Aircastle Announces Fourth Quarter and Full Year 2012 Results

STAMFORD, Conn., Feb. 21, 2013 /PRNewswire/ — Aircastle Limited (the “Company” or “Aircastle”) (NYSE: AYR) reported fourth quarter 2012 net income of $29.8 million, or $0.43 per diluted common share and adjusted net income of $36.4 million, or $0.52 per diluted common share. Net income for the year ended December 31, 2012 was $32.9 million, or $0.46 per diluted common share, and adjusted net income was $57.0 million, or $0.80 per diluted common share. The fourth quarter results included total revenues of $176.6 million, an increase of 13%, versus $156.9 million in the fourth quarter of 2011. For the full year 2012 total revenues were $686.6 million, up 13% versus $605.2 million in 2011.

Commenting on the results, Ron Wainshal, Aircastle’s CEO, stated: “Aircastle continued to execute on its value-oriented growth strategy in 2012, finishing the year with solid top line growth thanks to $843 million of investments and 99% portfolio utilization. We also continued to transform our balance sheet by building the unencumbered asset base to over $2 billion in aircraft and more than $600 million in unrestricted cash while pushing out the nearest debt maturity to 2017. We demonstrated our strong standing in the capital markets, where we raised $1.3 billion in unsecured debt during the year, including a $500 million issue in late November, which provides us with attractive growth capital for 2013. Looking ahead, we believe the market for new acquisitions looks good and we will continue pursuing investment opportunities in a disciplined way.”

Michael Inglese, Aircastle’s CFO, commented: “In addition to pursuing accretive new investments, we remain committed to returning capital to our shareholders. To that end, we repurchased $20 million of common shares under our current $50 million program since October, bringing the total to $138.5 million repurchased since the beginning of 2011, at an average price of $11.87 per share. In addition, we increased our dividend 10% during the year for a cumulative increase of 65% over the past eight quarters, reflecting the Company’s increased earnings base.”

Fourth Quarter Results

Lease rental revenue for the fourth quarter was $158.1 million, up $8.2 million or 6% year over year, due primarily to the impact of new aircraft acquisitions of $25.0 million, partially offset by lower revenue due to aircraft sales of $5.2 million and the year over year impact of lease extensions, transitions and terminations of $11.6 million.

Total revenues for the fourth quarter were $176.6 million, an increase of $19.7 million, or 13% from the previous year, reflecting higher lease rental revenue of $8.2 million, higher maintenance revenue of $4.2 million from a year over year increase in transitions, and an increase in other revenues of $8.0 million reflecting our purchase of a secured loan during the first quarter of 2012 and revenue from finance leases, primarily from acquisitions in 2012.

Adjusted EBITDA for the fourth quarter was $172.3 million, up $10.5 million, or 6% from the fourth quarter of 2011, due primarily to higher lease rental, maintenance and other revenue totaling $20.5 million, partially offset by a $7.4 million year-over year decline in gains from the sale of aircraft.

The fourth quarter 2012 results include aircraft impairment charges totaling $7.7 million and primarily reflects the impairment of one A320-200 that came off lease during the quarter for $6.7 million. These charges were largely offset by end of lease maintenance revenue related to the impaired aircraft totaling $7.5 million.

Adjusted net income for the quarter was $36.4 million, down $6.0 million year over year. The change reflects higher net revenues of $19.7 million that was offset by higher aircraft impairment charges of $7.7 million, lower gains from the sale of aircraft of $7.4 million, higher depreciation of $6.1 million, higher selling, general and administrative costs of $2.1 million, and higher adjusted interest expense of $1.9 million.

Full Year Results

Lease rental revenue for the full year was $623.5 million, up $43.3 million, or 7% year over year, reflecting the net impact of aircraft acquisitions made during 2012 and 2011 totaling $106.1 million, offset by lower lease rentals due to aircraft sales and disposals of $28.6 million and the impact of transitions, extensions and terminations totaling $34.2 million.

Total revenues for 2012 were $686.6 million, an increase of $81.4 million, up 13% from the previous year. The increase reflects higher lease rental revenue of $43.3 million, higher maintenance revenue of $16.4 million, lower amortization of net lease discounts and lease incentives of $3.6 million, higher revenues resulting from interest on our debt investments and finance leases of $12.2 million, and an increase of $5.9 million in early termination fees paid by lessees during 2012 versus 2011.

During the year we recorded maintenance revenue from 13 scheduled lease terminations of $18.4 million versus $21.7 million for nine scheduled lease terminations in 2011. In addition, we recorded $34.9 million of maintenance revenue from 13 aircraft returned early in 2012 versus $15.3 million from seven aircraft returned early in 2011. We recorded total non-cash impairment charges of $96.5 million and $6.4 million in 2012 and 2011, respectively.

During 2012 we impaired 18 aircraft, and the total $96.5 million non-cash charge was partially offset by maintenance and lease incentive revenue associated with seven of these aircraft, in the amount of $27.7 million.

Adjusted EBITDA for the full year was $647.6 million, up 7% from $607.9 million in 2011, due primarily to higher lease rental, maintenance and other revenues totaling $77.8 million, partially offset by a $33.3 million decrease in gains from aircraft sold during 2012.

Adjusted net income for the full year was $57.0 million, down $88.0 million year over year. The change reflects higher revenues of $81.4 million, primarily offset by higher aircraft impairment charges of $90.0 million, lower gains from the sale of aircraft of $33.3 million, higher depreciation of $27.8 million, and higher adjusted interest expense of $13.6 million.

Aviation Assets

During 2012, we acquired 24 aircraft investments for $843 million. We also sold or disposed of eight aircraft, which resulted in a pre-tax gain of approximately $5.7 million for the year.

As of December 31, 2012, Aircastle owned 159 aircraft having a net book value of $4.8 billion.

Financing Update

During 2012 we raised approximately $1.6 billion of total debt financing, including more than $730 million during the fourth quarter.

In December 2012, we closed a $150 million unsecured revolving credit facility with Citibank, N.A., Goldman Sachs Bank USA, J.P. Morgan Chase Bank N.A. and an affiliate of RBC Capital Markets, which has a three-year term scheduled to expire in December 2015. This facility is currently undrawn.

In late November of 2012, Aircastle issued $500 million aggregate principal amount of unsecured 6.25% Senior Notes due 2019. The proceeds will be used for general corporate purposes, including the purchase of aviation assets. The notes were issued at par value.

In April 2012, we closed an $800 million unsecured notes offering, consisting of $500 million of 6.75% senior notes due 2017 and $300 million of 7.63% senior notes due in 2020, both of which were issued at par. Aircastle used the net proceeds from the offering to repay outstanding indebtedness under its Term Financing No. 1 and the termination of associated interest rate derivatives, with the balance used for general corporate purposes, including the purchase of aviation assets.

During 2012, we entered into two 12 year term loans which are supported by guarantees from Compagnie Francaise d’Assurance pour le Commerce Exterieur, or COFACE, for the financing of two new Airbus Model A330-200 aircraft. The borrowings under these financings at December 31, 2012 had a weighted average rate of interest equal to 3.22%.

Dividends and Share Repurchase Program

On February 18, 2013 Aircastle’s Board of Directors declared a first quarter 2013 cash dividend on its common shares of $0.165 per share, payable on March 15, 2013 to shareholders of record on March 4, 2013. This is our 27th consecutive dividend. During 2012, Aircastle increased the dividend to common shareholders to the current quarterly rate of $0.165 per share, a 10% increase over the quarterly rate at the end of 2011.

Also during 2012, the Company’s Board of Directors authorized the repurchase of up to a total of $78.5 million of the Company’s common shares. As of February 20, 2013, under this authorization we repurchased 4.1 million shares at a total cost of $48.5 million, including commissions. We have $30 million remaining under the current authorization.