AerCap Holdings N.V. (NYSE:AER):
Net income of $265.4 million for the first quarter of 2018
Diluted earnings per share of $1.72 for the first quarter of 2018

Highlights

114 aircraft transactions executed in the first quarter of 2018, including 28 widebody transactions.
Approximately 95% of new aircraft deliveries through 2019 and approximately 80% through 2020 leased.
6.9 years average remaining lease term.
98.3% fleet utilization rate for the first quarter of 2018.
Closed on $2.9 billion of debt financing, including $1.15 billion senior unsecured notes offering.
$10.8 billion of available liquidity and adjusted debt/equity ratio of 2.8 to 1.
Book value per share of $59.60, an increase of 16% since March 31, 2017.
Repurchased 5.9 million shares in the first quarter of 2018 for $305 million.
New $200 million share repurchase program authorized, which will run through September 30, 2018.

Aengus Kelly, CEO of AerCap, commented: “I am pleased to report that the AerCap platform delivered another quarter of strong operating and financial results, with earnings per share of $1.72 and net income of $265 million. Our high level of lease placement activity reflected robust demand for our aircraft, and we continued to deploy excess capital to create value for our shareholders.”

First Quarter 2018 Financial Results

Net income of $265.4 million, compared with $261.2 million for the same period in 2017. Diluted earnings per share of $1.72, compared with $1.48 for the same period in 2017.

The increase in net income was primarily driven by an increase in net gain on sale of assets, partially offset by the impact of the Air Berlin and Monarch Airlines lease terminations in the second half of 2017, as well as by lower other income.
Diluted earnings per share increased 16%, primarily driven by the repurchase of 29.6 million shares from January 2017 through March 2018.

Revenue and Net Spread

Basic lease rents were $1,032.9 million for the first quarter of 2018, compared with $1,067.1 million for the same period in 2017. The decrease was primarily due to the sale of mid-life and older aircraft during 2017 and the first quarter of 2018 and lower utilization as a result of the Air Berlin and Monarch Airlines lease terminations in the second half of 2017.

Net gain on sale of assets for the first quarter of 2018 was $89.3 million, relating to 21 aircraft sold and two aircraft reclassified to finance leases, compared with $47.3 million for the same period in 2017, relating to 21 aircraft sold and three aircraft reclassified to finance leases. The increase was primarily due to the composition of asset sales.

Other income for the first quarter of 2018 was $9.5 million, compared with $32.5 million for the same period in 2017. Other income for the first quarter of 2017 included contractual payments related to a lease termination agreement with a lessee.

Annualized net spread was 8.5% for the first quarter of 2018, compared with 9.2% for the same period in 2017. The decrease was primarily due to the lower age of our owned fleet, which increased our average remaining lease term to 6.9 years. Younger aircraft tend to have lower yields than older aircraft.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $85.8 million for the first quarter of 2018, compared with $83.5 million for the same period in 2017. The increase was due to a temporary increase in share-based compensation expenses as a result of the timing of share grants and vesting associated with our share-based compensation programs. We expect share-based compensation expenses to decrease significantly in the second half of 2018.

Other Expenses

Leasing expenses were $132.5 million for the first quarter of 2018, compared with $122.4 million for the same period in 2017. The increase in leasing expenses was primarily due to expenses recognized as a result of the Air Berlin and Monarch Airlines lease terminations in the second half of 2017. Asset impairment charges were $2.1 million for the first quarter of 2018 and related to one older aircraft that we expect to sell. We did not record any asset impairment charges for the first quarter of 2017.

Effective Tax Rate

Our effective tax rate for the first quarter of 2018 was 13.0%, compared to 13.0% for the same period in 2017. The effective tax rate for the full year 2017 was 13.3%. The effective tax rate is impacted by the source and amount of earnings among our different tax jurisdictions.

Share Repurchase Program

Our Board of Directors approved a new share repurchase program authorizing total repurchases of up to $200 million of AerCap ordinary shares through September 30, 2018. 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 common shares 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. The program may be suspended or discontinued at any time.