Fly Leasing Limited, a global leader in aircraft leasing, announced its financial results for the second quarter of 2019.
"FLY continues to achieve record results, producing its fifth straight quarter of double-digit ROE," said Colm Barrington, FLY's Chief Executive Officer. "Our renewed fleet contributed to a 13% increase in operating lease rental revenue compared to the same quarter last year. Economic gains of nearly $19 million from the sale of seven aircraft helped us to achieve record Adjusted Net Income of $61.9 million, or $1.92 per share, in the quarter, and Adjusted Net Income of $109.0 million, or $3.37 per share, for the first six months of the year. Looking ahead, we expect another strong result in the third quarter."
"As a result of our deleveraging strategy following last year's major fleet acquisition, we have met our leverage target a year ahead of schedule," said Barrington. "We also have been repurchasing stock, buying back 1.47 million shares in the quarter. FLY will begin taking delivery of its $1 billion of contracted A320neo family aircraft later this year, and is well positioned to add aircraft as opportunities arise."
"We sold seven aircraft in the quarter at a 10% premium to book value, and in the third quarter, we have contracted to sell 14 more aircraft, also at gains, again demonstrating the value embedded in FLY's fleet," added Barrington. "Our record results have also added significantly to shareholders' equity, which is now over $24 per share and 13% above the level at the end of 2018. We continue to see great value in FLY's shares, which are trading at a 26% discount to book value. At its August meeting, FLY's board of directors authorized a new $50 million share repurchase program."
Financial Results
FLY is reporting net income of $54.1 million, or $1.68 per share, for the second quarter of 2019. This compares to net income of $24.3 million, or $0.87 per share, for the same period in 2018.
Net income for the six months ended June 30, 2019 was $99.0 million, or $3.
Adjusted Net Income
Adjusted Net Income was $61.9 million for the second quarter of 2019, compared to $25.2 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.92 in the second quarter of 2019, compared to $0.90 for the second quarter of 2018.
For the six months ended June 30, 2019, Adjusted Net Income was $109.0 million, or $3.37 per share, compared to $37.6 million, or $1.34 per share, for the same period last year.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
Share Repurchases
During the six months ended June 30, 2019, FLY repurchased 1.67 million shares in the open market at an average price of $16.18 per share, for a total cost of $27.0 million. As of June 30, 2019, FLY had approximately 31 million shares outstanding. On August 21, 2019, FLY's board of directors approved a new $50 million share repurchase program to replace its current program.
Financial Position
At June 30, 2019, FLY's total assets were $3.9 billion, including investment in flight equipment totaling $3.4 billion. Total cash at June 30, 2019 was $415.1 million, of which $351.9 million was unrestricted. The book value per share at June 30, 2019 was $24.28, a 13% increase since December 31, 2018. At June 30, 2019, FLY's net debt to equity ratio was 3.1x, reduced from 4.0x at December 31, 2018.
Aircraft Portfolio
At June 30, 2019, FLY had 98 aircraft and seven CFM engines on lease to 45 airlines in 25 countries. Of the 98 aircraft, 12 were classified as held for sale. The table below does not include one B767 aircraft owned by a joint venture in which FLY has a 57% interest, nor the seven engines.
Portfolio at
|
Jun. 30, 2019
|
Dec. 31, 2018
| ||
Number
|
% of Net
Book Value |
Number
|
% of Net
Book Value | |
Airbus A320 Family(1)
|
42
|
33%
|
55
|
38%
|
Airbus A330
|
3
|
5%
|
3
|
5%
|
Airbus A340
|
2
|
1%
|
2
|
1%
|
Boeing 737NG(2)
|
42
|
35%
|
42
|
32%
|
Boeing 737 MAX
|
2
|
3%
|
2
|
3%
|
Boeing 757-SF
|
1
|
0%
|
3
|
1%
|
Boeing 777-LRF
|
2
|
9%
|
2
|
8%
|
Boeing 787
|
4
|
14%
|
4
|
12%
|
Total
|
98
|
100%
|
113
|
100%
|
(1)
|
Includes five and ten Airbus A320 aircraft classified as held for sale at June 30, 2019 and December 31, 2018, respectively.
|
(2)
|
Includes seven and two aircraft classified as held for sale at June 30, 2019 and December 31, 2018, respectively.
|
At June 30, 2019, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.4 years. The average remaining lease term was 5.3 years, also weighted by net book value. At June 30, 2019, FLY's portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $354.2 million.
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