NOVATO, Calif., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ:WLFC) today reported that pretax income grew 27% to $8.3 million in the third quarter of 2017, compared to $6.5 million in the third quarter of 2016, on revenues of $65.9 million. The Company's third quarter 2017 results were bolstered by continued strength in its core leasing business with $33.5 million of lease rent revenue driven by 91% utilization at quarter end. Net income attributable to common shareholders for the third quarter increased 24% to $4.9 million, or $0.80 per diluted share, from $4.0 million, or $0.62 per diluted share, in the third quarter 2016.  Earnings in the third quarter include a $7.0 million non-cash write down of equipment and parts.

"In the third quarter, we completed two major financings: the closing of our WEST III ABS offering and a preferred stock offering.  WEST III aligns our long-lived assets with long-term, fixed rate capital and our preferred stock offering equitizes our balance sheet for continued growth," said Charles F. Willis, Chairman and CEO. 

"In addition to closing two milestone financings, we were very active trading equipment in the third quarter as we continue to execute our strategy to grow and improve the efficiency of our leasing portfolio," said Brian R. Hole, President. "Willis Aeronautical also continues to demonstrate its value to our total platform, not only in support of our effort to monetize residual values but also in support of our effort to deliver value-added programs for our customers."

Third Quarter 2017 Highlights:
  • Total revenue grew 28.0% to $65.9 million in the third quarter of 2017, from $51.5 million in the year ago period. 
  • Average utilization in the third quarter of 2017 remained constant at 91% from the year ago period. Utilization was 91% at the end of Q3 2017.
  • Third quarter lease rent revenue was $33.5 million, up 7.0% year-over-year.
  • Maintenance reserve revenue for the nine months ended September 30, 2017 increased 40.9% to $64.2 million compared to $45.6 million in the year ago period. 
  • The equipment portfolio grew 5.6% to $1.200 billion, from $1.137 billion from the year ago period, net of asset sales and depreciation expense.
  • Tangible book value per share increased 9.3% to $33.51 at September 30, 2017, as compared to $30.66 per share at December 31, 2016.
  • The Company maintained $561 million of undrawn revolver capacity at September 30, 2017.
  • The book value of owned and managed engines and aircraft, exclusive of assets managed by our WAML subsidiary, was approximately $1.6 billion at the end of the third quarter. 
  • During the quarter, the Company purchased five aircraft and two engines for a total purchase price of $58.2 million.
  • The Company issued 1,500,000 shares of 6.5% Series A-2 Preferred Stock, $0.01 par value per share at a gross issue price of $20.00 per share in September 2017.
  • The Company closed a $336 million asset-backed securitization, Willis Engine Structured Trust III (WEST III) on August 4, 2017. The Notes are secured by a portfolio of 56 engines from the revolving credit facility. We are using these funds, net of transaction expenses, to pay off part of our revolving credit facility.

Balance Sheet

As of September 30, 2017, Willis Lease had 214 commercial aircraft engines, 18 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.200 billion, as compared to 208 commercial aircraft engines, 10 aircraft, 5 aircraft parts packages, and other engine-related equipment in its lease portfolio, with a net book value of $1.137 billion a year ago.  The Company's funded debt-to-equity ratio was 4.32 to 1 at quarter end compared to 4.59 to 1 at December 31, 2016, and 4.51 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.

Contact Scott B. FlahertyChief Financial Officer(415) 408-4700

                                   
Consolidated Statements of Income (Loss)                                  
(In thousands, except per share data, unaudited) Three Months Ended         Nine Months Ended              
  September 30,     %     September 30,   %        
    2017       2016     Change     2017     2016   Change        
REVENUE                                  
Lease rent revenue $   33,474     $   31,270     7.0%   $   95,045   $   88,727   7.1%        
Maintenance reserve revenue     20,370         14,229     43.2%       64,212       45,562   40.9%        
Spare parts and equipment sales     9,294         4,160     123.4%       41,273       10,465   294.4%        
Gain on sale of leased equipment     174         180     (3.3)%       4,684       3,430   36.6%        
Other revenue     2,549         1,622     57.2%       6,439       3,614   78.2%        
Total revenue     65,861         51,461     28.0%       211,653       151,798   39.4%        
                                   
EXPENSES                                  
Depreciation and amortization expense     16,142         16,628     (2.9)%       48,786       49,235   (0.9)%        
Cost of spare parts and equipment sales     6,416         3,066     109.3%       29,546       7,785   279.5%        
Write-down of equipment     6,958         1,995     248.8%       22,243       5,924   275.5%        
General and administrative     14,308         12,257     16.7%       40,574       34,694   16.9%        
Technical expense     2,605         1,414     84.2%       7,345       4,913   49.5%        
Net finance costs                                  
  Interest expense     14,220         10,230     39.0%       36,398       30,635   18.8%        
  Loss on extinguishment of debt     -          -      0.0%       -        137   (100.0)%        
Total net finance costs     14,220         10,230     39.0%       36,398       30,772   18.3%        
Total expenses     60,649         45,590     33.0%       184,892       133,323   38.7%        
                                   
Earnings from operations     5,212         5,871     (11.2)%       26,761       18,475   44.8%        
                                   
Earnings from joint ventures     3,040         631     381.8%       6,055       874   592.8%        
                                   
Income before income taxes      8,252         6,502     26.9%       32,816       19,349   69.6%        
Income tax expense     2,960         2,517     17.6%       13,367       7,987   67.4%        
Net income $   5,292     $   3,985     32.8%   $   19,449   $   11,362   71.2%        
Preferred stock dividends     344         -      100.0%       988       -    100.0%        
Accretion of preferred stock issuance costs     9         -      100.0%       25       -    100.0%        
Net income attributable to common shareholders $   4,939     $   3,985     23.9%   $   18,436   $   11,362   62.3%        
                                   
Basic earnings per common share $   0.82     $   0.63         $   3.04   $   1.69            
                                   
Diluted earnings per common share $   0.80     $   0.62         $   2.97   $   1.66            
                                   
Average common shares outstanding     6,055         6,307             6,068       6,711            
Diluted average common shares outstanding      6,173         6,448             6,198       6,849            
                                   
                                   

 
               
Consolidated Balance Sheets              
(In thousands, except share data, unaudited)              
  September 30, 2017     December 31, 2016      
ASSETS              
Cash and cash equivalents $   7,879       $   10,076        
Restricted cash     64,051           22,298        
Equipment held for operating lease, less accumulated depreciation     1,199,883           1,136,603        
Maintenance rights     16,263           17,670        
Equipment held for sale     32,798           30,710        
Operating lease related receivable, net of allowances      16,422           16,484        
Spare parts inventory     18,422           25,443        
Investments     49,262           45,406        
Property, equipment & furnishings, less accumulated depreciation     16,187           16,802        
Intangibles assets, net     1,878           2,182        
Other assets     12,854           14,213        
Total assets $   1,435,899       $   1,337,887        
               
LIABILITIES AND SHAREHOLDERS' EQUITY              
Liabilities:              
Accounts payable and accrued expenses $   20,887       $   17,792        
Deferred income taxes     116,685           103,705        
Notes payable     932,132           900,255        
Maintenance reserves     69,600           71,602        
Security deposits     24,706           21,417        
Unearned lease revenue     6,813           5,823        
Total liabilities     1,170,823           1,120,594        
               
Redeemable preferred stock ($0.01 par value) $   49,485       $   19,760        
               
Shareholders' equity:              
Common stock ($0.01 par value)     64           64        
Paid-in capital in excess of par     1,624           2,512        
Retained earnings     214,438           196,002        
Accumulated other comprehensive loss, net of tax     (535 )         (1,045 )      
Total shareholders' equity     215,591           197,533        
               
Total liabilities and shareholders' equity $   1,435,899       $   1,337,887