Willis Lease Finance Corporation (NASDAQ:WLFC) today reported that pretax income grew 27% to $8.3 million in the third quarter of 2017, compared to $6.5 million in the third quarter of 2016, on revenues of $65.9 million. The Company’s third quarter 2017 results were bolstered by continued strength in its core leasing business with $33.5 million of lease rent revenue driven by 91% utilization at quarter end. Net income attributable to common shareholders for the third quarter increased 24% to $4.9 million, or $0.80 per diluted share, from $4.0 million, or $0.62 per diluted share, in the third quarter 2016. Earnings in the third quarter include a $7.0 million non-cash write down of equipment and parts.
“In the third quarter, we completed two major financings: the closing of our WEST III ABS offering and a preferred stock offering. WEST III aligns our long-lived assets with long-term, fixed rate capital and our preferred stock offering equitizes our balance sheet for continued growth,” said Charles F. Willis, Chairman and CEO.
“In addition to closing two milestone financings, we were very active trading equipment in the third quarter as we continue to execute our strategy to grow and improve the efficiency of our leasing portfolio,” said Brian R. Hole, President. “Willis Aeronautical also continues to demonstrate its value to our total platform, not only in support of our effort to monetize residual values but also in support of our effort to deliver value-added programs for our customers.”
Third Quarter 2017 Highlights:
Total revenue grew 28.0% to $65.9 million in the third quarter of 2017, from $51.5 million in the year ago period.
Average utilization in the third quarter of 2017 remained constant at 91% from the year ago period. Utilization was 91% at the end of Q3 2017.
Third quarter lease rent revenue was $33.5 million, up 7.0% year-over-year.
Maintenance reserve revenue for the nine months ended September 30, 2017 increased 40.9% to $64.2 million compared to $45.6 million in the year ago period.
The equipment portfolio grew 5.6% to $1.200 billion, from $1.137 billion from the year ago period, net of asset sales and depreciation expense.
Tangible book value per share increased 9.3% to $33.51 at September 30, 2017, as compared to $30.66 per share at December 31, 2016.
The Company maintained $561 million of undrawn revolver capacity at September 30, 2017.
The book value of owned and managed engines and aircraft, exclusive of assets managed by our WAML subsidiary, was approximately $1.6 billion at the end of the third quarter.
During the quarter, the Company purchased five aircraft and two engines for a total purchase price of $58.2 million.
The Company issued 1,500,000 shares of 6.5% Series A-2 Preferred Stock, $0.01 par value per share at a gross issue 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 from the revolving credit facility. We are using these funds, net of transaction expenses, to pay off part of our revolving credit facility.
Balance Sheet
As of September 30, 2017, Willis Lease had 214 commercial aircraft engines, 18 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.200 billion, as compared to 208 commercial aircraft engines, 10 aircraft, 5 aircraft parts packages, and other engine-related equipment in its lease portfolio, with a net book value of $1.137 billion a year ago. The Company’s funded debt-to-equity ratio was 4.32 to 1 at quarter end compared to 4.59 to 1 at December 31, 2016, and 4.51 to 1 a year ago.