NOVATO, Calif., March 10, 2017 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ:WLFC) today reported pre-tax earnings for 2016 of $23.9 million, up 87.4% from $12.8 million in 2015, on record revenue of $207.3 million.  Net income attributable to common shareholders for 2016 was $13.8 million, or $2.05 per diluted share, compared to $6.5 million, or $0.81 per diluted share in 2015. Fourth quarter 2016 net income attributable to common shareholders was $2.4 million, compared to $3.0 million in 2015, or $0.39 per diluted share in both periods.  Fourth quarter 2016 results were impacted by a $3.6 million non-cash write down as compared to a $0.6 million non-cash write down in the fourth quarter 2015.  

“I am very pleased that on a pre-tax basis our financial performance in 2016 was our most profitable since 2009,” said Charles F. Willis, Chairman and CEO.  “Our fourth quarter and full year results reflect a combination of improved utilization, growth in the lease portfolio and the continued effective management of our assets—all contributing to record total revenues of over $207 million. We also broadened our sources of equity through the issuance of preferred equity, which will serve our growth plans well.”    

“In addition to delivering solid financial results, the Company achieved a number of objectives in 2016 that position us well for the future,” said Brian R. Hole, President. “We amended both of our principal debt facilities, improving the flexibility and capacity of our ability to borrow and to manage our portfolio. We also formed Willis Asset Management Limited to purchase the consultancy business of Total Engine Support Limited and we now own and manage almost 800 engines, making us the largest independent owner and manager of engines in the world. We expect that the capabilities of the people and systems at WAM will help us develop and deliver cutting edge programs for our customers,” explained Hole.

2016 Highlights (at or for the periods ended December 31, 2016 as compared to December 31, 2015):

• Pre-tax earnings increased 87.4% to $23.9 million in 2016 from $12.8 million in 2015.
• Average utilization in the fourth quarter was sustained at 92% up from 91% reported for the year ago period.
• Total revenues grew 4.7% to $207.3 million in 2016, fueled primarily by a growing lease portfolio, higher portfolio utilization and rising lease rates.
• Lease rent revenues grew 11.0% to $119.9 million and 8.0% to $31.2 million for the full year and fourth quarter of 2016, respectively.
• The equipment portfolio grew 2.5% in 2016 to $1.137 billion from $1.109 billion a year ago.
• The Company purchased $149 million of equipment in 2016 as compared to $171 million in 2015.  In the fourth quarter of 2016, the Company purchased two aircraft and fourteen engines for $64 million. 
• Tangible book value per share increased 10.6% to $30.66 at December 31, 2016, compared to $27.72 a year ago.
• We repurchased a total of 1.2 million shares in 2016 at a weighted average price of $23.71 per share.  The Company repurchased 153,925 shares in the fourth quarter.
• On October 14, 2016, the Company issued $20.0 million of 6.5% Series A Preferred Stock.
• On October 26, 2016, through its wholly owned subsidiary Willis Asset Management Limited, the Company purchased the consultancy business of Total Engine Support Limited, significantly improving the Company’s asset management service offering and growing the Company’s owned and managed portfolio of engines, aircraft and equipment by over 500 assets.

“We believe we have a unique service offering in leasing, trading and asset management, materials and technical services, which customers are beginning to leverage,” said Hole. “There is a lot of competition in our markets but none that offers our full complement of products and services combined with our decades-long track record of delivering on promises. We will continue to emphasize creativity and reliability as we grow the business going forward.”

Balance Sheet

As of December 31, 2016, Willis Lease had 208 commercial aircraft engines, 11 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.137 billion, compared to 201 commercial aircraft engines, 10 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.109 billion, a year ago. The Company’s funded debt-to-equity ratio was 4.17 to 1 at year end, compared to 4.14 to 1 a year ago.

Willis Lease Finance

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, 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.

Consolidated Statements of Income
(In thousands, except per share data, unaudited)
	Three Months Ended											Years Ended
	December 31,								%			December 31,							%
		2016				2015			Change				2016			2015			Change
REVENUE
Lease rent revenue	$	31,168			$	28,849			8.0	%		$	119,895		$	108,046			11.0	%
Maintenance reserve revenue		11,529				14,361			(19.7	)%			57,091			53,396			6.9	%
Spare parts and equipment sales		7,318				10,582			(30.8	)%			17,783			25,582			(30.5	)%
Gain on sale of leased equipment		52				654			(92.0	)%			3,482			8,320			(58.1	)%
Other revenue		5,409				739			631.9	%			9,023			2,718			232.0	%
Total revenue		55,476				55,185			0.5	%			207,274			198,062			4.7	%
EXPENSES
Depreciation and amortization expense		17,045				17,034			0.1	%			66,280			69,424			(4.5	)%
Cost of spare parts and equipment sales		5,508				7,630			(27.8	)%			13,293			17,849			(25.5	)%
Write-down of equipment		3,590				601			497.3	%			9,514			9,181			3.6	%
General and administrative		13,086				11,918			9.8	%			47,780			42,744			11.8	%
Technical expense		2,080				1,567			32.7	%			6,993			9,403			(25.6	)%
Net finance costs
Interest expense		10,509				9,780			7.5	%			41,144			39,012			5.5	%
Loss (gain) on extinguishment of debt		-				-			0.0	%			137			(1,151	)		(111.9	)%
Total net finance costs		10,509				9,780			7.5	%			41,281			37,861			9.0	%
Total expenses		51,818				48,530			6.8	%			185,141			186,462			(0.7	)%
Earnings from operations		3,658				6,655			(45.0	)%			22,133			11,600			90.8	%
Earnings from joint ventures		939				48			n/a				1,813			1,175			54.3	%
Income before income taxes		4,597				6,703			(31.4	)%			23,946			12,775			87.4	%
Income tax expense		1,890				3,659			(48.3	)%			9,877			6,315			56.4	%
Net income	$	2,707			$	3,044			(11.1	)%		$	14,069		$	6,460			117.8	%
Accretion of preferred stock issuance costs		8				-			100.0	%			8			-			100.0	%
Preferred stock dividends		281				-			100.0	%			281			-			100.0	%
Net income attributable to common shareholders	$	2,418			$	3,044			(20.6	)%		$	13,780		$	6,460			113.3	%
Basic earnings per common share	$	0.39			$	0.39						$	2.10		$	0.83
Diluted earnings per common share	$	0.39			$	0.39						$	2.05		$	0.81
Average common shares outstanding		6,149				7,739							6,570			7,817
Diluted average common shares outstanding		6,275				7,872							6,714			7,987

  

Consolidated Balance Sheets
(In thousands, except share data, unaudited)
	December 31, 2016					December 31, 2015
ASSETS
Cash and cash equivalents	$	10,076				9,732
Restricted cash		22,298				33,026
Equipment held for operating lease, less accumulated depreciation		1,136,603				1,109,168
Maintenance rights		17,670				12,140
Equipment held for sale		30,710				23,454
Operating lease related receivable, net of allowances		16,484				13,626
Spare parts inventory		25,443				20,826
Investments		45,406				41,295
Property, equipment & furnishings, less accumulated depreciation		16,802				20,247
Intangibles assets, net		2,182				932
Other assets		14,213				9,839
Total assets	$	1,337,887				1,294,285
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses	$	17,792				21,665
Deferred income taxes		104,978				96,154
Notes payable		900,255				866,089
Maintenance reserves		71,602				71,054
Security deposits		21,417				25,010
Unearned lease revenue		5,823				5,090
Total liabilities		1,121,867				1,085,062
Redeemable preferred stock ($0.01 par value)		19,760				-
Shareholders' equity:
Common stock ($0.01 par value)		64				75
Paid-in capital in excess of par		2,512				28,720
Retained earnings		194,729				180,949
Accumulated other comprehensive loss, net of tax		(1,045	)			(521	)
Total shareholders' equity		196,260				209,223
Total liabilities, redeemable preferred stock and shareholders' equity	$	1,337,887				1,294,285

 

Consolidated Statements of Income (Loss)
(In thousands, except per share data, unaudited)
		Years Ended
		December 31,
			2016			2015				2014			2013				2012
REVENUE
Lease rent revenue		$	119,895		$	108,046			$	101,431		$	101,737			$	108,046
Maintenance reserve revenue			57,091			53,396				53,322			46,694				53,396
Spare parts and equipment sales			17,783			25,582				8,917			-				25,582
Gain on sale of leased equipment			3,482			8,320				5,882			5,675				8,320
Other revenue			9,023			2,718				4,506			4,306				2,718
Total revenue			207,274			198,062				174,058			158,412				198,062
EXPENSES
Depreciation and amortization expense			66,280			69,424				65,314			58,727				69,424
Cost of spare parts and equipment sales			13,293			17,849				7,474			-				17,849
Write-down of equipment			9,514			9,181				5,602			6,461				9,181
General and administrative			47,780			42,744				35,859			33,868				42,744
Technical expense			6,993			9,403				12,336			12,863				9,403
Net finance costs
Interest expense			41,144			39,012				37,062			38,719				31,669
Loss (gain) on extinguishment of debt			137			(1,151	)			-			-				15,462
Total net finance costs			41,281			37,861				37,062			38,719				47,131
Total expenses			185,141			186,462				163,647			150,638				195,732
Earnings from operations			22,133			11,600				10,411			7,774				937
Earnings from joint ventures			1,813			1,175				1,329			3,526				1,759
Income before income taxes			23,946			12,775				11,740			11,300				2,696
Income tax expense			9,877			6,315				4,560			(4,326	)			1,161
Net income		$	14,069		$	6,460			$	7,180		$	15,626			$	1,535
Accretion of preferred stock issuance costs			8			-				-			-				-
Preferred stock dividends			281			-				-			-				2,493
Preferred stock redemption costs			-			-				-			-				2,835
Net income (loss) attributable to common shareholders		$	13,780		$	6,460			$	7,180		$	15,626			$	(3,793	)
Basic earnings (loss) per common share		$	2.10		$	0.83			$	0.91		$	1.95			$	(0.45	)
Diluted earnings (loss) per common share		$	2.05		$	0.81			$	0.88		$	1.89			$	(0.43	)
Average common shares outstanding			6,570			7,817				7,917			8,029				8,490
Diluted average common shares outstanding			6,714			7,987				8,141			8,289				8,791

Contact: 
Scott B. Flaherty
Chief Financial Officer