July 24, 2024
Finance

Record Results by Willis Lease Finance Corporation with First Quarter Pre-tax Income of $29.9 million


Willis Lease Finance Corp.Willis Lease Finance Corp.

Willis Lease Finance Corp.

COCONUT CREEK, Fla., May 02, 2024 (GLOBE NEWSWIRE) — Willis Lease Finance Corporation (NASDAQ: WLFC) (“WLFC”) today reported record first quarter total revenues of $119.1 million and record quarterly pre-tax income of $29.9 million. For the three months ended March 31, 2024, aggregate, core lease rent and maintenance reserve revenues were at an all-time high of $96.8 million, up 26% as compared to $76.7 million in 2023. The growth was predominantly driven by core, recurring lease and maintenance revenues associated with a strong, resurging aviation marketplace, and airlines leveraging our leasing, parts and maintenance capabilities in order to avoid protracted engine shop visits.

“Having developed our 145 maintenance and exchange capabilities over the past few years, we have become the partner of choice for airlines looking to avoid or outsource maintenance risk,” said Austin C. Willis, Chief Executive Officer of WLFC. “This strategy has proven effective, particularly in our supply chain constrained environment.”

“The Company performed well in the first quarter of 2024 and is benefiting from the continued maturation of our strategy,” said Brian R. Hole, President of WLFC.

First Quarter 2024 Highlights (at or for the period ended March 31, 2024, as compared to March 31, 2023 and December 31, 2023):

  • Lease rent revenue of $52.9 million in the first quarter of 2024 was in-line with lease rent revenue of $53.2 million in the first quarter of 2023. During the three months ended March 31, 2024, we purchased equipment (including capitalized costs) totaling $62.8 million, which consisted of two aircraft and four engines and other parts and equipment purchased for our lease portfolio. During the three months ended March 31, 2023, we purchased equipment (including capitalized costs) totaling $55.7 million, which consisted of five engines and other parts and equipment purchased for our lease portfolio.

  • Maintenance reserve revenue was $43.9 million in the first quarter of 2024, an increase of 86.7%, compared to $23.5 million in the same quarter of 2023, reflecting the high level of usage of our assets by our customer base. Engines on lease with “non-reimbursable” usage fees generated $37.6 million of short-term maintenance revenues in 2024, compared to $23.5 million in the prior year. There was $6.3 million of long-term maintenance revenue recognized in the three months ended March 31, 2024, compared to no long-term maintenance revenue recognized for the three months ended March 31, 2023. As of March 31, 2024 and March 31, 2023, there were $26.7 million and $13.7 million, respectively, of deferred in-substance fixed payment use fees included in Unearned revenue associated with engines on short-term leases. These deferred in-substance fixed payment use fees represent portfolio utilization beyond the maintenance reserve revenues reflected in our Unaudited Consolidated Statements of Income.

  • Spare parts and equipment sales decreased to $3.3 million in the first quarter of 2024, compared to $5.1 million in the first quarter of 2023. The decrease in spare parts sales for the three months ended March 31, 2024 reflects variations in the timing of sales.

  • Gain on sale of leased equipment was $9.2 million in the first quarter of 2024, reflecting the sale of eight engines. Loss on sale of leased equipment was $0.1 million in the first quarter of 2023, reflecting the sale of two engines. The Company is experiencing a strong market for engine sales.

  • The Company generated a quarterly record of $29.9 million of pre-tax income in the first quarter of 2024, compared to the pre-tax income of $6.8 million in the first quarter of 2023.

  • The book value of lease assets directly owned or through our joint ventures, inclusive of our notes receivable, maintenance rights, and investments in sales-type leases, was $2,530.7 million as of March 31, 2024.

  • Diluted weighted average income per common share was $3.00 for the first quarter 2024, compared to diluted weighted average income per common share of $0.55 in the first quarter of 2023.

  • Book value per diluted weighted average common share outstanding increased to $69.35 at March 31, 2024, compared to $67.73 at December 31, 2023.

Balance Sheet

As of March 31, 2024, the Company’s lease portfolio was $2,270.4 million, consisting of $2,130.3 million of equipment held in our operating lease portfolio, $97.9 million of notes receivable, $9.2 million of maintenance rights, and $33.0 million of investments in sales-type leases, which represented 337 engines, 14 aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2023, the Company’s lease portfolio was $2,223.4 million, consisting of $2,112.8 million of equipment held in our operating lease portfolio, $92.6 million of notes receivable, $9.2 million of maintenance rights, and $8.8 million of investments in sales-type leases, which represented 337 engines, 12 aircraft, one marine vessel and other leased parts and equipment.

Willis Lease Finance Corporation

Willis Lease Finance Corporation (“WLFC”) leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers worldwide. These leasing activities are integrated with engine and aircraft trading, engine lease pools and asset management services through Willis Asset Management Limited, as well as various end-of-life solutions for engines and aviation materials provided through Willis Aeronautical Services, Inc. Additionally, through Willis Engine Repair Center®, Jet Centre by Willis, and Willis Aviation Services Limited, the Company’s service offerings include Part 145 engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport FBO and ground and cargo handling services.

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 war, terrorist activity and pandemics; changes in oil prices, rising inflation and other disruptions to 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 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 March 31,

 

 

 

 

2024

 

2023

 

% Change

 

REVENUE

 

 

 

 

 

 

 

 

 

 

 

 

Lease rent revenue

$

52,881

 

 

$

53,220

 

 

 

(0.6

)%

 

Maintenance reserve revenue

 

43,870

 

 

 

23,498

 

 

 

86.7

%

 

Spare parts and equipment sales

 

3,288

 

 

 

5,052

 

 

 

(34.9

)%

 

Interest revenue

 

2,269

 

 

 

2,046

 

 

 

10.9

%

 

Gain (loss) on sale of leased equipment

 

9,201

 

 

 

(133

)

 

nm

 

Maintenance services revenue

 

5,227

 

 

 

4,659

 

 

 

12.2

%

 

Other revenue

 

2,347

 

 

 

1,193

 

 

 

96.7

%

 

Total revenue

 

119,083

 

 

 

89,535

 

 

 

33.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

22,486

 

 

 

22,549

 

 

 

(0.3

)%

 

Cost of spare parts and equipment sales

 

2,705

 

 

 

4,499

 

 

 

(39.9

)%

 

Cost of maintenance services

 

5,574

 

 

 

3,927

 

 

 

41.9

%

 

Write-down of equipment

 

261

 

 

 

 

 

 

nm

 

General and administrative

 

29,581

 

 

 

27,831

 

 

 

6.3

%

 

Technical expense

 

8,255

 

 

 

4,342

 

 

 

90.1

%

 

Net finance costs:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

23,003

 

 

 

18,389

 

 

 

25.1

%

 

Total net finance costs

 

23,003

 

 

 

18,389

 

 

 

25.1

%

 

Total expenses

 

91,865

 

 

 

81,537

 

 

 

12.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

27,218

 

 

 

7,998

 

 

 

240.3

%

 

Income (loss) from joint ventures

 

2,674

 

 

 

(1,161

)

 

nm

 

Income before income taxes

 

29,892

 

 

 

6,837

 

 

 

337.2

%

 

Income tax expense

 

9,023

 

 

 

2,443

 

 

 

269.3

%

 

Net income

 

20,869

 

 

 

4,394

 

 

 

374.9

%

 

Preferred stock dividends

 

900

 

 

 

801

 

 

 

12.4

%

 

Accretion of preferred stock issuance costs

 

12

 

 

 

21

 

 

 

(42.9

)%

 

Net income attributable to common shareholders

$

19,957

 

 

$

3,572

 

 

 

458.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average income per common share

$

3.12

 

 

$

0.58

 

 

 

 

 

 

Diluted weighted average income per common share

$

3.00

 

 

$

0.55

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average common shares outstanding

 

6,387

 

 

 

6,123

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

6,659

 

 

 

6,456

 

 

 

 

 

 

 

 

Unaudited Consolidated Balance Sheets
(In thousands, except per share data)

 

March 31, 2024

 

December 31, 2023

 

ASSETS

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

7,622

 

 

$

7,071

 

 

Restricted cash

 

86,620

 

 

 

160,958

 

 

Equipment held for operating lease, less accumulated depreciation

 

2,130,327

 

 

 

2,112,837

 

 

Maintenance rights

 

9,180

 

 

 

9,180

 

 

Equipment held for sale

 

2,856

 

 

 

805

 

 

Receivables, net

 

61,881

 

 

 

58,485

 

 

Spare parts inventory

 

85,165

 

 

 

40,954

 

 

Investments

 

60,299

 

 

 

58,044

 

 

Property, equipment & furnishings, less accumulated depreciation

 

35,531

 

 

 

37,160

 

 

Intangible assets, net

 

1,034

 

 

 

1,040

 

 

Notes receivable, net

 

97,859

 

 

 

92,621

 

 

Investments in sales-type leases, net

 

33,013

 

 

 

8,759

 

 

Other assets

 

63,075

 

 

 

64,430

 

 

Total assets

$

2,674,462

 

 

$

2,652,344

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

$

103,348

 

 

$

52,937

 

 

Deferred income taxes

 

156,030

 

 

 

147,779

 

 

Debt obligations

 

1,735,570

 

 

 

1,802,881

 

 

Maintenance reserves

 

99,529

 

 

 

92,497

 

 

Security deposits

 

26,525

 

 

 

23,790

 

 

Unearned revenue

 

41,687

 

 

 

43,533

 

 

Total liabilities

 

2,162,689

 

 

 

2,163,417

 

 

 

 

 

 

 

 

 

 

 

Redeemable preferred stock ($0.01 par value)

 

49,976

 

 

 

49,964

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

Common stock ($0.01 par value)

 

69

 

 

 

68

 

 

Paid-in capital in excess of par

 

33,657

 

 

 

29,667

 

 

Retained earnings

 

417,738

 

 

 

397,781

 

 

Accumulated other comprehensive income, net of tax

 

10,333

 

 

 

11,447

 

 

Total shareholders’ equity

 

461,797

 

 

 

438,963

 

 

Total liabilities, redeemable preferred stock and shareholders’ equity

$

2,674,462

 

 

$

2,652,344

 

 

 

CONTACT:

Scott B. Flaherty

 

Chief Financial Officer

 

(561) 349-9989



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