Fly Leasing Reports Third Quarter 2019 Financial Results
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 Sep. 30, Dec. 31,
at 2019
2018
Number % of Net Number % of Net
Book Value 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
Fly Leasing Limited
Consolidated Statements of Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three months ended Nine
months
Sep. 30
, ended
Sep. 30,
2019 2018 2019 2018
(Unaudited)
(Unaudited)
(Unaudited) (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 provisio
n
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
---
Earning
s
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, Dec. 31,
2019 2018
( (
Una A
udited) udited)
---
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 en
ded
Sep. 30
,
2019 2018
(
Una
udited) (
Una
udited)
---
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 en
ded
Sep. 30
,
2019 2018
(
Una
udited) (
Una
udited)
---
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
c
ash 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 Nine
months
Sep
. 30, ended
Sep
. 30,
2019 2018 2019 2018
(Unaudited) (Unaudited) (Unaudited) (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
