PR Newswire | May 13, 2021 07:02AM EDT

05/13 06:00 CDT

Fly Leasing Reports First Quarter 2021 Financial Results DUBLIN, May 13, 2021

DUBLIN, May 13, 2021 /PRNewswire/ -- Fly Leasing Limited (NYSE: FLY) ("FLY"), a global leader in aircraft leasing, today announced its financial results for the first quarter of 2021.

Highlights

* Signed merger agreement to be acquired by Carlyle Aviation for $17.05 per share * Total revenues of $80.9 million * Net loss of $3.4 million, $0.11 per share * Unrestricted cash and cash equivalents of $117.2 million * $157 million net book value of unencumbered assets

"The pending acquisition of FLY by an affiliate of Carlyle Aviation Partners is on track and is expected to close in the third quarter," said Colm Barrington, CEO of FLY. "We believe that this transaction represents strong value for FLY shareholders with the per share cash consideration representing a premium of nearly 30% to FLY's closing price on March 26, 2021, the last trading day prior to the merger announcement."

"In the quarter, FLY's revenues and net income were again adversely impacted by the global pandemic," added Barrington. "While we are seeing improvements in some sectors of the global airline industry, particularly in U.S. and Chinese domestic traffic, there are still large parts of the world where COVID-19 is surging and both domestic and international air traffic is at a virtual standstill due to continuing travel restrictions. It now appears likely that it will be well into 2022 before global air traffic returns towards 2019 levels."

Financial Results

FLY is reporting a net loss of $3.4 million, or $0.11 per share, for the first quarter of 2021. This compares to net income of $38.1 million, or $1.24 per share, for the same period in 2020. During the first quarter of 2021, FLY recognized $5.9 million of costs associated with the pending transaction with Carlyle Aviation (see below under "Merger").

Adjusted Net Income(Loss)

Adjusted Net Loss was $1.4 million for the first quarter of 2021, compared to Adjusted Net Income of $43.6 million for the same period in the previous year. On a per share basis, Adjusted Net Loss was $0.04 in the first quarter of 2021, compared to Adjusted Net Income of $1.42 for the first quarter of 2020.

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

Financial Position

At March 31, 2021, FLY's total assets were $3.1 billion, including investment in flight equipment totaling $2.8 billion. Total cash at March 31, 2021 was $151.2 million, of which $117.2 million was unrestricted. At March 31, 2021, FLY's net debt to equity ratio was 2.2x, reduced from 2.3x as of December 31, 2020.

Merger

FLY announced on March 29, 2021 that it had entered into a definitive agreement to be acquired by an affiliate of Carlyle Aviation Partners ("Carlyle Aviation"), the commercial aviation investment and servicing arm within The Carlyle Group's $56 billion Global Credit platform. Under the terms of the Merger Agreement, FLY shareholders will receive $17.05 per share in cash, representing a total equity valuation of approximately $520 million. The total enterprise value of the transaction is approximately $2.36 billion. The transaction is expected to close in the third quarter of 2021 and is subject to customary closing conditions, including applicable regulatory clearance and the approval of FLY's shareholders. Given the pending transaction, FLY will not host a first quarter earnings call.

Aircraft Portfolio

At March 31, 2021, FLY had 84 aircraft and seven engines in its portfolio. FLY's aircraft and engines are on lease to 36 airlines in 22 countries. The table below does not include the engines.

Portfolio at Mar. 31, 2021 Dec. 31, 2020

Number % of Net Book Number % of Net Book Value Value

Airbus A320ceo Family 32 28% 32 28%

Airbus A320neo Family 1 2% 1 2%

Airbus A330 3 2% 3 2%

Boeing 737NG 40 39% 40 39%

Boeing 737 MAX 2 3% 2 3%

Boeing 777-LRF 2 11% 2 11%

Boeing 787 4 15% 4 15%

Total^(1) 84 100% 84 100%

^(1) Includes six aircraft classified as held for sale as of March 31, 2021. Noaircraft were classified as held for sale as of December 31, 2020.

At March 31, 2021, the average age of the portfolio, weighted by net book value of each aircraft and engine, was 8.6 years. The average remaining lease term was 4.7 years, also weighted by net book value.

About FLY

FLY is a global aircraft leasing company with a fleet of modern 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 certain non-GAAP financial measures, including Adjusted Net Income (Loss) and Adjusted Return on Equity. In calculating these non-GAAP financial measures, we have excluded certain amounts, as detailed in the reconciliation below.

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, risks and uncertainties related to the merger transaction with Carlyle Aviation, and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. Additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these risks. The extent to which the COVID-19 pandemic ultimately impacts FLY's business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. 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 DallasFly Leasing Limited+1 203-769-5916ir@flyleasing.com

Fly Leasing LimitedConsolidated Statements of Income (Loss)(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months ended Mar. 31,

2021 2020 (Unaudited) (Unaudited)

Revenues

Operating lease rental revenue $ 55,376 $ 85,535

End of lease income 25,811 2,427

Amortization of lease incentives (1,082) (614)

Amortization of lease discounts and (261) 92other

Operating lease revenue 79,844 87,440

Finance lease revenue 129 145

Gain on sale of aircraft - 31,717

Interest and other income 884 2,253

Total revenues 80,857 121,555

Expenses

Depreciation 29,967 31,631

Aircraft impairment 22,546 -

Interest expense 22,066 27,155

Selling, general and administrative 12,500 7,664

Provision for uncollectible operating 1,000 -receivables

(Gain) loss on derivatives (2,724) 507

Fair value (gain) loss on marketable (1,839) 9,412securities

Loss on extinguishment of debt - 850

Maintenance and other costs 1,104 1,184

Total expenses 84,620 78,403

Net income (loss) before provision (3,763) 43,152(benefit) for income taxes

Provision (benefit) for income taxes (370) 5,080

Net income (loss) $ (3,393) $ 38,072

Weighted average number of shares

- Basic 30,481,069 30,765,840

- Diluted 30,481,069 30,768,029

Earnings (loss) per share

- Basic and Diluted $ (0.11) $ 1.24

Fly Leasing LimitedConsolidated Balance Sheets(DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

Mar. 31, Dec. 31,

2021 2020 (Unaudited) (Audited)

Assets

Cash and cash equivalents $ 117,231 $ 132,097

Restricted cash and cash equivalents 34,000 29,432

Rent receivables, net 65,516 57,015

Investment in finance lease, net 10,075 10,396

Flight equipment held for sale, net 40,454 -

Flight equipment held for operating 2,438,666 2,529,428lease, net

Maintenance rights 279,124 279,124

Deferred tax asset, net 10,941 11,753

Fair value of derivative assets 3,570 2,085

Other assets, net 136,581 116,255

Total assets $ 3,136,158 $ 3,167,585

Liabilities

Accounts payable and accrued $ 27,391 $ 18,135liabilities

Rentals received in advance 6,620 8,724

Payable to related parties 4,362 4,058

Security deposits 36,226 36,439

Maintenance payment liability, net 201,820 203,684

Unsecured borrowings, net 297,082 296,876

Secured borrowings, net 1,603,986 1,642,242

Deferred tax liability, net 51,420 51,366

Fair value of derivative liabilities 35,648 46,169

Other liabilities 78,182 70,896

Total liabilities 2,342,737 2,378,589

Shareholders' equity

Common shares, $0.001 par value,499,999,900 shares authorized; 30,481,069 shares issued and 31 31outstanding at March 31,2021 and December 31, 2020

Manager shares, $0.001 par value; 100shares authorized, issued and - -outstanding

Additional paid-in capital 509,738 509,738

Retained earnings 309,574 312,967

Accumulated other comprehensive loss, (25,922) (33,740)net

Total shareholders' equity 793,421 788,996

Total liabilities and shareholders' $ 3,136,158 $ 3,167,585equity

Fly Leasing Limited Consolidated Statements of Cash Flows (DOLLARS IN THOUSANDS)



Three months ended Mar. 31,

2021 2020 (Unaudited) (Unaudited)

Cash Flows from Operating Activities

Net income (loss) $ (3,393)$ 38,072

Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:

Gain on sale of aircraft - (31,717)

Depreciation 29,967 31,631

Flight equipment impairment 22,546 -

Amortization of debt discounts and debt issuance 2,114 1,875 costs

Amortization of lease 1,421 604 incentives and other items

Provision for uncollectible 1,000 - operating lease receivables

Fair value (gain) loss on (1,839) 9,412 marketable securities

Loss on extinguishment of - 850 debt

Provision (benefit) for (370) 5,181 deferred income taxes

Maintenance payment liability- (2,487) recognized into earnings

Other (2,430) 268

Changes in operating assets and liabilities:

Rent receivables (14,981) (7,036)

Other assets (19,119) 230

Payable to related parties 304 (5,807)

Accounts payable, accrued liabilities and other12,904 9,957 liabilities

Net cash flows provided by 28,124 51,033 operating activities

Cash Flows from Investing Activities

Purchase of flight equipment - (27,282)

Proceeds from sale of - 160,271 aircraft, net

Payments for aircraft (1,604) (6,294) improvement

Payments for lessor (65) (347) maintenance obligations

Other 362 (231)

Net cash flows (used in) provided by investing (1,307) 126,117 activities



Three months ended Mar. 31,

2021 2020 (Unaudited) (Unaudited)

Cash Flows from Financing Activities

Security deposits received 1,921 3,305

Maintenance payment liability4,281 7,848 receipts

Maintenance payment liability(3,528) (10,109) disbursements

Debt extinguishment costs - (20)

Debt issuance costs (186) -

Repayment of secured (39,510) (118,211) borrowings

Shares repurchased - (6,504)

Net cash flows used in (37,022) (123,691) financing activities

Effect of exchange rate changes on unrestricted and (93) (18) restricted cash and cash equivalents

Net (decrease) increase in unrestricted and restricted (10,298) 53,441 cash and cash equivalents

Unrestricted and restricted cash and cash equivalents at 161,529 338,303 beginning of period

Unrestricted and restricted cash and cash equivalents at $ 151,231 $ 391,744 end of period



Reconciliation to Consolidated Balance Sheets:

Cash and cash equivalents $ 117,231 $ 361,151

Restricted cash and cash 34,000 30,593 equivalents

Unrestricted and restricted $ 151,231 $ 391,744 cash and cash equivalents



Fly Leasing LimitedReconciliation of Non-GAAP Measures(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

Three months ended Mar. 31,

2021 2020 (Unaudited) (Unaudited)

Net income (loss) $ (3,393) $ 38,072

Adjustments:

Unrealized foreign exchange gain (183) (95)

Deferred income taxes (370) 5,181

Fair value changes on undesignated (3,278) 481derivatives

Merger costs 5,853 -

Adjusted Net Income (Loss) $ (1,371) $ 43,639

Average Shareholders' Equity $ 791,209 $ 884,257

Adjusted Return on Equity (0.7%) 19.7%

Weighted average diluted shares 30,481,069 30,768,029outstanding

Adjusted Net Income (Loss) per $ (0.04) $ 1.42diluted share

FLY defines Adjusted Net Income (Loss) 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 (Loss) 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 (Loss) 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 (Loss) and Adjusted Return on Equity, in addition to GAAP net income (loss) and earnings (loss) 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 (Loss) 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 from those used by other companies.

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SOURCE Fly Leasing Limited