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.
_______________ | |
(1) |
See Appendix for an explanation of the reclassification of the Gain on Sale of Flight Equipment. |
(2) |
Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers. |
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
(In thousands, except share data) |
Three Months Ended March 31, | ||||||
2018 |
2017 | ||||||
Lease rental and finance and sales-type lease revenues |
$ |
186,925 |
$ |
194,659 |
|||
Total revenues(1) |
$ |
202,680 |
$ |
205,032 |
|||
Adjusted EBITDA(2) |
$ |
191,145 |
$ |
193,391 |
|||
Net income |
$ |
57,547 |
$ |
42,439 |
|||
Per common share - Diluted |
$ |
0.73 |
$ |
0.54 |
|||
Adjusted net income(2) |
$ |
56,751 |
$ |
45,691 |
|||
Per common share - Diluted |
$ |
0.72 |
$ |
0.58 |
_______________ | |
(1) |
As part of the Company's adoption of Financial Accounting Standards Board ("FASB") Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers (Topic 606), we have reclassified Gain on sale of flight equipment from Other income (expense) to Revenues on our Consolidated Statement of Income as of March 31, 2018. We believe this better reflects the sale of flight equipment as part of our ordinary activities and conforms our presentation to those of our publicly traded peers. The presentation for the three months ended March 31, 2017 has also been reclassified to conform to the current period presentation. The standard did not have a material impact on our consolidated financial statements and related disclosures. |
(2) |
Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers. |
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 $634 million on behalf of our joint ventures.
Owned Aircraft |
As of 2018(1) |
As of March 31, 2017(1) | |||||
Net Book Value of Flight Equipment ($ mils.) |
$ |
6,677 |
$ |
6,596 |
|||
Net Book Value of Unencumbered Flight Equipment ($ mils.) |
$ |
5,304 |
$ |
4,725 |
|||
Number of Aircraft |
222 |
200 |
|||||
Number of Unencumbered Aircraft |
193 |
163 |
|||||
Weighted Average Fleet Age (years)(2) |
9.3 |
8.2 |
|||||
Weighted Average Remaining Lease Term (years)(2) |
4.8 |
4.8 |
|||||
Weighted Average Fleet Utilization for the quarter ended(3) |
99.4 |
% |
98.3 |
% | |||
Portfolio Yield for the quarter ended(2)(4) |
11.5 |
% |
12.3 |
% | |||
Net Cash Interest Margin(5) |
8.3 |
% |
8.7 |
% | |||
Managed Aircraft on behalf of Joint Ventures |
|||||||
Net Book Value of Flight Equipment ($ mils.) |
$ |
634 |
$ |
682 |
|||
Number of Aircraft |
12 |
13 |
_______________ | |
(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. |
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 48th 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.
Aircastle Limited and Subsidiaries Consolidated Balance Sheets (Dollars in thousands, except share data) | |||||||
March 31, |
December 31, | ||||||
(Unaudited) |
|||||||
ASSETS |
|||||||
Cash and cash equivalents |
$ |
210,815 |
$ |
211,922 |
|||
Restricted cash and cash equivalents |
21,524 |
21,935 |
|||||
Accounts receivable |
7,818 |
12,815 |
|||||
Flight equipment held for lease, net of accumulated depreciation of $1,109,182 and $1,125,594, respectively |
6,143,695 |
6,188,469 |
|||||
Net investment in finance and sales-type leases |
533,373 |
545,750 |
|||||
Unconsolidated equity method investments |
78,220 |
76,982 |
|||||
Other assets |
173,654 |
141,210 |
|||||
Total assets |
$ |
7,169,099 |
$ |
7,199,083 |
|||
LIABILITIES AND SHAREHOLDERS' EQUITY |
|||||||
LIABILITIES |
|||||||
Borrowings from secured financings, net of debt issuance costs |
$ |
824,189 |
$ |
849,874 |
|||
Borrowings from unsecured financings, net of debt issuance costs |
3,391,224 |
3,463,732 |
|||||
Accounts payable, accrued expenses and other liabilities |
139,961 |
140,221 |
|||||
Lease rentals received in advance |
66,350 |
57,630 |
|||||
Security deposits |
130,350 |
130,628 |
|||||
Maintenance payments |
679,571 |
649,434 |
|||||
Total liabilities |
5,231,645 |
5,291,519 |
|||||
Commitments and Contingencies |
|||||||
SHAREHOLDERS' EQUITY |
|||||||
Preference shares, $0.01 par value, 50,000,000 shares authorized, no shares issued and outstanding |
— |
— |
|||||
Common shares, $0.01 par value, 250,000,000 shares authorized, 78,539,191 shares issued and outstanding at March 31, 2018; and 78,707,963 shares issued and outstanding at December 31, 2017 |
785 |
787 |
|||||
Additional paid-in capital |
1,522,113 |
1,527,796 |
|||||
Retained earnings |
415,605 |
380,331 |
|||||
Accumulated other comprehensive loss |
(1,049) |
(1,350) |
|||||
Total shareholders' equity |
1,937,454 |
1,907,564 |
|||||
Total liabilities and shareholders' equity |
$ |
7,169,099 |
$ |
7,199,083 |
Aircastle Limited and Subsidiaries Consolidated Statements of Income (Dollars in thousands, except per share amounts) (Unaudited) | |||||||
Three Months Ended March 31, | |||||||
2018 |
2017 | ||||||
Revenues: |
|||||||
Lease rental revenue |
$ |
177,483 |
$ |
190,586 |
|||
Finance and sales-type lease revenue |
9,442 |
4,073 |
|||||
Amortization of lease premiums, discounts and incentives |
(3,128) |
(3,112) |
|||||
Maintenance revenue |
11,991 |
12,287 |
|||||
Total lease revenue |
195,788 |
203,834 |
|||||
Gain on sale of flight equipment(1) |
5,768 |
759 |
|||||
Other revenue |
1,124 |
439 |
|||||
Total revenues(1) |
202,680 |
205,032 |
|||||
Operating expenses: |
|||||||
Depreciation |
75,002 |
79,174 |
|||||
Interest, net |
57,108 |
63,068 |
|||||
Selling, general and administrative (including non-cash share-based payment expense of $2,378 and $2,102 for the three months ended March 31, 2018 and 2017, respectively) |
17,835 |
16,167 |
|||||
Impairment of flight equipment |
— |
500 |
|||||
Maintenance and other costs |
988 |
2,931 |
|||||
Total expenses |
150,933 |
161,840 |
|||||
Total other income (expense) |
3,174 |
(1,149) |
|||||
Income from continuing operations before income taxes and earnings of unconsolidated equity method investments |
54,921 |
42,043 |
|||||
Income tax (benefit) provision |
(844) |
1,846 |
|||||
Earnings of unconsolidated equity method investments, net of tax |
1,782 |
2,242 |
|||||
Net income |
$ |
57,547 |
$ |
42,439 |
|||
Earnings per common share — Basic: |
|||||||
Net income per share |
$ |
0.73 |
$ |
0.54 |
|||
Earnings per common share — Diluted: |
|||||||
Net income per share |
$ |
0.73 |
$ |
0.54 |
|||
Dividends declared per share |
$ |
0.28 |
$ |
0.26 |
_______________ | |
(1) |
As part of the Company's adoption of FASB ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), we have reclassified Gain on sale of flight equipment from Other income (expense) to Revenues on our Consolidated Statement of Income as of March 31, 2018. We believe this better reflects the sale of flight equipment as part of our ordinary activities and conforms our presentation to those of our publicly traded peers. The presentation for the three months ended March 31, 2017 has also been reclassified to conform to the current period presentation. The standard did not have a material impact on our consolidated financial statements and related disclosures. |
Aircastle Limited and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands) (Unaudited) | |||||||
Three Months Ended | |||||||
2018 |
2017 | ||||||
Cash flows from operating activities: |
|||||||
Net income |
$ |
57,547 |
$ |
42,439 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||
Depreciation |
|
There is no comments yet.
You must login Login Sign up