DUBLIN, Nov. 12, 2015 /PRNewswire/ -- FLY Leasing Limited
(NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today
announced its financial results for the third quarter of 2015 and a
$100 million share repurchase
program.
Third Quarter 2015 Highlights
- Adjusted net income of $32.3
million or $0.78 per
share
- Net income of $19.9 million or
$0.47 per share
- Invested $214 million in new
aircraft
- Completed sales of 15 aircraft
- Executed an agreement to sell 12 older aircraft
Tender Offer and Share Repurchase Program
- $75 million modified Dutch
auction tender offer
- $25 million open market
repurchase program
- $10 million in additional open
market purchases by BBAM shareholders
- These initiatives replace the dividend
"Our third quarter results demonstrate our progress in selling
older and underperforming assets, enhancing our fleet metrics and
reducing costs," said Colm
Barrington, FLY's CEO. "Today we announced the next step in
FLY's transformation: a $100 million
share repurchase program that will replace our dividend. The tender
offer and open market share repurchase announced today will
accelerate the return of capital to shareholders and drive improved
return on equity and earnings per share for FLY."
"We have entered into agreements to sell a total of 57 aircraft
with an average age of 13 years," added Barrington. "Aircraft
sales, combined with our purchase of seven newer aircraft, have
reduced our average fleet age to seven years at quarter end, a
decrease of one year over the prior quarter. We have also improved
our cost structure by driving lower annual SG&A and interest
expense."
"Our aircraft sales have generated significant levels of
investible cash, enabling us to simultaneously invest in newer,
higher yielding aircraft and accelerate the return of capital to
our shareholders," added Barrington. "With our younger fleet, the
financial firepower to carry out our growth strategy and our new
initiatives, FLY will continue to grow the value of the business
for our shareholders."
Financial Results
FLY is reporting net income of $19.9
million or $0.47 per diluted
share for the third quarter of 2015. This compares to net income of
$15.4 million or $0.37 per diluted share for the same period in
2014.
Total revenues increased to $106.2
million. Operating lease rental revenue for the third
quarter of 2015 was $104.4 million,
compared to $98.0 million for the
same period in the previous year, an increase of 7%. The increase
was driven primarily by recently acquired aircraft and improved
utilization. Revenues include $27.7
million of rents from aircraft that are contracted to be
sold.
The net loss for the nine month period ended September 30, 2015 was $21.1 million, or $0.53 per share. This compares to net income of
$40.6 million, or $0.95 per share, for the same period in 2014. The
current year loss reflects a non-cash $65.4
million impairment charge taken in the second quarter. The
prior year results included $18.0
million of end of lease income and $18.9 million of gain on sale of aircraft.
For the current year, end of lease income was $26.9 million and gain on sale of aircraft
totaled $9.1 million.
Adjusted Net Income
Adjusted Net Income for the third quarter of 2015 was
$32.3 million, or $0.78 per share, as compared to $22.8 million, or $0.55 per share, for the same period in
2014. For the nine month period ended September 30, 2015, Adjusted Net Income was
$68.4 million, or $1.65 per share, as compared to $58.6 million, or 1.42 per share, for the same
period in 2014.
Dividend and Share Repurchases
FLY announced today that its Board of Directors approved a
$100 million share repurchase plan,
including a $75 million modified
Dutch auction tender offer, replacing its dividend. The share
repurchases will be funded using FLY's unrestricted cash. The
$25 million open market share
repurchase plan will be authorized through the end of 2016 and may
be suspended or discontinued at any time. BBAM shareholders have
informed FLY's Board that they intend to acquire an additional
$10 million of shares in the open
market following the tender offer.
Under FLY's previously authorized share repurchase program,
through September 30, 2015, the
company repurchased 141,773 shares at an average price of
$13.01 per share for a total cost of
approximately $1.9 million.
Subsequent to quarter end, FLY acquired an additional 279,556
shares through November 11, 2015, for
a total aggregate of 421,329 shares and a total cost of
$5.5 million.
On October 15, 2015, FLY declared
a dividend of $0.25 per share in
respect of the third quarter of 2015. This dividend will be paid on
November 20, 2015 to shareholders of
record on October 30, 2015.
Financial Position
At September 30, 2015, FLY's total
assets were $4.0 billion, and include
$2.6 billion of flight equipment held
for operating lease and $796.1
million of flight equipment held for sale. The
aircraft classified as held for sale are subject to sale agreements
and are expected to be sold over the next few months.
Total cash at September 30, 2015
was $564.6 million, of which
$378.9 million is unrestricted.
This compares to total cash of $476.7
million at December 31, 2014,
of which $337.6 million was
unrestricted. At September 30,
2015, FLY owned 13 unencumbered aircraft with a net book
value of $532.2 million, of which two
were held for sale with a net book value of $50.2 million.
Aircraft Portfolio
At September 30, 2015, FLY's 83
aircraft held for operating lease, shown in the table below, were
on lease to 43 lessees in 26 countries. The table does not include
33 aircraft that were held for sale at September 30, 2015 or the two B767 aircraft owned
by a joint venture in which FLY has a 57% interest.
|
|
|
|
Portfolio
at
|
Sep 30,
2015
|
Dec 31,
2014
|
|
Airbus
A319
|
10
|
18
|
|
Airbus
A320
|
14
|
27
|
|
Airbus
A321
|
3
|
3
|
|
Airbus
A330
|
3
|
4
|
|
Airbus
A340
|
3
|
3
|
|
Boeing 737
|
38
|
57
|
|
Boeing 747
|
-
|
1
|
|
Boeing 757
|
9
|
11
|
|
Boeing 767
|
1
|
1
|
|
Boeing 777
|
1
|
1
|
|
Boeing 787
|
1
|
1
|
|
Total
|
83
|
127
|
|
At September 30, 2015, the average
age of FLY's aircraft held for operating lease, weighted by the net
book value of each aircraft, was 7.0 years. The average remaining
lease term was 5.9 years, also weighted by net book value. At
September 30, 2015, the 83 aircraft
were generating annualized rents of approximately $301 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, November
12, 2015. Participants should call +1-253-237-1145
(International) or 800-535-7056 (North
America) and enter confirmation code 55763805 or ask an
operator for the FLY Leasing earnings call. 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.
Information Regarding the Planned Tender Offer
The discussion of the planned tender offer is for informational
purposes only and is not an offer to buy or the solicitation of an
offer to sell any FLY shares. The tender offer described in this
press release has not yet commenced, and there can be no assurance
that FLY will commence the tender offer on the terms described in
this press release or at all. If FLY commences the tender offer,
the tender offer will be made solely by an Offer to Purchase and
the related Letter of Transmittal, as they may be amended or
supplemented. Shareholders and investors are urged to read any
Tender Offer Statement on Schedule TO, filed by FLY with the
Securities and Exchange Commission (the "SEC") in connection with
the tender offer including the Offer to Purchase, the related
Letter of Transmittal and other offer materials and exhibits
thereto, as well as any amendments or supplements to the Schedule
TO when they become available, because they will contain important
information. If FLY commences the tender offer, it will file each
of the documents referenced in this paragraph with the SEC, and,
when available, investors may obtain them for free from the SEC at
its website (www.sec.gov) or from the information agent engaged by
FLY in connection with the tender offer.
About FLY
FLY is a global aircraft leasing company with a fleet of modern,
high-demand and fuel-efficient commercial jet aircraft. FLY
acquires and leases its aircraft under multi-year operating 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.
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, financial performance and the planned
tender offer and repurchase program. 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
Sep. 30, 2015
(Unaudited)
|
Three months
ended
Sep. 30, 2014
(Unaudited)
|
Nine months
ended
Sep.
30, 2015
(Unaudited)
|
Nine months
ended
Sep. 30,
2014
(Unaudited)
|
|
Revenues
|
|
|
|
|
|
Operating
lease rental revenue
|
$ 104,356
|
$ 97,984
|
$ 310,910
|
$ 283,095
|
|
End of
lease revenue
|
1,270
|
14,181
|
26,882
|
18,035
|
|
Amortization of lease incentives
|
(6,845)
|
(6,149)
|
(15,638)
|
(13,370)
|
|
Amortization of lease premiums, discounts and other
|
(461)
|
(934)
|
(2,047)
|
(3,085)
|
|
Operating lease
revenue
|
98,320
|
105,082
|
320,107
|
284,675
|
|
Equity
earnings from unconsolidated subsidiary
|
353
|
364
|
1,034
|
2,105
|
|
Gain on
sale of aircraft
|
7,188
|
23
|
9,085
|
18,878
|
|
Interest
and other income
|
378
|
74
|
1,381
|
718
|
|
Total
revenues
|
106,239
|
105,543
|
331,607
|
306,376
|
|
Expenses
|
|
|
|
|
|
Depreciation
|
32,529
|
43,960
|
132,265
|
126,488
|
|
Aircraft
impairment
|
—
|
—
|
65,398
|
—
|
|
Interest
expense
|
36,195
|
33,683
|
112,724
|
102,127
|
|
Net
(gain) loss on debt modification and extinguishment
|
3,206
|
—
|
9,375
|
(3,995)
|
|
Selling,
general and administrative
|
7,795
|
9,876
|
26,632
|
30,820
|
|
Ineffective, dedesignated and terminated derivatives
|
3,190
|
(149)
|
4,682
|
(117)
|
|
Maintenance and other costs
|
1,737
|
680
|
4,400
|
4,674
|
|
Total
expenses
|
84,652
|
88,050
|
355,476
|
259,997
|
|
Net income (loss)
before provision for income
taxes
|
21,587
|
17,493
|
(23,869)
|
46,379
|
|
Provision (benefit) for income taxes
|
1,658
|
2,132
|
(2,809)
|
5,781
|
|
Net income
(loss)
|
$
19,929
|
$ 15,361
|
$ (21,060)
|
$ 40,598
|
|
Weighted average
number of shares
|
|
|
|
|
|
-
Basic
|
41,462,995
|
41,432,998
|
41,451,035
|
41,395,847
|
|
-
Diluted
|
41,544,423
|
41,463,474
|
41,451,035
|
41,434,681
|
|
Earnings per
share
|
|
|
|
|
|
-
Basic
|
$ 0.48
|
$ 0.37
|
$ (0.53)
|
$ 0.95
|
|
-
Diluted
|
$ 0.47
|
$ 0.37
|
$ (0.53)
|
$ 0.95
|
|
Dividends declared
and paid per share
|
$ 0.25
|
$ 0.25
|
$ 0.75
|
$ 0.75
|
|
|
|
FLY Leasing
Limited
|
|
Consolidated
Balance Sheets
|
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Sep.
30,
2015
(Unaudited)
|
Dec.
31,
2014
(Audited)
|
|
Assets
|
|
|
|
Cash and
cash equivalents
|
$ 378,872
|
$ 337,560
|
|
Restricted cash and cash equivalents
|
185,722
|
139,139
|
|
Rent
receivables
|
2,549
|
4,887
|
|
Investment in unconsolidated subsidiary
|
7,045
|
4,002
|
|
Flight
equipment held for sale, net
|
796,113
|
—
|
|
Flight
equipment held for operating lease, net
|
2,575,246
|
3,705,407
|
|
Fair
market value of derivative assets
|
—
|
2,067
|
|
Other
assets, net
|
20,867
|
31,608
|
|
Total
assets
|
$ 3,966,414
|
$ 4,224,670
|
|
Liabilities
|
|
|
|
Accounts
payable and accrued liabilities
|
$ 31,494
|
$ 18,431
|
|
Rentals
received in advance
|
16,972
|
19,751
|
|
Payable
to related parties
|
6,620
|
2,772
|
|
Security
deposits
|
55,176
|
64,058
|
|
Maintenance payment liability
|
254,114
|
254,514
|
|
Unsecured borrowings, net
|
690,695
|
689,452
|
|
Secured
borrowings, net
|
2,106,679
|
2,335,328
|
|
Deferred
tax liability, net
|
12,510
|
16,289
|
|
Fair
market value of derivative liabilities
|
28,919
|
23,311
|
|
Other
liabilities
|
62,555
|
41,890
|
|
Total
liabilities
|
3,265,734
|
3,465,796
|
|
Shareholders'
equity
|
|
|
|
Common
shares, $0.001 par value, 499,999,900 shares authorized; 41,327,300
and 41,432,998 shares issued and outstanding at September 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
|
656,864
|
658,522
|
|
Retained
earnings
|
64,409
|
117,402
|
|
Accumulated other comprehensive loss, net
|
(20,634)
|
(17,091)
|
|
Total
shareholders' equity
|
700,680
|
758,874
|
|
Total liabilities
and shareholders' equity
|
$ 3,966,414
|
$ 4,224,670
|
|
|
|
|
|
FLY Leasing
Limited
|
|
Consolidated
Statements of Cash Flows
|
|
(DOLLARS IN
THOUSANDS)
|
|
|
Nine months
ended
Sep. 30, 2015
(Unaudited)
|
Nine months
ended
Sep. 30, 2014
(Unaudited)
|
|
Cash Flows from
Operating Activities
|
|
|
|
Net income
(loss)
|
$ (21,060)
|
$
40,598
|
|
Adjustments to
reconcile net income to net cash flows provided by operating
activities:
|
|
|
|
Equity in earnings
from unconsolidated subsidiary
|
(1,034)
|
(2,105)
|
|
Gain on sale of
aircraft
|
(9,085)
|
(18,878)
|
|
Depreciation
|
132,265
|
126,488
|
|
Aircraft
impairment
|
65,398
|
—
|
|
Amortization of debt
discounts and loan issuance costs
|
9,080
|
9,307
|
|
Amortization of lease
incentives
|
15,638
|
13,370
|
|
Amortization of lease
discounts, premiums and other items
|
1,800
|
2,112
|
|
Amortization of fair
market value adjustments associated with the GAAM
acquisition
|
2,884
|
4,953
|
|
Net (gain) loss on
debt modification and extinguishment
|
7,307
|
(4,048)
|
|
Share-based
compensation
|
195
|
(50)
|
|
Unrealized foreign
exchange loss on cash balances
|
119
|
284
|
|
Unrealized foreign
exchange gain on debt and other items
|
(812)
|
—
|
|
Provision for deferred
income taxes
|
(3,302)
|
5,781
|
|
Unrealized loss on
derivative instruments
|
3,562
|
(117)
|
|
Security deposits and
maintenance payment liability relieved
|
(27,118)
|
(17,223)
|
|
Distribution from
unconsolidated subsidiary
|
—
|
5,149
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Rent
receivables
|
5,251
|
(3,494)
|
|
Other
assets
|
1,708
|
1,549
|
|
Payable to related
parties
|
(7,912)
|
(4,450)
|
|
Accounts payable and
accrued liabilities
|
11,260
|
5,084
|
|
Rentals received in
advance
|
(2,779)
|
1,139
|
|
Other
liabilities
|
11,262
|
6,129
|
|
Net cash flows
provided by operating activities
|
194,627
|
171,578
|
|
Cash Flows from
Investing Activities
|
|
|
|
Investment on
unconsolidated subsidiary
|
(2,009)
|
—
|
|
Distribution from
unconsolidated subsidiary
|
—
|
1,484
|
|
Purchase of flight
equipment
|
(366,772)
|
(643,950)
|
|
Proceeds from sale of
aircraft, net
|
527,898
|
88,617
|
|
Payment for aircraft
improvement
|
(7,495)
|
(8,698)
|
|
Payments for
maintenance
|
(16,653)
|
(4,034)
|
|
Net cash flows
provided by (used in) investing activities
|
134,969
|
(566,581)
|
|
|
|
|
|
|
|
Nine months
ended
Sep. 30, 2015
(Unaudited)
|
Nine months
ended
Sep. 30, 2014
(Unaudited)
|
|
Cash Flows from
Financing Activities
|
|
|
|
Restricted cash and
cash equivalents
|
(46,583)
|
43,292
|
|
Security deposits
received
|
7,882
|
10,558
|
|
Security deposits
returned
|
(7,448)
|
(2,578)
|
|
Maintenance payment
liability receipts
|
63,865
|
68,203
|
|
Maintenance payment
liability disbursements
|
(33,901)
|
(44,413)
|
|
Proceeds from
termination of interest rate swaps
|
23
|
—
|
|
Debt issuance
costs
|
(917)
|
(1,390)
|
|
Proceeds from secured
borrowings
|
147,276
|
165,942
|
|
Repayment of secured
borrowings
|
(384,576)
|
(135,264)
|
|
Shares
repurchased
|
(1,853)
|
—
|
|
Dividends
|
(31,084)
|
(31,034)
|
|
Dividend
equivalents
|
(849)
|
(1,235)
|
|
Net cash flows
provided by (used in) financing activities
|
(288,165)
|
72,081
|
|
Effect of
exchange rate changes on cash and cash equivalents
|
(119)
|
(284)
|
|
Net increase
(decrease) in cash
|
41,312
|
(323,206)
|
|
Cash at beginning of
period
|
337,560
|
404,472
|
|
Cash at end of
period
|
$
378,872
|
$
81,266
|
|
|
|
|
Supplemental
Disclosure:
|
|
|
|
Cash paid during
the period for:
|
|
|
|
Interest
|
$
91,408
|
$
83,833
|
|
Taxes
|
157
|
156
|
|
Noncash
Activities:
|
|
|
|
Security deposits
applied to maintenance payment liability and rent
receivables
|
3,292
|
1,598
|
|
Maintenance payment
liability applied to rent receivables
|
2,523
|
—
|
|
Other liabilities
applied to maintenance payment liability and rent
receivables
|
240
|
979
|
|
Noncash investing
activities:
|
|
|
|
Aircraft
improvement
|
1,693
|
3,035
|
|
Noncash activities in
connection with purchase of aircraft
|
20,344
|
26,002
|
|
Noncash activities in
connection with sale of aircraft
|
36,595
|
12,479
|
|
|
|
|
|
|
FLY Leasing
Limited
|
|
Reconciliation of
Non-GAAP Measures
|
|
(DOLLARS IN
THOUSANDS, EXCEPT PER SHARE DATA)
|
|
|
Three months
ended
Sep. 30, 2015
(Unaudited)
|
Three months
ended
Sep. 30, 2014
(Unaudited)
|
Nine months
ended
Sep. 30,
2015
(Unaudited)
|
Nine months
ended
Sep. 30,
2014
(Unaudited)
|
|
Net income
(loss)
|
$ 19,929
|
$ 15,361
|
$ (21,060)
|
$ 40,598
|
|
Adjustments:
|
|
|
|
|
|
Aircraft
impairment
|
—
|
—
|
65,398
|
—
|
|
Amortization of debt discounts and loan issue costs
|
3,123
|
3,068
|
9,080
|
9,307
|
|
Amortization of lease premiums, discounts and other
|
479
|
707
|
1,800
|
2,112
|
|
Amortization of fair value adjustments recorded in purchase
accounting
|
748
|
1,422
|
2,884
|
4,953
|
|
Net
(gain) loss on debt modification and extinguishment
|
3,206
|
—
|
9,375
|
(3,995)
|
|
Non-cash
share based compensation
|
—
|
(14)
|
195
|
(50)
|
|
Unrealized foreign exchange (gain) loss
|
67
|
304
|
(693)
|
284
|
|
Deferred
income taxes
|
1,513
|
2,059
|
(3,302)
|
5,542
|
|
Ineffective, dedesignated and terminated derivatives
|
3,190
|
(149)
|
4,682
|
(117)
|
|
Adjusted Net
Income
|
$
32,255
|
$
22,758
|
$
68,359
|
$ 58,634
|
|
Average
Shareholders' Equity
|
$ 699,530
|
$ 752,107
|
$ 729,777
|
$ 753,491
|
|
Adjusted Return on
Equity
|
18.4%
|
12.1%
|
12.5%
|
10.4%
|
|
|
|
|
|
|
Weighted average
diluted shares outstanding
|
41,544,423
|
41,463,474
|
41,451,035
|
41,434,681
|
|
Adjusted Net
Income per share
|
$
0.78
|
$
0.55
|
$
1.65
|
$
1.42
|
|
|
|
|
|
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.
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SOURCE FLY Leasing Limited