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FLY Leasing Reports Second Quarter 2012 Financial Results

July 25, 2012

DUBLIN, July 25, 2012 /PRNewswire/ — 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 2012.

Second Quarter 2012 Highlights

  • Adjusted net income of $30.9 million, $1.19 per share
  • Net income of $25.7 million, EPS of $0.99
  • Sold three aircraft for a pre-tax gain of $8.5 million
  • Launched a $395 million term loan to refinance near-term debt maturities
  • Q2 dividend increased to $0.22 per share, $0.88 annually

“FLY is reporting a very strong second quarter, following an equally positive March quarter result,” said Colm Barrington, CEO of FLY. “The acquisition of a portfolio of 49 aircraft which was completed in late 2011 is now being reflected in increased operating income from our leasing activities. Our second quarter EPS of $0.99 brings our six month earnings to $1.77 per share, as compared to $0.26 per share in the same period last year. Due to these strong results, FLY has increased its quarterly dividend to $0.22 per share.”

“We were particularly pleased to have sold three older aircraft from our larger portfolio for a pre-tax gain of $8.5 million,” added Barrington. “These sales demonstrate the inherent value in FLY’s fleet and the strong investor interest in aviation assets.”

“FLY has also launched a $395 million term loan which we expect to complete in early August. Proceeds from the term loan will be used to repay our warehouse facility and other debt, and we will not have any material debt repayment obligations until 2018. This refinancing will reduce our leverage and is the first step towards our goal of reducing the overall leverage on our portfolio over the next two to three years.”

Second Quarter Financial Results

FLY’s net income and diluted earnings per share for the second quarter of 2012 were $25.7 million and $0.99 per share compared to $4.1 million and $0.16 per share in the same period of 2011. The increases in operating lease revenue and net income is primarily due to the growth in the aircraft portfolio following the aircraft acquisitions completed in late 2011. End of lease income and gains on the sale of three aircraft also contributed to the increase in net income as compared to the second quarter of 2011.

Net income and diluted earnings per share for the six months ended June 30, 2012 were $46.1 million and $1.77 per share compared to $6.9 million and $0.26 per share in the same period in 2011.

FLY’s net debt to total shareholders’ equity ratio was 4.4x at June 30, 2012 compared to 5.1x at December 31, 2011. Net debt is defined as book value of secured borrowings, less unrestricted cash and cash equivalents.

Adjusted Net Income

Adjusted Net Income was $30.9 million for the second quarter of 2012 compared to $7.3 million in the same period in the previous year. On a per share basis, Adjusted Net Income was $1.19 in the second quarter of 2012 compared to $0.28 for the same period in the previous year. For the six-months ended June 30, 2012, Adjusted Net Income was $57.7 million, or $2.23 per share compared to $11.0 million and $0.42 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 13, 2012, FLY declared a dividend of $0.22 per share in respect of the second quarter of 2012, a 10% increase from the quarterly dividend of $0.20 that FLY has paid since 2009. This dividend will be paid on August 20, 2012 to shareholders of record on July 30, 2012.

Financial Position

At June 30, 2012, FLY’s total assets were $3.2 billion, including flight equipment with a net book value of $2.7 billion. Restricted and unrestricted cash at June 30, 2012 totaled $480.0 million, of which $189.3 million was unrestricted. These amounts compare to total cash of $380.5 million and unrestricted cash of $82.1 million at December 31, 2011. During the first quarter of 2012, FLY sold securitization notes with a face value of $106.7 million, generating net cash proceeds of $52.8 million after repayment of associated debt.

Aircraft Portfolio

At June 30, 2012, FLY’s 108 aircraft were on lease to 53 lessees in 29 countries. The table below shows the aircraft in FLY’s portfolio on June 30, 2012 and December 31, 2011. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.

                                        Jun 30,           Dec 31,
                                           2012              2011
    Portfolio at
    Airbus A319                              20                20
    -----------                             ---               ---
    Airbus A320                              27                29
    -----------                             ---               ---
    Airbus A330                               1                 1
    -----------                             ---               ---
    Airbus A340                               3                 3
    -----------                             ---               ---
    Boeing 717                                6                 6
    ----------                              ---               ---
    Boeing 737                               38                37
    ----------                              ---               ---
    Boeing 747                                1                 1
    ----------                              ---               ---
    Boeing 757                               11                11
    ----------                              ---               ---
    Boeing 767                                1                 1
    ----------                              ---               ---
        Total                               108               109
        -----                               ---               ---

At June 30, 2012, the average age of FLY’s portfolio was 8.9 years weighted by the net book value of each aircraft. The average remaining lease term was 3.3 years, also weighted by net book value. At June 30, 2012, the leases were generating annualized revenues of approximately $345 million. For the second quarter of 2012, FLY’s lease utilization factor was 97% and for the six months ended June 30, 2012 the lease utilization factor was 98%.

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 2, 2012. Participants should call +1-706-758-4339 (International) or 877-309-0213 (North America) and enter confirmation code 94429047 or ask an operator for the FLY Leasing earnings call. 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 94429047. The replay recording will be available until August 16, 2012.

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 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. 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 Three months Six months             Six months
                                                                 ended        ended    ended                    ended
                                                              June 30,     June 30,  June 30,                June 30,
                                                                  2012         2011                  2012        2011
                                                           (Unaudited)  (Unaudited) (Unaudited)           (Unaudited)
                                                            ----------   ---------- ----------             ----------
    Revenues
    --------
       Operating lease revenue                                 $98,935      $54,194              $201,357    $101,762
       -----------------------                                 -------      -------              --------    --------
       Equity earnings from unconsolidated joint ventures        2,273          121                 4,128       1,337
       --------------------------------------------------        -----          ---                 -----       -----
       Gain on sale of aircraft                                  8,489            -                 8,489           -
       ------------------------                                  -----          ---                 -----         ---
       Interest and other income                                 1,213          856                 1,443       1,741
       -------------------------                                 -----          ---                 -----       -----
    Total revenues                                             110,910       55,171               215,417     104,840
    --------------                                             -------       ------               -------     -------
    Expenses
    --------
       Depreciation                                             34,318       20,924                68,493      41,565
       ------------                                             ------       ------                ------      ------
       Interest expense                                         36,628       18,327                73,650      36,896
       ----------------                                         ------       ------                ------      ------
       Selling, general and administrative                       9,361        8,212                18,778      13,897
       -----------------------------------                       -----        -----                ------      ------
       Ineffective cash flow hedges                             (1,208)           -                (1,227)          -
       ----------------------------                             ------          ---                ------         ---
       Maintenance and other costs                               1,782        2,606                 2,660       3,919
       ---------------------------                               -----        -----                 -----       -----
    Total expenses                                              80,881       50,069               162,354      96,277
    --------------                                              ------       ------               -------      ------
    Net income before provision for income taxes                30,029        5,102                53,063       8,563
    --------------------------------------------                ------        -----                ------       -----
       Provision for income taxes                                4,300        1,004                 6,947       1,702
       --------------------------                                -----        -----                 -----       -----
    Net income                                                 $25,729       $4,098               $46,116      $6,861
    ----------                                                 -------       ------               -------      ------
    Weighted average number of shares
    ---------------------------------
    -   Basic                                               25,769,115   25,648,928            25,741,559  26,035,817
    ---------                                               ----------   ----------            ----------  ----------
    -   Diluted                                             25,924,964   25,791,844            25,885,182  26,156,264
    -----------                                             ----------   ----------            ----------  ----------
    Earnings per share
    ------------------
    -   Basic                                                    $1.00        $0.16                 $1.78       $0.26
    ---------                                                    -----        -----                 -----       -----
    -   Diluted                                                  $0.99        $0.16                 $1.77       $0.26
    -----------                                                  -----        -----                 -----       -----
    Dividends declared and paid per share                        $0.20        $0.20                 $0.40       $0.40
    -------------------------------------                        -----        -----                 -----       -----

FLY Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                                       June 30, Dec. 31,    2011
                                                                                              2012     (Audited)
                                                                                       (Unaudited)
                                                                                        ----------
    Assets
    ------
       Cash and cash equivalents                                                          $189,336       $82,105
       -------------------------                                                          --------       -------
       Restricted cash and cash equivalents                                                290,686       298,404
       ------------------------------------                                                -------       -------
       Rent receivables                                                                      1,492         3,186
       ----------------                                                                      -----         -----
       Investment in unconsolidated joint ventures                                          16,788        15,141
       -------------------------------------------                                          ------        ------
       Flight equipment held for operating leases, net                                   2,679,487     2,762,289
       -----------------------------------------------                                   ---------     ---------
       Deferred tax asset, net                                                                   -         5,329
       -----------------------                                                                 ---         -----
       Fair market value of derivative asset                                                 1,220         4,023
       -------------------------------------                                                 -----         -----
       Other assets, net                                                                    20,505        28,021
       -----------------                                                                    ------        ------
    Total assets                                                                         3,199,514     3,198,498
    ------------                                                                         ---------     ---------
    Liabilities
    -----------
       Accounts payable and accrued liabilities                                             12,052        10,429
       ----------------------------------------                                             ------        ------
       Rentals received in advance                                                          14,909        15,297
       ---------------------------                                                          ------        ------
       Payable to related parties                                                            3,247         4,863
       --------------------------                                                            -----         -----
       Security deposits                                                                    47,200        50,672
       -----------------                                                                    ------        ------
       Maintenance payment liabilities                                                     221,004       231,793
       -------------------------------                                                     -------       -------
       Secured borrowings, net                                                           2,307,636     2,326,110
       -----------------------                                                           ---------     ---------
       Deferred tax liability, net                                                           1,555             -
       ---------------------------                                                           -----           ---
       Fair market value of derivative liabilities                                          88,571        98,487
       -------------------------------------------                                          ------        ------
       Other liabilities                                                                    16,880        17,814
       -----------------                                                                    ------        ------
    Total liabilities                                                                    2,713,054     2,755,465
    -----------------                                                                    ---------     ---------
    Shareholders' equity
    --------------------
    Common shares, $0.001 par value, 499,999,900 shares authorized; 25,769,115 and
     25,685,527 shares issued and outstanding at June 30, 2012 and December 31, 2011,
     respectively
                                                                                                26            26
    ---                                                                                        ---           ---
       Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding           -             -
       -------------------------------------------------------------------------------         ---           ---
       Additional paid in capital                                                          456,832       455,186
       --------------------------                                                          -------       -------
       Retained earnings                                                                    93,528        57,982
       -----------------                                                                    ------        ------
       Accumulated other comprehensive loss, net                                           (63,926)      (70,161)
       -----------------------------------------                                           -------       -------
    Total shareholders' equity                                                             486,460       443,033
    --------------------------                                                             -------       -------
    Total liabilities and shareholders' equity                                          $3,199,514    $3,198,498
    ------------------------------------------                                          ----------    ----------

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 Three months  Six months  Six months
                                                                   ended      ended       ended       ended
                                                                June 30,   June 30,    June 30,    June 30,
                                                                    2012       2011        2012        2011
                                                            (Unaudited) (Unaudited) (Unaudited) (Unaudited)
                                                              ----------  ---------- ----------  ----------
    Net Income                                                   $25,729      $4,098    $46,116      $6,861
    ----------                                                   -------      ------    -------      ------
    Add (less):
    -----------
       Ineffective
        portion of
        cash flow
        hedges                                                    (1,208)          -     (1,227)          -
       ---------------                                            ------         ---     ------         ---
       Non-cash
        share based
        compensation                                                 804       1,412      1,646       2,364
       -------------                                                 ---       -----      -----       -----
       Adjustments
        related to
        GAAM
        Portfolio
        acquisition:
       -------------
                       Amortization of fair value adjustments
                         recorded in purchase accounting           6,130           -     12,552           -
               --------------------------------------              -----         ---     ------         ---
                      Acquisition transaction fees and
                       expenses                                        -       1,747          -       1,747
               --------------------------------------                ---       -----        ---       -----
       Income tax
        effects                                                     (581)          -     (1,421)          -
       ----------                                                   ----         ---     ------         ---
    Adjusted Net
     Income                                                      $30,874      $7,257    $57,666     $10,972
    ------------                                                 -------      ------    -------     -------
    Weighted
     average
     diluted
     shares
     outstanding                                              25,924,964  25,791,844 25,885,182  26,156,264
    ------------                                              ----------  ---------- ----------  ----------
    Adjusted Net
     Income per
     share                                                         $1.19       $0.28      $2.23       $0.42
    ------------                                                   -----       -----      -----       -----

Adjusted Net Income Plus Depreciation and Amortization, a Non-GAAP Financial Measure, to Net Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

                          Three months Three months  Six months  Six months
                                 ended        ended       ended       ended
                              June 30,     June 30,    June 30,    June 30,
                                  2012         2011        2012        2011
                           (Unaudited)  (Unaudited) (Unaudited) (Unaudited)
                            ----------   ----------  ----------  ----------
    Adjusted Net
     Income                    $30,874       $7,257     $57,666     $10,972
    ------------               -------       ------     -------     -------
    Add:
    ----
       Depreciation             34,318       20,924      68,493      41,565
       ------------             ------       ------      ------      ------
       Other amortization        3,661        3,750       7,446       7,469
       ------------------        -----        -----       -----       -----
       Provision for
        deferred income
        taxes                    4,362          754       7,381       1,090
       ----------------          -----          ---       -----       -----
    Adjusted Net
     Income Plus
     Depreciation and
     Amortization              $73,215      $32,685    $140,986     $61,096
    -----------------          -------      -------    --------     -------

FLY defines Adjusted Net Income as net income plus or minus the after-tax impacts of the ineffective portion of cash flow hedges, non-cash share-based compensation, and adjustments related to the GAAM portfolio acquisition comprised of amortization of fair value adjustments recorded in purchase accounting and acquisition transaction fees and expenses. FLY believes that Adjusted Net Income provides useful information about operating performance and period over period comparisons. It also provides additional information that is useful for evaluating the underlying operating performance of our business without regard to the impacts of fair-value adjustments of debt that the company has assumed, acquired leases and derivative instruments and other non-recurring items of income and expense affecting current period results. Adjusted Net Income should be used as a supplement to and not as a substitute for financial measures determined in accordance with Accounting Principles Generally Accepted in the United States.

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, adjusted net income plus depreciation and amortization excludes certain positive and negative cash items, including principal payments, and 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. These measures should be considered in addition to, not as a substitute for net income or other financial measures determined in accordance with GAAP. Finally, FLY’s definitions may be different than those used by other companies.

SOURCE FLY Leasing Limited


Source: PR Newswire