NOVATO, Calif., March 10, 2017 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ:WLFC) today reported pre-tax earnings for 2016 of $23.9 million, up 87.4% from $12.8 million in 2015, on record revenue of $207.3 million.  Net income attributable to common shareholders for 2016 was $13.8 million, or $2.05 per diluted share, compared to $6.5 million, or $0.81 per diluted share in 2015. Fourth quarter 2016 net income attributable to common shareholders was $2.4 million, compared to $3.0 million in 2015, or $0.39 per diluted share in both periods.  Fourth quarter 2016 results were impacted by a $3.6 million non-cash write down as compared to a $0.6 million non-cash write down in the fourth quarter 2015.  

"I am very pleased that on a pre-tax basis our financial performance in 2016 was our most profitable since 2009," said Charles F. Willis, Chairman and CEO.  "Our fourth quarter and full year results reflect a combination of improved utilization, growth in the lease portfolio and the continued effective management of our assets—all contributing to record total revenues of over $207 million. We also broadened our sources of equity through the issuance of preferred equity, which will serve our growth plans well."    

"In addition to delivering solid financial results, the Company achieved a number of objectives in 2016 that position us well for the future," said Brian R. Hole, President. "We amended both of our principal debt facilities, improving the flexibility and capacity of our ability to borrow and to manage our portfolio. We also formed Willis Asset Management Limited to purchase the consultancy business of Total Engine Support Limited and we now own and manage almost 800 engines, making us the largest independent owner and manager of engines in the world. We expect that the capabilities of the people and systems at WAM will help us develop and deliver cutting edge programs for our customers," explained Hole.

2016 Highlights (at or for the periods ended December 31, 2016 as compared to December 31, 2015):

  • Pre-tax earnings increased 87.4% to $23.9 million in 2016 from $12.8 million in 2015.
  • Average utilization in the fourth quarter was sustained at 92% up from 91% reported for the year ago period.
  • Total revenues grew 4.7% to $207.3 million in 2016, fueled primarily by a growing lease portfolio, higher portfolio utilization and rising lease rates.
  • Lease rent revenues grew 11.0% to $119.9 million and 8.0% to $31.2 million for the full year and fourth quarter of 2016, respectively.
  • The equipment portfolio grew 2.5% in 2016 to $1.137 billion from $1.109 billion a year ago.
  • The Company purchased $149 million of equipment in 2016 as compared to $171 million in 2015.  In the fourth quarter of 2016, the Company purchased two aircraft and fourteen engines for $64 million. 
  • Tangible book value per share increased 10.6% to $30.66 at December 31, 2016, compared to $27.72 a year ago.
  • We repurchased a total of 1.2 million shares in 2016 at a weighted average price of $23.71 per share.  The Company repurchased 153,925 shares in the fourth quarter.
  • On October 14, 2016, the Company issued $20.0 million of 6.5% Series A Preferred Stock.
  • On October 26, 2016, through its wholly owned subsidiary Willis Asset Management Limited, the Company purchased the consultancy business of Total Engine Support Limited, significantly improving the Company's asset management service offering and growing the Company's owned and managed portfolio of engines, aircraft and equipment by over 500 assets.

"We believe we have a unique service offering in leasing, trading and asset management, materials and technical services, which customers are beginning to leverage," said Hole. "There is a lot of competition in our markets but none that offers our full complement of products and services combined with our decades-long track record of delivering on promises. We will continue to emphasize creativity and reliability as we grow the business going forward."

Balance Sheet

As of December 31, 2016, Willis Lease had 208 commercial aircraft engines, 11 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.137 billion, compared to 201 commercial aircraft engines, 10 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.109 billion, a year ago. The Company's funded debt-to-equity ratio was 4.17 to 1 at year end, compared to 4.14 to 1 a year ago.

Willis Lease Finance

Willis Lease Finance Corporation leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers in 120 countries. These leasing activities are integrated with engine and aircraft trading, engine lease pools and asset management services supported by cutting edge technology through its subsidiary Willis Asset Management, as well as various end-of-life solutions for aircraft, engines and aviation materials provided through its subsidiary, Willis Aeronautical Services, Inc.

Except for historical information, the matters discussed in this press release contain forward-looking statements that involve risks and uncertainties.  Do not unduly rely on forward-looking statements, which give only expectations about the future and are not guarantees.  Forward-looking statements speak only as of the date they are made, and we undertake no obligation to update them.  Our actual results may differ materially from the results discussed in forward-looking statements.  Factors that might cause such a difference include, but are not limited to: the effects on the airline industry and the global economy of events such as terrorist activity, changes in oil prices and other disruptions to the world markets; trends in the airline industry and our ability to capitalize on those trends, including growth rates of markets and other economic factors; risks associated with owning and leasing jet engines and aircraft; our ability to successfully negotiate equipment purchases, sales and leases, to collect outstanding amounts due and to control costs and expenses; changes in interest rates and availability of capital, both to us and our customers; our ability to continue to meet the changing customer demands; regulatory changes affecting airline operations, aircraft maintenance, accounting standards and taxes; the market value of engines and other assets in our portfolio; and risks detailed in the Company's Annual Report on Form 10-K and other continuing reports filed with the Securities and Exchange Commission.
                             
Consolidated Statements of Income                              
(In thousands, except per share data, unaudited)                  
  Three Months Ended         Years Ended        
  December 31,     %     December 31,   %  
    2016       2015     Change     2016     2015     Change  
REVENUE                            
Lease rent revenue $   31,168     $   28,849     8.0 %   $   119,895   $   108,046     11.0 %  
Maintenance reserve revenue     11,529         14,361     (19.7 )%       57,091       53,396     6.9 %  
Spare parts and equipment sales     7,318         10,582     (30.8 )%       17,783       25,582     (30.5 )%  
Gain on sale of leased equipment     52         654     (92.0 )%       3,482       8,320     (58.1 )%  
Other revenue     5,409         739     631.9 %       9,023       2,718     232.0 %  
Total revenue     55,476         55,185     0.5 %       207,274       198,062     4.7 %  
                             
EXPENSES                            
Depreciation and amortization expense     17,045         17,034     0.1 %       66,280       69,424     (4.5 )%  
Cost of spare parts and equipment sales     5,508         7,630     (27.8 )%       13,293       17,849     (25.5 )%  
Write-down of equipment     3,590         601     497.3 %       9,514       9,181     3.6 %  
General and administrative     13,086         11,918     9.8 %       47,780       42,744     11.8 %  
Technical expense     2,080         1,567     32.7 %       6,993       9,403     (25.6 )%  
Net finance costs                            
  Interest expense     10,509         9,780     7.5 %       41,144       39,012     5.5 %  
  Loss (gain) on extinguishment of debt     -          -      0.0 %       137       (1,151 )   (111.9 )%  
Total net finance costs     10,509         9,780     7.5 %       41,281       37,861     9.0 %  
Total expenses     51,818         48,530     6.8 %       185,141       186,462     (0.7 )%  
                             
Earnings from operations     3,658         6,655     (45.0 )%       22,133       11,600     90.8 %  
                             
Earnings from joint ventures     939         48     n/a       1,813       1,175     54.3 %  
                             
Income before income taxes      4,597         6,703     (31.4 )%       23,946       12,775     87.4 %  
Income tax expense      1,890         3,659     (48.3 )%       9,877       6,315     56.4 %  
Net income $   2,707     $   3,044     (11.1 )%   $   14,069   $   6,460     117.8 %  
  Accretion of preferred stock issuance costs     8         -      100.0 %       8       -      100.0 %  
  Preferred stock dividends     281         -      100.0 %       281       -      100.0 %  
Net income attributable to common shareholders $   2,418     $   3,044     (20.6 )%   $   13,780   $   6,460     113.3 %  
                             
Basic earnings per common share $   0.39     $   0.39         $   2.10   $   0.83        
                             
Diluted earnings per common share $   0.39     $   0.39         $   2.05   $   0.81        
                             
Average common shares outstanding     6,149         7,739             6,570       7,817        
Diluted average common shares outstanding      6,275         7,872             6,714       7,987        
                             

  
         
Consolidated Balance Sheets        
(In thousands, except share data, unaudited)        
  December 31, 2016     December 31, 2015
ASSETS        
Cash and cash equivalents $   10,076         9,732  
Restricted cash     22,298         33,026  
Equipment held for operating lease, less accumulated depreciation     1,136,603         1,109,168  
Maintenance rights     17,670         12,140  
Equipment held for sale     30,710         23,454  
Operating lease related receivable, net of allowances      16,484         13,626  
Spare parts inventory     25,443         20,826  
Investments     45,406         41,295  
Property, equipment & furnishings, less accumulated depreciation     16,802         20,247  
Intangibles assets, net     2,182         932  
Other assets     14,213         9,839  
Total assets $   1,337,887         1,294,285  
         
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY        
Liabilities:        
Accounts payable and accrued expenses $   17,792         21,665  
Deferred income taxes     104,978         96,154  
Notes payable     900,255         866,089  
Maintenance reserves     71,602         71,054  
Security deposits     21,417         25,010  
Unearned lease revenue     5,823         5,090  
Total liabilities     1,121,867         1,085,062  
         
Redeemable preferred stock ($0.01 par value)     19,760         -   
         
Shareholders' equity:        
Common stock ($0.01 par value)     64         75  
Paid-in capital in excess of par     2,512         28,720  
Retained earnings     194,729         180,949  
Accumulated other comprehensive loss, net of tax     (1,045 )       (521 )
Total shareholders' equity     196,260         209,223  
         
Total liabilities, redeemable preferred stock and shareholders' equity $   1,337,887         1,294,285  
         

 
                     
Consolidated Statements of Income (Loss)                    
(In thousands, except per share data, unaudited)    
    Years Ended  
    December 31,
      2016     2015       2014     2013       2012  
REVENUE                    
Lease rent revenue   $   119,895   $   108,046     $   101,431   $   101,737     $   108,046  
Maintenance reserve revenue       57,091       53,396         53,322       46,694         53,396  
Spare parts and equipment sales       17,783       25,582         8,917       -          25,582  
Gain on sale of leased equipment       3,482       8,320         5,882       5,675         8,320  
Other revenue       9,023       2,718         4,506       4,306         2,718  
Total revenue       207,274       198,062         174,058       158,412         198,062  
                     
EXPENSES                    
Depreciation and amortization expense       66,280       69,424         65,314       58,727         69,424  
Cost of spare parts and equipment sales       13,293       17,849         7,474       -          17,849  
Write-down of equipment       9,514       9,181         5,602       6,461         9,181  
General and administrative       47,780       42,744         35,859       33,868         42,744  
Technical expense       6,993       9,403         12,336       12,863         9,403  
Net finance costs                    
  Interest expense       41,144       39,012         37,062       38,719         31,669  
  Loss (gain) on extinguishment of debt       137       (1,151 )       -        -          15,462  
Total net finance costs       41,281       37,861         37,062       38,719         47,131  
Total expenses       185,141       186,462         163,647       150,638         195,732  
                     
Earnings from operations       22,133       11,600         10,411       7,774         937  
                     
Earnings from joint ventures       1,813       1,175         1,329       3,526         1,759  
                     
Income before income taxes        23,946       12,775         11,740       11,300         2,696  
Income tax expense        9,877       6,315         4,560       (4,326 )       1,161  
Net income   $   14,069   $   6,460     $   7,180   $   15,626     $   1,535  
                     
Accretion of preferred stock issuance costs       8       -          -        -          -   
Preferred stock dividends       281       -          -        -          2,493  
Preferred stock redemption costs       -        -          -        -          2,835  
Net income (loss) attributable to common shareholders   $   13,780   $   6,460     $   7,180   $   15,626     $   (3,793 )
                     
Basic earnings (loss) per common share   $   2.10   $   0.83     $   0.91   $   1.95     $   (0.45 )
                     
Diluted earnings (loss) per common share   $   2.05   $   0.81     $   0.88   $   1.89     $   (0.43 )
                     
Average common shares outstanding       6,570       7,817         7,917       8,029         8,490  
Diluted average common shares outstanding        6,714       7,987         8,141       8,289         8,791  
                     
Contact: Scott B. FlahertyChief Financial Officer

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