Fly Leasing Reports Fourth Quarter and Full Year 2019 Financial Results
Dublin, Ireland, February 27, 2020 – Fly
Leasing Limited (NYSE: FLY) (“FLY”), a global leader in aircraft leasing, today announced its financial results for the fourth quarter and full year of 2019.
Fourth Quarter 2019 Highlights
|
•
|
Adjusted Net Income of $77.0 million, $2.49 per share
|
|
•
|
Return on equity of 35.9%, Adjusted return on equity of 36.7%
|
|
•
|
Sold ten aircraft for an economic gain of $62.7 million, a 31% premium to book value
|
|
•
|
Purchased seven aircraft for $217.0 million
|
2019 Full Year Highlights
|
•
|
Net income of $225.9 million, $7.12 per share
|
|
•
|
Adjusted Net Income of $245.9 million, $7.75 per share
|
|
•
|
Return on equity of 29.2%, Adjusted return on equity of 31.8%
|
|
•
|
Sold 35 aircraft for an economic gain of $149.1 million, an 18% premium to book value
|
|
•
|
$28.42 book value per share at year end, a 32% increase since December 31, 2018
|
|
•
|
Net debt to equity ratio of 2.3x
|
“FLY is reporting record financial outcomes for the fourth quarter and full year 2019 along with adjusted returns on equity of more than 30% in both the quarter and full year,” said Colm Barrington, FLY’s Chief
Executive Officer. “At year end, our book value per share was $28.42, which was a 32% increase in the year. Our leverage was reduced to 2.3x at year end, down from 4.0x at the beginning of the year.”
“Our aircraft sales in 2019 demonstrated the value in our balance sheet, reduced lessee concentration, generated cash and reduced our leverage,” added Barrington. “In the year we sold 35 aircraft with an average age
of over 10 years, generating an economic gain of nearly $150 million, which was an 18% premium to book value.”
“FLY remains well positioned for a period of fleet enhancement as we continue to take delivery of our committed pipeline of new, fuel-efficient and low polluting Airbus A320neo family aircraft and pursue other
opportunities to acquire attractive aircraft,” said Barrington. “FLY has a strong balance sheet and ample financial capacity to support the acquisition of both our committed deliveries and additional aircraft that we expect to acquire this year.”
Financial Results
FLY is reporting net income of $75.2 million, or $2.43 per share, for the fourth quarter of 2019. This compares to net income of $31.0 million, or $0.95 per share, for the same
period in 2018.
Net income for the year ended December 31, 2019 was $225.9 million, or $7.12 per share, compared to net income of $85.7 million, or $2.88 per share, for the year ended December 31, 2018.
Adjusted Net Income
Adjusted Net Income was $77.0 million for the fourth quarter of 2019, compared to $30.8 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $2.49 in the fourth quarter of
2019, compared to $0.94 for the fourth quarter of 2018.
For the year ended December 31, 2019, Adjusted Net Income was $245.9 million, or $7.75 per share, compared to $91.2 million, or $3.06 per share, for the same period last year.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
Share Repurchases
During the year ended December 31, 2019, FLY repurchased 2.0 million shares at an average price of $16.29 per share, for a total cost of $32.8 million. As of December 31, 2019, FLY had 30.9 million shares outstanding
and had $50.0 million remaining under its share repurchase authorization.
Financial Position
At December 31, 2019, FLY’s total assets were $3.7 billion, including investment in flight equipment totaling $3.2 billion. Total cash at December 31, 2019 was $338.3 million, of which $285.6 million was
unrestricted. The book value per share at December 31, 2019 was $28.42, a 32% increase since December 31, 2018. At December 31, 2019, FLY’s net debt to equity ratio was 2.3x, reduced from 4.0x at December 31, 2018.
Aircraft Portfolio
At December 31, 2019, FLY’s portfolio consisted of 89 aircraft, six of which were classified as flight equipment held for sale, and seven engines. FLY’s aircraft and engines were on lease to 41 airlines in 24
countries. The table below does not include engines.
2
|
Portfolio at
|
Dec. 31, 2019
|
Dec. 31, 2018
|
||||||||||||||
|
Number
|
% of Net
Book Value
|
Number
|
% of Net
Book Value
|
|||||||||||||
|
Airbus A320ceo Family
|
34
|
28
|
%
|
55
|
38
|
%
|
||||||||||
|
Airbus A320neo Family
|
1
|
2
|
%
|
—
|
—
|
|||||||||||
|
Airbus A330
|
3
|
6
|
%
|
3
|
5
|
%
|
||||||||||
|
Airbus A340
|
—
|
—
|
2
|
1
|
%
|
|||||||||||
|
Boeing 737NG
|
42
|
37
|
%
|
42
|
32
|
%
|
||||||||||
|
Boeing 737 MAX
|
2
|
3
|
%
|
2
|
3
|
%
|
||||||||||
|
Boeing 757-SF
|
1
|
<1
|
% |
3
|
1
|
%
|
||||||||||
|
Boeing 777-LRF
|
2
|
10
|
%
|
2
|
8
|
%
|
||||||||||
|
Boeing 787
|
4
|
14
|
%
|
4
|
12
|
%
|
||||||||||
|
Total(1)
|
89
|
100
|
%
|
113
|
100
|
%
|
||||||||||
(1) Includes six aircraft and twelve aircraft classified as flight equipment held for sale at December 31, 2019 and December 31, 2018, respectively.
At December 31, 2019, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.6 years. The average remaining lease term was 5.3 years, also weighted by net book value. At
December 31, 2019, FLY’s portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $332 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 Thursday, February 27, 2020. Participants should call +1 (409) 220-9381 (International) or
(866) 438-0730 (North America) and enter confirmation code 8991734. 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.
3
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. 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
4
Fly Leasing Limited
Consolidated Statements of Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
Three months ended Dec. 31,
|
Year ended Dec. 31,
|
|||||||||||||||
|
2019
(Unaudited)
|
2018
(Unaudited)
|
2019
(Audited)
|
2018
(Audited)
|
|||||||||||||
|
Revenues
|
||||||||||||||||
|
Operating lease rental revenue
|
$
|
88,622
|
$
|
112,159
|
$
|
391,142
|
$
|
389,350
|
||||||||
|
End of lease income
|
48,394
|
4,264
|
78,781
|
20,333
|
||||||||||||
|
Amortization of lease incentives
|
(1,237
|
)
|
(2,614
|
)
|
(5,590
|
)
|
(9,738
|
)
|
||||||||
|
Amortization of lease discounts and other
|
39
|
(42
|
)
|
66
|
(431
|
)
|
||||||||||
|
Operating lease revenue
|
135,818
|
113,767
|
464,399
|
399,514
|
||||||||||||
|
Finance lease revenue
|
149
|
163
|
618
|
675
|
||||||||||||
|
Equity earnings (loss) from unconsolidated subsidiary
|
(10
|
)
|
56
|
2,717
|
(54
|
)
|
||||||||||
|
Gain on sale of aircraft
|
14,691
|
7,874
|
97,323
|
13,398
|
||||||||||||
|
Interest and other income
|
3,606
|
445
|
9,967
|
4,766
|
||||||||||||
|
Total revenues
|
154,254
|
122,305
|
575,024
|
418,299
|
||||||||||||
|
Expenses
|
||||||||||||||||
|
Depreciation
|
32,029
|
39,887
|
140,798
|
144,084
|
||||||||||||
|
Interest expense
|
29,935
|
40,703
|
137,133
|
144,742
|
||||||||||||
|
Selling, general and administrative
|
9,131
|
8,487
|
35,304
|
31,185
|
||||||||||||
|
Loss (gain) on derivatives
|
(89
|
)
|
233
|
2,720
|
(2,382
|
)
|
||||||||||
|
Loss on modification and extinguishment of debt
|
4,260
|
1,016
|
9,590
|
2,474
|
||||||||||||
|
Maintenance and other costs
|
229
|
510
|
3,075
|
2,547
|
||||||||||||
|
Total expenses
|
75,495
|
90,836
|
328,620
|
322,650
|
||||||||||||
|
Net income before provision for income taxes
|
78,759
|
31,469
|
246,404
|
95,649
|
||||||||||||
|
Provision for income taxes
|
3,601
|
460
|
20,527
|
9,926
|
||||||||||||
|
Net income
|
$
|
75,158
|
$
|
31,009
|
$
|
225,877
|
$
|
85,723
|
||||||||
|
Weighted average number of shares
|
||||||||||||||||
|
- Basic
|
30,898,410
|
32,650,019
|
31,607,781
|
29,744,083
|
||||||||||||
|
- Diluted
|
30,903,313
|
32,661,240
|
31,715,469
|
29,783,904
|
||||||||||||
|
Earnings per share
|
||||||||||||||||
|
- Basic
|
$
|
2.43
|
$
|
0.95
|
$
|
7.15
|
$
|
2.88
|
||||||||
|
- Diluted
|
$
|
2.43
|
$
|
0.95
|
$
|
7.12
|
$
|
2.88
|
||||||||
5
Fly Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA)
|
Dec. 31,
2019
(Audited)
|
Dec. 31,
2018
(Audited)
|
|||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
285,565
|
$
|
180,211
|
||||
|
Restricted cash and cash equivalents
|
52,738
|
100,869
|
||||||
|
Rent receivables
|
14,264
|
9,307
|
||||||
|
Investment in finance lease, net
|
11,639
|
12,822
|
||||||
|
Flight equipment held for sale, net
|
144,119
|
259,644
|
||||||
|
Flight equipment held for operating lease, net
|
2,720,000
|
3,228,018
|
||||||
|
Maintenance rights
|
290,958
|
298,207
|
||||||
|
Deferred tax asset, net
|
11,675
|
6,505
|
||||||
|
Fair value of derivative assets
|
4,824
|
5,929
|
||||||
|
Other assets, net
|
129,377
|
124,960
|
||||||
|
Total assets
|
$
|
3,665,159
|
$
|
4,226,472
|
||||
|
Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
$
|
22,746
|
$
|
23,146
|
||||
|
Rentals received in advance
|
16,391
|
21,322
|
||||||
|
Payable to related parties
|
10,077
|
4,462
|
||||||
|
Security deposits
|
40,726
|
60,097
|
||||||
|
Maintenance payment liability, net
|
219,371
|
292,586
|
||||||
|
Unsecured borrowings, net
|
619,407
|
617,664
|
||||||
|
Secured borrowings, net
|
1,695,525
|
2,379,869
|
||||||
|
Deferred tax liability, net
|
57,935
|
36,256
|
||||||
|
Fair value of derivative liabilities
|
27,943
|
8,558
|
||||||
|
Other liabilities
|
76,761
|
80,402
|
||||||
|
Total liabilities
|
2,786,882
|
3,524,362
|
||||||
|
Shareholders’ equity
|
||||||||
|
Common shares, $0.001 par value, 499,999,900 shares authorized; 30,898,410 and 32,650,019 shares issued and outstanding at December 31, 2019 and December 31, 2018, respectively
|
31
|
33
|
||||||
|
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
||||||
|
Additional paid-in capital
|
516,254
|
549,123
|
||||||
|
Retained earnings
|
380,392
|
154,347
|
||||||
|
Accumulated other comprehensive loss, net
|
(18,400
|
)
|
(1,393
|
)
|
||||
|
Total shareholders’ equity
|
878,277
|
702,110
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
3,665,159
|
$
|
4,226,472
|
||||
6
Fly Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)
|
Year ended Dec. 31,
|
||||||||
|
2019
(Audited)
|
2018
(Audited)
|
|||||||
|
Cash Flows from Operating Activities
|
||||||||
|
Net income
|
$
|
225,877
|
$
|
85,723
|
||||
|
Adjustments to reconcile net income to net cash flows provided by operating activities:
|
||||||||
|
Finance lease revenue
|
(618
|
)
|
(675
|
)
|
||||
|
Equity in (earnings) loss from unconsolidated subsidiary
|
(2,717
|
)
|
54
|
|||||
|
Gain on sale of aircraft
|
(97,323
|
)
|
(13,398
|
)
|
||||
|
Depreciation
|
140,798
|
144,084
|
||||||
|
Amortization of debt discounts and debt issuance costs
|
9,906
|
9,455
|
||||||
|
Amortization of lease incentives and other items
|
6,152
|
11,409
|
||||||
|
Loss on modification and extinguishment of debt
|
9,590
|
2,474
|
||||||
|
Unrealized foreign exchange gain
|
(271
|
)
|
(563
|
)
|
||||
|
Provision for deferred income taxes
|
20,449
|
9,864
|
||||||
|
Loss (gain) on derivative instruments
|
3,224
|
(1,269
|
)
|
|||||
|
Security deposits and maintenance payment liability recognized into earnings
|
(47,890
|
)
|
(15,597
|
)
|
||||
|
Distributions from unconsolidated subsidiary
|
2,727
|
2,131
|
||||||
|
Cash receipts from maintenance rights
|
4,637
|
3,013
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Rent receivables
|
(10,668
|
)
|
(12,866
|
)
|
||||
|
Other assets
|
(2,160
|
)
|
(4,119
|
)
|
||||
|
Payable to related parties
|
5,615
|
2,378
|
||||||
|
Accounts payable, accrued liabilities and other liabilities
|
4,842
|
18,982
|
||||||
|
Net cash flows provided by operating activities
|
272,170
|
241,080
|
||||||
|
Cash Flows from Investing Activities
|
||||||||
|
Distributions from unconsolidated subsidiary
|
2,639
|
3,103
|
||||||
|
Rent received from finance lease
|
1,800
|
1,800
|
||||||
|
Net payments for derivative settlements
|
(3,208
|
)
|
—
|
|||||
|
Investment income from equity certificates
|
1,603
|
—
|
||||||
|
Purchase of equity certificates
|
(10,481
|
)
|
(5,747
|
)
|
||||
|
Purchase of flight equipment
|
(319,995
|
)
|
(934,481
|
)
|
||||
|
Proceeds from sale of aircraft, net
|
824,116
|
177,702
|
||||||
|
Capitalized interest on Portfolio B order book
|
(4,893
|
)
|
—
|
|||||
|
Purchase price allocated to Portfolio B order book value
|
—
|
(80,450
|
)
|
|||||
|
Payments for aircraft improvement
|
(8,085
|
)
|
(6,779
|
)
|
||||
|
Payments for lessor maintenance obligations
|
(2,110
|
)
|
(8,601
|
)
|
||||
|
Net cash flows provided by (used in) investing activities
|
481,386
|
(853,453
|
)
|
|||||
7
|
Year ended Dec. 31,
|
||||||||
|
2019
(Unaudited)
|
2018
(Unaudited)
|
|||||||
|
Cash Flows from Financing Activities
|
||||||||
|
Security deposits received
|
4,369
|
15,042
|
||||||
|
Security deposits returned
|
(4,617
|
)
|
(8,716
|
)
|
||||
|
Maintenance payment liability receipts
|
60,744
|
84,102
|
||||||
|
Maintenance payment liability disbursements
|
(22,567
|
)
|
(15,495
|
)
|
||||
|
Net swap termination payments
|
—
|
1,801
|
||||||
|
Debt modification and extinguishment costs
|
(2,052
|
)
|
301
|
|||||
|
Debt issuance costs
|
(342
|
)
|
(3,619
|
)
|
||||
|
Proceeds from secured borrowings
|
—
|
826,396
|
||||||
|
Repayment of secured borrowings
|
(698,989
|
)
|
(482,703
|
)
|
||||
|
Net proceeds from shares issued
|
—
|
19,624
|
||||||
|
Shares repurchased
|
(32,871
|
)
|
—
|
|||||
|
Net cash flows (used in) provided by financing activities
|
(696,325
|
)
|
436,733
|
|||||
|
Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents
|
(8
|
)
|
(95
|
)
|
||||
|
Net increase (decrease) in unrestricted and restricted cash and cash equivalents
|
57,223
|
(175,735
|
)
|
|||||
|
Unrestricted and restricted cash and cash equivalents at beginning of year
|
281,080
|
456,815
|
||||||
|
Unrestricted and restricted cash and cash equivalents at end of year
|
$
|
338,303
|
$
|
281,080
|
||||
|
Reconciliation to Consolidated Balance Sheets:
|
||||||||
|
Cash and cash equivalents
|
$
|
285,565
|
$
|
180,211
|
||||
|
Restricted cash and cash equivalents
|
52,738
|
100,869
|
||||||
|
Unrestricted and restricted cash and cash equivalents
|
$
|
338,303
|
$
|
281,080
|
||||
8
Fly Leasing Limited
Reconciliation of Non-GAAP Measures
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
Three months ended Dec. 31,
|
Year ended Dec. 31,
|
|||||||||||||||
|
2019
(Unaudited)
|
2018
(Unaudited)
|
2019
(Unaudited)
|
2018
(Unaudited)
|
|||||||||||||
|
Net income
|
$
|
75,158
|
$
|
31,009
|
$
|
225,877
|
$
|
85,723
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
Unrealized foreign exchange loss (gain)
|
178
|
(187
|
)
|
(271
|
)
|
(668
|
)
|
|||||||||
|
Deferred income taxes
|
4,486
|
227
|
20,449
|
9,864
|
||||||||||||
|
Fair value changes on undesignated derivatives
|
(2,794
|
)
|
(286
|
)
|
(176
|
)
|
(3,732
|
)
|
||||||||
|
Adjusted Net Income
|
$
|
77,028
|
$
|
30,763
|
$
|
245,879
|
$
|
91,187
|
||||||||
|
Average Shareholders’ Equity
|
$
|
838,525
|
$
|
692,124
|
774,145
|
614,344
|
||||||||||
|
Adjusted Return on Equity
|
36.7
|
%
|
17.8
|
%
|
31.8
|
%
|
14.8
|
%
|
||||||||
|
Weighted average diluted shares outstanding
|
30,903,313
|
32,661,240
|
31,715,469
|
29,783,904
|
||||||||||||
|
Adjusted Net Income per diluted share
|
$
|
2.49
|
$
|
0.94
|
$
|
7.75
|
$
|
3.06
|
||||||||
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.
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