Aercap Holdings N.v. · NYSE:AER
Aercap — Q2 2014 Earnings Presentation
25 slides from Aercap's earnings presentation, Aug 12, 2014
Slide 1: Second Quarter 2014 Earnings Call
AerCap Holdings N.V. Second Quarter 2014 Earnings Call » August 12, 2014 1
Slide 2: Disclaimer Incl. Forward Looking Statements & Safe Harbor
Disclaimer Incl. Forward Looking Statements & Safe Harbor This presentation 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
Slide 3: Operational Update
Operational Update • ILFC Integration on track: – Smooth day one transition – End-state organization has been designed with a clear path to execution • Net spread for the second quarter was a 5-year high of 10.1%. • As of June 30, 2014, we had committed to purchase 350 aircraft with scheduled delive
Slide 4: Second Quarter Highlights
Second Quarter Highlights • Adjusted net income was $212.4 million for the second quarter of 2014 and adjusted earnings per share were $1.29 for the second quarter of 2014, an increase of 118% over the same period in 2013. • Key Highlights: • The adjusted debt to equity ratio increased to 3.7 to 1 a
Slide 5: Purchase Accounting Update
Purchase Accounting Update (Page 1 of 2) • The financial statements for AerCap Holdings N.V. reflect the fair value of the assets acquired, the liabilities assumed, and non-controlling interest from ILFC based upon preliminary valuations. The most significant areas include flight equipment, the forw
Slide 6: Purchase Accounting Update
Purchase Accounting Update (Page 2 of 2) • The forward order book fair value was determined by discounting the difference between the estimated fair value of the aircraft and their contractual purchase price at the respective future delivery dates. The order book fair value will be included in the c
Slide 7: Maintenance Rights Asset
Maintenance Rights Asset • In determining adjusted net income, an adjustment will be provided which reflects the difference between expensing this asset during the remaining lease term as compared to expensing this asset straight-line over the remaining economic life of the aircraft as shown below.
Slide 8: Earnings Outlook
Earnings Outlook Annual run-rate of earnings including synergies: Better operational performance Annual run-rate through Annual run-rate post 2017 offsets higher costs (depreciation, 2017 slightly lower from slightly higher from timing share comp.) resulting from share timing of costs relating to of
Slide 9: Net Income
Net Income ($ Millions) 2Q 2014 2Q 2013 H1 2014 H1 2013 Reported Net Income 138.3 75.7 193.0 143.1 Adjusted* for: mark-to-market on interest rate caps/swaps 5.7 (10.7) 10.0 (12.0) cost of share-based compensation 13.3 2.1 15.3 4.0 ILFC transaction related expenses 88.4 - 107.2 - maintenance rights r
Slide 10: Basic Earnings Per Share
Basic Earnings Per Share 2Q 2014 2Q 2013 H1 2014 H1 2013 Earnings Per Share $0.84 $0.67 $1.39 $1.26 Adjusted for: mark-to-market on interest rate caps/swaps, share based $0.45 $(0.08) $0.71 $(0.07) compensation, ILFC transaction related expenses and maintenance rights related expenses Adjusted Earni
Slide 11: Revenues and Other Income
Revenues and Other Income ($ Millions) 2Q 2014 2Q 2013 Basic Lease Rents* 716.7 219.5 Maintenance Rents and Other Receipts 46.6 10.3 Net Gain on Sale of Assets 19.0 10.5 Other Income** 24.5 6.7 Total Revenues and Other Income 806.8 247.0 * Second quarter 2014 basic lease rents increased by 227% over
Slide 12: Net Interest Margin (Net Spread)
Net Interest Margin (Net Spread) ($ Millions) 2Q 2014 2Q 2013 Net Interest Margin (Net Spread)* 550.8 160.1 Average Lease Assets 21,955 7,570 Annualized Margin % 10.1% 8.5% * Net Interest Margin (Net Spread) is basic lease rents less interest expense, excluding the non-cash charges relating to the m
Slide 13: Sales of Assets
Sales of Assets AerCap continues to optimize its portfolio through the sale of assets: ($ Millions) 2Q 2014 2Q 2013 Pre-tax Gain from Asset Sales 19.0 10.5 • In 2Q 2014: we sold our 42% equity interest in AerData. In addition we sold the GFL portfolio of 37 aircraft and four aircraft from our owned
Slide 14: Other Expenses and Taxes
Other Expenses and Taxes ($ Millions) 2Q 2014 2Q 2013 Leasing Expenses 22.6 10.3 SG&A 63.3 24.1 Transaction Related Expenses* 101.0 - YTD 2014 FY 2013 Blended Tax Rate** 18.0% 8.4% * Transaction related expenses are costs that were incurred in relation to the ILFC transaction including banking fees,
Slide 15: Cash
Cash ($ Millions) 2Q 2014 2Q 2013 Cash and Cash Equivalents at June 30 1,731.4 156.9 (Excl. Restricted Cash) Total Cash Balance at June 30 2,530.3 410.6 (Incl. Restricted Cash) Operating Cash Flow for the second quarter 455.2 156.2 Strong operating cash flow generation on track with expectations. 15
Slide 16: Liquidity Position as of 6/30/14
Liquidity Position as of 6/30/14 Sources (for 12 Months to ($ billions) 6/30/2015) Unsecured Revolvers $2.8 Sources do not include Undrawn Commitments 1.0 additional financing for AIG Revolver 1.0 deliveries of new aircraft Unrestricted Cash 1.7 purchases. Estimated Operating Cash Flow 3.1 Total Sou
Slide 17: Capital Structure
Capital Structure ($ Millions) 2Q 2014 2Q 2013 Total Debt at Quarter-End 31,341 6,024 Average Cost of Debt (including ~0.2% and ~0.4% 3.5% 3.9% relating to amortization of debt issuance costs)* Equity 7,274 2,274 Adjusted Debt / Equity Ratio ** 3.7 to 1 2.6 to 1 * Interest expense divided by average
Slide 18: Financial Outlook for Second Half 2014
Financial Outlook for Second Half 2014 Set forth below are the expected drivers for AerCap’s second half 2014 financial performance, which are subject to change. • Lease revenues of ~$5.0 billion on an annualized basis. • Costs on an annualized basis as follows: – Depreciation of ~$2.1 billion exclu
Slide 19: Supplemental Information
Supplemental Information 19
Slide 20: Aircraft Transactions Second Quarter
Aircraft Transactions Second Quarter 2014 • 36 lease agreements executed • 28 aircraft delivered to lessees • Ten aircraft purchased • 41 aircraft sold from our owned portfolio and seven from our managed portfolio 20
Slide 21: High Quality and Well-Diversified Portfolio
High Quality and Well-Diversified Portfolio Aircraft Portfolio as of June 30, 2014 Number of % Net Book Number of Managed & Aircraft on Aircraft under Sale / Owned Aircraft* Value AerDragon Aircraft Order** Purchase Contract Total Aircraft Airbus A319 143 8% 14 - - 157 Airbus A320 241 17% 48 105 - 3
Slide 22: Committed Aircraft Purchases
Committed Aircraft Purchases Total Actual YTD Remaining Remaining as 2Q 2014 2014 of June 30, 2014* Aircraft Purchases ($ Billions) 0.9 1.7 26.9 Number of Aircraft Purchases (Units) 13 21 350 * Consists of $3.6 billion in 2015, $4.4 billion in 2016, $5.9 billion in 2017, $5.9 billion in 2018, and $5
Slide 23: Portfolio Management Metrics for Owned Aircraft
Portfolio Management Metrics for Owned Aircraft Lease Portfolio 2Q 2014 2Q 2013 Utilization Rate* 98.8% 99.7% Portfolio Yield** 13.9% 12.1% Average Lease Term (Previous 12 Months) • New Leases for New Aircraft (Months) 155*** 166 • Leases for Used Aircraft (Months) 55**** 58 * Utilization rate weigh
Slide 24: Leasing Expenses
Leasing Expenses ($ Millions) 2Q 2014 2Q 2013 Default and Restructuring 2.8 0.8 Related* Normal Transition Costs 5.5 3.3 Lessor Maintenance 10.3 4.4 Contributions Other Leasing Costs 4.0 1.8 Leasing Expenses 22.6 10.3 *Default costs incurred in the second quarter 2014 related to four aircraft, one o
Slide 25: SG&A
SG&A ($ Millions) 2Q 2014 2Q 2013 Share-based compensation expenses 15.1 2.4 Other selling, general and 48.2 21.7 administrative expenses Selling, General and Administrative 63.3 24.1 Expenses The increase in SG&A , period over period, reflects the ILFC acquisition. 25