Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three and nine months ended September 30, 2022.

“Global passenger traffic, along with airline revenue trends and yields, remain on a solid recovery path with little sign of abatement despite global economic and geopolitical factors. Lease demand continues to accelerate, and we are in a good position looking forward with our valuable remaining delivery positions,” said John L. Plueger, Chief Executive Officer and President.

“Our strong balance sheet, young fleet, and attractive order book are once again proving to be the right combination in today’s world for our airline customers. Reflecting this confidence, I am pleased to announce that our Board of Directors has authorized an increase in our quarterly common stock dividend to $0.20 per share, representing the 10th increase and 40th consecutive dividend payment since the founding of ALC,” said Steven F. Udvar-Házy, Executive Chairman of the Board.

Third Quarter 2022 Results

The following table summarizes our operating results for the three and nine months ended September 30, 2022 and 2021 (in millions, except per share amounts and percentages):

Operating Results

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2022

2021

$ change

% change

2022

2021

$ change

% change

Revenues

$

561.3

 

$

524.5

 

$

36.8

 

7.0

%

$

1,715.7

 

$

1,491.2

 

$

224.5

 

15.1

%

Operating expenses

 

(423.5

)

 

(390.0

)

 

(33.5

)

8.6

%

 

(1,232.3

)

 

(1,138.6

)

 

(93.7

)

8.2

%

Write-off of Russian fleet

 

 

 

 

 

 

%

 

(802.4

)

 

 

 

(802.4

)

100.0

%

Income/(loss) before taxes

 

137.8

 

 

134.5

 

 

3.3

 

2.5

%

 

(318.9

)

 

352.6

 

 

(671.5

)

(190.4

)%

Net income/(loss) attributable to common stockholders

$

100.0

 

$

100.0

 

$

 

%

$

(273.6

)

$

265.8

 

$

(539.4

)

(202.9

)%

Diluted earnings/(loss) per share

$

0.90

 

$

0.87

 

$

0.03

 

3.4

%

$

(2.45

)

$

2.32

 

$

(4.77

)

(205.6

)%

Adjusted net income before income taxes(1)

$

146.3

 

$

146.5

 

$

(0.2

)

(0.1

)%

$

501.7

 

$

389.5

 

$

112.2

 

28.8

%

Adjusted diluted earnings per share before income taxes(1)

$

1.32

 

$

1.28

 

$

0.04

 

3.1

%

$

4.47

 

$

3.40

 

$

1.07

 

31.5

%

Key Financial Ratios

 

Three Months Ended

September 30,

Nine Months Ended

September 30,

 

2022

2021

2022

2021

Pre-tax margin

24.6

%

25.7

%

(18.6

)%

23.6

%

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

(2.9

)%

8.0

%

(2.9

)%

8.0

%

Adjusted pre-tax margin(1)

26.1

%

27.9

%

29.2

%

26.1

%

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

12.0

%

9.1

%

12.0

%

9.1

%

(1)

Adjusted net income before income taxes, adjusted diluted earnings per share before income taxes, adjusted pre-tax margin and adjusted pre-tax return on common equity have been adjusted to exclude the effects of certain non-cash items, one-time or non-recurring items, such as write-offs of our Russian fleet, that are not expected to continue in the future and certain other items. See note 1 under the Consolidated Statements of Operations included in this earnings release for a discussion of the non-GAAP measures and a reconciliation to their most comparable GAAP financial measures.

Highlights

  • Took delivery of 14 aircraft from our new order pipeline, representing $843 million in aircraft investments, ending the period with over $28 billion in total assets.
  • As of September 30, 2022, we had 405 aircraft in our owned fleet, with a net book value of $23.9 billion, a weighted average age of 4.5 years and a weighted average lease term remaining of 7.0 years.
  • Placed 99% of our contracted orderbook positions on long-term leases for aircraft delivering through the end of 2023 and have placed 58% of our entire orderbook.
  • Ended the quarter with $30.9 billion in committed minimum future rental payments consisting of $15.1 billion in contracted minimum rental payments on the aircraft in our existing fleet and $15.8 billion in minimum future rental payments related to aircraft on order.
  • Increased our quarterly cash dividend by approximately 8.1%, from $0.185 per share to $0.20 per share of our outstanding Class A common stock. The next quarterly dividend of $0.20 per share will be paid on January 10, 2023 to holders of record of our common stock as of December 16, 2022.

Financial Overview

Our total revenues for the three months ended September 30, 2022 increased by 7.0% to $561.3 million as compared to the three months ended September 30, 2021. The increase in total revenues was primarily driven by the continued growth in our fleet, significantly lower lease restructuring losses and higher aircraft sales, trading and other revenue, offset by the loss of rental revenue from the termination of our leasing activities in Russia and cash basis accounting. The increase in aircraft sales, trading and other revenue was primarily due to $11.6 million in gains from the sale of one aircraft and four sales-type lease transactions for the three months ended September 30, 2022. Our net income attributable to common stockholders for the three months ended September 30, 2022 was $100.0 million, or $0.90 per diluted share compared to $100.0 million, or $0.87 per diluted share, for the three months ended September 30, 2021. We recorded adjusted net income before income taxes during the three months ended September 30, 2022 of $146.3 million or $1.32 per adjusted diluted share as compared to $146.5 million or $1.28 per adjusted diluted share for the three months ended September 30, 2021. Net income attributable to common stockholders and adjusted net income before income taxes remained in-line with the prior year period, primarily due to increases in interest, depreciation and selling, general and administrative expenses which partially offset the revenue increases discussed above.

Flight Equipment Portfolio

As of September 30, 2022 the net book value of our fleet increased to $23.9 billion, compared to $22.9 billion as of December 31, 2021. As of September 30, 2022, we owned 405 aircraft in our aircraft portfolio, comprised of 297 narrowbody aircraft and 108 widebody aircraft, and we managed 87 aircraft. The weighted average fleet age and weighted average remaining lease term of our fleet as of September 30, 2022 was 4.5 years and 7.0 years, respectively. We have a globally diversified customer base of 115 airlines in 61 countries.

The following table summarizes the key portfolio metrics of our fleet as of September 30, 2022 and December 31, 2021:

 

September 30, 2022

December 31, 2021

Net book value of flight equipment subject to operating lease

$

23.9 billion

 

$

22.9 billion

Weighted-average fleet age(1)

4.5 years

 

4.4 years

Weighted-average remaining lease term(1)

7.0 years

 

7.2 years

 

 

 

 

Owned fleet

 

405

 

 

382

Managed fleet

87

 

92

Aircraft on order

 

412

 

 

431

Total

 

904

 

 

905

 

 

 

 

Current fleet contracted rentals

$

15.1 billion

 

$

14.8 billion

Committed fleet rentals

$

15.8 billion

 

$

16.1 billion

Total committed rentals

$

30.9 billion

 

$

30.9 billion

(1)

Weighted-average fleet age and remaining lease term calculated based on net book value of our flight equipment subject to operating lease.

 

The following table details the regional concentration of our flight equipment subject to operating leases:

 

September 30, 2022

December 31, 2021

Region

% of Net Book Value

% of Net Book Value

Europe

31.9 %

32.5 %

Asia (excluding China)

28.7 %

26.0 %

China

11.9 %

12.8 %

The Middle East and Africa

9.5 %

10.7 %

Central America, South America, and Mexico

7.8 %

6.8 %

U.S. and Canada

6.5 %

7.2 %

Pacific, Australia, and New Zealand

3.7 %

4.0 %

Total

100.0 %

100.0 %

The following table details the composition of our flight equipment subject to operating leases by aircraft type:

 

 

September 30, 2022

 

December 31, 2021

Aircraft type

 

Number of

Aircraft

 

% of Total

 

Number of

Aircraft

 

% of Total

Airbus A220-300

 

2

 

0.5

%

 

 

0.0

%

Airbus A319-100

 

1

 

0.2

%

 

1

 

0.3

%

Airbus A320-200

 

28

 

6.9

%

 

31

 

8.1

%

Airbus A320-200neo

 

26

 

6.4

%

 

23

 

6.0

%

Airbus A321-200

 

24

 

5.9

%

 

26

 

6.8

%

Airbus A321-200neo

 

73

 

18.0

%

 

69

 

18.1

%

Airbus A330-200

 

13

 

3.2

%

 

13

 

3.4

%

Airbus A330-300

 

5

 

1.2

%

 

8

 

2.1

%

Airbus A330-900neo

 

14

 

3.5

%

 

9

 

2.4

%

Airbus A350-900

 

13

 

3.3

%

 

12

 

3.1

%

Airbus A350-1000

 

6

 

1.5

%

 

5

 

1.3

%

Boeing 737-700

 

4

 

1.0

%

 

4

 

1.0

%

Boeing 737-800

 

83

 

20.5

%

 

88

 

23.0

%

Boeing 737-8 MAX

 

44

 

10.9

%

 

28

 

7.3

%

Boeing 737-9 MAX

 

11

 

2.8

%

 

7

 

1.8

%

Boeing 777-200ER

 

1

 

0.2

%

 

1

 

0.3

%

Boeing 777-300ER

 

24

 

5.9

%

 

24

 

6.3

%

Boeing 787-9

 

26

 

6.4

%

 

26

 

6.8

%

Boeing 787-10

 

6

 

1.5

%

 

6

 

1.6

%

Embraer E190

 

1

 

0.2

%

 

1

 

0.3

%

Total (1)

 

405

 

100.0

%

 

382

 

100.0

%

(1)

As of September 30, 2022, we had four aircraft classified as flight equipment held for sale. As of December 31, 2021, we did not have any flight equipment classified as held for sale.

Debt Financing Activities

We ended the third quarter of 2022 with total debt financing, net of discounts and issuance costs, of $18.8 billion. As of September 30, 2022, 87.0% of our total debt financing was at a fixed rate and 99.3% was unsecured. As of September 30, 2022, our composite cost of funds was 2.85%. We ended the third quarter with total liquidity of $6.7 billion.

As of the end of the periods presented, our debt portfolio was comprised of the following components (dollars in millions):

 

September 30, 2022

December 31, 2021

Unsecured

 

 

Senior notes

$

17,064

 

$

16,892

 

Revolving credit facility

 

1,570

 

 

 

Term financings

 

187

 

 

167

 

Total unsecured debt financing

 

18,821

 

 

17,059

 

Secured

 

 

Term financings

 

117

 

 

127

 

Export credit financing

 

13

 

 

18

 

Total secured debt financing

 

130

 

 

145

 

 

 

 

Total debt financing

 

18,951

 

 

17,204

 

Less: Debt discounts and issuance costs

 

(182

)

 

(182

)

Debt financing, net of discounts and issuance costs

$

18,769

 

$

17,022

 

Selected interest rates and ratios:

 

 

Composite interest rate(1)

 

2.85

%

 

2.79

%

Composite interest rate on fixed-rate debt(1)

 

2.86

%

 

2.90

%

Percentage of total debt at a fixed-rate

 

87.0

%

 

94.8

%

(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 3, 2022 at 4:30 PM Eastern Time to discuss the Company's financial results for the third quarter of 2022.

Investors can participate in the conference call by dialing 1 (888) 660-6652 domestic or 1 (647) 362-9199 international. The passcode for the call is 5952437.

The conference call will also be broadcast live through a link on the Investors 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 Investors 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 3, 2022 until 7:30 PM ET on November 10, 2022. If you wish to listen to the replay of this conference call, please dial 1 (800) 770-2030 domestic or 1 (647) 362-9199 international and enter passcode 5952437.

About Air Lease Corporation (NYSE: AL)

Air Lease Corporation is a leading global aircraft leasing company based in Los Angeles, California that has airline customers throughout the world. Air Lease Corporation and its team of dedicated and experienced professionals are principally engaged in purchasing new commercial aircraft and leasing them to its airline customers worldwide through customized aircraft leasing and financing solutions. Air Lease Corporation routinely posts information that may be important to investors in the “Investors” section of its website at www.airleasecorp.com. Investors and potential investors are encouraged to consult Air Lease Corporation’s website regularly for important information. The information contained on, or that may be accessed through, Air Lease Corporation's website is not incorporated by reference into, and is not a part of, this press release.

Forward-Looking Statements

This press release contains statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements appear in a number of places in this press release and include statements regarding, among other matters, the state of the airline industry, including the impact of Russia’s invasion of Ukraine and the impact of sanctions imposed on Russia, our access to the capital markets, the impact of lease deferrals and other accommodations, aircraft delivery delays and other factors affecting our financial condition or results of operations. Words such as “can,” “could,” “may,” “predicts,” “potential,” “will,” “projects,” “continuing,” “ongoing,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates” and “should,” and variations of these words and similar expressions, are used in many cases to identify these forward-looking statements. Any such forward-looking statements are not guarantees of future performance and involve risks, uncertainties, and other factors that may cause our actual results, performance or achievements, or industry results to vary materially from our future results, performance or achievements, or those of our industry, expressed or implied in such forward-looking statements. Such factors include, among others:

  • our inability to obtain additional capital on favorable terms, or at all, to acquire aircraft, service our debt obligations and refinance maturing debt obligations;
  • increases in our cost of borrowing or changes in interest rates;
  • our inability to generate sufficient returns on our aircraft investments through strategic acquisition and profitable leasing;
  • the failure of an aircraft or engine manufacturer to meet its delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery;
  • the extent to which the Russian invasion of Ukraine and the impact of sanctions imposed by the United States, European Union, United Kingdom and others affect our business, including our efforts to pursue insurance claims to recover losses related to aircraft detained in Russia, the exclusion of Russia, Ukraine and Belarus from the insurance policies that we separately purchase for our owned fleet, and the ability of our lessees to comply with their obligations to maintain insurance policies that cover their operations;
  • the extent to which the COVID-19 pandemic impacts our business;
  • obsolescence of, or changes in overall demand for, our aircraft;
  • changes in the value of, and lease rates for, our aircraft, including as a result of aircraft oversupply, manufacturer production levels, our lessees’ failure to maintain our aircraft, rising inflation, appreciation of the U.S. Dollar, and other factors outside of our control;
  • impaired financial condition and liquidity of our lessees, including due to lessee defaults and reorganizations, bankruptcies or similar proceedings;
  • increased competition from other aircraft lessors;
  • the failure by our lessees to adequately insure our aircraft or fulfill their contractual indemnity obligations to us;
  • increased tariffs and other restrictions on trade;
  • changes in the regulatory environment, including changes in tax laws and environmental regulations;
  • other events affecting our business or the business of our lessees and aircraft manufacturers or their suppliers that are beyond our or their control, such as the threat or realization of epidemic diseases, natural disasters, terrorist attacks, war or armed hostilities between countries or non-state actors; and
  • any additional factors discussed under “Part I — Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2021, “Part II — Item 1A. Risk Factors,” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 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 do not intend and undertake no obligation to update any forward-looking information to reflect actual results or 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, 2022

December 31, 2021

 

(unaudited)

Assets

 

Cash and cash equivalents

$

1,101,844

 

$

1,086,500

 

Restricted cash

 

15,124

 

 

21,792

 

Flight equipment subject to operating leases

 

28,656,269

 

 

27,101,808

 

Less accumulated depreciation

 

(4,727,410

)

 

(4,202,804

)

 

 

23,928,859

 

 

22,899,004

 

Deposits on flight equipment purchases

 

1,493,041

 

 

1,508,892

 

Other assets

 

1,685,103

 

 

1,452,534

 

Total assets

$

28,223,971

 

$

26,968,722

 

Liabilities and Shareholders’ Equity

 

 

Accrued interest and other payables

$

604,327

 

$

611,757

 

Debt financing, net of discounts and issuance costs

 

18,769,057

 

 

17,022,480

 

Security deposits and maintenance reserves on flight equipment leases

 

1,235,704

 

 

1,173,831

 

Rentals received in advance

 

149,923

 

 

138,816

 

Deferred tax liability

 

936,526

 

 

1,013,270

 

Total liabilities

$

21,695,537

 

$

19,960,154

 

Shareholders’ Equity

 

 

Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 10,600,000 (aggregate liquidation preference of $850,000) shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

$

106

 

$

106

 

Class A common stock, $0.01 par value; 500,000,000 shares authorized; 110,892,097 and 113,987,154 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

1,109

 

 

1,140

 

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

 

 

 

 

Paid-in capital

 

3,250,169

 

 

3,399,245

 

Retained earnings

 

3,274,113

 

 

3,609,885

 

Accumulated other comprehensive loss

 

2,937

 

 

(1,808

)

Total shareholders’ equity

$

6,528,434

 

$

7,008,568

 

Total liabilities and shareholders’ equity

$

28,223,971

 

$

26,968,722

 

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

 

(unaudited)

Revenues

 

 

 

 

 

 

 

 

Rental of flight equipment

 

$

541,397

 

 

$

519,535

 

 

$

1,653,223

 

 

$

1,439,674

 

Aircraft sales, trading and other

 

 

19,937

 

 

 

4,974

 

 

 

62,469

 

 

 

51,539

 

Total revenues

 

 

561,334

 

 

 

524,509

 

 

 

1,715,692

 

 

 

1,491,213

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Interest

 

 

122,348

 

 

 

114,659

 

 

 

358,621

 

 

 

346,244

 

Amortization of debt discounts and issuance costs

 

 

13,162

 

 

 

12,571

 

 

 

39,772

 

 

 

37,109

 

Interest expense

 

 

135,510

 

 

 

127,230

 

 

 

398,393

 

 

 

383,353

 

 

 

 

 

 

 

 

 

 

Depreciation of flight equipment

 

 

242,503

 

 

 

224,960

 

 

 

713,095

 

 

 

651,742

 

Write-off of Russian fleet

 

 

 

 

 

 

 

 

802,352

 

 

 

 

Selling, general and administrative

 

 

39,718

 

 

 

31,082

 

 

 

110,993

 

 

 

84,682

 

Stock-based compensation expense

 

 

5,764

 

 

 

6,692

 

 

 

9,799

 

 

 

18,800

 

Total expenses

 

 

423,495

 

 

 

389,964

 

 

 

2,034,632

 

 

 

1,138,577

 

Income/(loss) before taxes

 

 

137,839

 

 

 

134,545

 

 

 

(318,940

)

 

 

352,636

 

Income tax (expense)/benefit

 

 

(27,458

)

 

 

(27,208

)

 

 

76,606

 

 

 

(67,785

)

Net income/(loss)

 

$

110,381

 

 

$

107,337

 

 

$

(242,334

)

 

$

284,851

 

Preferred stock dividends

 

 

(10,425

)

 

 

(7,331

)

 

 

(31,275

)

 

 

(19,010

)

Net income/(loss) attributable to common stockholders

 

$

99,956

 

 

$

100,006

 

 

$

(273,609

)

 

$

265,841

 

 

 

 

 

 

 

 

 

 

Earnings/(Loss) per share of common stock:

 

 

 

 

 

 

 

 

Basic

 

$

0.90

 

 

$

0.88

 

 

$

(2.45

)

 

$

2.33

 

Diluted

 

$

0.90

 

 

$

0.87

 

 

$

(2.45

)

 

$

2.32

 

Weighted-average shares outstanding

 

 

 

 

 

 

 

 

Basic

 

 

110,892,097

 

 

 

114,122,512

 

 

 

111,874,002

 

 

 

114,071,951

 

Diluted

 

 

111,090,133

 

 

 

114,381,621

 

 

 

111,874,002

 

 

 

114,415,169

 

 

 

 

 

 

 

 

 

 

Other financial data

 

 

 

 

 

 

 

 

Pre-tax margin

 

 

24.6

%

 

 

25.7

%

 

 

(18.6

)%

 

 

23.6

%

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

 

 

(2.9

)%

 

 

8.0

%

 

 

(2.9

)%

 

 

8.0

%

Adjusted net income before income taxes(1)

 

$

146,340

 

 

$

146,477

 

 

$

501,708

 

 

$

389,535

 

Adjusted diluted earnings per share before income taxes(1)

 

$

1.32

 

 

$

1.28

 

 

$

4.47

 

 

$

3.40

 

Adjusted pre-tax margin(1)

 

 

26.1

%

 

 

27.9

%

 

 

29.2

%

 

 

26.1

%

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

 

 

12.0

%

 

 

9.1

%

 

 

12.0

%

 

 

9.1

%

(1)

Adjusted net income before income taxes (defined as net income/(loss) attributable to common stockholders excluding the effects of certain non-cash items, one-time or non-recurring items, such as write-offs of our Russian fleet, that are not expected to continue in the future and certain other items), adjusted pre-tax 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 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/(loss) attributable to common stockholders, pre-tax margin, earnings/(loss) per share, diluted earnings/(loss) 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 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 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 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 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 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 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 table shows the reconciliation of the numerator for adjusted pre-tax margin (in thousands, except percentages):

 

Three Months Ended September 30,

Nine Months Ended September 30,

 

2022

2021

2022

2021

 

(unaudited)

Reconciliation of the numerator for adjusted pre-tax margin (net income/(loss) attributable to common stockholders to adjusted net income before income taxes):

 

 

 

 

Net income/(loss) attributable to common stockholders

$

99,956

 

$

100,006

 

$

(273,609

)

$

265,841

 

Amortization of debt discounts and issuance costs

 

13,162

 

 

12,571

 

 

39,772

 

 

37,109

 

Write-off of Russian fleet

 

 

 

 

 

802,352

 

 

 

Stock-based compensation expense

 

5,764

 

 

6,692

 

 

9,799

 

 

18,800

 

Income tax expense/(benefit)

 

27,458

 

 

27,208

 

 

(76,606

)

 

67,785

 

Adjusted net income before income taxes

$

146,340

 

$

146,477

 

$

501,708

 

$

389,535

 

 

 

 

 

 

Denominator for adjusted pre-tax margin:

 

 

 

Total revenues

$

561,334

 

$

524,509

 

$

1,715,692

 

$

1,491,213

 

Adjusted pre-tax margin(a)

 

26.1

%

 

27.9

%

 

29.2

%

 

26.1

%

(a)

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

The following table shows the reconciliation of the numerator for 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,

 

2022

2021

2022

2021

 

(unaudited)

Reconciliation of the numerator for adjusted diluted earnings per share (net income/(loss) attributable to common stockholders to adjusted net income before income taxes):

 

 

 

 

Net income/(loss) attributable to common stockholders

$

99,956

$

100,006

$

(273,609

)

$

265,841

Amortization of debt discounts and issuance costs

 

13,162

 

12,571

 

39,772

 

 

37,109

Write-off of Russian fleet

 

 

 

802,352

 

 

Stock-based compensation expense

 

5,764

 

6,692

 

9,799

 

 

18,800

Income tax expense/(benefit)

 

27,458

 

27,208

 

(76,606

)

 

67,785

Adjusted net income before income taxes

$

146,340

$

146,477

$

501,708

 

$

389,535

 

 

 

 

 

Denominator for adjusted diluted earnings per share:

 

 

 

 

Weighted-average diluted common shares outstanding

 

111,090,133

 

114,381,621

 

111,874,002

 

 

114,415,169

Potentially dilutive securities, whose effect would have been anti-dilutive

 

 

 

329,947

 

 

Adjusted weighted-average diluted common shares outstanding

 

111,090,133

 

114,381,621

 

112,203,949

 

 

114,415,169

Adjusted diluted earnings per share before income taxes(b)

$

1.32

$

1.28

$

4.47

 

$

3.40

(b)

Adjusted diluted earnings per share before income taxes is adjusted net income before income taxes divided by adjusted weighted-average diluted common shares outstanding

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

 

Trailing Twelve Months Ended September 30,

 

2022

2021

 

(unaudited)

Reconciliation of the numerator for adjusted pre-tax return on common equity (net (loss)/income attributable to common stockholders to adjusted net income before income taxes):

 

 

Net (loss)/income attributable to common stockholders

$

(131,292

)

$

373,090

 

Amortization of debt discounts and issuance costs

 

53,284

 

 

48,474

 

Write-off of Russian fleet

 

802,352

 

 

 

Stock-based compensation expense

 

17,515

 

 

21,472

 

Income tax (benefit)/expense

 

(40,008

)

 

94,513

 

Adjusted net income before income taxes

$

701,851

 

$

537,549

 

 

 

 

Reconciliation of denominator for pre-tax return on common equity to adjusted pre-tax return on common equity:

 

 

Common shareholders' equity as of beginning of the period

$

6,033,783

 

$

5,727,323

 

Common shareholders' equity as of end of the period

$

5,678,434

 

$

6,033,783

 

Average common shareholders' equity

$

5,856,109

 

$

5,880,553

 

 

 

 

Adjusted pre-tax return on common equity(c)

 

12.0

%

 

9.1

%

(c)

Adjusted pre-tax return on common equity is adjusted net income before income taxes divided by average common shareholders’ equity

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

Nine Months Ended September 30,

 

2022

2021

 

(unaudited)

Operating Activities

 

 

Net (loss)/income

$

(242,334

)

$

284,851

 

Adjustments to reconcile net (loss)/income to net cash provided by operating activities:

 

 

Depreciation of flight equipment

 

713,095

 

 

651,742

 

Write-off of Russian fleet

 

802,352

 

 

 

Stock-based compensation expense

 

9,799

 

 

18,800

 

Deferred taxes

 

(78,035

)

 

64,931

 

Amortization of discounts and debt issuance costs

 

39,772

 

 

37,109

 

Amortization of prepaid lease costs

 

34,734

 

 

33,603

 

Gain on aircraft sales, trading and other activity

 

(85,616

)

 

(1,184

)

Changes in operating assets and liabilities:

 

 

Other assets

 

(243,109

)

 

(148,982

)

Accrued interest and other payables

 

(8,354

)

 

(7,283

)

Rentals received in advance

 

16,259

 

 

(4,199

)

Net cash provided by operating activities

 

958,563

 

 

929,388

 

Investing Activities

 

 

Acquisition of flight equipment under operating lease

 

(2,166,317

)

 

(1,670,203

)

Payments for deposits on flight equipment purchases

 

(428,424

)

 

(303,856

)

Proceeds from aircraft sales, trading and other activity

 

42,043

 

 

2,042

 

Acquisition of aircraft furnishings, equipment and other assets

 

(162,897

)

 

(178,359

)

Net cash used in investing activities

 

(2,715,595

)

 

(2,150,376

)

Financing Activities

 

 

Issuance of common stock upon exercise of options

 

 

 

1,438

 

Cash dividends paid on Class A common stock

 

(62,738

)

 

(54,737

)

Common shares repurchased

 

(150,000

)

 

(5,780

)

Net proceeds from preferred stock issuance

 

 

 

295,428

 

Cash dividends paid on preferred stock

 

(31,275

)

 

(19,010

)

Tax withholdings on stock-based compensation

 

(8,903

)

 

(7,441

)

Net change in unsecured revolving facilities

 

1,570,000

 

 

 

Proceeds from debt financings

 

1,497,615

 

 

3,655,830

 

Payments in reduction of debt financings

 

(1,327,146

)

 

(2,585,652

)

Debt issuance costs

 

(5,855

)

 

(9,688

)

Security deposits and maintenance reserve receipts

 

308,637

 

 

112,155

 

Security deposits and maintenance reserve disbursements

 

(24,627

)

 

(25,654

)

Net cash provided by financing activities

 

1,765,708

 

 

1,356,889

 

Net decrease in cash

 

8,676

 

 

135,901

 

Cash, cash equivalents and restricted cash at beginning of period

 

1,108,292

 

 

1,757,767

 

Cash, cash equivalents and restricted cash at end of period

$

1,116,968

 

$

1,893,668

 

Supplemental Disclosure of Cash Flow Information

 

 

Cash paid during the period for interest, including capitalized interest of $29,335 and $38,265 at September 30, 2022 and 2021, respectively

$

442,461

 

$

428,349

 

Cash paid for income taxes

$

5,808

 

$

2,739

 

Supplemental Disclosure of Noncash Activities

 

 

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

$

596,021

 

$

663,072

 

Cash dividends declared on common stock, not yet paid

$

20,515

 

$

18,263

 

 

Investors: Jason Arnold Vice President, Investor Relations Email: investors@airleasecorp.com

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

Ashley Arnold Manager, Media and Investor Relations Email: press@airleasecorp.com

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