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Air Lease Corporation Announces Fourth Quarter 2012 Results And Declares Its First Quarterly Cash Dividend On Its Common Stock

Investors can participate in the conference call by dialing (800) 299-8538 domestic or (617) 786-2902 international. The passcode for the call is 19927931.

For your convenience, the conference call can be replayed in its entirety beginning at 6:30 PM ET on February 28, 2013 until 11:59 PM ET on March 7, 2013. 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 85948357.

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

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. 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 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
(In thousands, except share and par value amounts)
 
   

December 31, 2012

   

December 31, 2011

 
Assets
Cash and cash equivalents $ 230,089 $ 281,805
Restricted cash 106,307 96,157
Flight equipment subject to operating leases 6,598,898 4,368,985
Less accumulated depreciation (347,035 ) (131,569 )
6,251,863 4,237,416
Deposits on flight equipment purchases 564,718 405,549

Deferred debt issue costs—less accumulated amortization of $32,288 and $17,500 as of December 31, 2012 and December 31, 2011, respectively

74,219 47,609
Other assets 126,428   96,057  
Total assets $ 7,353,624   $ 5,164,593  
Liabilities and Shareholders’ Equity
Accrued interest and other payables $ 90,169 $ 54,648
Debt financing 4,384,732 2,602,799
Security deposits and maintenance reserves on flight equipment leases 412,223 284,154
Rentals received in advance 41,137 26,017
Deferred tax liability 92,742   20,692  
Total liabilities $ 5,021,003   $ 2,988,310  
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 99,417,998 and 98,885,131 shares at December 31, 2012 and December 31, 2011, respectively

991 984

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 2,198,501 2,174,089
Retained earnings 133,111   1,192  
Total shareholders’ equity 2,332,621   2,176,283  
Total liabilities and shareholders’ equity $ 7,353,624   $ 5,164,593  
 
 
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share amounts)
 
   

Three Months Ended December 31,

   

Year Ended December, 31

2012     2011 2012     2011
 
Revenues
Rental of flight equipment $ 186,210 $ 113,627 $ 645,853 $ 332,719
Interest and other 3,885   1,430   9,893   4,022  
Total revenues 190,095 115,057 655,746 336,741
 
Expenses
Interest 39,111 14,719 130,419 44,862
Amortization of discounts and deferred debt issue costs 5,441 2,509

16,994

9,481

Extinguishment of debt -   -   -   3,349  
Interest expense 44,552 17,228 147,413 57,692
 
Depreciation of flight equipment 61,414 38,876 216,219 112,307
Selling, general and administrative 15,703 11,898 56,453 44,559
Stock-based compensation 7,140   8,368   31,688   39,342  
Total expenses 128,809   76,370   451,773   253,900  
 
Income before taxes 61,286 38,687 203,973 82,841
Income tax expense (21,477 ) (13,925 ) (72,054 ) (29,609 )
Net income $ 39,809   $ 24,762   $ 131,919   $ 53,232  
 

Net income per share of Class A and Class B Common Stock:

Basic $ 0.39 $ 0.25 $ 1.31 $ 0.59
Diluted $ 0.38 $ 0.24 $ 1.28 $ 0.59
Weighted-average shares outstanding:
Basic 101,247,337 100,714,470 100,991,871 89,592,945
Diluted 107,899,560 103,634,555 107,656,463 90,416,346
 
Other financial data:
Adjusted net income (1) $ 47,989 $ 31,660 $ 163,404 $ 87,954
Adjusted EBITDA (2) $ 173,768 $ 102,167 $ 596,451 $ 290,168
 

(1)

  Adjusted net income (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, income from operations or any other performance measures derived in accordance with GAAP. Adjusted net income 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 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 as a measure of both operating performance and liquidity, as well as a discussion of the limitations of adjusted net income as an analytical tool and a reconciliation of adjusted net income to our GAAP net loss and cash flow from operating activities.
 

Operating Performance: Management and our board of directors use adjusted net income 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 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 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 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 has limitations as an analytical tool, and should not be considered 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 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 may differ from the adjusted net income 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 and cash flows from operating activities, the most directly comparable GAAP measures of performance and liquidity, to adjusted net income (in thousands):

   

Three Months Ended December 31,

   

Year Ended December 31,

2012     2011 2012     2011
(unaudited) (unaudited)
Reconciliation of cash flows from operating activities to adjusted net income:
Net cash provided by operating activities $ 118,533 $ 100,969 $ 491,029 $ 267,166
Depreciation of flight equipment (61,414 ) (38,876 ) (216,219 ) (112,307 )
Stock-based compensation (7,140 ) (8,368 ) (31,688 ) (39,342 )
Deferred taxes (21,477 ) (13,883 ) (72,050 ) (29,567 )
Amortization of discounts and deferred debt issue costs (5,441 ) (2,509 ) (16,994 ) (9,481 )
Extinguishment of debt - - - (3,349 )
Changes in operating assets and liabilities:
Other assets (1,356 ) 2,011 18,758 17,438
Accrued interest and other payables 22,288 (5,882 ) (25,797 ) (19,347 )
Rentals received in advance (4,184 ) (8,700 ) (15,120 ) (17,979 )
Net income 39,809 24,762 131,919 53,232
Amortization of discounts and deferred debt issue costs 5,441 2,509 16,994 9,481
Extinguishment of debt - - - 3,349
Stock-based compensation 7,140 8,368 31,688 39,342
Tax effect (4,401 ) (3,979 ) (17,197 ) (17,450 )
Adjusted net income $ 47,989   $ 31,660   $ 163,404   $ 87,954  
 

Three Months Ended December 31,

Year Ended December 31,

2012 2011 2012 2011
(unaudited) (unaudited)
Reconciliation of net income to adjusted net income:
Net income $ 39,809 $ 24,762 $ 131,919 $ 53,232
Amortization of discounts and deferred debt issue costs 5,441 2,509 16,994 9,481
Extinguishment of debt - - - 3,349
Stock-based compensation 7,140 8,368 31,688 39,342
Tax effect (4,401 ) (3,979 ) (17,197 ) (17,450 )
Adjusted net income $ 47,989   $ 31,660   $ 163,404   $ 87,954  
 

(2)

  Adjusted EBITDA (defined as net income before net interest expense, stock-based compensation expense, income tax expense, 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, 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 (primarily one-time amortization of convertible debt discounts) 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 should not be considered 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 and cash flows from operating activities, the most directly comparable GAAP measures of performance and liquidity, to adjusted EBITDA (in thousands):

   

Three Months Ended December 31,

   

Year Ended December 31,

2012     2011 2012    

2011

(unaudited) (unaudited)
Reconciliation of cash flows from operating activities to adjusted EBITDA:
Net cash provided by operating activities $ 118,533 $ 100,969 $ 491,029 $ 267,166
Depreciation of flight equipment (61,414 ) (38,876 ) (216,219 ) (112,307 )
Stock-based compensation (7,140 ) (8,368 ) (31,688 ) (39,342 )
Deferred taxes (21,477 ) (13,883 ) (72,050 ) (29,567 )
Amortization of discounts and deferred debt issue costs (5,441 ) (2,509 ) (16,994 ) (9,481 )
Extinguishment of debt - - - (3,349 )
Changes in operating assets and liabilities:
Other assets

(1,356

)

2,011 18,758 17,438
Accrued interest and other payables 22,288 (5,882 ) (25,797 ) (19,347 )
Rentals received in advance   (4,184 )   (8,700 ) (15,120 )   (17,979 )
Net income 39,809 24,762 131,919 53,232
Net interest expense 43,928 16,236 144,571 55,678
Income taxes 21,477 13,925 72,054 29,609
Depreciation 61,414 38,876 216,219 112,307
Stock-based compensation   7,140     8,368   31,688     39,342  
Adjusted EBITDA $ 173,768   $ 102,167   $ 596,451   $ 290,168  
 

Three Months Ended December 31,

Year Ended December 31,

2012 2011 2012 2011
(unaudited) (unaudited)
Reconciliation of net income to adjusted EBITDA:
Net income $ 39,809 $ 24,762 $ 131,919 $ 53,232
Net interest expense 43,928 16,236 144,571 55,678
Income taxes 21,477 13,925 72,054 29,609
Depreciation 61,414 38,876 216,219 112,307
Stock-based compensation   7,140     8,368   31,688     39,342  
Adjusted EBITDA $ 173,768   $ 102,167   $ 596,451   $ 290,168  
 
 
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
   

Year Ended December 31,

2012     2011
(unaudited)
Operating Activities
Net income $ 131,919 $ 53,232
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of flight equipment 216,219 112,307
Stock-based compensation 31,688 39,342
Deferred taxes 72,050 29,567
Amortization of discounts and deferred debt issue costs 16,994 9,481
Extinguishment of debt 3,349
Changes in operating assets and liabilities:
Other assets (18,758 ) (17,438 )
Accrued interest and other payables 25,797 19,347
Rentals received in advance 15,120   17,979  
Net cash provided by operating activities 491,029   267,166  
Investing Activities
Acquisition of flight equipment under operating lease (1,899,231 ) (2,529,901 )
Payments for deposits on flight equipment purchases (418,278 ) (360,587 )
Proceeds from disposal of flight equipment 47,490
Acquisition of furnishings, equipment and other assets (74,905 ) (86,668 )
Net cash used in investing activities (2,344,924 )

(2,977,156

)

Financing Activities
Issuance of common stock 43 858,774
Tax withholdings on stock-based compensation (7,312 )
Issuance of convertible notes 193,000
Net change in unsecured revolving facilities 62,000 238,000
Proceeds from debt financings 2,115,607 1,344,530
Payments in reduction of debt financings (432,129 ) (84,796 )
Restricted cash (10,150 ) (47,481 )
Debt issue costs (42,149 ) (13,933 )
Security deposits and maintenance reserve receipts 142,541 180,862
Security deposits and maintenance reserve disbursements (26,272 ) (5,982 )
Net cash provided by financing activities 1,802,179   2,662,974  
Net increase (decrease) in cash

(51,716

)

(47,016 )
Cash and cash equivalents at beginning of period 281,805   328,821  
Cash and cash equivalents at end of period $ 230,089   $ 281,805  
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, including capitalized interest of $19,388 at December 31, 2012 and capitalized interest of $10,390 at December 31, 2011 $ 124,731 $ 51,986
Supplemental Disclosure of Noncash Activities

Buyer furnished equipment, capitalized interest, deposits on flight equipment purchases and seller financing applied to acquisition of flight equipment under operating leases

$ 377,892 $ 190,013




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