November 3, 2016

Date of Report

(Date of earliest event reported)

Delaware

(State or other jurisdiction of

incorporation)

001-35121

(Commission File Number)

27-1840403

(I.R.S. Employer

Identification No.)

2000 Avenue of the Stars, Suite 1000N

Los Angeles, California

(Address of principal executive offices)

90067

(Zip Code)

Registrant’s telephone number, including area code: (310) 553-0555

Not Applicable

(Former name or former address, if changed since last report.)

AIR LEASE CORPORATION

Date: November 3, 2016

/s/ Gregory B. Willis

Gregory B. Willis

Executive Vice President and Chief Financial Officer

Press release dated November 3, 2016

·

Generated quarterly diluted EPS of $0.86 for the three months ended September 30, 2016, an increase of 21.1% compared to the three months ended September 30, 2015 resulting in a pre-tax return on equity of 17.8% for the trailing twelve months ended September 30, 2016.

·

Generated quarterly adjusted diluted EPS before income taxes of $1.43 for the three months ended September 30, 2016, an increase of 19.2% compared to the three months ended September 30, 2015 resulting in an adjusted pre-tax return on equity of 19.0% for the trailing twelve months ended September 30, 2016.

·

Generated record quarterly revenues of $355.1 million for the three months ended September 30, 2016, an increase of 13.4% as compared to $313.1 million for the three months ended September 30, 2015.

·

Generated quarterly net income of $93.3 million with a pre-tax margin of 40.7% for the three months ended September 30, 2016 as compared to $77.0 million with a pre-tax margin of 38.2% for the three months ended September 30, 2015.

·

Generated quarterly adjusted net income before income taxes of $157.3 million with an adjusted margin of 44.3% for the three months ended September 30, 2016 as compared to $131.7 million with an adjusted margin of 42.0% for the three months ended September 30, 2015.

·

Placed 91% of our order book on long-term leases for aircraft delivering through 2018 and 82% through 2019.

·

Completed a senior unsecured notes offering in August 2016, issuing $750 million at 3.00%, maturing in 2023 followed by a senior unsecured notes offering in October 2016, issuing $500 million at 2.125%, maturing in 2020. 

·

In October 2016, Standard & Poor's Ratings Services raised its corporate credit and senior unsecured ratings on ALC to 'BBB' with a stable outlook.  

·

Increased our quarterly cash dividend by 50%, from $0.05 per share to $0.075 per share.  The next quarterly dividend of $0.075 per share will be paid on January 9, 2017, to holders of record of our common stock as of December 12, 2016.

Three Months Ended
September 30,

Nine Months Ended
September 30,

2016

2015

$ change

% change

2016

2015

$ change

% change

Revenues

$

$

$

%  

$

$

$

%

Income before taxes

$

$

$

%  

$

$

$

%

Net income

$

$

$

%  

$

$

$

%

Adjusted net income before income taxes(1)

$

$

$

%  

$

$

$

%

Diluted EPS

$

$

$

%  

$

$

$

%

Adjusted diluted EPS before income taxes(1)

$

$

$

%  

$

$

$

%

(1)

Adjusted net income before income taxes, adjusted pre-tax return on equity 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, adjusted pre-tax return on equity and adjusted diluted EPS before income taxes.

September 30, 2016

December 31, 2015

Owned fleet

Managed fleet

Order book

Weighted-average fleet age(1)

3.7 years

3.6 years

Weighted-average remaining lease term(1)

6.9 years

7.2 years

Aggregate fleet net book value

$

11.9 billion

$

10.8 billion

(1)

Weighted-average fleet age and remaining lease term calculated based on net book value.

September 30, 2016

December 31, 2015

Region

% of Net Book Value

% of Net Book Value

Europe

%  

 %

China

%  

 %

Asia (excluding China)

%  

 %

The Middle East and Africa

%  

 %

Central America, South America and Mexico

%  

 %

U.S. and Canada

%  

 %

Pacific, Australia, New Zealand

%  

 %

Total

%  

 %

September 30, 2016

December 31, 2015

Aircraft type

Number of
Aircraft

% of Total

Number of
Aircraft

% of Total

Airbus A319/320/321

%  

% 

Airbus A330-200/300

%  

%

Boeing 737-700/800

%  

%

Boeing 767-300ER

%  

%

Boeing 777-200ER

%  

%

Boeing 777-300ER

%  

%

Boeing 787-9

%  

—

—

%

Embraer E175/190

%  

%

ATR 42/72-600

%  

%

Total

%  

%

September 30,
2016

December 31,
2015

Unsecured

Senior notes

$

$

Revolving credit facility

Term financings

Convertible senior notes

Total unsecured debt financing

Secured

Term financings

Warehouse facility

—

Export credit financing

Total secured debt financing

Total debt financing

Less: Debt discounts and issuance costs

Debt financing, net of discounts and issuance costs

$

$

Selected interest rates and ratios:

Composite interest rate(1)

%  

 %

Composite interest rate on fixed-rate debt(1)

%  

 %

Percentage of total debt at fixed-rate

%  

 %

(1)

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

·

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 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, 2015 and under “Part I – Item 1A. Risk Factors,” in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016, and other SEC filings, including future SEC filings.

September 30,
2016

December 31,
2015

(unaudited)

Assets

Cash and cash equivalents

$

$

Restricted cash

Flight equipment subject to operating leases

Less accumulated depreciation

Deposits on flight equipment purchases

Other assets

Total assets

$

$

Liabilities and Shareholders’ Equity

Accrued interest and other payables

$

$

Debt financing, net of discounts and issuance costs

Security deposits and maintenance reserves on flight equipment leases

Rentals received in advance

Deferred tax liability

Total liabilities

$

$

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 102,843,309 and 102,582,669 shares at September 30, 2016 and December 31, 2015, respectively

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

—

—

Paid-in capital

Retained earnings

Total shareholders’ equity

$

$

Total liabilities and shareholders’ equity

$

$

Three Months Ended
 September 30,

Nine Months Ended
 September 30,

2016

2015

2016

2015

(unaudited)

Revenues

Rental of flight equipment

$

$

$

$

Aircraft sales, trading and other

Total revenues

Expenses

Interest

Amortization of debt discounts and issuance costs

Interest expense

Depreciation of flight equipment

Settlement

—

—

—

Selling, general and administrative

Stock-based compensation

Total expenses

Income before taxes

Income tax expense

Net income

$

$

$

$

Net income per share of Class A and B common stock

Basic

$

$

$

$

Diluted

$

$

$

$

Weighted-average shares outstanding

Basic

Diluted

Other financial data

Pre-tax profit margin

%  

%  

%  

%

Adjusted net income before income taxes(1)

$

$

$

$

Adjusted margin(1)

%  

%  

%  

%

Adjusted diluted earnings per share before income taxes(1)

$

$

$

$

Pre-tax return on equity (TTM)

%  

%  

%  

%

Adjusted pre-tax return on equity (TTM)(1)

%  

%  

%  

%

(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 (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, 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.

Three Months Ended
 September 30,

Nine Months Ended
 September 30,

2016

2015

2016

2015

(unaudited)

Reconciliation of net income to adjusted net income before income taxes:

Net income

$

$

$

$

Amortization of debt discounts and issuance costs

Stock-based compensation

Settlement

—

—

—

Insurance recovery on settlement

—

—

—

Provision for income taxes

Adjusted net income before income taxes

$

$

$

$

Adjusted margin(1)

%  

%  

%  

%

(1)

Adjusted margin is adjusted net income before income taxes divided by total revenues, excluding insurance recoveries.

Three Months Ended
 September 30,

Nine Months Ended
 September 30,

2016

2015

2016

2015

(unaudited)

Reconciliation of net income to adjusted diluted earnings per share before income taxes:

Net income

$

$

$

$

Amortization of debt discounts and issuance costs

Stock-based compensation

Settlement

—

—

—

Insurance recovery on settlement

—

—

—

Provision for income taxes

Adjusted net income before income taxes

$

$

$

$

Assumed conversion of convertible senior notes

Adjusted net income before income taxes plus assumed conversions

$

$

$

$

Weighted-average diluted shares outstanding

Adjusted diluted earnings per share before income taxes

$

$

$

$

Trailing Twelve Months
September 30,

2016

2015

(unaudited)

Reconciliation of net income to adjusted pre-tax return on equity:

Net income

$

$

Amortization of debt discounts and issuance costs

Stock-based compensation

Settlement

—

Insurance recovery on settlement

—

Provision for income taxes

Adjusted net income before income taxes

$

$

Shareholders' equity as of September 30, 2015 and 2014, respectively

$

$

Shareholders' equity as of September 30, 2016 and 2015, respectively

Average shareholders' equity

$

$

Adjusted pre-tax return on equity (TTM)

%  

%

Nine Months Ended
 September 30,

2016

2015

(unaudited)

Operating Activities

Net income

$

$

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of flight equipment

Stock-based compensation

Deferred taxes

Amortization of debt discounts and issuance costs

Gain on aircraft sales, trading and other activity

Changes in operating assets and liabilities:

Other assets

Accrued interest and other payables

Rentals received in advance

Net cash provided by operating activities

Investing Activities

Acquisition of flight equipment under operating lease

Payments for deposits on flight equipment purchases

Proceeds from aircraft sales, trading and other activity

Acquisition of furnishings, equipment and other assets

Net cash used in investing activities

Financing Activities

Issuance of common stock upon exercise of options

—

Cash dividends paid

Tax withholdings on stock-based compensation

Net change in unsecured revolving facilities

Proceeds from debt financings

Payments in reduction of debt financings

Net change in restricted cash

Debt issuance costs

Security deposits and maintenance reserve receipts

Security deposits and maintenance reserve disbursements

Net cash provided by financing activities

Net increase/(decrease) in cash

Cash and cash equivalents at beginning of period

Cash and cash equivalents at end of period

$

$

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for interest, including capitalized interest of $30,137 and $30,449 at September 30, 2016 and 2015, respectively

$

$

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

$

$

Cash dividends declared, not yet paid

$

$