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 2017.
Fourth Quarter 2017 Highlights
Net income of $7.2 million, $0.25 per share
Adjusted Net Income of $30.9 million, $1.09 per share
Refinanced and extended $375.0 million of unsecured notes
Completed a new $332 million secured debt facility
Repurchased 715,934 shares
2017 Full Year Highlights
Net income of $2.6 million, $0.09 per share
Adjusted Net Income of $66.6 million, $2.19 per share
Acquired ten aircraft for $456.0 million
Repurchased 4.3 million shares
"We continue to take initiatives at FLY that are producing solid core earnings and enhancing shareholder value," said Colm Barrington, CEO of FLY. "In 2017 we increased our fleet size, fleet value and operating lease revenue, each by more than 10%. The quality and youth of our fleet now rank us an industry leader. We repurchased more than 13% of our shares at a significant discount to book value, raised a new $332 million secured facility at a very attractive margin, and refinanced and extended $375 million of unsecured notes at a significantly reduced interest rate. This was a good investment in our future earnings despite the debt extinguishment charge in the fourth quarter."
"Last week we announced an exciting deal with AirAsia in which FLY will acquire a total of 55 aircraft, seven engines, and options to acquire 20 new A320neo family aircraft," added Barrington. "This landmark acquisition grows FLY's fleet with the most attractive and newest generation of narrowbody aircraft and will drive high levels of stable, long-term profitability and cash flows for the benefit of our stakeholders."
FLY is reporting net income of $7.2 million, or $0.25 per share, for the fourth quarter of 2017. This compares to a net loss of $63.8 million, or $1.98 per share, for the same period in 2016. The financial results for the fourth quarter of 2017 include $20.8 million of debt extinguishment costs, primarily relating to the discharge of FLY's 6.75% Senior Notes due 2020 ("2020 Notes").
Net income for the year ended December 31, 2017 was $2.6 million, or $0.09 per share, compared to a net loss of $29.1 million, or $0.88 per share for the year ended December 31, 2016.
Adjusted Net Income
Adjusted Net Income was $30.9 million for the fourth quarter of 2017, compared to $30.6 million for the same period in the previous year. On a per share basis, Adjusted Net Income was $1.09 in the fourth quarter of 2017, compared to $0.95 for the fourth quarter of 2016. For the year ended December 31, 2017, Adjusted Net Income was $66.6 million, or $2.19 per share, compared to $79.3 million, or $2.38 per share, for the year ended December 31, 2016.
A reconciliation of Adjusted Net Income to net income (loss) determined in accordance with GAAP is shown below.
During the fourth quarter, FLY repurchased 715,934 shares for $9.8 million at an average price of $13.65 per share. During the year ended December 31, 2017, FLY repurchased 4.3 million shares for $57.1 million at an average price of $13.35 per share. In November 2017, FLY's board of directors approved a $50.0 million share repurchase program expiring in December 2018, to replace its program which expired in December 2017.
On October 16, 2017, FLY completed its offering of $300 million of unsecured 5.25% Senior Notes due 2024. The net proceeds were approximately $294.2 million, which FLY used, together with cash on hand, to discharge the $375 million of its outstanding 2020 Notes.
On December 8, 2017, FLY closed a new $332 million secured debt facility. The facility has an eight-year term and bears interest at a rate of LIBOR plus 1.65%.
AirAsia Portfolio Acquisition
On February 28, 2018, FLY signed definitive agreements with AirAsia Berhad ("AAB") for the acquisition of 55 Airbus narrowbody aircraft, seven CFM engines and options to purchase an additional 20 Airbus A320neo family aircraft. Nearly all aircraft will be subject to leases to AAB and its affiliates, other than the option aircraft. The transaction is expected to close in the second and third quarters of 2018, subject to approval by AAB shareholders, receipt of necessary regulatory approvals and satisfaction of other customary closing conditions.
At December 31, 2017, FLY's total assets were $3.6 billion, including investment in flight equipment totaling $3.1 billion. Total cash at December 31, 2017 was $456.8 million, of which $329.1 million was unrestricted. The book value per share at December 31, 2017 was $19.43.
At December 31, 2017, FLY had 85 aircraft in its portfolio, with leases to 44 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.
At December 31, 2017, the average age of the portfolio, weighted by net book value of each aircraft, was 6.4 years. The average remaining lease term was 6.3 years, also weighted by net book value. At December 31, 2017, FLY's 83 aircraft on lease were generating annualized rental revenue of approximately $359 million. Two aircraft were off-lease at year end, one of which was subsequently delivered to a new lessee in January 2018, and the other aircraft is expected to be delivered to a new lessee in the first quarter of 2018. FLY's lease utilization factor was 98.3% for the fourth quarter of 2017 and 99.6% for the year.
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 8, 2018. Participants should call +1-253-237-1145 (International) or 800-535-7056 (North America) and enter confirmation code 3572428. A live webcast with slide presentation will be available on the Events & 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.