• Willis Lease Finance Corporation Reports Third Quarter Pre-tax Profit of $6.1 million

    Source: Nasdaq GlobeNewswire / 02 Nov 2021 06:00:00   America/New_York

    COCONUT CREEK, Fla., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported third quarter total revenues of $70.8 million and pre-tax profit of $6.1 million. For the three months ended September 30, 2021, aggregate lease rent and maintenance reserve revenues were $56.6 million and spare parts and equipment sales were $5.1 million. The Company reported increased total revenues in the third quarter when compared to the prior year period, primarily due to an increase in lease rent revenue and gain on sale of leased equipment partially offset by a reduction in long-term maintenance revenue.

    “We are encouraged to see some of the early stages of a recovery reflected in our improved quarterly performance,” said Charles F. Willis, Chairman and CEO. “While we are still a long way from a pre-COVID environment, and many hurdles still exist on that path, we are pleased to see our customers beginning to use the equipment they have more and increasingly requesting additional support. The aviation industry is important to the global recovery, and we are proud to be part of it.”

    “The continuing recovery of our airline and MRO customers, and the industry in general, has had a direct impact on our own success,” said Brian R. Hole, President. “And we believe our airline customers will continue to benefit from leveraging our scale and diversity of product and service offerings, whether in the form of capital, lease assets or technical and asset management services, as they focus on the huge task of repaying government loans while working feverishly to return whole fleets from storage.”

    Third Quarter 2021 Highlights (at or for the periods ended September 30, 2021, as compared to September 30, 2020, and December 31, 2020):

    • Lease rent revenue increased to $32.9 million in the third quarter of 2021, compared to $30.0 million in the third quarter of 2020 primarily reflecting an increase in the number of engines acquired and placed on lease.
    • Maintenance reserve revenue was $23.7 million in the third quarter of 2021, a decrease of 26.8% compared to $32.3 million in the same quarter of 2020. The decline in maintenance revenue was primarily influenced by lower long-term maintenance revenue, which is associated with engines returning from long-term lease, and increase in short-term maintenance revenue, which results from usage of the assets we have on short-term lease. Long-term maintenance reserve revenue was $18.6 million in the third quarter of 2021, compared to $30.6 million in the comparable prior period, and short-term maintenance reserve revenue was $5.0 million in the third quarter of 2021, compared to $1.7 million in the prior year period.
    • Spare parts and equipment sales increased to $5.1 million in the third quarter of 2021, compared to $2.9 million in the third quarter of 2020. The increase in spare parts sales was driven by improved industry wide demand compared to the prior year period.
    • Gain on sale of leased equipment was $2.4 million in the third quarter of 2021 reflecting the sale of six engines, one airframe and other parts and equipment. There was no gain on sale of leased equipment in the third quarter of 2020.
    • Other revenue increased by $1.3 million to $6.7 million in the third quarter of 2021, compared to $5.4 million in the third quarter of 2020, primarily reflecting interest income from our notes receivable and other service-related fees.
    • Income before income taxes was $6.1 million in the third quarter of 2021, compared to $6.0 million in the third quarter of 2020.
    • Our aggregate lease assets, inclusive of our equipment held for operating lease and notes receivable, at September 30, 2021 and 2020 was $2,167.4 million and $1,776.1 million, respectively, a 22.0% year-over-year increase.
    • The book value of lease assets we own directly or through our joint ventures, inclusive of our notes receivable, was $2,513.6 million at September 30, 2021. As of September 30, 2021, the Company also managed 488 engines, aircraft and related equipment on behalf of other parties.
    • The Company maintained $397 million of undrawn revolver capacity at September 30, 2021.
    • Diluted weighted average earnings per common share were $0.32 for the third quarter of 2021, compared to $0.35 in the third quarter of 2020.
    • Book value per diluted weighted average common share outstanding increased to $60.45 at September 30, 2021, compared to $59.40 at December 31, 2020.

    Balance Sheet

    As of September 30, 2021, the Company’s $1.971 billion equipment held for operating lease portfolio and $196.1 million notes receivable represented 313 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2020, the Company’s $1.887 billion equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment.

    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 Limited, as well as various end-of-life solutions for 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 and the COVID-19 pandemic; 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 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.

    Unaudited Consolidated Statements of Income
    (In thousands, except per share data) 

     Three Months Ended September 30,   Nine Months Ended September30,  
      2021  2020 % Change  2021   2020 % Change
    REVENUE           
    Lease rent revenue$32,908 $30,025 9.6% $96,859  $114,874 (15.7%)
    Maintenance reserve revenue 23,659  32,302 (26.8%)  60,749   82,816 (26.6%)
    Spare parts and equipment sales 5,091  2,888 76.3%  13,226   14,848 (10.9%)
    Gain on sale of leased equipment 2,440   100.0%  2,440   1,367 (100.0%)
    Asset transition fee       6,256    100.0%
    Other revenue 6,693  5,398 24.0%  18,858   13,300 41.8%
    Total revenue 70,791  70,613 0.3%  198,388   227,205 (12.7%)
                
    EXPENSES           
    Depreciation and amortization expense 21,274  24,022 (11.4%)  68,755   71,176 (3.4%)
    Cost of spare parts and equipment sales 3,921  4,125 (4.9%)  11,008   13,461 (18.2%)
    Write-down of equipment   5,245 (100.0%)  4,113   14,371 (71.4%)
    General and administrative 18,662  16,461 13.4%  54,312   51,256 6.0%
    Technical expense 2,524  827 205.2%  6,130   3,422 79.1%
    Net finance costs:           
         Interest expense 18,325  15,351 19.4%  50,331   47,136 6.8%
         Loss on debt extinguishment    %     4,688 (100.0%)
    Total net finance costs 18,325  15,351 19.4%  50,331   51,824 (2.9%)
    Total expenses 64,706  66,031 (2.0%)  194,649   205,510 (5.3%)
                
    Earnings from operations 6,085  4,582 32.8%  3,739   21,695 (82.8%)
    Earnings (loss) from joint ventures 21  1,457 (98.6%)  (1,183)  2,612 (145.3%)
    Income before income taxes 6,106  6,039 1.1%  2,556   24,307 (89.5%)
    Income tax expense 3,222  3,055 5.5%  946   11,665 (91.9%)
    Net income 2,884  2,984 (3.4%)  1,610   12,642 (87.3%)
    Preferred stock dividends 819  819 %  2,431   2,440 (0.4%)
    Accretion of preferred stock issuance costs 21  21 %  63   63 %
    Net income (loss) attributable to common shareholders$2,044 $2,144 (4.7%) $(884) $10,139 (108.7%)
                
    Basic weighted average earnings (loss) per common share$0.33 $0.36   $(0.14) $1.70  
    Diluted weighted average earnings (loss) per common share$0.32 $0.35   $(0.14) $1.66  
                
    Basic weighted average common shares outstanding 6,189  5,985    6,135   5,954  
    Diluted weighted average common shares outstanding 6,363  6,084    6,135   6,104  

    Unaudited Consolidated Balance Sheets
    (In thousands, except per share data)

      September 30, 2021  December 31, 2020 
        
    ASSETS      
    Cash and cash equivalents$15,092 $42,540 
    Restricted cash 56,477  36,385 
    Equipment held for operating lease, less accumulated depreciation 1,971,252  1,886,613 
    Maintenance rights 22,511  20,097 
    Equipment held for sale 11,057  2,850 
    Receivables, net of allowances 42,595  28,269 
    Spare parts inventory 53,556  59,434 
    Investments 53,153  53,275 
    Property, equipment & furnishings, less accumulated depreciation 30,800  31,753 
    Intangible assets, net 1,202  1,246 
    Notes receivable 196,146  158,708 
    Other assets 47,047  43,778 
    Total assets$2,500,888 $2,364,948 
        
    LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY  
    Liabilities:   
    Accounts payable and accrued expenses$50,124 $26,977 
    Deferred income taxes 118,941  116,838 
    Debt obligations 1,814,208  1,693,753 
    Maintenance reserves 61,482  82,484 
    Security deposits 22,915  19,522 
    Unearned revenue 12,590  11,637 
    Total liabilities 2,080,260  1,951,211 
        
    Redeemable preferred stock ($0.01 par value) 49,785  49,722 
        
    Shareholders’ equity:   
    Common stock ($0.01 par value) 66  66 
    Paid-in capital in excess of par 15,653  13,696 
    Retained earnings 354,486  355,370 
    Accumulated other comprehensive income (loss), net of tax 638  (5,117)
    Total shareholders’ equity 370,843  364,015 
    Total liabilities, redeemable preferred stock and shareholders’ equity$2,500,888 $2,364,948 
        

    CONTACT:

    Scott B. Flaherty
    Chief Financial Officer
    (561) 349-9989


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