EXHIBIT 99.1
FLY LEASING REPORTS second quarter 2014 results
Dublin, Ireland, July 31, 2014 – FLY Leasing
Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its
financial results for the second quarter of 2014.
Second Quarter 2014 Highlights
| • | Net income of $21.7 million, $0.51 per share | |
| • | 26% growth in operating lease rental revenue | |
| • | Sold seven aircraft and recorded gains on sale of $18.9 million | |
| • | Achieved 100% fleet utilization | |
| • | Acquired seven aircraft for $226 million | |
| • | After quarter end, acquired one B737-800 and contracted to buy three A330-300s | |
| • | Declared 27th consecutive quarterly dividend on July 17 ($0.25 per share) |
“FLY had a strong second quarter with 26% growth in operating lease rental revenue compared to the same quarter last year,” said Colm Barrington, FLY’s Chief Executive Officer. “This is the fourth consecutive quarter in which we have increased rental revenue, driven by FLY’s strong fleet growth over the last 12 months. FLY also booked gains from the sale of seven aircraft with an average age of 12.4 years. Since its inception, FLY has sold 29 aircraft with an average age of 12.5 years for an aggregate gain of $68 million. FLY continues to reduce the average age of its portfolio, which was 8.7 years at June 30.”
“We continue to find attractive acquisition opportunities in the sale and leaseback and secondary markets,” added Barrington. “We have already acquired 12 aircraft for more than $329 million this year and have an identified pipeline of more than $450 million. At June 30, we had unrestricted cash of $253 million and $325 million available under our acquisition facility, giving us ample capacity to fund our pipeline. As a result, we are confident of achieving our 15% net fleet growth target this year.”
“The global airline industry continues to grow, with IATA reporting a 6.2% increase in passenger traffic in the first five months of 2014. In addition, IATA forecasts that industry operating profits will increase by 49% to $32 billion in 2014” said Barrington.
Second Quarter Financial Results
FLY’s net income and diluted earnings per share for the second quarter of 2014 were $21.7 million and $0.51 compared to $5.9 million and $0.20 in the same period of 2013.
Total revenues increased 21% to $109.5 million. Operating lease rental revenue increased 26% for the second quarter of 2014 to $94.6 million compared to $75.0 million for the same period in the previous year. This increase was driven by the increase in the size of the portfolio and improved utilization. The second quarter 2014 results include $18.9 million in gains from aircraft sales, whereas the same period in the previous year included $17.0 million in end of lease income.
Net income and diluted earnings per share for the six months ended June 30, 2014 were $25.2 million and $0.58 compared to $38.8 million and $1.35 for the six months ended June 30, 2013. The 2014 results included $3.9 million of end of lease income compared to $47.6 million in 2013.
Adjusted Net Income
Adjusted net income was $18.8 million for the second quarter of 2014 compared to $11.2 million in the same period in the previous year. On a per share basis, Adjusted Net Income was $0.45 in the second quarter of 2014 compared to $0.40 for the same period in the previous year. For the six-months ended June 30, 2014, Adjusted Net Income was $24.0 million, or $0.58 per share, compared to $49.8 million, or $1.76 per share, 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.
Dividends
On July 17, 2014, FLY declared its 27th consecutive dividend. This dividend of $0.25 per share in respect of the second quarter of 2014 will be paid on August 20, 2014 to shareholders of record on July 31, 2014.
Financial Position
At June 30, 2014, FLY’s total assets were $3.6 billion, including flight equipment with a net book value of $3.2 billion. Restricted and unrestricted cash at June 30, 2014 totaled $378.4 million, of which $253.2 million was unrestricted. This compares to total cash of $579.3 million at December 31, 2013, of which $404.5 million was unrestricted. As of June 30, 2014, Fly had approximately $325 million available under its aircraft acquisition facility in addition to its unrestricted cash to fund aircraft purchases. Further, at June 30, 2014, there were seven unencumbered aircraft with a net book value of approximately $245.7 million.
FLY’s net leverage as of June 30, 2014 was unchanged at 2.9x since March 31, 2014. Net leverage is defined as the ratio of net debt to total shareholders’ equity, and net debt is defined as book value of all borrowings, less unrestricted cash and cash equivalents.
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Aircraft Portfolio
At June 30, 2014, all of FLY’s 117 aircraft, as shown in the table below, were on lease to 65 airlines in 36 countries. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.
| Portfolio at | Jun 30, 2014 | Dec 31, 2013 | ||||||
| Airbus A319 | 19 | 19 | ||||||
| Airbus A320 | 27 | 27 | ||||||
| Airbus A330 | 1 | 1 | ||||||
| Airbus A340 | 3 | 3 | ||||||
| Boeing 737 | 52 | 48 | ||||||
| Boeing 747 | 1 | 1 | ||||||
| Boeing 757 | 11 | 11 | ||||||
| Boeing 767 | 1 | 1 | ||||||
| Boeing 777 | 1 | 1 | ||||||
| Boeing 787 | 1 | 1 | ||||||
| Total | 117 | 113 | ||||||
As of June 30, 2014, the average age of FLY’s portfolio was 8.7 years weighted by the net book value of each aircraft. The average remaining lease term was 4.3 years, also weighted by net book value. As of June 30, 2014, FLY’s leases were generating annualized revenues of approximately $379 million. FLY’s lease utilization factor was 100% for the second quarter of 2014 and 99% for the six months ended June 30, 2014.
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, July 31, 2014. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 66858774 or ask an operator for the FLY Leasing earnings call. An earnings call presentation will also be available on FLY’s website at www.flyleasing.com.
A replay will be available shortly after the call. To access the replay, please dial +1-404-537-3406 (International) or 855-859-2056 (North America) and enter confirmation code 66858774. The replay recording will be available until August 10, 2014. 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.
About FLY
FLY acquires and leases modern, high-demand and fuel-efficient commercial jet aircraft under multi-year operating lease contracts to a diverse group of airlines throughout the world. FLY is managed and serviced by BBAM LP, one of the world’s leading aircraft lease managers with more than 20 years of experience. For more information about FLY, please visit its website at www.flyleasing.com.
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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 its 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 West Pier Dun Laoghaire Co Dublin, Ireland |
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FLY Leasing Limited
Consolidated Statements of Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
| Three months ended June 30, 2014 (Unaudited) | Three months ended June 30, 2013 (Unaudited) | Six months ended June 30, 2014 (Unaudited) | Six months ended June 30, 2013 (Unaudited) | |||||||||||||
| Revenues | ||||||||||||||||
| Operating lease rental revenue | $ | 94,575 | $ | 74,950 | $ | 185,111 | $ | 155,058 | ||||||||
| End of lease revenue | 175 | 16,953 | 3,854 | 47,552 | ||||||||||||
| Amortization of lease incentives | (3,833 | ) | (1,906 | ) | (7,221 | ) | (3,840 | ) | ||||||||
| Amortization of lease premiums, discounts & other | (951 | ) | (1,157 | ) | (2,151 | ) | (2,556 | ) | ||||||||
| Operating lease revenue | 89,966 | 88,840 | 179,593 | 196,214 | ||||||||||||
| Gain on sale of aircraft | 18,855 | — | 18,855 | 6,451 | ||||||||||||
| Equity earnings from unconsolidated subsidiary | 359 | 481 | 1,741 | 903 | ||||||||||||
| Interest and other income | 334 | 1,217 | 644 | 1,335 | ||||||||||||
| Total revenues | 109,514 | 90,538 | 200,833 | 204,903 | ||||||||||||
| Expenses | ||||||||||||||||
| Depreciation | 42,125 | 35,207 | 82,528 | 69,743 | ||||||||||||
| Interest expense | 33,819 | 29,164 | 68,444 | 60,185 | ||||||||||||
| Net (gain) loss on extinguishment of debt | (4,010 | ) | 2,140 | (4,010 | ) | 2,140 | ||||||||||
| Selling, general and administrative | 11,329 | 9,554 | 20,959 | 19,258 | ||||||||||||
| Ineffective, dedesignated and terminated derivatives | 97 | (792 | ) | 32 | (860 | ) | ||||||||||
| Maintenance and other costs | 1,584 | 8,534 | 3,994 | 9,924 | ||||||||||||
| Total expenses | 84,944 | 83,807 | 171,947 | 160,390 | ||||||||||||
| Net income before provision for income taxes | 24,570 | 6,731 | 28,886 | 44,513 | ||||||||||||
| Provision for income taxes | 2,896 | 816 | 3,649 | 5,753 | ||||||||||||
| Net income | $ | 21,674 | $ | 5,915 | $ | 25,237 | $ | 38,760 | ||||||||
| Weighted average number of shares | ||||||||||||||||
| - Basic | 41,419,515 | 28,150,215 | 41,376,963 | 28,109,929 | ||||||||||||
| - Diluted | 41,446,070 | 28,260,475 | 41,420,045 | 28,211,847 | ||||||||||||
| Earnings per share | ||||||||||||||||
| - Basic | $ | 0.51 | $ | 0.20 | $ | 0.58 | $ | 1.36 | ||||||||
| - Diluted | $ | 0.51 | $ | 0.20 | $ | 0.58 | $ | 1.35 | ||||||||
| Dividends declared and paid per share | $ | 0.25 | $ | 0.22 | $ | 0.50 | $ | 0.44 | ||||||||
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FLY Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS)
| June
30, 2014 (Unaudited) | Dec.
31, 2013 (Audited) | |||||||
| Assets | ||||||||
| Cash and cash equivalents | $ | 253,171 | $ | 404,472 | ||||
| Restricted cash and cash equivalents | 125,229 | 174,829 | ||||||
| Rent receivables | 3,408 | 2,922 | ||||||
| Investment in unconsolidated subsidiary | 3,287 | 8,179 | ||||||
| Flight equipment held for operating leases, net | 3,160,640 | 3,034,912 | ||||||
| Fair market value of derivative asset | 1,783 | 7,395 | ||||||
| Other assets, net | 32,572 | 39,650 | ||||||
| Total assets | $ | 3,580,090 | $ | 3,672,359 | ||||
| Liabilities | ||||||||
| Accounts payable and accrued liabilities | 15,584 | 16,592 | ||||||
| Rentals received in advance | 16,328 | 17,422 | ||||||
| Payable to related parties | 2,790 | 3,756 | ||||||
| Security deposits | 55,354 | 52,837 | ||||||
| Maintenance payment liabilities | 248,571 | 233,811 | ||||||
| Unsecured borrowings, net | 292,173 | 291,567 | ||||||
| Secured borrowings, net | 2,141,045 | 2,254,705 | ||||||
| Fair market value of derivative liabilities | 26,268 | 24,577 | ||||||
| Deferred tax liability, net | 10,462 | 7,746 | ||||||
| Other liabilities | 25,461 | 20,523 | ||||||
| Total liabilities | 2,834,036 | 2,923,536 | ||||||
| Shareholders’ equity | ||||||||
| Common shares, $0.001 par value, 499,999,900 shares authorized; 41,432,998 and 41,306,338 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 41 | 41 | ||||||
| Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding | — | — | ||||||
| Additional paid in capital | 658,456 | 658,492 | ||||||
| Retained earnings | 107,660 | 104,143 | ||||||
| Accumulated other comprehensive loss, net | (20,103 | ) | (13,853 | ) | ||||
| Total shareholders’ equity | 746,054 | 748,823 | ||||||
| Total liabilities and shareholders’ equity | $ | 3,580,090 | $ | 3,672,359 | ||||
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FLY Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)
| Six months ended June 30, 2014 | Six months ended June 30, 2013 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net Income | $ | 25,237 | $ | 38,760 | ||||
| Adjustments to reconcile net income to net cash flows provided by operating activities: | ||||||||
| Equity in earnings from unconsolidated subsidiary | (1,741 | ) | (903 | ) | ||||
| Gain on sale of aircraft | (18,855 | ) | (6,451 | ) | ||||
| Depreciation | 82,528 | 69,743 | ||||||
| Amortization of debt issuance costs | 2,716 | 3,748 | ||||||
| Amortization of lease incentives | 7,221 | 3,839 | ||||||
| Amortization of lease discounts/premiums and other items | 4,980 | 4,135 | ||||||
| Amortization of fair market value adjustments associated with the GAAM acquisition | 3,531 | 8,056 | ||||||
| Net (gain) loss on extinguishment of debt | (4,048 | ) | — | |||||
| Share-based compensation | (36 | ) | 2,474 | |||||
| Interest included in principal balance | — | 1,286 | ||||||
| Provision for income taxes | 3,649 | 4,925 | ||||||
| Unrealized gain on derivative instruments | 32 | (860 | ) | |||||
| Security deposits and maintenance payment liability relieved | (3,443 | ) | (31,377 | ) | ||||
| Security deposits and maintenance payment claims applied towards operating lease revenues | — | (2,101 | ) | |||||
| Distribution from unconsolidated subsidiary | 4,786 | — | ||||||
| Changes in operating assets and liabilities: | ||||||||
| Rent receivables | (2,877 | ) | (318 | ) | ||||
| Other assets | 1,768 | (1,023 | ) | |||||
| Payable to related parties | (3,499 | ) | (4,193 | ) | ||||
| Accounts payable and accrued liabilities | 1,060 | 1,544 | ||||||
| Rentals received in advance | (724 | ) | 705 | |||||
| Other liabilities | 4,405 | 4,774 | ||||||
| Net cash flows provided by operating activities | 106,690 | 96,763 | ||||||
| Cash Flows from Investing Activities | ||||||||
| Distribution from unconsolidated subsidiary | 1,847 | — | ||||||
| Purchase of flight equipment | (289,259 | ) | (130,513 | ) | ||||
| Proceeds from sale of aircraft | 81,867 | 31,039 | ||||||
| Payment for aircraft improvement | (7,693 | ) | — | |||||
| Lessor contribution to maintenance | (2,422 | ) | (9,127 | ) | ||||
| Net cash flows used in investing activities | (215,660 | ) | (108,601 | ) | ||||
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| Six
months ended June 30, 2014 | Six
months ended June 30, 2013 | |||||||
| Cash Flows from Financing Activities | ||||||||
| Restricted cash and cash equivalents | 49,600 | (19,320 | ) | |||||
| Security deposits received | 4,391 | 6,823 | ||||||
| Security deposits returned | (1,828 | ) | (2,553 | ) | ||||
| Maintenance payment liability receipts | 48,191 | 27,166 | ||||||
| Maintenance payment liability disbursements | (37,131 | ) | (11,743 | ) | ||||
| Debt issuance costs | (242 | ) | (4,364 | ) | ||||
| Proceeds from secured borrowings | — | 138,956 | ||||||
| Repayment of secured borrowings | (83,592 | ) | (133,936 | ) | ||||
| Dividends | (20,676 | ) | (12,356 | ) | ||||
| Dividend equivalents | (1,044 | ) | (655 | ) | ||||
| Net cash flows used in financing activities | (42,331 | ) | (11,982 | ) | ||||
| Net decrease in cash | (151,301 | ) | (23,820 | ) | ||||
| Cash at beginning of period | 404,472 | 163,124 | ||||||
| Cash at end of period | $ | 253,171 | $ | 139,304 | ||||
| Supplemental Disclosure: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | 59,634 | $ | 49,471 | ||||
| Taxes | 152 | 208 | ||||||
| Noncash Activities: | ||||||||
| Other liabilities applied to maintenance payment liability and rent receivables | 979 | — | ||||||
| Security deposits applied to maintenance payment liability and rent receivables | 820 | 1,299 | ||||||
| Noncash activities in connection with purchase of aircraft: | ||||||||
| Security deposits and maintenance payment liability assumed in connection with purchase of aircraft | 16,019 | — | ||||||
| Rent receivable applied to purchase of aircraft | 1,480 | — | ||||||
| Deposits applied to purchase of aircraft | 550 | — | ||||||
| Noncash activities in connection with sale of aircraft: | ||||||||
| Security deposits and maintenance payment liability applied to sales price | 8,678 | — | ||||||
| Refundable deposits applied to sale of aircraft | 2,626 | — | ||||||
| Rent receivable applied to sale of aircraft | 425 | — | ||||||
| Secured borrowings assumed by buyer | — | 38,500 | ||||||
| Derivative liabilities assumed by buyer | — | 5,000 | ||||||
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FLY Leasing Limited
Reconciliation of Adjusted Net Income, a Non-GAAP Financial Measure, to Net Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
| Three months ended June 30, 2014 (Unaudited) |
Three months ended June 30, 2013 (Unaudited) |
Six months ended June 30, 2014 (Unaudited) |
Six months ended June 30, 2013 (Unaudited) | |||||||||||||
| Net Income | $ | 21,674 | $ | 5,915 | $ | 25,237 | $ | 38,760 | ||||||||
| Add (less): | ||||||||||||||||
| Ineffective portion of cash flow hedges | 97 | (792 | ) | 32 | (860 | ) | ||||||||||
| Net (gain) loss on extinguishment of debt | (4,010 | ) | 2,140 | (4,010 | ) | 2,140 | ||||||||||
| Non-cash share based compensation | 20 | 668 | (36 | ) | 2,474 | |||||||||||
| Adjustments related to GAAM Portfolio acquisition: | ||||||||||||||||
| Amortization of fair value adjustments recorded in purchase accounting | 1,602 | 3,534 | 3,531 | 8,056 | ||||||||||||
| Income tax effects | (555 | ) | (230 | ) | (789 | ) | (796 | ) | ||||||||
| Adjusted Net Income | $ | 18,828 | $ | 11,235 | $ | 23,965 | $ | 49,774 | ||||||||
| Weighted average diluted shares outstanding | 41,446,070 | 28,260,475 | 41,420,045 | 28,211,847 | ||||||||||||
| Adjusted Net Income per share | $ | 0.45 | $ | 0.40 | $ | 0.58 | $ | 1.76 | ||||||||
Adjusted Net Income Plus Depreciation and Amortization, a Non-GAAP Financial Measure, to Net Income
(DOLLARS IN THOUSANDS)
| Three months ended June 30, 2014 (Unaudited) |
Three months ended June 30, 2013 (Unaudited) |
Six months ended June 30, 2014 (Unaudited) |
Six months ended June 30, 2013 (Unaudited) | |||||||||||||
| Adjusted Net Income | $ | 18,828 | $ | 11,235 | $ | 23,965 | $ | 49,774 | ||||||||
| Add: | ||||||||||||||||
| Depreciation | 42,125 | 35,207 | 82,528 | 69,743 | ||||||||||||
| Other amortization | 7,365 | 5,517 | 14,457 | 10,463 | ||||||||||||
| Provision for deferred income taxes | 3,404 | 1,081 | 4,272 | 5,721 | ||||||||||||
| Adjusted Net Income Plus Depreciation and Amortization | $ | 71,722 | $ | 53,040 | $ | 125,222 | $ | 135,701 | ||||||||
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FLY defines Adjusted Net Income as net income plus or minus the after-tax impacts of the ineffective portion of cash flow hedges, net gains and losses on extinguishment of debt, non-cash share-based compensation, and adjustments related to the GAAM portfolio acquisition comprised of amortization of fair value adjustments recorded in purchase accounting. Management believes that Adjusted Net Income provides information that is useful in evaluating the operating performance of FLY’s business and facilitates period-over-period comparisons without regard to gains and losses related to refinancing activity, share based compensation expense and the impacts of fair-value adjustments of debt, leases and derivative instruments that FLY assumed in connection with its acquisition of the GAAM portfolio.
Adjusted Net Income Plus Depreciation and Amortization is a cash flow measure that provides investors with an additional measure for evaluating FLY’s ongoing cash earnings, from which capital investments are made, debt is serviced and dividends are paid. However, this measure excludes certain cash items, including principal payments on debt, and therefore has certain important limitations as an indicator of FLY’s ability to pay dividends and reinvest in its business. Management uses Adjusted Net Income and Adjusted Net Income Plus Depreciation and Amortization as a measure for assessing FLY’s performance.
Adjusted Net Income and Adjusted Net Income Plus Depreciation and Amortization should be considered as supplements to, and not as a substitute for, net income and 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, including other companies in its industry.
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