Air Lease's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Air Lease Corporation (AL)

Q1 2012 Results Earnings Call

May 14, 2012 4:30 PM ET

Executives

Ryan McKenna – Assistant Vice President, Strategic Planning and Investor Relations

Steve Hazy – Chairman and CEO

John Plueger – President and COO

Greg Willis – Senior Vice President and CFO

Analysts

John Godyn – Morgan Stanley

Jamie Baker – JP Morgan

Gregory Lewis – Credit Suisse

Cathy O’Brien – Deutsche Bank

Arren Cyganovich – Evercore

Gary Liebowitz – Wells Fargo Securities

Mark Streeter – JP Morgan

Helane Becker – Dahlman Rose

David Fintzen – Barclays Capital

John Key – U.S. Partners

Glenn Engel – Bank of America

Presentation

Operator

Good afternoon, ladies and gentlemen. And welcome to the First Quarter 2012 Air Lease Corporation Earnings Conference Call. My name is Chris, and I’ll be your conference moderator for today. Presently, all participants are in a listen-only mode. Later, we will facilitate a question-and-answer session. (Operator Instructions)

As a reminder, this conference is being recorded for replay purposes. And this time, I will now like to turn the conference over to your presenter for today, Mr. Ryan McKenna. Sir, you may proceed.

Ryan McKenna

Good afternoon, everyone. And welcome to Air Lease Corporation’s first quarter 2012 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.

Earlier today, we published our first quarter results for fiscal year 2012. 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, May 14, 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, May 14, 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 today. 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 now like to turn the call over to our Chairman and Chief Executive Officer, Steve Hazy.

Steve Hazy

Thanks Ryan. Good afternoon and thank you for joining today. I’m pleased to report that for the three months ended March 31, 2012 Air Lease Corporation recorded pre-tax income of $41.6 million and net income of $26.9 million, resulting in $0.27 earnings per share for the first quarter of 2012. Our cash flow from operations was $101.5 million.

ALC saw demand holding up for new aircraft lease placements in the 2013 through 2015 delivery timeframe, particularly in Asia, as global passenger traffic continued to grow, partially offsetting higher fuel costs and lower airline financial performance during the first quarter.

Much attention has been focused on Europe in the media industry press. ALC has no significant concerns about our Europe customer’s to date. All are performing well and we do not have any significant lease derivatives.

Anticipate that regional economic factors and reduced airline financial performance may have some negative impact on the order books of the airplane manufacturers and we intend to capitalize on those opportunities.

The overall supply of new aircraft available to the marketplace for the next several years from the aircraft manufacturers remains limited, helping to make ALC an attractive leasing solution for airlines looking to procure new aircraft they need to optimize their fleets, maximize their flexibility, and reduce their own financing risks.

Our forward lease placements have been well balanced as to credit quality and airline strength. To date ALC’s approximately 80% placed on all of our new aircraft deliveries through the end of 2015. We see continued and robust demand for our remaining unplaced positions on new Boeing 737-800, A321-200 aircraft with sharklets, our remaining ATR 72-600 aircrafts, and our future orders for Boeing 777-300ER aircraft.

As we told you last quarter, many months ago we placed 100% of our current engine option A320 future deliveries. The last A320 we’ll deliver in 2013 and we are now looking forward to initial placements of our Airbus NEO single-aisle aircraft along with assessing lease demand for the new Boeing 737 MAX.

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