AerCap Holdings N.V. Reports Second Quarter 2010 Financial Results
Net spread, which is the margin earned on our leased assets, was $169.0 million for the second quarter of 2010, an increase of 50% over second quarter 2009
AMSTERDAM, Aug. 5 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the second quarter ended June 30, 2010.
The all-share acquisition of Genesis Lease Limited ("Genesis") which was completed on March 25, 2010 is fully reflected in all AerCap Holdings N.V. second quarter 2010 consolidated financial statements. The Genesis Transaction was not included in the AerCap Holdings N.V. first quarter 2010 income statement (including the number of outstanding shares used for earnings per share calculations) other than a one line item reflecting a $0.3 million amalgamation gain (net of transaction expenses and tax). The impact of the Genesis Transaction was also reflected in one line item in the AerCap Holdings N.V. first quarter 2010 consolidated cash flow statement (purchase of subsidiaries, net of cash acquired).
Second Quarter 2010 Highlights
-- Second quarter 2010 basic and diluted earnings per share were $0.41,
compared with $0.67 for the same period in 2009. Second quarter 2010
basic and diluted earnings per share excluding the impact of the
mark-to-market of interest rate caps and share-based compensation were
$0.50, compared with $0.46 in the second quarter 2009 on the same basis.
-- Second quarter 2010 net income was $48.9 million, compared with net
income of $56.6 million for the same period in 2009. Second quarter 2010
net income excluding the impact of the mark-to-market of interest rate
caps and share-based compensation was $59.6 million, compared with $39.1
million in the second quarter 2009 on the same basis.
-- Net spread, the difference between basic lease rents and interest
expense excluding the impact from the mark-to-market of interest rate
caps, was $169.0 million in the second quarter of 2010 compared to
$112.6 million in the second quarter of 2009, an increase of 50%. This
measure reflects the increase in leasing income and excludes income
derived from the sale of aircraft.
-- Sales revenue for the second quarter 2010 was $328.1 million, compared
to $117.9 million for the same period in 2009, and was generated from
the sale of five aircraft, five engines and parts inventory.
-- Basic lease rents for the second quarter of 2010 were $228.6 million,
compared to $141.4 million for the same period in 2009, an increase of
62%. Total lease revenue (basic rents, maintenance rents and
end-of-lease compensation) for the second quarter of 2010 was $260.7
million, compared to $169.8 million for the same period in 2009, an
increase of 54%.
-- Total revenue for the second quarter of 2010 was $594.7 million,
compared to $294.7 million for the same period in 2009. The increase was
mainly due to the increase in sales revenue and an increase in lease
revenue which was primarily driven by the Genesis Transaction and the
deliveries of forward order aircraft.
-- Total assets were $9.1 billion at June 30, 2010, an increase of 48% over
total assets of $6.1 billion at June 30, 2009. The Genesis Transaction
accounted for $1.5 billion of the increase in total assets. The
remaining $1.5 billion increase was driven primarily by deliveries of
forward order aircraft.
-- Committed purchases of aviation assets delivered or scheduled for
delivery in 2010 are $2.5 billion, of which $1.8 billion closed in the
first half year of 2010.
Financing Highlights – previously disclosed
-- AerCap signed agreements for $380 million of new debt facilities in the
second quarter and a total of $835 million in the year to date. In
addition, a $151 million refinancing through the issuance of notes
guaranteed by the United Kingdom's Export Credit Agency was completed
during the second quarter.
Klaus Heinemann, CEO of AerCap, commented: “AerCap has continued to deliver asset, revenue and net margin growth quarter after quarter while maintaining earnings per share that are consistently at the top end of the range among our listed competitors. AerCap’s solid liquidity is reflected in our total cash position, which now exceeds $500 million and represents one third of our current market capitalization.”
AerCap's CFO, Keith Helming, said: "We are pleased with our second quarter results which include a full quarter's financial impact of the Genesis Transaction, which is performing according to our expectations. The 48% year-on-year increase in total assets as well as the 50% increase in net spread highlight the profitability of our growing and diverse lease portfolio. In addition, our committed capital expenditures are essentially fully funded and we have secured $835 million of new debt facilities year-to-date 2010 which demonstrates AerCap's ability to tap global financing markets throughout varying market conditions."
Summary of Financial Results
AerCap recorded second quarter 2010 net income of $48.9 million or $0.41 earnings per basic and diluted share. Second quarter 2010 net income included net charges relating to the mark-to-market of interest rate caps and share-based compensation of $10.7 million or $0.09 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $10.1 million reflecting changes in forecasted interest rates. The after-tax charge from share-based compensation was $0.6 million.
Detailed Financial Data
($ in Millions)
Operating results
Three months ended Six months ended
June 30, June 30,
% increase/ % increase/
2010 2009 (decrease) 2010 2009 (decrease)
Revenues $ 594.7 $ 294.7 102% $ 958.7 $ 503.2 91%
Net income 48.9 56.6 (14%) 83.3 86.6 (4%)
Net income
excluding the
impact of
mark-to-market of
interest rate
caps
and share-based
compensation 59.6 39.1 52% 106.3 70.7 50%
Total revenue in the second quarter of 2010 increased 102% compared to the second quarter of 2009. This increase resulted primarily from an increase in sales revenue and basic lease rents driven by the additional aircraft acquired in the Genesis Transaction and the deliveries of forward order aircraft. For similar reasons, net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation increased by 52%.
Revenue breakdown
Three months ended Six months ended
June 30, June 30,
2010 2009 % increase/ 2010 2009 % increase/
(decrease) (decrease)
Lease revenue:
Basic lease rents $ 228.6 $ 141.4 62% $ 394.4 $ 282.8 39%
Maintenance rents 32.1 26.9 19% 41.6 39.5 5%
End-of-lease - 1.5 (100%) - 8.7 (100%)
compensation and
other receipts
Lease revenue $ 260.7 $ 169.8 54% $ 436.0 $ 331.0 32%
Sales revenue 328.1 117.9 178% 510.6 159.6 220%
Management fees 4.1 6.3 (35%) 7.9 11.7 (32%)
and interest
income
Other revenue 1.8 0.7 157% 4.2 0.9 367%
Total revenue $ 594.7 $ 294.7 102% $ 958.7 $ 503.2 91%
Basic lease rents were $228.6 million for the second quarter of 2010, an increase of 62% compared to the second quarter of 2009, as a result of our growing asset base. Our average lease assets increased by 71% to $7.5 billion compared to the second quarter of 2009. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $59.6 million in the second quarter of 2010, an increase of $30.8 million over the same period in 2009. The increase was primarily driven by the Genesis Transaction ($17.3 million) and the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 50% to $169.0 million in the second quarter of 2010 over the same period in 2009.
Three months ended Six months ended
June 30, June 30,
2010 2009 % increase/ 2010 2009 % increase/
(decrease) (decrease)
Basic lease rents $ 228.6 $ 141.4 62% $ 394.4 $ 282.8 39%
Interest on debt $ 75.5 $ 6.0 1,158% $ 126.9 $ 35.5 257%
Plus:
mark-to-market of
interest rate
caps (15.9) 22.8 (170%) (34.2) 22.2 (254%)
Interest on debt
excluding the
impact of
mark-to-market of
interest rate
caps $ 59.6 $ 28.8 107% $ 92.7 $ 57.7 61%
Net Spread $ 169.0 $ 112.6 50% $ 301.7 $ 225.1 34%
Effective tax rate
AerCap's blended effective tax rate during the first half year of 2010 was 8.8% (charge), consisting of 9.5% (charge) for AerCap's aircraft business and 32.1% (income) for AerCap's engine and parts business. The blended effective tax rate in 2009 was 1.9% (charge).
Financial position
% Increase over
June 30, 2010 June 30, 2009 June 30, 2009
Total cash (incl. restricted) $ 506.7 $ 346.6 46%
Flight equipment held for lease 7,624.7 4,493.8 70%
Total assets 9,098.4 6,130.8 48%
Total liabilities 7,176.9 4,835.8 48%
Total equity 1,921.5 1,295.1 48%
As of June 30, 2010, AerCap's portfolio consisted of 327 aircraft and 87 engines that were either owned, on order, under contract or letter of intent, or managed. This includes the 53 aircraft that AerCap added through the Genesis Transaction in March 2010. Subsequent to quarter-end, one of our lessees, Mexicana, filed for bankruptcy protection.
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 the mark-to-market of interest rate caps and share-based compensation. This measure is 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. In addition to GAAP net income, we believe this measure 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 and six month periods ended June 30, 2010 and 2009:
Three months ended Six months ended
June 30, June 30,
% increase/ % increase/
2010 2009 (decrease) 2010 2009 (decrease)
Net income $ 48.9 $ 56.6 (14%) $ 83.3 $ 86.6 (4%)
Plus: mark-to-market
of interest rate
caps, net of tax 10.1 (18.3) 155% 21.7 (17.5) 224%
share-based
compensation, net of
tax 0.6 0.8 (25%) 1.3 1.6 (19%)
Net income excluding
the impact of
mark-to-market
of interest rate
caps and share-based
compensation $ 59.6 $ 39.1 52% $ 106.3 $ 70.7 50%
Earnings per share excluding the impact of the 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 (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 and non-recurring charges. 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 lease rents for the three and six month periods ended June 30, 2010 and 2009 is included above.
Conference Call
In connection with the earnings release, management will host an earnings conference call today, Thursday, August 5, 2010 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 1-888-935-4575 or (International) +31-20-707-5512 and referencing code 4905052 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. The webcast replay will be archived in the "Investor Relations" section of the company's website for one year.
To participate in either event, please register at: http://client.sharedvalue.net/AerCap/Q210
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. AerCap also provides engine leasing, aircraft management services, 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," "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)
June 30, 2010 December 31, 2009 June 30, 2009
Assets
Cash and cash equivalents $ 260,256 $ 182,617 $ 218,423
Restricted cash 246,462 140,746 128,184
Trade receivables, net of
provisions 47,991 48,070 39,244
Flight equipment held for
operating leases, net 7,624,655 5,230,437 4,493,793
Flight equipment held for
sale 39,442 - -
Net investment in direct
finance leases 31,692 34,532 34,822
Notes receivables, net of
provisions 9,861 138,488 136,084
Prepayments on flight
equipment 259,387 527,666 576,754
Investments 29,775 21,031 20,111
Goodwill 6,776 6,776 6,776
Intangibles, net 70,498 31,399 37,893
Inventory 125,057 102,538 131,416
Derivative assets 23,447 44,866 40,035
Deferred income taxes 108,080 80,098 81,187
Other assets 214,980 180,237 186,105
Total Assets $ 9,098,359 $ 6,769,501 $ 6,130,827
Liabilities and Equity
Accounts payable $ 25,724 $ 11,832 $ 28,290
Accrued expenses and other
liabilities 94,975 80,399 76,559
Accrued maintenance
liability 371,482 228,006 206,873
Lessee deposit liability 139,357 126,093 112,112
Debt 6,393,867 * 4,846,664 4,336,966
Accrual for onerous
contracts 12,477 22,363 29,878
Deferred revenue 57,050 33,011 36,805
Derivative liabilities 81,973 7,801 8,285
Total liabilities 7,176,905 5,356,169 4,835,768
Share capital 1,163 699 699
Additional paid-in capital 968,625 593,133 591,623
Retained earnings 747,431 664,177 585,560
Total AerCap Holdings N.V.
shareholders' equity 1,717,219 1,258,009 1,177,882
Non-controlling interest 204,235 155,323 117,177
Total Equity 1,921,454 1,413,332 1,295,059
Total Liabilities and Equity $ 9,098,359 $ 6,769,501 $ 6,130,827
* Includes $82.3 million of subordinated debt received from our
joint venture partners
Supplemental information June 30, 2010 December 31, 2009 June 30, 2009
Debt/equity ratio 3.3 3.4 3.3
Debt/equity ratio (adjusted
for subordinated debt) 3.1 3.2 3.2
AerCap Holdings N.V.
Consolidated Income Statements - Unaudited
(In thousands of U.S. Dollars, except share and per share data)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Revenues
Lease revenue $ 260,695 $ 169,829 $ 436,005 $ 331,042
Sales revenue 328,131 117,879 510,585 159,596
Interest revenue 1,547 2,602 2,869 5,223
Management fee revenue 2,515 3,732 5,048 6,473
Other revenue 1,785 653 4,202 863
Total Revenues 594,673 294,695 958,709 503,197
Expenses
Depreciation 86,597 53,243 149,974 104,490
Asset impairment 2,721 13,733 2,721 20,950
Cost of goods sold 313,684 105,496 469,822 139,320
Interest on debt * 75,529 5,989 126,931 35,475
Operating lease in costs 3,063 3,273 6,214 6,587
Leasing expenses 15,926 22,076 26,416 41,237
Provision for doubtful notes
and accounts receivable (224) (879) 516 353
Selling, general and
administrative expenses 34,899 27,777 64,778 54,990
Total Expenses 532,195 230,708 847,372 403,402
Income from continuing
operations before income
taxes 62,478 63,987 111,337 99,795
Provision for income taxes (4,862) (827) (9,748) (2,687)
Amalgamation gain, net of
transaction expenses and tax - - 274 -
Net Income 57,616 63,160 101,863 97,108
Net (income) attributable to
non-controlling interest (8,761) (6,564) (18,609) (10,558)
Net Income attributable to
AerCap Holdings N.V. $ 48,855 $ 56,596 $ 83,254 $ 86,550
Basic and diluted earnings
per share $ 0.41 $ 0.67 $ 0.81 $ 1.02
Weighted average shares
outstanding - basic and
diluted 119,386,445 85,036,957 102,211,701 85,036,957
* The increase of $69.5 million in interest on debt in the second quarter 2010 as compared to the second quarter 2009 was primarily driven by (i) a $38.7 million increase in the mark-to-market on interest rate caps, (ii) a $17.3 million increase from the Genesis Transaction and (iii) the increase in our lease portfolio from the delivery of our forward order aircraft. The same items were also the primary drivers for the increase in the first half year of 2010 as compared to the first half year of 2009.
AerCap Holdings N.V.
Consolidated Statements of Cash Flows - Unaudited
(In thousands of U.S. Dollars)
Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
Net income 57,616 63,160 101,863 97,108
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation 86,597 53,243 149,974 104,490
Asset impairment 2,721 13,733 2,721 20,950
Amortisation of debt issuance
cost 7,024 4,054 12,330 7,888
Amortisation of intangibles 6,959 4,415 10,162 9,205
Provision for doubtful notes and
accounts receivable (339) (879) 357 353
Capitalised interest on
pre-delivery payments (153) (338) (313) (709)
Gain on disposal of assets (9,029) 570 (29,252) 1,018
Mark-to-market of non-hedged
derivatives 19,497 (18,502) 41,836 (19,504)
Deferred taxes 3,520 (102) 8,285 1,139
Share-based compensation 678 996 1,557 1,998
Changes in assets and
liabilities
Trade receivables and notes
receivable, net 4,501 1,244 6,151 5,528
Inventories 3,463 (17,205) 8,876 (2,721)
Other assets and derivative
assets (15,274) (6,543) (7,636) (10,730)
Other liabilities 748 (10,563) (13,552) (36,762)
Deferred revenue (749) (3,328) 11,997 1,884
Net cash provided by operating
activities 167,780 83,955 305,356 181,135
Purchase of flight equipment (691,633) (286,726) (1,321,362) (574,814)
Proceeds from sale/disposal of
assets 283,137 76,560 425,763 78,352
Prepayments on flight equipment (36,253) (127,857) (84,780) (286,361)
Purchase of subsidiaries, net of
cash acquired - - 70,618 -
Purchase of investments (7,500) - (7,500) -
Purchase of intangibles - - (9,006) -
Movement in restricted cash (31,977) 16,770 (74,260) (14,787)
Net cash used in investing
activities (484,226) (321,253) (1,000,527) (797,610)
Issuance of debt 896,904 835,278 1,616,282 1,280,978
Repayment of debt (542,821) (671,944) (885,640) (768,429)
Debt issuance costs paid (25,353) (10,743) (35,284) (14,113)
Maintenance payments received 37,949 25,115 68,533 48,883
Maintenance payments returned (12,800) (11,057) (22,724) (25,609)
Security deposits received 7,533 15,051 16,921 23,065
Security deposits returned (14,564) (4,569) (17,128) (7,530)
Capital contributions from
non-controlling interests 3,375 104,200 32,375 104,200
Net cash provided by financing
activities 350,223 281,331 773,335 641,445
Net increase in cash and cash
equivalents 33,777 44,033 78,164 24,970
Effect of exchange rate changes 571 (691) (525) (110)
Cash and cash equivalents at
beginning of period 225,908 175,081 182,617 193,563
Cash and cash equivalents at end
of period 260,256 218,423 260,256 218,423
Certain reclassifications have been made to prior years consolidated statements of cash flow to reflect the current year presentation.
SOURCE AerCap Holdings N.V.
Released August 5, 2010