Alcan (NYSE:AL)
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2 Years : From May 2011 to May 2013
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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