Fly Leasing Reports First Quarter 2021 Financial Results

About this update from Firefly Aerospace Inc.

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 Value Number % of Net Book 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 . No aircraft 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 Dallas Fly Leasing Limited +1 203-769-5916 [email protected] Fly Leasing Limited Consolidated Statements of Income (Loss) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Three months ended Mar. 31 , 2021 (Unaudited) 2020 (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 other (261) 92 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 receivables 1,000 — (Gain) loss on derivatives (2,724) 507 Fair value (gain) loss on marketable securities (1,839) 9,412 Loss on extinguishment of debt — 850 Maintenance and other costs 1,104 1,184 Total expenses 84,620 78,403 Net income (loss) before provisio n (benefit) for income taxes (3,763) 43,152 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 Earning s (loss) per share - Basic and Diluted $ (0.11) $ 1.24 Fly Leasing Limited Consolidated Balance Sheets (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA) Mar. 31 , 2021 ( Una udited) Dec. 31 , 2020 ( A udited) 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 lease, net 2,438,666 2,529,428 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 liabilities $ 27,391 $ 18,135 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 outstanding at March 31, 2021 and December 31, 2020 31 31 Manager shares, $0.001 par value; 100 shares authorized, issued and outstanding — — Additional paid-in capital 509,738 509,738 Retained earnings 309,574 312,967 Accumulated other comprehensive loss, net (25,922) (33,740) Total shareholders' equity 793,421 788,996 Total liabilities and shareholders' equity $ 3,136,158 $ 3,167,585 Fly Leasing Limited Consolidated Statements of Cash Flows (DOLLARS IN THOUSANDS) Three months en ded Mar. 31 , 2021 ( Una udited) 2020 ( Una udited) 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 costs 2,114 1,875 Amortization of lease incentives and other items 1,421 604 Provision for uncollectible operating lease receivables 1,000 — Fair value (gain) loss on marketable securities (1,839) 9,412 Loss on extinguishment of debt — 850 Provision (benefit) for deferred income taxes (370) 5,181 Maintenance payment liability recognized into earnings — (2,487) 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 other liabilities 12,904 9,957 Net cash flows provided by operating activities 28,124 51,033 Cash Flows from Investing Activities Purchase of flight equipment — (27,282) Proceeds from sale of aircraft, net — 160,271 Payments for aircraft improvement (1,604) (6,294) Payments for lessor maintenance obligations (65) (347) Other 362 (231) Net cash flows (used in) provided by investing activities (1,307) 126,117 Three months en ded Mar. 31 , 2021 ( Una udited) 2020 ( Una udited) Cash Flows from Financing Activities Security deposits received 1,921 3,305 Maintenance payment liability receipts 4,281 7,848 Maintenance payment liability disbursements (3,528) (10,109) Debt extinguishment costs — (20) Debt issuance costs (186) — Repayment of secured borrowings (39,510) (118,211) Shares repurchased — (6,504) Net cash flows used in financing activities (37,022) (123,691) Effect of exchange rate changes on unrestricted and restricted cash and cash equivalents (93) (18) Net (decrease) increase in unrestricted and restricted cash and c ash equivalents (10,298) 53,441 Unrestricted and restricted cash and cash equivalents at beginning of period 161,529 338,303 Unrestricted and restricted cash and cash equivalents at end of period $ 151,231 $ 391,744 Reconciliation to Consolidated Balance Sheets: Cash and cash equivalents $ 117,231 $ 361,151 Restricted cash and cash equivalents 34,000 30,593 Unrestricted and restricted cash and cash equivalents $ 151,231 $ 391,744 Fly Leasing Limited Reconciliation of Non-GAAP Measures (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Three months ended Mar. 31 , 2021 (Unaudited) 2020 (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 derivatives (3,278) 481 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 outstanding 30,481,069 30,768,029 Adjusted Net Income (Loss) per diluted share $ (0.04) $ 1.42 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. View original content to download multimedia: http://www.prnewswire.com/news-releases/fly-leasing-reports-first-quarter-2021-financial-results-301290536.html SOURCE Fly Leasing Limited

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