Record Results by Willis Lease Finance Corporation with First Quarter Pre-tax Income of $29.9 million
Willis Lease Finance (WLFC) reported record first quarter total revenues of $119.1 million with pre-tax income of $29.9 million. The growth was driven by core lease and maintenance revenues, reflecting a strong aviation marketplace. WLFC continues to be the partner of choice for airlines seeking maintenance services. The company saw an increase in maintenance reserve revenue and short-term maintenance revenues. Despite a decrease in spare parts sales, WLFC experienced a gain on the sale of leased equipment. Diluted weighted average income per common share and book value per diluted weighted average common share outstanding also showed positive growth.
Record first quarter total revenues of $119.1 million and pre-tax income of $29.9 million.
Growth driven by core lease and maintenance revenues, reflecting a strong aviation marketplace.
WLFC continues to be the partner of choice for airlines seeking maintenance services.
Increase in maintenance reserve revenue and short-term maintenance revenues.
Experienced a gain on the sale of leased equipment.
Positive growth in diluted weighted average income per common share and book value per diluted weighted average common share outstanding.
Spare parts and equipment sales decreased to $3.3 million in the first quarter of 2024.
Loss on sale of leased equipment was $0.1 million in the first quarter of 2023.
Insights
Willis Lease Finance Corporation's announcement of record pre-tax income of $29.9 million for the first quarter of 2024 is a robust indicator of the company's financial health. This figure is significantly up from the $6.8 million reported for the same period last year, suggesting a substantial year-over-year growth. Such an increase is likely to capture the attention of investors because it reflects the company's proficiency in scaling its revenue streams, particularly in the core lease rent and maintenance reserve revenues, which surged by 26%. Furthermore, the gain on sale of leased equipment rose dramatically to $9.2 million, indicating a healthy secondary market for the company's assets and an effective asset management strategy.
From a financial analysis perspective, the diluted weighted average income per share increase to $3.00, from $0.55, sends a strong positive signal about per-share earnings growth, which is often a key metric for investors. Similarly, an uptick in book value per share to $69.35 should be seen positively, as it suggests that the intrinsic value of the company is growing. For potential and existing investors, these metrics indicate a company that is effectively converting its sales and leasing operations into shareholder value.
The aviation industry has been experiencing a resurgence and WLFC's strategic positioning to offer leasing, parts and maintenance services is evidently paying dividends. The strength of the aviation marketplace has increased demand for WLFC's lease and maintenance services, with airlines looking to reduce downtime and costs associated with engine shop visits. This is evidenced by the increase in maintenance reserve revenue, an impressive 86.7% rise from the prior year, which speaks to the elevated usage of WLFC's assets.
WLFC's ongoing development of their 145 maintenance and exchange capabilities appears to be a strategic response to the supply chain constraints that are currently affecting the aviation industry. By positioning themselves as a partner that can mitigate maintenance risks for airlines, WLFC is leveraging the current market dynamic to strengthen its competitive advantage. This proactive approach to adapting to industry challenges and market opportunities may be of particular interest to investors looking at the longer-term prospects of the firm.
An analysis of the broader leasing market and how WLFC's results compare with industry norms could offer additional context for investors. The surge in lease rent revenue aligns with the increasing global demand for commercial air travel, which has a domino effect on the need for engines and maintenance services. WLFC's strategy to diversify its revenue streams through sales-type leases, maintenance rights and notes receivable suggests a holistic approach to asset management that could be a buffer against market volatility.
However, a decrease in spare parts and equipment sales could be a point of concern, as it may indicate an area where the company is losing ground or facing heightened competition. This dip, albeit small, warrants monitoring in subsequent quarters to see if it signifies a trend or is simply a matter of timing as suggested by the company.
COCONUT CREEK, Fla., May 02, 2024 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) (“WLFC”) today reported record first quarter total revenues of
“Having developed our 145 maintenance and exchange capabilities over the past few years, we have become the partner of choice for airlines looking to avoid or outsource maintenance risk,” said Austin C. Willis, Chief Executive Officer of WLFC. “This strategy has proven effective, particularly in our supply chain constrained environment.”
“The Company performed well in the first quarter of 2024 and is benefiting from the continued maturation of our strategy,” said Brian R. Hole, President of WLFC.
First Quarter 2024 Highlights (at or for the period ended March 31, 2024, as compared to March 31, 2023 and December 31, 2023):
- Lease rent revenue of
$52.9 million in the first quarter of 2024 was in-line with lease rent revenue of$53.2 million in the first quarter of 2023. During the three months ended March 31, 2024, we purchased equipment (including capitalized costs) totaling$62.8 million , which consisted of two aircraft and four engines and other parts and equipment purchased for our lease portfolio. During the three months ended March 31, 2023, we purchased equipment (including capitalized costs) totaling$55.7 million , which consisted of five engines and other parts and equipment purchased for our lease portfolio. - Maintenance reserve revenue was
$43.9 million in the first quarter of 2024, an increase of86.7% , compared to$23.5 million in the same quarter of 2023, reflecting the high level of usage of our assets by our customer base. Engines on lease with “non-reimbursable” usage fees generated$37.6 million of short-term maintenance revenues in 2024, compared to$23.5 million in the prior year. There was$6.3 million of long-term maintenance revenue recognized in the three months ended March 31, 2024, compared to no long-term maintenance revenue recognized for the three months ended March 31, 2023. As of March 31, 2024 and March 31, 2023, there were$26.7 million and$13.7 million , respectively, of deferred in-substance fixed payment use fees included in Unearned revenue associated with engines on short-term leases. These deferred in-substance fixed payment use fees represent portfolio utilization beyond the maintenance reserve revenues reflected in our Unaudited Consolidated Statements of Income. - Spare parts and equipment sales decreased to
$3.3 million in the first quarter of 2024, compared to$5.1 million in the first quarter of 2023. The decrease in spare parts sales for the three months ended March 31, 2024 reflects variations in the timing of sales. - Gain on sale of leased equipment was
$9.2 million in the first quarter of 2024, reflecting the sale of eight engines. Loss on sale of leased equipment was$0.1 million in the first quarter of 2023, reflecting the sale of two engines. The Company is experiencing a strong market for engine sales. - The Company generated a quarterly record of
$29.9 million of pre-tax income in the first quarter of 2024, compared to the pre-tax income of$6.8 million in the first quarter of 2023. - The book value of lease assets directly owned or through our joint ventures, inclusive of our notes receivable, maintenance rights, and investments in sales-type leases, was
$2,530.7 million as of March 31, 2024. - Diluted weighted average income per common share was
$3.00 for the first quarter 2024, compared to diluted weighted average income per common share of$0.55 in the first quarter of 2023. - Book value per diluted weighted average common share outstanding increased to
$69.35 at March 31, 2024, compared to$67.73 at December 31, 2023.
Balance Sheet
As of March 31, 2024, the Company’s lease portfolio was
Willis Lease Finance Corporation
Willis Lease Finance Corporation (“WLFC”) leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers worldwide. These leasing activities are integrated with engine and aircraft trading, engine lease pools and asset management services through Willis Asset Management Limited, as well as various end-of-life solutions for engines and aviation materials provided through Willis Aeronautical Services, Inc. Additionally, through Willis Engine Repair Center®, Jet Centre by Willis, and Willis Aviation Services Limited, the Company’s service offerings include Part 145 engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport FBO and ground and cargo handling services.
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 war, terrorist activity and pandemics; changes in oil prices, rising inflation and other disruptions to 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 March 31, | ||||||||||||
| 2024 | 2023 | % Change | ||||||||||
| REVENUE | ||||||||||||
| Lease rent revenue | $ | 52,881 | $ | 53,220 | (0.6 | )% | ||||||
| Maintenance reserve revenue | 43,870 | 23,498 | 86.7 | % | ||||||||
| Spare parts and equipment sales | 3,288 | 5,052 | (34.9 | )% | ||||||||
| Interest revenue | 2,269 | 2,046 | 10.9 | % | ||||||||
| Gain (loss) on sale of leased equipment | 9,201 | (133 | ) | nm | ||||||||
| Maintenance services revenue | 5,227 | 4,659 | 12.2 | % | ||||||||
| Other revenue | 2,347 | 1,193 | 96.7 | % | ||||||||
| Total revenue | 119,083 | 89,535 | 33.0 | % | ||||||||
| EXPENSES | ||||||||||||
| Depreciation and amortization expense | 22,486 | 22,549 | (0.3 | )% | ||||||||
| Cost of spare parts and equipment sales | 2,705 | 4,499 | (39.9 | )% | ||||||||
| Cost of maintenance services | 5,574 | 3,927 | 41.9 | % | ||||||||
| Write-down of equipment | 261 | — | nm | |||||||||
| General and administrative | 29,581 | 27,831 | 6.3 | % | ||||||||
| Technical expense | 8,255 | 4,342 | 90.1 | % | ||||||||
| Net finance costs: | ||||||||||||
| Interest expense | 23,003 | 18,389 | 25.1 | % | ||||||||
| Total net finance costs | 23,003 | 18,389 | 25.1 | % | ||||||||
| Total expenses | 91,865 | 81,537 | 12.7 | % | ||||||||
| Income from operations | 27,218 | 7,998 | 240.3 | % | ||||||||
| Income (loss) from joint ventures | 2,674 | (1,161 | ) | nm | ||||||||
| Income before income taxes | 29,892 | 6,837 | 337.2 | % | ||||||||
| Income tax expense | 9,023 | 2,443 | 269.3 | % | ||||||||
| Net income | 20,869 | 4,394 | 374.9 | % | ||||||||
| Preferred stock dividends | 900 | 801 | 12.4 | % | ||||||||
| Accretion of preferred stock issuance costs | 12 | 21 | (42.9 | )% | ||||||||
| Net income attributable to common shareholders | $ | 19,957 | $ | 3,572 | 458.7 | % | ||||||
| Basic weighted average income per common share | $ | 3.12 | $ | 0.58 | ||||||||
| Diluted weighted average income per common share | $ | 3.00 | $ | 0.55 | ||||||||
| Basic weighted average common shares outstanding | 6,387 | 6,123 | ||||||||||
| Diluted weighted average common shares outstanding | 6,659 | 6,456 | ||||||||||
Unaudited Consolidated Balance Sheets
(In thousands, except per share data)
| March 31, 2024 | December 31, 2023 | |||||||
| ASSETS | ||||||||
| Cash and cash equivalents | $ | 7,622 | $ | 7,071 | ||||
| Restricted cash | 86,620 | 160,958 | ||||||
| Equipment held for operating lease, less accumulated depreciation | 2,130,327 | 2,112,837 | ||||||
| Maintenance rights | 9,180 | 9,180 | ||||||
| Equipment held for sale | 2,856 | 805 | ||||||
| Receivables, net | 61,881 | 58,485 | ||||||
| Spare parts inventory | 85,165 | 40,954 | ||||||
| Investments | 60,299 | 58,044 | ||||||
| Property, equipment & furnishings, less accumulated depreciation | 35,531 | 37,160 | ||||||
| Intangible assets, net | 1,034 | 1,040 | ||||||
| Notes receivable, net | 97,859 | 92,621 | ||||||
| Investments in sales-type leases, net | 33,013 | 8,759 | ||||||
| Other assets | 63,075 | 64,430 | ||||||
| Total assets | $ | 2,674,462 | $ | 2,652,344 | ||||
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Accounts payable and accrued expenses | $ | 103,348 | $ | 52,937 | ||||
| Deferred income taxes | 156,030 | 147,779 | ||||||
| Debt obligations | 1,735,570 | 1,802,881 | ||||||
| Maintenance reserves | 99,529 | 92,497 | ||||||
| Security deposits | 26,525 | 23,790 | ||||||
| Unearned revenue | 41,687 | 43,533 | ||||||
| Total liabilities | 2,162,689 | 2,163,417 | ||||||
| Redeemable preferred stock ( | 49,976 | 49,964 | ||||||
| Shareholders’ equity: | ||||||||
| Common stock ( | 69 | 68 | ||||||
| Paid-in capital in excess of par | 33,657 | 29,667 | ||||||
| Retained earnings | 417,738 | 397,781 | ||||||
| Accumulated other comprehensive income, net of tax | 10,333 | 11,447 | ||||||
| Total shareholders’ equity | 461,797 | 438,963 | ||||||
| Total liabilities, redeemable preferred stock and shareholders’ equity | $ | 2,674,462 | $ | 2,652,344 | ||||
| CONTACT: | Scott B. Flaherty |
| Chief Financial Officer | |
| (561) 349-9989 |
FAQ
What were the first quarter total revenues reported by Willis Lease Finance ?
Willis Lease Finance reported first quarter total revenues of $119.1 million.
What was the pre-tax income for Willis Lease Finance in the first quarter?
Willis Lease Finance reported a pre-tax income of $29.9 million for the first quarter.
What was the reason behind the growth in core lease and maintenance revenues for Willis Lease Finance ?
The growth was driven by a strong aviation marketplace, with airlines leveraging WLFC's leasing, parts, and maintenance capabilities.
What service offerings are provided by Willis Lease Finance ?
Willis Lease Finance offers engine maintenance, aircraft line and base maintenance, aircraft disassembly, parking and storage, airport FBO, ground, and cargo handling services.
