AerCap Holdings N.V. Reports Fourth Quarter and Full Year 2008 Financial Results
AMSTERDAM, Feb. 25 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the fourth quarter and full year ended December 31, 2008.
Fourth Quarter 2008 Highlights
-- Fourth quarter 2008 net loss was $19.0 million, compared with net income
of $45.1 million for the same period in 2007. Fourth quarter 2008 net
income excluding the impact of the mark-to-market of interest rate caps
and share-based compensation was $18.7 million, compared with $57.0
million in fourth quarter 2007 on the same basis.
-- Fourth quarter net loss included charges of $21.0 million, net of tax
related to the previously disclosed airline defaults and inventory
impairments.
-- Fourth quarter 2008 basic and diluted loss per share was $0.22. Fourth
quarter 2008 basic and diluted earnings per share excluding the impact
of the mark-to-market of interest rate caps and share-based compensation
were $0.22.
-- Net spread, the difference between basic lease rents and interest
expense excluding the impact from the mark-to-market of interest rate
caps, was $87.8 million in fourth quarter 2008 compared to $79.0 million
in fourth quarter 2007, an increase of 11%. This measure reflects the
increase in leasing income.
-- Total revenue for the fourth quarter 2008 was $326.4 million, compared
to $284.6 million for the same period in 2007. The increase was mainly
due to higher aircraft sales revenue.
-- Sales revenue for the fourth quarter 2008 was $170.9 million, compared
to $138.0 million for the same period in 2007, and was generated from
the sale of two aircraft, five engines and parts inventory.
-- Total assets were $5.4 billion at December 31, 2008, an increase of 23%
over total assets of $4.4 billion at December 31, 2007.
Full Year 2008 Key Financial Highlights
-- Full year 2008 net income was $151.8 million, compared with $188.5
million for 2007. Full year 2008 net income excluding non-cash charges
relating to the mark-to-market of our interest rate caps and share-based
compensation was $197.8 million, down 6% vs. $210.6 million in 2007,
which was mainly caused by the previously disclosed airline defaults,
inventory impairments, lower gains from sales and lower other revenue.
-- Full year 2008 basic and diluted earnings per share were $1.79. Full
year 2008 basic and diluted earnings per share excluding the impact of
the mark-to-market of interest rate caps and share-based compensation
were $2.33.
-- Total revenue for the full year 2008 was $1,256.3 million, up 7% vs.
2007.
-- Net spread for the full year 2008 was $359.6 million, up 19% vs. 2007.
-- Sales revenue for the full year 2008 was $616.6 million, up 10% vs.
2007.
-- Aviation assets purchased and delivered in 2008 were $1.5 billion. In
addition to these completed purchases, at December 31, 2008 AerCap had
signed agreements for the purchase of four aircraft and letters of
intent for the purchase of two aircraft.
Fourth Quarter 2008 Financing Highlights - Previously Disclosed
-- AerCap signed a facility agreement with Calyon S.A. and other banks and
financial institutions, outlining the terms pursuant to which the
European Export Credit Agencies may provide guarantees on up to $1.4
billion of financing. This represents a significant portion of the
remaining financing needed for the Airbus A330 order delivering between
2009 and 2012. The European Export Credit Agencies consist of Coface in
France, ECGD in the United Kingdom, and Euler-Hermes in Germany. The
loans are to be provided by a syndicate of banks led by Calyon acting as
Global Arranger and are subject to customary ECA requirements.
Klaus Heinemann, CEO of AerCap, commented: "We are operating in an extremely difficult economic climate, but despite these challenges AerCap has continued to execute its growth strategy, including entering into new lease contracts and delivering aircraft to its lessees, along with arranging and maintaining committed financing sources. The combination of our experienced management team, coupled with stable core lease revenues and committed funding facilities provide a foundation with which to deal with the ongoing market challenges. Notwithstanding, the global financial markets are marked with considerable uncertainty and volatility. As such, if conditions erode further in 2009, such developments may have an adverse impact on the Company's clients and therefore, the Company. As a result, we will remain focused on liquidity and work toward minimizing any disruption these unprecedented market conditions may have on the Company's aircraft portfolio in the coming months."
AerCap's CFO, Keith Helming, added, "We are pleased with our performance during 2008, particularly in light of the current financial crisis and related airline defaults. Notwithstanding adverse market conditions, we continue to deliver revenue growth and derive significant advantages from the current low interest rate environment as a result of our hedging strategy, which is reflected in our increased net spread."
Summary of Financial Results
AerCap recorded a fourth quarter 2008 net loss of $19.0 million or $0.22 loss per basic and diluted share. Included in the fourth quarter 2008 net loss amount were charges relating to the mark-to-market of interest rate caps and share-based compensation of $37.7 million or $0.44 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $35.9 million and the after-tax charge from share-based compensation was $1.8 million.
Detailed Financial Data
($ in Millions)
Operating results
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Revenues $326.4 $284.6 15% $1,256.3 $1,176.5 7%
Net income (19.0) 45.1 -142% 151.8 188.5 -19%
Total revenue in fourth quarter 2008 increased 15% compared with fourth quarter 2007. This increase was largely driven by a higher amount of aircraft sales revenue in the fourth quarter 2008. Fourth quarter 2008 aircraft sales included the sale of an A330 delivered from our forward order.
Revenue breakdown
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Lease revenue:
Basic rents $134.7 $125.9 7% $520.7 $494.2 5%
Maintenance
rents 11.7 8.5 38% 69.3 40.2 72%
End-of-lease
compensation 2.7 2.8 -4% 15.2 19.8 -23%
Lease revenue $149.1 $137.2 9% $605.2 $554.2 9%
Sales revenue 170.9 138.0 24% 616.6 558.3 10%
Management fees
and interest
income 6.4 9.2 -30% 30.3 44.1 -31%
Other revenue - 0.2 100% 4.2 19.9 -79%
Total revenue $326.4 $284.6 15% $1,256.3 $1,176.5 7%
Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. This increase was partially offset by the impact from airline defaults which lowered basic lease rents by $4.7 million in fourth quarter 2008.
In addition, the increase in basic lease rents was reduced 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 was offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the fourth quarter 2008 increased 7% compared to fourth quarter 2007 to $134.7 million, interest expense excluding the impact of mark-to-market of interest rate caps and non-recurring charges remained constant at $46.9 million, as shown in the table below. We refer to the difference in these amounts of $87.8 as net spread, which increased 11% in fourth quarter 2008 over the same period in 2007.
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Basic rents $134.7 $125.9 7% $520.7 $494.2 5%
Interest on debt $99.0 $57.7 72% $219.2 $234.8 -7%
Plus:
mark-to-market
of interest
rate caps (52.1) (10.8) 382% (58.1) (14.4) 303%
Less:
Non-recurring
charges to
interest expense
from refinancing of
securitized bonds - - 0% - (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 $46.9 $46.9 0% $161.1 $193.0 -17%
Net Spread $87.8 $79.0 11% $359.6 $301.2 19%
Effective tax rate
AerCap's effective tax rate during the twelve month period ended December 31, 2008 was positive 0.3% (income), consisting of negative 2.0% (a charge) for AerCap's aircraft business and positive 56.8% (income) for AerCap's engine and parts business. The effective tax rate in 2007 was negative 11.8% (a charge). The positive tax rate resulted because the most significant portion of the charges relating to airline defaults and inventory impairments occurred in the higher tax rate jurisdictions, and the most significant portion of pre-tax earnings occurred in the lower tax rate jurisdictions.
Financial position
% Increase
over
December 31, December 31, December 31,
2008 2007 2007
Flight equipment held for lease $3,989.6 $3,050.2 31%
Total assets 5,410.8 4,394.2 23%
Total liabilities 4,284.8 3,413.1 26%
Total equity 1,109.0 950.4 17%
As of December 31, 2008, AerCap's portfolio consisted of 297 aircraft and 75 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 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 it 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 twelve month periods ended December 31, 2008 and 2007:
Three months ended Twelve months ended
December 31, December 31,
% increase/ % increase/
2008 2007 (decrease) 2008 2007 (decrease)
Net income $(19.0) $45.1 -142% $151.8 $188.5* -19%
Plus:
mark-to-market
of interest
rate caps,
net of tax 35.9 9.4 282% 39.6 12.6 214%
share-based
compensation,
net of tax 1.8 2.5 -28% 6.4 9.5 -33%
Net income
excluding the
impact of
mark-to-market
of interest
rate caps and
share-based
compensation $18.7 $57.0 -67% $197.8 $210.6 -6%
*- 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 instead of swaps for hedging purposes. The reconciliation of net spread to basic rents for the three month and twelve month periods ended December 31, 2008 and 2007 is included above.
Conference Call
In connection with the earnings release, management will host an earnings conference call today, Wednesday, February 25, 2009 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-676-6978 or (International) +1-706-634 5464 and referencing code 82185363 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 on 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 February 25, 2009 and continuing through March 30, 2009. To access the recording, call 800-642-1687 (U.S./Canada) or +1-706-645-9291 (International) and enter passcode 82185363. The replay will be archived in the "Investor Relations" section of the Company's website for one year.
In addition, a New York Group Lunch Presentation for investors and analysts will be hosted by AerCap's management today, Wednesday, February 25, 2009, at 12:30 pm Eastern Time at The New York Palace (the Henry Room). Doors will open at 12:00 pm.
To participate in either event, please register at: www.sharedvalue.net/aercap/q408results
For further information, contact Peter Wortel: +31 20 655 9658 (pwortel@aercap.com) or Mark Walter (Shared Value): +44 (0)20 7321 5039 (aercap@sharedvalue.net).
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 maintenance, repair and overhaul services and aircraft disassemblies. 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
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
December 31, December 31,
2008 2007
Assets
Cash and cash equivalents $193,563 $241,736
Restricted cash 113,397 95,072
Trade receivables, net of provisions 43,649 35,591
Flight equipment held for operating
leases, net 3,989,629 3,050,160
Flight equipment held for sale - 136,135
Net investment in direct finance leases 30,571 -
Notes receivables, net of provisions 134,067 184,820
Prepayments on flight equipment 448,945 247,839
Investments 18,678 11,678
Goodwill 6,776 6,776
Intangibles, net 47,099 41,855
Inventory 102,879 90,726
Derivative assets 19,352 21,763
Deferred income taxes 82,471 85,253
Other assets 179,750 144,823
Total Assets $5,410,826 $4,394,227
Liabilities and Shareholders' equity
Accounts payable $7,510 $16,376
Accrued expenses and other liabilities 104,750 81,379
Accrued maintenance liability 202,834 255,535
Lessee deposit liability 98,584 83,628
Debt 3,790,487* 2,892,744
Accrual for onerous contracts 33,306 46,411
Deferred revenue 34,922 33,574
Derivative liabilities 12,378 -
Deferred income taxes - 3,425
Total liabilities 4,284,771 3,413,072
Minority interest 17,018 30,782
Share capital 699 699
Additional paid-in capital 609,327 602,469
Retained earnings 499,011 347,205
Total shareholders' equity 1,109,037 950,373
Total Liabilities and Shareholders' equity $5,410,826 $4,394,227
* Includes $61.9 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 Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Revenues
Lease revenue $149,119 $137,157 $605,253 $554,226
Sales revenue 170,925 137,973 616,554 558,263
Interest revenue 3,584 6,020 18,515 29,742
Management fee revenue 2,779 3,206 11,749 14,343
Other revenue 25 203 4,181 19,947
Total Revenues 326,432 284,559 1,256,252 1,176,521
Expenses
Depreciation 46,061 34,815 169,392 141,113
Asset impairment 11,100 - 18,789 -
Cost of goods sold 146,596 104,458 506,312 432,143
Interest on debt 98,990 57,656 219,172 234,770
Operating lease in costs 3,303 4,664 14,512 20,176
Leasing expenses 32,356 4,595 55,569 18,825
Provision for doubtful notes
and accounts receivable 2,685 390 3,746 745
Selling, general and
administrative expenses 31,616 34,167 128,268 116,328
Total Expenses 372,707 240,745 1,115,760 964,100
Income from continuing
operations before
income taxes and
minority interest (46,275) 43,814 140,492 212,421
Provision for income taxes 15,851 (152) 430 (25,123)
Net income before
minority interest (30,424) 43,662 140,922 187,298
Minority interest, net
of taxes 11,426 1,453 10,883 1,155
Net Income $(18,998) $45,115 $151,805 $188,453
Basic and diluted
earnings per share (0.22) $0.53 $1.79 $2.22
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
(In thousands of U.S. Dollars)
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Net income (loss) (18,998) 45,115 151,805 188,453
Adjustments to reconcile
net income (loss) to net
cash provided by operating
activities
Minority interest (11,426) (1,453) (10,883) (1,155)
Depreciation 46,062 34,797 169,392 141,095
Asset impairment 11,100 - 18,789 -
Amortisation of debt
issuance cost 4,328 3,295 16,239 38,156
Amortisation of intangibles 3,788 2,938 14,615 10,800
Gain on elimination of
fair value guarantee - - - (10,736)
Gain on discounted purchase
of securitized bonds - - (2,783) -
Provision for doubtful notes
and accounts receivable 2,685 390 3,746 745
Capitalised interest on
pre-delivery payments 210 (1,361) (2,098) (5,968)
Gain on disposal of assets (15,073) (28,667) (80,341) (103,455)
Change in fair value of
derivative instruments 48,742 (4,231) 51,646 (3,892)
Deferred taxes (15,161) 3,393 (642) 13,929
Share-based compensation 1,475 2,899 6,858 10,916
Changes in assets and
liabilities
Trade receivables and
notes receivable, net (6,784) (12,376) (5,208) (28,647)
Inventories (14,683) (4,513) (5,469) 8,460
Other assets and
derivative assets (930) 9,561 (48,580) (16,041)
Accounts payable and accrued
expenses, including accrued
maintenance liability,
lessee deposits (9,545) (3,726) (28,001) (41,904)
Deferred revenue (3,594) 3,236 1,348 5,182
Net cash provided by
operating activities 22,196 49,297 250,433 205,938
Purchase of flight equipment (287,515) (242,357) (1,302,157) (699,807)
Proceeds from sale/
disposal of assets 135,048 116,875 487,475 449,313
Prepayments on
flight equipment (132,839) (57,440) (339,422) (164,074)
Receipt of notes receivable
in defeasance structures 44,157 - 44,157 -
Purchase of investments (7,550) - (17,550) -
Sale of investments - - 6,234 -
Purchase of intangibles - (1,633) (21,410) (18,427)
Movement in restricted cash 54,446 (34,258) (18,325) 17,205
Net cash used in investing
activities (194,253) (218,813) (1,160,998) (415,790)
Issuance of debt 494,446 291,588 1,642,784 2,395,956
Repayment of debt (306,972) (145,201) (742,258) (2,025,298)
Debt issuance costs paid (6,314) (7,162) (44,933) (49,579)
Capital contributions
from minority interests 5,000 - 5,000 -
Net cash provided by
financing activities 186,160 139,225 860,593 321,079
Net increase (decrease) in
cash and cash equivalents 14,103 (30,291) (49,972) 111,227
Effect of exchange rate
changes 3,016 30 1,799 (692)
Cash and cash equivalents at
beginning of period 176,444 271,997 241,736 131,201
Cash and cash equivalents at
end of period 193,563 241,736 193,563 241,736
SOURCE AerCap Holdings N.V.
Released February 25, 2009