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Fly Leasing Reports First Quarter 2019 Financial Results

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DUBLIN, May 9, 2019 /PRNewswire/ -- Fly Leasing Limited (NYSE:FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the first quarter of 2019.

FLY Leasing Limited logo. (PRNewsFoto/FLY Leasing Limited)

Highlights

  • Net income of $45.0 million, $1.38 per share
  • Adjusted Net Income of $47.2 million, $1.44 per share
  • Sold ten aircraft for a gain of $27.6 million, a 12% premium to book value
  • $22.74 book value per share, a 15% increase since March 31, 2018

"FLY has started the year with a very strong first quarter," said Colm Barrington, FLY's Chief Executive Officer. "Our renewed and larger fleet contributed to an 18% increase in operating lease rental revenue. Gains of over $27 million from the sale of ten aircraft helped us to achieve record Adjusted Net Income of $47.2 million and Adjusted EPS of $1.44. Looking ahead, we expect another strong result in Q2."

"Our strong results have also added significantly to shareholders' equity, which is now nearly $23 per share and 15% above the level of a year ago," added Barrington. "Sales of ten aircraft in the quarter, completed at a 12% premium to book value, have again demonstrated the value embedded in FLY's fleet. These sales have also contributed to our accelerated deleveraging. We are on track to meet our debt-to-equity targets more than a year ahead of our schedule."

"We continue to see great value in FLY shares, which are trading at more than a 35% discount to book value. Following our successful deleveraging, we have begun repurchasing stock under our share repurchase program. FLY is also well positioned to add more aircraft assets as opportunities arise."

Financial Results

FLY is reporting net income of $45.0 million, or $1.38 per share, for the first quarter of 2019. This compares to net income of $9.6 million, or $0.34 per share, for the same period in 2018.

Adjusted Net Income

Adjusted Net Income was $47.2 million for the first quarter of 2019, compared to Adjusted Net Income of $12.4 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.44 in the first quarter of 2019, compared to Adjusted Net Income of $0.44 for the first quarter of 2018.

A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.

Financial Position

At March 31, 2019, FLY's total assets were $4.1 billion, including investment in flight equipment totaling $3.5 billion. Total cash at March 31, 2019 was $436.3 million, of which $363.9 million was unrestricted. The book value per share at March 31, 2019 was $22.74, a 15% increase since March 31, 2018. At March 31, 2019, FLY's net debt to equity ratio was 3.4x, reduced from 4.0x as of December 31, 2018.

Aircraft Portfolio

At March 31, 2019, FLY had 103 aircraft and seven engines in its portfolio. Of the 103 aircraft, 99 were held for operating lease, one was classified as an investment in finance lease and three were classified as held for sale. FLY's aircraft and engines are on lease to 44 airlines in 25 countries. The table below does not include one B767 aircraft owned by a joint venture in which FLY has a 57% interest, nor the seven engines.

Portfolio at

Mar. 31, 2019

Dec. 31, 2018


Number

% of Net
Book Value

Number

% of Net
Book Value

Airbus A320 Family(1)

47

36%

55

38%

Airbus A330

3

5%

3

5%

Airbus A340

2

1%

2

1%

Boeing 737NG(2)

41

33%

42

32%

Boeing 737 MAX

2

3%

2

3%

Boeing 757(3)

2

0%

3

1%

Boeing 777-LRF

2

9%

2

8%

Boeing 787

4

13%

4

12%

      Total

103

100%

113

100%

(1) Includes two and ten Airbus A320 aircraft classified as held for sale at March 31, 2019 and December 31, 2018, respectively.

(2) Includes one and two aircraft classified as held for sale at March 31, 2019 and December 31, 2018, respectively.

(3) Includes one freighter.







At March 31, 2019, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.2 years. The average remaining lease term was 5.7 years, also weighted by net book value. At March 31, 2019, FLY's portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $411.2 million.

Conference Call and Webcast

FLY's senior management will host a conference call and webcast to discuss these results at 4:30 p.m. U.S. Eastern Time on Thursday, May 9, 2019. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 6078423. A live webcast with slide presentation will be available on the Events and Presentations page in the Investor Relations section of FLY's website at www.flyleasing.com. A webcast replay will be available on the company's website for one year.

About FLY

FLY is a global aircraft leasing company with a fleet of modern, high-demand, and fuel efficient commercial jet aircraft. FLY leases its aircraft under multi-year lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM, a worldwide leader in aircraft lease management and financing. For more information about FLY, please visit our website at www.flyleasing.com.

Non-GAAP Financial Measures

FLY provides all financial information in accordance with Generally Accepted Accounting Principles in the United States (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release, and on our conference call, certain non-GAAP financial measures, including Adjusted Net Income and Adjusted Return on Equity.  In calculating these non-GAAP financial measures, we have excluded certain amounts, as detailed in the reconciliation below.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for FLY's future business, operations and financial performance. Forward-looking statements are based on management's current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks, and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. Further information on the factors and risks that may affect FLY's business is included in filings FLY makes with the Securities and Exchange Commission from time to time, including its Annual Report on Form 20-F and its reports on Form 6-K. FLY expressly disclaims any obligation to update or revise any of these forward-looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise.

Contact:

Matt Dallas
Fly Leasing Limited
+1 203-769-5916
ir@flyleasing.com  

Fly Leasing Limited

Consolidated Statements of Income

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Mar. 31,


2019
(Unaudited)

2018
(Unaudited)

Revenues



Operating lease rental revenue

$      105,328

$       89,113

End of lease income

1,564

385

Amortization of lease incentives

(1,632)

(2,283)

Amortization of lease discounts and other

(8)

(139)

Operating lease revenue

105,252

87,076

Finance lease revenue

160

174

Equity earnings from unconsolidated subsidiary

56

112

Gain on sale of aircraft

27,620

Interest and other income

1,615

1,393

Total revenues

134,703

88,755

Expenses



Depreciation

37,585

33,733

Interest expense

38,179

32,923

Selling, general and administrative

8,722

8,610

Loss on derivatives

17

789

Loss on extinguishment of debt

2,169

Maintenance and other costs

598

778

Total expenses

87,270

76,833

Net income before provision for income taxes

47,433

11,922

Provision for income taxes

2,468

2,292

Net income

$         44,965

$         9,630

Weighted average number of shares



-  Basic

32,632,715

27,983,352

-  Diluted

32,632,715

28,006,572

Earnings per share



-  Basic

$            1.38

$           0.34

-  Diluted

$            1.38

$           0.34

 

Fly Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



Mar. 31,

 2019

(Unaudited)

Dec. 31,

2018

(Audited)

Assets



Cash and cash equivalents

$          363,930

$           180,211

Restricted cash and cash equivalents

72,337

100,869

Rent receivables

5,927

9,307

Investment in finance lease, net

12,532

12,822

Flight equipment held for sale, net

76,024

259,644

Flight equipment held for operating lease, net

3,181,107

3,228,018

Maintenance rights

267,193

298,207

Deferred tax asset, net

15,975

6,505

Fair value of derivative assets

5,948

5,929

Other assets, net

126,115

124,960

Total assets

$      4,127,088

$       4,226,472

Liabilities



Accounts payable and accrued liabilities

$            32,900

$             23,146

Rentals received in advance

18,043

21,322

Payable to related parties

4,069

4,462

Security deposits

53,196

60,097

Maintenance payment liability, net

292,605

292,586

Unsecured borrowings, net

618,100

617,664

Secured borrowings, net

2,228,268

2,379,869

Deferred tax liability, net

46,915

36,256

Fair value of derivative liabilities

16,206

8,558

Other liabilities

78,883

80,402

Total liabilities

3,389,185

3,524,362

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 32,452,427 and 32,650,019 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively

32

33

Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding

Additional paid-in capital

546,429

549,123

Retained earnings

199,480

154,347

Accumulated other comprehensive loss, net

(8,038)

(1,393)

Total shareholders' equity

737,903

702,110

Total liabilities and shareholders' equity

$      4,127,088

$       4,226,472

 

Fly Leasing Limited

Consolidated Statements of Cash Flows 

(DOLLARS IN THOUSANDS)



Three months ended Mar. 31,


2019
(Unaudited)

2018
(Unaudited)

Cash Flows from Operating Activities



Net income

$            44,965

$             9,630

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



Finance lease revenue

(160)

(174)

Equity in earnings from unconsolidated subsidiary

(56)

(112)

Gain on sale of aircraft

(27,620)

Depreciation

37,585

33,733

Amortization of debt discounts and debt issuance costs

2,796

1,999

Amortization of lease incentives and other items

1,839

2,702

Loss on extinguishment of debt

2,169

Unrealized foreign exchange (gain) loss

(172)

408

Provision for deferred income taxes

2,472

2,353

(Gain) loss on derivative instruments

(57)

1,251

Distributions from unconsolidated subsidiary

56

Cash receipts from maintenance rights

3,013

Changes in operating assets and liabilities:



Rent receivables

2,505

(1,244)

Other assets

(686)

(526)

Payable to related parties

(393)

(330)

Accounts payable, accrued liabilities and other liabilities

7,348

13,372

Net cash flows provided by operating activities

72,591

66,075

Cash Flows from Investing Activities



Distributions from unconsolidated subsidiary

29

Rent received from finance lease

450

450

Swap termination proceeds

114

Investment income from Horizon I Limited equity certificates

273

Purchase of flight equipment

(42,000)

Deposit on aircraft purchases

(30,000)

Proceeds from sale of aircraft, net

235,770

Capitalized interest on Portfolio B orderbook

(1,201)

Payments for aircraft improvement

(1,365)

Payments for lessor maintenance obligations

(584)

Net cash flows provided by (used in) investing activities

233,486

(71,550)



Three months ended Mar. 31,


2019
(Unaudited)

2018
(Unaudited)

Cash Flows from Financing Activities



Security deposits received

775

Security deposits returned

(1,546)

(2,310)

Maintenance payment liability receipts

17,016

19,358

Maintenance payment liability disbursements

(8,604)

(258)

Debt extinguishment costs

(54)

Debt issuance costs

(342)

(243)

Proceeds from secured borrowings

33,014

Repayment of secured borrowings

(155,184)

(45,834)

Shares repurchased

(2,117)

Net cash flows provided by (used in) financing activities

(150,831)

4,502

Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents

(59)

85

Net increase (decrease) in unrestricted and restricted cash and cash equivalents

155,187

(888)

Unrestricted and restricted cash and cash equivalents at beginning of period

281,080

456,815

Unrestricted and restricted cash and cash equivalents at end of period

$            436,267

$      455,927




Reconciliation to Consolidated Balance Sheets:



Cash and cash equivalents

$            363,930

$      384,345

Restricted cash and cash equivalents

72,337

71,582

Unrestricted and restricted cash and cash equivalents

$            436,267

$      455,927




 

Fly Leasing Limited

Reconciliation of Non-GAAP Measures



(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Mar. 31,


2019

(Unaudited)

2018

(Unaudited)

Net income

$         44,965

$         9,630

Adjustments:



Unrealized foreign exchange (gain) loss

(172)

408

Deferred income taxes

2,472

2,353

Fair value changes on undesignated derivatives

(112)

(2)

Adjusted Net Income

$         47,153

$       12,389

Average Shareholders' Equity

$       720,007

$     549,611

Adjusted Return on Equity

26.2%

9.0%




Weighted average diluted shares outstanding

32,632,715

28,006,572

Adjusted Net Income per diluted share

$             1.44

$           0.44

FLY defines Adjusted Net Income as net income plus or minus (i) unrealized foreign exchange gains and losses; (ii) deferred income taxes; (iii) the fair value changes associated with interest rate derivative contracts that are not accounted for as cash flow hedges; and (iv) non-recurring expenses. The adjustments included within Adjusted Net Income are primarily non-cash or non-recurring items that we consider unrelated to the ongoing performance of our operations. Adjusted Return on Equity is calculated by dividing Adjusted Net Income by average shareholders' equity for each period presented. For periods of less than one year, the resulting return is annualized.

FLY uses Adjusted Net Income and Adjusted Return on Equity, in addition to GAAP net income and earnings per share, to assess our core operating performance on a consistent basis from period to period. Management believes these measures are helpful in evaluating the operating performance of our ongoing operations and identifying trends in our performance, because they remove the effects of certain non-cash or non-recurring items and certain other items that are not indicative of our overall operating trends. In addition, Adjusted Net Income and Adjusted Return on Equity help us compare our performance to our competitors. These measures should be considered in addition to, and not as substitutes for, net income or other financial measures determined in accordance with GAAP. FLY's definitions may be different than those used by other companies.

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SOURCE Fly Leasing Limited

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