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DUBLIN, May 5, 2020 /PRNewswire/ --
Highlights
"The Covid-19 pandemic is creating significant challenges for the global aviation industry and for economies around the world. We would like to express our support for those directly affected by this illness and those whose jobs and businesses have been impacted," said Aengus Kelly, Chief Executive Officer of AerCap. "AerCap entered this crisis in a position of strength, with a strong balance sheet and liquidity position, an attractive aircraft portfolio and a high-quality customer base including many of the world's leading airlines. Most importantly, we have an unrivaled operating platform with a strong track record of successfully managing through challenging environments. With approximately $11 billion sources of liquidity, over $28 billion of unencumbered assets and a record low leverage ratio of 2.5 to 1, we are well-positioned to weather an extended period of turbulence and support the recovery of the airline industry in the future."
First Quarter 2020 Financial Results
Revenue and Net Spread
Three months ended March 31, | |||||||||
2020 | 2019 | % increase/(decrease) | |||||||
(U.S. Dollars in millions) | |||||||||
Lease revenue: | |||||||||
Basic lease rents | $1,030.8 | $1,075.3 | (4%) | ||||||
Maintenance rents and other receipts | 134.3 | 86.8 | 55% | ||||||
Total lease revenue | 1,165.1 | 1,162.1 | —% | ||||||
Net gain on sale of assets | 58.4 | 21.5 | 171% | ||||||
Other income | 14.7 | 21.4 | (31%) | ||||||
Total Revenues and other income | $1,238.2 | $1,205.0 | 3% | ||||||
Basic lease rents were $1,030.8 million for the first quarter of 2020, compared with $1,075.3 million for the same period in 2019. The decrease was primarily due to downtime relating to re-leasing activity and the write-off of certain lessee receivables.
Maintenance rents and other receipts were $134.3 million for the first quarter of 2020, compared with $86.8 million for the same period in 2019. The increase was primarily due to higher maintenance revenue recognized as a result of lease terminations and higher end of lease compensation recognized during the first quarter of 2020.
Net gain on sale of assets for the first quarter of 2020 was $58.4 million, relating to 12 aircraft sold for $265 million, compared with $21.5 million for the same period in 2019, relating to 19 aircraft sold for $340 million. The increase was primarily due to the composition of asset sales.
Other income for the first quarter of 2020 was $14.7 million, compared with $21.4 million for the same period in 2019. The decrease was primarily due to higher interest income and income from net insurance proceeds in the first quarter of 2019.
Three months ended March 31, | |||||||||
2020 | 2019 | % increase/(decrease) | |||||||
(U.S. Dollars in millions) | |||||||||
Basic lease rents | $1,030.8 | $1,075.3 | (4%) | ||||||
Interest expense | 318.6 | 334.2 | (5%) | ||||||
Adjusted for: | |||||||||
Mark-to-market of interest rate caps and swaps | (12.5) | (15.9) | (21%) | ||||||
Interest expense excluding mark-to-market of interest rate caps and swaps | 306.1 | 318.3 | (4%) | ||||||
Net interest margin (*) | $724.7 | $757.0 | (4%) | ||||||
Depreciation and amortization, including maintenance rights expense | (432.0) | (447.2) | (3%) | ||||||
Net interest margin, less depreciation and amortization | $292.7 | $309.8 | (6%) | ||||||
Average lease assets (*) | $37,671 | $37,266 | 1% | ||||||
Annualized net spread (*) | 7.7% | 8.1% | |||||||
Annualized net spread less depreciation and amortization (*) | 3.1% | 3.3% | |||||||
(*) 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 and swaps of $12.5 million was $306.1 million for the first quarter of 2020, compared with $318.3 million for the same period in 2019. Our average cost of debt was 4.1% for the first quarter of 2020, compared with 4.2% for the same period in 2019. Our average cost of debt includes debt issuance costs, upfront fees and other impacts of approximately 0.3% to 0.4%.
Selling, General and Administrative Expenses
Three months ended March 31, | |||||||||
2020 | 2019 | % increase/(decrease) | |||||||
(U.S. Dollars in millions) | |||||||||
Selling, general and administrative expenses | $46.8 | $49.5 | (5%) | ||||||
Share-based compensation expenses | 17.8 | 17.4 | 2% | ||||||
Total selling, general and administrative expenses | $64.6 | $66.9 | (3%) | ||||||
Other Expenses
Leasing expenses were $103.3 million for the first quarter of 2020, compared with $91.7 million for the same period in 2019. The increase was primarily due to an increase in leasing expenses as a result of higher lessor maintenance contributions, partially offset by a decrease in maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights asset balance. Asset impairment charges were $13.9 million for the first quarter of 2020, compared to $5.0 million recorded for the same period in 2019. Asset impairment charges recorded in the first quarter of 2020 related to sales transactions and lease terminations and were more than offset by maintenance revenue.
Effective Tax Rate
Our effective tax rate for the first quarter of 2020 was 13.5%, compared to 13.0% for the first quarter of 2019. The effective tax rate for the full year 2019 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
March 31, 2020 | March 31, 2019 | |||||
(U.S. Dollars in millions,except share and per share data) | ||||||
Total AerCap Holdings N.V. shareholders' equity | $9,382.9 | $8,906.2 | ||||
Ordinary shares outstanding | 129,637,008 | 139,597,805 | ||||
Unvested restricted stock | (2,300,595) | (2,418,788) | ||||
Ordinary shares outstanding (excl. unvested restricted stock) | 127,336,413 | 137,179,017 | ||||
Book value per ordinary share outstanding (excl. unvested restricted stock) | $73.69 | $64.92 | ||||
Book value per share has increased 14% since March 31, 2019.
Financial Position
March 31, 2020 | December 31, 2019 | % increase/(decrease) overDecember 31, 2019 | |||||||
(U.S. Dollars in millions, except debt/equity ratio) | |||||||||
Total cash, cash equivalents and restricted cash | $4,882.5 | $1,300.3 | 275% | ||||||
Total lease assets (*) | 37,658.6 | 37,930.4 | (1%) | ||||||
Total assets | 47,144.8 | 43,749.2 | 8% | ||||||
Debt | 32,760.8 | 29,486.1 | 11% | ||||||
Total liabilities | 37,692.8 | 34,367.0 | 10% | ||||||
Total AerCap Holdings N.V. shareholders' equity | 9,382.9 | 9,314.9 | 1% | ||||||
Total equity | 9,452.0 | 9,382.2 | 1% | ||||||
(*) Refer to "Notes Regarding Financial Information Presented in This Press Release" for details relating to these non-GAAP measures | |||||||||
In March 2020, we borrowed $4.0 billion under a senior unsecured revolving credit facility. This resulted in an increase in total cash, cash equivalents and restricted cash, debt and total liabilities during the first quarter of 2020. In April 2020, we repaid $3.0 billion of the outstanding amount.
As of March 31, 2020, AerCap's portfolio consisted of 1,372 aircraft that were owned, on order or managed. The average age of our owned fleet as of March 31, 2020 was 6.2 years (2.5 years for new technology aircraft, 11.5 years for current technology aircraft) and the average remaining contracted lease term was 7.5 years.
Boeing 737 MAX Delays
Following the fatal accidents of two Boeing 737 MAX aircraft, the worldwide fleet of these aircraft was grounded by aviation authorities in March 2019 and production was temporarily suspended by Boeing in January 2020, resulting in ongoing delays in the delivery of our aircraft on order from Boeing. As of March 31, 2020, we had 95 Boeing 737 MAX aircraft on order with Boeing and five already delivered and on lease. Boeing currently expects that the necessary regulatory approvals will be obtained in time to support resumption of the Boeing 737 MAX deliveries during the third quarter of 2020. It is uncertain, however, when and under what conditions our Boeing 737 MAX aircraft will return to service and when Boeing will resume making deliveries of our Boeing 737 MAX aircraft on order. As a result, we expect to incur future delays on our scheduled Boeing 737 MAX deliveries, and any such future delays are likely to have an impact on our financial results. Certain of our Boeing 737 MAX leases have now been cancelled, and we expect additional leases to be cancelled in the future. In cases where leases have been cancelled, we have the right to cancel our corresponding orders for delivery of those aircraft; nevertheless, these lease cancellations may have an adverse effect on our future cash flows and results of operations, which could be material.
2020 Earnings Guidance
We provided guidance with respect to our projected 2020 financial results at our Capital Markets Day investor presentation on November 11, 2019 and during our fourth quarter earnings call on February 13, 2020. Since then, the Covid-19 outbreak has been declared a pandemic by the World Health Organization and the outbreak Of Covid-19 and responsive government actions have caused significant economic disruption, a dramatic reduction in commercial airline traffic and a high volume of flight cancellations, resulting in a broad adverse impact on air travel and the aviation industry. Given the rapidly evolving situation, we are unable at this time to estimate the impact of the Covid-19 outbreak on our future financial results, and therefore we are withdrawing our 2020 guidance.
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 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.
March 31, 2020 | December 31, 2019 | |||||
(U.S. Dollars in millions,except debt/equity ratio) | ||||||
Debt | $32,761 | $29,486 | ||||
Adjusted for: | ||||||
Cash and cash equivalents | (4,694) | (1,121) | ||||
50% credit for long-term subordinated debt | (1,125) | (1,125) | ||||
Adjusted debt | $26,942 | $27,240 | ||||
Equity | $9,452 | $9,382 | ||||
Adjusted for: | ||||||
50% credit for long-term subordinated debt | 1,125 | 1,125 | ||||
Adjusted equity | $10,577 | $10,507 | ||||
Adjusted debt/equity ratio | 2.5 to 1 | 2.6 to 1 | ||||
Net interest margin, annualized net spread, annualized net spread less depreciation and amortization, and average cost of debtNet 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 and swaps. 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. Average cost of debt is calculated as interest expense, excluding mark-to-market on interest rate caps and swaps, divided by average debt balance. 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 assetsLease 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, Tuesday, May 5, 2020, at 8:30 am Eastern Daylight Time. The call can be accessed live via webcast, by visiting AerCap's website https://investors.aercap.com/results-and-events/financial-results, or by dialing (U.S./Canada) toll-free at 877-704-4237 or (International) + 1-201-493-6718 at least 5 minutes before start time.
The webcast replay will be archived in the "Investors" section of the Company's website for one year.
About AerCap
AerCap is the global leader in aircraft leasing with 1,372 aircraft owned, managed or on order and $47.1 billion of total assets as of March 31, 2020. 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) | ||||||||
March 31, 2020 | December 31, 2019 | |||||||
Assets | ||||||||
Cash and cash equivalents | $4,693,872 | $1,121,396 | ||||||
Restricted cash | 188,671 | 178,951 | ||||||
Trade receivables | 94,558 | 47,935 | ||||||
Flight equipment held for operating leases, net | 35,670,631 | 35,870,781 | ||||||
Maintenance rights and lease premium, net | 774,039 | 809,615 | ||||||
Flight equipment held for sale | 331,387 | 336,592 | ||||||
Net investment in finance and sales-type leases | 978,783 | 1,011,549 | ||||||
Prepayments on flight equipment | 3,108,703 | 2,954,478 | ||||||
Other intangibles, net | 302,100 | 307,394 | ||||||
Deferred income tax assets | 106,267 | 95,077 | ||||||
Other assets | 895,817 | 1,015,476 | ||||||
Total Assets | $47,144,828 | $43,749,244 | ||||||
Liabilities and Equity | ||||||||
Accounts payable, accrued expenses and other liabilities | $1,108,037 | $1,032,623 | ||||||
Accrued maintenance liability | 2,149,884 | 2,190,159 | ||||||
Lessee deposit liability | 723,949 | 747,790 | ||||||
Debt | 32,760,773 | 29,486,131 | ||||||
Deferred income tax liabilities | 950,199 | 910,336 | ||||||
Total liabilities | 37,692,842 | 34,367,039 | ||||||
Ordinary share capital €0.01 par value, 350,000,000 ordinary shares authorized as of March 31, 2020 and December 31, 2019; 138,847,345 and 141,847,345 ordinary shares issued and 129,637,008 and 131,583,489 ordinary shares outstanding (including 2,300,595 and 2,354,318 unvested restricted stock) as of March 31, 2020 and December 31, 2019, respectively | 1,721 | 1,754 | ||||||
Additional paid-in capital | 2,067,647 | 2,209,462 | ||||||
Treasury shares, at cost (9,210,337 and 10,263,856 ordinary shares as of March 31, 2020 and December 31, 2019, respectively) | (498,003) | (537,341) | ||||||
Accumulated other comprehensive loss | (174,581) | (93,587) | ||||||
Accumulated retained earnings | 7,986,142 | 7,734,609 | ||||||
Total AerCap Holdings N.V. shareholders' equity | 9,382,926 | 9,314,897 | ||||||
Non-controlling interest | 69,060 | 67,308 | ||||||
Total Equity | 9,451,986 | 9,382,205 | ||||||
Total Liabilities and Equity | $47,144,828 | $43,749,244 | ||||||
AerCap Holdings N.V | ||||||||
Unaudited Consolidated Income Statements | ||||||||
(U.S. Dollars in thousands, except share and per share data) | ||||||||
Three months ended March 31, | ||||||||
2020 | 2019 | |||||||
Revenues and other income | ||||||||
Lease revenue: | ||||||||
Basic lease rents | $1,030,794 | $1,075,282 | ||||||
Maintenance rents and other receipts | 134,285 | 86,811 | ||||||
Total lease revenue | 1,165,079 | 1,162,093 | ||||||
Net gain on sale of assets | 58,366 | 21,541 | ||||||
Other income | 14,732 | 21,393 | ||||||
Total Revenues and other income | 1,238,177 | 1,205,027 | ||||||
Expenses | ||||||||
Depreciation and amortization | 415,798 | 425,849 | ||||||
Asset impairment | 13,947 | 5,031 | ||||||
Interest expense | 318,617 | 334,179 | ||||||
Leasing expenses | 103,297 | 91,721 | ||||||
Selling, general and administrative expenses | 64,584 | 66,873 | ||||||
Total Expenses | 916,243 | 923,653 | ||||||
Income before income taxes and income of investments accounted for under the equity method | 321,934 | 281,374 | ||||||
Provision for income taxes | (43,461) | (36,579) | ||||||
Equity in net earnings of investments accounted for under the equity method | 1,331 | 2,102 | ||||||
Net income | $279,804 | $246,897 | ||||||
Net income attributable to non-controlling interest | (2,980) | (12,711) | ||||||
Net income attributable to AerCap Holdings N.V | $276,824 | $234,186 | ||||||
Basic earnings per share | $2.16 | $1.70 | ||||||
Diluted earnings per share | $2.14 | $1.68 | ||||||
Weighted average shares outstanding - basic | 128,299,745 | 138,153,456 | ||||||
Weighted average shares outstanding - diluted | 129,340,501 | 139,618,644 | ||||||
AerCap Holdings N.V | ||||||||
Unaudited Consolidated Statements of Cash Flows | ||||||||
(U.S. Dollars in thousands) | ||||||||
Three months ended March 31, | ||||||||
2020 | 2019 | |||||||
Net income | $279,804 | $246,897 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 415,798 | 425,849 | ||||||
Asset impairment | 13,947 | 5,031 | ||||||
Amortization of debt issuance costs, debt discount, debt premium and lease premium | 16,298 | 19,033 | ||||||
Amortization of fair value adjustment on debt | (16,267) | (27,060) | ||||||
Maintenance rights write-off | 33,393 | 52,357 | ||||||
Maintenance liability release to income | (63,422) | (46,285) | ||||||
Net gain on sale of assets | (58,366) | (21,541) | ||||||
Deferred income taxes | 44,616 | 37,769 | ||||||
Collections of finance and sales-type leases | 19,115 | 19,890 | ||||||
Other | 75,395 | 56,079 | ||||||
Changes in operating assets and liabilities: | ||||||||
Trade receivables | (49,342) | (55,039) | ||||||
Other assets | (96,013) | (10,172) | ||||||
Accounts payable, accrued expenses and other liabilities | 13,962 | 42,892 | ||||||
Net cash provided by operating activities | 628,918 | 745,700 | ||||||
Purchase of flight equipment | (61,326) | (815,274) | ||||||
Proceeds from sale or disposal of assets | 176,961 | 312,431 | ||||||
Prepayments on flight equipment | (350,836) | (280,335) | ||||||
Other | — | (11) | ||||||
Net cash used in investing activities | (235,201) | (783,189) | ||||||
Issuance of debt | 4,200,000 | 1,816,306 | ||||||
Repayment of debt | (918,422) | (537,246) | ||||||
Debt issuance costs paid, net of debt premium received | (1,739) | (13,863) | ||||||
Maintenance payments received | 144,876 | 174,390 | ||||||
Maintenance payments returned | (95,189) | (108,437) | ||||||
Security deposits received | 28,392 | 86,860 | ||||||
Security deposits returned | (48,608) | (78,270) | ||||||
Dividend paid to non-controlling interest holders and others | (1,228) | (1,674) | ||||||
Repurchase of shares and tax withholdings on share-based compensation | (118,571) | (140,978) | ||||||
Net cash provided by financing activities | 3,189,511 | 1,197,088 | ||||||
Net increase in cash, cash equivalents and restricted cash | 3,583,228 | 1,159,599 | ||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,032) | (403) | ||||||
Cash, cash equivalents and restricted cash at beginning of period | 1,300,347 | 1,415,035 | ||||||
Cash, cash equivalents and restricted cash at end of period | $4,882,543 | $2,574,231 | ||||||
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SOURCE AerCap Holdings N.V.
