DUBLIN, Ireland – FLY Leasing Limited, a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the second quarter of 2014.
Second Quarter 2014 Highlights
Net income of $21.7 million, $0.51 per share
26% growth in operating lease rental revenue
Sold seven aircraft and recorded gains on sale of $18.9 million
Achieved 100% fleet utilization
Acquired seven aircraft for $226 million
After quarter end, acquired one B737-800 and contracted to buy three A330-300s
Declared 27th consecutive quarterly dividend on July 17 ($0.25 per share)
“FLY had a strong second quarter with 26% growth in operating lease rental revenue compared to the same quarter last year,” said Colm Barrington, FLY’s Chief Executive Officer. “This is the fourth consecutive quarter in which we have increased rental revenue, driven by FLY’s strong fleet growth over the last 12 months. FLY also booked gains from the sale of seven aircraft with an average age of 12.4 years. Since its inception, FLY has sold 29 aircraft with an average age of 12.5 years for an aggregate gain of $68 million. FLY continues to reduce the average age of its portfolio, which was 8.7 years at June 30.”
“We continue to find attractive acquisition opportunities in the sale and leaseback and secondary markets,” added Barrington. “We have already acquired 12 aircraft for more than $247 million this year and have an identified pipeline of more than $450 million. At June 30, we had unrestricted cash of $253 million and $325 million available under our acquisition facility, giving us ample capacity to fund our pipeline. As a result, we are confident of achieving our 15% net fleet growth target this year.”
“The global airline industry continues to grow, with IATA reporting a 6.2% increase in passenger traffic in the first five months of 2014. In addition, IATA forecasts that industry operating profits will increase by 49% to $32 billion in 2014,” said Barrington.
Second Quarter Financial Results
FLY’s net income and diluted earnings per share for the second quarter of 2014 were $21.7 million and $0.51, compared to $5.9 million and $0.20 in the same period of 2013.
Total revenues increased 21% to $109.5 million. Operating lease rental revenue increased 26% for the second quarter of 2014 to $94.6 million, compared to $75.0 million for the same period in the previous year. This increase was driven by the increase in the size of the portfolio and improved utilization. The second quarter 2014 results include $18.9 million in gains from aircraft sales, whereas the same period in the previous year included $17.0 million in end of lease income.
Net income and diluted earnings per share for the six months ended June 30, 2014 were $25.2 million and $0.58, compared to $38.8 million and $1.35 for the six months ended June 30, 2013. The 2014 results included $3.9 million of end of lease income compared to $47.6 million in 2013.
Adjusted Net Income
Adjusted net income was $18.8 million for the second quarter of 2014, compared to $11.2 million in the same period in the previous year. On a per share basis, Adjusted Net Income was $0.45 in the second quarter of 2014, compared to $0.40 for the same period in the previous year. For the six months ended June 30, 2014, Adjusted Net Income was $24.0 million, or $0.58 per share, compared to $49.8 million, or $1.76 per share, for the same period in the previous year.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
Dividends
On July 17, 2014, FLY declared its 27th consecutive dividend. This dividend of $0.25 per share in respect of the second quarter of 2014 will be paid on August 20, 2014 to shareholders of record on July 31, 2014.
Financial Position
At June 30, 2014, FLY’s total assets were $3.6 billion, including flight equipment with a net book value of $3.2 billion. Restricted and unrestricted cash at June 30, 2014 totaled $378.4 million, of which $253.2 million was unrestricted. This compares to total cash of $579.3 million at December 31, 2013, of which $404.5 million was unrestricted. As of June 30, 2014, FLY had approximately $325 million available under its aircraft acquisition facility in addition to its unrestricted cash to fund aircraft purchases. Further, at June 30, 2014, there were seven unencumbered aircraft with a net book value of $245.7 million.
FLY’s net leverage as of June 30, 2014 was unchanged at 2.9x since March 31, 2014. Net leverage is defined as the ratio of net debt to total shareholders’ equity, and net debt is defined as book value of all borrowings, less unrestricted cash and cash equivalents.
Aircraft Portfolio
At June 30, 2014, all of FLY’s 117 aircraft, as shown in the table below, were on lease to 65 airlines in 36 countries. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.
Portfolio at
Jun 30, 2014
Dec 31, 2013
Airbus A319
19
19
Airbus A320
27
27
Airbus A330
1
1
Airbus A340
3
3
Boeing 737
52
48
Boeing 747
1
1
Boeing 757
11
11
Boeing 767
1
1
Boeing 777
1
1
Boeing 787
1
1
Total
117
113
As of June 30, 2014, the average age of FLY’s portfolio was 8.7 years weighted by the net book value of each aircraft. The average remaining lease term was 4.3 years, also weighted by net book value. As of June 30, 2014, FLY’s leases were generating annualized revenues of approximately $379 million. FLY’s lease utilization factor was 100% for the second quarter of 2014 and 99% for the six months ended June 30, 2014.
