DUBLIN, Nov. 8, 2019 /PRNewswire/ --

Highlights

  • 12% increase in EPS year over year.
  • Upgraded to BBB rating by S&P Global Ratings and placed on Positive Outlook by Moody's.
  • 108 aircraft transactions executed in the third quarter of 2019.
  • New technology aircraft now comprise 55% of our owned fleet.
  • Over $40 billion of contracted future lease revenues.
  • Approximately 97% of lease rents through 2022 already contracted.
  • Average current lease expires in 2027.
  • 99.8% fleet utilization rate for the third quarter of 2019.
  • $2.4 billion increase in average lease assets year over year.
  • 13% increase in book value per share since September 30, 2018.
  • Repurchased 2.0 million shares in the third quarter of 2019 for $104 million and 9.1 million shares year to date through November 6, 2019 for $438 million.
  • New $200 million share repurchase program authorized, which will run through March 31, 2020.

Aengus Kelly, CEO of AerCap, commented: "We are very pleased to report another quarter of strong results. During the third quarter of 2019 we generated earnings per share of $2.01 and net income of $270 million. The 108 aircraft transactions executed this quarter demonstrate the scale and reach of the AerCap platform. Our earnings consistency and the discipline we have shown in managing our business are reflected in S&P's recent upgrade of AerCap to BBB, another important milestone in our continuing upward ratings trajectory."

Third Quarter 2019 Financial Results

  • Net income was $270.3 million, compared with $263.4 million for the same period in 2018. Diluted earnings per share was $2.01, compared with $1.79 for the same period in 2018.
  • The increase in net income was primarily driven by higher lease rents resulting from an increase in average lease assets due to the delivery of new technology aircraft from July 2018 through September 2019, as well as higher net gain on sale of assets.
  • Diluted earnings per share increased 12%, driven by the same factors as net income and the repurchase of 14.7 million shares from July 2018 through September 2019.

Revenue and Net Spread



Three months ended September 30,


Nine months ended September 30,



2019


2018


% increase/ 
(decrease)


2019


2018


% increase/ 
(decrease)



(U.S. Dollars in millions)


(U.S. Dollars in millions)

Lease revenue:













   Basic lease rents


$1,066.6


$1,038.5


3%


$3,218.9


$3,094.5


4%


   Maintenance rents and other receipts


72.6


93.9


(23)%


268.5


289.2


(7)%


Lease revenue


1,139.2


1,132.4


1%


3,487.4


3,383.7


3%


Net gain on sale of assets


40.5


20.0


103%


140.2


160.5


(13)%


Other income


14.4


14.1


2%


52.7


36.0


46%


Total Revenues and other income


$1,194.1


$1,166.5


2%


$3,680.4


$3,580.3


3%


Basic lease rents were $1,066.6 million for the third quarter of 2019, compared with $1,038.5 million for the same period in 2018. The increase was primarily due to a $2.4 billion increase in average lease assets.

Maintenance rents and other receipts were $72.6 million for the third quarter of 2019, compared with $93.9 million for the same period in 2018. The decrease was primarily due to lower maintenance revenue recognized as a result of lease terminations.

Net gain on sale of assets for the third quarter of 2019 was $40.5 million, relating to 19 aircraft sold for $561.3 million, compared with $20.0 million for the same period in 2018, relating to 13 aircraft sold for $187.5 million. The increase was primarily due to the volume and composition of asset sales.



Three months ended September 30,


Nine months ended September 30,



2019


2018


% increase/
decrease


2019


2018


% increase/ 
(decrease)



(U.S. Dollars in millions)


(U.S. Dollars in millions)














Basic lease rents


$1,066.6


$1,038.5


3%


$3,218.9



$3,094.5



4%

Interest expense


312.3


292.1


7%


978.9



851.4



15%

Adjusted for:













   Mark-to-market of interest rate caps


(3.4)


4.9


NA


(29.1)



26.0



NA

Interest expense excluding mark-to-market of interest rate caps


308.9


297.0


4%


949.8



877.4



8%

Net interest margin (*)


$757.7


$741.5


2%


$2,269.1



$2,217.1



2%

Depreciation and amortization, including maintenance rights expense


(429.2)


(446.2)


(4)%


(1,311.7)



(1,375.3)



(5)%

Net interest margin, less depreciation and amortization


$328.5


$295.3


11%


$957.4



$841.8



14%














Average lease assets (*)


$37,663


$35,280


7%


$37,524



$35,037



7%

Annualized net spread (*)


8.0%


8.4%




8.1%



8.4%





Annualized net spread less depreciation and amortization (*)


3.5%


3.3%




3.4%



3.2%


















(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures

Interest expense excluding mark-to-market of interest rate caps of $3.4 million was $308.9 million for the third quarter of 2019, compared with $297.0 million for the same period in 2018. Our average cost of debt was 4.2% for the third quarter of 2019, compared with 4.1% for the same period in 2018. Our average cost of debt includes debt issuance costs, upfront fees, undrawn fees, commitment fees and original issuance discount fees of approximately 0.3%.

Selling, General and Administrative Expenses



Three months ended September 30,


Nine months ended September 30,



2019


2018


% increase/ 
(decrease)


2019


2018


% increase/ 
(decrease)



(U.S. Dollars in millions)


(U.S. Dollars in millions)














Selling, general and administrative expenses


$49.0


$48.4


1%


$144.4


$157.4


(8)%

Share-based compensation expenses


15.7


15.0


5%


51.7


77.1


(33)%

Total selling, general and administrative expenses


$64.7


$63.4


2%


$196.1


$234.5


(16)%

Other Expenses

Leasing expenses were $44.1 million for the third quarter of 2019, compared with $84.8 million for the same period in 2018. The decrease was primarily due to a decrease in maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights asset balance as well as a decrease in other leasing expenses recognized as a result of lease terminations. Asset impairment charges were $31.2 million for the third quarter of 2019, compared to $12.8 million recorded for the same period in 2018. Asset impairment charges recorded in the third quarter of 2019 primarily related to lease terminations and were partially offset by related maintenance revenue recognized upon termination.

Effective Tax Rate

Our effective tax rate for the third quarter of 2019 was 13.0%, the same as for the third quarter of 2018. The effective tax rate for the full year 2018 was 12.5%. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions.

Book Value Per Share



September 30,
2019


September 30,
2018



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






Total AerCap Holdings N.V. shareholders' equity


$9,174.9


$8,869.9






Ordinary shares outstanding


134,742,482


146,961,077

Unvested restricted stock


(2,229,371)


(2,133,610)

Ordinary shares outstanding (excl. unvested restricted stock)


132,513,111


144,827,467






Book value per ordinary share outstanding (excl. unvested restricted stock)


$69.24


$61.24

Book value per share has increased 13% since September 30, 2018.

Financial Position



September 30,

2019


December 31,
2018


% increase/
(decrease) over 
December 31,
2018



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








Total cash, cash equivalents and restricted cash


$1,196.6


$1,415.0


(15)%

Total lease assets (*)


37,888.5


37,244.6


2%

Total assets


43,549.0


43,208.9


1%

Debt


29,283.5


29,507.6


(1)%

Total liabilities


34,309.0


34,328.3


0%

Total AerCap Holdings N.V. shareholders' equity


9,174.9


8,828.0


4%

Total equity


9,240.0


8,880.6


4%








(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures

As of September 30, 2019, AerCap's portfolio consisted of 1,360 aircraft that were owned, on order or managed. The average age of our owned fleet as of September 30, 2019 was 6.2 years (2.2 years for new technology aircraft, 11.1 years for current technology aircraft) and the average remaining contracted lease term was 7.5 years.

Boeing 737 MAX Delays

On March 13, 2019, the Federal Aviation Administration issued an order to suspend operations of all Boeing 737 MAX aircraft in the U.S. and by U.S. aircraft operators following two recent fatal accidents involving Boeing 737 MAX aircraft. Non-U.S. civil aviation authorities have also issued directives to similar effect. Boeing has suspended deliveries of the Boeing 737 MAX until clearance is granted by the appropriate regulatory authorities. Prior to the grounding, we had delivered five Boeing 737 MAX aircraft that are currently on lease to an airline customer, and we currently have 95 Boeing 737 MAX aircraft on order. It is uncertain when and under what conditions the Boeing 737 MAX will return to service and when Boeing will resume making deliveries of these aircraft. As a result, we have incurred delays and expect to incur future delays on our scheduled Boeing 737 MAX deliveries.

Share Repurchase Program

In November 2019, our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $200 million of AerCap ordinary shares through March 31, 2020. 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.

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 are definitions 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.



September 30, 2019



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




Debt


$29,284




Adjusted for:



   Cash and cash equivalents


(1,037)

   50% credit for long-term subordinated debt


(750)

Adjusted debt


$27,497







Equity


$9,240




Adjusted for:



   50% credit for long-term subordinated debt


750

Adjusted equity


$9,990




Adjusted debt/equity ratio


2.75 to 1

Net interest margin, annualized net spread and annualized net spread less depreciation and amortization
Net interest margin is calculated as the difference between basic lease rents and interest expense, excluding the impact of the mark-to-market of interest rate caps. Annualized net spread is net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is net interest margin less depreciation and amortization, including maintenance rights expense, expressed as a percentage of average lease assets. We believe these measures may further assist investors in their understanding of the changes and trends related to the earnings of our leasing activities. These measures reflect 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.

Lease assets
Lease assets include flight equipment held for operating leases, flight equipment held for sale, net investment in finance and sales-type leases and maintenance rights assets.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Friday, November 8, 2019, at 8:30 am Eastern Standard Time. The call can be accessed live by dialing (U.S./Canada) +1 929 477 0448 or (International) +353 1 246 5638 and referencing code 7778627 at least 5 minutes before start time, or by visiting AerCap's website at www.aercap.com under "Investors."

The webcast replay will be archived in the "Investors" section of the Company's website for one year.

For further information, contact Joseph McGinley: +353 1 418 0428 (jmcginley@aercap.com).

About AerCap

AerCap (NYSE: AER) is the global leader in aircraft leasing with 1,360 aircraft owned, managed or on order and $43.5 billion of total assets as of September 30, 2019. 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 Shannon, Los Angeles, Singapore, Amsterdam, 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)














September 30, 2019


December 31, 2018










Assets







Cash and cash equivalents


$1,036,919


$1,204,018



Restricted cash


159,694


211,017



Trade receivables


54,863


40,379



Flight equipment held for operating leases, net


35,231,489


35,052,335



Maintenance rights and lease premium, net


917,353


1,113,190



Flight equipment held for sale


801,645


184,129



Net investment in finance and sales-type leases


1,038,832


1,003,286



Prepayments on flight equipment


2,930,971


3,024,520



Other intangibles, net


312,688


328,570



Deferred income tax assets


152,428


138,281



Other assets


912,132


909,190



Total Assets


$43,549,014


$43,208,915

















Liabilities and Equity







Accounts payable, accrued expenses and other liabilities


$1,046,204


$1,009,945



Accrued maintenance liability


2,281,224


2,237,494



Lessee deposit liability


762,261


768,677



Debt


29,283,522


29,507,587



Deferred income tax liabilities


935,812


804,598



Total liabilities


34,309,023


34,328,301










Ordinary share capital €0.01 par value, 350,000,000 ordinary shares authorized as of September 30, 2019 and December 31, 2018; 146,847,345 and 151,847,345 ordinary shares issued and 134,742,482 and 142,674,664 ordinary shares outstanding (including 2,229,371 and 2,429,442 unvested restricted stock) as of September 30, 2019 and December 31, 2018, respectively


1,810


1,866



Additional paid-in capital


2,448,236


2,712,417



Treasury shares, at cost 12,104,863 and 9,172,681 ordinary shares as of September 30, 2019 and December 31, 2018, respectively)


(591,085)


(476,085)



Accumulated other comprehensive loss


(108,139)


(1,824)



Accumulated retained earnings


7,424,094


6,591,674



Total AerCap Holdings N.V. shareholders' equity


9,174,916


8,828,048



Non-controlling interest


65,075


52,566



Total Equity


9,239,991


8,880,614










Total Liabilities and Equity


$43,549,014


$43,208,915









 
















AerCap Holdings N.V








Unaudited Consolidated Income Statements








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
























Three months ended September 30,


Nine months ended September 30,






2019


2018


2019


2018




Revenues and other income












Lease revenue:












Basic lease rents


$1,066,584


$1,038,521


$3,218,934


$3,094,517




Maintenance rents and other receipts


72,600


93,939


268,506


289,218




Net gain on sale of assets


40,519


19,992


140,217


160,517




Other income


14,382


14,065


52,731


36,043




Total Revenues and other income


1,194,085


1,166,517


3,680,388


3,580,295
















Expenses












Depreciation and amortization


415,313


412,722


1,260,255


1,253,169




Asset impairment


31,168


12,843


54,018


28,929




Interest expense


312,311


292,082


978,931


851,396




Leasing expenses


44,080


84,814


201,045


320,591




Selling, general and administrative expenses


64,712


63,401


196,128


234,455




Total Expenses


867,584


865,862


2,690,377


2,688,540
















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


326,501


300,655


990,011


891,755
















Provision for income taxes


(42,445)


(39,089)


(128,701)


(115,932)




Equity in net earnings of investments accounted for under the equity method


(12,065)


2,711


(8,028)


8,520
















Net income


$271,991


$264,277


$853,282


$784,343




Net income attributable to non-controlling interest


(1,701)


(926)


(17,346)


(1,353)
















Net income attributable to AerCap Holdings N.V


$270,290


$263,351


$835,936


$782,990
















Basic earnings per share


$2.03


$1.81


$6.16


$5.36




Diluted earnings per share


$2.01


$1.79


$6.10


$5.21




Weighted average shares outstanding - basic


133,182,744


145,669,773


135,732,923


146,040,042




Weighted average shares outstanding - diluted


134,175,597


147,123,818


136,990,028


150,231,051



























 









AerCap Holdings N.V







Unaudited Consolidated Statements of Cash Flows







(U.S. Dollars in thousands)









Nine months ended September 30,





2019


2018



Net income


$853,282


$784,343



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







Depreciation and amortization


1,260,255


1,253,169



Asset impairment


54,018


28,929



Amortization of debt issuance costs, debt discount, debt premium and lease premium


61,297


59,631



Amortization of fair value adjustment on debt


(62,361)


(115,549)



Maintenance rights write-off


174,544


234,964



Maintenance liability release to income


(143,316)


(177,264)



Net gain on sale of assets


(140,217)


(160,517)



Deferred income taxes


131,708


117,716



Collections of finance and sales-type leases


72,775




Other


134,416


88,593



 Changes in operating assets and liabilities:







   Trade receivables


(15,424)


(47,430)



   Other assets


(7,053)


(11,206)



   Accounts payable, accrued expenses and other liabilities


(36,561)


6,555



Net cash provided by operating activities


2,337,363


2,061,934










Purchase of flight equipment


(2,396,722)


(2,200,397)



Proceeds from sale or disposal of assets


1,171,886


1,338,776



Prepayments on flight equipment


(1,015,332)


(1,505,490)



Collections of finance and sales-type leases



73,617



Other


(17)


(21,359)



Net cash used in investing activities


(2,240,185)


(2,314,853)










Issuance of debt


5,339,455


4,069,555



Repayment of debt


(5,523,401)


(3,981,988)



Debt issuance costs paid, net of debt premium received


(18,524)


(52,734)



Maintenance payments received


564,374


567,511



Maintenance payments returned


(249,382)


(364,319)



Security deposits received


199,091


141,114



Security deposits returned


(194,841)


(144,795)



Dividend paid to non-controlling interest holders and others


(4,837)


(2,700)



Repurchase of shares and tax withholdings on share-based compensation


(425,609)


(597,047)



Net cash used in financing activities


(313,674)


(365,403)










Net decrease in cash, cash equivalents and restricted cash


(216,496)


(618,322)



Effect of exchange rate changes on cash, cash equivalents and restricted cash


(1,926)


2,966



Cash, cash equivalents and restricted cash at beginning of period


1,415,035


2,024,125



Cash, cash equivalents and restricted cash at end of period


$1,196,613


$1,408,769






























 

 

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SOURCE AerCap Holdings N.V.


Source: AerCap Holdings N.V.