EX-99.1 2 q1ex991.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1
wlfclogoa01.jpg    wlfclogoheader.jpg
 
 
 
CONTACT:
Scott B. Flaherty
NEWS RELEASE
 
Chief Financial Officer
 
(415) 408-4700
 
 

Willis Lease Finance Corporation Reports Record
Quarterly Pre-tax Profit of $27.8 million
 
COCONUT CREEK, FL — May 6, 2019 — Willis Lease Finance Corporation (NASDAQ: WLFC) today reported pre-tax profit of $27.8 million and total revenues of $103.8 million in the first quarter of 2019. The Company’s first quarter 2019 pre-tax results were driven by continued revenue growth in the core leasing business, an increase in trading activity and continuing spare parts sales. Aggregate lease rent and maintenance reserve revenues were $73.7 million for the first quarter of 2019.
 
“Our continued growth and the Company’s record quarterly revenue and pre-tax profits of $103.8 million and $27.8 million, respectively, speak to the market’s recognition of the value of the Willis Platform,” said Charles F. Willis, Chairman and CEO. “We continue to see a global client base leveraging our broad product offering of core lease services, materials, fleet transition solutions, asset management and materials services.”

“We are very pleased with our growth and financial results in the first quarter,” said Brian R. Hole, President. “We are even more excited, though, that our customers continue to subscribe to our message that it is more efficient to borrow an engine from us when they need it than it is to buy multiple new engines and deploy permanent capital in assets that are, by definition, ‘spare’.”
 
First Quarter 2019 Highlights (at or for the periods ended March 31, 2019, as compared to March 31, 2018, and December 31, 2018):
 
•
Total revenue increased by 47.2% to $103.8 million in the first quarter of 2019, compared to $70.5 million in the same quarter of 2018.
•
Lease rent revenue achieved a record quarterly high of $48.4 million in the first quarter of 2019; 22.0% growth from $39.6 million in the same quarter of 2018.
•
Quarterly Maintenance reserve revenue increased by $9.9 million, or 64.2%, to $25.4 million in the first quarter of 2019, compared to $15.4 million in the prior year period.
•
Spare parts and equipment sales increased by 34.8% to $17.5 million in the first quarter of 2019, compared to $13.0 million in the same quarter of 2018.
•
Earnings before tax were a record high $27.8 million in the first quarter of 2019, compared to $9.6 million in the same quarter of 2018.
•
Average utilization for the first quarter of 2019 increased to 89% from 86% in the comparable prior year quarter.
•
Our equipment lease portfolio was $1.605 billion at March 31, 2019, compared to $1.673 billion at December 31, 2018.
•
The book value of 311 lease assets we own directly or through our joint ventures was $2.0 billion at March 31, 2019. As of March 31, 2019, the Company also managed 437 engines, aircraft and related equipment on behalf of third parties.
•
The Company maintained $498 million of undrawn revolver capacity at March 31, 2019.
•
The Company repurchased a total of 7,671 shares of common stock in the first quarter of 2019 under the Company’s repurchase plan for $0.3 million.
•
Diluted weighted average earnings per common share was $3.35 per share for the first quarter of 2019.
•
Book value per diluted weighted average common share outstanding increased to $51.43 at March 31, 2019, compared to $47.43 at December 31, 2018.





Balance Sheet

As of March 31, 2019, the Company had a total lease portfolio consisting of 244 engines, 13 aircraft, 10 other leased parts and equipment and one marine vessel with a net book value of $1.605 billion. As of December 31, 2018, the Company had a total lease portfolio consisting of 244 engines and related equipment, 17 aircraft and 10 other leased parts and equipment, with a net book value of $1.673 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 Limited, 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.




Unaudited Consolidated Statements of Income
(In thousands, except per share data)
 
 
 
Three Months Ended March 31,
 
 
 
 
2019
 
2018
 
% Change
REVENUE
 
 

 
 

 
 

Lease rent revenue
 
$
48,369

 
$
39,644

 
22.0
 %
Maintenance reserve revenue
 
25,350

 
15,440

 
64.2
 %
Spare parts and equipment sales (1)
 
17,502

 
12,986

 
34.8
 %
Gain on sale of leased equipment (1)
 
9,570

 
545

 
1,656.0
 %
Other revenue
 
2,978

 
1,882

 
58.2
 %
Total revenue
 
103,769

 
70,497

 
47.2
 %
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
Depreciation and amortization expense
 
20,258

 
17,355

 
16.7
 %
Cost of spare parts and equipment sales (1)
 
14,412

 
11,388

 
26.6
 %
Write-down of equipment
 
1,105

 
—

 
—
 %
General and administrative
 
21,440

 
15,611

 
37.3
 %
Technical expense
 
1,788

 
3,677

 
(51.4
)%
Interest expense
 
17,879

 
13,595

 
31.5
 %
Total expenses
 
76,882

 
61,626

 
24.8
 %
 
 
 
 
 
 
 
Earnings from operations
 
26,887

 
8,871

 
203.1
 %
Earnings from joint ventures
 
946

 
747

 
26.6
 %
Income before income taxes
 
27,833

 
9,618

 
189.4
 %
Income tax expense
 
6,955

 
2,536

 
174.3
 %
Net income
 
20,878

 
7,082

 
194.8
 %
Preferred stock dividends
 
801

 
801

 
—
 %
Accretion of preferred stock issuance costs
 
21

 
20

 
5.0
 %
Net income attributable to common shareholders
 
$
20,056

 
$
6,261

 
220.3
 %
 
 
 
 
 
 
 
Basic weighted average earnings per common share
 
$
3.47

 
$
1.03

 
 
Diluted weighted average earnings per common share
 
$
3.35

 
$
1.00

 
 
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
 
5,779

 
6,104

 
 
Diluted weighted average common shares outstanding
 
5,978

 
6,256

 
 
———————
(1) Effective January 1, 2018, the Company adopted ASC 606 — Revenue from Contracts with Customers and has identified the transfer of engines and airframes from the lease portfolio to the Spare Parts segment for part out as sales to customers in accordance with the ordinary operations of our Spare Parts reportable segment. As such, we present the sale of these assets on a gross basis and have reclassified the gross revenue and costs of sale to the Spare parts and equipment sales and Cost of spare parts and equipment sales line items from the net gain (loss) presentation within the Gain on sale of leased equipment line item. The reclassification resulted in an increase in Spare parts and equipment sales of $6.7 million, a decrease in Gain on sale of leased equipment of $0.1 million and an increase in Cost of spare parts and equipment sales of $6.6 million for the three months ended March 31, 2018.





Unaudited Consolidated Balance Sheets
(In thousands, except per share data)
 
 
 
March 31, 2019
 
December 31, 2018
ASSETS
 
 

 
 

Cash and cash equivalents
 
$
12,181

 
$
11,688

Restricted cash
 
68,452

 
70,261

Equipment held for operating lease, less accumulated depreciation
 
1,605,120

 
1,673,135

Maintenance rights
 
14,763

 
14,763

Equipment held for sale
 
629

 
789

Receivables, net of allowances
 
24,986

 
23,270

Spare parts inventory
 
47,038

 
48,874

Investments
 
54,253

 
47,941

Property, equipment & furnishings, less accumulated depreciation
 
27,758

 
27,679

Intangible assets, net
 
1,359

 
1,379

Notes receivable
 
30,854

 
238

Other assets
 
18,109

 
14,926

Total assets
 
$
1,905,502

 
$
1,934,943

 
 
 
 
 
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
 
 

 
 
Liabilities:
 
 

 
 
Accounts payable and accrued expenses
 
$
32,410

 
$
42,939

Deferred income taxes
 
96,995

 
90,285

Debt obligations
 
1,297,836

 
1,337,349

Maintenance reserves
 
93,979

 
94,522

Security deposits
 
22,212

 
28,047

Unearned revenue
 
5,057

 
5,460

Total liabilities
 
1,548,489

 
1,598,602

 
 
 
 
 
Redeemable preferred stock ($0.01 par value)
 
49,575

 
49,554

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common stock ($0.01 par value)
 
62

 
62

Paid-in capital in excess of par
 
563

 
—

Retained earnings
 
306,912

 
286,623

Accumulated other comprehensive (loss) income, net of tax
 
(99
)
 
102

Total shareholders’ equity
 
307,438

 
286,787

Total liabilities, redeemable preferred stock and shareholders’ equity
 
$
1,905,502

 
$
1,934,943