FLY
$20.99
Fly Leasing
($.32)
(1.50%)
Earnings Details
2nd Quarter June 2019
Thursday, August 22, 2019 7:00:00 AM
Tweet Share Watch
Summary

Fly Leasing (FLY) Recent Earnings

Fly Leasing (FLY) reported 2nd Quarter June 2019 earnings of $1.92 per share on revenue of $147.0 million. The consensus earnings estimate was $1.45 per share on revenue of $142.9 million. Revenue grew 43.2% on a year-over-year basis.

Fly Leasing Ltd is a lessor of modern, fuel-efficient commercial jet aircraft. Its aircraft are leased under long-term to medium-term contracts to a diverse group of airlines throughout the world.

Results
Reported Earnings
$1.92
Earnings Whisper
-
Consensus Estimate
$1.45
Reported Revenue
$147.0 Mil
Revenue Estimate
$142.9 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Fly Leasing Reports Second Quarter 2019 Financial Results

DUBLIN, Aug. 22, 2019 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the second quarter of 2019.

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

Highlights

  • Net income of $54.1 million, $1.68 per share
  • Adjusted Net Income of $61.9 million, $1.92 per share
  • Sold seven aircraft for an economic gain of $18.9 million, a 10% premium to book value
  • Repurchased 1.47 million shares at an average price of $16.53 per share
  • $24.28 book value per share at quarter end, a 13% increase since December 31, 2018
  • Purchased two aircraft for $60.9 million

"FLY continues to achieve record results, producing its fifth straight quarter of double-digit ROE," said Colm Barrington, FLY's Chief Executive Officer. "Our renewed fleet contributed to a 13% increase in operating lease rental revenue compared to the same quarter last year. Economic gains of nearly $19 million from the sale of seven aircraft helped us to achieve record Adjusted Net Income of $61.9 million, or $1.92 per share, in the quarter, and Adjusted Net Income of $109.0 million, or $3.37 per share, for the first six months of the year. Looking ahead, we expect another strong result in the third quarter."

"As a result of our deleveraging strategy following last year's major fleet acquisition, we have met our leverage target a year ahead of schedule," said Barrington. "We also have been repurchasing stock, buying back 1.47 million shares in the quarter. FLY will begin taking delivery of its $1 billion of contracted A320neo family aircraft later this year, and is well positioned to add aircraft as opportunities arise."

"We sold seven aircraft in the quarter at a 10% premium to book value, and in the third quarter, we have contracted to sell 14 more aircraft, also at gains, again demonstrating the value embedded in FLY's fleet," added Barrington. "Our record results have also added significantly to shareholders' equity, which is now over $24 per share and 13% above the level at the end of 2018. We continue to see great value in FLY's shares, which are trading at a 26% discount to book value. At its August meeting, FLY's board of directors authorized a new $50 million share repurchase program."

Financial Results

FLY is reporting net income of $54.1 million, or $1.68 per share, for the second quarter of 2019. This compares to net income of $24.3 million, or $0.87 per share, for the same period in 2018.

Net income for the six months ended June 30, 2019 was $99.0 million, or $3.06 per share, compared to net income of $34.0 million, or $1.21 per share, for the six months ended June 30, 2018.

Adjusted Net Income

Adjusted Net Income was $61.9 million for the second quarter of 2019, compared to $25.2 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.92 in the second quarter of 2019, compared to $0.90 for the second quarter of 2018.

For the six months ended June 30, 2019, Adjusted Net Income was $109.0 million, or $3.37 per share, compared to $37.6 million, or $1.34 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 six months ended June 30, 2019, FLY repurchased 1.67 million shares in the open market at an average price of $16.18 per share, for a total cost of $27.0 million. As of June 30, 2019, FLY had approximately 31 million shares outstanding. On August 21, 2019, FLY's board of directors approved a new $50 million share repurchase program to replace its current program.

Financial Position

At June 30, 2019, FLY's total assets were $3.9 billion, including investment in flight equipment totaling $3.4 billion. Total cash at June 30, 2019 was $415.1 million, of which $351.9 million was unrestricted. The book value per share at June 30, 2019 was $24.28, a 13% increase since December 31, 2018. At June 30, 2019, FLY's net debt to equity ratio was 3.1x, reduced from 4.0x at December 31, 2018.

Aircraft Portfolio

At June 30, 2019, FLY had 98 aircraft and seven CFM engines on lease to 45 airlines in 25 countries. Of the 98 aircraft, 12 were classified as held for sale. The table below does not include one B767 aircraft owned by a joint venture in which FLY has a 57% interest, nor the seven engines.        

Portfolio at

Jun. 30, 2019

Dec. 31, 2018


Number

% of Net
Book Value

Number

% of Net
Book Value

Airbus A320 Family(1)

42

33%

55

38%

Airbus A330

3

5%

3

5%

Airbus A340

2

1%

2

1%

Boeing 737NG(2)

42

35%

42

32%

Boeing 737 MAX

2

3%

2

3%

Boeing 757-SF

1

0%

3

1%

Boeing 777-LRF

2

9%

2

8%

Boeing 787

4

14%

4

12%

      Total

98

100%

113

100%


(1)

Includes five and ten Airbus A320 aircraft classified as held for sale at June 30, 2019 and December 31, 2018, respectively.

(2)

Includes seven and two aircraft classified as held for sale at June 30, 2019 and December 31, 2018, respectively.

At June 30, 2019, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.4 years. The average remaining lease term was 5.3 years, also weighted by net book value. At June 30, 2019, FLY's portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $354.2 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, August 22, 2019. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 8491508. 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. 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 Jun. 30,

Six months ended Jun. 30,


2019
(Unaudited)

2018

(Unaudited)

2019

(Unaudited)

2018

(Unaudited)

Revenues





Operating lease rental revenue

$       101,108

$         89,215

$      206,436

$      178,328

End of lease income

28,823

12,612

30,387

12,997

Amortization of lease incentives

(1,319)

(2,361)

(2,951)

(4,644)

Amortization of lease discounts and other

11

(142)

3

(281)

Operating lease revenue

128,623

99,324

233,875

186,400

Finance lease revenue

156

171

316

345

Equity earnings (loss) from unconsolidated subsidiary

54

(358)

110

(246)

Gain on sale of aircraft

16,078

2,945

43,698

2,945

Interest and other income

2,122

591

3,737

1,984

Total revenues

147,033

102,673

281,736

191,428

Expenses





Depreciation

37,303

33,895

74,888

67,628

Interest expense

35,439

33,644

73,618

66,567

Selling, general and administrative

9,438

6,369

18,160

14,979

Loss (gain) on derivatives

255

(1,309)

272

(520)

Loss on extinguishment of debt

1,541

898

3,710

898

Maintenance and other costs

1,625

936

2,223

1,714

Total expenses

85,601

74,433

172,871

151,266

Net income before provision for income taxes

61,432

28,240

108,865

40,162

Provision for income taxes

7,382

3,896

9,850

6,188

Net income

$         54,050

$         24,344

$        99,015

$        33,974

Weighted average number of shares





-  Basic

32,053,830

27,983,352

32,341,674

27,983,352

-  Diluted

32,187,115

28,045,890

32,396,717

28,023,419

Earnings per share





-  Basic

$             1.69

$             0.87

$             3.06

$             1.21

-  Diluted

$             1.68

$             0.87

$             3.06

$             1.21




Fly Leasing Limited


Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA)



Jun. 30,

 2019

(Unaudited)

Dec. 31,
2018
(Audited)

Assets



Cash and cash equivalents

$           351,892

$         180,211

Restricted cash and cash equivalents

63,161

100,869

Rent receivables

5,864

9,307

Investment in finance lease, net

12,238

12,822

Flight equipment held for sale, net

320,359

259,644

Flight equipment held for operating lease, net

2,788,459

3,228,018

Maintenance rights

251,797

298,207

Deferred tax asset, net

16,740

6,505

Fair value of derivative assets

4,540

5,929

Other assets, net

130,170

124,960

Total assets

$        3,945,220

$      4,226,472

Liabilities



Accounts payable and accrued liabilities

$             23,232

$            23,146

Rentals received in advance

16,431

21,322

Payable to related parties

6,593

4,462

Security deposits

47,991

60,097

Maintenance payment liability, net

267,006

292,586

Unsecured borrowings, net

618,535

617,664

Secured borrowings, net

2,062,047

2,379,869

Deferred tax liability, net

52,711

36,256

Fair value of derivative liabilities

31,621

8,558

Other liabilities

65,390

80,402

Total liabilities

3,191,557

3,524,362

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized; 31,038,292 and 32,650,019 shares issued and outstanding at June 30, 2019 and 2018, respectively

31

33

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

Additional paid-in capital

522,050

549,123

Retained earnings

253,530

154,347

Accumulated other comprehensive loss, net

(21,948)

(1,393)

Total shareholders' equity

753,663

702,110

Total liabilities and shareholders' equity

$        3,945,220

$      4,226,472




Fly Leasing Limited


Consolidated Statements of Cash Flows

(DOLLARS IN THOUSANDS)



Six months ended Jun. 30,


2019
(Unaudited)

2018
(Unaudited)

Cash Flows from Operating Activities



Net income

$             99,015

$            33,974

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



Finance lease revenue

(316)

(345)

Equity (earnings) loss from unconsolidated subsidiary

(110)

246

Gain on sale of aircraft

(43,698)

(2,945)

Depreciation

74,888

67,628

Amortization of debt discounts and debt issuance costs

5,369

3,961

Amortization of lease incentives and other items

3,324

5,453

Loss on extinguishment of debt

3,710

898

Unrealized foreign exchange gain

(104)

(456)

Provision for deferred income taxes

9,991

6,327

Loss (gain) on derivative instruments

198

(74)

Security deposits and maintenance payment liability recognized into earnings

(26,145)

(9,965)

Distributions from unconsolidated subsidiary

109

2,212

Cash receipts from maintenance rights

1,741

3,013

Changes in operating assets and liabilities:



Rent receivables

(2,011)

(2,766)

Other assets

(3,250)

(2,212)

Payable to related parties

2,131

(2,168)

Accounts payable, accrued liabilities and other liabilities

(2,054)

2,005

Net cash flows provided by operating activities

122,788

104,786

Cash Flows from Investing Activities



Distributions from unconsolidated subsidiary

205

1,275

Rent received from finance lease

900

900

Swap termination proceeds

114

Investment income from Horizon I Limited equity certificates

571

Purchase of flight equipment

(61,381)

(69,258)

Deposit on aircraft purchases

(30,000)

Proceeds from sale of aircraft, net

410,939

99,339

Capitalized interest on Portfolio B orderbook

(2,433)

Payments for aircraft improvement

(2,832)

(170)

Payments for lessor maintenance obligations

(1,461)

(817)

Net cash flows provided by investing activities

344,622

1,269



Six months ended Jun. 30,


2019

(Unaudited)

2018

(Unaudited)

Cash Flows from Financing Activities



Security deposits received

1,417

Security deposits returned

(1,546)

(3,549)

Maintenance payment liability receipts

33,633

38,830

Maintenance payment liability disbursements

(12,738)

(2,104)

Debt extinguishment costs

(74)

(12)

Debt issuance costs

(342)

(5,534)

Proceeds from secured borrowings

49,288

Repayment of secured borrowings

(325,317)

(175,035)

Shares repurchased

(27,025)

Net cash flows used in financing activities

(333,409)

(96,699)

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

(28)

(47)

Net increase in unrestricted and restricted cash and cash equivalents

133,973

9,309

Unrestricted and restricted cash and cash equivalents at beginning of period

281,080

456,815

Unrestricted and restricted cash and cash equivalents at end of period

$             415,053

$       466,124




Reconciliation to Consolidated Balance Sheets:



Cash and cash equivalents

$             351,892

$       406,508

Restricted cash and cash equivalents

63,161

59,616

Unrestricted and restricted cash and cash equivalents

$             415,053

$       466,124




Fly Leasing Limited


Reconciliation of Non-GAAP Measures

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Jun. 30,

Six months ended Jun. 30,


2019

(Unaudited)

2018

(Unaudited)

2019

(Unaudited)

2018

(Unaudited)

Net income

$       54,050

$       24,344

$       99,015

$       33,974

Adjustments:





Unrealized foreign exchange loss (gain)

68

(864)

(104)

(456)

Deferred income taxes

7,519

3,974

9,991

6,327

Fair value changes on undesignated derivatives

255

(2,238)

143

(2,240)

Adjusted Net Income

$       61,892

$       25,216

$     109,045

$       37,605

Average Shareholders' Equity

$     745,783

$     571,881

731,225

562,490

Adjusted Return on Equity

33.2%

17.6%

29.8%

13.4%






Weighted average diluted shares outstanding

32,187,115

28,045,890

32,396,717

28,023,419

Adjusted Net Income per diluted share

$           1.92

$            0.90

$            3.37

$           1.34

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 its 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 View original content to download multimedia:http://www.prnewswire.com/news-releases/fly-leasing-reports-second-quarter-2019-financial-results-300905779.html

SOURCE Fly Leasing Limited