DUBLIN, Ireland,
Aug. 13 /PRNewswire-FirstCall/ -- Babcock & Brown Air
Limited (NYSE: FLY) ("B&B Air"), a global lessor of modern, fuel-efficient
commercial jet aircraft, today announced its financial results for the second
quarter and six months ending on
June 30, 2008.
Second Quarter 2008 Highlights
-- Net income of $11.1 million
-- Basic and diluted earnings per share of $0.33
-- Available Cash Flow of $33.2 million, or $0.99 per share
-- Total revenues of $57.2 million
-- Acquired three additional aircraft, increasing fleet to 62 aircraft
-- Re-leased two of the aircraft repossessed from ATA Airlines
-- Declared a dividend of $0.50 per share, to be paid on August 20, 2008
-- Commenced a $30 million share repurchase program
-- $584 million of financing capacity available at June 30, 2008
"Our fleet of modern and fuel-efficient aircraft is performing well, and
we see continuing global demand for the leasing of efficient, new generation
aircraft," said Colm Barrington, Chief Executive Officer of B&B Air. "During
the quarter we commenced a share buyback program that underscores the
confidence we have in the business and which is adding value to our
shareholders. We also declared our third consecutive quarterly dividend of
$0.50 per share."
"In June we re-leased on attractive terms two of the four aircraft that
were repossessed from ATA and have delivered the aircraft to the new lessee,"
added Barrington. "We are in discussions with several parties regarding the
remaining two aircraft. We also added to our fleet, with acquisitions of three
attractive aircraft and with leases that are accretive to our Available Cash
Flow per share. These new aircraft have been fully funded from our Aircraft
Acquisition Facility, which has already been equity funded."
Second Quarter 2008 Financial Results
B&B Air reported basic and diluted earnings per share of $0.33 and $0.68
for the three and six month periods ending on June 30, 2008, respectively. The
reported earnings per share for the second quarter are $0.02 less than in the
previous quarter, primarily due to lost revenue and costs associated with the
aircraft repossessed from ATA, partially offset by income generated from the
aircraft added to the portfolio.
Total revenues for the second quarter were $57.2 million, an increase of
$5.3 million over the first quarter. For the six month period, total revenues
were $109.1 million. The second quarter revenue reflects a partial quarter of
rentals from the aircraft acquired in the quarter.
Total expenses for the second quarter were $44.9 million, an increase of
$6.4 million over the first quarter. The increase in expenses is primarily due
to the increase in the size of the portfolio, along with approximately
$800,000 of repossession, maintenance and re-leasing expenses associated with
the four ex-ATA aircraft. Total expenses for the six months were $83.3
million.
Depreciation expense in the second quarter was $18.9 million as compared
to $15.0 million in the first quarter due to the increase in the number of
aircraft in the portfolio and initiation of depreciation on aircraft
previously accounted for as finance leases and not incurring depreciation.
Interest expense in the second quarter was $19.7 million as compared to $17.9
million in the first quarter, reflecting additional borrowing under the
Aircraft Acquisition Facility. Selling, General and Administrative expenses
were $5.3 million in the second quarter, representing 9.3% of total revenue as
compared to 9.7% of total revenue in the first quarter.
Income tax expense was $1.3 million and $3.1 million for the quarter and
six month periods, respectively and included recognition of tax credits earned
in prior periods. The effective tax rate for the second quarter was 10.3%
compared to 13.3% in the previous quarter. Net income in the second quarter
was $11.1 million, compared to $11.7 million in the first quarter.
Available Cash Flow
Available Cash Flow ("ACF"), which B&B Air defines as net income plus
depreciation, amortization of debt issue costs and the deferred tax provision,
was $33.2 million and $63.0 million for the three and six month periods,
respectively which equates to $0.99 and $1.88 per share. In the chart below is
a reconciliation of ACF to Net Income. The second quarter ACF of $0.99 per
share exceeded the first quarter ACF of $0.89 per share by approximately 11%.
ACF should be used as a supplement to and not as a substitute for
financial measures determined in accordance with Accounting Principles
Generally Accepted in the United States.
Dividend
On July 15, 2008 B&B Air declared a dividend of $0.50 per share in respect
of the second quarter. This dividend will be paid on August 20, 2008. This
interim dividend represents 51% of ACF per share for the second quarter.
Share Repurchase Program
On June 21, 2008, our Board of Directors approved a share repurchase
program authorizing B&B Air to repurchase up to $30.0 million of its shares
through June 2009. As of June 30, 2008, B&B Air had repurchased 42,000 shares
at an average price of $10.18 per share. Subsequent to June 30, 2008, B&B Air
repurchased 111,000 shares at an average price of $10.05 per share.
B&B Air expects the purchases to be made from time to time in the open
market or in privately negotiated transactions and will be funded from
available cash. The timing of the share repurchases under the program will
depend on a variety of factors, including market conditions and may be
suspended or discontinued at any time.
Aircraft Portfolio
All of the aircraft in B&B Air's portfolio are currently on lease, except
for two of the four aircraft repossessed from ATA. The remaining two ex-ATA
aircraft have been re-leased at rentals that exceed the previous rates.
The table below shows the aircraft in B&B Air's initial portfolio and the
portfolios on December 31, 2007, March 31, 2008 and June 30, 2008:
Portfolio On Oct 2, Dec 31, Mar 31, Jun 30,
2007 2007 2008 2008
Airbus A319 5 9 10 10
Airbus A320 16(1) 16(1) 17 18
Airbus A330 - - 1 1
Boeing 737 16(1) 16(1) 17 18
Boeing 747 - - 1 1
Boeing 757 9 10 11 12
Boeing 767 1 1 1 1
Boeing 777 - - 1 1
Total 47 52 59 62
(1) One Airbus A320 and one Boeing 737 from the Initial Portfolio were
transferred to B&B Air in February 2008 and were not included in the
Portfolio on December 31, 2007.
On June 30, 2008, the average age of B&B Air's portfolio was 6.3 years and
the average remaining lease term was 5.6 years, each being weighted by value.
Subsequent to June 30, 2008, B&B Air completed the acquisition of two
additional aircraft, an Airbus A320 on lease to Clickair (Spain) and a Boeing
737-800 on lease to Sky Airlines (Turkey) leaving approximately $506 million
of remaining borrowing capacity available in B&B Air's Aircraft Acquisition
Facility. After purchase of these aircraft B&B Air has a portfolio of 64
aircraft, with annualized contracted lease revenues of $228 million.
Conference Call and Webcast
B&B Air's senior management will host a conference call and webcast to
discuss these results at 9:00 a.m. U.S. Eastern Time on Wednesday, August 13,
2008.
Participants should call 866-696-7906 (North America) or +1-706-643-7953
(International) and enter confirmation code 58099301. A replay will be
available shortly after the call. To access the replay, dial 800-642-1687
(North America) or +1-706-645-9291 (International) and enter confirmation code
58099301. The replay recording will be available until August 27, 2008.
A live webcast of the conference call will be also available in the
investor section of B&B Air's website at http://www.babcockbrownair.com. An
archived webcast will be available for one year.
About Babcock & Brown Air
Babcock & Brown Air ("B&B Air") acquires and leases modern, fuel-efficient
commercial jet aircraft under multi-year operating lease contracts to a
diverse group of airlines throughout the world. B&B Air is managed and
serviced by Babcock & Brown Aircraft Management ("BBAM"), the world's fourth
largest aircraft lessor. For more information about B&B Air, visit our website
at http://www.babcockbrownair.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains certain "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements may be identified by words such as "expects,"
"intends," "anticipates," "plans," "believes," "seeks," "estimates," "will,"
or words of similar meaning and include, but are not limited to, statements
regarding the outlook for B&B Air's future business and financial performance.
Forward-looking statements are based on management's current expectations and
assumptions, which are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and results may
differ materially due to global political, economic, business, competitive,
market, regulatory and other factors and risks. B&B Air expressly disclaims
any obligation to update or revise any of these forward-looking statements,
whether because of future events, new information, a change in its views or
expectations, or otherwise.
Contact:
Matt Dallas
Babcock & Brown
+ 1-212-796-3918
matt.dallas@babcockbrown.com
Babcock & Brown Air Limited
Consolidated Statement of Operations
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three months Three months Six months
ended ended ended
March 31, 2008 June 30, 2008 June 30, 2008
(Unaudited) (Unaudited) (Unaudited)
Revenues
Operating lease revenue $48,388 $56,298 $104,686
Finance lease income 2,446 - 2,446
Interest and other income 1,111 901 2,012
Total revenues 51,945 57,199 109,144
Expenses
Depreciation 15,045 18,864 33,909
Interest expense 17,939 19,694 37,633
Selling, general and
administrative 5,044 5,310 10,354
Maintenance and other costs 439 1,002 1,441
Total expenses 38,467 44,870 83,337
Net income before provision
for income taxes 13,478 12,329 25,807
Provision for income taxes 1,794 1,267 3,061
Net income $11,684 $11,062 $22,746
Weighted average number of
shares 33,603,450 33,602,988 33,603,219
Basic and diluted earnings
per share $0.35 $0.33 $0.68
Dividends per share $0.50 $0.50 $1.00
Babcock & Brown Air Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PAR VALUE DATA)
June 30, December 31,
2008 2007
(Unaudited)
Assets
Cash and cash equivalents $27,028 $15,616
Rent receivables 3,106 832
Restricted cash and cash equivalents 98,738 112,621
Flight equipment held for operating leases, 1,806,603 1,309,142
net
Investment in direct finance leases, net - 74,693
Deferred tax asset, net 31,726 36,712
Other assets, net 38,196 39,610
Total assets 2,005,397 1,589,226
Liabilities
Accounts payable and accrued liabilities 8,240 7,983
Rentals received in advance 7,711 7,675
Payable to related parties 597 1,651
Security deposits 36,278 22,899
Maintenance payment liability 76,852 49,850
Notes payable, net 850,899 850,660
Borrowings under aircraft acquisition
facility 519,941 132,573
Other liabilities 10,358 25,433
Total liabilities 1,510,876 1,098,724
Shareholders' equity
Common shares, $0.001 par value; 499,999,900
shares authorized; 33,561,450 and
33,603,450 shares issued and outstanding at
June 30, 2008 and December 31, 2007,
respectively 34 34
Manager shares, $0.001 par value; 100 shares
authorized, issued and outstanding - -
Additional paid-in capital 506,052 506,339
Notes receivable for common shares - (1,827)
Retained earnings (deficit) (8,513) 2,345
Accumulated other comprehensive loss, net (3,052) (16,389)
Total shareholders' equity 494,521 490,502
Total liabilities and shareholders' equity $2,005,397 $1,589,226
Babcock & Brown Air Limited
Reconciliation of Available Cash Flow, a Non-GAAP Financial Measure, to
Net Income
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Three Six
months ended months ended months ended
March 31,2008 June 30,2008 June 30,2008
Net income $11,684 $11,062 $22,746
Add:
Depreciation 15,045 18,864 33,909
Amortization of
debt issuance
costs 1,515 1,781 3,296
Provision for
deferred income
taxes 1,608 1,473 3,081
Available cash
flow $29,852 $33,180 $63,032
Weighted average
shares outstanding 33,603,450 33,602,988 33,603,219
Available cash
flow per share $0.89 $0.99 $1.88
B&B Air defines Available Cash Flow ("ACF") as net income plus
depreciation, amortization of debt issue costs and provision for deferred
income taxes. B&B Air's definition of ACF may not be consistent with similar
definitions used by other companies. The reconciliation above compares ACF to
net income computed in accordance with GAAP, the most directly comparable GAAP
financial measure. B&B Air believes ACF provides investors with a measure for
evaluating its ability to pay dividends and reinvest in its business. However,
ACF excludes certain positive and negative cash items, including principal
payments if any and has certain important limitations as an indicator of B&B
Air's ability to pay dividends and reinvest in its business. Management uses
ACF as a measure for assessing B&B Air's operating performance. ACF should be
considered in addition to, not as a substitute for net income or other
financial measures determined in accordance with GAAP. For additional
information, please see B&B Air's financial statements and "Management's
Discussion and Analysis of Operations and Financial Condition" that will be
included in the periodic report it expects to file with the Securities and
Exchange Commission with respect to the financial statements discussed herein.
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