FLY Leasing Limited. May 2013

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Transcription:

FLY Leasing Limited May 2013

Caution Concerning Forward-Looking Statements This presentation contains "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," "anticipates," "intends," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for Fly Leasing Limited s (FLY) future business and financial performance, and for the aviation industry. 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, including those discussed in FLY s Annual Report on Form 20-F. FLY undertakes no obligation to update any forwardlooking statement, whether as a result of new information, future developments or otherwise. Page 1

FLY Overview FLY Leasing Limited ( FLY ) is a leading global lessor of commercial jet aircraft Completed NYSE IPO in October 2007 (NYSE: FLY), headquartered in Dublin, Ireland Low risk model popular aircraft, diversified lessees, long-term financing arrangements Comprehensive risk management and no speculative order book Managed and serviced by BBAM, the world s third largest aircraft lease manager 24 year track record, global and full service platform, unique airline and financial relationships Onex recently acquired 50% of BBAM and a 6% stake in FLY Strong liquidity position, demonstrated access to a variety of debt financings Disciplined investor focused on shareholder returns Tactical when acquiring, financing and selling aircraft Consistent quarterly dividends Opportunistic share and debt buybacks Strategic investments Page 2

FLY & BBAM at a Glance : Owner & Lessor : Manager & Servicer Aircraft Portfolio 100 Aircraft (1) 89% Narrow body (2) Manager Scale World s Third Largest Aircraft Lease Manager Aircraft Age 9.6 Years (1) (weighted average by NBV) Aircraft Under Management 400+ aircraft worth ~$12 billion Leased to 200+ Airlines in 50+ Countries Customers 52 Airlines in 32 Countries (1) Employees 120 Employees in 9 Offices Worldwide Remaining Lease Term 2.9 Years (1) (weighted average by NBV) Offices San Francisco, Incline Village, Dublin, New York, London, Zurich, Tokyo, Singapore, Santiago Founded Founded and Listed on NYSE in 2007 Founded 1989, 24-year Operating History Aligned Interest (1) As of March 31, 2013. (2) Includes two freighters. BBAM principals and Onex together own over 11% of FLY and agreed to long-term lock-ups Ownership Onex: 50% BBAM Principals: 50% Page 3

2012 was a Strong Year for FLY Increased Operating Revenue by 63% Reflects the value of the 49 aircraft portfolio acquired in October 2011 The acquisition nearly doubled FLY s fleet Completed with FLY s unrestricted cash and assumed debt--no new equity was required Sold BBAM Stake for a Gain of $36.9 Million FLY bought 15% of BBAM for $8.7m as part of April 2010 MBO In December 2012, Onex acquired 50% of BBAM, including FLY s 15% interest, for $165m FLY s gain was $36.9m Including distributions, the BBAM investment returned $62m to FLY, an IRR of 130%+ Onex and the BBAM principals also acquired $25m of stock in FLY Onex and the BBAM principals have agreed to long-term lock-ups on their shareholdings Significantly Deleveraged & Solidified the Long-Term Capital Structure Over the course of the year, reduced net debt : equity (1) from 5.1x to 3.6x Completed a $395m Term Loan in August 2012 Re-priced the Term Loan in December 2012, saving ~$4m in annual cash interest expense Extended $600m debt facility to November 2018 No significant debt maturities until 2018 Closed a $250 million aircraft acquisition facility to fund growth (1) Defined as total debt less unrestricted cash divided by shareholders equity. Page 4

Strong Year Reflected in 2012 Financial Results For the Year Ending December 31, 2012 (millions, except per share data) Total revenues $432.7 Total assets $2,968.7 Net income 47.7 Total liabilities 2,436.7 Earnings per Share $1.80 Total equity 532.0 Adjusted net income (1) 116.3 Unrestricted cash 163.1 Adjusted net income (1) per share $4.48 Total debt 2,052.4 (1) See Appendix 1 for definition of Adjusted net income Page 5

FLY Produced Robust Results in Q1 2013 Sold Nine Aircraft for Gains Average Age:13.5 years Gain of $6.5 million Surpassed Net Debt : Equity Target Net debt / equity is now 3.2x Below target of 3.5x Strong Liquidity Position / Funds for Growth Unrestricted Cash: $196.7 million $250 million Aircraft Acquisition Facility Page 6

Near Term Growth Strategy There are currently attractive aircraft acquisition opportunities Interest rates are at historic lows Export credit finance is more expensive and terms are more restrictive Sale and leaseback financings are becoming more attractive to airlines Targeting $300-$500 million of aircraft acquisitions in 2013 Growth will be funded with unrestricted cash and the $250 million Aircraft Acquisition Facility FLY acquired a 2013 B737-800 in April 2013; $220 of availability remains in the Aircraft Acquisition Facility Focus on new and nearly new aircraft Full visibility on financing availability, terms and costs, as well as lessee credit and lease economics Selective acquisitions of mid-aged aircraft Strong prospects for attractive returns at current pricing levels Reasonable downside protection Page 7

Attractive Portfolio of Leased Aircraft Modern Fleet - 9.6 Yr Average Age (1) Diversified Lessees - Top Ten Lessees by 52 Airlines 53 Airlines in 32 countries (4) (1) Contracted Revenue (1) A320 Family 45 B737 Next Generation 37 Europe 43% India, Asia & South Pacific 27% Lessee % of Revenue 5.8% B737 Classic (2) 1 North America 13% 5.8% 5.3% B757 (2) 11 Latin & South America 11% 4.9% Wide Body (3) 6 Middle East & Africa 6% 4.2% 4.1% Total 100 Total 100% 3.9% % Narrow body 89% 3.3% 3.0% 2.7% Footnotes: (1) Data as of March 31, 2013. Weighted by net book value. (2) Each includes one freighter. (3) One A330-200, one A340-300, two A340-600s, one B747-400 and one B767-300ER. TOP TEN LESSEES 43.0% Page 8

Geographical Profile Shift Highlights Increasing Asian Exposure YE 2010 34 Airlines in 23 countries Europe 46% Q1 2013 52 Airlines in 32 countries Europe 43% India, Asia & South Pacific 21% India, Asia & South Pacific 27% North America 20% North America 13% Latin & South America 8% Latin & South America 11% Middle East & Africa 5% Middle East & Africa 6% Total 100% Total 100% Page 9

Attractive Financing - No Significant Maturities Until 2018 Facility Balance at March 31, 2013 (1) No. of Aircraft Secured Effective Cost of Debt (2) Final Maturity Securitization $650m 35 3.64% November 2033 Nord LB Facility $500m 18 4.17% November 2018 BOS Facility $269m 11 5.22% 2013 2017 (3) One-Off Bank Debt $232m 14 5.49% 2013 2019 (3) Term Loan $385m 22 5.75% August 2018 Aircraft Acquisition Facility $0m -- L + 3.75% November 2017 Total $2,036m 100 4.59% (1) Face amount of debt excluding debt discounts. (2) Excludes amortization of loan fees and discount; reflects interest rate swaps and policy provider premiums. (3) Debt maturities match lease maturities. Page 10

FLY has De-Levered to Historically Low Levels Continued deleveraging will occur without significant equity contributions All financings amortize 100% of FLY s debt is secured - liabilities match assets The leverage assumed in the 2011 acquisition had the following unique characteristics: The assumed debt was non-recourse Pre-financial crisis terms and conditions High leverage reflected the attractive price paid for the portfolio Net Debt : Equity Ratio (1) 5.1x 2.0x 3.5x 2.5x 2.2x 3.6x 3.2x 2007 2008 2009 2010 2011 2012 Q1 2013 FLY is now below the target net debt : equity (1) of less than 3.5x (1) Defined as total debt less unrestricted cash divided by shareholders equity. Page 11

Funding Costs are Decreasing Effective Cost of Debt (1) 5.45% 5.25% 5.05% 4.85% 4.65% 4.45% 4.25% 5.28% 5.33% 5.22% 5.06% 4.87% 4.87% 4.87% 4.67% 4.59% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Interest rates are at historically low levels Historic interest rate swaps rolling off Market becoming receptive to lower spreads Capital markets conditions remain strong (1) Excludes amortization of loan fees and discounts. Page 12

FLY has Consistently Traded Older Aircraft at Gains Proven track record of divesting older aircraft at gains to book value Sold 21 aircraft for total gains of $48.8m Average age of aircraft sold: 12.4 years Annual Net Gains on Aircraft Sold (in $mm) $11.4 $13.4 $9.1 $8.4 $6.5 2008 2009 2010 2011 2012 2013 YTD # of A/C Sold 2 -- 4 2 4 9 Avg. Age of A/C Sold 12.9 -- 11.0 6.8 13.7 13.5 FLY will continue to selectively sell aircraft to profit from pockets of capital and manage portfolio age as well as lessee and jurisdictional exposures Page 13

Investment Highlights Modern Fleet Generating Strong Cash Flow Attractive Long- Term Debt Fuel-efficient, high demand narrow body aircraft Predictable income from leases, 2.9 year average remaining term Diversified customer base by geography and lessee No significant refinancing requirements until 2018 Reduced leverage to less than 3.5x net debt : equity target $250m acquisition facility - 2 year revolving + 3 year term Record of Enhancing Value Managed by BBAM, an Industry Leader Strong Industry Dynamics Sold 21 aircraft for a total gain of $48.8m (average age of 12.4 years) Paid 22 consecutive dividends for a cumulative return of $5.68 per share Repurchased 24% of IPO shares at an average of $7.91 per share Repurchased ~$200 million of debt at significant discount Achieved a pre-tax IRR in excess of 130% on its BBAM investment Originated 600+ aircraft valued at over $20bn Manages 400+ aircraft 3 rd largest aircraft lease manager in the world Veteran management team across full service platform Extensive global airline and financing relationships Air traffic grows at 1.5-2.0 x global GDP RPKs doubled every 15 years; expected to double again in next 15 years Leased aircraft are a growing % of airline fleets - developing markets and re-fleeting Page 14

Appendix 1 Adjusted Net Income Definition

Appendix 1 - Adjusted Net Income FLY defines Adjusted Net Income as net income plus or minus the ineffective portion of cash flow hedges, aircraft impairment, non-cash share-based compensation and adjustments related to the GAAM portfolio acquisition comprised of amortization of fair value adjustments recorded in purchase accounting and acquisition transaction fees and expenses. Management believes that Adjusted Net Income provides useful information about operating performance and period- over- period comparisons. It also provides additional information that is useful in evaluating the underlying operating performance of our business without regard to the impact of items such as fair value adjustments of debt that the company has assumed, acquired leases and derivative instruments and other non-recurring items of income and expense affecting current period results. See filings for a reconciliation. Page 16