·

Since our inception in 2010, we have built a leasing platform in size and scale exceeding $50 billion, consisting of approximately $22 billion in assets, $27 billion in aircraft orders and $3 billion in managed aircraft.

·

During the fourth quarter of 2019, we took delivery of 11 aircraft from our order book and purchased one aircraft from the secondary market, representing $825 million in aircraft investments.  As of December 31, 2019, we owned 292 aircraft in our operating lease portfolio, with a net book value of $18.7 billion, a weighted average age of 3.5 years and a weighted average lease term remaining of 7.2 years.

·

Finalized agreements to purchase an additional 102 aircraft comprised of 25 Airbus A321neo aircraft, 27 Airbus A321neo XLR and 50 Airbus A220 aircraft, with a purchase option for an additional 25 Airbus A220 aircraft.

·

Entered into 145 leases, lease extensions and letters of intent in 2019, ending the year with a customer base of 106 airlines in 59 countries.

·

To date, we placed 89% of our contracted order book positions on long-term leases for aircraft delivering through 2021 and 79% through 2022.

·

Ended the year with $29.1 billion in committed minimum future rental payments consisting of $14.1 billion in contracted minimum rental payments on the aircraft in our existing fleet and $15.0 billion in minimum future rental payments related to aircraft on order.

·

Issued approximately $3.2 billion of senior unsecured medium-term notes in 2019 and ended the year with total liquidity of $6.3 billion.

·

Declared a quarterly cash dividend of $0.15 per share on our outstanding common stock for the fourth quarter of 2019.  The dividend will be paid on April 8, 2020 to holders of record of our common stock as of March 20, 2020.

Three Months Ended 
December 31,

Twelve Months Ended 
December 31,

2019

2018

$ change

% change

2019

2018

$ change

% change

Revenues

$

548,556 

$

449,981 

$

98,575 

21.9 

%  

$

2,016,904 

$

1,679,702 

$

337,202 

20.1 

%

Income before taxes

$

206,417 

$

172,028 

$

34,389 

20.0 

%  

$

735,685 

$

640,138 

$

95,547 

14.9 

%

Net income available to common stockholders

$

161,092 

$

138,399 

$

22,693 

16.4 

%  

$

575,163 

$

510,835 

$

64,328 

12.6 

%

Adjusted net income before income taxes(1)

$

218,747 

$

184,816 

$

33,931 

18.4 

%  

$

781,163 

$

690,322 

$

90,841 

13.2 

%

Diluted earnings per share

$

1.42 

$

1.24 

$

0.18 

14.5 

%  

$

5.09 

$

4.60 

$

0.49 

10.7 

%

Adjusted diluted earnings per share before income taxes(1)

$

1.92 

$

1.65 

$

0.27 

16.4 

%  

$

6.91 

$

6.20 

$

0.71 

11.5 

%

(1)

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

December 31, 2019

December 31, 2018

Aggregate fleet net book value

$

18.7 billion

$

15.7 billion

Weighted-average fleet age(1)

3.5 years

3.8 years

Weighted-average remaining lease term(1)

7.2 years

6.8 years

Owned fleet(2)

292 

275 

Managed fleet(2)

83 

61 

Aircraft on order

413 

372 

Aircraft purchase options(3)

70 

50 

Total

858 

758 

Current fleet contracted rentals

$

14.1 billion

$

11.8 billion

Committed fleet rentals

$

15.0 billion

$

13.9 billion

Total committed rentals

$

29.1 billion

$

25.7 billion

(1)

Weighted-average fleet age and remaining lease term calculated based on net book value of our operating lease portfolio.

(2)

As of December 31, 2019, we transferred eight aircraft to flight equipment held for sale which is included in Other assets on the Consolidated Balance Sheet.  All of these aircraft are excluded from the owned fleet count and included in our managed fleet count.

(3)

As of December 31, 2019, we had options to acquire up to 45 Boeing 737-8 MAX aircraft and up to 25 Airbus A220 aircraft. As of December 31, 2018, we had options to acquire up to five Airbus A350-1000 aircraft and 45 Boeing 737-8 MAX aircraft.

December 31, 2019

December 31, 2018

Region

% of Net Book Value

% of Net Book Value(1)

Europe

29.0 

%  

29.9 

%

Asia (excluding China)

26.7 

%  

24.5 

%

China

15.7 

%  

17.0 

%

The Middle East and Africa

12.0 

%  

12.4 

%

Central America, South America, and Mexico

6.0 

%  

6.9 

%

U.S. and Canada

5.3 

%  

4.8 

%

Pacific, Australia, and New Zealand

5.3 

%  

4.5 

%

Total

100.0 

%  

100.0 

%

(1)

As of December 31, 2018, we had six aircraft held for sale included in the calculations in the table above.

December 31, 2019

December 31, 2018

Aircraft type

Number 
of Aircraft

% of Total

Number of
Aircraft(1)

% of Total

Airbus A319-100

1 

0.3 

%  

1 

0.4 

%

Airbus A320-200

21 

7.2 

%  

35 

12.7 

%

Airbus A320-200neo

13 

4.5 

%  

6 

2.2 

%

Airbus A321-200

28 

9.6 

%  

34 

12.4 

%

Airbus A321-200neo

35 

12.0 

%  

14 

5.1 

%

Airbus A330-200

12 

4.1 

%  

15 

5.4 

%

Airbus A330-300

7 

2.4 

%  

5 

1.8 

%

Airbus A330-900neo

7 

2.4 

%  

1 

0.4 

%

Airbus A350-900

10 

3.4 

%  

6 

2.2 

%

Boeing 737-700

4 

1.4 

%  

4 

1.4 

%

Boeing 737-800

85 

29.1 

%  

98 

35.6 

%

Boeing 737-8 MAX

15 

5.1 

%  

14 

5.1 

%

Boeing 767-300ER

1 

0.3 

%  

1 

0.4 

%

Boeing 777-200ER

1 

0.3 

%  

1 

0.4 

%

Boeing 777-300ER

24 

8.2 

%  

24 

8.7 

%

Boeing 787-9

23 

8.0 

%  

15 

5.4 

%

Boeing 787-10

4 

1.4 

%  

—  

0.0 

%

Embraer E190

1 

0.3 

%  

1 

0.4 

%

Total

292 

100.0 

%  

275 

100.0 

%

(1)

As of December 31, 2018, we had six aircraft held for sale included in the table above.

December 31,
2019

December 31,
 2018

Unsecured

Senior notes

$

12,357,811 

$

10,043,445 

Term financings

883,050 

607,340 

Revolving credit facilities

20,000 

602,000 

Total unsecured debt financing

13,260,861 

11,252,785 

Secured

Term financings

428,824 

371,203 

Export credit financing

31,610 

38,265 

Total secured debt financing

460,434 

409,468 

Total debt financing

13,721,295 

11,662,253 

Less: Debt discounts and issuance costs

Debt financing, net of discounts and issuance costs

$

13,578,866 

$

11,538,905 

Selected interest rates and ratios:

Composite interest rate(1)

3.34 

%  

3.46 

%

Composite interest rate on fixed rate debt(1)

3.39 

%  

3.42 

%

Percentage of total debt at fixed rate

88.40 

%  

86.41 

%

(1)

This rate does not include the effect of upfront fees, facility fees, undrawn fees or amortization of debt discounts and issuance costs.

·

our inability to obtain additional financing on favorable terms, if required, to complete the acquisition of sufficient aircraft as currently contemplated or to fund the operations and growth of our business;

·

our inability to obtain refinancing prior to the time our debt matures;

·

our inability to make acquisitions of, or lease, aircraft on favorable terms;

·

our inability to sell aircraft on favorable terms or to predict the timing of such sales;

·

impaired financial condition and liquidity of our lessees;

·

changes in overall demand for commercial aircraft leasing and aircraft management services;

·

deterioration of economic conditions in the commercial aviation industry generally;

·

potential natural disasters and terrorist attacks and the amount of our insurance coverage, if any, relating thereto;

·

increased maintenance, operating or other expenses or changes in the timing thereof;

·

changes in the regulatory environment, including tariffs and other restrictions on trade;

·

our inability to effectively oversee our managed fleet;

·

the failure of any manufacturer to meet its contractual aircraft delivery obligations to us, including or as a result of technical or other difficulties with aircraft before or after delivery, resulting in our inability to deliver the aircraft to our lessees; and

·

the factors discussed under “Part I – Item 1A. Risk Factors,” in our Annual Report on Form 10-K for the year ended December 31, 2019, and other SEC filings, including future SEC filings.

December 31, 2019

December 31, 2018

Assets

Cash and cash equivalents

$

317,488 

$

300,127 

Restricted cash

20,573 

22,871 

Flight equipment subject to operating leases

21,286,154 

17,985,324 

Less accumulated depreciation

18,704,337 

15,707,110 

Deposits on flight equipment purchases

1,564,188 

1,809,260 

Other assets

1,102,569 

642,440 

Total assets

$

21,709,155 

$

18,481,808 

Liabilities and Shareholders’ Equity

Accrued interest and other payables

$

516,497 

$

382,132 

Debt financing, net of discounts and issuance costs

13,578,866 

11,538,905 

Security deposits and maintenance reserves on flight equipment leases

1,097,061 

990,578 

Rentals received in advance

143,692 

119,526 

Deferred tax liability

749,495 

643,767 

Total liabilities

$

16,085,611 

$

13,674,908 

Shareholders’ Equity

Preferred Stock, $0.01 par value; 50,000,000 shares authorized; 10,000,000 shares of 6.150% Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series A (aggregate liquidation preference of $250,000) issued and outstanding at December 31, 2019 and no shares issued or outstanding at December 31, 2018

100 

—  

Class A common stock, $0.01 par value; 500,000,000 shares authorized; 113,350,267 and 110,949,850 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively

1,134 

1,110 

Class B Non-Voting common stock, $0.01 par value; authorized 10,000,000 shares; no shares issued or outstanding

—  

—  

Paid-in capital

2,777,601 

2,474,238 

Retained earnings

2,846,106 

2,331,552 

Accumulated other comprehensive loss

$

$

—

Total shareholders’ equity

$

5,623,544 

$

4,806,900 

Total liabilities and shareholders’ equity

$

21,709,155 

$

18,481,808 

Three Months Ended 
 December 31,

Twelve Months Ended 
 December 31,

2019

2018

2019

2018

(unaudited)

Revenues

Rental of flight equipment

$

504,391 

$

$

$

1,631,200 

Aircraft sales, trading and other

44,165 

48,502 

Total revenues

548,556 

1,679,702 

Expenses

Interest

106,639 

310,026 

Amortization of debt discounts and issuance costs

10,361 

32,706 

Interest expense

117,000 

342,732 

Depreciation of flight equipment

187,862 

581,985 

Selling, general and administrative

31,465 

97,369 

Stock-based compensation

5,812 

17,478 

Total expenses

342,139 

1,039,564 

Income before taxes

206,417 

640,138 

Income tax expense

Net income

164,935 

510,835 

Preferred stock dividends

—

— 

Net income available to common stockholders

$

161,092 

$

$

$

510,835 

Net income per share of common stock:

Basic

$

1.43 

$

$

$

4.88 

Diluted

$

1.42 

$

$

$

4.60 

Weighted-average shares of common stock outstanding

Basic

113,033,348 

104,716,301 

Diluted

113,728,058 

112,363,331 

Other financial data

Pre-tax profit margin

37.6 

%  

%  

%  

38.1 

%

Adjusted net income before income taxes(1)

$

218,747 

$

$

$

690,322 

Adjusted pre-tax profit margin(1)

39.9 

%  

%  

%  

41.1 

%

Adjusted diluted earnings per share before income taxes(1)(2)

$

1.92 

$

$

$

6.20 

Pre-tax return on common equity (trailing twelve months)

14.2 

%  

%  

%  

14.3 

%

Adjusted pre-tax return on common equity (trailing twelve months)(1)

15.4 

%  

%  

%  

15.5 

%

(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 plus assumed conversions 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.

Three Months Ended 
December 31,

Twelve Months Ended 
December 31,

2019

2018

2019

2018

(unaudited)

Reconciliation of net income available to common stockholders to adjusted net income before income taxes and adjusted pre-tax profit margin:

Net income available to common stockholders

$

$

138,399 

$

575,163 

$

510,835 

Amortization of debt discounts and issuance costs

8,475 

36,691 

32,706 

Stock-based compensation

4,313 

20,745 

17,478 

Provision for income taxes

33,629 

148,564 

129,303 

Adjusted net income before income taxes

$

$

184,816 

$

781,163 

$

690,322 

Total revenues

$

$

449,981 

$

2,016,904 

$

1,679,702 

Adjusted pre-tax profit margin

%  

41.1 

%  

38.7 

%  

41.1 

%

Three Months Ended 
December 31,

Twelve Months Ended 
December 31,

2019

2018

2019

2018

(unaudited)

Reconciliation of net income available to common stockholders to adjusted diluted earnings per share before income taxes:

Net income available to common stockholders

$

$

138,399 

$

575,163 

$

510,835 

Amortization of debt discounts and issuance costs

8,475 

36,691 

32,706 

Stock-based compensation

4,313 

20,745 

17,478 

Provision for income taxes

33,629 

148,564 

129,303 

Adjusted net income before income taxes

$

$

184,816 

$

781,163 

$

690,322 

Assumed conversion of convertible senior notes

—

914 

—  

6,219 

Adjusted net income before income taxes plus assumed conversions

$

$

185,730 

$

781,163 

$

696,541 

Weighted-average diluted shares of common stock outstanding

112,363,331 

Adjusted diluted earnings per share before income taxes

$

$

1.65 

$

6.91 

$

6.20 

Twelve Months 
December 31,

2019

2018

(unaudited)

Reconciliation of net income available to common stockholders to adjusted pre-tax return on common equity:

Net income available to common stockholders

$

575,163 

$

510,835 

Amortization of debt discounts and issuance costs

36,691 

32,706 

Stock-based compensation

20,745 

17,478 

Provision for income taxes

148,564 

129,303 

Adjusted net income before income taxes

$

781,163 

$

690,322 

Common shareholders' equity as of the beginning of the period

$

4,806,900 

$

4,127,442 

Common shareholders' equity as of the end of the period

$

5,373,544 

$

4,806,900 

Average common shareholders' equity

$

5,090,222 

$

4,467,171 

Adjusted pre-tax return on common equity

15.4 

%  

15.5 

%

Twelve Months Ended 
 December 31,

2019

2018

(unaudited)

Operating Activities

Net income

$

587,121 

$

510,835 

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of flight equipment

702,810 

581,985 

Stock-based compensation

20,745 

17,478 

Deferred taxes

92,049 

129,303 

Amortization of prepaid lease costs

32,849 

24,579 

Amortization of discounts and debt issuance costs

36,691 

32,706 

Gain on aircraft sales, trading and other activity

Changes in operating assets and liabilities:

Other assets

Accrued interest and other payables

139,337 

51,175 

Rentals received in advance

24,166 

14,705 

Net cash provided by operating activities

1,392,472 

1,254,101 

Investing Activities

Acquisition of flight equipment under operating lease

Payments for deposits on flight equipment purchases

Proceeds from aircraft sales, trading and other activity

995,345 

391,372 

Acquisition of aircraft furnishings, equipment and other assets

Net cash used in investing activities

Financing Activities

Issuance of common stock upon exercise of options and warrants

44,885 

4,826 

Issuance of preferred stock

242,130 

— 

Cash dividends paid on Class A common stock

Preferred dividends paid

— 

Tax withholdings on stock-based compensation

Net change in unsecured revolving facilities

Proceeds from debt financings

3,567,728 

3,533,885 

Payments in reduction of debt financings

Debt issuance costs

Security deposits and maintenance reserve receipts

310,220 

242,524 

Security deposits and maintenance reserve disbursements

Net cash provided by financing activities

2,466,568 

2,145,435 

Net increase in cash

15,063 

14,716 

Cash, cash equivalents and restricted cash at beginning of period

322,998 

308,282 

Cash, cash equivalents and restricted cash at end of period

$

338,061 

$

322,998 

Supplemental Disclosure of Cash Flow Information

Cash paid during the period for interest, including capitalized interest of $59,358 and $52,817 at December 31, 2019 and 2018, respectively

$

442,132 

$

332,426 

Cash paid for income taxes

$

16,657 

$

4,264 

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

$

1,399,136 

$

912,075 

Cash dividends declared, not yet paid

$

17,003 

$

14,421