Willis Lease Finance Corporation (NASDAQ:WLFC) today reported 50.4% growth in annual pre-tax income to $36.0 million, from $23.9 million in 2016, and recorded total revenues of $274.8 million. The Company’s 2017 pretax results were driven by solid revenue growth in the core leasing business and a significant increase in spare parts and equipment sales. Aggregate lease rent and maintenance reserve revenues of $210.6 million were driven by a 90% average utilization of a lease portfolio that grew 18.1% to $1.34 billion at year-end. Spare parts and equipment sales grew 189% on a year over year basis. Net income attributable to common shareholders grew 338% to $60.3 million for the year or to $9.69 of diluted weighted average earnings per common share. The positive tax effects of the Tax Cuts and Jobs Act of 2017 contributed $43.6 million to our 2017 after tax income.
“2017 was our most profitable year on a pre-tax basis since 2008, with record revenues,” said Charles F. Willis, Chairman and CEO. “Utilization of our lease portfolio remains high due in part to robust maintenance activity on engine types we support, including some older engine types many thought would have been retired long ago. Last year was also important for us from a capital perspective as we were successful in closing our WEST III asset backed securitization and a second round of preferred equity.”
“As we have said before, we believe our Platform differentiates us and our varied business areas delivered for our customers and, consequently, for us in 2017,” said Brian R. Hole, President. “In addition to our core leasing business, our trading, asset management and spare parts businesses performed well and continue to become more useful for our customers. We will continue to actively manage and grow our leasing portfolio and find new ways to create value for our growing customer base.”
2017 Highlights (at or for the periods ended December 31, 2017 as compared to December 31, 2016):
Total revenue grew 32.6% to $274.8 million in 2017, from $207.3 million in 2016.
Average utilization for the year was 90%, in line with 2016 performance.
Lease rent and maintenance reserve revenues grew 8.7% and 40.5% respectively. The $23.1 million increase in maintenance reserve revenues for 2017 was partially offset by a $15.4 million increase in non-cash write-down of equipment expense.
The equipment portfolio grew 18.1% to $1.343 billion, from $1.137 billion in 2016, net of asset sales and depreciation expense.
The Company purchased $345 million of equipment in 2017, compared to $149 million in 2016. In the fourth quarter of 2017, the Company purchased one aircraft and fourteen engines for $169 million.
Tangible book value per diluted weighted average common shares outstanding increased 42.4% to $41.63 at December 31, 2017, compared to $29.23 a year ago.
The Company maintained $399 million of undrawn revolver capacity at December 31, 2017.
The book value of lease assets, either owned directly or through our joint ventures, was $1.6 billion at the end of 2017.
A total of 155,312 shares of common stock were repurchased in 2017 under the Company’s five-year repurchase plan for $3.5 million.
The Company issued 1,500,000 shares of 6.5% Series A-2 Preferred Stock, $0.01 par value per share at a purchase price of $20.00 per share in September 2017.
The Company closed a $336 million asset-backed securitization, Willis Engine Structured Trust III (WEST III) on August 4, 2017. The Notes are secured by a portfolio of 56 engines.
As of December 31, 2017, the Company had a total lease portfolio consisting of 225 engines and related equipment, 16 aircraft and 7 other leased parts and equipment with a net book value of $1.343 billion. As of December 31, 2016, the Company had a total lease portfolio consisting of 208 engines and related equipment, 11 aircraft and 5 other leased parts and equipment, with a net book value of $1.137 billion.