AerCap Holdings N.V. Reports Fourth Quarter and Full Year 2010 Financial Results
Margin earned on lease assets (net spread), was $666 million for full year 2010, an increase of 43% over the prior year.
AMSTERDAM, Feb. 24, 2011 /PRNewswire/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the fourth quarter and full year ended December 31, 2010.
Fourth Quarter 2010 Highlights
-- Fourth quarter 2010 basic and diluted earnings per share was $0.53,
compared to earnings per share of $0.51 for the same period in 2009.
Fourth quarter 2010 basic and diluted earnings per share excluding the
impact of the mark-to-market of interest rate caps and share-based
compensation was $0.41, compared to $0.47 in fourth quarter 2009 on the
same basis.
-- Fourth quarter 2010 net income was $72.4 million, compared to net income
of $43.2 million for the same period in 2009. Fourth quarter 2010 net
income excluding the impact of the mark-to-market of interest rate caps
and share-based compensation was $56.3 million, compared to net income
of $40.3 million in fourth quarter 2009 on the same basis.
-- Margin earned on lease assets (net spread) was $187.2 million in fourth
quarter 2010 compared to $126.4 million in fourth quarter 2009, an
increase of 48%.
-- Basic lease rents for the fourth quarter of 2010 were $245.2 million,
compared to $156.6 million for the same period in 2009, an increase of
57%. Total lease revenue (basic rents, maintenance rents and
end-of-lease compensation) for the fourth quarter of 2010 was $270.8
million, compared to $165.7 million for the same period in 2009, an
increase of 63%.
-- Sales revenue for the fourth quarter 2010 was $121.3 million, compared
to $115.9 million for the same period in 2009, and was generated from
the sale of three aircraft, three engines and parts inventory.
-- Total revenue for the fourth quarter of 2010 was $397.7 million,
compared to $287.6 million for the same period in 2009. The increase was
mainly due to the increase in lease revenue which was primarily driven
by the all-share acquisition of Genesis Lease Limited (the "Genesis
Transaction") which occurred in March 2010 and the deliveries of forward
order aircraft.
-- Total assets were $9.6 billion at December 31, 2010, an increase of 42%
over total assets of $6.8 billion at December 31, 2009. The Genesis
Transaction accounted for $1.5 billion of the increase in total assets.
The remaining $1.3 billion increase was driven primarily by deliveries
of forward order aircraft.
Full Year 2010 Key Financial Highlights
-- Full year 2010 net income was $207.6 million, compared to $165.2 million
for the full year 2009. Full year 2010 net income excluding the impact
of the mark-to-market of interest rate caps and share-based compensation
was $223.9 million, an increase of 49% compared to $150.2 million for
the full year 2009. This increase was mainly caused by the Genesis
Transaction and the deliveries of forward order aircraft.
-- Full year 2010 basic and diluted earnings per share was $1.81, compared
to $1.94 for the full year 2009. Full year 2010 basic and diluted
earnings per share excluding the impact of the mark-to-market of
interest rate caps and share-based compensation was $1.95, compared to
$1.77 for the full year 2009.
-- Margin earned on lease assets (net spread) was $665.8 million for the
full year 2010, up 43% compared to the full year 2009.
-- Basic lease rents for the full year 2010 were $878.4 million, up 51%
compared to the full year 2009.
-- Sales revenue for the full year 2010 was $850.0 million, up 162%
compared to the full year 2009 and was generated from the sale of 16
aircraft, 16 engines and parts inventory.
-- Total revenue for the full year 2010 was $1.8 billion, up 83% compared
to the full year 2009 resulting primarily from sales revenue and an
increase in basic lease rents driven by the additional aircraft acquired
in the Genesis Transaction and the deliveries of forward order aircraft.
-- Aviation assets purchased and delivered in 2010 were $2.6 billion.
Klaus Heinemann, CEO of AerCap, commented: "AerCap's full year 2010 key financial highlights establish a new benchmark for the three P's that define a successful aircraft lessor. First, the Platform: AerCap's Operating Platform, managing global airline, manufacturer and investor relationships, is now among the three leading franchises and the largest independent franchise measured by aircraft asset value. Second, the Portfolio: AerCap's Aircraft Asset Portfolio consists primarily of the youngest, most fuel-efficient aircraft currently in production. The success of this Portfolio is best highlighted by its 2010 net spread of $666 million. Third, the Profitability: AerCap's 2010 Profit of $224 million after adjustments sets a new record in AerCap's history. Our earnings per share of $1.95 after adjustments highlights our ability to effectively integrate transactions such as the Genesis amalgamation and the Waha transaction without dilutive effects for existing shareholders, even in the year of completion."
AerCap's CFO, Keith Helming, added: "2010 represents an outstanding year for AerCap marked by several noteworthy financial achievements. The Company had a 83% rise in total revenue compared to 2009 driven by strong sales. Our net spread and net income rose by 43% and 26%, respectively, for the full year 2010, both representing historic highs for the Company. Our lease assets grew 54% during 2010, driven by the Genesis Transaction and forward order aircraft deliveries. In addition, our growth commitments continue to be well supported by our financing partners, as we entered into debt facility agreements totaling $1.6 billion in 2010. Finally, we ended fiscal year 2010 with $627 million of cash, which when combined with the financing commitments positions AerCap to benefit further from the recovery of the global aviation sector."
Summary of Financial Results
AerCap recorded fourth quarter 2010 net income of $72.4 million or $0.53 earnings per basic and diluted share. Fourth quarter 2010 net income included net income relating to mark-to-market of interest rate caps and share-based compensation of $16.1 million or $0.12 per basic and diluted share, net of tax. The after-tax gain relating to the mark-to-market of our interest rate caps was $17.5 million and the after-tax charge from share-based compensation was $1.4 million.
Detailed Financial Data
($ in Millions)
Operating results:
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2010 2009 (decrease) 2010 2009 (decrease)
Revenues $ 397.7 $ 287.6 38% $ 1,834.5 $ 1,003.3 83%
Net income 72.4 43.2 68% 207.6 165.2 26%
Net income
excluding the
impact of
mark-to-market
of interest
rate caps and
share-based
compensation 56.3 40.3 40% 223.9 150.2 49%
Total revenue in the fourth quarter of 2010 increased 38% compared to the fourth quarter of 2009. This increase resulted primarily from an increase in 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 mark-to-market of interest rate caps and share-based compensation increased by 40%.
Revenuebreakdown:
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2010 2009 (decrease) 2010 2009 (decrease)
Lease
revenue:
Basic lease
rents $ 245.2 $ 156.6 57% $ 878.4 $ 581.9 51%
Maintenance
rents 25.6 9.1 181% 82.4 59.0 40%
End-of-lease
compensation
and other
receipts - - 0% - 9.7 (100%)
Lease revenue $ 270.8 $ 165.7 63% $ 960.8 $ 650.6 48%
Sales revenue 121.3 115.9 5% 850.0 324.8 162%
Management
fees and
interest
income 4.4 5.2 (15%) 16.2 22.2 (27%)
Other revenue 1.2 0.8 50% 7.5 5.7 32%
Total revenue $ 397.7 $ 287.6 38% $ 1,834.5 $ 1,003.3 83%
Basic lease rents were $245.2 million for the fourth quarter of 2010, an increase of 57% compared to the fourth quarter of 2009, as a result of our growing asset base. Our average lease assets increased by 61% to $8.1 billion compared to the fourth quarter of 2009. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $58.0 million in the fourth quarter of 2010, an increase of $27.8 million over the same period in 2009. The increase was primarily driven by the Genesis Transaction ($9.6 million) and the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 48% to $187.2 million in the fourth quarter of 2010 over the same period in 2009.
Three months ended Twelve months ended
December 31, December 31,
% %
increase/ increase/
2010 2009 (decrease) 2010 2009 (decrease)
Basic lease $ $ $ $
rents 245.2 156.6 57% 878.4 581.9 51%
Interest on $ $ $
debt 38.2 23.8 61% 240.3 (a) $ 92.2 161%
Plus:
mark-to-market
of interest
rate caps 19.8 6.4 209% (27.7) 23.7 (217%)
Interest on
debt excluding
the impact of
mark-to-market
of interest $ $ $ $
rate caps 58.0 30.2 92% 212.6 115.9 83%
$ $ $ $
Net Spread 187.2 126.4 48% (b) 665.8 466.0 43% (b)
a) Interest on debt for the year ended December 31, 2010, includes $26.4
million of amortization of debt issuance cost.
b) The increase in net spread is lower than the increase in basic lease rents
as a result of the delivery of new forward order aircraft and the Genesis
Transaction. For new aircraft, the net spread is lower at the start of the
lease because of higher interest expenses resulting from a higher loan to
value. For the aircraft acquired through the Genesis Transaction, the net
spread is lower as a result of high fixed rate swaps.
Effective tax rate
AerCap's blended effective tax rate during the twelve month period ended December 31, 2010 was 8.6% (charge), consisting of 8.9% (charge) for AerCap's aircraft business and 34.2% (credit) for AerCap's engine and parts business. The blended effective tax rate in 2009 was 1.9% (charge). The blended effective tax rate in any year is impacted by the source and the amount of earnings among AerCap's different tax jurisdictions. The increase in the 2010 blended tax rate as compared to 2009 is the result of having a larger earnings increase in higher tax rate jurisdictions.
Financial position:
% Increase over
December 31, December 31, December 31,
2010 2009 2009
Total cash (incl. restricted) $ 626.9 $ 323.4 94%
Flight equipment held for lease 8,061.3 5,230.4 54%
Total assets 9,600.6 6,769.5 42%
Debt 6,566.2 4,846.7 35%
Total liabilities 7,383.2 5,356.2 38%
Total equity 2,217.4 1,413.3 57%
As of December 31, 2010, AerCap's portfolio consisted of 350 aircraft and 96 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 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 mark-to-market of interest rate caps and share-based compensation to net income for the three month and twelve month periods ended December 31, 2010 and 2009:
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2010 2009 (decrease) 2010 2009 (decrease)
Net income $ 72.4 $ 43.2 68% $ 207.6 $ 165.2 26%
Plus:
mark-to-market of
interest rate caps,
net of tax (17.5) (3.7) 373% 13.5 (18.2) (174%)
share-based
compensation, net
of tax 1.4 0.8 75% 2.8 3.2 (13%)
Net income
excluding the
impact of
mark-to-market of
interest rate caps
and share-based
compensation $ 56.3 $ 40.3 40% $ 223.9 $ 150.2 49%
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 (refer to third 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 rents for the three month and twelve month periods ended December 31, 2010 and 2009 is included above.
Conference Call
In connection with the earnings release, management will host an earnings conference call today, Thursday, February 24, 2010 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 1-866-239-0753 or (International) +31-20-713-2998 and referencing code 7638745 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, Thursday, February 24, 2011, 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/Q410
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, the United Arab Emirates, 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.
Financial Statements Follow
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
December 31, 2010 December 31, 2009
Assets
Cash and cash equivalents $ 404,450 $ 182,617
Restricted cash 222,464 140,746
Trade receivables, net of provisions 49,055 48,070
Flight equipment held for operating
leases, net 8,061,260 5,230,437
Net investment in direct finance leases 30,069 34,532
Notes receivables, net of provisions 15,497 138,488
Prepayments on flight equipment 199,417 527,666
Investments 72,985 21,031
Goodwill 6,776 6,776
Intangibles, net 58,637 31,399
Inventory 121,085 102,538
Derivative assets 55,211 44,866
Deferred income taxes 94,560 80,098
Other assets 209,141 180,237
Total Assets $ 9,600,607 $ 6,769,501
Liabilities and Equity
Accounts payable $ 16,045 $ 11,832
Accrued expenses and other liabilities 121,389 80,399
Accrued maintenance liability 420,824 228,006
Lessee deposit liability 130,031 126,093
Debt 6,566,163 * 4,846,664
Accrual for onerous contracts 12,928 22,363
Deferred revenue 60,061 33,011
Derivative liabilities 55,769 7,801
Total liabilities 7,383,210 5,356,169
Share capital 1,570 699
Additional paid-in capital 1,333,025 593,133
Accumulated other comprehensive income 5,005 -
Retained earnings 871,750 664,177
Total AerCap Holdings N.V.
shareholders' equity 2,211,350 1,258,009
Non-controlling interest 6,047 155,323
Total Equity 2,217,397 1,413,332
Total Liabilities and Equity $ 9,600,607 $ 6,769,501
* Includes $87.6 million of subordinated debt received from our joint venture
partners
Supplemental information December 31, 2010 December 31, 2009
Debt/equity ratio 3.0 3.4
Debt/equity ratio (adjusted for
subordinated debt) 2.8 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 Twelve months ended
December 31, December 31,
2010 2009 2010 2009
Revenues
Lease revenue $ 270,798 $ 165,672 $ 960,811 $ 650,604
Sales revenue 121,255 115,878 850,034 324,781
Interest revenue 652 2,449 4,269 10,105
Management fee revenue 3,746 2,780 11,815 12,074
Other revenue 1,213 781 7,532 5,703
Total Revenues 397,664 287,560 1,834,461 1,003,267
Expenses
Depreciation 93,833 60,843 333,753 220,996
Asset impairment 8,955 11,242 14,437 32,574
Cost of goods sold 113,447 69,604 785,322 248,897
Interest on debt 38,183 23,833 240,258 92,152
Operating lease in costs 3,061 3,235 12,332 13,090
Leasing expenses 24,364 13,279 68,102 65,164
Provision for doubtful notes
and accounts receivable 137 555 1,167 963
Selling, general and
administrative expenses 33,740 33,405 120,228 116,201
Other expenses - 1,065 - 2,965
Total Expenses 315,720 217,061 1,575,599 793,002
Income from continuing
operations before income
taxes 81,944 70,499 258,862 210,265
Provision for income taxes (6,424) (423) (22,316) (3,894)
Amalgamation gain, net of
transaction expenses and tax - - 274 -
Net income 75,520 70,076 236,820 206,371
Net income attributable to
non-controlling interest (3,079) (26,912) (29,247) (41,205)
Net Income attributable to
AerCap Holdings N.V. $ 72,441 $ 43,164 $ 207,573 $ 165,166
Basic and diluted earnings
per share $ 0.53 $ 0.51 $ 1.81 $ 1.94
Weighted average shares
outstanding - basic and
diluted 136,000,708 85,036,957 114,952,639 85,036,957
AerCap Holdings N.V.
Consolidated Statements of Cash Flows
(In thousands of U.S. Dollars)
Three months Three months Twelve months Twelve months
ended ended ended ended
December 31, December 31, December 31, December 31,
2010 2009 2010 2009
Net income 75,520 70,076 236,820 206,371
Adjustments to
reconcile net
income to net
cash provided by
operating
activities
Depreciation 93,835 60,843 333,754 220,996
Asset impairment 8,955 11,242 14,437 32,574
Amortisation of
debt issuance
cost 6,733 4,575 26,410 16,364
Amortisation of
intangibles 5,978 3,202 22,070 15,701
Provision for
doubtful notes
and accounts
receivable 392 424 1,312 1,364
Capitalised
interest on
pre-delivery
payments (122) (172) (590) (1,106)
Gain on disposal
of assets (1,153) (37,046) (37,203) (36,007)
Change in fair
value of
derivative
instruments (35,136) (3,287) 769 (18,929)
Deferred taxes 5,465 365 19,757 2,228
Share-based
compensation 1,746 1,000 3,402 3,910
Changes in assets
and liabilities -
Trade receivables
and notes
receivable, net 2,937 (836) (371) (6,686)
Inventories (8,578) 2,092 3,183 35,238
Other assets and
derivative assets (2,804) 7,285 (8,320) (7,236)
Other liabilities 12,680 (7,251) (14,170) (63,968)
Deferred revenue (6,872) (171) 14,182 (1,613)
Net cash provided
by operating
activities 159,576 112,341 615,442 399,201
Purchase of
flight equipment (150,912) (416,415) (1,939,874) (1,264,446)
Proceeds from
sale/disposal of
assets 70,593 73,238 664,218 153,481
Prepayments on
flight equipment (29,335) (50,251) (140,094) (453,305)
Purchase of
subsidiaries, net
of cash acquired - - 70,618 -
Purchase of
investments - - (7,500) -
Purchase of
intangibles - - (9,006) -
Movement in
restricted cash 11,490 (19,679) (50,262) (27,349)
Net cash used in
investing
activities (98,164) (413,107) (1,411,900) (1,591,619)
Issuance of debt 212,201 588,397 2,324,609 2,431,839
Repayment of debt (272,245) (332,878) (1,485,690) (1,414,456)
Debt issuance
costs paid (12,796) (12,398) (60,889) (32,723)
Maintenance
payments received 42,845 25,235 149,408 99,664
Maintenance
payments returned (13,683) (8,529) (42,250) (46,897)
Security deposits
received 4,643 15,806 29,535 42,169
Security deposits
returned (14,395) (2,215) (39,710) (12,840)
Issuance of
equity interests* 110,243 - 110,243 -
Capital
contributions
from
non-controlling
interests - 7,500 32,375 111,700
Net cash provided
by financing
activities 56,813 280,918 1,017,631 1,178,456
Net increase
(decrease) in
cash and cash
equivalents 118,225 (19,848) 221,173 (13,962)
Effect of
exchange rate
changes 462 (912) 660 3,016
Cash and cash
equivalents at
beginning of
period 285,763 203,377 182,617 193,563
Cash and cash
equivalents at
end of period 404,450 182,617 404,450 182,617
Three months Three months Twelve months Twelve months
ended ended ended ended
December 31, December 31, December 31, December 31,
*The issuance of
equity interest
is a net
presentation of
the following
items: 2010 2009 2010 2009
Consideration
paid (29.8
million shares
issued at a share
price of $13.85) 413,376 - 413,376 -
Purchase of
non-controlling
interests (262,092) - (262,092) -
Purchase of
investments (41,041) - (41,041) -
Issuance of
equity interests
(net cash
received) 110,243 - 110,243 -
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
SOURCE AerCap Holdings N.V.
Released February 24, 2011