Aircastle Reports Financial Results for the Three-Month Period Ended November 30, 2020

STAMFORD, Conn., Jan. 14, 2021 /PRNewswire/ --

Key Financial Metrics for the Three Months ended November 30, 2020

  • Total revenues of $180.9 million
  • Net income of $2.7 million
  • Adjusted EBITDA(1) of $167.5 million
  • Gain on sale of flight equipment of $13.0 million

Recent Highlights

  • For the nine months ended November 30, 2020, acquired five aircraft for $154.3 million, two of which were A320neo aircraft acquired in a sale leaseback transaction with Volaris
  • For the nine months ended November 30, 2020, sold six aircraft; average age of approximately eleven years; nine-month gain on sale of $24.2 million; through January 8, 2021, sold four additional aircraft
  • For the three months ended November 30, 2020, collections represented approximately 90% of lease rental and direct financing and sales-type lease revenues
  • In September, Moody's affirmed Aircastle's senior unsecured debt rating at Baa3

Liquidity

  • As of December 31, 2020, total liquidity of $2.2 billion includes $1.25 billion of undrawn credit facilities, $463 million of unrestricted cash, $153 million of contracted asset sales, and $343 million of projected operating cash flows through December 31, 2021
  • 224 unencumbered aircraft with a net book value of $5.4 billion
  • $753 million of total adjusted contractual commitments through December 31, 2021; includes $500 million of notes due in March 2021

(1)

Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.

Mike Inglese, Aircastle's Chief Executive Officer, commented, "Although 2020 has proven to be a very challenging environment for the aviation industry, we remain optimistic about the recovery of the global airline industry over the long term.  As vaccines become more widely available during 2021, we expect passengers to return, and aircraft leasing will play a critical role in the industry's recovery over the next few years.   With the strong, long-term shareholder support of Marubeni Corporation and Mizuho Leasing, along with our experienced management team, Aircastle is well positioned to grow in a disciplined and profitable manner over the long run."   

Aviation Assets
As of November 30, 2020, Aircastle owned 260 aircraft and other flight equipment having a net book value of $7.0 billion.  We also manage nine aircraft with a net book value of $315 million dollars on behalf of our joint venture with Mizuho Leasing.

Owned Aircraft

As of
Nov. 30, 2020(1)


As of
Nov. 30, 2019(1)

Net Book Value of Flight Equipment ($ mils.)

$

6,979



$

7,717


Net Book Value of Unencumbered Flight Equipment ($ mils.)

$

5,406



$

5,900


Number of Aircraft

260



270


Number of Unencumbered Aircraft

224



229


Number of Lessees

80



85


Number of Countries

45



48


Weighted Average Fleet Age (years)(2)

10.5



9.9


Weighted Average Remaining Lease Term (years)(2)

4.3



4.8


Weighted Average Fleet Utilization for the quarter ended(3)

94.0

%


99.3

%





Managed Aircraft on behalf of Joint Ventures




Net Book Value of Flight Equipment ($ mils.)

$

315



$

329


Number of Aircraft

9



9


_______________

(1)

Calculated using net book value of flight equipment held for lease and net investment in 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. The decrease from our historical utilization rate was primarily due to the early termination of leases.

Deferrals   
In the current environment airlines have sought support from their lessor partners.  These requests have generally come in the form of payment deferrals and lease restructurings.  As of January 8, 2021, seven of our airline customers  are subject to judicial insolvency proceedings or similar protection.  We lease 22 aircraft to these customers, which comprise 13% of our net book value of flight equipment and 11% of our reported lease rental and direct financing and sales-type lease revenues for the trailing twelve months ended November 30, 2020.  While we anticipate that there may be additional airline bankruptcies and liquidations during the winter, we remain confident that the major US and global carriers, as well as the largest low-cost carriers, have the means to survive the COVID-19 crisis.  

We continue to grant deferrals to help certain clients manage through the crisis.  As of January 8, 2021, we had executed documents or had approved deferral arrangements with 37 airlines representing approximately 46% of our customer base.  The amount currently deferred is $101 million, including $76 million that appears in our November 30, 2020 Consolidated Balance Sheet.  This represented approximately 15% of our reported lease rental and direct financing and sales-type lease revenues for the trailing twelve months ended November 30, 2020. 

New Fiscal Year End  
Aircastle previously announced that we changed our fiscal year end to the twelve-month period ending on the last day in February, beginning February 28, 2021.  This change better aligns our financial reporting with the financial reporting cycle of our shareholders, Marubeni Corporation and Mizuho Leasing Company, Limited.  

Conference Call
In connection with this press release, management will host a conference call on Thursday, January 14, 2021, at 9:00 A.M. Eastern Time.  All interested parties are welcome to participate on the live call.  The conference call can be accessed by dialing (800) 430-8332 (from within the U.S. and Canada) or (786) 204-3966 (from outside of the U.S. and Canada) ten minutes prior to the scheduled start and referencing the passcode "8160028".

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com.  Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast. 

For those who are not available to listen to the live call, a replay will be available until 12:00 P.M. Eastern Time on Saturday, February 13, 2021, 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 "8160028".

About Aircastle Limited
Aircastle Limited acquires, leases, and sells commercial jet aircraft to airlines throughout the world.  As of November 30, 2020, Aircastle owned and managed on behalf of its joint ventures 269 aircraft leased to 80 customers located in 45 countries.

Safe Harbor
All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends, and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as "anticipates," "expects," "intends," "plans," "projects," "believes," "may," "will," "would," "could," "should," "seeks," "estimates" and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's 2019 Annual Report on Form 10-K and in our Form 10-Q for the quarterly period ended March 31, 2020.  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)

(Unaudited)



November 30,
2020


February 29,
2020

ASSETS




Cash and cash equivalents

$       416,621


$       166,083

Restricted cash and cash equivalents

5,341


5,354

Accounts receivable

85,141


27,269

Flight equipment held for lease, net of accumulated depreciation of
$1,939,501 and $1,542,938, respectively

6,666,574


7,142,987

Net investment in leases, net of allowance for credit losses of $3,714 and
$6,558, respectively

312,038


426,252

Unconsolidated equity method investments

35,448


33,470

Other assets

271,237


206,617

  Total assets

$     7,792,400


$     8,008,032





LIABILITIES AND SHAREHOLDERS' EQUITY 




LIABILITIES




Borrowings from secured financings, net of debt issuance costs and
discounts

$       937,603


$     1,012,518

Borrowings from unsecured financings, net of debt issuance costs and
discounts

4,130,141


3,884,235

Accounts payable, accrued expenses and other liabilities

191,437


207,114

Lease rentals received in advance

55,480


107,944

Security deposits

82,706


109,663

Maintenance payments

568,135


650,369

  Total liabilities

5,965,502


5,971,843





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, 14,048
shares issued and outstanding at November 30, 2020 and 75,076,794
shares issued and outstanding at February 29, 2020


751

Additional paid-in capital

1,485,777


1,456,977

Retained earnings

341,121


578,461





  Total shareholders' equity

1,826,898


2,036,189

  Total liabilities and shareholders' equity

$     7,792,400


$     8,008,032





 

Aircastle Limited and Subsidiaries

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Dollars in thousands)

(Unaudited)



 Three Months Ended
November 30, 2020 


 Nine Months Ended
November 30, 2020 


2020


2019


2020


2019

Revenues:








Lease rental revenue

$    139,493


$    199,847


$       473,566


$     588,141

Direct financing and sales-type lease revenue

4,839


7,760


14,903


24,407

Amortization of lease premiums, discounts and
incentives

(5,384)


(5,819)


(17,360)


(17,077)

Maintenance revenue

24,843


15,360


121,508


55,807

  Total lease revenue

163,791


217,148


592,617


651,278

Gain (loss) on sale of flight equipment

12,951


26,512


24,181


39,134

Other revenue

4,169


5,215


17,962


9,370

  Total revenues

180,911


248,875


634,760


699,782









Operating expenses:








Depreciation

86,845


90,737


262,806


269,689

Interest, net

59,945


63,204


173,996


194,952

Selling, general and administrative (including
non-cash share-based payment expense of $0
and $3,209 for the three months ended
November 30, 2020 and 2019, and $28,049 and
$9,793 for the nine months ended November
30, 2020 and 2019, respectively)

15,145


18,389


76,152


55,060

Impairment of flight equipment

9,867



299,551


7,404

Maintenance and other costs

4,207


6,696


14,044


18,744

Total operating expenses

176,009


179,026


826,549


545,849









Other expense:








Loss on extinguishment of debt

(43)



(108)


(7,577)

Merger expenses

(450)


(3,044)


(32,492)


(3,044)

Other


(198)


(191)


(3,987)

Total other expense

(493)


(3,242)


(32,791)


(14,608)









Income (loss) from continuing operations
before income taxes and earnings of
unconsolidated equity method investments

4,409


66,607


(224,580)


139,325

Income tax provision

2,269


7,659


14,738


17,280

Earnings of unconsolidated equity method
investments, net of tax

572


601


1,978


2,281

Net income (loss)

$       2,712


$     59,549


$     (237,340)


$     124,326

Total comprehensive income (loss)

$       2,712


$     59,549


$     (237,340)


$     124,326









 

Aircastle Limited and Subsidiaries

Consolidated Statements of Cash Flows

(Dollars in thousands)

(Unaudited) 



Nine Months Ended
November 30, 2020




2020


2019



Cash flows from operating activities:






Net income (loss)

$         (237,340)


$           124,326



Adjustments to reconcile net income (loss) to net cash and restricted
cash provided by operating activities






Depreciation

262,806


269,689



Amortization of deferred financing costs

10,642


11,105



Amortization of lease premiums, discounts and incentives

17,360


17,077



Deferred income taxes

12,109


10,512



Non-cash share-based payment expense

28,049


9,793



Collections on net investment in leases

12,953


19,081



Security deposits and maintenance payments included in earnings

(107,732)


(40,496)



Gain on sale of flight equipment

(24,181)


(39,134)



Loss on extinguishment of debt

108


7,577



Impairment of flight equipment

299,551


7,404



Provision for credit losses

5,255




Other

(1,991)


219



Changes in certain assets and liabilities:






Accounts receivable

(55,946)


(6,516)



Other assets

(40,780)


6,689



Accounts payable, accrued expenses and other liabilities

(1,875)


(2,951)



Lease rentals received in advance

(54,608)


16,604



Net cash and restricted cash provided by operating activities

124,380


410,979



Cash flows from investing activities:






Acquisition and improvement of flight equipment

(134,263)


(953,170)



Proceeds from sale of flight equipment

113,588


345,318



Aircraft purchase deposits and progress payments, net of returned
deposits and aircraft sales deposits

(4,083)


(13,093)



Unconsolidated equity method investments and associated costs


(11,681)



Other

(594)


3,572



Net cash and restricted cash used in investing activities

(25,352)


(629,054)



Cash flows from financing activities:






Repurchase of shares

(25,536)


(9,873)



Parent contribution at Merger

25,536




Proceeds from secured and unsecured debt financings

1,193,871


2,141,848



Repayments of secured and unsecured debt financings

(1,027,164)


(1,814,686)



Debt extinguishment costs

(108)


(7,183)



Deferred financing costs

(6,358)


(13,343)



Security deposits and maintenance payments received

63,443


149,195



Security deposits and maintenance payments returned

(48,162)


(81,351)



Dividends paid

(24,025)


(67,453)



Net cash and restricted cash provided by financing activities

151,497


297,154



Net increase in cash and restricted cash:

250,525


79,079



Cash and restricted cash at beginning of period

171,437


133,299



Cash and restricted cash at end of period

$           421,962


$           212,378



 

Aircastle Limited and Subsidiaries

Reconciliation of GAAP to non-GAAP Measures

EBITDA and Adjusted EBITDA Reconciliation

(Dollars in thousands)

(Unaudited)



     Three Mos. Ended Nov. 30,


     Nine Mos. Ended Nov. 30,



2020


2019


2020


2019











 Net income (loss) 

$        2,712


$      59,549


$    (237,340)


$     124,326


 Depreciation 

86,845


90,737


262,806


269,689


 Amortization of lease premiums, discounts
and incentives 

5,384


5,819


17,360


17,077


 Interest, net 

59,945


63,204


173,996


194,952


 Income tax provision 

2,269


7,659


14,738


17,280


      EBITDA 

157,155


226,968


231,560


623,324


 Adjustments: 









   Impairment of Aircraft 

9,867


-


299,551


7,404


   Equity share of joint venture impairment 

-


-


-


2,724


   Loss on Extinguishment of debt 

43


-


280


7,577


   Non-cash share based payment expense 

-


3,209


28,049


9,793


   Merger related expense * 

437


3,043


35,039


3,043


   Loss on MTM of interest rate derivative
contracts 

-


394


19


4,267


      Adjusted EBITDA 

$     167,502


$     233,614


$      594,498


$     658,132












* Included $32.5 million in Other expense and $2.6 million in Selling, general and administrative expenses.


We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S. GAAP measure is helpful in identifying trends in our performance.


This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals, as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.


EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management  and the Board of Directors to review the consolidated financial performance of our business.


We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.

Contact:                                                                                                                                              
Aircastle Advisor LLC                                                                        
Frank Constantinople, SVP Investor Relations                                    
Tel: +1-203-504-1063                                                                         
fconstantinople@aircastle.com

(PRNewsfoto/Aircastle Limited)

 

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SOURCE Aircastle Limited

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