Aircastle Announces First Quarter 2013 Results

STAMFORD, Conn., May 2, 2013 /PRNewswire/ -- Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter 2013 net income of $23.1 million, or $0.34 per diluted common share, and adjusted net income of $27.4 million, or $0.40 per diluted common share.  The first quarter results included lease rental and finance lease revenues of $160.5 million versus $152.2 million in the first quarter of 2012. 

Commenting on the results, Ron Wainshal, Aircastle's CEO, stated: "Effective portfolio management was a major driver of our solid first quarter results, as we demonstrated both our aircraft servicing skills as well as our ability to exit end-of-life aircraft investments profitably.  Additionally, our aircraft purchase commitments for 2013 increased to more than $450 million, and we are encouraged by the growth in our new investment pipeline.  With nearly $700 million in unrestricted cash and strong operating cash flow, Aircastle is in an excellent position to pursue accretive new purchase opportunities."   

First Quarter Results

Lease rental and finance lease revenues for the first quarter were $160.5 million, up $8.2 million or 5% year over year, due primarily to the impact of aircraft acquisitions of $25.9 million, partially offset by lower revenues from aircraft sold of $6.5 million and the effect of lease extensions, transitions and terminations of $11.2 million.

Total revenues for the first quarter were $176.2 million, an increase of $11.3 million, or 7% versus the previous year.  The increase reflects $8.2 million of higher lease rental and finance lease revenues, $4.2 million of higher maintenance revenues associated with unscheduled lease terminations, and $4.3 million of higher other revenues from interest on debt investments and additional revenue in connection with early lease terminations. These increases were partially offset by higher amortization of net lease premiums and incentives in the first quarter of 2013 of $5.5 million, primarily due to two unscheduled lease transitions in the first quarter of the prior year which led to comparatively lower amortization of lease incentives. 

During the first quarter of 2013 we early terminated leases for five aircraft in the wake of lessee financial difficulties.  As a result, during the quarter we recorded maintenance and other revenues totaling $14.8 million which was partially offset by impairment charges totaling $6.2 million.  Two of these five aircraft – an A319-100 and a B767-300ER – have been classified as held for sale. 

Adjusted EBITDA for the first quarter was $168.6 million, up $16.7 million or 11% from the first quarter of 2012, driven primarily by higher lease rentals, maintenance and other revenues of $16.8. 

Net income for the first quarter was $23.1 million, down $9.5 million, or 29%.  Higher total revenues of $11.3 million and $1.0 million of higher gains from the sale of aircraft were offset by higher interest, net of $10.2 million, higher depreciation of $5.4 million and non-cash aircraft impairment charges of $6.2 million.  

Adjusted net income for the quarter was $27.4 million, down $5.0 million year over year, and reflects higher total revenues of $11.3 million and $1.0 million of higher gains from the sale of aircraft.  These increases were offset by non-cash impairment charges of $6.2 million, higher depreciation of $5.4 million and higher adjusted interest expense, maintenance and other costs of $5.6 million.

Aviation Assets

Thus far in 2013, we closed or committed to acquire ten aircraft for more than $450 million.  During the first quarter, we closed on the purchase of one 767-300ER subject to a finance lease.  Aircraft sales and dispositions totaled $19.8 million which resulted in a net gain on the sale of aircraft of $1.2 million. 

As of March 31, 2013, Aircastle owned 158 aircraft having a net book value of $4.7 billion.

Common Dividend and Share Repurchases

On May 1, 2013, Aircastle's Board of Directors declared a second quarter 2013 cash dividend on its common shares of $0.165 per share, payable on June 14, 2013 to shareholders of record on May 31, 2013. 

During the first quarter of 2013, we repurchased 679 thousand of our common shares at an aggregate cost of $8.6 million.  Since early 2011 we have repurchased 11.7 million shares at an average cost of $11.87 per share, and have $30 million remaining under the current repurchase authorization. 

Conference Call

In connection with this earnings release, management will host an earnings conference call on Thursday, May 2, 2013 at 10:00AM Eastern time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (888) 466-4587 (from within the U.S. and Canada) or (719) 325-2286 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "8072225".

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.  A replay of the webcast will be available for one month following the call.  In addition to this earnings release, an accompanying power point presentation has been posted to the Investor Relations section of Aircastle's website.

For those who are not available to listen to the live call, a replay will be available until 1:00PM Eastern time on Saturday, June 1, 2013 by dialing (888) 203-1112 (from within the U.S. and Canada) or (719) 457-0820 (from outside of the U.S. and Canada); please reference passcode "8072225".

About Aircastle Limited

Aircastle Limited acquires, leases and sells high-utility commercial jet aircraft to airlines throughout the world.  As of March 31, 2013, Aircastle's aircraft portfolio consisted of 158 aircraft on lease with 66 customers located in 36 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, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA, Adjusted EBITDA and Adjusted Net Income and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on 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 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 report. 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 expectations include, but are not limited to, capital markets disruption or volatility which could adversely affect our continued ability to obtain additional capital to finance new investments or our working capital needs; government fiscal or tax policies, general economic and business conditions or other factors affecting demand for aircraft or aircraft values 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 political unrest in North Africa, the Middle East or elsewhere, 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's filings with the SEC, including as previously disclosed in Aircastle's 2012 Annual Report on Form 10-K, and elsewhere in this report. 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 report. 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 Supplemental Financial Information accompanying this press release for a reconciliation of GAAP to non-GAAP numbers.

Contact: 
Frank Constantinople, SVP Investor Relations
Tel: +1-203-504-1063
[email protected]  

The IGB Group
Leon Berman
Tel: +1-212-477-8438
[email protected]

We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization.  We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-US GAAP measure is helpful in identifying trends in our performance.  This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.  EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization.  EBITDA is one of the metrics used by senior management and the board of directors to review the consolidated financial performance of our business.  We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes.  Adjusted EBITDA is a material component of these covenants.

Beginning with our report for the quarter ended March 31, 2012, management, to be more consistent with reporting practices of peer aircraft leasing companies, has revised the calculation of ANI to no longer exclude gains (losses) on sales of assets, and to exclude non-cash share based payment expense in the calculation of ANI.  Beginning with our quarterly report for the quarter ended June 30, 2012, we also excluded Term Financing No. 1 hedge loss amortization charges which will be reported in Interest, net on our consolidated statement of income from the calculation of ANI. The same applies to hedge loss amortization charges associated with Securitization No. 1, which began in the first quarter of 2013.  The calculation of ANI for the three months ended March 31, 2012 has been revised to be comparable with the current period presentation.

Management believes that ANI, when viewed in conjunction with the Company's results under US GAAP and the below reconciliation, provides useful information about operating and period-over-period performance, and provides 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 and gains or losses related to flight equipment and debt investments.

SOURCE Aircastle Limited