EX-99.1 2 ex99_1.htm EXHIBIT 99.1
Exhibit 99.1
 

 
FLY Leasing Reports First Quarter 2016 Financial Results

Dublin, Ireland, May 18, 2016 – FLY Leasing Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the first quarter of 2016.

First Quarter 2016 Highlights
· Adjusted Net Income of $16.2 million, $0.47 per share
· Net income of $7.1 million, $0.21 per share
· Closed $385 million aircraft acquisition facility
· Sold ten aircraft generating gross proceeds of $60 million after debt repayment
· $445 million of aircraft acquisitions scheduled to close in second quarter

“FLY moves into the second quarter having accomplished several strategic objectives: completing the sale of 45% of our fleet – primarily older aircraft – at gains to book value, repurchasing 19% of our shares at a discount to book value, reducing core SG&A, and completing a new, attractively priced $385 million aircraft acquisition facility,” said Colm Barrington, CEO of FLY.  “The company is in a strong position to deliver increased return on equity going forward.”

“We have ample financial capacity for our strategic objectives, including $330 million in unrestricted cash,” added Barrington.  “We expect to meet our goal of adding $750 million of aircraft to our fleet this year. The industry conditions remain strong, airline traffic is robust, our fleet is 100% utilized and we continue to see excellent global demand for leased aircraft."

Financial Results
 
FLY is reporting net income for the first quarter of 2016 of $7.1 million or $0.21 per diluted share.  This compares to net income of $19.9 million or $0.47 per diluted share for the same period in 2015.  The first quarter 2015 results include $21.9 million of end of lease revenue, whereas there was only $3.2 million of end of lease revenue in the first quarter of 2016.  All results for the first quarter of 2015 have been restated as described in FLY’s annual report on Form 20-F, which was filed on May 2, 2016.
 
Adjusted Net Income
 
Adjusted Net Income was $16.2 million for the first quarter of 2016 compared to $30.2 million in the same period in the previous year.  On a per share basis, Adjusted Net Income was $0.47 in the first quarter of 2016 compared to $0.73 for the same period in the previous year.
 
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.

Share Repurchases

During the first quarter, FLY repurchased 2.1 million shares for approximately $25 million.  FLY’s board of directors has approved an additional $30 million share repurchase program expiring in March 2017 to replace the previous program.  Under this program, FLY may make share repurchases from time to time in the open market or in privately negotiated transactions.  The timing of repurchases under this program will depend upon a variety of factors, including market conditions, and the program may be suspended or discontinued at any time.

Financial Position

At March 31, 2016, FLY’s total assets were $3.2 billion, including an investment in flight equipment totaling $2.7 billion. Investment in flight equipment includes $84.6 million of net maintenance right assets.  Cash and cash equivalents at March 31, 2016 totaled $428.1 million, of which $329.3 million was unrestricted.  In addition, FLY had twelve unencumbered aircraft with an aggregate net book value of $610.2 million at March 31, 2016.  The book value per share at March 31, 2016 was $18.83.

Aircraft Portfolio

At March 31, 2016, FLY’s 79 aircraft, as shown in the table below, were on lease to 43 airlines in 28 countries.  The table does not show aircraft that were held for sale which totaled four and thirteen, at March 31, 2016 and December 31, 2015, respectively, or the two B767 aircraft owned by a joint venture in which FLY has a 57% ownership interest.

Portfolio at
  
Mar 31,
2016
    
Dec 31,
2015
  
Airbus A319
    
10
      
10
  
Airbus A320
    
14
      
14
  
Airbus A321
    
3
      
3
  
Airbus A330
    
4
      
4
  
Airbus A340
    
2
      
3
  
Boeing 737
    
39
      
39
  
Boeing 757
    
3
      
3
  
Boeing 767
    
1
      
1
  
Boeing 777
    
2
      
2
  
Boeing 787
    
1
      
1
  
Total
    
79
      
80
  
 
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At March 31, 2016, the average age of the portfolio was 6.8 years weighted by the net book value, including maintenance rights, of each aircraft.  The average remaining lease term was 6.3 years, also weighted by net book value, including maintenance rights.  At March 31, 2016, the 79 aircraft were generating annualized rental revenue of approximately $292 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, May 18, 2016. Participants should dial +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 84645567 or ask an operator for the FLY earnings call. A live webcast of the conference call will be also available in the investor relations section of FLY’s website at www.flyleasing.com. An archived webcast will be available on FLY’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 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. 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. 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
 
3
FLY Leasing Limited
Consolidated Statements of Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
   
Three months
ended
Mar. 31, 2016
(Unaudited)
    
Three months
ended
Mar. 31, 2015
(Restated &
Unaudited)
  
Revenues
            
Operating lease rental revenue
  
$
74,633
    
$
103,148
  
End of lease revenue
    
3,206
      
21,936
  
Amortization of lease incentives
    
(2,773
)
    
(4,036
)
Amortization of lease premiums, discounts and other
    
(113
)
    
(945
)
Operating lease revenue
    
74,953
      
120,103
  
Finance lease income
    
892
      
―
  
Gain on sale of aircraft
    
5,143
      
2,637
  
Equity earnings from unconsolidated subsidiary
    
133
      
340
  
Interest and other income
    
87
      
206
  
Total revenues
    
81,208
      
123,286
  
Expenses
                
Depreciation
    
28,839
      
47,203
  
Interest expense
    
30,834
      
39,297
  
Debt modification and extinguishment costs
    
4,527
      
4,050
  
Selling, general and administrative
    
8,269
      
8,264
  
Ineffective and dedesignated derivatives
    
286
      
(264
)
Maintenance and other costs
    
1,199
      
1,586
  
Total expenses
    
73,954
      
100,136
  
Net income before provision for income taxes
    
7,254
      
23,150
  
Provision for income taxes
    
154
      
3,285
  
Net income
  
$
7,100
    
$
19,865
  
Weighted average number of shares:
                
-  Basic
    
34,287,783
      
41,432,998
  
-  Diluted
    
34,288,608
      
41,545,287
  
Earnings per share (net income per common share):
                
-  Basic and diluted
  
$
0.21
    
$
0.47
  
 
4
FLY Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
   
Mar. 31,
2016
(Unaudited)
    
Dec. 31,
2015
(Audited)
  
Assets
            
Cash and cash equivalents
  
$
329,273
    
$
275,998
  
Restricted cash and cash equivalents
    
98,875
      
174,933
  
Rent receivables
    
875
      
124
  
Investment in unconsolidated subsidiary
    
7,303
      
7,170
  
Investment in direct finance lease, net
    
34,531
      
34,878
  
Flight equipment held for sale, net
    
57,673
      
237,262
  
Flight equipment held for operating lease, net
    
2,550,957
      
2,585,426
  
Maintenance right asset, net
    
84,557
      
94,493
  
Fair market value of derivative assets
    
―
      
241
  
Other assets
    
6,240
      
6,450
  
Total assets
    
3,170,284
      
3,416,975
  
Liabilities
                
Accounts payable and accrued liabilities
    
30,101
      
17,548
  
Rentals received in advance
    
13,211
      
14,560
  
Payable to related parties
    
2,504
      
7,170
  
Security deposits
    
44,741
      
48,876
  
Maintenance payment liability
    
190,842
      
194,543
  
Unsecured borrowings, net
    
689,904
      
689,409
  
Secured borrowings, net
    
1,480,123
      
1,695,711
  
Fair market value of derivative liabilities
    
25,784
      
19,327
  
Deferred tax liability, net
    
20,030
      
20,741
  
Other liabilities
    
40,389
      
52,126
  
Total liabilities
    
2,537,629
      
2,760,011
  
Shareholders’ equity
                
Common shares, $0.001 par value, 499,999,900 shares authorized; 33,599,490 and 35,671,400 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively
    
34
      
36
  
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding
    
―
      
―
  
Additional paid in capital
    
552,158
      
577,290
  
Retained earnings
    
102,238
      
95,138
  
Accumulated other comprehensive loss, net
    
(21,775
)
    
(15,500
)
Total shareholders’ equity
    
632,655
      
656,964
  
Total liabilities and shareholders’ equity
  
$
3,170,284
    
$
3,416,975
  
 
5
FLY Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)
   
Three months
ended
Mar. 31, 2016
(Unaudited)
    
Three months
ended
Mar. 31, 2015
(Restated &
Unaudited)
  
Cash Flows from Operating Activities
            
Net Income
  
$
7,100
    
$
19,865
  
Adjustments to reconcile net income to net cash flows provided by operating activities:
                
Equity in earnings from unconsolidated subsidiary
    
(133
)
    
(340
)
Direct finance lease income
    
(892
)
    
―
  
Gain on sale of aircraft
    
(5,143
)
    
(2,637
)
Depreciation
    
28,839
      
47,203
  
Amortization of debt discounts and issuance costs
    
2,360
      
3,110
  
Amortization of lease incentives
    
2,773
      
4,036
  
Amortization of lease discounts, premiums and other items
    
113
      
719
  
Amortization of fair market value adjustments associated with the GAAM acquisition
    
672
      
1,237
  
Debt modification and extinguishment costs
    
3,679
      
4,050
  
Share-based compensation
    
―
      
152
  
Unrealized foreign exchange (gain) loss
    
1,001
      
(1,670
)
Maintenance rights cash receipts
    
6,150
      
―
  
Provision for deferred income taxes
    
94
      
3,038
  
Unrealized (gain) loss on derivative instruments
    
216
      
(264
)
Security deposits and maintenance payment liability recognized into earnings
    
(400
)
    
(21,936
)
Security deposits and maintenance payment claims applied towards operating lease revenues
    
(805
)
    
―
  
Changes in operating assets and liabilities:
                
Rent receivables
    
(751
)
    
(1,685
)
Other assets
    
(141
)
    
2,375
  
Payable to related parties
    
(7,239
)
    
(3,632
)
Accounts payable, accrued and other liabilities
    
18,065
      
8,134
  
Net cash flows provided by operating activities
    
55,558
      
61,755
  
Cash Flows from Investing Activities
                
Rent received from direct finance lease
    
1,230
      
―
  
Purchase of flight equipment
    
―
      
(137,113
)
Proceeds from sale of aircraft, net
    
155,359
      
126,503
  
Payment for aircraft improvement
    
(3,034
)
    
(4,403
)
Payments for maintenance
    
(514
)
    
(7,730
)
Net cash flows provided by (used in) investing activities
    
153,041
      
(22,743
)
 
6
   
Three months
ended
Mar. 31, 2016
(Unaudited)
    
Three months
ended
Mar. 31, 2015
(Restated &
Unaudited)
  
Cash Flows from Financing Activities
            
Restricted cash and cash equivalents
    
76,058
      
2,803
  
Security deposits received
    
―
      
845
  
Security deposits returned
    
―
      
(2,868
)
Maintenance payment liability receipts
    
17,968
      
17,514
  
Maintenance payment liability disbursements
    
(662
)
    
(8,332
)
Net swap termination payments
    
(538
)
    
23
  
Debt issuance costs
    
(349
)
    
(343
)
Proceeds from secured borrowings
    
16,756
      
67,802
  
Repayment of secured borrowings
    
(239,645
)
    
(162,852
)
Shares repurchased
    
(25,191
)
    
―
  
Dividends
    
―
      
(10,358
)
Dividend equivalents
    
―
      
(191
)
Net cash flows used in financing activities
    
(155,603
)
    
(95,957
)
Effect of exchange rate changes on cash and cash equivalents
    
279
      
(330
)
Net decrease in cash
    
53,275
      
(57,275
)
Cash at beginning of period
    
275,998
      
337,560
  
Cash at end of period
  
$
329,273
    
$
280,285
  
Supplemental Disclosure:
                
Cash paid during the period for:
                
Interest
  
$
16,573
    
$
24,059
  
Income taxes
    
18
      
110
  
Supplemental disclosure of noncash activities:
                
Security deposits applied to maintenance payment liability and rent receivables
    
―
      
2,542
  
Maintenance payment liability applied to rent receivables
    
―
      
2,108
  
Other liabilities applied to maintenance payment liability and rent receivables
    
―
      
240
  
Noncash investing activities:
                
Aircraft improvement
    
2,338
      
2,510
  
Noncash activities in connection with purchase of aircraft
    
―
      
8,468
  
Noncash activities in connection with sale of aircraft
    
27,432
      
9,061
  

7
FLY Leasing Limited
Reconciliation of Non-GAAP Measures
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
   
Three months
ended
Mar. 31, 2016
(Unaudited)
    
Three months
ended
Mar. 31, 2015
(Restated &
Unaudited)
  
Net income
  
$
7,100
    
$
19,865
  
Amortization of debt discounts and loan issuance costs
    
2,360
      
3,110
  
Amortization of lease discounts, premiums and other items
    
113
      
719
  
Amortization of GAAM acquisition date fair market value adjustments
    
672
      
1,237
  
Debt modification and extinguishment costs
    
4,527
      
4,050
  
Share-based compensation
    
―
      
152
  
Unrealized foreign exchange (gain) loss
    
1,001
      
(1,670
)
Deferred income taxes
    
94
      
3,038
  
Ineffective, dedesignated and terminated derivatives
    
286
      
(264
)
Adjusted Net Income
  
$
16,153
    
$
30,237
  
Average Shareholders’ Equity
  
$
644,810
    
$
757,960
  
Adjusted Return on Equity
    
10.0
%
    
16.0
%
                 
Weighted average diluted shares outstanding
    
34,288,608
      
41,545,287
  
Adjusted Net Income per diluted share
  
$
0.47
    
$
0.73
  
 
FLY defines Adjusted Net Income as net income plus or minus (i) non-cash amortization of debt discounts, loan issuance costs, lease discounts/premiums and other items; (ii) adjustments related to the GAAM portfolio acquisition comprised primarily of amortization of fair value adjustments recorded in purchase accounting; (iii) debt modification and extinguishment costs; (iv) non-cash share-based compensation; (v) unrealized foreign exchange gain/loss; (vi) deferred income taxes; and (vii) the ineffective portion and other comprehensive items associated with terminated cash flow hedges. Adjusted Return on Equity is calculated by dividing Adjusted Net Income over the average shareholders’ equity for the period presented. For periods of less than one year, Adjusted Net Income for the relevant period is annualized in calculating Adjusted Return on Equity.
 
We use 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 measures 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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