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Monday 15 March, 2021

Willis Lease Finance Corp.

Willis Lease Finance Corporation Reports Annual Pre-tax Profit of $17.3 million

Willis Lease Finance Corporation Reports Annual Pre-tax Profit of $17.3 million

COCONUT CREEK, Fla., March 15, 2021 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported annual total revenues of $288.7 million and pre-tax profit of $17.3 million for the year ended December 31, 2020. The Company reported lower revenue in 2020 when compared to the prior year, primarily due to the impact of the COVID-19 pandemic. The slowdown in global travel has led to a reduction in aircraft and engine utilization as well as a reduction in demand for aircraft and engine spare parts which keep airline fleets in operation. For the year ended December 31, 2020, aggregate lease rent and maintenance reserve revenues were $248.3 million and spare parts and equipment sales were $18.6 million.

“The COVID-19 pandemic obviously has had a dramatic impact on global travel and the aircraft and aircraft engine lessors, including our Company, have felt the effects of the slowdown,” said Charles F. Willis, Chairman and CEO. “We have worked hard this year to protect our own liquidity, focus on our customers and invest in new technology equipment, which we believe has positioned the Company well for continued growth and the industry’s eventual emergence from this crisis.”

“The entire industry has suffered as a result of the pandemic-driven disappearance of air travel, but we are proud of the way we have navigated this crisis and the way our employees have delivered for our shareholders and our customers,” said Brian R. Hole, President. “This Company has a long track record of innovating and fighting through cycles and we are excited for the opportunity to continue that trend now.”

2020 Highlights (at or for the year ended December 31, 2020, as compared to December 31, 2019):

  • Total revenue was $288.7 million in 2020, a 29.4% decrease when compared to $409.2 million in the prior year.
  • Lease rent revenue was $142.9 million in 2020.
  • Maintenance reserve revenue was $105.4 million in 2020, a decrease of 3.3% compared to $109.0 million in 2019. Long term maintenance reserve revenue, which is influenced by end of lease compensation, increased to $87.7 million in 2020, compared to $37.6 million in the prior year. Short term maintenance reserve revenue, which is influenced by our customers' usage of assets we lease to them, was $17.7 million in 2020 compared to $71.4 million in the prior year.
  • Spare parts and equipment sales were $18.6 million in 2020, compared to $74.7 million in 2019.
  • Income before income taxes was $17.3 million in 2020, compared to $88.9 million in 2019.
  • Our aggregate lease assets, inclusive of our equipment held for operating lease and notes receivable, at December 31, 2020 and 2019 was $2,045.3 million and $1,689.1 million, respectively, a 21.1% year-over-year increase.
  • The book value of lease assets we own directly or through our joint ventures was $2,384.7 million at December 31, 2020. As of December 31, 2020, the Company also managed 400 engines, aircraft and related equipment on behalf of third parties.
  • The Company maintained $223 million of undrawn revolver capacity at December 31, 2020.
  • Diluted weighted average earnings per common share were $1.05 for 2020, compared to $10.50 in 2019.
  • Under the Company's repurchase plan, the Company repurchased a total of 55,426 of common stock during 2020 for $1.5 million.
  • Book value per diluted weighted average common share outstanding increased to $59.40 at December 31, 2020, compared to $57.83 at December 31, 2019.

Balance Sheet

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. As of December 31, 2019, the Company's $1.651 billion equipment held for operating lease portfolio and $38.1 million notes receivable represented 263 engines, 12 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.

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

  Three Months Ended December 31,       Years Ended December 31,    
  2020   2019   % Change   2020   2019   % Change
REVENUE                      
Lease rent revenue $ 28,021     $ 48,206     (41.9 ) %   $ 142,895     $ 190,690     (25.1 ) %
Maintenance reserve revenue 22,549     18,000     25.3   %   105,365     108,998     (3.3 ) %
Spare parts and equipment sales 3,777     18,154     (79.2 ) %   18,625     74,651     (75.1 ) %
Gain on sale of leased equipment 2,024     765     164.6   %   3,391     20,044     (83.1 ) %
Other revenue 5,116     4,103     24.7   %   18,416     14,777     24.6   %
Total revenue 61,487     89,228     (31.1 ) %   288,692     409,160     (29.4 ) %
                       
EXPENSES                      
Depreciation and amortization expense 23,365     23,199     0.7   %   94,541     86,236     9.6   %
Cost of spare parts and equipment sales 3,301     15,455     (78.6 ) %   16,762     62,647     (73.2 ) %
Write-down of equipment 6,169     6,899     (10.6 ) %   20,540     18,220     12.7   %
General and administrative 16,654     20,437     (18.5 ) %   67,910     86,523     (21.5 ) %
Technical expense 3,111     3,188     (2.4 ) %   6,533     8,122     (19.6 ) %
Net finance costs:                      
Interest expense 15,888     15,657     1.5   %   63,024     66,889     (5.8 ) %
Loss on debt extinguishment           %   4,688     220     2,030.9   %
Total net finance costs 15,888     15,657     1.5   %   67,712     67,109     0.9   %
Total expenses 68,488     84,835     (19.3 ) %   273,998     328,857     (16.7 ) %
                       
(Loss) earnings from operations (7,001 )   4,393     (259.4 ) %   14,694     80,303     (81.7 ) %
Earnings from joint ventures 30     3,791     (99.2 ) %   2,642     8,578     (69.2 ) %
(Loss) income before income taxes (6,971 )   8,184     (185.2 ) %   17,336     88,881     (80.5 ) %
Income tax (benefit) expense (4,077 )   3,188     (227.9 ) %   7,588     21,959     (65.4 ) %
Net (loss) income (2,894 )   4,996     (157.9 ) %   9,748     66,922     (85.4 ) %
Preferred stock dividends 819     819       %   3,259     3,250     0.3   %
Accretion of preferred stock issuance costs 21     21       %   84     84       %
Net (loss) income attributable to common shareholders $ (3,734 )   $ 4,156     (189.8 ) %   $ 6,405     $ 63,588     (89.9 ) %
                       
Basic weighted average earnings per common share $ (0.62 )   $ 0.71         $ 1.07     $ 10.90      
Diluted weighted average earnings per common share $ (0.62 )   $ 0.68         $ 1.05     $ 10.50      
                       
Basic weighted average common shares outstanding 5,988     5,850         5,963     5,836      
Diluted weighted average common shares outstanding 5,988     6,099         6,128     6,058      
                               

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

    December 31, 2020   December 31, 2019
ASSETS        
Cash and cash equivalents   $ 42,540     $ 6,720  
Restricted cash   36,385     56,948  
Equipment held for operating lease, less accumulated depreciation   1,886,613     1,650,918  
Maintenance rights   20,097     3,133  
Equipment held for sale   2,850     120  
Receivables, net of allowances   28,269     24,059  
Spare parts inventory   59,434     41,759  
Investments   53,275     57,936  
Property, equipment & furnishings, less accumulated depreciation   31,753     31,520  
Intangible assets, net   1,246     1,312  
Notes receivable   158,708     38,145  
Other assets   43,778     28,038  
Total assets   $ 2,364,948     $ 1,940,608  
         
LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY        
Liabilities:        
Accounts payable and accrued expenses   $ 26,977     $ 45,648  
Deferred income taxes   116,838     110,418  
Debt obligations   1,693,753     1,251,006  
Maintenance reserves   82,484     106,870  
Security deposits   19,522     20,569  
Unearned revenue   11,637     6,121  
Total liabilities   1,951,211     1,540,632  
         
Redeemable preferred stock ($0.01 par value)   49,722     49,638  
         
Shareholders’ equity:        
Common stock ($0.01 par value)   66     64  
Paid-in capital in excess of par   13,696     4,557  
Retained earnings   355,370     348,965  
Accumulated other comprehensive loss, net of tax   (5,117 )   (3,248 )
Total shareholders’ equity   364,015     350,338  
Total liabilities, redeemable preferred stock and shareholders’ equity   $ 2,364,948     $ 1,940,608  
                 


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


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