AerCap Holdings N.V. Reports First Quarter 2008 Financial Results

AMSTERDAM, Netherlands, May 9 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE:AER) today announced the results of its operations for the first quarter ended March 31, 2008.

    First Quarter 2008 Highlights

    -- First quarter 2008 net income was $50.9 million, compared with $60.6
       million for the same period in 2007.  First quarter 2008 net income
       excluding non-cash charges relating to the mark-to-market of interest
       rate caps and share-based compensation was $59.9 million, compared with
       $66.7 million in first quarter 2007 on the same basis.
    -- The decrease in net income in first quarter 2008 compared with first
       quarter 2007 was driven by maintenance, sales, and other revenue which
       do not occur evenly throughout all quarters.  First quarter 2007 had a
       higher amount of these revenues than first quarter 2008.
    -- First quarter 2008 basic and diluted earnings per share were $0.60.
       First quarter 2008 basic and diluted earnings per share excluding
       non-cash charges relating to the mark-to-market of interest rate caps
       and share-based compensation were $0.71.
    -- Basic lease rents increased 7% in the first quarter 2008 compared to
       the first quarter 2007, while interest expense excluding non-cash
       charges relating to the mark-to-market of interest rate caps decreased
       11%.  The difference between basic lease rents and the adjusted
       interest expense was $85.6 million in first quarter 2008 compared to
       $72.7 million in first quarter 2007, an increase of 18%.
    -- Sales revenue for the first quarter 2008 was $142.5 million, compared
       to $148.9 million for the same period in 2007, and was generated from
       the sale of eight aircraft and the sale of parts inventory.  Total
       revenue for the first quarter 2008 was $294.5 million, compared to
       $309.5 million for the same period in 2007.
    -- Total assets were $4.6 billion at March 31, 2008, an increase of 14%
       over total assets of $4.0 billion at March 31, 2007.
    -- Committed purchases of aviation assets delivered or scheduled for
       delivery in 2008 are $1.2 billion, of which $277.1 million closed in
       first quarter 2008.  Total committed purchases include the purchase of
       a 21 used aircraft portfolio which is subject to a signed letter of
       intent.


    Significant Items Previously Disclosed Occurring Subsequent to Quarter End
    -- AerVenture, AerCap's joint venture with LoadAir and AlFawares of
       Kuwait, closed a $269.2 million credit facility with HSH Nordbank AG to
       finance the pre-delivery payments for 37 new A320 family aircraft under
       forward order from Airbus, scheduled for delivery between November 2009
       and May 2011. The funding requirements for all remaining pre-delivery
       payments of AerVenture have been met with this transaction.
    -- AerCap increased its pre-delivery payment funding facility by $68.4
       million. This facility was arranged by Citi and is to be used to
       finance the pre-delivery payments relating to A330 aircraft under
       forward order with Airbus, scheduled for delivery between January and
       April 2010.

Klaus Heinemann, CEO of AerCap, commented, "Our first quarter results continue to show the strength of our business model. The focus we have on properly managing the liability side of our business, combined with our contracted orders of state of the art, fuel-efficient aircraft, positions us for strong future earnings growth."

AerCap's CFO, Keith Helming, added, "We are pleased with our first quarter 2008 net income result. The year-over-year increase in basic rents is reflective of the growth of our leasing portfolio. In addition, we continue to realize the benefits of decreasing interest costs through the combination of lower interest rates and the utilization of caps for interest rate hedging."

Summary of Financial Results

AerCap recorded first quarter 2008 net income of $50.9 million or $0.60 per basic and diluted share. Included in the first quarter 2008 net income amount were non-cash charges related to the mark-to-market of interest rate caps and share-based compensation of $9.0 million or $0.11 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $7.6 million and the after-tax charge from share-based compensation was $1.4 million.


    Detailed Financial Data
    ($ in Millions)

    Operating results

                                                    Three months ended
                                                         March 31,
                                                                   % increase/
                                                 2008        2007   (decrease)

    Revenue                                     $294.5      $309.5     -5%
    Net income (loss)                             50.9        60.6    -16%



    Total revenue in first quarter 2008 decreased 5% compared with first
quarter 2007. This decrease was largely driven by a lower amount of other
revenue in first quarter 2008. Other revenue in first quarter 2007 included
$10.7 million relating to the elimination of a guarantee liability, which did
not occur in first quarter 2008. The decrease in net income in first quarter
2008 compared to the first quarter 2007 was also driven primarily by the lower
amount of other revenue.


    Revenue breakdown
                                                    Three months ended
                                                         March 31,
                                                                   % increase/
                                             2008         2007     (decrease)

    Lease revenue:
       Basic rents                          $126.5       $118.6         7%
       Maintenance rents                       9.2         11.9       -23%
       End-of-lease compensation               8.2          9.2       -11%
    Lease revenue                           $143.9       $139.7         3%
    Sales revenue                            142.5        148.9        -4%
    Interest revenue                           4.9          7.3       -33%
    Management fee revenue                     3.1          3.0         3%
    Other revenue                              0.1         10.6       -99%
    Total revenue                           $294.5       $309.5        -5%

As indicated in the table above, the growth in the Company's leased assets and the continued strength of lease rates is reflected in our revenue through the increase in basic rents. Partially offsetting the growth in basic rents are decreases in floating rate lease rentals which result from the decrease in interest rates. This decrease in basic rents on floating rate leases is completely offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the first quarter 2008 increased 7% compared to first quarter 2007 to $126.5 million, interest expense excluding non-cash charges relating to the mark-to-market of interest rate caps decreased 11% compared with first quarter 2007 to $40.9 million, as shown in the table below. The difference in these amounts was $85.6 million in first quarter 2008 compared to $72.7 million in first quarter 2007, an increase of 18%.


                                                       Three months ended
                                                            March 31,
                                                      2008              2007

    Basic rents                                     $126.5            $118.6

    Interest on debt                                 $49.6             $50.5
    Less: Non-cash charges relating to the
     mark-to-market of interest rate caps,
     net of tax                                       (8.7)             (4.6)
    Interest on debt excluding non-cash
     charges related to the mark-to-market
     of interest rate caps                           $40.9             $45.9

    Basic rents net of interest on debt
     excluding non-cash charges related to
     the mark-to-market of interest rate caps        $85.6             $72.7


    Effective tax rate
    AerCap's effective tax rate during the first quarter 2008 was 8.3%,
consisting of 8.0% for AerCap's aircraft business and 14.2% for AerCap's
engine and parts business. The effective tax rate in first quarter 2007 was
11.8%.


    Financial position
                                                                        %
                                            March 31,    March 31,  increase/
                                              2008         2007     (decrease)

    Flight equipment held for lease         $3,279.2     $3,074.5       7%
    Total assets                             4,594.7      4,026.4      14%
    Total liabilities                        3,561.2      3,180.7      12%
    Total equity                             1,002.9        814.0      23%

As of March 31, 2008, AerCap's portfolio consisted of 320 aircraft and 71 engines that were either owned, on order, under contract or letter of intent, or managed.

Notes Regarding Financial Information Presented In This Press Release

The financial information presented in this press release is not audited.

The following is a definition of a non-GAAP measure used in this press release and a reconciliation of such measure to the most closely related GAAP measure:

Net income excluding non-cash charges relating to the mark-to-market of interest rate caps and share-based compensation. This measure is determined by adding non-cash charges related to the mark-to-market losses on our interest rate caps and share-based compensation during the applicable period, net of related tax benefits, to GAAP net income. AerCap believes this measure provides investors with a more meaningful view on AerCap's operational performance and allows investors to better understand its operational performance in relation to past and future reporting periods. AerCap uses interest rate caps to allow the Company to benefit from decreasing interest rates and protect against the negative impact of rising interest rates on its floating rate debt. Management determines the appropriate level of caps in any period with reference to the mix of floating and fixed cash inflows from the Company's lease and other contracts. AerCap does not apply hedge accounting to its interest rate caps. As a result, AerCap is required to recognize the change in fair value of the interest rate caps in AerCap's income statement during each period. Following is a reconciliation of net income excluding non- cash charges relating to the mark-to-market of interest rate caps and share- based compensation to net income for the three month periods ended March 31, 2008 and 2007:


                                                      Three months ended
                                                            March 31,
                                                     2008              2007

    Net income                                      $50.9             $60.6
    Plus: Non-cash charges relating to
     the mark-to-market of interest rate
     caps, net of tax                                 7.6               4.0
               Non-cash charges related
                to share-based compensation,
                net of tax                            1.4               2.1
    Net income excluding non-cash charges
     related to the mark-to-market of
     interest rate caps and share-based
     compensation                                   $59.9             $66.7

Earnings per share excluding non-cash charges related to the mark-to- market of interest rate caps and share-based compensation are determined by dividing the amount of net income excluding such charges by the average number of shares outstanding for that period. The average number of shares is based on a daily average.

Conference Call

In connection with the earnings release, management will host an earnings conference call on Friday, May 9, 2008 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-772-1085 or (International) +1-706-634 5464 and referencing code 44711149 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under 'Investor Relations'.

The presentation slides for the conference call will be posted to AerCap's website in advance of the call. A replay of the call will be available beginning at 10:30 am Eastern Time / 4:30 pm Central European Time on May 9, 2008 and continuing through June 19, 2008. To access the recording, call 800-642-1687 (U.S./Canada) or +1-706-645-9291 (International) and enter passcode 44711149. The replay will be archived in the "Investor Relations" section of the Company's website for one year.

About AerCap Holdings N.V.

AerCap is an integrated global aviation company with a leading market position in aircraft and engine leasing, trading and parts sales. AerCap also provides aircraft management services and performs aircraft and engine maintenance, repair and overhaul services and aircraft disassemblies through its certified repair stations. AerCap is headquartered in The Netherlands and has offices in Ireland, the United States, 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," "will," "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.

    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


                         Financial Statements Follow



       AerCap Holdings N.V.
       Consolidated Balance Sheets - Unaudited
       (In thousands of U.S. Dollars)


                                            March 31,  December 31,  March 31,
                                               2008        2007        2007

       Assets
       Cash and cash equivalents             $197,170    $241,736    $140,103
       Restricted cash                        127,150      95,072      99,459
       Trade receivables, net of provisions    64,969      35,591      32,458
       Flight equipment held for operating
        leases, net                         3,279,244   3,050,160   3,074,519
       Flight equipment held for sale          51,857     136,135         -
       Notes receivables, net of provisions   199,037     184,820     166,344
       Prepayments on flight equipment        284,368     247,839     150,621
       Investments                             11,678      11,678      16,091
       Goodwill                                 6,776       6,776       6,776
       Intangibles, net                        45,427      41,855      49,080
       Inventory                               83,469      90,726      72,115
       Derivative assets                       18,896      21,763      18,764
       Deferred income taxes                   82,392      85,253      87,612
       Other assets                           142,217     144,823     112,489
       Total Assets                        $4,594,650  $4,394,227  $4,026,431


       Liabilities and Shareholders' Equity

       Accounts payable                        $9,246     $16,376      $7,222
       Accrued expenses and other
        liabilities                            87,294      81,379      70,828
       Accrued maintenance liability          261,948     255,535     257,829
       Lessee deposit liability                89,197      83,628      72,591
       Debt                                 3,044,462   2,892,744   2,665,987
       Accrual for onerous contracts           28,378      46,411      72,718
       Deferred revenue                        35,663      33,574      29,065
       Deferred income taxes                    4,997       3,425       4,490
       Total liabilities                    3,561,185   3,413,072   3,180,730

       Minority interest                       30,579      30,782      31,685

       Share capital                              699         699         699
       Additional paid-in capital             604,105     602,469     593,999
       Retained earnings                      398,082     347,205     219,318
       Total shareholders' equity           1,002,886     950,373     814,016

       Total Liabilities and Shareholders'
        Equity                             $4,594,650  $4,394,227  $4,026,431



       AerCap Holdings N.V.
       Consolidated Income Statements - Unaudited
       (In thousands of U.S. Dollars, except share and per share data)

                                                 Three months ended March 31,
                                                    2008              2007

       Revenues
       Lease revenue                              $143,856          $139,703
       Sales revenue                               142,463           148,885
       Interest revenue                              4,877             7,272
       Management fee revenue                        3,174             3,025
       Other revenue                                   163            10,587
       Total Revenues                              294,533           309,472

       Expenses
       Depreciation                                 38,475            33,932
       Cost of goods sold                          110,019           118,003
       Interest on debt                             49,596            50,484
       Operating lease in costs                      3,640             6,237
       Leasing expenses                              6,390             4,032
       Provision for doubtful notes and accounts
        receivable                                     548              (141)
       Selling, general and administrative
        expenses                                    30,622            26,585
       Total Expenses                              239,290           239,132

       Income from continuing operations
        before income taxes and minority
        interest                                    55,243            70,340

       Provision for income taxes                   (4,570)          (10,026)

       Net income before minority interest          50,673            60,314

       Minority interest, net of taxes                 203               252

       Net Income                                  $50,876           $60,566

       Basic and diluted earnings per share           0.60              0.71

       Weighted average shares outstanding -
        basic and diluted                       85,036,957        85,036,957



      AerCap Holdings N.V.
      Consolidated Statements of Cash Flows - Unaudited
      (In thousands of U.S. Dollars)

                                                  Three months ended March 31,
                                                     2008              2007

      Net income                                    50,876            60,566
      Adjustments to reconcile net income to net
       cash provided by operating activities
      Minority interest                               (203)             (252)
      Depreciation                                  38,474            33,932
      Amortisation of debt issuance cost             3,392             1,708
      Amortisation of intangibles                    3,504             1,944
      Gain on elimination of fair value guarantee      -             (10,736)
      Provision for doubtful notes and accounts
       receivable                                      548              (141)
      Capitalised interest on pre-delivery
       payments                                       (669)           (1,564)
      Gain on disposal of assets                   (22,949)          (24,961)
      Change in fair value of derivative
       instruments                                   2,867              (893)
      Deferred taxes                                 4,434            10,016
      Share-based compensation                       1,636             2,446
      Changes in assets and liabilities
         Trade receivables and notes receivable,
          net                                      (20,240)           (6,152)
         Inventories                                10,473            10,779
         Other assets                               (1,546)           (7,498)
         Accounts payable and accrued
          expenses, including accrued maintenance
          liability, lessee deposits                (3,721)          (51,185)
         Deferred revenue                            2,090               674
      Net cash provided by operating activities     68,966            18,683

      Purchase of flight equipment                (234,904)         (223,585)
      Proceeds from sale/disposal of assets         83,487           126,905
      Prepayments on flight equipment              (72,445)          (18,650)
      Purchase of intangibles                       (8,627)          (16,794)
      Movement in restricted cash                  (32,078)           12,818
      Net cash used in investing activities       (264,567)         (119,306)

      Issuance of debt                             278,081           246,503
      Repayment of debt                           (126,363)         (135,655)
      Debt issuance costs paid                        (367)           (1,459)
      Net cash provided by financing activities    151,351           109,389

      Net (decrease) increase in cash and cash
       equivalents                                 (44,250)            8,766
      Effect of exchange rate changes                 (316)              136
      Cash and cash equivalents at beginning of
       period                                      241,736           131,201
      Cash and cash equivalents at end of period   197,170           140,103

Source: AerCap Holdings N.V.

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