EX-99.1 2 q42022ex991.htm EX-99.1 Document

Exhibit 99.1
 image.jpg
 
CONTACT:
Scott B. Flaherty
NEWS RELEASE Chief Financial Officer
 (561) 349-9989
 

Willis Lease Finance Corporation Reports
Annual Pre-tax Income of $9.8 million
 
COCONUT CREEK, FL — March 9, 2023 — 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,
 20222021% Change20222021% Change
REVENUE 
Lease rent revenue$48,227 $37,972 27.0 %$162,571 $134,831 20.6 %
Maintenance reserve revenue23,907 13,212 80.9 %83,424 73,961 12.8 %
Spare parts and equipment sales6,621 4,191 58.0 %27,009 17,417 55.1 %
Interest income1,789 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 revenue8,183 3,210 154.9 %25,095 11,950 110.0 %
Total revenue88,144 75,814 16.3 %311,927 274,202 13.8 %
EXPENSES
Depreciation and amortization expense22,780 21,749 4.7 %88,260 90,504 (2.5)%
Cost of spare parts and equipment sales4,753 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 administrative25,710 21,038 22.2 %92,530 75,350 22.8 %
Technical expense3,193 3,251 (1.8)%14,415 9,381 53.7 %
Net finance costs:
     Interest expense17,534 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 costs14,976 17,654 (15.2)%64,185 67,985 (5.6)%
Total expenses71,412 71,213 0.3 %302,072 265,862 13.6 %
Income from operations16,732 4,601 263.7 %9,855 8,340 18.2 %
Income (Loss) from joint ventures1,469 1,983 (25.9)%(62)800 (107.8)%
Income before income taxes18,201 6,584 176.4 %9,793 9,140 7.1 %
Income tax expense3,858 4,842 (20.3)%4,354 5,788 (24.8)%
Net income14,343 1,742 723.4 %5,439 3,352 62.3 %
Preferred stock dividends819 821 (0.2)%3,250 3,251 0.0 %
Accretion of preferred stock issuance costs21 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 outstanding6,110 6,044 6,071 6,112 
Diluted weighted average common shares outstanding6,379 6,304 6,297 6,346 




Unaudited Consolidated Balance Sheets
(In thousands, except per share data)
 
 December 31, 2022December 31, 2021
ASSETS
Cash and cash equivalents$12,146 $14,329 
Restricted cash76,870 81,312 
Equipment held for operating lease, less accumulated depreciation2,111,935 1,991,368 
Maintenance rights17,708 22,511 
Equipment held for sale3,275 6,952 
Receivables, net of allowances46,954 39,623 
Spare parts inventory38,577 50,959 
Investments56,189 55,927 
Property, equipment & furnishings, less accumulated depreciation35,350 31,327 
Intangible assets, net1,129 1,188 
Notes receivable81,439 115,456 
Investments in sales-type leases6,440 — 
Other assets87,205 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 taxes132,516 124,332 
Debt obligations1,847,278 1,790,264 
Maintenance reserves59,453 65,976 
Security deposits20,490 19,349 
Unearned revenue17,863 10,458 
Total liabilities2,120,640 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 par20,386 15,401 
Retained earnings357,493 355,388 
Accumulated other comprehensive income, net of tax26,743 5,031 
Total shareholders’ equity404,688 375,885 
Total liabilities, redeemable preferred stock and shareholders’ equity$2,575,217 $2,462,927