Friday, 8 November 2019

Excellent results in the third quarter for Fly Leasing

The global aircraft leasing specialist Fly Leasing has released its latest results, showing a net income of over $59 million during the third quarter of this year.
Highlights
  • Net income of $51.7 million, $1.67 per share
  • Adjusted Net Income of $59.8 million, $1.93 per share
  • Return on equity of 26.6%, Adjusted Return on Equity of 30.8%
  • Sold eight aircraft for a gain of $38.9 million, a 17% premium to book value
  • Purchased two aircraft for $53.7 million
  • $25.85 book value per share at quarter end, a 20% increase since December 31, 2018
  • Net debt to equity ratio of 2.6x

"FLY continued to produce excellent results in the third quarter, with Adjusted Net Income of nearly $60 million, or $1.93 per share," said Colm Barrington, FLY's Chief Executive Officer. "This was our sixth straight quarter of double-digit ROE, with Adjusted Return on Equity of over 30%. In the nine months ended September 30, FLY produced Adjusted Net Income of $168.9 million, or $5.28 per share. Looking ahead, we expect another strong result in the fourth quarter."
"The aircraft sales in the quarter were completed at a 17% premium to book value, again demonstrating the value embedded in FLY's fleet," said Barrington. "Our strong results are also adding significantly to shareholders' equity, which is now nearly $26 per share, an increase of 20% from the beginning of the year."

"Our deleveraging following last year's major fleet acquisition has continued and at quarter end our net debt to equity ratio was 2.6x," added Barrington. "FLY has plentiful financial capacity to acquire the 21 A320neo family aircraft that we contracted in a purchase and leaseback transaction last year, the first of which is scheduled to deliver later this year. We also expect to acquire six more aircraft in the fourth quarter."


Financial Results
FLY is reporting net income of $51.7 million, or $1.67 per share, for the third quarter of 2019. This compares to net income of $20.7 million, or $0.68 per share, for the same period in 2018.
Net income for the nine months ended September 30, 2019 was $150.7 million, or $4.72 per share, compared to net income of $54.7 million, or $1.90 per share, for the nine months ended September 30, 2018.
Adjusted Net Income
Adjusted Net Income was $59.8 million for the third quarter of 2019, compared to $22.8 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.93 in the third quarter of 2019, compared to $0.75 for the third quarter of 2018.
For the nine months ended September 30, 2019, Adjusted Net Income was $168.9 million, or $5.28 per share, compared to $60.4 million, or $2.10 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 three months ended September 30, 2019, FLY repurchased 0.3 million shares in the open market at an average price of $16.83 per share, for a total cost of $5.8 million. During the nine months ended September 30, 2019, FLY repurchased 2.0 million shares at an average price of $16.29 per share, for a total cost of $32.8 million. As of September 30, 2019, FLY had 30.9 million shares outstanding and had $50.0 million remaining under its share repurchase authorization.
Financial Position
At September 30, 2019, FLY's total assets were $3.9 billion, including investment in flight equipment totaling $3.2 billion. Total cash at September 30, 2019 was $521.6 million, of which $432.7 million was unrestricted. The book value per share at September 30, 2019 was $25.85, a 20% increase since December 31, 2018. At September 30, 2019, FLY's net debt to equity ratio was 2.6x, reduced from 4.0x at December 31, 2018.
Aircraft Portfolio
At September 30, 2019, FLY had 92 aircraft in its portfolio, six of which were classified as flight equipment held for sale. FLY's aircraft and engines are on lease to 43 airlines in 24 countries. The table below does not include the seven engines that were in FLY's portfolio at September 30, 2019.
Portfolio at
Sep. 30, 2019
Dec. 31, 2018

Number

% of Net

Book Value
Number
% of Net

Book Value
Airbus A320 Family
39
31%
55
38%
Airbus A330
3
6%
3
5%
Airbus A340
2
1%
2
1%
Boeing 737NG
39
35%
42
32%
Boeing 737 MAX
2
3%
2
3%
Boeing 757-SF
1
<1 font="">
3
1%
Boeing 777-LRF
2
10%
2
8%
Boeing 787
4
14%
4
12%
      Total(1)
92
100%
113
100%


(1)
Includes six aircraft and 12 aircraft classified as held for sale at September 30, 2019 and December 31, 2018, respectively.
At September 30, 2019, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.7 years. The average remaining lease term was 5.0 years, also weighted by net book value. At September 30, 2019, FLY's portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $352 million.




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