Fly Leasing Reports Second Quarter 2017 Financial Results
DUBLIN, Aug. 10, 2017 /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 2017.
Second Quarter 2017 Highlights
- Net income of $2.9 million, nine cents per share
- Adjusted Net Income of $9.7 million, 31 cents per share
- Repurchased nearly two million shares at an average price of $13.07 per share
- Acquired five aircraft, four of which were new deliveries from manufacturers
- Upsized Term Loan by $50 million
- Repriced Term Loan, saving approximately $2 million in annual interest
"We grew our fleet by investing $290 million in five aircraft in the second quarter, including four new aircraft purchased from the manufacturers," said Colm Barrington, CEO of FLY. "The five aircraft are on leases with an average term of 11 years, further enhancing the overall quality of our fleet. We expect to see improved earnings from these aircraft, and others in our pipeline, as the year progresses."
"FLY continues to aggressively repurchase its shares," added Barrington. "In the second quarter, we bought back nearly two million shares for a total of $25.9 million. At quarter end, we repurchased approximately 6.5 percent of the shares outstanding at the beginning of the year. Our average repurchase price of just over $13 per share has helped increase our net book value per share this year to $19.08."
"We are focused on growth and have a strong pipeline of attractive aircraft investments that we expect to announce in the coming months," said Barrington. "We expect to meet our $750 million acquisition target in 2017 – and we have the financial resources to acquire an additional $2 billion of aircraft."
Financial Results
FLY is reporting net income of $2.9 million, or $0.09 per diluted share, for the second quarter of 2017. This compares to net income of $4.7 million, or $0.14 per share, for the same period in 2016.
Net income for the six months ended June 30, 2017 was $7.9 million, or $0.25 per share. For the same six month period in 2016, net income was $11.8 million, or $0.35 per share.
Adjusted Net Income
Adjusted Net Income was $9.7 million for the second quarter of 2017, compared to $15.0 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $0.31 in the second quarter of 2017, compared to $0.45 for the second quarter of 2016. For the six months ended June 30, 2017, Adjusted Net Income was $20.8 million, or $0.65 per share, compared to $31.4 million, or $0.93 per share, for the same six month period in 2016.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
Share Repurchases
During the first six months of 2017, FLY repurchased 2.1 million shares for approximately $27.2 million at an average price of $13.06 per share. At June 30, 2017, approximately $39.4 million remained under the share repurchase authorization. Subsequent to quarter end, FLY repurchased 740,957 shares at an average price of $13.77 per share through August 9, 2017. As of August 9, 2017, approximately $29 million remained under the share repurchase authorization.
Financial Position
At June 30, 2017, FLY's total assets were $3.5 billion, including investment in flight equipment totaling $3.0 billion. Total cash at June 30, 2017 was $455.2 million, of which $335.5 was unrestricted. The book value per share at June 30, 2017 was $19.08.
Aircraft Portfolio
At June 30, 2017, FLY's 81 aircraft were on lease to 45 airlines in 29 countries. The table below does not show the two B767 aircraft owned by a joint venture in which FLY has a 57% interest.
| Portfolio at |
Jun 30, |
Dec 31, |
| Airbus A319 |
9 |
9 |
| Airbus A320 |
13 |
12 |
| Airbus A321 |
3 |
3 |
| Airbus A330 |
3 |
3 |
| Airbus A340 |
2 |
2 |
| Boeing 737 |
41 |
38 |
| Boeing 757 |
3 |
3 |
| Boeing 777 |
2 |
2 |
| Boeing 787 |
5 |
4 |
| Total |
81 |
76 |
At June 30, 2017, the average age of the portfolio, weighted by net book value of each aircraft, was 6.1 years. The average remaining lease term was 6.8 years, also weighted by net book value. At June 30, 2017, the 81 aircraft were generating annualized rental revenue of approximately $352 million. FLY's lease utilization factor was 100% for the second quarter of 2017.
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, August 10, 2017. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 44952823. 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 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 |
Three months |
Six months |
Six months |
|
| Revenues |
||||
| Operating lease rental revenue |
$ 81,181 |
$ 73,874 |
$ 160,502 |
$ 148,507 |
| End of lease revenue |
— |
4,876 |
1,239 |
8,082 |
| Amortization of lease incentives |
(1,871) |
(2,317) |
(3,646) |
(5,090) |
| Amortization of lease premiums, discounts and other |
(101) |
(94) |
(183) |
(207) |
| Operating lease revenue |
79,209 |
76,339 |
157,912 |
151,292 |
| Finance lease income |
185 |
884 |
373 |
1,776 |
| Equity earnings from unconsolidated subsidiary |
127 |
131 |
252 |
264 |
| Gain on sale of aircraft |
— |
443 |
— |
5,586 |
| Interest and other income |
311 |
137 |
561 |
224 |
| Total revenues |
79,832 |
77,934 |
159,098 |
159,142 |
| Expenses |
||||
| Depreciation |
33,074 |
28,662 |
65,125 |
57,501 |
| Aircraft impairment |
— |
4,122 |
— |
4,122 |
| Interest expense |
31,890 |
29,474 |
63,723 |
60,308 |
| Net loss on modification and extinguishment of debt |
1,885 |
612 |
2,429 |
5,139 |
| Selling, general and administrative |
7,978 |
7,384 |
16,270 |
15,653 |
| Ineffective, dedesignated and terminated derivatives |
424 |
(22) |
373 |
264 |
| Maintenance and other costs |
758 |
455 |
1,230 |
1,654 |
| Total expenses |
76,009 |
70,687 |
149,150 |
144,641 |
| Net income before provision for income taxes |
3,823 |
7,247 |
9,948 |
14,501 |
| Provision for income taxes |
943 |
2,570 |
2,016 |
2,724 |
| Net income |
$ 2,880 |
$ 4,677 |
$ 7,932 |
$ 11,777 |
| Weighted average number of shares |
||||
| - Basic |
31,364,594 |
33,580,886 |
31,802,107 |
33,934,334 |
| - Diluted |
31,388,034 |
33,580,886 |
31,838,737 |
33,934,334 |
| Earnings per share |
||||
| - Basic and Diluted |
$ 0.09 |
$ 0.14 |
$ 0.25 |
$ 0.35 |
| FLY Leasing Limited |
||
| Consolidated Balance Sheets |
||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||
| Jun. 30, |
Dec. 31, |
|
| Assets |
||
| Cash and cash equivalents |
$ 335,473 |
$ 517,964 |
| Restricted cash and cash equivalents |
119,704 |
94,123 |
| Rent receivables |
19 |
419 |
| Investment in unconsolidated subsidiary |
7,951 |
7,700 |
| Investment in finance lease, net |
14,488 |
15,095 |
| Flight equipment held for operating lease, net |
2,923,635 |
2,693,821 |
| Maintenance right asset, net |
106,223 |
101,969 |
| Fair value of derivative assets |
1,939 |
1,905 |
| Deferred tax assets |
7,195 |
7,445 |
| Other assets, net |
6,804 |
6,568 |
| Total assets |
$ 3,523,431 |
$ 3,447,009 |
| Liabilities |
||
| Accounts payable and accrued liabilities |
$ 16,408 |
$ 13,786 |
| Rentals received in advance |
14,817 |
13,123 |
| Payable to related parties |
3,188 |
5,042 |
| Security deposits |
49,832 |
42,495 |
| Maintenance payment liability |
216,549 |
182,571 |
| Unsecured borrowings, net |
692,381 |
691,390 |
| Secured borrowings, net |
1,886,854 |
1,831,985 |
| Deferred tax liability, net |
21,863 |
19,847 |
| Fair value of derivative liabilities |
11,315 |
13,281 |
| Other liabilities |
34,567 |
40,254 |
| Total liabilities |
2,947,774 |
2,853,774 |
| Shareholders' equity |
||
| Common shares, $0.001 par value, 499,999,900 shares authorized; 30,174,969 and 32,256,440 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively |
30 |
32 |
| Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding |
— |
— |
| Additional paid in capital |
509,628 |
536,922 |
| Retained earnings |
73,958 |
66,026 |
| Accumulated other comprehensive loss, net |
(7,959) |
(9,745) |
| Total shareholders' equity |
575,657 |
593,235 |
| Total liabilities and shareholders' equity |
$ 3,523,431 |
$ 3,447,009 |
| FLY Leasing Limited |
|||||||||||
| Consolidated Statements of Cash Flows |
|||||||||||
| (DOLLARS IN THOUSANDS) |
|||||||||||
| Six months ended |
Six months ended |
||||||||||
| Jun. 30, 2017 |
Jun. 30, 2016 |
||||||||||
| Cash Flows from Operating Activities |
|||||||||||
| Net income |
$ |
7,932 |
$ |
11,777 |
|||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
|||||||||||
| Equity in earnings from unconsolidated subsidiary |
(252) |
(264) |
|||||||||
| Finance lease income |
(373) |
(1,776) |
|||||||||
| Gain on sale of aircraft |
— |
(5,586) |
|||||||||
| Depreciation |
65,125 |
57,501 |
|||||||||
| Aircraft impairment |
— |
4,122 |
|||||||||
| Amortization of debt discounts and issuance costs |
4,090 |
4,695 |
|||||||||
| Amortization of lease incentives |
3,646 |
5,090 |
|||||||||
| Amortization of lease discounts, premiums and other items |
183 |
206 |
|||||||||
| Amortization of GAAM acquisition fair value adjustments |
622 |
992 |
|||||||||
| Net loss on debt modification and extinguishment |
2,429 |
4,121 |
|||||||||
| Unrealized foreign exchange loss |
1,528 |
530 |
|||||||||
| Provision for deferred income taxes |
1,988 |
2,593 |
|||||||||
| Loss on derivative instruments |
229 |
183 |
|||||||||
| Security deposits and maintenance payment liability recognized into earnings |
— |
(3,450) |
|||||||||
| Security deposits and maintenance payment claims applied towards operating lease revenues |
— |
(805) |
|||||||||
| Cash receipts in settlement of maintenance rights |
— |
6,150 |
|||||||||
| Changes in operating assets and liabilities: |
|||||||||||
| Rent receivables |
(601) |
(597) |
|||||||||
| Other assets |
(287) |
(233) |
|||||||||
| Payable to related parties |
(6,197) |
(7,234) |
|||||||||
| Accounts payable, accrued and other liabilities |
248 |
(1,701) |
|||||||||
| Net cash flows provided by operating activities |
80,310 |
76,314 |
|||||||||
| Cash Flows from Investing Activities |
|||||||||||
| Rent received from finance lease |
980 |
2,460 |
|||||||||
| Purchase of flight equipment |
(279,044) |
(40,488) |
|||||||||
| Proceeds from sale of aircraft, net |
— |
209,382 |
|||||||||
| Payment for aircraft improvement |
(5,157) |
(2,255) |
|||||||||
| Payments for lessor maintenance obligations |
(6,782) |
(1,600) |
|||||||||
| Net cash flows provided by (used in) investing activities |
(290,003) |
167,499 |
|||||||||
| Six months ended |
Six months ended |
||||||||||
| Jun. 30, 2017 |
Jun. 30, 2016 |
||||||||||
| Cash Flows from Financing Activities |
|||||||||||
| Restricted cash and cash equivalents |
(25,575) |
80,172 |
|||||||||
| Security deposits received |
5,424 |
920 |
|||||||||
| Security deposits returned |
(1,080) |
(3,682) |
|||||||||
| Maintenance payment liability receipts |
35,455 |
36,343 |
|||||||||
| Maintenance payment liability disbursements |
(8,905) |
(2,278) |
|||||||||
| Net swap termination payments |
— |
(709) |
|||||||||
| Debt extinguishment costs |
(498) |
— |
|||||||||
| Debt issuance costs |
(64) |
(832) |
|||||||||
| Proceeds from secured borrowings |
147,179 |
84,249 |
|||||||||
| Repayment of secured borrowings |
(99,423) |
(304,938) |
|||||||||
| Shares repurchased |
(25,493) |
(26,944) |
|||||||||
| Net cash flows provided by (used in) financing activities |
27,020 |
(137,699) |
|||||||||
| Effect of exchange rate changes on cash and cash equivalents |
182 |
16 |
|||||||||
| Net increase (decrease) in cash |
(182,491) |
106,130 |
|||||||||
| Cash and cash equivalents at beginning of period |
517,964 |
275,998 |
|||||||||
| Cash and cash equivalents at end of period |
$ |
335,473 |
$ |
382,128 |
|||||||
| Supplemental Disclosure: |
|||||||||||
| Cash paid during the period for: |
|||||||||||
| Interest |
$ |
58,242 |
$ |
55,047 |
|||||||
| Taxes |
1,912 |
336 |
|||||||||
| Noncash investing Activities: |
|||||||||||
| Other liabilities applied to maintenance payment liability, security deposits, and rent receivables |
690 |
960 |
|||||||||
| Noncash activities: |
|||||||||||
| Aircraft improvement |
192 |
206 |
|||||||||
| Noncash activities in connection with purchase of aircraft |
10,546 |
2,687 |
|||||||||
| Noncash activities in connection with sale of aircraft |
— |
35,628 |
|||||||||
| 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 |
$ 2,880 |
$ 4,677 |
$ 7,932 |
$ 11,777 |
|
| Adjustments: |
|||||
| Aircraft impairment |
— |
4,122 |
— |
4,122 |
|
| Amortization of debt discounts and issue costs |
1,971 |
2,335 |
4,090 |
4,695 |
|
| Amortization of lease premiums, discounts and other |
100 |
93 |
183 |
206 |
|
| Amortization of fair value adjustments recorded in purchase accounting |
147 |
320 |
622 |
992 |
|
| Net loss on debt modification and extinguishment |
1,885 |
612 |
2,429 |
5,139 |
|
| Professional fees related to restatement |
— |
851 |
— |
1,101 |
|
| Transaction fees and expenses |
64 |
— |
1,669 |
— |
|
| Unrealized foreign exchange (gain) loss |
1,309 |
(471) |
1,528 |
530 |
|
| Deferred income taxes |
930 |
2,499 |
1,988 |
2,593 |
|
| (Gain) loss on ineffective, dedesignated and terminated derivatives |
424 |
(22) |
373 |
264 |
|
| Adjusted Net Income |
$ 9,710 |
$ 15,016 |
$ 20,814 |
$ 31,419 |
|
| Average Shareholders' Equity |
$ 587,283 |
$ 632,627 |
$ 589,267 |
$ 644,781 |
|
| Adjusted Return on Equity |
6.6% |
9.5% |
7.1% |
9.7% |
|
| Weighted average diluted shares outstanding |
31,388,034 |
33,580,886 |
31,838,737 |
33,934,334 |
|
| Adjusted Net Income per diluted share |
$ 0.31 |
$ 0.45 |
$ 0.65 |
$ 0.93 |
|
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) net losses from debt modification and extinguishment; (v) non-recurring expenses; (vi) unrealized foreign exchange gains and losses; (vii) deferred income taxes; and (viii) the ineffective portion and gains and losses associated with cash flow 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 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, 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, 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 a substitute for net income or other financial measures determined in accordance with Accounting Principles Generally Accepted in the United States. FLY's definitions may be different than those used by other companies.
SOURCE Fly Leasing Limited
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