Willis Lease Finance Reports YTD Net Income of $9.1 million

Dino D'Amore
By Dino D'Amore November 8, 2013 12:50

Willis Lease Finance Reports YTD Net Income of $9.1 million

Engine lessor Willis Lease Finance Corporation has reported net income attributable to common shareholders was $9.1 million, or $1.09 per diluted share, for the first nine months of 2013, compared to a loss of $3.0 million, or $0.34 per diluted share, in the first nine months of 2012. A significant improvement in portfolio utilization in the current quarter was overshadowed by asset write-downs and engine repair expenses. In the current quarter, a loss of $2.2 million, or $0.27 per diluted share, was recorded compared to a loss of $8.0 million, or $0.90 per diluted share, in the third quarter a year ago. A year ago, the same quarter’s results were impacted by a $15.4 million charge for extinguishment of debt and derivatives termination related to the successful closing of the WEST II ABS financing.

“We achieved substantial improvement in our portfolio utilization this quarter,” said Charles F. Willis, Chairman and CEO. “During September our portfolio utilization reached 88%, which represents a major improvement over the preceding quarter end level of 83%, and is the highest utilization percentage recorded for any month since February 2011. Furthermore, we believe the recent increase in our stock price since June, reflects the market’s recognition of our long-range strategic plan and our growing book value per share. Shareholder value was enhanced by 328,968 of common share repurchases in the current quarter, which was completed at a 39% discount to book value.”

“Leasing activity in September was robust, with a significant number of new leases signed, lifting our utilization to 88%, a level we haven’t seen for nearly three years,” said Donald A. Nunemaker, President. “One of the factors contributing to the improvement in utilization is that the market for V2500-A5 engines, which powers the A320 aircraft type, appears to be coming back to normal in terms of supply and demand. We had eight of these engines off-lease in early 2012 and have only two of these engines available for lease today.”

“The $2.2 million loss in the current quarter was mainly due to the write-down of certain assets and the expensing of engine repairs,” continued Willis. “The non-cash write-downs totaled $4.3 million, representing 0.4% of our total asset base, consisting of a $2.6 million write-down of parts inventories related to engines we consigned to third parties in the past, and a $1.7 million write-down of two engines we decided to part out. We also expensed $2.2 million in the period for engine repairs completed on two engines in our lease portfolio. We feel the above actions are appropriate to maintain a vibrant and suitably valued portfolio. The foregoing expenses overshadowed an otherwise profitable quarter – excluding these charges, third quarter pre-tax income was $2.9 million.”

“We remain well positioned to benefit from opportunities in the growing aviation leasing industry and are pleased to announce the completion of two significant strategic investments,” added Nunemaker. “In the third quarter, we invested $1.0 million to purchase the remaining 50% interest in our WOLF joint venture, with the purchase price representing a $12.7 million discount from the JV partner’s equity interest. We have decided to lease these engines, as we expect our total return will be greater than if we immediately sold them.”

“In addition to the WOLF asset acquisition, we recently announced the launch of Willis Aeronautical Services, Inc. (“WASI”), a new, wholly-owned subsidiary which will provide ‘end-of-life’ solutions for aviation materials and services related to aircraft engines,” added Willis. “In conjunction with the formation of this new subsidiary, we also acquired most of the assets and hired the team of professionals from JT-Power, LLC, a leader in supplying aftermarket material and services to the aviation industry. We see this as an opportunity to better manage the full lifecycle of our assets, enhance the returns on our engine portfolio and create incremental value for our shareholders.”

Dino D'Amore
By Dino D'Amore November 8, 2013 12:50
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