Willis Lease Finance Corporation Reports Second Quarter Pre-tax Income of $19.0 million
03 Agosto 2023 - 7:30AM
Willis Lease Finance Corporation (NASDAQ: WLFC) today reported
second quarter total revenues of $109.0 million and pre-tax
earnings of $19.0 million. For the three months ended June 30,
2023, aggregate lease rent and maintenance reserve revenues were
$89.8 million and spare parts and equipment sales were $4.6
million. The Company reported increased total revenues in the
second quarter when compared to the prior year period, primarily
due to an increase in the Company's core lease rent and short-term
maintenance revenues driven by continued global recovery in travel.
“Our second quarter results reflect the
fundamental strength of our core leasing business,” said Austin
Willis, the Company’s Chief Executive Officer. “A scarcity of
serviceable spare engines and strong demand from the airlines,
continues to drive favorable lease rates and terms.”
“Despite huge demand and industry-wide
shortages, our teams continue to deliver for our customers that
planned ahead and signed up for our custom-built programs as well
as for those requiring ad hoc support,” said Brian R. Hole,
President. “As always, people make the difference and ours are
world class.”
Second Quarter
2023 Highlights (at or for the
period ended June 30, 2023, as compared to June 30, 2022,
and December 31, 2022):
- Lease rent revenue increased by
$17.7 million, or 48.3%, to $54.4 million in the second quarter of
2023, compared to $36.7 million in the second quarter of 2022. The
increase is due to an increase in the number of engines acquired
and placed on lease, including an increase in utilization compared
to that of the prior period.
- Maintenance reserve revenue was
$35.4 million in the second quarter of 2023, an increase of 46.1%,
compared to $24.2 million in the same quarter of 2022. There was
$6.8 million long-term maintenance revenue recognized for the three
months ended June 30, 2023, compared to $15.1 million in the
comparable prior period. “Non-reimbursable” maintenance reserve
revenue is directly influenced by on lease engine flight hours and
cycles. Engines out on lease with “non-reimbursable” usage fees
generated $28.6 million of short-term maintenance revenues,
compared to $9.2 million in the comparable prior period. As of
June 30, 2023 and December 31, 2022, there was
$19.8 million and $6.3 million, respectively, of
cumulative deferred in-substance fixed payment use fees included in
“Unearned revenue.”
- Spare parts and equipment sales
decreased to $4.6 million in the second quarter of 2023, compared
to $6.8 million in the second quarter of 2022.
- Gain on sale of leased equipment
was $4.5 million in the second quarter of 2023, reflecting the sale
of two engines and other parts and equipment from the lease
portfolio. Gain on sale of leased equipment was $0.5 million in the
second quarter of 2022, reflecting the sale of eight engines.
- There was no gain on sale of
financial assets during the second quarter of 2023 as we did not
sell any notes receivable. Gain on sale of financial assets was
$3.1 million in the second quarter of 2022, reflecting the sale of
four notes receivable.
- The Company generated $19.0 million
of pre-tax income in the second quarter of 2023, a 73.2% increase
as compared to pre-tax income of $11.0 million in the second
quarter of 2022.
- The book value of lease assets we
own directly or through our joint ventures, inclusive of our notes
receivable, maintenance rights, and investments in sales-type
leases, was $2,551.3 million at June 30, 2023. As of
June 30, 2023, the Company also managed 339 engines, aircraft
and related equipment on behalf of other parties.
- The Company maintained $242.0
million of undrawn revolver capacity at June 30, 2023.
- Diluted weighted average income per
common share was $2.02 for the second quarter of 2023, compared to
diluted weighted average income of $0.81 in the second quarter of
2022.
- Book value per diluted weighted
average common share outstanding increased to $64.69 at
June 30, 2023, compared to $64.27 at December 31,
2022.
Balance Sheet
As of June 30, 2023, $2,161.7 million of
equipment held in our operating lease portfolio, $95.0 million of
notes receivable, $14.0 million of maintenance rights, and $5.8
million of investments in sales-type leases, which represented 348
engines, 12 aircraft, one marine vessel and other leased parts and
equipment. As of December 31, 2022, the Company had $2,111.9
million equipment held in our operating lease portfolio, $81.4
million of notes receivable, $17.7 million of maintenance rights,
and $6.4 million of investments in sales-type leases, which
represented 339 engines, 13 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 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, |
|
|
|
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
|
|
2023 |
|
|
|
2022 |
|
|
% Change |
REVENUE |
|
|
|
|
|
|
|
|
|
|
|
|
Lease rent revenue |
|
$ |
54,416 |
|
|
$ |
36,704 |
|
|
48.3 |
% |
|
$ |
107,636 |
|
|
$ |
74,829 |
|
|
43.8 |
% |
Maintenance reserve
revenue |
|
|
35,415 |
|
|
|
24,245 |
|
|
46.1 |
% |
|
|
58,913 |
|
|
|
39,079 |
|
|
50.8 |
% |
Spare parts and equipment
sales |
|
|
4,550 |
|
|
|
6,792 |
|
|
(33.0 |
)% |
|
|
9,602 |
|
|
|
13,422 |
|
|
(28.5 |
)% |
Interest revenue |
|
|
2,258 |
|
|
|
1,865 |
|
|
21.1 |
% |
|
|
4,304 |
|
|
|
3,978 |
|
|
8.2 |
% |
Gain on sale of leased
equipment |
|
|
4,461 |
|
|
|
498 |
|
|
795.8 |
% |
|
|
4,328 |
|
|
|
2,796 |
|
|
54.8 |
% |
Gain on sale of financial
assets |
|
|
— |
|
|
|
3,116 |
|
|
(100.0 |
)% |
|
|
— |
|
|
|
3,116 |
|
|
(100.0 |
)% |
Other revenue |
|
|
7,896 |
|
|
|
4,855 |
|
|
62.6 |
% |
|
|
13,748 |
|
|
|
9,672 |
|
|
42.1 |
% |
Total revenue |
|
|
108,996 |
|
|
|
78,075 |
|
|
39.6 |
% |
|
|
198,531 |
|
|
|
146,892 |
|
|
35.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
expense |
|
|
22,494 |
|
|
|
21,612 |
|
|
4.1 |
% |
|
|
45,043 |
|
|
|
43,421 |
|
|
3.7 |
% |
Cost of spare parts and
equipment sales |
|
|
3,058 |
|
|
|
7,014 |
|
|
(56.4 |
)% |
|
|
7,557 |
|
|
|
11,876 |
|
|
(36.4 |
)% |
Write-down of equipment |
|
|
1,671 |
|
|
|
78 |
|
|
2,042.3 |
% |
|
|
1,671 |
|
|
|
21,195 |
|
|
(92.1 |
)% |
General and
administrative |
|
|
38,327 |
|
|
|
20,427 |
|
|
87.6 |
% |
|
|
71,598 |
|
|
|
44,032 |
|
|
62.6 |
% |
Technical expense |
|
|
4,919 |
|
|
|
3,436 |
|
|
43.2 |
% |
|
|
7,748 |
|
|
|
9,082 |
|
|
(14.7 |
)% |
Net finance costs: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
19,085 |
|
|
|
16,023 |
|
|
19.1 |
% |
|
|
37,474 |
|
|
|
32,906 |
|
|
13.9 |
% |
Total net finance costs |
|
|
19,085 |
|
|
|
16,023 |
|
|
19.1 |
% |
|
|
37,474 |
|
|
|
32,906 |
|
|
13.9 |
% |
Total expenses |
|
|
89,554 |
|
|
|
68,590 |
|
|
30.6 |
% |
|
|
171,091 |
|
|
|
162,512 |
|
|
5.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (Loss) from
operations |
|
|
19,442 |
|
|
|
9,485 |
|
|
105.0 |
% |
|
|
27,440 |
|
|
|
(15,620 |
) |
|
(275.7 |
)% |
(Loss) Income from joint
ventures |
|
|
(474 |
) |
|
|
1,469 |
|
|
(132.3 |
)% |
|
|
(1,635 |
) |
|
|
(1,147 |
) |
|
42.5 |
% |
Income (Loss) before income
taxes |
|
|
18,968 |
|
|
|
10,954 |
|
|
73.2 |
% |
|
|
25,805 |
|
|
|
(16,767 |
) |
|
(253.9 |
)% |
Income tax expense
(benefit) |
|
|
5,152 |
|
|
|
5,046 |
|
|
2.1 |
% |
|
|
7,595 |
|
|
|
(1,474 |
) |
|
(615.3 |
)% |
Net income (loss) |
|
|
13,816 |
|
|
|
5,908 |
|
|
133.9 |
% |
|
|
18,210 |
|
|
|
(15,293 |
) |
|
(219.1 |
)% |
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 |
|
$ |
12,984 |
|
|
$ |
5,076 |
|
|
155.8 |
% |
|
$ |
16,556 |
|
|
$ |
(16,947 |
) |
|
(197.7 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average income
(loss) per common share |
|
$ |
2.04 |
|
|
$ |
0.83 |
|
|
|
|
$ |
2.65 |
|
|
$ |
(2.81 |
) |
|
|
Diluted weighted average
income (loss) per common share |
|
$ |
2.02 |
|
|
$ |
0.81 |
|
|
|
|
$ |
2.57 |
|
|
$ |
(2.81 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic weighted average common
shares outstanding |
|
|
6,354 |
|
|
|
6,129 |
|
|
|
|
|
6,239 |
|
|
|
6,040 |
|
|
|
Diluted weighted average
common shares outstanding |
|
|
6,442 |
|
|
|
6,246 |
|
|
|
|
|
6,449 |
|
|
|
6,040 |
|
|
|
Unaudited Consolidated Balance Sheets(In thousands, except per share data) |
|
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,918 |
|
|
$ |
12,146 |
|
Restricted cash |
|
|
49,094 |
|
|
|
76,870 |
|
Equipment held for operating
lease, less accumulated depreciation |
|
|
2,161,650 |
|
|
|
2,111,935 |
|
Maintenance rights |
|
|
14,032 |
|
|
|
17,708 |
|
Equipment held for sale |
|
|
2,713 |
|
|
|
3,275 |
|
Receivables, net of
allowances |
|
|
52,259 |
|
|
|
46,954 |
|
Spare parts inventory |
|
|
41,764 |
|
|
|
38,577 |
|
Investments |
|
|
53,716 |
|
|
|
56,189 |
|
Property, equipment &
furnishings, less accumulated depreciation |
|
|
37,329 |
|
|
|
35,350 |
|
Intangible assets, net |
|
|
1,100 |
|
|
|
1,129 |
|
Notes receivable, net of
allowances |
|
|
95,047 |
|
|
|
81,439 |
|
Investments in sales-type
leases, net of allowances |
|
|
5,827 |
|
|
|
6,440 |
|
Other assets |
|
|
83,507 |
|
|
|
87,205 |
|
Total assets |
|
$ |
2,603,956 |
|
|
$ |
2,575,217 |
|
|
|
|
|
|
LIABILITIES, REDEEMABLE
PREFERRED STOCK AND SHAREHOLDERS’ EQUITY |
|
|
|
|
Liabilities: |
|
|
|
|
Accounts payable and accrued
expenses |
|
$ |
41,927 |
|
|
$ |
43,040 |
|
Deferred income taxes |
|
|
137,884 |
|
|
|
132,516 |
|
Debt obligations |
|
|
1,827,021 |
|
|
|
1,847,278 |
|
Maintenance reserves |
|
|
73,872 |
|
|
|
59,453 |
|
Security deposits |
|
|
22,528 |
|
|
|
20,490 |
|
Unearned revenue |
|
|
33,626 |
|
|
|
17,863 |
|
Total liabilities |
|
|
2,136,858 |
|
|
|
2,120,640 |
|
|
|
|
|
|
Redeemable preferred stock
($0.01 par value) |
|
|
49,931 |
|
|
|
49,889 |
|
|
|
|
|
|
Shareholders’ equity: |
|
|
|
|
Common stock ($0.01 par
value) |
|
|
68 |
|
|
|
66 |
|
Paid-in capital in excess of
par |
|
|
21,740 |
|
|
|
20,386 |
|
Retained earnings |
|
|
373,965 |
|
|
|
357,493 |
|
Accumulated other
comprehensive income, net of tax |
|
|
21,394 |
|
|
|
26,743 |
|
Total shareholders’
equity |
|
|
417,167 |
|
|
|
404,688 |
|
Total liabilities, redeemable
preferred stock and shareholders’ equity |
|
$ |
2,603,956 |
|
|
$ |
2,575,217 |
|
CONTACT: |
Scott B. Flaherty |
|
Chief Financial Officer |
|
(561) 349-9989 |
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