FLY Leasing has reported a 34% increase in total revenues to $122.5 million for the first quarter of 2015, which include $120.1 million of operating lease revenue and $1.9 million in gains from the sale of three aircraft. Net income was $17.3 million, $0.41 per share, for the reporting period. This compares to net income of $3.6 million or $0.07 per diluted share for the same period in 2014. The first quarter 2015 results include $21.9 million of end of lease revenue and a charge of approximately $4.0 million associated with termination of the Aircraft Acquisition Facility. End of lease revenue was $3.7 million in the first quarter of 2014.
Adjusted Net Income was $26.6 million for the first quarter of 2015 compared to $9.8 million in the same period in the previous year. On a per share basis, Adjusted Net Income was $0.64 in the first quarter of 2015 compared to $0.24 for the same period in the previous year.
“FLY has started 2015 with strong first quarter results,” said Colm Barrington, FLY’s CEO. “Our investments have grown our fleet to 128 aircraft, an increase of 11 aircraft from a year ago, driving a 34% increase in total quarterly revenues. We are targeting $750 million in aircraft acquisitions this year and have acquired and identified $475 million of aircraft to date. Meanwhile, we continue to opportunistically trade aircraft, selling three aircraft in the first quarter for a gain of $1.9 million over book value.”
“Our net income of $17.3 million, or $0.41 per share, is a significant increase over the first quarter of last year, and is largely due to our growing fleet,” added Barrington. “We also continue to return capital to shareholders, declaring our 30th consecutive quarterly dividend.”
“We actively manage the company’s capital structure, just as we actively manage our fleet, taking advantage of the favorable funding environment and our access to well-priced debt,” said Barrington. “In April, we re-priced our Term Loan, which will reduce our interest cost by approximately $4 million annually.”
Gary S. Liebowitz, CFA, Senior Analyst at Wells Fargo remains positive on FLY and expects “to see P/B expansion from the current group-low 0.81x as: (1) lower debt costs improve ROE; and (2) more planes are sold at a premium to book, making it harder to justify the 19% discount to P/B parity. While waiting for this P/B expansion to play out, investors can earn an attractive 6.7% annual dividend yield. We remain at $1.15 in 2015E and raise 2016E to $1.60 from $1.55, mostly for lower debt costs. Our valuation range remains $16.50-$17.00 (0.90x mid-2016E P/B, or 9.0x-9.5x 2016E pretax P/E).”