STAMFORD, Conn., Aug. 8, 2017 /PRNewswire/ --
Key Financial Metrics
- Total revenues were $223.5
million for the second quarter of 2017, up 18%
- Total lease rental and finance and sales-type lease revenues
were $195.0 million, up 8%
- Net loss was $(7.1) million, or
$(0.09) per diluted common share;
includes $65.7 million of net
aircraft impairment charges related to freighter aircraft sales,
and $5.1 million of separation and
disability compensation paid to our former Chief Executive
- Adjusted net income was $2.4
million, or $0.03 per diluted
common share
- Adjusted EBITDA was $224.1
million for the second quarter, up 23%
- Cash ROE was 12.9%; net cash interest margin was 8.8%
Highlights
- Acquired seven mid-aged narrow-body aircraft for approximately
$86 million during the quarter
- Sold thirteen aircraft during the second quarter for proceeds
of $221.5 million and a gain on sale
of $13.5 million
- Further reduced our exposure to freighter aircraft by agreeing
to sell two 747-400 production freighters and one converted
freighter
- Repaid $500 million of 6.75%
coupon debt and borrowed $500 million
of 4.125% coupon debt; $13.1 million
of annual interest expense savings, or approximately $0.17 per share
- Declared our 45th consecutive quarterly dividend
Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR)
reported a second quarter 2017 net loss of $(7.1) million, or $(0.09) per diluted common share and adjusted net
income of $2.4 million, or
$0.03 per diluted common share.
The second quarter results included total lease rental and finance
and sales-type lease revenues of $195.0
million, an increase of 8%, as compared to $180.3 million in the second quarter of
2016. The results also include $65.7
million of net aircraft impairment charges, including
$13.5 million of related maintenance
payments, and $5.1 million of
separation and disability compensation paid to a former
executive.
Commenting on the results, Mike
Inglese, Aircastle's CEO, stated, "Our strong core results
in the second quarter highlight the portfolio de-risking that we
have pursued since the beginning of 2015. Over the past two
and a half years, we have taken advantage of market conditions to
sell 75 aircraft, generating $111
million in gains on sale, while also enhancing the quality
of our fleet. During that time, we also acquired 121 aircraft
for $3.3 billion."
Mr. Inglese continued, "In addition to our solid operating
performance, during the first six months of 2017, we
opportunistically sold fourteen aircraft and realized gains of more
than $14 million. During the
second quarter, we also reduced our freighter exposure by more than
45% by taking the opportunity to sell two younger production
freighters to a carrier in Asia. Our three remaining
production freighters are on longer term leases, and our orderly
exit from the cargo market, which began several years ago, is
nearing completion."
Concluding, Mr. Inglese added, "Aircastle's core business is
strong, and we are poised for accretive growth in the second half
of 2017. Our limited long-term capital commitments,
significant financial flexibility, and proven value investment
approach position us to continue to grow the business in a
disciplined and profitable manner."
Financial Results
|
(in thousands, except
share data)
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Total
Revenues
|
$
|
223,534
|
|
|
$
|
189,988
|
|
|
$
|
427,807
|
|
|
$
|
373,653
|
|
|
Lease Rental and
Finance and Sales-Type Lease Revenues
|
$
|
194,976
|
|
|
$
|
180,299
|
|
|
$
|
389,635
|
|
|
$
|
363,367
|
|
|
Adjusted
EBITDA
|
$
|
224,105
|
|
|
$
|
182,436
|
|
|
$
|
417,496
|
|
|
$
|
366,315
|
|
|
Net income
(loss)
|
$
|
(7,116)
|
|
|
$
|
20,030
|
|
|
$
|
35,323
|
|
|
$
|
56,292
|
|
|
Per
common share - Diluted
|
$
|
(0.09)
|
|
|
$
|
0.25
|
|
|
$
|
0.45
|
|
|
$
|
0.71
|
|
|
Adjusted net
income
|
$
|
2,448
|
|
|
$
|
24,205
|
|
|
$
|
48,139
|
|
|
$
|
68,296
|
|
|
Per
common share - Diluted
|
$
|
0.03
|
|
|
$
|
0.31
|
|
|
$
|
0.61
|
|
|
$
|
0.86
|
|
Second Quarter Results
Total revenues were $223.5
million, an increase of $33.5
million, or 18%, from the previous year. An increase
in lease rental and finance and sales-type lease revenue of
$14.7 million and a $16.4 million rise in maintenance revenues
accounted for most of the change. The increase in lease
rental and finance lease revenue in the second quarter was due to
net fleet growth over the past year. During the second
quarter of 2017, we recorded $28.9
million of maintenance revenue versus $12.5 million in the prior year, primarily driven
by return compensation associated with several wide-body aircraft
which transitioned during the quarter, and $13.5 million associated with one of the
production freighter aircraft that we agreed to sell.
During the quarter, we took the opportunity to sell two ten-year
old 747-400 production freighters scheduled to come off lease
within the next twelve months, and we recorded non-cash,
transactional impairment charges of $76.2
million in connection with this sale, partially offset by
$13.5 million of maintenance
revenue. We also recorded transactional impairment charges in
connection with the sale of a converted freighter in the amount of
$3.1 million. During the
quarter, we completed our annual fleet review with no additional
impairment charges.
The net loss in the second quarter was $(7.1) million, versus net income of $20.0 million in the prior year. Higher
aircraft impairment charges of $63.2
million and higher SG&A of $6.8
million were partially offset by higher total revenues of
$33.5 million and higher gains from
the sale of flight equipment of $11.4
million. SG&A increased due to separation and
disability compensation paid to our former CEO under the terms of
his employment and share-based award agreements.
Adjusted EBITDA for the second quarter was $224.1 million, up $41.7
million, or 23%, from the second quarter of 2016, primarily
due to higher revenues of $33.5
million and higher gains from the sale of flight equipment
of $11.4 million.
Adjusted net income for the quarter was $2.4 million, down $21.8
million compared to the prior year period. Higher
aircraft impairment charges of $63.2
million and higher SG&A excluding stock-based
compensation of $2.8 million were
partially offset by higher total revenues and gain on sales from
the sale of flight equipment of $44.9
million.
Breakdown of Second Quarter Results
|
(in millions, except
per share amounts)
|
Q2:17
Results
|
|
Freighter
Sales
|
|
Executive
Separation
|
|
Adjusted Q2:17
Results
|
|
Total
Revenues
|
$
|
223.5
|
|
|
$
|
13.5
|
|
|
$
|
—
|
|
|
$
|
210.0
|
|
|
Total Operating
Expenses
|
(244.4)
|
|
|
(79.2)
|
|
|
(5.1)
|
|
|
(160.1)
|
|
|
Total Other Income
(Expense)
|
12.0
|
|
|
—
|
|
|
—
|
|
|
12.0
|
|
|
Pre-Tax Income
(loss)
|
$
|
(8.9)
|
|
|
$
|
(65.7)
|
|
|
$
|
(5.1)
|
|
|
$
|
61.9
|
|
Aviation Assets
During the second quarter of 2017, we acquired seven mid-aged
narrow-body aircraft for approximately $86
million. In the first half of 2017, we acquired a
total of fifteen aircraft for approximately $275.7 million. These aircraft have a
weighted average age of approximately twelve years and a weighted
average remaining lease term of 5.9 years.
During the second quarter, we sold thirteen aircraft for
approximately $221.5 million.
In the first half of 2017, we sold fourteen aircraft for total
proceeds of $238.3 million and
recorded a gain on sale of $14.3
million. The weighted average age of the aircraft sold
was approximately twelve years with a weighted average remaining
lease term of 7.0 years.
During the second quarter, we also completed the transition of
three A330 aircraft that were previously leased with Singapore
Airlines. These aircraft are now leased to a European
airline. The fourth Singapore A330 transitioned in the third
quarter, and at quarter-end we had no remaining scheduled lease
placements for the balance of 2017.
As of June 30, 2017, Aircastle
owned and managed 203 aircraft with a net book value of
$6.8 billion. Of this total,
190 aircraft having a net book value of $6.2
billion are owned, while we manage an additional thirteen
aircraft with a net book value of approximately $675 million on behalf of our joint ventures with
Ontario Teachers' Pension Plan and IBJL Leasing. For the
second half of 2017, we have closed or committed to close
approximately $950 million of
additional aircraft investments, and expect to sell approximately
$600 million.
|
Owned
Aircraft
|
As
of
June
30,
2017(1)
|
|
As
of
June
30,
2016(1)
|
|
Net Book Value of
Flight Equipment ($ mils.)
|
$
|
6,173
|
|
|
$
|
6,168
|
|
|
Net Book Value of
Unencumbered Flight Equipment ($ mils.)
|
$
|
4,497
|
|
|
$
|
4,499
|
|
|
Number of
Aircraft
|
190
|
|
|
169
|
|
|
Number of
Unencumbered Aircraft
|
157
|
|
|
142
|
|
|
Weighted Average
Fleet Age (years)(2)
|
8.3
|
|
|
7.7
|
|
|
Weighted Average
Remaining Lease Term (years)(2)
|
4.7
|
|
|
5.5
|
|
|
Weighted Average
Fleet Utilization for the quarter ended(3)
|
99.3
|
%
|
|
99.0
|
%
|
|
Portfolio Yield for
the quarter ended(2)(4)
|
12.3
|
%
|
|
12.5
|
%
|
|
Net Cash Interest
Margin(5)
|
8.8
|
%
|
|
8.7
|
%
|
|
|
|
|
|
Managed Aircraft on
behalf of Joint Ventures
|
|
|
|
|
Net Book Value of
Flight Equipment ($ mils.)
|
$
|
675
|
|
|
$
|
612
|
|
|
Number of
Aircraft
|
13
|
|
|
10
|
|
|
|
|
(1)
|
Calculated using net
book value of flight equipment held for lease and net investment in
finance leases at period end.
|
|
(2)
|
Weighted by net book
value.
|
|
(3)
|
Aircraft on-lease
days as a percent of total days in period weighted by net book
value.
|
|
(4)
|
Lease rental revenue,
interest income and cash collections on our net investment in
finance and sales-type leases for the period as a percent of the
average net book value for the period; quarterly information is
annualized. Based on the growing level of finance and
sales-type lease revenue management revised the calculation of
portfolio yield to include our net investment in finance and
sales-type leases in the average net book value and to include the
interest income and cash collections on our net investment in
finance and sales-type leases in lease rentals.
|
|
(5)
|
Net Cash Interest
Margin = Lease rental yield plus finance lease revenue and
collections minus interest on borrowings, net of settlements on
interest rate derivatives, and other liabilities / average
NBV of flight equipment for the period calculated on a quarterly
basis, annualized. The second quarter of 2017 excludes a
non-recurring, $7.0 million accelerated collection received from a
lessee in connection with a finance lease.
|
Financing Activity
Year-to-date, we've secured $500
million of new financing. During the first quarter of
2017, we issued $500 million in
unsecured Senior Notes due 2024 bearing a coupon of 4.125%.
On April 17, 2017, we repaid
$500 million of maturing, unsecured
Senior Notes bearing a coupon of 6.75%. The associated annual
interest expense savings is approximately $13.1 million.
Common Dividend
On August 4, 2017, Aircastle's
Board of Directors declared a third quarter 2017 cash dividend on
its common shares of $0.26 per share,
payable on September 15, 2017 to
shareholders of record on August 31,
2017. This is our 45th consecutive dividend.
Conference Call
In connection with this earnings release, management will host
an earnings conference call on Tuesday,
August 8, 2017 at 10:00 A.M. Eastern
time. All interested parties are welcome to
participate on the live call. The conference call can be
accessed by dialing (800) 263-0877 (from within the U.S. and
Canada) or (323) 794-2130 (from
outside of the U.S. and Canada)
ten minutes prior to the scheduled start and referencing the
passcode "5786728".
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 3:00 P.M.
Eastern time on Thursday, September
7, 2017 by dialing (888) 203-1112 (from within the U.S. and
Canada) or (719) 457-8020
(from outside of the U.S. and Canada); please reference passcode
"1757279".
About Aircastle Limited
Aircastle Limited acquires, leases and sells commercial jet
aircraft to airlines throughout the world. As of June 30, 2017, Aircastle owned and managed on
behalf of its joint ventures 203 aircraft leased to 71 customers
located in 38 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, Adjusted EBITDA, Adjusted Net Income,
Cash Return on Equity and Net Cash Interest Margin 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 2016 Annual Report on Form
10- K. 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)
|
|
|
|
June
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
|
481,035
|
|
|
$
|
455,579
|
|
|
Restricted cash and
cash equivalents
|
49,613
|
|
|
53,238
|
|
|
Accounts
receivable
|
3,830
|
|
|
6,035
|
|
|
Flight equipment held
for lease, net of accumulated depreciation of $1,278,438 and
$1,224,899, respectively
|
5,818,821
|
|
|
6,247,585
|
|
|
Net investment in
finance and sales-type leases
|
354,474
|
|
|
260,853
|
|
|
Unconsolidated equity
method investments
|
76,158
|
|
|
72,977
|
|
|
Other
assets
|
259,409
|
|
|
148,398
|
|
|
Total
assets
|
$
|
7,043,340
|
|
|
$
|
7,244,665
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Borrowings from
secured financings, net of debt issuance costs
|
$
|
1,055,610
|
|
|
$
|
1,219,034
|
|
|
Borrowings from
unsecured financings, net of debt issuance costs
|
3,283,747
|
|
|
3,287,211
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
131,868
|
|
|
127,527
|
|
|
Lease rentals
received in advance
|
59,657
|
|
|
62,225
|
|
|
Security
deposits
|
123,107
|
|
|
122,597
|
|
|
Maintenance
payments
|
554,262
|
|
|
591,757
|
|
|
Total
liabilities
|
5,208,251
|
|
|
5,410,351
|
|
|
Commitments and
Contingencies
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
|
Preference shares,
$.01 par value, 50,000,000 shares authorized, no shares
issued and outstanding
|
—
|
|
|
—
|
|
|
Common shares,
$0.01 par value, 250,000,000 shares authorized,
78,713,706 shares issued and outstanding at June 30, 2017; and
78,593,133 shares issued and outstanding at December 31,
2016
|
787
|
|
|
786
|
|
|
Additional paid-in
capital
|
1,526,433
|
|
|
1,521,190
|
|
|
Retained
earnings
|
310,265
|
|
|
315,890
|
|
|
Accumulated other
comprehensive loss
|
(2,396)
|
|
|
(3,552)
|
|
|
Total shareholders'
equity
|
1,835,089
|
|
|
1,834,314
|
|
|
Total liabilities and
shareholders' equity
|
$
|
7,043,340
|
|
|
$
|
7,244,665
|
|
|
Aircastle Limited
and Subsidiaries
Consolidated
Statements of Income (Loss)
(Dollars in
thousands, except per share amounts)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Lease rental
revenue
|
$
|
189,098
|
|
|
$
|
176,125
|
|
|
$
|
379,684
|
|
|
$
|
355,695
|
|
|
Finance and
sales-type lease revenue
|
5,878
|
|
|
4,174
|
|
|
9,951
|
|
|
7,672
|
|
|
Amortization of lease
premiums, discounts and incentives
|
(3,280)
|
|
|
(3,828)
|
|
|
(6,392)
|
|
|
(4,898)
|
|
|
Maintenance
revenue
|
28,944
|
|
|
12,514
|
|
|
41,231
|
|
|
13,774
|
|
|
Total lease
revenue
|
220,640
|
|
|
188,985
|
|
|
424,474
|
|
|
372,243
|
|
|
Other
revenue
|
2,894
|
|
|
1,003
|
|
|
3,333
|
|
|
1,410
|
|
|
Total
revenues
|
223,534
|
|
|
189,988
|
|
|
427,807
|
|
|
373,653
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Depreciation
|
78,254
|
|
|
75,070
|
|
|
157,428
|
|
|
151,717
|
|
|
Interest,
net
|
61,672
|
|
|
62,452
|
|
|
124,740
|
|
|
126,693
|
|
|
Selling, general and
administrative (including non-cash share-based payment expense of
$6,028 and $2,094 for the three months ended, and $8,130 and $3,737
for the six months ended June 30, 2017 and 2016,
respectively)
|
22,187
|
|
|
15,406
|
|
|
38,354
|
|
|
30,898
|
|
|
Impairment of flight
equipment
|
79,930
|
|
|
16,723
|
|
|
80,430
|
|
|
16,723
|
|
|
Maintenance and other
costs
|
2,343
|
|
|
2,267
|
|
|
5,274
|
|
|
3,670
|
|
|
Total
expenses
|
244,386
|
|
|
171,918
|
|
|
406,226
|
|
|
329,701
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Gain on sale of
flight equipment
|
13,525
|
|
|
2,172
|
|
|
14,284
|
|
|
15,005
|
|
|
Other
|
(1,560)
|
|
|
147
|
|
|
(2,709)
|
|
|
74
|
|
|
Total other
income
|
11,965
|
|
|
2,319
|
|
|
11,575
|
|
|
15,079
|
|
|
Income (loss) from
continuing operations before income taxes and earnings of
unconsolidated equity method investment
|
(8,887)
|
|
|
20,389
|
|
|
33,156
|
|
|
59,031
|
|
|
Income tax
provision
|
495
|
|
|
2,385
|
|
|
2,341
|
|
|
6,324
|
|
|
Earnings of
unconsolidated equity method investments, net of tax
|
2,266
|
|
|
2,026
|
|
|
4,508
|
|
|
3,585
|
|
|
Net income
(loss)
|
$
|
(7,116)
|
|
|
$
|
20,030
|
|
|
$
|
35,323
|
|
|
$
|
56,292
|
|
|
Earnings (loss) per
common share — Basic:
|
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
$
|
(0.09)
|
|
|
$
|
0.25
|
|
|
$
|
0.45
|
|
|
$
|
0.71
|
|
|
Earnings (loss) per
common share — Diluted:
|
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
$
|
(0.09)
|
|
|
$
|
0.25
|
|
|
$
|
0.45
|
|
|
$
|
0.71
|
|
|
Dividends declared
per share
|
$
|
0.26
|
|
|
$
|
0.24
|
|
|
$
|
0.52
|
|
|
$
|
0.48
|
|
|
Aircastle Limited
and Subsidiaries
Consolidated
Statements of Cash Flows
(Dollars in
thousands) (Unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
Cash flows from
operating activities:
|
|
|
|
|
Net income
|
$
|
35,323
|
|
|
$
|
56,292
|
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
157,428
|
|
|
151,717
|
|
|
Amortization of
deferred financing costs
|
9,125
|
|
|
9,470
|
|
|
Amortization of lease
premiums, discounts and incentives
|
6,392
|
|
|
4,898
|
|
|
Deferred income
taxes
|
(833)
|
|
|
2,243
|
|
|
Non-cash share based
payment expense
|
8,130
|
|
|
3,737
|
|
|
Cash flow hedges
reclassified into earnings
|
1,156
|
|
|
8,369
|
|
|
Security deposits and
maintenance payments included in earnings
|
(23,063)
|
|
|
(5,651)
|
|
|
Gain on sale of
flight equipment
|
(14,284)
|
|
|
(15,005)
|
|
|
Impairment of flight
equipment
|
80,430
|
|
|
16,723
|
|
|
Other
|
1,211
|
|
|
(2,843)
|
|
|
Changes in certain
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
2,090
|
|
|
3,262
|
|
|
Other
assets
|
(11,407)
|
|
|
(85)
|
|
|
Accounts payable,
accrued expenses and other liabilities
|
(2,194)
|
|
|
4,284
|
|
|
Lease rentals
received in advance
|
(2,115)
|
|
|
(2,714)
|
|
|
Net cash and
restricted cash provided by operating activities
|
247,389
|
|
|
234,697
|
|
|
Cash flows from
investing activities:
|
|
|
|
|
Acquisition and
improvement of flight equipment
|
(148,364)
|
|
|
(478,026)
|
|
|
Proceeds from sale of
flight equipment
|
238,277
|
|
|
339,507
|
|
|
Aircraft purchase
deposits and progress payments, net of returned deposits and
aircraft sales deposits
|
(2,892)
|
|
|
(9,801)
|
|
|
Net investment in
finance and sales-type leases
|
(119,971)
|
|
|
(78,365)
|
|
|
Collections on
finance and sales-type leases
|
17,185
|
|
|
7,833
|
|
|
Unconsolidated equity
method investments and associated costs
|
—
|
|
|
(11,688)
|
|
|
Other
|
88
|
|
|
(509)
|
|
|
Net cash and
restricted cash used in investing activities
|
(15,677)
|
|
|
(231,049)
|
|
|
Cash flows from
financing activities:
|
|
|
|
|
Repurchase of
shares
|
(2,513)
|
|
|
(33,854)
|
|
|
Proceeds from secured
and unsecured debt financings
|
500,000
|
|
|
787,310
|
|
|
Repayments of secured
and unsecured debt financings
|
(667,472)
|
|
|
(459,021)
|
|
|
Deferred financing
costs
|
(8,540)
|
|
|
(16,121)
|
|
|
Restricted secured
liquidity facility collateral
|
—
|
|
|
65,000
|
|
|
Secured liquidity
facility collateral
|
—
|
|
|
(65,000)
|
|
|
Security deposits and
maintenance payments received
|
87,185
|
|
|
72,572
|
|
|
Security deposits and
maintenance payments returned
|
(77,593)
|
|
|
(26,094)
|
|
|
Dividends
paid
|
(40,948)
|
|
|
(37,830)
|
|
|
Net cash and
restricted cash (used in) provided by financing
activities
|
(209,881)
|
|
|
286,962
|
|
|
Net increase in
cash and restricted cash
|
21,831
|
|
|
290,610
|
|
|
Cash and restricted
cash at beginning of period
|
508,817
|
|
|
254,041
|
|
|
Cash and restricted
cash at end of period
|
$
|
530,648
|
|
|
$
|
544,651
|
|
|
Aircastle Limited
and Subsidiaries
Selected Financial
Guidance Elements for the Third Quarter of 2017
($ in millions,
except for percentages)
(Unaudited)
|
|
|
|
Guidance
Item
|
Q3:17
|
|
Lease rental
revenue
|
$170 -
$174
|
|
Finance lease
revenue
|
$5 - $6
|
|
Maintenance
revenue
|
$6 - $8
|
|
Amortization of net
lease discounts and lease incentives
|
($2) -
($3)
|
|
SG&A(1)
|
$16 - $17
|
|
Depreciation
|
$69 - $72
|
|
Interest,
net
|
$58 - $61
|
|
Gain on
sale
|
$18 - $24
|
|
Full year effective
tax rate
|
6% - 8%
|
|
|
|
(1)
|
Includes ~$2.4M of non-cash share based payment
expense.
|
|
Aircastle Limited
and Subsidiaries
Supplemental
Financial Information
(Amount in
thousands, except per share amounts)
(Unaudited)
|
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Revenues
|
$
|
223,534
|
|
|
$
|
189,988
|
|
|
$
|
427,807
|
|
|
$
|
373,653
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
$
|
136,585
|
|
|
$
|
163,765
|
|
|
$
|
326,224
|
|
|
$
|
345,924
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$
|
224,105
|
|
|
$
|
182,436
|
|
|
$
|
417,496
|
|
|
$
|
366,315
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(7,116)
|
|
|
$
|
20,030
|
|
|
$
|
35,323
|
|
|
$
|
56,292
|
|
|
Net income (loss)
allocable to common shares
|
$
|
(7,116)
|
|
|
$
|
19,856
|
|
|
$
|
35,068
|
|
|
$
|
55,844
|
|
|
Per common share -
Basic
|
$
|
(0.09)
|
|
|
$
|
0.25
|
|
|
$
|
0.45
|
|
|
$
|
0.71
|
|
|
Per common share -
Diluted
|
$
|
(0.09)
|
|
|
$
|
0.25
|
|
|
$
|
0.45
|
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$
|
2,448
|
|
|
$
|
24,205
|
|
|
$
|
48,139
|
|
|
$
|
68,296
|
|
|
Adjusted net income
allocable to common shares
|
$
|
2,428
|
|
|
$
|
23,994
|
|
|
$
|
47,791
|
|
|
$
|
67,752
|
|
|
Per common share -
Basic
|
$
|
0.03
|
|
|
$
|
0.31
|
|
|
$
|
0.61
|
|
|
$
|
0.86
|
|
|
Per common share -
Diluted
|
$
|
0.03
|
|
|
$
|
0.31
|
|
|
$
|
0.61
|
|
|
$
|
0.86
|
|
|
|
|
|
|
|
|
|
|
Basic common shares
outstanding
|
78,177
|
|
|
78,159
|
|
|
78,177
|
|
|
78,351
|
|
|
Diluted common shares
outstanding
|
78,177
|
|
|
78,159
|
|
|
78,404
|
|
|
78,351
|
|
|
|
|
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 and
Adjusted EBITDA Reconciliation
(Dollars in
thousands)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Dollars in
thousands)
|
|
(Dollars in
thousands)
|
|
Net income
(loss)
|
$
|
(7,116)
|
|
|
$
|
20,030
|
|
|
$
|
35,323
|
|
|
$
|
56,292
|
|
|
Depreciation
|
78,254
|
|
|
75,070
|
|
|
157,428
|
|
|
151,717
|
|
|
Amortization of lease
premiums, discounts and incentives
|
3,280
|
|
|
3,828
|
|
|
6,392
|
|
|
4,898
|
|
|
Interest,
net
|
61,672
|
|
|
62,452
|
|
|
124,740
|
|
|
126,693
|
|
|
Income tax
provision
|
495
|
|
|
2,385
|
|
|
2,341
|
|
|
6,324
|
|
|
EBITDA
|
136,585
|
|
|
163,765
|
|
|
326,224
|
|
|
345,924
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Impairment of flight
equipment
|
79,930
|
|
|
16,723
|
|
|
80,430
|
|
|
16,723
|
|
|
Non-cash share based
payment expense
|
6,028
|
|
|
2,094
|
|
|
8,130
|
|
|
3,737
|
|
|
(Gain) loss on
mark-to-market of interest rate derivative contracts
|
1,562
|
|
|
(146)
|
|
|
2,712
|
|
|
(69)
|
|
|
Adjusted
EBITDA
|
$
|
224,105
|
|
|
$
|
182,436
|
|
|
$
|
417,496
|
|
|
$
|
366,315
|
|
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.
|
Aircastle Limited
and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Measures
Adjusted Net
Income Reconciliation
(Dollars in
thousands)
(Unaudited)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Dollars in
thousands)
|
|
(Dollars in
thousands)
|
|
Net income
(loss)
|
$
|
(7,116)
|
|
|
$
|
20,030
|
|
|
$
|
35,323
|
|
|
$
|
56,292
|
|
|
Loan termination
fee(1)
|
988
|
|
|
—
|
|
|
988
|
|
|
1,509
|
|
|
(Gain) loss on
mark-to-market of interest rate derivative
contracts(2)
|
1,562
|
|
|
(146)
|
|
|
2,712
|
|
|
(69)
|
|
|
Write-off of deferred
financing fees(1)
|
986
|
|
|
—
|
|
|
986
|
|
|
1,972
|
|
|
Non-cash share based
payment expense(3)
|
6,028
|
|
|
2,094
|
|
|
8,130
|
|
|
3,737
|
|
|
Securitization No. 1
hedge loss amortization charges (1)
|
—
|
|
|
2,227
|
|
|
—
|
|
|
4,855
|
|
|
Adjusted net
income
|
$
|
2,448
|
|
|
$
|
24,205
|
|
|
$
|
48,139
|
|
|
$
|
68,296
|
|
|
|
|
(1)
|
Included in Interest,
net.
|
|
(2)
|
Included in Other
income (expense).
|
|
(3)
|
Included in Selling,
general and administrative expenses.
|
|
|
|
|
Management believes
that ANI, when viewed in conjunction with the Company's results
under U.S. GAAP and the above 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, changes related to refinancing activity and non-cash
share based payment expense.
|
|
Aircastle Limited
and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Measures
Cash Return on
Equity Calculation
(Dollars in
thousands)
(Unaudited)
|
|
|
|
CFFO
|
|
Finance
Lease
Collections
|
|
(Gain)
Loss on
Sale of Eqt.
|
|
Deprec.
|
|
Distributions
in excess (less
than) Equity
Earnings
|
|
Cash
Earnings
|
|
Average
Shareholders
Equity
|
|
12 Month
Cash
ROE
|
|
2011
|
$
|
359,377
|
|
|
$
|
—
|
|
|
$
|
39,092
|
|
|
$
|
242,103
|
|
|
$
|
—
|
|
|
$
|
156,366
|
|
|
$
|
1,370,513
|
|
|
11.4
|
%
|
|
2012
|
$
|
427,277
|
|
|
$
|
3,852
|
|
|
$
|
5,747
|
|
|
$
|
269,920
|
|
|
$
|
—
|
|
|
$
|
166,956
|
|
|
$
|
1,425,658
|
|
|
11.7
|
%
|
|
2013
|
$
|
424,037
|
|
|
$
|
9,508
|
|
|
$
|
37,220
|
|
|
$
|
284,924
|
|
|
$
|
—
|
|
|
$
|
185,841
|
|
|
$
|
1,513,156
|
|
|
12.3
|
%
|
|
2014
|
$
|
458,786
|
|
|
$
|
10,312
|
|
|
$
|
23,146
|
|
|
$
|
299,365
|
|
|
$
|
667
|
|
|
$
|
193,546
|
|
|
$
|
1,661,228
|
|
|
11.7
|
%
|
|
2015
|
$
|
526,285
|
|
|
$
|
9,559
|
|
|
$
|
58,017
|
|
|
$
|
318,783
|
|
|
$
|
(530)
|
|
|
$
|
274,548
|
|
|
$
|
1,759,871
|
|
|
15.6
|
%
|
|
2016
|
$
|
468,092
|
|
|
$
|
19,413
|
|
|
$
|
39,126
|
|
|
$
|
305,216
|
|
|
$
|
(1,782)
|
|
|
$
|
219,633
|
|
|
$
|
1,789,256
|
|
|
12.3
|
%
|
|
LTM Q2:17
|
$
|
480,784
|
|
|
$
|
28,765
|
|
|
$
|
38,405
|
|
|
$
|
310,927
|
|
|
$
|
(1,734)
|
|
|
$
|
235,293
|
|
|
$
|
1,817,414
|
|
|
12.9
|
%
|
|
|
|
|
|
Note:
LTM Average Shareholders' Equity is the
average of the most recent five quarters period end Shareholders'
Equity. Management believes that the
cash return on equity metric ("Cash ROE") when viewed in
conjunction with the Company's results under U.S. GAAP and the
above reconciliation, provide
useful information about operating and period-over-period
performance, and provide additional information that is useful for
evaluating the underlying
operating performance of our business without regard to periodic
reporting impacts related to non-cash revenue and expense items and
interest rate
derivative accounting, while recognizing the depreciating nature of
our assets.
|
|
Aircastle Limited
and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Measures
Net Cash Interest
Margin Calculation
(Dollars in
thousands)
(Unaudited)
|
|
|
|
|
Average
NBV
|
|
Quarterly Rental
Revenue(1)
|
|
Cash
Interest(2)
|
|
Annualized Net
Cash Interest Margin(1)(2)
|
|
Q1:12
|
|
$
|
4,388,008
|
|
|
$
|
152,242
|
|
|
$
|
44,969
|
|
|
9.8
|
%
|
|
Q2:12
|
|
$
|
4,542,477
|
|
|
$
|
156,057
|
|
|
$
|
48,798
|
|
|
9.4
|
%
|
|
Q3:12
|
|
$
|
4,697,802
|
|
|
$
|
163,630
|
|
|
$
|
41,373
|
|
|
10.4
|
%
|
|
Q4:12
|
|
$
|
4,726,457
|
|
|
$
|
163,820
|
|
|
$
|
43,461
|
|
|
10.2
|
%
|
|
Q1:13
|
|
$
|
4,740,161
|
|
|
$
|
162,319
|
|
|
$
|
48,591
|
|
|
9.6
|
%
|
|
Q2:13
|
|
$
|
4,840,396
|
|
|
$
|
164,239
|
|
|
$
|
44,915
|
|
|
9.9
|
%
|
|
Q3:13
|
|
$
|
4,863,444
|
|
|
$
|
167,876
|
|
|
$
|
47,682
|
|
|
9.9
|
%
|
|
Q4:13
|
|
$
|
5,118,601
|
|
|
$
|
176,168
|
|
|
$
|
49,080
|
|
|
9.9
|
%
|
|
Q1:14
|
|
$
|
5,312,651
|
|
|
$
|
181,095
|
|
|
$
|
51,685
|
|
|
9.7
|
%
|
|
Q2:14
|
|
$
|
5,721,521
|
|
|
$
|
190,574
|
|
|
$
|
48,172
|
|
|
10.0
|
%
|
|
Q3:14
|
|
$
|
5,483,958
|
|
|
$
|
182,227
|
|
|
$
|
44,820
|
|
|
10.0
|
%
|
|
Q4:14
|
|
$
|
5,468,637
|
|
|
$
|
181,977
|
|
|
$
|
44,459
|
|
|
10.1
|
%
|
|
Q1:15
|
|
$
|
5,743,035
|
|
|
$
|
181,027
|
|
|
$
|
50,235
|
|
|
9.1
|
%
|
|
Q2:15
|
|
$
|
5,967,898
|
|
|
$
|
189,238
|
|
|
$
|
51,413
|
|
|
9.2
|
%
|
|
Q3:15
|
|
$
|
6,048,330
|
|
|
$
|
191,878
|
|
|
$
|
51,428
|
|
|
9.3
|
%
|
|
Q4:15
|
|
$
|
5,962,874
|
|
|
$
|
188,491
|
|
|
$
|
51,250
|
|
|
9.2
|
%
|
|
Q1:16
|
|
$
|
5,988,076
|
|
|
$
|
186,730
|
|
|
$
|
51,815
|
|
|
9.0
|
%
|
|
Q2:16
|
|
$
|
5,920,030
|
|
|
$
|
184,469
|
|
|
$
|
55,779
|
|
|
8.7
|
%
|
|
Q3:16
|
|
$
|
6,265,175
|
|
|
$
|
193,909
|
|
|
$
|
57,589
|
|
|
8.7
|
%
|
|
Q4:16
|
|
$
|
6,346,361
|
|
|
$
|
196,714
|
|
|
$
|
58,631
|
|
|
8.7
|
%
|
|
Q1:17
|
|
$
|
6,505,355
|
|
|
$
|
200,273
|
|
|
$
|
58,839
|
|
|
8.7
|
%
|
|
Q2:17
|
|
$
|
6,512,100
|
|
|
$
|
199,522
|
|
|
$
|
55,871
|
|
|
8.8
|
%
|
|
|
|
(1)
|
Excludes loan
termination payments of $3.0 million in the second quarter of 2013,
$1.5 million and $3.5 million in the first quarter and fourth
quarter of 2016, respectively, and loan termination payments of
$1.0 million in the second quarter of 2017. The second
quarter of 2017 excludes a non-recurring, $7.0 million accelerated
collection received from a lessee in connection with a finance
lease.
|
|
|
|
(2)
|
Net Cash Interest
Margin = Lease rental yield plus finance lease revenue and
collections minus interest on borrowings, net of settlements on
interest rate derivatives, and other liabilities / average
NBV of flight equipment for the period calculated on a quarterly
basis, annualized. Based on the growing level of
finance and sales-type lease revenue, management revised the
calculation of portfolio yield to include our net investment in
finance and sales-type leases in the average net book value and to
include the interest income and cash collections on our net
investment in finance and sales-type leases in lease
rentals.
|
|
|
|
Management
believes that net cash interest margin, when viewed in conjunction
with the Company's results under U.S. GAAP and the above
reconciliation, provides useful information about the effective
deployment of our capital in the context of the yield on our
aircraft assets, the utilization of those assets by our lessees,
and our ability to borrow efficiently.
|
|
Aircastle Limited
and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Measures
Reconciliation of
Net Income Allocable to Common Shares
(In
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
2017
|
|
Six Months
Ended
June 30, 2017
|
|
Weighted-average
shares:
|
Shares
|
|
Percent
|
|
Shares
|
|
Percent
|
|
Common shares
outstanding – Basic
|
78,177
|
|
|
99.20
|
%
|
|
78,177
|
|
|
99.28
|
%
|
|
Unvested restricted
common shares
|
634
|
|
|
0.80
|
%
|
|
569
|
|
|
0.72
|
%
|
|
Total
weighted-average shares outstanding
|
78,811
|
|
|
100.00
|
%
|
|
78,746
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding – Basic
|
78,177
|
|
|
100.00
|
%
|
|
78,177
|
|
|
99.71
|
%
|
|
Effect of dilutive
shares(1)
|
—
|
|
|
0.00
|
%
|
|
227
|
|
|
0.29
|
%
|
|
Common shares
outstanding – Diluted
|
78,177
|
|
|
100.00
|
%
|
|
78,404
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
Net income
allocation
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
(7,116)
|
|
|
100.00
|
%
|
|
$
|
35,323
|
|
|
100.00
|
%
|
|
Distributed and
undistributed earnings allocated to unvested restricted
shares(2)
|
—
|
|
|
0.00
|
%
|
|
(255)
|
|
|
(0.72)
|
%
|
|
Earnings available to
common shares
|
$
|
(7,116)
|
|
|
100.00
|
%
|
|
$
|
35,068
|
|
|
99.28
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted net
income allocation
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$
|
2,448
|
|
|
100.00
|
%
|
|
$
|
48,139
|
|
|
100.00
|
%
|
|
Amounts allocated to
unvested restricted shares
|
(20)
|
|
|
(0.80)
|
%
|
|
(348)
|
|
|
(0.72)
|
%
|
|
Amounts allocated to
common shares – Basic and Diluted
|
$
|
2,428
|
|
|
99.20
|
%
|
|
$
|
47,791
|
|
|
99.28
|
%
|
|
|
|
(1)
|
For the three months
ended June 30, 2017, the effect of 170,116 contingently issuable
shares related to the Company's PSUs would have been anti-dilutive
and were excluded from the calculation. For the six months
ended June 30, 2017, dilutive shares represented contingently
issuable shares.
|
|
(2)
|
For the three months
ended June 30, 2017, the effect of any diluted shares on
distributed and undistributed earnings to restricted shares would
have been anti-dilutive and were excluded from the calculation. For
the six months ended June 30, 2017 distributed and undistributed
earnings to restricted shares were 0.72% of net income. The amount
of restricted share forfeitures for all periods present is
immaterial to the allocation of distributed and undistributed
earnings.
|
|
Aircastle Limited
and Subsidiaries
Reconciliation of
GAAP to Non-GAAP Measures
Reconciliation of
Net Income Allocable to Common Shares
(In
thousands)
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
2016
|
|
Six Months
Ended
June 30, 2016
|
|
Weighted-average
shares:
|
Shares
|
|
Percent
|
|
Shares
|
|
Percent
|
|
Common shares
outstanding – Basic
|
78,159
|
|
|
99.13
|
%
|
|
78,351
|
|
|
99.20
|
%
|
|
Unvested restricted
common shares
|
686
|
|
|
0.87
|
%
|
|
629
|
|
|
0.80
|
%
|
|
Total
weighted-average shares outstanding
|
78,845
|
|
|
100.00
|
%
|
|
78,981
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
Common shares
outstanding – Basic
|
78,159
|
|
|
100.00
|
%
|
|
78,351
|
|
|
100.00
|
%
|
|
Effect of dilutive
shares(1)
|
—
|
|
|
0.00
|
%
|
|
—
|
|
|
0.00
|
%
|
|
Common shares
outstanding – Diluted
|
78,159
|
|
|
100.00
|
%
|
|
78,351
|
|
|
100.00
|
%
|
|
|
|
|
|
|
|
|
|
Net income
allocation
|
|
|
|
|
|
|
|
|
Net income
|
$
|
20,030
|
|
|
100.00
|
%
|
|
$
|
56,292
|
|
|
100.00
|
%
|
|
Distributed and
undistributed earnings allocated to unvested restricted
shares(2)
|
(174)
|
|
|
(0.87)
|
%
|
|
(448)
|
|
|
(0.80)
|
%
|
|
Earnings available to
common shares
|
$
|
19,856
|
|
|
99.13
|
%
|
|
$
|
55,844
|
|
|
99.20
|
%
|
|
|
|
|
|
|
|
|
|
Adjusted net
income allocation
|
|
|
|
|
|
|
|
|
Adjusted net
income
|
$
|
24,205
|
|
|
100.00
|
%
|
|
$
|
68,296
|
|
|
100.00
|
%
|
|
Amounts allocated to
unvested restricted shares
|
(211)
|
|
|
(0.87)
|
%
|
|
(544)
|
|
|
(0.80)
|
%
|
|
Amounts allocated to
common shares – Basic and Diluted
|
$
|
23,994
|
|
|
99.13
|
%
|
|
$
|
67,752
|
|
|
99.20
|
%
|
|
|
|
(1)
|
For the three and six
months ended June 30, 2016 the company had no dilutive
shares.
|
|
(2)
|
For the three and six
months ended June 30, 2016, distributed and undistributed earnings
to restricted shares were 0.87% and 0.80% of net income
respectively. The amount of restricted share forfeitures for all
periods present is immaterial to the allocation of distributed and
undistributed earnings.
|
|
Contact:
|
|
|
|
|
|
Aircastle Advisor
LLC
|
|
|
|
The IGB
Group
|
|
Frank Constantinople,
SVP Investor Relations
|
|
|
|
Leon
Berman
|
|
Tel:
+1-203-504-1063
|
|
|
|
Tel:
+1-212-477-8438
|
|
fconstantinople@aircastle.com
|
|
|
|
lberman@igbir.com
|
View original
content:http://www.prnewswire.com/news-releases/aircastle-announces-second-quarter-2017-results-300500775.html
SOURCE Aircastle Limited