GlobeNewswire Inc | Nov 2, 2021 06:00AM EDT

November 02, 2021

COCONUT CREEK, Fla., Nov. 02, 2021 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported third quarter total revenues of $70.8 million and pre-tax profit of $6.1 million. For the three months ended September 30, 2021, aggregate lease rent and maintenance reserve revenues were $56.6 million and spare parts and equipment sales were $5.1 million. The Company reported increased total revenues in the third quarter when compared to the prior year period, primarily due to an increase in lease rent revenue and gain on sale of leased equipment partially offset by a reduction in long-term maintenance revenue.

We are encouraged to see some of the early stages of a recovery reflected in our improved quarterly performance, said Charles F. Willis, Chairman and CEO. While we are still a long way from a pre-COVID environment, and many hurdles still exist on that path, we are pleased to see our customers beginning to use the equipment they have more and increasingly requesting additional support. The aviation industry is important to the global recovery, and we are proud to be part of it.

The continuing recovery of our airline and MRO customers, and the industry in general, has had a direct impact on our own success, said Brian R. Hole, President. And we believe our airline customers will continue to benefit from leveraging our scale and diversity of product and service offerings, whether in the form of capital, lease assets or technical and asset management services, as they focus on the huge task of repaying government loans while working feverishly to return whole fleets from storage.

Third Quarter 2021 Highlights (at or for the periods ended September 30, 2021, as compared to September 30, 2020, and December 31, 2020):

-- Lease rent revenue increased to $32.9 million in the third quarter of 2021, compared to $30.0 million in the third quarter of 2020 primarily reflecting an increase in the number of engines acquired and placed on lease. -- Maintenance reserve revenue was $23.7 million in the third quarter of 2021, a decrease of 26.8% compared to $32.3 million in the same quarter of 2020. The decline in maintenance revenue was primarily influenced by lower long-term maintenance revenue, which is associated with engines returning from long-term lease, and increase in short-term maintenance revenue, which results from usage of the assets we have on short-term lease. Long-term maintenance reserve revenue was $18.6 million in the third quarter of 2021, compared to $30.6 million in the comparable prior period, and short-term maintenance reserve revenue was $5.0 million in the third quarter of 2021, compared to $1.7 million in the prior year period. -- Spare parts and equipment sales increased to $5.1 million in the third quarter of 2021, compared to $2.9 million in the third quarter of 2020. 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 $2.4 million in the third quarter of 2021 reflecting the sale of six engines, one airframe and other parts and equipment. There was no gain on sale of leased equipment in the third quarter of 2020. -- Other revenue increased by $1.3 million to $6.7 million in the third quarter of 2021, compared to $5.4 million in the third quarter of 2020, primarily reflecting interest income from our notes receivable and other service-related fees. -- Income before income taxes was $6.1 million in the third quarter of 2021, compared to $6.0 million in the third quarter of 2020. -- Our aggregate lease assets, inclusive of our equipment held for operating lease and notes receivable, at September 30, 2021 and 2020 was $2,167.4 million and $1,776.1 million, respectively, a 22.0% year-over-year increase. -- The book value of lease assets we own directly or through our joint ventures, inclusive of our notes receivable, was $2,513.6 million at September 30, 2021. As of September 30, 2021, the Company also managed 488 engines, aircraft and related equipment on behalf of other parties. -- The Company maintained $397 million of undrawn revolver capacity at September 30, 2021. -- Diluted weighted average earnings per common share were $0.32 for the third quarter of 2021, compared to $0.35 in the third quarter of 2020. -- Book value per diluted weighted average common share outstanding increased to $60.45 at September 30, 2021, compared to $59.40 at December 31, 2020.

Balance Sheet

As of September 30, 2021, the Companys $1.971 billion equipment held for operating lease portfolio and $196.1 million notes receivable represented 313 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2020, the Companys $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 Companys 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 Nine Months Ended September 30, September30, 2021 2020 % Change 2021 2020 % ChangeREVENUE Lease rent $ 32,908 $ 30,025 9.6 % $ 96,859 $ 114,874 (15.7 %)revenueMaintenancereserve 23,659 32,302 (26.8 %) 60,749 82,816 (26.6 %)revenueSpare partsand equipment 5,091 2,888 76.3 % 13,226 14,848 (10.9 %)salesGain on saleof leased 2,440 ? 100.0 % 2,440 1,367 (100.0 %)equipmentAsset ? ? ? 6,256 ? 100.0 %transition feeOther revenue 6,693 5,398 24.0 % 18,858 13,300 41.8 %Total revenue 70,791 70,613 0.3 % 198,388 227,205 (12.7 %) EXPENSES Depreciationand 21,274 24,022 (11.4 %) 68,755 71,176 (3.4 %)amortizationexpenseCost of spareparts and 3,921 4,125 (4.9 %) 11,008 13,461 (18.2 %)equipmentsalesWrite-down of ? 5,245 (100.0 %) 4,113 14,371 (71.4 %)equipmentGeneral and 18,662 16,461 13.4 % 54,312 51,256 6.0 %administrativeTechnical 2,524 827 205.2 % 6,130 3,422 79.1 %expenseNet finance costs:Interest 18,325 15,351 19.4 % 50,331 47,136 6.8 %expenseLoss ondebt ? ? ? % ? 4,688 (100.0 %)extinguishmentTotal net 18,325 15,351 19.4 % 50,331 51,824 (2.9 %)finance costsTotal expenses 64,706 66,031 (2.0 %) 194,649 205,510 (5.3 %) Earnings from 6,085 4,582 32.8 % 3,739 21,695 (82.8 %)operationsEarnings(loss) from 21 1,457 (98.6 %) (1,183 ) 2,612 (145.3 %)joint venturesIncome before 6,106 6,039 1.1 % 2,556 24,307 (89.5 %)income taxesIncome tax 3,222 3,055 5.5 % 946 11,665 (91.9 %)expenseNet income 2,884 2,984 (3.4 %) 1,610 12,642 (87.3 %)Preferredstock 819 819 ? % 2,431 2,440 (0.4 %)dividendsAccretion ofpreferred 21 21 ? % 63 63 ? %stock issuancecostsNet income(loss)attributable $ 2,044 $ 2,144 (4.7 %) $ (884 ) $ 10,139 (108.7 %)to commonshareholders Basic weightedaverageearnings $ 0.33 $ 0.36 $ (0.14 ) $ 1.70 (loss) percommon shareDilutedweightedaverage $ 0.32 $ 0.35 $ (0.14 ) $ 1.66 earnings(loss) percommon share Basic weightedaverage common 6,189 5,985 6,135 5,954 sharesoutstandingDilutedweightedaverage common 6,363 6,084 6,135 6,104 sharesoutstanding

UnauditedConsolidatedBalanceSheets(Inthousands,exceptpersharedata)

September December 30, 2021 31, 2020 ASSETS Cash and cash equivalents $ 15,092 $ 42,540 Restricted cash 56,477 36,385 Equipment held for operating lease, less 1,971,252 1,886,613 accumulated depreciationMaintenance rights 22,511 20,097 Equipment held for sale 11,057 2,850 Receivables, net of allowances 42,595 28,269 Spare parts inventory 53,556 59,434 Investments 53,153 53,275 Property, equipment& furnishings, less 30,800 31,753 accumulated depreciationIntangible assets, net 1,202 1,246 Notes receivable 196,146 158,708 Other assets 47,047 43,778 Total assets $ 2,500,888 $ 2,364,948 LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS? EQUITYLiabilities: Accounts payable and accrued expenses $ 50,124 $ 26,977 Deferred income taxes 118,941 116,838 Debt obligations 1,814,208 1,693,753 Maintenance reserves 61,482 82,484 Security deposits 22,915 19,522 Unearned revenue 12,590 11,637 Total liabilities 2,080,260 1,951,211 Redeemable preferred stock ($0.01 par value) 49,785 49,722 Shareholders? equity: Common stock ($0.01 par value) 66 66 Paid-in capital in excess of par 15,653 13,696 Retained earnings 354,486 355,370 Accumulated other comprehensive income (loss), 638 (5,117 )net of taxTotal shareholders? equity 370,843 364,015 Total liabilities, redeemable preferred stock $ 2,500,888 $ 2,364,948 and shareholders? equity

CONTACT:

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