Fly Leasing Reports Fourth Quarter and Full Year 2020 Financial Results
DUBLIN, Feb. 25, 2021 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the fourth quarter and full year of 2020.
Fourth Quarter 2020 Highlights
- Net loss of $107 million, $3.51 per share
- Non-cash impairment charge of $115 million
- Sold two aircraft and one engine;17% premium to book value
- Raised $180 million five-year Term Loan
- Repaid FLY's $325 million 2021 Notes
2020 Full Year Highlights
- Net loss of $67 million, $2.21 per share
- Sold eight aircraft and three engines; 19% premium to book value
- $25.88 book value per share
- 2.3x net debt to equity
- $132 million of unrestricted cash and cash equivalents
- Unencumbered assets of $180 million
"FLY's financial performance continues to be impacted by the COVID pandemic which has had an unprecedented impact on global air traffic," said Colm Barrington, FLY's Chief Executive Officer. "In the fourth quarter global airline passenger traffic was 70% less than in the same quarter a year ago. Fortunately, as COVID vaccines reach the majority of populations and border testing becomes more efficient, we expect to see a lifting of government restrictions on travel and pent up demand returning passenger numbers towards pre-pandemic levels later in the year."
"At year end, FLY's book value was $25.88 per share, our net debt to equity ratio was 2.3 times and our unrestricted cash was $132 million," Barrington added. "FLY has now redeemed its 2021 unsecured notes, has no capital commitments in 2021 and no significant debt maturities until 2023. We remain in a strong position to weather the current difficult, but improving, market conditions."
Financial Results
FLY is reporting a net loss of $107.0 million, or $3.51 per share, for the fourth quarter of 2020. This compares to net income of $75.2 million, or $2.43 per share, for the same period in 2019. The decrease in net income is primarily due to flight equipment impairment of $115.0 million.
Net loss for the year ended December 31, 2020 was $67.4 million, or $2.21 per share, compared to net income of $225.9 million, or $7.12 per share, for the year ended December 31, 2019.
Adjusted Net Income (Loss)
Adjusted Net Loss was $115.2 million for the fourth quarter of 2020, compared to Adjusted Net Income of $77.0 million for the same period in the previous year. On a per share basis, Adjusted Net Loss was $3.78 in the fourth quarter of 2020, compared to Adjusted Net Income of $2.49 for the fourth quarter of 2019.
For the year ended December 31, 2020, Adjusted Net Loss was $69.4 million, or $2.27 per share, compared to Adjusted Net Income of $245.9 million, or $7.75 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 December 31, 2020, FLY's total assets were $3.2 billion, including investment in flight equipment totaling $2.8 billion. Total cash at December 31, 2020 was $161.5 million, of which $132.1 million was unrestricted. The book value per share at December 31, 2020 was $25.88. Compared to the prior year, FLY's net debt to equity ratio at December 31, 2020 remained at 2.3x.
Flight Equipment Impairment
FLY recognized flight equipment impairment of $115.0 million in the fourth quarter of 2020, of which $106.0 million is related to two Airbus A330-300 aircraft expected to be returned by the lessee in 2021. These widebody aircraft are the only aircraft of their type in FLY's portfolio. The balance of the impairment charge is related to seven narrowbody aircraft that FLY expects to sell in 2021.
Aircraft Portfolio
At December 31, 2020, FLY had 84 aircraft and seven engines in its portfolio. FLY's aircraft and engines are on lease to 37 airlines in 23 countries. The table below does not include the engines.
Portfolio at |
Dec. 31, 2020 |
Dec. 31, 2019 |
|||||||
Number |
% of Net |
Number |
% of Net |
||||||
Airbus A320ceo Family |
32 |
28% |
34 |
28% |
|||||
Airbus A320neo Family |
1 |
2% |
1 |
2% |
|||||
Airbus A330 |
3 |
2% |
3 |
6% |
|||||
Boeing 737NG |
40 |
39% |
42 |
37% |
|||||
Boeing 737 MAX |
2 |
3% |
2 |
3% |
|||||
Boeing 757-SF |
— |
— |
1 |
<1% |
|||||
Boeing 777-LRF |
2 |
11% |
2 |
10% |
|||||
Boeing 787 |
4 |
15% |
4 |
14% |
|||||
Total(1) |
84 |
100% |
89 |
100% |
|||||
(1) Includes six aircraft classified as held for sale as of December 31, 2019. No aircraft were classified as held for sale as of December 31, 2020. |
At December 31, 2020, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 8.4 years. The average remaining lease term was 4.7 years, also weighted by net book value. At December 31, 2020, FLY's portfolio had contracted annualized rental revenue of approximately $307 million.
Conference Call and Webcast
FLY's senior management will host a conference call and webcast to discuss these results at 4:30 p.m. U.S. Eastern Time on Thursday, February 25, 2021. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 2325318. 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 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 (Loss) 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
[email protected]
Fly Leasing Limited |
||||
Consolidated Statements of Income (Loss) |
||||
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||||
Three months ended Dec. 31, |
Year ended Dec. 31, |
|||
2020 |
2019 (Unaudited) |
2020 (Audited) |
2019 (Audited) |
|
Revenues |
||||
Operating lease rental revenue |
$ 64,295 |
$ 88,622 |
$ 283,926 |
$ 391,142 |
End of lease income |
5,150 |
48,394 |
14,124 |
78,781 |
Amortization of lease incentives |
(1,244) |
(1,237) |
(3,578) |
(5,590) |
Amortization of lease premiums, discounts and other |
(274) |
39 |
(729) |
66 |
Operating lease revenue |
67,927 |
135,818 |
293,743 |
464,399 |
Finance lease revenue |
134 |
149 |
557 |
618 |
Gain on sale of aircraft |
4,286 |
14,691 |
36,003 |
97,323 |
Interest and other income |
407 |
3,596 |
4,052 |
12,684 |
Total revenues |
72,754 |
154,254 |
334,355 |
575,024 |
Expenses |
||||
Depreciation |
33,364 |
32,029 |
129,561 |
140,798 |
Flight equipment impairment |
115,000 |
— |
115,000 |
— |
Interest expense |
26,472 |
29,935 |
103,292 |
137,133 |
Selling, general and administrative |
8,489 |
9,131 |
30,902 |
35,304 |
Provision for uncollectible operating lease receivables |
1,000 |
— |
4,000 |
— |
Loss (gain) on derivatives |
1,714 |
(89) |
1,648 |
2,720 |
Fair value loss on marketable securities |
185 |
— |
13,025 |
— |
Loss on modification and extinguishment of debt |
1,012 |
4,260 |
1,862 |
9,590 |
Maintenance and other costs |
3,218 |
229 |
6,622 |
3,075 |
Total expenses |
190,454 |
75,495 |
405,912 |
328,620 |
Net income (loss) before provision (benefit) for income taxes |
(117,700) |
78,759 |
(71,557) |
246,404 |
Provision (benefit) for income taxes |
(10,664) |
3,601 |
(4,132) |
20,527 |
Net income (loss) |
$ (107,036) |
$ 75,158 |
$ (67,425) |
$ 225,877 |
Weighted average number of shares |
||||
- Basic |
30,481,069 |
30,898,410 |
30,551,873 |
31,607,781 |
- Diluted |
30,481,069 |
30,903,313 |
30,551,873 |
31,715,469 |
Earnings (loss) per share |
||||
- Basic |
$ (3.51) |
$ 2.43 |
$ (2.21) |
$ 7.15 |
- Diluted |
$ (3.51) |
$ 2.43 |
$ (2.21) |
$ 7.12 |
Fly Leasing Limited |
||
Consolidated Balance Sheets |
||
(DOLLARS IN THOUSANDS, EXCEPT PAR VALUE DATA) |
||
Dec. 31, 2020 (Audited) |
Dec. 31, |
|
Assets |
||
Cash and cash equivalents |
$ 132,097 |
$ 285,565 |
Restricted cash and cash equivalents |
29,432 |
52,738 |
Rent receivables, net |
57,015 |
14,264 |
Investment in finance lease, net |
10,396 |
11,639 |
Flight equipment held for sale, net |
— |
144,119 |
Flight equipment held for operating lease, net |
2,529,428 |
2,720,000 |
Maintenance rights |
279,124 |
290,958 |
Deferred tax asset, net |
11,753 |
11,675 |
Fair value of derivative assets |
2,085 |
4,824 |
Other assets, net |
116,255 |
129,377 |
Total assets |
$ 3,167,585 |
$ 3,665,159 |
Liabilities |
||
Accounts payable and accrued liabilities |
$ 18,135 |
$ 22,746 |
Rentals received in advance |
8,724 |
16,391 |
Payable to related parties |
4,058 |
10,077 |
Security deposits |
36,439 |
40,726 |
Maintenance payment liability, net |
203,684 |
219,371 |
Unsecured borrowings, net |
296,876 |
619,407 |
Secured borrowings, net |
1,642,242 |
1,695,525 |
Deferred tax liability, net |
51,366 |
57,935 |
Fair value of derivative liabilities |
46,169 |
27,943 |
Other liabilities |
70,896 |
76,761 |
Total liabilities |
2,378,589 |
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 December 31, 2020 and 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 |
312,967 |
380,392 |
Accumulated other comprehensive loss, net |
(33,740) |
(18,400) |
Total shareholders' equity |
788,996 |
878,277 |
Total liabilities and shareholders' equity |
$ 3,167,585 |
$ 3,665,159 |
Fly Leasing Limited |
||||
Consolidated Statements of Cash Flows |
||||
(DOLLARS IN THOUSANDS) |
||||
Year ended Dec. 31, |
||||
2020 (Audited) |
2019 |
|||
Cash Flows from Operating Activities |
||||
Net income (loss) |
$ (67,425) |
$ 225,877 |
||
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities: |
||||
Gain on sale of aircraft |
(36,003) |
(97,323) |
||
Depreciation |
129,561 |
140,798 |
||
Flight equipment impairment |
115,000 |
— |
||
Amortization of debt discounts and debt issuance costs |
7,717 |
9,906 |
||
Amortization of lease incentives and other items |
4,621 |
6,152 |
||
Provision for uncollectible operating lease receivables |
4,000 |
— |
||
Fair value loss on marketable securities |
13,025 |
— |
||
Loss on modification and extinguishment of debt |
1,862 |
9,590 |
||
Provision (benefit) for deferred income taxes |
(4,296) |
20,449 |
||
Security deposits and maintenance payment liability recognized into earnings |
(12,650) |
(47,890) |
||
Cash receipts from maintenance rights |
2,725 |
4,637 |
||
Other |
6,864 |
2,345 |
||
Changes in operating assets and liabilities: |
||||
Rent receivables |
(54,170) |
(10,668) |
||
Other assets |
3,073 |
(2,160) |
||
Payable to related parties |
(6,019) |
5,615 |
||
Accounts payable, accrued liabilities and other liabilities |
2,285 |
4,842 |
||
Net cash flows provided by operating activities |
110,170 |
272,170 |
||
Cash Flows from Investing Activities |
||||
Purchase of flight equipment |
(74,940) |
(319,995) |
||
Proceeds from sale of aircraft, net |
187,154 |
824,116 |
||
Payments for aircraft improvement |
(17,362) |
(8,085) |
||
Payments for lessor maintenance obligations |
(521) |
(2,110) |
||
Purchase of marketable securities |
— |
(10,481) |
||
Other |
(536) |
(2,059) |
||
Net cash flows provided by investing activities |
93,795 |
481,386 |
||
Year ended Dec. 31, |
||||
2020 |
2019 |
|||
Cash Flows from Financing Activities |
||||
Security deposits received |
4,009 |
4,369 |
||
Security deposits returned |
(349) |
(4,617) |
||
Maintenance payment liability receipts |
21,593 |
60,744 |
||
Maintenance payment liability disbursements |
(13,196) |
(22,567) |
||
Debt modification and extinguishment costs |
(230) |
(2,052) |
||
Debt issuance costs |
(3,312) |
(342) |
||
Repayment of unsecured borrowings |
(325,000) |
— |
||
Proceeds from secured borrowings |
171,900 |
— |
||
Repayment of secured borrowings |
(229,786) |
(698,989) |
||
Shares repurchased |
(6,516) |
(32,871) |
||
Net cash flows used in financing activities |
(380,887) |
(696,325) |
||
Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents |
148 |
(8) |
||
Net (decrease) increase in unrestricted and restricted cash and cash equivalents |
(176,774) |
57,223 |
||
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 |
$ 161,529 |
$ 338,303 |
||
Reconciliation to Consolidated Balance Sheets: |
||||
Cash and cash equivalents |
$ 132,097 |
$ 285,565 |
||
Restricted cash and cash equivalents |
29,432 |
52,738 |
||
Unrestricted and restricted cash and cash equivalents |
$ 161,529 |
$ 338,303 |
||
Fly Leasing Limited |
||||
Reconciliation of Non-GAAP Measures |
||||
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) |
||||
Three months ended Dec. 31, |
Year ended Dec. 31, |
|||
2020 (Unaudited) |
2019 (Unaudited) |
2020 (Unaudited) |
2019 (Unaudited) |
|
Net income (loss) |
$ (107,036) |
$ 75,158 |
$ (67,425) |
$ 225,877 |
Adjustments: |
||||
Unrealized foreign exchange loss (gain) |
337 |
178 |
714 |
(271) |
Deferred income taxes |
(10,417) |
4,486 |
(4,296) |
20,449 |
Fair value changes on undesignated derivatives |
1,871 |
(2,794) |
1,643 |
(176) |
Adjusted Net Income (Loss) |
$ (115,245) |
$ 77,028 |
$ (69,364) |
$ 245,879 |
Average Shareholders' Equity |
$ 840,813 |
$ 838,525 |
869,649 |
774,145 |
Adjusted Return on Equity |
(54.8%) |
36.7% |
(8.0%) |
31.8% |
Weighted average diluted shares outstanding |
30,481,069 |
30,903,313 |
30,551,873 |
31,715,149 |
Adjusted Net Income (Loss) per diluted share |
$ (3.78) |
$ 2.49 |
$ (2.27) |
$ 7.75 |
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.
SOURCE Fly Leasing Limited
