Air Lease Corporation (ALC) (NYSE: AL) announced today financial
results for the three and nine months ended September 30,
2015. Items of note included:
- 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.
The following table summarizes the results for the three and
nine months ended September 30, 2015 and 2014 (in thousands,
except share amounts):
Three Months Ended Nine Months Ended September
30, September 30, 2015 2014
$ change
% change 2015 2014
$ change
% change Revenues $ 313,126 $ 261,939 $ 51,187 19.5 %
$ 896,143 $ 764,549 $ 131,594 17.2 % Income before taxes $ 119,587
$ 96,277 $ 23,310 24.2 % $ 267,725 $ 286,666 $ (18,941 ) (6.6 ) %
Net income $ 77,042 $ 62,433 $ 14,609 23.4 % $ 172,492 $ 185,867 $
(13,375 ) (7.2 ) % Diluted EPS $ 0.71 $ 0.58 $ 0.13 22.4 % $ 1.60 $
1.73 $ (0.13 ) (7.5 ) % Adjusted income before taxes(1) $ 131,654 $
107,582 $ 24,072 22.4 % $ 374,879 $ 319,790 $ 55,089 17.2 %
Adjusted diluted EPS(1) $ 1.20 $ 0.99 $ 0.21 21.2 % $ 3.43 $ 2.95 $
0.48 16.3 % (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.
“ALC continued to execute its long-term business plan delivering
a 38% pretax profit margin, a 24% increase in our pretax income and
a 20% increase in our revenues compared to the third quarter of
2014. The consistency of these results along with our strong credit
metrics will continue to benefit ALC’s capital raising and
competitive position. Recognizing ALC's continuing strong
performance, our Board authorized an increase in ALC's quarterly
dividend to $0.05 per share,” said Steven F. Udvar-Házy, Chairman
and Chief Executive Officer of Air Lease Corporation.
“Continued positive global passenger traffic trends have
generated robust demand for aircraft in our order book and
maintained the values of our used aircraft. This year to date, ALC
has added 17 new customers and signed 67 lease agreements. Airline
customer demand for both the modern narrowbody and widebody
aircraft in our fleet remains healthy and we see stability in the
market for aircraft pricing as evidenced by our aircraft sales to
date and what we see in our forward deal pipeline,” said John L.
Plueger, President and Chief Operating Officer of Air Lease
Corporation.
Flight Equipment
Portfolio
As of September 30, 2015, we owned 235 aircraft in our
operating lease portfolio and we leased the aircraft to a globally
diversified customer base of 89 airlines in 50 countries. During
the quarter ended September 30, 2015, we took delivery of nine
aircraft from our order book and acquired three incremental
aircraft. In addition, we sold four aircraft, which were previously
classified as held for sale as of June 30, 2015. We also added two
aircraft to our managed fleet ending the quarter with 26 aircraft
managed for third parties.
Below are portfolio metrics of our fleet as of
September 30, 2015 and December 31, 2014:
September 30, 2015
December 31, 2014 Owned fleet 235 213 Managed fleet 26 17
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.
The following table sets forth the percentage of net book value
of our aircraft portfolio in the indicated regions as of
September 30, 2015 and December 31, 2014:
September 30, 2015
December 31, 2014 Region % of Net Book Value
% of Net Book Value Asia 43.2 % 42.9 % Europe 29.7 % 33.0 %
The Middle East and Africa 10.0 % 5.6 % Central America, South
America and Mexico 9.0 % 8.7 % Pacific, Australia, New Zealand 4.1
% 5.2 % U.S. and Canada 4.0 % 4.6 % Total 100.0 % 100.0 %
The following table sets forth the number of aircraft we leased
by aircraft type as of September 30, 2015 and
December 31, 2014:
September 30, 2015 December 31, 2014 Number
of Number of Aircraft type Aircraft %
of Total Aircraft % of Total Airbus A319/320/321
69 29.4 % 64 30.0 % Airbus A330-200/300 21 8.9 % 21 9.8 % Boeing
737-700/800 83 35.3 % 69 32.4 % Boeing 767-300ER 1 0.4 % 1 0.5 %
Boeing 777-200/300ER 16 6.8 % 10 4.7 % Embraer E175/190 26 11.1 %
30 14.1 % ATR 42/72-600 19 8.1 % 18 8.5 % Total 235 100.0 % 213
100.0 %
Debt Financing
Activities
We ended the third quarter of 2015 with total debt, net of
discounts and issuance costs, of $7.5 billion as compared to $6.6
billion as of December 31, 2014. Total debt was comprised of
$6.7 billion of unsecured debt, representing 88% of our debt
portfolio as of September 30, 2015 from 82% as of
December 31, 2014. In addition, our fixed rate debt increased
to 81% as of September 30, 2015 from 75% as of
December 31, 2014.
During the quarter, the Company issued $500 million in aggregate
principal amount of senior unsecured notes due 2018 that bear
interest at a rate of 2.625%. In addition, the Company entered into
an agreement to increase the capacity of its Syndicated Unsecured
Revolving Credit Facility by $90 million to $2.8 billion. We ended
the quarter with $2.8 billion in liquidity and a debt to equity
ratio of 2.55:1.
The Company’s debt financing was comprised of the following at
September 30, 2015 and December 31, 2014 (dollars in
thousands):
September 30,
2015 December 31, 2014 Unsecured Senior notes $
5,677,769 $ 4,579,194 Revolving credit facilities 494,000 569,000
Term financings 286,276 196,146 Convertible senior notes
200,000 200,000 Total unsecured debt financing
6,658,045 5,544,340
Secured Term financings 499,120 636,411
Warehouse facility 374,595 484,513 Export credit financing
59,893 64,884 Total secured debt financing
933,608 1,185,808 Total debt financing 7,591,653 6,730,148
Less: Debt discounts and issuance costs (93,413 )
(99,390 )
Debt financing, net of discounts and issuance
costs $ 7,498,240 $ 6,630,758
Selected
interest rates and ratios: Composite interest rate(1) 3.61 %
3.64 % Composite interest rate on fixed-rate debt(1) 4.04 % 4.22 %
Percentage of total debt at fixed-rate 80.83 % 75.26 % (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. (2) This rate does not include the effect of
upfront fees, undrawn fees or issuance cost amortization.
Conference Call
In connection with the earnings release, Air Lease Corporation
will host a conference call on November 5, 2015 at 4:30 PM
Eastern Time to discuss the Company's financial results for the
third quarter of 2015.
Investors can participate in the conference call by dialing
(877) 280-2126 domestic or (678) 562-4234 international. The
passcode for the call is 52144828.
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.
For your convenience, the conference call can be replayed in its
entirety beginning at 8:30 PM ET on November 5, 2015 until
11:59 PM ET, November 12, 2015. If you wish to listen to the replay
of this conference call, please dial (855) 859-2056 domestic or
(404) 537-3406 international and enter passcode 52144828.
About Air Lease Corporation (NYSE: AL)
Air Lease Corporation is a leading 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 customers 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.
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 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
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
(In thousands, except share and par
value amounts)
September 30, 2015 December 31, 2014
(unaudited) Assets Cash and cash equivalents $
119,722 $ 282,819 Restricted cash 10,700 7,469 Flight equipment
subject to operating leases 11,533,922 9,832,421 Less accumulated
depreciation (1,114,720 ) (878,617 ) 10,419,202
8,953,804 Deposits on flight equipment purchases 1,084,075
1,144,603 Other assets 277,995 302,485
Total assets $ 11,911,694 $ 10,691,180
Liabilities and Shareholders’ Equity Accrued interest and
other payables $ 168,558 $ 190,952 Debt financing, net of discounts
and issuance costs 7,498,240 6,630,758 Security deposits and
maintenance reserves on flight equipment leases 802,226 698,172
Rentals received in advance 84,630 75,877 Deferred tax liability
418,592 323,359
Total
liabilities $ 8,972,246 $ 7,919,118
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 1,010
1,010 Class B Non-Voting common stock, $0.01 par value; authorized
10,000,000 shares; no shares issued or outstanding — — Paid-in
capital 2,222,682 2,215,479 Retained earnings 715,756
555,573
Total shareholders’ equity $ 2,939,448
$ 2,772,062
Total liabilities and shareholders’
equity $ 11,911,694 $ 10,691,180 (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.
Air Lease Corporation and
Subsidiaries
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except share and per
share amounts)
Three Months Ended Nine Months Ended
September 30, September 30, 2015 2014
2015 2014 (unaudited) Revenues Rental
of flight equipment $ 304,264 $ 252,519 $ 860,281 $ 725,448
Aircraft sales, trading and other 8,862 9,420
35,862 39,101
Total revenues
313,126 261,939 896,143 764,549
Expenses Interest 60,103
48,582 173,654 140,275 Amortization of debt discounts and issuance
costs 7,419 7,423 22,782
20,902 Interest expense 67,522 56,005 196,436 161,177
Depreciation of flight equipment 102,046 86,119 291,460
245,736 Settlement — — 72,000 — Selling, general and administrative
19,323 19,656 56,150 58,748 Stock-based compensation 4,648
3,882 12,372 12,222
Total expenses 193,539 165,662
628,418 477,883 Income before
taxes 119,587 96,277 267,725 286,666 Income tax expense
(42,545 ) (33,844 ) (95,233 ) (100,799 ) Net
income $ 77,042 $ 62,433 $ 172,492 $ 185,867
Net income per share of Class A and B common
stock Basic $ 0.75 $ 0.61 $ 1.68 $ 1.82 Diluted $ 0.71 $ 0.58 $
1.60 $ 1.73
Other financial data Adjusted net
income(1) $ 131,654 $ 107,582 $ 374,879 $ 319,790 Adjusted diluted
earnings per share(1) $ 1.20 $ 0.99 $ 3.43 $ 2.95 (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.
Management and our board of directors use
adjusted net income and adjusted diluted earnings per share to
assess our consolidated financial and operating performance.
Management believes these measures are helpful in evaluating the
operating performance of our ongoing operations and identifying
trends in our performance, because they remove the effects of
certain non-cash items, one-time or non-recurring items that are
not expected to continue in the future and certain other items from
our operating results. Adjusted net income and adjusted diluted
earnings per share, however, should not be considered in isolation
or as a substitute for analysis of our operating results or cash
flows as reported under GAAP. Adjusted net income and adjusted
diluted earnings per share do not reflect our cash expenditures or
changes in or cash requirements for our working capital needs. In
addition, our calculation of adjusted net income and adjusted
diluted earnings per share may differ from the adjusted net income
and adjusted diluted earnings per share or analogous calculations
of other companies in our industry, limiting their usefulness as a
comparative measure.
Air Lease Corporation and
SubsidiariesCONSOLIDATED STATEMENTS OF INCOME(In
thousands, except share and per share amounts)
The following tables show the reconciliation
of net income to adjusted net income (in thousands):
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 $ 77,042 $ 62,433 $ 172,492 $ 185,867
Amortization of debt discounts and issuance costs 7,419 7,423
22,782 20,902 Stock-based compensation 4,648 3,882 12,372 12,222
Settlement — — 72,000 — Provision for income taxes 42,545
33,844 95,233 100,799 Adjusted net income $
131,654 $ 107,582 $ 374,879 $ 319,790
The following table shows the reconciliation
of net income to adjusted diluted earnings per share (in thousands,
except share and per share amounts):
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 $ 77,042 $ 62,433 $
172,492 $ 185,867 Amortization of debt discounts and issuance costs
7,419 7,423 22,782 20,902 Stock-based compensation 4,648 3,882
12,372 12,222 Settlement — — 72,000 — Provision for income taxes
42,545 33,844 95,233 100,799 Adjusted
net income $ 131,654 $ 107,582 $ 374,879 $ 319,790 Assumed
conversion of convertible senior notes 1,463 1,465
4,341 4,346 Adjusted net income plus assumed
conversions $ 133,117 $ 109,047 $ 379,220 $ 324,136
Weighted-average diluted shares outstanding 110,623,960
110,457,170 110,635,282 109,997,159 Adjusted
diluted earnings per share $ 1.20 $ 0.99 $ 3.43 $ 2.95
Air Lease Corporation and
Subsidiaries
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(In thousands)
Nine Months Ended
September 30,
2015 2014 (unaudited) Operating
Activities Net income $ 172,492 $ 185,867 Adjustments to
reconcile net income to net cash provided by operating activities:
Depreciation of flight equipment 291,460 245,736 Stock-based
compensation 12,372 12,222 Deferred taxes 95,233 100,799
Amortization of discounts and debt issuance costs 22,782 20,902
Gain on aircraft sales, trading and other activity (29,061 )
(37,075 ) Changes in operating assets and liabilities: Other assets
18,384 12,702 Accrued interest and other payables (5,857 ) 22,960
Rentals received in advance 8,753 7,060
Net cash provided by operating activities 586,558
571,173
Investing Activities Acquisition of
flight equipment under operating lease (1,697,742 ) (1,206,985 )
Payments for deposits on flight equipment purchases (482,798 )
(480,791 ) Proceeds from aircraft sales, trading and other activity
691,458 293,278 Acquisition of furnishings, equipment and other
assets (189,493 ) (168,092 ) Net cash used in
investing activities (1,678,575 ) (1,562,590 )
Financing Activities Issuance of common stock upon exercise
of options 40 845 Cash dividends paid (12,302 ) (9,171 ) Tax
withholdings on stock-based compensation (5,302 ) (18,089 ) Net
change in unsecured revolving facilities (75,000 ) (349,000 )
Proceeds from debt financings 1,217,384 1,656,395 Payments in
reduction of debt financings (293,736 ) (526,984 ) Net change in
restricted cash (3,231 ) 79,110 Debt issuance costs (4,188 ) (7,627
) Security deposits and maintenance reserve receipts 150,318
128,630 Security deposits and maintenance reserve disbursements
(45,063 ) (22,194 ) Net cash provided by financing
activities 928,920 931,915 Net decrease
in cash (163,097 ) (59,502 ) Cash and cash equivalents at beginning
of period 282,819 270,173 Cash and cash
equivalents at end of period $ 119,722 $ 210,671
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 $
199,745 $ 149,466
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 $ 766,616 $
583,776 Cash dividends declared, not yet paid $ 4,103 $ 3,072
View source
version on businesswire.com: http://www.businesswire.com/news/home/20151105006748/en/
Air Lease CorporationInvestors:Ryan McKennaVice
PresidentEmail: rmckenna@airleasecorp.comorMedia:Laura St.
JohnManager, Media and Investor RelationsEmail:
lstjohn@airleasecorp.comPhone: 310-553-0555
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