Dublin, Ireland, November 12, 2020 – Fly Leasing Limited (NYSE: FLY) (“FLY”), a global leader in aircraft leasing, today announced its financial results for the third quarter of 2020.

 

Highlights

 

“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.

 

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

 

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

 

		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

		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

		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

		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