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Fly Leasing Reports Fourth Quarter And Full Year 2017 Financial Results

Donnerstag, 08.03.2018 18:45 von PR Newswire

PR Newswire

DUBLIN, March 8, 2018 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the fourth quarter and full year of 2017.

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

Fourth Quarter 2017 Highlights

  • Net income of $7.2 million, $0.25 per share
  • Adjusted Net Income of $30.9 million, $1.09 per share
  • Refinanced and extended $375.0 million of unsecured notes
  • Completed a new $332 million secured debt facility
  • Repurchased 715,934 shares

2017 Full Year Highlights

  • Net income of $2.6 million, $0.09 per share
  • Adjusted Net Income of $66.6 million, $2.19 per share
  • Acquired ten aircraft for $456.0 million
  • Repurchased 4.3 million shares

"We continue to take initiatives at FLY that are producing solid core earnings and enhancing shareholder value," said Colm Barrington, CEO of FLY. "In 2017 we increased our fleet size, fleet value and operating lease revenue, each by more than 10%. The quality and youth of our fleet now rank us an industry leader. We repurchased more than 13% of our shares at a significant discount to book value, raised a new $332 million secured facility at a very attractive margin, and refinanced and extended $375 million of unsecured notes at a significantly reduced interest rate. This was a good investment in our future earnings despite the debt extinguishment charge in the fourth quarter."

"Last week we announced an exciting deal with AirAsia in which FLY will acquire a total of 55 aircraft, seven engines, and options to acquire 20 new A320neo family aircraft," added Barrington. "This landmark acquisition grows FLY's fleet with the most attractive and newest generation of narrowbody aircraft and will drive high levels of stable, long-term profitability and cash flows for the benefit of our stakeholders."

Financial Results

FLY is reporting net income of $7.2 million, or $0.25 per share, for the fourth quarter of 2017. This compares to a net loss of $63.8 million, or $1.98 per share, for the same period in 2016. The financial results for the fourth quarter of 2017 include $20.8 million of debt extinguishment costs, primarily relating to the discharge of FLY's 6.75% Senior Notes due 2020 ("2020 Notes").  

Net income for the year ended December 31, 2017 was $2.6 million, or $0.09 per share, compared to a net loss of $29.1 million, or $0.88 per share for the year ended December 31, 2016.

Adjusted Net Income

Adjusted Net Income was $30.9 million for the fourth quarter of 2017, compared to $30.6 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.09 in the fourth quarter of 2017, compared to $0.95 for the fourth quarter of 2016. For the year ended December 31, 2017, Adjusted Net Income was $66.6 million, or $2.19 per share, compared to $79.3 million, or $2.38 per share, for the year ended December 31, 2016.

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

Share Repurchases

During the fourth quarter, FLY repurchased 715,934 shares for $9.8 million at an average price of $13.65 per share. During the year ended December 31, 2017, FLY repurchased 4.3 million shares for $57.1 million at an average price of $13.35 per share. In November 2017, FLY's board of directors approved a $50.0 million share repurchase program expiring in December 2018, to replace its program which expired in December 2017.

Financings

On October 16, 2017, FLY completed its offering of $300 million of unsecured 5.25% Senior Notes due 2024. The net proceeds were approximately $294.2 million, which FLY used, together with cash on hand, to discharge the $375 million of its outstanding 2020 Notes.

On December 8, 2017, FLY closed a new $332 million secured debt facility. The facility has an eight-year term and bears interest at a rate of LIBOR plus 1.65%.

AirAsia Portfolio Acquisition

On February 28, 2018, FLY signed definitive agreements with AirAsia Berhad ("AAB") for the acquisition of 55 Airbus narrowbody aircraft, seven CFM engines and options to purchase an additional 20 Airbus A320neo family aircraft. Nearly all aircraft will be subject to leases to AAB and its affiliates, other than the option aircraft. The transaction is expected to close in the second and third quarters of 2018, subject to approval by AAB shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.

Financial Position

At December 31, 2017, FLY's total assets were $3.6 billion, including investment in flight equipment totaling $3.1 billion. Total cash at December 31, 2017 was $456.8 million, of which $329.1 million was unrestricted. The book value per share at December 31, 2017 was $19.43

Aircraft Portfolio

At December 31, 2017, FLY had 85 aircraft in its portfolio, with leases to 44 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

Dec. 31,
2017

Dec. 31,
2016

Airbus A319

9

9

Airbus A320

12

12

Airbus A321

3

3

Airbus A330

3

3

Airbus A340

2

2

Boeing 737

46

38

Boeing 757

3

3

Boeing 777

2

2

Boeing 787

5

4

      Total

85

76

At December 31, 2017, the average age of the portfolio, weighted by net book value of each aircraft, was 6.4 years. The average remaining lease term was 6.3 years, also weighted by net book value. At December 31, 2017, FLY's 83 aircraft on lease were generating annualized rental revenue of approximately $359 million. Two aircraft were off-lease at year end, one of which was subsequently delivered to a new lessee in January 2018, and the other aircraft is expected to be delivered to a new lessee in the first quarter of 2018. FLY's lease utilization factor was 98.3% for the fourth quarter of 2017 and 99.6% for the year.

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, March 8, 2018. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 3572428. A live webcast with slide presentation will be available on the Events & 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.

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 portfolio transactions (the "Transactions"); whether and when the 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 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 Transactions; risks relating to satisfaction of conditions to the financing of the Transactions; risks relating to FLY's ability to obtain additional required financing for the Transactions on favorable terms, or at all; the risk that expected benefits of the Transactions may not be fully realized or may take longer to realize than expected; the risk that business disruption resulting from the 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 (Loss)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


Three months ended Dec. 31,


Year ended Dec. 31,


2017
(Unaudited)

2016
(Unaudited)


2017
(Audited)

2016
(Audited)

Revenues






Operating lease rental revenue

$        89,019

$     82,755


$      337,137

$     313,976

End of lease income

16,598

770


17,837

8,918

Amortization of lease incentives

(2,066)

(1,808)


(7,668)

(8,898)

Amortization of lease premiums, discounts and other

(123)

(104)


(412)

(414)

Operating lease revenue

103,428

81,613


346,894

313,582

Finance lease revenue

177

64


731

2,066

Equity earnings from unconsolidated subsidiary

119

126


496

530

Gain on sale of aircraft

3,926

17,506


3,926

27,195

Interest and other income

284

1,291


1,204

1,666

Total revenues

107,934

100,600


353,251

345,039

Expenses






Depreciation

33,957

31,562


133,227

120,452

Aircraft impairment

92,000


22,000

96,122

Interest expense

31,382

31,774


127,782

123,161

Selling, general and administrative

7,445

6,055


30,671

30,077

Ineffective, dedesignated and terminated derivatives

(546)

(252)


(192)

91

Loss on modification and extinguishment of debt

20,798

4,100


23,309

9,246

Maintenance and other costs

888

351


2,524

2,279

Total expenses

93,924

165,590


339,321

381,428

Net income (loss) before provision (benefit) for income taxes

14,010

(64,990)


13,930

(36,389)

Provision (benefit) for income taxes

6,840

(1,159)


11,332

(7,277)

Net income (loss)

$           7,170

$  (63,831)


$         2,598

$   (29,112)

Weighted average number of shares






-  Basic

28,373,978

32,277,965


30,307,357

33,239,001

-  Diluted

28,427,967

32,277,965


30,353,425

33,239,001

Earnings (loss) per share






-  Basic

$            0.25

$     (1.98)


$             0.09

$        (0.88)

-  Diluted

$            0.25

$      (1.98)


$             0.09

$          (0.88)




Fly Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


Dec. 31,

 2017

(Audited)

Dec. 31,

2016

(Audited)

Assets



Cash and cash equivalents

$          329,105

$           517,964

Restricted cash and cash equivalents

127,710

94,123

Rent receivables

2,059

419

Investment in unconsolidated subsidiary

8,196

7,700

Investment in finance lease, net

13,946

15,095

Flight equipment held for operating lease, net

2,961,744

2,693,821

Maintenance right asset, net

131,299

101,969

Deferred tax asset, net

9,943

7,445

Fair value of derivative assets

2,643

1,905

Other assets, net

8,970

6,568

Total assets

$      3,595,615

$       3,447,009

Liabilities



Accounts payable and accrued liabilities

$            18,305

$             13,786

Rentals received in advance

14,968

13,123

Payable to related parties

2,084

5,042

Security deposits

49,689

42,495

Maintenance payment liability

244,151

182,571

Unsecured borrowings, net

615,922

691,390

Secured borrowings, net

2,029,675

1,831,985

Deferred tax liability, net

30,112

19,847

Fair value of derivative liabilities

7,344

13,281

Other liabilities

39,656

40,254

Total liabilities

3,051,906

2,853,774

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 27,983,352 and 32,256,440 shares issued and outstanding at December 31, 2017 and 2016, respectively

28

32

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

Additional paid in capital

479,637

536,922

Retained earnings

68,624

66,026

Accumulated other comprehensive loss, net

(4,580)

(9,745)

Total shareholders' equity

543,709

593,235

Total liabilities and shareholders' equity

$      3,595,615

$       3,447,009




Fly Leasing Limited

Consolidated Statements of Cash Flows

(DOLLARS IN THOUSANDS)


Year ended Dec. 31,


2017
(Audited)

2016
(Audited)

Cash Flows from Operating Activities



Net income (loss)

$                 2,598

$            (29,112)

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



Equity in earnings from unconsolidated subsidiary

(496)

(530)

Finance lease revenue

(731)

(2,066)

Gain on sale of aircraft

(3,926)

(27,195)

Depreciation

133,227

120,452

Aircraft impairment

22,000

96,122

Amortization of debt discounts and issuance costs

7,955

9,375

Amortization of lease incentives

7,668

8,898

Amortization of lease discounts, premiums and other items

412

388

Amortization of GAAM acquisition fair value adjustments

1,223

1,621

Loss on modification and extinguishment of debt

23,309

9,246

Unrealized foreign exchange (gain) loss

2,305

(437)

Provision (benefit) for deferred income taxes

5,178

(9,158)

(Gain) loss on derivative instruments

(478)

76

Security deposits and maintenance payment liability recognized into earnings

(16,268)

(3,450)

Security deposits and maintenance payment claims applied towards operating lease revenue

(684)

Cash receipts from maintenance rights

9,513

Maintenance rights recognized into earnings

465

Changes in operating assets and liabilities:



Rent receivables

(4,251)

(1,034)

Other assets

(2,599)

(1,134)

Payable to related parties

(10,126)

(17,163)

Accounts payable, accrued and other liabilities

11,588

(10,964)

Net cash flows provided by operating activities

179,053

152,764

Cash Flows from Investing Activities



Rent received from finance lease

1,880

2,970

Purchase of flight equipment

(434,122)

(552,166)

Proceeds from sale of aircraft, net

21,750

430,867

Payments for aircraft improvement

(7,357)

(2,230)

Payments for lessor maintenance obligations

(12,564)

(2,712)

Net cash flows used in investing activities

(430,413)

(123,271)




Year ended Dec. 31,


2017

(Audited)

2016

(Audited)

Cash Flows from Financing Activities


Security deposits received

7,196

920

Security deposits returned

(3,554)

(7,438)

Maintenance payment liability receipts

75,765

71,514

Maintenance payment liability disbursements

(14,303)

(10,951)

Net swap termination payments

(709)

Debt modification and extinguishment costs

(17,396)

(3,153)

Debt issuance costs

(1,464)

(2,552)

Proceeds from unsecured borrowings

295,150

Repayment of unsecured borrowings

(375,000)

Proceeds from secured borrowings

513,459

572,719

Repayment of secured borrowings

(326,909)

(448,346)

Shares repurchased

(57,286)

(40,257)

Net cash flows provided by financing activities

95,658

131,747

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

430

(84)

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

(155,272)

161,156

Unrestricted and restricted cash and cash equivalents at beginning of period

612,087

450,931

Unrestricted and restricted cash and cash equivalents at end of period

$          456,815

$         612,087








Fly Leasing Limited

Reconciliation of Non-GAAP Measures

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


Three months ended Dec. 31,


Year ended Dec. 31,


2017

(Unaudited)

2016

(Unaudited)


2017

(Unaudited)

2016

(Unaudited)

Net income (loss)

$         7,170

$      (63,831)


$        2,598

$     (29,112)

Adjustments:






Aircraft impairment

92,000


22,000

96,122

Amortization of debt discounts and debt issuance costs

1,902

2,170


7,955

9,375

Amortization of lease premiums, discounts and other

123

88


412

388

Amortization of fair value adjustments recorded in purchase accounting

295

316


1,223

1,621

Loss on modification and extinguishment of debt

20,798

4,100


23,309

9,246

Professional fees related to restatement


1,134

Transaction fees and expenses

146


1,815

Unrealized foreign exchange (gain) loss

301

(1,187)


2,305

(437)

Deferred income taxes

721

(2,854)


5,178

(9,158)

(Gain) loss on ineffective, dedesignated and terminated derivatives

(546)

(252)


(192)

91

Adjusted Net Income

$       30,910

$       30,550


$       66,603

$      79,270

Average Shareholders' Equity

$     543,705

$     620,937


$     571,042

$    632,818

Adjusted Return on Equity

22.7%

19.7%


11.7%

12.5%






Weighted average diluted shares outstanding(1)

28,427,967

32,277,965


30,353,425

33,239,001

Adjusted Net Income per diluted share

$               1.09

$             0.95


$                2.19

$              2.38







(1) The weighted average diluted shares outstanding for the three months and year ended December 31, 2017 includes dilutive common share equivalents of 53,989 and 46,068, respectively.

FLY defines Adjusted Net Income as net income (loss) 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) losses from debt modification and extinguishment; (v) non-recurring expenses; (vi) unrealized foreign exchange gains and losses; (vii) deferred income taxes; and (viii) the ineffective portion and gains and losses 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 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, 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, 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 a substitute for net income or other financial measures determined in accordance with Accounting Principles Generally Accepted in the United States. FLY's definitions may be different than those used by other companies.

 

SOURCE Fly Leasing Limited