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Babcock & Brown air reports second quarter 2009 results
Babcock & Brown air reports second quarter 2009 results07-Aug-2009 |
Second Quarter Highlights
“B&B Air is reporting another positive quarter,” said Colm Barrington B&B Air’s CEO. “Net income of $14 million and EPS of 46 cents represent significant increases from the same period of 2008. Despite well-publicized problems in the international airline industry, our portfolio has performed well. All but one aircraft was on lease during the quarter. However, we continue to monitor our lessees very carefully as many airlines are facing liquidity problems as a result of the current declines in global air traffic and yields.” “In the June quarter we continued to enhance shareholder value,” added Barrington. “We repurchased another $19 million principal amount of our notes payable for $10 million and we paid $7 million for options to acquire an additional $100 million of our notes payable at 48% of par value. During the quarter, we also repurchased an additional 2.2 million shares of our common stock at an average price of $4.08 per share and increased our unrestricted cash reserves to $64.1 million through generation of cash from the portfolio and a new $32 million non-recourse credit facility.”
Second Quarter 2009 Financial Results B&B Air’s net income and basic and diluted earnings per share for the second quarter of 2009 were $14.0 million and $0.46 per share compared to $11.1 million and $0.33 per share in the same period in the preceding year. The second quarter 2009 results include a gain of $8.6 million from repurchasing $19 million principal amount of notes payable for $10 million. Net income and basic and diluted earnings per share for the six-month period ended June 30, 2009 were $60.9 million and $1.94 per share compared to $22.7 million and $0.68 per share in the same period in the preceding year. The 2009 results benefited from the gain associated with the repurchase of approximately $119 million of notes payable and a lease termination settlement. Total revenues for the second quarter of 2009 were $64.5 million compared to $57.2 million for the same period in the preceding year. Operating lease revenue for the second quarter of 2009 was $53.8 million compared to $56.3 million in the same period of the previous year. The decrease is principally due to declines in lease rates that adjust with LIBOR, the absence of rent from the aircraft sold in the third and fourth quarters of 2008 and $4.0 million of end of lease revenue in the second quarter of 2008, with no corresponding amount in the second quarter of 2009, partially offset by rents from aircraft added to the portfolio in 2008. Total revenues for the six-month period ended June 30, 2009 were $173.6 million compared to $109.1 million for the same period in the preceding year. Total expenses in the second quarter of 2009 were $47.0 million, compared to $44.9 million in the same period in the previous year. The increase in expenses was primarily due to the increase in the size of the portfolio and to the amortization of the cost of options to repurchase up to $100 million of principal amount of notes payable. The $7 million cost of the options is being amortized on a straight line basis over the periods until their expiry. Total expenses for the six-month period ended June 30, 2009 were $95.1 million compared to $83.3 million for the same period in the preceding year. Depreciation expense in the second quarter of 2009 was $20.8 million compared to $18.9 million for the same period in the previous year. This increase is primarily due to the additional aircraft in the portfolio.
Interest expense in the second quarter of 2009 was $19.9 million compared to $19.7 million for the same period in the previous year. Again, the increase is mainly due to the increased size of the portfolio, partially offset by decreases in LIBOR which reduced interest costs on the debt amounts associated with aircraft with variable rate leases.
Selling, general and administrative expenses were $5.0 million in the second quarter of 2009 compared to $5.3 million in the same period of the previous year. The provision for income taxes was $3.5 million in the second quarter of 2009 and reflects the recognition of deferred taxes at a 25% rate on the gain associated with the purchase of the notes. The effective income tax rate for the second quarter of 2009 was 20.0% compared to 10.3% for the same period in the previous year.
Available Cash Flow (“ACF”), which B&B Air defines as net income plus depreciation, amortization of lease incentives and debt issuance costs and deferred income taxes, was $32.2 million for the second quarter of 2009 compared to $33.2 million for the same period in the previous year. ACF for the six-month period ended June 30, 2009 was $67.6 million compared to $63.0 million for the same period in the preceding year. ACF for the second quarter of 2008 and the six-month period ended June 30, 2008 was favorably impacted by the $4.0 million of end of lease revenue recorded in those periods. On a per share basis, ACF was $1.06 for the second quarter of 2009 compared to $0.99 in the same period of 2008, an increase of 7%. In the six-month period ended June 30, 2009, ACF per share was $2.15 compared to $1.88 in the same period in 2008, an increase of 14%. The gain on the purchase of notes payable is not included in ACF. 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 and Share Repurchases On July 15th, B&B Air declared a dividend of $0.20 per share in respect of the second quarter of 2009. This dividend will be paid on August 20, 2009 to shareholders of record on July 30, 2009. This dividend represents 19% of ACF for the second quarter of 2009. During the second quarter of 2009, B&B Air repurchased 2,208,963 shares at an average cost of $4.08 per share or a total of $9.0 million. These shares represented 6.8% of the shares outstanding at March 31, 2009. On June 30, 2009 there were 30,279,948 shares outstanding. Under the $30 million share repurchase program that has been extended to June 2010, B&B Air may make further share repurchases from time to time in the open market or in privately negotiated transactions. The timing of the repurchases under the program will depend upon a variety of factors, including market conditions, and may be suspended or discontinued at any time.
Financial Position At June 30, 2009, B&B Air’s total assets were $2.04 billion, including flight equipment held for operating leases with a net book value of $1.79 billion. Restricted and unrestricted cash at June 30, 2009 totaled $192.3 million, of which $64.1 million was unrestricted. These amounts compare to total cash of (c) Centre for Asia Pacific Aviation. Date posted: 7-Aug-09 |
