FLY Leasing Reports Third Quarter 2013 Financial Results

DUBLIN, Nov. 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 third quarter and first nine months of 2013.

(Logo: http://photos.prnewswire.com/prnh/20130709/SF44539LOGO)

Third Quarter 2013 Highlights

  • Adjusted Net Income of $2.7 million, $0.07 per share
  • Net income of $304,000
  • Added four Boeing 737-800 aircraft
  • Added a new Boeing 777-300ER aircraft
  • Raised $172.6 million of new equity capital
  • Declared 24th consecutive quarterly dividend on October 14th ($0.22 per share)
  • Dividend to be increased to $0.25 per share in 2014

Nine Month Highlights

  • Adjusted Net Income of $52.5 million, $1.65 per share
  • Net income of $39.1 million, $1.20 per share
  • Exceeded fleet growth targets for 2013
  • Increased unrestricted cash to over $200 million
  • Paid three quarterly dividends totaling $0.66 per share

"During the third quarter we added five aircraft, increasing our portfolio to 107 aircraft at quarter end," said Colm Barrington, CEO of FLY. "So far in the fourth quarter we have added two more aircraft, including a new Boeing 787 on a long-term lease to a top credit airline. This year we have added aircraft worth more than $560 million to our fleet, achieving our growth target for the year and putting us on track to add more than $600 million worth of aircraft by year end. FLY has the capital to maintain this strong growth in 2014 and we continue to see attractive acquisition opportunities."

"All of our aircraft are now on lease or committed to leases," added Barrington. "The global airline industry is strong with air traffic and airline load factors at or near all-time highs. Demand for leased aircraft remains strong and we are seeing improvements in lease rates. As we look ahead to 2014, FLY is well positioned to benefit from its strong financial position, its growing fleet and improving industry conditions. As a result, FLY's board has authorized a 14% increase in the dividend to be declared in respect of the fourth quarter of 2013.  FLY remains committed to returning capital to shareholders."

Third Quarter Financial Results

FLY's net income and diluted earnings per share for the third quarter of 2013 were $304,000 and $0.00 per share compared to a loss of $29.4 million and a loss of $1.15 per share in the same period of 2012. Operating lease revenue decreased from $84.4 million for the third quarter of 2012 to $78.4 million for the third quarter of 2013, primarily due to a decrease in end of lease income from $5.8 million in 2012 to $0 in 2013.  The loss in the third quarter of 2012 included expenses of $32.3 million associated with termination of interest rate swaps in connection with refinancing FLY's original Acquisition Facility. 

Net income and diluted earnings per share for the nine months ended September 30, 2013 were $39.1 million and $1.20 per share compared to $16.7 million and $0.63 per share for the nine months ended September 30, 2012.

Adjusted Net Income

Adjusted Net Income was $2.7 million for the third quarter of 2013 compared to $5.4 million in the same period in the previous year.  On a per share basis, Adjusted Net Income was $0.07 in the third quarter of 2013 compared to $0.21 for the same period in the previous year.  For the nine months ended September 30, 2013, Adjusted Net Income was $52.5 million, or $1.65 per share compared to $63.1 million and $2.43 per share for the same period in the previous year.

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

Dividends  

On October 14, 2013, FLY declared a dividend of $0.22 per share in respect of the third quarter of 2013. This dividend will be paid on November 19, 2013 to shareholders of record on October 30, 2013.  FLY's board has authorized an increase in the dividend to be declared in respect of the fourth quarter of 2013 to $0.25.

Financial Position

At September 30, 2013, FLY's total assets were $3.3 billion, including flight equipment with a net book value of $2.9 billion. Total cash at September 30, 2013 was $362.9 million, of which $207.0 million was unrestricted. This compares to total cash of $300.6 million at December 31, 2012, of which $163.1 million was unrestricted.

In July, FLY completed an underwritten public offering of 13,142,856 common shares in the form of ADSs at a price of $14.00 per ADS, generating net proceeds of approximately $172.6 million.

FLY's net leverage ratio, defined as the ratio of net debt to total shareholders' equity was 2.7x at September 30, 2013 compared to 3.6x at December 31, 2012.  Net debt is defined as book value of secured borrowings, less unrestricted cash and cash equivalents.

Aircraft Portfolio

At September 30, 2013, FLY's 107 aircraft were on lease to 56 airlines in 32 countries. The table below shows the aircraft in FLY's portfolio on September 30, 2013 and 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

Sep 30, 2013

Dec 31, 2012

Airbus A319

19

19

Airbus A320

26

27

Airbus A330

1

1

Airbus A340

3

3

Boeing 717

-

6

Boeing 737

44

40

Boeing 747

1

1

Boeing 757

11

11

Boeing 767

1

1

Boeing 777

1

-

    Total

107

109

At September 30, 2013, the average age of FLY's portfolio was 8.8 years weighted by the net book value of each aircraft. The average remaining lease term was 4.0 years, also weighted by net book value. At September 30, 2013, the leases were generating annualized revenues of approximately $345 million. FLY's lease utilization factor was 97% for the third quarter of 2013 and was 95% for the nine months ended September 30, 2013.

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, November 7, 2013.  Participants should call +1-706-758-4339 (International) or 877-309-0213 (North America) and enter confirmation code 68512691 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 68512691. The replay recording will be available until November 14, 2013.

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

Sept.  30,
2013
(Unaudited)

Three months
ended

Sept. 30,
2012
(Unaudited)

Nine months

ended

 Sept. 30,
2013

(Unaudited)

Nine months

ended

 Sept. 30,
2012

(Unaudited)

Revenues





   Operating lease revenue

$   78,369

$   84,443

$  274,583

$   285,800

   Equity earnings from unconsolidated subsidiaries

474

1,852

1,377

5,980

   (Loss) Gain on sale of aircraft

(47)

-

6,277

8,489

   Interest and other income

319

113

1,781

1,556

Total revenues

79,115

86,408

284,018

301,825

Expenses





   Depreciation

36,908

34,302

106,651

102,795

   Interest expense

30,016

36,045

90,201

109,695

   Debt extinguishment costs

564

-

2,704

-

   Selling, general and administrative

8,105

11,435

27,363

30,213

   Ineffective, dedesignated and terminated derivatives

(160)

32,580

(1,020)

31,353

   Maintenance and other costs

2,563

3,478

12,487

6,138

Total expenses

77,996

117,840

238,386

280,194

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

1,119

(31,432)

45,632

21,631

   Provision (benefit) for income taxes

815

(1,993)

6,568

4,954

Net income (loss)

$    304

$   (29,439)

$  39,064

$   16,677

Weighted average number of shares





-  Basic

38,797,022

25,769,115

31,711,440

25,750,811

-  Diluted

38,921,962

25,769,115

31,821,118

25,915,110

Earnings (loss) per share





 -  Basic

$   0.00

$   (1.15)

$   1.21

$   0.63

-   Diluted

$  0.00

$  (1.15)

$  1.20

$  0.63

Dividends declared and paid per share

$   0.22

$   0.22

$   0.66

$   0.62



FLY Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)


Sept. 30,

 2013

(Unaudited)

Dec. 31,    2012

(Audited)

Assets



   Cash and cash equivalents

$  206,966

$    163,124

   Restricted cash and cash equivalents

155,897

137,457

   Rent receivables

3,234

3,124

   Investment in unconsolidated subsidiaries

7,686

6,308

   Flight equipment held for operating lease, net

2,868,678

2,616,864

   Deferred tax asset, net

1,595

9,450

   Fair market value of derivative assets

4,902

319

   Other assets, net

36,616

32,026

Total assets

$ 3,285,574

$ 2,968,672

Liabilities



   Accounts payable and accrued liabilities

17,405

15,662

   Rentals received in advance

16,084

14,402

   Payable to related parties

3,101

2,789

   Security deposits

47,624

47,474

   Maintenance payment liability

225,230

225,733

   Secured borrowings, net

2,175,998

2,052,412

   Fair market value of derivative liabilities

30,649

48,967

   Other liabilities

32,092

29,231

Total liabilities

2,548,183

2,436,670

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 41,306,338 and 28,040,305 shares issued and outstanding at September 30, 2013 and December 31, 2012, respectively

41

28

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

   Additional paid in capital

657,600

482,733

   Retained earnings

99,952

83,138

   Accumulated other comprehensive loss, net

(20,202)

(33,897)

Total shareholders' equity

737,391

532,002

Total liabilities and shareholders' equity

$ 3,285,574

$ 2,968,672



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

Sept. 30,
2013
(Unaudited)

Three months
ended

Sept. 30,
2012
(Unaudited)

Nine months

ended

 Sept. 30,
2013

(Unaudited)

Nine months

ended

 Sept. 30,
2012

(Unaudited)

Net Income (loss)

$   304

$   (29,439)

$   39,064

$   16,677

Add (less):





   Ineffective portion of cash flow hedges

(160)

32,580

(1,020)

31,353

   Debt extinguishment costs

564

-

2,704

-

   Non-cash share based compensation

(189)

1,458

2,285

3,104

   Adjustments related to GAAM Portfolio acquisition:






        Amortization of fair value adjustments recorded in purchase accounting

2,899

5,606

10,955

18,158

   Income tax effects

(712)

(4,801)

(1,508)

(6,222)

Adjusted Net Income

$   2,706

$   5,404

$   52,480

$   63,070

Weighted average diluted shares outstanding

38,921,962

25,960,109

31,821,118

25,915,110

Adjusted Net Income per share

$   0.07

$   0.21

$   1.65

$   2.43









Adjusted Net Income Plus Depreciation and Amortization, a Non-GAAP Financial Measure, to Net Income

(DOLLARS IN THOUSANDS)


Three months
ended

Sept. 30,
2013
(Unaudited)

Three months
ended

Sept. 30,
2012
(Unaudited)

Nine months

ended

 Sept. 30,
2013

(Unaudited)

Nine months

ended

 Sept. 30,
2012

(Unaudited)

Adjusted Net Income

$  2,706

$   5,404

$   52,480

$   63,070

Add:





   Depreciation

36,908

34,302

106,651

102,795

   Other amortization

6,428

7,427

16,892

14,873

   Provision for deferred income taxes

2,833

2,014

8,554

9,395

Adjusted Net Income Plus Depreciation and Amortization

$   48,875

$   49,147

$   184,577

$   190,133







FLY defines Adjusted Net Income as net income plus or minus the after-tax impacts of the ineffective portion of cash flow hedges, debt extinguishment costs, non-cash share-based compensation, and adjustments related to the GAAM portfolio acquisition comprised of amortization of fair value adjustments recorded in purchase accounting. 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 Accounting Principles Generally Accepted 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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