Air Lease Corporation (NYSE:AL) Q3 2019 Results Earnings Conference Call November 7, 2019 4:30 PM ET Company Participants Mary Liz DePalma - Head of Investor Relations John Plueger - President and Chief Executive Officer Steve Házy - Executive Chairman Greg Willis - Executive Vice President and Chief Financial Officer Conference Call Participants Moshe Orenbuch - Credit Suisse Vincent Caintic - Stephens Catherine O'Brien - Goldman Sachs Scott Valentin - Compass Point Helane Becker - Cowen Koosh Patel - Deut ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35121 AIR LEASE CORPORATION (Exact name of registrant as specified in its charter) Delaware 27-1840403 (State or othe ...

Air Lease Corporation (NYSE:AL) Q2 2019 Earnings Conference Call August 8, 2019 4:30 PM ET Company Participants Mary Liz DePalma – Head of Investor Relations John Plueger – President and Chief Executive Officer Steve Házy – Executive Chairman Greg Willis – Executive Vice President and Chief Financial Officer Conference Call Participants Vincent Caintic – Stephens Moshe Orenbuch – Credit Suisse Catherine O'Brien – Goldman Sachs Jamie Baker – JP Morgan Helane Becker – Cowen Scott Valentin – Compass Point Res ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35121 AIR LEASE CORPORATION (Exact name of registrant as specified in its charter) Delaware 27-1840403 (State or other jur ...

Air Lease Corporation's (NYSE:AL) Q1 2019 Earnings Conference Call May 9, 2019 4:30 PM ET Company Participants Jason Arnold - Assistant Vice President of Finance John Plueger - President and Chief Executive Officer Steve Hazy - Executive Chairman Greg Willis - Executive Vice President and Chief Executive Officer Conference Call Participants Moshe Orenbuch - Credit Suisse Michael Linenberg - Deutsche Bank Scott Valentine - Compass Point Jamie Baker - JPMorgan Conor Cunningham - Cowen Catherine O'Brien - Gold ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-35121 AIR LEASE CORPORATION (Exact name of registrant as specified in its charter) 27-1840403 (I.R.S. Employer Identifica ...

Financial Data and Key Metrics Changes - For Q4 2018, the company reported diluted earnings per share of $1.24, with revenues increasing by 13% compared to the same quarter last year [9] - The total balance sheet grew to $18.5 billion, with 275 owned aircraft at year-end [9] - For the full year 2018, diluted earnings per share reached $4.60, with a pre-tax margin of 38.1% and a pre-tax return on equity of 14.3% [10] Business Line Data and Key Metrics Changes - The company took delivery of 12 new aircraft during Q4 and sold five aircraft, indicating active fleet management [9] - The total number of aircraft owned, managed, and on order reached 708, with 91% of the order book placed on long-term leases through 2020 [11] Market Data and Key Metrics Changes - The global airline market remains robust, with continued demand driven by passenger growth and the replacement of aging aircraft [13] - The company noted that the leasing market is highly competitive, but key competitors remain rational and disciplined [14] Company Strategy and Development Direction - The company anticipates 2019 to be a high growth year, with 80 aircraft deliveries under long-term profitable lease contracts [11] - The strategy includes a focus on maintaining a strong balance sheet and investment-grade ratings while expanding its fleet [12] - The company is not participating in the sale-leaseback market, which allows it to control new aircraft positions [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the airline industry's health, despite potential airline failures, and emphasized prudent risk management practices [15][16] - The company remains watchful of industrial recovery and production rates from OEMs, particularly regarding Airbus and Boeing [17] - Management highlighted the importance of modern aircraft in mitigating risks associated with older fleets [16] Other Important Information - The company achieved significant success in debt capital markets, issuing $3 billion in unsecured and senior unsecured notes [10] - The effective tax rate for 2018 was 20.2%, benefiting from tax reform [30] Q&A Session Summary Question: Overview of expectations for 2019 compared to 2018 - Management noted expectations for more stable fuel prices and interest rates in 2019 compared to 2018, with continued growth in the marketplace [39] Question: Lease rates and cost of funds outlook - Lease rate factors have remained stable, and while rising interest rates typically influence lease rates, the company does not foresee immediate changes [41] Question: CapEx financing and fleet growth metrics - The company expects no significant changes in portfolio metrics despite increased CapEx, maintaining a target debt-to-equity ratio of 2.5 to 1 [46] Question: Impact of delivery delays on customers - Management emphasized a focus on customer relationships and mitigating impacts from delivery delays, working closely with manufacturers [50] Question: Sale-leaseback market dynamics - Management observed a slowdown in the sale-leaseback market, with less aggressive interest and lower returns, indicating a potential market bottom [53] Question: Supply side dynamics and production rates - The company believes that Boeing and Airbus are maintaining production rates in line with demand, but remains concerned about supply chain vulnerabilities [84]

PART I [Business](index=5&type=section&id=Item%201.%20Business) Air Lease Corporation is a leading global aircraft leasing company focused on acquiring new commercial aircraft for lease to a diversified base of over 200 airlines - ALC's core business is purchasing new commercial aircraft directly from manufacturers like Boeing and Airbus and leasing them to airlines worldwide[6](index=6&type=chunk) Fleet and Financial Highlights (as of Dec 31, 2018) | Metric | Value | | :--- | :--- | | Owned Aircraft | 275 | | Managed Aircraft | 61 | | Fleet Net Book Value | $15.7 billion | | Fleet NBV Growth (YoY) | 18.3% | | Weighted Average Fleet Age | 3.8 years | | Weighted Average Remaining Lease Term | 6.8 years | | Committed Aircraft Purchases (through 2024) | 372 aircraft ($26.3B) | | Committed Minimum Future Rentals | $25.7 billion | FY 2018 Financial Performance vs. FY 2017 | Metric | FY 2018 | FY 2017 | Change | | :--- | :--- | :--- | :--- | | Total Revenues | $1.7 billion | $1.5 billion | +10.8% | | Income Before Taxes | $640.1 million | $609.5 million | +5.0% | | Net Income | $510.8 million | $756.2 million | -32.4%¹ | | Diluted EPS | $4.60 | $6.82 | -32.5%¹ | - The decrease in 2018 Net Income was primarily due to a one-time tax benefit of **$354.1 million** in 2017 resulting from the U.S. Tax Cuts and Jobs Act[13](index=13&type=chunk) - The company's financing strategy is focused on raising unsecured debt, which comprised **96.5%** of its **$11.5 billion** total debt at year-end 2018[11](index=11&type=chunk) [Risk Factors](index=18&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant business risks from capital access, substantial debt, competition, lessee defaults, geopolitical instability, and stock price volatility - A primary risk is the company's dependence on obtaining substantial additional capital to finance its growth and repay maturing debt. As of December 31, 2018, total consolidated indebtedness was approximately **$11.5 billion**[57](index=57&type=chunk)[64](index=64&type=chunk) - The company faces significant competition from other aircraft lessors, airlines, financial institutions, and new entrants, which could negatively affect lease rates and profitability[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk) - Lessee defaults or reorganizations are a major risk, as they can result in significant costs for repossession, maintenance, and remarketing, along with lost revenue[112](index=112&type=chunk)[113](index=113&type=chunk) - The company has concentrated exposure to political and economic risks in certain regions, particularly China, which could affect lessees' ability to meet their obligations[127](index=127&type=chunk)[128](index=128&type=chunk) - Risks to the stock price include market volatility, potential future offerings of debt or equity that could be dilutive, and provisions in Delaware law and the company's charter that may inhibit a takeover[193](index=193&type=chunk)[197](index=197&type=chunk)[199](index=199&type=chunk) [Unresolved Staff Comments](index=55&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[205](index=205&type=chunk) [Properties](index=55&type=section&id=Item%202.%20Properties) The company's primary assets are **275** owned aircraft, with commitments for **372** new aircraft by 2024 totaling **$26.3 billion**, and it leases its office spaces Owned Aircraft Portfolio (as of Dec 31, 2018) | Metric | Value | | :--- | :--- | | Total Aircraft | 275 | | Narrowbody Jet Aircraft | 207 | | Widebody Jet Aircraft | 68 | | Weighted Average Age | 3.8 years | Scheduled Lease Terminations (Number of Aircraft) | Year | Aircraft | | :--- | :--- | | 2019 | 5 | | 2020 | 15 | | 2021 | 20 | | 2022 | 24 | | 2023 | 37 | | Thereafter | 173 | New Aircraft Purchase Commitments (through 2024) | Manufacturer | Aircraft Type | Number | | :--- | :--- | :--- | | Airbus | A320/321neo | 137 | | Airbus | A330-900neo | 24 | | Airbus | A350-900/1000 | 18 | | Boeing | 737 MAX Family | 154 | | Boeing | 787-9/10 | 39 | | **Total** | | **372** | - The company has placed **100%** of its **78 aircraft** delivering in 2019 and **83.1%** of its **83 aircraft** delivering in 2020 on lease[217](index=217&type=chunk) [Legal Proceedings](index=57&type=section&id=Item%203.%20Legal%20Proceedings) The company states that it is not currently a party to any material legal proceedings or enforcement proceedings related to regulatory compliance matters - The company is not presently a party to any material legal proceedings[215](index=215&type=chunk) [Mine Safety Disclosures](index=57&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company's business - Not applicable[216](index=216&type=chunk) PART II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=58&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Class A common stock trades on the NYSE under **"AL"**, declared a **$0.43 per share** dividend in 2018, and saw no stock repurchases during the year - The company's Class A common stock is listed on the New York Stock Exchange under the symbol **"AL"**[218](index=218&type=chunk) Dividends Declared Per Share | Year | Dividend per Share | | :--- | :--- | | 2018 | $0.430 | | 2017 | $0.325 | | 2016 | $0.225 | - The company did not purchase any shares of its Class A common stock during 2018[224](index=224&type=chunk) [Selected Financial Data](index=60&type=section&id=Item%206.%20Selected%20Financial%20Data) This section provides a five-year summary of key consolidated financial and operating data, highlighting consistent growth in revenues, assets, and fleet size, along with non-GAAP reconciliations Selected Financial Data (2016-2018) | (in thousands, except per share data) | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | | **Total revenues** | $1,679,702 | $1,516,380 | $1,419,055 | | **Net income** | $510,835 | $756,152 | $374,925 | | **Diluted EPS** | $4.60 | $6.82 | $3.44 | | **Total assets** | $18,481,808 | $15,614,164 | $13,975,616 | | **Total debt, net** | $11,538,905 | $9,698,785 | $8,713,874 | | **Shareholders' equity** | $4,806,900 | $4,127,442 | $3,382,187 | | **Owned aircraft** | 275 | 244 | 237 | - The company provides non-GAAP metrics, including Adjusted Net Income Before Income Taxes, to exclude non-cash and non-recurring items. For 2018, this figure was **$690.3 million**, compared to **$657.8 million** in 2017[232](index=232&type=chunk)[234](index=234&type=chunk) - A significant tax benefit of **$354.1 million** was recorded in 2017 due to the U.S. Tax Cuts and Jobs Act, which substantially increased net income for that year compared to 2018 and 2016[231](index=231&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=67&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes the company's financial condition and operational results, attributing **18.3%** revenue growth to fleet expansion, detailing liquidity, financing, and critical accounting policies - The **10.8%** increase in total revenues in 2018 was primarily driven by a **$2.4 billion** increase in the net book value of the operating lease portfolio[246](index=246&type=chunk) - As of Dec 31, 2018, the company had commitments to purchase **372 aircraft** through 2024 for an estimated **$26.3 billion** and had placed **72%** of its order book on long-term leases for aircraft delivering through 2021[243](index=243&type=chunk) - The company's financing strategy focuses on unsecured debt, which represented **96.5%** of its **$11.5 billion** total debt at year-end. In 2018, ALC issued **$3.03 billion** in senior unsecured notes and increased its unsecured revolving credit facility to **$4.6 billion**[245](index=245&type=chunk) - Available liquidity at the end of 2018 was **$4.3 billion**, comprising **$300.1 million** in unrestricted cash and **$4.0 billion** in undrawn capacity under its revolving credit facility[267](index=267&type=chunk) [Results of Operations](index=81&type=section&id=Results%20of%20Operations) This section analyzes income statement trends, highlighting fleet-driven revenue growth, increased expenses, a 2018 net income decrease due to a 2017 tax benefit, and rising adjusted net income Comparison of Key Expenses (2018 vs. 2017) | Expense (in millions) | 2018 | 2017 | Change Driver | | :--- | :--- | :--- | :--- | | Interest Expense | $342.7 | $287.4 | Increased average debt balance and higher cost of funds. | | Depreciation Expense | $582.0 | $508.4 | Continued growth of the aircraft fleet. | | SG&A | $97.4 | $91.3 | General business growth. | - The effective tax rate was **20.2%** in 2018 compared to **-24.0%** in 2017. The negative rate in 2017 was due to a **$354.1 million** net tax benefit from the re-measurement of deferred tax liabilities following the Tax Reform Act[315](index=315&type=chunk) - Adjusted net income before income taxes increased to **$690.3 million** in 2018 from **$657.8 million** in 2017, driven by fleet growth, partially offset by reduced aircraft sales and trading activity[317](index=317&type=chunk) [Liquidity and Capital Resources](index=72&type=section&id=Liquidity%20and%20Capital%20Resources) The company finances growth primarily through unsecured debt, totaling **$11.5 billion** (96.5% unsecured) at year-end 2018, maintaining **$4.3 billion** in liquidity and investment-grade credit ratings Debt Composition (as of Dec 31, 2018) | Debt Type | Amount (in billions) | % of Total | | :--- | :--- | :--- | | Unsecured Debt | $11.3 | 96.5% | | Secured Debt | $0.4 | 3.5% | | **Total Debt** | **$11.7** | **100.0%** | - In 2018, the company issued **$2.95 billion** in senior unsecured notes and an additional **$75.0 million** in a private placement[271](index=271&type=chunk)[272](index=272&type=chunk) - The company's unsecured revolving credit facility was increased to **$4.6 billion** in 2018, with a final maturity extended to May 2022[287](index=287&type=chunk)[412](index=412&type=chunk) Credit Ratings (as of Dec 2018) | Rating Agency | Long-term Debt Rating | Outlook | | :--- | :--- | :--- | | Kroll Bond Ratings | A- | Stable | | Standard and Poor's | BBB | Stable | | Fitch Ratings | BBB | Stable | [Critical Accounting Policies](index=90&type=section&id=Critical%20Accounting%20Policies) This subsection details the accounting policies that management believes are most critical to the company's financial statements, as they require significant judgment and estimates - Lease Revenue: Rental income is recognized ratably over the lease term. Maintenance reserves collected from lessees are recognized as revenue only when the company is virtually certain they will not be reimbursed, which requires significant judgment regarding the timing and cost of future maintenance events[331](index=331&type=chunk)[334](index=334&type=chunk)[335](index=335&type=chunk) - Flight Equipment: Aircraft are stated at cost and depreciated on a straight-line basis over a **25-year life** to a **15% residual value**. Management performs quarterly impairment tests if indicators are present, comparing the aircraft's carrying amount to future undiscounted net cash flows[340](index=340&type=chunk)[342](index=342&type=chunk) - Income Taxes: The company uses the asset and liability method. Recognition of deferred tax assets and uncertain tax positions requires management to assess the probability of realization and whether a tax position is more than **50%** likely to be sustained on audit[396](index=396&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=94&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are interest rate risk and foreign exchange rate risk. Interest rate risk arises from its use of floating-rate debt to finance its fleet; a 1.0% increase in its composite interest rate would increase annual interest expense by an estimated $15.9 million. Foreign exchange risk is minimal as most revenues, expenses, and debt are denominated in U.S. dollars - The company is exposed to interest rate risk as **$1.6 billion** of its debt was floating-rate as of December 31, 2018[345](index=345&type=chunk) - A hypothetical **1.0%** increase in the composite interest rate would result in an additional **$15.9 million** in annualized interest expense on existing indebtedness as of year-end 2018[345](index=345&type=chunk) - Foreign exchange rate risk is considered minimal because the vast majority of lease agreements and debt are denominated in U.S. dollars. Only **0.7%** of 2018 lease revenues were in foreign currencies[347](index=347&type=chunk) [Financial Statements and Supplementary Data](index=95&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2018, including core statements, the independent auditor's report, and detailed notes on accounting policies [Notes to Consolidated Financial Statements](index=103&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosure on the company's accounting policies and the composition of accounts in the financial statements. Key notes cover debt financing (Note 2), rental income and future lease commitments (Note 5), concentration of geographic and credit risk (Note 6), income taxes (Note 7), aircraft purchase commitments (Note 8), and stock-based compensation (Note 11) Debt Maturities (as of Dec 31, 2018) | Year | Amount (in thousands) | | :--- | :--- | | 2019 | $1,083,726 | | 2020 | $1,220,454 | | 2021 | $1,685,961 | | 2022 | $3,071,445 | | 2023 | $1,870,676 | | Thereafter | $2,729,991 | Minimum Future Rentals on Delivered Fleet (as of Dec 31, 2018) | Year | Amount (in thousands) | | :--- | :--- | | 2019 | $1,742,589 | | 2020 | $1,689,333 | | 2021 | $1,587,150 | | 2022 | $1,455,673 | | 2023 | $1,270,209 | | Thereafter | $4,030,672 | | **Total** | **$11,775,626** | - As of December 31, 2018, the company had commitments to acquire **372 new aircraft** for an estimated aggregate purchase price of **$26.3 billion** through 2024[445](index=445&type=chunk)[448](index=448&type=chunk) - China was the only individual country representing at least **10%** of rental revenue for 2018, 2017, and 2016[433](index=433&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=134&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure - None[480](index=480&type=chunk) [Controls and Procedures](index=134&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management and the independent auditor concluded that the company's disclosure controls and internal control over financial reporting were effective as of December 31, 2018 - The company's Certifying Officers concluded that disclosure controls and procedures were effective as of December 31, 2018[482](index=482&type=chunk) - Management assessed internal control over financial reporting as effective based on the COSO framework, and the independent auditor issued an unqualified opinion on its effectiveness[484](index=484&type=chunk)[485](index=485&type=chunk) [Other Information](index=134&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[486](index=486&type=chunk) PART III [Directors, Executive Officers and Corporate Governance](index=135&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors and corporate governance is incorporated by reference from the company's 2019 Proxy Statement. Information on executive officers is provided in Part I of this report. The company has adopted a Code of Business Conduct and Ethics, which is available on its website - Most information required by this item is incorporated by reference from the registrant's 2019 Proxy Statement[487](index=487&type=chunk) [Executive Compensation](index=135&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item concerning executive compensation is incorporated by reference from the company's 2019 Proxy Statement - The information required by this item will be included in the 2019 Proxy Statement and is incorporated herein by reference[491](index=491&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=135&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item concerning security ownership is incorporated by reference from the company's 2019 Proxy Statement. Information regarding equity compensation plans is provided in Part II, Item 5 - The information required by this item will be included in the 2019 Proxy Statement and is incorporated herein by reference[492](index=492&type=chunk) [Certain Relationships and Related Transactions, and Director Independence](index=135&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) The information required for this item concerning related party transactions and director independence is incorporated by reference from the company's 2019 Proxy Statement - The information required by this item will be included in the 2019 Proxy Statement and is incorporated herein by reference[492](index=492&type=chunk) [Principal Accounting Fees and Services](index=135&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) The information required for this item concerning fees paid to the principal accountant is incorporated by reference from the company's 2019 Proxy Statement - The information required by this item will be included in the 2019 Proxy Statement and is incorporated herein by reference[493](index=493&type=chunk) PART IV [Exhibits, Financial Statement Schedules](index=136&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section provides a detailed list of all exhibits filed with the Form 10-K, including financial statements, corporate governance documents, debt agreements, and material contracts - This section provides a comprehensive list of all exhibits filed with the Form 10-K, including governance documents, debt agreements, and material contracts[497](index=497&type=chunk) [Form 10-K Summary](index=162&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company indicates that there is no Form 10-K summary provided - None[516](index=516&type=chunk)