Investor Relations

AerCap Holdings N.V. Reports Financial Results for the Second Quarter 2017 and Announces New Share Repurchase Program of $250 Million

DUBLIN--(BUSINESS WIRE)--Aug. 3, 2017--

AerCap Holdings N.V. (NYSE:AER):

  • Net income of $282.9 million for the second quarter of 2017 and $544.1 million for the first half of 2017
  • Diluted earnings per share of $1.67 for the second quarter of 2017 and $3.15 for the first half of 2017

Highlights

  • 108 aircraft transactions executed in the second quarter of 2017, including 25 widebody transactions.
  • 99.5% fleet utilization rate for the second quarter of 2017.
  • $9 billion of available liquidity.
  • Adjusted debt/equity ratio of 2.7 to 1.
  • $53.06 book value per share.
  • Repurchased 6.5 million shares in the second quarter of 2017 for $293 million and 14.2 million shares year to date through July 28, 2017 for $639 million.
  • Signed an agreement with Boeing for an order of 30 Boeing 787-9 aircraft.
  • In July 2017, completed the offering of $1.0 billion of 10-year senior unsecured notes with a 3.65% coupon.
  • New $250 million share repurchase program authorized, which will run through December 31, 2017.

Aengus Kelly, CEO of AerCap, commented: “AerCap completed the second quarter of 2017 with another strong set of results. During the first half of 2017 we generated $3.15 earnings per share and net income of $544.1 million. Our strong operational performance continued with the execution of 108 aircraft transactions during the second quarter. In addition, during the quarter we ordered a further 30 Boeing 787 aircraft, making AerCap the largest customer of the 787 Dreamliner. Most recently we successfully completed an offering of $1.0 billion of 10-year senior notes, further strengthening our financial position. The performance and activities illustrate the continued focus on execution by the AerCap team.”

Second Quarter 2017 Financial Results

  • Net income of $282.9 million, compared with $233.3 million for the same period in 2016. Diluted earnings per share of $1.67, compared with $1.22 for the same period in 2016.
  • The increase in net income and diluted earnings per share was driven primarily by higher net gain on sale of assets, higher maintenance rents and lower maintenance rights expense. Diluted earnings per share was also favorably impacted by the repurchase of 32.7 million shares for $1.4 billion from April 2016 through June 2017.

Components of Net Income/Earnings Per Share

Set forth below are the components of net income and diluted earnings per share.

  Three months ended June 30,     Six months ended June 30,
2017   2016 2017   2016

(After tax, U.S. Dollars in millions,
except per share data)

(After tax, U.S. Dollars in millions,
except per share data)

Components of Net Income

   
Net gain on sale of assets $60.8 $33.6 $102.2 $50.3
AeroTurbine results, including restructuring related expenses (12.5 ) (11.3 ) (26.1 ) (36.7 )
Maintenance rights expense (78.8 ) (93.2 ) (142.7 ) (188.4 )
All other earnings 313.4   304.2   610.7   631.2  
Net Income $282.9   $233.3   $544.1   $456.4  
 
 
 

Components of Earnings Per Share

Net gain on sale of assets $0.36 $0.18 $0.59 $0.26
AeroTurbine results, including restructuring related expenses (0.07 ) (0.06 ) (0.15 ) (0.19 )
Maintenance rights expense (0.47 ) (0.49 ) (0.83 ) (0.97 )
All other earnings 1.85   1.59   3.54   3.25  
Diluted Earnings Per Share $1.67   $1.22   $3.15   $2.35  
 

Revenue and Net Spread

  Three months ended June 30,   Six months ended June 30,
2017   2016  

% increase/
(decrease)

2017   2016  

% increase/
(decrease)

(U.S. Dollars in millions) (U.S. Dollars in millions)
 
Lease revenue:
Basic lease rents $1,053.5 $1,106.3 (5%) $2,120.5 $2,245.6 (6%)
Maintenance rents and other receipts 104.1 70.9 47% 194.0 221.3 (12%)
Lease revenue 1,157.6 1,177.2 (2%) 2,314.5 2,466.9 (6%)
Net gain on sale of assets 69.5 38.4 81% 116.9 57.4 104%
Other income 36.7 23.9 54% 69.2 33.2 108%
Total Revenues and other income $1,263.8 $1,239.5 2% $2,500.6 $2,557.5 (2%)
 

Basic lease rents were $1,053.5 million for the second quarter of 2017, compared with $1,106.3 million for the same period in 2016. The decrease was primarily due to the sale of mid-life and older aircraft during 2016 and 2017, which reduced average lease assets. Our average lease assets for the second quarter of 2017 were $34.0 billion, compared with $35.1 billion for the same period in 2016.

Maintenance rents and other receipts were $104.1 million for the second quarter of 2017, compared with $70.9 million for the same period in 2016. The increase was primarily driven by higher end of lease compensation received during the second quarter of 2017.

Net gain on sale of assets for the second quarter of 2017 was $69.5 million, relating to 24 aircraft sold and 6 aircraft reclassified to finance leases, compared with $38.4 million for the same period in 2016, relating to 32 aircraft sold and three aircraft reclassified to finance leases.

Other income for the second quarter of 2017 was $36.7 million, compared with $23.9 million for the same period in 2016. Other income for the second quarter of 2017 primarily consisted of non-recurring income from lease terminations.

  Three months ended June 30,   Six months ended June 30,
2017   2016  

% increase/
(decrease)

2017   2016  

% increase/
(decrease)

(U.S. Dollars in millions) (U.S. Dollars in millions)
 
Basic lease rents $1,053.5 $1,106.3 (5%) $2,120.5 $2,245.6 (6%)
 
Interest expense 275.0 280.7 (2%) 560.7 565.3 (1%)
Adjusted for:
Mark-to-market of interest rate caps and swaps (9.0 ) (7.6 ) 18% (15.5 ) (18.6 ) (17%)
Adjusted interest expense 266.0 273.1 (3%) 545.2 546.7 (0%)
           
Net interest margin, or net spread $787.5   $833.2   (5%) $1,575.3   $1,698.9   (7%)
 
Average lease assets $34,047 $35,140 (3%) $34,065 $35,329 (4%)
Annualized net spread 9.3 % 9.5 % 9.2 % 9.6 %
 

As shown in the table above, adjusted interest expense was $266.0 million in the second quarter of 2017, compared with $273.1 million for the same period in 2016.

Annualized net spread was 9.3% in the second quarter of 2017, compared with 9.5% for the same period in 2016. The decrease was primarily a result of the lower age of our owned fleet and the higher average cost of debt. Our average cost of debt increased primarily due to the issuance of new longer-term bonds to replace shorter-term ILFC notes, which had lower reported interest expense as a result of ILFC acquisition purchase accounting.

Selling, General and Administrative Expenses

  Three months ended June 30,   Six months ended June 30,
2017   2016  

% increase/
(decrease)

2017   2016  

% increase/
(decrease)

(U.S. Dollars in millions) (U.S. Dollars in millions)
 
Share-based compensation expenses $26.6 $25.0 6% $53.3 $50.7 5%
AeroTurbine selling, general and administrative expenses 4.3 12.3 (65%) 9.2 25.6 (64%)
AerCap selling, general and administrative expenses 53.7 49.2 9% 105.6 97.2 9%
Total selling, general and administrative expenses $84.6 $86.5 (2%) $168.1 $173.5 (3%)
 

Other Expenses

Asset impairment charges were $5.3 million for the second quarter of 2017, compared to $10.5 million recorded for the same period in 2016. Asset impairment recorded in the second quarter of 2017 related to two aircraft that are being sold at a loss but were treated as held for sale because the sale of those aircraft had not been completed as of June 30, 2017. The aircraft were part of an 18-aircraft portfolio that is being sold at an overall profit. Leasing expenses were $136.3 million for the second quarter of 2017, compared with $143.1 million for the same period in 2016. The decrease in leasing expenses was primarily related to lower maintenance rights expense associated with the maintenance activity during the second quarter of 2017. Restructuring related expenses were $4.7 million for the second quarter of 2017, compared with $3.5 million for the same period in 2016. Restructuring related expenses in the second quarter of 2017 and 2016 represented non-recurring charges related to the downsizing of AeroTurbine.

Effective Tax Rate

AerCap’s effective tax rate was 13.0% during the second quarter of 2017, compared to 13.5% for the same period in 2016. The effective tax rate for the full year 2016 was 14.5%. The effective tax rate in any year is impacted by the source and amount of earnings among AerCap’s different tax jurisdictions.

Book Value Per Share

  June 30, 2017  

December 31,
2016

  June 30, 2016
(U.S. Dollars in millions, except share and per share data)
 
Total AerCap Holdings N.V. shareholders' equity $8,520.8 $8,524.4 $8,351.7
 
Ordinary shares outstanding 163,418,626 176,247,154 187,865,737
Unvested restricted stock (2,833,754 ) (3,426,810 ) (3,327,742 )
Ordinary shares outstanding (excl. unvested restricted stock) 160,584,872   172,820,344   184,537,995  
 
Book value per ordinary share outstanding (excl. unvested restricted stock) $53.06   $49.33   $45.26  
 

Book value per share has increased 8% since December 31, 2016 and 17% since June 30, 2016.

Financial Position

  June 30, 2017  

December 31,
2016

 

% increase/
(decrease) over
December 31,
2016

(U.S. Dollars in millions, except debt/equity ratio)
 
Total cash (incl. restricted) $1,910.3 $2,364.6 (19%)
Total assets 41,019.5 41,620.5 (1%)
Debt 27,181.0 27,717.0 (2%)
Total liabilities 32,442.2 33,038.2 (2%)
Total AerCap Holdings N.V. shareholders' equity 8,520.8 8,524.4 (0%)
Total equity 8,577.2 8,582.3 (0%)
Adjusted debt (*) 24,829.9 24,931.6 (0%)
Adjusted equity (*) 9,327.2 9,332.3 (0%)
Adjusted debt/equity ratio (*) 2.7 to 1 2.7 to 1 0%
 
(*) Refer to Notes Regarding Financial Information Presented in This Press Release for details relating to the adjustments
 

As of June 30, 2017, AerCap’s portfolio consisted of 1,539 aircraft that were owned, on order or managed (including aircraft owned by AerDragon, a non-consolidated joint venture). The average age of our owned fleet as of June 30, 2017 was 7.3 years and the average remaining contracted lease term was 6.4 years.

Share Repurchase Program

Our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $250 million of AerCap ordinary shares through December 31, 2017. Repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable U.S. federal securities laws. The timing of repurchases and the exact number of common shares to be purchased will be determined by the Company’s management, in its discretion, and will depend upon market conditions and other factors. The program will be funded using the Company’s cash on hand and cash generated from operations. The program may be suspended or discontinued at any time.

In May 2017, we announced the authorization of a $300 million share repurchase program running through September 30, 2017. In July 2017, this share repurchase program was extended to run through December 31, 2017.

Notes Regarding Financial Information Presented in This Press Release

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

Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures.

The following is a definition of non-GAAP measures used in this press release. We believe these measures may further assist investors in their understanding of our operational performance.

Adjusted debt/equity ratio. This measure is the ratio obtained by dividing adjusted debt by adjusted equity.

  • Adjusted debt means consolidated total debt less cash and cash equivalents, and less a 50% equity credit with respect to certain long-term subordinated debt.
  • Adjusted equity means total equity, plus the 50% equity credit relating to the long-term subordinated debt.

Adjusted debt and adjusted equity are adjusted by the 50% equity credit to reflect the equity nature of those financing arrangements and to provide information that is consistent with definitions under certain of our debt covenants. We believe this measure may further assist investors in their understanding of our capital structure and leverage.

  June 30, 2017  

December 31,
2016

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

 
Debt $27,181 $27,717
 
Adjusted for:
Cash and cash equivalents (1,601 ) (2,035 )
50% credit for long-term subordinated debt (750 ) (750 )
Adjusted debt $24,830   $24,932  
 
 
Equity $8,577 $8,582
 
Adjusted for:
50% credit for long-term subordinated debt 750   750  
Adjusted equity $9,327   $9,332  
 
Adjusted debt/equity ratio 2.7 to 1   2.7 to 1  
 

Net interest margin, or net spread (refer to the second table under the Revenue and Net Spread section of this press release). This measure is the difference between basic lease rents and interest expense, excluding the impact of the mark-to-market of interest rate caps and swaps. 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 and utilization rates, as well as the impact from changes in the amount of debt and interest rates.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Thursday, August 3, 2017, at 8:30 a.m. Eastern Daylight time. The call can be accessed live by dialing (U.S./Canada) +1 719 325 4756 or (International) +353 1 246 5638 and referencing code 2380436 at least 5 minutes before start time, or by visiting AerCap’s website at 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. For further details and to register for this event please email: aercap@instinctif.com.

For further information, contact Brian Canniffe: +353 1 418 0461 (bcanniffe@aercap.com) or Mark Walter (Instinctif Partners): +44 20 7457 2020 (aercap@instinctif.com).

About AerCap

AerCap is the global leader in aircraft leasing with, as of June 30, 2017, 1,539 owned, managed or on order aircraft in its portfolio. AerCap has one of the most attractive order books in the industry. AerCap serves approximately 200 customers in approximately 80 countries with comprehensive fleet solutions. AerCap is listed on the New York Stock Exchange (AER) and has its headquarters in Dublin with offices in Amsterdam, Los Angeles, Shannon, Fort Lauderdale, Singapore, Shanghai, Abu Dhabi, Seattle and Toulouse.

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, and 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, we cannot assure you 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. Except as required by applicable law, 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 www.aercap.com and follow us on Twitter www.twitter.com/aercapnv.

   
AerCap Holdings N.V.
Unaudited Consolidated Balance Sheets
(U.S. Dollars in thousands)
 
June 30, 2017 December 31, 2016
 
Assets
Cash and cash equivalents $1,601,080 $2,035,447
Restricted cash 309,264 329,180
Trade receivables 81,758 64,923
Flight equipment held for operating leases, net 30,960,169 31,501,973
Maintenance rights intangible and lease premium, net 1,828,847 2,167,925
Flight equipment held for sale 651,600 107,392
Net investment in finance and sales-type leases 832,379 755,882
Prepayments on flight equipment 3,407,280 3,265,979
Other intangibles, net 376,801 397,101
Deferred income tax assets 215,602 215,445
Other assets 754,709   779,206  
Total Assets $41,019,489   $41,620,453  
 
 
Liabilities and Equity
Accounts payable, accrued expenses and other liabilities $1,046,261 $1,132,536
Accrued maintenance liability 2,692,580 2,750,576
Lessee deposit liability 866,486 859,099
Debt 27,180,966 27,716,999
Deferred income tax liabilities 655,949   578,979  
Total liabilities 32,442,242 33,038,189
 
Ordinary share capital €0.01 par value, 350,000,000 ordinary shares
authorized as of June 30, 2017 and December 31, 2016; 177,847,345
and 187,847,345 ordinary shares issued and 163,418,626 and
176,247,154 ordinary shares outstanding (including 2,833,754 and
3,426,810 unvested restricted stock) as of June 30, 2017 and
December 31, 2016, respectively 2,174 2,282
Additional paid-in capital 4,128,420 4,505,019
Treasury shares, at cost (14,428,719 and 11,600,191 ordinary shares
as of June 30, 2017 and December 31, 2016, respectively) (654,021 ) (490,092 )
Accumulated other comprehensive loss (3,066 ) (1,769 )
Accumulated retained earnings 5,047,251   4,509,007  
Total AerCap Holdings N.V. shareholders' equity 8,520,758 8,524,447
Non-controlling interest 56,489   57,817  
Total Equity 8,577,247 8,582,264
   
Total Liabilities and Equity $41,019,489   $41,620,453  
 
       
AerCap Holdings N.V.
Unaudited Consolidated Income Statements
(U.S. Dollars in thousands, except share and per share data)
 
Three months ended June 30, Six months ended June 30,
2017 2016 2017 2016
 
Revenues and other income
Lease revenue $1,157,562 $1,177,236 $2,314,524 $2,466,902
Net gain on sale of assets 69,525 38,411 116,853 57,444
Other income 36,663   23,849   69,199   33,168  
Total Revenues and other income 1,263,750 1,239,496 2,500,576 2,557,514
 
Expenses
Depreciation and amortization 435,005 451,287 873,546 917,898
Asset impairment 5,300 10,474 5,300 55,102
Interest expense 275,018 280,715 560,696 565,277
Leasing expenses 136,345 143,146 258,754 310,549
Restructuring related expenses 4,730 3,539 14,605 16,141
Selling, general and administrative expenses 84,633   86,466   168,115   173,494  
Total Expenses 941,031   975,627   1,881,016   2,038,461  
 

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

322,719 263,869 619,560 519,053
 
Provision for income taxes (41,956 ) (35,624 ) (80,541 ) (70,073 )
Equity in net earnings of investments accounted for under the equity method 2,107   2,337   5,087   4,743  
 
Net income $282,870 $230,582 $544,106 $453,723
 
Net loss (income) attributable to non-controlling interest 10 2,691 (53 ) 2,630
       

Net income attributable to AerCap Holdings N.V.

$282,880   $233,273   $544,053   $456,353  
 
Basic earnings per share $1.73 $1.24 $3.27 $2.37
Diluted earnings per share $1.67 $1.22 $3.15 $2.35
 
Weighted average shares outstanding - basic 163,150,532 188,601,172 166,512,330 192,311,911
Weighted average shares outstanding - diluted 169,263,392 190,528,697 172,568,854 194,156,616
 
   
AerCap Holdings N.V.
Unaudited Consolidated Statements of Cash Flows
(U.S. Dollars in thousands)
 
Six months ended June 30,
2017 2016
 
Net income $544,106 $453,723
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 873,546 917,898
Asset impairment 5,300 55,102
Amortization of debt issuance costs and debt discount 30,202 27,150
Amortization of lease premium intangibles 8,129 10,510
Amortization of fair value adjustment on debt (109,290 ) (184,348 )
Accretion of fair value adjustment on deposits and maintenance liabilities 16,718 27,045
Maintenance rights write off 283,430 383,134
Maintenance liability release to income (107,450 ) (237,890 )
Net gain on sale of assets (116,853 ) (57,444 )
Deferred income taxes 76,679 66,323
Restructuring related expenses 5,097 16,141
Other 66,352 80,173
Changes in operating assets and liabilities:
Trade receivables (14,947 ) 40,348
Other assets 38,447 108,924
Accounts payable, accrued expenses and other liabilities (803 ) (91,895 )
Net cash provided by operating activities 1,598,663 1,614,894
 
Purchase of flight equipment (1,260,123 ) (1,173,402 )
Proceeds from sale or disposal of assets 720,773 889,825
Prepayments on flight equipment (575,802 ) (386,022 )
Collections of finance and sales-type leases 43,863 30,017
Movement in restricted cash 19,916 (3,327 )
Other (35,706 ) -  
Net cash used in investing activities (1,087,079 ) (642,909 )
 
Issuance of debt 2,539,991 2,327,676
Repayment of debt (2,966,535 ) (2,632,700 )
Debt issuance costs paid (34,243 ) (21,395 )
Maintenance payments received 356,525 393,199
Maintenance payments returned (239,574 ) (262,138 )
Security deposits received 75,096 82,519
Security deposits returned (79,965 ) (123,928 )
Dividend paid to non-controlling interest holders (265 ) (10,501 )
Repurchase of shares and tax withholdings on share-based compensation (596,609 ) (543,781 )
Net cash used in financing activities (945,579 ) (791,049 )
 
Net (decrease) increase in cash and cash equivalents (433,995 ) 180,936
Effect of exchange rate changes on cash and cash equivalents (372 ) 518
Cash and cash equivalents at beginning of period 2,035,447   2,403,098  
Cash and cash equivalents at end of period $1,601,080   $2,584,552  
 

Source: AerCap Holdings N.V.

AerCap Holdings N.V.
For Media:
Gillian Culhane, +353 1 636 0945
Vice President Corporate Communications
gculhane@aercap.com
or
For Investors:
Brian Canniffe, +353 1 418 0461
Head of Investor Relations
bcanniffe@aercap.com

© 2017 AerCap Holdings N.V.

Privacy Policy

Terms of use