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Fly Leasing Reports First Quarter 2020 Financial Results

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DUBLIN, May 8, 2020 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the first quarter of 2020.

FLY Leasing Limited logo. (PRNewsFoto/FLY Leasing Limited)
FLY Leasing Limited logo. (PRNewsFoto/FLY Leasing Limited)

Highlights

  • Net income of $38.1 million, $1.24 per share

  • Adjusted Net Income of $43.6 million, $1.42 per share

  • Return on equity of 17.2%, Adjusted return on equity of 19.7%

  • Sold six aircraft and two engines for a gain of $31.7 million, a 20% premium to book value

  • $29.21 book value per share, a 28% increase since March 31, 2019

  • Unrestricted cash and cash equivalents of $361.2 million

  • $560 million net book value of unencumbered assets

  • 2.1x net debt to equity

"The COVID-19 pandemic has caused tremendous distress in the global aviation industry, and FLY remains highly focused on successfully managing through the crisis. FLY is well positioned to face what is certain to be a difficult year," said Colm Barrington, Chief Executive Officer of FLY. "Our high cash balance and low leverage puts us in a strong position to meet our operating and financial commitments in 2020. FLY does not have any orders with the aircraft manufacturers and the company has no near-term refinancing requirements."

"FLY is reporting strong financial results for the first quarter of 2020 and had an unrestricted cash balance of $361 million, and record low leverage of 2.1x at quarter end," said Barrington. "We have grown our book value per share to $29.21, which is a 28% increase from a year ago."

"We sold six aircraft with an average age of over 10 years, as well as two engines from a parted-out aircraft, generating a pre-tax gain of nearly $32 million, which was a 20% premium to book value," added Barrington. "Our aircraft sales again monetized value from our balance sheet, reduced our lessee concentration, generated cash, and further reduced leverage."

Financial Results

FLY is reporting net income of $38.1 million, or $1.24 per share, for the first quarter of 2020. This compares to net income of $45.0 million, or $1.38 per share, for the same period in 2019. The first quarter 2020 results include a $9.4 million unrealized fair value loss related to investments in ABS equity certificates.

Adjusted Net Income

Adjusted Net Income was $43.6 million for the first quarter of 2020, compared to $47.2 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.42 in the first quarter of 2020, compared to $1.44 for the first quarter of 2019.

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

Financial Position

At March 31, 2020, FLY's total assets were $3.6 billion, including investment in flight equipment totaling $3.0 billion. Total cash at March 31, 2020 was $391.7 million, of which $361.2 million was unrestricted. The book value per share at March 31, 2020 was $29.21, a 28% increase since March 31, 2019. At March 31, 2020, FLY's net debt to equity ratio was 2.1x, reduced from 3.4x as of March 31, 2019.

Aircraft Portfolio

At March 31, 2020, FLY had 84 aircraft and seven engines in its portfolio. FLY's aircraft and engines are on lease to 40 airlines in 24 countries. The table below does not include the engines.

Portfolio at

Mar. 31, 2020

Dec. 31, 2019


Number

% of Net
Book Value

Number

% of Net
Book Value

Airbus A320ceo Family

33

28%

34

28%

Airbus A320neo Family

1

2%

1

2%

Airbus A330

3

6%

3

6%

Boeing 737NG

38

36%

42

37%

Boeing 737 MAX

2

3%

2

3%

Boeing 757-SF

1

<1%

1

<1%

Boeing 777-LRF

2

10%

2

10%

Boeing 787

4

15%

4

14%

Total(1)

84

100%

89

100%


(1)

Includes six aircraft classified as flight equipment held for sale as of December 31, 2019. No aircraft was held for sale as of March 31, 2020.

At March 31, 2020, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.8 years. The average remaining lease term was 5.2 years, also weighted by net book value.

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 Friday, May 8, 2020. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 5452704. A live webcast with slide presentation will be available on the Events and Presentations page in the Investor Relations section of FLY's website at www.flyleasing.com. A webcast replay 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 leases its aircraft under multi-year 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.

Non-GAAP Financial Measures

FLY provides all financial information in accordance with Generally Accepted Accounting Principles in the United States (GAAP). To supplement our consolidated financial statements presented in accordance with GAAP, we are also providing with this press release, and on our conference call, certain non-GAAP financial measures, including Adjusted Net Income and Adjusted Return on Equity. In calculating these non-GAAP financial measures, we have excluded certain amounts, as detailed in the reconciliation below.

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, operations 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, and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. Additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these 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
ir@flyleasing.com

Fly Leasing Limited

Consolidated Statements of Income

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Mar. 31,


2020

2019


(Unaudited)

(Unaudited)

Revenues



Operating lease rental revenue

$ 85,535

$ 105,328

End of lease income

2,427

1,564

Amortization of lease incentives

(614)

(1,632)

Amortization of lease discounts and other

92

(8)

Operating lease revenue

87,440

105,252

Finance lease revenue

145

160

Gain on sale of aircraft

31,717

27,620

Interest and other income

2,253

1,671

Total revenues

121,555

134,703

Expenses



Depreciation

31,631

37,585

Interest expense

27,155

38,179

Selling, general and administrative

7,664

8,722

Loss on derivatives

507

17

Fair value loss on marketable securities

9,412

Loss on extinguishment of debt

850

2,169

Maintenance and other costs

1,184

598

Total expenses

78,403

87,270

Net income before provision for income taxes

43,152

47,433

Provision for income taxes

5,080

2,468

Net income

$ 38,072

$ 44,965

Weighted average number of shares



- Basic

30,765,840

32,632,715

- Diluted

30,768,029

32,632,715

Earnings per share



- Basic

$ 1.24

$ 1.38

- Diluted

$ 1.24

$ 1.38

Fly Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)



Mar. 31,

Dec. 31,


2020

2019


(Unaudited)

(Audited)

Assets



Cash and cash equivalents

$ 361,151

$ 285,565

Restricted cash and cash equivalents

30,593

52,738

Rent receivables

19,688

14,264

Investment in finance lease, net

11,334

11,639

Flight equipment held for sale, net

144,119

Flight equipment held for operating lease, net

2,716,757

2,720,000

Maintenance rights

280,152

290,958

Deferred tax asset, net

15,166

11,675

Fair value of derivative assets

7,152

4,824

Other assets, net

120,123

129,377

Total assets

$ 3,562,116

$ 3,665,159

Liabilities



Accounts payable and accrued liabilities

$ 31,706

$ 22,746

Rentals received in advance

13,910

16,391

Payable to related parties

4,270

10,077

Security deposits

40,140

40,726

Maintenance payment liability, net

195,665

219,371

Unsecured borrowings, net

619,842

619,407

Secured borrowings, net

1,579,273

1,695,525

Deferred tax liability, net

63,030

57,935

Fair value of derivative liabilities

54,102

27,943

Other liabilities

69,942

76,761

Total liabilities

2,671,880

2,786,882

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 30,481,069 and 30,898,410 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively

31

31

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

Additional paid-in capital

509,738

516,254

Retained earnings

418,464

380,392

Accumulated other comprehensive loss, net

(37,997)

(18,400)

Total shareholders' equity

890,236

878,277

Total liabilities and shareholders' equity

$ 3,562,116

$ 3,665,159

Fly Leasing Limited

Consolidated Statements of Cash Flows

(DOLLARS IN THOUSANDS)



Three months ended Mar. 31,


2020
(Unaudited)

2019
(Unaudited)

Cash Flows from Operating Activities



Net income

$ 38,072

$ 44,965

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



Gain on sale of aircraft

(31,717)

(27,620)

Depreciation

31,631

37,585

Amortization of debt discounts and debt issuance costs

1,875

2,796

Amortization of lease incentives and other items

604

1,839

Fair value loss on marketable securities

9,412

Loss on extinguishment of debt

850

2,169

Provision for deferred income taxes

5,181

2,472

Maintenance payment liability recognized into earnings

(2,487)

Other

268

(333)

Changes in operating assets and liabilities:



Rent receivables

(7,036)

2,505

Other assets

230

(742)

Payable to related parties

(5,807)

(393)

Accounts payable, accrued liabilities and other liabilities

9,957

7,348

Net cash flows provided by operating activities

51,033

72,591

Cash Flows from Investing Activities



Purchase of flight equipment

(27,282)

Proceeds from sale of aircraft, net

160,271

235,770

Payments for aircraft improvement

(6,294)

(1,365)

Payments for lessor maintenance obligations

(347)

(584)

Other

(231)

(335)

Net cash flows provided by investing activities

126,117

233,486



Three months ended Mar. 31,


2020

2019


(Unaudited)

(Unaudited)

Cash Flows from Financing Activities



Security deposits received

3,305

Security deposits returned

(1,546)

Maintenance payment liability receipts

7,848

17,016

Maintenance payment liability disbursements

(10,109)

(8,604)

Debt extinguishment costs

(20)

(54)

Debt issuance costs

(342)

Repayment of secured borrowings

(118,211)

(155,184)

Shares repurchased

(6,504)

(2,117)

Net cash flows used in financing activities

(123,691)

(150,831)

Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents

(18)

(59)

Net increase in unrestricted and restricted cash and cash equivalents

53,441

155,187

Unrestricted and restricted cash and cash equivalents at beginning of period

338,303

281,080

Unrestricted and restricted cash and cash equivalents at end of period

$ 391,744

$ 436,267




Reconciliation to Consolidated Balance Sheets:



Cash and cash equivalents

$ 361,151

$ 363,930

Restricted cash and cash equivalents

30,593

72,337

Unrestricted and restricted cash and cash equivalents

$ 391,744

$ 436,267

Fly Leasing Limited

Reconciliation of Non-GAAP Measures

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Mar. 31,


2020

2019


(Unaudited)

(Unaudited)

Net income

$ 38,072

$ 44,965

Adjustments:



Unrealized foreign exchange gain

(95)

(172)

Deferred income taxes

5,181

2,472

Fair value changes on undesignated derivatives

481

(112)

Adjusted Net Income

$ 43,639

$ 47,153

Average Shareholders' Equity

$ 884,257

$ 720,007

Adjusted Return on Equity

19.7%

26.2%




Weighted average diluted shares outstanding

30,768,029

32,632,715

Adjusted Net Income per diluted share

$ 1.42

$ 1.44

FLY defines Adjusted Net Income as net income plus or minus (i) unrealized foreign exchange gains and losses; (ii) deferred income taxes; (iii) the fair value changes associated with interest rate derivative contracts that are not accounted for as cash flow hedges; and (iv) non-recurring expenses. The adjustments included within Adjusted Net Income are primarily non-cash or non-recurring items that we consider unrelated to the ongoing performance of our operations. Adjusted Return on Equity is calculated by dividing Adjusted Net Income by average shareholders' equity for each period 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 or non-recurring items 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 substitutes for, net income or other financial measures determined in accordance with GAAP. FLY's definitions may be different than those used by other companies.

Cision
Cision

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SOURCE Fly Leasing Limited