Aercap Holdings N.v. · NYSE:AER
Aercap — Q3 2008 Earnings Presentation
26 slides from Aercap's earnings presentation, Nov 6, 2008
Slide 1: AerCap Holdings N.V. Third Quarter 2008 Earnings Call
AerCap Holdings N.V. Third Quarter 2008 Earnings Call November 6, 2008
Slide 2: Forward Looking Statements & Safe Harbor
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 identified by th
Slide 3: Third Quarter 2008 Highlights
Third Quarter 2008 Highlights Net income was $61.1 million in the third quarter 2008, exclusive of non-cash impact relating to mark-to-market of interest rate caps and share-based compensation (vs. $58.1 million in 3Q 2007) Earnings per share in the third quarter 2008 were $0.72 excluding the it
Slide 4: Net Income
Net Income ($ Million) 3Q 2007 3Q 2008 Total Net Income 48.6 51.3 Adjusted for: Mark-to-market on interest rate caps 6.7 8.2 Share-based compensation charges 2.8 1.6 Net Income excluding above 58.1 61.1 charges 4
Slide 5: Earnings Per Share
Earnings Per Share 3Q 2007 3Q 2008 Earnings Per Share $0.57 $0.60 Adjusted for: mark-to-market on interest rate caps and share 0.11 0.12 based compensation Earnings Per Share $0.68 $0.72 excluding above charges Average Shares Outstanding 85.0 85.0 (Millions) 5
Slide 6: Net Spread (Margin)
Net Spread (Margin) ($ Millions) 3Q 2007 3Q 2008 % Change Basic Lease Rents 125 133 6% Less: Interest Expense* (51) (40)** (22%) Net Spread (Margin) 75 93 25% Average Lease Assets 3,054 3,731 22% - Basic lease rents increase due to asset growth, partially offset by lessee defaults & interest rate de
Slide 7: Net Spread Trends
Net Spread Trends 2007 Avg. 2008 1st 2008 2nd 2008 3nd ($ Millions) Quarter Quarter Quarter Quarter Net Spread (Margin)* 77 86 93 93** Growth in Net Spread Reflective of Growth in Leasing Income; 2008 Avg. Quarter Expected to be ~$91 Million (+18% over 2007) * Net Spread = Basic rents minus interest
Slide 8: Total Revenue
Total Revenue ($ Millions) 3Q 2007 3Q 2008 Basic Lease Rents 125 133 Maintenance Rents 12 35* Sales Revenue 187 122 Servicing Fees and Interest Income 12 8 Other Revenue 0 4 Total Revenue 336 302** * Increase in maintenance rents driven by change-in-estimate and lessee defaults ** Decrease in revenu
Slide 9: Maintenance Reserves – Change in Estimate
Maintenance Reserves – Change in Estimate Accrued Maintenance Liability at September 30, 2008 $208 Million Amounts Not Expected to be Returned to Lessees $17 Million (Recorded as Maintenance Revenue in 3rd Qtr 2008)* * ~$4 Million Collected from Lessees During 3rd Quarter 2008 and ~$13 Million Colle
Slide 10: Impact from Defaults
Impact from Defaults ($ Millions) 2Q 2008 3Q 2008 Est. 4Q 2008 Est. 2008 Total Lost Basic Lease Rents (3) (6) ~ (3) ~ (12) (Net of Security Deposits) Maintenance Rents 2 8 - 10 Leasing Expenses - (1) ~ (10) ~ (11) Subtotal (1) 1 ~ (13) ~ (13) Accounting Specifics - Security deposits are applied agai
Slide 11: Sales Revenue
Sales Revenue ($ Millions) 3Q 2007 3Q 2008 6 aircraft sold* Aircraft Sales 165 97 1 A330-200 1 A321-200 Engine Sales 8 6 4 MD82 Part Sales 14 19 Total Sales Revenue 187 122 Sales margins 1 A330-200 ~9% 1 A321-200 ~22% Gain from Aircraft Sales 36 13 4 MD82 Break-even *In addition to these 6 aircraft
Slide 12: Leasing Expenses and SG&A
Leasing Expenses and SG&A 3Q 2007 3Q 2008 % Change ($ Millions) Operating lease in costs 4.7 4.3 (9%) Leasing expenses 0.5 5.4 > 100% SG&A 27.9 33.4* 20% Total Leasing expenses and SG&A 33.1 43.1* 30% *~$4 million of increase driven by higher Euro/U.S. dollar exchange rates 12
Slide 13: Tax Rate
Tax Rate FY 2007 YTD 2008 Tax Rate for Aircraft 9.8% 7.8% Tax Rate for Engine/Parts 35.4% 14.0% Blended Tax Rate 11.8% 8.3% 13
Slide 14: Total Assets and Number of Aircraft/Engines
Total Assets and Number of Aircraft/Engines 9/30/2007 9/30/2008 ($ Millions) 5,270 5,000 24% increase over 4,253 3Q 2007 Total Assets 4,000 Owned and on Balance Sheet 3,000 2,000 Number of Aircraft Owned, On Order, Managed, Decrease in units largely driven by Contracted, under LOI (units) 325 314 sa
Slide 15: Purchases of Aviation Assets
Purchases of Aviation Assets ($ Millions) 3Q YTD 2008 Committed 2008 Aircraft Related 1,040 1,315 Engines/Airframes 58 66 Total Purchases 1,098 1,381 Number of Aircraft 47 61 Purchases (Units) 15
Slide 16: Portfolio Management Metrics
Portfolio Management Metrics Lease Portfolio FY 2007 3Q 2008 Utilization Rate 98.4% 97.5% Portfolio Yield (Year-to-Date)* 18.1% 17.5% Average Term (Months) - New Aircraft Leases 107 121** - Used Aircraft Leases 72 65*** * Lease revenue divided by average book value of flight equipment ** Reflects 36
Slide 17: Aircraft Portfolio Valuation
Aircraft Portfolio Valuation Carrying Difference/ ($ Billion) External Value or Appraisers Appraisers Price Paid Value A320 Family, A330s, & B737NGs (~95% of Portfolio; 5.64 7.06 20% …only ~11% > 8 Years of Age) B757s, B767s, A300s 0.17 0.22 23% (~3.0% of Portfolio) B737 Classics and All Others 0.17
Slide 18: Debt and Equity
Debt and Equity ($ Million) 3Q 2007 3Q 2008 Total Debt 2,782 3,603 Average Cost of Debt in the Quarter* 6.8% 4.3% Shareholder Equity 908 1,127 Debt / Equity Ratio 3.1 to 1 3.2 to 1 * Interest expense divided by average debt balance, excluding mark-to-market on interest rate caps 18
Slide 19: Funding/Access to Capital
Funding/Access to Capital Unrestricted Cash Balance at September 30, 2008* $176 Million Operating Cash Flow for 3Q 2008 $73 Million * Free cash only (excludes restricted cash balance of $168 million) Remaining Financing Requirements (2009 - 2012) $4.7 Billion Less: Available Lines of Credit at Septe
Slide 20: 2008 Financial Outlook
2008 Financial Outlook Purchases of aviation assets expected to be ~$1.4 billion “Net spread” (basic lease rents less interest expense) is expected to increase ~18% over 2007 Full year sales revenue expected to be slightly above 2007 ― Estimate includes the sale of 2 aircraft in 4Q 2008 (curre
Slide 21: Third Quarter 2008 Highlights
Third Quarter 2008 Highlights Net income was $61.1 million in the third quarter 2008, exclusive of non-cash impact relating to mark-to-market of interest rate caps and share-based compensation (vs. $58.1 million in 3Q 2007) Earnings per share in the third quarter 2008 were $0.72 excluding the it
Slide 22: Appendix
Appendix * (AERCAP 22
Slide 23: Aircraft and Engine Transactions
Aircraft and Engine Transactions 24 new aircraft lease agreements and letters-of-intent executed during third quarter 2008 11 aircraft and 9 engines delivered to lessees during third quarter 2008 4 aircraft and 7 engines purchased during third quarter 2008 10 aircraft and 2 engines sold duri
Slide 24: Forward Order Aircraft
Forward Order Aircraft Total Option Option 5 5 Number of Aircraft Available 100 Available 20 57 LOI 9 Sold 7 LOI 4 Sold Lease 7 Agreement Lease 49 Agreement 25 Delivered 10 Delivered 2 As of As of December 31, 2007 September 30, 2008 24
Slide 25: Sales Revenue vs. Proceeds from Sales
Sales Revenue vs. Proceeds from Sales (Income vs. Cash Flow Statement) ($ Million) 3Q 2008 YTD 2008 Sales Revenue ( from Income Statement) 122 446 Less: Inventory Sales* (17) (87) Non-Cash Maintenance Sales Revenue - (7) Proceeds from Sales/Disposal of Assets 105 352 (from Cash Flow Statement) * Ref
Slide 26: Gain from Sales (Income vs. Cash Flow Statement)
Gain from Sales (Income vs. Cash Flow Statement) 3Q 2008 YTD 2008 Gain from Sales (Income Statement) 13 86 …. Sales Revenue less COGS Less: Inventory Sales* (4) (24) Add: Gain on Sale of Investments 3 3 Gain on Disposal of Assets 12 65 (Cash Flow Statement) * Reflected in Change in Assets /Liabiliti