AerCap Holdings N.V. Reports Third Quarter 2009 Financial Results
23% growth in net spread and 22% growth in total assets demonstrate AerCap's ability to deliver profitable growth.
AMSTERDAM, Nov. 6 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the third quarter ended September 30, 2009.
Third Quarter 2009 Highlights
-- Third quarter 2009 net income was $35.5 million, compared with net
income of $51.3 million for the same period in 2008. Third quarter 2009
net income excluding the impact of the mark-to-market of interest rate
caps and share-based compensation was $39.2 million, compared with $61.2
million in third quarter 2008 on the same basis. The decrease in net
income was largely due to lower maintenance revenue and lower income
from the sale of assets in third quarter 2009 as compared to third
quarter 2008.
-- Third quarter 2009 basic and diluted earnings per share were $0.42.
Third quarter 2009 basic and diluted earnings per share excluding the
impact of the mark-to-market of interest rate caps and share-based
compensation were $0.46.
-- Net spread, the difference between basic lease rents and interest
expense excluding the impact from the mark-to-market of interest rate
caps, was $114.6 million in third quarter 2009 compared to $93.3 million
in third quarter 2008, an increase of 23%. This measure reflects the
increase in leasing income.
-- Basic lease revenue for the third quarter 2009 was $142.4 million,
compared to $132.9 million for the same period in 2008, an increase of
7%. Total lease revenue for the third quarter 2009 was $153.8 million,
compared to $167.9 million for the same period in 2008, a decrease of
8%. The decrease in total lease revenue was due to lower maintenance
rents in third quarter 2009 as compared to third quarter 2008.
-- Total revenue for the third quarter 2009 was $212.5 million, compared to
$301.9 million for the same period in 2008. The decrease was mainly due
to lower aircraft sales revenue and lower maintenance revenue, partially
offset by higher basic lease revenue.
-- Sales revenue for the third quarter 2009 was $49.0 million, compared to
$122.4 million for the same period in 2008, and was generated from the
sale of one aircraft, three engines and parts inventory. In addition,
on October 29, 2009, we executed agreements for the sale of three of our
A330-300 forward order aircraft delivering in 2010 (the sales will be
recorded at time of delivery).
-- Total assets were $6.4 billion at September 30, 2009, an increase of 22%
over total assets of $5.3 billion at September 30, 2008.
-- Committed purchases of aviation assets delivered or scheduled for
delivery in 2009 are $1.8 billion, of which $1.1 billion closed in the
nine month period ended September 30, 2009.
Previously disclosed Third Quarter 2009 Highlights
-- In third quarter 2009, AerCap announced that the Boards of Directors of
AerCap Holdings N.V. and Genesis Lease Limited had approved a definitive
agreement under which AerCap and Genesis will merge in an all
share-for-share transaction.
Klaus Heinemann, CEO of AerCap, commented: "AerCap continues to substantially grow its core leasing business as measured by the Company's net spread results. Additionally, we have expanded AerCap's overall market position through the share-for-share transaction with Genesis Lease. Both are clear evidence that AerCap is well positioned to take advantage of the prevailing market dislocation. The performance of emerging markets and low cost carriers has begun to improve. Resumed 2010 passenger growth along with fuel costs based on 75 to 100 dollars per barrel, will enable the market for modern, state of the art narrowbodies to rapidly rebalance."
AerCap's CFO, Keith Helming, said: "Our third quarter 2009 results highlight the consistent growth in the Company's leasing related earnings as demonstrated through the 23% increase in net spread. Additionally, the Company's margin of net spread divided by average lease assets has remained constant year-over-year. The Company's consistent performance is attributable to the decrease in interest rates coupled with the use of interest rate caps, plus relatively stable basic lease rents achieved on deliveries of new, fuel-efficient aircraft."
Summary of Financial Results
AerCap recorded a third quarter 2009 net income of $35.5 million or $0.42 earnings per basic and diluted share. Included in the third quarter 2009 net income amount were charges relating to mark-to-market of interest rate caps and share-based compensation of $3.7 million or $0.04 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $3.0 million and the after-tax charge from share-based compensation was $0.7 million.
Detailed Financial Data
($ in Millions)
Operating results:
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
% increase/ % increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- -------- ---- ---- ---------
Revenues $212.5 $301.9 -30% $715.7 $929.8 -23%
Net income 35.5 51.3 -31% 122.0 170.8 -29%
Net income
excluding the
impact of mark-
to-market of
interest rate
caps and share-
based compensation 39.2 61.2 -36% 109.9 179.0 -39%
Total revenue in third quarter 2009 decreased 30% compared with third quarter 2008. This decrease was largely driven by lower sales revenue and lower maintenance revenue, partially offset by higher basic lease revenue.
Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 36%. This decrease was also driven by lower maintenance revenue ($20.6 million) and lower income from the sale of assets ($5.8 million), partially offset by an increase in net spread.
Revenue breakdown
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
% increase/ % increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- -------- ---- ---- ---------
Lease revenue:
Basic lease
rents $142.4 $132.9 7% $425.2 $386.0 10%
Maintenance
rents 10.4 34.6 -70% 49.9 57.6 -13%
End-of-lease
compensation
and other
receipts 1.0 0.4 150% 9.7 12.5 -22%
---- ---- -------- ---- ---- ---------
Lease
revenue $153.8 $167.9 -8% $484.8 $456.1 6%
Sales
revenue 49.0 122.4 -60% 202.4 445.6 -55%
Management fees
and interest
income 5.3 8.0 -34% 17.0 23.9 -29%
Other
revenue 4.4 3.6 22% 11.5 4.2 174%
---- ---- -------- ---- ---- ---------
Total
revenue $212.5 $301.9 -30% $715.7 $929.8 -23%
===== ===== ======== ===== ===== =========
Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. The increase in basic lease rents of 7% was less than the increase in average lease assets of 23%, as a result of decreasing interest rates. The impact of decreasing interest rates on basic lease rents was offset by lower interest expense. While basic lease rents for the third quarter 2009 increased 7% compared to third quarter 2008 to $142.4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 30% compared with third quarter 2008 to $27.8 million, as shown in the table below. We refer to the difference in these amounts as net spread, which increased 23% in third quarter 2009 over the same period in 2008 to an amount of $114.6 million. Our average lease assets increased by 23% to $4.6 billion compared to third quarter 2008.
Maintenance related revenues, including end-of-lease compensation, decreased $23.6 million in third quarter 2009 to $11.4 million from $35.0 million in third quarter 2008. The decrease was largely due to $21.2 million of non-recurring maintenance revenue in third quarter 2008. The non-recurring maintenance revenue related to a change in the estimate of the amount of maintenance rent expected to be reimbursed to lessees plus airline defaults. The change in estimate arose from the implementation of an improved model used to forecast future maintenance reimbursements, as disclosed in our previous filings. Since third quarter 2008 AerCap records as revenue all maintenance rent receipts not expected to be repaid to lessees. In third quarter 2008, $16.6 million was recorded as maintenance revenue as a result of the change in estimate. Of the $16.6 million, $12.9 million was collected from lessees during prior periods and was non-recurring. In addition, the termination of certain leases due to airline defaults triggered the recognition of $8.3 million of maintenance related revenues in third quarter 2008.
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
% increase/ % increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- -------- ---- ---- ---------
Basic lease rents $142.4 $132.9 7% $425.2 $386.0 10%
Interest on debt $32.8 $51.0 -36% $68.3 $120.2 -43%
Plus: mark-to-market
of interest rate
caps (5.0) (11.4) -56% 17.2 (6.0) -387%
---- ---- -------- ---- ---- ---------
Interest on debt
excluding the
impact of mark-
to-market of
interest rate caps $27.8 $39.6 -30% $85.5 $114.2 -25%
---- ---- -------- ---- ----- ---------
Net Spread $114.6 $93.3 23% $339.7 $271.8 25%
===== ==== ======== ===== ===== =========
Effective tax rate
AerCap's blended effective tax rate during the nine month period ended September 30, 2009 was 2.5%, consisting of 0.4% for AerCap's aircraft business and 36.4% for AerCap's engine and parts business. The annual blended effective tax rate for 2008 was positive 0.3% (income).
Financial position
% Increase over
September 30, September 30, September 30,
2009 2008 2008
------------ ------------ ---------------
Flight equipment held
for lease $4,761.9 $3,831.2 24%
Total assets 6,417.6 5,269.5 22%
Total liabilities 5,082.9 4,111.6 24%
Total equity 1,334.8 1,157.9 15%
As of September 30, 2009, AerCap's portfolio consisted of 304 aircraft and 85 engines that were either owned, on order, under contract or letter of intent, or managed.
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:
Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation. This measure is determined by adding the mark-to-market on our interest rate caps and share-based compensation during the applicable period, net of related tax benefits, to GAAP net income. AerCap believes this measure provides investors with a more meaningful view on AerCap's operational performance and allows investors to better understand its operational performance in relation to past and future reporting periods. AerCap uses interest rate caps to allow it to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on its 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 the Company's lease and other contracts. AerCap does not apply hedge accounting to its interest rate caps. As a result, AerCap is required to recognize the change in fair value of the interest rate caps in AerCap's income statement during each period. Following is a reconciliation of net income excluding the impact of mark-to-market of interest rate caps and share-based compensation to net income for the three and nine month periods ended September 30, 2009 and 2008:
Three months ended Nine months ended
September 30, September 30,
---------------------- ----------------------
% increase/ % increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- -------- ---- ---- ---------
Net income $35.5 $51.3 -31% $122.0 $170.8 -29%
Plus: mark-to-market
of interest rate
caps, net of tax 3.0 8.2 -63% (14.5) 3.7 -492%
share-based
compensation,
net of tax 0.7 1.7 -59% 2.4 4.5 -47%
---- ---- -------- ---- ---- ---------
Net income excluding
the impact of
mark-to-market of
interest rate caps
and share-based
compensation $39.2 $61.2 -36% $109.9 $179.0 -39%
==== ==== ======== ==== ==== =========
Earnings per share excluding the impact of mark-to-market of interest rate caps and share-based compensation are determined by dividing the amount of net income excluding such impact by the average number of shares outstanding for that period. The average number of shares is based on a daily average.
Net spread. This measure is the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps and non-recurring charges. AerCap believes this measure provides investors a better way to understand the changes and trends related to the earnings of its 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 for hedging purposes. The reconciliation of net spread to basic lease rents for the three and nine month periods ended September 30, 2009 and 2008 is included above.
Conference Call
In connection with the earnings release, management will host an earnings conference call today, Friday, November 6, 2009 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-676-6978 toll free or +1-706-634-5464 (International) and referencing code 35504602 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations."
The presentation slides for the conference call will be posted on AerCap's website in advance of the call. A replay of the call will be available beginning at 10:30 am Eastern Time / 4:30 pm Central European Time on November 6, 2009 and continuing through December 6, 2009. To access the recording, call (U.S./Canada) 800-642-1687 toll free or +1-706-645-9291 (International) and enter passcode 35504602. 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, Friday, November 6, 2009, at 12:30 pm Eastern Time at The New York Palace (the Henry Room). Doors will open at 12:00 pm.
To participate in either event, please register at: www.sharedvalue.net/aercap/q309results
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 an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. The company also provides aircraft management services and performs aircraft maintenance, repair and overhaul services and aircraft disassemblies. AerCap is headquartered in The Netherlands and has offices in Ireland, the United States, Singapore, China and the United Kingdom.
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," "will," "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.
For Investors:
Keith Helming
Chief Financial Officer
+31 20 655 9670
khelming@aercap.com
Peter Wortel
Investor Relations
+31 20 655 9658
pwortel@aercap.com
For Media:
Frauke Oberdieck
Corporate Communications
+31 20 655 9616
foberdieck@aercap.com
Financial Statements Follow
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
September 30, December 31, September 30,
2009 2008 2008
-------------- ------------- --------------
Assets
Cash and cash equivalents $203,377 $193,563 $176,444
Restricted cash 121,067 113,397 167,843
Trade receivables, net of
provisions 49,037 43,649 38,694
Flight equipment held for
operating leases, net 4,761,918 3,989,629 3,831,200
Flight equipment held for
sale - - 6,139
Net investment in direct
finance leases 34,069 30,571 -
Notes receivables, net of
provisions 141,628 134,067 179,080
Prepayments on flight
equipment 632,333 448,945 385,257
Investments 20,367 18,678 18,678
Goodwill 6,776 6,776 6,776
Intangibles, net 34,602 47,099 50,888
Inventory 108,444 102,879 89,746
Derivative assets 38,572 19,352 53,633
Deferred income taxes 80,463 82,471 76,091
Other assets 184,975 179,750 189,038
------- ------- -------
Total Assets $6,417,628 $5,410,826 $5,269,507
========== ========== ==========
Liabilities and Equity
Accounts payable $16,004 $7,510 $137
Accrued expenses and other
liabilities 77,591 104,750 118,638
Accrued maintenance
liability 216,345 202,834 208,064
Lessee deposit liability 113,025 98,584 98,094
Debt* 4,593,268 3,790,487 3,603,013
Accrual for onerous
contracts 24,378 33,306 31,053
Deferred revenue 33,479 34,922 38,516
Derivative liabilities 8,783 12,378 5,325
Deferred income taxes - - 8,782
------- ------- -------
Total liabilities 5,082,873 4,284,771 4,111,622
Share capital 699 699 699
Additional paid-in capital 592,133 609,327 607,852
Retained earnings 621,012 499,011 518,009
------- ------- -------
Total AerCap Holdings N.V.
shareholders' equity 1,213,844 1,109,037 1,126,560
Non-controlling interest 120,911 17,018 31,325
------- ------ ------
Total Equity 1,334,755 1,126,055 1,157,885
---------- ---------- ----------
Total Liabilities and Equity $6,417,628 $5,410,826 $5,269,507
========== ========== ==========
* Includes $63 million of subordinated debt received from our joint
venture partner relating to the TUI portfolio acquisition
AerCap Holdings N.V.
Consolidated Income Statements - Unaudited
(In thousands of U.S. Dollars, except share and per share data)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Lease revenue $153,890 $167,932 $484,932 $456,134
Sales revenue 49,012 122,441 202,364 445,629
Interest revenue 2,433 4,889 7,656 14,931
Management fee revenue 2,821 3,065 9,294 8,970
Other revenue 4,354 3,607 11,461 4,156
----- ----- ------ -----
Total Revenues 212,510 301,934 715,707 929,820
Expenses
Depreciation 55,663 45,329 160,153 123,331
Asset impairment 382 - 21,332 7,689
Cost of goods sold 39,973 108,850 179,293 359,716
Interest on debt 32,844 50,958 68,319 120,182
Operating lease
in costs 3,268 4,254 9,855 11,209
Leasing expenses 10,648 5,421 51,885 23,213
Provision for
doubtful notes and
accounts receivable 55 (186) 408 1,061
Selling, general
and
administrative
expenses 27,806 33,366 82,796 96,652
Other expenses 1,900 - 1,900 -
------ ------ ------- -------
Total Expenses 172,539 247,992 575,941 743,053
------ ------ ------- -------
Income from
continuing
operations before
income taxes 39,971 53,942 139,766 186,767
Provision for
income taxes (784) (3,896) (3,471) (15,421)
------ ------ ------- -------
Net income 39,187 50,046 136,295 171,346
Net (income) loss
attributable to non-
controlling interest (3,735) 1,285 (14,293) (543)
------- ------- -------- --------
Net Income
attributable to
AerCap Holdings
N.V. $35,452 $51,331 $122,002 $170,803
======= ======= ======== ========
Basic and diluted
earnings per share $0.42 $0.60 $1.43 $2.01
Weighted average
shares outstanding -
basic and diluted 85,036,957 85,036,957 85,036,957 85,036,957
AerCap Holdings N.V.
Consolidated Statements of Cash Flows - Unaudited
(In thousands of U.S. Dollars)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
---- ---- ---- ----
Net income 39,187 50,046 136,295 171,346
Adjustments to reconcile net
income to net cash provided
by operating activities
Depreciation 55,663 45,328 160,153 123,330
Asset impairment 382 - 21,332 7,689
Amortisation of debt
issuance cost 3,901 5,154 11,789 11,911
Amortisation of intangibles 3,294 3,788 12,499 10,827
Gain on discounted
purchase of securitized
bonds - (2,783) - (2,783)
Provision for doubtful
notes and accounts
receivable 587 (186) 940 1,061
Capitalised interest
on pre-delivery
payments (225) (909) (934) (2,308)
Gain on disposal of assets 21 (12,461) 1,039 (65,268)
Mark-to-market of
non-hedged
derivatives 3,862 13,980 (15,642) 2,904
Deferred taxes 724 3,529 1,863 14,519
Share-based compensation 912 1,962 2,910 5,383
Changes in assets and
liabilities
Trade receivables and
notes receivable, net (11,378) 22,539 (5,850) 1,576
Inventories 35,867 (7,061) 33,146 9,214
Other assets and derivative
assets (3,791) (22,160) (14,521) (47,652)
Accounts payable and
accrued expenses,
including
accrued maintenance
liability, lessee
deposits (6,965) (26,269) (4,918) (18,454)
Deferred revenue (3,326) (1,526) (1,442) 4,942
------ ------ ------ -----
Net cash provided by
operating activities 118,715 72,971 338,659 228,237
Purchase of flight equipment (273,217) (137,091) (848,031) (1,014,642)
Proceeds from sale/disposal of
assets 1,891 104,535 80,243 352,427
Prepayments on flight
equipment (116,693) (74,905) (403,054) (206,583)
Purchase of investments - (10,000) - (10,000)
Purchase of
subsidiaries, net of
cash acquired - - - -
Sale of investments - 6,234 - 6,234
Purchase of intangibles - 112 - (21,410)
Movement in restricted cash 7,117 15,965 (7,670) (72,771)
----- ------ ------ -------
Net cash used in investing
activities (380,902) (95,150) (1,178,512) (966,745)
Issuance of debt 562,464 207,692 1,843,442 1,148,338
Repayment of debt (313,149) (181,898) (1,081,578) (435,286)
Debt issuance costs paid (6,212) (2,998) (20,325) (38,619)
Capital contributions
from minority
interests - - 104,200 -
------ ------ ------ -----
Net cash provided by
financing activities 243,103 22,796 845,739 674,433
-
Net increase (decrease) in
cash and cash equivalents (19,084) 617 5,886 (64,075)
Effect of exchange rate
changes 4,038 (43) 3,928 (1,217)
Cash and cash
equivalents at
beginning of period 218,423 175,870 193,563 241,736
------- ------- ------- -------
Cash and cash
equivalents at end
of period 203,377 176,444 203,377 176,444
======= ======= ======= =======
SOURCE AerCap Holdings N.V.
Released November 6, 2009