AerCap Holdings N.V. Reports Financial Results for the Third Quarter 2022

• Net income for the third quarter of 2022 was $440 million, or $1.82 per share.
• Adjusted net income for the third quarter of 2022 was $537 million, or $2.21 per share.
• Raising full year 2022 adjusted EPS estimate to range of $8.00 - $8.50.

DUBLIN, Nov. 3, 2022 /PRNewswire/ -- AerCap Holdings N.V. (NYSE: AER), the global leader in aviation leasing, today reported financial results for the third quarter of 2022 ended September 30, 2022.

"We are pleased to report another strong quarter of results for AerCap. We continued to see robust demand for air travel and growing demand for both new and used leased aircraft and engines. We generated strong net income and cash flow and achieved our target leverage ratio well ahead of our expectations. As a result, we are raising our guidance for full year 2022," said Aengus Kelly, Chief Executive Officer of AerCap.

Highlights:

• Net income for the third quarter of 2022 was $440 million, or $1.82 per share.
• Adjusted net income for the third quarter of 2022 was $537 million, or $2.21 per share.
• Significant deleveraging in the third quarter of 2022: adjusted debt/equity ratio of 2.69 to 1 at September 30, 2022.
• Raising full year 2022 adjusted EPS estimate to range of $8.00 to $8.50 from previous range of $6.50 to $7.00, given strong performance year to date and fourth quarter outlook.
• Executed 255 transactions in the third quarter of 2022, including 184 lease agreements, 34 purchases and 37 sales.
• 100% of new aircraft order book placed through 2023.
• 23% margin on gain on sale of assets sold in the third quarter of 2022.
• Agreement executed for up to 30 Airbus A321 passenger-to-freighter conversions.
• Ratings outlook revised to positive by Moody's.

Revenue and Net Spread

		Three months ended September 30,						Nine months ended September 30,
		2022		2021		% increase/ (decrease)		2022		2021		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Lease revenue:
Basic lease rents		$1,473		$848		74 %		$4,488		$2,608		72 %
Maintenance rents and other receipts		120		110		8 %		408		424		(4 %)
Total lease revenue		1,593		958		66 %		4,897		3,032		61 %
Net gain on sale of assets		69		38		84 %		108		65		66 %
Other income		62		459		(86 %)		181		685		(74 %)
Total Revenues and other income		$1,724		$1,454		19 %		$5,185		$3,782		37 %

Basic lease rents were $1,473 million for the third quarter of 2022, compared with $848 million for the same period in 2021. The increase was primarily due to the impact of the GECAS acquisition. Basic lease rents were impacted by strong cash collections as well as $51 million of lease premium amortization.

Maintenance rents and other receipts were $120 million for the third quarter of 2022, compared with $110 million for the same period in 2021. Maintenance rents were reduced by $30 million as a result of maintenance rights assets that were amortized to revenue.

Net gain on sale of assets for the third quarter of 2022 was $69 million, relating to 30 assets sold for $373 million, compared with $38 million for the same period in 2021, relating to 11 aircraft sold for $101 million. The increase was primarily due to the volume and composition of asset sales.

Other income for the third quarter of 2022 was $62 million, compared with $459 million for the same period in 2021. The decrease was primarily driven by the amount of proceeds from unsecured claims. Other income in the third quarter of 2022 included $29 million of proceeds from unsecured claims, whereas other income in the third quarter of 2021 included $442 million of proceeds from unsecured claims.

		Three months ended September 30,						Nine months ended September 30,
		2022		2021		% increase/ (decrease)		2022		2021		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Basic lease rents		$1,473		$848		74 %		$4,488		$2,608		72 %
Adjusted for:
Amortization of lease premium/deficiency		51		1		NA		159		3		NA
Basic lease rents excluding amortization of lease premium/deficiency		$1,524		$849		80 %		$4,647		$2,611		78 %
Interest expense		391		287		36 %		1,172		861		36 %
Adjusted for:
Mark-to-market of interest rate caps and swaps		28		1		NA		67		11		NA
Interest expense excluding mark-to-market of interest rate caps and swaps		419		288		45 %		1,239		872		42 %
Net interest margin (*)		$1,105		$561		97 %		$3,408		$1,739		96 %
Depreciation and amortization		(581)		(393)		48 %		(1,796)		(1,182)		52 %
Net interest margin, less depreciation and amortization		$524		$168		212 %		$1,612		$557		189 %
Average lease assets (*)		$58,771		$36,095		63 %		$59,991		$36,158		66 %
Annualized net spread (*)		7.5 %		6.2 %				7.6 %		6.4 %
Annualized net spread less depreciation and amortization (*)		3.6 %		1.9 %				3.6 %		2.1 %
(*) 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 $419 million for the third quarter of 2022, compared with $288 million for the same period in 2021. The increase was primarily driven by interest on debt incurred to finance the GECAS acquisition. AerCap's average cost of debt was 3.2% for the third quarter of 2022 and 3.8% for the same period in 2021, excluding debt issuance costs, upfront fees and other impacts.

Selling, General and Administrative Expenses

		Three months ended September 30,						Nine months ended September 30,
		2022		2021		% increase/ (decrease)		2022		2021		% increase/ (decrease)
		(U.S. Dollars in millions)						(U.S. Dollars in millions)
Selling, general and administrative expenses		$80		$46		75 %		$229		$135		69 %
Share-based compensation expenses		25		22		13 %		79		64		24 %
Total selling, general and administrative expenses		$105		$68		55 %		$308		$199		55 %

Selling, general and administrative expenses increased to $105 million for the third quarter of 2022, compared with $68 million for the same period in 2021. The increase was primarily driven by higher expenses as a result of the GECAS acquisition.

Other Expenses

Asset impairment charges were $29 million for the third quarter of 2022, compared to $49 million for the same period in 2021. Asset impairment charges recorded in the third quarter of 2022 related to lease terminations, sales transactions and leasing transactions and were partially offset by related maintenance revenue. Leasing expenses were $161 million for the third quarter of 2022, compared with $54 million for the same period in 2021. The increase was primarily due to higher transition costs, lessor maintenance contributions and other leasing expenses and an increase in maintenance rights expense as a result of the GECAS acquisition.

Effective Tax Rate

AerCap's effective tax rate for the full year 2022 is expected to be 14% excluding net charges related to the Ukraine Conflict, compared to an effective tax rate of 14.2% for the full year 2021. 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.

AerCap's effective tax rate was 13.9% for the third quarter of 2022, compared to 12.4% for the third quarter of 2021.

 

Book Value Per Share

		September 30, 2022		September 30, 2021
		(U.S. Dollars in millions, except share and per share data)
Total AerCap Holdings N.V. shareholders' equity		$15,568		$9,855
Ordinary shares outstanding		245,879,536		133,379,789
Unvested restricted stock		(4,837,932)		(5,244,285)
Ordinary shares outstanding (excl. unvested restricted stock)		241,041,604		128,135,504
Book value per ordinary share outstanding (excl. unvested restricted stock)		$64.59		$76.91

 

Financial Position 

		September 30, 2022		December 31, 2021		% increase/ (decrease) over December 31, 2021
		(U.S. Dollars in millions)
Total cash, cash equivalents and restricted cash		$1,257		$1,915		(34 %)
Total assets		69,811		74,570		(6 %)
Debt		47,350		50,205		(6 %)
Total liabilities		54,167		57,922		(6 %)
Total AerCap Holdings N.V. shareholders' equity		15,568		16,571		(6 %)
Total equity		15,645		16,647		(6 %)

Flight Equipment Portfolio

As of September 30, 2022, AerCap's portfolio consisted of 3,571 aircraft, engines and helicopters that were owned, on order or managed. The average age of the company's owned aircraft fleet as of September 30, 2022 was 7.2 years (4.0 years for new technology aircraft, 13.3 years for current technology aircraft) and the average remaining contracted lease term was 7.2 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 net income / earnings per share

Adjusted net income is calculated as net loss excluding the after-tax impact of net charges related to the Ukraine Conflict, the amortization of maintenance rights and lease premium assets recognized under purchase accounting, and GECAS transaction and integration-related expenses. Adjusted earnings per share is calculated by dividing adjusted net income by the weighted average of our ordinary shares outstanding. Given the relative significance of these items during 2022, 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, 2022				Nine months ended September 30, 2022
		Net income		Earnings per share		Net (loss) income		(Loss) earnings per share
		(U.S. Dollars in millions,  except share and per share data)
Net earnings (loss) / earnings (loss) per share		$440		$1.82		($1,221)		($5.08)
Adjusted for:
Net (recoveries) charges related to Ukraine Conflict		(16)		(0.07)		2,713		11.23
Amortization of maintenance rights and lease premium assets recognized under purchase accounting		123		0.51		413		1.70
Transaction and integration-related expenses		4		0.01		30		0.12
Income tax effect of above adjustments		(14)		(0.06)		(394)		(1.63)
Adjusted net income / earnings per share*		$537		$2.21		$1,540		$6.35
* Denominator for adjusted earnings per share:
Weighted average shares outstanding - diluted								240,291,737
Potentially dilutive shares, whose effect would have been anti-dilutive								2,163,352
Adjusted weighted average shares outstanding - diluted								242,455,089
Adjusted earnings per share								$6.35

 

  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.

		September 30, 2022		December 31, 2021
	(U.S. Dollars in millions, except debt/equity ratio)
Debt		$47,350		$50,205
Adjusted for:
Cash and cash equivalents		(1,099)		(1,729)
50% credit for long-term subordinated debt		(1,125)		(1,125)
Adjusted debt		$45,126		$47,351
Equity		$15,645		$16,647
Adjusted for:
50% credit for long-term subordinated debt		1,125		1,125
Adjusted equity		$16,770		$17,772
Adjusted debt/equity ratio		2.69 to 1		2.66 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, 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 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, 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 leases and maintenance rights assets.

Conference Call

In connection with its report of third quarter 2022 results, management will host a conference call with members of the investment community today, Thursday, November 3, 2022, 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) [phone] and referencing code 8377326 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: [phone] ([e-mail]).

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, 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," "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, including the impacts of, and associated responses to: the Ukraine Conflict; 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, 2022		December 31, 2021
	Assets
	Cash and cash equivalents		$1,098,542		$1,728,794
	Restricted cash		158,174		185,959
	Trade receivables		135,594		181,455
	Flight equipment held for operating leases, net		54,611,068		57,825,056
	Investment in finance leases, net		1,882,937		1,929,220
	Flight equipment held for sale		10,224		304,362
	Prepayments on flight equipment		4,715,608		4,586,848
	Maintenance rights and lease premium, net		3,609,944		4,444,520
	Other intangibles, net		190,731		208,879
	Deferred tax assets		99,399		121,571
	Associated companies		780,427		705,087
	Other assets		2,518,506		2,348,017
	Total Assets		$69,811,154		$74,569,768
	Liabilities and Equity
	Accounts payable, accrued expenses and other liabilities		$1,710,512		$1,958,096
	Accrued maintenance liability		2,405,995		2,900,651
	Lessee deposit liability		774,357		773,753
	Debt		47,350,115		50,204,678
	Deferred tax liabilities		1,925,657		2,085,230
	Total Liabilities		54,166,636		57,922,408
	Ordinary share capital €0.01 par value, 450,000,000 ordinary shares authorized as of September 30, 2022 and
	December 31, 2021; 250,347,345 and 250,347,345 ordinary shares issued and 245,879,536 and 245,395,448
	ordinary shares outstanding (including 4,837,932 and 5,822,811 shares of unvested restricted stock) as of
	September 30, 2022 and December 31, 2021, respectively		3,024		3,024
	Additional paid-in capital		8,566,064		8,522,694
	Treasury shares, at cost (4,467,809 and 4,951,897 ordinary shares as of September 30, 2022 and
	December 31, 2021, respectively)		(257,786)		(285,901)
	Accumulated other comprehensive income (loss)		75,379		(79,335)
	Accumulated retained earnings		7,181,003		8,410,261
	Total AerCap Holdings N.V. shareholders' equity		15,567,684		16,570,743
	Non-controlling interest		76,834		76,617
	Total Equity		15,644,518		16,647,360
	Total Liabilities and Equity		$69,811,154		$74,569,768

 

 

	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,
			2022		2021		2022		2021
	Revenues and other income
	Lease revenue:
	Basic lease rents		$1,473,084		$847,650		$4,488,256		$2,607,974
	Maintenance rents and other receipts		119,542		110,423		408,235		424,252
	Total lease revenue		1,592,626		958,073		4,896,491		3,032,226
	Net gain on sale of assets		69,218		37,633		107,703		64,881
	Other income		62,181		458,700		180,559		684,717
	Total Revenues and other income		1,724,025		1,454,406		5,184,753		3,781,824
	Expenses
	Depreciation and amortization		580,934		393,366		1,796,092		1,182,086
	Net (recoveries) charges related to Ukraine Conflict		(16,137)		—		2,712,581		—
	Asset impairment		29,249		49,201		43,477		122,587
	Interest expense		390,809		287,213		1,171,588		860,917
	Loss on debt extinguishment		17		2,894		2,058		8,955
	Leasing expenses		161,416		53,519		562,702		157,061
	Selling, general and administrative expenses		105,319		68,197		307,666		198,619
	Transaction and integration-related expenses		3,565		100,859		30,198		195,534
	Total Expenses		1,255,172		955,249		6,626,362		2,725,759
	(Loss) gain on investments at fair value		(7,791)		2,156		(20,142)		(307)
	Income (loss) before income taxes and income of investments
	accounted for under the equity method		461,062		501,313		(1,461,751)		1,055,758
	Income tax (expense) benefit		(64,307)		(62,132)		163,956		(142,527)
	Equity in net earnings of investments accounted for under the equity method		44,593		1,848		79,024		5,703
	Net income (loss)		$441,348		$441,029		($1,218,771)		$918,934
	Net income attributable to non-controlling interest		(1,392)		(7,108)		(2,277)		(7,237)
	Net income (loss) attributable to AerCap Holdings N.V.		$439,956		$433,921		($1,221,048)		$911,697
	Basic earnings (loss) per share		$1.83		$3.39		($5.08)		$7.12
	Diluted earnings (loss) per share		$1.82		$3.35		($5.08)		$7.04
	Weighted average shares outstanding - basic		240,849,074		128,131,157		240,291,737		128,087,006
	Weighted average shares outstanding - diluted		242,364,744		129,378,791		240,291,737		129,585,420

 

 

	AerCap Holdings N.V.
	Unaudited Consolidated Statements of Cash Flows
	(U.S. Dollars in thousands)
			Nine months ended September 30,
			2022		2021
	Net (loss) income		($1,218,771)		$918,934
	Adjustments to reconcile net (loss) income to net cash provided by operating activities:
	Depreciation and amortization		1,796,092		1,182,086
	Net charges related to Ukraine Conflict		2,922,350		—
	Asset impairment		43,477		122,587
	Amortization of debt issuance costs, debt discount, debt premium and lease premium		236,723		50,305
	Amortization of fair value adjustments on debt		(4,831)		(12,452)
	Maintenance rights write-off		252,189		48,480
	Maintenance liability release to income		(151,003)		(206,085)
	Net gain on sale of assets		(107,703)		(64,881)
	Deferred tax (benefit) expense		(159,727)		143,222
	Share-based compensation		79,228		63,956
	Collections of finance leases		207,810		94,626
	Loss on investments at fair value		20,142		307
	Loss on debt extinguishment		2,058		8,955
	Transaction and integration-related expenses		—		158,746
	Other		(135,480)		22,780
	Changes in operating assets and liabilities:
	Trade receivables		36,163		87,855
	Other assets		85,371		(413,811)
	Accounts payable, accrued expenses and other liabilities		(283,698)		(246,296)
	Net cash provided by operating activities		3,620,390		1,959,314
	Purchase of flight equipment		(2,296,808)		(738,090)
	Proceeds from sale or disposal of assets		1,152,224		393,373
	Prepayments on flight equipment		(630,047)		(75,930)
	Other		67,757		—
	Net cash used in investing activities		(1,706,874)		(420,647)
	Issuance of debt		467,996		1,486,567
	Repayment of debt		(3,392,836)		(2,678,134)
	Debt issuance and extinguishment costs paid, net of debt premium received		(7,006)		(227,472)
	Maintenance payments received		574,856		267,925
	Maintenance payments returned		(220,602)		(172,035)
	Security deposits received		256,904		155,794
	Security deposits returned		(221,901)		(264,674)
	Dividend paid to non-controlling interest holders and others		(2,060)		(251)
	Repurchase of shares and tax withholdings on share-based compensation		(15,838)		(67,453)
	Net cash used in financing activities		(2,560,487)		(1,499,733)
	Net (decrease) increase in cash, cash equivalents and restricted cash		(646,971)		38,934
	Effect of exchange rate changes on cash, cash equivalents and restricted cash		(11,066)		281
	Cash, cash equivalents and restricted cash at beginning of period		1,914,753		1,495,290
	Cash, cash equivalents and restricted cash at end of period		$1,256,716		$1,534,505

 

 

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SOURCE AerCap Holdings N.V.