EX-99.1 2 a08-28308_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

 

 

CONTACT:

Brad Forsyth

 

 

 

Chief Financial Officer

 

 

 

(415) 408-4700

NEWS RELEASE

 

 

 

 

Willis Lease Finance Reports Record Earnings Per Share of $1.13 in 3Q08

 

NOVATO, CA –November 10, 2008 – Willis Lease Finance Corporation (NASDAQ: WLFC), a leading lessor of commercial jet engines, today reported record earnings per share in the third quarter of 2008.  Willis Lease’s net income available to common stockholders increased to $9.9 million, or $1.13 per diluted share, in the third quarter of 2008, compared to $3.0 million, or $0.34 per diluted share, in the like quarter a year ago. In the first nine months of 2008, net income available to common stockholders almost doubled to $19.9 million, or $2.27 per diluted share, from $10.2 million, or $1.18 per diluted share in the like period of 2007.

 

Third Quarter 2008 Highlights

 

·                  Lease rent revenue rose 19% to $26.0 million from a year ago.

·                  The lease portfolio increased 9% to $766 million from a year ago.

·                  Average utilization for the quarter was 91% compared with 92% a year ago.

·                  Generated an $11.1 million pretax gain from the sale of ten engines totaling $63 million

·                  Maintenance reserve revenue increased 6% to $8.3 million from a year ago.

·                  Liquidity available from warehouse and revolving credit facilities increased to $278 million at quarter end, up from $49 million a year ago.

·                  Book value per common share was $18.68 at September 30, 2008, up from $17.20 at September 30, 2007.

 

“The third quarter 2008 results proved to be one of the best in our 30-year history,” said Charles F. Willis, President and CEO.  “During the quarter, we completed the sale of ten jet engines for $63 million, a transaction which was nine months in the making. Besides contributing a gain of $11.1 million pretax to this quarter’s profitability, this transaction allowed us to move some older engines out of the portfolio and free up funds to invest in new engines. We have retained the servicing responsibility for this ten engine portfolio which will generate attractive servicing income going forward and allow us to maintain the valuable relationships we have built up with our customers over the years. We will continue to manage the mix of engines within our portfolio and sell engines when market conditions are advantageous.”

 

“Our profitability is strong, and we continue to grow at a solid pace.  Our utilization rate is high and the lease portfolio is healthy,” said Don Nunemaker, EVP and GM Leasing. “These are considerable accomplishments in light of the challenges facing companies in our industry today. Given the global downturn in economic activity, the worldwide financial crisis, fluctuations in the price of fuel and the uncertainty associated with each of these going forward, we have been able to successfully navigate our way through these obstacles. Fortunately, we continue to see strong demand for leased engines from our airline customers as the aviation industry looks to conserve capital and reduce expenses.”

 

Results from Operations

 

Further expansion of the engine portfolio continued to drive top line growth with third quarter lease rent revenues growing 19% to $26.0 million compared to $21.9 million in the third quarter of 2007.  Maintenance reserve revenue was up 6% to $8.3 million from $7.8 million in the year ago period due to the growth in the portfolio. Gain on sale of equipment was $11.6 million in the third quarter of 2008 related to the sale of eleven engines. The ten engine portfolio sale occurred at the end of the quarter resulting in a $51.9 million reduction in the NBV of the equipment portfolio. There were no engines sold in the year ago period.  Total third quarter revenue grew 54% to $45.9 million from $29.8 million in the third quarter of 2007.

 

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In the first nine months of 2008, lease rent revenue increased 23% to $77.0 million compared to $62.7 million in the first nine months of 2007.  Year-to-date, maintenance reserve revenue was up 3% to $24.1 million from $23.4 million. Year-to-date, gain on the sale of equipment was $12.8 million compared to $1.3 million in the first nine months of 2007.  Year-to-date, total revenue grew 31% to $115.4 million from $87.9 million in the first nine months of 2007.

 

With the growth in the engine portfolio, total expenses increased 23% to $29.4 million in the third quarter and 18% to $80.8 million year-to-date.  Depreciation in the third quarter of 2008 grew 22% to $10.1 million from $8.3 million a year ago.  In the first nine months of 2008, depreciation increased 23% to $27.8 million from $22.7 million in the like period of 2007. Write-down of equipment was $0.9 million in the third quarter of 2008, and $2.7 million year-to-date, compared to no write-down in the third quarter a year ago and $2.1 million in the first nine months of 2007.

 

“All of our debt carries variable interest rates tied to one-month LIBOR, although approximately half of our debt is currently hedged. Consequently, we paid higher interest costs in October on the un-hedged debt due to the spike in LIBOR,” said Brad Forsyth, Chief Financial Officer. “With the actions by the US and other governments to loosen the credit markets resulting in the recent decline in LIBOR interest rates, our finance costs will be favorably impacted going forward. Fortunately, our ability to access the credit markets through our existing WEST warehouse and revolving credit facilities has not been meaningfully impacted by the recent turmoil in the global financial markets.”  Third quarter net finance costs decreased to $9.2 million from $10.4 million in the year ago period, which includes a $1.5 million loss on extinguishment of debt in the third quarter a year ago.

 

General and administrative expenses increased to $9.2 million in the third quarter compared to $5.3 million in the third quarter a year ago primarily due to increased personnel related costs, technical services expenses and selling expenses as well as increased legal and accounting fees.  Year-to-date G&A expenses totaled $22.8 million compared to $17.0 million in the first nine months a year ago, an increase of 34%. In addition, Chief Operating Officer Lee Beaumont has left the company to focus on his consulting endeavors and new opportunities. “We appreciate all of the fine contributions Lee has made to our firm, and we wish him well in the future,” said Willis. “We do not anticipate filling the Chief Operating Officer position at this time, but rather will call on our senior management team to fulfill his duties and responsibilities.”

 

In the third quarter of 2008, income from operations increased to $16.5 million from $5.9 million in the year ago period. Year-to-date, income from operations grew to $34.6 million from $19.5 million in the first nine months of 2007.  Willis Lease generated net income of $10.7 million in the third quarter and $22.3 million in the first nine months of 2008, up from $3.8 million in the third quarter and $12.6 million in the first nine months of 2007.  After payment of preferred dividends, net income available to common stockholders grew to $9.9 million, or $1.13 per diluted share, compared to $3.0 million, or $0.34 per diluted share in the third quarter of 2007.  In the first nine months of 2008, net income available to common stockholders grew to $19.9 million, or $2.27 per diluted share, compared to $10.2 million, or $1.18 per diluted share in the year ago period.

 

Balance Sheet

 

At September 30, 2008, the company had 152 commercial aircraft engines, 3 aircraft parts packages, and 4 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $766.4 million, compared to 142 commercial aircraft engines, 3 aircraft parts packages, 4 aircraft and other engine-related equipment in its lease portfolio with a net book value of $703.0 million at September 30, 2007. The ten engine sale just prior to quarter end reduced the equipment portfolio net book value by $51.9 million at September 30, 2008.

 

The restricted cash balance increased in the quarter to $105.8 million compared to $75.7 million a year ago. The increase was due to the ten engine sale, with $41.2 million of the sale proceeds included in the restricted cash

 

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balance to be used for future engine purchases. Prior to this transaction, the restricted cash balance was $64.6 million. Equipment held for sale increased to $20.6 million compared to $6.0 million a year ago due to the increase in the number of engines consigned for part-out as well as the inclusion of an engine that was sold by Willis Lease in the fourth quarter.

 

Total assets increased 15% to $950.3 million at September 30, 2008, compared to $825.4 million a year ago.  Total shareholders’ equity was $196.6 million compared to $173.0 million a year ago.  Book value per common share increased to $18.68 compared to $17.79 at June 30, 2008, and $16.93 at December 31, 2007.

 

With the establishment of the new WEST $200 million warehouse facility in December 2007 and the placement of $212 million of WEST long term notes in March 2008, the company had $278 million of availability under its revolving credit and warehouse facilities at September 30, 2008, compared to $49 million a year earlier.  The company’s funded debt-to-equity ratio was 3.11 to 1 at September 30, 2008, compared to 3.10 to 1 at September 30, 2007.  Total capital expenditures in the first nine months of 2008 were $137.1 million compared to $129.4 million a year ago.

 

About Willis Lease Finance

 

Willis Lease Finance Corporation leases spare commercial aircraft engines, rotable parts and aircraft to commercial airlines, aircraft engine manufacturers and overhaul/repair facilities worldwide.  These leasing activities are integrated with the purchase and resale of used and refurbished commercial aircraft engines.

 

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.

 

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WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

Consolidated Statements of Income

(In thousands, except per share data, unaudited)

 

 

 

Three Months Ended
September 30,

 

%

 

Nine Months Ended
September 30,

 

%

 

 

 

2008

 

2007

 

Change

 

2008

 

2007

 

Change

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

26,003

 

$

21,930

 

18.6

%

$

77,041

 

$

62,680

 

22.9

%

Maintenance reserve revenue

 

8,281

 

7,848

 

5.5

%

24,083

 

23,376

 

3.0

%

Gain on sale of leased equipment

 

11,557

 

(37

)

n/a

 

12,818

 

1,263

 

914.9

%

Other income

 

53

 

73

 

(27.4

)%

1,435

 

578

 

148.3

%

Total revenue

 

45,894

 

29,814

 

53.9

%

115,377

 

87,897

 

31.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

10,082

 

8,267

 

22.0

%

27,807

 

22,656

 

22.7

%

Write-down of equipment

 

862

 

—

 

n/a

 

2,673

 

2,142

 

24.8

%

General and administrative

 

9,210

 

5,278

 

74.5

%

22,763

 

17,047

 

33.5

%

Net finance costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

9,628

 

9,929

 

(3.0

)%

28,989

 

27,928

 

3.8

%

Interest income

 

(413

)

(1,037

)

(60.2

)%

(1,476

)

(2,796

)

(47.2

)%

Loss upon extinguishment of debt

 

—

 

1,459

 

(100.0

)%

—

 

1,459

 

(100.0

)%

Total net finance costs

 

9,215

 

10,351

 

(11.0

)%

27,513

 

26,591

 

3.5

%

Total expenses

 

29,369

 

23,896

 

22.9

%

80,756

 

68,436

 

18.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

16,525

 

5,918

 

179.2

%

34,621

 

19,461

 

77.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint venture

 

183

 

163

 

12.3

%

565

 

455

 

24.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

16,708

 

6,081

 

174.8

%

35,186

 

19,916

 

76.7

%

Income tax expense

 

5,983

 

2,330

 

156.8

%

12,933

 

7,366

 

75.6

%

Net income

 

$

10,725

 

$

3,751

 

185.9

%

$

22,253

 

$

12,550

 

77.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends paid and declared-Series A

 

782

 

782

 

0.0

%

2,346

 

2,346

 

0.0

%

Net income attributable to common shareholders

 

$

9,943

 

$

2,969

 

234.9

%

$

19,907

 

$

10,204

 

95.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share:

 

$

1.20

 

$

0.36

 

 

 

$

2.42

 

$

1.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share:

 

$

1.13

 

$

0.34

 

 

 

$

2.27

 

$

1.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

8,253

 

8,174

 

 

 

8,223

 

8,106

 

 

 

Diluted average common shares outstanding

 

8,785

 

8,769

 

 

 

8,764

 

8,654

 

 

 

 

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WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share data, unaudited)

 

 

 

September

 

December

 

September

 

 

 

30, 2008

 

31, 2007

 

30, 2007

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

1,508

 

$

7,234

 

$

817

 

Restricted cash

 

105,828

 

64,960

 

75,686

 

Equipment held for operating lease, less accumulated depreciation

 

766,379

 

744,827

 

703,010

 

Equipment held for sale

 

20,561

 

5,006

 

6,033

 

Operating lease related receivable, net of allowances

 

8,679

 

5,550

 

5,862

 

Investments

 

10,451

 

10,327

 

10,292

 

Assets under derivative instruments

 

377

 

12

 

187

 

Property, equipment & furnishings, less accumulated depreciation

 

7,895

 

6,771

 

6,876

 

Equipment purchase deposits

 

13,211

 

12,180

 

6,120

 

Other assets

 

15,416

 

11,723

 

10,473

 

Total assets

 

$

950,305

 

$

868,590

 

$

825,356

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

14,623

 

$

11,825

 

$

12,002

 

Liabilities under derivative instruments

 

8,078

 

7,709

 

2,783

 

Deferred income taxes

 

58,696

 

46,632

 

46,392

 

Notes payable

 

612,155

 

567,108

 

536,452

 

Maintenance reserves

 

50,246

 

49,481

 

44,390

 

Security deposits

 

5,332

 

5,890

 

5,295

 

Unearned lease revenue

 

4,575

 

5,293

 

5,056

 

Total liabilities

 

753,705

 

693,938

 

652,370

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Preferred stock

 

$

31,915

 

$

31,915

 

$

31,915

 

Common stock ($0.01 par value)

 

88

 

84

 

82

 

Paid-in capital in excess of par

 

57,752

 

55,712

 

55,139

 

Accumulated other comprehensive loss, net of tax

 

(6,752

)

(6,749

)

(3,508

)

Retained earnings

 

113,597

 

93,690

 

89,358

 

Total shareholders’ equity

 

196,600

 

174,652

 

172,986

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

950,305

 

$

868,590

 

$

825,356

 

 

Note: Transmitted on Global Newswire on November 10, 2008 at 3:30 a.m. PDT

 

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