Air Lease Corporation Announces Second Quarter 2013 Results
Air Lease Corporation Announces Second Quarter 2013 Results
LOS ANGELES--(BUSINESS WIRE)-- Air Lease Corporation (ALC) (NYS: AL) announced today the results of its operations for the three and six months ended June 30, 2013.
Highlights
Air Lease Corporation reports another consecutive quarter of fleet, revenue, profitability and financing growth:
Diluted EPS increased by 46.4% to $0.41 per share for the three months ended June 30, 2013 from $0.28 per share for the three months ended June 30, 2012
Revenues increased 31.4% to $207.9 million for the three months ended June 30, 2013 compared to $158.2 million for the three months ended June 30, 2012
Income before taxes increased 51.1% to $66.3 million with a pretax margin of 31.9% for the three months ended June 30, 2013 compared to income before taxes of $43.9 million with a pretax margin of 27.7% for the three months ended June 30, 2012
ALC became a launch customer for Boeing's 787-10 Dreamliner at the Le Bourget airshow in June 2013, signing a non-binding memorandum of understanding for 30 787-10 aircraft and three additional 787-9 aircraft
Acquired twelve aircraft (including ten aircraft from our order book and two incremental aircraft), growing our fleet to 174 aircraft spread across a broad customer base of 78 airlines in 44 countries
We amended our 2010 Warehouse Facility, reducing the facility size by $250.0 million to $1.0 billion, reducing the interest rate to LIBOR plus 2.25% per annum from LIBOR plus 2.50% per annum on drawn balances, reducing the interest rate to 0.50% per annum from 0.75% per annum on undrawn balances and extending the availability period to June 2015 from June 2013 with a subsequent four year term out option
Our Board of Directors declared ALC's third quarterly cash dividend of $0.025 per share on our outstanding common stock
The following table summarizes the results for the three and six months ended June 30, 2013 and 2012 (in thousands, except share amounts):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||
2013 | 2012 | % change | 2013 | 2012 | % change | |||||||||||||||||||||||
Revenues | $ | 207,872 | $ | 158,173 | 31.4% | $ | 399,869 | $ | 290,726 | 37.5% | ||||||||||||||||||
Income before taxes | $ | 66,311 | $ | 43,884 | 51.1% | $ | 127,983 | $ | 85,494 | 49.7% | ||||||||||||||||||
Net income | $ | 42,990 | $ | 28,172 | 52.6% | $ | 82,986 | $ | 55,099 | 50.6% | ||||||||||||||||||
Cash provided by operating activities | $ | 146,739 | $ | 138,698 | 5.8% | $ | 307,880 | $ | 240,220 | 28.2% | ||||||||||||||||||
Diluted EPS | $ | 0.41 | $ | 0.28 | 46.4% | $ | 0.79 | $ | 0.54 | 46.3% | ||||||||||||||||||
Adjusted net income(1) | $ | 51,199 | $ | 36,713 | 39.5% | $ | 98,967 | $ | 70,813 | 39.8% | ||||||||||||||||||
Adjusted EBITDA(1) | $ | 190,748 | $ | 142,899 | 33.5% | $ | 368,006 | $ | 261,216 | 40.9% | ||||||||||||||||||
(1) | See notes 1 and 2 to the Consolidated Statements of Income included in this earnings release for a discussion of the non-GAAP measures adjusted net income and adjusted EBITDA. | ||
"Our strong results continued during the second quarter as we increased our fully diluted EPS by 46% compared to Q2 of 2012. With an eye towards our customers' future requirements, and ALC's long term growth, we placed a launch order for the Boeing 787-10 at the Le Bourget Airshow, which will begin delivering in 2019. The growth in overall global passenger traffic remains at or above our expectations and we continue to see steady demand for our aircraft," said Steven F. Udvar-Házy, Chairman and Chief Executive Officer of Air Lease Corporation.
"ALC's fleet continues to perform well with no significant change in overall portfolio lease rate factor. Our performance remains consistent and forward placements overall are tracking with our expectations. Having closed a large upsizing of our bank facility, we were able to drive our composite cost of funds below 4% for the quarter," said John L. Plueger, President and Chief Operating Officer of Air Lease Corporation.
Fleet Growth
Building on our base of 162 aircraft at March 31, 2013, we increased our fleet by twelve aircraft during the second quarter of 2013 and ended the second quarter with 174 aircraft spread across a broad customer base of 78 airlines across 44 countries.
Below are portfolio metrics of our fleet as of June 30, 2013 and December 31, 2012:
June 30, 2013 | December 31, 2012 | ||||||||||||
Fleet size | 174 | 155 | |||||||||||
Weighted-average fleet age(1) | 3.5 years | 3.5 years | |||||||||||
Weighted-average remaining lease term(1) | 7.1 years | 6.8 years | |||||||||||
Aggregate fleet net book value | $ 7.0 billion | $ 6.3 billion |
(1) | Weighted-average fleet age and remaining lease term calculated based on net book value. | ||
Over 90% of our aircraft are operated internationally. The following table sets forth the percentage of net book value of our aircraft portfolio in the indicated regions as of June 30, 2013 and December 31, 2012:
June 30, 2013 | December 31, 2012 | ||||||||||||
Region | % of net book value | % of net book value | |||||||||||
Asia/Pacific | 39.3% | 35.9% | |||||||||||
Europe | 37.2% | 38.4% | |||||||||||
Central America, South America and Mexico | 11.7% | 12.6% | |||||||||||
U.S. and Canada | 6.4% | 7.3% | |||||||||||
The Middle East and Africa | 5.4% | 5.8% | |||||||||||
Total | 100.0% | 100.0% | |||||||||||
The following table sets forth the number of aircraft we leased by aircraft type as of June 30, 2013 and December 31, 2012:
June 30, 2013 | December 31, 2012 | ||||||||||||||||||||
Aircraft type | Number of aircraft | % of Total | Number of aircraft | % of Total | |||||||||||||||||
Airbus A319/320/321 | 51 | 29.3% | 41 | 26.4% | |||||||||||||||||
Airbus A330-200/300 | 20 | 11.5% | 17 | 11.0% | |||||||||||||||||
Boeing 737-700/800 | 49 | 28.2% | 46 | 29.7% | |||||||||||||||||
Boeing 767-300ER | 3 | 1.7% | 3 | 1.9% | |||||||||||||||||
Boeing 777-200/300ER | 7 | 4.0% | 7 | 4.5% | |||||||||||||||||
Embraer E175/190 | 32 | 18.4% | 31 | 20.0% | |||||||||||||||||
ATR 72-600 | 12 | 6.9% | 10 | 6.5% | |||||||||||||||||
Total | 174 | 100.0% | 155 | 100.0% | |||||||||||||||||
Debt Financing Activities
During the second quarter of 2013 and through August 8, 2013, the Company expanded our banking group to 41 institutions and entered into additional debt facilities aggregating $747.7 million, which included a $607.0 million addition to our Syndicated Unsecured Revolving Credit Facility and additional facilities aggregating $140.7 million. We ended the second quarter of 2013 with total unsecured debt outstanding of $3.6 billion. The Company's unsecured debt as a percentage of total debt increased to 68.8% as of June 30, 2013 from 60.2% as of December 31, 2012, while maintaining a composite cost of funds of 3.74%. We ended the third quarter of 2013 with a conservative balance sheet with a low residual value risk profile and ample liquidity of $1.3 billion.
Our financing plan remains focused on raising unsecured debt in the global bank and capital markets, reinvesting cash flow from operations, and to a limited extent export credit financing. In May 2013, the Company received a corporate credit rating of A- from Kroll Bond Ratings which further broadens our access to attractively priced capital.
The Company's debt financing was comprised of the following at June 30, 2013 and December 31, 2012:
June 30, 2013 | December 31, 2012 | ||||||||||||||
(dollars in thousands) | |||||||||||||||
Unsecured | |||||||||||||||
Senior notes | $ | 2,170,620 | $ | 1,775,000 | |||||||||||
Revolving credit facilities | 950,000 | 420,000 | |||||||||||||
Term financings | 285,429 | 248,916 | |||||||||||||
Convertible senior notes | 200,000 | 200,000 | |||||||||||||
Total unsecured debt financing | 3,606,049 | 2,643,916 | |||||||||||||
Secured | |||||||||||||||
Warehouse facilities | 842,133 | 1,061,838 | |||||||||||||
Term financings | 715,973 | 688,601 | |||||||||||||
Export credit financing | 74,866 | — | |||||||||||||
Total secured debt financing | 1,632,972 | 1,750,439 | |||||||||||||
Total secured and unsecured debt financing | 5,239,021 | 4,394,355 | |||||||||||||
Less: Debt discount | (12,679 | ) | (9,623 | ) | |||||||||||
Total debt | $ | 5,226,342 | $ | 4,384,732 | |||||||||||
Selected interest rates and ratios: | |||||||||||||||
Composite interest rate(1) | 3.74 | % | 3.94 | % | |||||||||||
Composite interest rate on fixed rate debt(1) | 5.06 | % | 5.06 | % | |||||||||||
Percentage of total debt at fixed rate | 53.57 | % | 53.88 | % | |||||||||||
(1) | This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization. | ||
Dividend
On August 8, 2013, our board of directors approved our third consecutive quarterly cash dividend of $0.025 per share on our outstanding common stock. The dividend will be paid on October 7, 2013 to holders of record of our common stock as of September 17, 2013.
Conference Call
In connection with the earnings release, Air Lease Corporation will host a conference call on August 8, 2013 at 4:30 PM Eastern Time to discuss the Company's second quarter 2013 financial results.
Investors can participate in the conference call by dialing (866) 788-0542 domestic or (857) 350-1680 international. The passcode for the call is 60047305.
For your convenience, the conference call can be replayed in its entirety beginning at 6:30 PM ET on August 8, 2013 until 11:59 PM ET on August 15, 2013. 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 57699038.
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.
About Air Lease Corporation
Air Lease Corporation is an 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 partners 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 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;
our inability to effectively deploy the net proceeds from our capital raising activities;
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, 2012 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) | |||||||||||||
June 30, 2013 | December 31, 2012 | ||||||||||||
(unaudited) | |||||||||||||
Assets | |||||||||||||
Cash and cash equivalents | $ | 234,299 | $ | 230,089 | |||||||||
Restricted cash | 77,975 | 106,307 | |||||||||||
Flight equipment subject to operating leases | 7,462,993 | 6,598,898 | |||||||||||
Less accumulated depreciation | (479,681 | ) | (347,035 | ) | |||||||||
6,983,312 | 6,251,863 | ||||||||||||
Deposits on flight equipment purchases | 861,403 | 564,718 | |||||||||||
Deferred debt issue costs—less accumulated amortization of $41,357 and $32,288 as of June 30, 2013 and December 31, 2012, respectively | 90,720 | 74,219 | |||||||||||
Other assets | 191,962 | 126,428 | |||||||||||
Total assets | $ | 8,439,671 | $ | 7,353,624 | |||||||||
Liabilities and Shareholders' Equity | |||||||||||||
Accrued interest and other payables | $ | 112,675 | $ | ||||||||||
