AerCap Holdings N.V. Reports First Quarter 2007 Financial Results
AMSTERDAM, Netherlands, May 15 /PRNewswire-FirstCall/ --
Highlights
-- First quarter 2007 net income was $60.5 million, up 70% over first
quarter 2006.
-- We changed our method of accounting for certain maintenance obligations
as required by the issuance of a FASB Staff Position. The results for
first quarter 2007 and 2006 include the application of the new method.
-- First quarter 2007 basic and diluted earnings per share were $0.71, up
58% over first quarter 2006.
-- First quarter 2007 revenue was $309.5 million, up 123% over first
quarter 2006.
-- Sales revenue in the first quarter 2007 totaled $148.9 million and were
generated from the sale of five aircraft, ten engines and sale of parts
inventory.
-- Total assets were $4.0 billion at March 31, 2007, a 27% increase over
total assets of $3.2 billion at March 31, 2006.
-- Committed purchases of aviation assets for the full year 2007 are $746
million, of which $248 million were purchased in the first quarter of
2007.
-- We closed a refinancing of debt on 70 aircraft on May 8, 2007 through
the issuance of $1.66 billion of securitized bonds.
-- We signed an agreement for the purchase of an additional 10 new A330-
200 aircraft with Airbus on May 14, 2007.
Summary of Financial Results
AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) announced the results of its operations for the quarter ended March 31, 2007. The Company recorded net income for the first quarter 2007 of $60.5 million, or $0.71 per basic and diluted common share. This result represents an increase of 70% over the net income for the first quarter 2006. Klaus Heinemann, CEO of AerCap, commented, "Our strong net income in the first quarter 2007 reflects the successful operation of our integrated business model in a healthy industry environment. With the increase of our A330 forward order commitment with Airbus from 20 to 30 aircraft, the total number of aircraft under contract or letter of intent, now equals 121. This committed growth provides us with increased economies of scale for future operations and positions us to take advantage of customer demand for new technology aircraft in the future." AerCap's CFO, Keith Helming, added, "Our strong first quarter performance as compared to the prior year first quarter is evidence of the execution of our growth strategy and improvement of the economics in the aircraft operating lease industry."
Detailed Financial Data
($ in Millions)
Operating results
% increase over
First Quarter 2007 First Quarter 2006 First Quarter 2006
Revenues $309.5 $139.1 123%
Net income 60.5 35.5 70%
Revenue breakdown:
% increase
(decrease) over
First Quarter First Quarter First Quarter
2007 2006 2006
Lease revenue $139.7 $87.9 59%
Sales revenue 148.9 33.2 348%
Management fees,
interest income
and other revenue 20.9 17.9 17%
Total revenue $309.5 $139.0 123%
Effective tax rate
The effective tax rate for our aircraft business was 13.2% and was 38% for our engine and parts business, resulting in an overall consolidated effective tax rate of 14.3% during the first quarter 2007. We have adopted FIN 48 "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" effective January 1, 2007. The adoption of FIN 48 was immaterial to our financial statements.
Financial position
% Increase over
March 31, March 31, March 31,
2007 2006 2006
Flight equipment held for lease $3,076.8 $2,280.1 35%
Total assets 4,030.1 3,174.8 27%
Total liabilities 3,184.6 2,695.2 18%
Total equity 813.8 455.2 79%
As of March 31, 2007, our portfolio consisted of 341 aircraft and 71 engines that were either owned, on order, under contract or letter of intent, or managed. The number of aircraft and engines in our portfolio increased 35% since March 31, 2006 (303 aircraft and 2 engines).
ALS Securitization Refinancing
On May 8, 2007 we completed a refinancing of ALS, a securitization vehicle we established in September 2005, with the issuance of $1.66 billion of securitized bonds in one class of AAA-rated G-3 floating rate bonds. The proceeds from the refinancing, in addition to the issuance to AerCap of new class E-2 junior notes were used to redeem $812.1 million of G-1A, G-2A, C-1 and D-1 classes of ALS debt and to finance 28 additional aircraft that had been secured by a variety of other debt structures within the AerCap group. Net cash proceeds to AerCap after payment of all expenses and repayment of previously existing debt on the securitized aircraft total approximately $150 million. The G-3 bonds issued were priced at one-month LIBOR + 26 basis points. We estimate that the interest savings from this refinancing will be approximately $16 million per year, excluding any additional earnings generated from the reinvestment of the cash proceeds. Coincident with the ALS refinancing, the AerFunding warehouse was amended and restructured, resulting in a reduced interest rate spread and a two year extension to the revolving period. The size of the AerFunding facility remains $1.0 billion, which provides us with significant committed debt funding capacity for future acquisitions. As a result of the ALS refinancing, we expect to incur charges in the second quarter of 2007 of approximately $26 million for the write-off of unamortized debt issuance costs from the refinanced debt in addition to ALS bond prepayment and other related fees.
Maintenance Adjustment
On September 8, 2006, the Financial Accounting Standards Board issued FSP No. AUG AIR-1 ''Accounting for Planned Major Maintenance Activities'' ("FSP"). The FSP amends certain provisions in the AICPA Industry Audit Guide, "Audit of Airlines" and is applicable for our financial year beginning January 1, 2007. The FSP eliminates the "accrue in advance" methodology in accounting for certain future maintenance payments. As a result of the FSP, our previous method of accruing for the payment of top-up or lessor contribution obligations at the signing of a lease is no longer permitted. Accordingly, we have adjusted our historical financial statements in accordance with Statement of Financial Accounting Standards No. 154 "Accounting Changes and Error Corrections" ("FAS 154") to reflect the application of the new policy for top- up and lessor contribution obligations. Under our new policy, we will recognize an expense at the time of the occurrence of a lessor contribution or top-up payment, except in instances where we have established an accrual as an assumed liability for such payment, in connection with the purchase of an aircraft with a lease attached.
Following is a summary of the full-year 2005 and full-year 2006 effect of the adjustment on each financial statement line item affected by the change:
As Originally Effect of
Reported As Adjusted Adjustment
Year ended December 31,
2005 (A)
Lease revenue $348.9 $335.7 $(13.2)
Sales revenue 92.1 88.3 (3.8)
Depreciation 112.3 112.4 0.1
Leasing expenses 21.9 27.4 5.5
Income tax provision 14.7 10.0 (4.7)
Net income 83.4 65.5 (17.9)
Year ended December 31,
2006
Depreciation 102.4 102.5 0.1
Leasing expenses 47.4 21.5 (25.9)
Income tax provision 16.3 21.2 4.9
Net income 88.0 108.9 20.9
(A) The figures above for the year ended December 31, 2005 include the
aggregation of results for the six months ended June 30, 2005 for
AerCap B.V. (the predecessor company) and the results for the period
from June 27, 2005 to December 31, 2005 for AerCap Holdings N.V. (the
successor company). Of the net income impact of the maintenance
adjustment of ($17.9) million, $0.4 million relates to the period
from June 27, 2005 to December 31, 2005. The aggregation of these
two periods is not in accordance with US GAAP as AerCap B.V. and
AerCap Holdings N.V. are different reporting entities for accounting
purposes. This aggregated information is presented for information
purposes only. The following table presents the originally reported
US GAAP results by period:
Six Months Period from June 27, 2005 Non-GAAP
Ended June to December Aggregation
30, 2005 31, 2005 of Periods
Lease revenue $175.3 $173.6 $348.9
Sales revenue 79.6 12.5 92.1
Depreciation 66.4 45.9 112.3
Leasing expenses 9.7 12.2 21.9
Income tax provision (4.1) (10.6) (14.7)
Net income 33.7 49.7 83.4
There is no impact on our cash flows from the change in accounting policy.
Notes Regarding Financial Information Presented In This Press Release
The financial information presented in this press release is not audited.
Annual General Meeting of Shareholders
The Company held its 2006 annual general meeting (AGM) of shareholders on May 11, 2007 in Amsterdam. The AGM adopted the annual accounts and voted for all other items which required a vote.
Conference Call
In connection with the earnings release, management will host an earnings conference call on Tuesday, May 15, 2007 at 9:30 A.M. eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by (800) 218-9073 (U.S. domestic) or 001 303 262-2211 (International); there is no passcode.
A webcast of the conference call will be available at http://www.aercap.com.
For those who are not able to listen to the live call a replay will be available through May 22, 2007 and can be accessed by dialing toll-free (800) 405-2236 (U.S. domestic) or 001 303 590-3000 (International), pass code 11088128.
About AerCap Holdings N.V.
AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. AerCap also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations. AerCap has a fleet of over 300 aircraft owned, managed or under contracted orders and a diversified commercial engine portfolio. AerCap is headquartered in The Netherlands and has offices in Ireland and the United States.
Forward Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future operations. Words such as "expect(s)" and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. AerCap's expectations may not be attained. There are important factors that could cause actual results, level of activity, performance or achievements to differ from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this press release may not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. Such forward-looking statements speak only as of the date of this press release. AerCap expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
For more information regarding AerCap and to be added to our email distribution list, please visit http://www.aercap.com.
Financial Statements Follow
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
December 31, 2006
March 31, 2007 (adjusted) March 31,2006
Assets
Cash and cash equivalents $140,103 $131,201 $252,516
Restricted cash 99,459 112,277 130,542
Trade receivables, net of
provisions 32,458 25,058 7,444
Flight equipment held for
operating leases, net 3,076,815 2,969,111 2,280,121
Notes receivables, net of
provisions 166,344 167,451 171,170
Prepayments on flight
equipment 150,621 166,630 122,514
Investments 16,091 18,001 5,056
Goodwill 6,776 6,776 -
Intangibles 49,080 34,229 35,290
Inventory 72,115 82,811 -
Derivative assets 18,764 17,871 23,638
Deferred income taxes 88,939 97,841 90,515
Other assets 112,489 92,431 55,944
Total Assets $4,030,054 $3,921,688 $3,174,750
Liabilities and Shareholders' equity
Accounts payable $7,222 $6,958 $3,491
Accrued expenses and other
liabilities 70,828 92,466 68,218
Accrued maintenance liability 261,653 263,563 163,327
Lessee deposit liability 72,591 77,686 55,094
Term debt 2,665,987 2,555,139 2,245,256
Accrual for onerous contracts 72,718 111,333 130,008
Deferred revenue 29,065 28,391 23,712
Derivative liabilities - - 6,053
Deferred income taxes 4,490 3,383 -
Total liabilities 3,184,554 3,138,919 2,695,159
Minority interest 31,685 31,938 24,400
Ordinary share capital 699 699 646
Additional paid-in capital 593,999 591,553 369,354
Retained earnings 219,117 158,580 85,191
Total shareholders' equity 813,815 750,832 455,191
Total Liabilities and
Shareholders' equity $4,030,054 $3,921,688 $3,174,750
AerCap Holdings N.V.
Consolidated Income Statements - Unaudited
(In thousands of U.S. Dollars, except per share data)
Three months ended
March 31,
2007 (A) 2006
Revenues
Lease revenue $139,703 $87,941
Sales revenue 148,885 33,215
Interest revenue 7,272 8,934
Management fee revenue 3,025 3,681
Other revenue 10,587 5,322
Total Revenues 309,472 139,093
Expenses
Depreciation 33,968 24,360
Cost of goods sold 118,003 20,502
Interest on term debt 50,484 28,203
Operating lease in costs 6,237 6,356
Leasing expenses 4,032 4,528
Provision for doubtful notes and
accounts receivable (141) (1,298)
Selling, general and
administrative expenses 26,585 11,133
Total Expenses 239,168 93,784
Income from continuing operations
before income taxes and
minority interest 70,304 45,309
Provision for income taxes (10,019) (10,423)
Net income before minority
interest 60,285 34,886
Minority interest, net of taxes 252 600
Net Income $60,537 $35,486
Basic and diluted earnings per
share $0.71 $0.45
Weighted average shares
outstanding - basic and
diluted 85,036,957 78,236,957
(A) - Includes the results of operations of AeroTurbine
AerCap Holdings N.V.
Consolidated Statements of Cash Flows - Unaudited
Three months ended
March 31,
2007 2006
Net income 60,537 35,486
Adjustments to reconcile net
income to net cash provided by
operating activities
Minority interest (252) (600)
Depreciation and amortisation 33,968 24,360
Amortisation of debt issuance cost 1,708 1,821
Amortisation of intangibles 1,944 3,281
Gain on elimination of fair value
guarantee (10,736) -
Provision for doubtful notes and
accounts receivable (141) (1,298)
Capitalised interest on pre-
delivery payments (1,564) (1,367)
Gain on disposal of assets (24,961) (12,713)
Change in fair value of derivative
instruments (893) (7,252)
Deferred taxes 10,009 10,089
Share-based compensation 2,446 -
Changes in assets and liabilities
Trade receivables and notes
receivable, net (6,152) 25,880
Inventories 10,779 -
Other assets (7,498) (1,013)
Accounts payable and accrued
expenses, including
accrued maintenance
liability, lessee deposits (51,185) (24,333)
Deferred revenue 674 1,703
Net cash provided by operating
activities 18,683 54,044
Purchase of flight equipment (223,585) (108,250)
Proceeds from sale/disposal of
assets 126,905 33,215
Prepayments on flight equipment (18,650) (28,000)
Purchase of investments - (2,056)
Purchase of intangibles (16,794) -
Movement in restricted cash 12,818 27,188
Net cash used in investing
activities (119,306) (77,903)
Issuance of term debt 246,503 133,057
Repayment of term debt (135,655) (60,797)
Debt issuance costs paid (1,459) (4,210)
Capital contributions from
minority interests - 25,000
Net cash provided by financing
activities 109,389 93,050
Net (decrease) increase in cash
and cash equivalents 8,766 69,191
Effect of exchange rate changes 136 (229)
Cash and cash equivalents at
beginning of period 131,201 183,554
Cash and cash equivalents at end
of period 140,103 252,516
SOURCE AerCap Holdings
Released May 15, 2007