COCONUT CREEK, Fla., March 13, 2019 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported a record annual pre-tax profit of $56.3 million, from $36.0 million in 2017, including record total revenues of $348.3 million. The Company’s 2018 pretax results were driven by continued revenue growth in the core leasing business and an increase in spare parts and equipment sales. Aggregate lease rent and maintenance reserve revenues of $262.6 million were driven by high utilization of a lease portfolio that grew 24.6% to $1.673 billion at year-end.

“We are very pleased to have delivered strong performance across the Willis Lease Platform in 2018,” said Charles F. Willis, Chairman and CEO.  “Our global client base is recognizing the value of our vertically integrated offering of core lease services, materials, fleet transition solutions, asset management and materials services.”

“The continued evolution of our Platform lets us offer the industry new options for financing, managing and transitioning into and out of equipment,” said Brian R. Hole, President. “This includes our ConstantAccess program, which allows customers seeking operational and cost efficiency to leverage our portfolio instead of buying too many new, dedicated spare engines. We are pleased to be able to support our customers with these unique products and services during a period of very high demand in the market.”  

2018 Highlights (at or for the period ended December 31, 2018, as compared to December 31, 2017):

Balance Sheet
As of December 31, 2018, the Company had a total lease portfolio consisting of 244 engines and related equipment, 17 aircraft and 10 other leased parts and equipment with a net book value of $1.673 billion. As of December 31, 2017, the Company had a total lease portfolio consisting of 225 engines, 16 aircraft and 7 other leased parts and equipment, with a net book value of $1.343 billion.

Willis Lease Finance Corporation
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 Limited, 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.

Unaudited Consolidated Statements of Income            
(In thousands, except per share data)            
 Three Months Ended    Years Ended  
 December 31,  % December 31, %
  2018  2017   Change  2018  2017  Change
REVENUE            
Lease rent revenue$45,900 $35,324   29.9% $175,609 $130,369  34.7%
Maintenance reserve revenue 30,154  15,977   88.7%  87,009  80,189  8.5%
Spare parts and equipment sales (1) 34,973  10,150   244.6%  71,141  51,423  38.3%
Gain on sale of leased equipment (1) 5,282  245   2055.9%  6,944  4,929  40.9%
Other revenue 1,881  1,493   26.0%  7,644  7,930  (3.6)%
Total revenue 118,190  63,189   87.0%  348,347  274,840  26.7%
             
EXPENSES            
Depreciation and amortization expense 21,214  17,238   23.1%  76,814  66,023  16.3%
Cost of spare parts and equipment sales (1) 30,501  11,302   169.9%  61,025  40,848  49.4%
Write-down of equipment 5,858  2,687   118.0%  10,651  24,930  (57.3)%
General and administrative 21,504  15,164   41.8%  72,021  55,737  29.2%
Technical expense 1,943  2,384   (18.5)%  11,142  9,729  14.5%
Interest expense 17,603  12,322   42.9%  64,220  48,720  31.8%
Total expenses 98,623  61,097   61.4%  295,873  245,987  20.3%
             
Earnings from operations 19,567  2,092   835.3%  52,474  28,853  81.9%
Earnings from joint ventures 2,231  1,103   102.3%  3,800  7,158  (46.9)%
Income before income taxes 21,798  3,195   582.3%  56,274  36,011  56.3%
Income tax expense (benefit) 3,684  (39,515)  (109.3)%  13,043  (26,147) (149.9)%
Net income 18,114  42,710   (57.6)%  43,231  62,158  (30.4)%
Preferred stock dividends 819  825   (0.7)%  3,250  1,813  79.3%
Accretion of preferred stock issuance costs 21  21   0.0%  83  46  80.4%
Net income attributable to common shareholders$17,274 $41,864   (58.7)% $39,898 $60,299  (33.8)%
             
Basic weighted average earnings per common share$2.99 $6.87     $6.75 $9.93   
Diluted weighted average earnings per common share$2.91 $6.75     $6.60 $9.69   
             
Basic weighted average common shares outstanding 5,782  6,090      5,915  6,074   
Diluted weighted average common shares outstanding 5,939  6,201      6,046  6,220   


(1) Effective January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers and has identified the transfer of engines and airframes from the lease portfolio to the Spare Parts segment for part out as sales to customers in accordance with the ordinary operations of our Spare Parts reportable segment. As such, we present the sale of these assets on a gross basis and have reclassified the gross revenue and costs of sale to the Spare parts and equipment sales and Cost of spare parts and equipment sales line items from the net gain (loss) presentation within the Gain on sale of leased equipment line item. The reclassification resulted in an increase in Spare parts and equipment sales of $1.9 million, a decrease in Gain on sale of leased equipment of $0.2 million and an increase in Cost of spare parts and equipment sales of $1.7 million for the quarter ended December 31, 2018. Additionally, the reclassification resulted in an increase in Spare parts and equipment sales of $16.4 million, a decrease in Gain on sale of leased equipment of $0.7 million and an increase in Cost of spare parts and equipment sales of $15.7 million for the year ended December 31, 2018. The Company adopted ASC 606 on January 1, 2018, using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative periods. Therefore, the comparative information has not been adjusted and continues to be reported under ASC Topic 605 – Revenue Recognition.

     
     
Unaudited Consolidated Balance Sheets    
(In thousands, except per share data)    
 December 31, 2018  December 31, 2017
ASSETS    
Cash and cash equivalents$11,688  $7,052
Restricted cash 70,261   40,272
Equipment held for operating lease, less accumulated depreciation 1,673,135   1,342,571
Maintenance rights 14,763   14,763
Equipment held for sale (1) 789   34,172
Receivables, net of allowances 23,270   18,848
Spare parts inventory (1) 48,874   16,379
Investments 47,941   50,641
Property, equipment & furnishings, less accumulated depreciation 27,679   26,074
Intangible assets, net 1,379   1,727
Other assets 15,164   50,932
Total assets$1,934,943  $1,603,431
     
LIABILITIES, REDEEMABLE PREFERRED STOCK AND  SHAREHOLDERS' EQUITY    
Liabilities:    
Accounts payable and accrued expenses$42,939  $22,072
Deferred income taxes 90,285   78,280
Debt obligations 1,337,349   1,085,405
Maintenance reserves 94,522   75,889
Security deposits 28,047   25,302
Unearned revenue 5,460   8,102
Total liabilities 1,598,602   1,295,050
     
Redeemable preferred stock ($0.01 par value) 49,554   49,471
     
Shareholders' equity:    
Common stock ($0.01 par value) 62   64
Paid-in capital in excess of par -   2,319
Retained earnings 286,623   256,301
Accumulated other comprehensive income, net of tax 102   226
Total shareholders' equity 286,787   258,910
Total liabilities, redeemable preferred stock and shareholders' equity$1,934,943  $1,603,431
     


(1) Effective January 1, 2018, the Company adopted ASC 606 – Revenue from Contracts with Customers and has identified the transfer of engines and airframes from the lease portfolio to the Spare Parts segment for part out as sales of nonfinancial assets to customers of the reporting entity. As such, as of December 31, 2018, $22.9 million of these assets which had previously been included in Equipment held for sale are now within the Spare parts inventory line item on our Consolidated Balance Sheet. The Company adopted ASC 606 on January 1, 2018, using the modified retrospective approach applied only to contracts not completed as of the date of adoption, with no restatement of comparative 2017 periods. Therefore, the comparative information has not been adjusted and continues to be reported under ASC Topic 605 – Revenue Recognition.

Contact:
Scott B. Flaherty
Chief Financial Officer
(415) 408-4700