Air Lease Corporation Announces Fourth Quarter & Fiscal Year 2021 Results

John L. Plueger, Chief Executive Officer and President of leasing giant Air Lease Corporation: “We had a strong fourth quarter and second half of 2021 that benefited from continuing airline industry recovery, as seen in our cash collections, operating metrics, fleet expansion, and record lease placements. We resumed our aircraft sales program and concluded the largest aircraft order in ALC’s history to support the growing demand we are seeing in the marketplace,” 

Air Lease Corporation announces financial results for the three months and year ended December 31, 2021.

“We are witnessing strengthening lease rates overall across the spectrum of new and used aircraft, including improvement in widebody lease rates being positively influenced by the exceptional strength in the freight market. Reflecting continued confidence in our future and profitability, our Board of Directors has approved a $150 million common share repurchase authorization, in addition to our 37th consecutive quarterly dividend,” said Steven F. Udvar-Házy, Executive Chairman of the Board.

Highlights

Finalized agreements with Airbus to purchase a total of 116 aircraft, including 59 A321neos, 25 A220-300s, 20 A321XLRs, seven A350Fs and five A330-900s. This represented the largest individual order for new aircraft in our Company's history.

In February 2022, we agreed to purchase from Boeing 50 737 MAX aircraft, consisting of 32 incremental 737 MAX aircraft and 18 737 MAX aircraft resulting from the conversion of three 787 aircraft. Deliveries of the aircraft are scheduled to commence in 2024 and continue through 2026.

Issued $3.7 billion of senior unsecured medium-term notes in 2021 with a weighted average interest rate of 1.27% and ended the year with total liquidity(1) of $7.9 billion.

Took delivery of 15 aircraft from our order book during the fourth quarter, representing $1.2 billion in aircraft investments. As of December 31, 2021, we had 382 aircraft in our owned fleet, with a net book value of $22.9 billion, a weighted average age of 4.4 years and a weighted average lease term remaining of 7.2 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 year with $30.9 billion in committed minimum future rental payments consisting of $14.8 billion in contracted minimum rental payments on the aircraft in our existing fleet and $16.1 billion in minimum future rental payments related to aircraft on order.

Collection rate(2) for the three and twelve months ended December 31, 2021 was 99.3% and 91.4%, respectively. This contributed to the 26.3% increase in our operating cash flow for the year ended December 31, 2021.

Lease utilization rate(3) for the three and twelve months ended December 31, 2021 was 99.8%.

On February 15, 2022, our board of directors authorized a share repurchase program of up to $150.0 million of our Class A common stock. The program expires on September 30, 2022.

On February 15, 2022, our board of directors declared a quarterly cash dividend of $0.185 per share on our outstanding common stock. The dividend will be paid on April 7, 2022 to holders of record of our common stock as of March 18, 2022.

 

Operating Results

	Three Months Ended December 31,												Year Ended December 31,
		2021			2020		$ change			% change				2021			2020		$ change				% change
Revenues	$	597		$	489		$	108		22.1	%		$	2,088		$	2,015		$	73			3.6	%
Income before taxes		188			138			50		36.2	%			541			647			(106	)		(16.4	)%
Net income available to common stockholders		142			107			35		32.7	%			408			501			(93	)		(18.6	)%
Adjusted net income before income taxes(1)		200			148			52		35.1	%			590			692			(102	)		(14.7	)%
Diluted earnings per share	$	1.24		$	0.94		$	0.3		31.9	%		$	3.57		$	4.39		$	(0.82	)		(18.7	)%
Adjusted diluted earnings per share before income taxes(1)	$	1.75		$	1.30		$	0.45		34.6	%		$	5.15		$	6.07		$	(0.92	)		(15.2	)%

Key Financial Ratios

	Three Months Ended December 31,						Year Ended December 31,
	2021			2020			2021			2020
Pre-tax profit margin	31.5	%		28.2	%		25.9	%		32.1	%
Adjusted pre-tax profit margin(1)	33.5	%		30.3	%		28.2	%		34.3	%
Pre-tax return on common equity (trailing twelve months)	8.6	%		11.3	%		8.6	%		11.3	%
Adjusted pre-tax return on common equity (trailing twelve months)(1)	9.8	%		12.4	%		9.8	%		12.4	%

(1)

Adjusted net income before income taxes, adjusted diluted earnings per share before income taxes, adjusted pre-tax profit 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, 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 and a reconciliation to their most comparable GAAP financial measures.

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

		December 31, 2021					December 31, 2020
Aircraft type		Number of Aircraft		% of Total			Number of Aircraft		% of Total
Airbus A319-100		1		0.3	%		1		0.3	%
Airbus A320-200		31		8.1	%		31		9.4	%
Airbus A320-200neo		23		6.0	%		19		5.7	%
Airbus A321-200		26		6.8	%		28		8.4	%
Airbus A321-200neo		69		18.1	%		49		14.8	%
Airbus A330-200		13		3.4	%		13		3.9	%
Airbus A330-300		8		2.1	%		8		2.4	%
Airbus A330-900neo		9		2.4	%		8		2.4	%
Airbus A350-900		12		3.1	%		11		3.3	%
Airbus A350-1000		5		1.3	%		2		0.6	%
Boeing 737-700		4		1.0	%		4		1.2	%
Boeing 737-800		88		23.0	%		88		26.5	%
Boeing 737-8 MAX		28		7.3	%		15		4.5	%
Boeing 737-9 MAX		7		1.8	%		—		—	%
Boeing 777-200ER		1		0.3	%		1		0.3	%
Boeing 777-300ER		24		6.3	%		24		7.2	%
Boeing 787-9		26		6.8	%		23		7.0	%
Boeing 787-10		6		1.6	%		6		1.8	%
Embraer E190		1		0.3	%		1		0.3	%
Total		382		100.0	%		332		100.0	%

Financial Overview

Our total revenues for the year ended December 31, 2021 increased by 3.6% to $2.1 billion as compared to the year ended December 31, 2020. The increase in total revenues was primarily driven by the continued growth in our fleet, an increase in our cash collections from our lessees, as well as an increase in our aircraft sales, trading and other activity, partially offset by the impact of cash basis accounting and lease restructurings. The impact of cash basis accounting and lease restructurings for the year ended December 31, 2021 resulted in a decrease in revenue of $72.7 million and $132.5 million, respectively. Our net income available to common stockholders for the year ended December 31, 2021 was $408.2 million compared to $500.9 million for the year ended December 31, 2020. Our diluted earnings per share for the year ended December 31, 2021 was $3.57 compared to $4.39 for the year ended December 31, 2020. Despite the growth of our fleet, our net income available to common stockholders and diluted earnings per share decreased primarily due to the impact of lease restructurings and cash basis accounting.

——————————————————————

(1)

We define liquidity as unrestricted cash plus available borrowing capacity under our unsecured committed revolving credit facility.

(2)

Collection rate is defined as the sum of cash collected from lease rentals and maintenance reserves, and includes cash recovered from outstanding receivables from previous periods, as a percentage of the total contracted receivables due for the period. The collection rate is calculated after giving effect to lease deferral arrangements made as of December 31, 2021.

(3)

Lease utilization rate is calculated based on the number of days each aircraft was subject to a lease or letter of intent during the period, weighted by the net book value of the aircraft.

Air Lease Corporation and Subsidiaries CONSOLIDATED BALANCE SHEETS (In thousands, except share and par value amounts)
	December 31, 2021				December 31, 2020
	(in thousands, except share and par value amounts)
Assets
Cash and cash equivalents	$	1,086,500			$	1,734,155
Restricted cash		21,792				23,612
Flight equipment subject to operating leases		27,101,808				23,729,742
Less accumulated depreciation		(4,202,804	)			(3,349,392	)
		22,899,004				20,380,350
Deposits on flight equipment purchases		1,508,892				1,800,119
Other assets		1,452,534				1,276,939
Total assets	$	26,968,722			$	25,215,175
Liabilities and Shareholders’ Equity
Accrued interest and other payables	$	611,757			$	492,473
Debt financing, net of discounts and issuance costs		17,022,480				16,518,338
Security deposits and maintenance reserves on flight equipment leases		1,173,831				1,072,704
Rentals received in advance		138,816				142,915
Deferred tax liability		1,013,270				916,404
Total liabilities	$	19,960,154			$	19,142,834
Shareholders’ Equity
Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 10,600,000 (aggregate liquidation preference of $850,000) and 10,000,000 (aggregate liquidation preference of $250,000) shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively		106				100
Class A common stock, $0.01 par value; 500,000,000 shares authorized; 113,987,154 and 113,852,896 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively		1,140				1,139
Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding		—				—
Paid-in capital		3,399,245				2,793,178
Retained earnings		3,609,885				3,277,599
Accumulated other comprehensive (loss)/income		(1,808	)			325
Total shareholders’ equity	$	7,008,568			$	6,072,341
Total liabilities and shareholders’ equity	$	26,968,722			$	25,215,175

Air Lease Corporation and Subsidiaries CONSOLIDATED STATEMENTS OF INCOME (In thousands, except share and per share amounts and percentages)
		Three Months Ended December 31								Year Ended December 31,
		2021				2020				2021				2020
		(unaudited)
Revenues
Rental of flight equipment		$	563,663			$	483,621			$	2,003,337			$	1,946,620
Aircraft sales, trading and other			33,513				5,481				85,052				68,819
Total revenues			597,176				489,102				2,088,389				2,015,439
Expenses
Interest			116,152				113,980				462,396				431,733
Amortization of debt discounts and issuance costs			13,511				11,365				50,620				43,025
Interest expense			129,663				125,345				513,016				474,758
Depreciation of flight equipment			230,819				202,722				882,562				780,691
Selling, general and administrative			40,598				20,542				125,279				95,684
Stock-based compensation			7,716				2,672				26,516				17,628
Total expenses			408,796				351,281				1,547,373				1,368,761
Income before taxes			188,380				137,821				541,016				646,678
Income tax expense			(36,599	)			(26,728	)			(104,384	)			(130,414	)
Net income		$	151,781			$	111,093			$	436,632			$	516,264
Preferred stock dividends			(9,463	)			(3,844	)			(28,473	)			(15,375	)
Net income available to common stockholders		$	142,318			$	107,249				408,159				500,889
Net income per share of common stock:
Basic		$	1.25			$	0.94			$	3.58			$	4.41
Diluted		$	1.24			$	0.94			$	3.57			$	4.39
Weighted-average shares of common stock outstanding
Basic			113,987,154				113,795,564				114,050,578				113,684,782
Diluted			114,332,498				114,105,700				114,446,093				114,014,021
Other financial data
Pre-tax profit margin			31.5	%			28.2	%			25.9	%			32.1	%
Adjusted net income before income taxes(1)		$	200,144			$	148,014			$	589,679			$	691,956
Adjusted pre-tax profit margin(1)			33.5	%			30.3	%			28.2	%			34.3	%
Adjusted diluted earnings per share before income taxes(1)		$	1.75			$	1.30			$	5.15			$	6.07
Pre-tax return on common equity (trailing twelve months)			8.6	%			11.3	%			8.6	%			11.3	%
Adjusted pre-tax return on common equity (trailing twelve months)(1)			9.8	%			12.4	%			9.8	%			12.4	%

(1)		Adjusted net income before income taxes (defined as net income available to common stockholders excluding 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), adjusted pre-tax profit 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 available to common stockholders, pre-tax profit margin, earnings per share, diluted earnings 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 profit 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 profit 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 profit 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 profit 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 profit 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 profit 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 calculation for adjusted pre-tax profit margin (in thousands, except percentages):

	Three Months Ended December 31,								Year Ended December 31,
	2021				2020				2021				2020
	(unaudited)
Reconciliation of the numerator for adjusted pre-tax profit margin (net income available to common stockholders to adjusted net income before income taxes):
Net income available to common stockholders	$	142,318			$	107,249			$	408,159			$	500,889
Amortization of debt discounts and issuance costs		13,511				11,365				50,620				43,025
Stock-based compensation		7,716				2,672				26,516				17,628
Provision for income taxes		36,599				26,728				104,384				130,414
Adjusted net income before income taxes	$	200,144			$	148,014			$	589,679			$	691,956
Denominator for adjusted pre-tax profit margin:
Total revenues	$	597,176			$	489,102			$	2,088,389			$	2,015,439
Adjusted pre-tax profit margin(a)		33.5	%			30.3	%			28.2	%			34.3	%

(a)

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

The following table shows the calculation 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,
	2021				2020		2021			2020
	(unaudited)
Reconciliation of numerator for adjusted diluted earnings per share (net income available to common stockholders to adjusted net income before income taxes):
Net income available to common stockholders	$	142,318		$	107,249		$	408,159		$	500,889
Amortization of debt discounts and issuance costs		13,511			11,365			50,620			43,025
Stock-based compensation		7,716			2,672			26,516			17,628
Provision for income taxes		36,599			26,728			104,384			130,414
Adjusted net income before income taxes	$	200,144		$	148,014		$	589,679		$	691,956
Denominator for adjusted diluted earnings per share:
Weighted-average diluted shares of common stock outstanding		114,332,498			114,105,700			114,446,093			114,014,021
Adjusted diluted earnings per share before income taxes(b)	$	1.75		$	1.30		$	5.15		$	6.07

(b)

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

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

	Year Ended December 31,
	2021				2020
	(unaudited)
Reconciliation of the numerator for adjusted pre-tax return on common equity (net income available to common stockholders to adjusted net income before income taxes):
Net income available to common stockholders	$	408,159			$	500,889
Amortization of debt discounts and issuance costs		50,620				43,025
Stock-based compensation		26,516				17,628
Provision for income taxes		104,384				130,414
Adjusted net income before income taxes	$	589,679			$	691,956
Denominator for adjusted pre-tax return on common equity:
Common shareholders' equity as of the beginning of the period	$	5,822,341			$	5,373,544
Common shareholders' equity as of the end of the period	$	6,158,568			$	5,822,341
Average common shareholders' equity	$	5,990,455			$	5,597,943
Adjusted pre-tax return on common equity(c)		9.8	%			12.4	%

(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, 2021				Year Ended December 31, 2020
	(in thousands)
Operating Activities
Net income	$	436,632			$	516,264
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of flight equipment		882,562				780,691
Stock-based compensation		26,516				17,628
Deferred taxes		97,446				166,467
Amortization of prepaid lease costs		46,547				43,224
Amortization of discounts and debt issuance costs		50,620				43,025
Gain on aircraft sales, trading and other activity		(46,109	)			(34,654	)
Changes in operating assets and liabilities:
Other assets		(176,391	)			(415,347	)
Accrued interest and other payables		63,112				(22,810	)
Rentals received in advance		(4,099	)			(4,302	)
Net cash provided by operating activities		1,376,836				1,090,186
Investing Activities
Acquisition of flight equipment under operating lease		(2,506,175	)			(1,631,551	)
Payments for deposits on flight equipment purchases		(496,838	)			(885,679	)
Proceeds from aircraft sales, trading and other activity		137,887				151,132
Acquisition of aircraft furnishings, equipment and other assets		(229,654	)			(160,993	)
Net cash used in investing activities		(3,094,780	)			(2,527,091	)
Financing Activities
Issuance of common stock upon exercise of options and warrants		1,438				6,569
Issuance of preferred stock		591,340				—
Cash dividends paid on Class A common stock		(73,001	)			(68,183	)
Common shares repurchased		(5,780	)			—
Preferred dividends paid		(28,473	)			(15,375	)
Tax withholdings on stock-based compensation		(7,441	)			(8,618	)
Net change in unsecured revolving facilities		—				(20,000	)
Proceeds from debt financings		3,655,830				4,659,762
Payments in reduction of debt financings		(3,194,482	)			(1,728,029	)
Debt issuance costs		(10,245	)			(8,102	)
Security deposits and maintenance reserve receipts		174,521				114,596
Security deposits and maintenance reserve disbursements		(35,238	)			(76,009	)
Net cash provided by financing activities		1,068,469				2,856,611
Net (decrease)/increase in cash		(649,475	)			1,419,706
Cash, cash equivalents and restricted cash at beginning of period		1,757,767				338,061
Cash, cash equivalents and restricted cash at end of period	$	1,108,292			$	1,757,767
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for interest, including capitalized interest of $49,070 and $53,163 at December 31, 2021 and 2020, respectively	$	508,616			$	449,662
Cash paid for income taxes	$	5,734			$	29,733
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	$	1,009,554			$	782,896
Cash dividends declared, not yet paid		21,088				18,216

 

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