FLY Leasing Reports Second Quarter 2015 Financial Results
DUBLIN, July 29, 2015 /PRNewswire/ -- FLY Leasing Limited (NYSE: FLY) ("FLY"), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the second quarter of 2015.
Second Quarter 2015 Highlights
- Adjusted Net Income of $9.5 million, or $0.23 per share
- Net loss of $58.3 million after a $65.4 million impairment charge
- Contracted to sell 33 aircraft which will generate a $35 million pre-tax gain
- Re-priced Term Loan, saving $4 million in annual interest cost
- Reduced BBAM management fee by $5 million, or 47%, annually
- Declared 31st consecutive quarterly dividend on July 15 ($0.25 per share)
"In the second quarter, FLY achieved a major milestone in its fleet rejuvenation plan with an agreement to sell a portfolio of 33 aircraft, transforming its portfolio and setting a course to drive stronger returns," said Colm Barrington, CEO of FLY. "Combined with the sale of eight B757s previously announced, we have agreements to sell a total of 41 aircraft averaging 12.9 years of age at June 30. These sales accomplish several key objectives, including lowering our fleet age, generating approximately $450 million of additional cash and reducing our financial leverage."
"We are actively managing the company's capital structure while reducing operating costs," added Barrington. "In connection with the aircraft sales, BBAM has reduced its management fee by nearly half, demonstrating a strong commitment to its long-term partnership with FLY, as well as its aligned goal of maximizing returns for FLY shareholders. In addition, the re-pricing of our Term Loan will reduce our interest costs by about $4 million annually."
"Following completion of these sale transactions, FLY will be in a very strong position to grow by reinvesting in newer, younger aircraft and generating higher returns for its shareholders."
Financial Results
FLY is reporting a net loss of $58.3 million or $1.42 per diluted share for the second quarter of 2015. This compares to net income of $21.7 million or $0.51 per diluted share for the same period of 2014. The second quarter 2015 loss reflects a non-cash $65.4 million impairment charge. The second quarter 2014 results include $18.9 million in gains from aircraft sales.
Operating lease revenue for the second quarter of 2015 increased by $11.7 million to $101.7 million, 13.0% more than in the same period in the previous year.
The net loss for the six month period ended June 30, 2015 was $41.0 million, or $1.00 per share, after the impairment charge taken in the second quarter. For the six month period ended June 30, 2015, operating lease revenue increased 23.5% to $221.8 million.
Adjusted Net Income
Adjusted Net Income for the second quarter of 2015 was $9.5 million ($0.23 per share) as compared to $26 million ($0.63 per share) in the same quarter of 2014. For the six month period ended June 30, 2015, Adjusted Net Income was $36.1 million ($0.87 per share) as compared to $35.9 million ($0.87 per share) for the same period in 2014.
Dividend
On July 15, 2015, FLY declared a dividend of $0.25 per share in respect of the second quarter of 2015. This dividend will be paid on August 20, 2015 to shareholders of record on July 31, 2015. This dividend is FLY's 31st consecutive quarterly dividend. Dividends declared since FLY listed on the NYSE in September 2007 total $7.87 per share.
Financial Position
At June 30, 2015, FLY's total assets were $4.1 billion, and include $2.7 billion of flight equipment held for operating lease and $933.7 million of flight equipment held for sale. The aircraft classified as held for sale are subject to a definitive sale agreement and are expected to be transferred to the buyer over the next six months.
Total cash at June 30, 2015 was $462.1 million, of which $350.2 million was unrestricted. This compares to total cash of $476.7 million at December 31, 2014, of which $337.6 million was unrestricted. Further, at June 30, 2015, FLY owned 15 unencumbered aircraft with a net book value of $558.7 million.
Aircraft Portfolio
At June 30, 2015, FLY's 96 aircraft held for operating lease, shown in the table below, were on lease to 49 lessees in 30 countries. The table does not include 33 aircraft that are held for sale at June 30, 2015 or two B767 aircraft owned by a joint venture in which FLY has a 57% interest.
| Portfolio at |
Jun 30, |
Dec 31, |
| Airbus A319 |
13 |
18 |
| Airbus A320 |
19 |
27 |
| Airbus A321 |
3 |
3 |
| Airbus A330 |
3 |
4 |
| Airbus A340 |
3 |
3 |
| Boeing 737 |
41 |
57 |
| Boeing 747 |
1 |
1 |
| Boeing 757 |
11 |
11 |
| Boeing 767 |
1 |
1 |
| Boeing 777 |
- |
1 |
| Boeing 787 |
1 |
1 |
| Total |
96 |
127 |
At June 30, 2015, the average age of FLY's aircraft held for operating lease, weighted by the net book value of each aircraft, was 8.0 years. The average remaining lease term was 5.2 years, also weighted by net book value. At June 30, 2015, these leases were generating annualized revenues of approximately $310 million.
Conference Call and Webcast
FLY's senior management will host a conference call and webcast to discuss these results at 9:00 a.m. U.S. Eastern Time on Wednesday, July 29, 2015. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 73317082 or ask an operator for the FLY Leasing earnings call. A replay will be available shortly after the call. To access the replay, please dial +1-404-537-3406 (International) or 855-859-2056 (North America) and enter confirmation code 73317082. The telephone replay will be available for ten days. A live webcast of the conference call will be also available in the investor section of FLY's website at www.flyleasing.com. An archived webcast will be available for one year.
About FLY
FLY acquires and leases modern, high-demand and fuel-efficient commercial jet aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM LP, one of the world's leading aircraft lease managers with more than 20 years of experience. For more information about FLY, please visit our website at www.flyleasing.com.
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 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. 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
[email protected]
| FLY Leasing Limited |
||||
| Consolidated Statements of Income |
||||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||||
| Three months Jun. 30, 2015 |
Three months Jun. 30, 2014 |
Six months Jun. 30, 2015 |
Six months |
|
| Revenues |
||||
| Operating lease rental revenue |
$ 103,406 |
$ 94,575 |
$ 206,554 |
$ 185,111 |
| End of lease revenue |
3,676 |
175 |
25,612 |
3,854 |
| Amortization of lease incentives |
(4,757) |
(3,833) |
(8,793) |
(7,221) |
| Amortization of lease premiums, discounts and other |
(641) |
(951) |
(1,586) |
(2,151) |
| Operating lease revenue |
101,684 |
89,966 |
221,787 |
179,593 |
| Equity earnings from unconsolidated subsidiary |
341 |
359 |
681 |
1,741 |
| Gain on sale of aircraft |
— |
18,855 |
1,897 |
18,855 |
| Interest and other income |
797 |
334 |
1,003 |
644 |
| Total revenues |
102,822 |
109,514 |
225,368 |
200,833 |
| Expenses |
||||
| Depreciation |
49,662 |
42,125 |
99,736 |
82,528 |
| Aircraft impairment |
65,398 |
— |
65,398 |
— |
| Interest expense |
37,232 |
33,819 |
76,529 |
68,444 |
| Selling, general and administrative |
10,573 |
11,329 |
18,837 |
20,944 |
| Ineffective, dedesignated and terminated derivatives |
1,756 |
97 |
1,492 |
32 |
| Net (gain) loss on debt modification and extinguishment |
2,119 |
(4,010) |
6,169 |
(3,995) |
| Maintenance and other costs |
1,077 |
1,584 |
2,663 |
3,994 |
| Total expenses |
167,817 |
84,944 |
270,824 |
171,947 |
| Net income (loss) before provision for income taxes |
(64,995) |
24,570 |
(45,456) |
28,886 |
| Provision (benefit) for income taxes |
(6,740) |
2,896 |
(4,467) |
3,649 |
| Net income (loss) |
$ (58,255) |
$ 21,674 |
$ (40,989) |
$ 25,237 |
| Weighted average number of shares |
||||
| - Basic |
41,456,784 |
41,419,515 |
41,444,957 |
41,376,963 |
| - Diluted |
41,456,784 |
41,446,070 |
41,444,957 |
41,420,045 |
| Earnings per share |
||||
| - Basic and Diluted |
$ (1.42) |
$ 0.51 |
$ (1.00) |
$ 0.58 |
| Dividends declared and paid per share |
$ 0.25 |
$ 0.25 |
$ 0.50 |
$ 0.50 |
| FLY Leasing Limited |
||
| Consolidated Balance Sheets |
||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||
| Jun. 30, |
Dec. 31, |
|
| Assets |
||
| Cash and cash equivalents |
$ 350,220 |
$ 337,560 |
| Restricted cash and cash equivalents |
111,897 |
139,139 |
| Rent receivables |
1,633 |
4,887 |
| Investment in unconsolidated subsidiary |
4,683 |
4,002 |
| Flight equipment held for sale, net |
933,662 |
— |
| Flight equipment held for operating lease, net |
2,660,638 |
3,705,407 |
| Fair value of derivative assets |
487 |
2,067 |
| Other assets, net |
23,511 |
31,608 |
| Total assets |
$ 4,086,731 |
$ 4,224,670 |
| Liabilities |
||
| Accounts payable and accrued liabilities |
$ 19,903 |
$ 18,431 |
| Rentals received in advance |
17,781 |
19,751 |
| Payable to related parties |
3,328 |
2,772 |
| Security deposits |
59,153 |
64,058 |
| Maintenance payment liability |
250,425 |
254,514 |
| Unsecured borrowings, net |
690,280 |
689,452 |
| Secured borrowings, net |
2,268,900 |
2,335,328 |
| Deferred tax liability, net |
11,946 |
16,289 |
| Fair value of derivative liabilities |
21,100 |
23,311 |
| Other liabilities |
45,536 |
41,890 |
| Total liabilities |
3,388,352 |
3,465,796 |
| Shareholders' equity |
||
| Common shares, $0.001 par value, 499,999,900 shares authorized; 41,469,073 and 41,432,998 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively |
41 |
41 |
| Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding |
— |
— |
| Additional paid in capital |
658,717 |
658,522 |
| Retained earnings |
55,053 |
117,402 |
| Accumulated other comprehensive loss, net |
(15,432) |
(17,091) |
| Total shareholders' equity |
698,379 |
758,874 |
| Total liabilities and shareholders' equity |
$ 4,086,731 |
$ 4,224,670 |
| FLY Leasing Limited |
||||||||||||||||
| Consolidated Statements of Cash Flows |
||||||||||||||||
| (DOLLARS IN THOUSANDS) |
||||||||||||||||
| Six months ended |
Six months ended |
|||||||||||||||
| Cash Flows from Operating Activities |
||||||||||||||||
| Net income (loss) |
$ |
(40,989) |
$ |
25,237 |
||||||||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
||||||||||||||||
| Equity in earnings from unconsolidated subsidiary |
(681) |
(1,741) |
||||||||||||||
| Gain on sale of aircraft |
(1,897) |
(18,855) |
||||||||||||||
| Depreciation |
99,736 |
82,528 |
||||||||||||||
| Aircraft impairment |
65,398 |
— |
||||||||||||||
| Amortization of debt discounts and loan issuance costs |
5,957 |
6,239 |
||||||||||||||
| Amortization of lease incentives |
8,793 |
7,221 |
||||||||||||||
| Amortization of lease discounts, premiums and other items |
1,321 |
1,457 |
||||||||||||||
| Amortization of fair value adjustments associated with the GAAM acquisition |
2,136 |
3,531 |
||||||||||||||
| Net (gain) loss on debt modification and extinguishment |
5,160 |
(4,048) |
||||||||||||||
| Share-based compensation |
195 |
(36) |
||||||||||||||
| Unrealized foreign exchange (gain) loss on cash balances |
305 |
(20) |
||||||||||||||
| Unrealized foreign exchange gain on Euro denominated borrowing |
(1,065) |
— |
||||||||||||||
| Provision for deferred income taxes |
(4,815) |
3,649 |
||||||||||||||
| Unrealized loss on derivative instruments |
1,211 |
32 |
||||||||||||||
| Security deposits and maintenance payment liability relieved |
(25,612) |
(3,443) |
||||||||||||||
| Distribution from unconsolidated subsidiary |
— |
4,786 |
||||||||||||||
| Changes in operating assets and liabilities: |
||||||||||||||||
| Rent receivables |
6,825 |
(2,877) |
||||||||||||||
| Other assets |
1,507 |
1,768 |
||||||||||||||
| Payable to related parties |
(3,008) |
(3,499) |
||||||||||||||
| Accounts payable and accrued liabilities |
(1,482) |
1,060 |
||||||||||||||
| Rentals received in advance |
(1,970) |
(724) |
||||||||||||||
| Other liabilities |
4,247 |
4,405 |
||||||||||||||
| Net cash flows provided by operating activities |
121,272 |
106,670 |
||||||||||||||
| Cash Flows from Investing Activities |
||||||||||||||||
| Distribution from unconsolidated subsidiary |
— |
1,847 |
||||||||||||||
| Purchase of flight equipment |
(156,196) |
(289,259) |
||||||||||||||
| Proceeds from sale of aircraft |
126,503 |
81,867 |
||||||||||||||
| Payment for aircraft improvement |
(6,255) |
(7,693) |
||||||||||||||
| Lessor payments for maintenance |
(13,206) |
(2,422) |
||||||||||||||
| Net cash flows used in investing activities |
(49,154) |
(215,660) |
||||||||||||||
| Six months ended |
Six months ended |
|||||||||||||||
| Cash Flows from Financing Activities |
||||||||||||||||
| Restricted cash and cash equivalents |
27,242 |
49,600 |
||||||||||||||
| Security deposits received |
3,815 |
4,391 |
||||||||||||||
| Security deposits returned |
(6,618) |
(1,828) |
||||||||||||||
| Maintenance payment liability receipts |
42,163 |
48,191 |
||||||||||||||
| Maintenance payment liability disbursements |
(32,891) |
(37,131) |
||||||||||||||
| Proceeds from termination of interest rate swaps |
23 |
— |
||||||||||||||
| Debt issuance costs |
(914) |
(242) |
||||||||||||||
| Proceeds from secured borrowings |
147,277 |
— |
||||||||||||||
| Repayment of secured borrowings |
(217,890) |
(83,592) |
||||||||||||||
| Dividends |
(20,716) |
(20,676) |
||||||||||||||
| Dividend equivalents |
(644) |
(1,044) |
||||||||||||||
| Net cash flows used in financing activities |
(59,153) |
(42,331) |
||||||||||||||
| Effect of exchange rate changes on cash and cash equivalents |
(305) |
20 |
||||||||||||||
| Net increase (decrease) in cash |
12,660 |
(151,301) |
||||||||||||||
| Cash at beginning of period |
337,560 |
404,472 |
||||||||||||||
| Cash at end of period |
$ |
350,220 |
$ |
253,171 |
||||||||||||
| Supplemental Disclosure: |
||||||||||||||||
| Cash paid during the period for: |
||||||||||||||||
| Interest |
$ |
70,454 |
$ |
59,634 |
||||||||||||
| Taxes |
115 |
152 |
||||||||||||||
| Noncash Activities: |
||||||||||||||||
| Security deposits applied to maintenance payment liability and rent receivables |
3,175 |
820 |
||||||||||||||
| Maintenance payment liability applied to rent receivables |
2,108 |
— |
||||||||||||||
| Other liabilities applied to maintenance payment liability and rent receivables |
240 |
979 |
||||||||||||||
| Noncash investing activities: |
||||||||||||||||
| Aircraft improvement |
2,765 |
2,174 |
||||||||||||||
| Noncash activities in connection with purchase of aircraft: |
||||||||||||||||
| Rent receivable applied |
852 |
1,480 |
||||||||||||||
| Security deposits and maintenance payment liability assumed |
11,597 |
16,019 |
||||||||||||||
| Other assets applied |
898 |
550 |
||||||||||||||
| Other liabilities assumed |
6,997 |
-- |
||||||||||||||
| Noncash activities in connection with sale of aircraft: |
||||||||||||||||
| Rent receivable applied |
695 |
425 |
||||||||||||||
| Security deposits and maintenance payment liability transferred |
6,116 |
8,678 |
||||||||||||||
| Refundable deposits applied |
2,250 |
2,626 |
||||||||||||||
| FLY Leasing Limited |
|||||
| Reconciliation of Non-GAAP Measures |
|||||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
|||||
| Three months |
Three months |
Six months |
Six months |
||
| Net income (loss) |
$ (58,255) |
$ 21,674 |
$ (40,989) |
$ 25,237 |
|
| Adjustments: |
|||||
| Aircraft impairment |
65,398 |
— |
65,398 |
— |
|
| Amortization of debt discounts and loan issue costs |
2,847 |
3,097 |
5,957 |
6,239 |
|
| Amortization of lease premiums, discounts and other |
602 |
644 |
1,321 |
1,405 |
|
| Amortization of fair value adjustments recorded in purchase accounting |
899 |
1,602 |
2,136 |
3,531 |
|
| Net (gain) loss on debt modification and extinguishment |
2,119 |
(4,010) |
6,169 |
(3,995) |
|
| Non-cash share based compensation |
43 |
20 |
195 |
(36) |
|
| Unrealized foreign exchange (gain) loss |
910 |
13 |
(760) |
(20) |
|
| Deferred income taxes |
(6,841) |
2,849 |
(4,815) |
3,483 |
|
| Ineffective, dedesignated and terminated derivatives |
1,756 |
97 |
1,492 |
32 |
|
| Adjusted Net Income |
$ 9,478 |
$ 25,986 |
$ 36,104 |
$ 35,876 |
|
| Average Shareholders' Equity |
$ 729,033 |
$ 743,314 |
$ 728,627 |
$ 747,439 |
|
| Adjusted Return on Equity |
5.2% |
14.0% |
9.9% |
9.6% |
|
| Weighted average diluted shares outstanding |
41,456,784 |
41,446,070 |
41,444,957 |
41,420,045 |
|
| Adjusted Net Income per share |
$ 0.23 |
$ 0.63 |
$ 0.87 |
$ 0.87 |
|
FLY defines Adjusted Net Income as net income plus or minus (i) non-cash impairment charges; (ii) non-cash amortization of debt discounts, loan issuance costs, lease premiums and discounts, and other items; (iii) adjustments related to the GAAM portfolio acquisition comprised primarily of amortization of fair value adjustments recorded in purchase accounting; (iv) gain and losses from debt modification and extinguishment; (v) non-cash share-based compensation; (vi) unrealized foreign exchange gains and losses; (vii) deferred income taxes; and (viii) the ineffective portion and charges associated with cash flow hedges. Adjusted Return on Equity is calculated by dividing Adjusted Net Income by the average shareholders' equity for the periods presented. For periods of less than one year, the resulting return is annualized.
FLY uses Adjusted Net Income and Adjusted Return on Equity to assess our core operating performance on a consistent basis from period to period. 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, not as a substitute for net income or other financial measure determined in accordance with Accounting Principles Generally Accepted in the United States. FLY's definitions may be different than those used by other companies.
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SOURCE FLY Leasing Limited
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