FLY Leasing Reports First Quarter 2014 Financial Results

DUBLIN, May 8, 2014 /PRNewswire/ — 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 2014.

First Quarter 2014 Highlights

Net income of $3.6 million, $0.07 per share
Adjusted net income of $5.1 million, $0.12 per share
Acquired four aircraft at a cost of $82 million
Subsequent to quarter end, acquired three additional aircraft for $94 million
Declared our 26th consecutive quarterly dividend on April 15th ($0.25 per share)

“In the first four months of the year, we have added seven aircraft to the fleet, with a consequent growth in top line revenues,” said Colm Barrington, CEO of FLY. “We are making strong and steady progress in achieving our target of 15% growth in our fleet this year, having already spent $176 million. We have a robust acquisition pipeline and our continued deployment of capital will drive further revenue and earnings growth as the year progresses. We will also be selling more aircraft, demonstrating our consistent ability to monetize a range of aircraft types and ages at prices above their book values. This again underscores the positive market value of FLY’s fleet as compared to its book value.”

“Our first quarter revenue growth met our targets, principally due to our larger fleet and achieving 100% utilization during the quarter,” added Barrington. “We had less end of lease revenue than in the prior year and also experienced increased interest costs resulting from the $300 million unsecured debt issuance which closed in December. However, we fully expect earnings to increase as we utilize this new capital and continue growing our fleet. The airline, aircraft leasing and aircraft financing markets remain healthy and FLY will take advantage of opportunities in these markets to increase shareholder value, including by maintaining our industry-leading dividend.”

Financial Results

FLY is reporting net income for the first quarter of 2014 of $3.6 million or $0.07 per diluted share. This compares to net income of $32.8 million or $1.15 per diluted share for the same period in 2013. First quarter 2013 results benefitted from $30.6 million of end of lease income and $6.5 million in gains from aircraft sales. First quarter 2014 results were impacted by increases in interest expense as a result of FLY’s unsecured debt issuance last December, with much of the proceeds still unused.

Operating lease rental revenue increased 13% to $90.5 million. End of lease revenues were $3.7 million in the first quarter of 2014 compared to $30.6 million of end of lease revenue recognized in the same period in the previous year.

Adjusted Net Income

Adjusted Net Income was $5.1 million for the first quarter of 2014 compared to $38.5 million in the same period in the previous year, which included end of lease income and gains from sales of aircraft. On a per share basis, Adjusted Net Income was $0.12 in the first quarter of 2014 compared to $1.37 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 and Share Repurchases

On April 15, 2014, FLY declared a dividend of $0.25 per share in respect of the first quarter of 2014. This dividend will be paid on May 20, 2014 to shareholders of record on April 30, 2014. This is FLY’s 26th consecutive quarterly dividend.

On May 7, 2014, the Company’s board of directors approved a $30 million share repurchase program expiring in May 2015 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 the 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, 2014, FLY’s total assets were $3.7 billion, including flight equipment with a net book value of $3.1 billion. Cash and cash equivalents at March 31, 2014 totaled $520.2 million, of which $386.5 million was unrestricted. In addition to the $386.5 million of unrestricted cash at March 31, 2014, there was approximately $325 million available under our aircraft acquisition facility which may be used to fund aircraft purchases.

FLY’s net leverage, defined as the ratio of net debt to total shareholders’ equity was 2.9x at March 31, 2014. Net debt is defined as book value of all borrowings, less unrestricted cash and cash equivalents.

Aircraft Portfolio

At March 31, 2014, all of FLY’s 117 aircraft, as shown in the table below, were on lease to 63 airlines in 33 countries. The table does not include four B767 aircraft owned by a joint venture in which FLY has a 57% interest.

At March 31, 2014, the average age of the portfolio was 8.8 years weighted by the net book value of each aircraft. The average remaining lease term was 4.2 years, also weighted by net book value. At March 31, 2014, FLY’s leases were generating annualized rental revenues of approximately $374 million. For the first quarter of 2014, FLY’s lease utilization factor was 99%.