AerCap Holdings N.V. Reports Financial Results for Second Quarter 2023

• Net income for the second quarter of 2023 was $493 million, or $2.12 per share.

• Adjusted net income for the second quarter of 2023 was $596 million, or $2.56 per share.

• Raising full year 2023 adjusted earnings per share guidance to range of $8.50 - $9.00.

• New $500 million share repurchase program authorized.

DUBLIN, July 31, 2023 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the industry leader across all areas of aviation leasing, today reported financial results for the second quarter of 2023 ended June 30, 2023.

"AerCap produced another strong performance for the second quarter of 2023. We continue to benefit from strong demand for our aviation assets, as well as a robust sales market. Our confidence in the future is demonstrated by our increased 2023 full year EPS guidance as well as our new $500 million share repurchase program, which takes our share repurchase authorizations so far this year to $1.5 billion," said Aengus Kelly, Chief Executive Officer of AerCap.

Highlights:

• Return on equity of 12% and adjusted return on equity of 15% for the second quarter of 2023.

• Adjusted debt/equity ratio of 2.51 to 1 as of June 30, 2023.

• 25% margin on gain on sale of assets in the second quarter of 2023.

• Cash flow from operating activities was $1.2 billion for the second quarter of 2023.

• Executed 215 transactions in the second quarter of 2023, including 124 lease agreements, 32 purchases and 59 sales.

• 100% of new aircraft order book placed through 2024.

• Book value per share of $71.46 as of June 30, 2023, an increase of ~14% from June 30, 2022.

• ~5.1 million shares repurchased in the second quarter of 2023, at an average price of $58.54, for a total of $296 million.

• Increased full year 2023 adjusted earnings per share guidance to a range of $8.50 - $9.00, which does not include 2H 2023 gains on sale.

 

Revenue and Net Spread

		Three months ended June 30,						Six months ended June 30,
		2023		2022		% increase/ (decrease)		2023		2022		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Lease revenue:
Basic lease rents		$1,561		$1,462		7 %		$3,098		$3,015		3 %
Maintenance rents and other receipts		156		103		52 %		343		289		19 %
Total lease revenue		1,717		1,564		10 %		3,441		3,304		4 %
Net gain on sale of assets		166		35		371 %		265		38		589 %
Other income		41		71		(42 %)		83		118		(29 %)
Total Revenues and other income		$1,924		$1,671		15 %		$3,790		$3,461		10 %

 

Basic lease rents were $1,561 million for the second quarter of 2023, compared with $1,462 million for the same period in 2022. Basic lease rents for the second quarter of 2023 were impacted by $41 million of lease premium amortization.

Maintenance rents and other receipts were $156 million for the second quarter of 2023, compared with $103 million for the same period in 2022. Maintenance rents for the second quarter of 2023 were impacted by $29 million as a result of maintenance rights assets that were amortized to revenue.

Net gain on sale of assets for the second quarter of 2023 was $166 million, relating to 52 assets sold for $818 million, compared with $35 million for the same period in 2022, relating to 29 assets sold for $386 million. The increase was primarily due to the volume and composition of asset sales.

Other income for the second quarter of 2023 was $41 million, compared with $71 million for the same period in 2022. The decrease was primarily driven by higher proceeds from unsecured claims recognized in the second quarter of 2022.

		Three months ended June 30,						Six months ended June 30,
		2023		2022		% increase/  (decrease)		2023		2022		% increase/  (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Basic lease rents		$1,561		$1,462		7 %		$3,098		$3,015		3 %
Adjusted for:
Amortization of lease premium/deficiency		41		52		(21 %)		84		109		(23 %)
Basic lease rents excluding amortization of lease premium/deficiency		$1,603		$1,514		6 %		$3,182		$3,124		2 %
Interest expense		427		400		7 %		864		781		11 %
Adjusted for:
Mark-to-market of interest rate caps and swaps		3		3		—		(11)		39		NA
Interest expense excluding mark-to-market of interest rate caps and swaps		430		403		7 %		853		820		4 %
Adjusted net interest margin (*)		$1,172		$1,110		6 %		$2,329		$2,304		1 %
Depreciation and amortization		(616)		(581)		6 %		(1,226)		(1,215)		1 %
Adjusted net interest margin, less depreciation and amortization		$557		$530		5 %		$1,103		$1,089		1 %
Average lease assets (*)		$59,656		$59,064		1 %		$59,432		$60,601		(2 %)
Annualized net spread (*)		7.9 %		7.5 %				7.8 %		7.6 %
Annualized net spread less depreciation and amortization (*)		3.7 %		3.6 %				3.7 %		3.6 %

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

 

Interest expense excluding mark-to-market of interest rate caps and swaps was $430 million for the second quarter of 2023, compared with $403 million for the same period in 2022. AerCap's average cost of debt was 3.4% for the second quarter of 2023 and 3.0% for the same period in 2022, excluding debt issuance costs, upfront fees and other impacts.

Selling, General and Administrative Expenses

		Three months ended June 30,						Six months ended June 30,
		2023		2022		% increase/ (decrease)		2023		2022		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Selling, general and administrative expenses (excluding share- based compensation expenses)		$98		$78		25 %		$182		$148		23 %
Share-based compensation expenses		22		27		(19 %)		49		54		(9 %)
Selling, general and administrative expenses		$120		$105		14 %		$230		$202		14 %

 

Selling, general and administrative expenses increased to $120 million for the second quarter of 2023, compared with $105 million for the same period in 2022. The increase was primarily driven by higher personnel and travel-related expenses.

Other Expenses

Leasing expenses were $229 million for the second quarter of 2023, compared with $193 million for the same period in 2022. The increase was primarily due to higher maintenance rights asset amortization.

Effective Tax Rate

AerCap's effective tax rate was 14.1% for the second quarter of 2023, compared to an effective tax rate of 14.0% for the second quarter of 2022. 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 or loss, and certain other discrete items.

Book Value Per Share

		June 30, 2023		June 30, 2022
		(U.S. Dollars in millions, except share and per share data)
Total AerCap Holdings N.V. shareholders' equity		$16,312		$15,034
Ordinary shares outstanding		232,505,493		245,848,357
Unvested restricted stock		(4,233,182)		(5,032,769)
Ordinary shares outstanding (excl. unvested restricted stock)		228,272,311		240,815,588
Book value per ordinary share outstanding (excl. unvested restricted stock)		$71.46		$62.43

 

Financial Position

		June 30, 2023		December 31, 2022		% increase/ (decrease) over December 31, 2022
		(U.S. Dollars in millions)
Total cash, cash equivalents and restricted cash		$1,317		$1,757		(25 %)
Total assets		69,928		69,727		— %
Debt		46,256		46,533		(1 %)
Total liabilities		53,538		53,532		— %
Total AerCap Holdings N.V. shareholders' equity		16,312		16,118		1 %
Total equity		16,391		16,195		1 %

 

Flight Equipment

As of June 30, 2023, AerCap's portfolio consisted of 3,467 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of June 30, 2023 was 7.3 years (4.3 years for new technology aircraft, 13.8 years for current technology aircraft) and the average remaining contracted lease term was 7.2 years.

Share Repurchase Program

In July 2023, our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $500 million of AerCap ordinary shares through December 31, 2023. 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 ordinary 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 and metrics used in this press release. We believe these measures and metrics may further assist investors in their understanding of our performance. These measures and metrics should not be viewed in isolation and should only be used in conjunction with and as a supplement to our U.S. GAAP financial measures. Non-GAAP measures and metrics are not uniformly defined by all companies, including those in our industry, and so this additional information may not be comparable with similarly-titled measures and metrics and disclosures by other companies.

Adjusted net income / earnings per share and adjusted return on equity

Adjusted net income is calculated as net income excluding the after-tax impact of the amortization of maintenance rights and lease premium assets recognized under purchase accounting and net recoveries related to the Ukraine Conflict. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average of our ordinary shares outstanding. Adjusted return on equity is calculated by dividing adjusted net income by average shareholders' equity. Given the relative significance of these items during 2023, we have chosen to present this measure in order to assist investors in their understanding of the changes and trends related to our earnings.

 

		Three months ended June 30, 2023				Six months ended June 30, 2023
		Net income		Earnings per share		Net income		Earnings per share
		(U.S. Dollars in millions, except per share data)
Net income / earnings per share		$493		$2.12		$925		$3.90
Adjusted for:
Amortization of maintenance rights and lease premium    assets recognized under purchase accounting (*)		132		0.57		299		1.26
Net recoveries related to Ukraine Conflict		(14)		(0.06)		(28)		(0.12)
Income tax effect of above adjustments		(15)		(0.06)		(34)		(0.14)
Adjusted net income / earnings per share		$596		$2.56		$1,162		$4.90
Average AerCap HoldingsNV. shareholders' equity				$16,179				$16,158
Return on equity				12 %				11 %
Adjusted return on equity				15 %				14 %

(*) Includes $41 million adjustment to basic lease rents, $29 million adjustment to maintenance revenues and $62 million adjustment to leasing expenses for the three months ended June 30, 2023, and $84 million adjustment to basic lease rents, $74 million adjustment to maintenance revenues and $141 million adjustment to leasing expenses for the six months ended June 30, 2023

 

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.

		June 30, 2023		December 31, 2022
		(U.S. Dollars in millions,  except debt/equity ratio)
Debt		$46,256		$46,533
Adjusted for:
Cash and cash equivalents		(1,154)		(1,597)
50% credit for long-term subordinated debt		(1,125)		(1,125)
Adjusted debt		$43,977		$43,811
Equity		$16,391		$16,195
Adjusted for:
50% credit for long-term subordinated debt		1,125		1,125
Adjusted equity		$17,516		$17,320
Adjusted debt/equity ratio		2.51 to 1		2.53 to 1

 

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

Adjusted net interest margin is calculated as the difference between basic lease rents, excluding the impact of the amortization of lease premium/deficiency recognized under purchase accounting, and interest expense, excluding the impact of the mark-to-market of interest rate caps and swaps. Annualized net spread is adjusted net interest margin expressed as a percentage of average lease assets. Annualized net spread less depreciation and amortization is adjusted net interest margin less depreciation and amortization 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, debt issuance costs, upfront fees and other impacts, divided by average debt balance.

		Three months ended June 30,
		2023		2022
		(U.S. Dollars in millions)
Interest expense		$427		$400
Adjusted for:
Mark-to-market on interest rate caps and swaps		3		3
Debt issuance costs, upfront fees and other impacts		(38)		(37)
Interest expense, excluding mark-to-market on interest rate caps and swaps, debt issuance costs, upfront fees and other impacts		$393		$366
Average debt balance		$46,553		$48,769
Average cost of debt		3.4 %		3.0 %

 

Lease assets

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

Aviation assets

Aviation assets include aircraft, engines and helicopters.

Conference Call

In connection with its report of second quarter 2023 results, management will host a conference call with members of the investment community today, Monday, July 31, 2023, at 8:30 am Eastern Daylight 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) +1 646 828 8193 or (International) +353 1 246 5638 and referencing code 8163072 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 aviation leasing with one of the most attractive order books in the industry. AerCap serves approximately 300 customers around the world with comprehensive fleet solutions. AerCap is listed on the New York Stock Exchange (AER) and is based in Dublin with offices in Shannon, Miami, Singapore, Memphis, Amsterdam, Shanghai, Dubai, Seattle, Toulouse and other locations around the world.

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," "will," "aim," "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, including, among other things, the availability of capital to us and to our customers and changes in interest rates; the ability of our lessees and potential lessees to make lease payments to us; our ability to successfully negotiate flight equipment (which includes aircraft, engines and helicopters) purchases, sales and leases, to collect outstanding amounts due and to repossess flight equipment under defaulted leases, and to control costs and expenses; changes in the overall demand for commercial aviation leasing and aviation asset management services; the continued impacts of the Ukraine Conflict, including the resulting sanctions by the United States, the European Union, the United Kingdom and other countries, on our business and results of operations, financial condition and cash flows; the rate of recovery in air travel related to the Covid-19 pandemic, the aviation industry and global economic conditions; the potential impacts of the pandemic and responsive government actions on our business and results of operations, financial condition and cash flows; the effects of terrorist attacks on the aviation industry and on our operations; the economic condition of the global airline and cargo industry and economic and political conditions; development of increased government regulation, including travel restrictions, sanctions, regulation of trade and the imposition of import and export controls, tariffs and other trade barriers; a downgrade in any of our credit ratings; competitive pressures within the industry; regulatory changes affecting commercial flight equipment operators, flight equipment maintenance, engine standards, accounting standards and taxes.

As a result, we cannot assure you that the forward-looking statements included in this press release will prove to be accurate or correct. These and other important factors and risks are discussed in AerCap's annual report on Form 20-F and other filings with the United States Securities and Exchange Commission. 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 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)
			June 30, 2023		December 31, 2022
	Assets
	Cash and cash equivalents		$ 1,153,922		$ 1,597,147
	Restricted cash		163,065		159,623
	Trade receivables		62,993		132,202
	Flight equipment held for operating leases, net		55,604,909		55,220,809
	Investment in finance leases, net		1,373,096		1,356,072
	Flight equipment held for sale		808,525		292,808
	Prepayments on flight equipment		3,697,818		3,806,602
	Maintenance rights and lease premium, net		2,977,729		3,364,453
	Other intangibles, net		174,164		185,210
	Deferred tax assets		206,221		210,334
	Associated companies		870,312		811,219
	Other assets		2,835,653		2,590,439
	Total Assets		$ 69,928,407		$ 69,726,918
	Liabilities and Equity
	Accounts payable, accrued expenses and other liabilities		$ 1,504,518		$ 1,494,953
	Accrued maintenance liability		2,567,107		2,503,202
	Lessee deposit liability		876,556		806,655
	Debt		46,255,843		46,532,960
	Deferred tax liabilities		2,333,875		2,194,098
	Total Liabilities		53,537,899		53,531,868
	Ordinary share capital €0.01 par value, 450,000,000 ordinary shares authorized as of June 30, 2023 and    December 31, 2022 respectively 250,347,345 and 250,347,345 ordinary shares issued and 232,505,493 and 245,931,275   ordinary shares outstanding (including 4,233,182 and 4,837,602 unvested restricted stock) as of   June 30, 2023 and December 31, 2022, respectively		3,024		3,024
	Additional paid-in capital		8,604,293		8,586,034
	Treasury shares, at cost (17,841,852 and 4,416,070 ordinary shares as of June 30, 2023 and   December 31, 2022, respectively)		(1,026,074)		(254,699)
	Accumulated other comprehensive income		132,624		108,226
	Accumulated retained earnings		8,598,005		7,674,922
	Total AerCap Holdings N.V. shareholders' equity		16,311,872		16,117,507
	Non-controlling interest		78,636		77,543
	Total Equity		16,390,508		16,195,050
	Total Liabilities and Equity		$ 69,928,407		$ 69,726,918

 

	AerCap Holdings N.V
	Unaudited Consolidated Income Statements
	(U.S. Dollars in thousands, except share and per share data)
			Three months ended June 30,				Six months ended June 30,
			2023		2022		2023		2022
	Revenues and other income
	Lease revenue:
	Basic lease rents		$ 1,561,368		$ 1,461,526		$ 3,098,031		$ 3,015,172
	Maintenance rents and other receipts		156,014		102,798		343,156		288,693
	Total lease revenue		1,717,382		1,564,324		3,441,187		3,303,865
	Net gain on sale of assets		165,909		35,200		265,449		38,485
	Other income		41,090		71,188		83,467		118,378
	Total Revenues and other income		1,924,381		1,670,712		3,790,103		3,460,728
	Expenses
	Depreciation and amortization		615,604		580,744		1,226,121		1,215,158
	Net (recoveries) charges related to Ukraine Conflict		(13,964)		-		(28,072)		2,728,718
	Asset impairment		2,098		11,803		36,433		14,228
	Interest expense		427,376		399,994		863,598		780,779
	Loss on debt extinguishment		790		901		3,851		2,041
	Leasing expenses		229,238		193,231		455,247		401,286
	Selling, general and administrative expenses		119,737		104,872		230,341		202,347
	Transaction and integration-related expenses		-		9,245		-		26,633
	Total Expenses		1,380,879		1,300,790		2,787,519		5,371,190
	(Loss) gain on investments at fair value		(5,259)		(12,464)		3,986		(12,351)
	Income (loss) before income taxes and income of investments
	accounted for under the equity method		538,243		357,458		1,006,570		(1,922,813)
	Income tax (expense) benefit		(75,747)		(50,044)		(141,341)		228,263
	Equity in net earnings of investments accounted for under the equity method		34,374		33,148		66,918		34,431
	Net income (loss)		$ 496,870		$ 340,562		$ 932,147		($ 1,660,119)
	Net income attributable to non-controlling interest		(3,976)		(736)		(7,148)		(885)
	Net income (loss) attributable to AerCap HoldingsNV		$ 492,894		$ 339,826		$ 924,999		($ 1,661,004)
	Basic earnings (loss) per share		$ 2.13		$ 1.41		$ 3.93		($ 6.92)
	Diluted earnings (loss) per share		$ 2.12		$ 1.40		$ 3.90		($ 6.92)
	Weighted average shares outstanding - basic		231,318,582		240,367,450		235,321,261		240,008,449
	Weighted average shares outstanding - diluted		232,866,512		242,264,561		237,204,222		240,008,449

 

	AerCap Holdings N.V
	Unaudited Consolidated Statements of Cash Flows
	(U.S. Dollars in thousands)
			Six months ended June 30,
			2023		2022
	Net income (loss)		$ 932,147		($ 1,660,119)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
	Depreciation and amortization		1,226,121		1,215,158
	Net (recoveries) charges related to Ukraine Conflict		(15,072)		2,938,487
	Asset impairment		36,433		14,228
	Amortization of debt issuance costs, debt discount, debt premium and lease premium		130,723		161,633
	Maintenance rights write-off		214,821		179,667
	Maintenance liability release to income		(145,006)		(131,427)
	Net gain on sale of assets		(265,449)		(38,485)
	Deferred tax expense (benefit)		145,085		(225,819)
	Share-based compensation		48,669		54,381
	Collections of finance leases		233,812		140,140
	(Gain) loss on investments at fair value		(3,986)		12,351
	Loss on debt extinguishment		3,851		2,041
	Other		(16,089)		(94,400)
	Changes in operating assets and liabilities:
	Trade receivables		65,486		44,327
	Other assets		(56,712)		48,132
	Accounts payable, accrued expenses and other liabilities		21,762		(151,845)
	Net cash provided by operating activities		2,556,596		2,508,450
	Purchase of flight equipment		(2,290,042)		(1,328,669)
	Proceeds from sale or disposal of assets		944,798		796,373
	Prepayments on flight equipment		(789,408)		(415,070)
	Other		(116,636)		84,683
	Net cash used in investing activities		(2,251,288)		(862,683)
	Issuance of debt		2,327,579		84,996
	Repayment of debt		(2,590,220)		(2,413,244)
	Debt issuance and extinguishment costs paid, net of debt premium received		(35,627)		(9,135)
	Maintenance payments received		378,292		353,522
	Maintenance payments returned		(109,522)		(172,570)
	Security deposits received		193,524		148,781
	Security deposits returned		(114,150)		(140,441)
	Dividend paid to non-controlling interest holders		(6,055)		(580)
	Repurchase of shares and tax withholdings on share-based compensation		(790,013)		(8,140)
	Net cash used in financing activities		(746,192)		(2,156,811)
	Net decrease in cash, cash equivalents and restricted cash		(440,884)		(511,044)
	Effect of exchange rate changes		1,101		(1,260)
	Cash, cash equivalents and restricted cash at beginning of period		1,756,770		1,914,753
	Cash, cash equivalents and restricted cash at end of period		$ 1,316,987		$ 1,402,449

 

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

 

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SOURCE AerCap Holdings N.V.