Willis Lease Finance Corporation Reports Second Quarter Pre

COCONUT CREEK, Fla., Aug. 03, 2023 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported second quarter total revenues of $109.0 million and pre-tax earnings of $19.0 million. For the three months ended June 30, 2023, aggregate lease rent and maintenance reserve revenues were $89.8 million and spare parts and equipment sales were $4.6 million. The Company reported increased total revenues in the second 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 driven by continued global recovery in travel.

“Our second quarter results reflect the fundamental strength of our core leasing business,” said Austin Willis, the Company’s Chief Executive Officer. “A scarcity of serviceable spare engines and strong demand from the airlines, continues to drive favorable lease rates and terms.”

“Despite huge demand and industry-wide shortages, our teams continue to deliver for our customers that planned ahead and signed up for our custom-built programs as well as for those requiring ad hoc support,” said Brian R. Hole, President. “As always, people make the difference and ours are world class.”

Second Quarter 2023 Highlights (at or for the period ended June 30, 2023, as compared to June 30, 2022, and December 31, 2022):

Lease rent revenue increased by $17.7 million, or 48.3%, to $54.4 million in the second quarter of 2023, compared to $36.7 million in the second quarter of 2022. The increase is due to an increase in the number of engines acquired and placed on lease, including an increase in utilization compared to that of the prior period.

Maintenance reserve revenue was $35.4 million in the second quarter of 2023, an increase of 46.1%, compared to $24.2 million in the same quarter of 2022. There was $6.8 million long-term maintenance revenue recognized for the three months ended June 30, 2023, compared to $15.1 million in the comparable prior period. “Non-reimbursable” maintenance reserve revenue is directly influenced by on lease engine flight hours and cycles. Engines out on lease with “non-reimbursable” usage fees generated $28.6 million of short-term maintenance revenues, compared to $9.2 million in the comparable prior period. As of June 30, 2023 and December 31, 2022, there was $19.8 million and $6.3 million, respectively, of cumulative deferred in-substance fixed payment use fees included in “Unearned revenue.”

Spare parts and equipment sales decreased to $4.6 million in the second quarter of 2023, compared to $6.8 million in the second quarter of 2022.

Gain on sale of leased equipment was $4.5 million in the second quarter of 2023, reflecting the sale of two engines and other parts and equipment from the lease portfolio. Gain on sale of leased equipment was $0.5 million in the second quarter of 2022, reflecting the sale of eight engines.

There was no gain on sale of financial assets during the second quarter of 2023 as we did not sell any notes receivable. Gain on sale of financial assets was $3.1 million in the second quarter of 2022, reflecting the sale of four notes receivable.

The Company generated $19.0 million of pre-tax income in the second quarter of 2023, a 73.2% increase as compared to pre-tax income of $11.0 million in the second quarter of 2022.

The book value of lease assets we own directly or through our joint ventures, inclusive of our notes receivable, maintenance rights, and investments in sales-type leases, was $2,551.3 million at June 30, 2023. As of June 30, 2023, the Company also managed 339 engines, aircraft and related equipment on behalf of other parties.

The Company maintained $242.0 million of undrawn revolver capacity at June 30, 2023.

Diluted weighted average income per common share was $2.02 for the second quarter of 2023, compared to diluted weighted average income of $0.81 in the second quarter of 2022.

Book value per diluted weighted average common share outstanding increased to $64.69 at June 30, 2023, compared to $64.27 at December 31, 2022.

Balance Sheet

As of June 30, 2023, $2,161.7 million of equipment held in our operating lease portfolio, $95.0 million of notes receivable, $14.0 million of maintenance rights, and $5.8 million of investments in sales-type leases, which represented 348 engines, 12 aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2022, the Company had $2,111.9 million 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.

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 June 30,

Six months ended June 30,

2023

2022

% Change

2023

2022

% Change

REVENUE

Lease rent revenue

$

54,416

$

36,704

48.3

%

$

107,636

$

74,829

43.8

%

Maintenance reserve revenue

35,415

24,245

46.1

%

58,913

39,079

50.8

%

Spare parts and equipment sales

4,550

6,792

(33.0

)%

9,602

13,422

(28.5

)%

Interest revenue

2,258

1,865

21.1

%

4,304

3,978

8.2

%

Gain on sale of leased equipment

4,461

498

795.8

%

4,328

2,796

54.8

%

Gain on sale of financial assets

—

3,116

(100.0

)%

—

3,116

(100.0

)%

Other revenue

7,896

4,855

62.6

%

13,748

9,672

42.1

%

Total revenue

108,996

78,075

39.6

%

198,531

146,892

35.2

%

EXPENSES

Depreciation and amortization expense

22,494

21,612

4.1

%

45,043

43,421

3.7

%

Cost of spare parts and equipment sales

3,058

7,014

(56.4

)%

7,557

11,876

(36.4

)%

Write-down of equipment

1,671

78

2,042.3

%

1,671

21,195

(92.1

)%

General and administrative

38,327

20,427

87.6

%

71,598

44,032

62.6

%

Technical expense

4,919

3,436

43.2

%

7,748

9,082

(14.7

)%

Net finance costs:

Interest expense

19,085

16,023

19.1

%

37,474

32,906

13.9

%

Total net finance costs

19,085

16,023

19.1

%

37,474

32,906

13.9

%

Total expenses

89,554

68,590

30.6

%

171,091

162,512

5.3

%

Income (Loss) from operations

19,442

9,485

105.0

%

27,440

(15,620

)

(275.7

)%

(Loss) Income from joint ventures

(474

)

1,469

(132.3

)%

(1,635

)

(1,147

)

42.5

%

Income (Loss) before income taxes

18,968

10,954

73.2

%

25,805

(16,767

)

(253.9

)%

Income tax expense (benefit)

5,152

5,046

2.1

%

7,595

(1,474

)

(615.3

)%

Net income (loss)

13,816

5,908

133.9

%

18,210

(15,293

)

(219.1

)%

Preferred stock dividends

811

811

—

%

1,612

1,612

—

%

Accretion of preferred stock issuance costs

21

21

—

%

42

42

—

%

Net income (loss) attributable to common shareholders

$

12,984

$

5,076

155.8

%

$

16,556

$

(16,947

)

(197.7

)%

Basic weighted average income (loss) per common share

$

2.04

$

0.83

$

2.65

$

(2.81

)

Diluted weighted average income (loss) per common share

$

2.02

$

0.81

$

2.57

$

(2.81

)

Basic weighted average common shares outstanding

6,354

6,129

6,239

6,040

Diluted weighted average common shares outstanding

6,442

6,246

6,449

6,040

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

June 30, 2023

December 31, 2022

ASSETS

Cash and cash equivalents

$

5,918

$

12,146

Restricted cash

49,094

76,870

Equipment held for operating lease, less accumulated depreciation

2,161,650

2,111,935

Maintenance rights

14,032

17,708

Equipment held for sale

2,713

3,275

Receivables, net of allowances

52,259

46,954

Spare parts inventory

41,764

38,577

Investments

53,716

56,189

Property, equipment & furnishings, less accumulated depreciation

37,329

35,350

Intangible assets, net

1,100

1,129

Notes receivable, net of allowances

95,047

81,439

Investments in sales-type leases, net of allowances

5,827

6,440

Other assets

83,507

87,205

Total assets

$

2,603,956

$

2,575,217

LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY

Liabilities:

Accounts payable and accrued expenses

$

41,927

$

43,040

Deferred income taxes

137,884

132,516

Debt obligations

1,827,021

1,847,278

Maintenance reserves

73,872

59,453

Security deposits

22,528

20,490

Unearned revenue

33,626

17,863

Total liabilities

2,136,858

2,120,640

Redeemable preferred stock ($0.01 par value)

49,931

49,889

Shareholders’ equity:

Common stock ($0.01 par value)

68

66

Paid-in capital in excess of par

21,740

20,386

Retained earnings

373,965

357,493

Accumulated other comprehensive income, net of tax

21,394

26,743

Total shareholders’ equity

417,167

404,688

Total liabilities, redeemable preferred stock and shareholders’ equity

$

2,603,956

$

2,575,217

CONTACT:

Scott B. Flaherty

Chief Financial Officer

(561) 349-9989

Related Quotes