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

AMSTERDAM, Netherlands, Nov. 6 /PRNewswire-FirstCall/ -- AerCap Holdings N.V. (the "Company" or "AerCap") (NYSE: AER) today announced the results of its operations for the third quarter ended September 30, 2008.

Third Quarter 2008 Highlights

  • Third quarter 2008 net income was $51.3 million, compared with $48.6 million for the same period in 2007. Third quarter 2008 net income excluding the impact of the mark-to-market of interest rate caps and share-based compensation was $61.1 million, compared with $58.1 million in third quarter 2007 on the same basis.
  • Third quarter 2008 basic and diluted earnings per share were $0.60. Third quarter 2008 basic and diluted earnings per share excluding the impact of the mark-to-market of interest rate caps and share-based compensation were $0.72.
  • Net spread, 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, was $93.3 million in third quarter 2008 compared to $74.5 million in third quarter 2007, an increase of 25%. This measure reflects the increase in leasing income.
  • Sales revenue for the third quarter 2008 was $122.4 million, compared to $187.1 million for the same period in 2007, and was generated from the sale of six aircraft, two engines and the sale of parts inventory. In addition to the six aircraft sales, an A340 held in a joint venture that was 27% owned by AerCap was sold, which resulted in other revenue of $3.2 million.
  • Total revenue for the third quarter 2008 was $301.9 million, compared to $335.9 million for the same period in 2007. The decrease was mainly due to lower aircraft sales revenue.
  • Total assets were $5.3 billion at September 30, 2008, an increase of 24% over total assets of $4.3 billion at September 30, 2007.
  • Committed purchases of aviation assets delivered or scheduled for delivery in 2008 are $1.4 billion, of which $1.1 billion closed in the nine month period ended September 30, 2008.

Klaus Heinemann, CEO of AerCap, commented: "Our ability to achieve financial targets for the third quarter 2008 is the result of the efficient operation of our global aircraft asset management franchise in an increasingly difficult market environment. The recent weeks have shown unprecedented global financial challenges, the result of which reduces visibility of the primary factors which may impact the Company's performance in the coming months including, but not limited to, the prevailing LIBOR rate."

AerCap's CFO, Keith Helming, added: "While the prevailing market conditions have delayed our ability to achieve high-margin aircraft sales, the Company's leasing income or net spread performance continues to improve. Furthermore, notwithstanding the well-publicized market disruptions, AerCap's operating discipline, focused on proactive management of credit and interest rate risk, coupled with the maintenance of substantial liquidity, helps better protect the Company in the coming months."

Summary of Financial Results

AerCap recorded third quarter 2008 net income of $51.3 million or $0.60 per basic and diluted share. Included in the third quarter 2008 net income amount were charges relating to the mark-to-market of interest rate caps and share-based compensation of $9.8 million or $0.12 per basic and diluted share, net of tax. The after-tax charge relating to the mark-to-market of our interest rate caps was $8.2 million and the after-tax charge from share-based compensation was $1.6 million.

Detailed Financial Data

($ in Millions)

Operating results


                       Three months ended          Nine months ended
                          September 30,              September 30,
                          -------------              -------------
                                       %                           %
                                   increase/                   increase/
                      2008   2007  (decrease)    2008   2007   (decrease)
                      ----   ---- -----------    ----   ---- ------------

    Revenues        $301.9 $335.9        -10%  $929.8 $892.0            4%
    Net income        51.3   48.6          6%   170.8  143.3           19%

Total revenue in third quarter 2008 decreased 10% compared with third quarter 2007. This decrease was largely driven by a lower amount of aircraft sales revenue in the third quarter 2008.

Revenue breakdown

                        Three months ended         Nine months ended
                           September 30,              September 30,
                                        %                          %
                                    increase/                  increase/
                      2008    2007  (decrease)  2008    2007   (decrease)

    Lease revenue:
       Basic rents  $132.9  $125.2         6% $386.0  $368.3           5%
       Maintenance
        rents         34.6    11.2       209%   57.6    31.7          82%
       End-of-lease
        compensation   0.4     0.3        33%   12.5    17.1         -27%
    Lease revenue   $167.9  $136.7        23% $456.1  $417.1           9%
    Sales revenue    122.4   187.1       -35%  445.6   420.3           6%
    Management fees
     and interest
     income            8.0    12.1       -34%   23.9    34.9         -32%
    Other revenue      3.6       -       100%    4.2    19.7         -79%
    Total revenue   $301.9  $335.9       -10% $929.8  $892.0           4%

Basic lease rents continue to increase when compared to prior periods as a result of our growing asset base. This increase was partially offset by the impact from airline defaults which lowered basic lease rents by $5.9 million in third quarter 2008.

In addition, the increase in basic lease rents was reduced by the impact from decreasing interest rates on floating rate lease rentals between the periods. However, the decrease in basic rents on floating rate leases was offset by lower interest costs on the debt associated with the floating rate leases. While basic lease rents for the third quarter 2008 increased 6% compared to third quarter 2007 to $132.9 million, interest expense excluding the impact of mark-to-market of interest rate caps and non-recurring charges decreased 22% compared with third quarter 2007 to $39.6 million, as shown in the table below. We refer to the difference in these amounts of $93.3 as net spread, which increased 25% in third quarter 2008 over the same period in 2007.

                        Three months ended           Nine months ended
                           September 30,                September 30,
                                         %                           %
                                     increase/                   increase/
                      2008    2007   (decrease)    2008    2007  (decrease)

    Basic rents     $132.9  $125.2          6%  $386.0  $368.3          5%

    Interest on
     debt            $51.0*  $58.3        -13%  $120.2* $177.1        -32%
    Plus:
     mark-to-market
     of
     interest rate
     caps            (11.4)   (7.6)        50%    (6.0)   (8.0)       -25%
    Less:
     Non-recurring
     charges to
     interest
     expense
     from
     refinancing
     of securitized
     bonds               -       -          0%       -   (27.4)      -100%
    Interest on
     debt
     excluding the
     impact of
     mark-to-market
     of interest
     rate
     caps and
     non-recurring
     charges to
     interest
     expense
     from
     refinancing
     of securitized
     bonds           $39.6   $50.7        -22%  $114.2  $141.7        -19%

    Net Spread       $93.3   $74.5         25%  $271.8  $226.6         20%

*- Includes a gain of $2.8 million from discounted purchases of securitized bonds partially offset by a charge of $1.5 million relating to unamortized fees on the sale of securitized aircraft.

The increase in maintenance rents in third quarter 2008 when compared to prior periods is attributable, in part, to a change in the estimate of the amount of maintenance rent expected to be reimbursed to lessees. The change in estimate arose from the implementation of an improved model used to forecast future maintenance reimbursements. AerCap records as revenue, all maintenance rent receipts not expected to be repaid to lessees. In third quarter 2008, $16.6 million was recorded as maintenance revenue as a result of the change in estimate. Of the $16.6 million, $3.7 million was collected from lessees during third quarter 2008 and $12.9 million was collected in prior periods. As of September 30, 2008, AerCap had an accrued maintenance liability of $208.1 million.

The increase in maintenance rents is also partially due to the airline lease defaults. The termination of the leases triggered the recognition of $8.3 million of maintenance revenue in third quarter 2008, which represents the amount of maintenance rent previously collected from the airlines and still held by AerCap.

Effective tax rate

AerCap's effective tax rate during the nine month period ended September 30, 2008 was 8.3%, consisting of 7.8% for AerCap's aircraft business and 14.0% for AerCap's engine and parts business. The effective tax rate in 2007 was 11.8%.

Financial position


                                          % Increase
                                              over
                      Sept. 30,  Sept. 30, Sept. 30,
                         2008       2007      2007
                      ---------- --------- ----------

    Flight
     equipment held
     for lease        $3,831.2  $2,927.3         31%
    Total assets       5,269.5   4,253.2         24%
    Total
     liabilities       4,111.6   3,313.1         24%
    Total equity       1,126.6     907.9         24%

As of September 30, 2008, AerCap's portfolio consisted of 314 aircraft and 74 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 the mark-to-market 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 the impact of mark-to-market of interest rate caps and share-based compensation to net income for the three month and nine month periods ended September 30, 2008 and 2007:

                        Three months ended         Nine months ended
                           September 30,              September 30,
                                        %
                                    increase/                  % increase/
                      2008    2007  (decrease)  2008    2007    (decrease)

    Net income        $51.3   $48.6        6%  $170.8  $143.3*           19%
    Plus:
     mark-to-market
      of interest
      rate caps, net
      of tax            8.2     6.7       22%     3.7     7.0           -47%
     share-based
      compensation,
      net of tax        1.6     2.8      -43%     4.5     3.2            41%
    Net income
     excluding the
     impact of
     mark-to-market
     of interest
     rate
     caps and
     share-based
     compensation    $61.1   $58.1        5%  $179.0  $153.5            17%

*- Includes a charge to interest expense from refinancing of securitized bonds of $24.0 million, net of tax.

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. 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. AerCap believes this measure provides investors a better way to understand the changes and trends related to the earnings of its 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 for hedging purposes. The reconciliation of net spread to basic rents for the three month and nine month periods ended September 30, 2008 and 2007 is included on page 3 of this press release.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, November 6, 2008 at 9:30 am Eastern Time / 3:30 pm Central European Time. The call can be accessed live by dialing (U.S./Canada) 800-676-6978 or (International) +1-706-634 5464 and referencing code 69158965 at least 5 minutes before start time, or by visiting AerCap's website at http://www.aercap.com under "Investor Relations."

The presentation slides for the conference call will be posted on AerCap's website in advance of the call. A replay of the call will be available beginning at 10:30 am Eastern Time / 4:30 pm Central European Time on November 6, 2008 and continuing through December 6, 2008. To access the recording, call 800-642-1687 (U.S./Canada) or +1-706-645-9291 (International) and enter passcode 69158965. The 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 senior management today, Thursday, November 6, 2008, at 12:30 pm Eastern Time at The New York Palace. Doors will open at 12:00 pm.

To participate in either event, please register at: www.sharedvalue.net/aercap/q308results

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 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 maintenance, repair and overhaul services and aircraft disassemblies. AerCap is headquartered in The Netherlands and has offices in Ireland, the United States, Singapore, China and the United Kingdom.

Forward Looking Statements

This press release contains certain statements, estimates and forecasts with respect to future performance and events. These statements, estimates and forecasts are "forward-looking statements". In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as "may," "might," "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)


                      September 30,        December 31,      September 30,
                          2008                2007               2007
                          ----                ----               ----

    Assets
    Cash and cash
     equivalents       $176,444            $241,736           $271,997
    Restricted cash     167,843              95,072             60,814
    Trade
     receivables, net
     of provisions       38,694              35,591             26,978
    Flight equipment
     held for
     operating
     leases, net      3,831,200           3,050,160          2,927,257
    Flight equipment
     held for sale        6,139             136,135            163,962
    Notes
     receivables, net
     of provisions      179,080             184,820            181,447
    Prepayments on
     flight equipment   385,257             247,839            225,232
    Investments          18,678              11,678             16,091
    Goodwill              6,776               6,776              6,776
    Intangibles, net     50,888              41,855             43,161
    Inventory            89,746              90,726             75,861
    Derivative assets    53,633              21,763             17,532
    Deferred income
     taxes               76,091              85,253             91,897
    Other assets        189,038             144,823            144,201
                     ----------          ----------         ----------
    Total Assets     $5,269,507          $4,394,227         $4,253,206
                     ==========          ==========         ==========

    Liabilities and
     Shareholders'
     equity

    Accounts payable       $137             $16,376             $6,693
    Accrued expenses
     and other
     liabilities        118,638              81,379             76,914
    Accrued
     maintenance
     liability          208,064             255,535            261,760
    Lessee deposit
     liability           98,094              83,628             85,412
    Debt*             3,603,013           2,892,744          2,781,646
    Accrual for
     onerous contracts   31,053              46,411             69,174
    Deferred revenue     38,516              33,574             30,338
    Derivative
     liabilities          5,325                   -                  -
    Deferred income
     taxes                8,782               3,425              1,152
                          -----               -----              -----
    Total liabilities 4,111,622           3,413,072          3,313,089

    Minority interest    31,325              30,782             32,235

    Share capital           699                 699                699
    Additional
     paid-in capital    607,852             602,469            605,093
    Retained earnings   518,009             347,205            302,090
                     ----------          ----------         ----------
    Total shareholders'
     equity           1,126,560             950,373            907,882
                     ----------          ----------         ----------


    Total Liabilities
     and Shareholders'
     equity          $5,269,507          $4,394,227         $4,253,206
                     ==========          ==========         ==========



    * Includes $62.8 million of subordinated debt received from our
      joint venture partner relating to the TUI portfolio acquisition

    AerCap Holdings N.V.
    Consolidated Income Statements - Unaudited
    (In thousands of U.S. Dollars, except share and per share data)
                              Three months ended      Nine months ended
                                September 30,           September 30,
                               2008        2007        2008        2007
                               ----        ----        ----        ----

      Revenues
      Lease revenue        $167,932    $136,689    $456,134    $417,069
      Sales revenue         122,441     187,124     445,629     420,290
      Interest revenue        4,889       8,272      14,931      23,722
      Management fee
       revenue                3,065       3,789       8,970      11,137
      Other revenue           3,607           -       4,156      19,744
                              -----       -----       -----      ------
      Total Revenues        301,934     335,874     929,820     891,962

      Expenses
      Depreciation           45,329      35,143     123,331     106,298
      Asset impairment            -           -       7,689
      Cost of goods sold    108,850     151,103     359,716     327,685
      Interest on debt       50,958      58,268     120,182     177,114
      Operating lease in
       costs                  4,254       4,652      11,209      15,512
      Leasing expenses        5,421         495      23,213      14,230
      Provision for
       doubtful notes
       and accounts
       receivable              (186)        233       1,061         355
      Selling,
       general and
       administrative
       expenses              33,366      27,934      96,652      82,161
                             ------      ------      ------      ------
      Total Expenses        247,992     277,828     743,053     723,355

      Income from
       continuing
       operations before
       income taxes
       and minority          ------      ------     -------     -------
       interest              53,942      58,046     186,767     168,607

      Provision for income
       taxes                 (3,896)     (9,288)    (15,421)    (24,971)

                             ------      ------     -------     -------
      Net income before
       minority interest     50,046      48,758     171,346     143,636

      Minority
       interest, net
       of taxes               1,285        (152)       (543)       (298)

                            -------     -------    --------    --------
      Net Income            $51,331     $48,606    $170,803    $143,338
                            =======     =======    ========    ========

      Basic and diluted
       earnings per share     $0.60       $0.57       $2.01       $1.69

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

    AerCap Holdings N.V.
    Consolidated Statements of Cash Flows - Unaudited
    (In thousands of U.S. Dollars)
                                      Three months          Nine months
                                         ended                 ended
                                      September 30,         September 30,
                                    ----------------      ----------------
                                     2008      2007        2008        2007
                                     ----      ----        ----        ----

      Net income                   51,331    48,606     170,803     143,338
      Adjustments to
       reconcile net income
       to net cash provided
       by operating
       activities
      Minority interest            (1,285)      152         543         298
      Depreciation                 45,328    35,143     123,330     106,298
      Asset impairment                  -         -       7,689           -
      Amortisation of
       debt issuance
       cost                         5,154     3,302      11,911      34,861
      Amortisation
       of intangibles               3,788     2,939      10,827       7,862
      Gain on elimination of
       fair value guarantee             -         -           -     (10,736)
      Gain on discounted
       purchase of
       securitized bonds           (2,783)        -      (2,783)          -
      Provision for doubtful
       notes and accounts
       receivable                    (186)      233       1,061         355
      Capitalised interest
       on pre-delivery
       payments                      (909)   (1,621)     (2,308)     (4,607)
      Gain on disposal of
       assets                     (12,461)  (31,304)    (65,268)    (74,788)
       Mark-to-market of
        non-hedged
        derivatives                13,980     2,823       2,904         339
      Deferred taxes                3,529    (2,120)     14,519      10,536
      Share-based
       compensation                 1,962     3,243       5,383       8,017
      Changes in
       assets and
       liabilities
         Trade receivables
          and notes
          receivable, net          22,539    (7,231)      1,576     (16,271)
         Inventories               (7,061)   24,899       9,214      12,973
         Other assets and
          derivative assets       (22,160)   (6,084)    (47,652)    (25,602)
         Accounts payable
          and accrued
          expenses,
          including
          accrued
          maintenance
          liability,
          lessee deposits         (26,269)  (11,962)    (18,454)    (38,178)
         Deferred revenue          (1,526)   (1,123)      4,942       1,946
                                   ------    ------       -----       -----
       Net cash provided by
        operating activities       72,971    59,895     228,237     156,641

       Purchase of
        flight
        equipment                (137,091)  (68,273) (1,014,642)   (457,450)
       Proceeds from
        sale/disposal of
        assets                    104,535   147,256     352,427     332,438
       Prepayments on
        flight equipment          (74,905)  (37,432)   (206,583)   (106,634)
       Purchase of
        investments               (10,000)        -     (10,000)          -
      Sale of investments           6,234         -       6,234           -
       Purchase of
        intangibles                   112         -     (21,410)    (16,794)
       Movement in
        restricted
        cash                       15,965   117,302     (72,771)     51,463
                                   ------   -------     -------      ------
       Net cash (used in)
        provided by investing
        activities                (95,150)  158,853    (966,745)   (196,977)

      Issuance of debt            207,692    50,804   1,148,338   2,104,368
      Repayment of debt          (181,898) (246,812)   (435,286) (1,880,097)
      Debt issuance costs
       paid                        (2,998)     (398)    (38,619)    (42,417)
      Capital contributions
       from minority
       interests                        -         -           -           -
                                        -         -           -           -
                                   ------   -------     -------      ------
      Net cash provided by
       (used in) financing
       activities                  22,796  (196,406)    674,433     181,854
      Net increase
       (decrease) in cash
       and cash equivalents           617    22,342     (64,075)    141,518
      Effect of
       exchange rate
       changes                        (43)     (469)     (1,217)       (722)
      Cash and cash
       equivalents at
       beginning of period        175,870   250,124     241,736     131,201
                                  -------   -------     -------     -------
      Cash and cash
       equivalents at end
       of period                  176,444   271,997     176,444     271,997
                                  =======   =======     =======     ======= 

SOURCE AerCapHoldings N.V.

Data & News supplied by www.cloudquote.io
Stock quotes supplied by Barchart
Quotes delayed at least 20 minutes.
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.