Air Lease Corporation (NYSE: AL):
Third Quarter 2011 Highlights
- Third consecutive quarter of profitability growth
- Pretax profit margin increased to 31% for Q3 2011 compared to
15% for Q2 2011
- Revenues increased 24% to $92.1 million and pretax income
increased 160% to $28.3 million compared to Q2 2011
- Net income increased 160% to $18.3 million, compared to Q2
2011
- Adjusted net income1 increased 29% to $25.1 million and
adjusted EBITDA1 increased 27% to $80.0 million, compared to Q2
2011
- Quarterly cash provided by operating activities increased 71%
to $83.1 million, compared to Q2 2011
- Grew our fleet and signed lease placements for deliveries from
our order book
- From 65 aircraft at the end of Q2 2011, we purchased 14
aircraft, growing our fleet by 22% to 79 aircraft at the end of Q3
2011
- Entered into lease transactions covering 17 aircraft with 11
customers
- Reached our goal in contracting for 100 aircraft for delivery
by the end of 2011
Air Lease Corporation (ALC) (NYSE: AL) announced today the
results of its operations for the third quarter ended September 30,
2011. ALC recorded its third quarterly positive pre-tax income of
$28.3 million and net income of $18.3 million and recorded cash
flow from operations of $83.1 million.
"Passenger airline growth in many regions of the world continues
at a strong rate, and this, coupled with the requirement on the
part of all carriers to constantly push towards newer, and more
efficient fleets,” said Steven F. Udvar-Hazy, Chairman and CEO of
Air Lease Corporation.
“We are pleased with ALC’s Q3 results, which we believe
demonstrate that ALC has moved beyond its startup phase with three
successive quarters of increasing profitability,” said John L.
Plueger, President and Chief Operating Officer of Air Lease
Corporation. “Our growth trajectory is on track as we closed Q3
with a fleet of 79 aircraft, en route to our 2011 goal of 100
aircraft.”
“The financing community has continued to show support for ALC
amidst the international events affecting the global supply of
credit,” said James C. Clarke, Senior Vice President and Chief
Financial Officer of Air Lease Corporation. “ALC formed
relationships with 4 new banks during the quarter, expanding our
banking group to 20 financial institutions. We continue to build a
strong balance sheet with conservative leverage targets and
significant unsecured borrowing.”
The following table summarizes the results
for the quarters ended September 30, 2011 and June 30, 2011:
(dollars in thousands)
Q3 2011 Q2 2011
% change Revenues
$ 92,125
$ 74,344
24% Pretax income
$ 28,341 $ 10,888 160% Net
income
$ 18,271 $ 7,023 160% Cash provided by
operating activities
$ 83,076 $ 48,483 71% Adjusted
net income(1)
$ 25,122 $ 19,459 29% Adjusted
EBITDA(1)
$ 79,954 $ 62,780 27% Diluted EPS
$ 0.18
$ 0.08
125%
1
See notes 1 and 2 to the Consolidated Statement of
Operations included in this press release for a discussion of the
non-GAAP measures adjusted net income and adjusted EBITDA.
Fleet Growth
Building on our base of 65 aircraft at June 30, 2011, we added
14 aircraft during the third quarter of 2011 and ended the quarter
with 79 aircraft spread across a diverse and balanced customer base
of 49 airlines in 30 countries. We continue to evaluate
opportunities on an ongoing basis to acquire attractive aircraft
from other leasing companies and our airline customers, as well as
opportunistic transactions with the airframe manufacturers such
that we project we will grow our fleet to approximately 100
aircraft by the end of 2011.
Below are portfolio metrics as of
September 30, 2011 and December 31, 2010:
(dollars in
thousands)
September 30, 2011
December 31, 2010 Fleet size
79
40 Weighted average fleet age
3.6 years 3.8 years
Weighted average remaining lease term
6.3 years 5.6 years
Aggregate fleet cost
$ 3,433,308
$ 1,649,071
The following table sets forth the number
of aircraft we leased in the indicated regions as of September 30,
2011 and December 31, 2010:
September 30, 2011
December 31, 2010
Number of
aircraft
% of total
Number of
aircraft
% of total Europe
28 35.4 %
16 40.0 % Asia/Pacific
24
30.4 11 27.5 Central America, South America and Mexico
12 15.2 5 12.5 U.S. and Canada
8 10.1 5
12.5 The Middle East and Africa
7
8.9
3 7.5 Total
79
100.0 % 40
100.0 %
The following table sets forth the number
of aircraft we leased by aircraft type as of September 30, 2011 and
December 31, 2010:
September 30, 2011
December 31, 2010
Number of
aircraft
% of total
Number of
aircraft
% of total Airbus
A319-100
7 8.9
% 7 17.5 % Airbus
A320-200
17 21.5 8 20.0 Airbus A321-200
3
3.8 2 5.0 Airbus A330-200
8 10.1 2 5.0 Boeing
737-700
7 8.9 5 12.5 Boeing 737-800
26
32.9 14 35.0 Boeing 767-300ER
2 2.5 - - Boeing
777-300ER
4 5.1 2 5.0 Embraer E190
5
6.3
Total
79
100.0 %
40 100.0 %
We have made further progress in placing
our aircraft. As of September 30, 2011, we have entered into
contracts for the leaseof new and used aircraft scheduled to be
delivered through 2020 as follows:
Delivery year Number of
aircraft
Number
leased
% Leased
2011
22
22
100.0 % 2012 45 45 100.0 2013 31 15 48.4 2014 26 6
23.1 2015 24 - - Thereafter 91 -
- Total
239 88
36.8 %
Financing Activities
As of September 30, 2011, we had established a diverse lending
group consisting of 20 banks across four general types of lending
facilities with a composite interest rate of 3.09%. This rate does
not include the effect of upfront fees, undrawn fees or issuance
cost amortization.
During the third quarter of 2011, the
Company entered into four additional fixed-rate amortizing
unsecured facilities aggregating$62.9 million and a revolving $45.0
million unsecured credit facility as follows:
Facility Type
Term Interest Rate
Amount Unsecured term
loan 3 year(1)
3.25% $
35.0 million Unsecured term loan 5 year(1) 3.99% 20.0 million
Unsecured term loan 5 year(1) 3.85% 5.0 million Unsecured term loan
1 year(1) 3.00% 2.9 million Subtotal $ 62.9 million
Unsecured revolving facility(2)
3 year LIBOR + 2.00%
$ 45.0 million
(1)
Amortizing loan.
(2)
As of September 30, 2011, the Company
maintained a $2.5 million compensating balance with respect to this
credit facility.
We ended the third quarter of 2011 with a total of 13 unsecured
term facilities. The total amount outstanding under our unsecured
term facilities was $229.3 million and $13.1 million as of
September 30, 2011 and December 31, 2010, respectively.
The Company ended the third quarter of 2011 with a total of 13
revolving unsecured credit facilities aggregating $358.0 million,
each with a borrowing rate of LIBOR plus 2.00%. The total amount
outstanding under our bilateral revolving credit facilities was
$273.0 million and $120.0 million as of September 30, 2011 and
December 31, 2010, respectively.
In addition, one of our wholly-owned subsidiaries entered into a
recourse 11.75 year $70.9 million secured term facility at a rate
of LIBOR plus 1.50%. In connection with this facility, the Company
pledged $94.5 million in aircraft collateral. The outstanding
balance on our secured term facilities was $559.8 million and
$224.0 million at September 30, 2011 and December 31, 2010,
respectively.
During the third quarter of 2011, the Company drew $31.3 million
under the Warehouse Facility and incrementally pledged $36.8
million in aircraft collateral. As of September 30, 2011, the
Company had borrowed $740.5 million under the Warehouse Facility
and pledged 29 aircraft as collateral with a net book value of $1.2
billion.
The Company’s consolidated debt as of
September 30, 2011 and December 31, 2010 is summarized below:
(dollars in
thousands)
September 30, 2011
December 31, 2010 Warehouse credit facility
$
740,533
$ 554,915 Secured term debt financing
559,798 223,981
Unsecured financing
502,317 133,085 Total $
1,802,648 $ 911,981
Composite interest rate(1)
3.09 % 3.32 % Percentage of total debt at fixed rate
23.30 % 1.40 %
Composite interest rate on fixed
debt(1)
4.51
% 3.83 %
(1)
This rate does not include the effect of
upfront fees, undrawn fees or issuance cost amortization.
Financial Results for the Third Quarter of 2011
For the three months ended September 30, 2011, the Company
reported consolidated net income of $18.3 million, or $0.18 per
diluted share, compared to a consolidated net loss of $7.7 million,
or $0.12 per diluted share, for the three months ended September
30, 2010. The increase in net income for 2011, compared to 2010,
was primarily attributable to the acquisition and lease of
additional aircraft.
For the quarter ended September 30, 2011, we recorded $90.5
million in rental revenue, which includes overhaul revenue of $3.3
million. For the quarter ended September 30, 2010, we recorded
$19.1 million in rental revenue, which includes overhaul revenue of
$1.6 million. The increase in rental revenue for the three months
ended September 30, 2011, compared to 2010, was attributable to the
acquisition and lease of additional aircraft. The full impact on
rental revenue for aircraft acquired during the quarter will be
reflected in subsequent periods.
Interest and other income totaled $1.6 million and $0.6 million
for the three months ended September 30, 2011 and 2010,
respectively. During the quarter ended September 30, 2011, the
Company provided short-term bridge financing for the acquisition of
an aircraft for which we earned $1.1 million in fee and interest
income.
Interest expense totaled $13.3 million and $5.8 million for the
three months ended September 30, 2011 and 2010, respectively. The
change was primarily due to an increase in our outstanding debt
balances resulting in a $7.1 million increase in interest and an
increase of $0.4 million in amortization of our deferred debt issue
costs.
We recorded selling, general and administrative expenses of
$11.5 million and $7.9 million for the three months ended September
30, 2011 and 2010, respectively. Selling, general and
administrative expense represents a disproportionately higher
percentage of revenues during our initial years of operation. As we
continue to add new aircraft to our portfolio, we expect selling,
general and administrative expense to continue decreasing as a
percentage of our revenue.
During the three months ended September 30, 2011, the Company
recorded $83.1 million of cash from operations compared to $14.7
million for the three months ended September 30, 2010. The increase
in cash from operating activities for 2011, compared to 2010, was
primarily attributable to the acquisition and lease of additional
aircraft.
Financial Results for the First Nine Months of 2011
For the nine months ended September 30, 2011, the Company
reported consolidated net income of $28.5 million, or $0.33 per
diluted share, compared to a consolidated net loss of $49.4
million, or $1.64 per diluted share, for the period from inception
to September 30, 2010. The increase in net income for 2011,
compared to 2010, was primarily attributable to the acquisition and
lease of additional aircraft and the effect of a one-time $35.8
million charge for the amortization of convertible debt discounts
recorded during the second quarter of 2010.
For the nine months ended September 30, 2011, we recorded $219.1
million in rental revenue, which includes overhaul revenue of $7.6
million. For the period from inception to September 30, 2010, we
recorded $20.3 million in rental revenue, which includes overhaul
revenue of $1.8 million. The increase in rental revenue for 2011,
compared to 2010, was attributable to the acquisition and lease of
additional aircraft. The full impact on rental revenue for aircraft
acquired during the quarter will be reflected in subsequent
periods.
Interest and other income totaled $2.6 million and $1.1 million
for the nine months ended September 30, 2011 and the period from
inception to September 30, 2010, respectively. During the nine
months ended September 30, 2011, the Company provided short-term
bridge financing for the acquisition of an aircraft for which we
earned $1.1 million in fee and interest income. In addition, we
recorded $0.5 million in servicing fee revenue.
Interest expense totaled $40.5 million and $44.3 million for the
nine months ended September 30, 2011 and the period from inception
to September 30, 2010, respectively. The change was primarily due
to an increase in our outstanding debt balances resulting in a
$24.4 million increase in interest, an increase of $4.2 million in
amortization of our deferred debt issue costs and a $3.3 million
extinguishment of debt charge resulting from replacing two banks in
our Warehouse Facility in connection with its modification in April
2011, offset by a one-time $35.8 million charge for the
amortization of convertible debt discounts recorded during the
second quarter of 2010.
We recorded selling, general and administrative expenses of
$32.7 million and $14.2 million for the nine months ended September
30, 2011 and the period from inception to September 30, 2010,
respectively. Selling, general and administrative expense
represents a disproportionately higher percentage of revenues
during our initial years of operation. As we continue to add new
aircraft to our portfolio, we expect selling, general and
administrative expense to continue decreasing as a percentage of
our revenue.
During the nine months ended September 30, 2011, the Company
recorded $166.2 million of cash from operations compared to $11.6
million for the period from inception to September 30, 2010. The
increase in cash from operating activities for 2011, compared to
2010, was primarily attributable to the acquisition and lease of
additional aircraft.
Conference Call
In connection with the earnings release, Air Lease Corporation
will host a conference call on November 10, 2011 at 4:30 PM Eastern
Time to discuss the Company's financial results for the third
quarter of 2011.
Investors can participate in the conference call by dialing
(866) 383-8003 domestic or (617) 597-5330 international. The
passcode for the call is 39948334.
For your convenience, the conference call can be replayed in its
entirety beginning at 7:30 PM ET on November 10, 2011 until 11:59
PM ET November 17, 2011. If you wish to listen to the replay of
this conference call, please dial (888) 286-8010 domestic or (617)
801-6888 international and enter passcode 38410209.
The conference call will also be broadcast live through a link
on the Investor Relations page of the Air Lease Corporation website
at www.airleasecorp.com. Please visit the website at least 15
minutes prior to the call to register, download and install any
necessary audio software. A replay of the broadcast will be
available on the Investor Relations page of the Air Lease
Corporation website.
About Air Lease Corporation
Launched in 2010, Air Lease Corporation is an aircraft leasing
company based in Los Angeles, California that has airline
customers throughout the world. ALC and its team of dedicated and
experienced professionals are principally engaged in
purchasing commercial aircraft and leasing them to its airline
partners worldwide through customized aircraft leasing and
financing solutions. For more information, visit ALC's website
at www.airleasecorp.com.
Forward-Looking Statements
Statements in this press release that are not historical facts
are hereby identified as “forward-looking statements,” including
any statements about our expectations, beliefs, plans, predictions,
forecasts, objectives, assumptions or future events or performance
that are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words
or phrases such as “anticipate,” “believes,” “can,” “could,” “may,”
“predicts,” “potential,” “should,” “will,” “estimate,” “plans,”
“projects,” “continuing,” “ongoing,” “expects,” “intends” and
similar words or phrases. These statements are only predictions and
involve estimates, known and unknown risks, assumptions and
uncertainties that could cause actual results to differ materially
from those expressed in such statements, including as a result of
the following factors, among others:
- our status as a recently organized
corporation with a limited operating history;
- our inability to make acquisitions of,
or lease, aircraft on favorable terms;
- our inability to obtain additional
financing on favorable terms, if required, to complete the
acquisition of sufficient aircraft as currently contemplated or to
fund the operations and growth of our business;
- our inability to obtain refinancing
prior to the time our debt matures;
- impaired financial condition and
liquidity of our lessees;
- deterioration of economic conditions in
the commercial aviation industry generally;
- increased maintenance, operating or
other expenses or changes in the timing thereof;
- changes in the regulatory
environment;
- our inability to effectively deploy the
net proceeds from our capital raising activities; and
- potential natural disasters and
terrorist attacks and the amount of our insurance coverage, if any,
relating thereto.
All forward-looking statements are necessarily only estimates of
future results, and there can be no assurance that actual results
will not differ materially from expectations. You are therefore
cautioned not to place undue reliance on such statements. Any
forward-looking statement speaks only as of the date on which it is
made, and we undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of
unanticipated events.
AIR LEASE CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited) (in thousands,
except share data)
September 30, 2011
December
31, 2010
Assets Cash and cash equivalents
$
279,647 $ 328,821 Restricted cash
74,819 48,676
Flight equipment subject to operating leases
3,433,308
1,649,071 Less accumulated depreciation
(92,693
) (19,262 )
3,340,615 1,629,809 Deposits on
flight equipment purchases
406,487 183,367
Deferred debt issue costs - less
accumulated amortization of $11,726 and $4,754 as
of September 30, 2011 and December 31, 2010, respectively
46,439 46,422 Notes receivable
28,066 - Deferred tax
asset
- 8,875 Other assets
70,944
30,312
Total assets $ 4,247,017
$ 2,276,282
Liabilities and Shareholders'
Equity Accrued interest and other payables
$
44,139 $ 22,054 Debt financing
1,802,648 911,981
Security deposits and maintenance reserves on flight equipment
leases
232,816 109,274 Rentals received in advance
17,317 8,038 Deferred tax liability
6,809
-
Total liabilities
2,103,729 1,051,347
Shareholders' Equity Preferred Stock, $0.01 par value;
50,000,000 shares authorized; no shares issued or outstanding
- -
Class A Common Stock, $0.01 par value;
authorized 500,000,000 shares; issued and
outstanding 98,885,131 and 63,563,810
shares at September 30, 2011 and December 31, 2010,
respectively
984 636 Class B Non-Voting Common Stock, $0.01 par
value; authorized 10,000,000 shares; issued and outstanding
1,829,339 shares
18 18 Paid-in capital
2,165,856
1,276,321 Accumulated deficit
(23,570 )
(52,040 )
Total shareholders' equity 2,143,288
1,224,935
Total liabilities and
shareholders' equity $ 4,247,017 $
2,276,282
AIR LEASE
CORPORATION AND SUBSIDIARIES Consolidated Statements of
Operations (Unaudited)
For the three months ended
September 30,
For the nine
months ended
September 30,
For the period
from Inception to
September 30,
(in thousands, except share data)
2011
2010
2011
2010
Revenues Rental of flight equipment
$ 90,476 $ 19,110
$ 219,092 $ 20,345
Interest and other
1,649
642
2,592
1,116 Total revenues
92,125
19,752
221,684
21,461
- -
- -
Expenses - -
- - Interest
10,993 3,871
30,143 5,709 Amortization of deferred
debt issue costs
2,308 1,935
6,972 2,810
Extinguishment of debt
- -
3,349 - Amortization of
convertible debt discounts
-
-
-
35,798 Interest expense
13,301 5,806
40,464 44,317
- -
- - Depreciation of flight
equipment
30,657 6,301
73,431 6,628 Selling, general
and administrative
11,512 7,941
32,661 14,177
Stock-based compensation
8,314
10,941
30,974
13,196 Total expenses
63,784 30,989
177,530 78,318
- -
- -
Income (loss) before taxes
28,341 (11,237 )
44,154 (56,857 ) Income tax
(expense) benefit
(10,070 )
3,490
(15,684 )
7,492
Net income (loss) $
18,271 $ (7,747 )
$
28,470 $ (49,365 )
Net income
(loss) attributable to common shareholders per share Net income
(loss) Basic
$ 0.18 $ (0.12 )
$ 0.33 $
(1.64 ) Diluted
$ 0.18 $ (0.12 )
$ 0.33
$ (1.64 ) Weighted-average shares outstanding Basic
100,714,470 64,984,887
85,845,031 30,062,023 Diluted
100,767,839
64,984,887
85,946,120 30,062,023
Other Financial Data Adjusted net income
(loss) (1)
$ 25,122 $ 595
$ 56,294 $
(3,197 ) Adjusted EBITDA (2)
$
79,954 $ 11,174
$ 188,001 $
6,243 (1) Adjusted net income (loss) (defined
as net income before stock-based compensation expense and non-cash
interest expense, which includes the amortization of debt issuance
costs and extinguishment of debt) is a measure of both operating
performance and liquidity that is not defined by United States
generally accepted accounting principles (“GAAP”) and should not be
considered as an alternative to net income (loss), income from
operations or any other performance measures derived in accordance
with GAAP. Adjusted net income (loss) is presented as a
supplemental disclosure because management believes that it may be
a useful performance measure that is used within our industry. We
believe adjusted net income (loss) provides useful information on
our earnings from ongoing operations, our ability to service our
long-term debt and other fixed obligations, and our ability to fund
our expected growth with internally generated funds. Set forth
below is additional detail as to how we use adjusted net income
(loss) as a measure of both operating performance and liquidity, as
well as a discussion of the limitations of adjusted net income
(loss) as an analytical tool and a reconciliation of adjusted net
income (loss) to our GAAP net income (loss) and cash flow from
operating activities. Operating Performance: Management and
our board of directors use adjusted net income (loss) in a number
of ways to assess our consolidated financial and operating
performance, and we believe this measure is helpful in identifying
trends in our performance. We use adjusted net income (loss) as a
measure of our consolidated operating performance exclusive of
income and expenses that relate to the financing, income taxes, and
capitalization of the business. Also, adjusted net income (loss)
assists us in comparing our operating performance on a consistent
basis as it removes the impact of our capital structure (primarily
one-time amortization of convertible debt discounts) and
stock-based compensation expense from our operating results. In
addition, adjusted net income (loss) helps management identify
controllable expenses and make decisions designed to help us meet
our current financial goals and optimize our financial performance.
Accordingly, we believe this metric measures our financial
performance based on operational factors that we can influence in
the short term, namely the cost structure and expenses of the
organization. Liquidity: In addition to the uses described
above, management and our board of directors use adjusted net
income as an indicator of the amount of cash flow we have available
to service our debt obligations, and we believe this measure can
serve the same purpose for our investors. Limitations:
Adjusted net income (loss) has limitations as an analytical tool,
and you should not consider it in isolation, or as a substitute for
analysis of our operating results or cash flows as reported under
GAAP. Some of these limitations are as follows:
•
adjusted net income (loss) does not reflect (i) our
cash expenditures or future requirements for capital expenditures
or contractual commitments, or (ii) changes in or cash requirements
for our working capital needs; and
•
our calculation of adjusted net income (loss) may differ from the
adjusted net income (loss) or analogous calculations of other
companies in our industry, limiting its usefulness as a comparative
measure. The following tables show the reconciliation of net
income (loss) and cash flows from operating activities, the most
directly comparable GAAP measures of performance and liquidity, to
adjusted net income (loss) for three months ended September 30,
2011 and 2010, the nine months ended September 30, 2011 and the
period from inception to September 30, 2010. Cash flows from
operating activities for the three months ended September 30, 2011
is calculated as the difference between the cash flows from
operating activities for the nine months then ended and the six
months ended June 30, 2011. Cash flows from operating activities
for the three months ended September 30, 2010 is calculated as the
difference between cash flows from operating activities for the
three months then ended and the period from inception to June 30,
2010.
For the three months ended
September 30,
For the nine
months ended
September 30,
For the period
from Inception to
September 30,
(in thousands)
2011
2010
2011
2010
Reconciliation of cash flows from
operating activities to adjusted net income (loss):
Net cash provided by operating activities
$
83,076 $ 14,716
$ 166,197 $ 11,612
Depreciation of flight equipment
(30,657 ) (6,301 )
(73,431 ) (6,628 ) Stock-based compensation
(8,314 ) (10,941 )
(30,974 ) (13,196 )
Deferred taxes
(10,070 ) 3,490
(15,684
) 7,492 Amortization of deferred debt issue costs
(2,308 ) (1,935 )
(6,972 ) (2,810 )
Extinguishment of debt
- -
(3,349 ) -
Amortization of convertible debt discounts
- -
-
(35,798 ) Changes in operating assets and liabilities: Other assets
(900 ) 2,140
15,427 3,339 Accrued interest and
other payables
(10,444 ) (5,974 )
(13,465
) (8,275 ) Rentals received in advance
(2,112
) (2,942 )
(9,279 ) (5,101 ) Net income (loss)
18,271 (7,747 )
28,470 (49,365 ) Amortization of debt
issue costs
2,308 1,935
6,972 2,810 Extinguishment of
debt
- -
3,349 - Amortization of convertible debt
discounts
- -
- 35,798 Stock-based compensation
8,314 10,941
30,974 13,196 Tax effect
(3,771
) (4,534 )
(13,471 ) (5,636 ) Adjusted net
income (loss)
$ 25,122
$ 595
$ 56,294
$ (3,197 )
For the three months ended
September 30,
For the nine
months ended
September 30,
For the period
from Inception to
September 30,
(in thousands)
2011
2010
2011
2010
Reconciliation of net income (loss) to adjusted net income
(loss): Net income (loss)
$ 18,271 $ (7,747 )
$ 28,470 $ (49,365 ) Amortization of debt issue costs
2,308 1,935
6,972 2,810 Extinguishment of debt
- -
3,349 - Amortization of convertible debt
discounts
- -
- 35,798 Stock-based compensation
8,314 10,941
30,974 13,196 Tax effect
(3,771
) (4,534 )
(13,471 ) (5,636 ) Adjusted net
income (loss)
$ 25,122
$ 595
$ 56,294
$ (3,197 ) (2) Adjusted EBITDA (defined
as net income (loss) before net interest expense, extinguishment of
debt, stock-based compensation expense, income tax (expense)
benefit, and depreciation and amortization expense) is a measure of
both operating performance and liquidity that is not defined by
GAAP and should not be considered as an alternative to net income
(loss), income from operations or any other performance measures
derived in accordance with GAAP. Adjusted EBITDA is presented as a
supplemental disclosure because management believes that it may be
a useful performance measure that is used within our industry. We
believe adjusted EBITDA provides useful information on our earnings
from ongoing operations, our ability to service our long-term debt
and other fixed obligations, and our ability to fund our expected
growth with internally generated funds. Set forth below is
additional detail as to how we use adjusted EBITDA as a measure of
both operating performance and liquidity, as well as a discussion
of the limitations of adjusted EBITDA as an analytical tool and a
reconciliation of adjusted EBITDA to our GAAP net loss and cash
flow from operating activities. Operating Performance:
Management and our board of directors use adjusted EBITDA in a
number of ways to assess our consolidated financial and operating
performance, and we believe this measure is helpful in identifying
trends in our performance. We use adjusted EBITDA as a measure of
our consolidated operating performance exclusive of income and
expenses that relate to the financing, income taxes, and
capitalization of the business. Also, adjusted EBITDA assists us in
comparing our operating performance on a consistent basis as it
removes the impact of our capital structure and stock-based
compensation expense from our operating results. In addition,
adjusted EBITDA helps management identify controllable expenses and
make decisions designed to help us meet our current financial goals
and optimize our financial performance. Accordingly, we believe
this metric measures our financial performance based on operational
factors that we can influence in the short term, namely the cost
structure and expenses of the organization. Liquidity: In
addition to the uses described above, management and our board of
directors use adjusted EBITDA as an indicator of the amount of cash
flow we have available to service our debt obligations, and we
believe this measure can serve the same purpose for our investors.
Limitations: Adjusted EBITDA has limitations as an
analytical tool, and you should not consider it in isolation, or as
a substitute for analysis of our operating results or cash flows as
reported under GAAP. Some of these limitations are as follows:
•
adjusted EBITDA does not reflect our cash
expenditures or future requirements for capital expenditures or
contractual commitments;
•
adjusted EBITDA does not reflect changes in or cash requirements
for our working capital needs;
•
adjusted EBITDA does not reflect interest expense or cash
requirements necessary to service interest or principal payments on
our debt; and
•
other companies in our industry may calculate these measures
differently from how we calculate these measures, limiting their
usefulness as comparative measures. The following tables
show the reconciliation of net income (loss) and cash flows from
operating activities, the most directly comparable GAAP measures of
performance and liquidity, to adjusted EBITDA for the three months
ended September 30, 2011 and 2010, the nine months ended September
30, 2011 and the period from inception to September 30, 2010. Cash
flows from operating activities for the three months ended
September 30, 2011 is calculated as the difference between the cash
flows from operating activities for the nine months then ended and
the six months ended June 30, 2011. Cash flows from operating
activities for the three months ended September 30, 2010 is
calculated as the difference between cash flows from operating
activities for the three months then ended and the period from
inception to June 30, 2010.
For the three
months ended
September 30,
For the nine
months ended
September 30,
For the period
from Inception to
September 30,
(in thousands)
2011
2010
2011
2010
Reconciliation of cash flows from
operating activities to adjusted EBITDA:
Net cash provided by operating activities
$
83,076 $ 14,716
$ 166,197 $ 11,612
Depreciation of flight equipment
(30,657 ) (6,301 )
(73,431 ) (6,628 ) Stock-based compensation
(8,314 ) (10,941 )
(30,974 ) (13,196 )
Deferred taxes
(10,070 ) 3,490
(15,684
) 7,492 Amortization of deferred debt issue costs
(2,308 ) (1,935 )
(6,972 ) (2,810 )
Extinguishment of debt
- -
(3,349 ) -
Amortization of convertible debt discounts
- -
-
(35,798 ) Changes in operating assets and liabilities: Other assets
(900 ) 2,140
15,427 3,339 Accrued interest and
other payables
(10,444 ) (5,974 )
(13,465
) (8,275 ) Rentals received in advance
(2,112
) (2,942 )
(9,279 ) (5,101 ) Net income (loss)
18,271 (7,747 )
28,470 (49,365 ) Net interest expense
12,642 5,169
39,442 43,276 Income taxes
10,070
(3,490 )
15,684 (7,492 ) Depreciation
30,657 6,301
73,431 6,628 Stock-based compensation
8,314
10,941
30,974 13,196 Adjusted EBITDA
$ 79,954 $ 11,174
$ 188,001 $
6,243
For the three months ended
September 30,
For the nine
months ended
September 30,
For the period
from Inception to
September 30,
(in thousands)
2011
2010
2011
2010
Reconciliation of net income (loss) to adjusted EBITDA:
Net income (loss)
$ 18,271 $ (7,747 )
$
28,470 $ (49,365 ) Net interest expense
12,642 5,169
39,442 43,276 Income taxes
10,070 (3,490 )
15,684 (7,492 ) Depreciation
30,657 6,301
73,431 6,628 Stock-based compensation
8,314
10,941
30,974 13,196 Adjusted EBITDA
$ 79,954 $ 11,174
$ 188,001 $
6,243
AIR LEASE CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
For the nine
months ended
For the period
from Inception to
(dollars in thousands)
September 30,
2011 September 30, 2010
Operating Activities Net income (loss)
$
28,470 $ (49,365 ) Adjustments to reconcile net income
(loss) to net cash provided by operating activities: Depreciation
of flight equipment
73,431 6,628 Stock-based compensation
30,974 13,196 Deferred taxes
15,684 (7,492 )
Amortization of deferred debt issue costs
6,972 2,810
Extinguishment of debt
3,349 - Amortization of convertible
debt discounts
- 35,798 Changes in operating assets and
liabilities: Other assets
(15,427 ) (3,339 ) Accrued
interest and other payables
13,465 8,275 Rentals received in
advance
9,279 5,101 Net cash
provided by operating activities
166,197
11,612
Investing Activities Acquisition
of flight equipment under operating lease
(1,706,278
) (980,110 ) Payments for deposits on flight equipment
purchases
(278,820 ) (75,386 ) Acquisition of
furnishings, equipment and other assets
(38,844 )
(11,150 ) Advances on notes receivable
(30,000 ) -
Collections on notes receivable
1,934 -
Net cash used in investing activities
(2,052,008 ) (1,066,646 )
Financing
Activities Issuance of common stock and warrants
867,365
1,157,133 Tax withholdings on stock based compensation
(8,456 ) - Issuance of convertible notes
-
60,000 Net change in unsecured revolving facilities
153,000
- Proceeds from debt financings
800,043 203,631 Payments in
reduction of debt financings
(62,376 ) (4,940 )
Restricted cash
(26,143 ) (43,921 ) Debt issue costs
(10,338 ) (47,960 ) Security deposits and maintenance
reserve receipts
127,262 67,964 Security deposits and
maintenance reserve disbursements
(3,720 )
(5,049 ) Net cash provided by financing activities
1,836,637 1,386,858 Net increase
in cash
(49,174 ) 331,824 Cash at beginning of period
328,821 - Cash at end of period
$ 279,647 $ 331,824
Supplemental Disclosure of Cash Flow
Information Cash paid during the period for interest, including
capitalized interest of $7,297 at September 30, 2011 and
capitalized interest of $363 at September 30, 2010
$
34,849 $ 4,696
Supplemental
Disclosure of Noncash Activities Buyer furnished equipment,
capitalized interest and deposits on flight equipment purchases
applied to acquisition of flight equipment under operating leases
$ 77,959 $ - Conversion of convertible
notes to Class A Common Stock
$
- $ 60,000
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