Fly Leasing Reports Third Quarter 2020 Financial Results

DUBLIN, Nov. 12, 2020 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the third quarter of 2020.

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

Highlights

  • Net loss of $8.1 million, $0.26 loss per share
  • 2.1x net debt to equity
  • $285.1 million of unrestricted cash and cash equivalents at quarter end
  • New $180.0 million five-year senior secured term loan closed in October

"Despite the challenges of the COVID-19 pandemic, we are encouraged by improved domestic air travel demand in the quarter and the recent news of successful vaccine trials, which we believe will drive a recovery in air travel demand in 2021," said Colm Barrington, Chief Executive Officer of FLY. "Total cash collected improved from the prior quarter and we have begun to receive repayment of some deferred rents. A number of our lessees have received government support, which is helping the airlines meet their payment obligations."

"To buttress the balance sheet, we recently raised a new $180 million term loan," said Barrington. "FLY continues to have a historically low debt to equity ratio, no orders for aircraft or other capital commitments and no significant near-term refinancing requirements. FLY also benefits from BBAM's decades of experience and expertise in navigating industry cycles, which is a truly invaluable resource at this time."

Financial Results

FLY is reporting a net loss of $8.1 million, or $0.26 per share, for the third quarter of 2020. This compares to net income of $51.7 million, or $1.67 per share, for the same period in 2019. The decrease in net income is primarily due to the non-recognition of revenue for certain lessees and no aircraft sales in the current quarter.

Net income for the nine months ended September 30, 2020 was $39.6 million, or $1.30 per share, compared to net income of $150.7 million, or $4.72 per share, for the nine months ended September 30, 2019.

Adjusted Net Income

Adjusted Net Loss was $9.0 million for the third quarter of 2020, compared to Adjusted Net Income of $59.8 million for the same period in the previous year. On a per share basis, Adjusted Net Loss was $0.30 in the third quarter of 2020, compared to Adjusted Net Income of  $1.93 for the third quarter of 2019.

For the nine months ended September 30, 2020, Adjusted Net Income was $45.9 million, or $1.50 per share, compared to $168.9 million, or $5.28 per share, for the same period last year.

A reconciliation of Adjusted Net Income (Loss) to net income (loss) determined in accordance with GAAP is shown below.

Financial Position

At September 30, 2020, FLY's total assets were $3.5 billion, including investment in flight equipment totaling $3.0 billion. Total cash at September 30, 2020 was $307.5 million, of which $285.1 million was unrestricted. The book value per share at September 30, 2020 was $29.28. At September 30, 2020, FLY's net debt to equity ratio was 2.1x, compared to 2.3x at December 31, 2019.

2020 Term Loan

On October 15, 2020, FLY closed a new $180 million Term Loan to be secured by 11 narrowbody aircraft. The proceeds will be used for general corporate purposes, including the repayment of debt.

Aircraft Portfolio

At September 30, 2020, FLY had 86 aircraft and seven engines in its portfolio. FLY's aircraft and engines are on lease to 39 airlines in 24 countries. The table below does not include the engines.

Portfolio at

Sep. 30, 2020

Dec. 31, 2019



Number

% of Net
Book Value

Number

% of Net
Book Value


Airbus A320ceo Family

33

28%

34

28%


Airbus A320neo Family

1

2%

1

2%


Airbus A330

3

6%

3

6%


Boeing 737NG

40

37%

42

37%


Boeing 737 MAX

2

3%

2

3%


Boeing 757-SF

1

<1%

1

<1%


Boeing 777-LRF

2

10%

2

10%


Boeing 787

4

14%

4

14%


      Total(1)

86

100%

89

100%


(1) Includes six aircraft classified as held for sale as of December 31, 2019. No aircraft were
held for sale as of September 30, 2020.


At September 30, 2020, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 8.3 years. The average remaining lease term was 4.9 years, also weighted by net book value. At September 30, 2020, FLY's portfolio had contracted annualized rental revenue of approximately $316 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, 2020. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 3499165. 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. Additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these risks. The extent to which the COVID-19 pandemic ultimately impacts FLY's business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. 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 (Loss)

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Sep. 30,

Nine months ended Sep. 30,


2020 
(Unaudited)

2019

(Unaudited)

2020

(Unaudited)

2019

(Unaudited)

Revenues





Operating lease rental revenue

$         54,253

$         96,084

$      219,631

$      302,520

End of lease income

6,320

8,974

30,387

Amortization of lease incentives

(1,017)

(1,402)

(2,334)

(4,353)

Amortization of lease discounts and other

(297)

24

(455)

27

Operating lease revenue

59,259

94,706

225,816

328,581

Finance lease revenue

137

153

423

469

Gain on sale of aircraft

38,934

31,717

82,632

Interest and other income

688

5,241

3,645

9,088

Total revenues

60,084

139,034

261,601

420,770

Expenses





Depreciation

32,589

33,881

96,197

108,769

Interest expense

24,381

33,580

76,820

107,198

Selling, general and administrative

7,656

8,013

22,413

26,173

Provision for uncollectible operating lease
  
receivables

1,000

3,000

Loss (gain) on derivatives

(638)

2,537

(66)

2,809

Fair value loss on marketable securities

2,345

12,840

Loss on extinguishment of debt

1,620

850

5,330

Maintenance and other costs

1,188

623

3,404

2,846

Total expenses

68,521

80,254

215,458

253,125

Net income (loss) before provision (benefit)
   for
income taxes

(8,437)

58,780

46,143

167,645

Provision (benefit) for income taxes

(370)

7,076

6,532

16,926

Net income (loss)

$          (8,067)

$         51,704

$        39,611

$      150,719

Weighted average number of shares





-  Basic

30,481,069

30,873,297

30,575,646

31,846,836

-  Diluted

30,481,069

30,987,394

30,575,646

31,954,204

Earnings (loss) per share





-  Basic

$            (0.26)

$             1.67

$             1.30

$             4.73

-  Diluted

$            (0.26)

$             1.67

$             1.30

$             4.72

 

Fly Leasing Limited

Consolidated Balance Sheets

(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA)





Sep. 30,

 2020

(Unaudited)

Dec. 31,
2019
(Audited)

Assets



Cash and cash equivalents

$           285,124

$         285,565

Restricted cash and cash equivalents

22,354

52,738

Rent receivables, net

57,075

14,264

Investment in finance lease, net

10,713

11,639

Flight equipment held for sale, net

144,119

Flight equipment held for operating lease, net

2,699,341

2,720,000

Maintenance rights

285,869

290,958

Deferred tax asset, net

14,383

11,675

Fair value of derivative assets

4,183

4,824

Other assets, net

118,659

129,377

Total assets

$        3,497,701

$      3,665,159

Liabilities



Accounts payable and accrued liabilities

$             29,080

$            22,746

Rentals received in advance

9,847

16,391

Payable to related parties

3,763

10,077

Security deposits

38,934

40,726

Maintenance payment liability, net

203,499

219,371

Unsecured borrowings, net

620,713

619,407

Secured borrowings, net

1,509,449

1,695,525

Deferred tax liability, net

64,011

57,935

Fair value of derivative liabilities

50,315

27,943

Other liabilities

75,460

76,761

Total liabilities

2,605,071

2,786,882

Shareholders' equity



Common shares, $0.001 par value, 499,999,900 shares authorized;
30,481,069 and 30,898,410 shares issued and outstanding at
September 30, 2020 and December 31, 2019, respectively

31

31

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

Additional paid-in capital

509,738

516,254

Retained earnings

420,003

380,392

Accumulated other comprehensive loss, net

(37,142)

(18,400)

Total shareholders' equity

892,630

878,277

Total liabilities and shareholders' equity

$        3,497,701

$      3,665,159

 

Fly Leasing Limited

Consolidated Statements of Cash Flows

(DOLLARS IN THOUSANDS)



Nine months ended Sep. 30,


2020

(Unaudited)

2019
(Unaudited)

Cash Flows from Operating Activities



Net income

$             39,611

$         150,719

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



Gain on sale of aircraft

(31,717)

(82,632)

Depreciation

96,197

108,769

Amortization of debt discounts and debt issuance costs

5,484

7,786

Amortization of lease incentives and other items

3,026

4,843

Provision for uncollectible operating lease receivables

3,000

Fair value loss on marketable securities

12,840

Loss on extinguishment of debt

850

5,330

Provision for deferred income taxes

6,121

15,963

Security deposits and maintenance payment liability recognized into
   earnings

(2,487)

(26,145)

Cash receipts from maintenance rights

2,725

1,741

Other

(112)

5,121

Changes in operating assets and liabilities:



Rent receivables

(51,285)

(10,995)

Other assets

1,390

(5,280)

Payable to related parties

(6,314)

2,576

Accounts payable, accrued liabilities and other liabilities

7,806

12,468

Net cash flows provided by operating activities

87,135

190,264

Cash Flows from Investing Activities



Purchase of flight equipment

(74,128)

(114,826)

Proceeds from sale of aircraft, net

160,271

651,488

Payments for aircraft improvement

(15,298)

(3,059)

Payments for lessor maintenance obligations

(357)

(1,843)

Purchase of equity certificates

(7,425)

Other

(1,540)

740

Net cash flows provided by investing activities

68,948

525,075




Nine months ended Sep. 30,


2020
(Unaudited)

2019
(Unaudited)

Cash Flows from Financing Activities



Security deposits received

4,009

1,169

Security deposits returned

(1,546)

Maintenance payment liability receipts

17,359

48,631

Maintenance payment liability disbursements

(10,109)

(14,975)

Debt extinguishment costs

(20)

(194)

Debt issuance costs

(342)

Repayment of secured borrowings

(191,734)

(474,659)

Shares repurchased

(6,517)

(32,844)

Net cash flows used in financing activities

(187,012)

(474,760)

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

104

(55)

Net (decrease) increase in unrestricted and restricted cash and cash
   equivalents

(30,825)

240,524

Unrestricted and restricted cash and cash equivalents at beginning of
   period

338,303

281,080

Unrestricted and restricted cash and cash equivalents at end of period

$             307,478

$       521,604




Reconciliation to Consolidated Balance Sheets:



Cash and cash equivalents

$             285,124

$       432,747

Restricted cash and cash equivalents

22,354

88,857

Unrestricted and restricted cash and cash equivalents

$             307,478

$       521,604









 

Fly Leasing Limited

Reconciliation of Non-GAAP Measures

(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)



Three months ended Sep. 30,

Nine months ended Sep. 30,


2020

(Unaudited)

2019

(Unaudited)

2020

(Unaudited)

2019

(Unaudited)

Net income (loss)

$        (8,067)

$       51,704

$       39,611

$     150,719

Adjustments:





Unrealized foreign exchange (gain) loss

416

(345)

377

(449)

Deferred income taxes

(642)

5,972

6,121

15,963

Fair value changes on undesignated derivatives

(722)

2,475

(228)

2,618

Adjusted Net Income (Loss)

$        (9,015)

$       59,806

$       45,881

$     168,851

Average Shareholders' Equity

$     895,369

$     776,218

889,813

748,112

Adjusted Return on Equity

(4.0%)

30.8%

6.9%

30.1%






Weighted average diluted shares outstanding

30,481,069

30,987,394

30,575,646

31,954,204

Adjusted Net Income (Loss) per diluted share

$          (0.30)

$            1.93

$             1.50

$           5.28

FLY defines Adjusted Net Income (Loss) as net income (loss) 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 (Loss) 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 (Loss) 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 (Loss) and Adjusted Return on Equity, in addition to GAAP net income (loss) and earnings (loss) per share, to assess our 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 (Loss) 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 from those used by other companies.

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SOURCE Fly Leasing Limited

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