LOS ANGELES, Nov. 09, 2017 (GLOBE NEWSWIRE) -- Air Lease Corporation (ALC) (NYSE:AL) announces financial results for the three and nine months ended September 30, 2017.
- Revenues:
- $377 million for the three months ended September 30, 2017, an increase of 6.1%
- $1.1 billion for the nine months ended September 30, 2017, an increase of 6.6%
- Diluted earnings per share:
- $0.90 for the three months ended September 30, 2017, an increase of 4.7%
- $2.59 for the nine months ended September 30, 2017, an increase of 1.6%
- Adjusted diluted earnings per share before income taxes:
- $1.50 for the three months ended September 30, 2017, an increase of 4.9%
- $4.34 for the nine months ended September 30, 2017, an increase of 3.3%
- Margin:
- Pre-tax margin of 40.9% for the three months ended September 30, 2017
- Adjusted pre-tax margin of 44.2% for the three months ended September 30, 2017
- Return on equity:
- Pre-tax return on equity of 17.1% for the trailing twelve months ended September 30, 2017
- Adjusted pre-tax return on equity of 18.5% for the trailing twelve months ended September 30, 2017
Highlights
- Increased our quarterly cash dividend by 33%, from $0.075 per share to $0.10 per share. The next quarterly dividend of $0.10 per share will be paid on January 4, 2018 to holders of record of our common stock as of December 14, 2017.
- Added three new aircraft with a cost of $245 million ending the quarter with $12.7 billion in aircraft with a weighted average age of 3.7 years and a weighted average lease term remaining of 6.8 years.
- Sold seven aircraft, including three aircraft sold to Thunderbolt Aircraft Lease Limited, one aircraft sold to Blackbird Capital II, LLC and three aircraft sold to other third parties, for total sales proceeds of $185 million.
- Placed 91% of our order book on long-term leases for aircraft delivering through 2019 and 72% through 2020.
“We had a solid quarter, delivering strong, consistent margins, a 6.1% increase in revenues and a 6.6% increase in pre-tax income compared to the third quarter of 2016. Global passenger traffic growth and the need to replace aging aircraft continue to drive healthy demand for new aircraft. Looking ahead, we remain focused on our core leasing business, harvesting leasing placements in 2020 and beyond, and further developing our management and side car platforms,” said John L. Plueger, Chief Executive Officer and President.
“Since ALC’s inception, we have strived to build an industry leading aircraft lessor with strong and predictable growth, and to reward our shareholders in line with ALC’s achievements. With this in mind, we are pleased to announce that the Board of Directors has authorized a 33% increase in ALC’s quarterly dividend to $0.10 per share from $0.075 per share. This dividend increase is in recognition of ALC’s performance as well as the confidence we have in the business going forward,” said Steven F. Udvar-Házy, Executive Chairman of the Board.
The following table summarizes the results for the three and nine months ended September 30, 2017 and 2016 (in thousands, except share amounts):
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||||
| September 30, | September 30, | ||||||||||||||||||||||||||||
| 2017 | 2016 | $ change | % change | 2017 | 2016 | $ change | % change | ||||||||||||||||||||||
| Revenues | $ | 376,765 | $ | 355,101 | $ | 21,664 | 6.1 | % | $ | 1,117,909 | $ | 1,048,568 | $ | 69,341 | 6.6 | % | |||||||||||||
| Income before taxes | $ | 154,119 | $ | 144,573 | $ | 9,546 | 6.6 | % | $ | 443,866 | $ | 430,835 | $ | 13,031 | 3.0 | % | |||||||||||||
| Net income | $ | 99,188 | $ | 93,276 | $ | 5,912 | 6.3 | % | $ | 285,050 | $ | 277,937 | $ | 7,113 | 2.6 | % | |||||||||||||
| Adjusted net income before income taxes(1) | $ | 166,436 | $ | 157,256 | $ | 9,180 | 5.8 | % | $ | 479,739 | $ | 460,557 | $ | 19,182 | 4.2 | % | |||||||||||||
| Diluted EPS | $ | 0.90 | $ | 0.86 | $ | 0.04 | 4.7 | % | $ | 2.59 | $ | 2.55 | $ | 0.04 | 1.6 | % | |||||||||||||
| Adjusted diluted EPS before income taxes(1) | $ | 1.50 | $ | 1.43 | $ | 0.07 | 4.9 | % | $ | 4.34 | $ | 4.20 | $ | 0.14 | 3.3 | % | |||||||||||||
| (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 and a reconciliation to their most comparable GAAP financial measures. | |||||||||||||||||||||||||||||
Flight Equipment Portfolio
Our fleet grew by 5.2% based on net book value of $12.7 billion as of September 30, 2017 compared to $12.0 billion as of December 31, 2016. As of September 30, 2017, our fleet was comprised of 236 owned aircraft, with a weighted-average age and remaining lease term of 3.7 years and 6.8 years, respectively, and 51 managed aircraft. We have a globally diversified customer base of 90 airlines in 55 countries. For the fourth quarter of 2017, we have contracted to deliver eight aircraft from our new order pipeline and five aircraft from the secondary market, all subject to lease, representing capital expenditures of approximately $913 million.
During the quarter ended September 30, 2017, we took delivery of three new aircraft and sold seven aircraft from our operating lease portfolio.
Below are the key portfolio metrics of our fleet:
| September 30, 2017 | December 31, 2016 | ||||||||||
| Aggregate fleet net book value | $12.7 billion | $12.0 billion | |||||||||
| Weighted-average fleet age(1) | 3.7 years | 3.8 years | |||||||||
| Weighted-average remaining lease term(1) | 6.8 years | 6.9 years | |||||||||
| Fleet size | 236 | 237 | |||||||||
| Managed fleet | 51 | 30 | |||||||||
| Order book | 372 | 363 | |||||||||
| Current fleet contracted rentals | $9.6 billion | $9.4 billion | |||||||||
| Committed fleet rentals | $13.7 billion | $14.4 billion | |||||||||
| Total committed rentals | $23.3 billion | $23.8 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:
| September 30, 2017 | December 31, 2016 | |||||||
| Region | % of Net Book Value | % of Net Book Value | ||||||
| Europe | 32.2 | % | 29.5 | % | ||||
| China | 21.7 | % | 23.0 | % | ||||
| Asia (excluding China) | 20.9 | % | 22.7 | % | ||||
| The Middle East and Africa | 9.2 | % | 7.8 | % | ||||
| Central America, South America and Mexico | 7.7 | % | 7.8 | % | ||||
| U.S. and Canada | 4.8 | % | 5.4 | % | ||||
| Pacific, Australia and New Zealand | 3.5 | % | 3.8 | % | ||||
| Total | 100.0 | % | 100.0 | % | ||||
The following table details the composition of our fleet by aircraft type:
| September 30, 2017 | December 31, 2016 | |||||||||||||||||
| Aircraft type | Number of Aircraft | % of Total | Number of Aircraft | % of Total | ||||||||||||||
| Airbus A319-100 | 1 | 0.4% | 3 | 1.3% | ||||||||||||||
| Airbus A320-200 | 40 | 17.0% | 44 | 18.6% | ||||||||||||||
| Airbus A320-200neo | 5 | 2.1% | 1 | 0.4% | ||||||||||||||
| Airbus A321-200 | 29 | 12.3% | 31 | 13.1% | ||||||||||||||
| Airbus A321-200neo | 3 | 1.3% | — | —% | ||||||||||||||
| Airbus A330-200 | 16 | 6.8% | 17 | 7.2% | ||||||||||||||
| Airbus A330-300 | 5 | 2.1% | 5 | 2.1% | ||||||||||||||
| Boeing 737-700 | 3 | 1.3% | 8 | 3.4% | ||||||||||||||
| Boeing 737-800 | 101 | 42.8% | 95 | 40.1% | ||||||||||||||
| Boeing 767-300ER | 1 | 0.4% | 1 | 0.4% | ||||||||||||||
| Boeing 777-200ER | 1 | 0.4% | 1 | 0.4% | ||||||||||||||
| Boeing 777-300ER | 24 | 10.2% | 22 | 9.3% | ||||||||||||||
| Boeing 787-9 | 6 | 2.5% | 3 | 1.3% | ||||||||||||||
| Embraer E190 | 1 | 0.4% | 6 | 2.4% | ||||||||||||||
| Total | 236 | 100.0% | 237 | 100.0% | ||||||||||||||
Debt Financing Activities
We ended the third quarter of 2017 with total debt financing, net of discounts and issuance costs, of $9.2 billion, resulting in a debt to equity ratio of 2.53:1.
Our debt financing was comprised of unsecured debt of $8.8 billion and such unsecured debt represented 94.0% of our debt portfolio as of September 30, 2017 as compared to 92.4% as of December 31, 2016. Our fixed rate debt represented 78.1% of our debt portfolio as of September 30, 2017 as compared to 83.5% as of December 31, 2016. Our composite cost of funds decreased to 3.11% as of September 30, 2017 as compared to 3.42% as of December 31, 2016.
Our debt financing was comprised of the following at September 30, 2017 and December 31, 2016 (dollars in thousands):
| September 30, | December 31, 2016 | ||||||
| 2017 | |||||||
| Unsecured | |||||||
| Senior notes | $ | 6,919,871 | $ | 6,953,343 | |||
| Revolving credit facility | 1,436,000 | 766,000 | |||||
| Term financings | 211,782 | 211,346 | |||||
| Convertible senior notes | 199,985 | 199,995 | |||||
| Total unsecured debt financing | 8,767,638 | 8,130,684 | |||||
| Secured | |||||||
| Term financings | 511,353 | 619,767 | |||||
| Export credit financing | 46,583 | 51,574 | |||||
| Total secured debt financing | 557,936 | 671,341 | |||||
| Total debt financing | 9,325,574 | 8,802,025 | |||||
| Less: Debt discounts and issuance costs | (88,254 | ) | (88,151 | ) | |||
| Debt financing, net of discounts and issuance costs | $ | 9,237,320 | $ | 8,713,874 | |||
| Selected interest rates and ratios: | |||||||
| Composite interest rate(1) | 3.11 | % | 3.42 | % | |||
| Composite interest rate on fixed-rate debt(1) | 3.29 | % | 3.69 | % | |||
| Percentage of total debt at fixed-rate | 78.08 | % | 83.48 | % | |||
| (1) This rate does not include the effect of upfront fees, undrawn fees or discount and issuance cost amortization. | |||||||
Conference Call
In connection with the earnings release, Air Lease Corporation will host a conference call on November 9, 2017 at 4:30 PM Eastern Time to discuss the Company's financial results for the third quarter of 2017.
Investors can participate in the conference call by dialing (855) 308-8321 domestic or (330) 863-3465 international. The passcode for the call is 96216151.
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 9, 2017 until 7:30 PM ET November 16, 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 96216151.
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.
Contact
| Investors: |
| Mary Liz DePalma Director of Investor Relations Email: mdepalma@airleasecorp.com |
| Media: |
| Laura Woeste Manager, Media and Investor Relations Email: lwoeste@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 effectively oversee our managed fleet;
- 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)
| September 30, 2017 | December 31, 2016 | ||||||
| (unaudited) | |||||||
| Assets | |||||||
| Cash and cash equivalents | $ | 226,019 | $ | 274,802 | |||
| Restricted cash | 19,411 | 16,000 | |||||
| Flight equipment subject to operating leases | 14,397,998 | 13,597,530 | |||||
| Less accumulated depreciation | (1,725,061 | ) | (1,555,605 | ||||
| 12,672,937 | 12,041,925 | ||||||
| Deposits on flight equipment purchases | 1,551,750 | 1,290,676 | |||||
| Other assets | 431,530 | 352,213 | |||||
| Total assets | $ | 14,901,647 | $ | 13,975,616 | |||
| Liabilities and Shareholders’ Equity | |||||||
| Accrued interest and other payables | $ | 232,399 | $ | 256,775 | |||
| Debt financing, net of discounts and issuance costs | 9,237,320 | 8,713,874 | |||||
| Security deposits and maintenance reserves on flight equipment leases | 850,363 | 856,335 | |||||
| Rentals received in advance | 102,442 | 99,385 | |||||
| Deferred tax liability | 823,540 | 667,060 | |||||
| Total liabilities | $ | 11,246,064 | $ | 10,593,429 | |||
| 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 103,239,538 and 102,844,477 shares at September 30, 2017 and December 31, 2016, respectively | 1,032 | 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 | 2,248,950 | 2,237,866 | |||||
| Retained earnings | 1,405,601 | 1,143,311 | |||||
| Total shareholders’ equity | $ | 3,655,583 | $ | 3,382,187 | |||
| Total liabilities and shareholders’ equity | $ | 14,901,647 | $ | 13,975,616 | |||
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share, per share amounts and percentages)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| (unaudited) | ||||||||||||||||
| Revenues | ||||||||||||||||
| Rental of flight equipment | $ | 359,487 | $ | 340,864 | $ | 1,072,254 | $ | 985,375 | ||||||||
| Aircraft sales, trading and other | 17,278 | 14,237 | 45,655 | 63,193 | ||||||||||||
| Total revenues | 376,765 | 355,101 | 1,117,909 | 1,048,568 | ||||||||||||
| Expenses | ||||||||||||||||
| Interest | 63,514 | 64,720 | 193,591 | 188,870 | ||||||||||||
| Amortization of debt discounts and issuance costs | 6,959 | 8,081 | 22,388 | 22,630 | ||||||||||||
| Interest expense | 70,473 | 72,801 | 215,979 | 211,500 | ||||||||||||
| Depreciation of flight equipment | 127,553 | 113,251 | 377,952 | 333,962 | ||||||||||||
| Selling, general and administrative | 19,262 | 19,874 | 65,677 | 59,929 | ||||||||||||
| Stock-based compensation | 5,358 | 4,602 | 14,435 | 12,342 | ||||||||||||
| Total expenses | 222,646 | 210,528 | 674,043 | 617,733 | ||||||||||||
| Income before taxes | 154,119 | 144,573 | 443,866 | 430,835 | ||||||||||||
| Income tax expense | (54,931 | ) | (51,297 | ) | (158,816 | ) | (152,898 | ) | ||||||||
| Net income | $ | 99,188 | $ | 93,276 | $ | 285,050 | $ | 277,937 | ||||||||
| Net income per share of Class A and B common stock | ||||||||||||||||
| Basic | $ | 0.96 | $ | 0.91 | $ | 2.76 | $ | 2.70 | ||||||||
| Diluted | $ | 0.90 | $ | 0.86 | $ | 2.59 | $ | 2.55 | ||||||||
| Weighted-average shares outstanding | ||||||||||||||||
| Basic | 103,221,692 | 102,842,996 | 103,117,695 | 102,786,822 | ||||||||||||
| Diluted | 111,709,545 | 110,788,913 | 111,558,125 | 110,737,889 | ||||||||||||
| Other financial data | ||||||||||||||||
| Pre-tax profit margin | 40.9 | % | 40.7 | % | 39.7 | % | 41.1 | % | ||||||||
| Adjusted net income before income taxes(1) | $ | 166,436 | $ | 157,256 | $ | 479,739 | $ | 460,557 | ||||||||
| Adjusted margin before income taxes(1) | 44.2 | % | 44.3 | % | 43 | % | 44.1 | % | ||||||||
| Adjusted diluted earnings per share before income taxes(1) | $ | 1.50 | $ | 1.43 | $ | 4.34 | $ | 4.20 | ||||||||
| Pre-tax return on equity (TTM) | 17.1 | % | 17.8 | % | 17.1 | % | 17.8 | % | ||||||||
| Adjusted pre-tax return on equity (TTM)(1) | 18.5 | % | 19.0 | % | 18.5 | % | 19.0 | % | ||||||||
(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 our 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 | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Reconciliation of net income to adjusted net income before income taxes: | (unaudited) | ||||||||||||||
| Net income | $ | 99,188 | $ | 93,276 | $ | 285,050 | $ | 277,937 | |||||||
| Amortization of debt discounts and issuance costs | 6,959 | 8,081 | 22,388 | 22,630 | |||||||||||
| Stock-based compensation | 5,358 | 4,602 | 14,435 | 12,342 | |||||||||||
| Insurance recovery on settlement | — | — | (950 | ) | (5,250 | ) | |||||||||
| Provision for income taxes | 54,931 | 51,297 | 158,816 | 152,898 | |||||||||||
| Adjusted net income before income taxes | $ | 166,436 | $ | 157,256 | $ | 479,739 | $ | 460,557 | |||||||
| Reconciliation of denominator of adjusted margin before income taxes: | |||||||||||||||
| Total revenues | $ | 376,765 | $ | 355,101 | $ | 1,117,909 | $ | 1,048,568 | |||||||
| Insurance recovery on settlement | — | — | (950 | ) | (5,250 | ) | |||||||||
| Total revenues, excluding insurance recovery on settlement | $ | 376,765 | $ | 355,101 | $ | 1,116,959 | $ | 1,043,318 | |||||||
| Adjusted margin before income taxes(1) | 44.2 | % | 44.3 | % | 43 | % | 44.1 | % | |||||||
| (1) Adjusted margin before income taxes is adjusted net income before income taxes divided by total revenues, excluding recovery on settlement. | |||||||||||||||
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share, per share amounts and percentages)
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 | Nine Months Ended | ||||||||||||||
| September 30, | September 30, | ||||||||||||||
| 2017 | 2016 | 2017 | 2016 | ||||||||||||
| Reconciliation of net income to adjusted diluted earnings per share before income taxes: | (unaudited) | ||||||||||||||
| Net income | $ | 99,188 | $ | 93,276 | $ | 285,050 | $ | 277,937 | |||||||
| Amortization of debt discounts and issuance costs | 6,959 | 8,081 | 22,388 | 22,630 | |||||||||||
| Stock-based compensation | 5,358 | 4,602 | 14,435 | 12,342 | |||||||||||
| Insurance recovery on settlement | — | — | (950 | ) | (5,250 | ) | |||||||||
| Provision for income taxes | 54,931 | 51,297 | 158,816 | 152,898 | |||||||||||
| Adjusted net income before income taxes | $ | 166,436 | $ | 157,256 | $ | 479,739 | $ | 460,557 | |||||||
| Assumed conversion of convertible senior notes | 1,426 | 1,472 | 4,263 | 4,382 | |||||||||||
| Adjusted net income before income taxes plus assumed conversions | $ | 167,862 | $ | 158,728 | $ | 484,002 | $ | 464,939 | |||||||
| Weighted-average diluted shares outstanding | 111,709,545 | 110,788,913 | 111,558,125 | 110,737,889 | |||||||||||
| Adjusted diluted earnings per share before income taxes | $ | 1.50 | $ | 1.43 | $ | 4.34 | $ | 4.20 | |||||||
The following table shows the reconciliation of net income to adjusted pre-tax return on equity (in thousands, except share and per share amounts):
| Trailing Twelve Months | |||||||
| September 30, | |||||||
| 2017 | 2016 | ||||||
| Reconciliation of net income to adjusted pre-tax return on equity: | (unaudited) | ||||||
| Net income | $ | 382,038 | $ | 358,836 | |||
| Amortization of debt discounts and issuance costs | 30,700 | 30,355 | |||||
| Stock-based compensation | 19,034 | 16,992 | |||||
| Insurance recovery on settlement | (950 | ) | (9,750 | ) | |||
| Provision for income taxes | 211,231 | 196,702 | |||||
| Adjusted net income before income taxes | $ | 642,053 | $ | 593,135 | |||
| Shareholders' equity as of September 30, 2016 and 2015, respectively | $ | 3,288,289 | $ | 2,939,448 | |||
| Shareholders' equity as of September 30, 2017 and 2016, respectively | $ | 3,655,583 | $ | 3,288,289 | |||
| Average shareholders' equity | $ | 3,471,936 | $ | 3,113,869 | |||
| Adjusted pre-tax return on equity (TTM) | 18.5 | % | 19.0 | % | |||
Air Lease Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
| Nine Months Ended | |||||||
| September 30, | |||||||
| 2017 | 2016 | ||||||
| (unaudited) | |||||||
| Operating Activities | |||||||
| Net income | $ | 285,050 | $ | 277,937 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation of flight equipment | 377,952 | 333,962 | |||||
| Stock-based compensation | 14,435 | 12,342 | |||||
| Deferred taxes | 158,816 | 152,898 | |||||
| Amortization of debt discounts and issuance costs | 22,388 | 22,630 | |||||
| Gain on aircraft sales, trading and other activity | (23,785 | ) | (47,687 | ) | |||
| Changes in operating assets and liabilities: | |||||||
| Other assets | (80,509 | ) | (24,305 | ) | |||
| Accrued interest and other payables | (5,768 | ) | 23,769 | ||||
| Rentals received in advance | 3,057 | 9,933 | |||||
| Net cash provided by operating activities | 751,636 | 761,479 | |||||
| Investing Activities | |||||||
| Acquisition of flight equipment under operating lease | (1,304,317 | ) | (1,436,679 | ) | |||
| Payments for deposits on flight equipment purchases | (565,343 | ) | (641,737 | ) | |||
| Proceeds from aircraft sales, trading and other activity | 595,796 | 649,210 | |||||
| Acquisition of aircraft furnishings, equipment and other assets | (134,709 | ) | (165,378 | ) | |||
| Net cash used in investing activities | (1,408,573 | ) | (1,594,584 | ) | |||
| Financing Activities | |||||||
| Issuance of common stock upon exercise of options and warrants | 2,214 | — | |||||
| Cash dividends paid | (23,191 | ) | (15,413 | ) | |||
| Tax withholdings on stock-based compensation | (5,600 | ) | (5,890 | ) | |||
| Net change in unsecured revolving facilities | 670,000 | 298,000 | |||||
| Proceeds from debt financings | 1,101,673 | 1,526,001 | |||||
| Payments in reduction of debt financings | (1,266,440 | ) | (1,000,559 | ) | |||
| Net change in restricted cash | (3,411 | ) | (534 | ) | |||
| Debt issuance costs | (4,164 | ) | (4,362 | ) | |||
| Security deposits and maintenance reserve receipts | 173,879 | 153,151 | |||||
| Security deposits and maintenance reserve disbursements | (36,806 | ) | (47,142 | ) | |||
| Net cash provided by financing activities | 608,154 | 903,252 | |||||
| Net (decrease)/increase in cash | (48,783 | ) | 70,147 | ||||
| Cash and cash equivalents at beginning of period | 274,802 | 156,675 | |||||
| Cash and cash equivalents at end of period | $ | 226,019 | $ | 226,822 | |||
| Supplemental Disclosure of Cash Flow Information | |||||||
| Cash paid during the period for interest, including capitalized interest of $33,618 and $30,137 at September 30, 2017 and 2016, respectively | $ | 252,806 | $ | 224,420 | |||
| 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 | $ | 398,024 | $ | 642,417 | |||
| Cash dividends declared, not yet paid | $ | 7,742 | $ | 5,142 | |||