Aircastle (NYSE: AYR) Q1 2026 revenue $236M with $34M net income
Filing Impact
Filing Sentiment
Form Type
8-K
Rhea-AI Filing Summary
Aircastle Limited reported first quarter 2026 results for the three months ended May 31, 2026, with total revenues of $236 million and net income of $34 million. Adjusted EBITDA was $208 million, reflecting continued profitability from its aircraft leasing portfolio.
The company acquired 4 aircraft for $117 million and sold 5 aircraft and other flight equipment for $114 million, generating $11 million of gains. As of May 31, 2026, it owned 274 aircraft and other flight equipment with a net book value of $8.4 billion, with new technology aircraft representing 52% of fleet net book value and fleet utilization of 97.9%.
Liquidity remained strong. Aircastle raised $1 billion in new financings, including $650 million of 5.000% unsecured senior notes and a $375 million unsecured term loan, contributing to total liquidity of $2.6 billion as of July 1, 2026. Approximately 98% of total debt was unsecured, and adjusted net debt-to-equity stood at 2.2 times.
Positive
- None.
Negative
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Insights
Aircastle posts lower profit but maintains strong liquidity and fleet metrics.
Aircastle generated first quarter 2026 revenues of $236M and net income of $34M, down from $259.8M in revenue and $49.3M in net income a year earlier. Gains on aircraft sales also declined compared with 2025.
Despite softer earnings, the balance sheet and funding profile appear robust. The company raised $1B in new unsecured financings, leaving 98% of total debt unsecured and adjusted net debt-to-equity at 2.2x. Total liquidity was $2.6B as of July 1, 2026, including substantial undrawn facilities.
Operationally, Aircastle owned 274 aircraft with net book value of $8.4B, 52% in new technology models. Fleet utilization was 97.9% during the quarter, slightly below the prior year but still high. Future filings may clarify how leasing demand, secondary market values and funding costs affect margins through the remainder of 2026.
8-K Event Classification
2 items: 2.02, 9.01
2 items
Item 2.02
Results of Operations and Financial Condition
Financial
Disclosure of earnings results, typically an earnings press release or preliminary financials.
Item 9.01
Financial Statements and Exhibits
Exhibits
Financial statements, pro forma financial information, and exhibit attachments filed with this report.
Key Figures
Total revenues: $236M
Net income: $34M
Adjusted EBITDA: $208M
+5 more
8 metrics
Total revenues
$236M
Three months ended May 31, 2026
Net income
$34M
Three months ended May 31, 2026
Adjusted EBITDA
$208M
Three months ended May 31, 2026
New financings
$1B
Raised during first quarter 2026
Total liquidity
$2.6B
As of July 1, 2026
Unsecured senior notes
$650M at 5.000%
New notes issued in Q1 2026
Fleet net book value
$8.4B
Owned aircraft and flight equipment as of May 31, 2026
Fleet utilization
97.9%
Weighted average utilization Q1 2026
Key Terms
Adjusted EBITDA, net book value, unencumbered aircraft, impairment of flight equipment, +2 more
6 terms
Adjusted EBITDA financial
"Adjusted EBITDA(1) of $208 million"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
net book value financial
"New technology aircraft comprised 52% of our fleet's net book value"
Net book value is the value of an asset or a business shown on the balance sheet after subtracting accumulated depreciation, amortization and any write-downs from the asset’s original cost. Investors use it as a conservative, accounting-based estimate of what would remain if assets were sold or obligations settled — like the 'used' value on a car title — helping identify whether a stock appears cheap relative to the company's recorded assets.
unencumbered aircraft financial
"270 unencumbered aircraft and other flight equipment with a net book value of $8.3 billion"
impairment of flight equipment financial
"Impairment of flight equipment | 3,361 | | | 5,066"
loss on extinguishment of debt financial
"Loss on extinguishment of debt | — | | | 2,973"
Loss on extinguishment of debt is the accounting hit a company records when it retires or restructures a loan or bond for an amount that exceeds the debt’s recorded value—like paying more than the remaining balance to settle a loan early. It matters to investors because it reduces reported profit and can use cash, but may also cut future interest costs or signal financial stress; understanding it helps assess earnings quality and balance-sheet strength.
equity method investment financial
"Unconsolidated equity method investment | 31,638 | | | 47,540"
An equity method investment is an accounting way to report ownership in another company when an investor has significant influence (commonly around 20–50% of voting rights). Instead of listing the other company’s full assets and debts, the investor records its share of that company’s profits or losses on its own income statement—like keeping track of your share of a neighborhood bakery’s monthly earnings. Investors care because those shared profits, losses and changes in the investee’s value directly affect the investor’s reported earnings and balance sheet, so this method can materially change a company’s financial picture and valuation.
Earnings Snapshot
Revenue: $236M
Three months ended May 31, 2026
Revenue
$236M
Net income
$34M
Adjusted EBITDA
$208M
FAQ
How much revenue did Aircastle (AYR) generate in Q1 2026?
Aircastle generated $236 million in total revenues for the three months ended May 31, 2026. This includes lease rental revenue, maintenance revenue and gains on aircraft sales, reflecting activity across its global commercial jet leasing portfolio.
What was Aircastle (AYR)’s net income for the quarter ended May 31, 2026?
Aircastle reported net income of $34 million for the first quarter of 2026. This compares with $49.3 million a year earlier, reflecting lower total revenues and reduced gains on aircraft sales during the current period.
What is Aircastle (AYR)’s Adjusted EBITDA for Q1 2026?
Aircastle reported Adjusted EBITDA of $208 million for the three months ended May 31, 2026. Adjusted EBITDA starts from EBITDA and removes items like impairment of flight equipment and loss on extinguishment of debt used in note covenant calculations.
How strong is Aircastle (AYR)’s liquidity position as of mid-2026?
Aircastle reported total liquidity of $2.6 billion as of July 1, 2026. This includes $2.0 billion of undrawn facilities, $0.5 billion of projected adjusted operating cash flows and sales through July 1, 2027, and $0.1 billion of unrestricted cash.
What new financing did Aircastle (AYR) complete in Q1 2026?
During the first quarter of 2026, Aircastle raised $1 billion in new financings. This comprised $650 million of unsecured senior notes at 5.000% and a $375 million unsecured term loan with four lenders, which is expandable to $425 million.
What is the size and composition of Aircastle (AYR)’s aircraft fleet?
As of May 31, 2026, Aircastle owned 274 aircraft and other flight equipment with net book value of $8.4 billion and managed 5 additional aircraft. New technology aircraft accounted for 52% of the fleet’s net book value, with utilization at 97.9%.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 9, 2026
Aircastle Limited
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
Suite 400 | ||||||||
| (Address of principal executive offices) | (Zip Code) | |||||||
Registrant’s telephone number, including area code (203 ) 504-1020
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |||||
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |||||
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |||||
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition.
On July 9, 2026, Aircastle Limited announced financial results for its first quarter ended May 31, 2026, as described in the press release furnished hereto as Exhibit 99.1, which is incorporated herein by reference.
The information furnished pursuant to this Current Report on Form 8-K, including the exhibit hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description | |||||||
| 99.1 | Press Release dated July 9, 2026, issued by Aircastle Limited | |||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). | |||||||
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AIRCASTLE LIMITED (Registrant) | ||
| /s/ Sarah Clarkin | ||
| Sarah Clarkin | ||
| Chief Legal Officer and Secretary | ||
Date: July 9, 2026
July 9, 2026
FOR IMMEDIATE RELEASE
Contact:
Aircastle (Ireland) DAC (US)
Jim Connelly, SVP ESG & Corporate Communications
Tel: +1-203-504-1871
jconnelly@aircastle.com
Aircastle Announces First Quarter 2026 Results
Highlights for the Three Months Ended May 31, 2026
•Total revenues of $236 million and net income of $34 million
•6% increase in lease rental revenue compared to first quarter 2025
•Adjusted EBITDA(1) of $208 million
•Acquired 4 aircraft for $117 million
•Sold 5 aircraft and other flight equipment for proceeds of $114 million and gains on sales of $11 million
•New technology aircraft comprised 52% of our fleet's net book value as of May 31, 2026
Liquidity
•Raised $1 billion in new financings: $650 million unsecured senior notes at 5.000% and a $375 million unsecured term loan with 4 lenders; term loan is expandable to $425 million
•98% of total debt is unsecured as of May 31, 2026
•Adjusted net debt-to-equity of 2.2 times as of May 31, 2026
•Total liquidity of $2.6 billion as of July 1, 2026, which includes $2.0 billion of undrawn facilities, $0.5 billion of projected adjusted operating cash flows and sales through July 1, 2027, and $0.1 billion of unrestricted cash
•270 unencumbered aircraft and other flight equipment with a net book value of $8.3 billion
________________________________________
(1) Refer to the selected financial information accompanying this press release for a reconciliation of GAAP to Non-GAAP numbers.
Mike Inglese, Aircastle’s CEO, stated, “Over the past several months, we've seen conflict-related fuel prices challenge airline profitability, yet our customers are finding ways to manage costs. Despite this challenge to the sector, supply shortages have aviation investors seeing consistently high values for aircraft and engines. Favorable rental revenues and gains on sales enabled us to complete our first quarter of 2026 with $34 million in net income.”
Mr. Inglese concluded, “As the aviation finance market continues to mature, we're demonstrating our ability to quickly source liquidity. We sourced over $1 billion in new financings during the first quarter. With a proven track record and the shareholder support we receive from Marubeni Corporation and Mizuho Leasing, we look forward to deploying capital in 2026 with a disciplined strategy focused on profitability.”
Aviation Assets
As of May 31, 2026, Aircastle owned 274 aircraft and other flight equipment having a net book value of $8.4 billion and managed an additional 5 aircraft.
Owned Aircraft | As of May 31, 2026 | As of May 31, 2025 | |||||||||
| (Dollars in millions) | |||||||||||
| Net Book Value of Flight Equipment | $ | 8,412 | $ | 8,149 | |||||||
Net Book Value of Unencumbered Flight Equipment | $ | 8,296 | $ | 8,029 | |||||||
Number of Aircraft | 274 | 264 | |||||||||
Number of Unencumbered Aircraft | 270 | 260 | |||||||||
| Number of Lessees | 72 | 77 | |||||||||
| Number of Countries | 43 | 47 | |||||||||
Weighted Average Age (years)(1) | 9.2 | 8.9 | |||||||||
Weighted Average Remaining Lease Term (years)(1) | 5.3 | 5.6 | |||||||||
Weighted Average Fleet Utilization during the First Quarter(2) | 97.9 | % | 99.5 | % | |||||||
Managed Aircraft | |||||||||||
Number of Managed Aircraft(3) | 5 | 8 | |||||||||
_______________
(1)Weighted by Net Book Value.
(2)Aircraft on lease as a percentage of total days in period weighted by net book value.
(3)Number of managed aircraft as of May 31, 2026. includes 4 aircraft owned by our joint venture with Mizuho Leasing.
Conference Call
Following this press release, management will host a conference call on Thursday, July 9, 2026, at 9:00 A.M. Eastern Time. All interested parties are welcome to participate in the live call. The conference call can be accessed by dialing 1 (800) 836-8184 (from within the U.S. and Canada) or +1 (646) 357-8785 (outside the U.S. and Canada) ten minutes prior to the scheduled start. Please reference our company name “Aircastle” when prompted by the operator.
A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.aircastle.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.
For those who are not available to listen to the live call, a replay will be available on Aircastle's website shortly after the live call.
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About Aircastle Limited
Aircastle Limited acquires, leases and sells commercial jet aircraft to airlines throughout the world. As of May 31, 2026, Aircastle owned and managed 279 aircraft leased to 72 airline customers located in 43 countries.
Safe Harbor
All statements in this press release, other than characterizations of historical fact, are forward-looking statements within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not necessarily limited to, statements relating to our proposed public offering of notes and our ability to acquire, sell, lease or finance aircraft, raise capital, pay dividends and increase revenues, earnings, EBITDA and Adjusted EBITDA and the global aviation industry and aircraft leasing sector. Words such as “anticipates,” “expects,” “enables,” “intends,” “plans,” “positions,” “projects,” “believes,” “may,” “will,” “would,” “could,” “should,” “seeks,” “estimates” and variations on these words and similar expressions are intended to identify such forward-looking statements. These statements are based on our historical performance and that of our subsidiaries and on our current plans, estimates and expectations and are subject to a number of factors that could lead to actual results being materially different from those described in the forward-looking statements; Aircastle can give no assurance that its expectations will be attained. Accordingly, you should not place undue reliance on any such forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated as of the date of this press release. These risks or uncertainties include, but are not limited to, those described from time to time in Aircastle's filings with the SEC and previously disclosed under "Risk Factors" in Item 1A of Aircastle's most recent Form 10-K and any subsequent filings with the SEC. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Aircastle to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Such forward-looking statements speak only as of the date of this press release. Aircastle expressly disclaims any obligation to revise or update publicly any forward-looking statement to reflect future events or circumstances.
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Aircastle Limited and Subsidiaries
Consolidated Balance Sheets
(Dollars in thousands, except share data)
| May 31, 2026 | February 28, 2026 | ||||||||||
| (Unaudited) | |||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 440,922 | $ | 179,889 | |||||||
| Accounts receivable | 21,495 | 18,239 | |||||||||
| Flight equipment held for lease, net | 8,146,241 | 8,267,353 | |||||||||
| Net investment in leases, net | 265,915 | 267,085 | |||||||||
| Unconsolidated equity method investment | 31,638 | 47,540 | |||||||||
| Other assets | 260,524 | 209,680 | |||||||||
| Total assets | $ | 9,166,735 | $ | 8,989,786 | |||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||
| LIABILITIES | |||||||||||
| Borrowings from secured financings, net | $ | 111,592 | $ | 112,355 | |||||||
| Borrowings from unsecured financings, net | 5,288,395 | 5,139,411 | |||||||||
| Accounts payable, accrued expenses and other liabilities | 445,606 | 381,274 | |||||||||
| Lease rentals received in advance | 56,593 | 63,514 | |||||||||
| Security deposits | 68,363 | 65,424 | |||||||||
| Maintenance payments | 581,440 | 560,157 | |||||||||
| Total liabilities | 6,551,989 | 6,322,135 | |||||||||
| Commitments and Contingencies | |||||||||||
| SHAREHOLDERS’ EQUITY | |||||||||||
Preference shares, $0.01 par value, 50,000,000 shares authorized, 400 (aggregate liquidation preference of $400,000) shares issued and outstanding at May 31, 2026 and February 28, 2026 | — | — | |||||||||
Common shares, $0.01 par value, 250,000,000 shares authorized, 17,840 shares issued and outstanding at May 31, 2026 and February 28, 2026 | — | — | |||||||||
| Additional paid-in capital | 2,378,774 | 2,378,774 | |||||||||
| Retained earnings | 235,972 | 288,877 | |||||||||
| Total shareholders’ equity | 2,614,746 | 2,667,651 | |||||||||
| Total liabilities and shareholders’ equity | $ | 9,166,735 | $ | 8,989,786 | |||||||
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Aircastle Limited and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(Dollars in thousands, except per share amounts)
(Unaudited)
| Three Months Ended May 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
Revenues: | ||||||||||||||
Lease rental revenue | $ | 194,580 | $ | 183,043 | ||||||||||
Direct financing and sales-type lease revenue | 5,438 | 5,142 | ||||||||||||
Amortization of lease premiums, discounts and incentives | 391 | 2,766 | ||||||||||||
Maintenance revenue | 24,158 | 38,132 | ||||||||||||
Total lease revenue | 224,567 | 229,083 | ||||||||||||
Gain on sale or disposition of flight equipment | 10,866 | 30,289 | ||||||||||||
Other revenue | 97 | 472 | ||||||||||||
Total revenues | 235,530 | 259,844 | ||||||||||||
Operating expenses: | ||||||||||||||
Depreciation | 92,828 | 95,816 | ||||||||||||
Interest, net | 71,216 | 68,841 | ||||||||||||
Selling, general and administrative | 21,576 | 20,691 | ||||||||||||
| Provision for credit losses | (183) | 142 | ||||||||||||
Impairment of flight equipment | 3,361 | 5,066 | ||||||||||||
Maintenance and other costs | 5,292 | 4,244 | ||||||||||||
Total operating expenses | 194,090 | 194,800 | ||||||||||||
| Other expense: | ||||||||||||||
| Loss on extinguishment of debt | — | (2,973) | ||||||||||||
| Other | (494) | (456) | ||||||||||||
| Total other expense | (494) | (3,429) | ||||||||||||
| Income from continuing operations before income taxes and earnings of unconsolidated equity method investment | 40,946 | 61,615 | ||||||||||||
| Income tax provision | 7,526 | 12,721 | ||||||||||||
Earnings of unconsolidated equity method investment, net of tax | 198 | 393 | ||||||||||||
| Net income | $ | 33,618 | $ | 49,287 | ||||||||||
| Net income available to common shareholders | $ | 33,618 | $ | 49,287 | ||||||||||
| Total comprehensive income available to common shareholders | $ | 33,618 | $ | 49,287 | ||||||||||
5
Aircastle Limited and Subsidiaries
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
| Three Months Ended May 31, | |||||||||||
| 2026 | 2025 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 33,618 | $ | 49,287 | |||||||
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: | |||||||||||
Depreciation | 92,828 | 95,816 | |||||||||
Amortization of deferred financing costs | 4,777 | 4,470 | |||||||||
Amortization of lease premiums, discounts and incentives | (391) | (2,766) | |||||||||
Deferred income taxes | 6,980 | 7,979 | |||||||||
Collections on net investment in leases | 1,353 | 1,517 | |||||||||
Security deposits and maintenance payments included in earnings | (2,480) | (27,149) | |||||||||
Gain on sale or disposition of flight equipment | (10,866) | (30,289) | |||||||||
Loss on extinguishment of debt | — | 2,973 | |||||||||
Impairment of flight equipment | 3,361 | 5,066 | |||||||||
Provision for credit losses | (183) | 142 | |||||||||
| Distributions from unconsolidated equity method investment | 10,427 | — | |||||||||
Other | — | (394) | |||||||||
Changes in certain assets and liabilities: | |||||||||||
Accounts receivable | (779) | (1,720) | |||||||||
Other assets | (9,639) | 1,267 | |||||||||
Accounts payable, accrued expenses and other liabilities | (24,293) | 19,999 | |||||||||
Lease rentals received in advance | (7,052) | 1,674 | |||||||||
Net cash and cash equivalents provided by operating activities | 97,661 | 127,872 | |||||||||
Cash flows from investing activities: | |||||||||||
Acquisition and improvement of flight equipment | (107,422) | (479,614) | |||||||||
Proceeds from sale or disposition of flight equipment | 113,913 | 226,752 | |||||||||
Aircraft purchase deposits and progress payments, net of returned deposits and aircraft sales deposits | 4,800 | 2,751 | |||||||||
| Distributions from unconsolidated equity method investment in excess of earnings | 5,475 | — | |||||||||
Other | (204) | 936 | |||||||||
Net cash and cash equivalents provided by (used in) investing activities | 16,562 | (249,175) | |||||||||
Cash flows from financing activities: | |||||||||||
Proceeds from secured and unsecured debt financings | 1,022,634 | 725,000 | |||||||||
Repayments of secured and unsecured debt financings | (870,840) | (647,442) | |||||||||
Deferred financing costs | (8,350) | (6,106) | |||||||||
Security deposits and maintenance payments received | 31,257 | 39,932 | |||||||||
Security deposits and maintenance payments returned | (17,391) | (24,403) | |||||||||
Dividends paid | (10,500) | (21,500) | |||||||||
Net cash and cash equivalents provided by financing activities | 146,810 | 65,481 | |||||||||
Net increase (decrease) in cash and cash equivalents | 261,033 | (55,822) | |||||||||
Cash and cash equivalents at beginning of period | 179,889 | 279,052 | |||||||||
Cash and cash equivalents at end of period | $ | 440,922 | $ | 223,230 | |||||||
6
Aircastle Limited and Subsidiaries
Reconciliation of GAAP to Non-GAAP Measures
EBITDA and Adjusted EBITDA Reconciliation
(Dollars in thousands)
(Unaudited)
| Three Months Ended May 31, | ||||||||||||||
| 2026 | 2025 | |||||||||||||
Net income | $ | 33,618 | $ | 49,287 | ||||||||||
Depreciation | 92,828 | 95,816 | ||||||||||||
Amortization of lease premiums, discounts and incentives | (391) | (2,766) | ||||||||||||
Interest, net | 71,216 | 68,841 | ||||||||||||
Income tax provision | 7,526 | 12,721 | ||||||||||||
EBITDA | $ | 204,797 | $ | 223,899 | ||||||||||
Adjustments: | ||||||||||||||
Impairment of flight equipment | 3,361 | 5,066 | ||||||||||||
Loss on extinguishment of debt | — | 2,973 | ||||||||||||
Adjusted EBITDA | $ | 208,158 | $ | 231,938 | ||||||||||
We define EBITDA as income (loss) from continuing operations before income taxes, interest expense, and depreciation and amortization. We use EBITDA to assess our consolidated financial and operating performance, and we believe this non-U.S. GAAP measure is helpful in identifying trends in our performance.
This measure provides an assessment of controllable expenses and affords management the ability to make decisions which are expected to facilitate meeting current financial goals, as well as achieving optimal financial performance. It provides an indicator for management to determine if adjustments to current spending decisions are needed.
EBITDA provides us with a measure of operating performance because it assists us in comparing our operating performance on a consistent basis as it removes the impact of our capital structure (primarily interest charges on our outstanding debt) and asset base (primarily depreciation and amortization) from our operating results. Accordingly, this metric measures our financial performance based on operational factors that management can impact in the short-term, namely the cost structure, or expenses, of the organization. EBITDA is one of the metrics used by senior management and the Board of Directors to review the consolidated financial performance of our business.
We define Adjusted EBITDA as EBITDA (as defined above) further adjusted to give effect to adjustments required in calculating covenant ratios and compliance as that term is defined in the indenture governing our senior unsecured notes. Adjusted EBITDA is a material component of these covenants.
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