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Air Lease Corporation Reports Results for the Third Quarter of 2011

Dépèche transmise le 10 novembre 2011 par Business Wire

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

“ALC formed relationships with 4 new banks during the quarter, expanding our banking group to 20 financial institutions. We continue to build a strong balance sheet with conservative leverage targets and significant unsecured borrowing.”

Third Quarter 2011 Highlights

Third consecutive quarter of profitability growth
- Pretax profit margin increased to 31% for Q3 2011 compared to 15% for Q2 2011
- Revenues increased 24% to $92.1 million and pretax income increased 160% to $28.3 million compared to Q2 2011
- Net income increased 160% to $18.3 million, compared to Q2 2011
- Adjusted net income¹ increased 29% to $25.1 million and adjusted EBITDA¹ increased 27% to $80.0 million, compared to Q2 2011
- Quarterly cash provided by operating activities increased 71% to $83.1 million, compared to Q2 2011
Grew our fleet and signed lease placements for deliveries from our order book
- From 65 aircraft at the end of Q2 2011, we purchased 14 aircraft, growing our fleet by 22% to 79 aircraft at the end of Q3 2011
- Entered into lease transactions covering 17 aircraft with 11 customers
- Reached our goal in contracting for 100 aircraft for delivery by the end of 2011

Air Lease Corporation (ALC) (NYSE: AL) announced today the results of its operations for the third quarter ended September 30, 2011. ALC recorded its third quarterly positive pre-tax income of $28.3 million and net income of $18.3 million and recorded cash flow from operations of $83.1 million.

"Passenger airline growth in many regions of the world continues at a strong rate, and this, coupled with the requirement on the part of all carriers to constantly push towards newer, and more efficient fleets,” said Steven F. Udvar-Hazy, Chairman and CEO of Air Lease Corporation.

“We are pleased with ALC’s Q3 results, which we believe demonstrate that ALC has moved beyond its startup phase with three successive quarters of increasing profitability,” said John L. Plueger, President and Chief Operating Officer of Air Lease Corporation. “Our growth trajectory is on track as we closed Q3 with a fleet of 79 aircraft, en route to our 2011 goal of 100 aircraft.”

“The financing community has continued to show support for ALC amidst the international events affecting the global supply of credit,” said James C. Clarke, Senior Vice President and Chief Financial Officer of Air Lease Corporation. “ALC formed relationships with 4 new banks during the quarter, expanding our banking group to 20 financial institutions. We continue to build a strong balance sheet with conservative leverage targets and significant unsecured borrowing.”

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

(dollars in thousands)		Q3 2011		Q2 2011	% change
Revenues	$	92,125	$	74,344	24%
Pretax income	$	28,341	$	10,888	160%
Net income	$	18,271	$	7,023	160%
Cash provided by operating activities	$	83,076	$	48,483	71%
Adjusted net income⁽¹⁾	$	25,122	$	19,459	29%
Adjusted EBITDA⁽¹⁾	$	79,954	$	62,780	27%
Diluted EPS	$	0.18	$	0.08	125%

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 65 aircraft at June 30, 2011, we added 14 aircraft during the third quarter of 2011 and ended the quarter with 79 aircraft spread across a diverse and balanced customer base of 49 airlines in 30 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 project we will grow our fleet to approximately 100 aircraft by the end of 2011.

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

(dollars in thousands)

September 30, 2011

December 31, 2010

Fleet size

Weighted average fleet age

3.6 years

3.8 years

Weighted average remaining lease term

6.3 years

5.6 years

Aggregate fleet cost

3,433,308

1,649,071

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

	September 30, 2011			December 31, 2010
	Number of aircraft	% of total		Number of aircraft	% of total
Europe	28	35.4	%	16	40.0	%
Asia/Pacific	24	30.4		11	27.5
Central America, South America and Mexico	12	15.2		5	12.5
U.S. and Canada	8	10.1		5	12.5
The Middle East and Africa	7	8.9		3	7.5
Total	79	100.0	%	40	100.0	%

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

	September 30, 2011			December 31, 2010
	Number of aircraft	% of total		Number of aircraft	% of total
Airbus A319-100	7	8.9	%	7	17.5	%
Airbus A320-200	17	21.5		8	20.0
Airbus A321-200	3	3.8		2	5.0
Airbus A330-200	8	10.1		2	5.0
Boeing 737-700	7	8.9		5	12.5
Boeing 737-800	26	32.9		14	35.0
Boeing 767-300ER	2	2.5		-	-
Boeing 777-300ER	4	5.1		2	5.0
Embraer E190	5	6.3
Total	79	100.0	%	40	100.0	%

We have made further progress in placing our aircraft. As of September 30, 2011, we have entered into contracts for the lease of new and used aircraft scheduled to be delivered through 2020 as follows:

Delivery year	Number of aircraft	Number leased	% Leased
2011	22	22	100.0	%
2012	45	45	100.0
2013	31	15	48.4
2014	26	6	23.1
2015	24	-	-
Thereafter	91	-	-
Total	239	88	36.8	%

Financing Activities

As of September 30, 2011, we had established a diverse lending group consisting of 20 banks across four general types of lending facilities with a composite interest rate of 3.09%. This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization.

During the third quarter of 2011, the Company entered into four additional fixed-rate amortizing unsecured facilities aggregating
$62.9 million and a revolving $45.0 million unsecured credit facility as follows:

Facility Type

Term

Interest Rate

Amount

Unsecured term loan

3 year⁽¹⁾

3.25%

$ 35.0 million

Unsecured term loan

5 year⁽¹⁾

3.99%

20.0 million

Unsecured term loan

5 year⁽¹⁾

3.85%

5.0 million

Unsecured term loan

1 year⁽¹⁾

3.00%

2.9 million

Subtotal

$ 62.9 million

Unsecured revolving facility⁽²⁾

3 year

LIBOR + 2.00%

$ 45.0 million

⁽¹⁾			Amortizing loan.
⁽²⁾			As of September 30, 2011, the Company maintained a $2.5 million compensating balance with respect to this credit facility.

We ended the third quarter of 2011 with a total of 13 unsecured term facilities. The total amount outstanding under our unsecured term facilities was $229.3 million and $13.1 million as of September 30, 2011 and December 31, 2010, respectively.

The Company ended the third quarter of 2011 with a total of 13 revolving unsecured credit facilities aggregating $358.0 million, each with a borrowing rate of LIBOR plus 2.00%. The total amount outstanding under our bilateral revolving credit facilities was $273.0 million and $120.0 million as of September 30, 2011 and December 31, 2010, respectively.

In addition, one of our wholly-owned subsidiaries entered into a recourse 11.75 year $70.9 million secured term facility at a rate of LIBOR plus 1.50%. In connection with this facility, the Company pledged $94.5 million in aircraft collateral. The outstanding balance on our secured term facilities was $559.8 million and $224.0 million at September 30, 2011 and December 31, 2010, respectively.

During the third quarter of 2011, the Company drew $31.3 million under the Warehouse Facility and incrementally pledged $36.8 million in aircraft collateral. As of September 30, 2011, the Company had borrowed $740.5 million under the Warehouse Facility and pledged 29 aircraft as collateral with a net book value of $1.2 billion.

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

(dollars in thousands)		September 30, 2011			December 31, 2010
Warehouse credit facility	$	740,533		$	554,915
Secured term debt financing		559,798			223,981
Unsecured financing		502,317			133,085
Total	$	1,802,648		$	911,981
Composite interest rate⁽¹⁾		3.09	%		3.32	%
Percentage of total debt at fixed rate		23.30	%		1.40	%
Composite interest rate on fixed debt⁽¹⁾		4.51	%		3.83	%

⁽¹⁾			This rate does not include the effect of upfront fees, undrawn fees or issuance cost amortization.

Financial Results for the Third Quarter of 2011

For the three months ended September 30, 2011, the Company reported consolidated net income of $18.3 million, or $0.18 per diluted share, compared to a consolidated net loss of $7.7 million, or $0.12 per diluted share, for the three months ended September 30, 2010. The increase in net income for 2011, compared to 2010, was primarily attributable to the acquisition and lease of additional aircraft.

For the quarter ended September 30, 2011, we recorded $90.5 million in rental revenue, which includes overhaul revenue of $3.3 million. For the quarter ended September 30, 2010, we recorded $19.1 million in rental revenue, which includes overhaul revenue of $1.6 million. The increase in rental revenue for the three months ended September 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 and other income totaled $1.6 million and $0.6 million for the three months ended September 30, 2011 and 2010, respectively. During the quarter ended September 30, 2011, the Company provided short-term bridge financing for the acquisition of an aircraft for which we earned $1.1 million in fee and interest income.

Interest expense totaled $13.3 million and $5.8 million for the three months ended September 30, 2011 and 2010, respectively. The change was primarily due to an increase in our outstanding debt balances resulting in a $7.1 million increase in interest and an increase of $0.4 million in amortization of our deferred debt issue costs.

We recorded selling, general and administrative expenses of $11.5 million and $7.9 million for the three months ended September 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 September 30, 2011, the Company recorded $83.1 million of cash from operations compared to $14.7 million for the three months ended September 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 Nine Months of 2011

For the nine months ended September 30, 2011, the Company reported consolidated net income of $28.5 million, or $0.33 per diluted share, compared to a consolidated net loss of $49.4 million, or $1.64 per diluted share, for the period from inception to September 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 effect of a one-time $35.8 million charge for the amortization of convertible debt discounts recorded during the second quarter of 2010.

For the nine months ended September 30, 2011, we recorded $219.1 million in rental revenue, which includes overhaul revenue of $7.6 million. For the peri

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