Genesis Lease Announces Fourth Quarter Results
Genesis Lease Limited (NYSE:GLS) has announced its financial results for the fourth quarter and the year ended December 31, 2006. Results include 13 days of operations from the completion of its initial public offering (“IPO”) on December 19, 2006 through December 31, 2006, as well as the results of its predecessor entity for the period from October 1, 2006 through December 18, 2006.(1)
On December 19, 2006, Genesis completed its IPO and issued 27,860,000 shares at a public offering price of $23.00 per share. On December 19, 2006, Genesis also issued 3,450,000 shares to an affiliate of General Electric Company (“GE”), in a private placement for a price of $23.00 per share and issued $810 million of floating-rate aircraft lease-backed notes in a securitization transaction. Genesis used the net proceeds of the IPO, the private placement of shares to GE and the securitization to finance the acquisition of a portfolio of 41 aircraft from affiliates of GE. On January 16, 2007, Genesis sold an additional 4,179,000 shares after the underwriters of its IPO exercised their over-allotment option in full, as well as 517,500 additional shares in a private placement to GE, for aggregate additional proceeds of $108.0 million.(2)
John McMahon, President and Chief Executive Officer of Genesis, said, “We are very pleased to have successfully completed our initial public offering, the securitization and the purchase of our initial aircraft portfolio in a series of transactions that was recognized as the ’Deal of the Year 2006’ by the highly respected trade publication Airfinance Journal. We believe these achievements will provide a solid foundation from which to execute our strategy of growing our aircraft portfolio through accretive acquisitions. Subject to board approval, we anticipate paying our first dividend in May 2007 for the period from the completion of the IPO through March 31, 2007 in an amount of 53 cents per share, which reflects our anticipated quarterly dividend of 47 cents per share, plus an incremental amount of 6 cents to reflect the slightly longer period.”
Fourth Quarter Highlights
During the fourth quarter of 2006, Genesis:
* Successfully completed a $640.8 million IPO, a $79.4 million private placement and an $810.0 million securitization;
* Acquired a portfolio of 41 aircraft for a purchase price of $1,459.4 million;
* Received a commitment for a $1 billion senior secured revolving credit facility that will be used to finance the acquisition of additional aircraft; and
* Generated combined revenues of $41.6 million and combined net income of $7.0 million.
Genesis reported revenues of $6.0 million for the 13-day period from December 19, 2006 through December 31, 2006 and a net loss of $0.9 million for this period. The recognition of a net loss is primarily attributable to additional selling, general and administrative expenses related to the commencement of the company’s operations, including a non-cash charge of $0.9 million that primarily relates to stock-based compensation granted upon the pricing of the IPO. Combined revenues of Genesis and its predecessor for the quarter ended December 31, 2006 were $41.6 million, compared to $30.9 million for the quarter ended December 31, 2005, an increase of 35%. Combined net income of Genesis and its predecessor for the quarter ended December 31, 2006 was $7.0 million, compared to $4.5 million for the quarter ended December 31, 2005, an increase of 58%.
For the year ended December 31, 2006, combined revenues were $153.2 million, compared to $117.9 million for the prior year (an increase of 30%), and combined net income was $28.8 million, compared to $21.4 million for the prior year (an increase of 35%). Increases in year-over-year combined revenues reflect primarily the acquisition of additional aircraft by Genesis and its predecessor during 2005 and 2006.
Genesis reported EBITDA of $2.6 million for the 13-day period from December 19, 2006 through December 31, 2006. Genesis defines EBITDA as net income before provision for income taxes, interest and depreciation and amortization. EBITDA is a key measure of Genesis’s operating performance and liquidity that management uses to focus on consolidated operating results exclusive of expenses that relate to the financing and capitalization of its business. Combined EBITDA for the quarter ended December 31, 2006 was $38.7 million, compared to $28.8 million for the quarter ended December 31, 2005, an increase of 34%. For the full year, combined EBITDA was $144.2 million in 2006, compared to $113.5 million in 2005, an increase of 27%. Please read “Reconciliation of Non-GAAP Financial Measures - EBITDA” for a description of EBITDA and a reconciliation of net income to EBITDA.
Aircraft Acquisition and Leasing Activities
Genesis’s predecessor acquired one aircraft in the fourth quarter of 2006. The following table presents the number of aircraft included in Genesis’s initial portfolio of 41 aircraft that were owned by its predecessor as of each of the following dates:
December 31, 2004 31
September 30, 2005 34
December 31, 2005 37
March 31, 2006 37
June 30, 2006 38
September 30, 2006 40
As of December 31, 2006, Genesis owned, or had the right to receive rental cash flows from, the 41 aircraft in its initial aircraft portfolio. As of the date of this release, all 41 leases are performing, and generating rents, as expected under the respective lease agreements.
In the fourth quarter of 2006, Genesis agreed to extend the term of the lease of a Boeing 737-800 for a 72-month period from May 2008 through May 2014. In addition, as previously reported, Ajet Aviation of Cyprus defaulted in the fourth quarter of 2006 on a lease for a Boeing 737-800 that was scheduled to expire in 2008. This aircraft had been operated under a sublease to XL Airways of the United Kingdom that was scheduled to expire in May 2007. Following Ajet’s default, the primary lease was terminated, and the aircraft was re-leased to XL Airways through April 2007. Genesis also entered into a letter of intent to lease this aircraft to a new lessee for a 96-month term through 2015.
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