Friday, 8 November 2019

AerCap releases third quarter 2019 results

AerCap, a global leader in aircraft leasing with 1,360 aircraft owned, managed or on order and $43.5 billion of total assets has released its latest results.

The firm serves approximately 200 customers in approximately 80 countries and has offices in Shannon, Los Angeles, Singapore, Amsterdam, Shanghai, Abu Dhabi, Seattle and Toulouse with its head office in Dublin. During the third quarter, it achieved a net income of $270.3 million and $835.9 million for the nine months ended September 30, 2019

Aengus Kelly, CEO of AerCap, commented: "We are very pleased to report another quarter of strong results. During the third quarter of 2019 we generated earnings per share of $2.01 and net income of $270 million. The 108 aircraft transactions executed this quarter demonstrate the scale and reach of the AerCap platform. Our earnings consistency and the discipline we have shown in managing our business are reflected in S&P's recent upgrade of AerCap to BBB, another important milestone in our continuing upward rating trajectory."






Highlights
  • 12% increase in EPS year over year.
  • Upgraded to BBB rating by S&P Global Ratings and placed on Positive Outlook by Moody's.
  • 108 aircraft transactions executed in the third quarter of 2019.
  • New technology aircraft now comprise 55% of our owned fleet.
  • Over $40 billion of contracted future lease revenues.
  • Approximately 97% of lease rents through 2022 already contracted.
  • Average current lease expires in 2027.
  • 99.8% fleet utilization rate for the third quarter of 2019.
  • $2.4 billion increase in average lease assets year over year.
  • 13% increase in book value per share since September 30, 2018.
  • Repurchased 2.0 million shares in the third quarter of 2019 for $104 million and 9.1 million shares year to date through November 6, 2019 for $438 million.
  • New $200 million share repurchase program authorized, which will run through March 31, 2020.

Third Quarter 2019 Financial Results
  • Net income was $270.3 million, compared with $263.4 million for the same period in 2018. Diluted earnings per share was $2.01, compared with $1.79 for the same period in 2018.
  • The increase in net income was primarily driven by higher lease rents resulting from an increase in average lease assets due to the delivery of new technology aircraft from July 2018 through September 2019, as well as higher net gain on sale of assets.
  • Diluted earnings per share increased 12%, driven by the same factors as net income and the repurchase of 14.7 million shares from July 2018 through September 2019.
Revenue and Net Spread


Three months ended September 30,

Nine months ended September 30,


2019

2018

% increase/

(decrease)

2019

2018

% increase/

(decrease)


(U.S. Dollars in millions)

(U.S. Dollars in millions)
Lease revenue:












   Basic lease rents

$1,066.6

$1,038.5

3%

$3,218.9

$3,094.5

4%

   Maintenance rents and other receipts

72.6

93.9

(23)%

268.5

289.2

(7)%

Lease revenue

1,139.2

1,132.4

1%

3,487.4

3,383.7

3%

Net gain on sale of assets

40.5

20.0

103%

140.2

160.5

(13)%

Other income

14.4

14.1

2%

52.7

36.0

46%

Total Revenues and other income

$1,194.1

$1,166.5

2%

$3,680.4

$3,580.3

3%

Basic lease rents were $1,066.6 million for the third quarter of 2019, compared with $1,038.5 million for the same period in 2018. The increase was primarily due to a $2.4 billion increase in average lease assets.
Maintenance rents and other receipts were $72.6 million for the third quarter of 2019, compared with $93.9 million for the same period in 2018. The decrease was primarily due to lower maintenance revenue recognized as a result of lease terminations.
Net gain on sale of assets for the third quarter of 2019 was $40.5 million, relating to 19 aircraft sold for $561.3 million, compared with $20.0 million for the same period in 2018, relating to 13 aircraft sold for $187.5 million. The increase was primarily due to the volume and composition of asset sales.


Three months ended September 30,

Nine months ended September 30,


2019

2018

% increase/

decrease

2019

2018

% increase/

(decrease)


(U.S. Dollars in millions)

(U.S. Dollars in millions)













Basic lease rents

$1,066.6

$1,038.5

3%

$3,218.9


$3,094.5


4%
Interest expense

312.3

292.1

7%

978.9


851.4


15%
Adjusted for:












   Mark-to-market of interest rate caps

(3.4)

4.9

NA

(29.1)


26.0


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

308.9

297.0

4%

949.8


877.4


8%
Net interest margin (*)

$757.7

$741.5

2%

$2,269.1


$2,217.1


2%
Depreciation and amortization, including maintenance rights expense

(429.2)

(446.2)

(4)%

(1,311.7)


(1,375.3)


(5)%
Net interest margin, less depreciation and amortization

$328.5

$295.3

11%

$957.4


$841.8


14%













Average lease assets (*)

$37,663

$35,280

7%

$37,524


$35,037


7%
Annualized net spread (*)

8.0%

8.4%



8.1%


8.4%




Annualized net spread less depreciation and amortization (*)

3.5%

3.3%



3.4%


3.2%

















(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures
Interest expense excluding mark-to-market of interest rate caps of $3.4 million was $308.9 million for the third quarter of 2019, compared with $297.0 million for the same period in 2018. Our average cost of debt was 4.2% for the third quarter of 2019, compared with 4.1% for the same period in 2018. Our average cost of debt includes debt issuance costs, upfront fees, undrawn fees, commitment fees and original issuance discount fees of approximately 0.3%.
Selling, General and Administrative Expenses


Three months ended September 30,

Nine months ended September 30,


2019

2018

% increase/

(decrease)

2019

2018

% increase/

(decrease)


(U.S. Dollars in millions)

(U.S. Dollars in millions)













Selling, general and administrative expenses

$49.0

$48.4

1%

$144.4

$157.4

(8)%
Share-based compensation expenses

15.7

15.0

5%

51.7

77.1

(33)%
Total selling, general and administrative expenses



$64.7

$63.4

2%

$196.1

$234.5

(16)%
Other Expenses
Leasing expenses were $44.1 million for the third quarter of 2019, compared with $84.8 million for the same period in 2018. The decrease was primarily due to a decrease in maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights asset balance as well as a decrease in other leasing expenses recognized as a result of lease terminations. Asset impairment charges were $31.2 million for the third quarter of 2019, compared to $12.8 million recorded for the same period in 2018. Asset impairment charges recorded in the third quarter of 2019 primarily related to lease terminations and were partially offset by related maintenance revenue recognized upon termination.

Effective Tax Rate
Our effective tax rate for the third quarter of 2019 was 13.0%, the same as for the third quarter of 2018. The effective tax rate for the full year 2018 was 12.5%. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions.

Book Value Per Share


September 30,

2019

September 30,

2018


(U.S. Dollars in millions,

except share and per share data)





Total AerCap Holdings N.V. shareholders' equity

$9,174.9

$8,869.9





Ordinary shares outstanding

134,742,482

146,961,077
Unvested restricted stock

(2,229,371)

(2,133,610)
Ordinary shares outstanding (excl. unvested restricted stock)

132,513,111

144,827,467





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

$69.24

$61.24

Book value per share has increased by 13% since September 30, 2018.
Financial Position


September 30,
2019

December 31,

2018

% increase/

(decrease) over

December 31,

2018


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







Total cash, cash equivalents and restricted cash

$1,196.6

$1,415.0

(15)%
Total lease assets (*)

37,888.5

37,244.6

2%
Total assets

43,549.0

43,208.9

1%
Debt

29,283.5

29,507.6

(1)%
Total liabilities

34,309.0

34,328.3

0%
Total AerCap Holdings N.V. shareholders' equity

9,174.9

8,828.0

4%
Total equity

9,240.0

8,880.6

4%







(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures
As of September 30, 2019, AerCap's portfolio consisted of 1,360 aircraft that were owned, on order or managed. The average age of our owned fleet as of September 30, 2019 was 6.2 years (2.2 years for new technology aircraft, 11.1 years for current technology aircraft) and the average remaining contracted lease term was 7.5 years.

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

Share Repurchase Program
In November 2019, our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $200 million of AerCap ordinary shares through March 31, 2020. Repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable U.S. federal securities laws. The timing of repurchases and the exact number of common shares to be purchased will be determined by the Company's management, in its discretion, and will depend upon market conditions and other factors. The program will be funded using the Company's cash on hand and cash generated from operations. The program may be suspended or discontinued at any time.
Notes Regarding Financial Information Presented in This Press Release
The financial information presented in this press release is not audited.
Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.
The following are definitions of non-GAAP measures used in this press release. We believe these measures may further assist investors in their understanding of our operational performance.
Adjusted debt/equity ratio
This measure is the ratio obtained by dividing adjusted debt by adjusted equity.
  • Adjusted debt means consolidated total debt less cash and cash equivalents, and less a 50% equity credit with respect to certain long-term subordinated debt.
  • Adjusted equity means total equity, plus the 50% equity credit relating to the long-term subordinated debt.
Adjusted debt and adjusted equity are adjusted by the 50% equity credit to reflect the equity nature of those financing arrangements and to provide information that is consistent with definitions under certain of our debt covenants. We believe this measure may further assist investors in their understanding of our capital structure and leverage.


September 30, 2019


(U.S. Dollars in millions,

except debt/equity ratio)



Debt

$29,284



Adjusted for:


   Cash and cash equivalents

(1,037)
   50% credit for long-term subordinated debt

(750)
Adjusted debt

$27,497






Equity

$9,240



Adjusted for:


   50% credit for long-term subordinated debt

750
Adjusted equity

$9,990



Adjusted debt/equity ratio

2.75 to 1
Net interest margin, annualized net spread and annualized net spread less depreciation and amortization
Net interest margin is calculated as the difference between basic lease rents and interest expense, excluding the impact of the mark-to-market of interest rate caps. Annualized net spread is net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is net interest margin less depreciation and amortization, including maintenance rights expense, expressed as a percentage of average lease assets. We believe these measures may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. These measures reflect the impact from changes in the number of aircraft leased, lease rates and utilization rates, as well as the impact from changes in the amount of debt and interest rates.
Lease assets
Lease assets include flight equipment held for operating leases, flight equipment held for sale, net investment in finance and sales-type leases and maintenance rights assets.







AerCap Holdings N.V





Unaudited Consolidated Balance Sheets





(U.S. Dollars in thousands)













September 30, 2019

December 31, 2018









Assets






Cash and cash equivalents

$1,036,919

$1,204,018


Restricted cash

159,694

211,017


Trade receivables

54,863

40,379


Flight equipment held for operating leases, net

35,231,489

35,052,335


Maintenance rights and lease premium, net

917,353

1,113,190


Flight equipment held for sale

801,645

184,129


Net investment in finance and sales-type leases

1,038,832

1,003,286


Prepayments on flight equipment

2,930,971

3,024,520


Other intangibles, net

312,688

328,570


Deferred income tax assets

152,428

138,281


Other assets

912,132

909,190


Total Assets

$43,549,014

$43,208,915
















Liabilities and Equity






Accounts payable, accrued expenses and other liabilities

$1,046,204

$1,009,945


Accrued maintenance liability

2,281,224

2,237,494


Lessee deposit liability

762,261

768,677


Debt

29,283,522

29,507,587


Deferred income tax liabilities

935,812

804,598


Total liabilities

34,309,023

34,328,301









Ordinary share capital €0.01 par value, 350,000,000 ordinary shares authorized as of September 30, 2019 and December 31, 2018; 146,847,345 and 151,847,345 ordinary shares issued and 134,742,482 and 142,674,664 ordinary shares outstanding (including 2,229,371 and 2,429,442 unvested restricted stock) as of September 30, 2019 and December 31, 2018, respectively

1,810

1,866


Additional paid-in capital

2,448,236

2,712,417


Treasury shares, at cost 12,104,863 and 9,172,681 ordinary shares as of September 30, 2019 and December 31, 2018, respectively)

(591,085)

(476,085)


Accumulated other comprehensive loss

(108,139)

(1,824)


Accumulated retained earnings

7,424,094

6,591,674


Total AerCap Holdings N.V. shareholders' equity

9,174,916

8,828,048


Non-controlling interest

65,075

52,566


Total Equity

9,239,991

8,880,614









Total Liabilities and Equity

$43,549,014

$43,208,915























AerCap Holdings N.V







Unaudited Consolidated Income Statements







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























Three months ended September 30,

Nine months ended September 30,





2019

2018

2019

2018



Revenues and other income











Lease revenue:











Basic lease rents

$1,066,584

$1,038,521

$3,218,934

$3,094,517



Maintenance rents and other receipts

72,600

93,939

268,506

289,218



Net gain on sale of assets

40,519

19,992

140,217

160,517



Other income

14,382

14,065

52,731

36,043



Total Revenues and other income

1,194,085

1,166,517

3,680,388

3,580,295















Expenses











Depreciation and amortization

415,313

412,722

1,260,255

1,253,169



Asset impairment

31,168

12,843

54,018

28,929



Interest expense

312,311

292,082

978,931

851,396



Leasing expenses

44,080

84,814

201,045

320,591



Selling, general and administrative expenses

64,712

63,401

196,128

234,455



Total Expenses

867,584

865,862

2,690,377

2,688,540















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

326,501

300,655

990,011

891,755















Provision for income taxes

(42,445)

(39,089)

(128,701)

(115,932)



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

(12,065)

2,711

(8,028)

8,520















Net income

$271,991

$264,277

$853,282

$784,343



Net income attributable to non-controlling interest

(1,701)

(926)

(17,346)

(1,353)















Net income attributable to AerCap Holdings N.V

$270,290

$263,351

$835,936

$782,990















Basic earnings per share

$2.03

$1.81

$6.16

$5.36



Diluted earnings per share

$2.01

$1.79

$6.10

$5.21



Weighted average shares outstanding - basic

133,182,744

145,669,773

135,732,923

146,040,042



Weighted average shares outstanding - diluted

134,175,597

147,123,818

136,990,028

150,231,051


































AerCap Holdings N.V






Unaudited Consolidated Statements of Cash Flows






(U.S. Dollars in thousands)








Nine months ended September 30,




2019

2018


Net income

$853,282

$784,343


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






Depreciation and amortization

1,260,255

1,253,169


Asset impairment

54,018

28,929


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

61,297

59,631


Amortization of fair value adjustment on debt

(62,361)

(115,549)


Maintenance rights write-off

174,544

234,964


Maintenance liability release to income

(143,316)

(177,264)


Net gain on sale of assets

(140,217)

(160,517)


Deferred income taxes

131,708

117,716


Collections of finance and sales-type leases

72,775



Other

134,416

88,593


 Changes in operating assets and liabilities:






   Trade receivables

(15,424)

(47,430)


   Other assets

(7,053)

(11,206)


   Accounts payable, accrued expenses and other liabilities

(36,561)

6,555


Net cash provided by operating activities

2,337,363

2,061,934









Purchase of flight equipment

(2,396,722)

(2,200,397)


Proceeds from sale or disposal of assets

1,171,886

1,338,776


Prepayments on flight equipment

(1,015,332)

(1,505,490)


Collections of finance and sales-type leases


73,617


Other

(17)

(21,359)


Net cash used in investing activities

(2,240,185)

(2,314,853)









Issuance of debt

5,339,455

4,069,555


Repayment of debt

(5,523,401)

(3,981,988)


Debt issuance costs paid, net of debt premium received

(18,524)

(52,734)


Maintenance payments received

564,374

567,511


Maintenance payments returned

(249,382)

(364,319)


Security deposits received

199,091

141,114


Security deposits returned

(194,841)

(144,795)


Dividend paid to non-controlling interest holders and others

(4,837)

(2,700)


Repurchase of shares and tax withholdings on share-based compensation

(425,609)

(597,047)


Net cash used in financing activities

(313,674)

(365,403)









Net decrease in cash, cash equivalents and restricted cash

(216,496)

(618,322)


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

(1,926)

2,966


Cash, cash equivalents and restricted cash at beginning of period

1,415,035

2,024,125


Cash, cash equivalents and restricted cash at end of period

$1,196,613

$1,408,769





























SOURCE AerCap Holdings N.V.





Recommended for you...

No comments: