AerCap Holdings N.V. Reports Second Quarter 2008 Financial Results
Second Quarter 2008 Highlights
-- Second quarter 2008 net income was
-- Second quarter 2008 basic and diluted earnings per share were
-- Net spread, 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, was
-- Sales revenue for the second quarter 2008 was
-- Total revenue for the second quarter 2008 was
-- Total assets were
-- Committed purchases of aviation assets delivered or scheduled for delivery in 2008 are
-- AerCap acquired a 19-aircraft portfolio from TUI Travel in a joint venture with Deucalion Aviation Funds. This portfolio contains eleven Next Generation Boeing 737-800s, six Boeing B757-200s and two Boeing B767-300ERs. The portfolio was financed through a
-- AerCap closed a
-- In addition to the debt related to the TUI Travel acquisition and the securitization debt on ALS II, AerCap closed a
AerCap's CFO,
Summary of Financial Results
AerCap recorded second quarter 2008 net income of
Detailed Financial Data
($ in Millions)
Operating results
Three months ended Six months ended
June 30, June 30,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Revenues $ 333.4 $ 246.6 35% $ 627.9 $ 556.1 13%
Net income 68.6 34.2 101% 119.5 94.7 26%
Total revenue in second quarter 2008 increased 35% compared with second quarter 2007. This increase was largely driven by a higher amount of sales revenue in the second quarter 2008.
Revenue breakdown
Three months ended Six months ended
June 30, June 30,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Lease Revenue
Basic rents $ 126.6 $ 124.5 2% $ 253.1 $ 243.1 4%
Maintenance
rents 13.8 8.6 60% 23.0 20.5 12%
End-of-lease
compensation 4.0 7.6 -47% 12.1 16.8 -28%
Lease revenue $ 144.4 $ 140.7 3% $ 288.2 $ 280.4 3%
Sales revenue 180.7 84.3 114% 323.2 233.2 39%
Management fees
and interest
income 7.9 12.5 -37% 15.9 22.8 -30%
Other revenue 0.4 9.1 -96% 0.6 19.7 -97%
Total revenue $ 333.4 $ 246.6 35% $ 627.9 $ 556.1 13%
Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. This increase is partially offset by the impact from decreasing interest rates on floating rate lease rentals between the periods. However, the decrease in basic rents on floating rate leases is completely offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the second quarter 2008 increased 2% compared to second quarter 2007 to
Three months ended Six months ended
June 30, June 30,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Basic rents $ 126.6 $ 124.5 2% $ 253.1 $ 243.1 4%
Interest on debt $ 19.6 $68.4 -71% $ 69.2 $ 118.8 -42%
Plus:
mark-to-market
of interest rate
caps 13.9 8.6 62% 5.3 4.0 33%
Less: Non-recurring
charges to interest
expense from
refinancing of
securitized bonds - (27.4) -100% - (27.4) -100%
Interest on debt
excluding the
impact of
mark-to-market of
interest rate caps
and non-recurring
charges to interest
expense from refinancing
of securitized
bonds $ 33.5 $ 49.6 -32% $ 74.5 $ 95.4 -22%
Net spread $ 93.1 $ 74.9 24% $ 178.6 $ 147.7 21%
Effective tax rate
AerCap's effective tax rate during the first half year of 2008 was 8.7%,
consisting of 7.6% for AerCap's aircraft business and 27.5% for AerCap's
engine and parts business. The effective tax rate in 2007 was 11.8%.
Financial position
% Increase
over
June 30, 2008 June 30, 2007 June 30, 2007
Flight equipment held
for lease $3,765.4 $3,030.2 24%
Total assets 5,217.7 4,411.3 18%
Total liabilities 4,111.9 3,521.9 17%
Total equity 1,073.3 856.0 25%
As of
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 the Company 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 month and six month periods ended
Three months ended Six months ended
June 30, June 30,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Net income $68.6 $34.2 * 101% $ 119.5 $94.7 * 26%
Plus:
mark-to-market
of interest
rate caps,
net of tax (11.9) (7.5) 59% (4.3) (3.5) 23%
share-based
compensation,
net of tax 1.5 2.0 -25% 2.9 4.2 -31%
Net income
excluding the
impact of
mark-to-market
of interest rate
caps and
share-based
compensation $58.2 $28.7 103% $ 118.1 $95.4 24%
*- Includes a charge to interest expense from refinancing of securitized
bonds of $24.0 million, net of tax.
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 for hedging purposes. The reconciliation of net spread to basic rents for the three months and six month periods ended
Conference Call
In connection with the earnings release, management will host an earnings conference call today,
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
In addition, a New York Group Lunch Presentation for investors and analysts will be hosted by senior management today,
To participate in either event, please register at: www.sharedvalue.net/aercap/q208results
For further information, contact
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 is headquartered in
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.
Financial Statements Follow
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
June 30, December 31, June 30,
2008 2007 2007
Assets
Cash and cash equivalents $175,870 $241,736 $250,124
Restricted cash 183,808 95,072 178,116
Trade receivables, net of
provisions 40,642 35,591 29,470
Flight equipment held for
operating leases, net 3,765,378 3,050,160 3,030,170
Flight equipment held for sale 48,390 136,135 157,981
Notes receivables, net of
provisions 199,485 184,820 173,207
Prepayments on flight equipment 328,172 247,839 186,179
Investments 11,678 11,678 16,091
Goodwill 6,776 6,776 6,776
Intangibles, net 54,788 41,855 46,100
Inventory 88,627 90,726 83,064
Derivative assets 59,677 21,763 20,355
Deferred income taxes 78,617 85,253 92,132
Other assets 175,818 144,823 141,522
Total Assets $5,217,726 $4,394,227 $4,411,287
Liabilities and Shareholders' equity
Accounts payable $7,023 $16,376 $9,453
Accrued expenses and other
liabilities 107,865 81,379 70,914
Accrued maintenance liability 248,517 255,535 282,474
Lessee deposit liability 89,566 83,628 78,747
Debt* 3,580,002 2,892,744 2,977,654
Accrual for onerous contracts 28,472 46,411 68,376
Deferred revenue 40,042 33,574 31,460
Derivative liabilities 2,584 - -
Deferred income taxes 7,779 3,425 2,843
Total liabilities 4,111,850 3,413,072 3,521,921
Minority interest 32,610 30,782 33,333
Share capital 699 699 699
Additional paid-in capital 605,889 602,469 601,850
Retained earnings 466,678 347,205 253,484
Total shareholders' equity 1,073,266 950,373 856,033
Total Liabilities and
Shareholders' equity $5,217,726 $4,394,227 $4,411,287
* Includes $62.8 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 Six months ended
June 30, June 30,
2008 2007 2008 2007
Revenues
Lease revenue $144,346 $140,677 $288,202 $280,380
Sales revenue 180,725 84,281 323,188 233,166
Interest revenue 5,165 8,178 10,042 15,450
Management fee revenue 2,731 4,323 5,905 7,348
Other revenue 386 9,157 549 19,744
Total Revenues 333,353 246,616 627,886 556,088
Expenses
Depreciation 39,527 37,223 78,002 71,155
Asset impairment 7,689 - 7,689 -
Cost of goods sold 140,847 58,579 250,866 176,582
Interest on debt 19,628 68,362 69,224 118,846
Operating lease in costs 3,315 4,623 6,955 10,860
Leasing expenses 11,402 9,703 17,792 13,735
Provision for doubtful
notes and accounts
receivable 699 263 1,247 122
Selling, general and
administrative expenses 32,664 27,642 63,286 54,227
Total Expenses 255,771 206,395 495,061 445,527
Income from continuing
operations before
income taxes and
minority interest 77,582 40,221 132,825 110,561
Provision for income taxes (6,955) (5,657) (11,525) (15,683)
Net income before
minority interest 70,627 34,564 121,300 94,878
Minority interest, net
of taxes (2,031) (398) (1,828) (146)
Net Income $68,596 $34,166 $119,472 $94,732
Basic and diluted
earnings per share $0.81 $0.40 $1.40 $1.11
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 Six months ended
June 30, June 30,
2008 2007 2008 2007
Net income 68,596 34,166 119,472 94,732
Adjustments to reconcile net
income to net cash provided
by operating activities
Minority interest 2,031 398 1,828 146
Depreciation 39,528 37,223 78,002 71,155
Asset impairment 7,689 - 7,689 -
Amortisation of debt
issuance cost 3,365 29,851 6,757 31,559
Amortisation of intangibles 3,535 2,979 7,039 4,923
Gain on elimination of fair
value guarantee - - - (10,736)
Provision for doubtful notes
and accounts receivable 699 263 1,247 122
Capitalised interest on
pre-delivery payments (730) (1,422) (1,399) (2,986)
Gain on disposal of assets (29,858) (18,523) (52,807) (43,484)
Mark-to-market of non-hedged
derivatives (13,943) (1,591) (11,076) (2,484)
Deferred taxes 6,556 2,640 10,990 12,656
Share-based compensation 1,785 2,328 3,421 4,774
Changes in assets and
liabilities
Trade receivables and
notes receivable, net (723) (4,138) (20,963) (10,290)
Inventories 5,802 (22,705) 16,275 (11,926)
Other assets and
derivative assets (23,944) (12,020) (25,490) (19,518)
Accounts payable and
accrued expenses,
including accrued
maintenance liability,
lessee deposits 11,534 24,969 7,813 (26,216)
Deferred revenue 4,378 2,395 6,468 3,069
Net cash provided by
operating activities 86,300 76,813 155,266 95,496
Purchase of flight equipment (642,647) (165,592) (877,551) (389,177)
Proceeds from sale/disposal
of assets 164,405 58,277 247,892 185,182
Prepayments on flight
equipment (59,233) (50,552) (131,678) (69,202)
Purchase of intangibles (12,895) - (21,522) (16,794)
Movement in restricted cash (56,658) (78,657) (88,736) (65,839)
Net cash used in investing
activities (607,028) (236,524) (871,595) (355,830)
Issuance of debt 662,565 1,807,061 940,646 2,053,564
Repayment of debt (127,025) (1,497,630) (253,388) (1,633,285)
Debt issuance costs paid (35,254) (40,560) (35,621) (42,019)
Capital contributions from
minority interests - 1,250 - 1,250
Net cash provided by
financing activities 500,286 270,121 651,637 379,510
Net (decrease) increase in
cash and cash equivalents (20,442) 110,410 (64,692) 119,176
Effect of exchange rate
changes (858) (389) (1,174) (253)
Cash and cash equivalents at
beginning of period 197,170 140,103 241,736 131,201
Cash and cash equivalents at
end of period 175,870 250,124 175,870 250,124
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 August 7, 2008