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

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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








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