AerCap Holdings N.V. Reports Second Quarter 2009 Financial Results
18% growth in lease revenue, 21% growth in net spread and 18% growth in total assets demonstrate AerCap's ability to deliver profitable growth
AMSTERDAM, Aug. 6 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the second quarter ended June 30, 2009.
Second Quarter 2009 Highlights
-- Second quarter 2009 net income was $56.6 million, compared with net
income of $68.6 million for the same period in 2008. Second quarter 2009
net income excluding the impact of the mark-to-market of interest rate
caps and share-based compensation was $39.1 million, compared with $58.2
million in second quarter 2008 on the same basis. The decrease in net
income was largely due to lower income from the sale of assets in second
quarter 2009 as compared to second quarter 2008.
-- Second quarter 2009 basic and diluted earnings per share were $0.67.
Second quarter 2009 basic and diluted earnings per share excluding the
impact of the mark-to-market of interest rate caps and share-based
compensation were $0.46.
-- Lease revenue for the second quarter 2009 was $169.8 million, compared
to $144.4 million for the same period in 2008, an increase of 18%.
-- Net spread, the difference between basic lease rents and interest
expense excluding the impact from the mark-to-market of interest rate
caps, was $112.6 million in second quarter 2009 compared to $93.1
million in second quarter 2008, an increase of 21%. This measure
reflects the increase in leasing income.
-- Total revenue for the second quarter 2009 was $294.7 million, compared
to $333.4 million for the same period in 2008. The decrease was mainly
due to lower aircraft sales revenue partially offset by higher lease
revenue and other revenue.
-- Sales revenue for the second quarter 2009 was $111.6 million, compared
to $180.7 million for the same period in 2008, and was generated from
the sale of aircraft, engines and parts inventory.
-- Total assets were $6.1 billion at June 30, 2009, an increase of 18% over
total assets of $5.2 billion at June 30, 2008.
-- Committed purchases of aviation assets delivered or scheduled for
delivery in 2009 are $1.8 billion, of which $0.8 billion closed in the
first half year of 2009.
Second Quarter 2009 Financing Highlights - previously disclosed
-- $4.5 billion in financings completed since the second quarter of 2008.
-- Signed a joint-venture agreement with Waha Capital for a 50/50 joint
investment in AerVenture.
-- Signed a facility agreement with a German bank for a $221 million
pre-delivery financing of ten A330 aircraft.
-- Closed on the initial fundings for 16 A320 aircraft into the ALS II
facility ($499.1 million). The ALS II facility has the capacity to fund
a total of 30 A320 aircraft.
Klaus Heinemann, CEO of AerCap, commented: "Our net spread, which is our industry's key measure of lease rental income after interest expense, increased by 21 percent in second quarter 2009 as compared to the same period in 2008, while we were managing our portfolio through the worst recession since World War II. Our cash position reached nearly $350 million on June 30, 2009 representing over 50 percent of our current market capitalization." Klaus Heinemann added: "We achieved our key goal for the first half of 2009; all of our aircraft orders to be delivered in 2009 through 2011 are placed with airline clients with committed financing arranged. AerCap has strong growth prospects as one of the leading players in the global aircraft operating lease market with financial resources and a commitment to participate in the anticipated market recovery during 2010."
AerCap's CFO, Keith Helming, said: "We are pleased with our second quarter results, notwithstanding the difficult market conditions. The growth in our net spread highlights the increasing profitability of our core leasing portfolio which also demonstrates the continued improvement in the quality of our reported earnings. We are also committed to further growth in our total aircraft assets, as we strive to create profitable long-term value for our shareholders." Keith Helming added: "AerCap has now raised $4.5 billion in financing since the second quarter of 2008, during the peak of the credit crisis. The strength of our business model has been further validated by the significant investment by Waha Capital, who have become our joint partner/shareholder in AerVenture. We have also broadened and reinforced our lessee portfolio, adding Virgin Atlantic, one of the premier long haul carriers, to our sizeable list of reputable clients."
Summary of Financial Results
AerCap recorded a second quarter 2009 net income of $56.6 million or $0.67 earnings per basic and diluted share. Included in the second quarter 2009 net income amount were mark-to-market of interest rate caps and share-based compensation of $17.5 million or $0.21 per basic and diluted share, net of tax. The after-tax gain relating to the mark-to-market of our interest rate caps was $18.3 million and the after-tax charge from share-based compensation was $0.8 million.
Detailed Financial Data
($ in Millions)
Operating results
Three months ended Six months ended
June 30, June 30,
%increase/ %increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- --------- ---- ---- ---------
Revenues $294.7 $333.4 -12% $503.2 $627.9 -20%
Net income 56.6 68.6 -17% 86.6 119.5 -28%
Net income excluding
the impact of
mark-to-market of
interest rate caps
and share-based
compensation 39.1 58.2 -33% 70.7 118.1 -40%
Total revenue in second quarter 2009 decreased 12% compared with second quarter 2008. This decrease was largely driven by lower sales revenue in the second quarter 2009 partially offset by higher lease revenue and higher other revenue.
Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 33%. This decrease was driven by lower income from the sale of assets ($28.6 million) and the costs relating to airline defaults which occurred in 2008 ($5.1 million), partially offset by an increase in net spread.
Revenue breakdown
Three months ended Six months ended
June 30, June 30,
%increase/ %increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- --------- ---- ---- ---------
Lease revenue:
Basic lease rents $141.4 $126.6 12% $282.8 $253.1 12%
Maintenance rents 26.9 13.8 95% 39.5 23.0 72%
End-of-lease
compensation and
other receipts 1.5 4.0 -63% 8.7 12.1 -28%
--- --- ---- --- ---- ----
Lease revenue $169.8 $144.4 18% $331.0 $288.2 15%
Sales revenue 111.6 180.7 -38% 153.4 323.2 -53%
Management fees and
interest income 6.4 7.9 -19% 11.7 16.0 -27%
Other revenue 6.9 0.4 1625% 7.1 0.5 1320%
--- --- ----- --- --- -----
Total revenue $294.7 $333.4 -12% $503.2 $627.9 -20%
====== ====== ==== ====== ====== ====
Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. 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 lease 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 second quarter 2009 increased 12% compared to second quarter 2008 to $141.4 million, interest expense excluding the impact of mark-to-market of interest rate caps decreased 14% compared with second quarter 2008 to $28.8 million, as shown in the table below. We refer to the difference in these amounts as net spread, which increased 21% in second quarter 2009 over the same period in 2008 to an amount of $112.6 million. Our average lease assets increased by 23% to $4.3 billion compared to second quarter 2008.
Three months ended Six months ended
June 30, June 30,
%increase/ %increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- --------- ---- ---- ---------
Basic lease rents $141.4 $126.6 12% $282.8 $253.1 12%
Interest on debt $6.0 $19.6 -69% $35.5 $69.2 -49%
Plus: mark-to-
market of interest
rate caps 22.8 13.9 64% 22.2 5.3 319%
---- ---- -- ---- --- ---
Interest on debt
excluding the impact
of mark-to-market
of interest rate
caps $28.8 $33.5 -14% $57.7 $74.5 -23%
------ ----- -- ------ ------ --
Net Spread $112.6 $93.1 21% $225.1 $178.6 26%
====== ===== == ====== ====== ==
Maintenance related revenues, including end-of-lease compensation, increased $10.6 million in second quarter 2009 to $28.4 million from $17.8 million in second quarter 2008. Of these amounts collected in the second quarter 2009, $13.7 million were payments made by lessees in order to fulfill the contractual return conditions of their leases relating to certain returned aircraft. However, the receipt of these payments triggered corresponding impairments on these aircraft of $13.7 million (refer to expense section of income statement).
Effective tax rate
AerCap's blended effective tax rate during the first half of 2009 was 2.7%, consisting of 1.2% for AerCap's aircraft business and 34.3% for AerCap's engine and parts business. The annual blended effective tax rate for 2008 was positive 0.3% (income).
Financial position
% Increase over
June 30, 2009 June 30, 2008 June 30, 2008
------------- ------------- ----------------
Flight equipment
held for lease $4,493.8 $3,765.4 19%
Total assets 6,130.8 5,217.7 18%
Total liabilities 4,835.8 4,111.9 18%
Total equity 1,295.1 1,105.9 17%
As of June 30, 2009, AerCap's portfolio consisted of 290 aircraft and 83 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 and six month periods ended June 30, 2009 and 2008:
Three months ended Six months ended
June 30, June 30,
%increase/ %increase/
2009 2008 (decrease) 2009 2008 (decrease)
---- ---- ---------- ---- ---- ---------
Net income $56.6 $68.6 -17% $86.6 $119.5 -28%
Plus: mark-to-market
of interest rate caps,
net of tax (18.3) (11.9) 54% (17.5) (4.3) 307%
share-based
compensation,
net of tax 0.8 1.5 -47% 1.6 2.9 -45%
--- --- --- --- --- ---
Net income excluding
the impact of
mark-to-market of
interest rate caps and
share-based
compensation $39.1 $58.2 -33% $70.7 $118.1 -40%
===== ===== === ===== ====== ===
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 lease rents for the three and six month periods ended June 30, 2009 and 2008 is included above.
Conference Call
In connection with the earnings release, management will host an earnings conference call today, Thursday, August 6, 2009 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing 800-676-6978 (US/Canada - toll free) or +1-706-634-5464 (International) and referencing code 18445389 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 August 6, 2009 and continuing through September 6, 2009. To access the recording, call 800-642-1687 (US/Canada - toll free) or +1-706-645-9291 (International) and enter passcode 18445389. 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, Thursday, August 6, 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/q209results
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
Financial Statements Follow
AerCap Holdings N.V.
Consolidated Balance Sheets - Unaudited
(In thousands of U.S. Dollars)
June 30, December 31, June 30,
2009 2008 2008
--------- ------------- ---------
Assets
Cash and cash equivalents $218,423 $193,563 $175,870
Restricted cash 128,184 113,397 183,808
Trade receivables, net of provisions 39,244 43,649 40,642
Flight equipment held for operating
leases, net 4,493,793 3,989,629 3,765,378
Flight equipment held for sale - - 48,390
Net investment in direct finance
leases 34,822 30,571 -
Notes receivables, net of
provisions 136,084 134,067 199,485
Prepayments on flight equipment 576,754 448,945 328,172
Investments 20,111 18,678 11,678
Goodwill 6,776 6,776 6,776
Intangibles, net 37,893 47,099 54,788
Inventory 131,416 102,879 88,627
Derivative assets 40,035 19,352 59,677
Deferred income taxes 81,187 82,471 78,617
Other assets 186,105 179,750 175,818
------- ------- -------
Total Assets $6,130,827 $5,410,826 $5,217,726
========== ========== ==========
Liabilities and Equity
Accounts payable $28,290 $7,510 $7,023
Accrued expenses and other
liabilities 76,559 104,750 107,865
Accrued maintenance liability 206,873 202,834 248,517
Lessee deposit liability 112,112 98,584 89,566
Debt* 4,336,966 3,790,487 3,580,002
Accrual for onerous contracts 29,878 33,306 28,472
Deferred revenue 36,805 34,922 40,042
Derivative liabilities 8,285 12,378 2,584
Deferred income taxes - - 7,779
-- -- -----
Total liabilities 4,835,768 4,284,771 4,111,850
Share capital 699 699 699
Additional paid-in capital 591,623 609,327 605,889
Retained earnings 585,560 499,011 466,678
------- ------- -------
Total AerCap Holdings N.V.
shareholders' equity 1,177,882 1,109,037 1,073,266
Non-controlling interest 117,177 17,018 32,610
------- ------ ------
Total Equity 1,295,059 1,126,055 1,105,876
---------- ---------- ----------
Total Liabilities and Equity $6,130,827 $5,410,826 $5,217,726
========== ========== ==========
* Includes $63 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 Six months ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Revenues
Lease revenue $169,829 $144,346 $331,042 $288,202
Sales revenue 111,635 180,725 153,352 323,188
Interest revenue 2,602 5,165 5,223 10,042
Management fee revenue 3,732 2,731 6,473 5,905
Other revenue 6,897 386 7,107 549
----- --- ----- ---
Total Revenues 294,695 333,353 503,197 627,886
Expenses
Depreciation 53,243 39,527 104,490 78,002
Asset impairment 13,733 7,689 20,950 7,689
Cost of goods sold 105,496 140,847 139,320 250,866
Interest on debt 5,989 19,628 35,475 69,224
Operating lease in costs 3,273 3,315 6,587 6,955
Leasing expenses 22,076 11,402 41,237 17,792
Provision for doubtful notes
and accounts receivable (879) 699 353 1,247
Selling, general and
administrative expenses 27,777 32,664 54,990 63,286
------ ------ ------ ------
Total Expenses 230,708 255,771 403,402 495,061
------- ------- ------- -------
Income from continuing
operations before income
taxes 63,987 77,582 99,795 132,825
Provision for income taxes (827) (6,955) (2,687) (11,525)
------ ------ ------ -------
Net income 63,160 70,627 97,108 121,300
Net (income) loss attributable
to non-controlling
interest (6,564) (2,031) (10,558) (1,828)
------ ------ ------- ------
Net Income attributable to
AerCap Holdings N.V. $56,596 $68,596 $86,550 $119,472
======= ======= ======= ========
Basic and diluted earnings
per share $0.67 $0.81 $1.02 $1.40
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 - Unaudited
(In thousands of U.S. Dollars)
Three months ended Six months ended
June 30, June 30,
2009 2008 2009 2008
---- ---- ---- ----
Net income 63,160 70,627 97,108 121,300
Adjustments to reconcile net
income to net cash provided by
operating activities
Depreciation 53,243 39,528 104,490 78,002
Asset impairment 13,733 7,689 20,950 7,689
Amortisation of debt issuance
cost 4,054 3,365 7,888 6,757
Amortisation of intangibles 4,415 3,535 9,205 7,039
Provision for doubtful notes
and accounts receivable (879) 699 353 1,247
Capitalised interest on pre-
delivery payments (338) (730) (709) (1,399)
Gain on disposal of assets 570 (29,858) 1,018 (52,807)
Mark-to-market of non-hedged
derivatives (18,502) (13,943) (19,504) (11,076)
Deferred taxes (102) 6,556 1,139 10,990
Share-based compensation 996 1,785 1,998 3,421
Changes in assets and
liabilities
Trade receivables and notes
receivable, net 1,244 (723) 5,528 (20,963)
Inventories (17,205) 5,802 (2,721) 16,275
Other assets and derivative
assets (6,543) (23,944) (10,730) (25,490)
Accounts payable and accrued
expenses, including accrued
maintenance liability, lessee
deposits 13,977 11,534 2,047 7,813
Deferred revenue (3,328) 4,378 1,884 6,468
------ ----- ----- -----
Net cash provided by operating
activities 108,495 86,300 219,944 155,266
Purchase of flight equipment (286,726) (642,647) (574,814) (877,551)
Proceeds from sale/disposal
of assets 76,560 164,405 78,352 247,892
Prepayments on flight
equipment (127,857) (59,233) (286,361) (131,678)
Purchase of intangibles - (12,895) - (21,522)
Movement in restricted cash 16,770 (56,658) (14,787) (88,736)
------ ------- ------- -------
Net cash used in investing
activities (321,253) (607,028) (797,610) (871,595)
Issuance of debt 835,278 662,565 1,280,978 940,646
Repayment of debt (671,944) (127,025) (768,429) (253,388)
Debt issuance costs paid (10,743) (35,254) (14,113) (35,621)
Capital contributions from
minority interests 104,200 - 104,200 -
------- -- ------- --
Net cash provided by financing
activities 256,791 500,286 602,636 651,637
Net increase (decrease) in
cash and cash equivalents 44,033 (20,442) 24,970 (64,692)
Effect of exchange rate
changes (691) (858) (110) (1,174)
Cash and cash equivalents at
beginning of period 175,081 197,170 193,563 241,736
------- ------- ------- -------
Cash and cash equivalents at
end of period 218,423 175,870 218,423 175,870
======= ======= ======= =======
SOURCE AerCap Holdings N.V.
Released August 6, 2009