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Air Lease (AL) Q2 Earnings Beat, Revenues Miss Estimates

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Air Lease Corporation AL reported mixed numbers in the second quarter of 2018. The Los Angeles, CA-based company reported better-than-expected earnings per share (EPS). However, revenues missed estimates.

Air Lease’s EPS (excluding 40 cents from non-recurring items) of $1.44 surpassed the Zacks Consensus Estimate of $1.09. The bottom line was driven by reduced tax rate. Notably, effective tax rate in the quarter under review was 21.8% compared with 35.3% in the second quarter of 2017.

Quarterly revenues of $397.8 million missed the consensus mark of $400.4 million. However, the top line improved 4.4% on a year-over-year basis, primarily driven by higher revenues from rental of flight equipment, which climbed 9.9% year over year to $393.48 million. Meanwhile, revenues from aircraft sales, trading and other plunged 81% to $4.34 million.

Total expenses rose 11.25% to $250.41 million, thanks to higher interest expenses stemming from rise in average debt balances.

During the quarter, the company received delivery of 18 planes, thus exiting the quarter with 271 aircraft in its portfolio, up from 244 at the end of 2017. The average fleet net book value totaled $14.9 billion compared with $13.3 billion in December 2017. We are impressed by the company’s efforts to bolster its fleet.

In August 2018, the company entered into an agreement to purchase up to 78 Boeing airplanes. Additionally, an agreement was also signed to sell and manage a fleet of 18 jets to Thunderbolt Aircraft Lease Limited II. Sale of most of the planes is expected to be complete by the end of 2018.


Air Lease Corporation Price, Consensus and EPS Surprise


Air Lease Corporation Price, Consensus and EPS Surprise | Air Lease Corporation Quote



The board of directors announced a quarterly dividend of 10 cents per share, payable on Oct 5, 2018 to shareholders of record as of Sep 14.


Air Lease exited the second quarter with cash and cash equivalents of $259.53 million compared with $292.2 million at the end of December 2017. As of Jun 30, 2018, the company had $10.96 billion of debt financing, net of discount and issuance costs compared with $9.7 billion as of Dec 31, 2017.

The company generated $587.99 million of cash flow from operating activities during the first half of 2018 compared with $497.96 million in the year-ago period.

Zacks Rank & Upcoming Releases

Air Lease carries a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Transportation Sector are keenly awaiting earnings reports from key players Frontline Ltd. FRO, Golar LNG Limited GLNG and Fly Leasing Limited FLY. Fly Leasing and Golar LNG will release results on Aug 23 and Aug 24, respectively. Frontline will announce the same on Aug 31.

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