Aircastle LTD (NYSE:AYR) Q3 2018 Earnings Conference Call Transcript

Nov 01, 2018 • 10:00 am ET


Aircastle LTD (NYSE:AYR) Q3 2018 Earnings Conference Call Transcript


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Good day, and welcome to the Aircastle Third Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the conference over to Frank Constantinople, Head of IR. Sir, please go ahead.

Frank Constantinople

Thank you, Chelsea. Good morning everyone, and welcome to Aircastle Limited's third quarter 2018 earnings call. With me today are Mike Inglese, CEO; Aaron Dahlke, CFO; and Mike Kriedberg, our Chief Commercial Officer. We'll begin the presentation shortly, but I'd like to remind everyone that this call is being recorded. And the replay will be available through our website at along with the earnings press release and our PowerPoint presentation.

(Forward-Looking Cautionary Statements)

I'll direct you to Aircastle Limited's earning release for the full forward-looking statement legend.

And we'll now turn the call over to Mike Inglese.

Michael Inglese

Thanks, Frank. We're pleased to report that Aircastle had another strong quarter right in line with comps and consensus. Business fundamentals remain robust and overall economic trends are positive. Global airline profitability through the first three quarters has been solid. The developed markets are in very good shape. The emerging markets, while slowing, also continue to grow at a healthy rate. The demand for leased current technologies narrow-body aircraft remains resilient. While Aaron will cover the financials in detail, let me briefly summarize our third quarter results.

We reported Q3 net income of $36.3 million, adjusted net income of 38.2 million. Our book value per share at quarter end was $25.38, and over the past 12 months, that's a representative increase of about 6.7% in book value per share. Our dividend yield has averaged 5.2% over the same period, which produces a combined return of around 12%. On October 30th, our board approved Aircastle's 50th consecutive quarterly dividend. And dividend was increased from $0.28 to $0.30 per share per quarter, representing a 7.1% increase. Since 2011, the dividend has been increased nine times, effectively tripling in value.

Our 12 months GAAP ROE was 10.3%. Cash ROE came in at 13.7%. We were upgraded to investment grade by Moody's during the quarter, giving us investment-grade ratings from all three major agencies. In late September, we issued our first unsecured IG-rated notes at a very effective 4.4% rate. For the year, we're on track to acquire 36 narrow-body aircraft for about 1.35 billion. 10 of these are A320neos, our first investments in the new-tech aircraft. We closed on two of those NEOs during the third quarter and three more subsequent to quarter end. Finally, year-to-date we've repurchased $54 million of our common shares at an average cost of around $20 per share.

Let me spend a few minutes on current market conditions. The macro environment is strong, though there are developments that we continue to monitor. According to the IMF, global GDP growth is expected to continue at a 3.7% clip for 2018 and 2019, with all geographies, both emerging and developed markets, showing solid growth numbers. These estimates are down a bit from the 3.9%,