Air Lease Corp's CEO Discusses Q4 2011 Results - Earnings Call Transcript

Air Lease Corp (AL)

Q4 2011 Earnings Call

March 12, 2012 4:30 PM ET

Executives

Ryan McKenna – Director, Strategic Planning and Investor Relations

Steven F. Udvar-Hazy – Chairman and Chief Executive Officer

John L. Plueger – President and Chief Operating Officer

Gregory B. Willis – Senior Vice President and Chief Financial Officer

Analysts

John Godyn – Morgan Stanley

Jamie Baker – JPMorgan

Anthony Sibilia – Credit Suisse

Michael Linenberg - Deutsche Bank

Scott Valentin - FBR Capital Markets

Jason Arnold - RBC Capital Markets

Isaac Husseini - Barclays Capital

Helane Becker - Dahlman Rose

Gary Liebowitz - Wells Fargo Securities

Arren Cyganovich – Evercore

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2011 Air Lease Corp. Earnings Conference Call. My name is Derrick and I'll be your operator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of the conference. (Operator instructions). As a reminder, this conference is being recorded for replay purposes.

I will now like to turn the conference over to Mr. Ryan McKenna, Director of Strategic Planning and Investor Relations. Please proceed.

Ryan McKenna

Good afternoon, everyone, and welcome to Air Lease Corporation's fourth quarter 2011 earnings call. This is Ryan McKenna, Assistant Vice President, Strategic Planning and Investor Relations. I’m joined this afternoon by Steve Hazy, our Chairman and Chief Executive Officer; John Plueger, our President and Chief Operating Officer; and Greg Willis, our Senior Vice President and Chief Financial Officer.

On Friday March 9th, 2012, we published our fourth quarter results for fiscal year 2011. A copy of our earnings release is available on the Investors' section of our website at www.airleasecorp.com. This conference call is being webcast and recorded today, Monday, March 12, 2012, and an audio replay will be available on our website.

At this time, all participants to this call are in listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session.

Before we begin, please note that certain statements in this conference call, including answers to your questions are forward-looking statements within the meaning of the Private Securities Litigation Reform Act, including without limitation, statements regarding our future operations and performance, revenues, operating expenses, other income and expense, and stock-based compensation expense.

These statements and any projections as to the Company's future performance represent management's estimates of future results and speak only as of today, March 12, 2012. These estimates involve risks and uncertainties that could cause actual results to differ materially from expectations. Please refer to our filings with the Securities and Exchange Commission for a more detailed description of the risk factors that may affect our results.

Air Lease Corporation assumes no obligation to update any forward-looking statements or information in light of new information or future events. In addition, certain financial measures we will use during this call, such as adjusted EBITDA and adjusted net income, are non-GAAP measures and have been adjusted to exclude charges relating to discounts on certain convertible notes and stock-based compensation expense among other charges.

A description of our reasons for utilizing these non-GAAP measures as well as our definition of them and the reconciliation to corresponding GAAP measures, can be found in the earnings release we issued on March 9 th. This release can be found in both the investors and press section of our website at www.airleasecorp.com. Unauthorized recording of this conference call is not permitted.

I would like to turn the call over to Chairman and Chief Executive Officer, Steve Hazy.

Steven Udvar-Hazy

Thanks, Ryan. Good afternoon to all of you and thank you for joining us today. I'm pleased to report that for the three months ended December 31, 2011 Air Lease Corporation recorded pre-tax income of $38.7 million and net income of $24.8 million, resulting in a $0.24 earnings per share on a fully diluted basis. Our cash flow from operations was $101 million. Our Q4 results reflect a 37% increase in pre-tax earnings compared with Q3 of 2011. This is our sixth full quarter in business and now our fourth consecutive quarter of increasing profitability.

For the full year 2011, we achieved pre-tax income of $82.8 million and net income of $53.2 million on total revenues of $336.7 million, earning us a pre-tax profit margin for the year of 24.6% and a fully diluted earnings per share of $0.59. I am pleased with our results and even more proud of our dedicated team of management and employee shareholders, all of whom are consumed with the passion for the business. It is the in-depth knowledge of our customer’s requirements and the needs of the industry, coupled with the entrepreneurial culture, the spark of a youthful Company, and the unbridled enthusiasm of its people, the commitment to deliver superior results to our investors and our customers, and the unwavering belief in our business that form the core of ALC’s success.

Please allow me to make a few industry observations. As most of you know, 2011 and early 2012 brought unprecedented orders for new aircraft as fuel price remains the biggest cost threat to airline prosperity and environmental pressures continue to grow larger. The airline industry needs fuel-efficient, environmentally friendly and technologically advanced aircraft. ALC is well positioned to meet these needs with aircraft that reflect these characteristics, namely 102 aircraft in our current fleet and 217 new aircraft on order at December 31, 2011. At the same time, much noise has been made about the airframe manufacturers record increases in production rates and the potential negative impact that this increase might have on the global aircraft supply and demand equation in the face of softening economic conditions, airline profitability, particularly in some region of the world such as Europe.

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