2014

FLY Leasing Reports Fourth Quarter and Full Year 2012 Financial Results

DUBLIN, March 7, 2013 /PRNewswire/ -- FLY Leasing Limited (NYSE: FLY) ("FLY"), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the fourth quarter and full year of 2012.

Fourth Quarter 2012 Highlights

  • Adjusted net income of $53.2 million, $2.04 per share
  • Net income of $31.0 million, $1.17 per share
  • Raised a $250 million revolving Acquisition Facility to fund growth
  • Re-priced $395 million Term Loan, reducing annual cash interest payments by approximately $4 million
  • Declared 21st consecutive quarterly dividend on January 15th ($0.22 per share)

Additional 2012 Full Year Highlights

  • Adjusted net income of $116.3 million, $4.48 per share
  • Net income of $47.7 million, $1.80 per share
  • Sourced $1.3 billion of new secured debt financing
  • Reduced total secured borrowings by $274 million, reducing net leverage to 3.6x
  • Sold four aircraft with an average age of 13 years for a pre-tax gain of $8.4 million
  • Paid $0.84 per share in dividends

"FLY had another strong year in 2012, increasing our core operating lease revenues by 63% compared to 2011.  Adjusted Net Income was $116.3 million ($4.48 per share), and Net Income was $47.7 million ($1.80 per share)," said Colm Barrington, Chief Executive Officer of FLY.  "Our increased earnings in 2012 reflect the growth in our aircraft portfolio which has doubled in size over the last two years.  Our earnings also reflect significant contributions from our opportunistic sale of four aircraft in 2012 and the sale of our 15% interest in BBAM.  During 2012, we raised the quarterly dividend by 10% to 22 cents per share, for total dividends of 84 cents per share in the year."

"We also completed several significant financial objectives in 2012, including reducing our net leverage from 5.1x at the start of the year to 3.6x at year end," said Barrington.  "We are now well on our way to reducing our leverage to less than 3.5x.  In addition, we refinanced substantially all of our near-term debt maturities with a new $395 million senior secured term loan that matures in 2018, extended a $600 million bank facility from 2012 to 2018 and added a new and attractive $250 million acquisition facility.  In addition to lowering our financial leverage, our financing activities have also lowered our weighted-average contractual interest rate on our secured borrowings to 4.7% at December 31, 2012."

"Looking ahead, we are excited about the opportunities for FLY in 2013," added Barrington. "We have significant firepower to grow the Company with a new $250 million revolving Acquisition Facility and $163 million of unrestricted cash.  We expect to take advantage of positive industry dynamics, including strengthening air traffic and continued robust demand for the modern, fuel-efficient aircraft that make up FLY's fleet.  Aircraft leasing continues to grow in importance, becoming an increasingly important tool for airlines around the world.  Against this backdrop, we are well positioned to meet our growth targets both in terms of fleet and earnings."

Financial Results

FLY grew operating lease revenue by $145.7 million for a total of $376.4 million in 2012 compared to 2011, an increase of 63%.  This increase reflects the growth in our aircraft portfolio. 

FLY is reporting net income for the fourth quarter of 2012 of $31.0 million or $1.17 per diluted share.  This compares to a net loss of $9.2 million or $0.37 per share for the same period of 2011. In addition to the $36.9 million pre-tax gain on the sale of FLY's 15% ownership interest in BBAM, the fourth quarter results include an $11.4 million impairment charge on three aircraft.  We recovered approximately $9.7 million of this $11.4 million from end of lease compensation payments, retained maintenance reserves and disposition proceeds in the first quarter of 2013 in respect of the impaired aircraft.  The fourth quarter results also include a $7.6 million charge associated with the early repayment of debt, $4.2 million of which was related to the re-pricing of our term loan.

Net income for the year ended December 31, 2012 was $47.7 million or $1.80 per diluted share compared to $1.1 million or $0.03 per diluted share for 2011.  In addition to the 4th quarter items, the 2012 results include a one-time, pre-tax charge of $32.3 million to terminate interest rate swaps associated with a credit facility that was fully repaid during 2012. 

Adjusted Net Income

Adjusted Net Income was $53.2 million or $2.04 per share for the fourth quarter of 2012 compared to $20.7 million or $0.80 for the fourth quarter of the previous year. 

For the year ended December 31, 2012, Adjusted Net Income was $116.3 million or $4.48 per share compared to $35.8 million or $1.38 per share for the year ended December 31, 2011, an increase of 225%. 

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

Dividend

On January 15, 2013, FLY declared a dividend of $0.22 per share in respect of the fourth quarter of 2012. This dividend was paid on February 20, 2013 to shareholders of record on January 31, 2013. This dividend is FLY's 21st consecutive quarterly dividend.

Financial Position

At December 31, 2012, FLY's total assets were $3.0 billion, including flight equipment with a net book value of $2.6 billion. Total cash at December 31, 2012 was $300.6 million, of which $163.1 million was unrestricted. These amounts compare to total cash of $380.5 million and unrestricted cash of $82.1 million at December 31, 2011. 

FLY's net leverage, defined as the ratio of net debt to total shareholders' equity was 3.6x at December 31, 2012 compared to 5.1x at December 31, 2011. Net debt is defined as book value of secured borrowings, less unrestricted cash and cash equivalents. 

Aircraft Portfolio

At December 31, 2012, FLY's 109 aircraft were on lease to 55 lessees in 32 countries. The table below shows the aircraft in FLY's portfolio on December 31, 2012. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.



Portfolio at

Dec. 31, 2012

Airbus A319

19

Airbus A320

27

Airbus A330

1

Airbus A340

3

Boeing 717

6

Boeing 737

40

Boeing 747

1

Boeing 757

11

Boeing 767

1

      Total

109



At December 31, 2012, the average age of FLY's fleet was 9.4 years, weighted by the net book value of each aircraft. The average remaining lease term was 3.2 years, also weighted by net book value. At December 31, 2012, the leases were generating annualized revenues of approximately $326 million. For the fourth quarter of 2012, FLY's lease utilization factor was 93% and for the year ended December 31, 2012 the lease utilization factor was 95%.

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 7, 2013.  Participants should call +1-706-758-4339 (International) or 877-309-0213 (North America) and enter confirmation code 97063366 or ask an operator for the FLY Leasing earnings call. A replay will be available shortly after the call. To access the replay, please dial +1-404-537-3406 (International) or 855-859-2056 (North America) and enter confirmation code 97063366. The telephone replay will be available for one week.  A live webcast of the conference call will be also available in the investor section of FLY's website at www.flyleasing.com. An archived webcast will be available for one year.

About FLY

FLY acquires and leases modern, high-demand and fuel-efficient commercial jet aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM LP, one of the world's leading aircraft lease managers with more than 20 years of experience. 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. 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

Dec.  31,  2012 (Unaudited)

Three months ended

Dec. 31, 2011 (Unaudited)

Year ended

 Dec. 31, 2012

(Audited)

Year ended

 Dec. 31, 2011

(Audited)

 

Revenues





   Operating lease revenue

$  90,637

$   81,567

$  376,437

$   230,716

   Equity earnings from unconsolidated joint ventures

3,403

3,021

9,383

5,647

   Gain on sale of  investment in unconsolidated joint venture

36,882

-

36,882

-

   Gain (loss) on sale of aircraft

(129)

9,137

8,360

9,137

   Interest and other income

78

787

1,634

3,289

Total revenues

130,871

94,512

432,696

248,789

 

Expenses





   Depreciation

33,838

32,995

136,633

95,718

   Aircraft impairment

11,382

7,500

11,382

7,500

   Interest expense

32,796

35,373

142,491

90,547

   Debt extinguishment costs

7,628

-

7,628

-

   Selling, general and administrative

9,979

9,341

40,192

27,064

   Ineffective, dedesignated and terminated derivatives

518

184

31,871

184

   Transaction fees and expenses

-

16,108

-

18,038

   Maintenance and other costs

4,830

297

10,968

4,400

Total expenses

100,971

101,798

381,165

243,451

Net income (loss) before provision for income taxes

29,900

(7,286)

51,531

5,338

   Provision (benefit) for income taxes

(1,092)

1,895

3,862

4,242

Net income (loss)

$    30,992

$   (9,181)

$  47,669

$   1,096

Weighted average number of shares





-  Basic

25,918,379

25,660,661

25,792,932

25,843,348

-  Diluted

26,086,467

25,660,661

25,961,605

25,992,062

Earnings per share





 -  Basic

$   1.18

$   (0.37)

$   1.81

$   0.03

-   Diluted

$  1.17

$  (0.37)

$  1.80

$  0.03

Dividends declared and paid per share

$   0.22

$   0.20

$   0.84

$   0.80

 

FLY Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)





Dec. 31,

 2012

(Audited)

Dec. 31,    2011

(Audited)

 

Assets



   Cash and cash equivalents

$  163,124

$    82,105

   Restricted cash and cash equivalents

137,457

298,404

   Rent receivables

3,124

3,186

   Investment in unconsolidated joint ventures

6,308

15,141

   Flight equipment held for operating leases, net

2,616,864

2,762,289

   Deferred tax asset, net

9,450

5,329

   Fair market value of derivative asset

319

4,023

   Other assets, net

32,026

28,021

Total assets

$ 2,968,672

$ 3,198,498

Liabilities



   Accounts payable and accrued liabilities

$   15,662

$   10,429

   Rentals received in advance

14,402

15,297

   Payable to related parties

2,789

4,863

   Security deposits

47,474

50,672

   Maintenance payment liabilities

225,733

231,793

   Secured borrowings, net

2,052,412

2,326,110

   Fair market value of derivative liabilities

48,967

98,487

   Other liabilities

29,231

17,814

Total liabilities

2,436,670

2,755,465

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 28,040,305 and 25,685,527 shares issued and outstanding at December 31, 2012 and 2011, respectively

28

26

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

   Additional paid in capital

482,733

455,186

   Retained earnings

83,138

57,982

   Accumulated other comprehensive loss, net

(33,897)

(70,161)

Total shareholders' equity

532,002

443,033

Total liabilities and shareholders' equity

$ 2,968,672

$ 3,198,498

 

FLY Leasing Limited
Reconciliation of Adjusted Net Income, a Non-GAAP
Financial Measure, to Net Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)







Three months ended

Dec. 31, 2012 (Unaudited)

Three months ended

Dec. 31, 2011 (Unaudited)

Year ended

 Dec. 31, 2012

(Unaudited)

Year ended

 Dec. 31, 2011

(Unaudited)

Net Income (loss)

$   30,992

$   (9,181)

$   47,669

$   1,096

Add (less):





   Ineffective, dedesignated and terminated derivatives

518

184

31,871

184

   Debt extinguishment costs

7,628

-

7,628

-

   Aircraft impairment

11,382

7,500

11,382

7,500

   Non-cash share based compensation

531

1,672

3,635

4,768

   Adjustments related to GAAM Portfolio acquisition:






Amortization of fair value adjustments recorded in purchase accounting

5,453

5,838

23,611

5,838


 Acquisition transaction fees and expenses

-

16,108

-

18,038

   Income tax effects

(3,262)

(1,412)

(9,484)

(1,654)

Adjusted Net Income

$  53,242

$   20,709

$  116,312

$   35,770

Weighted average diluted shares outstanding

26,086,467

25,798,377

25,961,605

25,992,062

Adjusted Net Income per share

$   2.04

$   0.80

$   4.48

$   1.38







 

Adjusted Net Income Plus Depreciation and Amortization, a
Non-GAAP Financial Measure, to Net Income
(DOLLARS IN THOUSANDS)







Three months ended

Dec. 31, 2012 (Unaudited)

Three months ended

Dec. 31, 2011 (Unaudited)

Year ended

 Dec. 31, 2012

(Unaudited)

Year ended

 Dec. 31, 2011

(Unaudited)

Adjusted Net Income

$   53,242

$   20,709

$   116,312

$   35,770

Add:





   Depreciation

33,838

32,995

136,633

95,718

   Other amortization

4,551

4,410

19,423

15,342

   Provision for deferred income taxes

(8,068)

2,556

1,303

4,216

Adjusted Net Income Plus Depreciation and Amortization

$   83,563

$   60,670

$   273,671

$   151,046







FLY defines Adjusted Net Income as net income plus or minus the after-tax impacts of ineffective, dedesignated or terminated cash flow hedges, swap termination costs, non-cash share-based compensation, debt extinguishment costs, impairment, and adjustments related to the GAAM portfolio acquisition comprised of amortization of fair value adjustments recorded in purchase accounting and acquisition transaction fees and expenses. FLY believes that Adjusted Net Income provides useful information about operating performance and period over period comparisons.  It also provides additional information that is useful for evaluating the underlying operating performance of our business without regard to the impacts of fair-value adjustments of debt that the company has assumed, acquired leases and derivative instruments and other non-recurring items of income and expense affecting current period results.  Adjusted Net Income should be used as a supplement to and not as a substitute for financial measures determined in accordance with Generally Accepted Accounting Principles in the United States. 

Adjusted Net Income Plus Depreciation and Amortization is a cash flow measure that provides investors with an additional measure for evaluating FLY's ongoing cash earnings, from which capital investments are made, debt is serviced and dividends are paid.  However, adjusted net income plus depreciation and amortization excludes certain positive and negative cash items, including principal payments, and has certain important limitations as an indicator of FLY's ability to pay dividends and reinvest in its business.  Management uses Adjusted Net Income and Adjusted Net Income Plus Depreciation and Amortization as a measure for assessing FLY's performance.  These measures should be considered in addition to, not as a substitute for net income or other financial measures determined in accordance with GAAP.  Finally, FLY's definitions may be different than those used by other companies.

SOURCE FLY Leasing Limited



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