FLY Leasing Reports Fourth Quarter and Full Year 2012 Financial Results

DUBLIN, March 7, 2013 /PRNewswire/ — FLY Leasing Limited (NYSE: FLY) (“FLY”), a global lessor of modern, fuel-efficient commercial jet aircraft, today announced its financial results for the fourth quarter and full year of 2012.

Fourth Quarter 2012 Highlights

Adjusted net income of $53.2 million, $2.04 per share
Net income of $31.0 million, $1.17 per share
Raised a $250 million revolving Acquisition Facility to fund growth
Re-priced $395 million Term Loan, reducing annual cash interest payments by approximately $4 million
Declared 21st consecutive quarterly dividend on January 15th ($0.22 per share)
Additional 2012 Full Year Highlights

Adjusted net income of $116.3 million, $4.48 per share
Net income of $47.7 million, $1.80 per share
Sourced $1.3 billion of new secured debt financing
Reduced total secured borrowings by $274 million, reducing net leverage to 3.6x
Sold four aircraft with an average age of 13 years for a pre-tax gain of $8.4 million
Paid $0.84 per share in dividends
“FLY had another strong year in 2012, increasing our core operating lease revenues by 63% compared to 2011. Adjusted Net Income was $116.3 million ($4.48 per share), and Net Income was $47.7 million ($1.80 per share),” said Colm Barrington, Chief Executive Officer of FLY. “Our increased earnings in 2012 reflect the growth in our aircraft portfolio which has doubled in size over the last two years. Our earnings also reflect significant contributions from our opportunistic sale of four aircraft in 2012 and the sale of our 15% interest in BBAM. During 2012, we raised the quarterly dividend by 10% to 22 cents per share, for total dividends of 84 cents per share in the year.”

“We also completed several significant financial objectives in 2012, including reducing our net leverage from 5.1x at the start of the year to 3.6x at year end,” said Barrington. “We are now well on our way to reducing our leverage to less than 3.5×. In addition, we refinanced substantially all of our near-term debt maturities with a new $395 million senior secured term loan that matures in 2018, extended a $600 million bank facility from 2012 to 2018 and added a new and attractive $250 million acquisition facility. In addition to lowering our financial leverage, our financing activities have also lowered our weighted-average contractual interest rate on our secured borrowings to 4.7% at December 31, 2012.”

“Looking ahead, we are excited about the opportunities for FLY in 2013,” added Barrington. “We have significant firepower to grow the Company with a new $250 million revolving Acquisition Facility and $163 million of unrestricted cash. We expect to take advantage of positive industry dynamics, including strengthening air traffic and continued robust demand for the modern, fuel-efficient aircraft that make up FLY’s fleet. Aircraft leasing continues to grow in importance, becoming an increasingly important tool for airlines around the world. Against this backdrop, we are well positioned to meet our growth targets both in terms of fleet and earnings.”

Financial Results

FLY grew operating lease revenue by $145.7 million for a total of $376.4 million in 2012 compared to 2011, an increase of 63%. This increase reflects the growth in our aircraft portfolio.

FLY is reporting net income for the fourth quarter of 2012 of $31.0 million or $1.17 per diluted share. This compares to a net loss of $9.2 million or $0.37 per share for the same period of 2011. In addition to the $36.9 million pre-tax gain on the sale of FLY’s 15% ownership interest in BBAM, the fourth quarter results include an $11.4 million impairment charge on three aircraft. We recovered approximately $9.7 million of this $11.4 million from end of lease compensation payments, retained maintenance reserves and disposition proceeds in the first quarter of 2013 in respect of the impaired aircraft. The fourth quarter results also include a $7.6 million charge associated with the early repayment of debt, $4.2 million of which was related to the re-pricing of our term loan.

Net income for the year ended December 31, 2012 was $47.7 million or $1.80 per diluted share compared to $1.1 million or $0.03 per diluted share for 2011. In addition to the 4th quarter items, the 2012 results include a one-time, pre-tax charge of $32.3 million to terminate interest rate swaps associated with a credit facility that was fully repaid during 2012.

Adjusted Net Income

Adjusted Net Income was $53.2 million or $2.04 per share for the fourth quarter of 2012 compared to $20.7 million or $0.80 for the fourth quarter of the previous year.

For the year ended December 31, 2012, Adjusted Net Income was $116.3 million or $4.48 per share compared to $35.8 million or $1.38 per share for the year ended December 31, 2011, an increase of 225%.

A reconciliation of Adjusted Net Income to net income determined in accordance with GAAP is shown below.

Dividend

On January 15, 2013, FLY declared a dividend of $0.22 per share in respect of the fourth quarter of 2012. This dividend was paid on February 20, 2013 to shareholders of record on January 31, 2013. This dividend is FLY’s 21st consecutive quarterly dividend.

Financial Position

At December 31, 2012, FLY’s total assets were $3.0 billion, including flight equipment with a net book value of $2.6 billion. Total cash at December 31, 2012 was $300.6 million, of which $163.1 million was unrestricted. These amounts compare to total cash of $380.5 million and unrestricted cash of $82.1 million at December 31, 2011.

FLY’s net leverage, defined as the ratio of net debt to total shareholders’ equity was 3.6x at December 31, 2012 compared to 5.1x at December 31, 2011. Net debt is defined as book value of secured borrowings, less unrestricted cash and cash equivalents.

Aircraft Portfolio

At December 31, 2012, FLY’s 109 aircraft were on lease to 55 lessees in 32 countries. The table below shows the aircraft in FLY’s portfolio on December 31, 2012. The table does not include the four B767 aircraft owned by a joint venture in which FLY has a 57% interest.

At December 31, 2012, the average age of FLY’s fleet was 9.4 years, weighted by the net book value of each aircraft. The average remaining lease term was 3.2 years, also weighted by net book value. At December 31, 2012, the leases were generating annualized revenues of approximately $326 million. For the fourth quarter of 2012, FLY’s lease utilization factor was 93% and for the year ended December 31, 2012 the lease utilization factor was 95%.