EX-99.1 2 a09-8732_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

CONTACT:

Brad Forsyth

 

 

Chief Financial Officer

 

 

(415) 408-4700

 

NEWS RELEASE

 

Willis Lease Finance Reports Record 2008 Net Income of $26.6 Million

 

NOVATO, CA –March 25, 2009 – Willis Lease Finance Corporation (NASDAQ: WLFC), a leading lessor of commercial jet engines, today reported record revenues, net income and earnings per share in 2008, reflecting continued growth in the lease portfolio, high utilization of lease assets and historically low interest rates. Willis Lease’s net income available to common stockholders increased 61% to $23.5 million, or $2.68 per diluted share in 2008, compared to $14.5 million or $1.66 per diluted share a year ago.

 

2008 Highlights (at or for the year ended December 31, 2008 compared to December 31, 2007)

 

·                  The lease portfolio increased 11% from a year ago to $829.7 million.

·                  Average utilization was 93%, in line with a year ago.

·                  Lease rent revenues rose 19% to $102.4 million, contributing to a 25% increase in total revenue of $152.3 million.

·                  Maintenance reserve revenues contributed $33.7 million to revenue compared to $28.2 million a year ago.

·                  Earnings per diluted share grew 61% to $2.68 compared to $1.66 in 2007.

·                  Book value per common share was $17.66 at year end versus $16.93 at the end of 2007.

·                  Purchased 43 engines and sold or consigned 27 engines, ending the year with 160 engines in the portfolio.

·                  Liquidity available from warehouse and revolving credit facilities decreased to $242 million at year end, down slightly from $300 million a year ago.

 

“We had a great year,” said Charles F. Willis, President and CEO.  “I’m very proud of our outstanding performance in 2008.  We set new records for total revenue, net income, earnings per share and capital expenditures. We have a great team that worked hard to make this happen. A large part of our success in 2008 was the business volumes created from our lease pools in North America and China, developed several years ago. As a result of our in-roads in these markets, we generated more revenue in North America and China in 2008 than ever before. Having the engines that customers want has also contributed greatly to our success. Our long-term engine purchase agreement with CFM International has provided us with access to the most popular engine types available today, which has opened doors for us all over the world with customers that otherwise we may not have been able to attract.

 

“We can be successful in good times and bad,” continued Willis.  “In good times, demand for our leased engines rises along with the growth of the worldwide fleet of aircraft.  In bad times, demand is fueled by our customers desire to conserve cash.  That’s what I see happening now.  Many of our customers are deferring shop visits on their engines, choosing to lease our engines instead.  I expect that the desire to conserve cash will continue to generate healthy demand for our engines during these difficult economic times.”

 

“The fourth quarter of 2008 was our busiest ever,” said Donald A. Nunemaker, Executive Vice President & General Manager-Leasing.  “During the quarter, we purchased 11 engines totaling $89 million, entered into 23 new leases and raised the utilization rate from 88% at the end of September 2008 to 92% at year-end.  Most of our 2008 new engine deliveries were back-end loaded to the second half of the year. This accelerated pace of engine deliveries provided a significant challenge to our marketing, contracts and technical teams. Everyone worked together and did an exceptional job of quickly placing the engines into service and on lease at favorable terms.”

 

(more)

 


 

“Although it is still early to predict what will happen to the credit markets, we believe that we have the debt facilities in place to weather the current economic cycle due to our strong financial liquidity and the existence of our asset-backed securitization, WEST,” said Brad Forsyth, Chief Financial Officer. “Since its initial issuance in 2005, WEST cash flows have been strong, resulting in performance well ahead of original projections. WEST provides the majority of our debt and we benefit from the long term nature of this financing, with the notes payable over 13 to 15 years.”

 

“All of our debt is tied to one-month LIBOR which has recently dropped sharply in response to the economic downturn. With 60% of our interest costs fixed through hedging, our financing costs were relatively flat for the year and down 10% in the fourth quarter from a year ago. Despite the overall increase in debt levels, we benefited from the interest savings on the un-hedged portion of our debt,” Forsyth added. “In 2009, we expect to increase our hedging activities to protect against the risk of rising interest rates and take advantage of historically low long term swap rates. As always, our policy is to engage in hedging with only the highest rated counter parties.”

 

Balance Sheet

 

At December 31, 2008, the company had 160 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 $829.7 million, compared to 144 commercial aircraft engines, 3 aircraft parts packages, 6 aircraft and other engine-related equipment in its lease portfolio with a net book value of $744.8 million at December 31, 2007. Capital expenditures on equipment (including capitalized costs) totaled $229 million in 2008 of which $92 million was deployed in the fourth quarter.

 

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 $242 million of availability under its revolving credit and warehouse facilities at December 31, 2008, compared to $300 million a year earlier.  The company’s funded debt-to-equity ratio was 3.34 to 1 at December 31, 2008, compared to 3.25 to 1 at December 31, 2007.

 

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.

 

2


 

Consolidated Statements of Income

(In thousands, except per share data, audited)

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2008

 

2007

 

Change

 

2008

 

2007

 

Change

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

25,380

 

$

23,404

 

8.4

%

$

102,421

 

$

86,084

 

19.0

%

Maintenance reserve revenue

 

9,633

 

4,793

 

101.0

%

33,716

 

28,169

 

19.7

%

Gain/(Loss) on sale of leased equipment

 

(485

)

5,613

 

(108.6

)%

12,333

 

6,876

 

79.4

%

Other income

 

2,388

 

190

 

1156.8

%

3,823

 

768

 

397.8

%

Total revenue

 

36,916

 

34,000

 

8.6

%

152,293

 

121,897

 

24.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

9,631

 

8,480

 

13.6

%

37,438

 

31,136

 

20.2

%

Write-down of equipment

 

3,469

 

1,680

 

106.5

%

6,142

 

3,822

 

60.7

%

General and administrative

 

7,995

 

6,047

 

32.2

%

30,758

 

23,094

 

33.2

%

Net finance costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

9,651

 

10,012

 

(3.6

)%

38,640

 

37,940

 

1.8

%

Interest income

 

(411

)

(999

)

(58.9

)%

(1,887

)

(3,795

)

(50.3

)%

Net loss on extinguishment of debt

 

—

 

1,208

 

(100.0

)%

—

 

2,667

 

(100.0

)%

Total net finance costs

 

9,240

 

10,221

 

(9.6

)%

36,753

 

36,812

 

(0.2

)%

Total expenses

 

30,335

 

26,428

 

14.8

%

111,091

 

94,864

 

17.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

6,581

 

7,572

 

(13.1

)%

41,202

 

27,033

 

52.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint venture

 

232

 

245

 

(5.3

)%

797

 

700

 

13.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

6,813

 

7,817

 

(12.8

)%

41,999

 

27,733

 

51.4

%

Income tax expense

 

2,464

 

2,703

 

(8.8

)%

15,398

 

10,069

 

52.9

%

Net income

 

$

4,349

 

$

5,114

 

(15.0

)%

$

26,601

 

$

17,664

 

50.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends paid and declared-Series A

 

782

 

782

 

0.0

%

3,128

 

3,128

 

0.0

%

Net income attributable to common shareholders

 

$

3,567

 

$

4,332

 

(17.7

)%

$

23,473

 

$

14,536

 

61.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.43

 

$

0.53

 

 

 

$

2.85

 

$

1.79

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.41

 

$

0.48

 

 

 

$

2.68

 

$

1.66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

8,300

 

8,176

 

 

 

8,242

 

8,115

 

 

 

Diluted average common shares outstanding

 

8,787

 

9,007

 

 

 

8,760

 

8,742

 

 

 

 

3


 

Consolidated Balance Sheets

(In thousands, except share data, audited)

 

 

 

December 31,
2008

 

December 31,
2007

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

8,618

 

$

7,234

 

Restricted cash

 

69,194

 

64,960

 

Equipment held for operating lease, less accumulated depreciation

 

829,739

 

744,827

 

Equipment held for sale

 

21,191

 

5,006

 

Operating lease related receivable, net of allowances

 

8,607

 

5,550

 

Investments

 

10,434

 

10,327

 

Assets under derivative instruments

 

276

 

12

 

Property, equipment & furnishings, less accumulated depreciation

 

7,751

 

6,771

 

Equipment purchase deposits

 

13,530

 

12,180

 

Other assets

 

13,969

 

11,723

 

Total assets

 

$

983,309

 

$

868,590

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

12,732

 

$

11,825

 

Liabilities under derivative instruments

 

20,810

 

7,709

 

Deferred income taxes

 

56,118

 

46,632

 

Notes payable

 

641,125

 

567,108

 

Maintenance reserves

 

49,158

 

49,481

 

Security deposits

 

5,179

 

5,890

 

Unearned lease revenue

 

5,980

 

5,293

 

Total liabilities

 

791,102

 

693,938

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Preferred stock

 

$

31,915

 

$

31,915

 

Common stock ($0.01 par value)

 

91

 

84

 

Paid-in capital in excess of par

 

57,939

 

55,712

 

Retained earnings

 

117,163

 

93,690

 

Accumulated other comprehensive loss, net of tax benefit

 

(14,901

)

(6,749

)

Total shareholders’ equity

 

192,207

 

174,652

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

983,309

 

$

868,590

 

 

4


 

Consolidated Statements of Income

(In thousands, except per share data)

 

 

 

Twelve Months Ended
December 31,

 

 

 

2008

 

2007

 

2006

 

2005

 

2004

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

102,421

 

$

86,084

 

$

69,230

 

$

63,119

 

$

58,177

 

Maintenance reserve revenue

 

33,716

 

28,169

 

32,744

 

15,983

 

13,045

 

Gain/(Loss) on sale of leased equipment

 

12,333

 

6,876

 

3,781

 

(1,844

)

360

 

Other income

 

3,823

 

768

 

300

 

366

 

677

 

Total revenue

 

152,293

 

121,897

 

106,055

 

77,624

 

72,259

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Depreciation expense

 

37,438

 

31,136

 

26,255

 

25,786

 

23,336

 

Write-down of equipment

 

6,142

 

3,822

 

3,389

 

6,781

 

12,755

 

General and administrative

 

30,758

 

23,094

 

21,539

 

17,604

 

16,176

 

Net finance costs:

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

38,640

 

37,940

 

31,610

 

24,514

 

16,350

 

Interest income

 

(1,887

)

(3,795

)

(3,082

)

(1,541

)

(434

)

Realized and unrealized (gains)/losses on derivative instruments

 

—

 

—

 

(153

)

(1,589

)

(465

)

Net Loss on extinguishment of debt

 

—

 

2,667

 

—

 

1,375

 

—

 

Total net finance costs

 

36,753

 

36,812

 

28,375

 

22,759

 

15,451

 

Total expenses

 

111,091

 

94,864

 

79,558

 

72,930

 

67,718

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

41,202

 

27,033

 

26,497

 

4,694

 

4,541

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint venture

 

797

 

700

 

466

 

—

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

41,999

 

27,733

 

26,963

 

4,694

 

4,541

 

Income tax expense

 

15,398

 

10,069

 

9,077

 

1,053

 

1,213

 

Net income

 

$

26,601

 

$

17,664

 

$

17,886

 

$

3,641

 

$

3,328

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends paid and declared-Series A

 

3,128

 

3,128

 

2,945

 

—

 

—

 

Net income attributable to common shareholders

 

$

23,473

 

$

14,536

 

$

14,941

 

$

3,641

 

$

3,328

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

2.85

 

$

1.79

 

$

1.63

 

$

0.40

 

$

0.37

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

2.68

 

$

1.66

 

$

1.56

 

$

0.38

 

$

0.36

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

8,242

 

8,115

 

9,169

 

9,075

 

8,925

 

Diluted average common shares outstanding

 

8,760

 

8,742

 

9,606

 

9,515

 

9,276

 

 

5