Aircastle Announces First Quarter 2024 Results

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Jul 11, 2024, 07:00 ET

Highlights for the Three Months Ended May 31, 2024

Total revenues of $205 million and net income of $16 million
Adjusted EBITDA⁽¹⁾ of $186 million
Lease rental revenue and direct financing and sales-type lease revenue increased 14% compared to first quarter 2023
Acquired 9 aircraft for $223 million; net book value of flight equipment is $7.3 billion, up 7% compared to first quarter 2023
Fleet utilization at 99%

Liquidity

Ratings Outlook revised to Positive by S&P
Received $300 million equity from shareholders in June 2024, completing a $500 million total commitment
Total liquidity as of July 5, 2024 of $2.6 billion includes $2.0 billion of undrawn facilities, $0.5 billion of projected adjusted operating cash flows and sales through July 5, 2025, and $0.1 billion of unrestricted cash
212 unencumbered aircraft and other flight equipment with a net book value of $6.0 billion

STAMFORD, Conn., July 11, 2024 /PRNewswire/ -- Mike Inglese, Aircastle's Chief Executive Officer, commented, "The increasing demand for air travel has enabled global traffic to meet, and in some regions, exceed 2019 levels. While IATA is predicting world passengers to increase 3.8% annually over the next 20 years, aircraft and engine manufacturers are not providing the output that meets even baseline needs of airlines. As a result, we're seeing strong long-term demand for all narrow-body passenger aircraft types and extended viability of current technology aircraft."

Mr. Inglese concluded, "We recently announced that our shareholders, Marubeni Corporation and Mizuho Leasing, have completed their $500 million equity commitment. During the first quarter, our IG status was further bolstered by an Outlook revision to Positive from S&P. With positive tailwinds, we're pleased to be putting our equity to work and growing our fleet with the most sought-after narrow-body passenger aircraft."

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

Aviation Assets

As of May 31, 2024, Aircastle owned 250 aircraft and other flight equipment having a net book value of $7.3 billion. We also manage 9 aircraft with a net book value of $268 million on behalf of our joint venture with Mizuho Leasing.

Owned Aircraft	As of May 31, 2024	As of May 31, 2023
Net Book Value of Flight Equipment	$ 7,327	$ 6,862
Net Book Value of Unencumbered Flight Equipment	$ 5,958	$ 5,348
Number of Aircraft	250	244
Number of Unencumbered Aircraft	212	206
Number of Lessees	76	73
Number of Countries	44	43
Weighted Average Fleet Age (Years)⁽¹⁾	9.6	9.6
Weighted Average Remaining Lease Term (Years)⁽¹⁾	5.2	5.4
Weighted Average Fleet Utilization during the three months ended May 31, 2024 and 2023⁽²⁾	99.1 %	95.6 %

Managed Aircraft on behalf of Joint Ventures
Net Book Value of Flight Equipment	$ 268	$ 282
Number of Aircraft	9	9

_______________

1. Weighted by Net Book Value.

2. Aircraft on-lease days as a percentage of total days in period weighted by Net Book Value.

Conference Call

In connection with this press release, management will host a conference call on Thursday, July 11, 2024, 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 1 (800) 836-8184 (from within the U.S. and Canada) or +1 (646) 357-8785 (outside the U.S. and Canada) ten minutes prior to the scheduled start. Please reference our company name "Aircastle" when prompted by the operator.

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.

For those who are not available to listen to the live call, a replay will be available on Aircastle's website shortly after the live call.

About Aircastle Limited

Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of May 31, 2024, Aircastle owned and managed on behalf of its joint ventures 259 aircraft leased to 77 airline customers located in 44 countries.

Safe Harbor

All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted 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 our historical performance and that of our subsidiaries and on our current plans, estimates and expectations 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 such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's most recent Form 10-K and any subsequent filings with the SEC. 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 expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.

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

	May 31, 2024	February 29, 2024
	(Unaudited)
ASSETS
Cash and cash equivalents	$ 164,604	$ 129,977
Accounts receivable	9,380	12,518
Flight equipment held for lease, net	7,047,120	6,940,502
Net investment in leases, net	279,901	282,439
Unconsolidated equity method investment	43,229	42,710
Other assets	278,458	271,807

Total assets	$ 7,822,692	$ 7,679,953

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Borrowings from secured financings, net	$ 855,908	$ 875,397
Borrowings from unsecured financings, net	3,876,765	3,823,099
Accounts payable, accrued expenses and other liabilities	271,701	219,588
Lease rentals received in advance	63,137	52,654
Security deposits	71,488	69,544
Maintenance payments	533,838	505,897
Total liabilities	5,672,837	5,546,179

Commitments and Contingencies

SHAREHOLDERS' EQUITY
Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at May 31, 2024 and February 29, 2024	—	—
Common shares, $0.01 par value, 250,000,000 shares authorized, 15,564 shares issued and outstanding at May 31, 2024 and February 29, 2024	—	—
Additional paid-in capital	2,078,774	2,078,774
Retained earnings	71,081	55,000
Total shareholders' equity	2,149,855	2,133,774
Total liabilities and shareholders' equity	$ 7,822,692	$ 7,679,953

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

	Three Months Ended May 31,
	2024	2023
Revenues:
Lease rental revenue	$ 162,570	$ 146,735
Direct financing and sales-type lease revenue	5,457	1,073
Amortization of lease premiums, discounts and incentives	(6,649)	(7,207)
Maintenance revenue	42,149	34,520

Total lease revenue	203,527	175,121
Gain on sale or disposition of flight equipment	1,010	42,594
Other revenue	636	776

Total revenues	205,173	218,491

Operating expenses:
Depreciation	89,358	88,789
Interest, net	64,813	56,891
Selling, general and administrative	22,055	20,835
Provision for credit losses	(145)	6,959
Impairment of flight equipment	5,211	1,097
Maintenance and other costs	4,443	8,533

Total operating expenses	185,735	183,104

Other income (expense):
Other	(304)	1,337
Total other income (expense)	(304)	1,337

Income from continuing operations before income taxes and earnings of unconsolidated equity method investment	19,134	36,724
Income tax provision	3,572	14,360
Earnings of unconsolidated equity method investment, net of tax	519	406

Net income	$ 16,081	$ 22,770

Net income available to common shareholders	$ 16,081	$ 22,770

Total comprehensive income available to common shareholders	$ 16,081	$ 22,770

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

	Three Months Ended May 31,
	2024	2023
Cash flows from operating activities:
Net income	$ 16,081	$ 22,770
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation	89,358	88,789
Amortization of deferred financing costs	4,343	4,031
Amortization of lease premiums, discounts and incentives	6,649	7,207
Deferred income taxes	5,314	3,812
Collections on net investment in leases	713	927
Security deposits and maintenance payments included in earnings	(2,210)	(3,203)
Gain on sale or disposition of flight equipment	(1,010)	(42,594)
Impairment of flight equipment	5,211	1,097
Provision for credit losses	(145)	6,959
Other	(508)	(397)
Changes in certain assets and liabilities:
Accounts receivable	(1,273)	3,209
Other assets	(2,927)	(3,607)
Accounts payable, accrued expenses and other liabilities	17,967	2,272
Lease rentals received in advance	9,441	9,178
Net cash and cash equivalents provided by operating activities	147,004	100,450
Cash flows from investing activities:
Acquisition and improvement of flight equipment	(224,935)	(322,151)
Proceeds from sale of flight equipment	25,379	53,782
Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits	35,181	4,947
Other	(209)	(2,900)
Net cash and cash equivalents used in investing activities	(164,584)	(266,322)
Cash flows from financing activities:
Proceeds from secured and unsecured debt financings	550,000	624,911
Repayments of secured and unsecured debt financings	(520,118)	(569,206)
Deferred financing costs	(48)	(527)
Security deposits and maintenance payments received	34,960	31,620
Security deposits and maintenance payments returned	(2,087)	(6,131)
Dividends paid	(10,500)	(10,500)
Net cash and cash equivalents provided by financing activities	52,207	70,167
Net increase (decrease) in cash and cash equivalents	34,627	(95,705)
Cash and cash equivalents at beginning of period	129,977	231,861

Cash and cash equivalents at end of period	$ 164,604	$ 136,156

Aircastle Limited and Subsidiaries Reconciliation of GAAP to Non-GAAP Measures EBITDA and Adjusted EBITDA Reconciliation (Dollars in thousands) (Unaudited)

	Three Months Ended May 31,
	2024	2023
Net income	$ 16,081	$ 22,770
Depreciation	89,358	88,789
Amortization of lease premiums, discounts and incentives	6,649	7,207
Interest, net	64,813	56,891
Income tax provision	3,572	14,360

EBITDA	180,473	190,017
Adjustments:
Impairment of flight equipment	5,211	1,097

Adjusted EBITDA	$ 185,684	$ 191,114

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-U.S. 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.

Contact:
Aircastle Advisor LLC
James Connelly, SVP ESG & Corporate Communications
Tel: +1-203-504-1871
[email protected]

SOURCE Aircastle Advisor LLC