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Fly Leasing Reports First Quarter 2018 Financial Results

Donnerstag, 03.05.2018 22:10 von PR Newswire

PR Newswire

DUBLIN, May 3, 2018 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the first quarter of 2018.

FLY Leasing Limited logo. (PRNewsFoto/FLY Leasing Limited)

Highlights

  • Grew operating lease rental revenue by more than 12%
  • Net income of $9.6 million, $0.34 per share
  • Adjusted Net Income of $12.4 million, $0.44 per share
  • Acquired one new aircraft on a long-term lease
  • Signed agreements to acquire 55 aircraft

"FLY is reporting a solid first quarter based on a substantial increase in operating lease rental revenue," said Colm Barrington, FLY's Chief Executive Officer. "Our quarterly net income of $9.6 million – despite minimal end of lease income and no benefit from aircraft sales – represents the strong growth in our core leasing business. Our earnings of $0.34 per share are more than double the result from the same quarter last year."

"The acquisition that we announced on February 28th is proceeding as planned, with AirAsia's extraordinary general meeting scheduled for later this month," added Barrington. "We expect that the initial stage of the transaction will be completed in the second and third quarters of this year. As we acquire these aircraft and deploy our capital over the course of the year, we expect to see FLY generate strong shareholder returns."

Financial Results

FLY is reporting net income of $9.6 million, or $0.34 per share, for the first quarter of 2018. This compares to net income of $5.1 million, or $0.16 per share, for the same period in 2017.  

Adjusted Net Income

Adjusted Net Income was $12.4 million for the first quarter of 2018, compared to $5.9 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $0.44 in the first quarter of 2018, compared to $0.18 for the first quarter of 2017.

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

AirAsia Update

On February 28, 2018, FLY signed definitive agreements with AirAsia Berhad ("AAB") and its subsidiary, Asia Aviation Capital Limited, under which FLY will acquire 54 Airbus narrowbody aircraft and seven CFM engines on lease to AAB and its affiliates, and one Airbus narrowbody aircraft on lease to a third-party airline. In addition, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer as early as 2019. These transactions, taken together, are referred to as the "AirAsia Transactions."

Initially, FLY will acquire 34 Airbus A320-200 aircraft and seven engines. FLY expects to acquire these aircraft and engines in the second and third quarters of 2018, following the approval of the AirAsia Transactions by AAB's shareholders at their extraordinary general meeting scheduled for May 14, 2018.

Financial Position

At March 31, 2018, FLY's total assets were $3.6 billion, including investment in flight equipment totaling $3.1 billion. Total cash at March 31, 2018 was $455.9 million, of which $384.3 million was unrestricted. The book value per share at March 31, 2018 was $19.85

Aircraft Portfolio

At March 31, 2018, FLY had 86 aircraft in its portfolio, with leases to 45 airlines in 28 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

Mar. 31,
 2018

 

Dec. 31,
 2017

Airbus A319

9

9

Airbus A320

13

12

Airbus A321

3

3

Airbus A330

3

3

Airbus A340

2

2

Boeing 737

46

46

Boeing 757

3

3

Boeing 777

2

2

Boeing 787

5

5

      Total

86

85

At March 31, 2018, the average age of the portfolio, weighted by net book value of each aircraft, was 6.5 years. The average remaining lease term was 6.2 years, also weighted by net book value. At March 31, 2018, FLY's 85 aircraft on lease were generating annualized rental revenue of approximately $368 million. One aircraft was off-lease at quarter end, which was subsequently delivered to a new lessee in April 2018. FLY's lease utilization factor was 99% for the first quarter of 2018.

Conference Call and Webcast

FLY's senior management will host a conference call and webcast to discuss these results at 4:30 p.m. U.S. Eastern Time on Thursday, May 3, 2018. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 5469264. 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.

Beginning in the first quarter of 2018, we modified our reporting of Adjusted Net Income and Adjusted Return on Equity. As a result, we have modified our historical presentation of these measures. Prior period information has been revised to conform to the current period presentation.

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, including the expected benefits of the AirAsia Transactions; whether and when the AirAsia Transactions will be consummated; the amount of cash and stock consideration to be paid by FLY; the type, amount and terms of the acquisition financing to be obtained by FLY; and, the amount of any fees and expenses incurred in connection with the AirAsia Transactions. 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, including risks relating to the satisfaction of conditions to the closing of the AirAsia Transactions; risks relating to satisfaction of conditions to the financing of the AirAsia Transactions; risks relating to FLY's ability to obtain additional required financing for the AirAsia Transactions on favorable terms, or at all; the risk that expected benefits of the AirAsia Transactions may not be fully realized or may take longer to realize than expected; the risk that business disruption resulting from the AirAsia Transactions may be greater than expected; 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 Mar. 31,


2018
(Unaudited)

2017
(Unaudited)

Revenues



Operating lease rental revenue

$         89,113

$     79,321

End of lease income

385

1,239

Amortization of lease incentives

(2,283)

(1,775)

Amortization of lease premiums, discounts and other

(139)

(82)

Operating lease revenue

87,076

78,703

Finance lease revenue

174

188

Equity earnings from unconsolidated subsidiary

112

125

Interest and other income

1,393

250

Total revenues

88,755

79,266

Expenses



Depreciation

33,733

32,051

Interest expense

32,923

31,833

Selling, general and administrative

8,610

8,292

Loss (gain) on derivatives

789

(51)

Loss on modification and extinguishment of debt

544

Maintenance and other costs

778

472

Total expenses

76,833

73,141

Net income before provision for income taxes

11,922

6,125

Provision for income taxes

2,292

1,073

Net income

$           9,630

$       5,052

Weighted average number of shares



-  Basic

27,983,352

32,244,481

-  Diluted

28,006,572

32,301,322

Earnings per share



-  Basic

$            0.34

$        0.16

-  Diluted

$            0.34

$        0.16

 



Fly Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Mar. 31,

 2018
(Unaudited)

Dec. 31,

2017
(Audited)

Assets



Cash and cash equivalents

$          384,345

$           329,105

Restricted cash and cash equivalents

71,582

127,710

Rent receivables

1,653

2,059

Investment in unconsolidated subsidiary

8,308

8,196

Investment in finance lease, net

13,671

13,946

Flight equipment held for operating lease, net

2,979,030

2,961,744

Maintenance right asset, net

120,077

131,299

Deferred tax asset, net

9,949

9,943

Fair value of derivative assets

5,472

2,643

Other assets, net

39,433

8,970

Total assets

$      3,633,520

$       3,595,615

Liabilities



Accounts payable and accrued liabilities

$            29,335

$             18,305

Rentals received in advance

15,704

14,968

Payable to related parties

2,384

2,084

Security deposits

48,695

49,689

Maintenance payment liability

261,383

244,151

Unsecured borrowings, net

616,358

615,922

Secured borrowings, net

2,019,111

2,029,675

Deferred tax liability, net

32,736

30,112

Fair value of derivative liabilities

9,075

7,344

Other liabilities

43,226

39,656

Total liabilities

3,078,007

3,051,906

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 27,983,352 shares issued and outstanding at March 31, 2018 and December 31, 2017

28

28

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

Additional paid in capital

479,637

479,637

Retained earnings

78,255

68,624

Accumulated other comprehensive loss, net

(2,407)

(4,580)

Total shareholders' equity

555,513

543,709

Total liabilities and shareholders' equity

$      3,633,520

$       3,595,615

 

Fly Leasing Limited

Consolidated Statements of Cash Flows

(DOLLARS IN THOUSANDS)



Three months ended Mar. 31,


2018
(Unaudited)

2017
(Unaudited)

Cash Flows from Operating Activities



Net income

$                 9,630

$               5,052

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



Equity in earnings from unconsolidated subsidiary

(112)

(125)

Finance lease revenue

(174)

(188)

Depreciation

33,733

32,051

Amortization of debt discounts and issuance costs

1,999

2,119

Amortization of lease incentives

2,283

1,775

Amortization of lease discounts, premiums and other items

139

83

Amortization of GAAM acquisition fair value adjustments

280

475

Loss on modification and extinguishment of debt

532

Unrealized foreign exchange loss

408

219

Provision (benefit) for deferred income taxes

2,353

1,058

Loss (gain) on derivatives

1,251

(181)

Cash receipts from maintenance rights

3,013

Changes in operating assets and liabilities:



Rent receivables

(1,244)

332

Other assets

(526)

1,004

Payable to related parties

(330)

(2,890)

Accounts payable, accrued and other liabilities

13,372

12,205

Net cash flows provided by operating activities

66,075

53,521

Cash Flows from Investing Activities



Rent received from finance lease

450

510

Purchase of flight equipment

(42,000)

Deposit on AirAsia aircraft purchases

(30,000)

Payments for aircraft improvement

(5,157)

Payments for lessor maintenance obligations

(6,456)

Net cash flows used in investing activities

(71,550)

(11,103)




Three months ended Mar. 31,


2018
(
Unaudited)

2017
(
Unaudited)

Cash Flows from Financing Activities



Security deposits received

775

525

Security deposits returned

(2,310)

Maintenance payment liability receipts

19,358

16,341

Maintenance payment liability disbursements

(258)

(3,531)

Net swap termination payments

Debt modification and extinguishment costs

(12)

Debt issuance costs

(243)

Proceeds from secured borrowings

33,014

Repayment of secured borrowings

(45,834)

(60,496)

Shares repurchased

(1,291)

Net cash flows provided by (used in) financing activities

4,502

(48,464)

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

85

36

Net decrease in unrestricted and restricted cash and cash equivalents

(888)

(6,010)

Unrestricted and restricted cash and cash equivalents at beginning of period

456,815

612,087

Unrestricted and restricted cash and cash equivalents at end of period

$          455,927

$         606,077




Reconciliation to Consolidated Balance Sheets:



Cash and cash equivalents

$          384,345

$         536,877

Restricted cash and cash equivalents

71,582

69,200

Unrestricted and restricted cash and cash equivalents

$          455,927

$         606,077







 

Fly Leasing Limited

Reconciliation of Non-GAAP Measures

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)




Three months ended Mar. 31,


2018
(Unaudited)

2017(1)
(Unaudited)

Net income

$         9,630

$         5,052

Adjustments:



Unrealized foreign exchange loss

408

219

Deferred income taxes

2,353

1,058

Fair value changes on undesignated derivatives

(2)

(467)

Adjusted Net Income

$       12,389

$         5,862

Average Shareholders' Equity

$     549,611

$     596,072

Adjusted Return on Equity

9.0%

3.9%




Weighted average diluted shares outstanding

28,006,572

32,301,322

Adjusted Net Income per diluted share

$          0.44

$            0.18


(1) Revised to conform to current period presentation.

FLY defines Adjusted Net Income 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 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