company overview q2 2019 - aviation capital …...comprised of cash, cash equivalents and marketable...
TRANSCRIPT
COMPANY OVERVIEW Q2 2019
The information contained in the following slides is presented without any liability whatsoever to Aviation Capital Group LLC or any of its related entities (collectively “ACG”, the “Company”, “we” or “our”) or their respective directors or officers. If any information contained in these slides has been obtained or compiled from outside sources, such information has not been independently verified by ACG. The use of registered trademarks, commercial trademarks and logos or photographic materials within this presentation are exclusively for illustrative purposes and are not meant to violate the rights of the creators and/or applicable intellectual property laws. ACG makes no representation or warranty, expressed or implied, as to the accuracy, completeness or thoroughness of the content of the information, and ACG disclaims any responsibility for any errors or omissions in such information, including any financial calculations, projections and forecasts. In particular, ACG makes no representation or warranty that any projection, forecast, calculation, forward-looking statement, assumption or estimate contained in the following slides should or will be achieved. The forward-looking statements include, but are not limited to, statements regarding expected increases in ACG's aircraft portfolio. Actual results could differ materially from the expectations expressed by the forward-looking statements.
The information contained in the following slides refers to ACG and its owned portfolio of aircraft (unless aircraft managed by ACG are noted as included) and does not include aircraft financed or guaranteed through ACG’s Aircraft Financing Solutions program. All information is as of June 30, 2019 unless otherwise indicated. ACG does not undertake any obligation to update the information contained herein. Please note that in providing this information, ACG has not considered the objectives, financial position or needs of any reader. The reader should not construe this information as investment, legal, accounting or tax advice, and should obtain and rely on the reader’s own professional advice from its tax, legal, accounting and other professional advisers.
This presentation includes references to certain non-GAAP financial measures. Management believes that, in addition to using GAAP results to evaluate ACG’s business, these non-GAAP financial measures can be useful to compare results across periods. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures prepared in accordance with GAAP. The non-GAAP measures used by ACG may differ from the non-GAAP measures used by other companies. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measure set forth in the Appendix.
IMPORTANT NOTICE
1
Ownership Performance Portfolio Diversity Ratings
75.5%1
24.5%2
Equity$3.6 Billion
30 Years of Profitability
$9.7 Billionof Aircraft Assets
$2.2 Billion of Revolving Credit3
481 Aircraft4
5.3 Years Fleet Age5
6.8 Years Remaining
Lease Term5
~90 Airline Customers
In ~45 Countries
Representatives Based in 8 Countries
A (Stable)
A- (Stable)
BBB+ (Evolving)
1 Pacific Life Insurance Company, a U.S. corporation, indirectly owns 75.5% of ACG’s equity interest. For additional information about Pacific Life, visit Pacific Life online at www.PacificLife.com.2 Tokyo Century Corporation, a Japanese corporation, indirectly owns 24.5% of ACG’s equity interest. For additional information about Tokyo Century Corporation, visit Tokyo Century Corporation online at www.TokyoCentury.com.3 Revolving credit facilities of $0.2 billion available through 2019 and $2.0 billion available through 20244 Owned, managed and committed 5 Weighted average of owned aircraft based on net book value
ACG AT A GLANCE
2
Asia Pacific: 24%
Europe: 21%
South Asia: 5%
United States & Canada:
13%
Central America, South America
& Mexico: 15%
China: 15%
Middle East & Africa:
7%
Top 10 Countries %
1. China 15%
2. United States 10%
3. Indonesia 7%
4. Vietnam 6%
5. India 5%
6. Russian Federation 5%
7. Argentina 5%
8. Israel 5%
9. Poland 5%
10. Mexico 4%
Top 10 Customers %
1. American Airlines 5%
2. Lion 5%
3. LOT Polish Airlines 5%
4. Thomas Cook 4%
5. El Al 4%
6. Interjet 4%
7. Garuda 4%
8. Hainan Airlines 3%
9. Aerolineas Argentinas 3%
10. China Eastern 3%
ACG Global Presence (offices and representatives)
GLOBAL FLEET SOLUTIONS
Note: All percentage calculations are based on net book value and exclude aircraft off-lease.
3
16
6
133
1
6
154
1
97
1
66
747/757/767/777
787 Family
737 Family
A350
A330 Family
A320 Family
Owned/Managed Firm Orders/Commitments
220
16
7
230
2
6
228 25348186%Narrowbody1 Aircraft2
PORTFOLIO SNAPSHOT
1 Owned aircraft based on net book value2 Includes 267 owned, 49 managed and 165 committed aircraft
4
Liquidity: Access to Global Capital Markets
• Over $20 billion in capital raised• Daily access to liquid commercial paper market• $2.2 billion in revolving credit lines• Global banking relationships (50+ institutions)• 200+ institutional investors worldwide
ALM: Risk Management Culture
• Minimal duration mismatch• Industry leader in 10 year bond issuance• Superior leverage of 1.9x1
Diversification: Leader in Funding “InnoViation”
• Access to unsecured funding since 2007• 1st aircraft lessor with 5 year RCF maturity• Frequent 144A Issuer ($2.3 billion in 2018)• 20 years of ABS financing experience• Strategic multi-currency financing
Flexibility: Enterprise Level Funding
• Funding independent of asset decisions• $9.9 billion unencumbered assets2
• 1.5x unencumbered asset coverage3
1 Calculated as Net Debt divided by Adjusted Equity. Net Debt is calculated as debt financings net of cash and cash equivalents and restricted cash. Adjusted Equity is calculated as total members’ equity less accumulated other comprehensive loss. Adjusted Equity and Net Debt are non‐GAAP financial measures. See Appendix for reconciliations to their most directly comparable GAAP measures.
2 Comprised of cash, cash equivalents and marketable securities, in each case to the extent that such assets are not subject to a lien, and non‐pledged aircraft assets (aircraft, engines, airframes, parts and pre‐delivery payments)3 Debt covenant to maintain 1.25x unencumbered assets to unsecured debt
Maintain Appropriate Liquidity
Prudent Asset-Liability Management
Diversify Funding Sources
Maximize Operating Flexibility
30 YEARS FUNDING LEADERSHIP & “INNOVIATION”
5
Capital Profile2
6/30/2019
Corporate Unsecured Debt
61%
Equity34%
ECA/Ex-Im Secured Debt
5%2019
Remaining
2020 2021 2022 2023 2024 2025 2026 2027
Unsecured Debt Maturity Profile1 ($Millions)
6/30/2019
144A MTN/USPP Bank Term Loans
1 Excludes revolving lines of credit and commercial paper, which had aggregate outstanding balances of $20 million and $383 million, respectively2 Equity excludes accumulated other comprehensive loss
$0
$754
$1,550
$1,000 $975
$300
$800$750
$0
$10.7 Billion
DIVERSE FUNDING SOURCES
6
$1,839 $1,917
$2,961 $3,227 $3,572
2015 2016 2017 2018 Q2 2019
Adjusted Equity1 ($Millions)
$6,043 $6,907
$7,808 $9,490 $9,895
2015 2016 2017 2018 Q2 2019
Consolidated Unencumbered Assets2 ($Millions)
$835 $866 $874 $943
$452 $502
2015 2016 2017 2018 Q2 2018 Q2 2019
Operating Lease Revenue ($Millions)
7.5% 7.8%8.2% 8.2%
4.1% 3.8%
2015 2016 2017 2018 Q2 2018 Q2 2019
Net Interest Margin3,4
FINANCIAL PERFORMANCE
1 Adjusted equity is calculated as total members’ equity less accumulated other comprehensive loss2 Comprised of cash, cash equivalents and marketable securities, in each case to the extent that such assets are not subject to a lien, and non‐pledged aircraft assets (aircraft, engines, airframes, parts and pre‐delivery payments)3 Net Interest Margin is calculated as follows: ((Operating Lease Revenue + Finance Lease Revenue) – Interest, net)/Average Leased Assets. Leased assets is calculated as follows: Flight Equipment Held For Lease, net + Assets Held For Sale +
Investment In Finance Leases, net. 4 In March 2019, ACG changed the way it calculates Net Interest Margin. The new calculation differs from ACG’s historical calculation as follows: (i) “Average Leased Assets” is used in the denominator rather than “Average Total Assets”, and
(ii) Finance Lease Revenue is included in the numerator. Management determined that these changes were appropriate to more closely align ACG’s calculation of Net Interest Margin with similar metrics reported by ACG’s public peers. The above table reflects the new calculation for all historical periods.
7
($Thousands) June 30, 2019 December 31, 2018
Reconciliation of Debt financings, net to Net Debt:
Debt financings, net $7,034,586 $7,029,642
Less:
Restricted cash 203,237 199,262
Cash and cash equivalents 138,286 460,944
Net Debt $6,693,063 $6,369,436
Reconciliation of Total members' equity to Adjusted Equity:
Total members' equity $3,569,601 $3,224,690
Less:
Accumulated other comprehensive loss (2,526) (2,456)
Adjusted Equity $3,572,127 $3,227,146
Net Debt to Adjusted Equity11.9x 2.0x
APPENDIX: NON-GAAP RECONCILIATIONS
1 Calculated as Net Debt divided by Adjusted Equity
8
Aviation Capital Group840 Newport Center Drive, Suite 300Newport Beach, CA 92660 USA+1 949 219 4600www.AviationCapital.com
Enabling Higher Performance