Air Lease (AL) Q3 Earnings & Revenues Top on Fleet Growth

Air Lease Corporation AL delivered better-than-expected results in the third quarter of 2018. This Los Angeles, CA-based company’s earnings (excluding 9 cents from non-recurring items) of $1.41 surpassed the Zacks Consensus Estimate of $1.26. The bottom line was driven by a reduced tax rate as well as higher revenues.

Quarterly revenues of $450.7 million came above the Zacks Consensus Estimate of $442.3 million. The metric also improved 19.6% year over year, primarily owing to consistent fleet growth and a 61.7% surge in aircraft sales, trading and other revenues. Meanwhile, rental of flight equipment revenues climbed 17.6% from the year-ago figure.

The impressive results pleased investors. Consequently, shares of the company gained around 5% in after-hours trading on Nov 8.

Air Lease Corporation Price, Consensus and EPS Surprise

 

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

Total expenses rose 21.9% to $271.32 million, thanks to higher interest expenses, stemming from a rise in average debt balances as well as higher selling general and administrative expenses.

During the quarter, the company received a delivery of seven planes and sold 10 aircraft, thus exiting the period with 268 in its portfolio, up from 244 at the end of 2017. The average fleet net book value totaled $15.1 billion compared with $13.3 billion in December 2017. We are impressed by the company’s efforts to bolster its fleet. The aforementioned purchase of seven new aircraft is anticipated to add to its earnings growth in the next quarter as well.

Dividend Hike

The company’s board announced a 30% dividend hike to 13 cents per share from the previously declared 10 cents, payable Jan 9, 2019 to shareholders of record as of Dec 13, 2018.

Liquidity

Air Lease exited the third quarter with cash and cash equivalents of $228.5 million compared with $292.2 million at the end of December 2017. As of Sep 30, 2018, the company had $11.09 billion of debt financing, net of discount and issuance costs, compared with $9.7 billion as of Dec 31, 2017.

The company generated $870.1 million of cash flow from operating activities during the first nine months of 2018 compared with $751.64 million in the year-ago period.

Zacks Rank & Key Picks

Air Lease carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader Transportation sector are C.H. Robinson Worldwide, Inc. CHRW, CSX Corporation CSX and Spirit Airlines, Inc. SAVE. While C.H. Robinson carries a Zacks Rank #2 (Buy), CSX and Spirit Airlines sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Shares of C.H. Robinson, CSX and Spirit Airlines have rallied more than 13%, 42% and 52%, respectively, in a year.

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