Exhibit 99.1
FOR IMMEDIATE RELEASE
Contact:
Frank Constantinople, SVP Investor Relations
Tel: +1-203-504-1063
fconstantinople@aircastle.com
The IGB Group
Leon Berman
Tel: +1-212-477-8438
lberman@igbir.com
Aircastle Announces Third Quarter 2014 Results
Quarterly Dividend Increased 10% to $0.22 per Share, and $100 Million Share Repurchase Authorization Approved by Aircastle’s Board of Directors
Highlights
| | • | | Lease rental and finance lease revenues of $180.3 million, and Adjusted EBITDA1 of $177.4 million |
| | • | | Net income of $19.2 million, or $0.24 per diluted common share |
| | • | | Adjusted net income1 of $26.5 million, or $0.33 per diluted common share |
| | • | | Completed more than $1 billion of aircraft investments through the third quarter of 2014; more than $750 million of additional acquisitions expected to close by the end of Q1 2015 |
| | • | | Sold eleven aircraft to third parties during the third quarter for proceeds of $201 million and a net pre-tax contribution of $11.4 million; also sold a 777-300ER on lease with LATAM to our joint venture with Ontario Teachers’ Pension Plan |
| | • | | Fleet utilization of 100% with an aircraft portfolio yield of 13.2% and net cash interest margin of 9.9% |
| | • | | Increased the common dividend by 10%, to $0.22 per share; our 34th consecutive quarterly dividend declared |
| | • | | Board of Directors approved a $100 million share repurchase authorization |
Stamford, CT. November 4, 2014 – Aircastle Limited (the “Company” or “Aircastle”) (NYSE: AYR) reported third quarter 2014 net income of $19.2 million, or $0.24 per diluted common share, and adjusted net income of $26.5 million, or $0.33 per diluted common share. The third quarter results included lease rental and finance lease revenues of $180.3 million versus $165.3 million in the third quarter of 2013.
| 1 | Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers. |
Commenting on the results, Ron Wainshal, Aircastle’s CEO, stated, “During the third quarter, we recorded 9% lease rental revenue growth while increasing our net cash interest margin to 9.9%, among the highest in the industry. This strong performance demonstrates our success in improving Aircastle’s portfolio through an active mix of acquisitions, sales and lease placements. Aircastle completed more than $1 billion of aircraft acquisitions in the first three quarters of 2014, and we’ve built a substantial new investment pipeline to support strong and accretive growth. We also sold 35 aircraft and designated two 747 freighters for sale for a net contribution of over $23 million as we exit older technology models.”
Mr. Wainshal continued, “We’ve been taking advantage of favorable market conditions to position the company for profitable growth and on a path towards obtaining investment grade ratings. As market conditions evolve, we intend to remain disciplined investors with a flexible and nimble approach to aircraft acquisitions, focusing on situations that provide our shareholders with stable and attractive returns. We remain committed to generating sustainable cash flow and allocating capital efficiently between value-enhancing investments and returning capital to shareholders. To that end, our Board increased the quarterly dividend by 10%, to $0.22 per share, and authorized a $100 million repurchase program.”
Third Quarter Results
Third quarter of 2014 lease rental and finance lease revenues were $180.3 million, up $15.1 million, or 9% year over year, due primarily to the $43.3 million impact of aircraft acquisitions, offset by $21.1 million of lower revenues due to aircraft dispositions.
Total revenues for the third quarter were $177.6 million, an increase of $7.5 million, or 4% above the previous year. This increase was driven by $15.1 million in higher lease rental and finance lease revenue and $8.7 million in lower amortization of net lease discounts and incentives.1 These improvements were offset by lower maintenance revenue of $17.1 million.2
During the third quarter of 2014, in connection with our annual fleet review, we shortened the expected lives and reduced the residual values of two MD-11 freighter aircraft and recorded impairment charges of $20.4 million, or $0.25 per diluted common share.
Adjusted EBITDA for the third quarter was $177.4 million, up $8.2 million, or 5% from the third quarter of 2013. The increase was driven by higher lease rental and finance lease revenue of $15.1 million, and higher gain on sale of flight equipment of $8.3 million and other revenue and joint venture income of $1.8 million. These improvements were offset by lower maintenance revenue of $17.1 million.
Net income for the third quarter was $19.2 million, up $93.7 million. The improvement was due primarily to non-cash aircraft impairment charges associated with our annual fleet review decreasing by $85.7 million in the third quarter of 2014 versus the prior year. In addition, total revenues increased $7.5 million, while gains from the sale of flight equipment were $8.3 million higher. These improvements were offset by higher depreciation expense of $5.1 million from fleet net book value growth, and higher income tax expense of $4.1 million.
| 1 | The lower amortization was due to a lease incentive reversal of $5.3 million related to maintenance work which will not be performed during the lease. |
| 2 | Driven by $12.1 million from an unscheduled lease termination in the third quarter of 2013 and $8.7 million of contra-maintenance revenue in the third quarter of 2014, related to engine restoration work completed by a lessee prior to the scheduled return of two 737-800 aircraft. |
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Adjusted net income for the quarter was $26.5 million, up $95.6 million year over year, and reflects lower aircraft impairment charges of $85.7 million, higher total revenues of $7.5 million, higher gains on sale of flight equipment of $8.3 million and lower adjusted interest and maintenance expenses of $4.3 million. These improvements were offset by higher depreciation of $5.1 million, higher taxes of $4.1 million and lower other income of $0.9 million.
Aviation Assets
During the first nine months of the year, we acquired 14 aircraft for more than $1.0 billion. Since the end of the third quarter, we have acquired or expect to acquire, prior to the end of the first quarter of 2015, three wide-body and 18 narrow-body aircraft for more than $750 million.
During the first nine months of 2014, we sold 34 aircraft to third parties for total proceeds of $447 million. These sold aircraft had a weighted average age of approximately 17 years and included five freighter and eleven older technology aircraft. During the third quarter of 2014, we sold eleven aircraft to third parties and one 777-300ER aircraft on lease with LATAM to our joint venture with Ontario Teachers’ Pension Plan. As with the prior transactions with our joint venture, this sale allows us to manage exposures and pursue larger transactions while also enhancing our return on equity.
As of September 30, 2014, Aircastle owned 140 aircraft having a net book value of $5.3 billion.
| | | | | | | | |
| | | Owned
Aircraft as of
September 30,
2013(1) | | | Owned
Aircraft as of
September 30,
2014(1) | |
Flight Equipment Held for Lease ($ mils.) | | $ | 5,086 | | | $ | 5,304 | |
Unencumbered Flight Equipment ($ mils.) | | $ | 2,712 | | | $ | 2,924 | |
Number of Aircraft | | | 161 | | | | 140 | |
Number of Unencumbered Aircraft | | | 80 | | | | 85 | |
Passenger Aircraft (% of NBV) | | | 80 | % | | | 84 | % |
Freighter Aircraft (% of NBV) | | | 20 | % | | | 16 | % |
Weighted Average Fleet Age – Combined (years)(2) | | | 10.0 | | | | 8.6 | |
Weighted Average Remaining Combined Lease Term (years)(3) | | | 5.1 | | | | 5.0 | |
Weighted Average Fleet Utilization for the three months ended(4) | | | 100 | % | | | 100 | % |
Portfolio Yield for the three months ended(5) | | | 13.7 | % | | | 13.2 | % |
Net Cash Interest Margin(6) | | | 9.6 | % | | | 9.9 | % |
| (1) | Calculated using net book value of flight equipment held for lease and net investment in finance leases at period end. |
| (2) | Weighted average age by net book value. |
| (3) | Weighted average remaining lease term by net book value. |
| (4) | Aircraft on-lease days as a percent of total days in period weighted by net book value. |
| (5) | Lease rental revenue for the period as a percent of the average net book value of flight equipment held for lease for the period; quarterly information is annualized. |
| (6) | Net Cash Interest Margin = Lease rental yield 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. |
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Common Dividend
On October 31, 2014, Aircastle’s Board of Directors declared a fourth quarter 2014 cash dividend on its common shares of $0.22 per share, payable on December 15, 2014 to shareholders of record on November 28, 2014. This is a 10% increase over the previous quarter’s cash dividend and represents the fifth dividend increase since 2010.
Share Repurchase Authorization
On October 31, 2014 the Company’s Board of Directors authorized the repurchase of up to $100 million of the Company’s common shares. Under the program, the Company may purchase its common shares from time to time in the open market or in privately negotiated transactions. The amount and timing of the purchases will depend on a number of factors including the price and availability of the Company’s common shares, trading volume and general market conditions.
Conference Call
In connection with this earnings release, management will host an earnings conference call on Tuesday, November 4, 2014 at 10:00AM Eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by dialing (800) 768-6563 (from within the U.S. and Canada) or (785) 830-7991 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode “1608678”.
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 12:00PM Eastern time on Thursday, December 4, 2014 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 “1608678”.
About Aircastle Limited
Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of September 30, 2014, Aircastle’s aircraft portfolio consisted of 140 aircraft on lease with 61 customers located in 37 countries.
Safe Harbor
Certain items in this press release and other information we provide from time to time, may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but 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 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
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on management’s current expectations and beliefs 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 forward-looking statements contained in this press release. Factors that could have a material adverse effect on our operations and future prospects or that could cause actual results to differ materially from Aircastle’s expectations include, but are not limited to, capital markets disruption or volatility which could adversely affect our continued ability to obtain additional capital to finance new investments or our working capital needs; government fiscal or tax policies, general economic and business conditions or other factors affecting demand for aircraft or aircraft values and lease rates; our continued ability to obtain favorable tax treatment in Bermuda, Ireland and other jurisdictions; our ability to pay dividends; high or volatile fuel prices, lack of access to capital, reduced load factors and/or reduced yields, operational disruptions caused by political unrest and other factors affecting the creditworthiness of our airline customers and their ability to continue to perform their obligations under our leases and other risks detailed from time to time in Aircastle’s filings with the SEC, including as previously disclosed in Aircastle’s 2013 Annual Report on Form 10-K, and in our other filings with the SEC, press releases and other communications. 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 Limited expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in its expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
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Aircastle Limited and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)
| | | | | | | | |
| | | December 31,
2013 | | | September 30,
2014 | |
| | | | | | (Unaudited) | |
ASSETS | | | | | | | | |
Cash and cash equivalents | | $ | 654,613 | | | $ | 474,338 | |
Accounts receivable | | | 2,825 | | | | 3,896 | |
Restricted cash and cash equivalents | | | 122,773 | | | | 114,392 | |
Restricted liquidity facility collateral | | | 107,000 | | | | 65,000 | |
Flight equipment held for lease, net of accumulated depreciation of $1,430,325 and $1,350,950 | | | 5,044,410 | | | | 5,232,940 | |
Net investment in finance leases | | | 145,173 | | | | 70,723 | |
Unconsolidated equity method investment | | | 21,123 | | | | 30,501 | |
Other assets | | | 153,976 | | | | 175,454 | |
| | | | | | | | |
Total assets | | $ | 6,251,893 | | | $ | 6,167,244 | |
| | | | | | | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | | | | | | |
LIABILITIES | | | | | | | | |
Borrowings from secured financings (including borrowings of ACS Ireland VIEs of $152,545 and $78,418, respectively) | | $ | 1,586,835 | | | $ | 1,485,033 | |
Borrowings from unsecured financings | | | 2,150,527 | | | | 2,200,000 | |
Accounts payable, accrued expenses and other liabilities | | | 111,661 | | | | 162,970 | |
Lease rentals received in advance | | | 49,235 | | | | 48,027 | |
Liquidity facility | | | 107,000 | | | | 65,000 | |
Security deposits | | | 118,804 | | | | 125,765 | |
Maintenance payments | | | 442,432 | | | | 422,157 | |
Fair value of derivative liabilities | | | 39,992 | | | | 3,090 | |
| | | | | | | | |
Total liabilities | | | 4,606,486 | | | | 4,512,042 | |
| | | | | | | | |
Commitments and Contingencies | | | | | | | | |
| | |
SHAREHOLDERS’ EQUITY | | | | | | | | |
Preference shares, $.01 par value, 50,000,000 shares authorized, no shares issued and outstanding | | | — | | | | — | |
Common shares, $.01 par value, 250,000,000 shares authorized, 80,806,975 shares issued and outstanding at December 31, 2013; and 80,949,219 shares issued and outstanding at September 30, 2014 | | | 808 | | | | 809 | |
Additional paid-in capital | | | 1,562,106 | | | | 1,563,685 | |
Retained earnings | | | 158,398 | | | | 137,858 | |
Accumulated other comprehensive loss | | | (75,905 | ) | | | (47,150 | ) |
| | | | | | | | |
Total shareholders’ equity | | | 1,645,407 | | | | 1,655,202 | |
| | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 6,251,893 | | | $ | 6,167,244 | |
| | | | | | | | |
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Aircastle Limited and Subsidiaries
Consolidated Statements of Income
(Dollars in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
Revenues: | | | | | | | | | | | | | | | | |
Lease rental revenue | | $ | 161,148 | | | $ | 178,886 | | | $ | 475,656 | | | $ | 536,452 | |
| | | | |
Finance lease revenue | | | 4,122 | | | | 1,463 | | | | 12,120 | | | | 9,347 | |
| | | | |
Amortization of lease premiums, discounts and lease incentives | | | (9,737 | ) | | | (1,075 | ) | | | (25,527 | ) | | | (7,252 | ) |
Maintenance revenue (including contra maintenance revenue of $0 and $8,655 for the three months ended and $0 and $25,037 for the nine months ended September 30, 2013 and 2014, respectively) | | | 12,932 | | | | (4,189 | ) | | | 42,983 | | | | 35,035 | |
| | | | | | | | | | | | | | | | |
Total lease revenue | | | 168,465 | | | | 175,085 | | | | 505,232 | | | | 573,582 | |
Other revenue | | | 1,625 | | | | 2,511 | | | | 11,425 | | | | 6,763 | |
| | | | | | | | | | | | | | | | |
Total revenues | | | 170,090 | | | | 177,596 | | | | 516,657 | | | | 580,345 | |
| | | | | | | | | | | | | | | | |
Operating expenses: | | | | | | | | | | | | | | | | |
Depreciation | | | 70,469 | | | | 75,519 | | | | 212,448 | | | | 225,230 | |
Interest, net | | | 57,843 | | | | 56,794 | | | | 183,651 | | | | 181,551 | |
| | | | |
Selling, general and administrative (including non-cash share based payment expense of $1,067 and $949 for the three months ended and $2,931 and $3,167 for the nine months ended September 30, 2013 and 2014, respectively) | | | 12,830 | | | | 13,817 | | | | 39,297 | | | | 41,818 | |
Impairment of Aircraft | | | 106,136 | | | | 20,436 | | | | 112,335 | | | | 67,005 | |
Maintenance and other costs | | | 1,914 | | | | 713 | | | | 11,464 | | | | 5,222 | |
| | | | | | | | | | | | | | | | |
Total expenses | | | 249,192 | | | | 167,279 | | | | 559,195 | | | | 520,826 | |
| | | | | | | | | | | | | | | | |
Other income (expense): | | | | | | | | | | | | | | | | |
Gain on sale of flight equipment | | | 3,092 | | | | 11,390 | | | | 25,601 | | | | 13,384 | |
Loss on extinguishment of debt | | | — | | | | — | | | | — | | | | (36,570 | ) |
Other | | | 855 | | | | 1 | | | | 5,016 | | | | 758 | |
| | | | | | | | | | | | | | | | |
Total other income (expense) | | | 3,947 | | | | 11,391 | | | | 30,617 | | | | (22,428 | ) |
| | | | | | | | | | | | | | | | |
Income (loss) from continuing operations before income taxes | | | (75,155 | ) | | | 21,708 | | | | (11,921 | ) | | | 37,091 | |
Income tax provision | | | (597 | ) | | | 3,484 | | | | 6,719 | | | | 10,925 | |
Earnings of unconsolidated equity method investment, net of tax | | | — | | | | 927 | | | | — | | | | 1,898 | |
| | | | | | | | | | | | | | | | |
Net income (loss) | | $ | (74,558 | ) | | $ | 19,151 | | | $ | (18,640 | ) | | $ | 28,064 | |
| | | | | | | | | | | | | | | | |
Earnings per common share — Basic: | | | | | | | | | | | | | | | | |
Net income (loss) per share | | $ | (0.95 | ) | | $ | 0.24 | | | $ | (0.26 | ) | | $ | 0.35 | |
| | | | | | | | | | | | | | | | |
Earnings per common share — Diluted: | | | | | | | | | | | | | | | | |
Net income (loss) per share | | $ | (0.95 | ) | | $ | 0.24 | | | $ | (0.26 | ) | | $ | 0.35 | |
| | | | | | | | | | | | | | | | |
Dividends declared per share | | $ | 0.165 | | | $ | 0.200 | | | $ | 0.495 | | | $ | 0.600 | |
| | | | | | | | | | | | | | | | |
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Aircastle Limited and Subsidiaries
Consolidated Statements of Comprehensive Income
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
Net income (loss) | | $ | (74,558 | ) | | $ | 19,151 | | | $ | (18,640 | ) | | $ | 28,064 | |
| | | | | | | | | | | | | | | | |
Other comprehensive income, net of tax: | | | | | | | | | | | | | | | | |
Net change in fair value of derivatives, net of tax expense of $78 and $21 for the three months ended and $389 and $825 for the nine months ended September 30, 2013 and 2014, respectively | | | 1,798 | | | | 1,643 | | | | 13,751 | | | | 2,025 | |
Net derivative loss reclassified into earnings | | | 7,300 | | | | 8,549 | | | | 25,285 | | | | 26,730 | |
| | | | | | | | | | | | | | | | |
Other comprehensive income | | | 9,098 | | | | 10,192 | | | | 39,036 | | | | 28,755 | |
| | | | | | | | | | | | | | | | |
Total comprehensive income (loss) | | $ | (65,460 | ) | | $ | 29,343 | | | $ | 20,396 | | | $ | 56,819 | |
| | | | | | | | | | | | | | | | |
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Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
| | | | | | | | |
| | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2014 | |
Cash flows from operating activities: | | | | | | | | |
Net income (loss) | | $ | (18,640 | ) | | $ | 28,064 | |
Adjustments to reconcile net income to net cash provided by operating activities: | | | | | | | | |
Depreciation | | | 212,448 | | | | 225,230 | |
Amortization of deferred financing costs | | | 11,757 | | | | 10,493 | |
Amortization of net lease discounts and lease incentives | | | 25,527 | | | | 7,252 | |
Deferred income taxes | | | 3,419 | | | | (2,623 | ) |
Non-cash share based payment expense | | | 2,931 | | | | 3,167 | |
Cash flow hedges reclassified into earnings | | | 25,285 | | | | 26,730 | |
Security deposits and maintenance payments included in earnings | | | (32,047 | ) | | | (38,257 | ) |
Gain on sale of flight equipment | | | (25,601 | ) | | | (13,384 | ) |
Loss on extinguishment of debt | | | — | | | | 36,570 | |
Impairment of aircraft | | | 112,335 | | | | 67,005 | |
Other | | | (4,284 | ) | | | (2,278 | ) |
Changes in certain assets and liabilities: | | | | | | | | |
Accounts receivable | | | 1,588 | | | | (1,603 | ) |
Other assets | | | 1,155 | | | | (1,691 | ) |
Accounts payable, accrued expenses and other liabilities | | | 7,978 | | | | 17,138 | |
Lease rentals received in advance | | | (4,538 | ) | | | 4,162 | |
| | | | | | | | |
Net cash provided by operating activities | | | 319,313 | | | | 365,975 | |
| | | | | | | | |
Cash flows from investing activities: | | | | | | | | |
Acquisition and improvement of flight equipment and lease incentives | | | (837,183 | ) | | | (939,651 | ) |
Proceeds from sale of flight equipment | | | 285,199 | | | | 563,882 | |
Restricted cash and cash equivalents related to sale of flight equipment | | | (2,200 | ) | | | (24,606 | ) |
Aircraft purchase deposits and progress payments | | | (5,655 | ) | | | 1,315 | |
Net investment in finance leases | | | (11,595 | ) | | | (14,258 | ) |
Collections on finance leases | | | 6,658 | | | | 8,096 | |
Unconsolidated equity method investment and associated costs | | | — | | | | (8,592 | ) |
Distributions from unconsolidated equity method investment in excess of earnings | | | — | | | | 997 | |
Principal repayments on debt investment | | | 42,001 | | | | — | |
Other | | | (852 | ) | | | (466 | ) |
| | | | | | | | |
Net cash used in investing activities | | | (523,627 | ) | | | (413,283 | ) |
| | | | | | | | |
Cash flows from financing activities: | | | | | | | | |
Issuance of shares net of repurchases | | | 197,478 | | | | (2,092 | ) |
Proceeds from notes and term debt financings | | | 78,230 | | | | 803,200 | |
Securitization and term debt financing repayments | | | (430,482 | ) | | | (895,459 | ) |
Debt extinguishment costs | | | — | | | | (32,835 | ) |
Deferred financing costs | | | (2,910 | ) | | | (15,843 | ) |
Restricted secured liquidity facility collateral | | | — | | | | 42,000 | |
Secured liquidity facility collateral | | | — | | | | (42,000 | ) |
Restricted cash and cash equivalents related to financing activities | | | (77,701 | ) | | | 32,987 | |
Security deposits and maintenance payments received | | | 154,303 | | | | 131,136 | |
Security deposits and maintenance payments returned | | | (58,776 | ) | | | (72,030 | ) |
Payments for terminated cash flow hedges | | | — | | | | (33,427 | ) |
Dividends paid | | | (35,895 | ) | | | (48,604 | ) |
| | | | | | | | |
Net cash used in financing activities | | | (175,753 | ) | | | (132,967 | ) |
| | | | | | | | |
Net increase (decrease) in cash and cash equivalents | | | (380,067 | ) | | | (180,275 | ) |
Cash and cash equivalents at beginning of period | | | 618,217 | | | | 654,613 | |
| | | | | | | | |
Cash and cash equivalents at end of period | | $ | 238,150 | | | $ | 474,338 | |
| | | | | | | | |
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Aircastle Limited and Subsidiaries
Supplemental Financial Information
(Amount in thousands, except per share amounts)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
Revenues | | $ | 170,090 | | | $ | 177,596 | | | $ | 516,657 | | | $ | 580,345 | |
| | | | |
EBITDA | | $ | 62,894 | | | $ | 156,023 | | | $ | 409,705 | | | $ | 453,022 | |
| | | | |
Adjusted EBITDA | | $ | 169,242 | | | $ | 177,408 | | | $ | 521,244 | | | $ | 559,083 | |
| | | | |
Adjusted net income (loss) | | $ | (69,091 | ) | | $ | 26,545 | | | $ | 4,361 | | | $ | 87,497 | |
| | | | |
Adjusted net income (loss) allocable to common shares | | $ | (69,091 | ) | | $ | 26,348 | | | $ | 4,327 | | | $ | 86,868 | |
Per common share - Basic | | $ | (0.88 | ) | | $ | 0.33 | | | $ | 0.06 | | | $ | 1.08 | |
Per common share - Diluted | | $ | (0.88 | ) | | $ | 0.33 | | | $ | 0.06 | | | $ | 1.08 | |
| | | | |
Basic common shares outstanding | | | 78,544 | | | | 80,390 | | | | 71,462 | | | | 80,389 | |
Diluted common shares outstanding | | | 78,544 | | | | 80,390 | | | | 71,462 | | | | 80,389 | |
Refer to the selected information accompanying this press release for a reconciliation of GAAP to Non-GAAP information.
10
Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
EBITDA and Adjusted EBITDA Reconciliation
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| | | (Dollars in thousands) | |
Net income (loss) | | $ | (74,558 | ) | | $ | 19,151 | | | $ | (18,640 | ) | | $ | 28,064 | |
Depreciation | | | 70,469 | | | | 75,519 | | | | 212,448 | | | | 225,230 | |
Amortization of net lease discounts and lease incentives | | | 9,737 | | | | 1,075 | | | | 25,527 | | | | 7,252 | |
Interest, net | | | 57,843 | | | | 56,794 | | | | 183,651 | | | | 181,551 | |
Income tax provision | | | (597 | ) | | | 3,484 | | | | 6,719 | | | | 10,925 | |
| | | | | | | | | | | | | | | | |
EBITDA | | $ | 62,894 | | | $ | 156,023 | | | $ | 409,705 | | | $ | 453,022 | |
Adjustments: | | | | | | | | | | | | | | | | |
Impairment of aircraft | | | 106,136 | | | | 20,436 | | | | 112,335 | | | | 67,005 | |
Loss on extinguishment of debt | | | — | | | | — | | | | — | | | | 36,570 | |
Non-cash share based payment expense | | | 1,067 | | | | 949 | | | | 2,931 | | | | 3,167 | |
Gain on mark to market of interest rate derivative contracts | | | (855 | ) | | | — | | | | (3,727 | ) | | | (681 | ) |
| | | | | | | | | | | | | | | | |
Adjusted EBITDA | | $ | 169,242 | | | $ | 177,408 | | | $ | 521,244 | | | $ | 559,083 | |
| | | | | | | | | | | | | | | | |
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.
11
Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
Adjusted Net Income Reconciliation
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
| | | Three Months Ended
September 30, | | | Nine Months Ended
September 30, | |
| | | 2013 | | | 2014 | | | 2013 | | | 2014 | |
| | | (Dollars in thousands) | |
Net income (loss) | | $ | (74,558 | ) | | $ | 19,151 | | | $ | (18,640 | ) | | $ | 28,064 | |
Loss on extinguishment of debt(2) | | | — | | | | — | | | | — | | | | 36,570 | |
Loan termination fee(1) | | | — | | | | — | | | | 2,954 | | | | — | |
Ineffective portion and termination of hedges(1) | | | 91 | | | | (21 | ) | | | 2,222 | | | | 41 | |
Gain on mark to market of interest rate derivative contracts(2) | | | (855 | ) | | | — | | | | (3,727 | ) | | | (681 | ) |
Write-off of deferred financing fees(1) | | | 150 | | | | — | | | | 3,975 | | | | — | |
Non-cash share based payment expense(3) | | | 1,067 | | | | 949 | | | | 2,931 | | | | 3,167 | |
Term Financing No. 1 hedge loss amortization charges(1) | | | 4,591 | | | | 3,601 | | | | 13,478 | | | | 11,544 | |
Securitization No. 1 hedge loss amortization charges(1) | | | 423 | | | | 2,865 | | | | 1,168 | | | | 8,792 | |
| | | | | | | | | | | | | | | | |
Adjusted net income (loss) | | $ | (69,091 | ) | | $ | 26,545 | | | $ | 4,361 | | | $ | 87,497 | |
| | | | | | | | | | | | | | | | |
| (1) | Included in Interest, net. |
| (2) | Included in Other income (expense). |
| (3) | Included in Selling, general and administrative expenses. |
12
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
September 30, 2014 | | | Nine Months Ended
September 30, 2014 | |
Weighted-average shares: | | Shares | | | Percent(2) | | | Shares | | | Percent(2) | |
Common shares outstanding – Basic | | | 80,390 | | | | 99.26 | % | | | 80,389 | | | | 99.28 | % |
Unvested restricted common shares | | | 601 | | | | 0.74 | % | | | 582 | | | | 0.72 | % |
| | | | | | | | | | | | | | | | |
Total weighted-average shares outstanding | | | 80,991 | | | | 100.00 | % | | | 80,971 | | | | 100.00 | % |
| | | | | | | | | | | | | | | | |
Net income allocation | | | | | | | | | | | | | | | | |
Net income | | $ | 19,151 | | | | 100.00 | % | | $ | 28,064 | | | | 100.00 | % |
Distributed and undistributed earnings allocated to unvested restricted shares | | | (142 | ) | | | (0.74 | %) | | | (202 | ) | | | (0.72 | %) |
| | | | | | | | | | | | | | | | |
Earnings available to common shares | | $ | 19,009 | | | | 99.26 | % | | $ | 27,862 | | | | 99.28 | % |
| | | | | | | | | | | | | | | | |
Adjusted net income allocation | | | | | | | | | | | | | | | | |
Adjusted net income | | $ | 26,545 | | | | 100.00 | % | | $ | 87,497 | | | | 100.00 | % |
Amounts allocated to unvested restricted shares | | | (197 | ) | | | (0.74 | %) | | | (629 | ) | | | (0.72 | %) |
| | | | | | | | | | | | | | | | |
Amounts allocated to common shares | | $ | 26,348 | | | | 99.26 | % | | $ | 86,868 | | | | 99.28 | % |
| | | | | | | | | | | | | | | | |
| (1) | For the three and nine months ended September 30, 2014 the company had no dilutive shares. |
| (2) | Percentages rounded to two decimal places. |
13
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
September 30, 2013 | | | Nine Months Ended
September 30, 2013 | |
Weighted-average shares: | | Shares | | | Percent(2) | | | Shares | | | Percent(2) | |
Common shares outstanding – Basic | | | 78,544 | | | | 99.15 | % | | | 71,462 | | | | 99.22 | % |
Unvested restricted common shares | | | 669 | | | | 0.85 | % | | | 563 | | | | 0.78 | % |
| | | | | | | | | | | | | | | | |
Total weighted-average shares outstanding | | | 79,214 | | | | 100.00 | % | | | 72,025 | | | | 100.00 | % |
| | | | | | | | | | | | | | | | |
Net income allocation | | | | | | | | | | | | | | | | |
Net (loss) | | $ | (74,558 | ) | | | 100.00 | % | | $ | (18,640 | ) | | | 100.00 | % |
Distributed and undistributed earnings allocated to unvested restricted shares | | | — | | | | (0.00 | %) | | | — | | | | (0.00 | %) |
| | | | | | | | | | | | | | | | |
Earnings available to common shares | | $ | (74,558 | ) | | | 100.00 | % | | $ | (18,640 | ) | | | 100.00 | % |
| | | | | | | | | | | | | | | | |
Adjusted net income allocation | | | | | | | | | | | | | | | | |
Adjusted net income (loss) | | $ | (69,091 | ) | | | 100.00 | % | | $ | 4,361 | | | | 100.00 | % |
Amounts allocated to unvested restricted shares | | | — | | | | (0.00 | %) | | | (34 | ) | | | (0.78 | %) |
| | | | | | | | | | | | | | | | |
Amounts allocated to common shares | | $ | (69,091 | ) | | | 100.00 | % | | $ | 4,327 | | | | 99.22 | % |
| | | | | | | | | | | | | | | | |
| (1) | For the three and six months ended September 30, 2013 the company had no dilutive shares. |
| (2) | Percentages rounded to two decimal places. |
14
