DUBLIN, May 13, 2021 /PRNewswire/ -- Fly Leasing
Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing,
today announced its financial results for
the first quarter of 2021.
Highlights
- Signed merger agreement to be acquired by Carlyle Aviation for
$17.05 per share
- Total revenues of $80.9
million
- Net loss of $3.4 million,
$0.11 per share
- Unrestricted cash and cash equivalents of $117.2 million
- $157 million net book value of
unencumbered assets
"The pending acquisition of FLY by an affiliate of Carlyle
Aviation Partners is on track and is expected to close in the third
quarter," said Colm Barrington, CEO
of FLY. "We believe that this transaction represents strong value
for FLY shareholders with the per share cash consideration
representing a premium of nearly 30% to FLY's closing price on
March 26, 2021, the last trading day
prior to the merger announcement."
"In the quarter, FLY's revenues and net income were again
adversely impacted by the global pandemic," added Barrington.
"While we are seeing improvements in some sectors of the global
airline industry, particularly in U.S. and Chinese domestic
traffic, there are still large parts of the world where COVID-19 is
surging and both domestic and international air traffic is at a
virtual standstill due to continuing travel restrictions. It now
appears likely that it will be well into 2022 before global air
traffic returns towards 2019 levels."
Financial Results
FLY is reporting a net loss of $3.4 million, or $0.11 per share, for
the first quarter of 2021. This compares to net
income of $38.1 million, or
$1.24 per share, for the same
period in 2020. During the first quarter of 2021, FLY recognized
$5.9 million of costs associated with
the pending transaction with Carlyle Aviation (see below under
"Merger").
Adjusted Net Income (Loss)
Adjusted Net Loss was $1.4 million for the first quarter
of 2021, compared to Adjusted Net Income of $43.6 million for the same period in the
previous year. On a per share basis, Adjusted Net Loss was
$0.04 in the first quarter
of 2021, compared to Adjusted Net Income of $1.42 for the first quarter of
2020.
A reconciliation of Adjusted Net Income to net income
determined in accordance with GAAP is shown below.
Financial Position
At March 31, 2021, FLY's total
assets were $3.1 billion,
including investment in flight equipment totaling $2.8 billion. Total cash at March 31, 2021 was $151.2 million, of which $117.2 million was unrestricted. At
March 31, 2021, FLY's net debt to
equity ratio was 2.2x, reduced from 2.3x as of December 31, 2020.
Merger
FLY announced on March 29, 2021
that it had entered into a definitive agreement to be acquired by
an affiliate of Carlyle Aviation Partners ("Carlyle Aviation"), the
commercial aviation investment and servicing arm within The Carlyle
Group's $56 billion Global Credit
platform. Under the terms of the Merger Agreement, FLY shareholders
will receive $17.05 per share in
cash, representing a total equity valuation of approximately
$520 million. The total enterprise
value of the transaction is approximately $2.36 billion. The transaction is expected to
close in the third quarter of 2021 and is subject to customary
closing conditions, including applicable regulatory clearance and
the approval of FLY's shareholders. Given the pending transaction,
FLY will not host a first quarter earnings call.
Aircraft Portfolio
At March 31, 2021, FLY had 84
aircraft and seven engines in its portfolio. FLY's aircraft
and engines are on lease to 36 airlines in
22 countries. The table below does not
include the engines.
Portfolio
at
|
Mar.
31, 2021
|
Dec.
31, 2020
|
|
Number
|
% of Net Book
Value
|
Number
|
% of Net Book
Value
|
Airbus A320ceo
Family
|
32
|
28%
|
32
|
28%
|
Airbus A320neo
Family
|
1
|
2%
|
1
|
2%
|
Airbus
A330
|
3
|
2%
|
3
|
2%
|
Boeing
737NG
|
40
|
39%
|
40
|
39%
|
Boeing 737
MAX
|
2
|
3%
|
2
|
3%
|
Boeing
777-LRF
|
2
|
11%
|
2
|
11%
|
Boeing 787
|
4
|
15%
|
4
|
15%
|
Total(1)
|
84
|
100%
|
84
|
100%
|
(1)
Includes six aircraft classified as held for sale as of
March 31, 2021. No aircraft were classified as held for sale
as of December 31, 2020.
|
At March 31, 2021, the average age
of the portfolio, weighted by net book value of each
aircraft and engine, was 8.6 years. The average remaining
lease term was 4.7 years, also weighted by net book value.
About FLY
FLY is a global aircraft leasing company with a fleet of modern
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 certain
non-GAAP financial measures, including Adjusted Net Income (Loss)
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, risks
and uncertainties related to the merger transaction with Carlyle
Aviation, and the risk that FLY may be unable to achieve its
portfolio growth expectations, or to reap the benefits of such
growth. Additional or unforeseen effects from the COVID-19 pandemic
and the global economic climate may give rise to or amplify many of
these risks. The extent to which the COVID-19 pandemic ultimately
impacts FLY's business, results of operations and financial
condition will depend on future developments, which are highly
uncertain and cannot be predicted. 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 Mar. 31,
|
|
2021 (Unaudited)
|
2020
(Unaudited)
|
Revenues
|
|
|
Operating lease
rental revenue
|
$
55,376
|
$
85,535
|
End of lease
income
|
25,811
|
2,427
|
Amortization of lease
incentives
|
(1,082)
|
(614)
|
Amortization of lease
discounts and other
|
(261)
|
92
|
Operating lease
revenue
|
79,844
|
87,440
|
Finance lease
revenue
|
129
|
145
|
Gain on sale of
aircraft
|
—
|
31,717
|
Interest and other
income
|
884
|
2,253
|
Total
revenues
|
80,857
|
121,555
|
Expenses
|
|
|
Depreciation
|
29,967
|
31,631
|
Aircraft
impairment
|
22,546
|
—
|
Interest
expense
|
22,066
|
27,155
|
Selling, general and
administrative
|
12,500
|
7,664
|
Provision for
uncollectible operating receivables
|
1,000
|
—
|
(Gain) loss on
derivatives
|
(2,724)
|
507
|
Fair value (gain) loss
on marketable securities
|
(1,839)
|
9,412
|
Loss
on extinguishment of debt
|
—
|
850
|
Maintenance and other
costs
|
1,104
|
1,184
|
Total
expenses
|
84,620
|
78,403
|
Net
income (loss) before provision
(benefit) for income taxes
|
(3,763)
|
43,152
|
Provision (benefit) for income
taxes
|
(370)
|
5,080
|
Net
income (loss)
|
$
(3,393)
|
$
38,072
|
Weighted average
number of shares
|
|
|
-
Basic
|
30,481,069
|
30,765,840
|
-
Diluted
|
30,481,069
|
30,768,029
|
Earnings
(loss) per share
|
|
|
-
Basic and Diluted
|
$
(0.11)
|
$
1.24
|
Fly Leasing
Limited Consolidated Balance Sheets (DOLLARS IN
THOUSANDS, EXCEPT SHARE DATA)
|
|
|
Mar.
31,
2021
(Unaudited)
|
Dec.
31,
2020
(Audited)
|
Assets
|
|
|
Cash and cash
equivalents
|
$
117,231
|
$
132,097
|
Restricted cash and
cash equivalents
|
34,000
|
29,432
|
Rent receivables,
net
|
65,516
|
57,015
|
Investment in finance
lease, net
|
10,075
|
10,396
|
Flight equipment held
for sale, net
|
40,454
|
—
|
Flight equipment held
for operating lease, net
|
2,438,666
|
2,529,428
|
Maintenance
rights
|
279,124
|
279,124
|
Deferred tax asset,
net
|
10,941
|
11,753
|
Fair value of
derivative assets
|
3,570
|
2,085
|
Other assets,
net
|
136,581
|
116,255
|
Total
assets
|
$
3,136,158
|
$
3,167,585
|
Liabilities
|
|
|
Accounts payable and
accrued liabilities
|
$
27,391
|
$
18,135
|
Rentals received in
advance
|
6,620
|
8,724
|
Payable to related
parties
|
4,362
|
4,058
|
Security
deposits
|
36,226
|
36,439
|
Maintenance payment
liability, net
|
201,820
|
203,684
|
Unsecured borrowings,
net
|
297,082
|
296,876
|
Secured borrowings,
net
|
1,603,986
|
1,642,242
|
Deferred tax
liability, net
|
51,420
|
51,366
|
Fair value of
derivative liabilities
|
35,648
|
46,169
|
Other
liabilities
|
78,182
|
70,896
|
Total
liabilities
|
2,342,737
|
2,378,589
|
Shareholders'
equity
|
|
|
Common shares, $0.001
par value, 499,999,900 shares authorized;
30,481,069 shares issued and outstanding at March 31,
2021 and December 31, 2020
|
31
|
31
|
Manager shares, $0.001
par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
Additional paid-in
capital
|
509,738
|
509,738
|
Retained
earnings
|
309,574
|
312,967
|
Accumulated other
comprehensive loss, net
|
(25,922)
|
(33,740)
|
Total
shareholders' equity
|
793,421
|
788,996
|
Total liabilities
and shareholders' equity
|
$
3,136,158
|
$
3,167,585
|
Fly Leasing
Limited Consolidated Statements of Cash
Flows
(DOLLARS IN THOUSANDS)
|
|
|
Three months
ended Mar. 31,
|
|
2021 (Unaudited)
|
2020
(Unaudited)
|
Cash Flows from
Operating Activities
|
|
|
Net
income (loss)
|
$
(3,393)
|
$
38,072
|
Adjustments to
reconcile net income (loss) to net cash flows provided by
operating activities:
|
|
|
Gain on sale of
aircraft
|
—
|
(31,717)
|
Depreciation
|
29,967
|
31,631
|
Flight equipment
impairment
|
22,546
|
—
|
Amortization of debt
discounts and debt issuance costs
|
2,114
|
1,875
|
Amortization of lease
incentives and other items
|
1,421
|
604
|
Provision for
uncollectible operating lease receivables
|
1,000
|
—
|
Fair value (gain) loss
on marketable securities
|
(1,839)
|
9,412
|
Loss on extinguishment
of debt
|
—
|
850
|
Provision (benefit) for deferred income
taxes
|
(370)
|
5,181
|
Maintenance payment
liability recognized into earnings
|
—
|
(2,487)
|
Other
|
(2,430)
|
268
|
Changes in operating
assets and liabilities:
|
|
|
Rent
receivables
|
(14,981)
|
(7,036)
|
Other
assets
|
(19,119)
|
230
|
Payable to related
parties
|
304
|
(5,807)
|
Accounts payable,
accrued liabilities and other liabilities
|
12,904
|
9,957
|
Net cash flows
provided by operating activities
|
28,124
|
51,033
|
Cash Flows from
Investing Activities
|
|
|
Purchase of flight
equipment
|
—
|
(27,282)
|
Proceeds from sale of
aircraft, net
|
—
|
160,271
|
Payments for aircraft
improvement
|
(1,604)
|
(6,294)
|
Payments for lessor
maintenance obligations
|
(65)
|
(347)
|
Other
|
362
|
(231)
|
Net cash flows
(used in) provided by investing
activities
|
(1,307)
|
126,117
|
|
|
Three months
ended Mar. 31,
|
|
2021
(Unaudited)
|
2020
(Unaudited)
|
Cash Flows from
Financing Activities
|
|
|
Security deposits
received
|
1,921
|
3,305
|
Maintenance payment
liability receipts
|
4,281
|
7,848
|
Maintenance payment
liability disbursements
|
(3,528)
|
(10,109)
|
Debt extinguishment
costs
|
—
|
(20)
|
Debt issuance
costs
|
(186)
|
—
|
Repayment of secured
borrowings
|
(39,510)
|
(118,211)
|
Shares
repurchased
|
—
|
(6,504)
|
Net cash flows
used in financing activities
|
(37,022)
|
(123,691)
|
Effect of exchange
rate changes on unrestricted and restricted cash and cash
equivalents
|
(93)
|
(18)
|
Net
(decrease) increase in unrestricted
and restricted cash and cash
equivalents
|
(10,298)
|
53,441
|
Unrestricted and
restricted cash and cash equivalents at beginning of
period
|
161,529
|
338,303
|
Unrestricted
and restricted cash and cash equivalents at end of
period
|
$
151,231
|
$
391,744
|
|
|
|
Reconciliation to
Consolidated Balance Sheets:
|
|
|
Cash and cash
equivalents
|
$
117,231
|
$
361,151
|
Restricted cash and
cash equivalents
|
34,000
|
30,593
|
Unrestricted and
restricted cash and cash equivalents
|
$
151,231
|
$
391,744
|
|
Fly Leasing
Limited Reconciliation of Non-GAAP
Measures (DOLLARS IN THOUSANDS, EXCEPT PER SHARE
DATA)
|
|
|
Three months ended
Mar. 31,
|
|
2021
(Unaudited)
|
2020
(Unaudited)
|
Net
income (loss)
|
$
(3,393)
|
$
38,072
|
Adjustments:
|
|
|
Unrealized foreign
exchange gain
|
(183)
|
(95)
|
Deferred income
taxes
|
(370)
|
5,181
|
Fair value changes on
undesignated derivatives
|
(3,278)
|
481
|
Merger
costs
|
5,853
|
—
|
Adjusted Net
Income (Loss)
|
$
(1,371)
|
$
43,639
|
Average
Shareholders' Equity
|
$
791,209
|
$
884,257
|
Adjusted Return on
Equity
|
(0.7%)
|
19.7%
|
|
|
|
Weighted average
diluted shares outstanding
|
30,481,069
|
30,768,029
|
Adjusted Net
Income (Loss) per diluted
share
|
$
(0.04)
|
$
1.42
|
FLY defines Adjusted Net Income (Loss) as net income (loss) 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 (Loss) 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 (Loss) 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 (Loss) and Adjusted Return on
Equity, in addition to GAAP net income (loss) and earnings (loss)
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 (Loss) 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 from those used by other companies.
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SOURCE Fly Leasing Limited