AerCap Holdings N.V. Reports Financial Results for the Fourth Quarter 2020
03/02/2021 - 07:00 AM
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) over December 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 (jmcginley@aercap.com ).
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
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SOURCE AerCap Holdings N.V.