Sunday, 6 May 2018

Aircastle results are in....

Aircastle Announces First Quarter 2018 Results

Aircastle Limited 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.
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
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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



.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
March 31,
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.


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