AerCap Holdings N.V. Reports First Quarter 2012 Financial Results
Adjusted net income for the first quarter of 2012 was $69.1 million.
Amsterdam, Netherlands; May 8, 2012 - AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the first quarter ended March 31, 2012.
First Quarter 2012 Net Income and Earnings Per Share
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First quarter 2012 reported net income was $65.0 million, compared with $72.1 million for the same period in 2011. First quarter 2012 reported basic and diluted earnings per share was $0.46, compared with reported basic and diluted earnings per share of $0.48 for the same period in 2011.
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First quarter 2012 adjusted net income was $69.1 million, compared with first quarter 2011 adjusted net income of $75.3 million. Adjusted net income excludes non-cash charges relating to the mark-to-market of interest rate caps and share-based compensation. First quarter 2012 adjusted earnings per share was $0.49, compared with $0.50 for the same period in 2011.
Aengus Kelly, CEO of AerCap, commented: "The first quarter has seen AerCap deliver another very strong set of results. The combination of our young fuel efficient aircraft portfolio, disciplined growth strategy and robust capital structure continue to deliver industry leading returns. This combination of factors has also resulted in AerCap being rated Investment Grade by both S&P and Fitch, these ratings coupled with our ample liquidity and access to capital ensure that AerCap will be able to rapidly respond to market investment opportunities that may arise in the balance of this year and beyond."
Additional First Quarter 2012 Financial Highlights
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Net interest margin earned on lease assets, or net spread, was $174.4 million in the first quarter of 2012 compared with $180.1 million for the same period in 2011. Net interest margin as a percent to average lease assets was 8.85% for first quarter 2012 as compared to 9.22% for first quarter 2011. The decrease in net interest margin is driven by the impact from the delivery of new aircraft.
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Total assets were $9.3 billion at March 31, 2012, a decrease of 5% over total assets of $9.8 billion at March 31, 2011. The net decrease is attributed to the sale of AeroTurbine and the sale of our 50% interest in a joint venture containing three A330 aircraft, totaling $0.6 billion, offset by new aircraft deliveries.
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Debt to equity ratio was 2.6 to 1 at March 31, 2012, compared to 2.9 to 1 at March 31, 2011.
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Committed purchases of aviation assets delivered or scheduled for delivery in 2012 are $985 million, of which $258 million closed in the first three months of 2012.
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We entered into debt facility agreements totaling $0.3 billion in first quarter 2012.
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AerCap was assigned an investment grade corporate credit rating of BBB- with a stable outlook by both Standard and Poor's Ratings Services and Fitch Ratings.
AerCap's CFO, Keith Helming, added: "We are very proud of the recent investment grade corporate credit ratings which are representative of management's disciplined approach to capital allocation and liquidity. The total interest costs of the Company's debt obligations remain at the 4% level, inclusive of all up-front fees paid in addition to the hedging costs to fully protect the Company from adverse interest rate risks. Our debt to equity ratio is now 2.6 to 1 with book equity of $2.35 billion. Coupled with a total cash balance in excess of $720 million, AerCap is well positioned to carry forward its business strategy in 2012 and beyond to maximize value for its shareholders and other Company's stakeholders."
Summary of Financial Results
Operating results
($ in Millions)
| Three months ended March 31, | |||
| 2012 | 2011 | % increase/ (decrease) |
|
| Net income | $65.0 | $72.1 | (10%) |
| Adjusted net income | 69.1 | 75.3 | (8%) |
Both reported and adjusted net income in the first quarter of 2012 were down slightly from the same period in 2011. This decrease was the result of the timing of revenues and expenses relating to defaults and restructurings in the first quarter of 2011 and 2012.
Revenue breakdown
| Three months ended March 31, | |||
| 2012 | 2011 |
% increase/ (decrease) |
|
| Lease revenue: | |||
| Basic lease rents | $235.1 | $237.1 | (1%) |
| Maintenance rents and other receipts | 17.6 | 20.1 | (12%) |
| Lease revenue | 252.7 | 257.2 | (2%) |
| Net loss on sale of assets | (0.2) | (1.3) | 85% |
| Management fees and interest income | 5.2 | 5.7 | (9%) |
| Other revenue | 0.2 | 2.5 | (92%) |
| Total revenue | $257.9 | $264.1 | (2%) |
Basic lease rents were $235.1 million for the first quarter of 2012, a decrease of 1% compared with the same period in 2011. Our average lease assets increased by 1% to $7.9 billion compared with the first quarter of 2011.
Basic rents, maintenance rents and other receipts, or total lease revenue, for the first quarter of 2011 was $252.7 million, compared to $257.2 million for the same period in 2011, a decrease of 2%.
Net loss on sale of assets for the first quarter of 2012 was a loss of $0.2 million, compared to a $1.3 million loss for the same period in 2011. Net loss on sale of assets for the first quarter of 2012 was generated from the sale of an older B757 aircraft partially offset by a gain on a new A330 aircraft.
Total revenue for the first quarter of 2012 was $257.9 million, compared to $264.1 million for the same period in 2011.
| Three months ended March 31, | |||
| 2012 | 2011 |
% increase/ (decrease) |
|
| Basic lease rents | $235.1 | $237.1 | (1%) |
| Interest on debt | 64.0 | 58.7 | 9% |
| Plus: mark-to-market of interest rate caps | (3.3) | (1.7) | 94% |
| Interest on debt excluding the impact of mark-to-market of interest rate caps | 60.7 | 57.0 | 6% |
| Net interest margin, or net spread | $174.4 | $180.1 | (3%) |
(a) Interest on debt for the quarter ended March 31, 2012 includes $7.1 million of amortization of debt issuance costs.
As shown in the table above, interest expense excluding the impact of the mark-to-market of interest rate caps was $60.7 million in the first quarter of 2012, a 6% increase compared with the first quarter of 2011. Net spread in the first quarter of 2012 decreased 3% compared with the same period in 2011.
Selling, general and administrative expenses breakdown
| Three months ended March 31, | |||
| 2012 | 2011 |
% increase/ (decrease) |
|
| Aircraft management fees | $0.5 | $1.6 | (69%) |
| Mark-to-market of foreign currency hedges, foreign currency balances and other derivatives |
(4.9) | (7.2) | (32%) |
| Share-based compensation expenses | 1.5 | 1.2 | 25% |
| Other selling, general and administrative expenses | 19.2 | 21.2 | (9%) |
| Total selling, general and administrative expenses | $16.3 | $16.8 | (3%) |
Effective tax rate
AerCap's blended effective tax rate during the first three months of 2012 was 8.7%. The blended effective tax rate in 2011 was 6.7%.
Financial position
| March 31, 2012 | March 31, 2011 |
% increase/ (decrease) over March 31, 2011 |
|
| Total cash (incl. restricted) | $728.3 | $621.2 | 17% |
| Flight equipment held for lease | 7,974.7 | 8,366.6 | (5%) |
| Total assets | 9,255.9 | 9,789.1 | (5%) |
| Debt | 6,176.8 | 6,731.1 | (8%) |
| Total liabilities | 6,907.4 | 7,496.4 | (8%) |
| Total equity | 2,348.5 | 2,292.7 | 2% |
| Debt/equity ratio | 2.6 | 2.9 | (10%) |
As of March 31, 2012, AerCap's portfolio consisted of 350 aircraft that were either owned, on order, under contract or letter of intent, or managed. Total assets were $9.3 billion at March 31, 2012, a decrease of 5% over total assets of $9.8 billion at March 31, 2011. The net decrease is attributed to the sale of AeroTurbine and the sale of our 50% interest in a joint venture containing three A330 aircraft, totaling $0.6 billion, offset by new aircraft deliveries.
Notes Regarding Financial Information Presented In This Press Release
The financial information presented in this press release is not audited.
The following is a definition of non-GAAP measures used in this press release and a reconciliation of such measure to the most closely related GAAP measure:
Adjusted net income and adjusted earnings per share. These measures are determined by adding non-cash charges related to the mark-to-market losses on our interest rate caps and share based compensation during the applicable period, net of related tax benefits, to GAAP net income. Adjusted earnings per share are determined by dividing the amount of adjusted net income by the average number of shares outstanding for that period. The average number of shares is based on a daily average.
In addition to GAAP net income and earnings per share, we believe these measures may provide investors with supplemental information regarding our operational performance and may further assist investors in their understanding of our operational performance in relation to past and future reporting periods. We use interest rate caps to allow us to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on our floating rate debt. Management determines the appropriate level of caps in any period with reference to the mix of floating and fixed cash inflows from our lease and other contracts. We do not apply hedge accounting to our interest rate caps. As a result, we recognize the change in fair value of the interest rate caps in our income statement during each period.
Following is a reconciliation of net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation to net income for the three month periods ended March 31, 2012 and 2011:
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Three months ended March 31, |
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| 2012 | 2011 | % increase/ (decrease) |
|
| Net income | $65.0 | $72.1 | (10%) |
| Plus: mark-to-market of interest rate caps, net of tax | 2.8 | 1.5 | 87% |
| share-based compensation, net of tax | 1.3 | 1.7 | (24%) |
| Adjusted net income | $69.1 | $75.3 | (8%) |
Net interest margin, or net spread (refer to second table under Revenue breakdown section of this press release). This measure is the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps. We believe this measure may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. This measure reflects the impact from changes in the number of aircraft leased, lease rates, utilization rates, as well as the impact from the use of interest rate caps instead of swaps to hedge our interest rate risk. The reconciliation of net spread to basic rents for the three month periods ended March 31, 2012 and 2011 is included above.
Conference Call
In connection with the earnings release, management will host an earnings conference call today, Tuesday, May 8, 2012 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 1-480-629-9692 or (International) +31-20-794-8504 and referencing code 4529515 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations".
The webcast replay will be archived in the "Investor Relations" section of the company's website for one year.
In addition, a New York Group Lunch Presentation for investors and analysts will be hosted by AerCap's management today, Tuesday, May 8, 2012, at 12:30 pm Eastern Time at The New York Palace (the Henry Room), 455 Madison Avenue, New York. Doors will open at 12:00 pm.
To participate in either event, please register at: http://client.sharedvalue.net/AerCap/Q112
For further information, contact Peter Wortel: +31 20 655 9658 (pwortel@aercap.com)
or Mark Walter (Shared Value): +44 (0)20 7321 5039 (aercap@sharedvalue.net).
About AerCap Holdings N.V.
AerCap is the world's leading independent aircraft leasing company and has one of the youngest fleets in the industry. AerCap has a portfolio of 350 aircraft with a focus on fuel-efficient narrowbodies and widebodies. AerCap is a New York Stock Exchange-listed company (AER) headquartered in The Netherlands with offices in Ireland, the United States, China, Singapore and the United Arab Emirates.
Forward Looking Statements
This press release contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are "forward-looking statements". In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as "may," "might," "should," "expect," "plan," "intend," "estimate," "anticipate," "believe," "predict," "potential" or "continue" or the negatives thereof or variations thereon or similar terminology. All statements other than statements of historical fact included in this press release are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, may include projections of our future financial performance based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements. As a result, there can be no assurance that the forward-looking statements included in this press release will prove to be accurate or correct. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this press release might 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. We do not undertake any obligation to, and will not, update any forward-looking statements, whether as a result of new information, future events or otherwise.
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.
Unaudited Consolidated Balance Sheets
(In thousands of U.S. Dollars)
| March 31, 2012 | December 31, 2011 | March 31, 2011 | |
| Assets | |||
| Cash and cash equivalents | $ 424,694 | $ 411,081 | $ 322,450 |
| Restricted cash | 303,652 | 237,325 | 210,134 |
| Trade receivables, net of provisions | 10,494 | 16,063 | 58,976 |
| Flight equipment held for operating leases, net | 7,974,747 | 7,895,874 | 8,366,553 |
| Net investment in direct finance leases | 24,103 | 25,094 | 28,633 |
| Notes receivables, net of provisions | 4,282 | 5,200 | 18,153 |
| Prepayments on flight equipment | 102,741 | 95,619 | 130,784 |
| Investments | 84,968 | 84,079 | 78,138 |
| Goodwill | - | - | 6,776 |
| Intangibles | 26,700 | 29,677 | 53,364 |
| Inventory | 8,864 | 13,953 | 124,985 |
| Derivative assets | 18,629 | 21,050 | 85,183 |
| Deferred income taxes | 86,771 | 91,258 | 89,680 |
| Other assets | 185,254 | 181,359 | 215,246 |
| Total Assets | $ 9,255,899 | $ 9,107,632 | $ 9,789,055 |
| Liabilities and Equity | |||
| Accounts payable | $ 674 | $ 4,142 | $ 18,684 |
| Accrued expenses and other liabilities | 82,994 | 74,458 | 105,176 |
| Accrued maintenance liability | 475,203 | 452,582 | 423,562 |
| Lessee deposit liability | 104,263 | 102,844 | 120,689 |
| Debt | 6,176,754 | 6,111,165 | 6,731,055 |
| Accrual for onerous contracts | - | 3,971 | 4,800 |
| Deferred revenue | 46,645 | 47,994 | 52,265 |
| Derivative liabilities | 20,900 | 27,159 | 40,143 |
| Total liabilities | 6,907,433 | 6,824,315 | 7,496,374 |
| Ordinary share capital €0.01 par value (250,000,000 ordinary shares authorized, 149,232,426 ordinary shares issued and outstanding) | 1,570 | 1,570 | 1,570 |
| Additional paid-in capital | 1,341,670 | 1,340,205 | 1,334,967 |
| Treasury stock (9,332,982 ordinary shares) | (100,000) | (100,000) | - |
| Accumulated other comprehensive income (loss) | (9,266) | (8,513) | 5,818 |
| Accumulated retained earnings | 1,108,984 | 1,043,974 | 943,839 |
| Total AerCap Holdings N.V. shareholders' equity | 2,342,958 | 2,277,236 | 2,286,194 |
| Non-controlling interest | 5,508 | 6,081 | 6,487 |
| Total Equity | 2,348,466 | 2,283,317 | 2,292,681 |
| Total Liabilities and Equity | $ 9,255,899 | $ 9,107,632 | $ 9,789,055 |
| * Includes $64.3 million of subordinated debt received from our joint venture partners | |||
| Supplemental information | March 31, 2012 | December 31, 2011 | March 31, 2011 |
| Debt/equity ratio | 2.6 | 2.7 | 2.9 |
| Debt/equity ratio (adjusted for subordinated debt) | 2.5 | 2.6 | 2.8 |
AerCap Holdings N.V.
Unaudited Consolidated Income Statements
(In thousands of U.S. Dollars, except share and per share data)
|
Three months ended March 31, |
||
| 2012 | 2011 | |
| Revenues | ||
| Lease revenue | $252,738 | $257,242 |
| Net loss on sale of assets | (219) | (1,315) |
| Management fee revenue | 4,530 | 5,148 |
| Interest revenue | 622 | 580 |
| Other revenue | 229 | 2,456 |
| Total Revenues | 257,900 | 264,111 |
| Expenses | ||
| Depreciation | 89,028 | 90,425 |
| Asset impairment | - | 7,749 |
| Interest on debt | 63,967 | 58,701 |
| Operating lease-in costs | 2,522 | 3,051 |
| Leasing expenses | 18,477 | 11,096 |
| Provision for doubtful accounts | - | (39) |
| Selling, general and administrative expenses | 16,328 | 16,834 |
| Total Expenses | 190,322 | 187,817 |
| Income from continuing operations before income taxes and income of investments accounted for under the equity method | 67,578 | 76,294 |
| Provision for income taxes | (5,878) | (5,773) |
| Net income of investments accounted for under the equity method | 2,737 | 2,654 |
| Net Income from continuing operations | 64,437 | 73,175 |
| Loss from discontinued operations, net of tax (AeroTurbine) | - | (646) |
| Net income | 64,437 | 72,529 |
| Net loss (income) attributable to non-controlling interest | 573 | (440) |
| Net Income attributable to AerCap Holdings N.V. | $ 65,010 | $ 72,089 |
| Total earnings per share, basic and diluted | $0.46 | $0.48 |
| Weighted average shares outstanding, basic and diluted | 139,899,444 | 149,232,426 |
Certain reclassifications have been made to prior years Unaudited Consolidated Income Statements to reflect the current year presentation.
AerCap Holdings N.V.
Unaudited Consolidated Statements of Cash Flows
(In thousands of U.S. Dollars)
| Three months ended March 31, | Three months ended March 31, | |
| 2012 | 2011 | |
| Net income | $64,437 | $72,529 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Depreciation | 89,028 | 98,322 |
| Asset impairment | - | 7,749 |
| Amortization of debt issuance costs | 7,115 | 7,451 |
| Amortization of intangibles | 2,977 | 5,273 |
| Provision for doubtful accounts | - | 1,643 |
| Capitalised interest on pre-delivery payments | (336) | (39) |
| Net loss on sale of assets | 219 | 478 |
| Mark-to-market of non-hedged derivatives | (3,784) | (18,376) |
| Deferred taxes | 4,595 | 7,859 |
| Share-based compensation | 1,465 | 2,273 |
| Changes in assets and liabilities: | ||
| Trade receivables and notes receivable, net | 6,487 | (14,365) |
| Inventories | 5,089 | (368) |
| Other assets and derivative assets | (5,714) | (28,944) |
| Other liabilities | (4,057) | (41,270) |
| Deferred revenue | (1,349) | (7,797) |
| Net cash provided by operating activities | 166,172 | 92,418 |
| Purchase of flight equipment | (268,647) | (359,889) |
| Proceeds from sale/disposal of assets | 107,967 | 25,943 |
| Prepayments on flight equipment | (8,206) | (8,678) |
| Purchase of investments | - | (2,500) |
| Movement in restricted cash | (66,327) | 12,330 |
| Net cash used in investing activities | (235,213) | (332,794) |
| Issuance of debt | 354,590 | 405,904 |
| Repayment of debt | (289,106) | (243,809) |
| Debt issuance costs paid | (5,926) | (14,819) |
| Maintenance payments received | 39,708 | 33,907 |
| Maintenance payments returned | (18,409) | (20,538) |
| Security deposits received | 4,105 | 1,910 |
| Security deposits returned | (1,925) | (6,717) |
| Net cash provided by financing activities | 83,037 | 155,838 |
| Net increase (decrease) in cash and cash equivalents | 13,996 | (84,538) |
| Effect of exchange rate changes | (383) | 2,538 |
| Cash and cash equivalents at beginning of period | 411,081 | 404,450 |
| Cash and cash equivalents at end of period | $424,694 | $322,450 |
Certain reclassifications have been made to prior years Unaudited Consolidated Statements of Cash Flows to reflect the current year presentation.
Released May 8, 2012