DUBLIN, Nov. 9, 2017 /PRNewswire/ -- Fly Leasing Limited
(NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today
announced its financial results for the third quarter of 2017.
Third Quarter 2017 Highlights
- Net loss of $12.5 million,
$0.43 per share
- Adjusted Net Income of $14.9
million, $0.51 per share
- Acquired three aircraft for $114
million
- Repurchased 1.5 million shares
- Priced $300 million of unsecured
5.25% senior notes due 2024
"We were active on several fronts this quarter as we acquired
three aircraft, including another new 737 MAX 8, repurchased a
further 1.5 million shares and refinanced our unsecured notes that
were due 2020," said Colm
Barrington, CEO of FLY. "We have acquired eight aircraft in
the first nine months of 2017 for a total of $403 million, growing the fleet to 84 aircraft.
Our growth capacity remains strong with the ability to acquire over
$2 billion worth of new aircraft
without the need to raise additional funds."
"FLY has repurchased a total of 3.6 million shares so far this
year, and we ended the quarter with a net book value per share of
$18.95," added Barrington. "We see
great value in our shares and will continue to repurchase stock
under our current buyback program."
"We also remain focused on driving down our cost of debt," said
Barrington. "The refinancing of our unsecured notes will result in
substantial savings, reducing our borrowing costs by nearly
$10 million per year starting in
2018. Further, following quarter end, we repriced our term loan,
which will result in an additional $1
million of annual interest cost savings."
Financial Results
FLY is reporting a net loss of $12.5
million, or $0.43 per share,
for the third quarter of 2017, primarily driven by a $22.0 million non-cash impairment charge. This
compares to net income of $22.9
million, or $0.70 per share,
for the same period in 2016.
Net loss for the nine months ended September 30, 2017 was $4.6 million, or $0.15 per share. For the same nine-month period
in 2016, net income was $34.7
million, or $1.03 per
share.
Adjusted Net Income
Adjusted Net Income was $14.9
million for the third quarter of 2017, compared to
$17.3 million for the same period in
the previous year. On a per share basis, Adjusted Net Income was
$0.51 in the third quarter of 2017,
compared to $0.53 for the third
quarter of 2016. For the nine months ended September 30, 2017, Adjusted Net Income was
$35.7 million, or $1.15 per share, compared to $48.7 million, or $1.45 per share, for the same nine-month period
in 2016.
A reconciliation of Adjusted Net Income to net income (loss)
determined in accordance with GAAP is shown below.
Aircraft Impairment
As a result of a lessee's insolvency filing during the third
quarter, FLY recorded an impairment charge of $22.0 million on a 2001 vintage Airbus A330-200
to write the aircraft down to its estimated current market
value.
Share Repurchases
During the nine months ended September
30, 2017, FLY repurchased 3.6 million shares for
$47.3 million at an average price of
$13.29 per share. At September 30, 2017, $19.3
million remained under the share repurchase authorization.
Subsequent to quarter end, FLY repurchased 159,462 shares at an
average price of $13.90 per share
through November 3, 2017. As of
November 3, 2017, $17.1 million remained under the share repurchase
authorization.
Senior Unsecured Notes Due 2024
On October 16, 2017, FLY completed
its offering of $300 million of
unsecured 5.25% Senior Notes due 2024. The net proceeds were
approximately $294.2 million, which
FLY has used, together with cash on hand, to discharge its
outstanding 6.75% Senior Notes due 2020.
Financial Position
At September 30, 2017, FLY's total
assets were $3.5 billion, including
investment in flight equipment totaling $3.1
billion. Total cash at September 30,
2017 was $394.2 million, of
which $272.1 was unrestricted. The
book value per share at September 30,
2017 was $18.95.
Aircraft Portfolio
At September 30, 2017, FLY's 84
aircraft were on lease to 45 airlines in 29 countries. The table
below does not include the two B767 aircraft owned by a joint
venture in which FLY has a 57% interest.
Portfolio
at
|
Sep.
30,
2017
|
Dec.
31,
2016
|
Airbus
A319
|
9
|
9
|
Airbus
A320(1)
|
13
|
12
|
Airbus
A321
|
3
|
3
|
Airbus
A330
|
3
|
3
|
Airbus
A340
|
2
|
2
|
Boeing 737
|
44
|
38
|
Boeing 757
|
3
|
3
|
Boeing 777
|
2
|
2
|
Boeing 787
|
5
|
4
|
Total
|
84
|
76
|
|
(1) One
aircraft was held for sale at September 30, 2017.
|
At September 30, 2017, the average
age of the portfolio, weighted by net book value of each aircraft,
was 6.2 years. The average remaining lease term was 6.5 years, also
weighted by net book value. At September 30,
2017, the 84 aircraft were generating annualized rental
revenue of approximately $366
million. FLY's lease utilization factor was 100% for the
third 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, November 9,
2017. Participants should call +1-253-237-1145
(International) or 800-535-7056 (North
America) and enter confirmation code 96666152. 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
ir@flyleasing.com
Fly Leasing
Limited
|
Consolidated
Statements of Income (Loss)
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
Sep. 30, 2017
(Unaudited)
|
Sep. 30, 2016
(Unaudited)
|
|
Sep. 30,
2017
(Unaudited)
|
Sep. 30,
2016
(Unaudited)
|
Revenues
|
|
|
|
|
|
Operating lease
rental revenue
|
$
87,616
|
$
82,714
|
|
$
248,118
|
$
231,221
|
End of lease
income
|
—
|
66
|
|
1,239
|
8,148
|
Amortization of lease
incentives
|
(1,956)
|
(2,000)
|
|
(5,602)
|
(7,090)
|
Amortization
of lease premiums, discounts and other
|
(106)
|
(103)
|
|
(289)
|
(310)
|
Operating lease
revenue
|
85,554
|
80,677
|
|
243,466
|
231,969
|
Finance lease
revenue
|
181
|
226
|
|
554
|
2,002
|
Equity earnings from
unconsolidated subsidiary
|
125
|
140
|
|
377
|
404
|
Gain on sale of
aircraft
|
—
|
4,103
|
|
—
|
9,689
|
Interest and other
income
|
359
|
151
|
|
920
|
375
|
Total
revenues
|
86,219
|
85,297
|
|
245,317
|
244,439
|
Expenses
|
|
|
|
|
|
Depreciation
|
34,145
|
31,389
|
|
99,270
|
88,890
|
Aircraft
impairment
|
22,000
|
—
|
|
22,000
|
4,122
|
Interest
expense
|
32,677
|
31,079
|
|
96,400
|
91,387
|
Selling, general and
administrative
|
6,956
|
8,369
|
|
23,226
|
24,022
|
Ineffective,
dedesignated and terminated derivatives
|
(19)
|
79
|
|
354
|
343
|
Net loss on
modification and extinguishment of debt
|
82
|
7
|
|
2,511
|
5,146
|
Maintenance and other
costs
|
406
|
274
|
|
1,636
|
1,928
|
Total
expenses
|
96,247
|
71,197
|
|
245,397
|
215,838
|
Net income
(loss) before provision (benefit) for
income taxes
|
(10,028)
|
14,100
|
|
(80)
|
28,601
|
Provision (benefit)
for income taxes
|
2,476
|
(8,842)
|
|
4,492
|
(6,118)
|
Net income
(loss)
|
$
(12,504)
|
$
22,942
|
|
$
(4,572)
|
$
34,719
|
Weighted average
number of shares
|
|
|
|
|
|
-
Basic
|
29,299,976
|
32,824,486
|
|
30,958,898
|
33,561,684
|
-
Diluted
|
29,299,976
|
32,824,486
|
|
30,958,898
|
33,561,684
|
Earnings
(loss) per share
|
|
|
|
|
|
- Basic and
Diluted
|
$
(0.43)
|
$
0.70
|
|
$
(0.15)
|
$
1.03
|
Fly Leasing
Limited
|
Consolidated
Balance Sheets
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Sep.
30,
2017
(Unaudited)
|
Dec.
31,
2016
(Audited)
|
Assets
|
|
|
Cash and cash
equivalents
|
$
272,080
|
$
517,964
|
Restricted cash and
cash equivalents
|
122,134
|
94,123
|
Rent
receivables
|
634
|
419
|
Investment in
unconsolidated subsidiary
|
8,077
|
7,700
|
Investment in finance
lease, net
|
14,219
|
15,095
|
Flight equipment held
for sale, net
|
22,499
|
—
|
Flight equipment held
for operating lease, net
|
2,949,628
|
2,693,821
|
Maintenance right
asset, net
|
116,863
|
101,969
|
Deferred tax
assets
|
7,149
|
7,445
|
Fair value of
derivative assets
|
1,879
|
1,905
|
Other assets,
net
|
8,374
|
6,568
|
Total
assets
|
$
3,523,536
|
$
3,447,009
|
Liabilities
|
|
|
Accounts payable and
accrued liabilities
|
$
26,706
|
$
13,786
|
Rentals received in
advance
|
14,815
|
13,123
|
Payable to related
parties
|
2,028
|
5,042
|
Security
deposits
|
49,249
|
42,495
|
Maintenance payment
liability
|
240,593
|
182,571
|
Unsecured borrowings,
net
|
692,877
|
691,390
|
Secured borrowings,
net
|
1,885,963
|
1,831,985
|
Deferred tax
liability, net
|
24,376
|
19,847
|
Fair value of
derivative liabilities
|
10,291
|
13,281
|
Other
liabilities
|
32,938
|
40,254
|
Total
liabilities
|
2,979,836
|
2,853,774
|
Shareholders'
equity
|
|
|
Common shares, $0.001
par value, 499,999,900 shares authorized; 28,697,805 and 32,256,440
shares issued and outstanding at September 30, 2017 and December
31, 2016, respectively
|
29
|
32
|
Manager shares, $0.001
par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
Additional paid in
capital
|
489,447
|
536,922
|
Retained
earnings
|
61,454
|
66,026
|
Accumulated other
comprehensive loss, net
|
(7,230)
|
(9,745)
|
Total
shareholders' equity
|
543,700
|
593,235
|
Total liabilities
and shareholders' equity
|
$
3,523,536
|
$
3,447,009
|
Fly Leasing
Limited
|
Consolidated
Statements of Cash Flows
|
(DOLLARS IN
THOUSANDS)
|
|
|
Nine months
ended
|
|
Sep.
30, 2017
(Unaudited)
|
Sep. 30,
2016
(Unaudited)
|
Cash Flows from
Operating Activities
|
|
|
Net income
(loss)
|
$
(4,572)
|
$
34,719
|
Adjustments to
reconcile net income (loss) to net cash flows provided by operating
activities:
|
|
|
Equity in earnings
from unconsolidated subsidiary
|
(377)
|
(404)
|
Finance lease
revenue
|
(554)
|
(2,002)
|
Gain on sale of
aircraft
|
—
|
(9,689)
|
Depreciation
|
99,270
|
88,890
|
Aircraft
impairment
|
22,000
|
4,122
|
Amortization of debt
discounts and issuance costs
|
6,053
|
7,205
|
Amortization of lease
incentives
|
5,602
|
7,090
|
Amortization of lease
discounts, premiums and other items
|
289
|
300
|
Amortization of GAAM
acquisition fair value adjustments
|
928
|
1,305
|
Net loss on debt
modification and extinguishment
|
2,511
|
4,096
|
Unrealized foreign
exchange loss
|
2,004
|
750
|
Provision for deferred
income taxes
|
4,457
|
(6,304)
|
Loss on derivative
instruments
|
105
|
349
|
Security deposits and
maintenance payment liability recognized into earnings
|
—
|
(3,450)
|
Security deposits and
maintenance payment claims applied towards operating lease
revenues
|
—
|
(774)
|
Cash receipts in
settlement of maintenance rights
|
—
|
6,150
|
Changes in operating
assets and liabilities:
|
|
|
Rent
receivables
|
(2,441)
|
(731)
|
Other
assets
|
(1,925)
|
(1,395)
|
Payable to related
parties
|
(9,061)
|
(9,765)
|
Accounts payable,
accrued and other liabilities
|
13,757
|
5,542
|
Net cash flows
provided by operating activities
|
138,046
|
126,004
|
Cash Flows from
Investing Activities
|
|
|
Rent received from
finance lease
|
1,430
|
2,777
|
Purchase of flight
equipment
|
(383,426)
|
(505,824)
|
Proceeds from sale of
aircraft, net
|
—
|
273,877
|
Payments for aircraft
improvement
|
(5,157)
|
(2,266)
|
Payments for lessor
maintenance obligations
|
(12,123)
|
(1,942)
|
Net cash flows
used in investing activities
|
(399,276)
|
(233,378)
|
|
|
|
Nine months
ended
|
|
Sep. 30,
2017 (Unaudited)
|
Sep. 30,
2016 (Unaudited)
|
Cash Flows from
Financing Activities
|
|
|
Restricted cash and
cash equivalents
|
(27,828)
|
113,025
|
Security deposits
received
|
7,196
|
3,920
|
Security deposits
returned
|
(3,554)
|
(6,640)
|
Maintenance payment
liability receipts
|
56,439
|
54,654
|
Maintenance payment
liability disbursements
|
(13,734)
|
(6,068)
|
Net swap termination
payments
|
—
|
(709)
|
Debt extinguishment
costs
|
(602)
|
—
|
Debt issuance
costs
|
(307)
|
(1,169)
|
Proceeds from secured
borrowings
|
184,685
|
408,282
|
Repayment of secured
borrowings
|
(140,194)
|
(371,579)
|
Shares
repurchased
|
(47,010)
|
(37,899)
|
Net cash flows
provided by financing activities
|
15,091
|
155,817
|
Effect of exchange
rate changes on cash and cash equivalents
|
255
|
62
|
Net increase
(decrease) in cash
|
(245,884)
|
48,505
|
Cash and cash
equivalents at beginning of period
|
517,964
|
275,998
|
Cash and cash
equivalents at end of period
|
$
272,080
|
$
324,503
|
Fly Leasing
Limited
|
Reconciliation of
Non-GAAP Measures
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
Sep. 30, 2017
(Unaudited)
|
Sep. 30, 2016
(Unaudited)
|
|
Sep. 30,
2017
(Unaudited)
|
Sep. 30,
2016
(Unaudited)
|
Net income
(loss)
|
$
(12,504)
|
$
22,942
|
|
$
(4,572)
|
$
34,719
|
Adjustments:
|
|
|
|
|
|
Aircraft
impairment
|
22,000
|
—
|
|
22,000
|
4,122
|
Amortization of debt
discounts and issue costs
|
1,963
|
2,510
|
|
6,053
|
7,205
|
Amortization of lease
premiums, discounts and other
|
106
|
94
|
|
289
|
300
|
Amortization of fair
value adjustments recorded in purchase accounting
|
306
|
313
|
|
928
|
1,305
|
Net loss on debt
modification and extinguishment
|
82
|
7
|
|
2,511
|
5,146
|
Professional fees
related to restatement
|
—
|
33
|
|
—
|
1,134
|
Transaction fees and
expenses
|
—
|
—
|
|
1,669
|
—
|
Unrealized foreign
exchange loss
|
476
|
220
|
|
2,004
|
750
|
Deferred income
taxes
|
2,469
|
(8,897)
|
|
4,457
|
(6,304)
|
(Gain) loss on
ineffective, dedesignated and terminated derivatives
|
(19)
|
79
|
|
354
|
343
|
Adjusted Net
Income
|
$
14,879
|
$
17,301
|
|
$
35,693
|
$
48,720
|
Average
Shareholders' Equity
|
$
559,679
|
$
640,618
|
|
$
577,875
|
$
642,714
|
Adjusted Return on
Equity
|
10.6%
|
10.8%
|
|
8.2%
|
10.1%
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding(1)
|
29,360,178
|
32,824,486
|
|
31,003,598
|
33,561,684
|
Adjusted Net
Income per diluted share
|
$
0.51
|
$
0.53
|
|
$
1.15
|
$
1.45
|
|
|
(1)
|
The weighted average
diluted shares outstanding for the three and nine months ended
September 30, 2017 includes dilutive common share equivalents of
60,202 and 44,700, respectively.
|
FLY defines Adjusted Net Income as net income (loss) 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 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.
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SOURCE Fly Leasing Limited