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AerCap Holdings N.V. Reports Financial Results for the Second Quarter 2018

July 30, 2018

DUBLIN--(BUSINESS WIRE)--Jul 30, 2018--AerCap Holdings N.V. (“AerCap”) (NYSE: AER):

Net income of $254.2 million for the second quarter of 2018 and $519.6 million for the first half of 2018 Diluted earnings per share of $1.70 for the second quarter of 2018 and $3.42 for the first half of 2018

Highlights

90 aircraft transactions executed in the second quarter of 2018, including 17 widebody transactions. 20 aircraft purchased for $1.5 billion. 6.6 years average age of owned fleet. 7.1 years average remaining lease term. 98.9% fleet utilization rate for the second quarter of 2018. Closed on $2.7 billion of debt financing. $11.7 billion of available liquidity and adjusted debt/equity ratio of 2.8 to 1. Book value per share of $59.25, an increase of 12% since June 30, 2017. Repurchased 1.9 million shares in the second quarter of 2018 for $101 million.

Aengus Kelly, CEO of AerCap, commented: “I am pleased to report another quarter of strong operating and financial results, with earnings per share of $1.70 and net income of $254.2 million. The AerCap platform remained active in the quarter, completing 90 aircraft transactions, including 17 widebody transactions. We took delivery of 20 aircraft and expect to take delivery of over 200 new technology aircraft through the end of 2020. We continue to see strong global demand from our airline customers and have access to $11.7 billion of liquidity to meet our strategic objectives.”

Second Quarter 2018 Financial Results

Net income of $254.2 million, compared with $282.9 million for the same period in 2017. Diluted earnings per share of $1.70, compared with $1.67 for the same period in 2017. The decrease in net income was primarily driven by lower other income as well as a decrease in net gain on sale of assets. Other income for the second quarter of 2017 included contractual payments related to a lease termination agreement. The increase in diluted earnings per share was primarily driven by the repurchase of 24.9 million shares from April 2017 through June 2018.

Revenue and Net Spread

Basic lease rents were $1,023.1 million for the second quarter of 2018, compared with $1,053.5 million for the same period in 2017. The decrease was primarily due to the sale of mid-life and older aircraft from April 2017 through June 2018.

Maintenance rents and other receipts were $107.9 million for the second quarter of 2018, compared with $104.1 million for the same period in 2017.

Net gain on sale of assets for the second quarter of 2018 was $51.2 million, relating to 30 aircraft sold and four aircraft reclassified to finance leases, compared with $69.5 million for the same period in 2017, relating to 24 aircraft sold and six aircraft reclassified to finance leases. The decrease was primarily due to the composition of asset sales.

Other income for the second quarter of 2018 was $12.4 million, compared with $36.7 million for the same period in 2017. Other income for the second quarter of 2017 included contractual payments related to a lease termination agreement.

Interest expense excluding mark-to-market of interest rate caps of $4.5 million was $289.4 million for the second quarter of 2018, compared with $266.0 million for the same period in 2017. Our average cost of debt was 4.1% for the second quarter of 2018, compared with 3.9% for the same period in 2017. 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.

Annualized net spread was 8.4% for the second quarter of 2018, compared with 9.3% for the same period in 2017. The decrease was primarily due to the lower age of our owned fleet, which increased our average remaining lease term to 7.1 years. Younger aircraft tend to have lower yields than older aircraft.

Selling, General and Administrative Expenses

Other Expenses

Leasing expenses were $103.3 million for the second quarter of 2018, compared with $136.3 million for the same period in 2017. The decrease was primarily due to lower maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights intangible asset balance. Asset impairment charges were $14.0 million for the second quarter of 2018, compared to $5.3 million recorded for the same period in 2017. Asset impairment recorded in the second quarter of 2018 related to sales transactions and lease terminations and was offset by maintenance revenue.

Effective Tax Rate

Our effective tax rate for the second quarter of 2018 was 13.0%, compared to 13.0% for the same period in 2017. The effective tax rate for the full year 2017 was 13.3%. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions.

Book Value Per Share

Book value per share has increased 12% since June 30, 2017.

Financial Position

As of June 30, 2018, AerCap’s portfolio consisted of 1,471 aircraft that were owned, on order or managed. The average age of our owned fleet as of June 30, 2018 was 6.6 years and the average remaining contracted lease term was 7.1 years.

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.

Net interest margin, or net spread, and annualized net spread

Net interest margin, or net spread, is 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. 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 intangible assets.

Conference Call

In connection with the earnings release, management will host an earnings conference call today, Monday, July 30, 2018, at 8:30 am Eastern Daylight Time. The call can be accessed live by dialing (U.S./Canada) +1 929 477 0448 or (International) +353 1 246 5621 and referencing code 3294370 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 is the global leader in aircraft leasing with, as of June 30, 2018, 1,471 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 Shannon, Los Angeles, Singapore, Amsterdam, Fort Lauderdale, Shanghai, Abu Dhabi, Seattle and Toulouse.

Forward-Looking Statements

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