Aircastle Announces First Quarter 2018 Results

STAMFORD, Conn., May 3, 2018 /PRNewswire/ -- 

Key Financial Metrics

• Total revenues⁽¹⁾ were $202.7 million
• Total lease rental and finance and sales-type lease revenues were $186.9 million
• Net income was $57.5 million, or $0.73 per diluted common share
• Adjusted net income⁽²⁾ was $56.8 million, or $0.72 per diluted common share
• Adjusted EBITDA⁽²⁾ was $191.1 million
• Cash ROE⁽²⁾ was 15.9%; net cash interest margin was 8.3%

First Quarter 2018 Highlights

• Acquired four narrow-body aircraft for $111 million
• Sold four older narrow-body aircraft for $44 million and a gain on sale of $5.8 million
• Committed to acquire twelve additional narrow-body aircraft this year for more than $490 million, including our first expected investment in A320 NEOs
• Declared our 48th consecutive quarterly dividend
• Repurchased $9.6 million of our shares year-to-date at average price of $19.54 per share

Aircastle Limited (the "Company" or "Aircastle") (NYSE: AYR) reported first quarter 2018 net income of $57.5 million, or $0.73 per diluted common share, and adjusted net income of $56.8 million, or $0.72 per diluted common share.  The first quarter results included total lease rental and finance and sales-type lease revenues of $186.9 million, a decrease of 4.0%, versus $194.7 million in the first quarter of 2017.  Compared sequentially to the fourth quarter of 2017, lease rental and finance and sales-type lease revenues increased by 4.3%, from $179.3 million.

Commenting on the results, Mike Inglese, Aircastle's Chief Executive Officer, stated, "Aircastle's strong first quarter results reflect portfolio enhancements that were completed over the past year.  The quality of our fleet has improved, and we continued to reduce residual value risk and generate healthy gains from aircraft sold during the first quarter.  We have also continued to actively pursue attractive growth opportunities and have already acquired or committed to acquire more than $600 million of narrow-body aircraft in 2018, which includes Aircastle's first investment in new technology narrow-body aircraft."

Mr. Inglese concluded, "With a 35% increase in net earnings per diluted share and consistently high cash ROE and fleet utilization, Aircastle is positioned to continue increasing the sustainable cash flow that supports our attractive dividend.  As a public company, since 2006 we have acquired more than $14 billion of aircraft, paid out more than $790 million of dividends, and have repurchased more than $202 million of our shares at an average price of $13.50.  By continuing to execute our thoughtful capital allocation strategy, Aircastle remains committed to creating long-term value for our shareholders."

Financial Results

First Quarter Results

Net income for the quarter was $57.5 million, an increase of $15.1 million, or 36%, versus the prior year.  Lower total revenues of $2.4 million were offset by lower interest expense of $6.0 million, lower depreciation of $4.2 million and a mark to market benefit from interest rate hedging of $3.2 million.

Total revenues were $202.7 million, a decrease of $2.4 million, or 1.1%, from the previous year. The decrease was driven by a $7.7 million decline in lease rental and finance and sales-type lease revenues, partially offset by a $5.0 million increase in the gain on the sale of flight equipment.  Rental revenues were lower primarily due to the impact of wide-body lease transitions and extensions which occurred during the fourth quarter of 2017 at lower lease rates.

Adjusted EBITDA for the first quarter was $191.1 million, a decrease of $2.2 million, or 1.2%, from the first quarter of 2017, due primarily to lower rental revenues, partially offset by higher gains from aircraft sales.  We sold four aircraft for a gain on sale of $5.8 million during the first quarter of 2018 versus one aircraft sale that was closed during the first quarter of 2017.

Aviation Assets

During the first quarter 2018, we acquired four aircraft for $111 million and had commitments to acquire twelve additional aircraft in 2018 for more than $490 million.  These sixteen aircraft have a weighted average age of 4.7 years and a weighted average remaining lease term of 5.6 years.  All of the aircraft that we have acquired or have committed to acquire this year are narrow-body aircraft.

As of March 31, 2018, Aircastle owned 222 aircraft having a net book value of $6.7 billion.  We also manage twelve aircraft with a net book value of $634 million on behalf of our joint ventures.

Financing Activity

During the first quarter of 2018, we repaid $75 million that was drawn under our unsecured revolving line of credit.  The current undrawn available balance under this committed credit facility is $710 million.

Common Dividend

On May 1, 2018, Aircastle's Board of Directors declared a second quarter 2018 cash dividend on its common shares of $0.28 per share, payable on June 15, 2018 to shareholders of record on May 31, 2018.  This is our 48^th consecutive dividend.

Share Repurchases

Since the beginning of the year, the Company acquired approximately 494 thousand shares at an average price of $19.54 per share.  Aircastle's Board of Directors previously authorized a $100 million share repurchase program, and there is approximately $86 million remaining under this authorization.  Since 2011, the Company has repurchased 15.0 million shares at an average cost of $13.50 per share.

Conference Call

In connection with this earnings release, management will host an earnings conference call on Thursday, May 3, 2018 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 (866) 548-4713 (from within the U.S. and Canada) or (323) 794-2093 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "8952759".

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 1:00 P.M. Eastern time on Saturday, June 2, 2018 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 "8952759".

About Aircastle Limited

Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world.  As of March 31, 2018, Aircastle owned and managed on behalf of its joint ventures 234 aircraft leased to 81 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, 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 2017 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.