FLY Leasing Reports Fourth Quarter and Full Year 2016 Financial Results
DUBLIN, March 9, 2017 /PRNewswire/ -- FLY Leasing Limited (NYSE: FLY), a global leader in aircraft leasing, today announced its financial results for the fourth quarter and full year of 2016.
Fourth Quarter 2016 Highlights
- Net loss of $63.8 million, $1.98 per share, including a non-cash impairment charge of $92 million
- Adjusted Net Income of $30.6 million, $0.95 per share
- Sold eight aircraft for gains of $14.8 million
- Acquired two aircraft
2016 Full Year Highlights
- Net loss $29.1 million, $0.88 per share
- Adjusted Net Income of $79.3 million, $2.38 per share
- Completed $559 million of acquisitions
- Sold 27 aircraft at a premium to book value
- Repurchased 3.4 million shares, nearly 10% of shares outstanding
"In 2016 we continued to transform FLY's fleet, which is now the youngest in the company's history and among the youngest in the industry, at an average age of 6.2 years," said Colm Barrington, CEO of FLY. "We sold 27 aircraft during the year – primarily mid-life models – at a premium to book value. We invested in newer equipment, acquiring ten aircraft during the year. In addition, we continued to repurchase shares, buying back a total of 3.4 million shares or approximately ten percent of outstanding shares at the beginning of the year."
"We entered 2017 with ample liquidity that provides us with the opportunity to grow our portfolio and to continue our share buyback program," added Barrington. "We set a target of acquiring $750 million of new aircraft in 2017 and have the financial firepower to exceed this level if we find the right opportunities to enhance our portfolio and shareholder value."
"We are encouraged by the resilience of global air traffic and the continued profitability of the airline sector," added Barrington. "There is a continuing strong market for leased aircraft, evidenced by the fact that our fleet is fully utilized and that we have no aircraft available for lease until the end of the year."
Financial Results
FLY is reporting a net loss of $63.8 million or $1.98 per share for the fourth quarter of 2016. The loss is primarily driven by a $92 million non-cash impairment charge taken on three older, out-of-production wide-body aircraft. In the fourth quarter of 2015, FLY reported net income of $19.1 million, or $0.47 per share.
The net loss for the year ended December 31, 2016 was $29.1 million, or $0.88 per share, compared to net income of $22.8 million, or $0.52 per share for the year ended December 31, 2015.
Adjusted Net Income
Adjusted Net Income was $30.6 million for the fourth quarter of 2016 compared to $48.3 million in the same period in the previous year. On a per share basis, Adjusted Net Income was $0.95 per share for the fourth quarter of 2016 and $1.19 per share for the fourth quarter of 2015. Adjusted Net Income excludes the non-cash impairment charge and other charges not considered core to our operations.
For the year ended December 31, 2016, Adjusted Net Income was $79.3 million, or $2.38 per share compared to $132.0 million, or $3.19 per share for the year ended December 31, 2015.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
Asset Impairments
In the fourth quarter of 2016, FLY recorded a non-cash impairment charge of $92 million. FLY wrote down two 2006 vintage Airbus A340-600s and one 2001 vintage Airbus A330-200 to their current market values. These aircraft are FLY's oldest wide-body aircraft and the only aircraft of their type in FLY's portfolio. FLY also evaluated the remainder of its fleet on an aircraft-by-aircraft basis for impairment.
Share Repurchases
During the year ended December 31, 2016, FLY repurchased 3.4 million shares for approximately $40 million, or $11.73 per share. At December 31, 2016, approximately $67 million remains available under the current share repurchase program. At December 31, 2016, there were 32.3 million shares outstanding.
Financial Position
At December 31, 2016, FLY's total assets were $3.4 billion, including $2.8 billion of investment in flight equipment. Total cash at December 31, 2016 was $612.1 million, of which $518.0 million was unrestricted.
Total shareholders' equity per share at December 31, 2016 was $18.39.
Aircraft Portfolio
At December 31, 2016, FLY's 76 aircraft were on lease to 42 lessees in 27 countries. The table below does not include 13 aircraft that were held for sale at December 31, 2015 or the two B767 aircraft owned by a joint venture in which FLY has a 57% interest. There were no aircraft held for sale at December 31, 2016.
| Portfolio at |
Dec. 31, |
Dec 31, |
| Airbus A319 |
9 |
10 |
| Airbus A320 |
12 |
14 |
| Airbus A321 |
3 |
3 |
| Airbus A330 |
3 |
4 |
| Airbus A340 |
2 |
3 |
| Boeing 737 |
38 |
39 |
| Boeing 757 |
3 |
3 |
| Boeing 767 |
- |
1 |
| Boeing 777 |
2 |
2 |
| Boeing 787 |
4 |
1 |
| Total |
76 |
80 |
At December 31, 2016, the average age of FLY's fleet, weighted by the net book value of each aircraft, was 6.2 years. The average remaining lease term, also weighted by net book value, was 6.8 years as of December 31, 2016. At December 31, 2016, the portfolio of 76 aircraft was generating annualized rents of approximately $325 million. FLY's lease utilization factor was 100% for the fourth quarter of 2016 and 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 9, 2017. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 60244748 or ask an operator for the FLY Leasing earnings call. 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 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 acquires and leases its aircraft under multi-year operating 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 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. 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
[email protected]
| FLY Leasing Limited |
||||
| Consolidated Statements of Income |
||||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||||
| Three months Dec. 31, 2016 |
Three months Dec. 31, 2015 |
Year ended Dec. 31, 2016 (Audited) |
Year ended Dec. 31, 2015 (Audited) |
|
| Revenues |
||||
| Operating lease revenue |
$ 81,613 |
$ 109,584 |
$ 313,582 |
$ 429,691 |
| Finance lease income |
64 |
299 |
2,066 |
299 |
| Equity earnings from unconsolidated subsidiary |
126 |
125 |
530 |
1,159 |
| Gain on sale of aircraft |
17,506 |
12,718 |
27,195 |
28,959 |
| Interest and other income |
1,291 |
908 |
1,666 |
2,289 |
| Total revenues |
100,600 |
123,634 |
345,039 |
462,397 |
| Expenses |
||||
| Depreciation |
31,562 |
35,645 |
120,452 |
159,732 |
| Aircraft impairment |
92,000 |
14,268 |
96,122 |
66,093 |
| Interest expense |
31,774 |
32,724 |
123,161 |
145,448 |
| Net loss on debt modification and extinguishment |
4,100 |
8,116 |
9,246 |
17,491 |
| Selling, general and administrative |
6,055 |
7,042 |
30,077 |
33,674 |
| Ineffective, dedesignated and terminated derivatives |
(252) |
(548) |
91 |
4,134 |
| Maintenance and other costs |
351 |
3,228 |
2,279 |
7,628 |
| Total expenses |
165,590 |
100,475 |
381,428 |
434,200 |
| Net income (loss) before provision for income taxes |
(64,990) |
23,159 |
(36,389) |
28,197 |
| Provision (benefit) for income taxes |
(1,159) |
4,014 |
(7,277) |
5,399 |
| Net income (loss) |
$ (63,831) |
$ 19,145 |
$ (29,112) |
$ 22,798 |
| Weighted average number of shares |
||||
| - Basic |
32,277,965 |
40,545,100 |
33,239,001 |
41,222,690 |
| - Diluted |
32,277,965 |
40,582,169 |
33,239,001 |
41,315,149 |
| Earnings (loss) per share |
||||
| - Basic |
$ (1.98) |
$ 0.47 |
$ (0.88) |
$ 0.52 |
| - Diluted |
$ (1.98) |
$ 0.47 |
$ (0.88) |
$ 0.52 |
| FLY Leasing Limited |
||
| Consolidated Balance Sheets |
||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||
| Dec. 31, (Audited) |
Dec. 31, |
|
| Assets |
||
| Cash and cash equivalents |
$ 517,964 |
$ 275,998 |
| Restricted cash and cash equivalents |
94,123 |
174,933 |
| Rent receivables |
419 |
124 |
| Investment in unconsolidated subsidiary |
7,700 |
7,170 |
| Flight equipment held for sale, net |
— |
237,262 |
| Flight equipment held for operating lease, net |
2,693,821 |
2,585,426 |
| Maintenance rights, net |
101,969 |
94,493 |
| Investment in finance lease, net |
15,095 |
34,878 |
| Fair market value of derivative assets |
1,905 |
241 |
| Deferred tax asset, net |
7,445 |
7,505 |
| Other assets, net |
6,568 |
6,450 |
| Total assets |
$ 3,447,009 |
$ 3,424,480 |
| Liabilities |
||
| Accounts payable and accrued liabilities |
$ 13,786 |
$ 17,548 |
| Rentals received in advance |
13,123 |
14,560 |
| Payable to related parties |
5,042 |
7,170 |
| Security deposits |
42,495 |
48,876 |
| Maintenance payment liability |
182,571 |
194,543 |
| Unsecured borrowings, net |
691,390 |
689,409 |
| Secured borrowings, net |
1,831,985 |
1,695,711 |
| Fair market value of derivative liabilities |
13,281 |
19,327 |
| Deferred tax liability, net |
19,847 |
28,246 |
| Other liabilities |
40,254 |
52,126 |
| Total liabilities |
2,853,774 |
2,767,516 |
| Shareholders' equity |
||
| Common shares, $0.001 par value, 499,999,900 shares authorized; 32,256,440 and 35,671,400 shares issued and outstanding at December 31, 2016 and 2015, respectively |
32 |
36 |
| Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding |
— |
— |
| Additional paid-in capital |
536,922 |
577,290 |
| Retained earnings |
66,026 |
95,138 |
| Accumulated other comprehensive loss, net |
(9,745) |
(15,500) |
| Total shareholders' equity |
593,235 |
656,964 |
| Total liabilities and shareholders' equity |
$ 3,447,009 |
$ 3,424,480 |
| FLY Leasing Limited |
||||||||||
| Consolidated Statements of Cash Flows |
||||||||||
| (DOLLARS IN THOUSANDS) |
||||||||||
| Year ended |
Year ended |
|||||||||
| Dec. 31, 2016(Audited) |
Dec. 31, 2015(Audited) |
|||||||||
| Cash Flows from Operating Activities |
||||||||||
| Net income |
$ |
(29,112) |
$ |
22,798 |
||||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: |
||||||||||
| Equity earnings from unconsolidated subsidiary |
(530) |
(1,159) |
||||||||
| Finance lease income |
(2,066) |
(299) |
||||||||
| Gain on sale of aircraft |
(27,195) |
(28,959) |
||||||||
| Depreciation |
120,452 |
159,732 |
||||||||
| Aircraft impairment |
96,122 |
66,093 |
||||||||
| Amortization of debt discounts and issuance costs |
9,375 |
11,922 |
||||||||
| Amortization of lease incentives |
8,898 |
20,527 |
||||||||
| Amortization of lease discounts, premiums and other items |
388 |
2,046 |
||||||||
| Amortization of fair market value adjustments associated with the GAAM acquisition |
1,621 |
3,650 |
||||||||
| Net loss on debt modification and extinguishment |
6,094 |
13,868 |
||||||||
| Share-based compensation |
— |
195 |
||||||||
| Unrealized foreign exchange gain |
(437) |
(1,247) |
||||||||
| Provision for deferred income taxes |
(9,158) |
4,919 |
||||||||
| Unrealized loss on derivative instruments |
76 |
4,134 |
||||||||
| Security deposits and maintenance payment liability relieved |
(3,450) |
(48,658) |
||||||||
| Security deposits and maintenance payment claims applied towards operating lease revenues |
(684) |
— |
||||||||
| Cash receipts in settlement of maintenance rights |
9,513 |
— |
||||||||
| Changes in operating assets and liabilities: |
||||||||||
| Rent receivables |
(1,034) |
6,814 |
||||||||
| Other assets |
(1,134) |
137 |
||||||||
| Payable to related parties |
(17,163) |
(19,407) |
||||||||
| Accounts payable, accrued liabilities and other |
(10,965) |
(2,183) |
||||||||
| Net cash flows provided by operating activities |
149,611 |
214,923 |
||||||||
| Cash Flows from Investing Activities |
||||||||||
| Investment in unconsolidated subsidiary |
— |
(2,009) |
||||||||
| Rent received from finance lease |
2,970 |
424 |
||||||||
| Investment in finance lease |
— |
(33,596) |
||||||||
| Purchase of additional aircraft |
(552,166) |
(567,523) |
||||||||
| Proceeds from sale of aircraft |
430,867 |
1,110,046 |
||||||||
| Payment for aircraft improvement |
(2,230) |
(8,196) |
||||||||
| Lessor contribution to maintenance |
(2,712) |
(18,609) |
||||||||
| Net cash flows provided by (used in) investing activities |
(123,271) |
480,537 |
||||||||
| Year ended |
Year ended |
|||||||||
| Dec. 31, 2016 (Audited) |
Dec. 31, 2015 (Audited) |
|||||||||
| Cash Flows from Financing Activities |
||||||||||
| Restricted cash and cash equivalents |
80,828 |
(35,794) |
||||||||
| Security deposits received |
920 |
13,914 |
||||||||
| Security deposits returned |
(7,438) |
(7,788) |
||||||||
| Maintenance payment liability receipts |
71,514 |
84,491 |
||||||||
| Maintenance payment liability disbursements |
(10,951) |
(38,768) |
||||||||
| Swap termination payments, net |
(709) |
(3,737) |
||||||||
| Debt issuance costs |
(2,552) |
(933) |
||||||||
| Proceeds from secured borrowings |
572,719 |
147,276 |
||||||||
| Repayment of secured borrowings |
(448,346) |
(791,385) |
||||||||
| Repurchase of common shares |
(40,257) |
(81,432) |
||||||||
| Dividends |
— |
(41,388) |
||||||||
| Dividend equivalents |
— |
(1,054) |
||||||||
| Net cash flows provided by (used in) financing activities |
215,728 |
(756,598) |
||||||||
| Effect of exchange rate changes on cash and cash equivalents |
(102) |
(424) |
||||||||
| Net increase (decrease) in cash |
241,966 |
(61,562) |
||||||||
| Cash at beginning of period |
275,998 |
337,560 |
||||||||
| Cash at end of period |
$ |
517,964 |
$ |
275,998 |
||||||
| Supplemental Disclosure: |
||||||||||
| Cash paid during the period for: |
||||||||||
| Interest |
$ |
110,351 |
$ |
132,780 |
||||||
| Taxes |
460 |
384 |
||||||||
| Noncash Activities: |
||||||||||
| Security deposits applied to maintenance payment liability, rent receivables, rentals received in advance, and other assets |
— |
3,292 |
||||||||
| Maintenance payment liability applied to rent receivables and rentals received in advance |
— |
2,523 |
||||||||
| Other liabilities applied to maintenance payment liability and rent receivables |
2,250 |
240 |
||||||||
| Noncash investing activities: |
||||||||||
| Aircraft improvement |
5,245 |
1,587 |
||||||||
| Noncash activities in connection with the purchase of aircraft |
6,388 |
19,382 |
||||||||
| Noncash activities in connection with sale of aircraft |
78,722 |
93,819 |
||||||||
| FLY Leasing Limited |
|||||
| Reconciliation of Non-GAAP Measures |
|||||
| (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
|||||
| Three months Dec. 31, 2016 |
Three months Dec. 31, 2015 |
Year ended Dec. 31, 2016 (Unaudited) |
Year ended Dec. 31, 2015 (Unaudited) |
||
| Net income (loss) |
$ (63,831) |
$ 19,145 |
$ (29,112) |
$ 22,798 |
|
| Adjustments: |
|||||
| Aircraft impairment |
92,000 |
14,268 |
96,122 |
66,093 |
|
| Amortization of debt discounts and loan issue costs |
2,170 |
2,842 |
9,375 |
11,922 |
|
| Amortization of lease premiums, discounts and other |
88 |
246 |
388 |
2,046 |
|
| Amortization of fair value adjustments recorded in purchase accounting |
316 |
766 |
1,621 |
3,650 |
|
| Net loss on debt modification and extinguishment |
4,100 |
8,116 |
9,246 |
17,491 |
|
| Non-cash share based compensation |
— |
— |
— |
195 |
|
| Professional fees related to restatement |
— |
— |
1,134 |
— |
|
| Unrealized foreign exchange gain |
(1,187) |
(554) |
(437) |
(1,247) |
|
| Deferred income taxes |
(2,854) |
4,027 |
(9,158) |
4,919 |
|
| Ineffective, dedesignated and terminated derivatives |
(252) |
(548) |
91 |
4,134 |
|
| Adjusted Net Income |
$ 30,550 |
$ 48,308 |
$ 79,270 |
$ 132,001 |
|
| Average Shareholders' Equity |
$ 620,937 |
$ 689,869 |
$ 632,818 |
$ 721,715 |
|
| Adjusted Return on Equity |
19.7% |
28.0% |
12.5% |
18.3% |
|
| Weighted average diluted shares outstanding |
32,277,965 |
40,582,169 |
33,239,001 |
41,315,149 |
|
| Adjusted Net Income per share |
$ 0.95 |
$ 1.19 |
$ 2.38 |
$ 3.19 |
|
FLY defines Adjusted Net Income as net income 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) net losses from debt modification and extinguishment; (v) non-cash share-based compensation; (vi) legal and accounting expenses related to the restatement of our financial statements in 2016; (vii) unrealized foreign exchange gains; (viii) deferred income taxes; (ix) the ineffective portion and charges 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
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