November 05, 2010 at 07:03 AM EDT
AerCap Holdings N.V. Reports Third Quarter 2010 Financial Results
Net spread, which is the margin earned on our leased assets, was $171.8 million for the third quarter of 2010, an increase of 50% over third quarter 2009

AMSTERDAM, Nov. 5, 2010 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the third quarter ended September 30, 2010.

Third Quarter 2010 Highlights

  • Third quarter 2010 basic and diluted earnings per share were $0.43, compared with $0.42 for the same period in 2009. Third quarter 2010 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation were $0.51, compared with $0.46 in the third quarter 2009 on the same basis.
  • Third quarter 2010 net income was $51.9 million, compared with net income of $35.5 million for the same period in 2009. Third quarter 2010 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $61.1 million, compared with $39.2 million in the third quarter 2009 on the same basis.
  • Net spread, the difference between basic lease rents and interest expense excluding the impact from the mark-to-market of interest rate caps, was $171.8 million in the third quarter of 2010 compared to $114.6 million in the third quarter of 2009, an increase of 50%. This measure reflects the increase in leasing income and excludes income derived from the sale of aircraft.
  • Basic lease rents for the third quarter of 2010 were $233.9 million, compared to $142.4 million for the same period in 2009, an increase of 64%. Total lease revenue (basic rents, maintenance rents and end-of-lease compensation) for the third quarter of 2010 was $254.0 million, compared to $153.8 million for the same period in 2009, an increase of 65%.
  • Sales revenue for the third quarter 2010 was $218.2 million, compared to $49.0 million for the same period in 2009, and was generated from the sale of three aircraft, five engines and parts inventory.
  • Total revenue for the third quarter of 2010 was $478.1 million, compared to $212.5 million for the same period in 2009. The increase was mainly due to the increase in sales revenue and an increase in lease revenue which was primarily driven by the all-share acquisition of Genesis Lease Limited ("the Genesis Transaction") which occurred in March 2010 and the deliveries of forward order aircraft.
  • Total assets were $9.3 billion at September 30, 2010, an increase of 46% over total assets of $6.4 billion at September 30, 2009. The Genesis Transaction accounted for $1.5 billion of the increase in total assets.  The remaining $1.4 billion increase was driven primarily by deliveries of forward order aircraft.
  • Committed purchases of aviation assets delivered or scheduled for delivery in 2010 are $2.5 billion, of which $2.4 billion closed in the nine month period ended September 30, 2010.

Klaus Heinemann, CEO of AerCap, commented: "The end of the third quarter 2010 marks the completion of the largest expansion program in AerCap's history. Lease assets increased by 67% to $7.97 billion compared to the end of the same quarter last year. This growth was achieved with solid equity support. AerCap's total equity reached $1.98 billion by quarter end, and we were able to achieve this without dilution of earnings per share.  Third quarter earnings per share were 51 cents on an adjusted basis compared to 46 cents for the same quarter last year.  This strong financial performance coupled with the recent addition of Waha Leasing to the AerCap family positions the Company for continued long term success."

AerCap's CFO, Keith Helming, said: "The 125% increase in total revenue, 50% growth in net spread and the consequent 46% increase in net income in the third quarter 2010 compared to the same period in 2009 further underlines our ability to deliver profitable growth.  The increase in these key metrics was mainly due to the completion of the Genesis Transaction and the deliveries of our forward order aircraft.  In addition, our liquidity position continues to be strong as demonstrated by the $520 million of cash on hand at the end of September."

Summary of Financial Results

The Genesis Transaction which was completed on March 25, 2010 is fully reflected in all AerCap Holdings N.V. second and third quarter 2010 consolidated financial statements. The Genesis Transaction was not included in the AerCap Holdings N.V. first quarter 2010 income statement (including the number of outstanding shares used for earnings per share calculations) other than one line item reflecting a $0.3 million amalgamation gain (net of transaction expenses and tax). The impact of the Genesis Transaction was also reflected in one line item in the AerCap Holdings N.V. first quarter 2010 consolidated cash flow statement (purchase of subsidiaries, net of cash acquired).

AerCap recorded third quarter 2010 net income of $51.9 million or $0.43 earnings per basic and diluted share. Third quarter 2010 net income included net charges relating to mark-to-market of interest rate caps and share-based compensation of $9.2 million or $0.08 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $9.0 million reflecting changes in forecasted interest rates. The after-tax charge from share-based compensation was $0.2 million.

Detailed Financial Data

($ in Millions)

Operating results



Three months ended
September 30,


Nine months ended
September 30,



2010


2009


% increase/  (decrease)


2010


2009


% increase/  (decrease)














Revenues


$              478.1


$              212.5


125%


$ 1,436.8


$ 715.7


101%

Net income


51.9


35.5


46%


135.1


122.0


11%

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation


61.1


39.2


56%


167.4


109.9


52%



Total revenue in the third quarter of 2010 increased 125% compared to the third quarter of 2009. This increase resulted primarily from an increase in sales revenue and basic lease rents driven by the additional aircraft acquired in the Genesis Transaction and the deliveries of forward order aircraft. For similar reasons, net income excluding the impact of mark-to-market of interest rate caps and share-based compensation increased by 56%.

Revenue breakdown
















Three months ended
September 30,


Nine months ended
September 30,



2010


2009


% increase/  (decrease)


2010


2009


% increase/  (decrease)














Lease revenue:













  Basic lease rents


$              233.9


$              142.4


64%


$    633.2


$ 425.2


49%

  Maintenance rents


20.1


10.4


93%


56.8


49.9


14%

  End-of-lease compensation and other receipts


-


1.0


(100%)


-


9.7


(100%)

Lease revenue


$              254.0


$              153.8


65%


$    690.0


$ 484.8


42%

Sales revenue


218.2


49.0


345%


728.8


208.6


249%

Management fees and interest income


3.8


5.3


(28%)


11.7


17.0


(31%)

Other revenue


2.1


4.4


(52%)


6.3


5.2


21%

Total revenue


$              478.1


$              212.5


125%


$ 1,436.8


$ 715.6


101%



Basic lease rents were $233.9 million for the third quarter of 2010, an increase of 64% compared to the third quarter of 2009, as a result of our growing asset base. Our average lease assets increased by 70% to $7.8 billion compared to the third quarter of 2009. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $62.1 million in the third quarter of 2010, an increase of $34.3 million over the same period in 2009. The increase was primarily driven by the Genesis Transaction ($15.0 million) and the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 50% to $171.8 million in the third quarter of 2010 over the same period in 2009.



Three months ended
September 30,


Nine months ended
September 30,



2010


2009


% increase/  (decrease)


2010


2009


% increase/  (decrease)














Basic lease rents


$              233.9


$              142.4


64%


$    633.2


$ 425.2


49%














Interest on debt


$                75.1


$                32.8


129%


$    202.1


$   68.3


196%

Plus: mark-to-market of interest rate caps


(13.0)


(5.0)


160%


(47.6)


17.2


(377%)

Interest on debt excluding the impact of mark-to-market of interest rate caps


$                62.1


$                27.8


123%


$    154.5


$   85.5


81%














Net Spread  


$              171.8


$              114.6


50%


$    478.7


$ 339.7


41%



* The increase in net spread is lower than the increase in basic lease rents as a result of the delivery of new forward order aircraft and the Genesis Transaction. For new aircraft, the net spread is lower at the start of the lease because of higher interest expenses resulting from a higher loan to value.

Effective tax rate

AerCap's blended effective tax rate during the nine month period ended September 30, 2010 was 9.0% (charge), consisting of 9.3% (charge) for AerCap's aircraft business and 29.8% (income) for AerCap's engine and parts business. The blended effective tax rate in 2009 was 1.9% (charge). The blended effective tax rate in any year is impacted by the source and the amount of earnings among AerCap's different tax jurisdictions.  The increase in the 2010 blended tax rate as compared to 2009 is the result of having more earnings generated from higher tax rate jurisdictions.

Financial position










September 30,
2010


September 30,
2009


% Increase
over
September 30,
2009








Total cash (incl. restricted).


$              519.7


$              324.4


60%

Flight equipment held for lease


7,974.1


4,761.9


67%

Total assets


9,338.6


6,417.6


46%

Total liabilities


7,358.1


5,082.9


45%

Total equity


1,980.5


1,334.8


48%



As of September 30, 2010, AerCap's portfolio consisted of 324 aircraft and 83 engines that were either owned, on order, under contract or letter of intent, or managed. This includes aircraft that AerCap added through the Genesis Transaction in March 2010.

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 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. In addition to GAAP net income, we believe this measure may provide investors with supplemental information regarding our operational performance and may further assist investors in their understanding of our operational performance in relation to past and future reporting periods. We use interest rate caps to allow us to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on our 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 our lease and other contracts. We do not apply hedge accounting to our interest rate caps. As a result, we recognize the change in fair value of the interest rate caps in our 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 nine month periods ended September 30, 2010 and 2009:



Three months ended
September 30,


Nine months ended
September 30,



2010


2009


% increase/  (decrease)


2010


2009


% increase/  (decrease)














Net income


$                51.9


$                35.5


46%


$    135.1


$ 122.0


11%

Plus: mark-to-market of interest rate caps, net of tax


9.0


3.0


(200%)


30.8


(14.5)


312%

          share-based compensation, net of tax


0.2


0.7


(71%)


1.5


2.4


(38%)

Net income excluding the impact of mark-to-market of interest rate caps and share-based compensation


$                61.1


$                39.2


56%


$    167.4


$ 109.9


52%



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 (refer to third table under Revenue breakdown section of this press release). 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.  We believe this measure may further assist investors in their understanding of the changes and trends related to the earnings of our 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 to hedge our interest rate risk. The reconciliation of net spread to basic lease rents for the three and nine month periods ended September 30, 2010 and 2009 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Friday, November 5, 2010 at 9:30 am Eastern Time / 2:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 1-866-239-0753 or (International) +31-20-713-2998 and referencing code 7436381 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. 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 AerCap's management today, Friday, November 5, 2010, at 12:30 pm Eastern Time at The New York Palace (the Henry Room), 455 Madison Avenue, New York. Doors will open at 12:00 pm.

To participate in either event, please register at: www.sharedvalue.net/aercap/Q310

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 the world's leading independent aircraft leasing company. AerCap also provides engine leasing, aircraft management services, 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," "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.

Financial Statements Follow










AerCap Holdings N.V.








Consolidated Balance Sheets - Unaudited








(In thousands of U.S. Dollars)


















September 30,
2010


December 31,
2009


September 30,
2009










Assets








Cash and cash equivalents


$                   285,763


$                  182,617


$                   203,377


Restricted cash


233,954


140,746


121,067


Trade receivables, net of provisions


60,001


48,070


49,037


Flight equipment held for operating leases, net


7,974,109


5,230,437


4,761,918


Net investment in direct finance leases


28,170


34,532


34,069


Notes receivables, net of provisions


7,939


138,488


141,628


Prepayments on flight equipment


197,616


527,666


632,333


Investments


30,774


21,031


20,367


Goodwill


6,776


6,776


6,776


Intangibles, net


64,568


31,399


34,602


Inventory


119,097


102,538


108,444


Derivative assets


23,981


44,866


38,572


Deferred income taxes


102,117


80,098


80,463


Other assets


203,715


180,237


184,975


Total Assets


$                9,338,580


$               6,769,501


$                6,417,628


















Liabilities and Equity
















Accounts payable


$                     17,516


$                    11,832


$                     16,004


Accrued expenses and other liabilities


98,149


80,399


77,591


Accrued maintenance liability


400,461


228,006


216,345


Lessee deposit liability


138,316


126,093


113,025


Debt


6,562,293

*

4,846,664


4,593,268


Accrual for onerous contracts


10,917


22,363


24,378


Deferred revenue


66,106


33,011


33,479


Derivative liabilities


64,302


7,801


8,783


Total liabilities


7,358,060


5,356,169


5,082,873










Share capital


1,163


699


699


Additional paid-in capital


968,724


593,133


592,133


Accumulated other comprehensive income (loss)


(470)


-


-


Retained earnings


799,309


664,177


621,012


Total AerCap Holdings N.V. shareholders' equity


1,768,726


1,258,009


1,213,844


Non-controlling interest


211,794


155,323


120,911


Total Equity


1,980,520


1,413,332


1,334,755










Total Liabilities and Equity


$                9,338,580


$               6,769,501


$                6,417,628










* Includes $88.0 million of subordinated debt received from our joint venture partners












Supplemental information


September 30,
2010


December 31,
2009


September 30,
2009


Debt/equity ratio


3.3


3.4


3.4


Debt/equity ratio (adjusted for subordinated debt)


3.1


3.2


3.2














AerCap Holdings N.V.






Consolidated Income Statements - Unaudited






(In thousands of U.S. Dollars, except share and per share data)








Three months ended
September 30,


Nine months ended
September 30,




2010


2009


2010


2009












Revenues










Lease revenue


$      254,008


$    153,890


$      690,013


$    484,932


Sales revenue


218,194


49,012


728,779


208,608


Interest revenue


748


2,433


3,617


7,656


Management fee revenue


3,021


2,821


8,069


9,294


Other revenue


2,117


4,354


6,319


5,217


Total Revenues


478,088


212,510


1,436,797


715,707












Expenses










Depreciation


89,946


55,663


239,920


160,153


Asset impairment


2,761


382


5,482


21,332


Cost of goods sold


202,053


39,973


671,875


179,293


Interest on debt


75,144


32,844


202,075


68,319


Operating lease in costs


3,057


3,268


9,271


9,855


Leasing expenses


17,322


10,648


43,738


51,885


Provision for doubtful notes and accounts receivable


514


55


1,030


408


Selling, general and administrative expenses


21,710


27,806


86,488


82,796


Other expenses


-


1,900


-


1,900


Total Expenses


412,507


172,539


1,259,879


575,941












Income from continuing operations before income taxes


65,581


39,971


176,918


139,766












Provision for income taxes


(6,144)


(784)


(15,892)


(3,471)


Amalgamation gain, net of transaction expenses and tax


-


-


274


-












Net Income


59,437


39,187


161,300


136,295












Net (income) attributable to non-controlling interest


(7,559)


(3,735)


(26,168)


(14,293)












Net Income attributable to AerCap Holdings N.V.


$        51,878


$      35,452


$      135,132


$    122,002












Basic and diluted earnings per share


$            0.43


$          0.42


$            1.25


$          1.43












Weighted average shares outstanding - basic and diluted


119,386,445


85,036,957


107,936,616


85,036,957



* The increase of $42.3 million in interest on debt in the third quarter 2010 as compared to the third quarter 2009 was primarily driven by (i) a $8.1 million increase in the mark-to-market on interest rate caps, (ii) a $15.0 million increase from the Genesis Transaction and (iii) the increase in our lease portfolio from the delivery of our forward order aircraft. The same items were also the primary drivers for the increase in the nine month period ended September 30, 2010 as compared to the nine month period ended September 30, 2009.


AerCap Holdings N.V.










Consolidated Statements of Cash Flows - Unaudited










(In thousands of U.S. Dollars)












Three months ended
September 30,


Nine months ended
September 30,




2010


2009


2010


2009












Net income


59,437


39,187


161,300


136,295


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










Depreciation


89,945


55,663


239,919


160,153


Asset impairment


2,761


382


5,482


21,332


Amortisation of debt issuance cost


7,347


3,901


19,677


11,789


Amortisation of intangibles


5,930


3,294


16,092


12,499


Provision for doubtful notes and accounts receivable


563


587


920


940


Capitalised interest on pre-delivery payments


(155)


(225)


(468)


(934)


Gain on disposal of assets


(6,798)


21


(36,050)


1,039


Mark-to-market of non-hedged derivatives


(5,931)


3,862


35,905


(15,642)


Deferred taxes


6,007


724


14,292


1,863


Share-based compensation


99


912


1,656


2,910


Changes in assets and liabilities






-




   Trade receivables and notes receivable, net


(9,459)


(11,378)


(3,308)


(5,850)


   Inventories


2,885


35,867


11,761


33,146


   Other assets and derivative assets


2,120


(3,791)


(5,516)


(14,521)


   Other liabilities


(13,298)


(26,865)


(26,850)


(63,627)


   Deferred revenue


9,057


(3,326)


21,054


(1,442)


Net cash provided by operating activities


150,510


98,815


455,866


279,950












Purchase of flight equipment


(467,600)


(271,054)


(1,788,962)


(845,868)


Proceeds from sale/disposal of assets


167,862


1,891


593,625


80,243


Prepayments on flight equipment


(25,979)


(116,693)


(110,759)


(403,054)


Purchase of subsidiaries, net of cash acquired


-


-


70,618


-


Purchase of investments


-


-


(7,500)


-


Purchase of intangibles


-


-


(9,006)


-


Movement in restricted cash


12,508


7,117


(61,752)


(7,670)


Net cash used in investing activities


(313,209)


(378,739)


(1,313,736)


(1,176,349)












Issuance of debt


496,126


562,464


2,112,408


1,843,442


Repayment of debt


(327,805)


(313,149)


(1,213,445)


(1,081,578)


Debt issuance costs paid


(12,809)


(6,212)


(48,093)


(20,325)


Maintenance payments received


38,030


25,546


106,563


74,429


Maintenance payments returned


(5,843)


(8,011)


(28,567)


(33,620)


Security deposits received


7,971


9,222


24,892


32,287


Security deposits returned


(8,187)


(9,020)


(25,315)


(16,550)


Capital contributions from non-controlling interests


-


-


32,375


104,200


Net cash provided by financing activities


187,483


260,840


960,818


902,285












Net increase in cash and cash equivalents


24,784


(19,084)


102,948


5,886


Effect of exchange rate changes


723


4,038


198


3,928


Cash and cash equivalents at beginning of period


260,256


218,423


182,617


193,563


Cash and cash equivalents at end of period


285,763


203,377


285,763


203,377



Certain reclassifications have been made to prior years consolidated statements of cash flow to reflect the current year presentation.

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



SOURCE AerCap Holdings N.V.

Related Stocks:
Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here