DUBLIN, Nov. 17, 2016 /PRNewswire/ -- FLY Leasing
Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing,
today announced its financial results for the third quarter of
2016.
Highlights
- Net Income of $22.9 million, or
$0.70 per share
- Adjusted Net Income of $17.3
million, or $0.53 per
share
- Acquired seven aircraft at a cost of $467 million
- Sold three older aircraft for a gain of $4.1 million, a 19% premium to net book
value
- Repurchased 894,011 shares at an average price of $11.34 per share
"FLY is continuing to execute its program to enhance shareholder
value," said Colm Barrington, FLY's
CEO. "We are selling older aircraft at gains to book value and
investing the proceeds in newer models, mainly in attractive sale
and leaseback transactions, as well as repurchasing our shares.
These initiatives are producing solid operating results, with net
income of 70 cents per share for the
quarter."
"In the quarter we sold three aircraft with an average age of 15
years, generating a gain of $4.1
million, a 19% premium to net book value," added Barrington.
"Meanwhile, we invested $467 million
in seven aircraft with an average age of about two-and-one-half
years. The impact of these and earlier transactions on our
portfolio metrics was significant, reducing our fleet age to 6.2
years and increasing our average lease term to 6.7 years. FLY
continues to have ample resources to fund its growth strategy with
more than $1 billion of unrestricted
cash, available debt capacity and unencumbered assets providing
more than $2 billion of purchasing
power."
"FLY continued to repurchase shares, acquiring nearly 900,000
shares in the quarter," said Barrington. "Since September 2015, we have repurchased 22% of our
shares at a significant discount to net book value, which helped
increase FLY's book value to nearly $20.00 per share."
"Our clients continue to perform strongly," added Barrington.
"2016 will be the most profitable year for the world's airlines due
to strong passenger growth, high load factors and low fuel prices.
This is good news for the aircraft leasing industry, as are recent
decisions by the manufacturers to reduce aircraft supply by cutting
the production rates of certain aircraft types. We continue to see
a strong market for aircraft sales and opportunities for aircraft
purchases."
Financial Results
FLY is reporting net income of $22.9
million, or $0.70 per share,
for the third quarter of 2016. This compares to a restated net
income of $27.5 million, or
$0.66 per share, for the same period
in 2015.
Net income for the nine months ended September 30, 2016 was $34.7 million, or $1.03 per share. The restated net income was
$3.7 million, or $0.07 per share, for the same period in 2015.
Adjusted Net Income
Adjusted Net Income was $17.3
million for the third quarter of 2016, compared to
$41.1 million for the same period in
the previous year. On a per share basis, Adjusted Net Income
was $0.53 in the third quarter of
2016, compared to $0.99 for the third
quarter of 2015. For the nine months ended September 30, 2016, Adjusted Net Income was
$48.7 million, or $1.45 per share, compared to $83.7 million, or $2.01 per share for the same period in 2015.
Share Repurchases
During the first nine months of 2016, FLY repurchased 3.2
million shares for approximately $38
million. At September 30,
2016, approximately $69
million remained available under the current $75 million share repurchase program. At
September 30, 2016, there were 32.5
million shares outstanding.
Financial Position
At September 30, 2016, FLY's total
assets were $3.5 billion, including
investment in flight equipment totaling $3.1
billion.
Cash and cash equivalents at September
30, 2016 totaled $386.4
million, of which $324.5
million was unrestricted. The book value per share at
September 30, 2016 was $19.99.
Aircraft Portfolio
At September 30, 2016, FLY's 81
aircraft were on lease to 43 airlines in 28 countries. The table
does not show aircraft that were held for sale, which were one and
thirteen at September 30, 2016 and
December 31, 2015, respectively, or
the two Boeing 767 aircraft owned by a joint venture in which FLY
has a 57% interest.
|
Portfolio
at
|
Sep 30,
2016
|
Dec 31,
2015
|
|
Airbus
A319
|
9
|
10
|
|
Airbus
A320
|
15
|
14
|
|
Airbus
A321
|
3
|
3
|
|
Airbus
A330
|
3
|
4
|
|
Airbus
A340
|
2
|
3
|
|
Boeing 737
|
40
|
39
|
|
Boeing 757
|
3
|
3
|
|
Boeing 767
|
—
|
1
|
|
Boeing 777
|
2
|
2
|
|
Boeing 787
|
4
|
1
|
|
Total
|
81
|
80
|
At September 30, 2016, the average
age of the portfolio weighted by net book value of each aircraft,
was 6.2 years. The average remaining lease term was 6.7 years, also
weighted by net book value. At September 30,
2016, FLY's portfolio was generating annualized rental
revenue of approximately $347
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 Thursday, November
17, 2016. Participants should call +1-253-237-1145
(International) or 800-535-7056 (North
America) and enter confirmation code 95203082. 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
acquires and 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
|
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
Three months
ended
Sep. 30, 2016
(Unaudited)
|
Three months
ended
Sep. 30, 2015
(Restated &
Unaudited)
|
Nine months
ended
Sep.
30, 2016
(Unaudited)
|
Nine months
ended
Sep. 30,
2015
(Restated &
Unaudited)
|
|
Revenues
|
|
|
|
|
|
Operating
lease rental revenue
|
$
82,714
|
$
104,356
|
$ 231,221
|
$
310,910
|
|
End of
lease revenue
|
66
|
1,270
|
8,148
|
26,882
|
|
Amortization of lease incentives
|
(2,000)
|
(6,845)
|
(7,090)
|
(15,638)
|
|
Amortization of lease premiums, discounts and other
|
(103)
|
(461)
|
(310)
|
(2,047)
|
|
Operating lease revenue
|
80,677
|
98,320
|
231,969
|
320,107
|
|
Finance
lease income
|
226
|
—
|
2,002
|
—
|
|
Equity
earnings from unconsolidated subsidiary
|
140
|
353
|
404
|
1,034
|
|
Gain on
sale of aircraft
|
4,103
|
13,604
|
9,689
|
16,241
|
|
Interest
and other income
|
151
|
378
|
375
|
1,381
|
|
Total
revenues
|
85,297
|
112,655
|
244,439
|
338,763
|
|
Expenses
|
|
|
|
|
|
Depreciation
|
31,389
|
30,097
|
88,890
|
124,087
|
|
Aircraft
impairment
|
—
|
—
|
4,122
|
51,825
|
|
Interest
expense
|
31,079
|
36,195
|
91,387
|
112,724
|
|
Net loss
on modification and extinguishment of debt
|
7
|
3,206
|
5,146
|
9,375
|
|
Selling,
general and administrative
|
8,369
|
7,795
|
24,022
|
26,632
|
|
Ineffective, dedesignated and terminated derivatives
|
79
|
3,190
|
343
|
4,682
|
|
Maintenance and other costs
|
274
|
1,737
|
1,928
|
4,400
|
|
Total
expenses
|
71,197
|
82,220
|
215,838
|
333,725
|
|
Net income before
provision for income
taxes
|
14,100
|
30,435
|
28,601
|
5,038
|
|
Provision (benefit) for income taxes
|
(8,842)
|
2,952
|
(6,118)
|
1,385
|
|
Net
income
|
$
22,942
|
$
27,483
|
$
34,719
|
$
3,653
|
|
Weighted average
number of shares
|
|
|
|
|
|
-
Basic
|
32,824,486
|
41,462,995
|
33,561,684
|
41,451,035
|
|
-
Diluted
|
32,824,486
|
41,544,423
|
33,561,684
|
41,560,388
|
|
Earnings per
share
|
|
|
|
|
|
- Basic and
Diluted
|
$
0.70
|
$
0.66
|
$
1.03
|
$
0.07
|
|
Dividends declared
and paid per share
|
$
—
|
$
0.25
|
$
—
|
$
0.75
|
|
FLY Leasing
Limited
|
|
Consolidated
Balance Sheets
|
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
Sep.
30,
2016
(Unaudited)
|
Dec. 31,
2015
(Audited)
|
|
Assets
|
|
|
|
Cash and
cash equivalents
|
$
324,503
|
$
275,998
|
|
Restricted cash and cash equivalents
|
61,901
|
174,933
|
|
Rent
receivables
|
855
|
124
|
|
Investment in unconsolidated subsidiary
|
7,574
|
7,170
|
|
Investment in direct finance lease, net
|
—
|
34,878
|
|
Flight
equipment held for sale, net
|
17,392
|
237,262
|
|
Flight
equipment held for operating lease, net
|
2,946,337
|
2,585,426
|
|
Maintenance right asset, net
|
91,413
|
94,493
|
|
Fair
market value of derivative assets
|
—
|
241
|
|
Other
assets, net
|
7,138
|
6,450
|
|
Total
assets
|
$
3,457,113
|
$
3,416,975
|
|
Liabilities
|
|
|
|
Accounts
payable and accrued liabilities
|
$
26,668
|
$
17,548
|
|
Rentals
received in advance
|
14,391
|
14,560
|
|
Payable
to related parties
|
8,827
|
7,170
|
|
Security
deposits
|
46,654
|
48,876
|
|
Maintenance payment liability
|
207,852
|
194,543
|
|
Unsecured borrowings, net
|
690,895
|
689,409
|
|
Secured
borrowings, net
|
1,743,221
|
1,695,711
|
|
Deferred
tax liability, net
|
13,840
|
20,741
|
|
Fair
market value of derivative liabilities
|
24,027
|
19,327
|
|
Other
liabilities
|
32,100
|
52,126
|
|
Total
liabilities
|
2,808,475
|
2,760,011
|
|
Shareholders'
equity
|
|
|
|
Common
shares, $0.001 par value, 499,999,900 shares authorized; 32,453,979
and 35,671,400 shares issued and outstanding at September 30, 2016
and December 31, 2015, respectively
|
32
|
36
|
|
Manager
shares, $0.001 par value; 100 shares authorized, issued and
outstanding
|
—
|
—
|
|
Additional paid in capital
|
539,286
|
577,290
|
|
Retained
earnings
|
129,857
|
95,138
|
|
Accumulated other comprehensive loss, net
|
(20,537)
|
(15,500)
|
|
Total
shareholders' equity
|
648,638
|
656,964
|
|
Total liabilities
and shareholders' equity
|
$
3,457,113
|
$
3,416,975
|
|
FLY Leasing
Limited
|
|
Consolidated
Statements of Cash Flows
|
|
(DOLLARS IN
THOUSANDS)
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
Nine months
ended
|
|
|
|
|
Sep. 30, 2016
(Unaudited)
|
|
|
Sep. 30, 2015
(Restated &
Unaudited)
|
|
|
Cash Flows from
Operating Activities
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
34,719
|
|
$
|
3,653
|
|
|
Adjustments to
reconcile net income to net cash flows provided by operating
activities:
|
|
|
|
|
|
|
|
|
Equity in earnings
from unconsolidated subsidiary
|
|
|
(404)
|
|
|
(1,034)
|
|
|
Direct finance lease
income
|
|
|
(2,002)
|
|
|
—
|
|
|
Gain on sale of
aircraft
|
|
|
(9,689)
|
|
|
(16,241)
|
|
|
Depreciation
|
|
|
88,890
|
|
|
124,087
|
|
|
Aircraft
impairment
|
|
|
4,122
|
|
|
51,825
|
|
|
Amortization of debt
discounts and issuance costs
|
|
|
7,205
|
|
|
9,080
|
|
|
Amortization of lease
incentives
|
|
|
7,090
|
|
|
15,638
|
|
|
Amortization of lease
discounts, premiums and other items
|
|
|
300
|
|
|
1,800
|
|
|
Amortization of fair
market value adjustments associated with the GAAM
acquisition
|
|
|
1,305
|
|
|
2,884
|
|
|
Net loss on
modification and extinguishment of debt
|
|
|
4,096
|
|
|
7,307
|
|
|
Share-based
compensation
|
|
|
—
|
|
|
195
|
|
|
Unrealized foreign
exchange (gain) loss
|
|
|
750
|
|
|
(693)
|
|
|
Provision (benefit)
for deferred income taxes
|
|
|
(6,304)
|
|
|
892
|
|
|
Loss on derivative
instruments
|
|
|
349
|
|
|
3,562
|
|
|
Security deposits and
maintenance payment liability recognized into earnings
|
|
|
(3,450)
|
|
|
(27,118)
|
|
|
Security deposits
applied towards operating lease revenues
|
|
|
(774)
|
|
|
—
|
|
|
Cash receipts in
settlement of maintenance rights
|
|
|
6,150
|
|
|
—
|
|
|
Changes in operating
assets and liabilities:
|
|
|
|
|
|
|
|
|
Rent
receivables
|
|
|
(731)
|
|
|
5,251
|
|
|
Other
assets
|
|
|
(1,395)
|
|
|
1,708
|
|
|
Payable to related
parties
|
|
|
(9,765)
|
|
|
(7,912)
|
|
|
Accounts payable,
accrued and other liabilities
|
|
|
5,542
|
|
|
19,743
|
|
|
Net cash flows
provided by operating activities
|
|
|
126,004
|
|
|
194,627
|
|
|
Cash Flows from
Investing Activities
|
|
|
|
|
|
|
|
|
Investment in
unconsolidated subsidiary
|
|
|
—
|
|
|
(2,009)
|
|
|
Rent received from
direct finance lease
|
|
|
2,777
|
|
|
—
|
|
|
Purchase of flight
equipment
|
|
|
(505,824)
|
|
|
(366,772)
|
|
|
Proceeds from sale of
aircraft
|
|
|
273,877
|
|
|
527,898
|
|
|
Payment for aircraft
improvement
|
|
|
(2,266)
|
|
|
(7,495)
|
|
|
Lessor payments for
lease incentive obligations
|
|
|
(1,942)
|
|
|
(16,653)
|
|
|
Net cash flows
provided by (used in) investing activities
|
|
|
(233,378)
|
|
|
134,969
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine months
ended
|
|
|
Nine months
ended
|
|
|
|
|
Sep. 30, 2016
(Unaudited)
|
|
|
Sep. 30, 2015
(Restated &
Unaudited)
|
|
|
Cash Flows from
Financing Activities
|
|
|
|
|
|
|
|
|
Restricted cash and
cash equivalents
|
|
|
113,025
|
|
|
(46,583)
|
|
|
Security deposits
received
|
|
|
3,920
|
|
|
7,882
|
|
|
Security deposits
returned
|
|
|
(6,640)
|
|
|
(7,448)
|
|
|
Maintenance payment
liability receipts
|
|
|
54,654
|
|
|
63,865
|
|
|
Maintenance payment
liability disbursements
|
|
|
(6,068)
|
|
|
(33,901)
|
|
|
Net swap termination
payments
|
|
|
(709)
|
|
|
23
|
|
|
Debt issuance
costs
|
|
|
(1,169)
|
|
|
(917)
|
|
|
Proceeds from secured
borrowings
|
|
|
408,282
|
|
|
147,276
|
|
|
Repayment of secured
borrowings
|
|
|
(371,579)
|
|
|
(384,576)
|
|
|
Shares
repurchased
|
|
|
(37,899)
|
|
|
(1,853)
|
|
|
Dividends
|
|
|
—
|
|
|
(31,084)
|
|
|
Dividend
equivalents
|
|
|
—
|
|
|
(849)
|
|
|
Net cash flows
provided by (used in) financing activities
|
|
|
155,817
|
|
|
(288,165)
|
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
|
|
62
|
|
|
(119)
|
|
|
Net increase in
cash
|
|
|
48,505
|
|
|
41,312
|
|
|
Cash at beginning of
period
|
|
|
275,998
|
|
|
337,560
|
|
|
Cash at end of
period
|
|
$
|
324,503
|
|
$
|
378,872
|
|
|
|
|
|
|
|
|
|
|
Supplemental
Disclosure:
|
|
|
|
|
|
|
|
|
Cash paid during
the period for:
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
70,458
|
|
$
|
91,408
|
|
|
Taxes
|
|
|
352
|
|
|
157
|
|
|
Noncash
Activities:
|
|
|
|
|
|
|
|
|
Security deposits
applied to maintenance payment liability and rent
receivables
|
|
|
—
|
|
|
3,292
|
|
|
Maintenance payment
liability applied to rent receivables
|
|
|
—
|
|
|
2,523
|
|
|
Other liabilities
applied to maintenance payment liability, security deposits and
rent receivables
|
|
|
1,590
|
|
|
240
|
|
|
Noncash
activities:
|
|
|
|
|
|
|
|
|
Aircraft
improvement
|
|
|
387
|
|
|
1,693
|
|
|
Noncash activities in
connection with purchase of aircraft
|
|
|
2,475
|
|
|
20,344
|
|
|
Noncash activities in
connection with sale of aircraft
|
|
|
46,536
|
|
|
36,595
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FLY Leasing
Limited
|
|
Reconciliation of
Non-GAAP Measures
|
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
Three months
ended
Sep. 30, 2016
(Unaudited)
|
Three months
ended
Sep. 30, 2015
(Restated &
Unaudited)
|
Nine months
ended
Sep. 30,
2016
(Unaudited)
|
Nine months
ended
Sep. 30,
2015
(Restated &
Unaudited)
|
|
Net income
|
$
22,942
|
$
27,483
|
$
34,719
|
$
3,653
|
|
Adjustments:
|
|
|
|
|
|
Aircraft
impairment
|
—
|
—
|
4,122
|
51,825
|
|
Amortization of debt discounts and loan issue costs
|
2,510
|
3,123
|
7,205
|
9,080
|
|
Amortization of lease premiums, discounts and
other
|
94
|
479
|
300
|
1,800
|
|
Amortization of fair value adjustments recorded in purchase
accounting
|
313
|
748
|
1,305
|
2,884
|
|
Net loss
on modification and extinguishment of debt
|
7
|
3,206
|
5,146
|
9,375
|
|
Non-cash
share based compensation
|
—
|
—
|
—
|
195
|
|
Professional fees related to restatement
|
33
|
—
|
1,134
|
—
|
|
Unrealized foreign exchange (gain) loss
|
220
|
67
|
750
|
(693)
|
|
Deferred
income taxes
|
(8,897)
|
2,807
|
(6,304)
|
892
|
|
Ineffective, dedesignated and terminated derivatives
|
79
|
3,190
|
343
|
4,682
|
|
Adjusted Net
Income
|
$
17,301
|
$
41,103
|
$
48,720
|
$
83,693
|
|
Average
Shareholders' Equity
|
$
640,618
|
$
717,846
|
$
642,714
|
$
737,903
|
|
Adjusted Return on
Equity
|
10.8%
|
22.9%
|
10.1%
|
15.1%
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
32,824,486
|
41,544,423
|
33,561,684
|
41,560,388
|
|
Adjusted Net
Income per share
|
$
0.53
|
$
0.99
|
$
1.45
|
$
2.01
|
|
|
|
|
|
|
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-cash share-based
compensation; (vi) legal and accounting expenses related to the
restatement of our financial statements and related litigation
(vii) unrealized foreign exchange gains and losses; (viii) deferred
income taxes; and (ix) the ineffective portion and charges
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 the
ongoing performance of our operations 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, we believe that Adjusted Net Income and
Adjusted Return on Equity help us and our investors and potential
investors compare our performance to our competitors. These
measures should be considered in addition to, not as a substitute
for net income or other financial measure determined in accordance
with Accounting Principles Generally Accepted in the United
States. FLY's definitions may be different than those used by
other companies, limiting their usefulness as comparative
measures.
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SOURCE FLY Leasing Limited