EX-99.1 2 q4ex991.htm EXHIBIT 99.1 Exhibit


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

Willis Lease Finance Corporation Reports
Annual Pre-tax Profit of $88.9 million
 
COCONUT CREEK, FL — March 11, 2020 — Willis Lease Finance Corporation (NASDAQ: WLFC) today reported annual total revenues of $409.2 million and pre-tax profit of $88.9 million for the year ended December 31, 2019. The Company’s 2019 pre-tax results were driven by continued leasing revenue growth as well as gains associated with the active management of its portfolio. Aggregate lease rent and maintenance reserve revenues were $299.7 million for 2019. The Company's results also include $18.2 million of non-cash write downs.
 
“2019 was a great year for our business as evidenced by our exceeding $400 million of revenue and $88.9 million of earnings before tax,” said Charles F. Willis, Chairman and CEO. “There is obvious volatility in the global markets, generally, but we believe the Company is well positioned to continue to build market share and grow customer relationships by leveraging our in-demand portfolio of lease assets and continuing to focus on delivering unique customer solutions.”

“We are very proud of what our teams accomplished in 2019, but given the macro issues facing our industry, obviously now is no time to rest on last year’s performance,” said Brian R. Hole, President. “We believe the Willis Platform™ can deliver the most value in a stressed environment when our customers are raising or conserving cash and looking for ways to reduce engine expense, or avoid it altogether, by leveraging our balance sheet, existing engine portfolio, surplus material and overall power plant management capabilities.”
 
2019 Highlights (at or for the year ended December 31, 2019, as compared to December 31, 2018):
 
•
Total revenue increased by 17.5% to $409.2 million in 2019 compared to $348.3 million in 2018.
•
Lease rent revenue was $190.7 million in 2019; 8.6% growth from $175.6 million in 2018.
•
Maintenance reserve revenue was $109.0 million in 2019, an increase of 25.3% compared to $87.0 million in 2018. Long term maintenance reserve revenue increased to $37.6 million in 2019, compared to $23.3 million in the prior year.
•
Spare parts and equipment sales were $74.7 million in 2019, compared to $71.1 million in 2018.
•
Gain on sale of leased equipment was $20.0 million in 2019, reflecting the sale of 16 engines, seven aircraft, four airframes and other related equipment from the lease portfolio, compared to $6.9 million in 2018, reflecting the sale of 14 engines, six aircraft, one airframe and other related equipment from the lease portfolio.
•
Other revenue increased by $7.1 million to $14.8 million in 2019, compared to $7.6 million in 2018, primarily reflecting interest revenue from our notes receivable and an increase in fees earned related to engines managed on behalf of third parties.
•
Income before income taxes was $88.9 million in 2019, compared to $56.3 million in 2018.
•
The book value of lease assets we own directly or through our joint ventures was $2.0 billion at December 31, 2019. As of December 31, 2019, the Company also managed 450 engines, aircraft and related equipment on behalf of third parties.
•
The Company maintained $603 million of undrawn revolver capacity at December 31, 2019.
•
Diluted weighted average earnings per common share was $10.50 for 2019, compared to $6.60 in 2018.
•
Book value per diluted weighted average common share outstanding increased to $57.83 at December 31, 2019, compared to $47.43 at December 31, 2018.





Balance Sheet

As of December 31, 2019, the Company had a total lease portfolio consisting of 263 engines, 12 aircraft, 10 other leased parts and equipment and one marine vessel with a net book value of $1.651 billion. As of December 31, 2018, the Company had a total lease portfolio consisting of 244 engines, 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 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 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 Willis’ 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,
 
 
 
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
REVENUE
 
 
 
 
 

 
 
 
 
 
 
Lease rent revenue
$
48,206

 
$
45,900

 
5.0
 %
 
$
190,690

 
$
175,609

 
8.6
 %
Maintenance reserve revenue
18,000

 
30,154

 
(40.3
)%
 
108,998

 
87,009

 
25.3
 %
Spare parts and equipment sales
18,154

 
34,973

 
(48.1
)%
 
74,651

 
71,141

 
4.9
 %
Gain on sale of leased equipment
765

 
5,282

 
(85.5
)%
 
20,044

 
6,944

 
188.7
 %
Other revenue
4,103

 
1,881

 
118.1
 %
 
14,777

 
7,644

 
93.3
 %
Total revenue
89,228

 
118,190

 
(24.5
)%
 
409,160

 
348,347

 
17.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
EXPENSES
 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense
23,199

 
21,214

 
9.4
 %
 
86,236

 
76,814

 
12.3
 %
Cost of spare parts and equipment sales
15,455

 
30,500

 
(49.3
)%
 
62,647

 
61,025

 
2.7
 %
Write-down of equipment
6,899

 
5,859

 
17.8
 %
 
18,220

 
10,651

 
71.1
 %
General and administrative
20,437

 
21,505

 
(5.0
)%
 
86,523

 
72,021

 
20.1
 %
Technical expense
3,188

 
1,943

 
64.1
 %
 
8,122

 
11,142

 
(27.1
)%
Net finance costs:
 
 
 
 


 
 
 
 
 


     Interest expense
15,657

 
17,602

 
(11.0
)%
 
66,889

 
64,220

 
4.2
 %
     Loss on debt extinguishment
—

 
—

 
—
 %
 
220

 
—

 
100.0
 %
Total net finance costs
15,657

 
17,602

 
(11.0
)%
 
67,109

 
64,220

 
4.5
 %
Total expenses
84,835

 
98,623

 
(14.0
)%
 
328,857

 
295,873

 
11.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
Earnings from operations
4,393

 
19,567

 
(77.5
)%
 
80,303

 
52,474

 
53.0
 %
Earnings from joint ventures
3,791

 
2,231

 
69.9
 %
 
8,578

 
3,800

 
125.7
 %
Income before income taxes
8,184

 
21,798

 
(62.5
)%
 
88,881

 
56,274

 
57.9
 %
Income tax expense
3,188

 
3,684

 
(13.5
)%
 
21,959

 
13,043

 
68.4
 %
Net income
4,996

 
18,114

 
(72.4
)%
 
66,922

 
43,231

 
54.8
 %
Preferred stock dividends
819

 
819

 
—
 %
 
3,250

 
3,250

 
—
 %
Accretion of preferred stock issuance costs
21

 
21

 
—
 %
 
84

 
83

 
1.2
 %
Net income attributable to common shareholders
$
4,156

 
$
17,274

 
(75.9
)%
 
$
63,588

 
$
39,898

 
59.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average earnings per common share
$
0.71

 
$
2.99

 
 
 
$
10.90

 
$
6.75

 
 
Diluted weighted average earnings per common share
$
0.68

 
$
2.91

 
 
 
$
10.50

 
$
6.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
5,850

 
5,782

 
 
 
5,836

 
5,915

 
 
Diluted weighted average common shares outstanding
6,099

 
5,939

 
 
 
6,058

 
6,046

 
 






Unaudited Consolidated Balance Sheets
(In thousands, except per share data)
 
 
 
December 31, 2019
 
December 31, 2018
ASSETS
 
 
 
 
Cash and cash equivalents
 
$
6,720

 
$
11,688

Restricted cash
 
56,948

 
70,261

Equipment held for operating lease, less accumulated depreciation
 
1,650,918

 
1,673,135

Maintenance rights
 
3,133

 
14,763

Equipment held for sale
 
120

 
789

Receivables, net of allowances
 
24,059

 
23,270

Spare parts inventory
 
41,759

 
48,874

Investments
 
57,936

 
47,941

Property, equipment & furnishings, less accumulated depreciation
 
31,520

 
27,679

Intangible assets, net
 
1,312

 
1,379

Notes receivable
 
38,145

 
238

Other assets
 
28,038

 
14,926

Total assets
 
$
1,940,608

 
$
1,934,943

 
 
 
 
 
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
 
 
 
 
Liabilities:
 
 
 
 
Accounts payable and accrued expenses
 
$
45,648

 
$
42,939

Deferred income taxes
 
110,418

 
90,285

Debt obligations
 
1,251,006

 
1,337,349

Maintenance reserves
 
106,870

 
94,522

Security deposits
 
20,569

 
28,047

Unearned revenue
 
6,121

 
5,460

Total liabilities
 
1,540,632

 
1,598,602

 
 
 
 
 
Redeemable preferred stock ($0.01 par value)
 
49,638

 
49,554

 
 
 
 
 
Shareholders’ equity:
 
 
 
 
Common stock ($0.01 par value)
 
64

 
62

Paid-in capital in excess of par
 
4,557

 
—

Retained earnings
 
348,965

 
286,623

Accumulated other comprehensive (loss) income, net of tax
 
(3,248
)
 
102

Total shareholders’ equity
 
350,338

 
286,787

Total liabilities, redeemable preferred stock and shareholders’ equity
 
$
1,940,608

 
$
1,934,943