AerCap Holdings N.V. Reports Fourth Quarter and Full Year 2007 Financial Results
AMSTERDAM, Netherlands, Feb. 27 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the fourth quarter ended December 31, 2007.
Fourth Quarter 2007 Highlights -- Fourth quarter 2007 net income was $45.1 million, compared with a net loss of $8.0 million for the same period in 2006. Fourth quarter 2007 net income excluding non-cash charges relating to the mark-to-market of interest rate caps and share-based compensation was $57.0 million, an increase of 11% vs. fourth quarter 2006 of $51.2 million on the same basis. -- Fourth quarter 2007 basic and diluted earnings per share were $0.53. Fourth quarter 2007 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 $0.67. -- Total revenue for the fourth quarter 2007 was $284.6 million, an increase of 34% vs. fourth quarter 2006. -- Basic lease rents for the fourth quarter 2007 were $125.9 million, an increase of 16% vs. fourth quarter 2006. -- Sales revenue for the fourth quarter 2007 was $138.0 million, an increase of 113% vs. fourth quarter 2006, and was generated from the sale of eight aircraft, three engines and the sale of parts inventory. -- Total assets were $4.4 billion at December 31, 2007, an increase of 12% over total assets of $3.9 billion at December 31, 2006. -- Aviation assets purchased and delivered in 2007 were $787.6 million. In addition to these completed purchases, at December 31, 2007 AerCap had signed agreements for the purchase of seven used aircraft and letters of intent for the purchase of five used aircraft. Full Year 2007 Financial Highlights -- Full year 2007 net income was $188.5 million, compared with $109.0 million for the same period in 2006. Full year 2007 net income excluding non-cash charges relating to the mark-to-market of interest rate caps and share-based compensation was $210.6 million, an increase of 23% vs. full year 2006 of $171.3 million. The full year 2007 net income includes a $24.0 million charge, net of tax, related to the refinancing of securitized bonds in the second quarter. -- Full year 2007 basic and diluted earnings per share were $2.22. Full year 2007 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 $2.48. -- Total revenue for the full year 2007 was $1,176.5 million, an increase of 44% vs. full year 2006. -- Basic lease rents for the full year 2007 were $494.2 million, an increase of 26% vs. full year 2006. -- Sales revenue for the full year 2007 was $558.3 million, an increase of 85% vs. full year 2006. Significant Items Previously Disclosed -- AerCap closed three financing transactions during the fourth quarter 2007, increasing committed funding by $440 million. In addition, AerCap successfully extended the term of its existing $1 billion warehouse facility with UBS and a syndicate of financial institutions from May 2013 to May 2014. -- A corporate tax restructuring was completed during the fourth quarter 2007. This structure reduced the overall effective tax rate to 11.8% for AerCap in the full year 2007. The effective tax rate for the next several years is expected to be comparable or slightly lower to the full year 2007 tax rate.
Klaus Heinemann, CEO of AerCap, commented, "We are delighted to present outstanding results for 2007. We continue to deliver on our growth program, having increased the value of our portfolio significantly in 2007, and we remain very well positioned to compete for more assets to add to our high quality and well diversified portfolio. In addition, we have been able to optimize our portfolio throughout 2007 through the sale of older, less fuel- efficient aircraft. There are no signs that the robust demand for modern and more fuel efficient aircraft is slowing, as evidenced by our ability to place all new aircraft coming up for delivery by Airbus in 2008 and 2009 under either letters of intent or signed lease agreements. We are currently marketing 2010 and 2011 delivery positions and see no weakening of demand for this period either."
AerCap's CFO, Keith Helming, added, "We had further strong revenue growth for both fourth quarter and full year 2007. Notwithstanding the recent volatility in global capital markets, we are well positioned with substantial liquidity and committed debt facilities to pursue our growth strategy and to respond to investment opportunities as they arise. Our ability to provide a stable platform for future growth with over $2 billion of committed funding at attractive rates demonstrates the confidence the financing community has in AerCap's strong business model."
Summary of Financial Results
AerCap recorded fourth quarter 2007 net income of $45.1 million or $0.53 per basic and diluted share. Included in the fourth quarter 2007 net income amount were non-cash charges related to the mark-to-market of interest rate caps and share-based compensation of $11.9 million or $0.14 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to- market of our interest rate caps was $9.4 million and the after-tax charge from share-based compensation was $2.5 million.
Detailed Financial Data ($ in Millions) Operating results Three months ended Twelve months ended December 31, December 31, % % increase/ increase/ 2007 2006 (decrease) 2007 2006 (decrease) Revenue $284.6 $211.6 34% $1,176.5 $814.4 44% Net income (loss) 45.1 (8.0) N/A 188.5 109.0 73% Revenue breakdown: Three months ended Twelve months ended December 31, December 31, % % increase/ increase/ 2007 2006 (decrease) 2007 2006 (decrease) Lease revenue: Basic rents $125.9 $108.4 16% $494.2 $390.9 26% Maintenance rents 8.5 5.4 57% 40.2 16.3 147% End-of-lease compensation 2.8 19.0 -85% 19.8 36.7 -46% Lease revenue $137.2 $132.8 3% $554.2 $443.9 25% Sales revenue 138.0 64.7 113% 558.3 301.4 85% Management fees and interest income 9.2 11.8 -22% 44.1 48.8 -10% Other revenue 0.2 2.3 -91% 19.9 20.3 -2% Total revenue $284.6 $211.6 34% $1,176.5 $814.4 44%
As indicated in the table above, lease revenue increased by 3% between the fourth quarter 2007 and the fourth quarter 2006 and 25% between the two twelve-month periods. The growth in the Company's leased assets and the continued strength of lease rates is reflected in our revenue through the significant increase in basic rents.
Effective tax rate
AerCap's effective tax rate during the full year 2007 was 11.8%, consisting of 9.8% for AerCap's aircraft business and 35.4% for AerCap's engine and parts business. Financial position % Increase over December 31, December 31, December 2007 2006 31, 2006 Flight equipment held for lease $3,050.2 $2,966.8 3% Total assets 4,393.7 3,918.0 12% Total liabilities 3,413.1 3,135.1 9% Total equity 950.4 751.0 27%
As of December 31, 2007, AerCap's portfolio consisted of 316 aircraft and 69 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 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 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 and twelve month periods ended December 31, 2007 and 2006:
Three months ended Twelve months ended ($s in Millions) December 31, December 31, 2007 2006 2007 2006 Net income $45.1 $(8.0) $188.5 * $109.0 Plus: Non-cash charges relating to the mark-to-market of interest rate caps, net of tax 9.4 0.5 12.6 (6.8) Non-cash charges related to share-based compensation, net of tax 2.5 58.7 9.5 69.1 Net income excluding non-cash charges related to the mark-to- market of interest rate caps and share-based compensation $57.0 $51.2 $210.6 * $171.3 * - Includes a 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 and New York Group Lunch Presentation
In connection with the earnings release, management will host two events today, Wednesday, February 27, 2008. There will be a conference call and webcast for investors and analysts 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 34282378 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 a.m. EST on February 27, 2008 and continuing through Wednesday, March 12, 2008. To access the recording, call 800-642-1687 (U.S. investors) or +1-706-645-9291 (International investors) and enter passcode 34282378. The webcast 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 senior management today, Wednesday, February 27, 2008, at 12:30 p.m. (EST) at The St. Regis Hotel. Doors will open at 12:00 p.m.
To participate in either event, please register at: www.sharedvalue.net/aercap/q407results
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 firstname.lastname@example.org Peter Wortel Investor Relations +31 20 655 9658 email@example.com For Media: Frauke Oberdieck Corporate Communications +31 20 655 9616 firstname.lastname@example.org AerCap Holdings N.V. Consolidated Balance Sheets - Unaudited (In thousands of U.S. Dollars) December 31, 2007 December 31, 2006 (adjusted) * Assets Cash and cash equivalents $241,736 $131,201 Restricted cash 95,072 112,277 Trade receivables, net of provisions 35,591 25,058 Flight equipment held for operating leases, net 3,050,160 2,966,779 Flight equipment held for sale 136,135 - Notes receivables, net of provisions 184,820 167,451 Prepayments on flight equipment 247,839 166,630 Investments 11,678 18,000 Goodwill 6,776 6,776 Intangibles, net 41,855 34,229 Inventory 90,726 82,811 Derivative assets 21,763 17,871 Deferred income taxes 85,253 96,521 Other assets 144,823 92,432 Total Assets $4,394,227 $3,918,036 Liabilities and Shareholders' Equity Accounts payable $16,376 $6,958 Accrued expenses and other liabilities 81,379 92,466 Accrued maintenance liability 255,535 259,739 Lessee deposit liability 83,628 77,686 Debt 2,892,744 2,555,139 Accrual for onerous contracts 46,411 111,333 Deferred revenue 33,574 28,391 Deferred income taxes 3,425 3,383 Total liabilities 3,413,072 3,135,095 Minority interest 30,782 31,937 Share capital 699 699 Additional paid-in capital 602,469 591,553 Retained earnings 347,205 158,752 Total shareholders' equity 950,373 751,004 Total Liabilities and Shareholders' Equity $4,394,227 $3,918,036 * 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 Twelve months ended December 31, December 31, 2007 2006 2007 2006 (Adjusted*) (Adjusted*)(A) Revenues Lease revenue $137,157 $132,794 $554,226 $443,925 Sales revenue 137,973 64,740 558,263 301,405 Interest revenue 6,020 8,025 29,742 34,681 Management fee revenue 3,206 3,742 14,343 14,072 Other revenue 203 2,322 19,947 20,336 Total Revenues 284,559 211,623 1,176,521 814,419 Expenses Depreciation 34,815 30,040 141,113 102,387 Cost of goods sold 104,458 37,013 432,143 220,277 Interest on debt 57,656 54,787 234,770 166,219 Operating lease in costs 4,664 6,307 20,176 25,232 Leasing expenses 4,595 9,882 18,825 21,477 Provision for doubtful notes and accounts receivable 390 661 745 (186) Selling, general and administrative expenses 34,167 82,793 116,328 149,364 Total Expenses 240,745 221,483 964,100 684,770 Income from continuing operations before income taxes and minority interest 43,814 (9,860) 212,421 129,649 Provision for income taxes (152) 1,957 (25,123) (21,246) Net income before minority interest 43,662 (7,903) 187,298 108,403 Minority interest, net of taxes 1,453 (142) 1,155 588 Net Income $45,115 $(8,045) $188,453 $108,991 Basic and diluted earnings per share 0.53 (0.10) 2.22 1.38 Weighted average shares outstanding - basic and diluted 85,036,957 81,193,479 85,036,957 78,982,162 * - 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 Twelve months ended December 31, December 31, 2007 2006 2007 2006 (Adjusted*) (Adjusted*) Net income (loss) 45,115 (8,045) 188,453 108,991 Adjustments to reconcile net income (loss) to net cash provided by operating activities - Minority interest (1,453) 142 (1,155) (588) Depreciation 34,797 30,040 141,095 102,387 Amortisation of debt issuance cost 3,295 5,891 38,156 11,777 Amortisation of intangibles 2,938 1,476 10,800 10,132 Gain on elimination of fair value guarantee - - (10,736) - Provision for doubtful notes and accounts receivable 390 (237) 745 (186) Capitalised interest on pre- delivery payments (1,361) (1,141) (5,968) (4,888) Release of provision against debt - (4,139) (4,139) Gain on disposal of assets (28,667) (19,567) (103,455) (67,720) Change in fair value of derivative instruments (4,231) (8,979) (3,892) (9,166) Deferred taxes 3,393 (1,955) 13,929 21,011 Share-based compensation 2,899 63,642 10,916 78,635 Changes in assets and liabilities - Trade receivables and notes receivable, net (12,376) (6,143) (28,647) 30,299 Inventories (4,513) 8,617 8,460 (24,216) Other assets 9,561 (3,636) (16,041) (7,990) Accounts payable and accrued expenses, including accrued - - maintenance liability, lessee deposits (3,726) 113,725 (41,904) 98,936 Deferred revenue 3,236 2,396 5,182 5,104 Net cash provided by operating activities 49,297 172,087 205,938 348,379 - Purchase of flight equipment (242,357) (489,060) (699,807) (879,497) Proceeds from sale/disposal of assets 116,875 34,718 449,313 253,199 Prepayments on flight equipment (57,440) (33,762) (164,074) (93,708) Purchase of investments - (15,000) (15,000) Purchase of subsidiaries, net of cash acquired - 2,146 - (143,100) Purchase of intangibles (1,633) (10,636) (18,427) (10,636) Movement in restricted cash (34,258) 12,788 17,205 45,453 Net cash used in investing activities (218,813) (498,806) (415,790) (843,289) - Issuance of debt 291,588 367,554 2,395,956 908,077 Repayment of debt (145,201) (260,679) (2,025,298) (607,721) Debt issuance costs paid (7,162) (7,933) (49,579) (32,940) Issuance of equity interests - 143,617 - 143,617 Dividends paid to minority interests - (225) - (225) Capital contributions from minority interests - - - 32,750 Net cash provided by financing activities 139,225 242,334 321,079 443,558 - Net (decrease) increase in cash and cash equivalents (30,291) (84,385) 111,227 (51,352) Effect of exchange rate changes 30 261 (692) (1,001) Cash and cash equivalents at beginning of period 271,997 215,325 131,201 183,554 Cash and cash equivalents at end of period 241,736 131,201 241,736 131,201 * - 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 February 27, 2008