FLY Leasing Reports Third Quarter 2012 Financial Results

DUBLIN, Nov. 8, 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 third quarter of 2012.

Third Quarter 2012 Highlights

Adjusted Net Income of $5.4 million, $0.21 per share
Net loss of $29.4 million or $1.15 per share, including one-time expenses related to the Term Loan of $33.9 million
Entered into a new $395 million Senior Secured Term Loan, reducing net leverage to 4.2x
Purchased two B737-800s, bringing fleet to 110 aircraft
Declared a dividend of $0.22 per share on October 15th
Closed $250 million aircraft acquisition facility on November 7th
“FLY is reporting a net loss of $29 million for the third quarter due to one-time charges including the termination of interest rate swaps associated with the debt refinancing completed in August,” said Colm Barrington, CEO of FLY. “The refinancing achieved several important objectives including providing long-term financing with an attractive free cash profile, reducing leverage and future interest costs, and eliminating significant refinancing requirements through 2018.”

“Our fleet generated strong revenue in the quarter,” added Barrington. “The portfolio of 49 aircraft acquired last year is now contributing significantly to our bottom line, helping to grow our Adjusted Net Income as compared to the same period of last year and demonstrating the true value of the strategic acquisition.”

“During the third quarter, we acquired two additional B737-800s, growing our fleet to 110 aircraft on lease to 53 airlines in 29 countries,” said Barrington. “We continue to see attractive opportunities for growth and FLY is well positioned to take advantage of these prospects, with $115 million of unrestricted cash and the $250 million new aircraft acquisition facility we recently closed.”

Third Quarter Financial Results

FLY is reporting a net loss for the third quarter of 2012 of $29.4 million or $1.15 per share. This compares to net income of $3.4 million and $0.13 per share for the same period of 2011. The loss is attributable to pre-tax, one-time, refinancing related expenses of $33.9 million, including a pre-tax charge of $32.3 million to terminate interest rate swaps associated with a credit facility that was fully repaid during the quarter. Operating lease revenue increased to $84.4 million for the third quarter of 2012 from $47.4 million for the same period in 2011, primarily due to growth in the aircraft portfolio following the aircraft acquisitions completed in late 2011.

Net income and diluted earnings per share for the nine months ended September 30, 2012 were $16.7 million and $0.63 per share compared to $10.3 million and $0.39 per share for the same period in 2011. The increase is due to income from the additional aircraft in the portfolio, partially offset by one-time refinancing related expenses.

Adjusted Net Income

Adjusted Net Income was $5.4 million or $0.21 per share for the third quarter of 2012 compared to $4.3 million or $0.17 per share in the third quarter of the previous year.

For the nine-months ended September 30, 2012, Adjusted Net Income was $63.1 million ($2.43 per share) compared to $15.1 million ($0.58 per share) for the same period of the previous year. The significant increase reflects the income from the increased portfolio and additional end of lease income in 2012 as compared to 2011.

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

Dividend

On October 15, 2012, FLY declared a dividend of $0.22 per share in respect of the third quarter of 2012. This dividend will be paid on November 20, 2012 to shareholders of record on October 30, 2012. This dividend is the 20th consecutive quarterly dividend declared by FLY.

Financial Position

At September 30, 2012, FLY’s total assets were $3.0 billion, including flight equipment with a net book value of $2.7 billion. Restricted and unrestricted cash at September 30, 2012 totalled $281.7 million, of which $115.0 million was unrestricted. These amounts compare to total cash of $380.5 million and unrestricted cash of $82.1 million at December 31, 2011.

FLY entered into a new $395 million senior term loan secured by 23 aircraft and maturing in 2018. The refinancing addressed all of FLY’s remaining 2012 debt maturities as well as amounts due under a facility maturing in 2013. As a result of the refinancing, FLY’s net leverage, defined as the ratio of net debt to total shareholders’ equity was reduced to 4.2x at September 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.

Aircraft Portfolio

At September 30, 2012, FLY’s 110 aircraft were on lease to 53 lessees in 29 countries. The table below shows the aircraft in FLY’s portfolio on September 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.

At September 30, 2012, the average age of FLY’s fleet was 9.2 years, weighted by the net book value of each aircraft. The average remaining lease term was 3.1 years, also weighted by net book value. At September 30, 2012, the leases were generating annualized revenues of approximately $341 million. For the third quarter of 2012, FLY’s lease utilization factor was 96% and for the nine months ended September 30, 2012 the lease utilization factor was 98%.