EX-99.1 2 a17-8247_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

NEWS RELEASE

CONTACT:

Scott B. Flaherty

Chief Financial Officer

(415) 408-4700

 

Willis Lease Finance Reports 2016 Pre-tax Profit Up 87.4% to $23.9 Million

 

NOVATO, CA — March 10, 2017 — Willis Lease Finance Corporation (NASDAQ: WLFC) today reported pre-tax earnings for 2016 of $23.9 million, up 87.4% from $12.8 million in 2015, on record revenue of $207.3 million.  Net income attributable to common shareholders for 2016 was $13.8 million, or $2.05 per diluted share, compared to $6.5 million, or $0.81 per diluted share in 2015. Fourth quarter 2016 net income attributable to common shareholders was $2.4 million, compared to $3.0 million in 2015, or $0.39 per diluted share in both periods.  Fourth quarter 2016 results were impacted by a $3.6 million non-cash write down as compared to a $0.6 million non-cash write down in the fourth quarter 2015.

 

“I am very pleased that on a pre-tax basis our financial performance in 2016 was our most profitable since 2009,” said Charles F. Willis, Chairman and CEO.  “Our fourth quarter and full year results reflect a combination of improved utilization, growth in the lease portfolio and the continued effective management of our assets—all contributing to record total revenues of over $207 million. We also broadened our sources of equity through the issuance of preferred equity, which will serve our growth plans well.”

 

“In addition to delivering solid financial results, the Company achieved a number of objectives in 2016 that position us well for the future,” said Brian R. Hole, President. “We amended both of our principal debt facilities, improving the flexibility and capacity of our ability to borrow and to manage our portfolio. We also formed Willis Asset Management Limited to purchase the consultancy business of Total Engine Support Limited and we now own and manage almost 800 engines, making us the largest independent owner and manager of engines in the world. We expect that the capabilities of the people and systems at WAM will help us develop and deliver cutting edge programs for our customers,” explained Hole.

 

2016 Highlights (at or for the periods ended December 31, 2016 as compared to December 31, 2015):

 

·                  Pre-tax earnings increased 87.4% to $23.9 million in 2016 from $12.8 million in 2015.

 

·                  Average utilization in the fourth quarter was sustained at 92% up from 91% reported for the year ago period.

 

·                  Total revenues grew 4.7% to $207.3 million in 2016, fueled primarily by a growing lease portfolio, higher portfolio utilization and rising lease rates.

 

·                  Lease rent revenues grew 11.0% to $119.9 million and 8.0% to $31.2 million for the full year and fourth quarter of 2016, respectively.

 

·                  The equipment portfolio grew 2.5% in 2016 to $1.137 billion from $1.109 billion a year ago.

 


 

·                  The Company purchased $149 million of equipment in 2016 as compared to $171 million in 2015.  In the fourth quarter of 2016, the Company purchased two aircraft and fourteen engines for $64 million.

 

·                  Tangible book value per share increased 10.6% to $30.66 at December 31, 2016, compared to $27.72 a year ago.

 

·                  We repurchased a total of 1.2 million shares in 2016 at a weighted average price of $23.71 per share.  The Company repurchased 153,925 shares in the fourth quarter.

 

·                  On October 14, 2016, the Company issued $20.0 million of 6.5% Series A Preferred Stock.

 

·                  On October 26, 2016, through its wholly owned subsidiary Willis Asset Management Limited, the Company purchased the consultancy business of Total Engine Support Limited, significantly improving the Company’s asset management service offering and growing the Company’s owned and managed portfolio of engines, aircraft and equipment by over 500 assets.

 

“We believe we have a unique service offering in leasing, trading and asset management, materials and technical services, which customers are beginning to leverage,” said Hole. “There is a lot of competition in our markets but none that offers our full complement of products and services combined with our decades-long track record of delivering on promises. We will continue to emphasize creativity and reliability as we grow the business going forward.”

 

Balance Sheet

 

As of December 31, 2016, Willis Lease had 208 commercial aircraft engines, 11 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.137 billion, compared to 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 $1.109 billion, a year ago. The Company’s funded debt-to-equity ratio was 4.17 to 1 at year end, compared to 4.14 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 and asset management services supported by cutting edge technology through its subsidiary Willis Asset Management, 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 and other continuing reports filed with the Securities and Exchange Commission.

 


 

Consolidated Statements of Income

(In thousands, except per share data, unaudited)

 

 

 

Three Months Ended

 

 

 

Years Ended

 

 

 

 

 

December 31,

 

%

 

December 31,

 

%

 

 

 

2016

 

2015

 

Change

 

2016

 

2015

 

Change

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

31,168

 

$

28,849

 

8.0

%

$

119,895

 

$

108,046

 

11.0

%

Maintenance reserve revenue

 

11,529

 

14,361

 

(19.7

)%

57,091

 

53,396

 

6.9

%

Spare parts and equipment sales

 

7,318

 

10,582

 

(30.8

)%

17,783

 

25,582

 

(30.5

)%

Gain on sale of leased equipment

 

52

 

654

 

(92.0

)%

3,482

 

8,320

 

(58.1

)%

Other revenue

 

5,409

 

739

 

631.9

%

9,023

 

2,718

 

232.0

%

Total revenue

 

55,476

 

55,185

 

0.5

%

207,274

 

198,062

 

4.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

17,045

 

17,034

 

0.1

%

66,280

 

69,424

 

(4.5

)%

Cost of spare parts and equipment sales

 

5,508

 

7,630

 

(27.8

)%

13,293

 

17,849

 

(25.5

)%

Write-down of equipment

 

3,590

 

601

 

497.3

%

9,514

 

9,181

 

3.6

%

General and administrative

 

13,086

 

11,918

 

9.8

%

47,780

 

42,744

 

11.8

%

Technical expense

 

2,080

 

1,567

 

32.7

%

6,993

 

9,403

 

(25.6

)%

Net finance costs

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

10,509

 

9,780

 

7.5

%

41,144

 

39,012

 

5.5

%

Loss (gain) on extinguishment of debt

 

—

 

—

 

0.0

%

137

 

(1,151

)

(111.9

)%

Total net finance costs

 

10,509

 

9,780

 

7.5

%

41,281

 

37,861

 

9.0

%

Total expenses

 

51,818

 

48,530

 

6.8

%

185,141

 

186,462

 

(0.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

3,658

 

6,655

 

(45.0

)%

22,133

 

11,600

 

90.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint ventures

 

939

 

48

 

n/a

 

1,813

 

1,175

 

54.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

4,597

 

6,703

 

(31.4

)%

23,946

 

12,775

 

87.4

%

Income tax expense

 

1,890

 

3,659

 

(48.3

)%

9,877

 

6,315

 

56.4

%

Net income

 

$

2,707

 

$

3,044

 

(11.1

)%

$

14,069

 

$

6,460

 

117.8

%

Accretion of preferred stock issuance costs

 

8

 

—

 

100.0

%

8

 

—

 

100.0

%

Preferred stock dividends

 

281

 

—

 

100.0

%

281

 

—

 

100.0

%

Net income attributable to common shareholders

 

$

2,418

 

$

3,044

 

(20.6

)%

$

13,780

 

$

6,460

 

113.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per common share

 

$

0.39

 

$

0.39

 

 

 

$

2.10

 

$

0.83

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per common share

 

$

0.39

 

$

0.39

 

 

 

$

2.05

 

$

0.81

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

6,149

 

7,739

 

 

 

6,570

 

7,817

 

 

 

Diluted average common shares outstanding

 

6,275

 

7,872

 

 

 

6,714

 

7,987

 

 

 

 


 

Consolidated Balance Sheets

(In thousands, except share data, unaudited)

 

 

 

December 31, 2016

 

December 31, 2015

 

ASSETS

 

 

 

 

 

Cash and cash equivalents

 

$

10,076

 

$

9,732

 

Restricted cash

 

22,298

 

33,026

 

Equipment held for operating lease, less accumulated depreciation

 

1,136,603

 

1,109,168

 

Maintenance rights

 

17,670

 

12,140

 

Equipment held for sale

 

30,710

 

23,454

 

Operating lease related receivable, net of allowances

 

16,484

 

13,626

 

Spare parts inventory

 

25,443

 

20,826

 

Investments

 

45,406

 

41,295

 

Property, equipment & furnishings, less accumulated depreciation

 

16,802

 

20,247

 

Intangibles assets, net

 

2,182

 

932

 

Other assets

 

14,213

 

9,839

 

Total assets

 

$

1,337,887

 

$

1,294,285

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Liabilities:

 

 

 

 

 

Accounts payable and accrued expenses

 

$

17,792

 

$

21,665

 

Deferred income taxes

 

104,978

 

96,154

 

Notes payable

 

900,255

 

866,089

 

Maintenance reserves

 

71,602

 

71,054

 

Security deposits

 

21,417

 

25,010

 

Unearned lease revenue

 

5,823

 

5,090

 

Total liabilities

 

1,121,867

 

1,085,062

 

 

 

 

 

 

 

Redeemable preferred stock ($0.01 par value)

 

19,760

 

—

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Common stock ($0.01 par value)

 

64

 

75

 

Paid-in capital in excess of par

 

2,512

 

28,720

 

Retained earnings

 

194,729

 

180,949

 

Accumulated other comprehensive loss, net of tax

 

(1,045

)

(521

)

Total shareholders’ equity

 

196,260

 

209,223

 

 

 

 

 

 

 

Total liabilities, redeemable preferred stock and shareholders’ equity

 

$

1,337,887

 

$

1,294,285

 

 


 

Consolidated Statements of Income (Loss)

(In thousands, except per share data, unaudited)

 

 

 

Years Ended
December 31,

 

 

 

2016

 

2015

 

2014

 

2013

 

2012

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

 

$

119,895

 

$

108,046

 

$

101,431

 

$

101,737

 

$

108,046

 

Maintenance reserve revenue

 

57,091

 

53,396

 

53,322

 

46,694

 

53,396

 

Spare parts and equipment sales

 

17,783

 

25,582

 

8,917

 

—

 

25,582

 

Gain on sale of leased equipment

 

3,482

 

8,320

 

5,882

 

5,675

 

8,320

 

Other revenue

 

9,023

 

2,718

 

4,506

 

4,306

 

2,718

 

Total revenue

 

207,274

 

198,062

 

174,058

 

158,412

 

198,062

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

66,280

 

69,424

 

65,314

 

58,727

 

69,424

 

Cost of spare parts and equipment sales

 

13,293

 

17,849

 

7,474

 

—

 

17,849

 

Write-down of equipment

 

9,514

 

9,181

 

5,602

 

6,461

 

9,181

 

General and administrative

 

47,780

 

42,744

 

35,859

 

33,868

 

42,744

 

Technical expense

 

6,993

 

9,403

 

12,336

 

12,863

 

9,403

 

Net finance costs

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

41,144

 

39,012

 

37,062

 

38,719

 

31,669

 

Loss (gain) on extinguishment of debt

 

137

 

(1,151

)

—

 

—

 

15,462

 

Total net finance costs

 

41,281

 

37,861

 

37,062

 

38,719

 

47,131

 

Total expenses

 

185,141

 

186,462

 

163,647

 

150,638

 

195,732

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from operations

 

22,133

 

11,600

 

10,411

 

7,774

 

937

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings from joint ventures

 

1,813

 

1,175

 

1,329

 

3,526

 

1,759

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

23,946

 

12,775

 

11,740

 

11,300

 

2,696

 

Income tax expense

 

9,877

 

6,315

 

4,560

 

(4,326

)

1,161

 

Net income

 

$

14,069

 

$

6,460

 

$

7,180

 

$

15,626

 

$

1,535

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of preferred stock issuance costs

 

8

 

—

 

—

 

—

 

—

 

Preferred stock dividends

 

281

 

—

 

—

 

—

 

2,493

 

Preferred stock redemption costs

 

—

 

—

 

—

 

—

 

2,835

 

Net income (loss) attributable to common shareholders

 

$

13,780

 

$

6,460

 

$

7,180

 

$

15,626

 

$

(3,793

)

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share

 

$

2.10

 

$

0.83

 

$

0.91

 

$

1.95

 

$

(0.45

)

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per common share

 

$

2.05

 

$

0.81

 

$

0.88

 

$

1.89

 

$

(0.43

)

 

 

 

 

 

 

 

 

 

 

 

 

Average common shares outstanding

 

6,570

 

7,817

 

7,917

 

8,029

 

8,490

 

Diluted average common shares outstanding

 

6,714

 

7,987

 

8,141

 

8,289

 

8,791