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Air Lease Corporation Reports Results for the Second Quarter of 2011

Dépèche transmise le 11 août 2011 par Business Wire

Air Lease Corporation Reports Results for the Second Quarter of 2011

Air Lease Corporation Reports Results for the Second Quarter of 2011

LOS ANGELES--(BUSINESS WIRE)--Air Lease Corporation (ALC) (NYSE: AL):

“Building on the success of our IPO in April, ALC continued generating growth by significantly increasing our portfolio of aircraft in the second quarter”

 
Second Quarter 2011 Highlights
   

• Second consecutive quarter of profitability growth

°

Pre-tax income increased 121% to $10.9 million and net income increased 121% to $7.0 million, compared to Q1 2011

°

Adjusted net income1 increased 66% to $19.5 million and adjusted EBITDA1 increased 39% to $62.8 million, compared to Q1 2011

°

Quarterly cash provided by operating activities increased 26% to $48.5 million, compared to Q1 2011

• Initial public offering on the New York Stock Exchange completed on April 25, 2011

°

Gross proceeds of $922.9 million

• Grew our fleet and signed lease placements for deliveries from our order book

°

From 49 aircraft at the end of Q1 2011, we purchased 16 aircraft, growing our fleet by 33% to 65 aircraft at the end of Q2 2011

°

Entered into nine lease transactions covering 18 aircraft with eight customers

• Strengthened our order book

°

Ended Q2 with 2011 forward purchase commitments for 22 new aircraft and nine used aircraft resulting in a total of 96 aircraft, building towards our goal of 100 aircraft by the end of the year

°

Entered into letters of intent to acquire up to 83 new aircraft from Airbus, Boeing and Embraer, delivering between 2012 and 2020

• New source of funding

   

°

Issued $120.0 million in senior unsecured notes with a five-year term and a coupon of 5% in a private placement to institutional investors

 

Air Lease Corporation (ALC) (NYSE: AL) announced today the results of its operations for the second quarter ended June 30, 2011. ALC recorded its second quarterly positive pre-tax income of $10.9 million and net income of $7.0 million and recorded cash flow from operations of $48.5 million.

“Building on the success of our IPO in April, ALC continued generating growth by significantly increasing our portfolio of aircraft in the second quarter,” said Steven F. Udvar-Házy, Chairman and CEO of Air Lease Corporation. “Despite current volatility in the marketplace, the aviation industry has entered a period of expansion and ALC is capitalizing on opportunities as market conditions evolve.”

“With respect to the recent economic turmoil, credit markets have remained liquid and have had little impact on ALC’s short term borrowing costs thus far,” added John L. Plueger, President and Chief Operating Officer of Air Lease Corporation. “ALC is well capitalized with a strong balance sheet that has a debt to equity ratio less than 1:1. We have ample liquidity to continue our growth trajectory amidst the current market dislocation.”

The following table summarizes the results for the quarters ended June 30, 2011 and March 31, 2011:

              Q2 2011             Q1 2011             % change  
Revenues           $ 74,344           $ 55,215             35 %
Pre-tax income $ 10,888 $ 4,924 121 %
Net income $ 7,023 $ 3,176 121 %
Cash provided by operating activities $ 48,483 $ 38,549 26 %
Adjusted net income(1) $ 19,459 $ 11,713 66 %
Adjusted EBITDA(1) $ 62,780 $ 45,249 39 %
Diluted EPS           $ 0.08           $ 0.05             60 %

______________________

1 See notes 1 and 2 to the Consolidated Statement of Operations included in this press release for a discussion of the non-GAAP measures adjusted net income and adjusted EBITDA.

 

Fleet Growth

Building on our base of 49 aircraft at March 31, 2011, we added 16 aircraft during the second quarter of 2011 and ended the quarter with 65 aircraft spread across a diverse and balanced customer base of 43 airlines in 26 countries. We continue to evaluate opportunities on an ongoing basis to acquire attractive aircraft from other leasing companies and our airline customers, as well as opportunistic transactions with the airframe manufacturers such that we estimate we will grow our fleet to approximately 100 aircraft by the end of 2011.

Below are portfolio metrics as of June 30, 2011 and December 31, 2010:

(dollars in thousands)       June 30, 2011                               December 31, 2010
Fleet size       65                               40
Weighted average fleet age 3.6 years 3.8 years
Weighted average remaining lease term 6.1 years 5.6 years
Aggregate fleet cost       $ 2,876,962                               $ 1,649,071
 

The following table sets forth the number of aircraft we leased in the indicated regions as of June 30, 2011 and December 31, 2010:

        June 30, 2011           December 31, 2010  
         

Number of
aircraft

        % of total          

Number of
aircraft

        % of total  
Europe 24         36.9 % 16         40.0 %
Asia/Pacific 22 33.9 11 27.5
Central America, South America and Mexico 8 12.3 5 12.5
U.S. and Canada 8 12.3 5 12.5
The Middle East and Africa 3         4.6           3         7.5  
Total         65         100.0 %         40         100.0 %
 

The following table sets forth the number of aircraft we leased by aircraft type as of June 30, 2011 and December 31, 2010:

        June 30, 2011           December 31, 2010  
         

Number of
aircraft

        % of total          

Number of
aircraft

        % of total  
Airbus A319-100 7         10.8 % 7         17.5 %
Airbus A320-200 16 24.6 8 20.0
Airbus A321-200 3 4.6 2 5.0
Airbus A330-200 5 7.7 2 5.0
Boeing 737-700 5 7.7 5 12.5
Boeing 737-800 24 36.9 14 35.0
Boeing 767-300ER 1 1.5 - -

Boeing 777-300ER

4         6.2           2         5.0  

Total

        65         100.0 %         40         100.0 %
 

We have made further progress in placing our aircraft. As of June 30, 2011, we have entered into contracts for the lease of new and used aircraft scheduled to be delivered through 2017 as follows:


Delivery year

     

Number of
aircraft

       

Number
leased

       

% Leased

 
2011       31         31         100.0 %
2012 46 37 80.4
2013 25 14 56.0
2014 26 6 23.1
2015 24 ̶ ̶

Thereafter

91         ̶         ̶  

Total

      243         88         36.2 %
 

Financing Activities

As of June 30, 2011, ALC had built a diverse lending group consisting of 16 banks providing lending facilities with an overall composite cost of funds of 3.29%. This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization. During the second quarter of 2011, the Company issued $120.0 million in senior unsecured notes in a private placement to institutional investors. The notes have a five-year term and a coupon of 5.0%. In addition, we entered into two five-year and one three-year unsecured term facilities totaling $17.0 million with interest rates ranging from 3.0% to 4.0%. As of quarter end, we had 12 unsecured revolving bilateral credit facilities totaling $313.0 million. In addition, two of our wholly-owned subsidiaries entered into two separate secured term facilities, with recourse to the Company, aggregating $82.8 million. The two facilities consisted of a three-year $20.3 million facility at a floating rate of LIBOR plus 2.75% and a $62.5 million facility with an eight-year $56.0 million tranche at a rate of LIBOR plus 2.99% and a two-year $6.5 million tranche at a rate of LIBOR plus 2.10%. In connection with these facilities, the Company pledged $129.0 million in aircraft collateral.

The Company’s consolidated debt as of June 30, 2011 and December 31, 2010 is summarized below:

  (dollars in thousands)           June 30, 2011             December 31, 2010  
Warehouse credit facility         $ 709,252         $ 554,915
Secured term debt financing 503,419 223,981
Unsecured financing 170,899   133,085  
Total $ 1,383,570   $ 911,981  
Composite interest rate (1)           3.29 %           3.32 %
 

(1)

This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization.

 

On April 1, 2011, we executed an amendment to the Warehouse Facility that took effect on April 21, 2011. This facility, as amended, provides us with financing of up to $1.25 billion. We are able to draw on this facility, as amended, during an availability period that was extended to June 2013. The interest rate on this facility, as amended, was reduced to LIBOR plus 2.50% on drawn balances and 0.75% on undrawn balances.

During the second quarter of 2011, the Company drew $104.9 million under the Warehouse Facility and incrementally pledged $163.1 million in aircraft collateral. As of June 30, 2011, the Company had borrowed $709.3 million under the Warehouse Facility and pledged 28 aircraft as collateral with a net book value of $1.2 billion.

Financial Results for the Second Quarter of 2011

For the three months ended June 30, 2011, the Company reported consolidated net income of $7.0 million, or $0.08 per diluted share, compared to a consolidated net loss of $41.1 million, or $2.37 per diluted share, for the three months ended June 30, 2010. The increase in net income for 2011, compared to 2010, was primarily attributable to the acquisition and lease of additional aircraft and the effects of a one-time $35.8 million charge for the amortization of convertible debt discounts recorded during the second quarter of 2010.

For the quarter ended June 30, 2011, we recorded $74.0 million in rental revenue, which includes overhaul revenue of $2.6 million. For the quarter ended June 30, 2010, we recorded $1.2 million in rental revenue, which includes overhaul revenue of $0.2 million. The increase in rental revenue for the three months ended June 30, 2011, compared to 2010, was attributable to the acquisition and lease of additional aircraft. The full impact on rental revenue for aircraft acquired during the quarter will be reflected in subsequent periods.

Interest expense totaled $15.8 million and $38.5 million for the three months ended June 30, 2011 and 2010, respectively. The change was primarily due to an increase in our outstanding debt balances resulting in an $8.3 million increase in interest, an increase of $1.5 million in amortization of our deferred debt issue costs and a $3.3 million extinguishment of debt charge resulting from replacing two banks in our Warehouse Facility in connection with its modification in April 2011, offset by a one-time $35.8 million charge for the amortization of convertible debt discounts recorded during the second quarter of 2010.

We recorded selling, general and administrative expenses of $11.3 million and $5.8 million for the three months ended June 30, 2011 and 2010, respectively. Selling, general and administrative expense represents a disproportionately higher percentage of revenues during our initial years of operation. As we continue to add new aircraft to our portfolio, we expect selling, general and administrative expense to continue decreasing as a percentage of our revenue.

During the three months ended June 30, 2011, the Company recorded $48.5 million of cash from operations compared to $0.2 million for the three months ended June 30, 2010. The increase in cash from operating activities for 2011, compared to 2010, was primarily attributable to the acquisition and lease of additional aircraft.

Financial Results for the First Six Months of 2011

For the six months ended June 30, 2011, the Company reported consolidated net income of $10.2 million, or $0.13 per diluted share, compared to a consolidated net loss of $41.6 million, or $4.17 per diluted share, for the period from inception to June 30, 2010. The increase in net income for 2011, compared to 2010, was primarily attributable to the acquisition and lease of additional aircraft and the effects of a one-time $35.8 million charge for the amortization of convertible debt discounts recorded during the second quarter of 2010.

For the six months ended June 30, 2011, we recorded $128.6 million in rental revenue, which includes overhaul revenue of $4.3 million. For the period from inception to June 30, 2010, we recorded $1.2 million in rental revenue, which includes overhaul revenue of $0.2 million. The increase in rental revenue for 2011, compared to 2010, was attributable to the acquisition and lease of additional aircraft. The full impact on rental revenue for aircraft acquired during the quarter will be reflected in subsequent periods.

Interest expense totaled $27.2 million and $38.5 million for the six months ended June 30, 2011 and the period from inception to June 30, 2010, respectively. The change was primarily due to an increase in our outstanding debt balances resulting in a $17.3 million increase in interest, an increase of $3.8 million in amortization of our deferred debt issue costs and a $3.3 million extinguishment of debt charge resulting from replacing two banks in our Warehouse Facility in connection with its modification in April 2011, offset by a one-time $35.8 million charge for the amortization of convertible debt discounts recorded during the second quarter of 2010.

We recorded selling, general and administrative expenses of $21.1 million and $6.2 million for the six months ended June 30, 2011 and the period from inception to June 30, 2010, respectively. Selling, general and administrative expense represents a disproportionately higher percentage of revenues during our initial years of operation. As we continue to add new aircraft to our portfolio, we expect selling, general and administrative expense to continue decreasing as a percentage of our revenue.

During the six months ended June 30, 2011, the Company recorded $87.0 million of cash from operations compared to $2.0 million for the period from inception to June 30, 2010. The increase in cash from operating activities for 2011, compared to 2010, was primarily attributable to the acquisition and lease of additional aircraft.

Conference Call

In connection with the earnings release, Air Lease Corporation will host a conference call on August 11, 2011 at 4:30 PM Eastern Time to discuss the Company's financial results for the second quarter of 2011.

Investors can participate in the conference call by dialing 1-800-798-2796 domestic or 1-617-614-6204 international. The passcode for the call is 11523124.

For your convenience, the conference call can be replayed in its entirety beginning at 7:30 PM ET on August 11, 2011 until 11:59 PM ET August 12, 2011. If you wish to listen to the replay of this conference call, please dial 1-888-286-8010 domestic or 1-617-801-6888 international and enter passcode 61067132.

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

Launched in 2010, 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 that are not historical facts and may be forward-looking. 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 status as a recently organized corporation with a limited operating history;
  • 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 of our equity offerings;
  • the existence of registration rights with respect to a portion of our outstanding common stock; and
  • potential natural disasters and terrorist attacks and the amount of our insurance coverage, if any, relating thereto.

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
(Unaudited)
                 
 
(in thousands, except share data)           June 30, 2011             December 31, 2010
Assets
Cash and cash equivalents $ 445,038 $ 328,821
Restricted cash 68,862 48,676
Flight equipment subject to operating leases 2,876,962 1,649,071
Less accumulated depreciation (62,036 ) (19,262 )
2,814,926 1,629,809
Deposits on fli

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