FLY Leasing closer to leverage target, sourced $1.3 billion of new financings in 2012, says CEO

By Lisa Kerner

Charlotte, N.C., March 7 - FLY Leasing Ltd. had a "really good" 2012, according to chief executive officer Colm Barrington, with "significantly increased revenues and earnings, greatly reduced financial leverage, elimination of short-term debt maturities, lower interest costs, higher per-share net book value and significantly increased year-end unrestricted cash."

The company reduced its net leverage from the prior year as the industry continued to strengthen, according to Barrington, who made his comments on Thursday during a conference call to discuss FLY's fourth-quarter and full-year 2012 earnings.

In 2012, FLY completed several significant financial objectives, including reducing its net leverage from 5.1 times at the start of the year to 3.6 times at year's end.

"We are now well on our way of reaching our targeted leverage of 3 to 1," Barrington said.

In addition, Barrington is pleased with the major growth in revenues and earnings that were achieved without the need to raise any new equity capital, providing a "truly dramatic" impact on earnings.

"In 2012, FLY sourced $1.3 billion of new financings, including a $600 million secured bank financing and a $400 million secured publicly issued term loan," Barrington said.

Both of these facilities mature in 2018 and replace facilities with 2012 and 2013 maturities.

FLY also sourced a $200 million acquisition facility during the year.

Barrington said secured borrowings were down $274 million to $2.1 billion for the year, while shareholder equity was up 10% at $532 million, or $18.19 per share.

The company reported adjusted net income of $116.3 million, or $4.48 per share, for the full year, while net income was $47.7 million, or $1.80 per share.

For the quarter, adjusted net income was $53.2 million, or $2.04 per share. Full-year net income was $47.7 million, or $1.80 per share.

Barrington attributed the earnings increase to growth in FLY's aircraft portfolio and the opportunistic sale of four aircraft and its 15% interest in BBAM LP, the company that manages FLY's fleet.

Positive earnings coupled with FLY's strong cash position resulted in a 10% dividend increase to 22 cents per share in 2012. The company paid 84 cents per share in dividends for the year.

"FLY has now paid 21 consecutive quarterly dividends since we issued our shares on the New York Stock Exchange in 2007," Barrington said.

"FLY is now in a strong position to grow its fleet," Barrington said, and will do so by focusing on sale, leaseback and secondary market transactions. The company is targeting $300 million to $500 million of new aircraft acquisition in 2013.

The company's net income for the quarter was $31 million, or $1.17 per share, compared with a loss in the prior-year quarter, according to chief financial officer Gary Dales.

At the end of the year, FLY had assets of $3 billion and a total cash balance of $300.6 million, including $1.63 million of unrestricted cash.

These amounts compare with total cash of $380.5 million and unrestricted cash of $82.1 million at Dec. 31, 2011, according to FLY's earnings news release.

FLY has reduced its cash interest expense by 1% and has "no significant debt maturities until 2018," according to Dales.

BBAM CEO Steve Zissis said over the past 12 months, FLY has grown cash, sold aircraft, grown its fleet, increased the cash dividend "on the back of healthy free cash flow after debt service," executed on its financing plan and grew unrestricted cash to be in a strong position for growth over in the coming months.

Zissis highlighted FLY's participation in the capital market, which "continues to be a viable avenue for financing aviation portfolios."

FLY is an aircraft lessor with corporate offices in Dublin and San Francisco.

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