Willis Lease Finance Corporation (WLFC), the independent jet engine lessor, has reported quarterly pretax income of $5.8 million in the second quarter 2016, up $6.7 million when compared to second quarter 2015 pretax income. Net income for the second quarter increased by $3.9 million to $3.4 million, or $0.49 per diluted share, from $(0.5million), or $(0.06) per diluted share, in the second quarter of 2015. Earnings in the second quarter included a $1.9 million non-cash charge associated with the write down of an engine that will be retired at lease expiration.
“The core leasing business continues to perform well, benefitting from strong demand for many of the engine types in our portfolio,” said Charles F. Willis, Chairman and CEO. “Our 90% plus utilization, which is always subject to fluctuation, has also allowed us to more appropriately price our products and services.”
“We continue to focus on driving margin within the business, as we position ourselves for the future,” said Brian R. Hole, President. “With up to $1.0 billion in available credit from our newly amended revolving credit facility, as well as other capital markets alternatives available to the Company, we are actively pursuing opportunities to grow our leasing portfolio and diversify sources of revenue. This includes continuing to transition our subsidiary, Willis Aero, into a full scale end-of-life solutions provider and accelerating efforts to market our new business line providing industry leading technical services to customers around the world.”
During the second quarter, total revenue grew 13.3% to $49.6 million in the second quarter of 2016 from $43.8 million in the year ago comparable period. Second quarter lease rent revenue was $29.2 million, up 12.7% from the year ago comparable period. Lease rent revenue was $57.5 million, up 12.3% for the six months ended June 30, 2016, from the corresponding year ago period. Average utilization in the second quarter of 2016 was 90%, higher than the 84% recorded in the year ago comparable period and up from 87% in the prior quarter.
WLFC’s maintenance reserve revenue increased 48.1% to $15.5 million in 2Q16 compared to $10.5 million in 2Q15. Maintenance reserve revenue increased 36.7% to $31.3 million in the six months ended June 30, 2016, compared to $22.9 million corresponding year ago period.
The book value of owned and managed engines and aircraft was approximately $1.4 billion at the end of the second quarter, while the tangible book value per share increased 6% to $29.32 at June 30, 2016, compared to $27.72 at December 31, 2015.
Willis Lease Finance purchased a total of 742,000 shares of common stock in the quarter under the company’s five-year share repurchase plan. As previously stated, during the reporting period, Willis Lease Finance expanded its revolving credit facility to up to $1.0 billion, including a $110 million accordion feature, and extended its maturity to 2021. Liquidity available from the revolving credit facility was $316 million at June 30, 2016, up from $151 million at December 31, 2015.
“We delivered significant value to the shareholders this quarter by capturing the discount to book value in our common equity through our share repurchase efforts,” said Willis. “We believe the market has recognized the value of these efforts, as evidenced by our industry-leading, year-to-date share price appreciation.”
As of June 30, 2016, Willis Lease had 201 commercial aircraft engines, 10 aircraft and 5 aircraft parts packages and other engine-related equipment in its lease portfolio, with a net book value of $1.1 billion. The company’s funded debt-to-equity ratio was 4.47 to 1 at quarter end compared to 4.14 to 1 at December 31, 2015.