AerCap Holdings N.V. Reports Fourth Quarter and Full Year 2010 Financial Results

AMSTERDAM, Feb. 24, 2011 /PRNewswire/ -- 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, 2010.

Fourth Quarter 2010 Highlights

  • Fourth quarter 2010 basic and diluted earnings per share was $0.53, compared to earnings per share of $0.51 for the same period in 2009. Fourth quarter 2010 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $0.41, compared to $0.47 in fourth quarter 2009 on the same basis.
  • Fourth quarter 2010 net income was $72.4 million, compared to net income of $43.2 million for the same period in 2009. Fourth quarter 2010 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $56.3 million, compared to net income of $40.3 million in fourth quarter 2009 on the same basis.
  • Margin earned on lease assets (net spread) was $187.2 million in fourth quarter 2010 compared to $126.4 million in fourth quarter 2009, an increase of 48%.
  • Basic lease rents for the fourth quarter of 2010 were $245.2 million, compared to $156.6 million for the same period in 2009, an increase of 57%. Total lease revenue (basic rents, maintenance rents and end-of-lease compensation) for the fourth quarter of 2010 was $270.8 million, compared to $165.7 million for the same period in 2009, an increase of 63%.
  • Sales revenue for the fourth quarter 2010 was $121.3 million, compared to $115.9 million for the same period in 2009, and was generated from the sale of three aircraft, three engines and parts inventory.
  • Total revenue for the fourth quarter of 2010 was $397.7 million, compared to $287.6 million for the same period in 2009. The increase was mainly due to the 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 $9.6 billion at December 31, 2010, an increase of 42% over total assets of $6.8 billion at December 31, 2009. The Genesis Transaction accounted for $1.5 billion of the increase in total assets. The remaining $1.3 billion increase was driven primarily by deliveries of forward order aircraft.

Full Year 2010 Key Financial Highlights

  • Full year 2010 net income was $207.6 million, compared to $165.2 million for the full year 2009. Full year 2010 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $223.9 million, an increase of 49% compared to $150.2 million for the full year 2009. This increase was mainly caused by the Genesis Transaction and the deliveries of forward order aircraft.
  • Full year 2010 basic and diluted earnings per share was $1.81, compared to $1.94 for the full year 2009. Full year 2010 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $1.95, compared to $1.77 for the full year 2009.
  • Margin earned on lease assets (net spread) was $665.8 million for the full year 2010, up 43% compared to the full year 2009.
  • Basic lease rents for the full year 2010 were $878.4 million, up 51% compared to the full year 2009.
  • Sales revenue for the full year 2010 was $850.0 million, up 162% compared to the full year 2009 and was generated from the sale of 16 aircraft, 16 engines and parts inventory.
  • Total revenue for the full year 2010 was $1.8 billion, up 83% compared to the full year 2009 resulting primarily from sales revenue and an increase in basic lease rents driven by the additional aircraft acquired in the Genesis Transaction and the deliveries of forward order aircraft.
  • Aviation assets purchased and delivered in 2010 were $2.6 billion.

Klaus Heinemann, CEO of AerCap, commented: "AerCap's full year 2010 key financial highlights establish a new benchmark for the three P's that define a successful aircraft lessor. First, the Platform: AerCap's Operating Platform, managing global airline, manufacturer and investor relationships, is now among the three leading franchises and the largest independent franchise measured by aircraft asset value. Second, the Portfolio: AerCap's Aircraft Asset Portfolio consists primarily of the youngest, most fuel-efficient aircraft currently in production. The success of this Portfolio is best highlighted by its 2010 net spread of $666 million. Third, the Profitability: AerCap's 2010 Profit of $224 million after adjustments sets a new record in AerCap's history. Our earnings per share of $1.95 after adjustments highlights our ability to effectively integrate transactions such as the Genesis amalgamation and the Waha transaction without dilutive effects for existing shareholders, even in the year of completion."

AerCap's CFO, Keith Helming, added: "2010 represents an outstanding year for AerCap marked by several noteworthy financial achievements. The Company had a 83% rise in total revenue compared to 2009 driven by strong sales. Our net spread and net income rose by 43% and 26%, respectively, for the full year 2010, both representing historic highs for the Company. Our lease assets grew 54% during 2010, driven by the Genesis Transaction and forward order aircraft deliveries. In addition, our growth commitments continue to be well supported by our financing partners, as we entered into debt facility agreements totaling $1.6 billion in 2010. Finally, we ended fiscal year 2010 with $627 million of cash, which when combined with the financing commitments positions AerCap to benefit further from the recovery of the global aviation sector."

Summary of Financial Results

AerCap recorded fourth quarter 2010 net income of $72.4 million or $0.53 earnings per basic and diluted share. Fourth quarter 2010 net income included net income relating to mark-to-market of interest rate caps and share-based compensation of $16.1 million or $0.12 per basic and diluted share, net of tax. The after-tax gain relating to the mark-to-market of our interest rate caps was $17.5 million and the after-tax charge from share-based compensation was $1.4 million.

Detailed Financial Data

($ in Millions)


Operating results:


Three months ended

December 31,


Twelve months ended

December 31,


2010


2009


% increase/

(decrease)


2010


2009


% increase/

(decrease)













Revenues 

$   397.7


$   287.6


38%


$ 1,834.5


$ 1,003.3


83%

Net income 

72.4


43.2


68%


207.6


165.2


26%

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

56.3


40.3


40%


223.9


150.2


49%



Total revenue in the fourth quarter of 2010 increased 38% compared to the fourth quarter of 2009. This increase resulted primarily from an increase in 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 40%.

Revenue breakdown:



Three months ended

December 31,


Twelve months ended

December 31,



2010


2009


% increase/

(decrease)


2010


2009


% increase/

(decrease)














Lease revenue:













  Basic lease rents


$   245.2


$   156.6


57%


$    878.4


$    581.9


51%

  Maintenance rents


25.6


9.1


181%


82.4


59.0


40%

  End-of-lease compensation and other receipts


-


-


0%


-


9.7


(100%)

Lease revenue


$   270.8


$   165.7


63%


$    960.8


$    650.6


48%

Sales revenue


121.3


115.9


5%


850.0


324.8


162%

Management fees and interest income


4.4


5.2


(15%)


16.2


22.2


(27%)

Other revenue


1.2


0.8


50%


7.5


5.7


32%

Total revenue


$   397.7


$   287.6


38%


$ 1,834.5


$ 1,003.3


83%



Basic lease rents were $245.2 million for the fourth quarter of 2010, an increase of 57% compared to the fourth quarter of 2009, as a result of our growing asset base. Our average lease assets increased by 61% to $8.1 billion compared to the fourth quarter of 2009. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $58.0 million in the fourth quarter of 2010, an increase of $27.8 million over the same period in 2009. The increase was primarily driven by the Genesis Transaction ($9.6 million) and the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 48% to $187.2 million in the fourth quarter of 2010 over the same period in 2009.



Three months ended

December 31,


Twelve months ended

December 31,




2010


2009


% increase/

(decrease)


2010


2009


% increase/

(decrease)










Basic lease rents


$   245.2


$   156.6


57%


$    878.4


$    581.9


51%
















Interest on debt


$     38.2


$     23.8


61%


$    240.3

(a)

$      92.2


161%


Plus: mark-to-market of interest rate caps


19.8


6.4


209%


(27.7)


23.7


(217%)


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


$     58.0


$     30.2


92%


$    212.6


$    115.9


83%
















Net Spread


$   187.2


$   126.4


48%

(b)

$    665.8


$    466.0


43%

(b)
















a)  Interest on debt for the year ended December 31, 2010, includes $26.4 million of amortization of debt issuance cost.

b)  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. For the aircraft acquired through the Genesis Transaction, the net spread is lower as a result of high fixed rate swaps.



Effective tax rate

AerCap's blended effective tax rate during the twelve month period ended December 31, 2010 was 8.6% (charge), consisting of 8.9% (charge) for AerCap's aircraft business and 34.2% (credit) 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 a larger earnings increase in higher tax rate jurisdictions.

Financial position:



December 31,

2010


December 31,

2009


% Increase over

December 31,

2009







Total cash (incl. restricted)

$         626.9


$         323.4


94%

Flight equipment held for lease

8,061.3


5,230.4


54%

Total assets

9,600.6


6,769.5


42%

Debt

6,566.2


4,846.7


35%

Total liabilities

7,383.2


5,356.2


38%

Total equity

2,217.4


1,413.3


57%



As of December 31, 2010, AerCap's portfolio consisted of 350 aircraft and 96 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 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 month and twelve month periods ended December 31, 2010 and 2009:



Three months ended

December 31,


Twelve months ended

December 31,



2010


2009


% increase/

(decrease)


2010


2009


% increase/

(decrease)














Net income


$     72.4


$     43.2


68%


$    207.6


$    165.2


26%

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


(17.5)


(3.7)


373%


13.5


(18.2)


(174%)

          share-based compensation, net of tax


1.4


0.8


75%


2.8


3.2


(13%)

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


$     56.3


$     40.3


40%


$    223.9


$    150.2


49%



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 rents for the three month and twelve month periods ended December 31, 2010 and 2009 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, February 24, 2010 at 9:30 am Eastern Time / 3:30 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 7638745 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations".

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, Thursday, February 24, 2011, 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: http://client.sharedvalue.net/AerCap/Q410

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, the United Arab Emirates, 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)
















December 31, 2010


December 31, 2009








Assets






Cash and cash equivalents


$          404,450


$          182,617


Restricted cash


222,464


140,746


Trade receivables, net of provisions


49,055


48,070


Flight equipment held for operating leases, net


8,061,260


5,230,437


Net investment in direct finance leases


30,069


34,532


Notes receivables, net of provisions


15,497


138,488


Prepayments on flight equipment


199,417


527,666


Investments


72,985


21,031


Goodwill


6,776


6,776


Intangibles, net


58,637


31,399


Inventory


121,085


102,538


Derivative assets


55,211


44,866


Deferred income taxes


94,560


80,098


Other assets


209,141


180,237


Total Assets


$       9,600,607


$       6,769,501














Liabilities and Equity












Accounts payable


$            16,045


$            11,832


Accrued expenses and other liabilities


121,389


80,399


Accrued maintenance liability


420,824


228,006


Lessee deposit liability


130,031


126,093


Debt


6,566,163

*

4,846,664


Accrual for onerous contracts


12,928


22,363


Deferred revenue


60,061


33,011


Derivative liabilities


55,769


7,801


Total liabilities


7,383,210


5,356,169








Share capital


1,570


699


Additional paid-in capital


1,333,025


593,133


Accumulated other comprehensive income


5,005


-


Retained earnings


871,750


664,177


Total AerCap Holdings N.V. shareholders' equity


2,211,350


1,258,009


Non-controlling interest


6,047


155,323


Total Equity


2,217,397


1,413,332








Total Liabilities and Equity


$       9,600,607


$       6,769,501








* Includes $87.6 million of subordinated debt received from our joint venture partners








Supplemental information


December 31, 2010


December 31, 2009


Debt/equity ratio


3.0


3.4


Debt/equity ratio (adjusted for subordinated debt)


2.8


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

December 31,

Twelve months ended

December 31,




2010


2009


2010


2009












Revenues










Lease revenue


$       270,798


$       165,672


$       960,811


$       650,604


Sales revenue


121,255


115,878


850,034


324,781


Interest revenue


652


2,449


4,269


10,105


Management fee revenue


3,746


2,780


11,815


12,074


Other revenue


1,213


781


7,532


5,703


Total Revenues


397,664


287,560


1,834,461


1,003,267












Expenses










Depreciation


93,833


60,843


333,753


220,996


Asset impairment


8,955


11,242


14,437


32,574


Cost of goods sold


113,447


69,604


785,322


248,897


Interest on debt


38,183


23,833


240,258


92,152


Operating lease in costs


3,061


3,235


12,332


13,090


Leasing expenses


24,364


13,279


68,102


65,164


Provision for doubtful notes and accounts receivable


137


555


1,167


963


Selling, general and administrative expenses


33,740


33,405


120,228


116,201


Other expenses


-


1,065


-


2,965


Total Expenses


315,720


217,061


1,575,599


793,002












Income from continuing operations before income taxes


81,944


70,499


258,862


210,265












Provision for income taxes


(6,424)


(423)


(22,316)


(3,894)


Amalgamation gain, net of transaction expenses and tax


-


-


274


-












Net income


75,520


70,076


236,820


206,371












Net income attributable to non-controlling interest


(3,079)


(26,912)


(29,247)


(41,205)












Net Income attributable to AerCap Holdings N.V.


$         72,441


$         43,164


$       207,573


$       165,166












Basic and diluted earnings per share


$             0.53


$             0.51


$             1.81


$             1.94












Weighted average shares outstanding - basic and diluted


136,000,708


85,036,957


114,952,639


85,036,957




AerCap Holdings N.V.


Consolidated Statements of Cash Flows


(In thousands of U.S. Dollars)




Three months ended

December 31,


Three months ended

December 31,


Twelve months ended

December 31,


Twelve months ended

December 31,




2010


2009


2010


2009












Net income


75,520


70,076


236,820


206,371


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










Depreciation


93,835


60,843


333,754


220,996


Asset impairment


8,955


11,242


14,437


32,574


Amortisation of debt issuance cost


6,733


4,575


26,410


16,364


Amortisation of intangibles


5,978


3,202


22,070


15,701


Provision for doubtful notes and accounts receivable


392


424


1,312


1,364


Capitalised interest on pre-delivery payments


(122)


(172)


(590)


(1,106)


Gain on disposal of assets


(1,153)


(37,046)


(37,203)


(36,007)


Change in fair value of derivative instruments


(35,136)


(3,287)


769


(18,929)


Deferred taxes


5,465


365


19,757


2,228


Share-based compensation


1,746


1,000


3,402


3,910


Changes in assets and liabilities






-




   Trade receivables and notes receivable, net


2,937


(836)


(371)


(6,686)


   Inventories


(8,578)


2,092


3,183


35,238


   Other assets and derivative assets


(2,804)


7,285


(8,320)


(7,236)


   Other liabilities


12,680


(7,251)


(14,170)


(63,968)


   Deferred revenue


(6,872)


(171)


14,182


(1,613)


Net cash provided by operating activities


159,576


112,341


615,442


399,201












Purchase of flight equipment


(150,912)


(416,415)


(1,939,874)


(1,264,446)


Proceeds from sale/disposal of assets


70,593


73,238


664,218


153,481


Prepayments on flight equipment


(29,335)


(50,251)


(140,094)


(453,305)


Purchase of subsidiaries, net of cash acquired


-


-


70,618


-


Purchase of investments


-


-


(7,500)


-


Purchase of intangibles


-


-


(9,006)


-


Movement in restricted cash


11,490


(19,679)


(50,262)


(27,349)


Net cash used in investing activities


(98,164)


(413,107)


(1,411,900)


(1,591,619)












Issuance of debt


212,201


588,397


2,324,609


2,431,839


Repayment of debt


(272,245)


(332,878)


(1,485,690)


(1,414,456)


Debt issuance costs paid


(12,796)


(12,398)


(60,889)


(32,723)


Maintenance payments received


42,845


25,235


149,408


99,664


Maintenance payments returned


(13,683)


(8,529)


(42,250)


(46,897)


Security deposits received


4,643


15,806


29,535


42,169


Security deposits returned


(14,395)


(2,215)


(39,710)


(12,840)


Issuance of equity interests*


110,243


-


110,243


-


Capital contributions from non-controlling interests


-


7,500


32,375


111,700


Net cash provided by financing activities


56,813


280,918


1,017,631


1,178,456












Net increase (decrease) in cash and cash equivalents


118,225


(19,848)


221,173


(13,962)


Effect of exchange rate changes


462


(912)


660


3,016


Cash and cash equivalents at beginning of period


285,763


203,377


182,617


193,563


Cash and cash equivalents at end of period


404,450


182,617


404,450


182,617
























Three months ended

December 31,


Three months ended

December 31,


Twelve months ended

December 31,


Twelve months ended

December 31,


*The issuance of equity interest is a net presentation of the following items:


2010


2009


2010


2009


Consideration paid (29.8 million shares issued at a share price of $13.85)


413,376


-


413,376


-


Purchase of non-controlling interests


(262,092)


-


(262,092)


-


Purchase of investments


(41,041)


-


(41,041)


-


Issuance of equity interests (net cash received)


110,243


-


110,243


-













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.

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