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Air Lease Corporation Announces Fourth Quarter & Fiscal Year 2023 Results

Air Lease Corporation (ALC) (NYSE: AL) announces financial results for the three months and year ended December 31, 2023.

“Fourth quarter and full-year performance at ALC was very strong. With the exception of the benefit of tax reform in 2017, we achieved record revenues and profits for the 4th quarter, with net income increasing 56% and revenues increasing 19% over the prior year’s quarter. Similarly, for the full year 2023 we enjoyed record revenues, aircraft sales, and total assets which exceeded $30 billion for the first time. Looking forward, the commercial aircraft supply/demand backdrop remains highly favorable for our current fleet and our $22 billion forward orderbook scheduled to deliver over the next 4-5 years,” said John L. Plueger, Chief Executive Officer and President, and Steven F. Udvar-Házy, Executive Chairman of the Board.

Fourth Quarter and Fiscal Year 2023 Results

The following table summarizes our operating results for the three months and year ended December 31, 2023 and 2022 (in millions, except per share amounts and percentages):

Operating Results

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

2023

 

2022

 

$ change

 

% change

 

2023

 

2022

 

$ change

 

% change

Revenues

$

716.6

 

 

$

601.6

 

 

$

115.0

 

 

19.1

%

 

$

2,685.0

 

 

$

2,317.3

 

 

$

367.7

 

 

15.9

%

Operating expenses

 

(517.2

)

 

 

(452.3

)

 

 

(64.9

)

 

14.3

%

 

 

(1,998.4

)

 

 

(1,684.6

)

 

 

(313.8

)

 

18.6

%

(Write-off) of Russian fleet, net of recoveries

 

67.0

 

 

 

30.9

 

 

 

36.1

 

 

116.8

%

 

 

67.0

 

 

 

(771.5

)

 

 

838.5

 

 

%

Income/(loss) before taxes

 

266.4

 

 

 

180.2

 

 

 

86.2

 

 

47.8

%

 

 

753.6

 

 

 

(138.8

)

 

 

892.4

 

 

%

Net income/(loss) attributable to common stockholders

$

210.6

 

 

$

134.9

 

 

$

75.7

 

 

56.1

%

 

$

572.9

 

 

$

(138.7

)

 

$

711.6

 

 

%

Diluted earnings/(loss) per share

$

1.89

 

 

$

1.21

 

 

$

0.68

 

 

56.2

%

 

$

5.14

 

 

$

(1.24

)

 

$

6.38

 

 

%

Adjusted net income before income taxes(1)

$

213.9

 

 

$

158.2

 

 

$

55.7

 

 

35.2

%

 

$

733.6

 

 

$

659.9

 

 

$

73.7

 

 

11.2

%

Adjusted diluted earnings per share before income taxes(1)

$

1.92

 

 

$

1.42

 

 

$

0.50

 

 

35.2

%

 

$

6.58

 

 

$

5.89

 

 

$

0.69

 

 

11.7

%

Key Financial Ratios

Three Months Ended

December 31,

Year Ended

December 31,

 

2023

2022

2023

2022

Pre-tax margin

37.2%

29.9%

28.1%

(6.0)%

Adjusted pre-tax margin(1)

29.8%

26.3%

27.3%

28.5%

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

 

 

11.8%

(3.0)%

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

 

 

12.1%

 

11.0%

——————————————————————

(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 net write-offs and recoveries 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

  • During the fourth quarter, we took delivery of 22 aircraft from our order book, representing approximately $1.2 billion in aircraft investments, ending the period with 463 aircraft in our owned fleet and over $30 billion in total assets.
  • We recognized a net benefit of approximately $67 million from the settlement of insurance claims with respect to four aircraft in our owned fleet and our equity interest in certain aircraft in our managed fleet that were previously on lease to JSC Siberia Airline (“S7”), a Russian airline.
  • Sold eight aircraft1 during the fourth quarter for approximately $440 million in sales proceeds.
  • We have $1.5 billion of aircraft in our sales pipeline in 2024, which includes $605 million in flight equipment held for sale as of December 31, 2023 and $892 million of aircraft subject to letters of intent.
  • We have placed 100% of our committed orderbook on long-term leases for aircraft delivering through the end of 2025 and have placed approximately 65% of our entire orderbook delivering through 2028.
  • We ended the year with $31.0 billion in committed minimum future rental payments consisting of $16.4 billion in contracted minimum rental payments on the aircraft in our existing fleet and $14.6 billion in minimum future rental payments related to aircraft which will deliver between 2024 through 2027.
  • In 2023, we raised approximately $3.6 billion in committed debt financings and ended the year with total liquidity of $6.8 billion.
  • On February 13, 2024, our board of directors declared a quarterly cash dividend of $0.21 per share on our outstanding Class A common stock. The next quarterly dividend of $0.21 per share will be paid on April 10, 2024 to holders of record of our Class A common stock as of March 15, 2024.

Financial Overview

Fourth Quarter 2023 vs. Fourth Quarter 2022

Our total revenues for the three months ended December 31, 2023 increased by 19% to $717 million as compared to the three months ended December 31, 2022. The increase in total revenues was primarily driven by the continued growth in our fleet, an increase in sales activity and higher end of lease revenue. During the three months ended December 31, 2023, we recognized $59 million in gains from the sale of eight aircraft. We also recognized $60 million in end of lease revenue related to the return of seven aircraft. During the three months ended December 31, 2022, we recorded approximately $28 million in gains from the sale of six aircraft1.

Our net income attributable to common stockholders for the three months ended December 31, 2023 was $211 million, or $1.89 per diluted share, compared to $135 million, or $1.21 per diluted share, for the three months ended December 31, 2022. The increase from the prior year period was primarily driven by the increase in revenue as discussed above, partially offset by higher interest expense as a result of the increase in our composite cost of funds. In addition, we recognized a net benefit of approximately $67 million from the settlement of insurance claims under S7’s insurance policies related to four aircraft in our owned fleet and our equity interest in certain aircraft in our managed fleet that were previously on lease to S7.

Adjusted net income before income taxes during the three months ended December 31, 2023 was $214 million or $1.92 per adjusted diluted share, as compared to $158 million, or $1.42 per adjusted diluted share, for the three months ended December 31, 2022. The increase in our adjusted net income before income taxes primarily relates to the increase in revenues as discussed above, partially offset by higher interest expense.

Full Year 2023 vs. Full Year 2022

Our total revenues for the year ended December 31, 2023 increased by 16% to $2.7 billion as compared to the year ended December 31, 2022. The increase in total revenues was primarily driven by the continued growth in our fleet, an increase in sales activity and higher end of lease revenue. During the year ended December 31, 2023, we recognized $156 million in gains from the sale of 27 aircraft1 and also recognized $124 million in end of lease revenue from the return of 22 aircraft. During the year ended December 31, 2022, we recognized $48 million in gains from the sale of 15 aircraft1. In addition, in 2022, we recorded $76.6 million in income related to security deposit forfeitures and maintenance reserve revenue from the return of 12 aircraft as well as the termination of our leasing activities in Russia.

Our net income attributable to common stockholders for the year ended December 31, 2023 was $573 million, or $5.14 per diluted share, as compared to a net loss attributable to common stockholders of $139 million, or $1.24 loss per diluted share, for the year ended December 31, 2022. The increase from the prior year was primarily due to an increase in revenues as discussed above partially offset by higher interest expense, which resulted from an increase in our composite cost of funds. In addition, in 2023, we recognized a net benefit of approximately $67 million from the settlement of insurance claims mentioned above, while in 2022, we recognized a net write-off of $772 million related to our Russian fleet.

Adjusted net income before income taxes during the year ended December 31, 2023 was $734 million or $6.58 per adjusted diluted share, as compared to $660 million, or $5.89 per adjusted diluted share, for the year ended December 31, 2022. The increase in our adjusted net income before income taxes primarily relates to the increase in revenues as discussed above, partially offset by higher interest expense.

——————————————————————

1 Aircraft sales include one sales-type lease transaction and two sales-type lease transactions during the quarter and year ended December 31, 2023, respectively. During the quarter and year ended December 31, 2022, aircraft sales includes one sales-type lease transaction and nine sales-type lease transactions, respectively.

Flight Equipment Portfolio

As of December 31, 2023, the net book value of our fleet increased to $26.2 billion, compared to $24.5 billion as of December 31, 2022. As of December 31, 2023, we owned 463 aircraft in our aircraft portfolio, comprised of 345 narrowbody aircraft and 118 widebody aircraft, and we managed 78 aircraft. The weighted average fleet age and weighted average remaining lease term of flight equipment subject to operating lease as of December 31, 2023 was 4.6 years and 7.0 years, respectively. We have a globally diversified customer base comprised of 119 airlines in 62 countries as of December 31, 2023.

The following table summarizes the key portfolio metrics of our fleet as of December 31, 2023 and December 31, 2022:

 

December 31, 2023

 

December 31, 2022

Net book value of flight equipment subject to operating lease

$

26.2 billion

 

$

24.5 billion

Weighted-average fleet age(1)

 

4.6 years

 

 

4.5 years

Weighted-average remaining lease term(1)

 

7.0 years

 

 

7.1 years

 

 

 

 

 

 

Owned fleet(2)

 

463

 

 

417

Managed fleet

 

78

 

 

85

Aircraft on order

 

334

 

 

398

Total

 

875

 

 

900

 

 

 

 

 

 

Current fleet contracted rentals

$

16.4 billion

 

$

15.6 billion

Committed fleet rentals

$

14.6 billion

 

$

15.8 billion

Total committed rentals

$

31.0 billion

 

$

31.4 billion

 

 

 

 

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

(2) As of December 31, 2023, our owned fleet count included 14 aircraft classified as flight equipment held for sale and 12 aircraft classified as net investments in sales-type leases, which are both included in Other assets on the Consolidated Balance Sheet.

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

 

December 31, 2023

 

December 31, 2022

Region

% of Net Book Value

 

% of Net Book Value

Asia Pacific

39.8

%

 

44.1

%

Europe

37.7

%

 

32.5

%

Central America, South America, and Mexico

9.0

%

 

7.8

%

The Middle East and Africa

7.9

%

 

9.3

%

U.S. and Canada

5.6

%

 

6.3

%

Total(1)

100.0

%

 

100.0

%

 

 

 

 

(1) As of December 31, 2022, we had four aircraft classified as held for sale with a carrying value of $153.5 million included in the table above.

The following table details the composition of our owned fleet by aircraft type:

 

 

December 31, 2023

 

December 31, 2022

Aircraft type

 

Number of

Aircraft

 

% of Total

 

Number of

Aircraft

 

% of Total

Airbus A220-100

 

2

 

0.4

%

 

 

%

Airbus A220-300

 

13

 

2.8

%

 

4

 

1.0

%

Airbus A319-100

 

1

 

0.2

%

 

1

 

0.2

%

Airbus A320-200

 

28

 

6.0

%

 

28

 

6.7

%

Airbus A320-200neo

 

25

 

5.4

%

 

23

 

5.5

%

Airbus A321-200

 

23

 

5.0

%

 

23

 

5.5

%

Airbus A321-200neo

 

95

 

20.6

%

 

78

 

18.7

%

Airbus A330-200(1)

 

13

 

2.8

%

 

13

 

3.1

%

Airbus A330-300

 

5

 

1.1

%

 

5

 

1.2

%

Airbus A330-900neo

 

23

 

5.0

%

 

16

 

3.8

%

Airbus A350-900

 

14

 

3.0

%

 

13

 

3.1

%

Airbus A350-1000

 

7

 

1.5

%

 

6

 

1.4

%

Boeing 737-700

 

3

 

0.6

%

 

4

 

1.0

%

Boeing 737-800

 

73

 

15.8

%

 

82

 

19.7

%

Boeing 737-8 MAX

 

52

 

11.2

%

 

47

 

11.3

%

Boeing 737-9 MAX

 

29

 

6.3

%

 

15

 

3.7

%

Boeing 777-200ER

 

1

 

0.2

%

 

1

 

0.2

%

Boeing 777-300ER

 

24

 

5.2

%

 

24

 

5.8

%

Boeing 787-9

 

25

 

5.4

%

 

27

 

6.5

%

Boeing 787-10

 

6

 

1.3

%

 

6

 

1.4

%

Embraer E190

 

1

 

0.2

%

 

1

 

0.2

%

Total(2)

 

463

 

100.0

%

 

417

 

100.0

%

 

 

 

 

 

 

 

 

 

(1) As of December 31, 2023, aircraft count includes two Airbus A330-200 aircraft classified as freighters.

(2) As of December 31, 2023, our owned fleet count included 14 aircraft classified as flight equipment held for sale and 12 aircraft classified as net investments in sales-type leases, which are both included in Other assets on the Consolidated Balance Sheet.

Debt Financing Activities

We ended the fourth quarter of 2023 with total debt financing, net of discounts and issuance costs, of $19.2 billion. As of December 31, 2023, 84.7% of our total debt financing was at a fixed rate and 98.4% was unsecured. As of December 31, 2023, our composite cost of funds was 3.77%. We ended the year with total liquidity of $6.8 billion.

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

 

December 31, 2023

 

December 31, 2022

Unsecured

 

 

 

Senior unsecured securities

$

16,330

 

 

$

17,095

 

Term financings

 

1,628

 

 

 

583

 

Revolving credit facility

 

1,100

 

 

 

1,020

 

Total unsecured debt financing

 

19,058

 

 

 

18,698

 

Secured

 

 

 

Export credit financing

 

205

 

 

 

11

 

Term financings

 

101

 

 

 

114

 

Total secured debt financing

 

306

 

 

 

125

 

 

 

 

 

Total debt financing

 

19,364

 

 

 

18,823

 

Less: Debt discounts and issuance costs

 

(181

)

 

 

(182

)

Debt financing, net of discounts and issuance costs

$

19,183

 

 

$

18,641

 

Selected interest rates and ratios:

 

 

 

Composite interest rate(1)

 

3.77

%

 

 

3.07

%

Composite interest rate on fixed-rate debt(1)

 

3.26

%

 

 

2.98

%

Percentage of total debt at a fixed-rate

 

84.71

%

 

 

91.34

%

 

 

 

 

(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 February 15, 2024 at 4:30 PM Eastern Time to discuss the Company's financial results for the fourth quarter and year ended 2023.

Investors can participate in the conference call by dialing 1 (888) 660-6652 domestic or 1 (646) 960-0554 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 on February 15, 2024 until 11:59 PM ET on February 22, 2024. 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, our access to the capital and debt markets, the impact of Russia’s invasion of Ukraine and the impact of sanctions imposed on Russia, the impact of the Israel Hamas conflict, aircraft and engine delivery delays and manufacturing flaws, our aircraft sales pipeline and expectations, changes in inflation and interest rates and other macroeconomic conditions 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, decreases in our credit ratings, 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 contractual obligations to us, including or as a result of manufacturing defects and technical or other difficulties with aircraft or engines before or after delivery;
  • our ability to recover losses related to aircraft detained in Russia, including through insurance claims and related litigation;
  • 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, inflation, 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, or the failure of such insurers to fulfill their contractual obligations;
  • 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, 2023, and other Securities and Exchange Commission (“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)

 

 

December 31, 2023

 

December 31, 2022

 

(unaudited)

Assets

 

 

 

Cash and cash equivalents

$

460,870

 

 

$

766,418

 

Restricted cash

 

3,622

 

 

 

13,599

 

Flight equipment subject to operating leases

 

31,787,241

 

 

 

29,466,888

 

Less accumulated depreciation

 

(5,556,033

)

 

 

(4,928,503

)

 

 

26,231,208

 

 

 

24,538,385

 

Deposits on flight equipment purchases

 

1,203,068

 

 

 

1,344,973

 

Other assets

 

2,553,484

 

 

 

1,733,330

 

Total assets

$

30,452,252

 

 

$

28,396,705

 

Liabilities and Shareholders’ Equity

 

 

 

Accrued interest and other payables

$

1,164,140

 

 

$

696,899

 

Debt financing, net of discounts and issuance costs

 

19,182,657

 

 

 

18,641,063

 

Security deposits and maintenance reserves on flight equipment leases

 

1,519,719

 

 

 

1,293,929

 

Rentals received in advance

 

143,861

 

 

 

147,654

 

Deferred tax liability

 

1,281,837

 

 

 

970,797

 

Total liabilities

$

23,292,214

 

 

$

21,750,342

 

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 December 31, 2023 and December 31, 2022, respectively

$

106

 

 

$

106

 

Class A common stock, $0.01 par value; 500,000,000 shares authorized; 111,027,252 and 110,892,097 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively

 

1,110

 

 

 

1,109

 

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

 

 

 

 

 

Paid-in capital

 

3,287,234

 

 

 

3,255,973

 

Retained earnings

 

3,869,813

 

 

 

3,386,820

 

Accumulated other comprehensive income

 

1,775

 

 

 

2,355

 

Total shareholders’ equity

$

7,160,038

 

 

$

6,646,363

 

Total liabilities and shareholders’ equity

$

30,452,252

 

 

$

28,396,705

 

Air Lease Corporation and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Three Months Ended

December 31,

 

Year Ended

December 31,

 

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

 

(unaudited)

Revenues

 

 

 

 

 

 

 

 

Rental of flight equipment

 

$

644,074

 

 

$

561,285

 

 

$

2,477,607

 

 

$

2,214,508

 

Aircraft sales, trading and other

 

 

72,494

 

 

 

40,325

 

 

 

207,370

 

 

 

102,794

 

Total revenues

 

 

716,568

 

 

 

601,610

 

 

 

2,684,977

 

 

 

2,317,302

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

Interest

 

 

169,355

 

 

 

134,303

 

 

 

654,910

 

 

 

492,924

 

Amortization of debt discounts and issuance costs

 

 

13,639

 

 

 

13,482

 

 

 

54,053

 

 

 

53,254

 

Interest expense

 

 

182,994

 

 

 

147,785

 

 

 

708,963

 

 

 

546,178

 

 

 

 

 

 

 

 

 

 

Depreciation of flight equipment

 

 

273,113

 

 

 

252,860

 

 

 

1,068,772

 

 

 

965,955

 

Write-off of Russian fleet, net of (recoveries)

 

 

(67,022

)

 

 

(30,877

)

 

 

(67,022

)

 

 

771,476

 

Selling, general and administrative

 

 

49,798

 

 

 

45,862

 

 

 

186,015

 

 

 

156,855

 

Stock-based compensation expense

 

 

11,285

 

 

 

5,804

 

 

 

34,615

 

 

 

15,603

 

Total expenses

 

 

450,168

 

 

 

421,434

 

 

 

1,931,343

 

 

 

2,456,067

 

Income/(loss) before taxes

 

 

266,400

 

 

 

180,176

 

 

 

753,634

 

 

 

(138,765

)

Income tax (expense)/benefit

 

 

(45,349

)

 

 

(34,865

)

 

 

(139,012

)

 

 

41,741

 

Net income/(loss)

 

$

221,051

 

 

$

145,311

 

 

$

614,622

 

 

$

(97,024

)

Preferred stock dividends

 

 

(10,425

)

 

 

(10,425

)

 

 

(41,700

)

 

 

(41,700

)

Net income/(loss) attributable to common stockholders

 

$

210,626

 

 

$

134,886

 

 

$

572,922

 

 

$

(138,724

)

 

 

 

 

 

 

 

 

 

Earnings/(Loss) per share of common stock:

 

 

 

 

 

 

 

 

Basic

 

$

1.90

 

 

$

1.22

 

 

$

5.16

 

 

$

(1.24

)

Diluted

 

$

1.89

 

 

$

1.21

 

 

$

5.14

 

 

$

(1.24

)

Weighted-average shares of common stock outstanding

 

 

 

 

 

 

 

 

Basic

 

 

111,027,252

 

 

 

110,892,097

 

 

 

111,005,088

 

 

 

111,626,508

 

Diluted

 

 

111,410,767

 

 

 

111,162,063

 

 

 

111,438,589

 

 

 

111,626,508

 

 

 

 

 

 

 

 

 

 

Other financial data

 

 

 

 

 

 

 

 

Pre-tax margin

 

 

37.2

%

 

 

29.9

%

 

 

28.1

%

 

 

(6.0

)%

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

 

 

11.8

%

 

 

(3.0

)%

 

 

11.8

%

 

 

(3.0

)%

Adjusted net income before income taxes(1)

 

$

213,877

 

 

$

158,160

 

 

$

733,580

 

 

$

659,868

 

Adjusted diluted earnings per share before income taxes(1)

 

$

1.92

 

 

$

1.42

 

 

$

6.58

 

 

$

5.89

 

Adjusted pre-tax margin(1)

 

 

29.8

%

 

 

26.3

%

 

 

27.3

%

 

 

28.5

%

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

 

 

12.1

%

 

 

11.0

%

 

 

12.1

%

 

 

11.0

%

(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 net write-offs and recoveries 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

December 31,

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(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

$

210,626

 

 

$

134,886

 

 

$

572,922

 

 

$

(138,724

)

Amortization of debt discounts and issuance costs

 

13,639

 

 

 

13,482

 

 

 

54,053

 

 

 

53,254

 

Write-off of Russian fleet, net of (recoveries)

 

(67,022

)

 

 

(30,877

)

 

 

(67,022

)

 

 

771,476

 

Stock-based compensation expense

 

11,285

 

 

 

5,804

 

 

 

34,615

 

 

 

15,603

 

Income tax expense/(benefit)

 

45,349

 

 

 

34,865

 

 

 

139,012

 

 

 

(41,741

)

Adjusted net income before income taxes

$

213,877

 

 

$

158,160

 

 

$

733,580

 

 

$

659,868

 

 

 

 

 

 

 

 

 

Denominator for adjusted pre-tax margin:

 

 

 

 

 

Total revenues

$

716,568

 

 

$

601,610

 

 

$

2,684,977

 

 

$

2,317,302

 

Adjusted pre-tax margin(a)

 

29.8

%

 

 

26.3

%

 

 

27.3

%

 

 

28.5

%

 

 

 

 

 

 

 

 

(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

December 31,

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

 

2023

 

 

 

2022

 

 

(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

$

210,626

 

 

$

134,886

 

 

$

572,922

 

 

$

(138,724

)

Amortization of debt discounts and issuance costs

 

13,639

 

 

 

13,482

 

 

 

54,053

 

 

 

53,254

 

Write-off of Russian fleet, net of (recoveries)

 

(67,022

)

 

 

(30,877

)

 

 

(67,022

)

 

 

771,476

 

Stock-based compensation expense

 

11,285

 

 

 

5,804

 

 

 

34,615

 

 

 

15,603

 

Income tax expense/(benefit)

 

45,349

 

 

 

34,865

 

 

 

139,012

 

 

 

(41,741

)

Adjusted net income before income taxes

$

213,877

 

 

$

158,160

 

 

$

733,580

 

 

$

659,868

 

 

 

 

 

 

 

 

 

Denominator for adjusted diluted earnings per share:

 

 

 

 

 

 

 

Weighted-average diluted common shares outstanding

 

111,410,767

 

 

 

111,162,063

 

 

 

111,438,589

 

 

 

111,626,508

 

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

 

 

 

 

 

 

 

 

 

 

361,186

 

Adjusted weighted-average diluted common shares outstanding

 

111,410,767

 

 

 

111,162,063

 

 

 

111,438,589

 

 

 

111,987,694

 

Adjusted diluted earnings per share before income taxes(b)

$

1.92

 

 

$

1.42

 

 

$

6.58

 

 

$

5.89

 

 

 

 

 

 

 

 

 

(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):

 

 

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

(unaudited)

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

 

 

 

Net income/(loss) attributable to common stockholders

$

572,922

 

 

$

(138,724

)

Amortization of debt discounts and issuance costs

 

54,053

 

 

 

53,254

 

Write-off of Russian fleet, net of (recoveries)

 

(67,022

)

 

 

771,476

 

Stock-based compensation expense

 

34,615

 

 

 

15,603

 

Income tax expense/(benefit)

 

139,012

 

 

 

(41,741

)

Adjusted net income before income taxes

$

733,580

 

 

$

659,868

 

 

 

 

 

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

$

5,796,363

 

 

$

6,158,568

 

Common shareholders' equity as of end of the period

$

6,310,038

 

 

$

5,796,363

 

Average common shareholders' equity

$

6,053,201

 

 

$

5,977,466

 

 

 

 

 

Adjusted pre-tax return on common equity(c)

 

12.1

%

 

 

11.0

%

 

 

 

 

(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)

 

 

Year Ended

December 31,

 

 

2023

 

 

 

2022

 

 

(unaudited)

Operating Activities

 

 

 

Net income/(loss)

$

614,622

 

 

$

(97,024

)

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

 

 

 

Depreciation of flight equipment

 

1,068,772

 

 

 

965,955

 

Write-off of Russian fleet, net of (recoveries)

 

(67,022

)

 

 

771,476

 

Stock-based compensation expense

 

34,615

 

 

 

15,603

 

Deferred taxes

 

133,358

 

 

 

(43,492

)

Amortization of prepaid lease costs

 

75,389

 

 

 

47,849

 

Amortization of discounts and debt issuance costs

 

54,053

 

 

 

53,254

 

Gain on aircraft sales, trading and other activity

 

(226,945

)

 

 

(113,103

)

Changes in operating assets and liabilities:

 

 

 

Other assets

 

48,310

 

 

 

(232,613

)

Accrued interest and other payables

 

13,333

 

 

 

255

 

Rentals received in advance

 

(1,605

)

 

 

13,990

 

Net cash provided by operating activities

 

1,746,880

 

 

 

1,382,150

 

Investing Activities

 

 

 

Acquisition of flight equipment under operating lease

 

(3,789,113

)

 

 

(2,904,723

)

Payments for deposits on flight equipment purchases

 

(433,452

)

 

 

(518,270

)

Proceeds from aircraft sales, trading and other activity

 

1,684,814

 

 

 

235,424

 

Proceeds from settlement of insurance claim

 

64,714

 

 

 

 

Acquisition of aircraft furnishings, equipment and other assets

 

(305,346

)

 

 

(216,635

)

Net cash used in investing activities

 

(2,778,383

)

 

 

(3,404,204

)

Financing Activities

 

 

 

Cash dividends paid on Class A common stock

 

(88,792

)

 

 

(83,253

)

Common shares repurchased

 

 

 

 

(150,000

)

Cash dividends paid on preferred stock

 

(41,700

)

 

 

(41,700

)

Tax withholdings on stock-based compensation

 

(3,354

)

 

 

(8,903

)

Net change in unsecured revolving facility

 

80,000

 

 

 

1,020,000

 

Proceeds from debt financings

 

2,993,732

 

 

 

2,659,996

 

Payments in reduction of debt financings

 

(2,593,338

)

 

 

(2,085,898

)

Debt issuance costs

 

(13,052

)

 

 

(6,827

)

Security deposits and maintenance reserve receipts

 

398,345

 

 

 

417,224

 

Security deposits and maintenance reserve disbursements

 

(15,863

)

 

 

(26,860

)

Net cash provided by financing activities

 

715,978

 

 

 

1,693,779

 

Net (decrease)/increase in cash

 

(315,525

)

 

 

(328,275

)

Cash, cash equivalents and restricted cash at beginning of period

 

780,017

 

 

 

1,108,292

 

Cash, cash equivalents and restricted cash at end of period

$

464,492

 

 

$

780,017

 

Supplemental Disclosure of Cash Flow Information

 

 

 

Cash paid during the period for interest, including capitalized interest of $43,093 and $39,655 at December 31, 2023 and 2022, respectively

$

693,826

 

 

$

533,897

 

Cash paid for income taxes

$

7,801

 

 

$

6,362

 

Supplemental Disclosure of Noncash Activities

 

 

 

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

$

827,377

 

 

$

914,501

 

Flight equipment subject to operating leases reclassified to flight equipment held for sale

$

1,730,212

 

 

$

377,131

 

Flight equipment subject to operating leases reclassified to investment in sales-type lease

$

66,907

 

 

$

255,205

 

Cash dividends declared on Class A common stock, not yet paid

$

23,316

 

 

$

22,178

 

 

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