COCONUT CREEK, Fla., Aug. 05, 2020 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported second quarter total revenues of $75.0 million and pre-tax profit of $9.7 million. The Company reported lower revenue in the second quarter of 2020 than the prior year period due primarily to the impact the COVID-19 pandemic has had on the aviation industry, generally, leading to reduced revenues in the core leasing business. Aggregate lease rent and maintenance reserve revenues were $68.4 million for the second quarter of 2020.
“We are pleased to have maintained profitability in the second quarter, with $9.7 million of reported pre-tax income, given the unprecedented impacts the COVID-19 pandemic has had on our industry,” said Charles F. Willis, Chairman and CEO. “As we have from the beginning of this event, we are working closely with our global customer base to provide tailored lease and service solutions while also maintaining a focus on the strength of our own balance sheet and liquidity."
“At this point, our customers are fighting to survive what essentially has been the disappearance of a flying public,” said Brian R. Hole, President. “We believe we are well-positioned, though, to support the recovery by leveraging our entire Platform, from available financing, hundreds of lease engines and aircraft, technical services, aircraft storage and maintenance, surplus material and a multitude of specialized programs, all of which are designed to drive out cost and help our customers return to profitability.”
Second Quarter 2020 Highlights (at or for the periods ended June 30, 2020, as compared to June 30, 2019, and December 31, 2019):
- Total revenue was $75.0 million in the second quarter of 2020, a 21.7% decrease when compared to $95.8 million in the same quarter of 2019.
- Lease rent revenue was $38.5 million in the second quarter of 2020.
- Maintenance reserve revenue was $30.0 million in the second quarter of 2020, an increase of $3.5 million, or 13.3%, compared to $26.5 million in the same quarter of 2019. Long term maintenance reserve revenue, which is influenced by end of lease compensation, increased to $27.2 million for the second quarter of 2020, compared to $6.7 million in the comparable prior period. Short term maintenance reserve revenue, which is influenced by lease asset usage, was $2.8 million for the second quarter of 2020 compared to $19.8 million in the comparable prior period.
- Spare parts and equipment sales were $2.9 million in the second quarter of 2020, compared to $14.6 million during the same quarter of 2019.
- Income before income taxes was $9.7 million in the second quarter of 2020, compared to $21.8 million in the same quarter of 2019 and was $18.3 million in the first half of 2020, compared to $49.6 million in the first half of 2019.
- Our equipment held for operating lease portfolio was $1.654 billion at June 30, 2020, compared to $1.651 billion at December 31, 2019.
- The book value of lease assets we own directly or through our joint ventures was $2.0 billion at June 30, 2020. As of June 30, 2020, the Company also managed 402 engines, aircraft and related equipment on behalf of third parties.
- The Company maintained $447 million of undrawn revolver capacity at June 30, 2020.
- Under the Company’s repurchase plan, the Company repurchased a total of 54,626 shares of common stock in the second quarter of 2020 for $1.5 million.
- Diluted weighted average earnings per common share was $0.74 for the second quarter of 2020, compared to $2.66 in the similar period in 2019.
- Book value per diluted weighted average common share outstanding increased to $58.56 at June 30, 2020, compared to $57.83 at December 31, 2019.
Balance Sheet
As of June 30, 2020, the Company’s $1.654 billion equipment held for operating lease portfolio consisted of 264 engines, 10 aircraft and 11 other leased assets. As of December 31, 2019, the Company’s $1.651 billion equipment held for operating lease portfolio consisted of 263 engines, 10 aircraft and 11 other leased assets.
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 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 and the COVID-19 pandemic; 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 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 June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||||||||||||||||||||||||||
| REVENUE | |||||||||||||||||||||||||||||||||||||||
| Lease rent revenue | $ | 38,454 | $ | 45,025 | (14.6 | )% | $ | 84,849 | $ | 93,394 | (9.1 | )% | |||||||||||||||||||||||||||
| Maintenance reserve revenue | 29,986 | 26,475 | 13.3 | % | 50,514 | 51,825 | (2.5 | )% | |||||||||||||||||||||||||||||||
| Spare parts and equipment sales | 2,855 | 14,586 | (80.4 | )% | 11,960 | 32,088 | (62.7 | )% | |||||||||||||||||||||||||||||||
| (Loss) Gain on sale of leased equipment | (700 | ) | 5,120 | (113.7 | )% | 1,367 | 14,690 | (90.7 | )% | ||||||||||||||||||||||||||||||
| Other revenue | 4,388 | 4,591 | (4.4 | )% | 7,902 | 7,569 | 4.4 | % | |||||||||||||||||||||||||||||||
| Total revenue | 74,983 | 95,797 | (21.7 | )% | 156,592 | 199,566 | (21.5 | )% | |||||||||||||||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization expense | 23,764 | 20,043 | 18.6 | % | 47,154 | 40,301 | 17.0 | % | |||||||||||||||||||||||||||||||
| Cost of spare parts and equipment sales | 2,648 | 12,585 | (79.0 | )% | 9,336 | 26,997 | (65.4 | )% | |||||||||||||||||||||||||||||||
| Write-down of equipment | 6,997 | 3,262 | 114.5 | % | 9,126 | 4,367 | 109.0 | % | |||||||||||||||||||||||||||||||
| General and administrative | 15,228 | 21,389 | (28.8 | )% | 34,795 | 42,829 | (18.8 | )% | |||||||||||||||||||||||||||||||
| Technical expense | 1,468 | 1,407 | 4.3 | % | 2,595 | 3,195 | (18.8 | )% | |||||||||||||||||||||||||||||||
| Net finance costs: | |||||||||||||||||||||||||||||||||||||||
| Interest expense | 16,089 | 16,781 | (4.1 | )% | 31,785 | 34,660 | (8.3 | )% | |||||||||||||||||||||||||||||||
| Loss on debt extinguishment | — | 220 | (100.0 | )% | 4,688 | 220 | 2,030.9 | % | |||||||||||||||||||||||||||||||
| Total net finance costs | 16,089 | 17,001 | (5.4 | )% | 36,473 | 34,880 | 4.6 | % | |||||||||||||||||||||||||||||||
| Total expenses | 66,194 | 75,687 | (12.5 | )% | 139,479 | 152,569 | (8.6 | )% | |||||||||||||||||||||||||||||||
| Earnings from operations | 8,789 | 20,110 | (56.3 | )% | 17,113 | 46,997 | (63.6 | )% | |||||||||||||||||||||||||||||||
| Earnings from joint ventures | 948 | 1,676 | (43.4 | )% | 1,155 | 2,622 | (55.9 | )% | |||||||||||||||||||||||||||||||
| Income before income taxes | 9,737 | 21,786 | (55.3 | )% | 18,268 | 49,619 | (63.2 | )% | |||||||||||||||||||||||||||||||
| Income tax expense | 4,365 | 4,811 | (9.3 | )% | 8,610 | 11,766 | (26.8 | )% | |||||||||||||||||||||||||||||||
| Net income | 5,372 | 16,975 | (68.4 | )% | 9,658 | 37,853 | (74.5 | )% | |||||||||||||||||||||||||||||||
| Preferred stock dividends | 811 | 810 | 0.1 | % | 1,621 | 1,611 | 0.6 | % | |||||||||||||||||||||||||||||||
| Accretion of preferred stock issuance costs | 21 | 21 | — | % | 42 | 42 | — | % | |||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 4,540 | $ | 16,144 | (71.9 | )% | $ | 7,995 | $ | 36,200 | (77.9 | )% | |||||||||||||||||||||||||||
| Basic weighted average earnings per common share | $ | 0.76 | $ | 2.75 | $ | 1.35 | $ | 6.22 | |||||||||||||||||||||||||||||||
| Diluted weighted average earnings per common share | $ | 0.74 | $ | 2.66 | $ | 1.31 | $ | 6.01 | |||||||||||||||||||||||||||||||
| Basic weighted average common shares outstanding | 6,012 | 5,866 | 5,936 | 5,823 | |||||||||||||||||||||||||||||||||||
| Diluted weighted average common shares outstanding | 6,098 | 6,061 | 6,111 | 6,020 | |||||||||||||||||||||||||||||||||||
Unaudited Consolidated Balance Sheets
(In thousands, except per share data)
| June 30, 2020 | December 31, 2019 | |||||||||||
| ASSETS | ||||||||||||
| Cash and cash equivalents | $ | 100,096 | $ | 6,720 | ||||||||
| Restricted cash | 71,312 | 56,948 | ||||||||||
| Equipment held for operating lease, less accumulated depreciation | 1,653,695 | 1,650,918 | ||||||||||
| Maintenance rights | 767 | 3,133 | ||||||||||
| Equipment held for sale | 50 | 120 | ||||||||||
| Receivables, net of allowances | 41,678 | 24,059 | ||||||||||
| Spare parts inventory | 50,670 | 41,759 | ||||||||||
| Investments | 58,865 | 57,936 | ||||||||||
| Property, equipment & furnishings, less accumulated depreciation | 32,260 | 31,520 | ||||||||||
| Intangible assets, net | 1,282 | 1,312 | ||||||||||
| Notes receivable | 170,362 | 38,145 | ||||||||||
| Other assets | 28,534 | 28,038 | ||||||||||
| Total assets | $ | 2,209,571 | $ | 1,940,608 | ||||||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Liabilities: | ||||||||||||
| Accounts payable and accrued expenses | $ | 32,359 | $ | 45,648 | ||||||||
| Deferred income taxes | 117,915 | 110,418 | ||||||||||
| Debt obligations | 1,520,240 | 1,251,006 | ||||||||||
| Maintenance reserves | 100,179 | 106,870 | ||||||||||
| Security deposits | 22,841 | 20,569 | ||||||||||
| Unearned revenue | 8,489 | 6,121 | ||||||||||
| Total liabilities | 1,802,023 | 1,540,632 | ||||||||||
| Redeemable preferred stock ($0.01 par value) | 49,680 | 49,638 | ||||||||||
| Shareholders’ equity: | ||||||||||||
| Common stock ($0.01 par value) | 66 | 64 | ||||||||||
| Paid-in capital in excess of par | 7,203 | 4,557 | ||||||||||
| Retained earnings | 356,960 | 348,965 | ||||||||||
| Accumulated other comprehensive loss, net of tax | (6,361 | ) | (3,248 | ) | ||||||||
| Total shareholders’ equity | 357,868 | 350,338 | ||||||||||
| Total liabilities, redeemable preferred stock and shareholders’ equity | $ | 2,209,571 | $ | 1,940,608 | ||||||||
CONTACT:
Scott B. Flaherty
Chief Financial Officer
(561) 349-9989