Willis Lease Finance Earns $1.6 Million or $0.19 Per Share in First Quarter of 2013

NOVATO, Calif., May 6, 2013 (GLOBE NEWSWIRE) — Willis Lease Finance Corporation (Nasdaq:WLFC), the premier independent jet engine lessor in the commercial finance sector, today reported earnings of $1.6 million, or $0.19 per diluted share, in the first quarter ended March 31, 2013, compared to $2.5 million, or $0.29 per diluted share, in the like quarter a year ago, with the drop in earnings primarily due to reduced gains on the sale of leased equipment. In the fourth quarter of 2012, Willis Lease recorded a loss of $0.8 million or $0.09 per diluted share, after absorbing a $2.8 million charge related to preferred share issuance costs incurred in a prior period resulting from the redemption of its Series A Preferred shares.

“The highlight of our first quarter was the $118 million, 19 engine purchase-leaseback transaction completed in March with SAS Group’s subsidiary Scandinavian Airlines,” said Charles F. Willis, Chairman and CEO. “This transaction was one of the largest and most complex engine sale and leaseback transactions ever done. We added 11 engines valued at $63 million to our lease portfolio, and a further 8 engines valued at $55 million were acquired by our joint venture, Willis Mitsui & Co Engine Support Limited. Since the engines were purchased in different tranches late in the quarter, the full quarterly impact on lease rent revenue won’t be realized until the second quarter.”

“At the recent Airfinance Journal awards ceremony in New York last month, our WEST II financing received yet another award and was recognized as the 2012 “Engine Deal of the Year,” and I can assure you that we are not resting on our laurels," continued Willis. “Our finance team is working on several projects to further improve upon our capital structure and resources going forward. Looking at the capital markets today, I don’t recall a time when I have seen more availability. I have been saying for a long time that access to capital is one of our strengths, and we intend to continue to take advantage of opportunities the market offers.”

First Quarter 2013 Highlights (at or for the periods ended March 31, 2013, compared to March 31, 2012 and December 31, 2012):

Lease portfolio increased 4.6% to $1.02 billion, largely due to the purchase-leaseback transaction with Scandinavian Airlines that was completed late in the quarter.
Average utilization for the first quarter was 84%, consistent with the first quarter a year ago and down slightly from 85% in the fourth quarter of 2012.
Quarter-end utilization was 82% compared to 85% a year ago and 86% at December 31, 2012.
Total revenues fell slightly to $35.3 million from $35.7 million a year ago, with all revenue line items increasing in the period except for gains from sale of equipment which decreased $1.9 million.
Lease rent revenues increased 1.7% to $24.5 million compared to $24.1 million a year ago.
Maintenance reserve revenues increased 7.6% to $9.2 million, compared to $8.6 million a year ago.
Total net finance costs increased 17% to $9.2 million, compared to $7.9 million in the year ago quarter, reflecting higher debt levels and higher average financing costs. The higher interest costs (pre-tax) were partially offset by the elimination of the quarterly $0.8 million preferred dividend (after-tax).
Liquidity available from the revolving credit facility was $83 million at quarter end compared to $116 million a year ago.
Book value per common share was $23.21 compared to $22.44 a year ago.
“Market conditions have changed little since the end of last year,” said Donald A. Nunemaker, President. "The one significant exception is the activity surrounding the CFM56-7B engine type which powers the Boeing 737NG aircraft. We are seeing a noticeable increase in demand for this engine type. Since the utilization rate for our 7B engines is already well above 90%, the heightened demand won’t necessarily allow us to put more engines on lease. It will, however, generate more opportunities to place these engines when they are returned and will likely lead to incrementally higher rents on new leases. We believe that most of this increased demand is due to a greater number of engines in operators’ fleets requiring shop visits. Perhaps this is one of the first tangible signs of the “bow wave” of shop visits that has been the subject of industry predictions for this engine type for the last five years."

Balance Sheet

At March 31, 2013, Willis Lease had 193 commercial aircraft engines, 3 aircraft parts packages and 7 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $1.02 billion, compared to 193 commercial aircraft engines, 3 aircraft parts packages and 12 aircraft and other engine-related equipment in its lease portfolio, with a net book value of $974.3 million a year ago. The Company’s funded debt-to-equity is 3.75 to 1 at quarter end, compared to 3.49 to 1 at December 31, 2012 and 2.96 to 1 a year ago, with the increase primarily due to the $31.9 million equity reduction resulting from the preferred share redemption in October 2012.