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


Source: Fly Leasing Limited