AerCap Holdings N.V. Reports Third Quarter 2007 Financial Results
AMSTERDAM, Netherlands, Nov. 8 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announces the results of its operations for the third quarter ended September 30, 2007.
Third Quarter Highlights
-- Third quarter 2007 net income was $48.6 million, compared with $46.7
million for the same period in 2006. Third quarter 2007 net income
excluding non-cash charges relating to the mark-to-market of our
interest rate caps and share-based compensation was $58.1 million.
-- Third quarter 2007 basic and diluted earnings per share were $0.57.
Third quarter 2007 basic and diluted earnings per share excluding non-
cash charges relating to the mark-to-market of our interest rate caps
and share-based compensation were $0.68.
-- Total revenue for the third quarter 2007 was $335.9 million, up 12% vs.
third quarter 2006.
-- Lease revenue for the third quarter 2007 was $136.7 million, up 23% vs.
third quarter 2006.
-- Sales revenue for the third quarter 2007 was $187.1 million, up 14% vs.
third quarter 2006 and was generated from the sale of seven aircraft,
four engines and the sale of parts inventory.
-- Total assets were $4.3 billion at September 30, 2007, a 20% increase
over total assets of $3.5 billion at September 30, 2006.
-- Committed purchases of aviation assets delivered or scheduled for
delivery in 2007 are $854.2 million thus far, of which $518.7 million
closed in the first nine months of 2007.
-- A funding facility of $182 million was closed for pre-delivery payments
relating to eight new A330s under a forward order with Airbus
Significant events previously disclosed
-- On August 6, 2007, AerCap completed a secondary offering of 20 million
shares, increasing the percentage of shares held by public investors
from 31% to 54%.
-- AerCap signed six new lease agreements and executed 22 letters of
intent including 16 letters of intent for new aircraft with average
lease terms of 108 months. In addition, on October 10, 2007, we signed
lease agreements for six new A320s for a period of 120 months with
Aeroflot - a new customer.
Klaus Heinemann, CEO of AerCap, commented, "Our growth program has progressed well with 29 aircraft and 11 engine acquisitions since December 2006. The continued strength of the aviation lease market in combination with our strong marketing capability allows AerCap to lock in attractive lease terms for long periods. This is reflected in the average lease term of 108 months that we achieved in letters of intent executed for new aircraft in the third quarter 2007. We are also very pleased to have won the Russian national carrier, Aeroflot as a new customer, with a transaction involving six new Airbus 320 aircraft with a 120-month lease period."
AerCap's CFO, Keith Helming, added, "We are delighted to report strong revenue growth for this quarter, particularly lease revenue. AerCap is well positioned for future growth with nearly $2 billion of committed funding plus free cash of $272 million. Since the start of the recent concerns in the debt markets, we were also able to close on a $182 million funding facility with a major institution for pre-delivery payments on our A330 forward order. In addition, we are pursuing other opportunities for new debt financing to allow for further growth."
Summary of Financial Results
AerCap recorded third quarter 2007 net income of $48.6 million or $0.57 per basic and diluted share. Included in the third quarter 2007 net income amount was a net loss on non-cash charges related to the mark-to-market of our interest rate caps and share-based compensation of $9.5 million or $0.11 per basic and diluted share. The net loss relating to the mark-to-market of our interest rate caps was $6.7 million and the net loss from share-based compensation was $2.8 million.
Detailed Financial Data
($ in Millions)
Operating results
Three months ended Nine months ended
September 30, September 30,
%increase/ %increase/
2007 2006 (decrease) 2007 2006 (decrease)
Revenue ..... $335.9 $300.4* 12% $892.0 $602.8 48%
Net income .. 48.6 46.7* 4% 143.3** 117.0 22%
* - Revenue and net income include $12.7 million and $11.1 million,
respectively, primarily from the sale of financial assets classified
as other revenue in the table below.
** - Includes a non-recurring charge to interest expense from refinancing
of securitized bonds of $24.0 million, net of tax.
Revenue breakdown
Three months ended Nine months ended
September 30, September 30,
%increase/ %increase/
2007 2006 (decrease) 2007 2006 (decrease)
Lease revenue:
Basic rents ... $125.2 $98.8 27% $368.3 $282.5 30%
Maintenance
rents ........ 11.2 4.5 149% 31.7 10.9 191%
End-of-lease
compensation 0.3 7.7 -96% 17.1 17.7 -3%
Lease revenue... $136.7 $111.0 23% $417.1 $311.1 34%
Sales revenue . 187.1 164.7 14% 420.3 236.7 78%
Management fees
and interest
income ........ 12.1 12.0 1% 34.9 37.0 -6%
Other revenue... - 12.7 -100% 19.7 18.0 9%
Total revenue .. $335.9 $300.4 12% $892.0 $602.8 48%
As indicated in the table above, lease revenue increased by 23% between the third quarter 2007 and the third quarter 2006 and 34% between the two nine-month periods. The growth in the Company's leased assets and the continued strength of lease rates in the current economic environment is reflected in our revenue through the significant increase in basic rents.
Effective tax rate
The effective tax rate during the third quarter 2007 for AerCap's aircraft business was 15.0% and was 34.2% for the Company's engine and parts business, resulting in an overall consolidated effective tax rate of 16.0%.
Financial position
%Increase
over
September September September
30, 2007 30, 2006 30, 2006
Flight equipment held for lease.. $2,927.3 $2,542.1 15%
Total assets .................... 4,253.2 3,548.2 20%
Total liabilities ............... 3,313.1 2,964.4 12%
Total equity .................... 907.9 551.8 65%
As of September 30, 2007, AerCap's portfolio consisted of 325 aircraft and 65 engines that were either owned, on order, under contract or letter of intent, or managed.
Secondary Offering of 20 million shares (as previously disclosed)
In the third quarter of 2007, AerCap filed a registration statement with the U.S. Securities and Exchange Commission for the sale of 20 million of the Company's existing shares which were subsequently sold by companies controlled by funds and accounts affiliated with Cerberus in a secondary offering completed on August 6, 2007. The registration increased the percentage of the Company's shares held by public shareholders from 31% to 54%. Proceeds from the sale of the registered shares were received by Cerberus-affiliated companies, members of senior management and board of directors. The Company did not receive any of the proceeds of the offering.
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 our 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 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 and nine month periods ended September 30, 2007 and 2006:
($s in Millions) Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
Net income .......... $48.6 $46.7 $143.3* $117.0
Plus: Non-cash charges
relating to the
mark-to-market of
interest rate caps,
net of tax ......... 6.7 7.5 3.2 (7.3)
Non-cash charges
related to share-
based compensation,
net of tax .... 2.8 9.3 7.0 10.5
Net income excluding
non-cash charges related
to the mark-to-market of
interest rate caps and
share-based compensation $58.1 $63.5 $153.5* $120.2
* - Includes a non-recurring charge to interest expense from refinancing
of securitized bonds of $24.0 million, net of tax.
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 Thursday, November 8, 2007 at 9:30 a.m. EST. The call can be accessed live by dialing (U.S. investors) 800-772-1085 or (International investors) +1-706-634-5464 and referencing code 20964418 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under 'Investor Relations'.
A replay of the call will be available beginning at 1:00 p.m. EST on November 8, 2007 and continuing through Thursday, November 22, 2007. To access the recording, call 800-642-1687 (U.S. investors) or +1-706-645-9291 (International investors) and enter pass code 20964418. 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, 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 AerCap does 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
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
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
December 31, September 30,
September 30, 2006 2006
2007 (adjusted)* (adjusted)*
Assets
Cash and cash equivalents $271,997 $131,201 $215,325
Restricted cash 60,814 112,277 125,065
Trade receivables, net of
provisions 26,978 25,058 27,959
Flight equipment held for
operating leases, net 2,927,257 2,966,779 2,542,119
Flight equipment held for sale 163,962 - -
Notes receivables, net of
provisions 181,447 167,451 158,303
Prepayments on flight equipment 225,232 166,630 129,496
Investments 16,091 18,001 3,000
Goodwill 6,776 6,776 37,225
Intangibles, net 43,161 34,229 30,455
Inventory 75,861 82,811 85,475
Derivative assets 17,532 17,871 10,520
Deferred income taxes 91,897 96,521 95,837
Other assets 144,201 92,432 87,425
Total Assets $4,253,206 $3,918,037 $3,548,204
Liabilities and Shareholders' equity
Accounts payable $6,693 $6,958 $3,571
Accrued expenses and other
liabilities 76,914 92,466 73,325
Accrued maintenance liability 261,760 259,739 180,441
Lessee deposit liability 85,412 77,686 63,403
Debt 2,781,646 2,555,139 2,458,977
Accrual for onerous contracts 69,174 111,333 112,300
Deferred revenue 30,338 28,391 26,621
Deferred income taxes 1,152 3,383 45,785
Total liabilities 3,313,089 3,135,095 2,964,423
Minority interest 32,235 31,938 32,020
Share capital 699 699 646
Additional paid-in capital 605,093 591,553 384,318
Retained earnings 302,090 158,752 166,797
Total shareholders' equity 907,882 751,004 551,761
Total Liabilities and
Shareholders' equity $4,253,206 $3,918,037 $3,548,204
* 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 Nine months ended
September 30, September 30,
2006 2006
2007 (Adjusted*)(A) 2007 (Adjusted*)(A)
Revenues
Lease revenue $136,689 $110,974 $417,069 $311,131
Sales revenue 187,124 164,662 420,290 236,665
Interest revenue 8,272 8,730 23,722 26,656
Management fee
revenue 3,789 3,263 11,137 10,330
Other revenue - 12,738 19,744 18,014
Total Revenues 335,874 300,367 891,962 602,796
Expenses
Depreciation 35,143 21,044 106,298 72,347
Cost of goods sold 151,103 133,538 327,685 183,264
Interest on debt 58,268 51,808 177,114 111,432
Operating lease in
costs 4,652 6,298 15,512 18,925
Leasing expenses 495 (10) 14,230 11,595
Provision for
doubtful notes and
accounts receivable 233 (1,443) 355 (847)
Selling, general and
administrative
expenses 27,934 36,337 82,161 66,571
Total Expenses 277,828 247,572 723,355 463,287
Income from
continuing
operations before
income taxes and
minority interest 58,046 52,795 168,607 139,509
Provision for income
taxes (9,288) (6,167) (24,971) (23,203)
Net income before
minority interest 48,758 46,628 143,636 116,306
Minority interest,
net of taxes (152) 37 (298) 730
Net Income $48,606 $46,665 $143,338 $117,036
Basic and diluted
earnings per share 0.57 0.60 1.69 1.50
Weighted average
shares outstanding
- basic and
diluted $85,036,957 $78,236,957 $85,036,957 $78,236,957
* - Adjusted for our adoption of FSP No. AUG AIR-1 "Accounting for
Planned Major Maintenance Activities" on January 1, 2007.
(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 Nine months ended
September 30, September 30,
2006 2006
2007 (Adjusted*)(A) 2007 (Adjusted*)(A)
Net income 48,606 46,665 143,338 117,036
Adjustments to reconcile net
income to net cash provided
by operating activities
Minority interest 152 (37) 298 (730)
Depreciation 35,143 20,859 106,298 72,347
Amortisation of debt issuance
cost 3,302 2,191 34,861 5,886
Amortisation of intangibles 2,939 1,575 7,862 8,656
Gain on elimination of fair
value guarantee - - (10,736) -
Provision for doubtful notes
and accounts receivable 233 (545) 355 51
Capitalised interest on pre-
delivery payments (1,621) (1,109) (4,607) (3,747)
Gain on disposal of assets (31,304) (26,731) (74,788) (48,153)
Change in fair value of
derivative instruments 2,823 18,660 339 (187)
Deferred taxes (2,120) 6,142 10,536 22,966
Share-based compensation 3,243 13,058 8,017 14,993
Changes in assets and
liabilities
Trade receivables and notes
receivable, net (7,231) 19,665 (16,271) 36,442
Inventories 24,899 (30,824) 12,973 (32,833)
Other assets (6,084) (3,314) (25,602) (4,354)
Accounts payable and
accrued expenses,
including - -
accrued maintenance
liability, lessee
deposits (11,962) 4,034 (38,178) (14,789)
Deferred revenue (1,123) 675 1,946 2,708
Net cash provided by operating
activities 59,895 70,964 156,641 176,292
Purchase of flight equipment (68,273) (134,111) (457,450) (390,437)
Proceeds from sale/disposal of
assets 147,256 158,695 332,438 218,481
Prepayments on flight
equipment (37,432) (25,080) (106,634) (59,946)
Purchase of subsidiaries, net
of cash acquired - - - (145,246)
Purchase of intangibles - - (16,794) -
Movement in restricted cash 117,302 (7,645) 51,463 32,665
Net cash provided by (used in)
investing activities 158,853 (8,141) (196,977) (344,483)
Issuance of debt 50,804 80,227 2,104,368 540,523
Repayment of debt (246,812) (163,886)(1,880,097) (347,042)
Debt issuance costs paid (398) (1,140) (42,417) (25,007)
Capital contributions from
minority interests - - - 32,750
Net cash (used in) provided
by financing activities (196,406) (84,799) 181,854 201,224
-
Net increase (decrease) in
cash and cash equivalents 22,342 (21,976) 141,518 33,033
Effect of exchange rate
changes (469) (87) (722) (1,262)
Cash and cash equivalents at
beginning of period 250,124 237,388 131,201 183,554
Cash and cash equivalents at
end of period 271,997 215,325 271,997 215,325
* - Adjusted for our adoption of FSP No. AUG AIR-1 "Accounting for
Planned Major Maintenance Activities" on January 1, 2007.
(A) - Includes the results of operations of AeroTurbine from the date of
our acquisition - April 26, 2006.
SOURCE AerCap Holdings N.V.
Released November 8, 2007