8-K
WILLIS LEASE FINANCE CORP (WLFC)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________________________________________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
______________________________________________________________________
Date of Report (Date of earliest event reported): March 14, 2022
Willis Lease Finance Corporation
(Exact Name of Registrant as Specified in Charter)
| Delaware | 001-15369 | 68-0070656 |
|---|---|---|
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File<br>Number) | (I.R.S. Employer<br>Identification Number) |
4700 Lyons Technology Parkway
Coconut Creek, FL 33073
(Address of Principal Executive Offices) (Zip Code)
Registrant’s telephone number, including area code: (561) 349-9989
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of Each Class | Trading Symbol | Name of exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value per share | WLFC | Nasdaq Global Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02(a) Results of Operations and Financial Condition
Item 7.01 Regulation FD Disclosure
The following information and exhibit are furnished pursuant to Item 2.02(a), “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure”. This information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
On March 14, 2022, the Company issued a news release setting forth the Company’s results from operations for the three and twelve months ended December 31, 2021 and financial condition as of December 31, 2021. A copy of the news release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01 Financial Statements & Exhibits
The Company hereby furnishes the following exhibit pursuant to Item 2.02(a), “Results of Operations and Financial Condition” and Item 7.01, “Regulation FD Disclosure”.
| Exhibit No. | Description |
|---|---|
| 99.1 | News Release issued by Willis Lease Finance Corporation dated March14, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned duly authorized officer.
Dated: March 14, 2022
| WILLIS LEASE FINANCE CORPORATION | |
|---|---|
| By: | /s/ Scott B. Flaherty |
| Scott B. Flaherty | |
| Senior Vice President and Chief Financial Officer |
3
Document
Exhibit 99.1
| CONTACT: | Scott B. Flaherty | ||
|---|---|---|---|
| NEWS RELEASE | Chief Financial Officer | ||
| (561) 349-9989 |
Willis Lease Finance Corporation Reports
Annual Pre-tax Profit of $9.1 million
COCONUT CREEK, FL — March 14, 2022 — Willis Lease Finance Corporation (NASDAQ: WLFC) today reported annual total revenues of $274.2 million and pre-tax profit of $9.1 million. For the year ended December 31, 2021, aggregate lease rent and maintenance reserve revenues were $208.8 million and spare parts and equipment sales were $17.4 million. The Company reported increased total revenues in the fourth quarter when compared to the prior year period, primarily due to both an increase in lease rent revenue and gain on sale of leased equipment and financial assets, partially offset by a reduction in long-term maintenance revenue.
“We continued to see a slow recovery during the second half of 2021 as travel began to open on a global basis only to be dampened again near year-end by COVID-19 variants,” said Charles F. Willis, Chairman and CEO. “COVID-related travel prohibitions have been relaxed more recently, but now the industry faces new stresses associated with geo-political issues that are tragic on every level. As always, we continue to focus on the things we can control, and we believe the Company is well positioned to help our customers provide an essential product: air travel.”
“The world has been, and continues to be, an unsettled place, but the dedication of our employees is constant,” said Brian R. Hole, President. “Their efforts allow us to deliver the novel programs, financing products and services our customers need more and more as they realize that ‘same again’ will not be an adequate strategy in the current times”
2021 Highlights (at or for the quarter and year ended December 31, 2021, as compared to at or for the quarter and year ended December 31, 2020):
•Total revenue was $274.2 million in 2021, a 5% decrease when compared to $288.7 million in the prior year. Revenue for the three months ended December 31, 2021 was $75.8 million, up 23.3% from the comparative period in 2020.
•Lease rent revenue was $134.8 million in 2021, off 5.6% from 2020.
•Maintenance reserve revenue was $74.0 million in 2021, a decrease of 29.8% compared to $105.4 million in the prior year.
•The decline in maintenance revenue was primarily influenced by lower long-term maintenance revenue associated with engines returning from long-term lease.
•Short-term maintenance revenue, driven by engine usage, was flat at $17.7 million year over year.
•Spare parts and equipment sales decreased to $17.4 million in 2021, compared to $18.6 million in 2020, primarily due to no equipment sales during 2021 compared to $0.9 million for the sale of one engine in 2020.
•Gain on sale of leased equipment increased 76.2% to $6.0 million in 2021 reflecting the sale of 12 engines and one airframe, compared to $3.4 million in 2020 reflecting the sale of 11 engines and two airframes.
•Gain on sale of financial assets, effectively the sale of leased equipment, was $10.9 million in 2021 reflecting the sale of two notes receivable.
•The Company recognized a $6.3 million asset transition fee in 2021 as a result of the close out of an engine transition program. This fee was part of a program the Company provided to a large operator as it transitions its fleet to next generation technologies.
•Other revenue increased by $6.5 million to $24.9 million in 2021, compared to $18.4 million in 2020, primarily reflecting interest income from our notes receivable and other service-related fees.
•Income before income taxes was $9.1 million in 2021, compared to $17.3 million in 2020.
•Our aggregate lease assets, inclusive of our equipment held for operating lease and notes receivable, at December 31, 2021 and 2020 was $2,106.8 million and $2,045.3 million, respectively, a 3.0% year-over-year increase.
•The book value of lease assets we own directly or through our joint ventures, inclusive of our notes receivable, was $2,448.4 million at December 31, 2021. As of December 31, 2021, the Company also managed 475 engines, aircraft and related equipment on behalf of other parties.
•The Company maintained $410 million of undrawn revolver capacity at December 31, 2021.
•During 2021, the Company repurchased 268,408 shares of common stock for approximately $10.1 million at a weighted average price of $37.57 per share.
•Diluted weighted average earnings per common share were $0.00 for 2021, compared to $1.05 in 2020.
•Book value per diluted weighted average common share outstanding decreased to $59.23 at December 31, 2021, compared to $59.40 at December 31, 2020.
Balance Sheet
As of December 31, 2021, the Company’s $1.991 billion equipment held for operating lease portfolio and $115.5 million notes receivable represented 304 engines, 12 aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2020, the Company’s $1.887 billion equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment.
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 Limited, as well as various end-of-life solutions for 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 and the COVID-19 pandemic; 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 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 December 31, | Years Ended December 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||
| REVENUE | ||||||||||||
| Lease rent revenue | $ | 37,972 | $ | 28,021 | 35.5 | % | $ | 134,831 | $ | 142,895 | (5.6) | % |
| Maintenance reserve revenue | 13,212 | 22,549 | (41.4) | % | 73,961 | 105,365 | (29.8) | % | ||||
| Spare parts and equipment sales | 4,191 | 3,777 | 11.0 | % | 17,417 | 18,625 | (6.5) | % | ||||
| Gain on sale of leased equipment | 3,535 | 2,024 | 74.7 | % | 5,975 | 3,391 | 76.2 | % | ||||
| Gain on sale of financial assets | 10,874 | — | 100.0 | % | 10,874 | — | 100.0 | % | ||||
| Asset transition fee | — | — | — | % | 6,256 | — | 100.0 | % | ||||
| Other revenue | 6,030 | 5,116 | 17.9 | % | 24,888 | 18,416 | 35.1 | % | ||||
| Total revenue | 75,814 | 61,487 | 23.3 | % | 274,202 | 288,692 | (5.0) | % | ||||
| EXPENSES | ||||||||||||
| Depreciation and amortization expense | 21,749 | 23,365 | (6.9) | % | 90,504 | 94,541 | (4.3) | % | ||||
| Cost of spare parts and equipment sales | 3,919 | 3,301 | 18.7 | % | 14,927 | 16,762 | (10.9) | % | ||||
| Write-down of equipment | 3,602 | 6,169 | (41.6) | % | 7,715 | 20,540 | (62.4) | % | ||||
| General and administrative | 21,038 | 16,654 | 26.3 | % | 75,350 | 67,910 | 11.0 | % | ||||
| Technical expense | 3,251 | 3,111 | 4.5 | % | 9,381 | 6,533 | 43.6 | % | ||||
| Net finance costs: | ||||||||||||
| Interest expense | 17,654 | 15,888 | 11.1 | % | 67,985 | 63,024 | 7.9 | % | ||||
| Loss on debt extinguishment | — | — | — | % | — | 4,688 | (100.0) | % | ||||
| Total net finance costs | 17,654 | 15,888 | 11.1 | % | 67,985 | 67,712 | 0.4 | % | ||||
| Total expenses | 71,213 | 68,488 | 4.0 | % | 265,862 | 273,998 | (3.0) | % | ||||
| Earnings (loss) from operations | 4,601 | (7,001) | (165.7) | % | 8,340 | 14,694 | (43.2) | % | ||||
| Earnings from joint ventures | 1,983 | 30 | 6,510.0 | % | 800 | 2,642 | (69.7) | % | ||||
| Income (loss) before income taxes | 6,584 | (6,971) | (194.4) | % | 9,140 | 17,336 | (47.3) | % | ||||
| Income tax expense (benefit) | 4,842 | (4,077) | (218.8) | % | 5,788 | 7,588 | (23.7) | % | ||||
| Net income (loss) | 1,742 | (2,894) | (160.2) | % | 3,352 | 9,748 | (65.6) | % | ||||
| Preferred stock dividends | 821 | 819 | 0.2 | % | 3,251 | 3,259 | (0.2) | % | ||||
| Accretion of preferred stock issuance costs | 20 | 21 | (4.8) | % | 83 | 84 | (1.2) | % | ||||
| Net income (loss) attributable to common shareholders | $ | 901 | $ | (3,734) | (124.1) | % | $ | 18 | $ | 6,405 | (99.7) | % |
| Basic weighted average earnings (loss) per common share | $ | 0.15 | $ | (0.62) | $ | — | $ | 1.07 | ||||
| Diluted weighted average earnings (loss) per common share | $ | 0.14 | $ | (0.62) | $ | — | $ | 1.05 | ||||
| Basic weighted average common shares outstanding | 6,044 | 5,988 | 6,112 | 5,963 | ||||||||
| Diluted weighted average common shares outstanding | 6,304 | 5,988 | 6,346 | 6,128 |
Unaudited Consolidated Balance Sheets
(In thousands, except per share data)
| December 31, 2021 | December 31, 2020 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Cash and cash equivalents | $ | 14,329 | $ | 42,540 |
| Restricted cash | 81,312 | 36,385 | ||
| Equipment held for operating lease, less accumulated depreciation | 1,991,368 | 1,886,613 | ||
| Maintenance rights | 22,511 | 20,097 | ||
| Equipment held for sale | 6,952 | 2,850 | ||
| Receivables, net of allowances | 39,623 | 28,269 | ||
| Spare parts inventory | 50,959 | 59,434 | ||
| Investments | 55,927 | 53,275 | ||
| Property, equipment & furnishings, less accumulated depreciation | 31,327 | 31,753 | ||
| Intangible assets, net | 1,188 | 1,246 | ||
| Notes receivable | 115,456 | 158,708 | ||
| Other assets | 51,975 | 43,778 | ||
| Total assets | $ | 2,462,927 | $ | 2,364,948 |
| LIABILITIES, REDEEMABLE PREFERRED STOCK AND SHAREHOLDERS’ EQUITY | ||||
| Liabilities: | ||||
| Accounts payable and accrued expenses | $ | 26,858 | $ | 26,977 |
| Deferred income taxes | 124,332 | 116,838 | ||
| Debt obligations | 1,790,264 | 1,693,753 | ||
| Maintenance reserves | 65,976 | 82,484 | ||
| Security deposits | 19,349 | 19,522 | ||
| Unearned revenue | 10,458 | 11,637 | ||
| Total liabilities | 2,037,237 | 1,951,211 | ||
| Redeemable preferred stock ($0.01 par value) | 49,805 | 49,722 | ||
| Shareholders’ equity: | ||||
| Common stock ($0.01 par value) | 65 | 66 | ||
| Paid-in capital in excess of par | 15,401 | 13,696 | ||
| Retained earnings | 355,388 | 355,370 | ||
| Accumulated other comprehensive income (loss), net of tax | 5,031 | (5,117) | ||
| Total shareholders’ equity | 375,885 | 364,015 | ||
| Total liabilities, redeemable preferred stock and shareholders’ equity | $ | 2,462,927 | $ | 2,364,948 |