DUBLIN, Nov. 8, 2019 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the third quarter of 2019.

Highlights

  • Net income of $51.7 million, $1.67 per share
  • Adjusted Net Income of $59.8 million, $1.93 per share
  • Return on equity of 26.6%, Adjusted Return on Equity of 30.8%
  • Sold eight aircraft for a gain of $38.9 million, a 17% premium to book value
  • Purchased two aircraft for $53.7 million
  • $25.85 book value per share at quarter end, a 20% increase since December 31, 2018
  • Net debt to equity ratio of 2.6x

"FLY continued to produce excellent results in the third quarter, with Adjusted Net Income of nearly $60 million, or $1.93 per share," said Colm Barrington, FLY's Chief Executive Officer. "This was our sixth straight quarter of double-digit ROE, with Adjusted Return on Equity of over 30%. In the nine months ended September 30, FLY produced Adjusted Net Income of $168.9 million, or $5.28 per share. Looking ahead, we expect another strong result in the fourth quarter."

"The aircraft sales in the quarter were completed at a 17% premium to book value, again demonstrating the value embedded in FLY's fleet," said Barrington. "Our strong results are also adding significantly to shareholders' equity, which is now nearly $26 per share, an increase of 20% from the beginning of the year."

"Our deleveraging following last year's major fleet acquisition has continued and at quarter end our net debt to equity ratio was 2.6x," added Barrington. "FLY has plentiful financial capacity to acquire the 21 A320neo family aircraft that we contracted in a purchase and leaseback transaction last year, the first of which is scheduled to deliver later this year. We also expect to acquire six more aircraft in the fourth quarter."

Financial Results

FLY is reporting net income of $51.7 million, or $1.67 per share, for the third quarter of 2019. This compares to net income of $20.7 million, or $0.68 per share, for the same period in 2018.

Net income for the nine months ended September 30, 2019 was $150.7 million, or $4.72 per share, compared to net income of $54.7 million, or $1.90 per share, for the nine months ended September 30, 2018.

Adjusted Net Income

Adjusted Net Income was $59.8 million for the third quarter of 2019, compared to $22.8 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.93 in the third quarter of 2019, compared to $0.75 for the third quarter of 2018.

For the nine months ended September 30, 2019, Adjusted Net Income was $168.9 million, or $5.28 per share, compared to $60.4 million, or $2.10 per share, for the same period last year.

A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.

Share Repurchases

During the three months ended September 30, 2019, FLY repurchased 0.3 million shares in the open market at an average price of $16.83 per share, for a total cost of $5.8 million. During the nine months ended September 30, 2019, FLY repurchased 2.0 million shares at an average price of $16.29 per share, for a total cost of $32.8 million. As of September 30, 2019, FLY had 30.9 million shares outstanding and had $50.0 million remaining under its share repurchase authorization.

Financial Position

At September 30, 2019, FLY's total assets were $3.9 billion, including investment in flight equipment totaling $3.2 billion. Total cash at September 30, 2019 was $521.6 million, of which $432.7 million was unrestricted. The book value per share at September 30, 2019 was $25.85, a 20% increase since December 31, 2018. At September 30, 2019, FLY's net debt to equity ratio was 2.6x, reduced from 4.0x at December 31, 2018.

Aircraft Portfolio

At September 30, 2019, FLY had 92 aircraft in its portfolio, six of which were classified as flight equipment held for sale. FLY's aircraft and engines are on lease to 43 airlines in 24 countries. The table below does not include the seven engines that were in FLY's portfolio at September 30, 2019.

Portfolio at

Sep. 30, 2019

Dec. 31, 2018


Number


% of Net
Book Value

Number

% of Net
Book Value

Airbus A320 Family

39

31%

55

38%

Airbus A330

3

6%

3

5%

Airbus A340

2

1%

2

1%

Boeing 737NG

39

35%

42

32%

Boeing 737 MAX

2

3%

2

3%

Boeing 757-SF

1

<1%

3

1%

Boeing 777-LRF

2

10%

2

8%

Boeing 787

4

14%

4

12%

      Total(1)

92

100%

113

100%



(1)

Includes six aircraft and 12 aircraft classified as held for sale at September 30, 2019 and December 31, 2018, respectively.

At September 30, 2019, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.7 years. The average remaining lease term was 5.0 years, also weighted by net book value. At September 30, 2019, FLY's portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $352 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 Friday, November 8, 2019. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 7897326. A live webcast with slide presentation will be available on the Events and 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.

Non-GAAP Financial Measures

FLY provides all financial information in accordance with Generally Accepted Accounting Principles in the United States (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release, and on our conference call, certain non-GAAP financial measures, including Adjusted Net Income and Adjusted Return on Equity.  In calculating these non-GAAP financial measures, we have excluded certain amounts, as detailed in the reconciliation below.

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. 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, 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
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Sep. 30,

Nine months ended Sep. 30,


2019
(Unaudited)

2018
(Unaudited)

2019
(Unaudited)

2018 
(Unaudited)

Revenues





Operating lease rental revenue

$         96,084

$         98,863

$      302,520

$      277,191

End of lease income

3,072

30,387

16,069

Amortization of lease incentives

(1,402)

(2,480)

(4,353)

(7,124)

Amortization of lease discounts and other

24

(108)

27

(389)

Operating lease revenue

94,706

99,347

328,581

285,747

Finance lease revenue

153

167

469

512

Equity earnings (loss) from unconsolidated subsidiary

2,617

136

2,727

(110)

Gain on sale of aircraft

38,934

2,579

82,632

5,524

Interest and other income

2,624

2,337

6,361

4,321

Total revenues

139,034

104,566

420,770

295,994

Expenses





Depreciation

33,881

36,569

108,769

104,197

Interest expense

33,580

37,472

107,198

104,039

Selling, general and administrative

8,013

7,719

26,173

22,698

Loss (gain) on derivatives

2,537

(2,095)

2,809

(2,615)

Loss on extinguishment of debt

1,620

560

5,330

1,458

Maintenance and other costs

623

323

2,846

2,037

Total expenses

80,254

80,548

253,125

231,814

Net income before provision for income taxes

58,780

24,018

167,645

64,180

Provision for income taxes

7,076

3,278

16,926

9,466

Net income

$         51,704

$         20,740

$      150,719

$        54,714

Weighted average number of shares





-  Basic

30,873,297

30,302,193

31,846,836

28,764,793

-  Diluted

30,987,394

30,381,248

31,954,204

28,818,464

Earnings per share





-  Basic

$             1.67

$             0.68

$             4.73

$             1.90

-  Diluted

$             1.67

$             0.68

$             4.72

$             1.90

 

Fly Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA)



Sep. 30,
 2019
(
Unaudited)

Dec. 31,
2018
(
Audited)

Assets



Cash and cash equivalents

$

432,747

$

180,211

Restricted cash and cash equivalents

88,857

100,869

Rent receivables

15,625

9,307

Investment in finance lease, net

11,941

12,822

Flight equipment held for sale, net

152,794

259,644

Flight equipment held for operating lease, net

2,752,831

3,228,018

Maintenance rights

256,404

298,207

Deferred tax asset, net

17,552

6,505

Fair value of derivative assets

6,656

5,929

Other assets, net

134,207

124,960

Total assets

$

3,869,614

$

4,226,472

Liabilities



Accounts payable and accrued liabilities

$

35,202

$

23,146

Rentals received in advance

15,434

21,322

Payable to related parties

7,038

4,462

Security deposits

46,324

60,097

Maintenance payment liability, net

252,099

292,586

Unsecured borrowings, net

618,971

617,664

Secured borrowings, net

1,915,435

2,379,869

Deferred tax liability, net

59,256

36,256

Fair value of derivative liabilities

37,618

8,558

Other liabilities

83,465

80,402

Total liabilities

3,070,842

3,524,362

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 30,898,410 and 32,650,019 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

31

33

Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding

Additional paid-in capital

516,255

549,123

Retained earnings

305,234

154,347

Accumulated other comprehensive loss, net

(22,748)

(1,393)

Total shareholders' equity

798,772

702,110

Total liabilities and shareholders' equity

$

3,869,614

$

4,226,472

 

Fly Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)



Nine months ended Sep. 30,


2019
(
Unaudited)

2018
(
Unaudited)

Cash Flows from Operating Activities



Net income

$           150,719

$            54,714

Adjustments to reconcile net income to net cash flows provided by
operating activities:



Finance lease revenue

(469)

(512)

Equity in (earnings) loss from unconsolidated subsidiary

(2,727)

110

Gain on sale of aircraft

(82,632)

(5,524)

Depreciation

108,769

104,197

Amortization of debt discounts and debt issuance costs

7,786

6,399

Amortization of other comprehensive income into interest expense

3,026

Amortization of lease incentives and other items

4,843

8,374

Loss on extinguishment of debt

5,330

1,458

Unrealized foreign exchange gain

(449)

(481)

Provision for deferred income taxes

15,963

9,637

Loss (gain) on derivative instruments

3,312

(4,847)

Security deposits and maintenance payment liability recognized into earnings

(26,145)

(11,846)

Distributions from unconsolidated subsidiary

2,727

2,075

Cash receipts from maintenance rights

1,741

3,013

Changes in operating assets and liabilities:



Rent receivables

(10,995)

(5,665)

Other assets

(2,553)

(3,835)

Payable to related parties

2,576

(11,159)

Accounts payable, accrued liabilities and other liabilities

12,468

20,161

Net cash flows provided by operating activities

190,264

169,295

Cash Flows from Investing Activities



Distributions from unconsolidated subsidiary

2,639

1,874

Rent received from finance lease

1,350

1,350

Net payments for derivative settlements

(512)

Investment income from equity certificates

934

Purchase of equity certificates

(7,425)

Purchase of flight equipment

(114,826)

(617,370)

Deposit on aircraft purchases

(299,945)

Proceeds from sale of aircraft, net

651,488

113,829

Capitalized interest on Portfolio B orderbook

(3,671)

Payments for aircraft improvement

(3,059)

(170)

Payments for lessor maintenance obligations

(1,843)

(8,229)

Net cash flows provided by (used in) investing activities

525,075

(808,661)




Nine months ended Sep. 30,


2019
(
Unaudited)

2018
(
Unaudited)

Cash Flows from Financing Activities



Security deposits received

1,169

10,907

Security deposits returned

(1,546)

(6,224)

Maintenance payment liability receipts

48,631

59,611

Maintenance payment liability disbursements

(14,975)

(8,902)

Net swap termination payments

1,136

Debt extinguishment costs

(194)

436

Debt issuance costs

(342)

(2,216)

Proceeds from secured borrowings

705,201

Repayment of secured borrowings

(474,659)

(328,595)

Net proceeds from shares issued

19,394

Shares repurchased

(32,844)

Net cash flows (used in) provided by financing activities

(474,760)

450,748

Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents

(55)

(61)

Net increase (decrease) in unrestricted and restricted cash and cash equivalents

240,524

(188,679)

Unrestricted and restricted cash and cash equivalents at beginning of period

281,080

456,815

Unrestricted and restricted cash and cash equivalents at end of period

$             521,604

$       268,136




Reconciliation to Consolidated Balance Sheets:



Cash and cash equivalents

$             432,747

$       180,078

Restricted cash and cash equivalents

88,857

88,058

Unrestricted and restricted cash and cash equivalents

$             521,604

$       268,136









 

Fly Leasing Limited
Reconciliation of Non-GAAP Measures
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Sep. 30,

Nine months ended Sep. 30,


2019
(Unaudited)

2018
(Unaudited)

2019
(Unaudited)

2018
(Unaudited)

Net income

$       51,704

$       20,740

$     150,719

$       54,714

Adjustments:





Unrealized foreign exchange gain

(345)

(25)

(449)

(481)

Deferred income taxes

5,972

3,310

15,963

9,637

Fair value changes on undesignated derivatives

2,475

(1,206)

2,618

(3,446)

Adjusted Net Income

$       59,806

$       22,819

$     168,851

$       60,424

Average Shareholders' Equity

$     776,218

$     635,193

748,112

592,402

Adjusted Return on Equity

30.8%

14.4%

30.1%

13.6%






Weighted average diluted shares outstanding

30,987,394

30,381,248

31,954,204

28,818,464

Adjusted Net Income per diluted share

$           1.93

$            0.75

$            5.28

$           2.10

FLY defines Adjusted Net Income as net income plus or minus (i) unrealized foreign exchange gains and losses; (ii) deferred income taxes; (iii) the fair value changes associated with interest rate derivative contracts that are not accounted for as cash flow hedges; and (iv) non-recurring expenses. The adjustments included within Adjusted Net Income are primarily non-cash or non-recurring items that we consider unrelated to the ongoing performance of our operations. Adjusted Return on Equity is calculated by dividing Adjusted Net Income by average shareholders' equity for each period 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 or non-recurring items 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 substitutes for, net income or other financial measures determined in accordance with GAAP. FLY's definitions may be different than those used by other companies.

 

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SOURCE Fly Leasing Limited


Source: Fly Leasing Limited