LOS ANGELES, Feb. 23, 2017 (GLOBE NEWSWIRE) -- Air Lease Corporation (ALC) (NYSE:AL) announces record financial results for the year and three months ended December 31, 2016.
  • Revenues:-  $1.4 billion for the full year 2016, an increase of 16.0%-  $370.5 million for the fourth quarter of 2016, an increase of 13.4%
  • Diluted earnings per share:-  $3.44 for the full year 2016, an increase of 47.0%-  $0.89 for the fourth quarter of 2016, an increase of 20.3%
  • Adjusted diluted earnings per share before income taxes:-  $5.67 per share for the full year 2016, an increase of 22.2%-  $1.48 per share for the fourth quarter of 2016, an increase of 22.3%
  • Margin:-  Pre-tax margin of 40.9% for the full year 2016-  Adjusted pre-tax margin of 44.1% for the full year 2016
  • Return on equity:-  Pre-tax return on equity of 18.1% for the full year 2016-  Adjusted pre-tax return on equity of 19.5% for the full year 2016

Highlights
  • Signed agreements for 122 aircraft with 39 customers across 33 countries during the year ended December 31, 2016.
  • Ended the year with a net book value of $12.0 billion in aircraft with a weighted average age of 3.8 years and a weighted average lease term remaining of 6.9 years.
  • Minimum future contracted rentals for our current and future fleet increased to $23.8 billion.
  • Placed 92% of our order book on long-term leases for aircraft delivering through 2019.
  • Sold 46 aircraft for proceeds of $1.2 billion during the year ended December 31, 2016, including the completion of the sales for all of our remaining ATR aircraft and 20 of our 25 Embraer aircraft to Nordic Aviation Capital.
  • In January 2017, we received an investment grade corporate and long-term debt credit rating of 'BBB' with a stable outlook from Fitch Ratings Inc ("Fitch").
  • Declared a quarterly cash dividend of $0.075 per share on our outstanding common stock for the fourth quarter of 2016.  The dividend will be paid on April 7, 2017 to holders of record of our common stock as of March 20, 2017.

"We had a great fourth quarter and a terrific year, posting record financial results in a highly competitive lease market.  Global passenger growth increased a healthy 6.3% in 2016 and continues to provide a fundamental stimulus to our business going forward. We completed the sale of all but five units (scheduled to be completed Q1 2017) of our Embraer fleet to NAC, which for the first time drove our aircraft sales over $1 billion for the year. We continue to pursue strategic initiatives that build on our core competencies, and we enter 2017 with a tailwind from our new investment grade 'BBB' rating from Fitch," said John L. Plueger, Chief Executive Officer and President.

"Our team positioned ALC for future growth with the quality and earning power of our jet fleet, lessee diversification, and a solid balance sheet, with investment grade ratings from three agencies. We successfully pre-leased more single-aisle and twin-aisle aircraft than in any previous year, which we believe has enabled us to lock in excellent long-term commercial business with stable and growing cash flows. The professionalism with which the ALC team performed, on both new aircraft leasing and sales of used aircraft, deserves much credit. We focused on building shareholder value during 2016 by producing strong financial results and by increasing our common stock dividends by 50%. We believe we are well positioned for another successful year in 2017," said Steven F. Udvar-Házy, Executive Chairman of the Board.

The following table summarizes the results for the three months and years ended December 31, 2016 and 2015 (in thousands, except per share amounts):
  Three Months Ended  December 31,   Twelve Months Ended  December 31,
  2016   2015   $ change   % change   2016   2015   $ change   % change
Revenues $ 370,487     $ 326,697     $ 43,790     13.4 %   $ 1,419,055     $ 1,222,840     $ 196,215     16.0 %
Income before taxes $ 149,403     $ 124,703     $ 24,700     19.8 %   $ 580,238     $ 392,953     $ 187,285     47.7 %
Net income $ 96,988     $ 80,899     $ 16,089     19.9 %   $ 374,925     $ 253,391     $ 121,534     48.0 %
Adjusted net income before income taxes (1) $ 162,314     $ 132,578     $ 29,736     22.4 %   $ 622,871     $ 507,982     $ 114,889     22.6 %
Diluted EPS $ 0.89     $ 0.74     $ 0.15     20.3 %   $ 3.44     $ 2.34     $ 1.10     47.0 %
Adjusted diluted EPS before income taxes (1) $ 1.48     $ 1.21     $ 0.27     22.3 %   $ 5.67     $ 4.64     $ 1.03     22.2 %
                                                           
(1)  Adjusted net income before income taxes and adjusted diluted earnings per share before income taxes have been adjusted to exclude the effects of certain non-cash items, one-time or non-recurring items, such as settlement expense, net of recoveries, that are not expected to continue in the future and certain other items. See note 1 under the Consolidated Statements of Income included in this earnings release for a discussion of the non-GAAP measures adjusted net income before income taxes and adjusted diluted EPS before income taxes. 

Flight Equipment Portfolio

As of December 31, 2016, our fleet was comprised of 237 owned aircraft, with a weighted-average age and remaining lease term of 3.8 years and 6.9 years, respectively, and 30 managed aircraft.  We have a globally diversified customer base of 85 airlines in 51 countries.

During the year ended December 31, 2016, we took delivery of 43 aircraft from our order book and sold 46 aircraft from our operating lease portfolio.

Below are the key portfolio metrics of our fleet:
  December 31, 2016   December 31, 2015
Fleet size 237   240
Managed fleet 30   29
Order book 363   389
       
Weighted-average fleet age (1) 3.8 years   3.6 years
Weighted-average remaining lease term (1) 6.9 years   7.2 years
Aggregate fleet net book value $12.0 billion   $10.8 billion
       
Current fleet contracted rentals $9.4 billion   $8.9 billion
Committed fleet rentals $14.4 billion   $12.0 billion
Total committed rentals $23.8 billion   $20.9 billion
   
         
(1)  Weighted-average fleet age and remaining lease term calculated based on net book value.

The following table details the region concentration of our fleet:
  December 31, 2016   December 31, 2015
Region % of Net Book Value   % of Net Book Value
Europe 29.5%   30.0%
China 23.0%   22.6%
Asia (excluding China) 22.7%   21.4%
The Middle East and Africa 7.8%   9.5%
Central America, South America and Mexico 7.8%   8.5%
U.S. and Canada 5.4%   4.1%
Pacific, Australia, New Zealand 3.8%   3.9%
Total 100.0%   100.0%

The following table details the composition of our fleet by aircraft type:
    December 31, 2016   December 31, 2015
Aircraft type   Number of Aircraft   % of Total   Number of Aircraft   % of Total
Airbus A319-100   3     1.3 %   3     1.3 %
Airbus A320-200   44     18.6 %   39     16.3 %
Airbus A320-200neo   1     0.4 %       %
Airbus A321-200   31     13.1 %   26     10.9 %
Airbus A330-200   17     7.2 %   16     6.7 %
Airbus A330-300   5     2.1 %   5     2.1 %
Boeing 737-700   8     3.4 %   8     3.3 %
Boeing 737-800   95     40.1 %   79     32.9 %
Boeing 767-300ER   1     0.4 %   1     0.4 %
Boeing 777-200ER   1     0.4 %   1     0.4 %
Boeing 777-300ER   22     9.3 %   17     7.1 %
Boeing 787-9   3     1.3 %       %
Embraer E175       %   5     2.1 %
Embraer E190   6     2.4 %   21     8.7 %
ATR 42/72-600       %   19     7.8 %
Total   237     100.0 %   240     100.0 %

Debt Financing Activities

We ended the fourth quarter of 2016 with total debt, net of discounts and issuance costs, of $8.7 billion resulting in a debt to equity ratio of 2.58:1.

Our debt financing was comprised of unsecured debt of $8.1 billion, representing 92.4% of our debt portfolio as of December 31, 2016 as compared to 88.4% as of December 31, 2015.  Our fixed rate debt represented 83.5% of our debt portfolio as of December 31, 2016 as compared to 78.7% as of December 31, 2015.  Our composite cost of funds decreased to 3.42% as of December 31, 2016 as compared to 3.59% as of December 31, 2015.

Our debt financing was comprised of the following at December 31, 2016 and December 31, 2015 (dollars in thousands):
  December 31, 2016   December 31, 2015
Unsecured      
Senior notes $ 6,953,343     $ 5,677,769  
Revolving credit facility 766,000     720,000  
Term financings 211,346     292,788  
Convertible senior notes 199,995     200,000  
  Total unsecured debt financing $ 8,130,684     $ 6,890,557  
Secured      
Term financings $ 619,767     $ 477,231  
Warehouse facilities     372,423  
Export credit financing 51,574     58,229  
  Total secured debt financing $ 671,341     $ 907,883  
       
Total secured and unsecured debt financing $ 8,802,025     $ 7,798,440  
Less: Debt discounts and issuance costs (88,151 )   (86,019 )
Debt financing, net of discounts and issuance costs (1) $ 8,713,874     $ 7,712,421  
Selected interest rates and ratios:      
Composite interest rate 3.42 %   3.59 %
Composite interest rate on fixed rate debt 3.69 %   4.04 %
Percentage of total debt at fixed rate 83.48 %   78.70 %
       
(1)  This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization.

Conference Call

In connection with the earnings release, Air Lease Corporation will host a conference call on February 23, 2017 at 4:30 PM Eastern Time to discuss the Company's financial results for the fourth quarter and year end 2016.

Investors can participate in the conference call by dialing (855) 308-8321 domestic or (330) 863-3465 international. The passcode for the call is 52035371.

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 February 23, 2017 until 7:30 PM ET on March 2, 2017. 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 52035371.

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;
  • 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;
  • 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, 2016, 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.

Air Lease Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and par value amounts)
 
  December 31,2016   December 31,2015
   
Assets      
Cash and cash equivalents $ 274,802     $ 156,675  
Restricted cash 16,000     16,528  
Flight equipment subject to operating leases 13,597,530     12,026,798  
Less accumulated depreciation (1,555,605 )   (1,213,323 )
  12,041,925     10,813,475  
Deposits on flight equipment purchases 1,290,676     1,071,035  
Other assets 352,213     297,385  
Total assets $ 13,975,616     $ 12,355,098  
Liabilities and Shareholders' Equity      
Accrued interest and other payables $ 256,775     $ 215,983  
Debt financing, net of discounts and issuance costs 8,713,874     7,712,421  
Security deposits and maintenance reserves on flight equipment leases 856,335     853,330  
Rentals received in advance 99,385     91,485  
Deferred tax liability 667,060     461,967  
Total liabilities $ 10,593,429     $ 9,335,186  
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 102,844,477 and 102,582,669 shares at December 31, 2016 and December 31, 2015, respectively 1,010     1,010  
Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding      
Paid-in capital 2,237,866     2,227,376  
Retained earnings 1,143,311     791,526  
Total shareholders' equity $ 3,382,187     $ 3,019,912  
Total liabilities and shareholders' equity $ 13,975,616     $ 12,355,098  
               

Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share, per share amounts and percentages) 
 
  Three Months EndedDecember 31,   Year Ended December 31,
  2016   2015   2016   2015
Revenues (unaudited)        
Rental of flight equipment $ 353,627     $ 314,263     $ 1,339,002     $ 1,174,544  
Aircraft sales, trading and other 16,860     12,434     80,053     48,296  
Total revenues 370,487     326,697     1,419,055     1,222,840  
               
Expenses              
Interest 66,389     61,983     255,259     235,637  
Amortization of debt discounts and issuance costs 8,312     7,725     30,942     30,507  
Interest expense 74,701     69,708     286,201     266,144  
               
Depreciation of flight equipment 118,720     106,300     452,682     397,760  
Settlement             72,000  
Selling, general and administrative 23,064     21,336     82,993     76,961  
Stock-based compensation 4,599     4,650     16,941     17,022  
Total expenses 221,084     201,994     838,817     829,887  
               
Income before taxes 149,403     124,703     580,238     392,953  
Income tax expense (52,415 )   (43,804 )   (205,313 )   (139,562 )
Net income $ 96,988     $ 80,899     $ 374,925     $ 253,391  
               
Net income per share of Class A and B common stock              
Basic $ 0.94     $ 0.79     $ 3.65     $ 2.47  
Diluted $ 0.89     $ 0.74     $ 3.44     $ 2.34  
Weighted-average shares outstanding              
Basic 102,843,867     102,581,742     102,801,161     102,547,774  
Diluted 111,000,951     110,629,779     110,798,727     110,628,865  
               
Other financial data (unaudited)              
Pre-tax profit margin 40.3 %   38.2 %   40.9 %   32.1 %
Adjusted net income before income taxes (1) $ 162,314     $ 132,578     $ 622,871     $ 507,982  
Adjusted margin before income taxes (1) 43.8 %   41.1 %   44.1 %   41.7 %
Adjusted diluted earnings per share before income taxes (1) $ 1.48     $ 1.21     $ 5.67     $ 4.64  
Pre-tax return on equity         18.1 %   13.6 %
Adjusted pre-tax return on equity (1)         19.5 %   17.5 %
 
(1)  Adjusted net income before income taxes (defined as net income excluding the effects of certain non-cash items, one-time or non-recurring items, such as settlement expense, net of recoveries, that are not expected to continue in the future and certain other items), adjusted margin before income taxes (defined as adjusted net income before income taxes divided by total revenues, excluding insurance recoveries), adjusted pre-tax return on equity (defined as adjusted net income before income taxes divided by average shareholders' equity) and adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes divided by the weighted average diluted common shares outstanding) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income, pre-tax profit margin, earnings per share, pre-tax return on equity, and diluted earnings per share, or any other performance measures derived in accordance with GAAP. Adjusted net income before income taxes, adjusted margin before income taxes, adjusted pre-tax return on equity and adjusted diluted earnings per share before income taxes, are presented as supplemental disclosure because management believes they provide useful information on our earnings from ongoing operations.
 
Management and our board of directors use adjusted net income before income taxes, adjusted margin before income taxes, adjusted pre-tax return on equity and adjusted diluted earnings per share before income taxes to assess our consolidated financial and operating performance.  Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance, because they remove the effects of certain non-cash items, one-time or non-recurring items that are not expected to continue in the future and certain other items from our operating results.  Adjusted net income before income taxes, adjusted margin before income taxes, adjusted pre-tax return on equity and adjusted diluted earnings per share before income taxes, however, should not be considered in isolation or as a substitute for analysis of our operating results or cash flows as reported under GAAP. Adjusted net income before income taxes, adjusted margin before income taxes, adjusted pre-tax return on equity and adjusted diluted earnings per share before income taxes do not reflect our cash expenditures or changes in or cash requirements for our working capital needs.  In addition, our calculation of adjusted net income before income taxes, adjusted margin before income taxes, adjusted pre-tax return on equity and adjusted diluted earnings per share before income taxes may differ from the adjusted net income before income taxes, adjusted margin before income taxes, adjusted pre-tax return on equity and adjusted diluted earnings per share before income taxes or analogous calculations of other companies in our industry, limiting their usefulness as a comparative measure.

The following tables show the reconciliation of net income to adjusted net income before income taxes and adjusted margin before income taxes (in thousands, except percentages):
  Three Months Ended December 31,   Year Ended December 31,
  2016   2015   2016   2015
Reconciliation of net income to adjusted net income before income taxes: (unaudited)
Net income $ 96,988     $ 80,899     $ 374,925     $ 253,391  
Amortization of debt discounts and issuance costs 8,312     7,725     30,942     30,507  
Stock-based compensation 4,599     4,650     16,941     17,022  
Settlement             72,000  
Insurance recovery on settlement     (4,500 )   (5,250 )   (4,500 )
Provision for income taxes 52,415     43,804     205,313     139,562  
Adjusted net income before income taxes $ 162,314     $ 132,578     $ 622,871     $ 507,982  
Adjusted margin before income taxes (1) 43.8 %   41.1 %   44.1 %   41.7 %
               
(1)  Adjusted margin before income taxes is adjusted net income before income taxes divided by total revenues, excluding insurance recoveries.

The following table shows the reconciliation of net income to adjusted diluted earnings per share before income taxes (in thousands, except share and per share amounts):
  Three Months Ended December 31,   Year Ended December 31,
  2016   2015   2016   2015
Reconciliation of net income to adjusted diluted earnings per share before income taxes: (unaudited)
Net income $ 96,988     $ 80,899     $ 374,925     $ 253,391  
Amortization of debt discounts and issuance costs 8,312     7,725     30,942     30,507  
Stock-based compensation 4,599     4,650     16,941     17,022  
Settlement             72,000  
Insurance recovery on settlement     (4,500 )   (5,250 )   (4,500 )
Provision for income taxes 52,415     43,804     205,313     139,562  
Adjusted net income before income taxes $ 162,314     $ 132,578     $ 622,871     $ 507,982  
Assumed conversion of convertible senior notes 1,447     1,472     5,780     5,806  
Adjusted net income before income taxes plus assumed conversions $ 163,761     $ 134,050     $ 628,651     $ 513,788  
Weighted-average diluted shares outstanding 111,000,951     110,629,779     110,798,727     110,628,865  
Adjusted diluted earnings per share before income taxes $ 1.48     $ 1.21     $ 5.67     $ 4.64  

The following table shows the reconciliation of net income to adjusted pre-tax return on equity (in thousands, except share and per share amounts):
  Year Ended December 31,
  2016   2015
Reconciliation of net income to adjusted pre-tax return on equity: (unaudited)
Net income $ 374,925     $ 253,391  
Amortization of debt discounts and issuance costs 30,942     30,507  
Stock-based compensation 16,941     17,022  
Settlement     72,000  
Insurance recovery on settlement (5,250 )   (4,500 )
Provision for income taxes 205,313     139,562  
Adjusted net income before income taxes $ 622,871     $ 507,982  
       
Shareholders' equity as of December 31, 2015 and 2014, respectively $ 3,019,912     $ 2,772,062  
Shareholders' equity as of December 31, 2016 and 2015, respectively $ 3,382,187     $ 3,019,912  
Average shareholders' equity $ 3,201,050     $ 2,895,987  
       
Adjusted pre-tax return on equity 19.5 %   17.5 %

Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
 
  Year Ended December 31, 2016   Year Ended December 31, 2015
   
Operating Activities      
Net income $ 374,925     $ 253,391  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation of flight equipment 452,682     397,760  
Stock-based compensation 16,941     17,022  
Deferred taxes 205,313     138,608  
Amortization of discounts and debt issuance costs 30,942     30,507  
Gain on aircraft sales, trading and other activity (61,494 )   (33,898 )
Changes in operating assets and liabilities:      
Other assets (53,114 )   4,162  
Accrued interest and other payables 45,983     16,635  
Rentals received in advance 7,900     15,608  
Net cash provided by operating activities 1,020,078     839,795  
Investing Activities      
Acquisition of flight equipment under operating lease (1,914,093 )   (2,088,646 )
Payments for deposits on flight equipment purchases (868,091 )   (597,170 )
Proceeds from aircraft sales, trading and other activity 988,040     752,747  
Acquisition of furnishings, equipment and other assets (211,372 )   (219,732 )
Net cash used in investing activities (2,005,516 )   (2,152,801 )
Financing Activities      
Issuance of common stock upon exercise of options 20     60  
Cash dividends paid (20,555 )   (16,405 )
Tax withholdings on stock-based compensation (5,890 )   (5,302 )
Net change in unsecured revolving facilities 46,000     151,000  
Proceeds from debt financings 2,021,966     1,232,384  
Payments in reduction of debt financings (1,093,910 )   (328,248 )
Net change in restricted cash 528     (9,059 )
Debt issuance costs (5,042 )   (4,518 )
Security deposits and maintenance reserve receipts 218,754     218,380  
Security deposits and maintenance reserve disbursements (58,306 )   (51,430 )
Net cash provided by financing activities 1,103,565     1,186,862  
Net increase (decrease) in cash 118,127     (126,144 )
Cash and cash equivalents at beginning of period 156,675     282,819  
Cash and cash equivalents at end of period $ 274,802     $ 156,675  
Supplemental Disclosure of Cash Flow Information      
Cash paid during the period for interest, including capitalized interest of $40,883 and $40,118 at December 31, 2016 and 2015, respectively $ 293,969     $ 259,968  
Supplemental Disclosure of Noncash Activities      
Buyer furnished equipment, capitalized interest, deposits on flight equipment purchases and seller financing applied to acquisition of flight equipment and other assets applied to payments for deposits on flight equipment purchases $ 873,828     $ 944,469  
Cash dividends declared, not yet paid $ 7,714     $ 5,129  
               
ContactInvestors:Ryan McKennaVice PresidentEmail: rmckenna@airleasecorp.comMedia:Laura St. JohnManager, Media and Investor RelationsEmail: lstjohn@airleasecorp.com

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