PR Newswire | Mar 2, 2021 07:01AM EST

03/02 06:00 CST

AerCap Holdings N.V. Reports Financial Results for the Fourth Quarter 2020 DUBLIN, March 2, 2021

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/ 2020 2019 % increase/ (decrease) (decrease)

(U.S. Dollars in millions) (U.S. Dollars in millions)

Lease revenue:

Basic lease $ 885 $ 1,062 (17%) $ 3,762 $ 4,281 (12%)rents

Maintenancerents and other 110 133 (17%) 559 401 39%receipts

Lease revenue 995 1,195 (17%) 4,321 4,682 (8%)

Net gain on sale 14 49 (71%) 90 189 (53%)of assets

Other income 22 14 63% 83 66 25%

Total Revenues $ 1,032 $ 1,257 (18%) $ 4,494 $ 4,937 (9%)and other income

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/ 2020 2019 % increase/ (decrease) (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 311 316 (1%) 1,234 1,265 (3%)and swaps

Net interest margin (*) $ 575 $ 747 (23%) $ 2,528 $ 3,016 (16%)

Depreciation and amortization, including maintenance rights (408) (441) (8%) (1,691) (1,753) (4%)expense

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 PressRelease" 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/ 2020 2019 % increase/ (decrease) (decrease)

(U.S. Dollars in millions) (U.S. Dollars in millions)

Selling, generaland administrative $ 44 $ 54 (18%) $ 173 $ 198 (13%)expenses

Share-basedcompensation 20 18 11% 69 69 (0%)expenses

Total selling,general and $ 64 $ 71 (11%) $ 242 $ 267 (9%)administrativeexpenses

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, December 31, 2020 2019

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



Total AerCap Holdings N.V. shareholders' $8,864 $9,315 equity



Ordinary shares outstanding 130,398,538 131,583,489

Unvested restricted stock (2,552,346) (2,354,318)

Ordinary shares outstanding (excl. unvested 127,846,192 129,229,171 restricted stock)



Book value per ordinary share outstanding $69.34 $72.08 (excl. unvested restricted stock)

Financial Position

December 31, December 31, % increase/ 2020 2019 (decrease) over December 31,2019

(U.S. Dollars in millions)

Total cash, cash equivalents and $ 1,495 $ 1,300 15%restricted cash

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. 8,864 9,315 (5%)shareholders' equity

Total equity 8,932 9,382 (5%)

(*) Refer to "Notes Regarding Financial Information Presented in This PressRelease" 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,December 31, 2020 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 debt1,125 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, December 31, 2020 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 $ 1,109,325 $ 1,032,623 liabilities

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 (eu)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 1,721 1,754 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

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, (459,994) (537,341) respectively)

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 110,143 132,500 559,395 401,006 and other receipts

Total lease revenue 995,476 1,194,826 4,321,006 4,682,266

Net gain on sale of 14,099 48,618 89,618 188,835 assets

Other income 22,042 13,508 83,005 66,239

Total Revenues and 1,031,617 1,256,952 4,493,629 4,937,340 other income

Expenses

Depreciation and 401,787 415,866 1,645,373 1,676,121 amortization

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 75,625 - 118,460 - extinguishment

Leasing expenses 91,453 86,905 323,535 287,950

Selling, general and administrative 63,746 71,330 242,161 267,458 expenses

Total Expenses 969,839 906,321 4,664,737 3,596,698

Loss on investment (29,089) - (143,510) - at fair value

Income (loss) before income taxes and income of 32,689 350,631 (314,618) 1,340,642 investments accounted for under the equity method

Income tax (7,080) (39,013) 17,231 (167,714) (expense) benefit

Equity in net earnings of investments 2,861 1,877 2,464 (6,151) accounted for under the equity method

Net income (loss) $ 28,470 $ 313,495 ($ 294,923) $ 1,166,777

Net loss (income) attributable to 8 (3,737) (3,643) (21,083) non-controlling interest

Net income (loss) attributable to $ 28,478 $ 309,758 ($ 298,566) $ 1,145,694 AerCap Holdings N.V

Basic earnings $ 0.22 $ 2.36 ($ 2.34) $ 8.51 (loss) per share

Diluted earnings $ 0.22 $ 2.34 ($ 2.34) $ 8.43 (loss) per share

Weighted average shares outstanding 127,662,360 131,119,824 127,743,828 134,570,169 - basic

Weighted average shares outstanding 128,840,968 132,227,255 127,743,828 135,898,139 - diluted

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, 64,970 79,645 debt premium and lease premium

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 (126,177) 31 liabilities

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 (253,806) (36,592) debt premium received

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 (127,777) (639,941) share-based compensation

Net cash used in financing activities (1,225,332) (265,006)

Net increase (decrease) in cash, cash equivalents 192,763 (114,067) and restricted cash

Effect of exchange rate changes 2,180 (621)

Cash, cash equivalents and restricted cash at 1,300,347 1,415,035 beginning of period

Cash, cash equivalents and restricted cash at end of $ 1,495,290 $ 1,300,347 period

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SOURCE AerCap Holdings N.V.