Air Lease CEO Discusses Q2 2012 Results - Earnings Call Transcript

Air Lease Corp (AL)

Q22012 Earnings Call

August 9, 2012 4:30 pm ET

Executives

Ryan McKenna - Assistant Vice President, Head of Strategic Planning and Investor Relations

Steve Udvar-Hazy - Chairman and Chief Executive Officer

John Plueger - President and Chief Operating Officer

Greg Willis - Senior Vice President and Chief Financial Officer.

Analysts

Michael Linenberg - Deutsche Bank

Jason Arnold - RBC Capital Markets

Arren Cyganovich - Evercore

Scott Valentin - FBR Capital Markets

Joseph Abboud - JP Morgan

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the second quarter 2012 Air Lease corporation earnings conference call. My name is Fab, and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the conference over to your host for today, Mr. Ryan McKenna, Head of Strategic Planning and Investor Relations. Please proceed.

Ryan McKenna

Good afternoon, everyone, and welcome to Air Lease Corporation's second quarter 2012 earnings call. This is Ryan McKenna, Assistant Vice President, Strategic Planning and Investor Relations. I am 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 second 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, Thursday, August 9, 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 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, August 9, 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 using these non-GAAP measures as well as our definition of them and their 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 the 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, Steve Hazy.

Steven Udvar-Hazy

Thanks, Ryan. Good afternoon and thank you for joining us today. I am very pleased to report that Air Lease Corporation achieved a 250% increase in second quarter 2012 earnings per share over 2011 second quarter results. We also recorded a 315% increase in the first half of 2012 EPS versus the first half of 2011, demonstrating execution of our strong growth plans.

During the second quarter, ALC saw stable lease demand for our new advanced technology aircraft, despite financial issues affecting Europe and the potential slowing of growth in China. The vast majority of our lease placements reflect airline aircraft replacements versus growth.

It is important to take a long-term view of industry fundamentals rather than to be overly optimistic when the market is robust or overly concerned when the market is softer. The nature of our business is to sign long-term leases on aircraft that provide stable multiyear cash flows, which allows for consistent profit generation through the cycles.

Over the past 18 months, Air Lease chose to place our new aircraft as soon as possible as opposed to waiting for spot shortages of aircraft that might increase lease rates. This strategy has proven to be successful as we have locked in attractive lease rate on long-term contracts with less potential volatility resulting from forced placements in choppy economic environment. This gives ALC the ability to pursue incremental growth transactions and seize upon well priced opportunities. Air Lease's business plan is based on a diverse but highly efficient mix of aircraft types to constitute an optimized commercial airliner portfolio that will maximize long-term profit generation.

Our recent launch order for the Boeing 737 MAX and the favorable economics associated with being a launch customer will complement our well-balanced order book which now includes the A320, A321ceo's and a significant order for 50 neo's. A330-200's and 300's, Boeing 787-9 Dreamliner's, Boeing 777-300ER's, Boeing 737-800NG's and of course, the Boeing 737-8 and -9 MAX aircraft along with Embraer 190's and ATR 72-600. Our order book now includes approximately 300 of the most highly in demand aircraft delivering over the next 10 years.

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