GlobeNewswire Inc | Aug 5, 2020 06:00AM EDT

August 05, 2020

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 June30, 2020, as compared to June30, 2019, and December31, 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 June30, 2020, compared to $1.651 billion at December31, 2019. -- The book value of lease assets we own directly or through our joint ventures was $2.0 billion at June30, 2020. As of June30, 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 June30, 2020. -- Under the Companys 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 June30, 2020, compared to $57.83 at December31, 2019.

Balance Sheet

As of June30, 2020, the Companys $1.654 billion equipment held for operating lease portfolio consisted of 264 engines, 10 aircraft and 11 other leased assets. As of December31, 2019, the Companys $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 Companys Annual Report on Form10-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 % ChangeREVENUE Lease rent $ 38,454 $ 45,025 (14.6 )% $ 84,849 $ 93,394 (9.1 )%revenueMaintenancereserve 29,986 26,475 13.3 % 50,514 51,825 (2.5 )%revenueSpare partsand equipment 2,855 14,586 (80.4 )% 11,960 32,088 (62.7 )%sales(Loss) Gain onsale of leased (700 ) 5,120 (113.7 )% 1,367 14,690 (90.7 )%equipmentOther 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 Depreciationand 23,764 20,043 18.6 % 47,154 40,301 17.0 %amortizationexpenseCost of spareparts and 2,648 12,585 (79.0 )% 9,336 26,997 (65.4 )%equipmentsalesWrite-down of 6,997 3,262 114.5 % 9,126 4,367 109.0 %equipmentGeneral and 15,228 21,389 (28.8 )% 34,795 42,829 (18.8 )%administrativeTechnical 1,468 1,407 4.3 % 2,595 3,195 (18.8 )%expenseNet finance costs:Interest 16,089 16,781 (4.1 )% 31,785 34,660 (8.3 )%expenseLoss on debt ? 220 (100.0 )% 4,688 220 2,030.9 %extinguishmentTotal net 16,089 17,001 (5.4 )% 36,473 34,880 4.6 %finance costsTotal expenses 66,194 75,687 (12.5 )% 139,479 152,569 (8.6 )% Earnings from 8,789 20,110 (56.3 )% 17,113 46,997 (63.6 )%operationsEarnings from 948 1,676 (43.4 )% 1,155 2,622 (55.9 )%joint venturesIncome before 9,737 21,786 (55.3 )% 18,268 49,619 (63.2 )%income taxesIncome tax 4,365 4,811 (9.3 )% 8,610 11,766 (26.8 )%expenseNet income 5,372 16,975 (68.4 )% 9,658 37,853 (74.5 )%Preferredstock 811 810 0.1 % 1,621 1,611 0.6 %dividendsAccretion ofpreferred 21 21 ? % 42 42 ? %stock issuancecostsNet incomeattributable $ 4,540 $ 16,144 (71.9 )% $ 7,995 $ 36,200 (77.9 )%to commonshareholders Basic weightedaverage $ 0.76 $ 2.75 $ 1.35 $ 6.22 earnings percommon shareDilutedweightedaverage $ 0.74 $ 2.66 $ 1.31 $ 6.01 earnings percommon share Basic weightedaverage common 6,012 5,866 5,936 5,823 sharesoutstandingDilutedweightedaverage common 6,098 6,061 6,111 6,020 sharesoutstanding

UnauditedConsolidatedBalanceSheets(Inthousands,exceptpersharedata)

June30, 2020 December 31, 2019ASSETS Cash and cash equivalents $ 100,096 $ 6,720 Restricted cash 71,312 56,948 Equipment held for operating lease, less 1,653,695 1,650,918 accumulated depreciationMaintenance 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 32,260 31,520 accumulated depreciationIntangible 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? EQUITYLiabilities: 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 (6,361 ) (3,248 )taxTotal shareholders? equity 357,868 350,338 Total liabilities, redeemable preferred stock $ 2,209,571 $ 1,940,608 and shareholders? equity

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