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.
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 email@example.com Peter Wortel Investor Relations +31 20 655 9658 firstname.lastname@example.org For Media: Frauke Oberdieck Corporate Communications +31 20 655 9616 email@example.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