NOVATO, Calif., Aug. 11, 2008 (PRIME NEWSWIRE) -- Willis Lease Finance Corporation (Nasdaq:WLFC), a leading lessor of commercial jet engines, today reported the ongoing growth of its engine portfolio, high utilization and strong market demand for leased engines contributed to 20% year-over-year revenue growth in the second quarter of 2008. Willis Lease net income available to common stockholders increased 56% to $5.6 million, or $0.64 per diluted share, in the second quarter of 2008, compared to $3.6 million, or $0.42 per diluted share, in the like quarter a year ago. In the first half of 2008, net income available to common stockholders grew 38% to $10.0 million, or $1.14 per diluted share, from $7.2 million, or $0.84 per diluted share in the like period of 2007.
Second Quarter 2008 Highlights
* The lease portfolio increased 21% to $787 million from a year ago. * Average utilization for the quarter was 96%, the same as a year ago, virtually at full capacity. * Lease rent revenue rose 23% to $26.2 million from a year ago. * Maintenance reserve revenue increased 15% to $9.5 million from a year ago. * Liquidity available from warehouse and revolving credit facilities increased to $298.5 million at quarter end, up from $94.8 million a year ago. * Book value per common share was $17.79 at June 30, 2008, up from $17.40 at June 30, 2007.
"This is one of the best quarters we have ever had," said Charles F. Willis, President and CEO. "Our earnings are strong, utilization is high and our engine portfolio continues to grow as planned. We have benefited greatly by being able to provide our customers with the engines that are in greatest demand. Several years ago we made the conscious decision to invest more heavily in new engines which power the latest generation of narrowbody aircraft, namely the B737-NG and A320 model families. That decision is serving us well today. These engines have the latest technology, are more fuel-efficient, environmentally-friendly, and cost less to maintain -- all attributes which make them more attractive to our customers, especially now."
"The commercial aviation business is facing one of its biggest challenges ever in terms of having to find a way to deal with record high fuel costs. Many airlines have announced plans to reduce capacity by parking older, less fuel-efficient aircraft which are no longer economical to operate," added Willis. "Cash is once again becoming a scarce commodity with our customers as they are required to support higher operating expenses driven by the cost of fuel. When cash is tight, airlines will turn to leasing. For us it will mean more opportunities to purchase engines from our customers and lease them back, as well as more opportunities to provide short-term leases to customers wishing to defer large engine maintenance expenses."
"In keeping with the strategy of shifting the mix of engines within our portfolio to newer generation engine types, we are in the process of selling and parting out seven JT8D engines, which power the aging MD-80 fleet, leaving only ten of this engine type in our portfolio," added Brad Forsyth, Chief Financial Officer. "Consequently, a $1.0 million write-down of equipment was recorded in the second quarter to adjust book values for two of the seven engines, with sale and projected part-out proceeds expected to exceed the asset book values for the other five engines."
Results from Operations
In the second quarter of 2008, lease rent revenues grew 23% to $26.2 million compared to $21.4 million in the second quarter of 2007, reflecting the 21% year-over-year growth in the engine portfolio. Maintenance reserve revenue was up 15% to $9.5 million from $8.3 million in the year ago period due to the growth in the portfolio. Gain on sale of equipment was $1.3 million in the second quarter of 2008 compared to $1.2 million in the year ago period. In the second quarter of 2008, Willis Lease sold two helicopters recently purchased in December 2007 and sold one engine in the year ago quarter. Total second quarter revenue grew 20% to $37.2 million from $31.0 million in the second quarter of 2007.
In the first six months of 2008, lease rent revenues grew 25% to $51.0 million compared to $40.8 million in the first six months of 2007. Year to date, maintenance reserve revenue was up 2% to $15.8 million from $15.5 million with six long term leases maturing this year compared to nine in the year ago period. Gain on sale of equipment was $1.3 million in the first half of both 2008 and 2007. The settlement of a claim for $1.0 million related to litigation arising from a lessee default boosted other income in the first six months of 2008 to $1.4 million compared to $0.5 million in the first half of 2007. Year to date, total revenue grew 20% to $69.5 million from $58.1 million in the first six months of 2007.
Capacity expansion and additions to the engine portfolio continued to drive growth in total expenses in both the quarter and first six months of 2008. In the second quarter of 2008, total expenses grew 13% to $27.3 million from $24.3 million in the second quarter a year ago. Depreciation in the second quarter of 2008 grew 14% to $9.1 million from $7.9 million a year ago. Second quarter net finance costs increased only 10% to $9.1 million from $8.3 million a year ago resulting from the recent drop in interest rates. In the quarter, Willis Lease wrote down equipment by a total of $1.8 million compared to $2.1 million in the second quarter a year ago. General and administrative expenses were up 24% in the second quarter of 2008 at $7.3 million from $5.9 million in the second quarter of 2007.
In the first six months of 2008, total expenses increased 15% to $51.4 million from $44.5 million in the first six months of 2007. Depreciation in the first half of 2008 grew 23% to $17.7 million from $14.4 million a year ago. The write-down of equipment in the first half was equal to the second quarter write-down in each of 2008 and 2007. Year-to-date, net finance costs increased 13% to $18.3 million from $16.2 million a year ago. General and administrative expenses were up 15% in the first six months of 2008 at $13.6 million from $11.8 million in the first half of 2007.
In the second quarter of 2008, income from operations was up 48% to $9.9 million from $6.7 million in the year ago period. Year to date, income from operations grew 34% to $18.1 million from $13.5 million in the first six months of 2007. Second quarter pretax income grew 47% to $10.1 million from $6.9 million in the second quarter a year ago. For the first half of 2008, pretax income grew 34% to $18.5 million from $13.8 million in the first half of 2007. Willis Lease generated net income of $6.4 million in the second quarter of 2008, up from $4.4 million in the second quarter of 2007. After payment of preferred dividends, net income available to common stockholders grew 56% to $5.6 million, or $0.64 per diluted share, compared to $3.6 million, or $0.42 per diluted share in the second quarter of 2007. In the first half of 2008, net income available to common stockholders grew 38% to $10.0 million, or $1.14 per diluted share, compared to $7.2 million, or $0.84 per diluted share.
Balance Sheet
At June 30, 2008, the company had 146 commercial jet engines, 14 turboprop engines, 3 aircraft parts packages, and 4 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $786.8 million, compared to 133 commercial jet engines, 3 turboprop engines, 3 aircraft parts packages, 4 aircraft and other engine-related equipment in its lease portfolio with a net book value of $647.6 million at June 30, 2007.
Total assets increased 18% to $920.6 million at June 30, 2008, compared to $778.9 million a year ago. Total shareholders' equity was $186.4 million compared to $173.6 million a year ago. Book value per common share increased to $17.79 compared to $16.54 at March 31, 2008, and $16.93 at December 31, 2007.
With the establishment of the new WEST $200 million warehouse facility in December 2007 and the placement of $212 million of WEST long term notes in March 2008, the company had $298.5 million of availability under its revolving credit and warehouse facilities at June 30, 2008, compared to $94.8 million a year earlier. The company's funded debt to equity ratio was 3.21 to 1 at June 30, 2008, compared to 2.85 to 1 at June 30, 2007. Total capital expenditures in the first six months of 2008 were $80.4 million compared to $64.2 million a year ago.
About Willis Lease Finance
Willis Lease Finance Corporation leases spare commercial aircraft engines, rotable parts and aircraft to commercial airlines, aircraft engine manufacturers and overhaul/repair facilities worldwide. These leasing activities are integrated with the purchase and resale of used and refurbished commercial aircraft engines.
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Statements of Income
(In thousands, except per share data, unaudited)
Three Months Six Months
Ended June 30, % Ended June 30, %
2008 2007 Change 2008 2007 Change
------- ------- ------- ------- ------- -------
REVENUE
Lease rent
revenue $26,216 $21,354 22.8% $51,038 $40,750 25.2%
Maintenance
reserve revenue 9,515 8,250 15.3% 15,802 15,528 1.8%
Gain on sale of
leased equipment 1,261 1,239 1.8% 1,261 1,300 (3.0)%
Other income 248 124 100.0% 1,382 505 173.7%
------- ------- ------- -------
Total revenue 37,240 30,967 20.3% 69,483 58,083 19.6%
------- ------- ------- -------
EXPENSES
Depreciation
expense 9,085 7,946 14.3% 17,725 14,389 23.2%
Write-down of
equipment 1,811 2,142 (15.5)% 1,811 2,142 (15.5)%
General and
administrative 7,275 5,872 23.9% 13,553 11,769 15.2%
Net finance
costs:
Interest expense 9,584 9,218 4.0% 19,361 17,999 7.6%
Interest income (439) (909) (51.7)% (1,063) (1,759) (39.6)%
------- ------- ------- -------
Total net finance
costs 9,145 8,309 10.1% 18,298 16,240 12.7%
------- ------- ------- -------
Total expenses 27,316 24,269 12.6% 51,387 44,540 15.4%
------- ------- ------- -------
Earnings from
operations 9,924 6,698 48.2% 18,096 13,543 33.6%
Earnings from
joint venture 200 205 (2.4)% 382 292 30.8%
------- ------- ------ -------
Income before
income taxes 10,124 6,903 46.7% 18,478 13,835 33.6%
Income tax
expense 3,702 2,509 47.6% 6,951 5,036 38.0%
------- ------- ------- -------
Net income $ 6,422 $ 4,394 46.1% $11,527 $ 8,799 31.0%
Preferred stock
dividends paid
and declared-
Series A 782 782 0.0% 1,564 1,564 0.0%
------- ------- ------- -------
Net income
attributable to
common
stockholders $ 5,640 $ 3,612 56.1% $ 9,963 $ 7,235 37.7%
======= ======= ======= =======
Basic earnings
per common
share: $ 0.69 $ 0.44 $ 1.21 $ 0.90
======= ======= ======= =======
Diluted earnings
per common
share: $ 0.64 $ 0.42 $ 1.14 $ 0.84
======= ======= ======= =======
Average common
shares
outstanding 8,225 8,118 8,208 8,066
Diluted average
common shares
outstanding 8,754 8,636 8,764 8,589
WILLIS LEASE FINANCE CORPORATION
AND SUBSIDIARIES
Consolidated Balance Sheets
(In thousands, except share data, unaudited)
June 30, Dec. 31, June 30,
2008 2007 2007
-------- -------- --------
ASSETS
Cash and cash equivalents $ 1,576 $ 7,234 $ 2,974
Restricted cash 64,198 64,960 77,425
Equipment held for operating lease, less
accumulated depreciation 786,791 744,827 647,572
Equipment held for sale 9,079 5,006 7,752
Operating lease related receivable, net
of allowances 6,895 5,550 3,849
Investments 10,458 10,327 10,299
Assets under derivative instruments 467 12 3,368
Property, equipment & furnishings, less
accumulated depreciation 7,424 6,771 7,048
Other assets 33,692 23,903 18,578
-------- -------- --------
Total assets $920,580 $868,590 $778,865
======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 11,286 $ 11,825 $ 12,345
Liabilities under derivative instruments 7,029 7,709 --
Deferred income taxes 53,578 46,632 46,232
Notes payable 598,968 567,108 495,165
Maintenance reserves 52,811 49,481 40,315
Security deposits 6,407 5,890 5,149
Unearned lease revenue 4,131 5,293 6,032
-------- -------- --------
Total liabilities 734,210 693,938 605,238
-------- -------- --------
Shareholders' equity:
Preferred stock $ 31,915 $ 31,915 $ 31,915
Common stock ($0.01 par value) 87 84 81
Paid-in capital in excess of par 56,745 55,712 54,969
Accumulated other comprehensive loss,
net of tax (6,030) (6,749) 273
Retained earnings 103,653 93,690 86,389
-------- -------- --------
Total shareholders' equity 186,370 174,652 173,627
-------- -------- --------
Total liabilities and shareholders'
equity $920,580 $868,590 $778,865
======== ======== ========
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.