AerCap Holdings N.V. Reports First Quarter 2008 Financial Results
AMSTERDAM, Netherlands, May 9 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the first quarter ended March 31, 2008.
First Quarter 2008 Highlights
-- First quarter 2008 net income was $50.9 million, compared with $60.6
million for the same period in 2007. First quarter 2008 net income
excluding non-cash charges relating to the mark-to-market of interest
rate caps and share-based compensation was $59.9 million, compared with
$66.7 million in first quarter 2007 on the same basis.
-- The decrease in net income in first quarter 2008 compared with first
quarter 2007 was driven by maintenance, sales, and other revenue which
do not occur evenly throughout all quarters. First quarter 2007 had a
higher amount of these revenues than first quarter 2008.
-- First quarter 2008 basic and diluted earnings per share were $0.60.
First quarter 2008 basic and diluted earnings per share excluding
non-cash charges relating to the mark-to-market of interest rate caps
and share-based compensation were $0.71.
-- Basic lease rents increased 7% in the first quarter 2008 compared to
the first quarter 2007, while interest expense excluding non-cash
charges relating to the mark-to-market of interest rate caps decreased
11%. The difference between basic lease rents and the adjusted
interest expense was $85.6 million in first quarter 2008 compared to
$72.7 million in first quarter 2007, an increase of 18%.
-- Sales revenue for the first quarter 2008 was $142.5 million, compared
to $148.9 million for the same period in 2007, and was generated from
the sale of eight aircraft and the sale of parts inventory. Total
revenue for the first quarter 2008 was $294.5 million, compared to
$309.5 million for the same period in 2007.
-- Total assets were $4.6 billion at March 31, 2008, an increase of 14%
over total assets of $4.0 billion at March 31, 2007.
-- Committed purchases of aviation assets delivered or scheduled for
delivery in 2008 are $1.2 billion, of which $277.1 million closed in
first quarter 2008. Total committed purchases include the purchase of
a 21 used aircraft portfolio which is subject to a signed letter of
intent.
Significant Items Previously Disclosed Occurring Subsequent to Quarter End
-- AerVenture, AerCap's joint venture with LoadAir and AlFawares of
Kuwait, closed a $269.2 million credit facility with HSH Nordbank AG to
finance the pre-delivery payments for 37 new A320 family aircraft under
forward order from Airbus, scheduled for delivery between November 2009
and May 2011. The funding requirements for all remaining pre-delivery
payments of AerVenture have been met with this transaction.
-- AerCap increased its pre-delivery payment funding facility by $68.4
million. This facility was arranged by Citi and is to be used to
finance the pre-delivery payments relating to A330 aircraft under
forward order with Airbus, scheduled for delivery between January and
April 2010.
Klaus Heinemann, CEO of AerCap, commented, "Our first quarter results continue to show the strength of our business model. The focus we have on properly managing the liability side of our business, combined with our contracted orders of state of the art, fuel-efficient aircraft, positions us for strong future earnings growth."
AerCap's CFO, Keith Helming, added, "We are pleased with our first quarter 2008 net income result. The year-over-year increase in basic rents is reflective of the growth of our leasing portfolio. In addition, we continue to realize the benefits of decreasing interest costs through the combination of lower interest rates and the utilization of caps for interest rate hedging."
Summary of Financial Results
AerCap recorded first quarter 2008 net income of $50.9 million or $0.60 per basic and diluted share. Included in the first quarter 2008 net income amount were non-cash charges related to the mark-to-market of interest rate caps and share-based compensation of $9.0 million or $0.11 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $7.6 million and the after-tax charge from share-based compensation was $1.4 million.
Detailed Financial Data
($ in Millions)
Operating results
Three months ended
March 31,
% increase/
2008 2007 (decrease)
Revenue $294.5 $309.5 -5%
Net income (loss) 50.9 60.6 -16%
Total revenue in first quarter 2008 decreased 5% compared with first
quarter 2007. This decrease was largely driven by a lower amount of other
revenue in first quarter 2008. Other revenue in first quarter 2007 included
$10.7 million relating to the elimination of a guarantee liability, which did
not occur in first quarter 2008. The decrease in net income in first quarter
2008 compared to the first quarter 2007 was also driven primarily by the lower
amount of other revenue.
Revenue breakdown
Three months ended
March 31,
% increase/
2008 2007 (decrease)
Lease revenue:
Basic rents $126.5 $118.6 7%
Maintenance rents 9.2 11.9 -23%
End-of-lease compensation 8.2 9.2 -11%
Lease revenue $143.9 $139.7 3%
Sales revenue 142.5 148.9 -4%
Interest revenue 4.9 7.3 -33%
Management fee revenue 3.1 3.0 3%
Other revenue 0.1 10.6 -99%
Total revenue $294.5 $309.5 -5%
As indicated in the table above, the growth in the Company's leased assets and the continued strength of lease rates is reflected in our revenue through the increase in basic rents. Partially offsetting the growth in basic rents are decreases in floating rate lease rentals which result from the decrease in interest rates. This 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 first quarter 2008 increased 7% compared to first quarter 2007 to $126.5 million, interest expense excluding non-cash charges relating to the mark-to-market of interest rate caps decreased 11% compared with first quarter 2007 to $40.9 million, as shown in the table below. The difference in these amounts was $85.6 million in first quarter 2008 compared to $72.7 million in first quarter 2007, an increase of 18%.
Three months ended
March 31,
2008 2007
Basic rents $126.5 $118.6
Interest on debt $49.6 $50.5
Less: Non-cash charges relating to the
mark-to-market of interest rate caps,
net of tax (8.7) (4.6)
Interest on debt excluding non-cash
charges related to the mark-to-market
of interest rate caps $40.9 $45.9
Basic rents net of interest on debt
excluding non-cash charges related to
the mark-to-market of interest rate caps $85.6 $72.7
Effective tax rate
AerCap's effective tax rate during the first quarter 2008 was 8.3%,
consisting of 8.0% for AerCap's aircraft business and 14.2% for AerCap's
engine and parts business. The effective tax rate in first quarter 2007 was
11.8%.
Financial position
%
March 31, March 31, increase/
2008 2007 (decrease)
Flight equipment held for lease $3,279.2 $3,074.5 7%
Total assets 4,594.7 4,026.4 14%
Total liabilities 3,561.2 3,180.7 12%
Total equity 1,002.9 814.0 23%
As of March 31, 2008, AerCap's portfolio consisted of 320 aircraft and 71 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 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-cash charges relating to 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. 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 non- cash charges relating to the mark-to-market of interest rate caps and share- based compensation to net income for the three month periods ended March 31, 2008 and 2007:
Three months ended
March 31,
2008 2007
Net income $50.9 $60.6
Plus: Non-cash charges relating to
the mark-to-market of interest rate
caps, net of tax 7.6 4.0
Non-cash charges related
to share-based compensation,
net of tax 1.4 2.1
Net income excluding non-cash charges
related to the mark-to-market of
interest rate caps and share-based
compensation $59.9 $66.7
Earnings per share excluding non-cash charges related to the mark-to- market of interest rate caps and share-based compensation are determined by dividing the amount of net income excluding such charges by the average number of shares outstanding for that period. The average number of shares is based on a daily average.
Conference Call
In connection with the earnings release, management will host an earnings conference call on Friday, May 9, 2008 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-772-1085 or (International) +1-706-634 5464 and referencing code 44711149 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 to 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 May 9, 2008 and continuing through June 19, 2008. To access the recording, call 800-642-1687 (U.S./Canada) or +1-706-645-9291 (International) and enter passcode 44711149. The 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 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)
March 31, December 31, March 31,
2008 2007 2007
Assets
Cash and cash equivalents $197,170 $241,736 $140,103
Restricted cash 127,150 95,072 99,459
Trade receivables, net of provisions 64,969 35,591 32,458
Flight equipment held for operating
leases, net 3,279,244 3,050,160 3,074,519
Flight equipment held for sale 51,857 136,135 -
Notes receivables, net of provisions 199,037 184,820 166,344
Prepayments on flight equipment 284,368 247,839 150,621
Investments 11,678 11,678 16,091
Goodwill 6,776 6,776 6,776
Intangibles, net 45,427 41,855 49,080
Inventory 83,469 90,726 72,115
Derivative assets 18,896 21,763 18,764
Deferred income taxes 82,392 85,253 87,612
Other assets 142,217 144,823 112,489
Total Assets $4,594,650 $4,394,227 $4,026,431
Liabilities and Shareholders' Equity
Accounts payable $9,246 $16,376 $7,222
Accrued expenses and other
liabilities 87,294 81,379 70,828
Accrued maintenance liability 261,948 255,535 257,829
Lessee deposit liability 89,197 83,628 72,591
Debt 3,044,462 2,892,744 2,665,987
Accrual for onerous contracts 28,378 46,411 72,718
Deferred revenue 35,663 33,574 29,065
Deferred income taxes 4,997 3,425 4,490
Total liabilities 3,561,185 3,413,072 3,180,730
Minority interest 30,579 30,782 31,685
Share capital 699 699 699
Additional paid-in capital 604,105 602,469 593,999
Retained earnings 398,082 347,205 219,318
Total shareholders' equity 1,002,886 950,373 814,016
Total Liabilities and Shareholders'
Equity $4,594,650 $4,394,227 $4,026,431
AerCap Holdings N.V.
Consolidated Income Statements - Unaudited
(In thousands of U.S. Dollars, except share and per share data)
Three months ended March 31,
2008 2007
Revenues
Lease revenue $143,856 $139,703
Sales revenue 142,463 148,885
Interest revenue 4,877 7,272
Management fee revenue 3,174 3,025
Other revenue 163 10,587
Total Revenues 294,533 309,472
Expenses
Depreciation 38,475 33,932
Cost of goods sold 110,019 118,003
Interest on debt 49,596 50,484
Operating lease in costs 3,640 6,237
Leasing expenses 6,390 4,032
Provision for doubtful notes and accounts
receivable 548 (141)
Selling, general and administrative
expenses 30,622 26,585
Total Expenses 239,290 239,132
Income from continuing operations
before income taxes and minority
interest 55,243 70,340
Provision for income taxes (4,570) (10,026)
Net income before minority interest 50,673 60,314
Minority interest, net of taxes 203 252
Net Income $50,876 $60,566
Basic and diluted earnings per share 0.60 0.71
Weighted average shares outstanding -
basic and diluted 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 March 31,
2008 2007
Net income 50,876 60,566
Adjustments to reconcile net income to net
cash provided by operating activities
Minority interest (203) (252)
Depreciation 38,474 33,932
Amortisation of debt issuance cost 3,392 1,708
Amortisation of intangibles 3,504 1,944
Gain on elimination of fair value guarantee - (10,736)
Provision for doubtful notes and accounts
receivable 548 (141)
Capitalised interest on pre-delivery
payments (669) (1,564)
Gain on disposal of assets (22,949) (24,961)
Change in fair value of derivative
instruments 2,867 (893)
Deferred taxes 4,434 10,016
Share-based compensation 1,636 2,446
Changes in assets and liabilities
Trade receivables and notes receivable,
net (20,240) (6,152)
Inventories 10,473 10,779
Other assets (1,546) (7,498)
Accounts payable and accrued
expenses, including accrued maintenance
liability, lessee deposits (3,721) (51,185)
Deferred revenue 2,090 674
Net cash provided by operating activities 68,966 18,683
Purchase of flight equipment (234,904) (223,585)
Proceeds from sale/disposal of assets 83,487 126,905
Prepayments on flight equipment (72,445) (18,650)
Purchase of intangibles (8,627) (16,794)
Movement in restricted cash (32,078) 12,818
Net cash used in investing activities (264,567) (119,306)
Issuance of debt 278,081 246,503
Repayment of debt (126,363) (135,655)
Debt issuance costs paid (367) (1,459)
Net cash provided by financing activities 151,351 109,389
Net (decrease) increase in cash and cash
equivalents (44,250) 8,766
Effect of exchange rate changes (316) 136
Cash and cash equivalents at beginning of
period 241,736 131,201
Cash and cash equivalents at end of period 197,170 140,103
SOURCE AerCap Holdings N.V.
Released May 9, 2008