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February 13, 2020

AerCap Holdings N.V. Reports Record EPS for Full Year 2019 and Announces New Share Repurchase Program

DUBLIN – February 13, 2020

  • Net income of $309.8 million for the fourth quarter of 2019 and $1,145.7 million for the full year 2019

  • Diluted earnings per share of $2.34 for the fourth quarter of 2019 and $8.43 for the full year 2019

Highlights

  • 44% increase in diluted EPS for the fourth quarter of 2019 year over year.

  • New technology aircraft now comprise 58% of our owned fleet.

  • Approximately $40 billion of contracted future lease rents.

  • Approximately 97% of lease rents through 2022 already contracted.

  • Average current lease expires in the third quarter of 2027.

  • 99.8% fleet utilization rate for the fourth quarter of 2019 (99.6% for full year 2019).

  • Adjusted debt/equity ratio of 2.6 to 1.

  • 22% secured debt to total assets ratio.

  • 6.1 years average age of owned fleet.

  • $1.4 billion increase in average lease assets over the fourth quarter of 2018.

  • 15% increase in book value per share since December 31, 2018.

  • Upgraded to BBB rating by S&P Global Ratings.

  • Repurchased 3.4 million shares in the fourth quarter of 2019 for $197 million.

  • New $250 million share repurchase program authorized, which will run through June 30, 2020.

Aengus Kelly, CEO of AerCap, said: “I am very pleased to report a record year of financial results with earnings per share of $8.43. New technology aircraft now represent 58% of our aircraft fleet, the highest percentage of any major lessor, positioning AerCap well for success in the years ahead and continued leadership in providing the most fuel-efficient aircraft to airlines around the world.”

Fourth Quarter 2019 Financial Results

  • Net income increased by 33% to $309.8 million, from $232.6 million for the same period in 2018. Diluted earnings per share was $2.34, compared with $1.62 for the same period in 2018.
  • The increase in net income was primarily driven by higher maintenance revenue and lower leasing expenses.
  • Diluted earnings per share increased by 44%, driven by the repurchase of 16.6 million shares from October 2018 through December 2019 and the same factors as net income.

Full Year 2019 Financial Results

  • Net income was $1,145.7 million, compared with $1,015.6 million for 2018. Diluted earnings per share was $8.43, compared with $6.83 for 2018.
  • The increase in net income was primarily driven by higher lease rents resulting from an increase in average lease assets due to the delivery of new technology aircraft in 2018 and 2019.
  • Diluted earnings per share increased by 23%, driven by the repurchase of 25.9 million shares during 2018 and 2019 and the same factors as net income.

Revenue and Net Spread

 

Three months ended December 31,

Year ended December 31,

 

2019

2018

% increase/  (decrease)

2019

2018

% increase/  (decrease)

 

(U.S. Dollars in millions)

(U.S. Dollars in millions)

Lease revenue:

 

 

 

 

 

 

   Basic lease rents

$1,062.3

$1,051.0

1%

$4,281.3

$4,145.6

3%

   Maintenance rents and other receipts

132.5

102.3

30%

401.0

391.5

2%

Lease revenue

1,194.8

1,153.4

4%

4,682.3

4,537.1

3%

Net gain on sale of assets

48.6

40.8

19%

188.8

201.3

(6%)

Other income

13.5

25.5

(47%)

66.2

61.6

7%

Total Revenues and other income

$1,257.0

$1,219.7

3%

$4,937.3

$4,800.0

3%

Basic lease rents were $1,062.3 million for the fourth quarter of 2019, compared with $1,051.0 million for the same period in 2018. The increase was primarily due to an increase in average lease assets.

Maintenance rents and other receipts were $132.5 million for the fourth quarter of 2019, compared with $102.3 million for the same period in 2018. The increase was primarily the result of higher end of lease compensation recognized during the fourth quarter of 2019.

Net gain on sale of assets for the fourth quarter of 2019 was $48.6 million, relating to 28 aircraft sold for $729 million, compared with $40.8 million for the same period in 2018, relating to 27 aircraft sold for $515 million. The increase was primarily due to the volume and composition of asset sales.

Other income for the fourth quarter of 2019 was $13.5 million, compared with $25.5 million for the same period in 2018. The decrease was primarily due to higher inventory sales in the fourth quarter of 2018.

 

Three months ended December 31,

Year ended December 31,

 

2019

2018

% increase/  (decrease)

2019

2018

% increase/  (decrease)

 

(U.S. Dollars in millions)

(U.S. Dollars in millions)

 

 

 

 

 

 

 

Basic lease rents

$1,062.3

$1,051.0

1%

$4,281.3

$4,145.6

3%

 

 

 

 

 

 

 

Interest expense

316.1

322.7

(2%

1,295.0

1,174.1

10%

Adjusted for:

 

 

 

 

 

 

   Mark-to-market of interest rate caps

(0.6)

(20.8)

(97%)

(29.7)

5.2

NA

Interest expense excluding mark-to-market of interest rate caps

315.5

301.9

5%

1,265.3

1,179.3

7%

Net interest margin (*)

$746.8

$749.1

0

$3,016.0

$2,966.3

2%

Depreciation and amortization, including maintenance rights expense

(441.1)

(461.5)

(4%)

(1,752.7)

(1,836.8)

(5%)

Net interest margin, less depreciation and amortization (*)

$305.7

$287.6

6%

$1,263.3

$1,129.5

12%

 

 

 

 

 

 

 

Average lease assets (*)

$37,789

$36,364

4%

$37,590

$35,369

6%

 

 

 

 

 

 

 

Annualized net spread (*)

7.9%

8.2%

 

8.0%

8.4%

 

Annualized net spread less depreciation and amortization (*)

3.2%

3.2%

 

3.4%

3.2%

 

(*) Refer to “Notes Regarding Financial Information Presented in This Press Release” for details relating to these non-GAAP measures

Interest expense excluding mark-to-market of interest rate caps of $0.6 million was $315.5 million for the fourth quarter of 2019, compared with $301.9 million for the same period in 2018. Our average cost of debt was 4.2% for the fourth quarter of 2019, compared with 4.1% for the same period in 2018. Our average cost of debt includes debt issuance costs, upfront fees and other impacts of approximately 0.4%.

Selling, General and Administrative Expenses

 

Three months ended December 31,

Year ended December 31,

 

2019

2018

% increase/  (decrease)

2019

2018

% increase/  (decrease)

 

(U.S. Dollars in millions)

(U.S. Dollars in millions)

 

 

 

 

 

 

 

Selling, general and administrative expenses

$53.6

$52.7

2%

$198.1

$210.0

(6%)

Share-based compensation expenses

17.7

18.1

(2%)

69.4

95.2

(27%)

Total selling, general and administrative expenses

$71.3

$70.8

1%

$267.5

$305.2

(12%)

Selling, general and administrative expenses decreased by 12% to $267.5 million for the full year 2019, compared with $305.2 million for the full year 2018, and were approximately 5.4% of total revenues.

Other Expenses

Leasing expenses were $86.9 million for the fourth quarter of 2019, compared with $125.9 million for the same period in 2018. The decrease was primarily due to a decrease in leasing expenses as a result of lease terminations, as well as a decrease in maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights asset balance. Asset impairment charges were $16.1 million for the fourth quarter of 2019, compared to $15.3 million recorded for the same period in 2018. Asset impairment charges recorded in the fourth quarter of 2019 related to lease terminations and sales transactions and were more than offset by maintenance revenue.

Effective Tax Rate

Our effective tax rate for the full year 2019 was 12.5%, the same as for the full year 2018. The effective tax rate is impacted by the source and amount of earnings among our various tax jurisdictions.

Book Value Per Share

 

December 31, 2019

December 31, 2018

(U.S. Dollars in millions, except share and per share data)

Total AerCap Holdings N.V. shareholders' equity

$9,314.9

$8,828.0

 

 

 

Ordinary shares outstanding

131,583,489

142,674,664

Unvested restricted stock

(2,354,318)

(2,429,442)

Ordinary shares outstanding (excl. unvested restricted stock)

129,229,171

140,245,222

 

 

 

Book value per ordinary share outstanding (excl. unvested restricted stock)

$72.08

$62.95

Book value per share has increased 15% since December 31, 2018.

Financial Position

 

December 31, 2019

December 31, 2018

% increase/
(decrease) over 
December 31, 2018

 

(U.S. Dollars in millions, except debt/equity ratio)

 

 

 

 

Total cash, cash equivalents and restricted cash

$1,300.3

$1,415.0

(8%)

Total lease assets (*)

37,930.4

37,244.6

2%

Total assets

43,749.2

43,208.9

1%

Debt

29,486.1

29,507.6

0%

Total liabilities

34,367.0

34,328.3

0%

Total AerCap Holdings N.V. shareholders' equity

9,314.9

8,828.0

6%

Total equity

9,382.2

8,880.6

6%

(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures

As of December 31, 2019, AerCap’s portfolio consisted of 1,334 aircraft that were owned, on order or managed. The average age of our owned fleet as of December 31, 2019 was 6.1 years (2.3 years for new technology aircraft, 11.3 years for current technology aircraft) and the average remaining contracted lease term was 7.5 years.

Boeing 737 MAX Delays

On March 13, 2019, the Federal Aviation Administration issued an order to suspend operations of all Boeing 737 MAX aircraft in the U.S. and by U.S. aircraft operators following two recent fatal accidents involving Boeing 737 MAX aircraft. Non-U.S. civil aviation authorities have also issued directives to similar effect. Boeing has suspended deliveries of the Boeing 737 MAX until clearance is granted by the appropriate regulatory authorities. Prior to the grounding, we had delivered five Boeing 737 MAX aircraft that are currently on lease to an airline customer, and we currently have 95 Boeing 737 MAX aircraft on order. Boeing currently estimates that the Boeing 737 MAX will begin to return to service in mid-2020. However, it is uncertain when and under what conditions our Boeing 737 MAX aircraft will return to service and when Boeing will resume making deliveries of our Boeing 737 MAX aircraft on order. As a result, we have incurred delays and expect to incur future delays on our Boeing 737 MAX deliveries, and any such future delays are likely to have an impact on our financial results.

Share Repurchase Program

In January 2020, our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $250 million of AerCap ordinary shares through June 30, 2020. Repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable U.S. federal securities laws. The timing of repurchases and the exact number of ordinary shares to be purchased will be determined by the Company’s management, in its discretion, and will depend upon market conditions and other factors. The program will be funded using the Company’s cash on hand and cash generated from operations. The program may be suspended or discontinued at any time.

Airbus A320neo Family Option Exercise

In February 2020, we exercised an option to purchase an additional 50 Airbus A320neo Family aircraft from Airbus, with deliveries starting in 2024.

Notes Regarding Financial Information Presented in This Press Release

The financial information presented in this press release is not audited.

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The following are definitions of non-GAAP measures used in this press release. We believe these measures may further assist investors in their understanding of our operational performance.

Adjusted debt/equity ratio

This measure is the ratio obtained by dividing adjusted debt by adjusted equity.

  • Adjusted debt means consolidated total debt less cash and cash equivalents, and less a 50% equity credit with respect to certain long-term subordinated debt.
  • Adjusted equity means total equity, plus the 50% equity credit relating to the long-term subordinated debt.

Adjusted debt and adjusted equity are adjusted by the 50% equity credit to reflect the equity nature of those financing arrangements and to provide information that is consistent with definitions under certain of our debt covenants. We believe this measure may further assist investors in their understanding of our capital structure and leverage.

 

December 31, 2019

December 31, 2018

(U.S. Dollars in millions, except debt/equity ratio)

Debt

$29,486

$29,508

 

 

 

Adjusted for:

 

 

   Cash and cash equivalents

(1,121)

(1,204)

   50% credit for long-term subordinated debt

(1,125)

(750)

Adjusted debt

$27,240

$27,554

 

 

 

Equity

$9,382

$8,881

 

 

 

Adjusted for:

 

 

   50% credit for long-term subordinated debt

1,125

750

Adjusted equity

$10,507

$9,631

 

 

 

Adjusted debt/equity ratio

2.6 to 1

2.9 to 1

Net interest margin, annualized net spread, annualized net spread less depreciation and amortization, and average cost of debt

Net interest margin is calculated as the difference between basic lease rents and interest expense, excluding the impact of the mark-to-market of interest rate caps. Annualized net spread is net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is net interest margin less depreciation and amortization, including maintenance rights expense, expressed as a percentage of average lease assets. Average cost of debt is calculated as interest expense, excluding mark-to-market on interest rate caps, divided by average debt balance. We believe these measures may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. These measures reflect the impact from changes in the number of aircraft leased, lease rates and utilization rates, as well as the impact from changes in the amount of debt and interest rates.

Lease assets

Lease assets include flight equipment held for operating leases, flight equipment held for sale, net investment in finance and sales-type leases and maintenance rights assets.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, February 13, 2020, at 8:30 am Eastern Standard Time. The call can be accessed live by dialing (U.S./Canada) +1 929 477 0324 or (International) +353 1 246 5621 and referencing code 8756050 at least 5 minutes before start time, or by visiting AerCap’s website at www.aercap.com under “Investors.”

The webcast replay will be archived in the “Investors” section of the Company’s website for one year.

For further information, contact Joseph McGinley: +353 1 418 0428 (jmcginley@aercap.com).

About AerCap

AerCap is the global leader in aircraft leasing with 1,334 aircraft owned, managed or on order and $43.7 billion of total assets as of December 31, 2019. AerCap has one of the most attractive order books in the industry. AerCap serves approximately 200 customers in approximately 80 countries with comprehensive fleet solutions. AerCap is listed on the New York Stock Exchange (AER) and has its headquarters in Dublin with offices in Shannon, Los Angeles, Singapore, Amsterdam, Shanghai, Abu Dhabi, Seattle and Toulouse.

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,” “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, and 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, we cannot assure you 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. Except as required by applicable law, 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 www.aercap.com and follow us on Twitter www.twitter.com/aercapnv.

AerCap Holdings N.V.
Unaudited Consolidated Balance Sheets
(U.S. Dollars in thousands)

 

December 31, 2019

December 31, 2018

Assets

 

 

Cash and cash equivalents

$1,121,396

$1,204,018

Restricted cash

178,951

211,017

Trade receivables

47,935

40,379

Flight equipment held for operating leases, net

35,870,781

35,052,335

Maintenance rights and lease premium, net

809,615

1,113,190

Flight equipment held for sale

336,592

184,129

Net investment in finance and sales-type leases

1,011,549

1,003,286

Prepayments on flight equipment

2,954,478

3,024,520

Other intangibles, net

307,394

328,570

Deferred income tax assets

95,077

138,281

Other assets

1,015,476

909,190

Total Assets

$43,749,244

$43,208,915

 

 

 

Liabilities and Equity

 

 

Accounts payable, accrued expenses and other liabilities

$1,032,623

$1,009,945

Accrued maintenance liability

2,190,159

2,237,494

Lessee deposit liability

747,790

768,677

Debt

29,486,131

29,507,587

Deferred income tax liabilities

910,336

804,598

Total liabilities

34,367,039

34,328,301

 

 

 

Ordinary share capital €0.01 par value, 350,000,000 ordinary shares authorized as of December 31, 2019 and December 31, 2018; 141,847,345 and 151,847,345 ordinary shares issued and 131,583,489 and 142,674,664 ordinary shares outstanding  (including 2,354,318 and 2,429,442 unvested restricted stock) as of December 31, 2019 and December 31, 2018, respectively

1,754

1,866

Additional paid-in capital

2,209,462

2,712,417

 

 

 

Treasury shares, at cost (10,263,856 and 9,172,681 ordinary shares as of December 31, 2019 and December 31, 2018, respectively)

(537,341)

(476,085)

Accumulated other comprehensive loss

(93,587)

(1,824)

Accumulated retained earnings

7,734,609

6,591,674

Total AerCap Holdings N.V. shareholders' equity

9,314,897

8,828,048

Non-controlling interest

67,308

52,566

Total Equity

9,382,205

8,880,614

 

 

 

Total Liabilities and Equity

$43,749,244

$43,208,915

AerCap Holdings N.V.
Unaudited Consolidated Income Statements
(U.S. Dollars in thousands, except share and per share data)

 

Three months ended December 31,

Year ended December 31,

 

2019

2018

2019

2018

Revenues and other income

 

 

 

 

Lease revenue:

 

 

 

 

Basic rents

$1,062,326

$1,051,035

$4,281,260

$4,145,552

Maintenance rents and other receipts

132,500

102,323

401,006

391,541

Lease revenue

1,194,826

1,153,358

4,682,266

4,537,093

Net gain on sale of assets

48,618

40,806

188,835

201,323

Other income

13,508

25,521

66,239

61,564

Total Revenues and other income

1,256,952

1,219,685

4,937,340

4,799,980

 

 

 

 

 

Expenses

 

 

 

 

Depreciation and amortization

415,866

425,905

1,676,121

1,679,074

Asset impairment

16,131

15,257

70,149

44,186

Interest expenses

316,089

322,678

1,295,020

1,174,074

Leasing expenses

86,905

125,896

287,950

446,487

Selling, general and administrative expenses

71,330

70,771

267,458

305,226

Total Expenses

906,321

960,507

3,596,698

3,649,047

 

 

 

 

 

Income before income taxes and income of investments accounted for under the equity method

350,631

259,178

1,340,642

1,150,933

 

 

 

 

 

Provision for income taxes

(39,013)

(28,147)

(167,714)

(144,079)

Equity in net earnings of investments accounted for under the equity method

1,877

2,123

(6,151)

10,643

 

 

 

 

 

Net income

$313,495

$233,154

$1,166,777

$1,017,497

 

 

 

 

 

Net income attributable to non-controlling interest

(3,740)

(512)

(21,086)

(1,865

 

 

 

 

 

Net income attributable to AerCap Holdings N.V.

$309,755

$232,642

$1,145,691

$1,015,632

 

 

 

 

 

Basic earnings per share

$2.36

$1.63

$8.51

$7.00

Diluted earnings per share

$2.34

$1.62

$8.43

$6.83

 

 

 

 

 

Weighted average shares outstanding - basic

131,119,824

142,557,379

134,570,169

145,162,220

Weighted average shares outstanding - diluted

132,227,255

144,033,735

135,898,139

148,706,266

AerCap Holdings N.V.
Unaudited Consolidated Statements of Cash Flows
(U.S. Dollars in thousands

 

Year ended December 31,

 

2019

2018

Net income

$1,166,777

$1,017,497

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

1,676,121

1,679,074

Asset impairment

70,149

44,186

Amortization of debt issuance costs, debt discount, debt premium and lease premium

79,645

76,499

Amortization of fair value adjustment on debt

(79,098)

(142,596)

Maintenance rights write-off

244,748

287,119

Maintenance liability release to income

(207,849)

(228,081)

Net gain on sale of assets

(188,835)

(201,323)

Deferred income taxes

162,498

147,588

Collections of finance and sales-type leases

98,365

Other

165,527

155,628

 Changes in operating assets and liabilities:

 

 

   Trade receivables

(8,751)

19,839

   Other assets

(73,646)

9,800

   Accounts payable, accrued expenses and other liabilities

31

(24,858)

Net cash provided by operating activities

3,105,682

2,840,372

 

 

 

Purchase of flight equipment

(3,359,092)

(4,036,194)

Proceeds from sale or disposal of assets

1,773,766

1,822,601

Prepayments on flight equipment

(1,369,400)

(1,912,215)

Collections of finance and sales-type leases

94,703

Other

(17)

(21,505)

Net cash used in investing activities

(2,954,743)

(4,052,610)

 

 

 

Issuance of debt

6,539,310

5,589,825

Repayment of debt

(6,504,830)

(4,360,520)

Debt issuance costs paid, net of debt premium received

(36,592)

(57,831)

Maintenance payments received

736,423

743,256

Maintenance payments returned

(352,032)

(459,326)

Security deposits received

232,219

208,259

Security deposits returned

(233,222)

(220,452)

Dividend paid to non-controlling interest holders and others

(6,341)

(8,403)

Repurchase of shares and tax withholdings on share-based compensation

(639,941)

(834,398)

Net cash (used in) provided by financing activities

(265,006)

600,410

 

 

 

Net decrease in cash, cash equivalents and restricted cash

(114,067)

(611,828)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(621)

2,738

Cash, cash equivalents and restricted cash at beginning of period

1,415,035

2,024,125

Cash, cash equivalents and restricted cash at end of period

$1,300,347

$1,415,035