Second Quarter 2019 Earnings August 22, 2019
Forward-Looking Statements This presentation 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, and the risk that FLY may be unable to achieve its portfolio growth expectations, or to reap the benefits of such growth. 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. Notes: 1. All period end figures are as of June 30, 2019 except as otherwise noted. Any 2019 year-to-date data is as of August 20, 2019. 2. Fleet age and lease term are calculated using the weighted net book value of flight equipment held for operating lease and flight equipment held for sale, including maintenance rights and investment in finance lease, at period end. 3. In addition to U.S. GAAP financials, this presentation includes certain non-GAAP operating and financial measures. These non-GAAP operating and financial measures are in addition to, not a substitute for or superior to, measures of financial performance prepared in accordance with U.S. GAAP. We have provided a reconciliation of those measures to the most directly comparable GAAP measures in the Appendix. For further information, please refer to FLY’s earnings press release dated August 22, 2019. 2
Colm Barrington CEO
Strong Industry Conditions Airlines Aircraft Leasing ROBUST GLOBAL STRONG DEMAND AIR TRAFFIC GROWTH FOR LEASED AIRCRAFT 5.0% Passenger Growth + 2019 Growth Manufacturer Backlogs Forecast (1) ROBUST SECONDARY CONTINUED AIRLINE MARKET PROFITABILITY $28B 2019 Global Airline 95 Aircraft Sold Jan 2015 to Profit Forecast (1) June 2019 at 8% Premium to NBV 4 (1) Source: IATA, as of June 2019.
BBAM – A Strong Partner for FLY Strong Alignment of Interests BBAM shareholders own 17% of FLY stock • $27+ billion of AUM • 30 years of experience • 500+ aircraft managed • 150 professionals Buying & Selling Power Advantage • 200+ airline relationships • 8 offices worldwide Provides FLY access to larger deals & stronger returns Global Leader FLY benefits from BBAM’s full -service global platform Purely an Aircraft Manager BBAM does not own any aircraft 5
• Pipeline of new technology aircraft DISCIPLINED • Rigor on pricing ACQUISITIONS • Limited financing risk FLY’s Strategy • Long-dated and amortizing CONSERVATIVE • Limited balloon repayments FINANCING • Focus on secured markets • Consistently sell at gains ACTIVE FLEET • Acquire new aircraft MANAGEMENT • Maintain a young fleet ENHANCING • Steadily growing book value per share SHAREHOLDER • Delivering double-digit ROE • Repurchasing shares at a discount to BV VALUE 6
DELIVERING RECORD RESULTS Q2 Highlights $61.9M ADJUSTED NET INCOME KEY NUMBERS 33% $1.92 AT A GLANCE ADJUSTED EPS ADJUSTED ROE $24.28 BOOK VALUE PER SHARE 7
Q2 Financial Results Adjusted Earnings Per Share Adjusted Net Income Book Value Per Share +146% +$1.02 +13% $24.28 $1.92 $61.9 $25.2 $21.50 $0.90 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q4 2018 Q2 2019 GAAP Q2 2018 Q2 2019 GAAP Q2 2018 Q2 2019 Net Income $24.3 $54.1 EPS $0.87 $1.68 8 Note: Dollars in millions, except per share amounts.
Q2 Financial Results Net Spread (1) Operating Lease Rental Revenue Total Revenues +13% +43% +7.1% $101.1 7.5% $147.0 $102.7 $89.2 7.0% Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Note: Dollars in millions. (1) Net Spread is operating lease revenue plus finance lease revenue, less end of 9 lease income and interest expense, annualized, divided by average net book value.
Strong & Steady Growth in Book Value Per Share Share Repurchases $24.28 +16% • See strong value in FLY shares, which trade at 26% discount to book value ➢ History of profitably selling aircraft above $22.74 book value • Repurchased 1.47M shares in Q2 at average price of $16.53 per share $21.50 • Repurchased additional 0.3M shares in Q3 $20.89 to date at avg price of $16.83 per share • New $50M share repurchase program Q3 2018 Q4 2018 Q1 2019 Q2 2019 10
FLY’s Fleet of 98 Modern Aircraft 33% 35% AIRBUS A320 BOEING 737NG Net Book Value 42 42 FAMILY NBV NBV $3.4B AIRBUS A330 5% BOEING 737 MAX 3% 3 2 $3.0B 1% BOEING 757-SF Q2 2018 Q2 2019 AIRBUS A340 0% 2 1 Total Aircraft 98 9% BOEING 777-LRF CFM ENGINES 7 2 Owned & Leased Separately 85 BOEING 787 14% 5.3 7.4 4 Q2 2018 Q2 2019 YEARS AVG. AGE YEARS AVG. LEASE TERM 11 Note: Percentages represent weighted average net book value.
Solid Growth Pipeline & Ample Capacity NEO Delivery Schedule Actively Targeting Acquisitions 9 9 • Acquired 2 aircraft in Q2 • 4 aircraft to be acquired in H2 for $125M+ 2 1 • Pipeline of 21 new A320neo family aircraft • First A321neo to deliver in Q4 Q4 2019 2020 2021 2022 Strong Liquidity, Long-Dated Financing • $352M unrestricted cash • $288M NBV of unencumbered aircraft $2B+ • 4.7 year average debt life GROWTH CAPACITY • No significant debt maturities until Q4 2021 12
Aircraft Sales Generating Healthy Benefits 2019 Aircraft Sales 10% • 7 aircraft sold in Q2; $18.9M economic gain (1) ; 10% premium PREMIUM ON Q2 AIRCRAFT SALES • 14 aircraft contracted to be sold TO NET BOOK VALUE Accelerated Reduction in Leverage 3.1x • Reduced to 3.1x from 4.0x at December 31, 2018 NET DEBT-TO-EQUITY RATIO • Achieved target leverage ahead of expectations AT JUNE 30 (1) Economic gain includes gain on sale and retained end of lease income. 13
Positive Momentum Continued in Q2 Attractive Portfolio of Record Adjusted EPS ✓ Strong Outlook Aircraft and Leases of $1.92 ✓ Modern Portfolio ✓ Identified Growth Adjusted ROE 7 Aircraft Sold at of 33% 10% Premium to NBV ✓ Limited Refinancing Risk ✓ Limited 1.47M Shares Repurchased Refinancing Risk at 32% Discount to Book Value 14
Julie Ruehl CFO
Strong and Steady Growth Double-Digit ROE for 5th Consecutive Quarter Q2 Net Income ROE Net Income and ROE $54.1 29.0% +$30M +71% 17.0% $24.3 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Adjusted Q2 2018 Q2 2019 Adjusted Q2 2018 Q2 2019 ROE 17.6% 33.2% Net Income $25.2 $61.9 16 Note: Dollars in millions.
Financial Overview Q2 2019 Q2 2018 (In millions) 13% Operating Lease Rental Revenue $101.1 $89.2 INCREASE IN Q2 End of Lease Income 28.8 12.6 OPERATING LEASE RENTAL REVENUE Amortization of Lease Incentives and Other (1.3) (2.5) Operating Lease Revenue $128.6 $99.3 Finance Lease Income 0.2 0.2 43% Gain on Sale of Aircraft 16.1 2.9 INCREASE IN Q2 Other Income 2.2 0.2 TOTAL REVENUES Total Revenues $147.0 $102.7 Note: Sums may not foot due torounding. 17
Expense Comparison Q2 2019 Q2 2018 (In millions) Depreciation $37.3 $33.9 Interest Expense 35.4 33.6 Selling, General and Administrative 9.4 6.4 Loss (Gain) on Derivatives 0.3 (1.3) Loss on Extinguishment of Debt 1.5 0.9 Maintenance and Other Costs 1.6 0.9 Total Expenses $85.6 $74.4 19% Decrease in Total Expenses as a Percent of Total Revenues Note: Sums may not foot due torounding. 18
Financial Guidance Q3 2019 (In millions) $70M Operating Lease Rental Revenue $94 – 96 Lease Incentives and Other ($1 – 2) PRE-TAX INCOME FOR Q3 Gain on Sale of Aircraft $50+ End of Lease Income – Depreciation $33 – 34 Interest Expense $33 – 34 $50M+ Debt Extinguishment Costs $3 GAIN ON SALE Maintenance and Other Costs < $1 FOR Q3 SG&A (1) $8 – 9 (1) Forecasted SG&A does not consider foreign exchange gains or losses due to the unpredictability of such items. 19
$70M Q3 Pre-Tax Income FLY’s Value Proposition Growing Book Value Per Share Committed Significant Growth Pipeline Buying Power FIRST OF 21 A320NEO FAMILY $2B+ OF CAPACITY DELIVERIES IN Q4 2019 Shares Trading 26% Below Book Value 20
Appendices
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