PR Newswire | Nov 10, 2021 07:00AM EST

11/10 06:00 CST

AerCap Holdings N.V. Reports Financial Results for the Third Quarter 2021- Net income for the third quarter of 2021 was $434 million, or $3.35 per share.- Excluding expenses related to the GECAS transaction, net income for the third quarter of 2021 was $522 million, or $4.04 per share.- The airline industry is experiencing a rapid recovery in air travel in many of the world's major markets. DUBLIN, Nov. 10, 2021

DUBLIN, Nov. 10, 2021 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the third quarter of 2021 ended September 30, 2021.

Aengus Kelly, Chief Executive Officer of AerCap, said,"I am pleased to report a strong quarter of earnings, with net income of $434 million, or $3.35 per share. This quarter was an important inflection point for the company. Our business continues to recover from the effects of the Covid-19 pandemic, with leasing demand and cash collections remaining strong. The GECAS transaction adds a portfolio of well-priced assets and a deeply experienced team of people that will further enhance AerCap's position as the lessor of choice for airlines around the world."

Highlights:

* Completed the GECAS acquisition on November 1, 2021, making AerCap the worldwide industry leader across all areas of aviation leasing: aircraft, engines and helicopters. * Completed the offering of $21 billion of senior unsecured notes in October 2021 and a $2 billion secured institutional term loan in November 2021 to finance the GECAS acquisition with an average coupon of approximately 2.6% and an average tenor of 7.1 years. * Adjusted debt/equity ratio of 2.3 to 1 at September 30, 2021, which was a record low for the company. Pro forma for the GECAS acquisition, our adjusted debt/equity ratio was 2.8 to 1 as of September 30, 2021. * Continued to see significant improvements in cash collections, trade receivables and deferral requests. * Special items in the third quarter of 2021 included $442 million ($387 million after-tax) of other income related to proceeds from unsecured claims and $101 million ($88 million after-tax) of expenses related to the GECAS transaction. * Signed lease agreements for 42 aircraft in the third quarter of 2021. * 100% of new aircraft order book placed through 2022.

Revenue and Net Spread

Three months ended September 30,Nine months ended September 30,

2021 2020 % increase/ 2021 2020 % increase/ (decrease) (decrease)

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

Lease revenue:

Basic lease rents $848 $897 (6%) $2,608$2,876(9%)

Maintenance rents and other receipts110 91 22% 424 449 (6%)

Total lease revenue 958 988 (3%) 3,032 3,326 (9%)

Net gain on sale of assets 38 7 422% 65 76 (14%)

Other income 459 31 1,365% 685 61 1,022%

Total Revenues and other income $1,454$1,027 42% $3,782$3,4629%



Basic lease rents were $848 million for the third quarter of 2021, compared with $897 million for the same period in 2020. 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 third quarter of 2021, compared with $91 million for the same period in 2020. The increase was primarily due to higher maintenance revenue recognized as a result of lease terminations during the third quarter of 2021.

Net gain on sale of assets for the third quarter of 2021 was $38 million, relating to 11 aircraft sold for $101 million, compared with $7 million for the same period in 2020, relating to seven aircraft sold for $63 million. The increase was primarily due to the higher volume and composition of asset sales.

Other income for the third quarter of 2021 was $459 million, compared with $31 million for the same period in 2020. The increase was primarily driven by proceeds from unsecured claims in the third quarter of 2021.

Three months ended September 30,Nine months ended September 30,

2021 2020 % increase/ 2021 2020 % increase/ (decrease) (decrease)

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



Basic lease rents $848 $897 (6%) $2,608 $2,876 (9%)



Interest expense 287 307 (7%) 861 938 (8%)

Adjusted for:

Mark-to-market of interest rate caps and swaps 1 - NA 11 (15) NA

Interest expense excluding mark-to-market of interest rate caps and swaps288 307 (6%) 872 924 (6%)

Net interest margin (*) $559 $590 (5%) $1,736 $1,952 (11%)

Depreciation and amortization, including maintenance rights expense (393) (428) (8%) (1,188)(1,283)(7%)

Net interest margin, less depreciation and amortization $166 $164 2% $548 $670 (18%)



Average lease assets (*) $36,095 $36,926 (2%) $36,158$37,313(3%)



Annualized net spread (*) 6.2% 6.4% 6.4% 7.0%

Annualized net spread less depreciation and amortization (*) 1.8% 1.8% 2.0% 2.4%



(*) 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 $288 million for the third quarter of 2021, compared with $307 million for the same period in 2020. AerCap's average cost of debt was 3.8% for the third quarter of 2021, and 3.8% for the same period in 2020, excluding debt issuance costs, upfront fees and other impacts.

Selling, General and Administrative Expenses

Three months ended September 30,Nine months ended September 30,

2021 2020 % increase/ 2021 2020 % increase/ (decrease) (decrease)

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



Selling, general and administrative expenses $46 $44 5% $127 $129 (1%)

Share-based compensation expenses 22 17 29% 71 50 44%

Total selling, general and administrative expenses$68 $61 12% $199 $178 11%

Total selling, general and administrative expenses increased primarily due to the timing of compensation-related expenses.

Other Expenses

Asset impairment charges were $49 million for the third quarter of 2021, compared to $973 million for the same period in 2020. Asset impairment charges recorded in the third quarter of 2021 related to lease terminations and were largely offset by maintenance releases. Asset impairment charges recorded in the third quarter of 2020 included $915 million of impairment of flight equipment, related primarily to current technology widebody aircraft, in particular Airbus A330 and Boeing 777 aircraft, as well as the write-off of $58 million of goodwill.

Leasing expenses were $54 million for the third quarter of 2021, compared with $51 million for the same period in 2020. The increase was primarily due to higher leasing expenses as a result of lease terminations, partially offset by a decrease in maintenance rights expense as a result of lower maintenance activity during the period and the lower maintenance rights asset balance.

Effective Tax Rate

AerCap's effective tax rate for the full year 2021 is expected to be 13.5%, compared to an effective tax rate of 5.5% for the full year 2020. 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 12.4% for the third quarter of 2021, compared to 11.1% for the third quarter of 2020. Our effective tax rate in any quarter can be impacted by revisions to the estimated full-year rate.

Other Assets

Other assets increased from $1,229 million as of December 31, 2020 to $1,670 million as of September 30, 2021, primarily due to receivables related to proceeds from unsecured claims that were received in October 2021 and unamortized debt issuance costs related to the bridge financing for the GECAS transaction.

Book Value Per Share

September 30, 2021September 30, 2020

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



Total AerCap Holdings N.V. shareholders' equity $9,855 $8,811



Ordinary shares outstanding 133,379,789 129,756,613

Unvested restricted stock (5,244,285) (2,163,670)

Ordinary shares outstanding (excl. unvested restricted stock) 128,135,504 127,592,943



Book value per ordinary share outstanding (excl. unvested restricted stock)$76.91 $69.06

Financial Position

% increase/ September 30, 2021 December 31, 2020 (decrease) over December 31, 2020

(U.S. Dollars in millions)



Total cash, cash equivalents and restricted cash $1,535 $1,495 3%

Total lease assets (*) 35,962 36,642 (2%)

Total assets 41,499 42,048 (1%)

Debt 27,540 28,742 (4%)

Total liabilities 31,569 33,116 (5%)

Total AerCap Holdings N.V. shareholders' equity 9,855 8,864 11%

Total equity 9,930 8,932 11%



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

Aircraft Portfolio

As of September 30, 2021, AerCap's portfolio consisted of 1,304 aircraft that were owned, on order or managed. The average age of the company's owned fleet as of September 30, 2021 was 6.7 years (3.6 years for new technology aircraft, 12.7 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.

Net income / earnings per share excluding GECAS transaction-related expenses

Net income excluding GECAS transaction-related expenses is calculated as net income excluding the after-tax impact of transaction-related expenses. Earnings per share excluding GECAS transaction-related expenses is calculated by dividing net income excluding GECAS transaction-related expenses by the weighted average of our ordinary shares outstanding. Given the relative significance of this item during 2021, 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 September 30, 2021Nine months ended September 30, 2021

Earnings Earnings Net income Net income per share per share

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



Net income / earnings per share $434 $3.35 $912 $7.04



Transaction-related expenses 101 0.78 196 1.51

Income tax benefit (13) (0.10) (24) (0.19)



Net income / earnings per share excluding GECAS transaction-related expenses $522 $4.04 $1,083 $8.36

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.

Pro Forma for AerCap stand-alone GECAS acquisition

September 30, 2021September 30, 2021December 31, 2020

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



Debt $51,477 $27,540 $28,742



Adjusted for:

Cash and cash equivalents (1,651) (1,311) (1,249)

50% credit for long-term subordinated debt(1,125) (1,125) (1,125)

Adjusted debt $48,701 $25,104 $26,368





Equity $16,513 $9,930 $8,932



Adjusted for:

50% credit for long-term subordinated debt1,125 1,125 1,125

Adjusted equity $17,638 $11,055 $10,057



Adjusted debt/equity ratio 2.8 to 1 2.3 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, debt issuance costs, upfront fees and other impacts, 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 third quarter 2021 results, management will host a conference call with members of the investment community today, Wednesday, November 10, 2021, at 8:30 am Eastern Time. The call can be accessed live by dialing (U.S./Canada) +1 929 477 0324 or (International) +353 1 246 5638 and referencing code 6980765 at least 5 minutes before start time, or by visiting AerCap's website at www.aercap.com under "Investors".

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, Los Angeles, Singapore, Amsterdam, Shanghai, Abu Dhabi, 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," "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, our ability to successfully integrate GECAS' operations and employees and realize anticipated synergies and cost savings; and the potential impact of the consummation of the GECAS transaction on relationships, including with employees, suppliers, customers and competitors, 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, except share data)



September 30, 2021December 31, 2020



Assets

Cash and cash equivalents $1,311,234 $1,248,772

Restricted cash 223,271 246,518

Trade receivables 79,504 170,675

Flight equipment held for operating leases, net 34,411,391 35,156,450

Investment in finance and sales-type leases, net 814,989 878,451

Flight equipment held for sale 192,403 -

Prepayments on flight equipment 1,872,387 2,111,659

Maintenance rights and lease premium, net 594,685 649,914

Other intangibles, net 207,569 224,634

Deferred income tax assets 121,812 131,532

Other assets 1,670,083 1,229,434

Total Assets $41,499,328 $42,048,039





Liabilities and Equity

Accounts payable, accrued expenses and other liabilities $881,173 $1,109,325

Accrued maintenance liability 1,596,414 1,750,395

Lessee deposit liability 497,178 600,321

Debt 27,539,694 28,742,081

Deferred income tax liabilities 1,054,915 913,431

Total liabilities 31,569,374 33,115,553



Ordinary share capital (eu)0.01 par value, 450,000,000 and 350,000,000 ordinary shares authorized as of September 30, 2021 and December 31, 2020, respectively; 138,847,345 and 138,847,345 ordinary shares issued and 133,379,789 and 130,398,538 ordinary shares 1,721 1,721 outstanding (including 5,244,285 and 2,552,346 unvested restricted stock) as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital 1,946,529 2,078,125

Treasury shares, at cost (5,467,556 and 8,448,807 ordinary shares as of September 30, 2021 (313,907) (459,994) and December 31, 2020, respectively)

Accumulated other comprehensive loss (101,972) (155,085)

Accumulated retained earnings 8,322,581 7,399,703

Total AerCap Holdings N.V. shareholders' equity 9,854,952 8,864,470

Non-controlling interest 75,002 68,016

Total Equity 9,929,954 8,932,486



Total Liabilities and Equity $41,499,328 $42,048,039





AerCap Holdings N.V

Unaudited Consolidated Income Statements

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



Three Months Ended September 30, Nine months ended September 30,

2021 2020 2021 2020



Revenues and other income

Lease revenue:

Basic lease rents $847,650 $897,358 $2,607,974 $2,876,278

Maintenance rents and other receipts 110,423 90,743 424,252 449,252

Total lease revenue 958,073 988,101 3,032,226 3,325,530

Net gain on sale of assets 37,633 7,151 64,881 75,519

Other income 458,700 31,304 684,717 60,963

Total Revenues and other income 1,454,406 1,026,556 3,781,824 3,462,012



Expenses

Depreciation and amortization 393,366 415,970 1,182,086 1,243,586

Asset impairment 49,201 972,921 122,587 1,060,289

Interest expense 287,213 307,316 860,917 937,691

Loss on debt extinguishment 2,894 42,835 8,955 42,835

Leasing expenses 53,519 51,211 157,061 232,082

Selling, general and administrative expenses 68,197 60,918 198,619 178,415

Transaction-related expenses 100,859 - 195,534 -

Total Expenses 955,249 1,851,171 2,725,759 3,694,898



Gain (loss) on investment at fair value 2,156 (128,363) (307) (114,421)



Income before income taxes and income of investments

accounted for under the equity method 501,313 (952,978) 1,055,758 (347,307)



Income tax (expense) benefit (62,132) 106,077 (142,527) 24,311

Equity in net earnings of investments accounted for under the equity method1,848 (3,901) 5,703 (397)



Net income (loss) $441,029 ($850,802) $918,934 ($323,393)



Net (income) loss attributable to non-controlling interest (7,108) 873 (7,237) (3,651)



Net income (loss) attributable to AerCap Holdings N.V. $433,921 ($849,929) $911,697 ($327,044)



Basic earnings (loss) per share $3.39 ($6.66) $7.12 ($2.56)

Diluted earnings (loss) per share $3.35 ($6.66) $7.04 ($2.56)



Weighted average shares outstanding - basic 128,131,157 127,589,905 128,087,006 127,771,182

Weighted average shares outstanding - diluted 129,378,791 127,589,905 129,585,420 127,771,182





AerCap Holdings N.V

Unaudited Consolidated Statements of Cash Flows

(U.S. Dollars in thousands)



Nine months ended September 30,

2021 2020



Net income (loss) $918,934 ($323,393)

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

Depreciation and amortization 1,182,086 1,243,586

Asset impairment 122,587 1,060,289

Amortization of debt issuance costs, debt discount, debt premium and lease 50,305 45,802 premium

Amortization of fair value adjustment on debt (12,452) (41,418)

Maintenance rights write-off 48,480 101,791

Maintenance liability release to income (206,085) (297,815)

Net gain on sale of assets (64,881) (75,519)

Deferred income taxes 143,222 (21,737)

Share-based compensation 63,956 49,513

Collections of finance and sales-type leases 94,626 47,117

Loss on investment at fair value 307 114,421

Loss on debt extinguishment 8,955 42,835

Transaction-related expenses 158,746 -

Other 22,780 150,937

Changes in operating assets and liabilities:

Trade receivables 87,855 (148,184)

Other assets (413,811) (382,914)

Accounts payable, accrued expenses and other liabilities (246,296) (87,468)

Net cash provided by operating activities 1,959,314 1,477,843



Purchase of flight equipment (738,090) (306,048)

Proceeds from sale or disposal of assets 393,373 379,518

Prepayments on flight equipment (75,930) (564,927)

Net cash used in investing activities (420,647) (491,457)



Issuance of debt 1,486,567 10,165,837

Repayment of debt (2,678,134) (8,451,299)

Debt issuance and extinguishment costs paid, net of debt premium received (227,472) (145,260)

Maintenance payments received 267,925 266,654

Maintenance payments returned (172,035) (312,136)

Security deposits received 155,794 53,915

Security deposits returned (264,674) (216,975)

Dividend paid to non-controlling interest holders and others (251) (2,843)

Repurchase of shares and tax withholdings on share-based compensation (67,453) (119,779)

Net cash (used in) provided by financing activities (1,499,733) 1,238,114



Net increase in cash, cash equivalents and restricted cash 38,934 2,224,500

Effect of exchange rate changes on cash, cash equivalents and restricted cash 281 939

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

Cash, cash equivalents and restricted cash at end of period $1,534,505 $3,525,786



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SOURCE AerCap Holdings N.V.