8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report: May 8, 2017

Willis Lease Finance Corporation

(Exact Name of Registrant as Specified in Charter)

Delaware	001-15369	68-0070656
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

773 San Marin Drive, Suite 2215
Novato, California 94998

(Address of Principal Executive Offices) (Zip Code)

Registrant’s telephone number, including area code: (415) 408-4700

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Item 2.02(a) Results of Operations and Financial Condition

Item 7.01 Regulation FD Disclosure

The following information and exhibit are furnished pursuant to Item 2.02(a), “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure”. This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

On May 8, 2017, the Company issued a news release setting forth the Company’s results from operations for the three months ended March 31, 2017 and financial condition as of March 31, 2017. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements & Exhibits

The Company hereby furnishes the following exhibit pursuant to Item 2.02(a), “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure”.

Exhibit No.	Description
99.1	News Release issued by Willis Lease Finance Corporation dated May 8, 2017.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer.

Dated May 8, 2017

WILLIS LEASE FINANCE CORPORATION
By:	/s/ Scott B. Flaherty
Scott B. Flaherty
Senior Vice President and Chief Financial Officer

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EX-99.1

Exhibit 99.1

NEWS RELEASE	CONTACT:	Scott B. Flaherty
		Chief Financial Officer
		(415) 408-4700

Willis Lease Finance Reports First Quarter Pretax Profit Grew 104% to $14.4 Million

NOVATO, CA —May 8, 2017 — Willis Lease Finance Corporation (NASDAQ: WLFC) today reported that pretax income grew 104% to $14.4 million in the first quarter of 2017 compared to $7.1 million in the first quarter of 2016 on revenues of $77.9 million. The Company’s first quarter 2017 results were bolstered by $32.0 million of maintenance reserve revenue, of which $21.5 million was long term maintenance revenue related to assets coming off lease. These revenues were offset by related non-cash write downs totaling $13.0 million. Net income attributable to common shareholders for the first quarter increased 95.4% to $7.8 million, or $1.26 per diluted share, from $4.0 million, or $0.55 per diluted share, in the first quarter of 2016.

“We continue to produce strong pre-tax financial results in 2017, realizing our most profitable quarter since 2008,” said Charles F. Willis, Chairman and CEO.  “Utilization remains strong at 89% at the end of the first quarter, our lease portfolio is growing and Willis Aero is delivering better than expected revenues and margin.”

“Our complementary leasing, surplus material and trading businesses performed well, resulting in the Company achieving record quarterly revenues of $78 million,” said Brian R. Hole, President. “We do not expect to repeatedly earn such large long-term maintenance reserve revenues but our pre-tax income exceeded expectations even without the net impact of long-term reserve revenue and non-cash writedowns. We continue to actively manage the portfolio in an effort to maximize cash and margin efficiency.”

First Quarter 2017 Highlights (at or for the periods ended March 31, 2017, compared to March 31, 2016, and December 31, 2016):

·Total revenue grew 53.7% to $77.9 million in the first quarter of 2017 from $50.7 million in the year ago period.

·Average utilization in the first quarter of 2017 was 89% as compared to 92% in the preceding quarter and 87% in the year ago comparable period.

·First quarter lease rent revenue was $30.2 million, up 6.9% year-over-year and down 3% from the prior quarter.

·Maintenance reserve revenue increased 102% to $32 million compared to $15.8 million and $11.5 million in 1Q16 and 4Q16, respectively.

·The Company purchased $40.3 million of assets in the first quarter of 2017, and sold $32.7 million of assets.

·During the quarter the Company recorded a $13 million non-cash writedown associated with the disposition, retirement and part out of certain assets.

·The equipment portfolio grew 1.0% in the first quarter of 2017 to $1.095 billion compared to 1Q16.

·Tangible book value per share increased 1% to $31.49 at March 31, 2017, compared to $30.66 at the end of the first quarter 2016.

·A total of 40,479 shares of common stock were repurchased in the quarter under the Company’s five-year repurchase plan for $0.9 million.

·Liquidity available from the revolving credit facility was $305 million at March 31, 2017, up from $161 million a year ago.

·Willis Aero spare parts sales totaled $6.2 million with a margin of $1.5 million in the first quarter of 2017.  In the year ago period, spare parts sales were $2.6 million with a margin of $0.7 million.

·Trading equipment sales in the first quarter of 2017 were $6.4 million, with a margin of $1.7 million.

Balance Sheet

As of March 31, 2017, Willis Lease had 209 commercial aircraft engines, 9 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.095 billion, compared to 201 commercial aircraft engines, 10 aircraft, 5 aircraft parts packages, and other engine-related equipment in its lease portfolio, with a net book value of $1.084 billion a year ago.  The Company’s funded debt-to-equity ratio was 4.24 to 1 at quarter end compared to 4.59 to 1 at December 31, 2016, and 4.06 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.

WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Loss)

(In thousands, except per share data, unaudited)

	Three Months Ended
	March 31,		December 31,		March 31,		% Change vs		% Change vs
	2017		2016		2016		Dec 31, 2016		Mar 31, 2016
REVENUE
Lease rent revenue	$	30,233	$	31,168	$	28,276	(3.0	)%	6.9	%
Maintenance reserve revenue	31,961		11,529		15,819		177.2	%	102.0	%
Spare parts and equipment sales	12,596		7,318		2,632		72.1	%	378.6	%
Gain on sale of leased equipment	983		52		2,992		1790.4	%	(67.1	)%
Other revenue	2,173		5,409		1,000		(59.8	)%	117.3	%
Total revenue	77,946		55,476		50,719		40.5	%	53.7	%
EXPENSES
Depreciation and amortization expense	16,628		17,045		16,419		(2.4	)%	1.3	%
Cost of spare parts and equipment sales	9,400		5,508		1,932		70.7	%	386.5	%
Write-down of equipment	13,009		3,590		2,036		262.4	%	538.9	%
General and administrative	13,201		13,086		11,752		0.9	%	12.3	%
Technical expense	2,292		2,080		1,696		10.2	%	35.1	%
Net finance costs	10,865		10,509		10,008		3.4	%	8.6	%
Total expenses	65,395		51,818		43,843		26.2	%	49.2	%
Earnings from operations	12,551		3,658		6,876		243.1	%	82.5	%
Earnings from joint ventures	1,854		939		187		97.4	%	891.4	%
Income before income taxes	14,405		4,597		7,063		213.4	%	104.0	%
Income tax expense	6,238		1,890		3,052		230.1	%	104.4	%
Net income	$	8,167	$	2,707	$	4,011	201.7	%	103.6	%
Preferred stock dividends	321		281		—		14.2	%	100.0	%
Accretion of preferred stock issuance costs	7		8		—		(12.5	)%	100.0	%
Net income attributable to common shareholders	$	7,839	$	2,418	$	4,011	224.2	%	95.4	%
Basic earnings per common share	$	1.28	$	0.39	$	0.56
Diluted earnings per common share	$	1.26	$	0.39	$	0.55
Average common shares outstanding	6,114		6,149		7,149
Diluted average common shares outstanding	6,240		6,275		7,272

WILLIS LEASE FINANCE CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(In thousands, except share data, unaudited)

	March 31, 2017			December 31, 2016			March 31, 2016
ASSETS
Cash and cash equivalents	$	11,890		$	10,076		$	12,743
Restricted cash	29,306			22,298			29,964
Equipment held for operating lease, less accumulated depreciation	1,094,673			1,136,603			1,083,506
Maintenance rights	17,160			17,670			16,774
Equipment held for sale	58,083			30,710			25,971
Operating lease related receivable, net of allowances	11,771			16,484			15,690
Spare parts inventory	24,475			25,443			19,293
Investments	44,540			45,406			43,272
Property, equipment & furnishings, less accumulated depreciation	16,638			16,802			17,001
Intangibles assets, net	2,081			2,182			874
Other assets	12,372			14,213			11,048
Total assets	$	1,322,989		$	1,337,887		$	1,276,136
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY
Liabilities:
Accounts payable and accrued expenses	$	22,239		$	17,792		$	23,087
Deferred income taxes	110,063			104,978			98,889
Notes payable	872,201			900,255			850,031
Maintenance reserves	66,751			71,602			65,554
Security deposits	21,256			21,417			25,074
Unearned lease revenue	5,243			5,823			4,351
Total liabilities	1,097,753			1,121,867			1,066,986
Redeemable preferred stock ($0.01 par value)	19,767			19,760			—
Shareholders’ equity:
Common stock ($0.01 par value)	65			64			74
Paid-in capital in excess of par	2,324			2,512			24,925
Retained earnings	203,841			194,729			184,960
Accumulated other comprehensive loss, net of tax	(761		)	(1,045		)	(809		)
Total shareholders’ equity	205,469			196,260			209,150
Total liabilities, redeemable preferred stock and shareholders’ equity	$	1,322,989		$	1,337,887		$	1,276,136

Note:  Transmitted on GlobeNewswire on May 8, 2017, at 6:00 am PT