Air Lease Corporation (ALC) (NYSE:AL) announces financial results for the year and three months ended December 31, 2017.
$1,516 million for the full year 2017, an increase of 6.9%
$398 million for the three months ended December 31, 2017, an increase of 7.6%
Diluted earnings per share:
$6.82 for the full year 2017, an increase of 98.3%
$4.22 for the three months ended December 31, 2017, an increase of 374.2%
Adjusted diluted earnings per share before income taxes:
$5.94 for the full year 2017, an increase of 4.8%
$1.60 for the three months ended December 31, 2017, an increase of 8.1%
Diluted earnings per share, excluding effects of the Tax Cuts and Jobs Act ("Tax Reform Act"):
$3.65 for the full year 2017, an increase of 6.1%
$1.06 for the three months ended December 31, 2017, an increase of 19.1%
Pre-tax margin of 40.2% for the full year 2017
Adjusted pre-tax margin of 43.4% for the full year 2017
Return on equity:
Pre-tax return on equity of 16.2% for the full year 2017
Adjusted pre-tax return on equity of 17.5% for the full year 2017
Recorded a $354 million tax benefit or $3.16 per diluted share for the quarter ended December 31, 2017, due to the remeasurement of deferred tax liabilities as a result of the Tax Reform Act. The Tax Reform Act lowers the U.S. corporate tax rate from 35% to 21% effective January 1, 2018. We expect that the lower U.S. corporate tax rate will help to increase our net income and accelerate our growth.
Took delivery of our first 737 MAX and A350 aircraft from our orderbook in the fourth quarter of 2017 and have commitments to purchase 128 737 MAX aircraft and 18 A350 aircraft between 2018 and 2023.
Ended the year with a net book value of $13.3 billion in aircraft with a weighted average age of 3.8 years and a weighted average lease term remaining of 6.8 years.
Placed 97% of our order book on long-term leases for aircraft delivering through 2019 and 79% through 2020.
Ended the year with $23.4 billion in committed minimum future rental payments, including $10.1 billion in contracted minimum rental payments on the aircraft in our existing fleet and $13.3 billion in minimum future rental payments related to aircraft delivering in the future.
Issued a total of $2.2 billion of senior unsecured notes in 2017 and ended the year with liquidity of $3.2 billion and further decreased our composite cost of funds to 3.20%.
Declared a quarterly cash dividend of $0.10 per share on our outstanding common stock for the fourth quarter of 2017. The dividend will be paid on April 6, 2018 to holders of record of our common stock as of March 20, 2018.
“Air Lease achieved solid financial results for the fourth quarter and full year 2017. For the first time, we exceeded $15 billion in assets and $1.5 billion in total revenues. We also maintained a high level of profitability. The industry backdrop remains healthy with passenger traffic up 7.6% year over year in 2017, exceeding the 10-year average annual growth rate. These robust levels of passenger traffic further support the ongoing demand for new aircraft we have seen from our customers. Looking ahead, we believe ALC is well positioned for continued growth, further enhanced by expected ongoing benefits resulting from the Tax Cuts and Jobs Act,” said John L. Plueger, Chief Executive Officer and President.
“The ALC team should be commended for their customer focus and strong risk management principles, both of which underpin the results of the fourth quarter and full year 2017. Since inception ALC has been focused on driving shareholder value, and over the last 5 years ALC’s profits have increased more than threefold. Moving forward, we believe our valuable order book of highly in-demand, modern, fuel-efficient aircraft will service the needs of our customers, and together with our investment grade profile, will position us for continued success in the years to come,” said Steven F. Udvar-Házy, Executive Chairman of the Board.
Flight Equipment Portfolio
Our fleet grew by 10.3% based on net book value of $13.3 billion as of December 31, 2017 compared to $12.0 billion as of December 31, 2016. As of December 31, 2017, our fleet was comprised of 244 aircraft, with a weighted-average age and remaining lease term of 3.8 years and 6.8 years, respectively, and 50 managed aircraft. We have a globally diversified customer base of 91 airlines in 55 countries.
During the quarter ended December 31, 2017, we took delivery of eight new aircraft, four incremental aircraft from the secondary market, and sold two aircraft from our operating lease portfolio. We also received insurance proceeds relating to the insured loss of two aircraft.
Debt Financing Activities
We ended the fourth quarter of 2017 with total debt financing, net of discounts and issuance costs, of $9.7 billion, resulting in a debt to equity ratio of 2.35:1.
Our debt financing was comprised of unsecured debt of $9.3 billion and such unsecured debt represented 94.6% of our debt portfolio as of December 31, 2017 as compared to 92.4% as of December 31, 2016. Our fixed rate debt represented 85.4% of our debt portfolio as of December 31, 2017 as compared to 83.5% as of December 31, 2016. Our composite cost of funds decreased to 3.20% as of December 31, 2017 as compared to 3.42% as of December 31, 2016.