EX-99.1 2 a14-7352_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE

CONTACT:  Brad Forsyth

Chief Financial Officer

(415) 408-4700

 

 

 

 

 

Strong Fourth Quarter Propels Willis Lease Finance to $15.6 Million Profit in 2013

 

NOVATO, CA – March 3, 2014 – Willis Lease Finance Corporation (NASDAQ: WLFC), the premier independent jet engine lessor in the commercial finance sector, today reported 2013 net income attributable to common shareholders of $15.6 million, or $1.89 per diluted share. Fourth quarter net income attributable to common shareholders was $6.6 million, or $0.81 per diluted share, fueled by 12.9% growth in lease rent revenue due to improved utilization and a larger lease portfolio, which contributed to 18.9% overall growth in total revenue.

 

“We ended 2013 with significant momentum, purchasing six new engines in December for over $75 million, contributing to growth in both our portfolio and the Willis Mitsui JV portfolio, and closing new lease agreements for 19 engines, which is a record-setting pace for us,” said Charles F. Willis, Chairman and CEO.  “Our earnings this quarter are the highest we’ve reported since the third quarter of 2009. A major improvement in our portfolio utilization is one of the major reasons for the strong results, which has carried into 2014. Utilization reached 89% at the end of January 2014 which is the highest level reached in the past three years. Improving lease demand across all engine types, underpinned by our continued access to the global bank and capital markets, has provided a strong start to 2014.”

 

In the fourth quarter of 2012, Willis Lease recorded a $2.8 million charge related to the redemption of its preferred stock, which resulted in a net loss of $0.8 million, or $0.09 per diluted share. For the full year in 2012, a $15.5 million pre-tax charge for extinguishment of debt and derivatives termination related to the successful closing of the WEST II ABS financing contributed to a net loss of $3.8 million, or $0.43 per diluted share.

 

Fourth Quarter and 2013 Highlights (at or for the three-month periods ended December 31, 2013, compared to December 31, 2012 and September 30, 2013):

 

♦                Tangible book value per share increased 10.8% to $25.31 compared to $22.85 a year ago.

♦                Repurchased 395,254 shares of common stock in 2013 for $5.9 million at a weighted average price of $14.97 per share.

♦                The lease portfolio increased 7.4% to $1.03 billion from $0.96 billion a year ago.

♦                Lease rent revenues increased 12.9% in the quarter and 7.6% for the year, reflecting higher average portfolio utilization and an increase in the average size of the lease portfolio.

♦                Total revenues increased 18.9% in the quarter and 7.0% for the year.

♦                Interest expense increased 22.0% to $38.7 million compared to $31.7 million a year ago, reflecting higher debt levels due to growth in the lease portfolio and higher average financing costs. The higher interest costs (pre-tax) were partially offset by the elimination of the $2.5 million preferred dividend (after-tax) resulting from the repurchase of the preferred stock in October 2012.

♦                Average utilization in 2013 was 84% compared to 83% in 2012.

♦                Utilization was 86% at December 31, 2013, up from 85% at September 30, 2013 and 83% at June 30, 2013.

♦                Liquidity under the revolving credit facility was $88 million at year end, down from $148 million a year ago.

 

 

(more)

 


 

WLFC earns $1.89 EPS in 2013

March 3, 2014

Page 2

 

“In addition to growing our engine portfolio, we made strategic investments during 2013 to better position our business for the future,” said Donald Nunemaker, President. “We increased the size of the engine lease portfolio of the Willis Mitsui joint venture by more than $100 million in 2013, ending the year with 26 engines with a book value of $242 million. We also launched Willis Aeronautical Services, Inc. to provide end-of-life solutions for aviation materials and services related to aircraft engines and acquired most of the assets and hired the team of professionals from JT-Power, LLC.  The integration of this business is going well and the business was accretive to 2013 earnings, sooner than expected.”

 

Balance Sheet

 

At December 31, 2013, Willis Lease had 202 commercial aircraft engines, 5 aircraft parts packages and 4 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $1.03 billion, compared to 184 commercial aircraft engines, 4 aircraft parts packages and 7 aircraft and other engine-related equipment in its lease portfolio, with a net book value of 0.96 billion, a year ago.  The Company’s funded debt-to-equity is 3.70 to 1 at year end, compared to 3.60 to 1 at September 30, 2013 and 3.50 to 1 a year ago.

 

About Willis Lease Finance

 

Willis Lease Finance Corporation leases large and regional spare commercial aircraft engines, APU’s and aircraft to airlines, aircraft engine manufacturers, air cargo carriers and maintenance, repair and overhaul providers in 110 countries. These leasing activities are integrated with engine and aircraft trading, engine lease pools supported by cutting edge technology, 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/A and other continuing reports filed with the Securities and Exchange Commission.

 


 

WLFC earns $1.89 EPS in 2013

March 3, 2014

Page 3

 

 

Consolidated Statements of Income

 

(In thousands, except per share data)

 

 

 

Three Months Ended

 

 

 

Twelve Months Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2013

 

2012

 

Change

 

2013

 

2012

 

Change

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

  $

26,721

 

  $

23,674

 

12.9%

 

  $

101,737

 

  $

94,591

 

7.6%

 

Maintenance reserve revenue

 

16,786

 

12,719

 

32.0%

 

46,694

 

41,387

 

12.8%

 

Gain on sale of leased equipment

 

2,119

 

942

 

124.9%

 

5,675

 

5,499

 

3.2%

 

Other revenue

 

1,577

 

2,357

 

(33.1)%

 

4,306

 

6,613

 

(34.9)%

 

Total revenue

 

47,203

 

39,692

 

18.9%

 

158,412

 

148,090

 

7.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

15,164

 

13,710

 

10.6%

 

58,727

 

52,591

 

11.7%

 

Write-down of equipment

 

193

 

3,118

 

(93.8)%

 

6,461

 

5,874

 

10.0%

 

General and administrative

 

9,603

 

9,212

 

4.2%

 

33,868

 

34,551

 

(2.0)%

 

Technical expense

 

2,440

 

2,291

 

6.5%

 

12,863

 

7,006

 

83.6%

 

Net finance costs:

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

9,735

 

9,155

 

6.3%

 

38,719

 

31,749

 

22.0%

 

Interest income

 

-    

 

-    

 

0.0%

 

-    

 

(80)

 

(100.0)%

 

Loss on debt extinguishment and derivatives termination

 

-    

 

50

 

(100.0)%

 

-    

 

15,462

 

(100.0)%

 

Total net finance costs

 

9,735

 

9,205

 

5.8%

 

38,719

 

47,131

 

(17.8)%

 

Total expenses

 

37,135

 

37,536

 

(1.1)%

 

150,638

 

147,153

 

2.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

10,068

 

2,156

 

367.0%

 

7,774

 

937

 

729.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint ventures

 

340

 

811

 

(58.1)%

 

3,526

 

1,759

 

100.5%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

10,408

 

2,967

 

250.8%

 

11,300

 

2,696

 

319.1%

 

Income tax expense (benefit)

 

3,855

 

756

 

409.9%

 

(4,326)

 

1,161

 

(472.6)%

 

Net income

 

  $

6,553

 

  $

2,211

 

196.4%

 

  $

15,626

 

  $

1,535

 

918.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

-    

 

147

 

(100.0)%

 

-    

 

2,493

 

(100.0)%

 

Preferred stock redemption costs

 

-    

 

2,835

 

(100.0)%

 

-    

 

2,835

 

(100.0)%

 

Net income (loss) attributable to common shareholders

 

  $

6,553

 

  $

(771)

 

n/a      

 

  $

15,626

 

  $

(3,793)

 

n/a      

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

 

  $

0.84

 

  $

(0.09)

 

 

 

  $

1.95

 

  $

(0.45)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share

 

  $

0.81

 

  $

(0.09)

 

 

 

  $

1.89

 

  $

(0.43)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

7,846

 

8,277

 

 

 

8,029

 

8,490

 

 

 

Diluted average common shares outstanding

 

8,084

 

8,525

 

 

 

8,289

 

8,791

 

 

 

 

 


 

WLFC earns $1.89 EPS in 2013

March 3, 2014

Page 4

 

 

Consolidated Balance Sheets

 

(In thousands, except share data)

 

 

 

December 31,

 

December 31,

 

 

2013

 

2012

ASSETS

 

 

 

 

Cash and cash equivalents

 

$

12,469

 

$

5,379

Restricted cash

 

51,126

 

24,591

Equipment held for operating lease, less accumulated depreciation

 

1,033,022

 

961,459

Equipment held for sale

 

32,491

 

23,607

Operating lease related receivable, net of allowances

 

13,286

 

12,916

Inventory

 

3,280

 

-

Investments

 

23,485

 

21,831

Property, equipment & furnishings, less accumulated depreciation

 

4,950

 

5,989

Intangible assets, net

 

1,396

 

-

Equipment purchase deposits

 

1,369

 

1,369

Other assets

 

22,355

 

21,574

Total assets

 

$

1,199,229

 

$

1,078,715

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

Liabilities:

 

 

 

 

Accounts payable and accrued expenses

 

$

16,283

 

$

15,374

Liabilities under derivative instruments

 

-

 

1,690

Deferred income taxes

 

86,685

 

90,638

Notes payable

 

787,614

 

696,988

Maintenance reserves

 

77,335

 

63,313

Security deposits

 

15,158

 

6,956

Unearned lease revenue

 

3,549

 

4,593

Total liabilities

 

986,624

 

879,552

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

Common stock ($0.01 par value)

 

$

84

 

$

87

Paid-in capital in excess of par

 

44,741

 

47,785

Retained earnings

 

167,455

 

151,829

Accumulated other comprehensive income (loss), net of tax

 

325

 

(538)

Total shareholders’ equity

 

212,605

 

199,163

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,199,229

 

$

1,078,715

 


 

WLFC earns $1.89 EPS in 2013

March 3, 2014

Page 5

 

 

Consolidated Statements of Income (Loss)

 

(In thousands, except per share data)

 

 

 

Twelve Months Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

 

2012

 

2011

 

2010

 

2009

REVENUE

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

101,737

 

$

94,591

 

$

104,663

 

$

102,133

 

$

102,390

Maintenance reserve revenue

 

46,694

 

41,387

 

39,161

 

34,776

 

46,049

Gain on sale of leased equipment

 

5,675

 

5,499

 

11,110

 

7,990

 

1,043

Other revenue

 

4,306

 

6,613

 

1,719

 

3,403

 

958

Total revenue

 

158,412

 

148,090

 

156,653

 

148,302

 

150,440

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

58,727

 

52,591

 

51,250

 

48,704

 

44,091

Write-down of equipment

 

6,461

 

5,874

 

3,341

 

2,874

 

6,133

General and administrative

 

33,868

 

34,551

 

35,701

 

29,302

 

26,765

Technical expense

 

12,863

 

7,006

 

8,394

 

8,118

 

7,149

Net finance costs:

 

 

 

 

 

 

 

 

 

 

Interest expense

 

38,719

 

31,749

 

35,201

 

40,945

 

36,013

Interest income

 

-

 

(80)

 

(167)

 

(212)

 

(280)

Loss (Gain) on debt extinguishment and derivatives termination

 

-

 

15,462

 

343

 

-

 

(876)

Total net finance costs

 

38,719

 

47,131

 

35,377

 

40,733

 

34,857

Total expenses

 

150,638

 

147,153

 

134,063

 

129,731

 

118,995

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

7,774

 

937

 

22,590

 

18,571

 

31,445

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint ventures

 

3,526

 

1,759

 

1,295

 

1,109

 

942

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

11,300

 

2,696

 

23,885

 

19,680

 

32,387

Income tax expense (benefit)

 

(4,326)

 

1,161

 

9,377

 

7,630

 

10,020

Net income

 

$

15,626

 

$

1,535

 

$

14,508

 

$

12,050

 

$

22,367

 

 

 

 

 

 

 

 

 

 

 

Preferred stock dividends

 

-

 

2,493

 

3,128

 

3,128

 

3,128

Preferred stock redemption costs

 

-

 

2,835

 

-

 

-

 

-

Net income (loss) attributable to common shareholders

 

$

15,626

 

$

(3,793)

 

$

11,380

 

$

8,922

 

$

19,239

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

 

$

1.95

 

$

(0.45)

 

$

1.35

 

$

1.03

 

$

2.30

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share

 

$

1.89

 

$

(0.43)

 

$

1.28

 

$

0.96

 

$

2.14

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

8,029

 

8,490

 

8,423

 

8,681

 

8,364

Diluted average common shares outstanding

 

8,289

 

8,791

 

8,876

 

9,251

 

8,983

 

-0-

 

 

Note:  Transmitted on GlobeNewswire on March 3, 2014, at 6:00 a.m. PST.