NOVATO, Calif., Aug. 08, 2017 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ:WLFC) today reported that pretax income grew 76% to $10.2 million in the second quarter of 2017, compared to $5.8 million in the second quarter of 2016, on revenues of $67.8 million. The Company's second quarter 2017 results were bolstered by continued strength in its core leasing business with 90% utilization at quarter end and $19.4 million of spare parts and equipment sales revenue, of which $12.9 million was generated by the sale of equipment. Net income attributable to common shareholders for the second quarter increased 68% to $5.7 million, or $0.92 per diluted share, from $3.4 million, or $0.49 per diluted share, in the second quarter 2016.  Earnings in the second quarter included a $2.3 million non-cash write down of equipment and parts.

"We continue to drive strong pre-tax financial growth in 2017, and build the business for the future," said Charles F. Willis, Chairman and CEO.  "Our leasing business is delivering support and value for our customers at a time when engine shop visit activity is extremely high."

"We believe we have a unique service offering and our customers are just beginning to see the value of our total platform," said Brian R. Hole, President. "While leasing remains strong with utilization of 90% at quarter end and our trading business continues to become more efficient, we will focus on growth and delivering additional value worldwide through our subsidiaries, Willis Aeronautical Services and Willis Asset Management."

Second Quarter 2017 Highlights:
  • Total revenue grew 36.7% to $67.8 million in the second quarter of 2017, from $49.6 million in the year ago period. 
  • Average utilization in the second quarter of 2017 was 88% as compared to 89% in the preceding quarter. Utilization was 90% at the end of Q2 2017.
  • Second quarter lease rent revenue was $31.3 million, up 7.4% year-over-year.
  • Maintenance reserve revenue for the six months ended June 30, 2017 increased 40% to $43.8 million compared to $31.3 million in the year ago period. 
  • The Company purchased $81.5 million and sold $21.2 million of assets in the second quarter of 2017.
  • The equipment portfolio grew 2.1% to $1.161 billion, from $1.137 billion at year end 2016, net of asset sales and depreciation expense.
  • Tangible book value per share increased 7% to $32.52 at June 30, 2017, as compared to $30.66 per share at December 31, 2016.
  • Under the Company's five-year repurchase plan, the Company purchased a total of 114,833 shares of common stock in the quarter for $2.7 million.
  • The Company maintained $250 million of undrawn revolver capacity at June 30, 2017.

Balance Sheet

As of June 30, 2017, Willis Lease had 217 commercial aircraft engines, 13 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.161 billion, compared to 201 commercial aircraft engines, 10 aircraft, 5 aircraft parts packages, and other engine-related equipment in its lease portfolio, with a net book value of $1.081 billion a year ago.  The Company's funded debt-to-equity ratio was 4.40 to 1 at quarter end compared to 4.59 to 1 at December 31, 2016, and 4.47 to 1 a year ago.

Willis Lease FinanceWillis 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         Six Months Ended        
  June 30,     %     June 30,   %  
    2017       2016     Change     2017     2016   Change  
REVENUE                            
Lease rent revenue $   31,337     $   29,181     7.4 %   $   61,572   $   57,457   7.2 %  
Maintenance reserve revenue     11,881         15,514     (23.4 )%       43,843       31,333   39.9 %  
Spare parts and equipment sales     19,383         3,673     427.7 %       31,979       6,305   407.2 %  
Gain on sale of leased equipment     3,527         258     1267.1 %       4,509       3,250   38.7 %  
Other revenue     1,716         992     73.0 %       3,888       1,992   95.2 %  
Total revenue     67,844         49,618     36.7 %       145,791       100,337   45.3 %  
                             
EXPENSES                            
Depreciation and amortization expense     16,015         16,188     (1.1 )%       32,644       32,607   0.1 %  
Cost of spare parts and equipment sales     13,730         2,787     392.6 %       23,130       4,719   390.1 %  
Write-down of equipment     2,277         1,893     20.3 %       15,285       3,929   289.0 %  
General and administrative     13,065         10,685     22.3 %       26,265       22,437   17.1 %  
Technical expense     2,448         1,803     35.8 %       4,740       3,499   35.5 %  
Net finance costs                            
  Interest expense     11,312         10,397     8.8 %       22,178       20,405   8.7 %  
  Loss on extinguishment of debt     -          137     (100.0 )%       -        137   (100.0 )%  
Total net finance costs     11,312         10,534     7.4 %       22,178       20,542   8.0 %  
Total expenses     58,847         43,890     34.1 %       124,242       87,733   41.6 %  
                             
Earnings from operations     8,997         5,728     57.1 %       21,549       12,604   71.0 %  
                             
Earnings from joint ventures     1,161         56     n/a       3,015       243   n/a  
                             
Income before income taxes      10,158         5,784     75.6 %       24,564       12,847   91.2 %  
Income tax expense     4,168         2,418     72.4 %       10,406       5,470   90.2 %  
Net income $   5,990     $   3,366     78.0 %   $   14,158   $   7,377   91.9 %  
Preferred stock dividends     324         -      100.0 %       646       -    (100.0 )%  
Accretion of preferred stock issuance costs     9         -      100.0 %       17       -    100.0 %  
Net income attributable to common shareholders $   5,657     $   3,366     68.1 %   $   13,495   $   7,377   82.9 %  
                             
Basic earnings per common share $   0.94     $   0.50         $   2.22   $   1.07      
                             
Diluted earnings per common share $   0.92     $   0.49         $   2.18   $   1.05      
                             
Average common shares outstanding     6,036         6,685             6,075       6,917      
Diluted average common shares outstanding      6,142         6,819             6,201       7,047      
                             
                             

 
           
Consolidated Balance Sheets          
(In thousands, except share data, unaudited)          
  June 30, 2017     December 31, 2016  
ASSETS          
Cash and cash equivalents $   11,256       $   10,076    
Restricted cash     43,244           22,298    
Equipment held for operating lease, less accumulated depreciation     1,160,545           1,136,603    
Maintenance rights     17,159           17,670    
Equipment held for sale     27,826           30,710    
Operating lease related receivable, net of allowances      12,867           16,484    
Spare parts inventory     22,955           25,443    
Investments     45,928           45,406    
Property, equipment & furnishings, less accumulated depreciation     16,400           16,802    
Intangibles assets, net     1,980           2,182    
Other assets     26,194           14,213    
Total assets $   1,386,354       $   1,337,887    
           
LIABILITIES AND SHAREHOLDERS' EQUITY          
Liabilities:          
Accounts payable and accrued expenses $   24,452       $   17,792    
Deferred income taxes     114,127           104,978    
Notes payable     921,782           900,255    
Maintenance reserves     68,512           71,602    
Security deposits     23,074           21,417    
Unearned lease revenue     5,195           5,823    
Total liabilities     1,157,142           1,121,867    
           
Redeemable preferred stock ($0.01 par value) $   19,777       $   19,760    
           
Shareholders' equity:          
Common stock ($0.01 par value)     64           64    
Paid-in capital in excess of par     708           2,512    
Retained earnings     209,497           194,729    
Accumulated other comprehensive loss, net of tax     (834 )         (1,045 )  
Total shareholders' equity     209,435           196,260    
           
Total liabilities and shareholders' equity $   1,386,354       $   1,337,887    
           
CONTACT:Scott B. FlahertyChief Financial Officer(415) 408-4700

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