Aercap Holdings N.v. · NYSE:AER
Aercap — Investor Presentation (2024)
22 slides from Aercap's investor presentation, 2024
Slide 1: Strategy – Aengus Kelly, Chief Executive Officer
STRATEGY AENGUS KELLY CHIEF EXECUTIVE OFFICER
Slide 2: We Asked - What's On Your Mind?
WE ASKED - WHAT’S ON YOUR MIND? Clear focus on capital allocation strategy, industry supply & demand dynamics and outlook Market Sales Insurance Pricing Engines Strategy OEMs Unsecured Funding Trends Cycle Outlook Upside Framework Rate Economics Production Rates Balance Sheet Management Share Suppli
Slide 3: Today's Key Messages
TODAY’S KEY MESSAGES Supply and Demand Environment Expected to Remain Favorable for Years AerCap’s Industrial Platform Creates Significant Value Through the Asset’s Life Capital Allocation Strategy Maximizes Shareholder Value Through the Cycle These Factors Combine to Create Consistent ROE and BVPS
Slide 4: Strong Industry
STRONG INDUSTRY © AerCap
Slide 5: Aircraft Supply Issues Will Persist for Many Years
AIRCRAFT SUPPLY ISSUES WILL PERSIST FOR MANY YEARS Manufacturing delays, coupled with increased oversight and engine maturation challenges, continue to delay the delivery of new technology aircraft 2024 Narrowbody Deliveries Likely to Remain Below 2017 2024 Widebody Deliveries Likely to Remain Below
Slide 6: Supply Chain Issues Compounding
SUPPLY CHAIN ISSUES COMPOUNDING Several supply chain issues have resulted in significant delays to both turnaround times for used assets and new deliveries 1 2 MRO capacity was significantly OEMs remain significantly reduced during Covid-19, resulting in behind production schedules MRO substantial b
Slide 7: Engine OEMs Provide Key Brake to Supply
ENGINE OEMS PROVIDE KEY BRAKE TO SUPPLY Engine OEMs need multiple shop visits over 20 years to generate returns, which ensures restraint on new engine supply Lifecycle Revenue Sources for OEMs • Aircraft OEMs generate their revenues from the initial sale, 100% so are incentivized to increase product
Slide 8: Aircraft Demand Continues to Strengthen
AIRCRAFT DEMAND CONTINUES TO STRENGTHEN Widespread aircraft shortages are leading to higher extension rates and higher aircraft sale prices AerCap’s Aircraft Extension Rates Increasing AerCap’s Gain-on-Sale Margin Remains Above Trend 90% 30% 25% 80% 25% 24% 23% 21% 70% 20% 18% 18% 60% 15% 14% 10% 50
Slide 9: Strong Company
STRONG COMPANY © AerCap
Slide 10: Unrivaled Platform Generates Consistent Capital
UNRIVALED PLATFORM GENERATES CONSISTENT CAPITAL Portfolio Management Stable Liability Structure • Disciplined portfolio • Asset / Liability matching management CAPITAL GENERATION Leads to stronger revenues, profitability and cash flows Scale of Execution Strategic Positioning • Deal flow advantages;
Slide 11: History of Strategic Capital Allocation
HISTORY OF STRATEGIC CAPITAL ALLOCATION Dynamic capital allocation policy enables deployment of capital towards its most productive uses DE-LEVERING ORGANIC GROWTH M&A RETURN OF CAPITAL • Strong Balance Sheet • Direct OEM Orders • Counter-cyclical M&A • Share Repurchases • Prudent Leverage & • Off-M
Slide 12: Leverage Discipline Creates Financial Flexibility
DE-LEVERING LEVERAGE DISCIPLINE CREATES FINANCIAL FLEXIBILITY AerCap consistently manages to a prudent leverage range, supporting higher credit ratings Adj. Leverage Ratio (Net Debt / Equity) 4.0x ILFC Acquisition 3.8x 3.6x 3.4x 3.2x Charge related to Ukraine Conflict 3.0x $3.9bn Share Repurchases C
Slide 13: Engine Investment Offers New Optionality
ORGANIC GROWTH ENGINE INVESTMENT OFFERS NEW OPTIONALITY AerCap has invested over $40 billion in organic growth in the last ten years, rejuvenating the fleet AerCap Capex by Asset Investment Case for Engines ($ billion) 8.0 • Strategically important new asset class for AerCap, with investment focused
Slide 14: Long History of Successful M&A
M&A LONG HISTORY OF SUCCESSFUL M&A AerCap has grown by over $62 billion through counter-cyclical M&A transactions at a discount to book value Date Announced Acquiror Target Deal Value ($ bn) • AerCap has grown through four significant acquisitions all at a Jun. 2005 2.8 discount to book value • Thes
Slide 15: Balanced Returns to Shareholders
RETURN OF CAPITAL BALANCED RETURNS TO SHAREHOLDERS AerCap generates significant cash flow each year to return to shareholders SHARE REPURCHASES MODEST DIVIDENDS >$8 billion announced since Broadens the investor base 2015, including $500 million announced today Signals confidence in the >$8BN 1.2% du
Slide 16: Strong Outlook
STRONG OUTLOOK © AerCap
Slide 17: Capital Recycling Trade – Highly Accretive
CAPITAL RECYCLING TRADE – HIGHLY ACCRETIVE Robust demand for mid-life and older aircraft continues to support secondary sales at attractive margins, freeing up capital to deploy into share repurchases 1Q 2024 Asset Sales 1Q 2024 Asset Sales and Share Repurchases ($ million) $1,000 2.0x $900 Total Mu
Slide 18: Supply Shortage Creating Arbitrage Opportunities
SUPPLY SHORTAGE CREATING ARBITRAGE OPPORTUNITIES AerCap sells assets to professional buyers above book value and buys shares from the market below book, creating value Average Age of Aircraft Sales Sales Units % by Asset Technology Significant Equity Multiple Arbitrage (Years) 25 2.0x 20 1.8x 14% 1.
Slide 19: Consistent Returns Despite Moves in Interest Rates
CONSISTENT RETURNS DESPITE MOVES IN INTEREST RATES AerCap’s Return on Equity has been remarkably consistent – Covid-19 and the Ukraine Conflict caused it to drop temporarily AerCap Return on Equity Since 2007 30% Global Oil European Debt Ebola / Russian Covid-19 Ukraine Financial Crisis Crisis Crisi
Slide 20: Consistent Outperformance Versus U.S. Treasuries
CONSISTENT OUTPERFORMANCE VERSUS U.S. TREASURIES AerCap’s Return on Equity has beaten 5-year U.S. Treasuries by more than 9% per annum on average since 2007 AerCap Return on Equity Since 2007 14% Global Oil European Debt Ebola / Russian Covid-19 Ukraine Financial Crisis Crisis Crisis Pandemic Confli
Slide 21: Steady Growth in Book Value Per Share
STEADY GROWTH IN BOOK VALUE PER SHARE AerCap’s book value per share has grown by a CAGR of ~20% over the last two years $90 $87.47 $85 $80 $75 $70 $65 $61.11 $60 $55 $50 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 AerCap BVPS See Supplemental Information – Endnotes. © AerCap 25
Slide 22: Today's Key Messages
TODAY’S KEY MESSAGES Supply and Demand Environment Expected to Remain Favorable for Years AerCap’s Industrial Platform Creates Significant Value Through the Asset’s Life Capital Allocation Strategy Maximizes Shareholder Value Through the Cycle These Factors Combine to Create Consistent ROE and BVPS