Strong Fourth Quarter Propels Willis Lease Finance to $15.6 Million Profit in 2013

NOVATO, Mar 03, 2014 (GLOBE NEWSWIRE via COMTEX) — Willis Lease Finance Corporation WLFC +6.20% , the premier independent jet engine lessor in the commercial finance sector, today reported 2013 net income attributable to common shareholders of $15.6 million, or $1.89 per diluted share. Fourth quarter net income attributable to common shareholders was $6.6 million, or $0.81 per diluted share, fueled by 12.9% growth in lease rent revenue due to improved utilization and a larger lease portfolio, which contributed to 18.9% overall growth in total revenue.

“We ended 2013 with significant momentum, purchasing six new engines in December for over $75 million and closing new lease agreements for 19 engines, which is a record-setting pace for us,” said Charles F. Willis, Chairman and CEO. “Our earnings this quarter are the highest we’ve reported since the third quarter of 2009. A major improvement in our portfolio utilization is one of the major reasons for the strong results, which has carried into 2014. Utilization reached 89% at the end of January 2014 which is the highest level reached in the past three years. Improving lease demand across all engine types, underpinned by our continued access to the global bank and capital markets, has provided a strong start to 2014.”

In the fourth quarter of 2012, Willis Lease recorded a $2.8 million charge related to the redemption of its preferred stock, which resulted in a net loss of $0.8 million, or $0.09 per diluted share. For the full year in 2012, a $15.5 million pre-tax charge for extinguishment of debt and derivatives termination related to the successful closing of the WEST II ABS financing contributed to a net loss of $3.8 million, or $0.43 per diluted share.

Fourth Quarter and 2013 Highlights (at or for the three-month periods ended December 31, 2013, compared to December 31, 2012 and September 30, 2013):

— Tangible book value per share increased 10.8% to $25.31 compared to $22.85 a year ago.

— Repurchased 395,254 shares of common stock in 2013 for $5.9 million at a weighted average price of $14.97 per share.

— The lease portfolio increased 7.4% to $1.03 billion from $0.96 billion a year ago.

— Lease rent revenues increased 12.9% in the quarter and 7.6% for the year, reflecting higher average portfolio utilization and an increase in the average size of the lease portfolio.

— Total revenues increased 18.9% in the quarter and 7.0% for the year.

— Interest expense increased 22.0% to $38.7 million compared to $31.7 million a year ago, reflecting higher debt levels due to growth in the lease portfolio and higher average financing costs. The higher interest costs (pre-tax) were partially offset by the elimination of the $2.5 million preferred dividend (after-tax) resulting from the repurchase of the preferred stock in October 2012.

— Average utilization in 2013 was 84% compared to 83% in 2012.

— Utilization was 86% at December 31, 2013, up from 85% at September 30, 2013 and 83% at June 30, 2013.

— Liquidity under the revolving credit facility was $88 million at year end, down from $148 million a year ago.

“In addition to growing our engine portfolio, we made strategic investments during 2013 to better position our business for the future,” said Donald Nunemaker, President. “We increased the size of the engine lease portfolio of the Willis Mitsui joint venture by more than $100 million in 2013, ending the year with 26 engines with a book value of $242 million. We also launched Willis Aeronautical Services, Inc. to provide end-of-life solutions for aviation materials and services related to aircraft engines and acquired most of the assets and hired the team of professionals from JT-Power, LLC. The integration of this business is going well and the business was accretive to 2013 earnings, sooner than expected.”

Balance Sheet

At December 31, 2013, Willis Lease had 202 commercial aircraft engines, 5 aircraft parts packages and 4 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $1.03 billion, compared to 184 commercial aircraft engines, 4 aircraft parts packages and 7 aircraft and other engine-related equipment in its lease portfolio, with a net book value of 0.96 billion, a year ago. The Company’s funded debt-to-equity is 3.70 to 1 at year end, compared to 3.60 to 1 at September 30, 2013 and 3.50 to 1 a year ago.