AerCap Holdings N.V. Reports Second Quarter 2011 Financial Results

AMSTERDAM, Aug. 5, 2011 /PRNewswire/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the second quarter ended June 30, 2011.

Second Quarter 2011 Highlights

Net income

  • Second quarter 2011 net income was $30.8 million, compared with net income of $48.9 million for the same period in 2010.
  • Second quarter 2011 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $51.4 million, compared with net income of $59.6 million for the same period in 2010.
  • In the second quarter 2011 the Company acquired the right to provide lease and aircraft related services to the Genesis portfolio for $21.4 million, net of tax. Excluding the impact of the mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights, second quarter 2011 net income was $72.8 million, an increase of 22% compared to net income of $59.6 million in the second quarter of 2010 on the same basis.

Earnings per share

  • Second quarter 2011 basic and diluted earnings per share was $0.21, compared with $0.41 for the same period in 2010.
  • Second quarter 2011 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $0.35, compared with $0.50 for the same period in 2010.
  • Second quarter 2011 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights was $0.49, compared with $0.50 for the same period in 2010.

Other financial highlights

  • Margin earned on lease assets (net spread) was $187.0 million in the second quarter of 2011 compared to $173.9 million in the second quarter of 2010, an increase of 8%.
  • Basic lease rents for the second quarter of 2011 were $251.2 million, compared to $233.5 million for the same period in 2010, an increase of 8%. Total lease revenue (basic rents, maintenance rents and other receipts) for the second quarter of 2011 was $284.1 million, compared to $260.7 million for the same period in 2010, an increase of 9%. The increases were mainly due to the deliveries of forward order aircraft.
  • Sales revenue for the second quarter of 2011 was $74.5 million, compared to $328.1 million for the same period in 2010. Sales revenue for the second quarter of 2011 was generated from the sale of our 50% interest in three A330 aircraft that had been part of a joint venture with a third party, the sale of five engines and parts inventory. Sales revenue for the second quarter of 2010 was higher than second quarter 2011 due to the sale of two new A330 aircraft and two new A320 aircraft.
  • Total revenue for the second quarter of 2011 was $364.3 million, compared to $594.0 million for the same period in 2010 for the reasons mentioned above.
  • Committed purchases of aviation assets delivered or scheduled for delivery in 2011 are $838 million, of which $638 million closed in the first half year of 2011.
  • Total assets were $9.6 billion at June 30, 2011, an increase of 5% over total assets of $9.1 billion at June 30, 2010. The increase was driven primarily by deliveries of forward order aircraft.

Aengus Kelly, CEO of AerCap, commented: "Our second quarter results and activities illustrate AerCap's ability to consistently deliver industry leading results. Net income for the quarter was $72.8 million or $0.49 cents after adjusting for the one-off charge relating to the buy-out of the Genesis portfolio servicing rights, the impact of the mark-to-market of interest rate caps and share-based compensation. This industry leading profitability is driven by the excellence of our platform, the quality of our portfolio and the efficiency and robustness of our funding structures."

AerCap's CFO, Keith Helming, said: "In addition to the strong earnings generated from our portfolio, our access to capital continues to expand. We completed another $1 billion of financings to date in 2011 including an extension of our $775 million non-recourse revolving debt facility by an additional two years. Total cash on hand at the end of the second quarter is in excess of $500 million and this amount will be further enhanced from the expected sale of AeroTurbine."

Summary of Financial Results

AerCap recorded a second quarter 2011 net income of $30.8 million or $0.21 earnings per basic and diluted share. Second quarter 2011 net income included net charges relating to the mark-to-market of interest rate caps and share-based compensation of $20.6 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 $18.9 million, which reflects changes in forecasted interest rates, and the after-tax charge from share-based compensation was $1.7 million. Second quarter 2011 net income also included a one-off charge relating to the buy-out of the Genesis portfolio servicing rights of $21.4 million or $0.14 per basic and diluted share, net of tax. Second quarter 2011 net income excluding the impact of mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights was $72.8 million or $0.49 per basic and diluted share, net of tax.

Detailed Financial Data

($ in Millions)

Operating results



Three months ended
June 30,


Six months ended
June 30,



2011


2010


% increase/  (decrease)


2011


2010


% increase/  (decrease)














Revenues


$                  364.3


$                  594.0


(39%)


$                  726.6


$                  957.5


(24%)

Net income


30.8


48.9


(37%)


102.9


83.3


24%

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


51.4


59.6


(14%)


126.6


106.3


19%

Net income excluding the impact of mark-to-market of
interest rate caps, share-based compensation and the
one-off charge relating to the buy-out of the Genesis
portfolio servicing rights.


72.8


59.6


22%


148.0


106.3


39%



Net income for the second quarter of 2011 excluding the impact of mark-to-market of interest rate caps and share-based compensation decreased by 14%. This decrease was primarily caused by the one-off charge relating to the buy-out of the Genesis portfolio servicing rights in the second quarter. Excluding the impact of mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights net income increased by 22%. This increase was primarily caused by an increase in net spread as a result of the deliveries of forward order aircraft and the purchase of the 50% equity interest in AerVenture from Waha.

Revenue breakdown
















Three months ended
June 30,


Six months ended
June 30,



2011


2010


% increase/  (decrease)


2011


2010


% increase/  (decrease)














Lease revenue:













  Basic lease rents


$                  251.2


$                  233.5


8%


$                  498.5


$                  399.3


25%

  Maintenance rents and other receipts


32.9


27.2


21%


59.0


36.7


61%

Lease revenue


$                  284.1


$                  260.7


9%


$                  557.5


$                  436.0


28%

Sales revenue


74.5


328.1


(77%)


155.5


510.6


(70%)

Management fees and interest income


5.4


4.1


32%


10.8


7.9


37%

Other revenue


0.3


1.1


(73%)


2.8


3.0


(7%)

Total revenue


$                  364.3


$                  594.0


(39%)


$                  726.6


$                  957.5


(24%)



Basic lease rents were $251.2 million for the second quarter of 2011, an increase of 8% compared to the second quarter of 2010, as a result of our growing asset base. Our average lease assets increased by 12% to $8.4 billion compared to the second quarter of 2010. As shown in the table below, interest expense excluding the impact of the mark-to-market of interest rate caps was $64.2 million in the second quarter of 2011, an 8% increase compared to the second quarter of 2010. The increase was primarily driven by the increase in our lease portfolio from the delivery of forward order aircraft. As a result, net spread increased 8% to $187.0 million in the second quarter of 2011 over the same period in 2010.



Three months ended
June 30,


Six months ended
June 30,



2011


2010


% increase/  (decrease)


2011


2010


% increase/  (decrease)














Basic lease rents


$                  251.2


$                  233.5


8%


$                  498.5


$                  399.3


25%














Interest on debt


$                    86.0

(a)

$                    75.5


14%


$                  148.9


$                  126.9


17%

Plus: mark-to-market of interest rate caps


(21.8)


(15.9)


(37%)


(23.5)


(34.2)


31%

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


$                    64.2


$                    59.6


8%


$                  125.4


$                    92.7


35%














Net Spread


$                  187.0


$                  173.9


8%


$                  373.1


$                  306.6


22%



a) Interest on debt for the quarter ended June 30, 2011, includes $10.1 million of amortization of debt issuance costs.

Effective tax rate

AerCap's blended effective tax rate during the first half year of 2011 was 8.0% (charge), consisting of 8.9% (charge) for AerCap's aircraft business and 38.1% (credit) for AerCap's engine and parts business. The blended effective tax rate in 2010 was 8.6% (charge).

Financial position










June 30, 2011


June 30, 2010


% Increase over
June 30, 2010








Total cash (incl. restricted)


$                  535.1


$                  506.7


6%

Flight equipment held for lease


8,158.2


7,624.7


7%

Total assets


9,571.0


9,098.4


5%

Debt


6,519.2


6,393.9


2%

Total liabilities


7,254.8


7,176.9


1%

Total equity


2,316.2


1,921.5


21%



As of June 30, 2011, AerCap's portfolio consisted of 335 aircraft and 95 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 and six month periods ended June 30, 2011 and 2010:



Three months ended
June 30,


Six months ended
June 30,



2011


2010


% increase/  (decrease)


2011


2010


% increase/  (decrease)














Net income


$                    30.8


$                    48.9


(37%)


$                  102.9


$                    83.3


24%

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


18.9


10.1


87%


20.3


21.7


(6%)

          share-based compensation, net of tax


1.7


0.6


183%


3.4


1.3


162%

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


$                    51.4

(a)

$                    59.6


(14%)


$                  126.6

(a)

$                  106.3


19%



a) Net income for the second quarter 2011 excluding mark-to-market of interest rate caps, share-based compensation and the one-off charge relating to the buy-out of the Genesis portfolio servicing rights was $72.8 million, an increase of 22% compared to the second quarter of 2010 on the same basis.

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 second 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. 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 and six month periods ended June 30, 2011 and 2010 is included above.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Friday, August 5, 2011 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 1-480-629-9692 or (International) +31-20-794-8504 and referencing code 4449992 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.

To participate in the event, please register at: http://client.sharedvalue.net/AerCap/Q211

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)


















June 30,
2011


December 31,
2010


June 30,
2010










Assets








Cash and cash equivalents


$       344,061


$                  404,450


$       260,256


Restricted cash


191,026


222,464


246,462


Trade receivables, net of provisions


60,895


49,055


47,991


Flight equipment held for operating leases, net


8,158,226


8,061,260


7,624,655


Flight equipment held for sale


26,536


-


39,442


Net investment in direct finance leases


27,327


30,069


31,692


Notes receivables, net of provisions


14,531


15,497


9,861


Prepayments on flight equipment


129,042


199,417


259,387


Investments


78,345


72,985


29,775


Goodwill


6,776


6,776


6,776


Intangibles, net


48,809


58,637


70,498


Inventory


132,796


121,085


125,057


Derivative assets


58,873


55,211


23,447


Deferred income taxes


85,613


94,560


108,080


Other assets


208,181


209,141


214,980


Total Assets


$    9,571,037


$               9,600,607


$    9,098,359


















Liabilities and Equity
















Accounts payable


$         20,827


$                    16,045


$         25,724


Accrued expenses and other liabilities


86,700


121,389


94,975


Accrued maintenance liability


433,841


420,824


371,482


Lessee deposit liability


107,606


130,031


139,357


Debt


6,519,233

*

6,566,163


6,393,867


Accrual for onerous contracts


6,739


12,928


12,477


Deferred revenue


48,505


60,061


57,050


Derivative liabilities


31,364


55,769


81,973


Total liabilities


7,254,815


7,383,210


7,176,905










Share capital


1,570


1,570


1,163


Additional paid-in capital


1,336,850


1,333,025


968,625


Treasury stock


(1,449)


-


-


Accumulated other comprehensive income


(1,292)


5,005


-


Retained earnings


974,681


871,750


747,431


Total AerCap Holdings N.V. shareholders' equity


2,310,360


2,211,350


1,717,219


Non-controlling interest


5,862


6,047


204,235


Total Equity


2,316,222


2,217,397


1,921,454










Total Liabilities and Equity


$    9,571,037


$               9,600,607


$    9,098,359










* Includes $64.3 million of subordinated debt received from our joint venture partners












Supplemental information


June 30, 2011


December 31, 2010


June 30, 2010


Debt/equity ratio


2.8


3.0


3.3


Debt/equity ratio (adjusted for subordinated debt)


2.7


2.8


3.1




AerCap Holdings N.V.






Consolidated Income Statements - Unaudited






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








Three months ended
June 30,

Six months ended
June 30,




2011


2010


2011


2010












Revenues










Lease revenue


$      284,146


$      260,695


$      557,480


$      436,005


Sales revenue


74,471


328,131


155,560


510,585


Management fee revenue


4,680


2,515


9,350


5,048


Interest revenue


736


1,547


1,425


2,869


Other revenue


316


1,105


2,806


2,956


Total Revenues


364,349


593,993


726,621


957,463












Expenses










Depreciation


98,855


86,597


197,177


149,974


Asset impairment


4,984


2,721


12,733


2,721


Cost of goods sold


53,372


313,684


123,132


469,822


Interest on debt


86,047


75,529


148,920


126,931


Operating lease in costs


2,989


3,063


6,040


6,214


Leasing expenses


22,604


15,926


36,719


26,416


Provision for doubtful notes and accounts receivable


2,391


(224)


4,034


516


Selling, general and administrative expenses


62,433


34,899


91,272


64,778


Total Expenses


333,675


532,195


620,027


847,372












Income from continuing operations before income taxes


30,674


61,798


106,594


110,091












Provision for income taxes


(2,483)


(4,862)


(8,528)


(9,748)


Net Income of investments accounted for under the equity method


2,517


680


5,171


1,246


Bargain purchase gain ("Amalgamation gain"), net of transaction expenses


-


-


-


274












Net Income


30,708


57,616


103,237


101,863












Net income attributable to non-controlling interest


134


(8,761)


(306)


(18,609)












Net Income attributable to AerCap Holdings N.V.


$        30,842


$        48,855


$      102,931


$        83,254












Basic and diluted earnings per share


$            0.21


$            0.41


$            0.69


$            0.81












Weighted average shares outstanding - basic and diluted


149,211,244


119,386,445


149,221,776


102,211,701



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


AerCap Holdings N.V.










Consolidated Statements of Cash Flows - Unaudited










(In thousands of U.S. Dollars)












Three months ended
June 30,


Six months ended
June 30,




2011


2010


2011


2010












Net income


30,708


57,616


103,237


101,863


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










Amalgamation gain


-


-


-


(31,023)


Depreciation


98,855


86,597


197,177


149,974


Asset impairment


4,984


2,721


12,733


2,721


Amortisation of debt issuance cost


10,097


7,024


17,548


12,330


Amortisation of intangibles


4,555


6,959


9,828


10,162


Provision for doubtful notes and accounts receivable


2,391


(339)


4,034


357


Capitalised interest on pre-delivery payments


(13)


(153)


(52)


(313)


Gain on disposal of assets


(9,316)


(9,029)


(8,838)


(29,252)


Mark-to-market of non-hedged derivatives


13,311


19,497


(5,065)


41,836


Deferred taxes


2,246


3,520


10,105


6,235


Share-based compensation


2,029


678


4,302


1,557


Changes in assets and liabilities










   Trade receivables and notes receivable, net


(1,294)


4,501


(15,659)


6,151


   Inventories


247


3,463


(121)


8,876


   Other assets and derivative assets


(4,477)


(15,274)


(33,420)


(7,636)


   Other liabilities


(9,479)


26,206


(50,749)


14,574


   Deferred revenue


(2,815)


(749)


(10,612)


11,997


Net cash provided by operating activities


142,029


193,238


234,448


300,409












Purchase of flight equipment


(138,497)


(691,633)


(498,386)


(1,321,362)


Proceeds from sale/disposal of assets


33,408


283,137


59,351


425,763


Prepayments on flight equipment


(7,313)


(36,253)


(15,991)


(84,780)


Purchase of subsidiaries, net of cash acquired


-


-


-


103,691


Purchase of investments


-


(7,500)


(2,500)


(7,500)


Purchase of intangibles


-


-


-


(9,006)


Movement in restricted cash


18,228


(31,977)


30,558


(74,260)


Net cash used in investing activities


(94,174)


(484,226)


(426,968)


(967,454)












Issuance of debt


728,339


896,904


1,134,243


1,616,282


Repayment of debt


(743,344)


(542,821)


(987,153)


(885,640)


Debt issuance costs paid


(9,793)


(25,353)


(24,612)


(35,284)


Maintenance payments received


18,795


12,491


52,702


40,407


Maintenance payments returned


(13,198)


(12,800)


(33,736)


(22,724)


Security deposits received


10,774


7,533


12,684


16,921


Security deposits returned


(19,233)


(14,564)


(25,950)


(17,128)


Repurchase of shares


(1,449)


-


(1,449)


-


Capital contributions from non-controlling interests


-


3,375


-


32,375


Net cash (used in) provided by financing activities


(29,109)


324,765


126,729


745,209












Net increase (decrease) in cash and cash equivalents


18,746


33,777


(65,791)


78,164


Effect of exchange rate changes


2,865


571


5,402


(525)


Cash and cash equivalents at beginning of period


322,450


225,908


404,450


182,617


Cash and cash equivalents at end of period


344,061


260,256


344,061


260,256



Certain reclassifications have been made to prior years consolidated statements of cash flows 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.

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