Form 6-K Fly Leasing Ltd For: May 03
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 of the Securities
Exchange Act of 1934
Date of Report: May 3, 2018
Commission File Number: 001-33701
Fly Leasing Limited
(Exact Name of registrant as specified in its charter)
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West Pier Business Campus
Dun Laoghaire
County Dublin, A96 N6T7
Ireland |
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(Address of principal executive office)
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Indicate by check mark whether registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
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Form 20-F
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☒
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Form 40-F
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☐ |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
The following document, which is attached as an exhibit hereto, is incorporated by reference herein.
| Exhibit |
Title
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| 99.1 |
Press release of Fly Leasing Limited, dated May 3, 2018.
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2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Fly Leasing Limited
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||||
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(Registrant)
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||||
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Date:
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May 3, 2018
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By:
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/s/ Colm Barrington
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Colm Barrington
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||||
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Chief Executive Officer and Director
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||||
3
EXHIBIT INDEX
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Exhibit
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Title
|
|
Press release of Fly Leasing Limited, dated May 3, 2018.
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4
Exhibit 99.1
Fly Leasing Reports First Quarter 2018 Financial Results
Dublin, Ireland, May 3, 2018 – Fly Leasing Limited (NYSE: FLY) (“FLY”), a global leader in aircraft leasing, today announced its financial results for the first quarter of 2018.
Highlights
| · |
Grew operating lease rental revenue by more than 12%
|
| · |
Net income of $9.6 million, $0.34 per share
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| · |
Adjusted Net Income of $12.4 million, $0.44 per share
|
| · |
Acquired one new aircraft on a long-term lease
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| · |
Signed agreements to acquire 55 aircraft
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“FLY is reporting a solid first quarter based on a substantial increase in operating lease rental revenue,” said Colm Barrington, FLY’s Chief Executive Officer. “Our quarterly net income of $9.6 million – despite minimal end of lease income and no benefit from aircraft sales – represents the strong growth in our core leasing business. Our earnings of $0.34 per share are more than double the result from the same quarter last year.”
“The acquisition that we announced on February 28th is proceeding as planned, with AirAsia’s extraordinary general meeting scheduled for later this month,” added Barrington. “We expect that the initial stage of the transaction will be completed in the second and third quarters of this year. As we acquire these aircraft and deploy our capital over the course of the year, we expect to see FLY generate strong shareholder returns.”
Financial Results
FLY is reporting net income of $9.6 million, or $0.34 per share, for the first quarter of 2018. This compares to net income of $5.1 million, or $0.16 per share, for the same period in 2017.
Adjusted Net Income
Adjusted Net Income was $12.4 million for the first quarter of 2018, compared to $5.9 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $0.44 in the first quarter of 2018, compared to $0.18 for the first quarter of 2017.
A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.
AirAsia Update
On February 28, 2018, FLY signed definitive agreements with AirAsia Berhad ("AAB") and its subsidiary, Asia Aviation Capital Limited, under which FLY will acquire 54 Airbus narrowbody aircraft and seven CFM engines on lease to AAB and its affiliates, and one Airbus narrowbody aircraft on lease to a third-party airline. In addition, FLY will acquire the option to purchase an additional 20 Airbus A320neo family aircraft, not subject to lease, which begin delivering from the manufacturer as early as 2019. These transactions, taken together, are referred to as the “AirAsia Transactions.”
Initially, FLY will acquire 34 Airbus A320-200 aircraft and seven engines. FLY expects to acquire these aircraft and engines in the second and third quarters of 2018, following the approval of the AirAsia Transactions by AAB’s shareholders at their extraordinary general meeting scheduled for May 14, 2018.
Financial Position
At March 31, 2018, FLY’s total assets were $3.6 billion, including investment in flight equipment totaling $3.1 billion. Total cash at March 31, 2018 was $455.9 million, of which $384.3 million was unrestricted. The book value per share at March 31, 2018 was $19.85.
Aircraft Portfolio
At March 31, 2018, FLY had 86 aircraft in its portfolio, with leases to 45 airlines in 28 countries. The table below does not include the two B767 aircraft owned by a joint venture in which FLY has a 57% interest.
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Portfolio at
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Mar. 31,
2018
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Dec. 31,
2017
|
||||||
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Airbus A319
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9
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9
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||||||
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Airbus A320
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13
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12
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||||||
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Airbus A321
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3
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3
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||||||
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Airbus A330
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3
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3
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||||||
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Airbus A340
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2
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2
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||||||
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Boeing 737
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46
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46
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||||||
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Boeing 757
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3
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3
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||||||
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Boeing 777
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2
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2
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||||||
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Boeing 787
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5
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5
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||||||
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Total
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86
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85
|
||||||
At March 31, 2018, the average age of the portfolio, weighted by net book value of each aircraft, was 6.5 years. The average remaining lease term was 6.2 years, also weighted by net book value. At March 31, 2018, FLY's 85 aircraft on lease were generating annualized rental revenue of approximately $368 million. One aircraft was off-lease at quarter end, which was subsequently delivered to a new lessee in April 2018. FLY’s lease utilization factor was 99% for the first quarter of 2018.
2
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, May 3, 2018. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 5469264. 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
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 and Adjusted Return on Equity. In calculating these non-GAAP financial measures, we have excluded certain amounts, as detailed in the reconciliation below.
Beginning in the first quarter of 2018, we modified our reporting of Adjusted Net Income and Adjusted Return on Equity. As a result, we have modified our historical presentation of these measures. Prior period information has been revised to conform to the current period presentation.
3
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, including the expected benefits of the AirAsia Transactions; whether and when the AirAsia Transactions will be consummated; the amount of cash and stock consideration to be paid by FLY; the type, amount and terms of the acquisition financing to be obtained by FLY; and, the amount of any fees and expenses incurred in connection with the AirAsia Transactions. 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, including risks relating to the satisfaction of conditions to the closing of the AirAsia Transactions; risks relating to satisfaction of conditions to the financing of the AirAsia Transactions; risks relating to FLY’s ability to obtain additional required financing for the AirAsia Transactions on favorable terms, or at all; the risk that expected benefits of the AirAsia Transactions may not be fully realized or may take longer to realize than expected; the risk that business disruption resulting from the AirAsia Transactions may be greater than expected; and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. 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
4
Fly Leasing Limited
Consolidated Statements of Income
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
Three months ended Mar. 31,
|
||||||||
|
2018
(Unaudited)
|
2017
(Unaudited)
|
|||||||
|
Revenues
|
||||||||
|
Operating lease rental revenue
|
$
|
89,113
|
$
|
79,321
|
||||
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End of lease income
|
385
|
1,239
|
||||||
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Amortization of lease incentives
|
(2,283
|
)
|
(1,775
|
)
|
||||
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Amortization of lease premiums, discounts and other
|
(139
|
)
|
(82
|
)
|
||||
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Operating lease revenue
|
87,076
|
78,703
|
||||||
|
Finance lease revenue
|
174
|
188
|
||||||
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Equity earnings from unconsolidated subsidiary
|
112
|
125
|
||||||
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Interest and other income
|
1,393
|
250
|
||||||
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Total revenues
|
88,755
|
79,266
|
||||||
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Expenses
|
||||||||
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Depreciation
|
33,733
|
32,051
|
||||||
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Interest expense
|
32,923
|
31,833
|
||||||
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Selling, general and administrative
|
8,610
|
8,292
|
||||||
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Loss (gain) on derivatives
|
789
|
(51
|
)
|
|||||
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Loss on modification and extinguishment of debt
|
—
|
544
|
||||||
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Maintenance and other costs
|
778
|
472
|
||||||
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Total expenses
|
76,833
|
73,141
|
||||||
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Net income before provision for income taxes
|
11,922
|
6,125
|
||||||
|
Provision for income taxes
|
2,292
|
1,073
|
||||||
|
Net income
|
$
|
9,630
|
$
|
5,052
|
||||
|
Weighted average number of shares
|
||||||||
|
- Basic
|
27,983,352
|
32,244,481
|
||||||
|
- Diluted
|
28,006,572
|
32,301,322
|
||||||
|
Earnings per share
|
||||||||
|
- Basic
|
$
|
0.34
|
$
|
0.16
|
||||
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- Diluted
|
$
|
0.34
|
$
|
0.16
|
||||
5
Fly Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
Mar. 31,
2018
(Unaudited)
|
Dec. 31,
2017
(Audited)
|
|||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
384,345
|
$
|
329,105
|
||||
|
Restricted cash and cash equivalents
|
71,582
|
127,710
|
||||||
|
Rent receivables
|
1,653
|
2,059
|
||||||
|
Investment in unconsolidated subsidiary
|
8,308
|
8,196
|
||||||
|
Investment in finance lease, net
|
13,671
|
13,946
|
||||||
|
Flight equipment held for operating lease, net
|
2,979,030
|
2,961,744
|
||||||
|
Maintenance right asset, net
|
120,077
|
131,299
|
||||||
|
Deferred tax asset, net
|
9,949
|
9,943
|
||||||
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Fair value of derivative assets
|
5,472
|
2,643
|
||||||
|
Other assets, net
|
39,433
|
8,970
|
||||||
|
Total assets
|
$
|
3,633,520
|
$
|
3,595,615
|
||||
|
Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
$
|
29,335
|
$
|
18,305
|
||||
|
Rentals received in advance
|
15,704
|
14,968
|
||||||
|
Payable to related parties
|
2,384
|
2,084
|
||||||
|
Security deposits
|
48,695
|
49,689
|
||||||
|
Maintenance payment liability
|
261,383
|
244,151
|
||||||
|
Unsecured borrowings, net
|
616,358
|
615,922
|
||||||
|
Secured borrowings, net
|
2,019,111
|
2,029,675
|
||||||
|
Deferred tax liability, net
|
32,736
|
30,112
|
||||||
|
Fair value of derivative liabilities
|
9,075
|
7,344
|
||||||
|
Other liabilities
|
43,226
|
39,656
|
||||||
|
Total liabilities
|
3,078,007
|
3,051,906
|
||||||
|
Shareholders’ equity
|
||||||||
|
Common shares, $0.001 par value, 499,999,900 shares authorized; 27,983,352 shares issued and outstanding at March 31, 2018 and December 31, 2017
|
28
|
28
|
||||||
|
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
||||||
|
Additional paid in capital
|
479,637
|
479,637
|
||||||
|
Retained earnings
|
78,255
|
68,624
|
||||||
|
Accumulated other comprehensive loss, net
|
(2,407
|
)
|
(4,580
|
)
|
||||
|
Total shareholders’ equity
|
555,513
|
543,709
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
3,633,520
|
$
|
3,595,615
|
||||
6
Fly Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)
|
Three months ended Mar. 31,
|
||||||||
|
2018
(Unaudited) |
2017
(Unaudited) |
|||||||
|
Cash Flows from Operating Activities
|
||||||||
|
Net income
|
$
|
9,630
|
$
|
5,052
|
||||
|
Adjustments to reconcile net income to net cash flows provided by operating activities:
|
||||||||
|
Equity in earnings from unconsolidated subsidiary
|
(112
|
)
|
(125
|
)
|
||||
|
Finance lease revenue
|
(174
|
)
|
(188
|
)
|
||||
|
Depreciation
|
33,733
|
32,051
|
||||||
|
Amortization of debt discounts and issuance costs
|
1,999
|
2,119
|
||||||
|
Amortization of lease incentives
|
2,283
|
1,775
|
||||||
|
Amortization of lease discounts, premiums and other items
|
139
|
83
|
||||||
|
Amortization of GAAM acquisition fair value adjustments
|
280
|
475
|
||||||
|
Loss on modification and extinguishment of debt
|
—
|
532
|
||||||
|
Unrealized foreign exchange loss
|
408
|
219
|
||||||
|
Provision (benefit) for deferred income taxes
|
2,353
|
1,058
|
||||||
|
Loss (gain) on derivatives
|
1,251
|
(181
|
)
|
|||||
|
Cash receipts from maintenance rights
|
3,013
|
—
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Rent receivables
|
(1,244
|
)
|
332
|
|||||
|
Other assets
|
(526
|
)
|
1,004
|
|||||
|
Payable to related parties
|
(330
|
)
|
(2,890
|
)
|
||||
|
Accounts payable, accrued and other liabilities
|
13,372
|
12,205
|
||||||
|
Net cash flows provided by operating activities
|
66,075
|
53,521
|
||||||
|
Cash Flows from Investing Activities
|
||||||||
|
Rent received from finance lease
|
450
|
510
|
||||||
|
Purchase of flight equipment
|
(42,000
|
)
|
—
|
|||||
|
Deposit on AirAsia aircraft purchases
|
(30,000
|
)
|
—
|
|||||
|
Payments for aircraft improvement
|
—
|
(5,157
|
)
|
|||||
|
Payments for lessor maintenance obligations
|
—
|
(6,456
|
)
|
|||||
|
Net cash flows used in investing activities
|
(71,550
|
)
|
(11,103
|
)
|
||||
7
|
Three months ended Mar. 31,
|
||||||||
|
2018
(Unaudited) |
2017
(Unaudited) |
|||||||
|
Cash Flows from Financing Activities
|
||||||||
|
Security deposits received
|
775
|
525
|
||||||
|
Security deposits returned
|
(2,310
|
)
|
—
|
|||||
|
Maintenance payment liability receipts
|
19,358
|
16,341
|
||||||
|
Maintenance payment liability disbursements
|
(258
|
)
|
(3,531
|
)
|
||||
|
Net swap termination payments
|
—
|
—
|
||||||
|
Debt modification and extinguishment costs
|
—
|
(12
|
)
|
|||||
|
Debt issuance costs
|
(243
|
)
|
—
|
|||||
|
Proceeds from secured borrowings
|
33,014
|
—
|
||||||
|
Repayment of secured borrowings
|
(45,834
|
)
|
(60,496
|
)
|
||||
|
Shares repurchased
|
—
|
(1,291
|
)
|
|||||
|
Net cash flows provided by (used in) financing activities
|
4,502
|
(48,464
|
)
|
|||||
|
Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents
|
85
|
36
|
||||||
|
Net decrease in unrestricted and restricted cash and cash equivalents
|
(888
|
)
|
(6,010
|
)
|
||||
|
Unrestricted and restricted cash and cash equivalents at beginning of period
|
456,815
|
612,087
|
||||||
|
Unrestricted and restricted cash and cash equivalents at end of period
|
$
|
455,927
|
$
|
606,077
|
||||
|
Reconciliation to Consolidated Balance Sheets:
|
||||||||
|
Cash and cash equivalents
|
$
|
384,345
|
$
|
536,877
|
||||
|
Restricted cash and cash equivalents
|
71,582
|
69,200
|
||||||
|
Unrestricted and restricted cash and cash equivalents
|
$
|
455,927
|
$
|
606,077
|
||||
8
Fly Leasing Limited
Reconciliation of Non-GAAP Measures
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
Three months ended Mar. 31,
|
||||||||
|
2018
(Unaudited)
|
2017(1)
(Unaudited)
|
|||||||
|
Net income
|
$
|
9,630
|
$
|
5,052
|
||||
|
Adjustments:
|
||||||||
|
Unrealized foreign exchange loss
|
408
|
219
|
||||||
|
Deferred income taxes
|
2,353
|
1,058
|
||||||
|
Fair value changes on undesignated derivatives
|
(2
|
)
|
(467
|
)
|
||||
|
Adjusted Net Income
|
$
|
12,389
|
$
|
5,862
|
||||
|
Average Shareholders’ Equity
|
$
|
549,611
|
$
|
596,072
|
||||
|
Adjusted Return on Equity
|
9.0
|
%
|
3.9
|
%
|
||||
|
Weighted average diluted shares outstanding
|
28,006,572
|
32,301,322
|
||||||
|
Adjusted Net Income per diluted share
|
$
|
0.44
|
$
|
0.18
|
||||
|
(1)
|
Revised to conform to current period presentation.
|
FLY defines Adjusted Net Income 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 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 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 and Adjusted Return on Equity, in addition to GAAP net income and earnings 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 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 than those used by other companies.
9