Air Lease Corporation (ALC) (NYSE: AL) announced today financial results for the year and three months ended December 31, 2014.
Highlights
Air Lease Corporation reported another consecutive quarter of record fleet, revenue and profitability growth:
- Diluted EPS increased 32% to $2.38 per share for the year ended December 31, 2014 compared to $1.80 per share for the year ended December 31, 2013. Diluted EPS increased 18% to $0.65 per share for the three months ended December 31, 2014 compared to $0.55 per share for the three months ended December 31, 2013.
- Revenues increased 22% to $1 billion for the year ended December 31, 2014 compared to $859 million for the year ended December 31, 2013. Revenues increased 18% to $286 million for the three months ended December 31, 2014 compared to $243 million for the three months ended December 31, 2013.
- Income before taxes increased 35% to $395 million with a pretax profit margin of 38% for the year ended December 31, 2014 compared to income before taxes of $293 million with a pretax profit margin of 34% for the year ended December 31, 2013. Income before taxes increased 19% to $108 million with a pretax profit margin of 38% for the three months ended December 31, 2014 compared to income before taxes of $91 million with a pretax profit margin of 37% for the three months ended December 31, 2013.
- Recorded $20 million in gains on aircraft sales, trading and other activity for the three months ended December 31, 2014 compared to $17 million in gains on aircraft sales, trading and other activity for the three months ended December 31, 2013.
- In January 2015, the Company became the launch customer for the Airbus A321LR.
- Our Board of Directors declared a quarterly cash dividend of $0.04 per share on our outstanding common stock. The dividend will be paid on April 7, 2015 to holders of record of our common stock as of March 20, 2015.
The following table summarizes the results for the three months and years ended December 31, 2014 and 2013 (in thousands, except share amounts):
Three Months Ended | Year Ended | |||||||||||||||||||||||||||||||||||
| 2014 | 2013 | % change | 2014 | 2013 | % change | |||||||||||||||||||||||||||||||
| Revenues | $ | 285,944 | $ | 242,901 | 17.7 | % | $ | 1,050,493 | $ | 858,675 | 22.3 | % | ||||||||||||||||||||||||
| Income before taxes | $ | 108,110 | $ | 90,571 | 19.4 | % | $ | 394,776 | $ | 293,442 | 34.5 | % | ||||||||||||||||||||||||
| Net income | $ | 70,131 | $ | 58,847 | 19.2 | % | $ | 255,998 | $ | 190,411 | 34.4 | % | ||||||||||||||||||||||||
| Diluted EPS | $ | 0.65 | $ | 0.55 | 18.2 | % | $ | 2.38 | $ | 1.80 | 32.2 | % | ||||||||||||||||||||||||
“Air Lease Corporation concluded 2014 by generating over $1 billion in annual revenue for the very first time. At the same time, we delivered record profitability with a 38% pre-tax profit margin. Air Lease is now celebrating its fifth birthday as a Company and we are pleased with the consistency of our financial and operating results since inception. ALC's business prospects look strong as the demand for our new technology aircraft remains robust,” said Steven F. Udvar-Házy, Chairman and Chief Executive Officer of Air Lease Corporation.
“Global passenger traffic grew 5.9% in 2014, continuing the strong global trends which underpin the need for aircraft. The market is healthy for new aircraft and we see a great deal of interest in the used market as well. We seized on opportunities during the quarter, recording gains of $20 million on sales, trading and other activity. We kicked off 2015 by issuing a $600 million seven year senior unsecured investment grade bond, with a fixed interest rate of 3.75%. This issuance continues our trend of raising attractively priced long dated financing and enhancing our investment grade credit profile,” said John L. Plueger, President and Chief Operating Officer of Air Lease Corporation.
Flight Equipment Portfolio
As of December 31, 2014, we owned 213 aircraft in our operating lease portfolio and we leased the aircraft to a globally diversified customer base of 77 airlines in 46 countries. During the quarter ended December 31, 2014, we delivered nine aircraft from our new order pipeline. In addition, we sold eight aircraft from our operating lease portfolio during the quarter ended December 31, 2014. As of December 31, 2014, we managed 17 aircraft for third parties.
Below are portfolio metrics of our fleet as of December 31, 2014 and December 31, 2013:
| December 31, 2014 | December 31, 2013 | |||||
| Fleet size | 213 | 193 | ||||
| Weighted-average fleet age(1) | 3.5 years | 3.7 years | ||||
| Weighted-average remaining lease term(1) | 7.3 years | 7.1 years | ||||
| Aggregate fleet net book value | $9.0 billion | $7.6 billion | ||||
__________________ | ||||||
The following table sets forth the percentage of net book value of our aircraft portfolio in the indicated regions as of December 31, 2014 and December 31, 2013:
| December 31, 2014 | December 31, 2013 | |||||||
Region | % of Net Book Value | % of Net Book Value | ||||||
| Asia | 42.9 | % | 41.6 | % | ||||
| Europe | 33.0 | % | 34.9 | % | ||||
| Central America, South America and Mexico | 8.7 | % | 10.9 | % | ||||
| The Middle East and Africa | 5.6 | % | 4.9 | % | ||||
| Pacific, Australia, New Zealand | 5.2 | % | 2.0 | % | ||||
| U.S. and Canada | 4.6 | % | 5.7 | % | ||||
| Total | 100.0 | % | 100.0 | % | ||||
The following table sets forth the number of aircraft we leased by aircraft type as of December 31, 2014 and December 31, 2013:
December 31, 2014 | December 31, 2013 | |||||||||||||||||
| Aircraft type | Number of | % of Total | Number of | % of Total | ||||||||||||||
| Airbus A319/320/321 | 64 | 30.0 | % | 55 | 28.5 | % | ||||||||||||
Airbus A330-200/300 | 21 | 9.8 | % | 21 | 10.9 | % | ||||||||||||
Boeing 737-700/800 | 69 | 32.4 | % | 60 | 31.1 | % | ||||||||||||
| Boeing 767-300ER | 1 | 0.5 | % | 3 | 1.6 | % | ||||||||||||
| Boeing 777-200/300ER | 10 | 4.7 | % | 7 | 3.6 | % | ||||||||||||
| Embraer E175/190 | 30 | 14.1 | % | 31 | 16.0 | % | ||||||||||||
| ATR 72-600 | 18 | 8.5 | % | 16 | 8.3 | % | ||||||||||||
| Total | 213 | 100.0 | % | 193 | 100.0 | % | ||||||||||||
Debt Financing Activities
We ended 2014 with total debt outstanding of $6.7 billion as compared to $5.9 billion as of December 31, 2013. We ended 2014 with total unsecured debt outstanding of $5.5 billion compared to $4.3 billion as of December 31, 2013, increasing the Company’s unsecured debt as a percentage of total debt to 82.3% as of December 31, 2014 compared to 73.4% as of December 31, 2013. The Company’s fixed rate debt as a percentage of total debt increased to 75.2% as of December 31, 2014 from 61.9% as of December 31, 2013. Since the end of 2014, we issued $600.0 million in senior unsecured notes maturing in 2022 with a fixed interest rate of 3.75%.
We ended 2014 with a debt to equity ratio of 2.42:1 and available liquidity of $2.1 billion. Our financing strategy remains focused on raising unsecured debt in the global bank and capital markets.
The Company’s debt financing was comprised of the following at December 31, 2014 and December 31, 2013 (dollars in thousands):
| December 31, 2014 | December 31, 2013 | ||||
| Unsecured | |||||
| Senior notes | 4,579,194 | 3,055,620 | |||
| Revolving credit facilities | 569,000 | 808,000 | |||
| Term financings | 196,146 | 247,722 | |||
| Convertible senior notes | 200,000 | 200,000 | |||
Total unsecured debt financing | 5,544,340 | 4,311,342 | |||
| Secured | |||||
| Warehouse facilities | 484,513 | 828,418 | |||
| Term financings | 636,411 | 654,369 | |||
| Export credit financing | 64,884 | 71,539 | |||
Total secured debt financing | 1,185,808 | 1,554,326 | |||
| Total secured and unsecured debt financing | 6,730,148 | 5,865,668 | |||
| Less: Debt discount | (15,786 | ) | (12,351 | ) | |
| Total debt | 6,714,362 | 5,853,317 | |||
| Selected interest rates and ratios: | |||||
| Composite interest rate(1) | 3.64 | % | 3.60 | % | |
| Composite interest rate on fixed rate debt(1) | 4.22 | % | 4.56 | % | |
| Percentage of total debt at fixed rate | 75.20 | % | 61.90 | % | |
| (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 26, 2015 at 4:30 PM Eastern Time to discuss the Company's year end financial results for 2014.
Investors can participate in the conference call by dialing (800) 299-9630 domestic or (617) 786-2904 international. The passcode for the call is 38284996.
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 8:30 PM ET on February 26, 2015 until 11:59 PM ET on March 5, 2015. 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 66254088.
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, including to the Company's recently formed joint venture;
- 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, 2014 and other 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, 2014 | December 31, 2013 | ||||||||||
| Assets | |||||||||||
| Cash and cash equivalents | $ | 282,819 | $ | 270,173 | |||||||
| Restricted cash | 7,469 | 87,308 | |||||||||
| Flight equipment subject to operating leases | 9,832,421 | 8,234,315 | |||||||||
Less accumulated depreciation | (878,617 | ) | (621,180 | ) | |||||||
| 8,953,804 | 7,613,135 | ||||||||||
| Deposits on flight equipment purchases | 1,144,603 | 1,075,023 | |||||||||
Deferred debt issuance costs—less accumulated amortization of $72,783 and $51,578 as of December 31, 2014 and December 31, 2013, respectively | 83,604 | 90,249 | |||||||||
| Other assets | 302,485 | 196,716 | |||||||||
| Total assets | $ | 10,774,784 | $ | 9,332,604 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||
| Accrued interest and other payables | 190,952 | $ | 131,223 | ||||||||
| Debt financing, net of discounts | 6,714,362 | 5,853,317 | |||||||||
| Security deposits and maintenance reserves on flight equipment leases | 698,172 | 569,847 | |||||||||
| Rentals received in advance | 75,877 | 61,520 | |||||||||
| Deferred tax liability | 323,359 | 193,263 | |||||||||
| Total liabilities | $ | 8,002,722 | $ | 6,809,170 | |||||||
| 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 102,392,208 and 101,822,676 shares at December 31, 2014 and December 31, 2013, respectively | 1,010 | 1,009 | |||||||||
Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding | — | — | |||||||||
| Paid-in capital | 2,215,479 | 2,209,566 | |||||||||
| Retained earnings | 555,573 | 312,859 | |||||||||
| Total shareholders’ equity | $ | 2,772,062 | $ | 2,523,434 | |||||||
| Total liabilities and shareholders’ equity | $ | 10,774,784 | $ | 9,332,604 | |||||||
Air Lease Corporation and Subsidiaries | ||||||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||
(In thousands, except share amounts) | ||||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||||
| 2014 | 2013 | 2014 | 2013 | |||||||||||||||
(unaudited) | ||||||||||||||||||
Revenues | ||||||||||||||||||
Rental of flight equipment | $ | 265,793 | $ | 226,279 | $ | 991,241 | $ | 836,516 | ||||||||||
| Aircraft sales, trading and other | 20,151 | 16,622 | 59,252 | 22,159 | ||||||||||||||
| Total revenues | 285,944 | 242,901 | 1,050,493 | 858,675 | ||||||||||||||
| Expenses | ||||||||||||||||||
| Interest | 52,543 | 43,099 | 192,818 | 168,743 | ||||||||||||||
Amortization of discounts and deferred debt issuance costs | 6,870 | 7,056 | 27,772 | 23,627 | ||||||||||||||
| Interest expense | 59,413 | 50,155 | 220,590 | 192,370 | ||||||||||||||
| Depreciation of flight equipment | 90,921 | 75,580 | 336,657 | 280,037 | ||||||||||||||
| Selling, general and administrative | 23,674 | 22,820 | 82,422 | 71,212 | ||||||||||||||
| Stock-based compensation | 3,826 | 3,775 | 16,048 | 21,614 | ||||||||||||||
| Total expenses | 177,834 | 152,330 | 655,717 | 565,233 | ||||||||||||||
| Income before taxes | 108,110 | 90,571 | 394,776 | 293,442 | ||||||||||||||
| Income tax expense | (37,979 | ) | (31,724 | ) | (138,778 | ) | (103,031 | ) | ||||||||||
Net income | $ | 70,131 | $ | 58,847 | $ | 255,998 | $ | 190,411 | ||||||||||
Net income per share of Class A and Class B common stock: | ||||||||||||||||||
| Basic | $ | 0.68 | $ | 0.58 | $ | 2.51 | $ | 1.88 | ||||||||||
| Diluted | $ | 0.65 | $ | 0.55 | $ | 2.38 | $ | 1.80 | ||||||||||
| Weighted-average shares outstanding | ||||||||||||||||||
| Basic | 102,387,530 | 101,792,573 | 102,142,828 | 101,529,137 | ||||||||||||||
| Diluted | 110,422,760 | 109,632,661 | 110,192,771 | 108,963,550 | ||||||||||||||
Air Lease Corporation and Subsidiaries | |||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
(In thousands) | |||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||
| Operating Activities | |||||||||||
| Net income | $ | 255,998 | $ | 190,411 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation of flight equipment | 336,657 | 280,037 | |||||||||
| Stock-based compensation | 16,048 | 21,614 | |||||||||
| Deferred taxes | 137,107 | 102,636 | |||||||||
| Tax benefits from stock-based compensation arrangements | (7,011 | ) | (2,115 | ) | |||||||
| Amortization of discounts and deferred debt issuance costs | 27,772 | 23,627 | |||||||||
| Gain on aircraft sales, trading and other activity | (56,457 | ) | (19,234 | ) | |||||||
| Changes in operating assets and liabilities: | |||||||||||
| Other assets | (1,191 | ) | (2,653 | ) | |||||||
| Accrued interest and other payables | 45,738 | 39,507 | |||||||||
| Rentals received in advance | 14,357 | 20,383 | |||||||||
| Net cash provided by operating activities | 769,018 | 654,213 | |||||||||
| Investing Activities | |||||||||||
| Acquisition of flight equipment under operating lease | (1,568,748 | ) | (1,329,619 | ) | |||||||
| Payments for deposits on flight equipment purchases | (601,307 | ) | (828,839 | ) | |||||||
| Proceeds from aircraft sales, trading and other activity | 603,849 | 97,748 | |||||||||
| Acquisition of furnishings, equipment and other assets | (239,451 | ) | (125,184 | ) | |||||||
| Net cash used in investing activities | (1,805,657 | ) | (2,185,894 | ) | |||||||
Financing Activities | |||||||||||
| Issuance of common stock upon exercise of options | 944 | — | |||||||||
| Cash dividends paid | (12,243 | ) | (7,608 | ) | |||||||
| Tax withholdings on stock-based compensation | (18,089 | ) | (12,664 | ) | |||||||
| Tax benefits from stock-based compensation arrangements | 7,011 | 2,115 | |||||||||
| Net change in unsecured revolving facilities | (239,000 | ) | 388,000 | ||||||||
| Proceeds from debt financings | 1,663,120 | 1,608,854 | |||||||||
| Payments in reduction of debt financings | (577,212 | ) | (531,831 | ) | |||||||
| Net change in restricted cash | 79,839 | 18,999 | |||||||||
| Debt issuance costs | (7,975 | ) | (37,535 | ) | |||||||
| Security deposits and maintenance reserve receipts | 185,639 | 172,662 | |||||||||
| Security deposits and maintenance reserve disbursements | (32,749 | ) | (29,227 | ) | |||||||
| Net cash provided by financing activities | 1,049,285 | 1,571,765 | |||||||||
| Net increase (decrease) in cash | 12,646 | 40,084 | |||||||||
| Cash and cash equivalents at beginning of period | 270,173 | 230,089 | |||||||||
| Cash and cash equivalents at end of period | $ | 282,819 | $ | 270,173 | |||||||
Supplemental Disclosure of Cash Flow Information | |||||||||||
Cash paid during the period for interest, including capitalized interest of $42,775, $32,659 and $19,388 at December 31, 2014, 2013 and 2012, respectively | $ | 211,345 | $ | 188,464 | |||||||
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 | $ | 756,286 | $ | 459,432 | |||||||
| Cash dividends declared, not yet paid | $ | 4,096 | $ | 3,055 | |||||||
Contacts:
Investors:
Ryan McKenna
Vice
President
rmckenna@airleasecorp.com
or
Media:
Laura
St. John
Manager, Media and Investor Relations
lstjohn@airleasecorp.com
310-553-0555
