Dahlman Rose Gives Color On FLY Leasing's Earnings Miss

FLY Leasing FLY reported 1Q11 EPS of $0.14 missing Dahlman's and the consensus estimate. Lease revenues in the quarter were down by 12.3% leading to the earnings miss. Management indicated they currently expect annualized lease revenues of $210 million before lease incentives based on the existing fleet. Dahlman expects to see an uptick in leasing revenue to ~$49.6 million in 2Q after lease incentives, from $47.6 million this quarter. Given management's guidance and 1Q11 results, Dahlman lowered its 2011 EPS estimate to $0.94 from $1.33. Its preliminary 2012 EPS estimate of $0.93 implies lease revenue of $209.5 million. During 1Q11, FLY bought back 1,058,573 share at an average price of $11.94. Management announced that the Board of Directors approved a new $30 million share repurchase program expiring in May 2012. Management further indicated that FLY will continue to buy back stock since the company's shares are trading at a discount to book value. FLY reported 1Q11 EPS of $0.14 missing Dahlman Rose's and the consensus estimate of $0.31. The miss was due to a 12.3% decrease in operating lease revenue. During the quarter, FLY had five aircraft in the process of being re-leased and had down time on the aircraft, negatively affecting lease revenues. The decline in revenue was partially offset by operating expenses being down by 1.8% during the quarter. Dahlman Rose has a $16.50 PT and Buy rating on FLY FLY closed Wednesday at $13.99