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.
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.