FLY Leasing Reports Second Quarter 2016 Financial Results
DUBLIN, July 28, 2016 /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 2016.
Second Quarter 2016 Highlights
- Net income of $4.7 million, or $0.14 per share
- Adjusted Net Income of $15.0 million, or $0.45 per share
- Acquired one new aircraft in the quarter and five aircraft in July
- New $75 million share repurchase program
"We continue to rejuvenate our fleet through the sale of older aircraft and their replacement with newer models," said Colm Barrington, CEO of FLY. "In the second quarter we sold six aircraft with an average age of 18 years and so far this year, we have purchased six aircraft with an average age of approximately 2 years. We will continue with our strategy of selling older aircraft opportunistically and purchasing newer models prudently. In addition to actively managing our portfolio, we see good value in our shares which trade at a significant discount to book value. Yesterday we approved a new $75 million share repurchase program."
"FLY remains in a strong position to achieve its strategic objectives with $382 million in unrestricted cash and the capacity to acquire up to $2 billion worth of aircraft," added Barrington. "Our fleet is 100% utilized and we continue to see excellent demand for leased aircraft."
Financial Results
FLY is reporting net income of $4.7 million, or $0.14 per diluted share, for the second quarter of 2016. This compares to a restated net loss of $43.7 million, or $1.06 per share, for the same period in 2015.
Net income for the six months ended June 30, 2016 was $11.8 million, or $0.35 per share. For the same six month period in 2015, there was a restated net loss of $23.8 million, or $0.59 per share.
Adjusted Net Income
Adjusted Net Income was $15.0 million for the second quarter of 2016 compared to $12.4 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $0.45 in the second quarter of 2016 compared to $0.30 for the second quarter of 2015. For the six months ended June 30, 2016, Adjusted Net Income was $31.4 million, or $0.93 per share, compared to $42.6 million, or $1.03 per share, in 2015.
Share Repurchases
FLY has repurchased approximately 20% of its shares since September 30, 2015 for $106.2 million. Subsequent to quarter end, FLY approved a new $75 million share repurchase program to replace its previously authorized $30 million program. There were 33.3 million shares outstanding at quarter end.
Financial Position
At June 30, 2016, FLY's total assets were $3.2 billion, including investment in flight equipment totaling $2.7 billion.
Cash and cash equivalents at June 30, 2016 totaled $476.9 million, of which $382.1 million was unrestricted. In addition, FLY had eight unencumbered aircraft with a net book value of $531.8 million. The net book value per share at June 30, 2016 was $18.97.
Aircraft Portfolio
At June 30, 2016, FLY's 76 aircraft were on lease to 43 airlines in 29 countries. The table does not show aircraft that were held for sale which totaled two and thirteen at June 30, 2016 and December 31, 2015, respectively, or the two B767 aircraft owned by a joint venture in which FLY has a 57% interest.
| Portfolio at |
Jun 30, |
Dec 31, |
| Airbus A319 |
10 |
10 |
| Airbus A320 |
15 |
14 |
| Airbus A321 |
3 |
3 |
| Airbus A330 |
4 |
4 |
| Airbus A340 |
2 |
3 |
| Boeing 737 |
36 |
39 |
| Boeing 757 |
3 |
3 |
| Boeing 767 |
— |
1 |
| Boeing 777 |
2 |
2 |
| Boeing 787 |
1 |
1 |
| Total |
76 |
80 |
At June 30, 2016, the average age of the portfolio, weighted by net book value, was 6.8 years. The average remaining lease term was 6.3 years, also weighted by net book value. At June 30, 2016, our fleet was 100% utilized and the 76 aircraft were generating annualized rental revenue of approximately $293 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 Thursday, July 28, 2016. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 39862155. A live webcast with slide presentation will be available on the Events 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 acquires and leases its aircraft under multi-year lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM LP, a worldwide leader in aircraft lease management and financing. 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. 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
[email protected]
| FLY Leasing Limited |
||||
| Consolidated Statements of Income |
||||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||||
| Three months Jun. 30, 2016 |
Three months Jun. 30, 2015 |
Six months Jun. 30, 2016 (Unaudited) |
Six months Jun. 30, 2015 (Restated & |
|
| Revenues |
||||
| Operating lease rental revenue |
$ 73,874 |
$ 103,406 |
$ 148,507 |
$ 206,554 |
| End of lease revenue |
4,876 |
3,676 |
8,082 |
25,612 |
| Amortization of lease incentives |
(2,317) |
(4,757) |
(5,090) |
(8,793) |
| Amortization of lease premiums, discounts and other |
(94) |
(641) |
(207) |
(1,586) |
| Operating lease revenue |
76,339 |
101,684 |
151,292 |
221,787 |
| Finance lease income |
884 |
— |
1,776 |
— |
| Equity earnings from unconsolidated subsidiary |
131 |
341 |
264 |
681 |
| Gain on sale of aircraft |
443 |
— |
5,586 |
2,637 |
| Interest and other income |
137 |
797 |
224 |
1,003 |
| Total revenues |
77,934 |
102,822 |
159,142 |
226,108 |
| Expenses |
||||
| Depreciation |
28,662 |
46,787 |
57,501 |
93,990 |
| Aircraft impairment |
4,122 |
51,825 |
4,122 |
51,825 |
| Interest expense |
29,474 |
37,232 |
60,308 |
76,529 |
| Net loss on modification and extinguishment of debt |
612 |
2,119 |
5,139 |
6,169 |
| Selling, general and administrative |
7,384 |
10,573 |
15,653 |
18,837 |
| Ineffective, dedesignated and terminated derivatives |
(22) |
1,756 |
264 |
1,492 |
| Maintenance and other costs |
455 |
1,077 |
1,654 |
2,663 |
| Total expenses |
70,687 |
151,369 |
144,641 |
251,505 |
| Net income (loss) before provision for income taxes |
7,247 |
(48,547) |
14,501 |
(25,397) |
| Provision (benefit) for income taxes |
2,570 |
(4,852) |
2,724 |
(1,567) |
| Net income (loss) |
$ 4,677 |
$ (43,695) |
$ 11,777 |
$ (23,830) |
| Weighted average number of shares |
||||
| - Basic |
33,580,886 |
41,456,784 |
33,934,334 |
41,444,957 |
| - Diluted |
33,580,886 |
41,456,784 |
33,934,334 |
41,444,957 |
| Earnings per share |
||||
| - Basic and Diluted |
$ 0.14 |
$ (1.06) |
$ 0.35 |
$ (0.59) |
| Dividends declared and paid per share |
$ — |
$ 0.25 |
$ — |
$ 0.50 |
| FLY Leasing Limited |
||
| Consolidated Balance Sheets |
||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||
| Jun. 30, (Unaudited) |
Dec. 31, |
|
| Assets |
||
| Cash and cash equivalents |
$ 382,128 |
$ 275,998 |
| Restricted cash and cash equivalents |
94,761 |
174,933 |
| Rent receivables |
509 |
124 |
| Investment in unconsolidated subsidiary |
7,434 |
7,170 |
| Investment in direct finance lease, net |
34,185 |
34,878 |
| Flight equipment held for sale, net |
32,741 |
237,262 |
| Flight equipment held for operating lease, net |
2,524,145 |
2,585,426 |
| Maintenance right asset, net |
84,351 |
94,493 |
| Fair market value of derivative assets |
— |
241 |
| Other assets, net |
6,071 |
6,450 |
| Total assets |
$ 3,166,325 |
$ 3,416,975 |
| Liabilities |
||
| Accounts payable and accrued liabilities |
$ 14,330 |
$ 17,548 |
| Rentals received in advance |
13,977 |
14,560 |
| Payable to related parties |
4,115 |
7,170 |
| Security deposits |
43,854 |
48,876 |
| Maintenance payment liability |
198,657 |
194,543 |
| Unsecured borrowings, net |
690,399 |
689,409 |
| Secured borrowings, net |
1,483,812 |
1,695,711 |
| Deferred tax liability, net |
22,277 |
20,741 |
| Fair market value of derivative liabilities |
27,824 |
19,327 |
| Other liabilities |
34,482 |
52,126 |
| Total liabilities |
2,533,727 |
2,760,011 |
| Shareholders' equity |
||
| Common shares, $0.001 par value, 499,999,900 shares authorized; 33,347,990 and 35,671,400 shares issued and outstanding at June 30, 2016 and December 31, 2015, respectively |
33 |
36 |
| Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding |
— |
— |
| Additional paid in capital |
549,473 |
577,290 |
| Retained earnings |
106,915 |
95,138 |
| Accumulated other comprehensive loss, net |
(23,823) |
(15,500) |
| Total shareholders' equity |
632,598 |
656,964 |
| Total liabilities and shareholders' equity |
$ 3,166,325 |
$ 3,416,975 |
| FLY Leasing Limited |
|||||||||||||||
| Consolidated Statements of Cash Flows |
|||||||||||||||
| (DOLLARS IN THOUSANDS) |
|||||||||||||||
| Six months ended |
Six months ended |
||||||||||||||
| Jun. 30, 2016 |
Jun. 30, 2015 |
||||||||||||||
| Cash Flows from Operating Activities |
|||||||||||||||
| Net income (loss) |
$ |
11,777 |
$ |
(23,830) |
|||||||||||
| Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: |
|||||||||||||||
| Equity in earnings from unconsolidated subsidiary |
(264) |
(681) |
|||||||||||||
| Direct finance lease income |
(1,776) |
— |
|||||||||||||
| Gain on sale of aircraft |
(5,586) |
(2,637) |
|||||||||||||
| Depreciation |
57,501 |
93,990 |
|||||||||||||
| Aircraft impairment |
4,122 |
51,825 |
|||||||||||||
| Amortization of debt discounts and issuance costs |
4,695 |
5,957 |
|||||||||||||
| Amortization of lease incentives |
5,090 |
8,793 |
|||||||||||||
| Amortization of lease discounts, premiums and other items |
206 |
1,321 |
|||||||||||||
| Amortization of fair market value adjustments associated with the GAAM acquisition |
992 |
2,136 |
|||||||||||||
| Net loss on modification and extinguishment of debt |
4,121 |
5,160 |
|||||||||||||
| Share-based compensation |
— |
195 |
|||||||||||||
| Unrealized foreign exchange (gain) loss |
530 |
(760) |
|||||||||||||
| Provision (benefit) for deferred income taxes |
2,593 |
(1,915) |
|||||||||||||
| Unrealized loss on derivative instruments |
183 |
1,211 |
|||||||||||||
| Cash receipts in settlement of maintenance rights |
6,150 |
— |
|||||||||||||
| Security deposits and maintenance payment liability recognized into earnings |
(3,450) |
(25,612) |
|||||||||||||
| Security deposits and maintenance payment claims applied towards operating lease revenues |
(805) |
— |
|||||||||||||
| Changes in operating assets and liabilities: |
|||||||||||||||
| Rent receivables |
(597) |
6,825 |
|||||||||||||
| Other assets |
(233) |
1,507 |
|||||||||||||
| Payable to related parties |
(7,234) |
(3,008) |
|||||||||||||
| Accounts payable, accrued and other liabilities |
(1,701) |
795 |
|||||||||||||
| Net cash flows provided by operating activities |
76,314 |
121,272 |
|||||||||||||
| Cash Flows from Investing Activities |
|||||||||||||||
| Rent received from direct finance lease |
2,460 |
— |
|||||||||||||
| Purchase of flight equipment |
(40,488) |
(156,196) |
|||||||||||||
| Proceeds from sale of aircraft |
209,382 |
126,503 |
|||||||||||||
| Payment for aircraft improvement |
(2,255) |
(6,255) |
|||||||||||||
| Lessor payments for lease incentive obligations |
(1,600) |
(13,206) |
|||||||||||||
| Net cash flows provided by (used in) investing activities |
167,499 |
(49,154) |
|||||||||||||
| Six months ended |
Six months ended |
||||||||||||||
| Jun. 30, 2016 |
Jun. 30, 2015 |
||||||||||||||
| Cash Flows from Financing Activities |
|||||||||||||||
| Restricted cash and cash equivalents |
80,172 |
27,242 |
|||||||||||||
| Security deposits received |
920 |
3,815 |
|||||||||||||
| Security deposits returned |
(3,682) |
(6,618) |
|||||||||||||
| Maintenance payment liability receipts |
36,343 |
42,163 |
|||||||||||||
| Maintenance payment liability disbursements |
(2,278) |
(32,891) |
|||||||||||||
| Net swap termination payments |
(709) |
23 |
|||||||||||||
| Debt issuance costs |
(832) |
(914) |
|||||||||||||
| Proceeds from secured borrowings |
84,249 |
147,277 |
|||||||||||||
| Repayment of secured borrowings |
(304,938) |
(217,890) |
|||||||||||||
| Shares repurchased |
(26,944) |
— |
|||||||||||||
| Dividends |
— |
(20,716) |
|||||||||||||
| Dividend equivalents |
— |
(644) |
|||||||||||||
| Net cash flows used in financing activities |
(137,699) |
(59,153) |
|||||||||||||
| Effect of exchange rate changes on cash and cash equivalents |
16 |
(305) |
|||||||||||||
| Net increase in cash |
106,130 |
12,660 |
|||||||||||||
| Cash at beginning of period |
275,998 |
337,560 |
|||||||||||||
| Cash at end of period |
$ |
382,128 |
$ |
350,220 |
|||||||||||
| Supplemental Disclosure: |
|||||||||||||||
| Cash paid during the period for: |
|||||||||||||||
| Interest |
$ |
55,047 |
$ |
70,454 |
|||||||||||
| Taxes |
336 |
115 |
|||||||||||||
| Noncash Activities: |
|||||||||||||||
| Security deposits applied to maintenance payment liability and rent receivables |
— |
3,175 |
|||||||||||||
| Maintenance payment liability applied to rent receivables |
— |
2,108 |
|||||||||||||
| Other liabilities applied to maintenance payment liability, security deposits and rent receivables |
960 |
240 |
|||||||||||||
| Noncash activities: |
|||||||||||||||
| Aircraft improvement |
206 |
2,765 |
|||||||||||||
| Noncash activities in connection with purchase of aircraft |
2,687 |
20,344 |
|||||||||||||
| Noncash activities in connection with sale of aircraft |
35,628 |
9,016 |
|||||||||||||
| FLY Leasing Limited |
|||||
| Reconciliation of Non-GAAP Measures |
|||||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
|||||
| Three months Jun. 30, 2016 |
Three months Jun. 30, 2015 |
Six months Jun. 30, 2016 (Unaudited) |
Six months Jun. 30, 2015 (Restated & |
||
| Net income (loss) |
$ 4,677 |
$ (43,695) |
$ 11,777 |
$ (23,830) |
|
| Adjustments: |
|||||
| Aircraft impairment |
4,122 |
51,825 |
4,122 |
51,825 |
|
| Amortization of debt discounts and loan issue costs |
2,335 |
2,847 |
4,695 |
5,957 |
|
| Amortization of lease premiums, discounts and other |
93 |
602 |
206 |
1,321 |
|
| Amortization of fair value adjustments recorded in purchase accounting |
320 |
899 |
992 |
2,136 |
|
| Net loss on modification and extinguishment of debt |
612 |
2,119 |
5,139 |
6,169 |
|
| Non-cash share based compensation |
— |
43 |
— |
195 |
|
| Professional fees related to restatement |
851 |
— |
1,101 |
— |
|
| Unrealized foreign exchange (gain) loss |
(471) |
910 |
530 |
(760) |
|
| Deferred income taxes |
2,499 |
(4,953) |
2,593 |
(1,915) |
|
| Ineffective, dedesignated and terminated derivatives |
(22) |
1,756 |
264 |
1,492 |
|
| Adjusted Net Income |
$ 15,016 |
$ 12,353 |
$ 31,419 |
$ 42,590 |
|
| Average Shareholders' Equity |
$ 632,627 |
$ 736,292 |
$ 644,781 |
$ 734,586 |
|
| Adjusted Return on Equity |
9.5% |
6.7% |
9.7% |
11.6% |
|
| Weighted average diluted shares outstanding |
33,580,886 |
41,456,784 |
33,934,334 |
41,444,957 |
|
| Adjusted Net Income per share |
$ 0.45 |
$ 0.30 |
$ 0.93 |
$ 1.03 |
|
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 non-cash amortization of fair value adjustments recorded in purchase accounting; (iv) net losses from debt modification and extinguishment; (v) non-cash share-based compensation; (vi) legal and accounting expenses related to the restatement of our financial statements and related litigation; (vii) unrealized foreign exchange gains and losses; (viii) deferred income taxes; and (ix) the ineffective portion and charges associated with hedges. The adjustments included within Adjusted Net Income are primarily non-cash items, one-time or non-recurring items that are not expected to continue in the future, and certain other items that we consider unrelated to the ongoing performance of our operations. 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, in addition to GAAP net income and earnings per share, to assess the ongoing performance of our operations 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 items, one-time or non-recurring items that are not expected to continue in the future, and certain other items that are not indicative of our overall operating trends. In addition, we believe that Adjusted Net Income and Adjusted Return on Equity help us and our investors and potential investors 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, limiting their usefulness as comparative measures.
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SOURCE FLY Leasing Limited
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