Aircastle Announces Fourth Quarter and Full Year 2022 Results

News provided by

Aircastle Advisor LLC

Apr 25, 2023, 07:00 ET

Three Months Ended February 28, 2023

Net income of $14 million compared to $216 million net loss in fourth quarter 2021⁽¹⁾
Total revenues of $189 million and Adjusted EBITDA⁽²⁾ of $180 million
Acquired 7 aircraft for $296 million; 6 of which were new technology aircraft including 1 A320neo, 1 A321neo, 1 737MAX8, and 3 Embraer E2s
Sold 8 aircraft for proceeds of $92 million and a gain on sale of flight equipment of $4 million

Full Year Ended February 28, 2023

Cash flows from operations increased 17% compared to fiscal year 2021
Acquired 22 aircraft during the fiscal year 2022 for $914 million; new technology composed 77% of NBV acquired; converted 3 737-800 to freighter
Sold 25 aircraft and other flight equipment for proceeds of $426 million and a total gain on sale of $71 million; average age of aircraft sold was 17 years
Executed 187 transactions for the fiscal year, comprised of lease agreements, amendments, extensions, purchases and sales

Liquidity

Raised $850 million in new financings from a $450 million secured aircraft financing facility and $400 million for new or upsized revolving credit facilities
As of April 3, 2023, total liquidity of $2.0 billion includes $1.4 billion of undrawn credit facilities, $0.5 billion of projected adjusted operating cash flows through April 1, 2024, and $0.1 billion of unrestricted cash, and
We have 209 unencumbered aircraft with a net book value of $5.5 billion

STAMFORD, Conn., April 25, 2023 /PRNewswire/ -- Mike Inglese, Aircastle's Chief Executive Officer, commented, "We're proud to finish fiscal 2022 with a return to profitability and increased trading while navigating challenging macroeconomics. Despite the competitive market for new technology aircraft, our team successfully completed just over $900 million in new acquisitions, over three-quarters of which were new technology. Meanwhile, our capital markets team also worked through the volatile interest rate environment and sourced $850 million in new financing."

Mr. Inglese concluded, "Our partnership with the Marubeni Corporation and Mizuho Leasing has just marked its three year anniversary. During 2022, this relationship continued to deliver on expanded market access and credit rating support. Our unique ownership, along with a limited forward order book and our ability to quickly raise and deploy capital, we are well positioned for disciplined future growth."


(1)	Refer to the Notes to the Consolidated Financial Statements included in our Annual Report on Form 10-K for additional information.
(2)	Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.

Aviation Assets

As of February 28, 2023, Aircastle owned 239 aircraft and other flight equipment having a net book value of $6.6 billion. We also manage 9 aircraft with a net book value of $285 million on behalf of our joint venture with Mizuho Leasing.

Owned Aircraft	As of February 28, 2023⁽¹⁾	As of February 28, 2022⁽¹⁾
Net Book Value of Flight Equipment ($ mils.)	$ 6,635	$ 6,464
Net Book Value of Unencumbered Flight Equipment ($ mils.)	$ 5,469	$ 5,352
Number of Aircraft	239	251
Number of Unencumbered Aircraft	209	219
Number of Lessees	73	81
Number of Countries	44	45
Weighted Average Fleet Age (years)⁽²⁾	9.7	10.2
Weighted Average Remaining Lease Term (years)⁽²⁾	5.3	4.9
Weighted Average Fleet Utilization for the fourth quarter⁽³⁾	94.6 %	95.6 %
Weighted Average Fleet Utilization for the year ended⁽³⁾	94.8 %	94.2 %

Managed Aircraft on behalf of Joint Ventures
Net Book Value of Flight Equipment ($ mils.)	$ 285	$ 298
Number of Aircraft	9	9


(1)	Excludes nine aircraft that remain in Russia with zero Net Book Value - see "Update on Russian Invasion of Ukraine" above and Note 3 in the Notes to Consolidated Financial Statements.
(2)	Weighted by Net Book Value.
(3)	Aircraft on-lease days as a percent 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 Tuesday, April 25, 2023, 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 (877) 870-4263 (from within the U.S. and Canada) or +1 (412) 317-0790 (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 February 28, 2023, Aircastle owned and managed on behalf of its joint ventures 248 aircraft leased to 73 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)

	February 28,
	2023	2022
ASSETS
Cash and cash equivalents	$ 231,861	$ 167,891
Restricted cash and cash equivalents	—	2,791
Accounts receivable	12,855	63,666
Flight equipment held for lease, net	6,567,606	6,313,950
Net investment in leases, net	67,694	150,325
Unconsolidated equity method investment	40,505	38,317
Other assets	346,330	356,326
Total assets	$ 7,266,851	$ 7,093,266

LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Borrowings from secured financings, net of debt issuance costs	$ 752,298	$ 684,039
Borrowings from unsecured financings, net of debt issuance costs	3,842,454	3,835,841
Accounts payable, accrued expenses and other liabilities	206,473	177,424
Lease rentals received in advance	66,816	37,361
Security deposits	61,734	69,189
Maintenance payments	465,618	459,713
Total liabilities	5,395,393	5,263,567

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 February 28, 2023 and 2022	—	—
Common shares, $0.01 par value, 250,000,000 shares authorized, 14,048 shares issued and outstanding at February 28, 2023 and 2022	—	—
Additional paid-in capital	1,878,774	1,878,774
Retained earnings (accumulated deficit)	(7,316)	(49,075)
Total shareholders' equity	1,871,458	1,829,699
Total liabilities and shareholders' equity	$ 7,266,851	$ 7,093,266

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

	Three Months Ended February 28,		Year Ended February 28,
	2023	2022	2023	2022
Revenues:
Lease rental revenue	$ 153,520	$ 169,434	$ 586,508	$ 595,236
Direct financing and sales-type lease revenue	2,080	2,356	9,030	10,733
Amortization of lease premiums, discounts and incentives	(5,905)	(164)	(20,574)	(20,190)
Maintenance revenue	34,312	70,826	138,099	152,030
Total lease revenue	184,007	242,452	713,063	737,809
Gain on sale of flight equipment	3,651	8,057	70,860	26,001
Other revenue	1,716	4,336	12,110	5,977
Total revenues	189,374	254,845	796,033	769,787

Operating expenses:
Depreciation	86,367	87,220	332,663	337,528
Interest, net	52,968	50,387	204,606	214,352
Selling, general and administrative	21,499	17,624	76,857	66,338
Provision for credit losses	(36)	(40)	1,507	930
Impairment of flight equipment	17,644	341,324	85,623	452,250
Maintenance and other costs	5,186	6,891	22,196	31,166
Total operating expenses	183,628	503,406	723,452	1,102,564

Other income (expense):
Loss on extinguishment of debt	(173)	—	(636)	(14,156)
Other	10,819	—	14,092	57,682
Total other income	10,646	—	13,456	43,526

Income (loss) from continuing operations before income taxes and earnings of unconsolidated equity method investments	16,392	(248,561)	86,037	(289,251)
Income tax provision (benefit)	3,134	(30,875)	25,466	(7,998)
Earnings of unconsolidated equity method investment, net of tax	408	1,834	2,188	3,044
Net income (loss)	$ 13,666	$ (215,852)	$ 62,759	$ (278,209)
Preference share dividends	(10,500)	(10,501)	(21,000)	(16,159)

Net income (loss) available to common shareholders	$ 3,166	$ (226,353)	$ 41,759	$ (294,368)

Total comprehensive income (loss) available to common shareholders	$ 3,166	$ (226,353)	$ 41,759	$ (294,368)

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

	Year Ended February 28,
	2023	2022
Cash flows from operating activities:
Net income (loss)	$ 62,759	$ (278,209)
Adjustments to reconcile net loss to net cash and restricted cash provided by operating activities:
Depreciation	332,663	337,528
Amortization of deferred financing costs	14,338	16,267
Amortization of lease premiums, discounts and incentives	20,574	20,190
Deferred income taxes	13,690	(9,386)
Collections on net investments in leases	6,505	14,297
Security deposits and maintenance payments included in earnings	(66,194)	(123,969)
Gain on the sale of flight equipment	(70,860)	(26,001)
Loss on extinguishment of debt	636	14,156
Impairment of flight equipment	85,623	452,250
Provision for credit losses	1,507	930
Other	(2,211)	(3,043)
Changes on certain assets and liabilities:
Accounts receivable	17,338	16,948
Other assets	(12,510)	(29,963)
Accounts payable, accrued expenses and other liabilities	4,278	(5,716)
Lease rentals received in advance	29,601	(23,414)
Net cash and restricted cash provided by operating activities	437,737	372,865
Cash flows from investing activities:
Acquisition and improvement of flight equipment	(994,040)	(795,426)
Proceeds from sale of flight equipment	426,454	210,718
Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits	28,393	(202)
Distributions from unconsolidated equity method investment in excess of earnings	—	104
Other	1,319	(1,694)
Net cash and restricted cash used in investing activities	(537,874)	(586,500)
Cash flows from financing activities:
Net proceeds from preference share issuance	—	392,997
Proceeds from secured and unsecured debt financings	493,848	20,000
Repayments of secured and unsecured debt financings	(420,372)	(646,943)
Deferred financing costs	(13,242)	(5,339)
Debt extinguishment costs	(310)	(13,372)
Security deposits and maintenance payments received	142,699	88,891
Security deposits and maintenance payments returned	(20,307)	(26,857)
Dividends paid	(21,000)	(5,658)
Net cash and restricted cash provided by (used in) financing activities	161,316	(196,281)
Net increase (decrease) in cash and restricted cash:	61,179	(409,916)
Cash and restricted cash at beginning of year	170,682	580,598

Cash and restricted cash at end of year	$ 231,861	$ 170,682

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

	Three Months Ended February 28,		Year Ended February 28,
	2023	2022	2023	2022
Net income (loss)	$ 13,666	$ (215,852)	$ 62,759	$ (278,209)
Depreciation	86,367	87,220	332,663	337,528
Amortization of lease premiums, discounts and incentives	5,905	164	20,574	20,190
Interest, net	52,968	50,387	204,606	214,352
Income tax provision (benefit)	3,134	(30,875)	25,466	(7,998)
EBITDA	162,040	(108,956)	646,068	285,863
Adjustments:
Impairment of flight equipment	17,644	341,324	85,623	452,250
Loss on extinguishment of debt	173	—	636	14,156

Adjusted EBITDA	$ 179,857	$ 232,368	$ 732,327	$ 752,269

______________

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
Jim Connelly, SVP ESG & Corporate Communications
Tel: +1-203-504-1871
[email protected]

SOURCE Aircastle Advisor LLC