DUBLIN, March 8, 2018 /PRNewswire/ -- Fly Leasing Limited
(NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today
announced its financial results for the fourth quarter and full
year of 2017.
Fourth Quarter 2017 Highlights
- Net income of $7.2 million,
$0.25 per share
- Adjusted Net Income of $30.9
million, $1.09 per share
- Refinanced and extended $375.0
million of unsecured notes
- Completed a new $332 million
secured debt facility
- Repurchased 715,934 shares
2017 Full Year Highlights
- Net income of $2.6 million,
$0.09 per share
- Adjusted Net Income of $66.6
million, $2.19 per share
- Acquired ten aircraft for $456.0
million
- Repurchased 4.3 million shares
"We continue to take initiatives at FLY that are producing solid
core earnings and enhancing shareholder value," said Colm Barrington, CEO of FLY. "In 2017 we
increased our fleet size, fleet value and operating lease revenue,
each by more than 10%. The quality and youth of our fleet now rank
us an industry leader. We repurchased more than 13% of our shares
at a significant discount to book value, raised a new $332 million secured facility at a very
attractive margin, and refinanced and extended $375 million of unsecured notes at a
significantly reduced interest rate. This was a good investment in
our future earnings despite the debt extinguishment charge in the
fourth quarter."
"Last week we announced an exciting deal with AirAsia in which
FLY will acquire a total of 55 aircraft, seven engines, and options
to acquire 20 new A320neo family aircraft," added Barrington. "This
landmark acquisition grows FLY's fleet with the most attractive and
newest generation of narrowbody aircraft and will drive high levels
of stable, long-term profitability and cash flows for the benefit
of our stakeholders."
Financial Results
FLY is reporting net income of $7.2
million, or $0.25 per share,
for the fourth quarter of 2017. This compares to a net loss of
$63.8 million, or $1.98 per share, for the same period in 2016. The
financial results for the fourth quarter of 2017 include
$20.8 million of debt extinguishment
costs, primarily relating to the discharge of FLY's 6.75% Senior
Notes due 2020 ("2020 Notes").
Net income for the year ended December
31, 2017 was $2.6 million, or
$0.09 per share, compared to a net
loss of $29.1 million, or
$0.88 per share for the year ended
December 31, 2016.
Adjusted Net Income
Adjusted Net Income was $30.9
million for the fourth quarter of 2017, compared to
$30.6 million for the same period in
the previous year. On a per share basis, Adjusted Net Income was
$1.09 in the fourth quarter of 2017,
compared to $0.95 for the fourth
quarter of 2016. For the year ended December
31, 2017, Adjusted Net Income was $66.6 million, or $2.19 per share, compared to $79.3 million, or $2.38 per share, for the year ended December 31, 2016.
A reconciliation of Adjusted Net Income to net income (loss)
determined in accordance with GAAP is shown below.
Share Repurchases
During the fourth quarter, FLY repurchased 715,934 shares for
$9.8 million at an average price of
$13.65 per share. During the year
ended December 31, 2017, FLY
repurchased 4.3 million shares for $57.1
million at an average price of $13.35 per share. In November 2017, FLY's board of directors approved
a $50.0 million share repurchase
program expiring in December 2018, to
replace its program which expired in December 2017.
Financings
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 used, together with cash on hand, to discharge the $375 million of its outstanding 2020 Notes.
On December 8, 2017, FLY closed a
new $332 million secured debt
facility. The facility has an eight-year term and bears interest at
a rate of LIBOR plus 1.65%.
AirAsia Portfolio Acquisition
On February 28, 2018, FLY signed
definitive agreements with AirAsia Berhad ("AAB") for the
acquisition of 55 Airbus narrowbody aircraft, seven CFM engines and
options to purchase an additional 20 Airbus A320neo family
aircraft. Nearly all aircraft will be subject to leases to AAB and
its affiliates, other than the option aircraft. The transaction is
expected to close in the second and third quarters of 2018, subject
to approval by AAB shareholders, receipt of necessary regulatory
approvals and satisfaction of other customary closing
conditions.
Financial Position
At December 31, 2017, FLY's total
assets were $3.6 billion, including
investment in flight equipment totaling $3.1
billion. Total cash at December 31,
2017 was $456.8 million, of
which $329.1 million was
unrestricted. The book value per share at December 31, 2017 was $19.43.
Aircraft Portfolio
At December 31, 2017, FLY had 85
aircraft in its portfolio, with leases to 44 airlines in 28
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
|
Dec.
31, 2017
|
Dec.
31, 2016
|
Airbus
A319
|
9
|
9
|
Airbus
A320
|
12
|
12
|
Airbus
A321
|
3
|
3
|
Airbus
A330
|
3
|
3
|
Airbus
A340
|
2
|
2
|
Boeing 737
|
46
|
38
|
Boeing 757
|
3
|
3
|
Boeing 777
|
2
|
2
|
Boeing 787
|
5
|
4
|
Total
|
85
|
76
|
At December 31, 2017, the average
age of the portfolio, weighted by net book value of each aircraft,
was 6.4 years. The average remaining lease term was 6.3 years, also
weighted by net book value. At December 31,
2017, FLY's 83 aircraft on lease were generating annualized
rental revenue of approximately $359
million. Two aircraft were off-lease at year end, one of
which was subsequently delivered to a new lessee in January 2018, and the other aircraft is expected
to be delivered to a new lessee in the first quarter of 2018. FLY's
lease utilization factor was 98.3% for the fourth quarter of 2017
and 99.6% for the year.
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, March 8,
2018. Participants should call +1-253-237-1145
(International) or 800-535-7056 (North
America) and enter confirmation code 3572428. A live webcast
with slide presentation will be available on the Events &
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
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, operations and financial
performance, including the expected benefits of the AirAsia
portfolio transactions (the "Transactions"); whether and when the
Transactions will be consummated; the amount of cash and stock
consideration to be paid by FLY; the type, amount and terms of the
acquisition financing to be obtained by FLY; and, the amount of any
fees and expenses incurred in connection with the Transactions.
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,
including risks relating to the satisfaction of conditions to the
closing of the Transactions; risks relating to satisfaction of
conditions to the financing of the Transactions; risks relating to
FLY's ability to obtain additional required financing for the
Transactions on favorable terms, or at all; the risk that expected
benefits of the Transactions may not be fully realized or may take
longer to realize than expected; the risk that business disruption
resulting from the Transactions may be greater than expected; 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 (Loss)
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
Three months ended
Dec. 31,
|
|
Year
ended Dec. 31,
|
|
2017 (Unaudited)
|
2016 (Unaudited)
|
|
2017 (Audited)
|
2016 (Audited)
|
Revenues
|
|
|
|
|
|
Operating lease
rental revenue
|
$
89,019
|
$
82,755
|
|
$
337,137
|
$
313,976
|
End of lease
income
|
16,598
|
770
|
|
17,837
|
8,918
|
Amortization of lease
incentives
|
(2,066)
|
(1,808)
|
|
(7,668)
|
(8,898)
|
Amortization of lease
premiums, discounts and other
|
(123)
|
(104)
|
|
(412)
|
(414)
|
Operating lease
revenue
|
103,428
|
81,613
|
|
346,894
|
313,582
|
Finance lease
revenue
|
177
|
64
|
|
731
|
2,066
|
Equity earnings from
unconsolidated subsidiary
|
119
|
126
|
|
496
|
530
|
Gain on sale of
aircraft
|
3,926
|
17,506
|
|
3,926
|
27,195
|
Interest and other
income
|
284
|
1,291
|
|
1,204
|
1,666
|
Total
revenues
|
107,934
|
100,600
|
|
353,251
|
345,039
|
Expenses
|
|
|
|
|
|
Depreciation
|
33,957
|
31,562
|
|
133,227
|
120,452
|
Aircraft
impairment
|
—
|
92,000
|
|
22,000
|
96,122
|
Interest
expense
|
31,382
|
31,774
|
|
127,782
|
123,161
|
Selling, general and
administrative
|
7,445
|
6,055
|
|
30,671
|
30,077
|
Ineffective,
dedesignated and terminated derivatives
|
(546)
|
(252)
|
|
(192)
|
91
|
Loss on modification
and extinguishment of debt
|
20,798
|
4,100
|
|
23,309
|
9,246
|
Maintenance and other
costs
|
888
|
351
|
|
2,524
|
2,279
|
Total
expenses
|
93,924
|
165,590
|
|
339,321
|
381,428
|
Net income
(loss) before provision (benefit) for
income taxes
|
14,010
|
(64,990)
|
|
13,930
|
(36,389)
|
Provision (benefit)
for income taxes
|
6,840
|
(1,159)
|
|
11,332
|
(7,277)
|
Net income
(loss)
|
$
7,170
|
$
(63,831)
|
|
$
2,598
|
$
(29,112)
|
Weighted average
number of shares
|
|
|
|
|
|
-
Basic
|
28,373,978
|
32,277,965
|
|
30,307,357
|
33,239,001
|
-
Diluted
|
28,427,967
|
32,277,965
|
|
30,353,425
|
33,239,001
|
Earnings
(loss) per share
|
|
|
|
|
|
-
Basic
|
$
0.25
|
$
(1.98)
|
|
$
0.09
|
$
(0.88)
|
-
Diluted
|
$
0.25
|
$
(1.98)
|
|
$
0.09
|
$
(0.88)
|
|
|
|
Fly Leasing
Limited
|
Consolidated
Balance Sheets
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
Dec.
31,
2017
(Audited)
|
Dec.
31,
2016
(Audited)
|
Assets
|
|
|
Cash and cash
equivalents
|
$
329,105
|
$
517,964
|
Restricted cash and
cash equivalents
|
127,710
|
94,123
|
Rent
receivables
|
2,059
|
419
|
Investment in
unconsolidated subsidiary
|
8,196
|
7,700
|
Investment in finance
lease, net
|
13,946
|
15,095
|
Flight equipment held
for operating lease, net
|
2,961,744
|
2,693,821
|
Maintenance right
asset, net
|
131,299
|
101,969
|
Deferred tax asset,
net
|
9,943
|
7,445
|
Fair value of
derivative assets
|
2,643
|
1,905
|
Other assets,
net
|
8,970
|
6,568
|
Total
assets
|
$
3,595,615
|
$
3,447,009
|
Liabilities
|
|
|
Accounts payable and
accrued liabilities
|
$
18,305
|
$
13,786
|
Rentals received in
advance
|
14,968
|
13,123
|
Payable to related
parties
|
2,084
|
5,042
|
Security
deposits
|
49,689
|
42,495
|
Maintenance payment
liability
|
244,151
|
182,571
|
Unsecured borrowings,
net
|
615,922
|
691,390
|
Secured borrowings,
net
|
2,029,675
|
1,831,985
|
Deferred tax
liability, net
|
30,112
|
19,847
|
Fair value of
derivative liabilities
|
7,344
|
13,281
|
Other
liabilities
|
39,656
|
40,254
|
Total
liabilities
|
3,051,906
|
2,853,774
|
Shareholders'
equity
|
|
|
Common shares, $0.001
par value, 499,999,900 shares authorized; 27,983,352 and 32,256,440
shares issued and outstanding at December 31, 2017 and 2016,
respectively
|
28
|
32
|
Manager shares, $0.001
par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
Additional paid in
capital
|
479,637
|
536,922
|
Retained
earnings
|
68,624
|
66,026
|
Accumulated other
comprehensive loss, net
|
(4,580)
|
(9,745)
|
Total
shareholders' equity
|
543,709
|
593,235
|
Total liabilities
and shareholders' equity
|
$
3,595,615
|
$
3,447,009
|
|
|
|
Fly Leasing
Limited
|
Consolidated
Statements of Cash Flows
|
(DOLLARS IN
THOUSANDS)
|
|
Year ended Dec.
31,
|
|
2017 (Audited)
|
2016 (Audited)
|
Cash Flows from
Operating Activities
|
|
|
Net income
(loss)
|
$
2,598
|
$
(29,112)
|
Adjustments to
reconcile net income (loss) to net cash flows provided by operating
activities:
|
|
|
Equity in earnings
from unconsolidated subsidiary
|
(496)
|
(530)
|
Finance lease
revenue
|
(731)
|
(2,066)
|
Gain on sale of
aircraft
|
(3,926)
|
(27,195)
|
Depreciation
|
133,227
|
120,452
|
Aircraft
impairment
|
22,000
|
96,122
|
Amortization of debt
discounts and issuance costs
|
7,955
|
9,375
|
Amortization of lease
incentives
|
7,668
|
8,898
|
Amortization of lease
discounts, premiums and other items
|
412
|
388
|
Amortization of GAAM
acquisition fair value adjustments
|
1,223
|
1,621
|
Loss on modification
and extinguishment of debt
|
23,309
|
9,246
|
Unrealized foreign
exchange (gain) loss
|
2,305
|
(437)
|
Provision (benefit)
for deferred income taxes
|
5,178
|
(9,158)
|
(Gain) loss on
derivative instruments
|
(478)
|
76
|
Security deposits and
maintenance payment liability recognized into earnings
|
(16,268)
|
(3,450)
|
Security deposits and
maintenance payment claims applied towards operating lease
revenue
|
—
|
(684)
|
Cash receipts from
maintenance rights
|
—
|
9,513
|
Maintenance rights
recognized into earnings
|
465
|
—
|
Changes in operating
assets and liabilities:
|
|
|
Rent
receivables
|
(4,251)
|
(1,034)
|
Other
assets
|
(2,599)
|
(1,134)
|
Payable to related
parties
|
(10,126)
|
(17,163)
|
Accounts payable,
accrued and other liabilities
|
11,588
|
(10,964)
|
Net cash flows
provided by operating activities
|
179,053
|
152,764
|
Cash Flows from
Investing Activities
|
|
|
Rent received from
finance lease
|
1,880
|
2,970
|
Purchase of flight
equipment
|
(434,122)
|
(552,166)
|
Proceeds from sale of
aircraft, net
|
21,750
|
430,867
|
Payments for aircraft
improvement
|
(7,357)
|
(2,230)
|
Payments for lessor
maintenance obligations
|
(12,564)
|
(2,712)
|
Net cash flows
used in investing activities
|
(430,413)
|
(123,271)
|
|
|
|
Year ended Dec.
31,
|
|
2017
(Audited)
|
2016
(Audited)
|
Cash Flows from
Financing Activities
|
|
Security deposits
received
|
7,196
|
920
|
Security deposits
returned
|
(3,554)
|
(7,438)
|
Maintenance payment
liability receipts
|
75,765
|
71,514
|
Maintenance payment
liability disbursements
|
(14,303)
|
(10,951)
|
Net swap termination
payments
|
—
|
(709)
|
Debt modification and
extinguishment costs
|
(17,396)
|
(3,153)
|
Debt issuance
costs
|
(1,464)
|
(2,552)
|
Proceeds from
unsecured borrowings
|
295,150
|
—
|
Repayment of unsecured
borrowings
|
(375,000)
|
—
|
Proceeds from secured
borrowings
|
513,459
|
572,719
|
Repayment of secured
borrowings
|
(326,909)
|
(448,346)
|
Shares
repurchased
|
(57,286)
|
(40,257)
|
Net cash flows
provided by financing activities
|
95,658
|
131,747
|
Effect of exchange
rate changes on unrestricted and restricted cash and cash
equivalents
|
430
|
(84)
|
Net increase
(decrease) in unrestricted and restricted cash
and cash equivalents
|
(155,272)
|
161,156
|
Unrestricted and
restricted cash and cash equivalents at beginning of
period
|
612,087
|
450,931
|
Unrestricted
and restricted cash and cash equivalents at end of
period
|
$
456,815
|
$
612,087
|
|
|
|
|
|
|
|
Fly Leasing
Limited
|
Reconciliation of
Non-GAAP Measures
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
Three months ended
Dec. 31,
|
|
Year ended Dec.
31,
|
|
2017
(Unaudited)
|
2016
(Unaudited)
|
|
2017
(Unaudited)
|
2016
(Unaudited)
|
Net income
(loss)
|
$
7,170
|
$
(63,831)
|
|
$
2,598
|
$
(29,112)
|
Adjustments:
|
|
|
|
|
|
Aircraft
impairment
|
—
|
92,000
|
|
22,000
|
96,122
|
Amortization of debt
discounts and debt issuance costs
|
1,902
|
2,170
|
|
7,955
|
9,375
|
Amortization of lease
premiums, discounts and other
|
123
|
88
|
|
412
|
388
|
Amortization of fair
value adjustments recorded in purchase accounting
|
295
|
316
|
|
1,223
|
1,621
|
Loss on modification
and extinguishment of debt
|
20,798
|
4,100
|
|
23,309
|
9,246
|
Professional fees
related to restatement
|
—
|
—
|
|
—
|
1,134
|
Transaction fees and
expenses
|
146
|
—
|
|
1,815
|
—
|
Unrealized foreign
exchange (gain) loss
|
301
|
(1,187)
|
|
2,305
|
(437)
|
Deferred income
taxes
|
721
|
(2,854)
|
|
5,178
|
(9,158)
|
(Gain) loss on
ineffective, dedesignated and terminated derivatives
|
(546)
|
(252)
|
|
(192)
|
91
|
Adjusted Net
Income
|
$
30,910
|
$
30,550
|
|
$
66,603
|
$
79,270
|
Average
Shareholders' Equity
|
$
543,705
|
$
620,937
|
|
$
571,042
|
$
632,818
|
Adjusted Return on
Equity
|
22.7%
|
19.7%
|
|
11.7%
|
12.5%
|
|
|
|
|
|
Weighted average
diluted shares outstanding(1)
|
28,427,967
|
32,277,965
|
|
30,353,425
|
33,239,001
|
Adjusted Net
Income per diluted share
|
$
1.09
|
$
0.95
|
|
$
2.19
|
$
2.38
|
|
|
|
|
|
|
(1) The
weighted average diluted shares outstanding for the three months
and year ended December 31, 2017 includes dilutive common share
equivalents of 53,989 and 46,068, 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) 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