FLY Leasing Reports Second Quarter 2011 Financial Results

Aug 04, 2011, 07:06 ET from FLY Leasing Limited

DUBLIN, Aug. 4, 2011 /PRNewswire/ -- FLY Leasing Limited (NYSE: FLY) ("FLY"), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the second quarter of 2011.

Second Quarter 2011 Highlights

  • Entered into an agreement to purchase $1.4 billion portfolio of 49 aircraft
  • Adjusted net income of $5.5 million, EPS of $0.21, excluding share-based compensation
  • Net income of $4.1 million, EPS of $0.16
  • Available Cash Flow of $30.8 million, $1.19 per share
  • Unrestricted cash of $187.5 million at June 30th
  • Initiated a new $30 million share repurchase program
  • Declared 15th consecutive quarterly dividend on July 15th

"FLY has grown its unrestricted cash balance to $188 million at the end of the second quarter, which will allow the company to complete the acquisition of 49 aircraft, which was announced separately, out of its cash balance," said Colm Barrington, CEO of FLY Leasing. "We are providing strong value for shareholders by utilizing a portion of our unrestricted cash balance and assuming existing debt previously on the aircraft to be acquired, to complete a transformational acquisition for the company, growing our portfolio by 80 percent to 109 aircraft. Please see our separate announcement for full details."

"In connection with the acquisition, we expensed $1.6 million ($0.06 per share) in respect of due diligence and structuring expenses," said Barrington.

"FLY declared a dividend of $0.20 per share for the second quarter, which will be paid on August 19th to shareholders of record on July 29th," said Barrington. "This is our 15th consecutive quarterly dividend. FLY remains strongly committed to its policy of returning capital to shareholders in the form of a quarterly cash dividend."

"We remain optimistic about the continuing and increasing strength of the aircraft leasing industry, which is reinforced by recent significant orders for new aircraft from airlines in both Asia and North America.  We will continue to opportunistically pursue attractive one-off and portfolio acquisitions," concluded Barrington.

Second Quarter Financial Results

FLY's net income and basic and diluted earnings per share for the second quarter of 2011 were $4.1 million and $0.16 per share compared to $13.2 million and $0.46 per share in the same period of 2010. The decrease in net income is primarily due to a reduction in end of lease revenue recognized during the second quarter of 2011 compared to the same period in the previous year and costs incurred in the second quarter of 2011 related to the portfolio acquisition that was separately announced and readying aircraft for delivery to their new lessees during the quarter.

Net income and diluted earnings per share for the six months ended June 30, 2011 were $6.9 million and $0.26 per share compared to $29.8 million and $1.01 per share in the same period in 2010. The 2010 results benefited from a gain of $12.5 million from the sale of an option to purchase our notes payable.  The 2011 results were impacted by a reduction in the recognition of end of lease revenue and the expenses recorded in the second quarter of 2011 associated with the portfolio acquisition announced earlier and preparing aircraft for delivery to their new lessees.  SG&A expense for 2010 includes $2.2 million of expenses associated with our separation from Babcock & Brown.  

Available Cash Flow

Available Cash Flow ("ACF"), which FLY defines as net income plus depreciation, lease incentive amortization, amortization of debt issue costs, non-cash equity based compensation, the deferred tax provision and other one-time, non-cash items, was $30.8 million for the second quarter of 2011 compared to $42.5 million for the same period in the previous year. The decrease is primarily due to the decline in net income. ACF per share was $1.19 for the second quarter of 2011 compared to $1.47 in the same period of 2010.

For the six months ended June 30, 2011, ACF was $59.0 million or $2.26 per share.  This compares to $87.5 million or $2.95 per share for the same period of 2010.

ACF 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.

Dividends and Share Repurchases

On July 15, 2011, FLY declared a dividend of $0.20 per share in respect of the second quarter of 2011. This dividend will be paid on August 19, 2011 to shareholders of record on July 29, 2011.  

In May 2011, FLY initiated a $30 million, one year share repurchase program. Under this program, FLY may make share repurchases from time to time in the open market or in privately negotiated transactions.  The timing of repurchases under the program will depend upon a variety of factors, including market conditions, and the program may be suspended or discontinued at any time.  No shares were purchased under this program during the 2nd quarter of 2011.  At June 30, 2011, there are 25.6 million shares outstanding.

Financial Position

At June 30, 2011, FLY's total assets were $2.0 billion, including flight equipment with a net book value of $1.6 billion. Restricted and unrestricted cash at June 30, 2011 totaled $344.1 million, of which $187.5 million was unrestricted. These amounts compare to total cash of $329.0 million and unrestricted cash of $164.1 million at December 31, 2010.  

Aircraft Portfolio

At June 30, 2011 FLY's aircraft were on lease to 34 lessees in 22 countries.  All aircraft are on lease.  The table below shows the aircraft in FLY's portfolio on June 30, 2011 and December 31, 2010.  The table does not include the four B767 aircraft owned by the joint venture in which FLY has a 57% interest or the 49 aircraft in the portfolio to be acquired.

Portfolio at

Jun 30, 2011

Dec 31, 2010

Airbus A319

10

10

Airbus A320

16

16

Airbus A330

1

1

Boeing 737

19

19*

Boeing 747

1

1

Boeing 757

11

11

Boeing 767

1

1

Boeing 777

1

1

   Total

60

60

* Includes one new B737-800 under contract and delivered in February 2011.  

At June 30, 2011, the average age of FLY's portfolio was 8.4 years weighted by the net book value of each aircraft. The average remaining lease term was 4.4 years, also weighted by net book value. At June 30, 2011 the leases were generating annualized revenues of $205 million. For the second quarter of 2011, FLY's lease utilization factor was 98% and for the six months ended June 30, 2011 the lease utilization factor was 96%.

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, August 4, 2011.  Participants should call +1-706-758-4339 (International) or 877-309-0213 (North America) and enter confirmation code 77991239 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 +1-706-645-9291 (International) or 800-642-1687 (North America) and enter confirmation code 77991239. The replay recording will be available until August 11, 2010.

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 and the proposed portfolio acquisition that was separately announced. 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

June  30,

      2011

(Unaudited)

Three months

ended

June 30,

      2010

(Unaudited)

Six months ended

June 30,

2011 (Unaudited)

Six months ended

June 30,

 2010 (Unaudited)

Revenues

  Operating lease revenue

$   54,194

$   61,438

$  101,762

$   115,683

  Equity earnings from unconsolidated joint ventures

121

580

1,337

580

  Gain on sale of option to purchase notes payable

-

12,501

  Lease termination settlement

539

580

1,088

1,169

  Interest and other income

317

816

653

1,189

Total revenues

55,171

63,414

104,840

131,122

Expenses

  Depreciation

20,924

21,116

41,565

42,381

  Interest expense

18,327

18,770

36,896

37,822

  Selling, general and administrative

8,212

7,675

13,897

12,645

  Debt purchase option amortization

-

-

947

  Maintenance and other costs

2,606

534

3,919

1,353

Total expenses

50,069

48,095

96,277

95,148

Net income before provision for income taxes

5,102

15,319

8,563

35,974

  Provision for income taxes

1,004

2,159

1,702

6,147

Net income

$    4,098

$   13,160

$  6,861

$   29,827

Weighted average number of shares

-  Basic

25,648,928

28,887,534

26,035,817

29,579,894

-  Diluted

25,791,844

28,922,127

26,156,264

29,614,487

Earnings per share

-  Basic and Diluted

$   0.16

$   0.46

$   0.26

$   1.01

Dividends declared and paid per share

$   0.20

$   0.20

$   0.40

$   0.40

FLY Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

June 30,

2011

(Unaudited)

Dec. 31,

  2010

(Audited)

Assets

  Cash and cash equivalents

$  187,544

$  164,107

  Restricted cash and cash equivalents.

156,533

164,935

  Rent receivables

1,472

995

  Investment in unconsolidated joint ventures

15,359

9,655

  Flight equipment held for operating leases, net

1,620,285

1,613,458

  Deferred tax asset, net

1,873

3,046

  Fair market value of derivative asset

432

2,226

  Other assets, net

15,517

19,802

Total assets

$ 1,999,015

$  1,978,224

Liabilities

  Accounts payable and accrued liabilities

10,874

5,190

  Rentals received in advance

8,057

9,868

  Payable to related parties

966

1,539

  Security deposits

31,972

31,682

  Maintenance payment liabilities

153,350

135,019

  Notes payable, net

599,825

596,190

  Borrowings under aircraft acquisition facility

545,249

561,636

  Other secured borrowings

94,742

66,283

  Fair market value of derivative liabilities

81,024

82,436

  Other liabilities

11,429

13,477

Total liabilities

1,537,488

1,503,320

Shareholders' equity

Common shares, $0.001 par value, 499,999,900 shares authorized; 25,648,928 and 26,707,501 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively

26

27

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

  Additional paid in capital

453,256

463,559

  Retained earnings

74,326

77,984

  Accumulated other comprehensive loss, net

(66,081)

(66,666)

Total shareholders' equity

461,527

474,904

Total liabilities and shareholders' equity

$ 1,999,015

$  1,978,224

FLY Leasing Limited

Reconciliation of Available Cash Flow, a Non-GAAP Financial Measure, to Net Income

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months

ended

June 30,      

2011

(Unaudited

Three months

ended

June 30,

      2010

(Unaudited

Six months ended

June 30,

2011 (Unaudited)

Six months ended

June 30,

  2010 (Unaudited)

Net Income

$4,098

$13,160

$6,861

$29,827

Add:

  Depreciation

20,924

21,116

41,565

42,381

  Lease incentive amortization

1,730

1,364

3,187

2,607

  Amortization of debt issue costs

1,873

1,958

3,981

3,848

  Non-cash share based compensation

1,411

846

2,363

846

   Professional fees reimbursed by Babcock & Brown

-

2,180

-

2,180

  Provision for deferred income taxes

754

1,869

1,090

5,818

Available cash flow

$30,790

$42,493

$59,047

$87,507

Weighted average diluted shares outstanding

25,791,844

28,922,127

26,156,264

29,614,487

Available cash flow per share

$1.19

$1.47

$2.26

$2.95

FLY defines Available Cash Flow ("ACF") as net income plus depreciation, amortization of lease incentives and debt issue costs, non cash share based compensation and deferred income taxes. In addition, other one-time, non-cash items are excluded from ACF.  FLY's definition of ACF may not be consistent with similar definitions used by other companies. The reconciliation above compares ACF to net income computed in accordance with Accounting Principles Generally Accepted in the United States (GAAP), the most directly comparable GAAP financial measure. FLY believes ACF provides investors with a measure for evaluating its ability to pay dividends and reinvest in its business. However, ACF excludes certain positive and negative cash items, including principal payments, if any, and has certain important limitations as an indicator of FLY's ability to pay dividends and reinvest in its business. Management uses ACF as a measure for assessing FLY's performance. ACF should be considered in addition to, not as a substitute for net income or other financial measures determined in accordance with GAAP. For additional information, please see FLY's financial statements and "Management's Discussion and Analysis of Operations and Financial Condition" that will be included in the periodic report it expects to file with the Securities and Exchange Commission with respect to the financial statements discussed herein.

SOURCE FLY Leasing Limited



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