34.9 million, or $0.45 per diluted share, increased by 67.0% and 28.6%, respectively, over Q1 2007
  • Adjusted income from continuing operations plus depreciation(1) of $1.07 per diluted share grew by 48.6% over Q1 2007
  • Entered into and funded a $786.1 million, seven year term debt facility for a portfolio of 28 aircraft
  • Completed $169.9 million in acquisitions for the quarter Financial Results

     

    STAMFORD, Conn., May 9 /PRNewswire-FirstCall/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter total revenues of $135.0 million and net income of $31.6 million, or $0.41 per diluted share. Income from continuing operations for the first quarter was also $31.6 million, or $0.41 per diluted share, and included expenses of approximately $3.3 million, or $0.04 per diluted share, comprised of $3.0 million of charges related to the termination and ineffective portion of certain interest rate hedge agreements and a $0.3 million loss on the sale of certain debt investments.

    First quarter revenue of $135.0 million increased 92.8% over first quarter 2007. Income from continuing operations grew 51.7% year over year. The year over year increases in revenues and income from continuing operations primarily reflect the growth in our aviation assets to $4.2 billion at March 31, 2008 from $2.1 billion at March 31, 2007 and the corresponding higher weighted average debt balance compared to the prior period.

    Aviation Assets

    As of March 31, 2008 Aircastle owned aviation assets having an aggregate purchase price of $4.2 billion, including 136 aircraft.

                                                    Owned Aircraft as of
                                                      March 31, 2008(A)
        121 Passenger Aircraft                               77%
        15 Freighter Aircraft                                23%
        Number of Lessees                                     59
        Number of Countries                                   31
        Weighted Average Remaining Lease Term (years)        5.2
        Percentage of Aircraft Leased Outside U.S.           92%
        Percentage of "Latest Generation" Aircraft           86%
    
        (A) Calculated using net book value.
    
    
        Capital Markets Activity

    On May 2, 2008, Aircastle announced that two of its subsidiaries entered into and funded a $786.1 million, seven year term debt facility on a portfolio of 28 aircraft. The facility was arranged by Calyon New York Branch acting as Sole Bookrunner with HSH Nordbank AG, New York Branch, KfW Ipex-Bank GmbH and DVB Bank AG acting as Joint Lead Arrangers. Proceeds from the financing will be used to repay related outstanding amounts for the aircraft under Aircastle's existing credit facilities. The loans will bear interest on a floating rate basis at a rate of one-month LIBOR plus 1.75%.

    Aircastle's CEO Ron Wainshal commented, "Our financial results during the first quarter of 2008 were strong, with $119.9 million in EBITDA and $1.07 per diluted share of adjusted income from continuing operations plus depreciation. We believe global aircraft lease market demand remains healthy and our aircraft portfolio continues to perform extremely well, generating a run rate revenue yield on aviation assets of more than 13.7%(2) with an average remaining lease term of 5.2 years.

    Looking ahead, I believe there will continue to be excellent opportunities for asset-based, value-oriented investors and we intend to capitalize on our extensive experience acquiring and managing aviation assets. In addition, we continue to look for ways to grow our earnings, including through managed funds to invest in additional aircraft."

    Non-GAAP Information

    Aircastle discloses certain non-GAAP financial information, which management believes provides a meaningful basis for comparison among present and future periods. The following are non-GAAP measures used in the accompanying financial information:

        -- EBITDA
        -- Adjusted income from continuing operations
        -- Adjusted income from continuing operations plus depreciation
        -- Adjusted shareholders' equity
    
    

    We urge you to read the reconciliation of such data to the related GAAP measures appearing later in this release.

    Conference Call

    In connection with this earnings release, management will host an earnings conference call on Friday, May 9, 2008 at 12:00 P.M. Eastern time. A copy of the earnings release will be posted to the Investors section of the Aircastle Limited website provided below. 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 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, May 16, 2008 by dialing (800) 642-1687 (from within the U.S.) or (706) 645-9291 (from outside of the U.S.); please reference passcode "43220638."

    About Aircastle Limited

    Aircastle Limited is a global aviation company that acquires and leases high-utility commercial jet aircraft to airlines throughout the world. As of May 6, 2008, Aircastle had acquired and committed to acquire aviation assets having an aggregate purchase price equal to $4.3 billion and $1.3 billion, respectively, for a total of approximately $5.6 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, extend, modify or replace existing financing and increase revenues, earnings and EBITDA. Words such as "anticipate(s)," "expect(s)," "intend(s)," "plan(s)," "target(s)," "project(s)," "predict(s)," "believe(s)," "may," "will," "would," "could," "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. 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, 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 ability to find new ways to raise capital, including managing investment funds; 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; 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; high fuel prices and other factors affecting the creditworthiness of our airline customers; interest rate fluctuations; margin calls and termination payments 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 customers, including geographical concentration; and other risks detailed from time to time in Aircastle Limited's filings with the Securities and Exchange Commission ( the "SEC"), including "Risk Factors" as previously disclosed in Aircastle's 2007 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.
    
        (2) The run rate revenue yield is calculated by dividing the annualized
            month end lease rental run rate by the flight equipment held for lease
            net of accumulated depreciation.
    
    
    
                          Aircastle Limited and Subsidiaries
                             Consolidated Balance Sheets
                      (Dollars in thousands, except share data)
    
                                                      December 31,    March 31,
                                                          2007           2008
                                                                     (unaudited)
    
        ASSETS
        Cash and cash equivalents                        $13,546        $17,351
        Accounts receivable                                4,957          5,899
        Debt investments                                 113,015         22,374
        Restricted cash and cash equivalents             161,317        179,289
        Flight equipment held for lease,
         net of accumulated depreciation of
         $189,737 and $237,708                         3,807,116      3,980,634
        Aircraft purchase deposits and
         progress payments                               245,331        170,638
        Leasehold improvements, furnishings
         and equipment, net of accumulated
         depreciation of $1,335 and $1,526                 1,391          1,390
        Other assets                                      80,969        122,648
          Total assets                               $ 4,427,642    $ 4,500,223
    
        LIABILITIES AND SHAREHOLDERS' EQUITY
        LIABILITIES
        Borrowings under credit facilities              $798,186       $981,592
        Borrowings from securitizations                1,677,736      1,662,044
        Accounts payable, accrued expenses
         and other liabilities                            65,967         73,302
        Dividends payable                                 55,004         19,640
        Lease rentals received in advance                 31,016         26,669
        Repurchase agreements                             67,744          2,283
        Security deposits                                 74,661         72,398
        Maintenance payments                             208,363        230,585
        Fair value of derivative liabilities             154,388        248,365
          Total liabilities                            3,133,065      3,316,878
    
        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,
         78,574,657 shares issued and
         outstanding at December 31, 2007;
         and 78,559,976 shares issued and
         outstanding at March 31, 2008                       786            786
        Additional paid-in capital                     1,468,140      1,468,840
        Dividends in excess of earnings                  (48,960)       (36,963)
        Accumulated other comprehensive loss            (125,389)      (249,318)
          Total shareholders' equity                   1,294,577      1,183,345
          Total liabilities and
           shareholders' equity                      $ 4,427,642    $ 4,500,223
    
    
    
                          Aircastle Limited and Subsidiaries
                          Consolidated Statements of Income
                   (Dollars in thousands, except per share amounts)
                                     (Unaudited)
    
                                                           Three Months Ended
                                                                March 31,
                                                           2007           2008
        Revenues:
          Lease rentals                                 $ 67,358      $ 133,627
          Interest income                                  2,588          1,291
          Other revenue                                       58             38
            Total revenues                                70,004        134,956
    
        Expenses:
          Depreciation                                    21,633         48,215
          Interest, net                                   16,730         41,011
          Selling, general and administrative
           (including non-cash share based
           payment expense of $1,258 and $1,598,
           respectively)                                   8,497         11,489
          Other expenses                                     382            890
            Total expenses                                47,242        101,605
    
        Income from continuing operations before
         income taxes                                     22,762         33,351
        Income tax provision                               1,905          1,714
        Income from continuing operations                 20,857         31,637
        Earnings from discontinued operations,
         net of income taxes                                 684              -
        Net income                                      $ 21,541        $31,637
    
        Basic earnings per share:
          Income from continuing operations                $0.35          $0.41
          Earnings from discontinued operations,
           net of income taxes                              0.01              -
          Net income per share                             $0.36          $0.41
    
        Diluted earnings per share:
          Income from continuing operations                $0.35          $0.41
          Earnings from discontinued operations,
           net of income taxes                              0.01              -
          Net income per share                             $0.36          $0.41
    
        Dividends declared per share                       $0.50          $0.25
    
    
    
                          Aircastle Limited and Subsidiaries
                        Consolidated Statements of Cash Flows
                                (Dollars in thousands)
                                     (Unaudited)
    
                                                           Three Months Ended
                                                                March 31,
                                                           2007           2008
    
        Cash flows from Operating activities:
        Net income                                       $21,541        $31,637
          Adjustments to reconcile net income
           to net cash provided by operating
           activities (inclusive of amounts
           related to discontinued operations)
            Depreciation                                  22,394         48,162
            Amortization of deferred
             financing costs                               1,514          2,584
            Amortization of lease premiums
             and discounts, and other related
             lease items                                  (1,701)        (2,713)
            Deferred income taxes                          1,892          1,061
            Accretion of purchase discounts
             on debt investments                            (208)          (149)
            Non-cash share based payment expense           1,258          1,598
            Cash flow hedges reclassified
             into earnings                                (1,007)          (139)
            Ineffective portion of cash flow hedges           42          1,998
            Loss on sale of investments                        -            245
            Changes in certain assets and
             liabilities:
              Accounts receivable                          4,215           (942)
              Restricted cash and cash equivalents       (15,373)       (17,972)
              Other assets                                  (458)           574
              Accounts payable, accrued expenses
               and other liabilities                      (5,056)        (2,081)
              Payable to affiliates                          (35)          (185)
              Lease rentals received in advance            2,976         (4,347)
              Security deposits and maintenance
               payments                                   28,525         19,959
                Net cash provided by operating
                 activities                               60,519         79,290
        Cash flows from investing activities:
          Acquisition and improvement of flight
           equipment                                    (446,390)      (117,027)
          Aircraft purchase deposits and
           progress payments                              (8,600)        (5,312)
          Purchase of debt investments                   (15,251)             -
          Proceeds from sale of debt investments               -         65,335
          Principal repayments on debt investments        12,664         11,224
          Margin call payments on derivatives and
           repurchase agreements                          (5,660)      (198,882)
          Margin call receipts on derivatives
           and repurchase agreements                           -        158,244
          Leasehold improvements, furnishings
           and equipment                                       -           (190)
            Net cash used in investing activities       (463,237)       (86,608)
        Cash flows from financing activities:
          Issuance of common shares in public
           offerings, net                                493,056              -
          Repurchase of shares from directors
           and employees                                    (210)          (898)
          Securitization repayments                       (5,400)       (15,692)
          Deferred financing costs                        (1,227)        (2,571)
          Credit facility borrowings                     486,584        325,608
          Credit facility repayments                    (552,961)      (142,202)
          Proceeds from repurchase agreements                140              -
          Principal repayments on repurchase agreement    (3,790)       (65,461)
          Payments for terminated cash flow hedges             -        (32,657)
          Dividends paid                                 (22,584)       (55,004)
            Net cash provided by financing activities    393,608         11,123
        Net decrease in cash and cash equivalents         (9,110)         3,805
        Cash and cash equivalents at beginning
         of period                                        58,118         13,546
        Cash and cash equivalents at end of period       $49,008        $17,351
    
    
    
                          Aircastle Limited and Subsidiaries
                           Supplement Financial Information
                   (Amount in thousands, except per share amounts)
                                     (Unaudited)
    
                                                 Three Months Ended
                                                      March 31,        Percent
                                                 2007         2008     Increase
    
        Revenues                              $ 70,004    $ 134,956     92.8%
    
        Annualized month end lease
         rental run rate at period end        $292,397    $ 546,549     86.9%
    
        EBITDA                                $ 59,466    $ 119,931    101.7%
    
        Adjusted Income from
         continuing operations                $ 20,899      $34,901     67.0%
          Basic earnings per share               $0.36        $0.45     25.0%
          Diluted earnings per share             $0.35        $0.45     28.6%
    
        Adjusted Income from continuing
         operations plus depreciation         $ 42,532      $83,116     95.4%
          Basic earnings per share               $0.72        $1.07     48.6%
          Diluted earnings per share             $0.72        $1.07     48.6%
    
        Basic Shares Outstanding                58,864       77,720
        Diluted Shares Outstanding              59,156       77,720
    
    

    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,
                                                           2007           2008
    
        Net income                                      $ 21,541        $31,637
        Depreciation                                      21,633         48,215
        Amortization                                      (1,659)        (2,646)
        Interest, net                                     16,730         41,011
        Income tax provision                               1,905          1,714
        Earnings from discontinued operations,
         net of income taxes                                (684)             -
        EBITDA                                          $ 59,466      $ 119,931
    
    

    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-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 Income from Continuing Operations plus Depreciation Reconciliation
                                (Dollars in thousands)
                                     (Unaudited)
    
                                                           Three Months Ended
                                                                March 31,
                                                           2007           2008
    
        Income from continuing operations               $ 20,857        $31,637
          Termination of cash flow hedge                       -          1,021
          Ineffective portion of cash flow hedges             42          1,998
          Loss on sale of debt investments                     -            245
        Adjusted income from continuing operations        20,899         34,901
    
          Depreciation                                    21,633         48,215
        Adjusted income from continuing operations
         plus depreciation                               $42,532        $83,116
    
    

    We adjust income from continuing operations for termination of cash flow hedges, ineffective portion of cash flow hedges and loss on sale of debt investments. We use adjusted income from continuing operations to assess our consolidated financial and operating performance, and we believe this non-GAAP measure is helpful in identifying trends in our performance net of non- recurring items.

    We use adjusted income from continuing operations plus depreciation 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
                     Adjusted Shareholders' Equity Reconciliation
                                (Dollars in thousands)
                                     (Unaudited)
    
                                                    December 31,      March 31,
                                                           2007           2008
    
        Shareholders' equity                          $1,294,577     $1,183,345
          Fair value of derivative liability             154,388        248,365
        Adjusted shareholders' equity                 $1,448,965     $1,431,171
    
    

    We define adjusted shareholders' equity as shareholders' equity less the fair value of our derivative contracts. We believe this non-GAAP measure provides us with a consistent basis to evaluate and measure our operating performance net of mark to market (i.e., unrealized) fluctuations in our derivative contracts.

    SOURCE Aircastle Limited

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