AL Air Lease Corporation

November 5, 2015

Date of Report

(Date of earliest event reported)

Delaware

(State or other jurisdiction of

incorporation)

001-35121

(Commission File Number)

27-1840403

(I.R.S. Employer

Identification No.)

2000 Avenue of the Stars, Suite 1000N

Los Angeles, California

(Address of principal executive offices)

90067

(Zip Code)

Registrant’s telephone number, including area code: (310) 553-0555

Not Applicable

(Former name or former address, if changed since last report.)

AIR LEASE CORPORATION

Date: November 5, 2015

/s/ Gregory B. Willis

Gregory B. Willis

Senior Vice President and Chief Financial Officer

Press release dated November 5, 2015

·

Diluted EPS increased 22% to $0.71 for the three months ended September 30, 2015 as compared to $0.58 for the three months ended September 30, 2014.

·

Adjusted diluted EPS increased 21% to $1.20 for the three months ended September 30, 2015 as compared to $0.99 for the three months ended September 30, 2014.

·

Revenues increased 20% to $313 million for the three months ended September 30, 2015 as compared to $262 million for the three months ended September 30, 2014.

·

Income before taxes increased 24% to $120 million with a pretax margin of 38% for the three months ended September 30, 2015 as compared to $96 million with a pretax margin of 37% for the three months ended September 30, 2014.

·

Market demand remains strong for our aircraft and order book.  We are 94% placed through 2017 and have maintained 100% utilization of our current fleet across a diverse customer base of 89 airlines in 50 countries.

·

In October 2015, Standard & Poor's Ratings Services revised its outlook on ALC to positive from stable and affirmed all ratings on ALC, including its 'BBB-' corporate credit rating. 

·

In August 2015, we completed a senior unsecured notes offering of $500 million due 2018 at 2.625%.

·

In September 2015, we entered into an agreement to increase the capacity of our Syndicated Unsecured Revolving Credit Facility by $90 million to $2.8 billion.

·

Increased our annual cash dividend by 25%, from $0.16 per share per annum to $0.20 per share per annum. The next quarterly dividend of $0.05 per share will be paid on January 6, 2016 to holders of record of our common stock on December 14, 2015.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2015

2014

$ change

% change

2015

2014

$ change

% change

Revenues

$

$

$

%

$

$

$

%

Income before taxes

$

$

$

%

$

$

$

%

Net income

$

$

$

%

$

$

$

%

Diluted EPS

$

$

$

%

$

$

$

%

Adjusted income before taxes(1)

$

$

$

%

$

$

$

%

Adjusted diluted EPS(1)

$

$

$

%

$

$

$

%

(1)

Adjusted net income and adjusted diluted earnings per share have been adjusted to exclude the effects of certain non-cash items, one-time or non-recurring items, such as settlement expense, that are not expected to continue in the future and certain other items. See note 1 under the Consolidated Statements of Income included in this earnings release for a discussion of the non-GAAP measures adjusted net income and adjusted diluted EPS.

September 30, 2015

December 31, 2014

Owned fleet

Managed fleet

Weighted-average fleet age(1) 

3.5 years

3.5 years

Weighted-average remaining lease term(1) 

7.3 years

7.3 years

Aggregate fleet net book value

$

10.4 billion

$

9.0 billion

(1) Weighted-average fleet age and remaining lease term calculated based on net book value of ALC's owned fleet.

September 30, 2015

December 31, 2014

Region

% of Net Book Value

% of Net Book Value

Asia

%  

%

Europe

%  

%

The Middle East and Africa

%  

%

Central America, South America and Mexico

%  

%

Pacific, Australia, New Zealand

%  

%

U.S. and Canada

%  

%

Total

%  

%

September 30, 2015

December 31, 2014

Number of

Number of

Aircraft type

Aircraft

% of Total

Aircraft

% of Total

Airbus A319/320/321

%  

%

Airbus A330-200/300

%  

%

Boeing 737-700/800

%  

%

Boeing 767-300ER

%  

%

Boeing 777-200/300ER

%  

%

Embraer E175/190

%  

%

ATR 42/72-600

%  

%

Total

%  

%

September 30, 2015

December 31, 2014

Unsecured

Senior notes

$

$

Revolving credit facilities

Term financings

Convertible senior notes

Total unsecured debt financing

Secured

Term financings

Warehouse facility

Export credit financing

Total secured debt financing

Total debt financing

Less: Debt discounts and issuance costs

Debt financing, net of discounts and issuance costs

$

$

Selected interest rates and ratios:

Composite interest rate(1)

%  

%

Composite interest rate on fixed-rate debt(1)

%  

%

Percentage of total debt at fixed-rate

%  

%

Investors:

Ryan McKenna
Vice President
Email: rmckenna@airleasecorp.com

Media:

Laura St. John
Manager, Media and Investor Relations
Email: lstjohn@airleasecorp.com

·

our inability to make acquisitions of, or lease, aircraft on favorable terms;

·

our inability to sell 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;

·

potential natural disasters and terrorist attacks and the amount of our insurance coverage, if any, relating thereto; and

·

the factors discussed under “Part I – Item 1A. Risk Factors,” In our Annual Report on Form 10-K for the year ended December 31, 2014 and other SEC filings

September 30, 2015

December 31, 2014

(unaudited)

Assets

Cash and cash equivalents

$

$

Restricted cash

Flight equipment subject to operating leases

Less accumulated depreciation

Deposits on flight equipment purchases

Other assets

Total assets

$

$

Liabilities and Shareholders’ Equity

Accrued interest and other payables

$

$

Debt financing, net of discounts and issuance costs

Security deposits and maintenance reserves on flight equipment leases

Rentals received in advance

Deferred tax liability

Total liabilities

$

$

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 102,580,955 and 102,392,208 shares at September 30, 2015 and December 31, 2014, respectively

Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding

 —

 —

Paid-in capital

Retained earnings

Total shareholders’ equity

$

$

Total liabilities and shareholders’ equity

$

$

(1)

Pursuant to the early adoption of ASU No. 2015-03, Interest-Imputation of Interest, debt issuance costs have been presented as a direct deduction from the carrying amount of the related debt liability. This change has been applied retrospectively.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(unaudited)

Revenues

Rental of flight equipment

$

$

$

$

Aircraft sales, trading and other

Total revenues

Expenses

Interest

Amortization of debt discounts and issuance costs

Interest expense

Depreciation of flight equipment

Settlement

 —

 —

 —

Selling, general and administrative

Stock-based compensation

Total expenses

Income before taxes

Income tax expense

Net income

$

$

$

$

Net income per share of Class A and B common stock

Basic

$

$

$

$

Diluted

$

$

$

$

Other financial data

Adjusted net income(1)

$

$

$

$

Adjusted diluted earnings per share(1)

$

$

$

$

(1)

Adjusted net income (defined as net income excluding the effects of certain non-cash items, one-time or non-recurring items, such as settlement expense, that are not expected to continue in the future and certain other items), and adjusted diluted earnings per share (defined as net income excluding the effects of certain non-cash items, one-time or non-recurring items, such as settlement expense, that are not expected to continue in the future and certain other items divided by the weighted average diluted common shares outstanding) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income, earnings per share, and diluted earnings per share, or any other performance measures derived in accordance with GAAP. Adjusted net income and adjusted diluted earnings per share, are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations.

Three Months Ended

Nine Months Ended

September 30,

September 30,

2015

2014

2015

2014

(unaudited)

(unaudited)

Reconciliation of net income to adjusted net income:

Net income

$

$

$

$

Amortization of debt discounts and issuance costs

Stock-based compensation

Settlement

 —

 —

 —

Provision for income taxes

    Adjusted net income

$

$

$

$

Three Months Ended

September 30,

Nine Months Ended

September 30,

2015

2014

2015

2014

(unaudited)

(unaudited)

Reconciliation of net income to adjusted diluted earnings per share:

Net income

$

$

$

$

Amortization of debt discounts and issuance costs

Stock-based compensation

Settlement

 —

 —

 —

Provision for income taxes

Adjusted net income

$

$

$

$

Assumed conversion of convertible senior notes

Adjusted net income plus assumed conversions

$

$

$

$

Weighted-average diluted shares outstanding

Adjusted diluted earnings per share

$

$

$

$

Nine Months Ended

September 30,

2015

2014

(unaudited)

Operating Activities

Net income

$

$

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of flight equipment

Stock-based compensation

Deferred taxes

Amortization of discounts and debt issuance costs

Gain on aircraft sales, trading and other activity

Changes in operating assets and liabilities:

Other assets

Accrued interest and other payables

Rentals received in advance

Net cash provided by operating activities

Investing Activities

Acquisition of flight equipment under operating lease

Payments for deposits on flight equipment purchases

Proceeds from aircraft sales, trading and other activity

Acquisition of furnishings, equipment and other assets

Net cash used in investing activities

Financing Activities

Issuance of common stock upon exercise of options

Cash dividends paid

Tax withholdings on stock-based compensation

Net change in unsecured revolving facilities

Proceeds from debt financings

Payments in reduction of debt financings

Net change in restricted cash

Debt issuance costs

Security deposits and maintenance reserve receipts

Security deposits and maintenance reserve disbursements

Net cash provided by financing activities

Net decrease in cash

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

$

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for interest, including capitalized interest of $30,449 and $31,907 at September 30, 2015 and 2014, respectively

$

$

Supplemental Disclosure of Noncash Activities

Buyer furnished equipment, capitalized interest, deposits on flight equipment purchases and seller financing applied to acquisition of flight equipment and other assets applied to payments for deposits on flight equipment purchases

$

$

Cash dividends declared, not yet paid

$

$