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Wednesday, August 6, 2014, 12:00 pm

Willis Lease Finance second-quarter revenues rise 11%

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    NOVATO — Jet engine and aircraft lessor Willis Lease Finance Corporation (Nasdaq: WLFC) on Wednesday reported its revenue increased 11.3 percent in the second quarter and 16.4 percent in the first half of the year.

    Willis Lease FinanceTotal revenues were $42.3 million in the second quarter, ended June 30, compared with $38.0 million in a year before. There were increases in all revenue line items, the company said. Lease revenues were $24.8 million in the second quarter, unchanged from 12 months before, but increased 5.0 percent to $51.7 million in the first half of this year. Maintenance reserve revenues increased 23.5 percent to $14.6 million in the second quarter and grew 36.0 percent to $28.6 million in the first half of the year.

    “We continue to build a dynamic business model that has demonstrated long-term vibrancy through multiple market cycles,” said Charles Willis, chairman and CEO.

    Core earnings had “considerable improvement” this year over those of the first half of last year, with pretax income growing 88 percent in the second quarter and increasing 128 percent in the first half of the year, he said. 

    Second-quarter net income decreased to $2.2 million, or $0.27 per diluted share, from $9.7 million, or $1.17 a share, a year before. But earnings for the second quarter of last year got a boost from a one-time $8.6 million tax benefit and higher-than-normal earnings from joint ventures from $3.4 million in maintenance reserve revenue after leases in the WOLF joint venture were terminated.

    But Willis Lease Finance in June announced a joint venture, called CASC Willis Engine Leasing Company, Ltd., with China Aviation Supplies Import & Export Corporation Limited, which the Novato-based company said is a leader in that country for aviation supplies, distribution and logistics.

    The Novato company also renewed a revolving credit facility, extending the debt facility to $700 million from $450 million. The company said the offering was substantially oversubscribed, and three new banks joined the facility and all nine banks in the prior revolver either maintained or increased their commitment levels. Willis Lease Finance had $357 million in liquidity from that facility as of June 30.

    Willis Lease Finance leases large and regional spare commercial aircraft engines, auxiliary power units (nonpropulsion engines that power aircraft systems) and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers in 110 countries. These leasing activities are integrated with engine and aircraft trading, engine lease pools as well as various end-of-life solutions for aircraft, engines and aviation materials provided through subsidiary Willis Aeronautical Services, Inc.

    Average utilization of equipment in the leasing pool in the current quarter was 81 percent, compared with 83 percent in the second quarter of 2013. Utilization was 82 percent at the end of the second quarter of this year, compared with 84 percent at the end of the first quarter and 83 percent a year before.

    “While new leasing activity continues to be strong, we had an unusually high number of engines come off lease in the latter part of the first quarter, which continued into the first part of the second quarter,” said Donald Nunemaker, president. “As a result, utilization was down slightly at the end of the second quarter and lease rent revenues were flat compared to the year ago quarter. Leasing spare engines continues to make economic sense for our customers, and we remain confident that the long-term outlook for our business is strong. In the short-term, however, headwinds created by supply and demand dynamics are contributing to a challenging environment for us.”

    Willis Lease had 196 commercial aircraft engines, five aircraft parts packages, four aircraft and other engine-related equipment in its lease portfolio, with a net book value of $1.017 billion, up from $1.015 billion a year before.

    With about an hour left to go in Wednesday’s trading session, the price of the company stock was $21.35, up 1.14 percent from Tuesday.

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