COCONUT CREEK, Fla., Nov. 05, 2018 (GLOBE NEWSWIRE) — Willis Lease Finance Corporation (NASDAQ: WLFC) today reported a pre-tax profit of $13.3 million in the third quarter of 2018, including record quarterly lease rent revenue of $47.0 million. Leasing results were driven by continued high utilization and 18.5% growth of our portfolio to $1.590 billion at quarter-end compared to $1.343 billion at December 31, 2017. Aggregate lease rent and maintenance reserve revenues were $66.4 million for the third quarter 2018, up 23.2% from the comparable period in 2017.
“We continue to deliver positive profits and cash flow during a significant period of expansion for the Company,” said Charles F. Willis, Chairman and CEO. “We are very excited about our growth and capabilities in our asset management business, which we believe will be what helps us re-shape the industry and especially the way airlines utilize and manage engines.”
“Demand for engines, parts and technical services grew in the third quarter and our financial results reflect that our Platform is uniquely situated to deliver value for our customers across the spectrum,” said Brian R. Hole, President. “While our priority is to deliver for customers today, we are always looking for ways to grow the Platform with new and innovative products and programs for tomorrow.”
Third Quarter 2018 Highlights (at or for the periods ended September 30, 2018, as compared to September 30, 2017, and December 31, 2017):
- Total revenue grew by 18.4% to $78.0 million in the third quarter of 2018, compared to $65.9 million in the comparable prior year period.
- Lease rent revenue achieved a record quarterly high of $47.0 million in the third quarter of 2018; 40.4% growth from $33.5 million in the comparable quarter of 2017.
- Earnings before tax was $13.3 million in the third quarter of 2018, up 60.7% when compared to the comparable quarter of 2017.
- We closed our $373.4 million WEST IV ABS transaction during the third quarter of 2018, which helps us lock in attractive long-term fixed rate debt and de-lever our revolving credit facility.
- General and administrative expenses increased, primarily due to one-time costs associated with facility relocations and employee transitions, increased headcount to support our broadening Platform and increased compensation accruals due to operating performance.
- Utilization at the end of the third quarter of 2018 was 92% compared to 89% at 2017 year-end.
- Our equipment lease portfolio grew 18.5% to $1.590 billion, from $1.343 billion at December 31, 2017, net of asset sales and depreciation expense. The book value of lease assets we own directly or through our joint ventures was $1.9 billion at September 30, 2018. As of September 30, 2018, the Company managed 423 engines, aircraft and related equipment on behalf of third parties.
- The Company maintained $424 million of undrawn revolver capacity at September 30, 2018.
- Diluted weighted average earnings per common share grew 84% to $1.47 per share from the comparable period in 2017.
- Book value per diluted weighted average common share outstanding increased to $44.50 at September 30, 2018, compared to $41.63 at December 31, 2017.
As of September 30, 2018, the Company had a total lease portfolio consisting of 250 engines, 14 aircraft and 10 other leased parts and equipment with a net book value of $1.590 billion. As of December 31, 2017, the Company had a total lease portfolio consisting of 225 engines, 16 aircraft and 7 other leased parts and equipment, with a net book value of $1.343 billion.
Willis Lease Finance Corporation
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.
Scott B. Flaherty
Chief Financial Officer
Unaudited Condensed Consolidated Statements of Income
(In thousands, except per share data)
|Three Months Ended||Nine Months Ended|
|September 30,||%||September 30,||%|
|Lease rent revenue||$||46,984||$||33,474||40.4%||$||129,710||$||95,045||36.5%|
|Maintenance reserve revenue||19,370||20,370||(4.9)%||56,855||64,212||(11.5)%|
|Spare parts and equipment sales||8,354||9,294||(10.1)%||21,701||41,273||(47.4)%|
|Gain on sale of leased equipment||1,256||174||621.8%||2,142||4,684||(54.3)%|
|Depreciation and amortization expense||19,861||16,142||23.0%||55,600||48,786||14.0%|
|Cost of spare parts and equipment sales (1)||5,848||7,148||(18.2)%||16,537||32,121||(48.5)%|
|Write-down of equipment (1)||1,215||6,226||(80.5)%||4,793||19,668||(75.6)%|
|General and administrative||18,124||14,308||26.7%||50,517||40,574||24.5%|
|Earnings from operations||12,751||5,212||144.6%||32,907||26,761||23.0%|
|Earnings from joint ventures||506||3,040||(83.4)%||1,569||6,055||(74.1)%|
|Income before income taxes||13,257||8,252||60.7%||34,476||32,816||5.1%|
|Income tax expense||3,583||2,960||21.0%||9,359||13,367||(30.0)%|
|Preferred stock dividends||819||344||138.1%||2,431||988||146.1%|
|Accretion of preferred stock issuance costs||21||9||133.3%||62||25||148.0%|
|Net income attributable to common shareholders||$||8,834||$||4,939||78.9%||$||22,624||$||18,436||22.7%|
|Basic weighted average earnings per common share||$||1.50||$||0.82||$||3.80||$||3.04|
|Diluted weighted average earnings per common share (2)||$||1.47||$||0.80||$||3.72||$||2.97|
|Basic weighted average common shares outstanding||5,900||6,055||5,960||6,068|
|Diluted weighted average common shares outstanding (2)||6,004||6,184||6,083||6,215|
(1) The amounts herein include reclassifications of scrap inventory write-offs and lower of cost or market write-downs that were previously presented within Write-down of equipment to the Costs of spare parts and equipment sales expense line item. The three and nine months ended September 30, 2017 were impacted by a reclassification of $0.7 million and $2.6 million, respectively, reflected as an increase to Cost of spare parts and equipment sales and a decrease to Write-down of equipment.
(2) Diluted earnings per common share and diluted weighted average common shares outstanding have been adjusted to properly exclude the effects of income tax benefits on unvested restricted stock in accordance with ASU 2016-09. The adjustment did not impact diluted earnings per common share and impacted diluted weighted average common shares outstanding by approximately 11,000 shares for the third quarter of 2017. The adjustment impacted diluted earnings per common share and diluted weighted average common shares outstanding for the nine months of 2017 by $0.01 and approximately 17,000 shares, respectively.
Unaudited Condensed Consolidated Balance Sheets
(In thousands, except per share data)
|September 30, 2018||December 31, 2017|
|Cash and cash equivalents||$||8,436||$||7,052|
|Equipment held for operating lease, less accumulated depreciation||1,590,482||1,342,571|
|Equipment held for sale||40,931||34,172|
|Operating lease related receivables, net of allowances||24,777||18,848|
|Spare parts inventory||24,409||16,379|
|Property, equipment & furnishings, less accumulated depreciation||26,245||26,074|
|Intangible assets, net||1,430||1,727|
|LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY|
|Accounts payable and accrued expenses||$||40,879||$||22,072|
|Deferred income taxes||87,142||78,280|
|Redeemable preferred stock ($0.0l par value)||49,533||49,471|
|Common stock ($0.0l par value)||62||64|
|Paid-in capital in excess of par||–||2,319|
|Accumulated other comprehensive income, net of tax||962||226|
|Total shareholders’ equity||270,688||258,910|
|Total liabilities, redeemable preferred stock and shareholders’ equity||$||1,965,196||$||1,603,431|