Dutch aircraft lessor AerCap Holdings N.V. (AER) on Tuesday reported an 83 percent surge in profit for the second quarter from last year, as results were boosted by the company's acquisition of aircraft leasing unit International Lease Finance Corp. or ILFC. Both revenue and adjusted earnings per share for the quarter beat analysts' estimates.
Aengus Kelly, CEO of AerCap, said, "We are very pleased with our financial results and the ongoing ILFC integration process, as evidenced by the numbers. Our net spread of 10% is running at a 5-year high with fleet utilization of approximately 99%."
Net income attributable to the company for the second quarter was $138.30 million or $0.83 per share, up from $75.69 million or $0.66 per share in the year-ago period.
The increase in net income was driven primarily by the ILFC transaction. In May, 2014, AerCap completed the $5.4 billion acquisition of aircraft leasing unit ILFC from insurer American International Group Inc. (AIG).
The results of ILFC have been consolidated in AerCap's income statement and cash flow statement for the second quarter as of May 14, 2014, the completion date. The latest quarter's results include expenses relating to the ILFC transaction of $88.4 million, net of tax.
Adjusted net income for the quarter was $212.4 million or $1.29 per share, compared to $67.1 million or $0.59 per share in the prior-year quarter. On average, eleven analysts polled by Thomson Reuters expected the company to report earnings of $0.79 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues and other income for the quarter more than tripled to $806.77 million from $247.04 million in the prior-year period. Analysts had a consensus revenue estimate for the quarter of $739.95 million.
Net interest margin earned on lease assets, or net spread, rose to $550.8 million from $160.1 million in the year-ago period.
Net interest margin as a percentage of average lease assets was 10.1 percent for the quarter, up from 8.5 percent in the same period last year. The increase was primarily attributable to the ILFC transaction.
The company said it executed 122 aircraft transactions during the latest quarter. As at quarter-end, AerCap's portfolio consisted of 1,678 aircraft that were owned - including aircraft owned by AerDragon, a non-consolidated joint venture, on order, under contract or managed.
As at the end of the quarter, AerCap had committed to purchase 350 aircraft with scheduled delivery dates up to 2022.
The company noted that over 90 percent of its committed aircraft purchases delivering 2014 through December 2016 and about 50 percent of its committed aircraft purchases delivering 2014 through 2022 are placed, either under lease contract or a letter of intent.
AER closed Monday's trading at $44.48. In Tuesday's pre-market trades, the stock is up $1.17 or 2.63 percent to $45.65.
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