• Willis Lease Finance Corporation Reports Annual Pre-tax Income of $9.8 million

    Source: Nasdaq GlobeNewswire / 09 Mar 2023 06:00:01   America/New_York

    COCONUT CREEK, Fla., March 09, 2023 (GLOBE NEWSWIRE) --

    Willis Lease Finance Corporation (NASDAQ: WLFC) today reported annual total revenues of $311.9 million and pre-tax income of $9.8 million. For the year ended December 31, 2022, aggregate lease rent and maintenance reserve revenues were $246.0 million and spare parts and equipment sales were $27.0 million. The Company reported increased total revenues in the fourth quarter when compared to the prior year period, primarily due to an increase in the Company’s core lease rent and short-term maintenance revenues.

    “2022 represents the beginnings of a solid recovery for our business,” said Austin C. Willis, the Company’s Chief Executive Officer. “The recovery in the leasing markets, driving increased demand and rate, positions the Company to combat the inflationary effects of a new, post-COVID environment.”

    “Our programs are becoming the bellwether for airlines looking for efficiency and to de-couple from counterparties that are struggling to produce consistently,” said Brian R. Hole, President. “As a result, the fourth quarter likely was the busiest we have been in my time with the Company, and I am incredibly proud of the effort our people put into delivering for our customers.”

    Fourth Quarter 2022 Highlights (at or for the quarter and year ended December 31, 2022, as compared to at or for the quarter and year ended December 31, 2021):

    • Lease rent revenue increased by $27.7 million, or 20.6%, to $162.6 million in 2022, compared to $134.8 million in 2021, primarily reflecting an increase in the number of engines acquired and placed on lease, including an increase in utilization compared to the prior period.
    • Maintenance reserve revenue was $83.4 million in 2022, an increase of 12.8%, compared to $74.0 million in 2021. Short-term maintenance revenue, a proxy for flight activity, was $47.4 million in 2022, compared to $17.7 million in 2021, as a result of the continued recovery in global flight traffic. As of December 31, 2022, there was $6.3 million of collected use fees included in Unearned Revenue, which further reflects increased usage of the lease portfolio.
    • Spare parts and equipment sales increased to $27.0 million in 2022, compared to $17.4 million in 2021. The increase in spare parts sales was driven by an industry-wide increase in engine and aircraft utilization, and the demand for parts associated with such increase compared to the prior year period.
    • Gain on sale of leased equipment was $3.1 million in 2022, reflecting the sale of 25 engines. Gain on sale of leased equipment was $6.0 million in 2021, reflecting the sale of 12 engines and one airframe.
    • Gain on sale of financial assets was $3.1 million in 2022, reflecting the sale of four notes receivable. Gain on sale of financial assets was $10.9 million in 2021, reflecting the sale of two notes receivable.
    • The Company generated $9.8 million of pre-tax income in 2022 compared to $9.1 million in the comparable period of 2021.
    • The book value of lease assets we own directly or through our joint ventures, inclusive of our notes receivable, maintenance rights, and investment in sales-type leases, was $2,518.6 million at December 31, 2022. As of December 31, 2022, the Company also managed 324 engines, aircraft and related equipment on behalf of other parties.
    • The Company maintained $273.0 million of undrawn revolver capacity at December 31, 2022.
    • Diluted weighted average income per common share was $0.33 for 2022, compared to $0.00 in 2021.
    • Book value per diluted weighted average common share outstanding increased to $64.27 at December 31, 2022, compared to $59.23 at December 31, 2021.

    Balance Sheet

    As of December 31, 2022, the Company’s lease portfolio was $2,217.5 million, consisting of $2,111.9 million of equipment held in our operating lease portfolio, $81.4 million of notes receivable, $17.7 million of maintenance rights, and $6.4 million of investments in sales-type leases, which represented 339 engines, 13 aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2021, the Company’s lease portfolio was $2,129.3 million, consisting of $1,991.4 million of equipment held in our operating lease portfolio, $115.5 million of notes receivable, and $22.5 million of maintenance rights, which represented 304 engines, 12 aircraft, one marine vessel and other leased parts and equipment.

    Willis Lease Finance Corporation

    Willis Lease Finance Corporation (“WLFC”) leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers worldwide. These leasing activities are integrated with engine and aircraft trading, engine lease pools and asset management services through Willis Asset Management Limited, as well as various end-of-life solutions for engines and aviation materials provided through Willis Aeronautical Services, Inc. Additionally, through Willis Engine Repair Center®, Jet Centre by Willis, and Willis Aviation Services Limited, the Company’s service offerings include Part 145 engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport FBO and ground and cargo handling services.

    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 war, terrorist activity and the COVID-19 pandemic; changes in oil prices, rising inflation and other disruptions to 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
    December 31,
       Years Ended December 31,  
      2022  2021 % Change  2022  2021 % Change
    REVENUE           
    Lease rent revenue$48,227  $37,972 27.0% $162,571  $134,831 20.6%
    Maintenance reserve revenue 23,907   13,212 80.9%  83,424   73,961 12.8%
    Spare parts and equipment sales 6,621   4,191 58.0%  27,009   17,417 55.1%
    Interest income 1,789   2,820 (36.6)%  7,579   12,938 (41.4)%
    (Loss) Gain on sale of leased equipment (583)  3,535 (116.5)%  3,133   5,975 (47.6)%
    Gain on sale of financial assets    10,874 (100.0)%  3,116   10,874 (71.3)%
    Asset transition fee     N/A     6,256 (100.0)%
    Other revenue 8,183   3,210 154.9%  25,095   11,950 110.0%
    Total revenue 88,144   75,814 16.3%  311,927   274,202 13.8%
                
    EXPENSES           
    Depreciation and amortization expense 22,780   21,749 4.7%  88,260   90,504 (2.5)%
    Cost of spare parts and equipment sales 4,753   3,919 21.3%  20,833   14,927 39.6%
    Write-down of equipment    3,602 (100.0)%  21,849   7,715 183.2%
    General and administrative 25,710   21,038 22.2%  92,530   75,350 22.8%
    Technical expense 3,193   3,251 (1.8)%  14,415   9,381 53.7%
    Net finance costs:           
    Interest expense 17,534   17,654 (0.7)%  66,743   67,985 (1.8)%
    Gain on debt extinguishment (2,558)   N/A  (2,558)   N/A
    Total net finance costs 14,976   17,654 (15.2)%  64,185   67,985 (5.6)%
    Total expenses 71,412   71,213 0.3%  302,072   265,862 13.6%
                
    Income from operations 16,732   4,601 263.7%  9,855   8,340 18.2%
    Income (Loss) from joint ventures 1,469   1,983 (25.9)%  (62)  800 (107.8)%
    Income before income taxes 18,201   6,584 176.4%  9,793   9,140 7.1%
    Income tax expense 3,858   4,842 (20.3)%  4,354   5,788 (24.8)%
    Net income 14,343   1,742 723.4%  5,439   3,352 62.3%
    Preferred stock dividends 819   821 (0.2)%  3,250   3,251 0.0%
    Accretion of preferred stock issuance costs 21   20 5.0%  84   83 1.2%
    Net income attributable to common shareholders$13,503  $901 1,398.7% $2,105  $18 11,594.4%
                
    Basic weighted average income per common share$2.21  $0.15   $0.35  $  
    Diluted weighted average income per common share$2.12  $0.14   $0.33  $  
                
    Basic weighted average common shares outstanding 6,110   6,044    6,071   6,112  
    Diluted weighted average common shares outstanding 6,379   6,304    6,297   6,346  
                      
                      

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

      December 31, 2022 December 31, 2021
    ASSETS    
    Cash and cash equivalents $12,146 $14,329
    Restricted cash  76,870  81,312
    Equipment held for operating lease, less accumulated depreciation  2,111,935  1,991,368
    Maintenance rights  17,708  22,511
    Equipment held for sale  3,275  6,952
    Receivables, net of allowances  46,954  39,623
    Spare parts inventory  38,577  50,959
    Investments  56,189  55,927
    Property, equipment & furnishings, less accumulated depreciation  35,350  31,327
    Intangible assets, net  1,129  1,188
    Notes receivable  81,439  115,456
    Investments in sales-type leases  6,440  
    Other assets  87,205  51,975
    Total assets $2,575,217 $2,462,927
         
    LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY    
    Liabilities:    
    Accounts payable and accrued expenses $43,040 $26,858
    Deferred income taxes  132,516  124,332
    Debt obligations  1,847,278  1,790,264
    Maintenance reserves  59,453  65,976
    Security deposits  20,490  19,349
    Unearned revenue  17,863  10,458
    Total liabilities  2,120,640  2,037,237
         
    Redeemable preferred stock ($0.01 par value)  49,889  49,805
         
    Shareholders’ equity:    
    Common stock ($0.01 par value)  66  65
    Paid-in capital in excess of par  20,386  15,401
    Retained earnings  357,493  355,388
    Accumulated other comprehensive income, net of tax  26,743  5,031
    Total shareholders’ equity  404,688  375,885
    Total liabilities, redeemable preferred stock and shareholders’ equity $2,575,217 $2,462,927


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

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