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AerCap Holdings N.V. Reports Financial Results for the Fourth Quarter 2020

March 2, 2021 7:00 AM EST

DUBLIN, March 2, 2021 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aircraft leasing, today reported financial results for the fourth quarter of 2020.

  • Net income for the fourth quarter of 2020 was $28 million, or $0.22 per share. This was impacted by cash accounting and debt extinguishment costs of $117 million and $76 million, pre-tax, respectively.
  • Cash flow from operating activities was $653 million, an increase of 21% from the third quarter of 2020.

Aengus Kelly, Chief Executive Officer of AerCap, said: "I am pleased to report further positive progress for the company in the fourth quarter. Our operating cash flows increased significantly, we ran a number of successful aircraft placement campaigns and we see a renewed enthusiasm from our customers. As the pace of vaccinations accelerates around the world, allowing governments to ease restrictions, we believe the strength of consumer demand will become more evident, driving further confidence in the sector."

Highlights

Strong Balance Sheet:

  • AerCap ended the fourth quarter with over $9 billion in total sources of liquidity, representing next 12 months' sources-to-uses coverage ratio of 2.3x.
  • Adjusted debt/equity ratio of 2.6 to 1, below the company's target of 2.7x to 1.
  • Secured debt-to-total assets ratio of 26%.
  • Approximately $26 billion of unencumbered assets, providing a high degree of flexibility.
  • In January 2021, AerCap completed the offering of $1 billion of 5-year senior unsecured notes with a 1.75% coupon.

Attractive Aircraft Fleet:

  • AerCap's average current lease expires in 2028, and only 7% of the company's aircraft by book value are scheduled to come off lease through the end of 2022.
  • AerCap has already placed all of its new aircraft deliveries from its order book for 2021 and is 98% placed through 2022.
  • New technology aircraft comprise 63% of AerCap's fleet. The average age of the company's owned fleet as of December 31, 2020 was 6.4 years and the average remaining contracted lease term was 7.3 years. The fleet utilization rate for the fourth quarter of 2020 was 97%.

Revenue and Net Spread

Three months ended December 31,

Year ended December 31,

2020

2019

% increase/(decrease)

2020

2019

% increase/(decrease)

(U.S. Dollars in millions)

(U.S. Dollars in millions)

Lease revenue:

   Basic lease rents

$ 885

$ 1,062

(17%)

$ 3,762

$ 4,281

(12%)

   Maintenance rents and other receipts

110

133

(17%)

559

401

39%

Lease revenue

995

1,195

(17%)

4,321

4,682

(8%)

Net gain on sale of assets

14

49

(71%)

90

189

(53%)

Other income

22

14

63%

83

66

25%

Total Revenues and other income

$ 1,032

$ 1,257

(18%)

$ 4,494

$ 4,937

(9%)

Basic lease rents were $885 million for the fourth quarter of 2020, compared with $1,062 million for the same period in 2019. The decrease was primarily due to lease restructurings, transitions and the impact of airline bankruptcies.

Maintenance rents and other receipts were $110 million for the fourth quarter of 2020, compared with $133 million for the same period in 2019. The decrease was primarily due to lower end of lease compensation recognized during the fourth quarter of 2020.

Net gain on sale of assets for the fourth quarter of 2020 was $14 million, relating to 12 aircraft sold for $97 million, compared with $49 million for the same period in 2019, relating to 28 aircraft sold for $729 million. The decrease was primarily due to the lower volume and composition of asset sales.

Other income for the fourth quarter of 2020 was $22 million, compared with $14 million for the same period in 2019. The increase was primarily driven by higher interest income.

Three months ended December 31,

Year ended December 31,

2020

2019

% increase/(decrease)

2020

2019

% increase/(decrease)

(U.S. Dollars in millions)

(U.S. Dollars in millions)

Basic lease rents

$ 885

$ 1,062

(17%)

$ 3,762

$ 4,281

(12%)

Interest expense

311

316

(2%)

1,248

1,295

(4%)

Adjusted for:

   Mark-to-market of interest rate caps and swaps

0

(1)

NA

(14)

(30)

(52%)

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

311

316

(1%)

1,234

1,265

(3%)

Net interest margin (*)

$ 575

$ 747

(23%)

$ 2,528

$ 3,016

(16%)

Depreciation and amortization, including maintenance rights expense

(408)

(441)

(8%)

(1,691)

(1,753)

(4%)

Net interest margin less depreciation and amortization (*)

$ 167

$ 306

(45%)

$ 837

$ 1,263

(34%)

Average lease assets (*)

$ 36,496

$ 37,789

(3%)

$ 37,145

$ 37,590

(1%)

Annualized net spread (*)

6.3%

7.9%

6.8%

8.0%

Net Spread less depreciation and amortization (*)

1.8%

3.2%

2.3%

3.4%

(*) 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 was $311 million for the fourth quarter of 2020, compared with $316 million for the same period in 2019. AerCap's average cost of debt was 4.1% for the fourth quarter of 2020, compared with 4.2% for the same period in 2019. The company's 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 December 31,

Year ended December 31,

2020

2019

% increase/(decrease)

2020

2019

% increase/(decrease)

(U.S. Dollars in millions)

(U.S. Dollars in millions)

Selling, general and administrative expenses

$ 44

$ 54

(18%)

$ 173

$ 198

(13%)

Share-based compensation expenses

20

18

11%

69

69

(0%)

Total selling, general and administrative expenses

$ 64

$ 71

(11%)

$ 242

$ 267

(9%)

Selling, general and administrative expenses decreased by 11% to $64 million for the fourth quarter of 2020, compared with $71 million for the same period in 2019.

Other Expenses

Asset impairment charges were $27 million for the fourth quarter of 2020, compared to $16 million recorded for the same period in 2019. Asset impairment charges recorded in the fourth quarter of 2020 related to lease terminations and sales transactions and were partially offset by related maintenance revenue.

Effective Tax Rate

AerCap's effective tax rate for the full year 2020 was 5.5%, compared with the effective tax rate of 12.5% for the full year 2019. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions as well as the amount of permanent tax differences relative to pre-tax income.

The company's effective tax rate was 21.7% for the fourth quarter of 2020, compared to 11.1% for the fourth quarter of 2019. Our effective tax rate in any quarter can be impacted by revisions to the estimated full year rate.

Book Value Per Share

December 31, 2020

December 31, 2019

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

Total AerCap Holdings N.V. shareholders' equity

$8,864

$9,315

Ordinary shares outstanding

130,398,538

131,583,489

Unvested restricted stock

(2,552,346)

(2,354,318)

Ordinary shares outstanding (excl. unvested restricted stock)

127,846,192

129,229,171

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

$69.34

$72.08

Financial Position

December 31,2020

December 31,2019

% increase/(decrease) overDecember 31,2019

(U.S. Dollars in millions)

Total cash, cash equivalents and restricted cash

$ 1,495

$ 1,300

15%

Total lease assets (*)

36,642

37,930

(3%)

Total assets

42,048

43,749

(4%)

Debt

28,742

29,486

(3%)

Total liabilities

33,116

34,367

(4%)

Total AerCap Holdings N.V. shareholders' equity

8,864

9,315

(5%)

Total equity

8,932

9,382

(5%)

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

Aircraft Portfolio

As of December 31, 2020, AerCap's portfolio consisted of 1,330 aircraft that were owned, on order or managed. The average age of the company's owned fleet as of December 31, 2020 was 6.4 years (3.0 years for new technology aircraft, 12.1 years for current technology aircraft) and the average remaining contracted lease term was 7.3 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 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.

December 31, 2020

December 31, 2019

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

Debt

$28,742

$29,486

Adjusted for:

   Cash and cash equivalents

(1,249)

(1,121)

   50% credit for long-term subordinated debt

(1,125)

(1,125)

Adjusted debt

$26,368

$27,240

Equity

$8,932

$9,382

Adjusted for:

   50% credit for long-term subordinated debt

1,125

1,125

Adjusted equity

$10,057

$10,507

Adjusted debt/equity ratio

2.6 to 1

2.6 to 1

Net interest margin, annualized net spread, annualized net spread less depreciation and amortization and average cost of debt

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 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 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 its report of fourth quarter 2020 results, management will host a conference call with members of the investment community today, Tuesday, March 2, 2021, at 8:30 am Eastern Time. The call can be accessed live via webcast by AerCap's website at www.aercap.com under "Investors", or by dialing (U.S./Canada) +1 929 477 0402 or (International) +353 1 246 5621 and referencing code 6107189 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.

For further information, contact Joseph McGinley: +353 1 418 0428 ([email protected]).

About AerCap

AerCap is the global leader in aircraft leasing. 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, including the impacts of, and associated responses to, the Covid-19 pandemic, 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)

December 31, 2020

December 31, 2019

Assets

Cash and cash equivalents

$ 1,248,772

$ 1,121,396

Restricted cash

246,518

178,951

Trade receivables

170,675

47,935

Flight equipment held for operating leases, net

35,156,450

35,870,781

Investment in finance and sales-type leases, net

878,451

1,011,549

Flight equipment held for sale

-

336,592

Prepayments on flight equipment

2,111,659

2,954,478

Maintenance rights and lease premium, net

649,914

809,615

Other intangibles, net

224,634

307,394

Deferred income tax assets

131,532

95,077

Other assets

1,229,434

1,015,476

Total Assets

$ 42,048,039

$ 43,749,244

Liabilities and Equity

Accounts payable, accrued expenses and other liabilities

$ 1,109,325

$ 1,032,623

Accrued maintenance liability

1,750,395

2,190,159

Lessee deposit liability

600,321

747,790

Debt

28,742,081

29,486,131

Deferred income tax liabilities

913,431

910,336

Total liabilities

33,115,553

34,367,039

Ordinary share capital €0.01 par value, 350,000,000 ordinary shares authorized as of December 31, 2020 and 2019; 138,847,345 and 141,847,345 ordinary shares issued and 130,398,538 and 131,583,489 ordinary shares outstanding (including 2,552,346 and 2,354,318 unvested restricted stock) as of December 31, 2020 and 2019, respectively

1,721

1,754

Additional paid-in capital

2,078,125

2,209,462

Treasury shares, at cost (8,448,807 and 10,263,856 ordinary shares as of December 31, 2020 and 2019, respectively)

(459,994)

(537,341)

Accumulated other comprehensive loss

(155,085)

(93,587)

Accumulated retained earnings

7,399,703

7,734,609

Total AerCap Holdings N.V. shareholders' equity

8,864,470

9,314,897

Non-controlling interest

68,016

67,308

Total Equity

8,932,486

9,382,205

Total Liabilities and Equity

$ 42,048,039

$ 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 December 31,

Year ended December 31,

2020

2019

2020

2019

Revenues and other income

Lease revenue:

Basic lease rents

$ 885,333

$ 1,062,326

$ 3,761,611

$ 4,281,260

Maintenance rents and other receipts

110,143

132,500

559,395

401,006

Total lease revenue

995,476

1,194,826

4,321,006

4,682,266

Net gain on sale of assets

14,099

48,618

89,618

188,835

Other income

22,042

13,508

83,005

66,239

Total Revenues and other income

1,031,617

1,256,952

4,493,629

4,937,340

Expenses

Depreciation and amortization

401,787

415,866

1,645,373

1,676,121

Asset impairment

26,694

16,131

1,086,983

70,149

Interest expense

310,534

316,089

1,248,225

1,295,020

Loss on debt extinguishment

75,625

-

118,460

-

Leasing expenses

91,453

86,905

323,535

287,950

Selling, general and administrative expenses

63,746

71,330

242,161

267,458

Total Expenses

969,839

906,321

4,664,737

3,596,698

Loss on investment at fair value

(29,089)

-

(143,510)

-

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

32,689

350,631

(314,618)

1,340,642

Income tax (expense) benefit

(7,080)

(39,013)

17,231

(167,714)

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

2,861

1,877

2,464

(6,151)

Net income (loss)

$ 28,470

$ 313,495

($ 294,923)

$ 1,166,777

Net loss (income) attributable to non-controlling interest

8

(3,737)

(3,643)

(21,083)

Net income (loss) attributable to AerCap Holdings N.V

$ 28,478

$ 309,758

($ 298,566)

$ 1,145,694

Basic earnings (loss) per share

$ 0.22

$ 2.36

($ 2.34)

$ 8.51

Diluted earnings (loss) per share

$ 0.22

$ 2.34

($ 2.34)

$ 8.43

Weighted average shares outstanding - basic

127,662,360

131,119,824

127,743,828

134,570,169

Weighted average shares outstanding - diluted

128,840,968

132,227,255

127,743,828

135,898,139

 

AerCap Holdings N.V.

Unaudited Consolidated Statements of Cash Flows

(U.S. Dollars in thousands)

Year ended December 31,

2020

2019

Net (loss) income

($ 294,923)

$ 1,166,777

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Depreciation and amortization

1,645,373

1,676,121

Asset impairment

1,086,983

70,149

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

64,970

79,645

Amortization of fair value adjustment on debt

(47,279)

(79,098)

Maintenance rights write-off

133,015

244,748

Maintenance liability release to income

(344,210)

(207,849)

Net gain on sale of assets

(89,618)

(188,835)

Deferred income taxes

(20,882)

162,498

Share-based compensation

69,187

69,410

Collections of finance and sales-type leases

68,128

98,365

Loss on investment at fair value

143,510

-

Loss on debt extinguishment

118,460

-

Other

252,350

96,117

 Changes in operating assets and liabilities:

   Trade receivables

(128,188)

(8,751)

   Other assets

(400,316)

(73,646)

   Accounts payable, accrued expenses and other liabilities

(126,177)

31

Net cash provided by operating activities

2,130,383

3,105,682

Purchase of flight equipment

(778,547)

(3,359,092)

Proceeds from sale or disposal of assets

471,437

1,773,766

Prepayments on flight equipment

(405,178)

(1,369,400)

Other

-

(17)

Net cash used in investing activities

(712,288)

(2,954,743)

Issuance of debt

10,946,333

6,539,310

Repayment of debt

(11,560,015)

(6,504,830)

Debt issuance and extinguishment costs paid, net of debt premium received

(253,806)

(36,592)

Maintenance payments received

345,699

736,423

Maintenance payments returned

(412,492)

(352,032)

Security deposits received

137,130

232,219

Security deposits returned

(297,469)

(233,222)

Dividend paid to non-controlling interest holders

(2,935)

(6,341)

Repurchase of shares and tax withholdings on share-based compensation

(127,777)

(639,941)

Net cash used in financing activities

(1,225,332)

(265,006)

Net increase (decrease) in cash, cash equivalents and restricted cash

192,763

(114,067)

Effect of exchange rate changes

2,180

(621)

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

$ 1,495,290

$ 1,300,347

 

AerCap logo (PRNewsfoto/AerCap Holdings N.V.)

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/aercap-holdings-nv-reports-financial-results-for-the-fourth-quarter-2020-301237883.html

SOURCE AerCap Holdings N.V.



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