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Air Lease Corporation Announces Third Quarter 2018 Results

November 8, 2018

LOS ANGELES--(BUSINESS WIRE)--Nov 8, 2018--Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three and nine months ended September 30, 2018.

Revenues: $451 million for the three months ended September 30, 2018, an increase of 19.6% $1.2 billion for the nine months ended September 30, 2018, an increase of 10.0% Diluted earnings per share: $1.32 for the three months ended September 30, 2018, an increase of 46.7% $3.36 for the nine months ended September 30, 2018, an increase of 29.7% Adjusted diluted earnings per share before income taxes: $1.73 for the three months ended September 30, 2018, an increase of 15.3% $4.55 for the nine months ended September 30, 2018, an increase of 4.8% Margin: Pre-tax margin of 39.8% for the three months ended September 30, 2018 Adjusted pre-tax margin of 42.7% for the three months ended September 30, 2018 Return on equity: Pre-tax return on equity of 15.6% for the trailing twelve months ended September 30, 2018 Adjusted pre-tax return on equity of 16.8% for the trailing twelve months ended September 30, 2018

Highlights

Took delivery of seven aircraft from our order book representing $682 million in capital expenditures, ending the quarter with $15.1 billion in aircraft with a weighted average age of 3.8 years and a weighted average lease term remaining of 6.8 years. Sold 10 aircraft to Thunderbolt II Aircraft Lease Limited during the quarter for sales proceeds of $244 million. Ended the quarter with our aircraft order book 96% placed through 2019 and 82% placed through 2020 on long term leases. Ended the quarter with $24.1 billion in committed minimum future rental payments consisting of $11.4 billion in contracted minimum rental payments on the aircraft in our existing fleet and $12.7 billion in minimum future rental payments related to aircraft on order. Raised $1.6 billion in debt financing during the quarter, including issuances of unsecured senior notes of $700 million at 3.500% due 2022 and $500 million at 4.625% due 2028. Increased our quarterly cash dividend by 30%, from $0.10 per share to $0.13 per share. The next quarterly dividend of $0.13 per share will be paid on January 9, 2019 to holders of record of our Class A common stock as of December 13, 2018.

“We had an excellent quarter achieving record revenues while delivering consistent, strong pre-tax margins and returns on equity. Aircraft sales into the Thunderbolt II platform progressed well, as did our forward lease placements for the quarter. Aircraft leasing and sales demand remain solid. Interest rate adjusters have been applied at our new aircraft deliveries throughout 2018 as they were intended and contracted in our leases. We are well prepared for the CapEx growth we envision through 2019,” said John L. Plueger, Chief Executive Officer and President.

“In just nine years, Air Lease has grown into an industry leading lessor with more than $17.5 billion in assets across 94 airline customers worldwide. We are pleased with ALC’s strong financial performance, and believe our business model and our people continue to differentiate our platform enabling us to produce extraordinary results. In recognition of ALC’s success, we are pleased to announce that the Board of Directors has authorized a 30% increase in ALC’s quarterly dividend to $0.13 per share from $0.10 per share,” said Steven F. Udvar-Házy, Executive Chairman of the Board.

The following table summarizes our operating results for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share amounts and percentages):

Revenues increased $74 million or 20% to $451 million for the three months ended September 30, 2018, as compared to the three months ended September 30, 2017. This increase was principally driven by the continued growth of our fleet, as well as an increase in our sales and trading activity. During the quarter we sold 10 aircraft generating $24 million in gains, as compared to the corresponding prior year quarter, where we sold seven aircraft generating $7 million in gains.

Income before taxes increased $25 million or 16% to $179 million for the three months ended September 30, 2018, as compared to the three months ended September 30, 2017. This increase was principally driven by the continued growth of our fleet and an increase in our sales and trading activity, partially offset by increases in our interest expense, due to the rise in our average debt balances and composite interest rate, and selling general and administrative expenses resulting from increased transactional expenses.

Net income increased $47 million or 48% to $147 million representing $1.32 per diluted share for the three months ended September 30, 2018, as compared to the three months ended September 30, 2017. This increase was driven by the growth in revenues highlighted above, partially offset by the increased expenses mentioned above. Furthermore, our lower tax expense was primarily due to the effects from the U.S. Tax Cuts and Jobs Act (the “Tax Reform Act”), which, among other things, lowered the corporate tax rate from 35% to 21% effective January 1, 2018. In addition to the effects of the Tax Reform Act, we recorded an $8.4 million tax benefit from the utilization of foreign tax credits in the period.

Flight Equipment Portfolio

Our fleet grew by 14.1% to a net book value of $15.1 billion as of September 30, 2018 compared to $13.3 billion as of December 31, 2017. As of September 30, 2018, our fleet was comprised of 268 owned aircraft, with a weighted-average age and remaining lease term of 3.8 years and 6.8 years, respectively, and 60 managed aircraft. We have a globally diversified customer base of 94 airlines in 56 countries.

During the quarter ended September 30, 2018, we took delivery of seven aircraft from our order book and sold 10 aircraft ending the quarter with 268 owned aircraft in our operating lease portfolio.

The following table summarizes the key portfolio metrics of our fleet as of September 30, 2018 and December 31, 2017:

The following table details the region concentration of our fleet:

The following table details the composition of our fleet by aircraft type:

Debt Financing Activities

We ended the third quarter of 2018 with total debt financing, net of discounts and issuance costs, of $11.1 billion, resulting in a debt to equity ratio of 2.48:1.

Our debt financing was comprised of unsecured debt of $10.8 billion representing 96.1% of our debt portfolio as of September 30, 2018 as compared to 94.6% as of December 31, 2017. Our fixed rate debt represented 91.7% of our debt portfolio as of September 30, 2018 as compared to 85.4% as of December 31, 2017. Our composite cost of funds increased to 3.45% as of September 30, 2018 as compared to 3.20% as of December 31, 2017.

In the third quarter of 2018, we raised $1.6 billion in debt financing, including issuances of unsecured senior notes of $700 million at 3.500% due 2022 and $500 million at 4.625% due 2028.

Our debt financing was comprised of the following at September 30, 2018 and December 31, 2017 (dollars in thousands):

Conference Call

In connection with this earnings release, Air Lease Corporation will host a conference call on November 8, 2018 at 4:30 PM Eastern Time to discuss the Company’s financial results for the third quarter of 2018.

Investors can participate in the conference call by dialing (855) 308-8321 domestic or (330) 863-3465 international. The passcode for the call is 2458797.

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 7:30 PM ET on November 8, 2018 until 7:30 PM ET on November 15, 2018. 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 2458797.

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 or to predict the timing of such sales; 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 effectively oversee our managed fleet; 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, including tariffs and other restrictions on trade; unanticipated impacts of the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”), including as a result of changes in assumptions we make in our interpretation of the Tax Reform Act, guidance related to application of the Tax Reform Act that may be issued in the future, and actions that we may take as a result of our expected impact of the Tax Reform Act; 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, 2017, and other SEC filings, including future 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.

View source version on businesswire.com:https://www.businesswire.com/news/home/20181108005956/en/

CONTACT: Air Lease Corporation

Investors:

Mary Liz DePalma

Assistant Vice President, Investor Relations

Email:mdepalma@airleasecorp.com

or

Media:

Laura Woeste

Manager, Media and Investor Relations

Email:lwoeste@airleasecorp.com

KEYWORD: UNITED STATES NORTH AMERICA CALIFORNIA

INDUSTRY KEYWORD: TRANSPORT AIR MANUFACTURING AEROSPACE PROFESSIONAL SERVICES FINANCE

SOURCE: Air Lease Corporation

Copyright Business Wire 2018.

PUB: 11/08/2018 04:00 PM/DISC: 11/08/2018 04:00 PM

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