Air Lease Corporation Announces Third Quarter 2019 Results

LOS ANGELES--()--Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three and nine months ended September 30, 2019.

  • Revenues:
    • $531 million for the three months ended September 30, 2019, an increase of 17.8%
    • $1.5 billion for the nine months ended September 30, 2019, an increase of 19.4%
  • Diluted earnings per share:
    • $1.34 for the three months ended September 30, 2019, an increase of 1.5%
    • $3.67 for the nine months ended September 30, 2019, an increase of 9.2%
  • Adjusted diluted earnings per share before income taxes:
    • $1.80 for the three months ended September 30, 2019, an increase of 4.0%
    • $4.98 for the nine months ended September 30, 2019, an increase of 9.5%
  • Margin:
    • Pre-tax profit margin of 36.5% for the three months ended September 30, 2019
    • Adjusted pre-tax profit margin of 38.4% for the three months ended September 30, 2019
  • Return on common equity:
    • Pre-tax return on common equity of 14.3% for the trailing twelve months ended September 30, 2019
    • Adjusted pre-tax return on common equity of 15.4% for the trailing twelve months ended September 30, 2019

Highlights

  • Took delivery of 15 aircraft from our order book during the quarter, representing approximately $1.5 billion in aircraft investments. As of September 30, 2019, our fleet was comprised of 307 owned aircraft with a net book value of $18.9 billion, with a weighted average age and a weighted average lease term remaining of 3.6 years and 7.2 years, respectively.
  • Placed 83% of our order book on long-term leases for aircraft delivering through 2021.
  • Ended the quarter with $28.7 billion in committed minimum future rental payments consisting of $14.1 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.6 billion in minimum future rental payments related to aircraft on order.
  • On October 31, 2019, we initiated a portfolio sale of 19 aircraft to Thunderbolt Aircraft Lease Limited III (“Thunderbolt III”) and will continue to manage these aircraft. We anticipate closing the transaction on November 8, 2019 and expect a majority of the aircraft transfers to be completed over the next two quarters.
  • Issued $1.1 billion of Medium-Term Notes comprised of (i) $600.0 million due 2023 at a fixed rate of 2.25% and (ii) $500.0 million due 2029 at a fixed rate of 3.25%.
  • Increased our quarterly cash dividend by approximately 15%, from $0.13 per share to $0.15 per share of our outstanding Class A common stock. The next quarterly dividend of $0.15 per share will be paid on January 6, 2020 to holders of record of our Class A common stock as of December 20, 2019.

“Third quarter results reflect continued strength and stability in the underlying performance trends of our business and fundamental demand for our aircraft. All of our aircraft previously leased to Thomas Cook have been profitably placed with new airline customers. Even considering meaningful delays from both Boeing and Airbus, our 25% year-over-year fleet value expansion is significant, and strong growth is expected to continue via our 316 aircraft forward orderbook,” said John L. Plueger, Chief Executive Officer and President.

“Global air travel demand remains healthy in the face of market headlines. The MAX grounding has reduced industry net seat capacity, and environmental concerns further drive the need for ALC’s orderbook aircraft. Reflecting continued strong performance, our Board of Directors has authorized a 15% increase in ALC’s quarterly dividend to $0.15 per share from $0.13 per share – the 7th dividend increase and 28th consecutive quarterly dividend payment in ALC’s history,” said Steven F. Udvar-Házy, Executive Chairman of the Board.

The following table summarizes our operating results for the three and nine months ended September 30, 2019 and 2018 (in thousands, except per share amounts and percentages):

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended

September 30,

 

 

 

2019

 

2018

 

$ change

 

% change

 

 

2019

 

2018

 

$ change

 

% change

 

Revenues

 

$

530,902

 

$

450,698

 

$

80,204

 

17.8

%

$

1,468,348

 

$

1,229,721

 

$

238,627

 

19.4

%

Income before taxes

 

$

193,787

 

$

179,382

 

$

14,405

 

8.0

%

$

529,267

 

$

468,110

 

$

61,157

 

13.1

%

Net income available to common stockholders

 

$

151,943

 

$

146,574

 

$

5,369

 

3.7

%

$

414,071

 

$

372,436

 

$

41,635

 

11.2

%

Adjusted net income before income taxes(1)

 

$

203,918

 

$

192,429

 

$

11,489

 

6.0

%

$

562,416

 

$

505,506

 

$

56,910

 

11.3

%

Diluted earnings per share

 

$

1.34

 

$

1.32

 

$

0.02

 

1.5

%

$

3.67

 

$

3.36

 

$

0.31

 

9.2

%

Adjusted diluted earnings per share before income taxes(1)

 

$

1.80

 

$

1.73

 

$

0.07

 

4.0

%

$

4.98

 

$

4.55

 

$

0.43

 

9.5

%

(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, 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 earnings per share before income taxes and a reconciliation to their most comparable GAAP financial measures.

Flight Equipment Portfolio

Our owned fleet grew by 20.4% to a net book value of $18.9 billion as of September 30, 2019 compared to $15.7 billion as of December 31, 2018. As of September 30, 2019, our fleet was comprised of 307 owned aircraft, with a weighted-average age and remaining lease term of 3.6 years and 7.2 years, respectively, and 64 managed aircraft. We have a globally diversified customer base of 108 airlines in 59 countries.

During the quarter ended September 30, 2019, we took delivery of 15 aircraft from our order book and sold five aircraft ending the quarter with 307 owned aircraft in our operating lease portfolio.

The following table summarizes the key portfolio metrics of our fleet as of September 30, 2019 and December 31, 2018:

 

 

September 30, 2019

 

December 31, 2018

Aggregate fleet net book value

 

$

18.9 billion

 

$

15.7 billion

Weighted-average fleet age(1)

 

 

3.6 years

 

 

3.8 years

Weighted-average remaining lease term(1)

 

 

7.2 years

 

 

6.8 years

 

 

 

 

 

 

 

Owned fleet

 

 

307

 

 

275

Managed fleet

 

 

64

 

 

61

Aircraft on order(2)(3)

 

 

316

 

 

372

Aircraft purchase options(4)

 

 

50

 

 

50

Total

 

 

737

 

 

758

 

 

 

 

 

 

 

Current fleet contracted rentals

 

$

14.1 billion

 

$

11.8 billion

Committed fleet rentals

 

$

14.6 billion

 

$

13.9 billion

Total committed rentals

 

$

28.7 billion

 

$

25.7 billion

(1)

Weighted-average fleet age and remaining lease term calculated based on net book value.

(2)

Excluded from the table above are memorandums of understanding ("MOU") with Airbus, signed in June 2019, to launch the A321 XLR aircraft and to order the A220 aircraft. Through these MOUs, we committed to purchase 100 aircraft comprised of 27 A321 XLR aircraft, 23 A321neo aircraft and 50 A220 aircraft, and we have purchase options for an additional 25 A220 aircraft.

(3)

The table above reflects the conversion of purchase orders for 15 Boeing 737 MAX aircraft to five Boeing 787-9 aircraft pursuant to an October 2019 agreement with Boeing.

(4)

As of September 30, 2019 and December 31, 2018, we had options to acquire up to five Airbus A350-1000 aircraft and 45 Boeing 737-8 MAX aircraft.

The following table details the regional concentration of our owned fleet:

 

 

 

 

 

 

 

 

 

September 30, 2019

 

December 31, 2018

 

Region

 

% of Net Book Value

 

% of Net Book Value

 

Europe

 

29.2

%

29.9

%

Asia (excluding China)

 

25.7

%

24.5

%

China

 

16.2

%

17.0

%

The Middle East and Africa

 

11.9

%

12.4

%

Central America, South America and Mexico

 

6.7

%

6.9

%

U.S. and Canada

 

5.3

%

4.8

%

Pacific, Australia and New Zealand

 

5.0

%

4.5

%

Total

 

100.0

%

100.0

%

The following table details the composition of our owned fleet by aircraft type:

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2019

 

December 31, 2018

 

Aircraft type

 

Number of
Aircraft

 

% of Total

 

Number of
Aircraft

 

% of Total

 

Airbus A319-100

 

1

 

0.3

%

1

 

0.4

%

Airbus A320-200

 

30

 

9.8

%

35

 

12.7

%

Airbus A320-200neo

 

11

 

3.6

%

6

 

2.2

%

Airbus A321-200

 

33

 

10.7

%

34

 

12.4

%

Airbus A321-200neo

 

29

 

9.4

%

14

 

5.1

%

Airbus A330-200

 

14

 

4.6

%

15

 

5.4

%

Airbus A330-300

 

6

 

2.0

%

5

 

1.8

%

Airbus A330-900neo

 

6

 

2.0

%

1

 

0.4

%

Airbus A350-900

 

10

 

3.3

%

6

 

2.2

%

Boeing 737-700

 

4

 

1.3

%

4

 

1.4

%

Boeing 737-800

 

95

 

30.9

%

98

 

35.6

%

Boeing 737-8 MAX

 

15

 

4.9

%

14

 

5.1

%

Boeing 767-300ER

 

1

 

0.3

%

1

 

0.4

%

Boeing 777-200ER

 

1

 

0.3

%

1

 

0.4

%

Boeing 777-300ER

 

24

 

7.8

%

24

 

8.7

%

Boeing 787-9

 

23

 

7.5

%

15

 

5.4

%

Boeing 787-10

 

3

 

1.0

%

 

%

Embraer E190

 

1

 

0.3

%

1

 

0.4

%

Total(1)

 

307

 

100.0

%

275

 

100.0

%

(1)

As of September 30, 2019 and December 31, 2018, we had six aircraft held for sale at the end of both periods.

Debt Financing Activities

We ended the third quarter of 2019 with total debt financing, net of discounts and issuance costs, of $13.8 billion, resulting in a debt to equity ratio of 2.52:1.

Our debt financing was comprised of unsecured debt of $13.5 billion representing 96.9% of our debt portfolio as of September 30, 2019 as compared to 96.5% as of December 31, 2018. Our fixed rate debt represented 84.7% of our debt portfolio as of September 30, 2019 as compared to 86.4% as of December 31, 2018. Our composite cost of funds decreased to 3.37% as of September 30, 2019 as compared to 3.46% as of December 31, 2018.

During the three months ended September 30, 2019, we issued $1.1 billion of Medium-Term Notes comprised of (i) $600.0 million due 2023 at a fixed rate of 2.25% and (ii) $500.0 million due 2029 at a fixed rate of 3.25%.

Our debt financing was comprised of the following at September 30, 2019 and December 31, 2018 (dollars in thousands):

 

 

 

 

 

 

 

 

 

 

September 30,
2019

 

 

December 31,
2018

 

Unsecured

 

 

 

 

 

 

 

Senior notes

 

$

12,050,000

 

$

10,043,445

 

Term financings

 

 

813,150

 

 

607,340

 

Revolving credit facilities

 

 

610,000

 

 

602,000

 

Total unsecured debt financing

 

 

13,473,150

 

 

11,252,785

 

Secured

 

 

 

 

 

 

 

Term financings

 

 

392,593

 

 

371,203

 

Export credit financing

 

 

33,274

 

 

38,265

 

Total secured debt financing

 

 

425,867

 

 

409,468

 

 

 

 

 

 

 

 

 

Total debt financing

 

 

13,899,017

 

 

11,662,253

 

Less: Debt discounts and issuance costs

 

 

(147,145)

 

 

(123,348)

 

Debt financing, net of discounts and issuance costs

 

$

13,751,872

 

$

11,538,905

 

Selected interest rates and ratios:

 

 

 

 

 

 

 

Composite interest rate(1)

 

 

3.37

%

 

3.46

%

Composite interest rate on fixed-rate debt(1)

 

 

3.41

%

 

3.42

%

Percentage of total debt at fixed-rate

 

 

84.74

%

 

86.41

%

(1)

This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs.

Conference Call

In connection with this earnings release, Air Lease Corporation will host a conference call on November 7, 2019 at 4:30 PM Eastern Time to discuss the Company's financial results for the third quarter of 2019.

Investors can participate in the conference call by dialing (855) 308-8321 domestic or (330) 863-3465 international. The passcode for the call is 7447217.

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 November 7, 2019 until 7:30 PM ET on November 14, 2019. 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 7447217.

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. ALC routinely posts information that may be important to investors in the "Investors" section of ALC's website at www.airleasecorp.com. Investors and potential investors are encouraged to consult the ALC website regularly for important information about ALC. The information contained on, or that may be accessed through, ALC's website is not incorporated by reference into, and is not a part of, this press release.

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 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;
  • our inability to make acquisitions of, or lease, aircraft on favorable terms;
  • our inability to sell aircraft on favorable terms or to predict the timing of such sales;
  • impaired financial condition and liquidity of our lessees;
  • changes in overall demand for commercial aircraft leasing and aircraft management services;
  • deterioration of economic conditions in the commercial aviation industry generally;
  • potential natural disasters and terrorist attacks and the amount of our insurance coverage, if any, relating thereto;
  • increased maintenance, operating or other expenses or changes in the timing thereof;
  • changes in the regulatory environment, including tariffs and other restrictions on trade;
  • our inability to effectively oversee our managed fleet;
  • the failure of any manufacturer to meet its contractual aircraft delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery, resulting in our inability to deliver the aircraft to our lessees; 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, 2018, "Part II – Item 1A. Risk Factors," in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019 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)

 

 

 

 

 

 

 

 

 

 

September 30, 2019

 

December 31, 2018

 

 

 

 

(unaudited)

 

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

291,772

 

$

300,127

 

Restricted cash

 

 

44,651

 

 

22,871

 

Flight equipment subject to operating leases

 

 

21,601,147

 

 

17,985,324

 

Less accumulated depreciation

 

 

(2,689,880)

 

 

(2,278,214)

 

 

 

 

18,911,267

 

 

15,707,110

 

Deposits on flight equipment purchases

 

 

1,600,959

 

 

1,809,260

 

Other assets

 

 

761,052

 

 

642,440

 

Total assets

 

$

21,609,701

 

$

18,481,808

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Accrued interest and other payables

 

$

420,444

 

$

382,132

 

Debt financing, net of discounts and issuance costs

 

 

13,751,872

 

 

11,538,905

 

Security deposits and maintenance reserves on flight equipment leases

 

 

1,091,073

 

 

990,578

 

Rentals received in advance

 

 

134,635

 

 

119,526

 

Deferred tax liability

 

 

749,504

 

 

643,767

 

Total liabilities

 

$

16,147,528

 

$

13,674,908

 

Shareholders’ Equity

 

 

 

 

 

 

 

Preferred stock, $0.01 par value; 50,000,000 shares authorized; 10,000,000 shares of 6.150% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A (aggregate liquidation preference of $250,000) issued and outstanding at September 30, 2019 and no shares issued or outstanding at December 31, 2018

 

 

100

 

 

 

Class A common stock, $0.01 par value; 500,000,000 shares authorized; 112,701,349 and 110,949,850 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

 

 

1,127

 

 

1,110

 

Class B non-voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding

 

 

 

 

 

Paid-in capital

 

 

2,758,928

 

 

2,474,238

 

Retained earnings

 

 

2,702,018

 

 

2,331,552

 

Total shareholders’ equity

 

$

5,462,173

 

$

4,806,900

 

Total liabilities and shareholders’ equity

 

$

21,609,701

 

$

18,481,808

 

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except share, per share amounts and percentages)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

(unaudited)

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

Rental of flight equipment

 

$

492,869

 

$

422,763

 

$

1,412,478

 

$

1,194,104

 

Aircraft sales, trading and other

 

 

38,033

 

 

27,935

 

 

55,870

 

 

35,617

 

Total revenues

 

 

530,902

 

 

450,698

 

 

1,468,348

 

 

1,229,721

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest

 

 

104,637

 

 

82,189

 

 

290,681

 

 

224,584

 

Amortization of debt discounts and issuance costs

 

 

9,078

 

 

8,199

 

 

26,330

 

 

24,231

 

Interest expense

 

 

113,715

 

 

90,388

 

 

317,011

 

 

248,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation of flight equipment

 

 

183,788

 

 

149,703

 

 

514,948

 

 

428,437

 

Selling, general and administrative

 

 

34,715

 

 

26,377

 

 

92,188

 

 

71,194

 

Stock-based compensation

 

 

4,897

 

 

4,848

 

 

14,934

 

 

13,165

 

Total expenses

 

 

337,115

 

 

271,316

 

 

939,081

 

 

761,611

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before taxes

 

 

193,787

 

 

179,382

 

 

529,267

 

 

468,110

 

Income tax expense

 

 

(38,000)

 

 

(32,808)

 

 

(107,081)

 

 

(95,674)

 

Net income

 

$

155,787

 

$

146,574

 

$

422,186

 

$

372,436

 

Preferred stock dividends

 

 

(3,844)

 

 

 

 

(8,115)

 

 

 

Net income available to common stockholders

 

$

151,943

 

$

146,574

 

$

414,071

 

$

372,436

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share of Class A and B common stock

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

1.36

 

$

1.41

 

$

3.71

 

$

3.58

 

Diluted

 

$

1.34

 

$

1.32

 

$

3.67

 

$

3.36

 

Weighted-average shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

112,133,556

 

 

104,066,785

 

 

111,511,960

 

 

103,940,723

 

Diluted

 

 

113,263,396

 

 

112,509,612

 

 

112,837,526

 

 

112,377,870

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other financial data

 

 

 

 

 

 

 

 

 

 

 

 

 

Pre-tax profit margin

 

 

36.5

%

 

39.8

%

 

36.0

%

 

38.1

%

Adjusted net income before income taxes(1)

 

$

203,918

 

$

192,429

 

$

562,416

 

$

505,506

 

Adjusted pre-tax profit margin(1)

 

 

38.4

%

 

42.7

%

 

38.3

%

 

41.1

%

Adjusted diluted earnings per share before income taxes(1)

 

$

1.80

 

$

1.73

 

$

4.98

 

$

4.55

 

Pre-tax return on common equity (trailing twelve months)

 

 

14.3

%

 

15.6

%

 

14.3

%

 

15.6

%

Adjusted pre-tax return on common equity (trailing twelve months)(1)

 

 

15.4

%

 

16.8

%

 

15.4

%

 

16.8

%

(1)

Adjusted net income before income taxes (defined as net income available to common stockholders excluding 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), adjusted pre-tax profit margin (defined as adjusted net income before income taxes divided by total revenues), adjusted diluted earnings per share before income taxes (defined as adjusted net income before income taxes plus assumed conversions divided by the weighted average diluted common shares outstanding) and adjusted pre-tax return on common equity (defined as adjusted net income before income taxes divided by average common shareholders' equity) are measures of operating performance that are not defined by GAAP and should not be considered as an alternative to net income available to common stockholders, pre-tax profit margin, earnings per share, diluted earnings per share and pre-tax return on common equity, or any other performance measures derived in accordance with GAAP. Adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity 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 pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity 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 pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity, 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 pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity do not reflect our cash expenditures or changes in our cash requirements for our working capital needs. In addition, our calculation of adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity may differ from the adjusted net income before income taxes, adjusted pre-tax profit margin, adjusted diluted earnings per share before income taxes and adjusted pre-tax return on common equity 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 available to common stockholders to adjusted net income before income taxes and adjusted pre-tax profit margin (in thousands, except percentages):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2019

 

2018

 

2019

 

2018

 

 

 

(unaudited)

 

Reconciliation of net income available to common stockholders to adjusted net income before income taxes and adjusted pre-tax profit margin:

 

 

Net income available to common stockholders

 

$

151,943

 

$

146,574

 

$

414,071

 

$

372,436

 

Amortization of debt discounts and issuance costs

 

 

9,078

 

 

8,199

 

 

26,330

 

 

24,231

 

Stock-based compensation

 

 

4,897

 

 

4,848

 

 

14,934

 

 

13,165

 

Provision for income taxes

 

 

38,000

 

 

32,808

 

 

107,081

 

 

95,674

 

Adjusted net income before income taxes

 

$

203,918

 

$

192,429

 

$

562,416

 

$

505,506

 

Total revenues

 

$

530,902

 

$

450,698

 

$

1,468,348

 

$

1,229,721

 

Adjusted pre-tax profit margin(1)

 

 

38.4

%

 

42.7

%

 

38.3

%

 

41.1

%

(1)

Adjusted pre-tax profit margin is adjusted net income before income taxes divided by total revenues.

The following table shows the reconciliation of net income available to common stockholders to adjusted diluted earnings per share before income taxes (in thousands, except share and per share amounts):

 

 

 

 

 

 

 

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

2019

 

2018

 

2019

 

2018

 

 

(unaudited)

Reconciliation of net income available to common stockholders to adjusted diluted earnings per share before income taxes:

 

Net income available to common stockholders

 

$

151,943

 

$

146,574

 

$

414,071

 

$

372,436

Amortization of debt discounts and issuance costs

 

 

9,078

 

 

8,199

 

 

26,330

 

 

24,231

Stock-based compensation

 

 

4,897

 

 

4,848

 

 

14,934

 

 

13,165

Provision for income taxes

 

 

38,000

 

 

32,808

 

 

107,081

 

 

95,674

Adjusted net income before income taxes

 

$

203,918

 

$

192,429

 

$

562,416

 

$

505,506

Assumed conversion of convertible senior notes

 

 

 

 

1,823

 

 

 

 

5,309

Adjusted net income before income taxes plus assumed conversions

 

$

203,918

 

$

194,252

 

$

562,416

 

$

510,815

Weighted-average diluted common shares outstanding

 

 

113,263,396

 

 

112,509,612

 

 

112,837,526

 

 

112,377,870

Adjusted diluted earnings per share before income taxes

 

$

1.80

$

1.73

 

$

4.98

 

$

4.55

The following table shows the reconciliation of net income available to common stockholders to adjusted pre-tax return on common equity (in thousands, except percentages):

 

 

 

Trailing Twelve Months Ended
September 30,

 

 

 

2019

 

2018

 

 

 

(unaudited)

Reconciliation of net income available to common stockholders to adjusted pre-tax return on common equity:

 

 

 

 

 

 

 

Net income available to common stockholders

 

 

552,470

 

 

843,538

 

Amortization of debt discounts and issuance costs

 

 

34,805

 

 

31,297

 

Stock-based compensation

 

 

19,247

 

 

18,534

 

Provision for income taxes

 

 

140,710

 

 

(209,764)

 

Adjusted net income before income taxes

 

$

747,232

 

$

683,605

 

 

 

 

 

 

 

 

 

Common shareholders' equity as of the beginning of the period

 

$

4,478,918

 

$

3,655,583

 

Common shareholders' equity as of the end of the period

 

$

5,212,173

 

$

4,478,918

 

Average common shareholders' equity

 

$

4,845,546

 

$

4,067,251

 

 

 

 

 

 

 

 

 

Adjusted pre-tax return on common equity

 

 

15.4

%

 

16.8

%

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended
September 30,

 

 

 

2019

 

2018

 

 

 

(unaudited)

 

Operating Activities

 

 

 

 

 

 

 

Net income

 

$

422,186

 

$

372,436

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation of flight equipment

 

 

514,948

 

 

428,437

 

Stock-based compensation

 

 

14,934

 

 

13,165

 

Deferred taxes

 

 

97,566

 

 

95,674

 

Amortization of debt discounts and issuance costs

 

 

26,330

 

 

24,231

 

Amortization of prepaid lease costs

 

 

24,190

 

 

18,713

 

Gain on aircraft sales, trading and other activity

 

 

(45,123)

 

 

(24,469)

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Other assets

 

 

(149,740)

 

 

(62,528)

 

Accrued interest and other payables

 

 

51,156

 

 

110

 

Rentals received in advance

 

 

15,109

 

 

4,335

 

Net cash provided by operating activities

 

 

971,556

 

 

870,104

 

Investing Activities

 

 

 

 

 

 

 

Acquisition of flight equipment under operating lease

 

 

(3,021,758)

 

 

(1,874,094)

 

Payments for deposits on flight equipment purchases

 

 

(727,982)

 

 

(548,225)

 

Proceeds from aircraft sales, trading and other activity

 

 

426,382

 

 

239,067

 

Acquisition of aircraft furnishings, equipment and other assets

 

 

(236,847)

 

 

(204,449)

 

Net cash used in investing activities

 

 

(3,560,205)

 

 

(2,387,701)

 

Financing Activities

 

 

 

 

 

 

 

Issuance of common stock upon exercise of options

 

 

31,823

 

 

4,188

 

Cash dividends paid on Class A common stock

 

 

(43,383)

 

 

(31,155)

 

Preferred dividends paid

 

 

(8,115)

 

 

 

Tax withholdings on stock-based compensation

 

 

(4,089)

 

 

(7,141)

 

Net change in unsecured revolving facility

 

 

8,000

 

 

(847,000)

 

Proceeds from debt financings

 

 

3,135,918

 

 

3,358,885

 

Payments in reduction of debt financings

 

 

(947,837)

 

 

(1,131,206)

 

Net proceeds from preferred stock issuance

 

 

242,139

 

 

 

Debt issuance costs

 

 

(9,443)

 

 

(9,327)

 

Security deposits and maintenance reserve receipts

 

 

230,966

 

 

173,754

 

Security deposits and maintenance reserve disbursements

 

 

(33,905)

 

 

(52,764)

 

Net cash provided by financing activities

 

 

2,602,074

 

 

1,458,234

 

Net increase/(decrease) in cash

 

 

13,425

 

 

(59,363)

 

Cash, cash equivalents and restricted cash at beginning of period

 

 

322,998

 

 

308,282

 

Cash, cash equivalents and restricted cash at end of period

 

$

336,423

 

$

248,919

 

Supplemental Disclosure of Cash Flow Information

 

 

 

 

 

 

 

Cash paid during the period for interest, including capitalized interest of $46,314 and $38,947 at September 30, 2019 and 2018, respectively

 

$

358,237

 

$

278,297

 

Cash paid for income taxes

 

$

9,515

 

$

2,506

 

Supplemental Disclosure of Noncash Activities

 

 

 

 

 

 

 

Buyer furnished equipment, capitalized interest and deposits on flight equipment purchases applied to acquisition of flight equipment

 

$

1,161,573

 

$

663,223

 

Cash dividends declared on Class A common stock, not yet paid

 

$

14,644

 

$

10,407

 

 

Contacts

Investors:
Mary Liz DePalma
Assistant Vice President, Investor Relations
Email: investors@airleasecorp.com

Jason Arnold
Assistant Vice President, Finance
Email: investors@airleasecorp.com

Media:
Laura Woeste
Manager, Media and Investor Relations
Email: press@airleasecorp.com

Social Media Profiles

Contacts

Investors:
Mary Liz DePalma
Assistant Vice President, Investor Relations
Email: investors@airleasecorp.com

Jason Arnold
Assistant Vice President, Finance
Email: investors@airleasecorp.com

Media:
Laura Woeste
Manager, Media and Investor Relations
Email: press@airleasecorp.com