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Willis Lease Finance Reports Third Quarter Pretax Profit of $6.5 Million

NOVATO, Calif., Nov. 04, 2016 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ:WLFC), the leader in independent financing, trading and servicing for both engines and aircraft, today reported quarterly pretax income of $6.5 million in the third quarter of 2016, up $1.9 million, or 40%, when compared to third quarter 2015 pretax income. Net income for the third quarter increased by $1.4 million, or 56%, to $4.0 million, or $0.62 per diluted share, from $2.6 million, or $0.32 per diluted share, in the third quarter of 2015. Earnings in the third quarter of 2016 included a $2.0 million non-cash charge associated with the write-down of equipment.

“Our core leasing business continued to drive top line growth and bottom line profitability, achieving 92% utilization at quarter end,” said Charles F. Willis, Chairman and CEO. “At the moment, we continue to see strong leasing demand across all engine types, and we are actively growing the portfolio to meet that demand.”

“We had a very active third quarter, as we continue to position ourselves for the future,” said Brian R. Hole, President. “The leasing business is obviously strong, and we added nearly $43 million of income producing assets in the quarter and sold over $4 million of spare parts and equipment. Just after quarter end, we closed a $20 million preferred equity offering and then purchased the assets of Total Engine Support Limited (TES), both of which reinforce our growth strategy across our leasing, trading and asset management and technical services businesses,” explained Mr. Hole.

Third Quarter 2016 Highlights (at or for the periods ended September 30, 2016, compared to September 30, 2015, and December 31, 2015):

  • Lease rent revenue grew 11.5% to $31.3 million in the third quarter of 2016 from $28.1 million in the year ago comparable period. Total lease rent revenue for the nine months ended September 30, 2016, was $88.7 million, up 12.0%, from the corresponding year ago period.
  • Average utilization in the third quarter of 2016 was 91%, up from 90% in the second quarter of 2016.
  • Pretax income of $6.5 million is up $1.9 million or 40% from the year ago comparable period.
  • Third quarter net income was $4.0 million, or $0.62 per diluted share, as compared to $2.6 million or $0.32 per diluted share in the comparable year ago period.
  • The book value of owned and managed engines and aircraft was approximately $1.4 billion at the end of the third quarter.
  • Tangible book value per share increased 8% to $29.88 at September 30, 2016, compared to $27.72 at December 31, 2015.
  • The Company purchased a total of 116,000 shares of common stock in the quarter under the Company’s five-year share repurchase plan.
  • Liquidity available from the revolving credit facility was $303 million at September 30, 2016, up from $151 million at December 31, 2015.
  • During the quarter, the Company purchased one aircraft and nine engines for a total purchase price of $42.8 million.
  • The Company issued 1,000,000 shares of 6.5% Series A Preferred Stock, $0.01 par value per share at a purchase price of $20.00 per share in October 2016.
  • On October 26, 2016, the Company purchased, through its wholly owned subsidiary Willis Asset Management Limited, the assets of Total Engine Support Limited a UK-based, leading asset management, technical services and consultancy business.

Balance Sheet

As of September 30, 2016, Willis Lease had 208 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 $1.1 billion. The Company’s funded debt-to-equity ratio was 4.51 to 1 at quarter end compared to 4.14 to 1 at December 31, 2015.

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 supported by cutting edge technology, 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.

Willis Lease Finance Reports Third Quarter Pretax Profit of $6.5 Million
November 4, 2016
Page 3
Consolidated Statements of Income (Loss)
(In thousands, except per share data, unaudited)Three Months Ended Nine Months Ended
September 30, % September 30, %
2016 2015 Change 2016 2015 Change
REVENUE
Lease rent revenue$ 31,270 $ 28,055 11.5% $ 88,727 $ 79,197 12.0%
Maintenance reserve revenue 14,229 16,119 (11.7)% 45,562 39,035 16.7%
Spare parts and equipment sales 4,160 9,133 (54.5)% 10,465 15,000 (30.2)%
Gain on sale of leased equipment 180 3,804 (95.3)% 3,430 7,666 (55.3)%
Other revenue 1,622 619 162.0% 3,614 1,978 82.7%
Total revenue 51,461 57,730 (10.9)% 151,798 142,876 6.2%
EXPENSES
Depreciation and amortization expense 16,628 17,102 (2.8)% 49,235 52,390 (6.0)%
Cost of spare parts and equipment sales 3,066 5,919 (48.2)% 7,785 10,219 (23.8)%
Write-down of equipment 1,995 5,498 (63.7)% 5,924 8,580 (31.0)%
General and administrative 12,257 11,742 4.4% 34,694 30,826 12.5%
Technical expense 1,414 3,570 (60.4)% 4,913 7,836 (37.3)%
Net finance costs
Interest expense 10,230 9,805 4.3% 30,635 29,232 4.8%
Loss (gain) on extinguishment of debt - - 0.0% 137 (1,151) n/a
Total net finance costs 10,230 9,805 4.3% 30,772 28,081 9.6%
Total expenses 45,590 53,636 (15.0)% 133,323 137,932 (3.3)%
Earnings from operations 5,871 4,094 43.4% 18,475 4,944 273.7%
Earnings from joint ventures 631 558 13.1% 874 1,127 (22.4)%
Income before income taxes 6,502 4,652 39.8% 19,349 6,071 218.7%
Income tax expense 2,517 2,101 19.8% 7,987 2,648 201.6%
Net income$ 3,985 $ 2,551 56.2% $ 11,362 $ 3,423 231.9%
Basic earnings per common share$ 0.63 $ 0.33 $ 1.69 $ 0.44
Diluted earnings per common share$ 0.62 $ 0.32 $ 1.66 $ 0.43
Average common shares outstanding 6,307 7,839 6,711 7,843
Diluted average common shares outstanding 6,448 7,963 6,849 8,011

Willis Lease Finance Reports Third Quarter Pretax Profit of $6.5 Million
November 4, 2016
Page 4
Consolidated Balance Sheets
(In thousands, except share data, unaudited)
September 30, 2016 December 31, 2015
ASSETS
Cash and cash equivalents$ 10,653 $ 9,732
Restricted cash 28,217 33,026
Equipment held for operating lease, less accumulated depreciation 1,118,202 1,109,168
Maintenance rights 16,774 12,140
Equipment held for sale 13,899 23,454
Operating lease related receivable, net of allowances 12,128 13,626
Spare parts inventory 19,235 20,826
Investments 43,314 41,295
Property, equipment & furnishings, less accumulated depreciation 16,545 20,247
Intangibles assets, net 758 932
Other assets 11,603 9,839
Total assets$ 1,291,328 $ 1,294,285
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses$ 15,700 $ 21,665
Deferred income taxes 102,788 96,154
Notes payable 885,643 866,089
Maintenance reserves 61,160 71,054
Security deposits 24,530 25,010
Unearned lease revenue 5,033 5,090
Total liabilities 1,094,854 1,085,062
Shareholders' equity:
Common stock ($0.01 par value)$ 66 $ 75
Paid-in capital in excess of par 5,940 28,720
Retained earnings 192,311 180,949
Accumulated other comprehensive loss, net of tax (1,843) (521)
Total shareholders' equity 196,474 209,223
Total liabilities and shareholders' equity$ 1,291,328 $ 1,294,285


CONTACT: Scott B. Flaherty Chief Financial Officer (415) 408-4700 The Cereghino Group IR CONTACT: 206-388-5785

Source:Willis Lease Finance Corp.

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