FLY Leasing Reports Second Quarter 2015 Financial Results

Jul 29, 2015, 07:00 ET from FLY Leasing Limited

DUBLIN, July 29, 2015 /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 2015.

Second Quarter 2015 Highlights

  • Adjusted Net Income of $9.5 million, or $0.23 per share
  • Net loss of $58.3 million after a $65.4 million impairment charge
  • Contracted to sell 33 aircraft which will generate a $35 million pre-tax gain
  • Re-priced Term Loan, saving $4 million in annual interest cost
  • Reduced BBAM management fee by $5 million, or 47%, annually
  • Declared 31st consecutive quarterly dividend on July 15 ($0.25 per share)

"In the second quarter, FLY achieved a major milestone in its fleet rejuvenation plan with an agreement to sell a portfolio of 33 aircraft, transforming its portfolio and setting a course to drive stronger returns," said Colm Barrington, CEO of FLY.  "Combined with the sale of eight B757s previously announced, we have agreements to sell a total of 41 aircraft averaging 12.9 years of age at June 30.  These sales accomplish several key objectives, including lowering our fleet age, generating approximately $450 million of additional cash and reducing our financial leverage."

"We are actively managing the company's capital structure while reducing operating costs," added Barrington.  "In connection with the aircraft sales, BBAM has reduced its management fee by nearly half, demonstrating a strong commitment to its long-term partnership with FLY, as well as its aligned goal of maximizing returns for FLY shareholders.  In addition, the re-pricing of our Term Loan will reduce our interest costs by about $4 million annually."

"Following completion of these sale transactions, FLY will be in a very strong position to grow by reinvesting in newer, younger aircraft and generating higher returns for its shareholders."

Financial Results

FLY is reporting a net loss of $58.3 million or $1.42 per diluted share for the second quarter of 2015.  This compares to net income of $21.7 million or $0.51 per diluted share for the same period of 2014.  The second quarter 2015 loss reflects a non-cash $65.4 million impairment charge.  The second quarter 2014 results include $18.9 million in gains from aircraft sales.

Operating lease revenue for the second quarter of 2015 increased by $11.7 million to $101.7 million, 13.0% more than in the same period in the previous year.   

The net loss for the six month period ended June 30, 2015 was $41.0 million, or $1.00 per share, after the impairment charge taken in the second quarter. For the six month period ended June 30, 2015, operating lease revenue increased 23.5% to $221.8 million.

Adjusted Net Income

Adjusted Net Income for the second quarter of 2015 was $9.5 million ($0.23 per share) as compared to $26 million ($0.63 per share) in the same quarter of 2014.  For the six month period ended June 30, 2015, Adjusted Net Income was $36.1 million ($0.87 per share) as compared to $35.9 million ($0.87 per share) for the same period in 2014.

Dividend

On July 15, 2015, FLY declared a dividend of $0.25 per share in respect of the second quarter of 2015. This dividend will be paid on August 20, 2015 to shareholders of record on July 31, 2015. This dividend is FLY's 31st consecutive quarterly dividend.  Dividends declared since FLY listed on the NYSE in September 2007 total $7.87 per share.

Financial Position

At June 30, 2015, FLY's total assets were $4.1 billion, and include $2.7 billion of flight equipment held for operating lease and $933.7 million of flight equipment held for sale.  The aircraft classified as held for sale are subject to a definitive sale agreement and are expected to be transferred to the buyer over the next six months.    

Total cash at June 30, 2015 was $462.1 million, of which $350.2 million was unrestricted.  This compares to total cash of $476.7 million at December 31, 2014, of which $337.6 million was unrestricted. Further, at June 30, 2015, FLY owned 15 unencumbered aircraft with a net book value of $558.7 million

Aircraft Portfolio

At June 30, 2015, FLY's 96 aircraft held for operating lease, shown in the table below, were on lease to 49 lessees in 30 countries. The table does not include 33 aircraft that are held for sale at June 30, 2015 or two B767 aircraft owned by a joint venture in which FLY has a 57% interest.

Portfolio at

Jun 30, 2015

Dec 31, 2014

Airbus A319

13

18

Airbus A320

19

27

Airbus A321

3

3

Airbus A330

3

4

Airbus A340

3

3

Boeing 737

41

57

Boeing 747

1

1

Boeing 757

11

11

Boeing 767

1

1

Boeing 777

-

1

Boeing 787

1

1

      Total

96

127

At June 30, 2015, the average age of FLY's aircraft held for operating lease, weighted by the net book value of each aircraft, was 8.0 years. The average remaining lease term was 5.2 years, also weighted by net book value. At June 30, 2015, these leases were generating annualized revenues of approximately $310 million.

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 Wednesday, July 29, 2015.  Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 73317082 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 73317082. The telephone replay will be available for ten days.  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

Jun. 30, 2015 (Unaudited)

Three months ended

Jun. 30, 2014 (Unaudited)

Six months ended

Jun. 30, 2015 (Unaudited)

Six months ended Jun. 30, 2014 (Unaudited)

Revenues

   Operating lease rental revenue

$     103,406

$     94,575

$  206,554

$   185,111

   End of lease revenue

3,676

175

25,612

3,854

   Amortization of lease incentives

(4,757)

(3,833)

(8,793)

(7,221)

   Amortization of lease premiums, discounts and other

(641)

(951)

(1,586)

(2,151)

              Operating lease revenue

101,684

89,966

221,787

179,593

   Equity earnings from unconsolidated subsidiary

341

359

681

1,741

   Gain on sale of aircraft

18,855

1,897

18,855

   Interest and other income

797

334

1,003

644

Total revenues

102,822

109,514

225,368

200,833

Expenses

   Depreciation

49,662

42,125

99,736

82,528

   Aircraft impairment

65,398

65,398

   Interest expense

37,232

33,819

76,529

68,444

   Selling, general and administrative

10,573

11,329

18,837

20,944

   Ineffective, dedesignated and terminated derivatives

1,756

97

1,492

32

   Net (gain) loss on debt modification and extinguishment

2,119

(4,010)

6,169

(3,995)

   Maintenance and other costs

1,077

1,584

2,663

3,994

Total expenses

167,817

84,944

270,824

171,947

Net income (loss) before provision for

income taxes

(64,995)

24,570

(45,456)

28,886

   Provision (benefit) for income taxes

(6,740)

2,896

(4,467)

3,649

Net income (loss)

$      (58,255)

$     21,674

$  (40,989)

$     25,237

Weighted average number of shares

-  Basic

41,456,784

41,419,515

41,444,957

41,376,963

-  Diluted

41,456,784

41,446,070

41,444,957

41,420,045

Earnings per share

-  Basic and Diluted

$     (1.42)

$    0.51

$    (1.00)

$     0.58

Dividends declared and paid per share

$      0.25

$    0.25

$      0.50

$     0.50

FLY Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Jun. 30, 2015 (Unaudited)

Dec. 31, 2014 (Audited)

Assets

   Cash and cash equivalents

$      350,220

$     337,560

   Restricted cash and cash equivalents

111,897

139,139

   Rent receivables

1,633

4,887

   Investment in unconsolidated subsidiary

4,683

4,002

   Flight equipment held for sale, net

933,662

   Flight equipment held for operating lease, net

2,660,638

3,705,407

   Fair value of derivative assets

487

2,067

   Other assets, net

23,511

31,608

Total assets

$   4,086,731

$ 4,224,670

Liabilities

   Accounts payable and accrued liabilities

$        19,903

$       18,431

   Rentals received in advance

17,781

19,751

   Payable to related parties

3,328

2,772

   Security deposits

59,153

64,058

   Maintenance payment liability

250,425

254,514

   Unsecured borrowings, net

690,280

689,452

   Secured borrowings, net

2,268,900

2,335,328

   Deferred tax liability, net

11,946

16,289

   Fair value of derivative liabilities

21,100

23,311

   Other liabilities

45,536

41,890

Total liabilities

3,388,352

3,465,796

Shareholders' equity

   Common shares, $0.001 par value, 499,999,900 shares authorized; 41,469,073 and 41,432,998 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively

41

41

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

   Additional paid in capital

658,717

658,522

   Retained earnings

55,053

117,402

   Accumulated other comprehensive loss, net

(15,432)

(17,091)

Total shareholders' equity

698,379

758,874

Total liabilities and shareholders' equity

$   4,086,731

$ 4,224,670

FLY Leasing Limited

Consolidated Statements of Cash Flows

(DOLLARS IN THOUSANDS)

Six months ended Jun. 30, 2015 (Unaudited)

Six months ended Jun. 30, 2014 (Unaudited)

Cash Flows from Operating Activities

Net income (loss)

$

(40,989)

$

25,237

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

      Equity in earnings from unconsolidated subsidiary

(681)

(1,741)

      Gain on sale of aircraft

(1,897)

(18,855)

      Depreciation

99,736

82,528

      Aircraft impairment

65,398

      Amortization of debt discounts and loan issuance costs

5,957

6,239

      Amortization of lease incentives

8,793

7,221

      Amortization of lease discounts, premiums and other items

1,321

1,457

      Amortization of fair value adjustments associated with the GAAM acquisition

2,136

3,531

      Net (gain) loss on debt modification and extinguishment

5,160

(4,048)

      Share-based compensation

195

(36)

      Unrealized foreign exchange (gain) loss on cash balances

305

(20)

      Unrealized foreign exchange gain on Euro denominated borrowing

(1,065)

      Provision for deferred income taxes

(4,815)

3,649

      Unrealized loss on derivative instruments

1,211

32

      Security deposits and maintenance payment liability relieved

(25,612)

(3,443)

      Distribution from unconsolidated subsidiary

4,786

      Changes in operating assets and liabilities:

            Rent receivables

6,825

(2,877)

            Other assets

1,507

1,768

            Payable to related parties

(3,008)

(3,499)

            Accounts payable and accrued liabilities

(1,482)

1,060

            Rentals received in advance

(1,970)

(724)

            Other liabilities

4,247

4,405

Net cash flows provided by operating activities

121,272

106,670

Cash Flows from Investing Activities

   Distribution from unconsolidated subsidiary

1,847

   Purchase of flight equipment

(156,196)

(289,259)

   Proceeds from sale of aircraft

126,503

81,867

   Payment for aircraft improvement

(6,255)

(7,693)

   Lessor payments for maintenance

(13,206)

(2,422)

Net cash flows used in investing activities

(49,154)

(215,660)

Six months ended Jun. 30, 2015 (Unaudited)

Six months ended Jun. 30, 2014 (Unaudited)

Cash Flows from Financing Activities

     Restricted cash and cash equivalents

27,242

49,600

     Security deposits received

3,815

4,391

     Security deposits returned

(6,618)

(1,828)

     Maintenance payment liability receipts

42,163

48,191

     Maintenance payment liability disbursements

(32,891)

(37,131)

     Proceeds from termination of interest rate swaps

23

     Debt issuance costs

(914)

(242)

     Proceeds from secured borrowings

147,277

     Repayment of secured borrowings

(217,890)

(83,592)

     Dividends

(20,716)

(20,676)

     Dividend equivalents

(644)

(1,044)

Net cash flows used in financing activities

(59,153)

(42,331)

      Effect of exchange rate changes on cash and cash equivalents

(305)

20

Net increase (decrease) in cash

12,660

(151,301)

     Cash at beginning of period

337,560

404,472

Cash at end of period

$

350,220

$

253,171

Supplemental Disclosure:

Cash paid during the period for:

     Interest

$

70,454

$

59,634

     Taxes

115

152

Noncash Activities:

     Security deposits applied to maintenance payment liability and rent receivables

3,175

820

     Maintenance payment liability applied to rent receivables

2,108

     Other liabilities applied to maintenance payment liability and rent receivables

240

979

     Noncash investing activities:

        Aircraft improvement

2,765

2,174

        Noncash activities in connection with purchase of aircraft:

                              Rent receivable applied

852

1,480

                              Security deposits and maintenance payment liability assumed

11,597

16,019

                              Other assets applied

898

550

                              Other liabilities assumed

6,997

--

Noncash activities in connection with sale of aircraft:

Rent receivable applied

695

425

Security deposits and maintenance payment liability transferred

6,116

8,678

Refundable deposits applied

2,250

2,626

FLY Leasing Limited

Reconciliation of Non-GAAP Measures

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months ended Jun. 30, 2015 (Unaudited)

Three months ended Jun. 30, 2014 (Unaudited)

Six months ended Jun. 30, 2015 (Unaudited)

Six months ended Jun. 30, 2014 (Unaudited)

Net income (loss)

$      (58,255)

$       21,674

$      (40,989)

$     25,237

Adjustments:

   Aircraft impairment

65,398

65,398

   Amortization of debt discounts and loan issue costs

2,847

3,097

5,957

6,239

   Amortization of lease premiums, discounts and other

602

644

1,321

1,405

   Amortization of fair value adjustments recorded in purchase accounting

899

1,602

2,136

3,531

   Net (gain) loss on debt modification and extinguishment

2,119

(4,010)

6,169

(3,995)

   Non-cash share based compensation

43

20

195

(36)

   Unrealized foreign exchange (gain) loss

910

13

(760)

(20)

   Deferred income taxes

(6,841)

2,849

(4,815)

3,483

   Ineffective, dedesignated and terminated derivatives

1,756

97

1,492

32

Adjusted Net Income

$         9,478

$       25,986

$       36,104

$     35,876

Average Shareholders' Equity

$     729,033

$     743,314

$     728,627

$   747,439

Adjusted Return on Equity

5.2%

14.0%

9.9%

9.6%

Weighted average diluted shares outstanding

41,456,784

41,446,070

41,444,957

41,420,045

Adjusted Net Income per share

$              0.23

$              0.63

$                 0.87

$             0.87

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) gain and losses from debt modification and extinguishment; (v) non-cash share-based compensation; (vi) unrealized foreign exchange gains and losses; (vii) deferred income taxes; and (viii) the ineffective portion and charges associated with cash flow hedges.  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 to assess our core operating performance on a consistent basis from period to period.  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, not as a substitute for net income or other financial measure determined in accordance with Accounting Principles Generally Accepted in the United States.  FLY's definitions may be different than those used by other companies.

Logo - http://photos.prnewswire.com/prnh/20130709/SF44539LOGO

 

SOURCE FLY Leasing Limited



RELATED LINKS

http://www.flyleasing.com