Willis Lease Finance Corporation Reports Annual Pre-tax Profit of $9.1 million

COCONUT CREEK, Fla., March 14, 2022 (GLOBE NEWSWIRE) — Willis Lease Finance Corporation WLFC today reported annual total revenues of $274.2 million and pre-tax profit of $9.1 million. For the year ended December 31, 2021, aggregate lease rent and maintenance reserve revenues were $208.8 million and spare parts and equipment sales were $17.4 million. The Company reported increased total revenues in the fourth quarter when compared to the prior year period, primarily due to both an increase in lease rent revenue and gain on sale of leased equipment and financial assets, partially offset by a reduction in long-term maintenance revenue.

“We continued to see a slow recovery during the second half of 2021 as travel began to open on a global basis only to be dampened again near year-end by COVID-19 variants,” said Charles F. Willis, Chairman and CEO. “COVID-related travel prohibitions have been relaxed more recently, but now the industry faces new stresses associated with geo-political issues that are tragic on every level. As always, we continue to focus on the things we can control, and we believe the Company is well positioned to help our customers provide an essential product: air travel.”


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“The world has been, and continues to be, an unsettled place, but the dedication of our employees is constant,” said Brian R. Hole, President. “Their efforts allow us to deliver the novel programs, financing products and services our customers need more and more as they realize that ‘same again’ will not be an adequate strategy in the current times”

2021 Highlights (at or for the quarter and year ended December 31, 2021, as compared to at or for the quarter and year ended December 31, 2020):

  • Total revenue was $274.2 million in 2021, a 5% decrease when compared to $288.7 million in the prior year. Revenue for the three months ended December 31, 2021 was $75.8 million, up 23.3% from the comparative period in 2020.
  • Lease rent revenue was $134.8 million in 2021, off 5.6% from 2020.
  • Maintenance reserve revenue was $74.0 million in 2021, a decrease of 29.8% compared to $105.4 million in the prior year.
    • The decline in maintenance revenue was primarily influenced by lower long-term maintenance revenue associated with engines returning from long-term lease.
    • Short-term maintenance revenue, driven by engine usage, was flat at $17.7 million year over year.
  • Spare parts and equipment sales decreased to $17.4 million in 2021, compared to $18.6 million in 2020, primarily due to no equipment sales during 2021 compared to $0.9 million for the sale of one engine in 2020.
  • Gain on sale of leased equipment increased 76.2% to $6.0 million in 2021 reflecting the sale of 12 engines and one airframe, compared to $3.4 million in 2020 reflecting the sale of 11 engines and two airframes.
  • Gain on sale of financial assets, effectively the sale of leased equipment, was $10.9 million in 2021 reflecting the sale of two notes receivable.
  • The Company recognized a $6.3 million asset transition fee in 2021 as a result of the close out of an engine transition program. This fee was part of a program the Company provided to a large operator as it transitions its fleet to next generation technologies.
  • Other revenue increased by $6.5 million to $24.9 million in 2021, compared to $18.4 million in 2020, primarily reflecting interest income from our notes receivable and other service-related fees.
  • Income before income taxes was $9.1 million in 2021, compared to $17.3 million in 2020.
  • Our aggregate lease assets, inclusive of our equipment held for operating lease and notes receivable, at December 31, 2021 and 2020 was $2,106.8 million and $2,045.3 million, respectively, a 3.0% year-over-year increase.
  • The book value of lease assets we own directly or through our joint ventures, inclusive of our notes receivable, was $2,448.4 million at December 31, 2021. As of December 31, 2021, the Company also managed 475 engines, aircraft and related equipment on behalf of other parties.
  • The Company maintained $410 million of undrawn revolver capacity at December 31, 2021.
  • During 2021, the Company repurchased 268,408 shares of common stock for approximately $10.1 million at a weighted average price of $37.57 per share.
  • Diluted weighted average earnings per common share were $0.00 for 2021, compared to $1.05 in 2020.
  • Book value per diluted weighted average common share outstanding decreased to $59.23 at December 31, 2021, compared to $59.40 at December 31, 2020.

Balance Sheet

As of December 31, 2021, the Company’s $1.991 billion equipment held for operating lease portfolio and $115.5 million notes receivable represented 304 engines, 12 aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2020, the Company’s $1.887 billion equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight 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 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. 

CONTACT: Scott B. Flaherty
  Chief Financial Officer
  (561) 349-9989

Unaudited Consolidated Statements of Income
(In thousands, except per share data) 

  Three Months Ended December 31,       Years Ended December 31,    
    2021     2020     % Change     2021     2020   % Change
REVENUE                      
Lease rent revenue $ 37,972   $ 28,021     35.5 %   $ 134,831   $ 142,895   (5.6) %
Maintenance reserve revenue   13,212     22,549     (41.4) %     73,961     105,365   (29.8) %
Spare parts and equipment sales   4,191     3,777     11.0 %     17,417     18,625   (6.5) %
Gain on sale of leased equipment   3,535     2,024     74.7 %     5,975     3,391   76.2 %
Gain on sale of financial assets   10,874         100.0 %     10,874       100.0 %
Asset transition fee           %     6,256       100.0 %
Other revenue   6,030     5,116     17.9 %     24,888     18,416   35.1 %
Total revenue   75,814     61,487     23.3 %     274,202     288,692   (5.0) %
                       
EXPENSES                      
Depreciation and amortization expense   21,749     23,365     (6.9) %     90,504     94,541   (4.3) %
Cost of spare parts and equipment sales   3,919     3,301     18.7 %     14,927     16,762   (10.9) %
Write-down of equipment   3,602     6,169     (41.6) %     7,715     20,540   (62.4) %
General and administrative   21,038     16,654     26.3 %     75,350     67,910   11.0 %
Technical expense   3,251     3,111     4.5 %     9,381     6,533   43.6 %
Net finance costs:                      
Interest expense   17,654     15,888     11.1 %     67,985     63,024   7.9 %
Loss on debt extinguishment           %         4,688   (100.0) %
Total net finance costs   17,654     15,888     11.1 %     67,985     67,712   0.4 %
Total expenses   71,213     68,488     4.0 %     265,862     273,998   (3.0) %
                       
Earnings (loss) from operations   4,601     (7,001 )   (165.7) %     8,340     14,694   (43.2) %
Earnings from joint ventures   1,983     30     6,510.0 %     800     2,642   (69.7) %
Income (loss) before income taxes   6,584     (6,971 )   (194.4) %     9,140     17,336   (47.3) %
Income tax expense (benefit)   4,842     (4,077 )   (218.8) %     5,788     7,588   (23.7) %
Net income (loss)   1,742     (2,894 )   (160.2) %     3,352     9,748   (65.6) %
Preferred stock dividends   821     819     0.2 %     3,251     3,259   (0.2) %
Accretion of preferred stock issuance costs   20     21     (4.8) %     83     84   (1.2) %
Net income (loss) attributable to common shareholders $ 901   $ (3,734 )   (124.1) %   $ 18   $ 6,405   (99.7) %
                       
Basic weighted average earnings (loss) per common share $ 0.15   $ (0.62 )       $   $ 1.07    
Diluted weighted average earnings (loss) per common share $ 0.14   $ (0.62 )       $   $ 1.05    
                       
Basic weighted average common shares outstanding   6,044     5,988           6,112     5,963    
Diluted weighted average common shares outstanding   6,304     5,988           6,346     6,128    

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

    December 31, 2021   December 31, 2020
ASSETS        
Cash and cash equivalents   $ 14,329   $ 42,540  
Restricted cash     81,312     36,385  
Equipment held for operating lease, less accumulated depreciation     1,991,368     1,886,613  
Maintenance rights     22,511     20,097  
Equipment held for sale     6,952     2,850  
Receivables, net of allowances     39,623     28,269  
Spare parts inventory     50,959     59,434  
Investments     55,927     53,275  
Property, equipment & furnishings, less accumulated depreciation     31,327     31,753  
Intangible assets, net     1,188     1,246  
Notes receivable     115,456     158,708  
Other assets     51,975     43,778  
Total assets   $ 2,462,927   $ 2,364,948  
         
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY        
Liabilities:        
Accounts payable and accrued expenses   $ 26,858   $ 26,977  
Deferred income taxes     124,332     116,838  
Debt obligations     1,790,264     1,693,753  
Maintenance reserves     65,976     82,484  
Security deposits     19,349     19,522  
Unearned revenue     10,458     11,637  
Total liabilities     2,037,237     1,951,211  
         
Redeemable preferred stock ($0.01 par value)     49,805     49,722  
         
Shareholders’ equity:        
Common stock ($0.01 par value)     65     66  
Paid-in capital in excess of par     15,401     13,696  
Retained earnings     355,388     355,370  
Accumulated other comprehensive income (loss), net of tax     5,031     (5,117 )
Total shareholders’ equity     375,885     364,015  
Total liabilities, redeemable preferred stock and shareholders’ equity   $ 2,462,927   $ 2,364,948  

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