NOVATO, Calif., Aug. 06, 2018 (GLOBE NEWSWIRE) -- Willis Lease Finance Corporation (NASDAQ: WLFC) today reported a pre-tax profit of $11.6 million in the second quarter of 2018, driven by strong sales in each of our leasing, spare parts and asset management businesses. The Company achieved record quarterly lease rent revenue of $43.1 million in the period driven by continued high utilization and 14.9% growth of our portfolio to $1.542 billion at quarter-end compared to $1.343 billion at December 31, 2017. Aggregate lease rent and maintenance reserve revenues were $65.1 million for the second quarter 2018, up 37.5% and 85.5% respectively.

“We continue to deliver strong cash flow and profits during a significant growth period for the Company,” said Charles F. Willis, Chairman and CEO. “Our focus is on growing and shaping our portfolio, and the business generally, to ensure that we have the right assets and services in the right places, at the right time, delivering maximum value for our customers.”

“The industry continues to see high demand for lease engines, parts and services and we are poised to deliver on each because of the strength and depth of our asset portfolio and our Platform,” said Brian R. Hole, President. “We believe we are leading a fundamental industry change as airlines realize it is more efficient to access our Platform of assets and services on demand than to acquire a large number of perpetually under-utilized spare engines.”

Second Quarter 2018 Highlights (at or for the periods ended June 30, 2018, as compared to June 30, 2017, and December 31, 2017):

-- Total revenue grew by 9.5% to $74.3 million in the second quarter of 2018, compared to $67.8 million in the prior year period. -- Lease rent revenue achieved a record quarterly high of $43.1 million in the second quarter of 2018; 37.5% growth from $31.3 million in the same quarter of 2017. -- Quarterly maintenance reserve revenue increased by $10.2 million over the prior year period due to an increase in long-term lease transition relative to the prior year period. -- Spare parts and equipment sales decreased $12.3 million versus the second quarter of 2017 as there were no equipment sales in the current period. -- General and administrative expenses increased, primarily due to costs associated with relocating and transitioning employees in our various offices and hiring to support our broadening Platform. -- Utilization at the end of the second quarter of 2018 was 88% compared to 89% at 2017 year-end. Utilization was negatively impacted by delivery of new, off lease engines over the period. -- Our equipment lease portfolio grew 14.9% to $1.542 billion, from $1.343 billion at December 31, 2017, net of asset sales and depreciation expense. The book value of lease assets we own directly or through our joint ventures was $1.9 billion at June 30, 2018. -- The Company purchased $104.5 million of equipment in the second quarter of 2018, compared to $76.9 million in the second quarter of 2017. -- The Company maintained $224 million of undrawn revolver capacity at June 30, 2018. -- Tangible book value per diluted weighted average common share outstanding increased to $43.33 at June 30, 2018, compared to $41.63 at December 31, 2017.

Balance Sheet

As of June 30, 2018, the Company had a total lease portfolio consisting of 246 engines and related equipment, 15 aircraft and 10 other leased parts and equipment with a net book value of $1.542 billion. 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.

Willis Lease Finance Corporation

Willis Lease Finance Corporation leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers in 120 countries. These leasing activities are integrated with engine and aircraft trading, engine lease pools and asset management services supported by cutting edge technology through its subsidiary Willis Asset Management, as well as various end-of-life solutions for aircraft, engines and aviation materials provided through its subsidiary, Willis Aeronautical Services, Inc.

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 terrorist activity, changes in oil prices and other disruptions to the 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 the 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 Six Months Ended June 30, % June 30, % ------------------ -------------------- 2018 2017 Change 2018 2017 Change -------- -------- -------- --------- --------- --------- REVENUE Lease rent revenue $ 43,081 $ 31,337 37.5 % $ 82,726 $ 61,572 34.4 % Maintenance reserve revenue 22,045 11,881 85.5 % 37,485 43,843 (14.5 )% Spare parts and equipment sales 7,061 19,383 (63.6 )% 13,347 31,979 (58.3 )% Gain on sale of leased equipment 245 3,527 (93.1 )% 886 4,509 (80.4 )% Other revenue 1,871 1,716 9.0 % 3,752 3,888 (3.5 )% - ------ - ------ - ------- - ------- Total revenue 74,303 67,844 9.5 % 138,196 145,791 (5.2 )% - ------ - ------ - ------- - ------- EXPENSES Depreciation and amortization expense 18,384 16,015 14.8 % 35,739 32,644 9.5 % Cost of spare parts and equipment sales (1) 5,906 14,656 (59.7 )% 10,689 24,973 (57.2 )% Write-down of equipment (1) 3,578 1,351 164.8 % 3,578 13,442 (73.4 )% General and administrative 16,782 13,065 28.5 % 32,393 26,265 23.3 % Technical expense 3,232 2,448 32.0 % 6,909 4,740 45.8 % Interest expense 15,138 11,312 33.8 % 28,732 22,178 29.6 % - ------ - ------ - ------- - ------- Total expenses 63,020 58,847 7.1 % 118,040 124,242 (5.0 )% - ------ - ------ - ------- - ------- Earnings from operations 11,283 8,997 25.4 % 20,156 21,549 (6.5 )% Earnings from joint ventures 316 1,161 (72.8 )% 1,063 3,015 (64.7 )% - ------ - ------ - ------- - ------- Income before income taxes 11,599 10,158 14.2 % 21,219 24,564 (13.6 )% Income tax expense 3,240 4,168 (22.3 )% 5,776 10,406 (44.5 )% - ------ - ------ - ------- - ------- Net income 8,359 5,990 39.5 % 15,443 14,158 9.1 % Preferred stock dividends 810 324 150.0 % 1,612 646 149.5 % Accretion of preferred stock issuance costs 21 9 133.3 % 42 17 147.1 % - ------ - ------ - ------- - ------- Net income attributable to common shareholders $ 7,528 $ 5,657 33.1 % $ 13,789 $ 13,495 2.2 % - ------ - ------ - ------- - ------- Basic weighted average earnings per common $ 1.28 $ 0.94 $ 2.30 $ 2.22 share - ------ - ------ - ------- - ------- Diluted weighted average earnings per common $ 1.26 $ 0.92 $ 2.25 $ 2.17 share (2) - ------ - ------ - ------- - ------- Basic weighted average common shares 5,878 6,036 5,990 6,075 outstanding Diluted weighted average common shares 5,991 6,158 6,123 6,213 outstanding (2)

_______________________________(1) The amounts herein include reclassifications of scrap inventory write-offs and lower of cost or market write-downs that were previously presented within Write-down of equipment to the Costs of spare parts and equipment sales expense line item. The three and six months ended June 30, 2017 were impacted by a reclassification of $0.9 million and $1.8 million, respectively, reflected as an increase to Cost of spare parts and equipment sales and a decrease to Write-down of equipment.

(2) Diluted earnings per common share and diluted weighted average common shares outstanding have been adjusted to properly exclude the effects of income tax benefits on unvested restricted stock in accordance with ASU 2016-09. The adjustment did not impact diluted earnings per common share and impacted diluted weighted average common shares outstanding by approximately 16,000 shares for the second quarter of 2017. The adjustment impacted diluted earnings per common share and diluted weighted average common shares outstanding for the first half of 2017 by $0.01 and approximately 12,000 shares, respectively.

Unaudited Consolidated Balance Sheets (In thousands, except per share data) June 30, December 2018 31, 2017 ----------- ----------- ASSETS Cash and cash equivalents $ 8,938 $ 7,052 Restricted cash 37,880 40,272 Equipment held for operating lease, less accumulated depreciation 1,542,329 1,342,571 Maintenance rights 14,763 14,763 Equipment held for sale 18,430 34,172 Operating lease related receivables, net of allowances 20,238 18,848 Spare parts inventory 27,146 16,379 Investments 50,749 50,641 Property, equipment & furnishings, less accumulated depreciation 25,967 26,074 Intangible assets, net 1,525 1,727 Other assets 35,470 50,932 - --------- - --------- Total assets $ 1,783,435 $ 1,603,431 - --------- - --------- LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS' EQUITY Liabilities: Accounts payable and accrued expenses $ 28,137 $ 22,072 Deferred income taxes 83,814 78,280 Debt obligations 1,232,847 1,085,405 Maintenance reserves 88,114 75,889 Security deposits 27,143 25,302 Unearned revenue 8,581 8,102 - --------- - --------- Total liabilities 1,468,636 1,295,050 - --------- - --------- Redeemable preferred stock ($0.0l par value) 49,512 49,471 Shareholders' equity: Common stock ($0.0l par value) 64 64 Paid-in capital in excess of par 1,474 2,319 Retained earnings 262,548 256,301 Accumulated other comprehensive income, net of tax 1,201 226 - --------- - --------- Total shareholders' equity 265,287 258,910 - --------- - --------- Total liabilities, redeemable preferred stock and shareholders' equity $ 1,783,435 $ 1,603,431 - --------- - ---------

CONTACT: Scott B. FlahertyChief Financial Officer(415) 408-4700