Aircraft leasing company Air Lease Corporation (NYSE:AL) reported Q4 CY2024 results topping the market’s revenue expectations , but sales were flat year on year at $712.9 million. Its GAAP profit of $0.83 per share was 12.2% above analysts’ consensus estimates.
Revenue: $712.9 million vs analyst estimates of $701.4 million (flat year on year, 1.6% beat)
EPS (GAAP): $0.83 vs analyst estimates of $0.74 (12.2% beat)
Operating Margin: 19.6%, down from 62.7% in the same quarter last year
owned aircraft: 489, up 26 year on year
Market Capitalization: $5.09 billion
Company Overview
Established by a founder of Century City in Los Angeles, Air Lease Corporation (NYSE:AL) provides aircraft leasing and financing solutions to airlines worldwide.
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Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Over the last five years, Air Lease grew its sales at a mediocre 6.3% compounded annual growth rate. This was below our standard for the industrials sector and is a tough starting point for our analysis.
Air Lease Quarterly Revenue
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Air Lease’s annualized revenue growth of 8.6% over the last two years is above its five-year trend, suggesting some bright spots.
Air Lease Year-On-Year Revenue Growth
Air Lease also discloses its number of owned aircraft, which reached 489 in the latest quarter. Over the last two years, Air Lease’s owned aircraft averaged 10.2% year-on-year growth. Because this number is higher than its revenue growth during the same period, we can see the company’s monetization has fallen.
Air Lease Owned Aircraft
This quarter, Air Lease’s $712.9 million of revenue was flat year on year but beat Wall Street’s estimates by 1.6%.
Looking ahead, sell-side analysts expect revenue to grow 11.1% over the next 12 months, an improvement versus the last two years. This projection is healthy and indicates its newer products and services will spur better top-line performance.
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Operating Margin
Air Lease has been a well-oiled machine over the last five years. It demonstrated elite profitability for an industrials business, boasting an average operating margin of 43.9%. This result isn’t surprising as its high gross margin gives it a favorable starting point.
Analyzing the trend in its profitability, Air Lease’s operating margin decreased by 13.6 percentage points over the last five years. Even though its historical margin is high, shareholders will want to see Air Lease become more profitable in the future.
Air Lease Trailing 12-Month Operating Margin (GAAP)
This quarter, Air Lease generated an operating profit margin of 19.6%, down 43.1 percentage points year on year. Since Air Lease’s operating margin decreased more than its gross margin, we can assume it was recently less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Sadly for Air Lease, its EPS declined by 8.1% annually over the last five years while its revenue grew by 6.3%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.
Air Lease Trailing 12-Month EPS (GAAP)
Diving into the nuances of Air Lease’s earnings can give us a better understanding of its performance. As we mentioned earlier, Air Lease’s operating margin declined by 13.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Air Lease, its two-year annual EPS growth of 121% was higher than its five-year trend. This acceleration made it one of the faster-growing industrials companies in recent history.
In Q4, Air Lease reported EPS at $0.83, down from $1.89 in the same quarter last year. Despite falling year on year, this print easily cleared analysts’ estimates. Over the next 12 months, Wall Street expects Air Lease’s full-year EPS of $3.33 to grow 22.4%.
Key Takeaways from Air Lease’s Q4 Results
It was encouraging to see Air Lease beat analysts’ EPS expectations this quarter. We were also happy its revenue outperformed Wall Street’s estimates. Overall, we think this was a decent quarter with some key metrics above expectations. The stock remained flat at $46.35 immediately after reporting.
