EX-99.1 2 a16-10902_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

 

NEWS RELEASE

CONTACT:

Brian R. Hole

 

 

President

 

 

(415) 408-4700

 

Willis Lease Finance Reports First Quarter Pretax Profit Grew 79.0% to $6.7 Million

 

NOVATO, CA — May 9, 2016 — Willis Lease Finance Corporation (NASDAQ: WLFC), the premier independent jet engine lessor in the commercial finance sector, today reported that pretax income grew 79.0% to $6.7 million in the first quarter of 2016 compared to $3.7 million in the first quarter of 2015. The Company’s first quarter 2016 results include a $2.0 million non-cash write down due to the retirement of one engine for disassembly. Net income for the first quarter increased 64.0% to $3.8 million, or $0.52 per diluted share, from $2.3 million, or $0.29 per diluted share, in the first quarter of 2015 and increased 26.7% from $3.0 million, or $0.37 per diluted share, in the fourth quarter of 2015.

 

We are continuing to see the benefit of the changes we have been implementing over the last twelve to eighteen months and strong market conditions,” said Charles F. Willis, Chairman and CEO.  “Our total portfolio utilization, which includes our consolidated subsidiary WEST II, remains strong.  We are divesting of underperforming assets and adding to the portfolio for both increased market demand and quality opportunities.”

 

“In addition, in April, we expanded our revolving credit facility from $700 million to $1.0 billion, including a $110 million accordion feature, so we are prepared to invest in high quality opportunities,” Willis continued.  “Our access to the banking and capital markets continues to be one of our core strengths.”

 

“Our leasing business continues to perform with utilization at 89.8% at the end of the first quarter, which is squarely within our target range,” said Brian R. Hole, President. “While utilization will remain subject to variability, we are benefitting from our ability to deliver lease engines through customer specific programs, which is a very distinct competitive advantage for our Company. We also continue to actively trade assets, both airframes and engines, and have built a solid team focused on continuing to grow in this sector.”

 

First Quarter 2016 Highlights (at or for the periods ended March 31, 2016, compared to March 31, 2015, and December 31, 2015):

 

·                  Total revenue grew 18.1% to $50.6 million in the first quarter of 2016 from $42.8 million in the year ago period.

·                  Average utilization in the first quarter of 2016 was 86.7%, lower than the 90.6% achieved in the preceding quarter and a significant improvement from 80.9% reported in the year ago period.

·                  First quarter lease rent revenue was $28.1 million, up 12.1% year-over-year and down 2.5% from the prior quarter.

·                  Maintenance reserve revenue increased 11.8% to $15.8 million in 1Q16 compared to $14.1 million in 1Q15 and grew 10.5% from $14.3 million in 4Q15.

·                  The Company invested $39.7 million to purchase 5 engines, 4 of which were on lease, and sold $48.5 million of assets in the first quarter of 2016.

 


 

·                  The sale of 6 engines, certain parts and one airframe generated $3.0 million of gain on sale.

·                  One engine was retired and is being parted out, resulting in a $2.0 million non-cash write-down.

·                  Total engines and aircraft owned and managed have grown to nearly $1.5 billion.  The owned lease portfolio grew 4.8% in the first quarter of 2016 to $1.102 billion compared to 1Q15.

·                  Tangible book value per share increased 7.0% to $28.29 at March 31, 2016, compared to $26.43 at the end of the first quarter 2015.

·                  A total of 200,000 shares of common stock were repurchased in the quarter under the Company’s five-year repurchase plan reapproved in April 2015.

·                  Liquidity available from the revolving credit facility was $161 million at March 31, 2016, down from $239 million a year ago.  With the upsizing of the revolving credit facility in April, liquidity at April 30, 2016, was $341 million.

 

Willis Aero spare parts sales totaled $2.6 million and margin was $0.7 million in the first quarter of 2016.  In the year ago quarter, spare parts sales were $2.2 million and margin was also $0.7 million.  In the fourth quarter of 2015, equipment and parts sales were $10.6 million, with a margin contribution of $3.0 million, with equipment sales delivering a material benefit through the sale of one airframe.

 

“Willis Aero continues to add value to our overall business,” Hole said.  “Not only did Willis Aero deliver $0.7 million in profit for the quarter, but they also sold parts from our stock delivering over $0.23 million in gain on sale. Willis Aero’s value to our core business and financial performance is multi-dimensional and we expect them to continue to grow with us.”

 

Balance Sheet

 

As of March 31, 2016, Willis Lease had 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 $1.102 billion, compared to 205 commercial aircraft engines, 5 aircraft parts packages, 5 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $1.051 billion a year ago.  The Company’s funded debt-to-equity ratio was 4.05 to 1 at quarter end compared to 4.12 to 1 at December 31, 2015, and 3.77 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 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.

 


 

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

 

Consolidated Statements of Income

(In thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

March 31,

 

December 31,

 

March 31,

 

% Change vs

 

% Change vs

 

 

 

2016

 

2015

 

2015

 

Dec 31, 2015

 

Mar 31, 2015

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

28,139

 

$

28,873

 

$

25,097

 

(2.5

)%

12.1

%

Maintenance reserve revenue

 

15,819

 

14,320

 

14,148

 

10.5

%

11.8

%

Spare parts and equipment sales

 

2,609

 

10,608

 

2,151

 

(75.4

)%

21.3

%

Gain on sale of leased equipment

 

2,989

 

654

 

662

 

357.0

%

351.5

%

Other revenue

 

1,000

 

740

 

756

 

35.1

%

32.3

%

Total revenue

 

50,556

 

55,195

 

42,814

 

(8.4

)%

18.1

%

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

16,644

 

17,124

 

17,705

 

(2.8

)%

(6.0

)%

Cost of spare parts and equipment sales

 

1,915

 

7,647

 

1,480

 

(75.0

)%

29.4

%

Write-down of equipment

 

2,036

 

601

 

24

 

238.8

%

8383.3

%

General and administrative

 

11,752

 

11,918

 

9,972

 

(1.4

)%

17.8

%

Technical expense

 

1,696

 

1,567

 

1,832

 

8.2

%

(7.4

)%

Net finance costs

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

10,008

 

9,780

 

9,567

 

2.3

%

4.6

%

Gain on extinguishment of debt

 

—

 

—

 

(1,151

)

0.0

%

(100.0

)%

Total net finance costs

 

10,008

 

9,780

 

8,416

 

2.3

%

18.9

%

Total expenses

 

44,051

 

48,637

 

39,429

 

(9.4

)%

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

6,505

 

6,558

 

3,385

 

(0.8

)%

92.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint ventures

 

187

 

48

 

354

 

289.6

%

(47.2

)%

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

6,692

 

6,606

 

3,739

 

1.3

%

79.0

%

Income tax expense

 

2,924

 

3,633

 

1,441

 

(19.5

)%

102.9

%

Net income

 

$

3,768

 

$

2,973

 

$

2,298

 

26.7

%

64.0

%

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.53

 

$

0.38

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.52

 

$

0.37

 

$

0.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

7,149

 

7,739

 

7,848

 

 

 

 

 

Diluted average common shares outstanding

 

7,272

 

7,872

 

8,044

 

 

 

 

 

 


 

WILLIS LEASE FINANCE CORPORATION

AND SUBSIDIARIES

 

Consolidated Balance Sheets

(In thousands, except share data, unaudited)

 

 

 

March 31, 2016

 

December 31, 2015

 

March 31, 2015

 

ASSETS

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,743

 

$

9,732

 

$

15,635

 

Restricted cash

 

29,964

 

33,026

 

45,616

 

Equipment held for operating lease, less accumulated depreciation

 

1,101,604

 

1,122,859

 

1,050,922

 

Equipment held for sale

 

25,971

 

23,454

 

17,600

 

Operating lease related receivable, net of allowances

 

15,690

 

14,072

 

14,596

 

Spare parts inventory

 

19,293

 

20,526

 

18,288

 

Investments

 

43,272

 

41,295

 

42,574

 

Property, equipment & furnishings, less accumulated depreciation

 

17,001

 

20,247

 

21,311

 

Equipment purchase deposits

 

—

 

—

 

6,817

 

Intangibles assets, net

 

874

 

932

 

1,106

 

Other assets

 

11,048

 

9,839

 

10,559

 

Total assets

 

$

1,277,460

 

$

1,295,982

 

$

1,245,024

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$

23,087

 

$

21,665

 

$

12,636

 

Deferred income taxes

 

99,347

 

96,742

 

91,866

 

Notes payable

 

850,031

 

866,089

 

827,475

 

Maintenance reserves

 

65,554

 

71,054

 

69,672

 

Security deposits

 

25,074

 

25,010

 

20,771

 

Unearned lease revenue

 

4,351

 

5,090

 

3,381

 

Total liabilities

 

1,067,444

 

1,085,650

 

1,025,801

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Common stock ($0.01 par value)

 

$

74

 

$

75

 

$

83

 

Paid-in capital in excess of par

 

24,925

 

28,720

 

42,140

 

Retained earnings

 

185,826

 

182,058

 

177,000

 

Accumulated other comprehensive loss, net of tax

 

(809

)

(521

)

—

 

Total shareholders’ equity

 

210,016

 

210,332

 

219,223

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

1,277,460

 

$

1,295,982

 

$

1,245,024

 

 

Note:  Transmitted on GlobeNewswire on May 9, 2016, at 6:00 am PT