Willis Lease Finance Reports 2011 Net Income to Common Up 28% Over 2010
Willis Lease Finance Corporation?WLFC?-2.19%?, a leading lessor of commercial jet engines, reported 2011 net income grew 20% to $14.5 million and net income available to common shareholders increased 28% to $11.4 million, or $1.28 per share, up from $8.9 million or $0.96 per diluted common share a year ago.
Willis Lease earned $3.6 million in the fourth quarter ended December 31, 2011, compared to $4.0 million in the fourth quarter a year ago. After payment of preferred dividends, net income available to common shareholders was $2.9 million, or $0.33 per share, in the fourth quarter of 2011, compared to $3.2 million or $0.35 per share in the like quarter a year ago.
2011 Highlights (at or for the periods ended December 31, 2011, compared to December 31, 2010):
-- Average utilization for the year was 86%, the same as a year ago. With the purchase of a portfolio of off-lease assets just prior to year end, utilization was 82% at December 31, 2011 compared to 90% a year ago. -- Total revenues increased 6% to $156.7 million from $148.3 million a year ago. -- Lease rent revenues increased 2.5% to $104.7 million compared to $102.1 million a year ago. -- Maintenance reserve revenues increased to $39.2 million, compared to $34.8 million in 2010. -- Gains on sale of leased equipment contributed $11.1 million, up from $8.0 million a year ago. -- Total net finance costs decreased 13% to $35.4 million compared to $40.7 million in 2010, reflecting the maturity of higher cost interest rate swaps over the past year. -- Liquidity available from the revolving credit facility was $117.0 million at year end, up from $54.0 million a year ago. -- Repurchased 434,748 shares in 2011 at an average price of $13.02 per share, up from 367,483 shares at an average price of 11.31 per share in 2010. -- Book value per common share was $22.48 compared to $21.24 a year ago.
"Economic headwinds continue to buffet the aviation industry, including high fuel costs, tight margins and sluggish passenger demand in many regions, which has resulted in a steep decline in overall airline profitability in 2011 compared to 2010," said Charles F. Willis, Chairman and CEO. "On top of that, the industry has been shaken by a rash of airline bankruptcies including American Airlines, Malev, Spanair, Avianova and World Airways. Despite the industry turbulence, Willis Lease still managed to generate not only a reasonable profit but also a healthy increase over the previous year."
?We are continuing to make progress on many of our key strategic objectives including expanding our access to capital, deepening our industry relationships through joint ventures and other alliances and further penetrating the regional market,? Willis continued. ?In 2011, we expanded our capital base through the establishment of a $345 million, 5 year revolving credit facility which can be upsized further to $450 million. We were also excited to launch a promising engine leasing joint venture with Mitsui, which provided a new source of both debt and equity capital. Also, we purchased eleven ATR turboprop aircraft and seven engines late in the fourth quarter of 2011, further expanding our existing regional aviation portfolio. We are very pleased with the demand for these assets and have received significant interest from several operators for lease or outright purchase. To date, we have leased one engine and have signed letters of intent for the lease of three aircraft.?
?The available supply of certain engine types continues to outpace demand,? said Donald A. Nunemaker, President, ?which increases the level of competition for each lease opportunity. As a consequence, our portfolio utilization is less than where we?d like it to be, and lease rates on many new transactions continue to be under pressure. We ended the year with a portfolio utilization of 82%, however late in the fourth quarter we added $26 million of aviation assets to our portfolio which were not on lease at year end. Asset acquisitions just prior to quarter end contribute little if any revenues during the quarter and adversely impact the period end utilization rate. Once these assets are leased or sold in the normal course of business, a more normal utilization results.?
?Lower hedging costs contributed to the 13% decline in net finance costs during 2011,? said Brad Forsyth, Chief Financial Officer. ?Payments made under the interest rate swap agreements dropped to $11.3 million in 2011 from $18.6 million in 2010. We believe our current hedging position, which covers 54% of our floating rate debt, is adequate and we will continue to monitor interest swap rates to manage our hedge position appropriately based on market conditions.?
The blended federal and state effective tax rate for 2011 was 39.3% compared to 38.8% a year ago.
Read more:?http://www.marketwatch.com/story/willis-lease-finance-reports-2011-net-income-to-common-up-28-over-2010-2012-03-12
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