AerCap Holdings N.V. Reports Second Quarter 2007 Financial Results
AMSTERDAM, Netherlands, Aug. 7 /PRNewswire-FirstCall/ -- Highlights -- Second quarter 2007 net income excluding non-recurring charges to interest expense from refinancing of securitized bonds was $58.2 million and excludes a non-recurring charge to interest expense of $24.0 million, net of tax, in connection with the refinancing of Aircraft Lease Securitization (ALS) bonds. Second quarter 2007 net income was $34.2 million including this charge. -- Second quarter 2007 basic and diluted earnings per share excluding non- recurring charges to interest expense from refinancing of securitized bonds were $0.68 and excludes a non-recurring charge to interest expense of $0.28 per basic and diluted share in connection with the refinancing of ALS bonds. Second quarter 2007 basic and diluted earnings per share were $0.40 including this charge. -- Second quarter 2007 revenue was $246.6 million, up 51% over second quarter 2006. -- Sales revenue in the second quarter 2007 totaled $84.3 million and was generated from the sale of three aircraft, six engines and the sale of parts inventory. -- Total assets were $4.4 billion at June 30, 2007, a 23% increase over total assets of $3.6 billion at June 30, 2006. -- Committed purchases of aviation assets scheduled for delivery in 2007 are $798.7 million thus far, of which $458.6 million were delivered in the first half of 2007. -- On August 6, 2007 we closed a secondary offering of 20 million of our shares, increasing the percentage of our shares held by public investors from 31% to 54% and to 58% assuming the underwriters exercise their overallotment option. Significant events during second quarter 2007 previously disclosed: -- We closed a refinancing of debt on 70 aircraft on May 8, 2007 through the issuance of $1.66 billion of securitized bonds. -- We signed an agreement for the purchase of an additional 10 new A330- 200 aircraft with Airbus on May 14, 2007.
Summary of Financial Results
AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) announced the results of its operations for the quarter ended June 30, 2007. The Company recorded net income excluding non-recurring charges to interest expense from the refinancing of securitized bonds of $58.2 million or $0.68 per basic and diluted share which excludes a non-recurring charge to interest expense of $24.0 million or $0.28 per basic and diluted share in connection with the refinancing of ALS bonds. This represents an increase of 66% over the comparable figure for the second quarter 2006. The Company recorded net income for the second quarter 2007 of $34.2 million, or $0.40 per basic and diluted common share. This represents a 2% decrease from the comparable figure for the second quarter 2006. Klaus Heinemann, CEO of AerCap, commented, "In addition to our strong second quarter 2007 operating and net income performance, the increase of our A330 forward order from 20 to 30 aircraft and the completion of our secondary offering in August 2007 are significant transactions that are favorable to long-term shareholder value. AerCap's success in maintaining a high utilization rate of our existing leased assets and our significant order book of new aircraft, many of which are already under lease commitments, is expected to contribute to our current and future operating performance." AerCap's CFO, Keith Helming, added, "The refinancing of our securitization debt provides cost-effective and secure long-term financing for a majority of aircraft in our current owned fleet. This refinancing, combined with our success at re-balancing our fleet of leased assets through opportunistic aircraft trades and committed future growth through our forward order contracts, is expected to have a positive impact on future operating performance."
Detailed Financial Data ($ in Millions) Operating results: Three months ended Six months ended June 30, June 30, %increase/ %increase/ 2007 2006 (decrease) 2007 2006 (decrease) Revenues $246.6 $163.3 51% $556.1 $302.4 84% Net income 34.2 34.9 -2% 94.7 70.4 35% Revenue breakdown Three months ended Six months ended June 30, June 30, %increase/ %increase/ 2007 2006 (decrease) 2007 2006 (decrease) Lease revenue $140.7 $112.2 25% $280.4 $200.2 40% Sales revenue 84.3 38.8 117% 233.2 72.0 224% Management fees, interest income and other revenue 21.6 12.3 76% 42.5 30.2 41% Total revenue $246.6 $163.3 51% $556.1 $302.4 84%
Effective tax rate
The effective tax rate for our aircraft business was 11.8% and was 34.8% for our engine and parts business, resulting in an overall consolidated effective tax rate of 14.1% during the second quarter 2007.
Financial position %Increase over June 30, June 30, June 30, 2007 2006 2006 Flight equipment held for lease $3,030.2 $2,555.0 19% Total assets 4,411.3 3,577.8 23% Total liabilities 3,521.9 3,054.2 15% Total equity 856.0 491.5 74%
As of June 30, 2007, our portfolio consisted of 346 aircraft and 64 engines that were either owned, on order, under contract or letter of intent, or managed. The number of aircraft and engines in our portfolio increased 9.6% since June 30, 2006 (324 aircraft and 50 engines).
Secondary Offering of 20 million shares
In the third quarter of 2007, we registered 20 million of our existing shares with the Securities and Exchange Commission effective July 31, 2007 which were subsequently sold by companies controlled by funds and accounts affiliated with Cerberus in a secondary offering that closed on August 6, 2007. The registration increased the percentage of our shares held by public shareholders from 31% to 54% and to 58% assuming the underwriters exercise their overallotment option. Proceeds from the sale of the registered shares were received by Cerberus-affiliated companies, members of our senior management and board of directors and an employee of Cerberus. We did not receive any of the proceeds of the offering.
ALS Securitization Refinancing (as previously disclosed)
On May 8, 2007, ALS, a lease securitization special purpose entity that we consolidate in our financial statements, completed a refinancing through the issuance of $1.66 billion of AAA-rated class G-3 floating rate notes. The proceeds from the issuance of these notes were used to redeem all of the outstanding ALS debt, other than the most junior class of notes, to refinance the indebtedness that had been incurred to purchase 24 previously acquired aircraft, and to finance the purchase of four additional new aircraft, increasing ALS's aircraft portfolio size to 70 aircraft. The class G-3 notes bear an interest rate of one-month LIBOR plus 26 basis points, resulting in annual savings of approximately $16 million. Concurrently with the ALS refinancing, our revolving credit facility was amended and restated, resulting in a reduced interest rate spread and a two-year extension of the revolving period to May 2010. The size of our revolving credit facility remains $1.0 billion. As a result of the ALS refinancing, we reported a non-recurring expense in the second quarter of 2007 of $24.0 million, net of tax for the write-off of unamortized debt issuance costs related to the refinanced debt, costs related to the prepayment of the prior ALS notes and other related fees. The majority of this non-recurring expense was non-cash.
Notes Regarding Financial Information Presented In This Press Release
The financial information presented in this press release is not audited.
The following is a definition of a non-GAAP measure used in this press release and a reconciliation of such measure to the most closely related GAAP measure:
Net income excluding non-recurring charges to interest expense from refinancing of securitized bonds. This measure is determined by adding interest expense charges in connection with the refinancing of securitized bonds, net of related tax benefits, to GAAP net income. We use this measure to evaluate and communicate the results of our operations in periods where significant charges to interest expense from such refinancings have been recognized. These charges in the second quarter 2007 were recognized in connection with our refinancing of ALS securitized bonds. We do not expect interest expense charges of a similar magnitude to occur in comparable periods in the future. We believe this measure provides investors with a more meaningful view on our operational performance and allows investors to better understand our operational performance in relation to past and future reporting periods. Following is a reconciliation of net income excluding non- recurring charges to interest expense from refinancing of securitized bonds to net income:
($s in Millions) Three months ended June 30, June 30, 2007 2006 Net income $34.2 $34.9 Plus: Non-recurring charges to interest expense from refinancing of securitized bonds, net of tax 24.0 - Net income excluding non-recurring charges to interest expense from refinancing of securitized bonds $58.2 $34.9
Earnings per share excluding non-recurring charges to interest expense from the refinancing of securitized bonds are determined by dividing the amount of net income excluding non-recurring charges to interest expense from the refinancing of securitized bonds by the average number of shares outstanding for that period. The average number of shares is based on a daily average.
In connection with the earnings release, management will host an earnings conference call on Tuesday, August 7, 2007 at 9:30 A.M. eastern time. All interested parties are welcome to participate on the live call. The conference call can be accessed by dialing (US investors) 800 257-6607 or (International investors) 001 303 262-2125; there is no passcode.
A webcast of the conference call will be available at http://www.aercap.com. For those who are not able to listen to the live call a replay will be available through August 14, 2007 and can be accessed by dialing toll-free (US) (800) 405-2236 or (international) 001 303 590-3000, pass code 11094107. The webcast replay will be archived in the "Investor Relations" section of the company's website for one year.
About AerCap Holdings N.V.
AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. AerCap also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations. AerCap has a fleet of over 340 aircraft owned, managed or under contracted orders and a diversified commercial engine portfolio. AerCap is headquartered in The Netherlands and has offices in Ireland, the United States, China and the United Kingdom.
Forward Looking Statements
Certain items in this press release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, but not necessarily limited to, statements relating to future operations. Words such as "expect(s)" and similar expressions are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of factors that could lead to actual results materially different from those described in the forward-looking statements. AerCap's expectations may not be attained. There are important factors that could cause actual results, level of activity, performance or achievements to differ from the results, level of activity, performance or achievements expressed or implied in the forward-looking statements. In light of these risks, uncertainties and assumptions, the future performance or events described in the forward-looking statements in this press release may not occur. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. Such forward-looking statements speak only as of the date of this press release. AerCap expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or change in events, conditions or circumstances on which any statement is based.
For more information regarding AerCap and to be added to our email distribution list, please visit http://www.aercap.com.
For Investors: Keith Helming Chief Financial Officer +31 20 655 9670 firstname.lastname@example.org Peter Wortel Investor Relations +31 20 655 9658 email@example.com For Media: Frauke Oberdieck Corporate Communications +31 20 655 9616 firstname.lastname@example.org Financial Statements Follow AerCap Holdings N.V. Consolidated Balance Sheets - Unaudited (In thousands of U.S. Dollars) December 31, June 30, 2006 June 30, 2007 (adjusted) 2006 Assets Cash and cash equivalents $250,124 $131,201 $237,388 Restricted cash 178,116 112,277 117,420 Trade receivables, net of provisions 29,470 25,058 28,402 Flight equipment held for operating leases, net 3,030,170 2,966,779 2,554,974 Flight equipment held for sale 157,981 - - Notes receivables, net of provisions 173,207 167,451 176,980 Prepayments on flight equipment 186,179 166,630 113,074 Investments 16,091 18,001 2,999 Goodwill 6,776 6,776 37,225 Intangibles, net 46,100 34,229 33,412 Inventory 83,064 82,811 54,651 Derivative assets 20,355 17,871 30,680 Deferred income taxes 92,132 96,521 104,560 Other assets 141,522 92,432 86,015 Total Assets $4,411,287 $3,918,037 $3,577,780 Liabilities and Shareholders' equity Accounts payable $9,453 $6,958 $6,497 Accrued expenses and other liabilities 70,914 92,466 70,906 Accrued maintenance liability 282,474 259,739 167,868 Lessee deposit liability 78,747 77,686 69,023 Debt 2,977,654 2,555,139 2,542,636 Accrual for onerous contracts 68,376 111,333 121,442 Deferred revenue 31,460 28,391 25,946 Derivative liabilities - - 1,500 Deferred income taxes 2,843 3,383 48,366 Total liabilities 3,521,921 3,135,095 3,054,184 Minority interest 33,333 31,938 32,057 Share capital 699 699 646 Additional paid-in capital 601,850 591,553 370,761 Retained earnings 253,484 158,752 120,132 Total shareholders' equity 856,033 751,004 491,539 Total Liabilities and Shareholders' equity $4,411,287 $3,918,037 $3,577,780 * Adjusted for our adoption of FSP No. AUG AIR-1 "Accounting for Planned Major Maintenance Activities" on January 1, 2007. 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, 2007(A) 2006(A) 2007(A) 2006(A) Revenues Lease revenue $140,677 $112,216 $280,380 $200,157 Sales revenue 84,281 38,788 233,166 72,003 Interest revenue 8,178 8,992 15,450 17,926 Management fee revenue 4,323 3,386 7,348 7,067 Other revenue 9,157 (46) 19,744 5,276 Total Revenues 246,616 163,336 556,088 302,429 Expenses Depreciation 37,223 26,979 71,155 51,303 Cost of goods sold 58,579 29,224 176,582 49,726 Interest on term debt 68,362 31,421 118,846 59,624 Operating lease in costs 4,623 6,271 10,860 12,627 Leasing expenses 9,703 7,077 13,735 11,605 Provision for doubtful notes and accounts receivable 263 1,894 122 596 Selling, general and administrative expenses 27,642 19,101 54,227 30,234 Total Expenses 206,395 121,967 445,527 215,715 Income from continuing operations before income taxes and minority interest 40,221 41,369 110,561 86,714 Provision for income taxes (5,657) (6,606) (15,683) (17,036) Net income before minority interest 34,564 34,763 94,878 69,678 Minority interest, net of taxes (398) 93 (146) 693 Net Income $34,166 $34,856 $94,732 $70,371 Basic and diluted earnings per share $0.40 $0.45 $1.11 $0.90 Weighted average shares outstanding - basic and diluted 85,036,957 78,236,957 85,036,957 78,236,957 (A) - Includes the results of operations of AeroTurbine from the date of our acquisition - April 26, 2006. 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, 2007(A) 2006(A) 2007(A) 2006(A) Net income 34,166 34,856 94,732 70,371 Adjustments to reconcile net income to net cash provided by operating activities Minority interest 398 (93) 146 (693) Depreciation 37,223 27,164 71,155 51,488 Amortisation of debt issuance cost 29,851 1,874 31,559 3,695 Amortisation of intangibles 2,979 3,800 4,923 7,081 Gain on elimination of fair value guarantee - - (10,736) - Provision for doubtful notes and accounts receivable 263 1,894 122 596 Capitalised interest on pre- delivery payments (1,422) (1,271) (2,986) (2,638) Gain on disposal of assets (18,523) (8,709) (43,484) (21,422) Change in fair value of derivative instruments (1,591) (11,595) (2,484) (18,847) Deferred taxes 2,640 6,728 12,656 16,824 Share-based compensation 2,328 1,935 4,774 1,935 Changes in assets and liabilities Trade receivables and notes receivable, net (4,138) (9,103) (10,290) 16,777 Inventories (22,705) (2,009) (11,926) (2,009) Other assets (12,020) (27) (19,518) (1,040) Accounts payable and accrued expenses, including accrued maintenance liability, lessee deposits 24,969 5,510 (26,216) (18,823) Deferred revenue 2,395 330 3,069 2,033 Net cash provided by operating activities 76,813 51,284 95,496 105,328 Purchase of flight equipment (165,592) (148,076) (389,177) (256,326) Proceeds from sale/disposal of assets 58,277 26,571 185,182 59,786 Prepayments on flight equipment (50,552) (6,866) (69,202) (34,866) Purchase of investments - 2,056 - - Purchase of subsidiaries, net of cash acquired - (145,246) - (145,246) Purchase of intangibles - - (16,794) - Movement in restricted cash (78,657) 13,122 (65,839) 40,310 Net cash used in investing activities (236,524) (258,439) (355,830) (336,342) Issuance of debt 1,807,061 327,239 2,053,564 460,296 Repayment of debt (1,497,630) (122,359) (1,633,285) (183,156) Debt issuance costs paid (40,560) (19,657) (42,019) (23,867) Capital contributions from minority interests 1,250 7,750 1,250 32,750 Net cash provided by financing activities 270,121 192,973 379,510 286,023 Net increase (decrease) in cash and cash equivalents 110,410 (14,182) 119,176 55,009 Effect of exchange rate changes (389) (946) (253) (1,175) Cash and cash equivalents at beginning of period 140,103 252,516 131,201 183,554 Cash and cash equivalents at end of period 250,124 237,388 250,124 237,388 (A) - Includes the cash flows of AeroTurbine from the date of our acquisition - April 26, 2006.
SOURCE AerCap Holdings N.V.
Released August 7, 2007