Willis Lease Finance Corporation Reports Second Quarter Pre-tax Income of $11.0 million
August 04 2022 - 06:30AM
GlobeNewswire Inc.
Willis Lease Finance Corporation (NASDAQ: WLFC) today reported
second quarter total revenues of $78.1 million. For the three
months ended June 30, 2022, aggregate lease rent and maintenance
reserve revenues were $60.9 million and spare parts and equipment
sales were $6.8 million. The Company reported increased total
revenues in the second quarter when compared to the prior year
period, primarily due to an increase in lease rent revenue and
short-term maintenance revenue.
“Second quarter pre-tax profit of $11.0 million
speaks to the strength of the underlying business and represents
the beginnings of a recovery post a first quarter, heavily
influenced by the Russian crisis,” said Austin C. Willis, the
Company’s Chief Executive Officer.
“We are pleased with our second quarter results
and our team’s efforts to recover the Company from the impacts of
the pandemic, Russia’s decision to confiscate our engines and
rising interest rates,” said Brian R. Hole, President. “We continue
to believe that our programmatic offerings will be the difference
for customers working to optimize capacity at a time when both new
equipment production and maintenance are facing historic
difficulties and delay.”
Second Quarter 2022 Highlights
(at or for the periods ended June 30, 2022, as compared to June 30,
2021, and December 31, 2021):
- Lease rent revenue increased by $4.3 million, or 13.2%, to
$36.7 million in the second quarter of 2022, compared to $32.4
million in the same quarter of 2021, primarily reflecting an
increase in the number of engines placed on lease as supported by
an increase in utilization compared to the prior year period.
- Maintenance reserve revenue was $24.2 million in the second
quarter of 2022, an increase of 40.3% compared to $17.3 million in
the same quarter of 2021. Long-term maintenance revenue, which is
influenced by end of lease compensation and the realization of
long-term maintenance reserves associated with engines coming off
lease, increased to $15.1 million for the second quarter of 2022,
compared to $14.8 million in the comparable prior period.
Short-term maintenance reserve revenue, which is directly
influenced by on lease engine flight hours and cycles, increased to
$9.2 million for the second quarter of 2022, compared to $2.5
million in the comparable prior period.
- Spare parts and equipment sales increased to $6.8 million in
the second quarter of 2022, compared to $3.6 million in the second
quarter of 2021. The increase in spare parts sales was driven by
improved industry wide demand compared to the prior year
period.
- Gain on sale of leased equipment was $0.5 million in the second
quarter of 2022 reflecting the sale of eight engines. Gain on sale
of financial assets, effectively the sale of leased equipment, was
$3.1 million in the second quarter of 2022 reflecting the sale of
four notes receivable. There were no sales of leased equipment or
notes receivable in the second quarter of 2021.
- The Company generated $11.0 million of pre-tax income in the
second quarter of 2022 compared to $(1.9) million in the comparable
quarter of 2021.
- The book value of lease assets we own directly or through our
joint ventures, inclusive of our notes receivable and investment in
sales-type leases, was $2,352.4 million at June 30, 2022. As of
June 30, 2022, the Company also managed 351 engines, aircraft and
related equipment on behalf of other parties.
- The Company maintained $431.0 million of undrawn revolver
capacity at June 30, 2022.
- During the second quarter of 2022, the Company repurchased a
total of 101,435 shares of common stock for approximately $3.4
million at a weighted average price of $33.55 per share.
- Diluted weighted average income (loss) per common share was
$0.81 for the second quarter of 2022, compared to $(0.12) in the
second quarter of 2021.
- Book value per diluted weighted average common share
outstanding increased to $62.07 at June 30, 2022, compared to
$59.23 at December 31, 2021.
Balance Sheet
As of June 30, 2022, $1,957.6 million of
equipment held in our operating lease portfolio, $83.3 million
notes receivable, and $7.0 million investment in sales-type leases,
represented 293 engines, twelve aircraft, one marine vessel and
other leased parts and equipment. As of December 31, 2021, the
Company had $1,991.4 million equipment held for operating
lease portfolio and $115.5 million notes receivable, which
represented 304 engines, twelve aircraft, one marine vessel and
other leased parts and equipment.
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 war, terrorist activity and the COVID-19 pandemic; 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 June 30, |
|
|
|
Six Months Ended June 30, |
|
|
|
2022 |
|
2021 |
|
% Change |
|
2022 |
|
2021 |
|
% Change |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
Lease rent revenue |
$ |
36,704 |
|
$ |
32,431 |
|
|
13.2% |
|
$ |
74,829 |
|
|
$ |
63,951 |
|
|
17.0% |
Maintenance reserve revenue |
|
24,245 |
|
|
17,278 |
|
|
40.3% |
|
|
39,079 |
|
|
|
37,090 |
|
|
5.4% |
Spare parts and equipment
sales |
|
6,792 |
|
|
3,569 |
|
|
90.3% |
|
|
13,422 |
|
|
|
8,135 |
|
|
65.0% |
Gain on sale of leased
equipment |
|
498 |
|
|
— |
|
|
N/A |
|
|
2,796 |
|
|
|
— |
|
|
N/A |
Gain on sale of financial
assets |
|
3,116 |
|
|
— |
|
|
N/A |
|
|
3,116 |
|
|
|
— |
|
|
N/A |
Asset transition fee |
|
— |
|
|
6,256 |
|
|
(100.0)% |
|
|
— |
|
|
|
6,256 |
|
|
(100.0)% |
Other revenue |
|
6,720 |
|
|
6,938 |
|
|
(3.1)% |
|
|
13,650 |
|
|
|
12,165 |
|
|
12.2% |
Total revenue |
|
78,075 |
|
|
66,472 |
|
|
17.5% |
|
|
146,892 |
|
|
|
127,597 |
|
|
15.1% |
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
expense |
|
21,612 |
|
|
23,340 |
|
|
(7.4)% |
|
|
43,421 |
|
|
|
47,481 |
|
|
(8.6)% |
Cost of spare parts and equipment
sales |
|
7,014 |
|
|
3,278 |
|
|
114.0% |
|
|
11,876 |
|
|
|
7,087 |
|
|
67.6% |
Write-down of equipment |
|
78 |
|
|
2,246 |
|
|
(96.5)% |
|
|
21,195 |
|
|
|
4,113 |
|
|
415.3% |
General and administrative |
|
20,427 |
|
|
19,499 |
|
|
4.8% |
|
|
44,032 |
|
|
|
35,650 |
|
|
23.5% |
Technical expense |
|
3,436 |
|
|
2,296 |
|
|
49.7% |
|
|
9,082 |
|
|
|
3,606 |
|
|
151.9% |
Net finance costs: |
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
16,023 |
|
|
16,987 |
|
|
(5.7)% |
|
|
32,906 |
|
|
|
32,006 |
|
|
2.8% |
Total net finance costs |
|
16,023 |
|
|
16,987 |
|
|
(5.7)% |
|
|
32,906 |
|
|
|
32,006 |
|
|
2.8% |
Total expenses |
|
68,590 |
|
|
67,646 |
|
|
1.4% |
|
|
162,512 |
|
|
|
129,943 |
|
|
25.1% |
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
9,485 |
|
|
(1,174 |
) |
|
(907.9)% |
|
|
(15,620 |
) |
|
|
(2,346 |
) |
|
565.8% |
Income (loss) from joint
ventures |
|
1,469 |
|
|
(685 |
) |
|
(314.5)% |
|
|
(1,147 |
) |
|
|
(1,204 |
) |
|
(4.7)% |
Income (loss) before income
taxes |
|
10,954 |
|
|
(1,859 |
) |
|
(689.2)% |
|
|
(16,767 |
) |
|
|
(3,550 |
) |
|
372.3% |
Income tax expense (benefit) |
|
5,046 |
|
|
(1,917 |
) |
|
(363.2)% |
|
|
(1,474 |
) |
|
|
(2,276 |
) |
|
(35.2)% |
Net income (loss) |
|
5,908 |
|
|
58 |
|
|
10,086.2% |
|
|
(15,293 |
) |
|
|
(1,274 |
) |
|
1,100.4% |
Preferred stock dividends |
|
811 |
|
|
811 |
|
|
—% |
|
|
1,612 |
|
|
|
1,612 |
|
|
—% |
Accretion of preferred stock
issuance costs |
|
21 |
|
|
21 |
|
|
—% |
|
|
42 |
|
|
|
42 |
|
|
—% |
Net income (loss) attributable to
common shareholders |
$ |
5,076 |
|
$ |
(774 |
) |
|
(755.8)% |
|
$ |
(16,947 |
) |
|
$ |
(2,928 |
) |
|
478.8% |
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average income
(loss) per common share |
$ |
0.83 |
|
$ |
(0.12 |
) |
|
|
|
$ |
(2.81 |
) |
|
$ |
(0.48 |
) |
|
|
Diluted weighted average income
(loss) per common share |
$ |
0.81 |
|
$ |
(0.12 |
) |
|
|
|
$ |
(2.81 |
) |
|
$ |
(0.48 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common
shares outstanding |
|
6,129 |
|
|
6,218 |
|
|
|
|
|
6,040 |
|
|
|
6,107 |
|
|
|
Diluted weighted average common
shares outstanding |
|
6,246 |
|
|
6,218 |
|
|
|
|
|
6,040 |
|
|
|
6,107 |
|
|
|
Unaudited Consolidated Balance Sheets(In thousands, except per share data)
|
June 30, 2022 |
|
December 31, 2021 |
ASSETS |
|
|
|
Cash and cash equivalents |
$ |
12,858 |
|
$ |
14,329 |
Restricted cash |
|
60,982 |
|
|
81,312 |
Equipment held for operating
lease, less accumulated depreciation |
|
1,957,638 |
|
|
1,991,368 |
Maintenance rights |
|
22,511 |
|
|
22,511 |
Equipment held for sale |
|
4,380 |
|
|
6,952 |
Receivables, net of
allowances |
|
40,472 |
|
|
39,623 |
Spare parts inventory |
|
43,396 |
|
|
50,959 |
Investments |
|
55,341 |
|
|
55,927 |
Property, equipment &
furnishings, less accumulated depreciation |
|
32,737 |
|
|
31,327 |
Intangible assets, net |
|
1,158 |
|
|
1,188 |
Notes receivable |
|
83,295 |
|
|
115,456 |
Investment in sales-type
leases |
|
7,025 |
|
|
— |
Other assets |
|
74,590 |
|
|
51,975 |
Total assets |
$ |
2,396,383 |
|
$ |
2,462,927 |
|
|
|
|
LIABILITIES, REDEEMABLE PREFERRED
STOCK AND SHAREHOLDERS’ EQUITY |
|
|
|
Liabilities: |
|
|
|
Accounts payable and accrued
expenses |
$ |
26,183 |
|
$ |
26,858 |
Deferred income taxes |
|
127,400 |
|
|
124,332 |
Debt obligations |
|
1,731,807 |
|
|
1,790,264 |
Maintenance reserves |
|
56,811 |
|
|
65,976 |
Security deposits |
|
18,037 |
|
|
19,349 |
Unearned revenue |
|
11,404 |
|
|
10,458 |
Total liabilities |
|
1,971,642 |
|
|
2,037,237 |
|
|
|
|
Redeemable preferred stock ($0.01
par value) |
|
49,847 |
|
|
49,805 |
|
|
|
|
Shareholders’ equity: |
|
|
|
Common stock ($0.01 par
value) |
|
63 |
|
|
65 |
Paid-in capital in excess of
par |
|
14,562 |
|
|
15,401 |
Retained earnings |
|
338,441 |
|
|
355,388 |
Accumulated other comprehensive
income, net of tax |
|
21,828 |
|
|
5,031 |
Total shareholders’ equity |
|
374,894 |
|
|
375,885 |
Total liabilities, redeemable
preferred stock and shareholders’ equity |
$ |
2,396,383 |
|
$ |
2,462,927 |
CONTACT: |
Scott B. Flaherty |
|
Chief Financial Officer |
|
(561) 349-9989 |
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