AerCap Holdings N.V. Reports Strong Financial Results for Second Quarter 2024

• Net income for the second quarter of 2024 was $448 million, or $2.28 per share.
• Adjusted net income for the second quarter of 2024 was $592 million, or $3.01 per share.
• Raising full year adjusted earnings per share guidance from approximately $9.20 to approximately $10.25, not including any gains on sale in the second half of 2024.

DUBLIN, Aug. 1, 2024 /PRNewswire/ -- AerCap Holdings N.V. (NYSE:AER), the industry leader across all areas of aviation leasing, today reported strong financial results for the second quarter of 2024.

"In an industry environment that has remained positive, AerCap continued to produce strong results in the second quarter. We were pleased to receive credit rating upgrades from Moody's and S&P reflecting the company's best-in-class performance. We continue to actively deploy capital for growth opportunities and to return capital through share repurchases and dividends to our shareholders. As a result of our outperformance during the first half of the year and our positive outlook going forward, we have raised our earnings guidance for the full year," said Aengus Kelly, Chief Executive Officer of AerCap.

Highlights:

• Return on equity of 11% and adjusted return on equity of 14% for the second quarter of 2024.
• Entered into an agreement with Airbus in July 2024 to purchase 36 A320neo Family aircraft, to be leased to Spirit Airlines upon delivery in 2027 and 2028.
• Adjusted debt/equity ratio of 2.4 to 1 as of June 30, 2024.
• Initiated quarterly dividend of $0.25 per share.
• Ratings upgraded to Baa1 by Moody's and BBB+ by S&P; outlook revised to positive by Fitch.
• Unlevered gain on sale margin of 20% for assets sold in the second quarter of 2024, or 1.7x book value on an equity basis.
• Cash flow from operating activities of $1.4 billion for the second quarter of 2024.
• Book value per share of $89.47 as of June 30, 2024, an increase of approximately 25% from June 30, 2023.
• Returned $345 million to shareholders through the repurchase of 3.9 million shares during the second quarter of 2024, at an average price of $88.66 per share.
• Increased full year 2024 adjusted earnings per share guidance from approximately $9.20 to approximately $10.25, which does not include any gains on sale in the second half of 2024.

Revenue and Net Spread

 

Basic lease rents were $1,568 million for the second quarter of 2024, compared with $1,561 million for the same period in 2023. Basic lease rents for the second quarter of 2024 were negatively impacted by $32 million of lease premium amortization.

Maintenance rents and other receipts were $180 million for the second quarter of 2024, compared with $156 million for the same period in 2023. Maintenance rents for the second quarter of 2024 were negatively impacted by $99 million as a result of maintenance rights and lease premium assets that were amortized to revenue.

Net gain on sale of assets for the second quarter of 2024 was $129 million, relating to 31 assets sold for $793 million, compared with $166 million for the same period in 2023, relating to 52 assets sold for $818 million. The decrease was primarily due to the volume and composition of asset sales.

Other income for the second quarter of 2024 was $81 million, compared with $41 million for the same period in 2023. The increase was primarily driven by higher interest income.

 

 

Interest expense excluding mark-to-market of interest rate derivatives was $474 million for the second quarter of 2024, compared with $430 million for the same period in 2023. AerCap's average cost of debt was 3.8% for the second quarter of 2024 and 3.4% for the same period in 2023, excluding debt issuance costs, upfront fees and other impacts.

Selling, General and Administrative Expenses

 

Selling, general and administrative expenses were $125 million for the second quarter of 2024, compared with $120 million for the same period in 2023. The increase was primarily driven by higher share-based compensation expenses, which included some upfront recognition of expenses.

Other Expenses

Asset impairment charges were $28 million for the second quarter of 2024, compared with $2 million recorded for the same period in 2023. Asset impairment charges recorded in the second quarter of 2024 primarily related to the return of older aircraft and were offset by related maintenance revenue. Leasing expenses were $173 million for the second quarter of 2024, compared with $229 million for the same period in 2023. Leasing expenses for the second quarter of 2024 were negatively impacted by $37 million of maintenance rights amortization.

Effective Tax Rate

AerCap's effective tax rate was 15.5% for the second quarter of 2024, compared to an effective tax rate of 14.1% for the second quarter of 2023. 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

 

Financial Position 

 

Flight Equipment 

As of June 30, 2024, AerCap's portfolio consisted of 3,492 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, 2024 was 7.4 years (4.7 years for new technology aircraft, 14.5 years for current technology aircraft) and the average remaining contracted lease term was 7.4 years.

Dividend

In July 2024, AerCap's Board of Directors declared a quarterly cash dividend of $0.25 per share, with a payment date of September 5, 2024, to shareholders of record of AerCap ordinary shares as of the close of business on August 14, 2024.

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, adjusted return on equity and adjusted earnings per share guidance

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 2024, we have chosen to present this measure in order to assist investors in their understanding of the changes and trends related to our earnings.

 

 

Adjusted earnings per share guidance for full year 2024 is calculated as projected 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, divided by the weighted average of our projected ordinary shares outstanding.

 

 

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.

 

 

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 derivatives. 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 derivatives, debt issuance costs, upfront fees and other impacts, divided by average debt balance.

 

 

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 2024 results, management will host a conference call with members of the investment community today, Thursday, August 1, 2024, 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 5638 and referencing code 6712875 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 ([email protected]).

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 but not limited to 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 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; the impact of current hostilities in the Middle East, or any escalation thereof, on the aviation industry or our business; 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; and disruptions and security breaches affecting our information systems or the information systems of our third-party providers.

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, 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.

 

 

 

 

 

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SOURCE AerCap Holdings N.V.