Form 6-K Fly Leasing Ltd For: Mar 07
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: March 7, 2019
Commission File Number: 001-33701
Fly Leasing Limited
(Exact Name of registrant as specified in its charter)
West Pier Business Campus
Dun Laoghaire
County Dublin, A96 N6T7
|
|
Ireland |
|
Indicate by check mark whether registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
|
Form 20-F
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☒ |
Form 40-F
|
☐ |
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 |
|
|
|
| 99.1 |
Press release of Fly Leasing Limited, dated March 7, 2019. |
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.
|
Fly Leasing Limited
|
|||||
|
(Registrant)
|
|||||
|
Date:
|
March 7, 2019
|
By:
|
/s/ Colm Barrington
|
||
|
Colm Barrington
|
|||||
|
Chief Executive Officer and Director
|
|||||
3
EXHIBIT INDEX
Exhibit 99.1
Fly Leasing Reports Fourth Quarter and Full Year 2018 Financial Results
Dublin, Ireland, March 7, 2019 – 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 2018.
Fourth Quarter 2018 Highlights
|
·
|
Net income of $31.0 million, $0.95 per share
|
|
·
|
Adjusted Net Income of $30.8 million, $0.94 per share
|
|
·
|
26% increase in operating lease rental revenue
|
|
·
|
100% fleet utilization
|
|
·
|
Sold three aircraft for a gain of $7.9 million, a 12% premium to book value
|
2018 Full Year Highlights
|
·
|
Net income of $85.7 million, $2.88 per share
|
|
·
|
Adjusted Net Income of $91.2 million, $3.06 per share
|
|
·
|
15% increase in operating lease rental revenue
|
|
·
|
Sold six aircraft at a 17% premium to book value
|
|
·
|
Grew book value 11% to $21.50 per share
|
“FLY is reporting a great financial outcome for the fourth quarter and a record result for the full year,” said Colm Barrington, FLY’s Chief
Executive Officer. “Our renewed and larger fleet drove a 26% increase in operating lease rental revenue as compared to the fourth quarter of 2017. We held expenses below last year’s level, resulting in Adjusted Net Income of $30.8 million for the
quarter, or 94 cents per share.”
“FLY’s strong operating performance throughout 2018 produced a record full-year result, with Adjusted EPS of $3.06 per share,” added
Barrington. “Based on these strong trends, FLY is expecting another great financial result in 2019, starting with first quarter expected pre-tax income of more than $45 million.”
“The strategy that we have implemented at FLY over the last few years is bearing fruit,” said Barrington. “During 2018 we increased our fleet
significantly, and since then we have reduced our leverage through profitable aircraft sales and now have ample financial capacity for growth.”
Financial Results
FLY is reporting net income of $31.0 million, or $0.95 per share, for the fourth quarter of 2018. This
compares to a net income of $7.2 million, or $0.25 per share, for the same period in 2017.
Net income for the year ended December 31, 2018 was $85.7 million, or $2.88 per share, compared to a net income of $2.6 million, or $0.09 per
share, for the year ended December 31, 2017.
Adjusted Net Income
Adjusted Net Income was $30.8 million for the fourth quarter of 2018, compared to Adjusted Net Income of $7.3 million for the same period in
the previous year. On a per share basis, Adjusted Net Income was $0.94 in the fourth quarter of 2018, compared to Adjusted Net Income of $0.26 for the fourth quarter of 2017. For the year ended December 31, 2018, Adjusted Net Income was $91.2
million, or $3.06 per share, compared to $8.2 million, or $0.27 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.
Portfolio Acquisition Update
As of December 31, 2018, FLY had completed the acquisition of 33 Airbus A320 aircraft and seven engines pursuant to the transaction that was
first announced in February 2018.
Financial Position
At December 31, 2018, FLY’s total assets were $4.2 billion, including investment in flight equipment totaling $3.8 billion. Total cash at
December 31, 2018 was $281.1 million, of which $180.2 million was unrestricted. The book value per share at December 31, 2018 was $21.50, an 11% increase since the beginning of the year. At December 31, 2018, FLY’s net debt to equity ratio was
4.0x, an improvement from 4.3x as of the beginning of the year.
Aircraft Portfolio
At December 31, 2018, FLY had 113 aircraft and seven engines in its portfolio. Of the 113 aircraft, 100 were held for operating lease, one was
classified as an investment in finance lease and 12 were classified as held for sale. FLY’s aircraft are on lease to 46 airlines in 26 countries. 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.
2
|
Portfolio at
|
Dec. 31, 2018
|
Dec. 31, 2017
|
||||||||||||||
|
Number
|
% of Net
Book Value
|
Number
|
% of Net
Book Value
|
|||||||||||||
|
Airbus A319
|
8
|
3
|
%
|
9
|
4
|
%
|
||||||||||
|
Airbus A320(1)
|
44
|
32
|
%
|
12
|
11
|
%
|
||||||||||
|
Airbus A321
|
3
|
3
|
%
|
3
|
4
|
%
|
||||||||||
|
Airbus A330
|
3
|
5
|
%
|
3
|
6
|
%
|
||||||||||
|
Airbus A340
|
2
|
1
|
%
|
2
|
1
|
%
|
||||||||||
|
Boeing 737(1)
|
42
|
32
|
%
|
44
|
42
|
%
|
||||||||||
|
Boeing 737 MAX
|
2
|
3
|
%
|
2
|
3
|
%
|
||||||||||
|
Boeing 757
|
3
|
1
|
%
|
3
|
1
|
%
|
||||||||||
|
Boeing 777
|
2
|
8
|
%
|
2
|
10
|
%
|
||||||||||
|
Boeing 787
|
4
|
12
|
%
|
5
|
18
|
%
|
||||||||||
|
Total
|
113
|
100
|
%
|
85
|
100
|
%
|
||||||||||
| (1) At December 31, 2018, includes ten Airbus A320 and two Boeing 737 aircraft classified as held for sale. | ||||||||||||||||
At December 31, 2018, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 7.2 years. The average
remaining lease term was 5.8 years, also weighted by net book value. At December 31, 2018, FLY’s portfolio, excluding aircraft held for sale, was generating annualized rental revenue of approximately $453.2 million. FLY’s lease utilization
factor was 100% for the fourth quarter of 2018 and 99.7% for the year ended December 31, 2018.
Conference Call and Webcast
FLY’s senior management will host a conference call and webcast to discuss these results at 9:00 a.m. U.S. Eastern Time on Thursday, March 7,
2019. Participants should call +1 (409) 220-9381 (International) or (866) 438-0730 (North America) and enter confirmation code 2569936. 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, a worldwide leader in aircraft lease management and financing. For more information about FLY, please visit our
website at www.flyleasing.com.
3
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.
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. 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 Dec. 31,
|
Year ended Dec. 31,
|
|||||||||||||||
|
2018
(Unaudited)
|
2017
(Unaudited)
|
2018
(Audited)
|
2017
(Audited)
|
|||||||||||||
|
Revenues
|
||||||||||||||||
|
Operating lease rental revenue
|
$
|
112,159
|
$
|
89,019
|
$
|
389,350
|
$
|
337,137
|
||||||||
|
End of lease income
|
4,264
|
16,598
|
20,333
|
17,837
|
||||||||||||
|
Amortization of lease incentives
|
(2,614
|
)
|
(2,066
|
)
|
(9,738
|
)
|
(7,668
|
)
|
||||||||
|
Amortization of lease premiums, discounts and other
|
(42
|
)
|
(123
|
)
|
(431
|
)
|
(412
|
)
|
||||||||
|
Operating lease revenue
|
113,767
|
103,428
|
399,514
|
346,894
|
||||||||||||
|
Finance lease revenue
|
163
|
177
|
675
|
731
|
||||||||||||
|
Equity earnings (loss) from unconsolidated subsidiary
|
56
|
119
|
(54
|
)
|
496
|
|||||||||||
|
Gain on sale of aircraft
|
7,874
|
3,926
|
13,398
|
3,926
|
||||||||||||
|
Interest and other income
|
445
|
284
|
4,766
|
1,204
|
||||||||||||
|
Total revenues
|
122,305
|
107,934
|
418,299
|
353,251
|
||||||||||||
|
Expenses
|
||||||||||||||||
|
Depreciation
|
39,887
|
33,957
|
144,084
|
133,227
|
||||||||||||
|
Aircraft impairment
|
—
|
—
|
—
|
22,000
|
||||||||||||
|
Interest expense
|
40,703
|
31,382
|
144,742
|
127,782
|
||||||||||||
|
Selling, general and administrative
|
8,487
|
7,445
|
31,185
|
30,671
|
||||||||||||
|
Loss (gain) on derivatives
|
233
|
(546
|
)
|
(2,382
|
)
|
(192
|
)
|
|||||||||
|
Loss on modification and extinguishment of debt
|
1,016
|
20,798
|
2,474
|
23,309
|
||||||||||||
|
Maintenance and other costs
|
510
|
888
|
2,547
|
2,524
|
||||||||||||
|
Total expenses
|
90,836
|
93,924
|
322,650
|
339,321
|
||||||||||||
|
Net income before provision for income taxes
|
31,469
|
14,010
|
95,649
|
13,930
|
||||||||||||
|
Provision for income taxes
|
460
|
6,840
|
9,926
|
11,332
|
||||||||||||
|
Net income
|
$
|
31,009
|
$
|
7,170
|
$
|
85,723
|
$
|
2,598
|
||||||||
|
Weighted average number of shares
|
||||||||||||||||
|
- Basic
|
32,650,019
|
28,373,978
|
29,744,083
|
30,307,357
|
||||||||||||
|
- Diluted
|
32,661,240
|
28,427,967
|
29,783,904
|
30,353,425
|
||||||||||||
|
Earnings per share
|
||||||||||||||||
|
- Basic
|
$
|
0.95
|
$
|
0.25
|
$
|
2.88
|
$
|
0.09
|
||||||||
|
- Diluted
|
$
|
0.95
|
$
|
0.25
|
$
|
2.88
|
$
|
0.09
|
||||||||
5
Fly Leasing Limited
Consolidated Balance Sheets
(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
|
Dec. 31,
2018
(Audited)
|
Dec. 31,
2017
(Audited)
|
|||||||
|
Assets
|
||||||||
|
Cash and cash equivalents
|
$
|
180,211
|
$
|
329,105
|
||||
|
Restricted cash and cash equivalents
|
100,869
|
127,710
|
||||||
|
Rent receivables
|
9,307
|
2,059
|
||||||
|
Investment in finance lease, net
|
12,822
|
13,946
|
||||||
|
Flight equipment held for sale, net
|
259,644
|
—
|
||||||
|
Flight equipment held for operating lease, net
|
3,228,018
|
2,961,744
|
||||||
|
Maintenance rights
|
298,207
|
131,299
|
||||||
|
Deferred tax asset, net
|
6,505
|
9,943
|
||||||
|
Fair value of derivative assets
|
5,929
|
2,643
|
||||||
|
Other assets, net
|
124,960
|
17,166
|
||||||
|
Total assets
|
$
|
4,226,472
|
$
|
3,595,615
|
||||
|
Liabilities
|
||||||||
|
Accounts payable and accrued liabilities
|
$
|
23,146
|
$
|
18,305
|
||||
|
Rentals received in advance
|
21,322
|
14,968
|
||||||
|
Payable to related parties
|
4,462
|
2,084
|
||||||
|
Security deposits
|
60,097
|
49,689
|
||||||
|
Maintenance payment liability, net
|
292,586
|
244,151
|
||||||
|
Unsecured borrowings, net
|
617,664
|
615,922
|
||||||
|
Secured borrowings, net
|
2,379,869
|
2,029,675
|
||||||
|
Deferred tax liability, net
|
36,256
|
30,112
|
||||||
|
Fair value of derivative liabilities
|
8,558
|
7,344
|
||||||
|
Other liabilities
|
80,402
|
39,656
|
||||||
|
Total liabilities
|
3,524,362
|
3,051,906
|
||||||
|
Shareholders’ equity
|
||||||||
|
Common shares, $0.001 par value, 499,999,900 shares authorized; 32,650,019 and 27,983,352 shares issued and outstanding at December 31,
2018 and 2017, respectively
|
33
|
28
|
||||||
|
Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding
|
—
|
—
|
||||||
|
Additional paid in capital
|
549,123
|
479,637
|
||||||
|
Retained earnings
|
154,347
|
68,624
|
||||||
|
Accumulated other comprehensive loss, net
|
(1,393
|
)
|
(4,580
|
)
|
||||
|
Total shareholders’ equity
|
702,110
|
543,709
|
||||||
|
Total liabilities and shareholders’ equity
|
$
|
4,226,472
|
$
|
3,595,615
|
||||
6
Fly Leasing Limited
Consolidated Statements of Cash Flows
(DOLLARS IN THOUSANDS)
|
Year ended Dec. 31,
|
||||||||
|
2018
(Audited)
|
2017
(Audited)
|
|||||||
|
Cash Flows from Operating Activities
|
||||||||
|
Net income
|
$
|
85,723
|
$
|
2,598
|
||||
|
Adjustments to reconcile net income to net cash flows provided by operating activities:
|
||||||||
|
Finance lease revenue
|
(675
|
)
|
(731
|
)
|
||||
|
Equity in (earnings) loss from unconsolidated subsidiary
|
54
|
(496
|
)
|
|||||
|
Gain on sale of aircraft
|
(13,398
|
)
|
(3,926
|
)
|
||||
|
Depreciation
|
144,084
|
133,227
|
||||||
|
Aircraft impairment
|
—
|
22,000
|
||||||
|
Amortization of debt discounts and issuance costs
|
9,455
|
7,955
|
||||||
|
Amortization of lease incentives
|
9,738
|
7,668
|
||||||
|
Amortization of lease discounts, premiums and other items
|
432
|
412
|
||||||
|
Amortization of acquisition fair value adjustments
|
1,239
|
1,223
|
||||||
|
Loss on modification and extinguishment of debt
|
2,474
|
23,309
|
||||||
|
Unrealized foreign exchange (gain) loss
|
(563
|
)
|
2,305
|
|||||
|
Provision for deferred income taxes
|
9,864
|
5,178
|
||||||
|
Gain on derivatives
|
(1,269
|
)
|
(478
|
)
|
||||
|
Security deposits and maintenance payment liability recognized into earnings
|
(15,597
|
)
|
(16,268
|
)
|
||||
|
Distributions from unconsolidated subsidiary
|
2,131
|
—
|
||||||
|
Cash receipts from maintenance rights
|
3,013
|
—
|
||||||
|
Maintenance rights recognized into earnings
|
—
|
465
|
||||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Rent receivables
|
(12,866
|
)
|
(4,251
|
)
|
||||
|
Other assets
|
(4,119
|
)
|
(2,599
|
)
|
||||
|
Payable to related parties
|
2,378
|
(10,126
|
)
|
|||||
|
Accounts payable, accrued liabilities and other liabilities
|
18,982
|
11,588
|
||||||
|
Net cash flows provided by operating activities
|
241,080
|
179,053
|
||||||
|
Cash Flows from Investing Activities
|
||||||||
|
Distributions from unconsolidated subsidiary
|
3,103
|
—
|
||||||
|
Rent received from finance lease
|
1,800
|
1,880
|
||||||
|
Investment in Horizon I Limited equity certificates
|
(5,747
|
)
|
—
|
|||||
|
Purchase of flight equipment
|
(934,481
|
)
|
(434,122
|
)
|
||||
|
Proceeds from sale of aircraft, net
|
177,702
|
21,750
|
||||||
|
Purchase price allocated to Portfolio B orderbook value
|
(80,450
|
)
|
—
|
|||||
|
Payments for aircraft improvement
|
(6,779
|
)
|
(7,357
|
)
|
||||
|
Payments for lessor maintenance obligations
|
(8,601
|
)
|
(12,564
|
)
|
||||
|
Net cash flows used in investing activities
|
(853,453
|
)
|
(430,413
|
)
|
||||
7
|
Year ended Dec. 31,
|
||||||||
|
2018
(Audited)
|
2017
(Audited)
|
|||||||
|
Cash Flows from Financing Activities
|
||||||||
|
Security deposits received
|
15,042
|
7,196
|
||||||
|
Security deposits returned
|
(8,716
|
)
|
(3,554
|
)
|
||||
|
Maintenance payment liability receipts
|
84,102
|
75,765
|
||||||
|
Maintenance payment liability disbursements
|
(15,495
|
)
|
(14,303
|
)
|
||||
|
Net swap termination payments
|
1,801
|
—
|
||||||
|
Debt modification and extinguishment costs
|
301
|
(17,396
|
)
|
|||||
|
Debt issuance costs
|
(3,619
|
)
|
(1,464
|
)
|
||||
|
Proceeds from unsecured borrowings
|
—
|
295,150
|
||||||
|
Repayment of unsecured borrowings
|
—
|
(375,000
|
)
|
|||||
|
Proceeds from secured borrowings
|
826,396
|
513,459
|
||||||
|
Repayment of secured borrowings
|
(482,703
|
)
|
(326,909
|
)
|
||||
|
Net proceeds from issuance of shares
|
19,624
|
—
|
||||||
|
Shares repurchased
|
—
|
(57,286
|
)
|
|||||
|
Net cash flows provided by financing activities
|
436,733
|
95,658
|
||||||
|
Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents
|
(95
|
)
|
430
|
|||||
|
Net decrease in unrestricted and restricted cash and cash equivalents
|
(175,735
|
)
|
(155,272
|
)
|
||||
|
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
|
$
|
281,080
|
$
|
456,815
|
||||
|
Reconciliation to Consolidated Balance Sheets:
|
||||||||
|
Cash and cash equivalents
|
$
|
180,211
|
$
|
329,105
|
||||
|
Restricted cash and cash equivalents
|
100,869
|
127,710
|
||||||
|
Unrestricted and restricted cash and cash equivalents
|
$
|
281,080
|
$
|
456,815
|
||||
8
Fly Leasing Limited
Reconciliation of Non-GAAP Measures
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
|
Three months ended Dec. 31,
|
Year ended Dec. 31,
|
|||||||||||||||
|
2018
(Unaudited)
|
2017(1)
(Unaudited)
|
2018
(Unaudited)
|
2017(1)
(Unaudited)
|
|||||||||||||
|
Net income
|
$
|
31,009
|
$
|
7,170
|
$
|
85,723
|
$
|
2,598
|
||||||||
|
Adjustments:
|
||||||||||||||||
|
Unrealized foreign exchange (gain) loss
|
(187
|
)
|
301
|
(668
|
)
|
2,305
|
||||||||||
|
Deferred income taxes
|
227
|
721
|
9,864
|
5,178
|
||||||||||||
|
Fair value changes on undesignated derivatives
|
(286
|
)
|
(899
|
)
|
(3,732
|
)
|
(1,843
|
)
|
||||||||
|
Adjusted Net Income
|
$
|
30,763
|
$
|
7,293
|
$
|
91,187
|
$
|
8,238
|
||||||||
|
Average Shareholders’ Equity
|
$
|
692,124
|
$
|
543,705
|
$
|
614,344
|
$
|
571,042
|
||||||||
|
Adjusted Return on Equity
|
17.8
|
%
|
5.4
|
%
|
14.8
|
%
|
1.4
|
%
|
||||||||
|
Weighted average diluted shares outstanding
|
32,661,240
|
28,427,967
|
29,783,904
|
30,353,425
|
||||||||||||
|
Adjusted Net Income per diluted share
|
$
|
0.94
|
$
|
0.26
|
$
|
3.06
|
$
|
0.27
|
||||||||
| (1) |
Revised to conform to current period presentation.
|
FLY defines Adjusted Net Income as net income 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