AerCap reports record 2015 financial results and authorizes share repurchase program of $400 million

Dino D'Amore
By Dino D'Amore February 24, 2016 19:06

AerCap reports record 2015 financial results and authorizes share repurchase program of $400 million

AerCap has reported adjusted net income of $1.2758bn for the full year 2015, compared with $855.5 million for full year 2014. The lessor’s reported net income for the year was $1.1787bn, compared with $810.4 million for full year 2014. Reported basic earnings per share of $5.78, compared with $4.61 for full year 2014.

Aengus Kelly, CEO of AerCap, commented: “We ended 2015 with record earnings and liquidity of $1.3 billion and $9.2 billion, respectively. These results reflect the consistency of our earnings and the excellent operational performance of AerCap. As we look forward to 2016 we continue to see robust demand for our aircraft and a financing market that is extremely receptive to the AerCap name. As a result, we are pleased to announce a $400 million share repurchase program.”

During the fourth quarter of 2015, AerCap’s adjusted net income was $282.1 million, compared with $296.7 million for the same period in 2014. Adjusted basic earnings per share of $1.43, compared with $1.40 for the same period in 2014. Adjusted net income and earnings per share were primarily impacted by non-cash expenses related to the restructuring of AeroTurbine, partially offset by higher gain on sale of assets and, in the case of earnings per share, lower outstanding shares as a result of share repurchases completed in the second quarter of 2015.

Reported net income during the fourth quarter was $264.2 million, compared with $298.2 million for the same period in 2014. Reported basic earnings per share of $1.34, compared with $1.41 for the same period in 2014. Reported net income and earnings per share were driven by the same factors as adjusted net income in addition to lower maintenance rights related expenses included in the results for the fourth quarter of 2014.

Fourth quarter 2015 adjusted net income decreased 5% compared with the same period in 2014 and fourth quarter 2015 adjusted earnings per share increased 2% over the same period in 2014 both of which were primarily impacted by non-cash expenses related to the restructuring of AeroTurbine, partially offset by higher gain on sale of assets and, in the case of earnings per share, lower outstanding shares as a result of share repurchases completed in the second quarter of 2015. Fourth quarter 2015 reported net income and reported earnings per share were impacted by the same drivers and the adjustments set forth in the table.

Adjusted net income reflects, among other items, expensing the maintenance rights asset over the remaining economic life of the aircraft as compared to expensing this asset during the remaining lease term as reflected in reported net income. The maintenance rights asset represents the difference between the actual physical condition of the former ILFC aircraft at the acquisition date and the value based on the contractual return conditions in the lease contracts.

Basic lease rents were $1,148.8 million for the fourth quarter of 2015, compared with $1,159.0 million for the same period in 2014. The decrease was primarily due to the sale of older aircraft, partially offset by the purchase of new aircraft. AerCap’s average lease assets for the fourth quarter of 2015 were $35.8 billion, compared with $36.1 billion for the same period in 2014.

Maintenance rents and other receipts were $136.7 million for the fourth quarter of 2015, compared with $79.8 million for the same period in 2014. The increase was driven primarily by maintenance liability releases upon agreed lease terminations related to 17 aircraft in the fourth quarter of 2015. All of these aircraft have been released or sold or are expected to be sold.

Net gain on sale of assets for the fourth quarter of 2015 was $43.4 million, relating to 22 aircraft, compared with a net gain of $25.8 million for the same period in 2014, relating to nine aircraft. During the fourth quarter of 2015, AerCap also parted-out three aircraft and reclassified three aircraft to finance leases, which had no impact on net gain on sale of assets.

Leasing expenses were $126.3 million for the fourth quarter of 2015, compared with $74.8 million for the same period in 2014. The increase was driven primarily by higher maintenance rights related expenses. Transaction, integration and restructuring related expenses were $50.8 million for the fourth quarter of 2015, compared with $11.9 million for the same period in 2014. Transaction, integration and restructuring related expenses in the fourth quarter of 2015 include a write down of leased engines and intangibles of $22.4 million and $24.8 million, respectively and $2.1 million of severance expenses all related to the restructuring of AeroTurbine, and $1.5 million related to the ILFC acquisition.

AerCap’s blended effective tax rate during the full year 2015 was 13.9%. The blended effective tax rate for the full year 2014 was 15.0%. The decrease in our effective tax rate is driven primarily by the transfer of aircraft from the United States to Ireland. The blended effective tax rate in any year is impacted by the source and amount of earnings among AerCap’s different tax jurisdictions.

AerCap has authorized a $400 million share repurchase program, which will run through June 30, 2016. Repurchases under the program may be made through open market purchases or privately negotiated transactions in accordance with applicable U.S. federal securities laws. The timing of repurchases and the exact number of shares of common stock to be purchased will be determined by the Company’s management, in its discretion, and will depend upon market conditions and other factors. The program will be funded using the Company’s cash on hand and cash generated from operations.

Dino D'Amore
By Dino D'Amore February 24, 2016 19:06