Willis Lease(WLFC) - 2023 Q4 - Annual Results

Financial Performance Overview WLFC achieved record 2023 financial results, propelled by robust lease revenue growth and strategic vertical integration in aviation services 2023 Full-Year Financial Highlights Willis Lease Finance Corporation (WLFC) reported record-breaking financial results for 2023, with total revenues reaching $418.6 million and pre-tax income surging to $67.1 million Key Financial Metrics (FY 2023 vs FY 2022) | Metric | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total Revenues | $418.6 million | $311.9 million | +34.2% | | Pre-Tax Income | $67.1 million | $9.8 million | +585.5% | | Lease Rent & Maintenance Reserve Revenues | $346.8 million | $246.0 million | +41.0% | | Diluted EPS | $6.23 | $0.33 | +1787.9% | | Book Value Per Share | $67.73 | $64.27 | +5.4% | - The company's lease portfolio was valued at $2.22 billion as of December 31, 2023, a slight increase from $2.21 billion at year-end 2022, consisting of 337 engines and 12 aircraft[3] - WLFC successfully raised $410 million in Asset-Backed Security (ABS) financings, refinanced its credit facility, and utilized the Japanese Operating Lease with Call Option (JOLCO) market multiple times during 2023[5] Management Commentary and Strategy Management attributed the record 2023 results to the company's strategic expansion into vertically integrated aviation services, creating a 'virtuous cycle' of efficiency and enabling unique offerings - The company's vertical integration across leasing, materials, asset management, and MRO services has established a 'virtuous cycle of growth and efficiency', minimizing maintenance turn times and costs while maximizing asset value and on-lease revenue generation[2] - WLFC leverages its balance sheet and service businesses to offer unique solutions like the 'ConstantThrust' program, which helps airlines manage engine-related expenses and asset usage, allowing them to focus on their core passenger transport business[2] - The company's financial performance underscores its leadership in the aircraft engine leasing and after-market services sector, achieving record revenue and the second-highest pre-tax earnings in its history[2] Business and Market Outlook WLFC leases commercial aircraft engines, APUs, and aircraft globally, integrating these activities with trading, asset management, and MRO services, capitalizing on surging demand for spare engine leasing - WLFC's core business involves leasing large and regional spare commercial aircraft engines, APUs, and aircraft, which is integrated with services like engine trading, asset management, and end-of-life solutions[4] - The company identifies a confluence of industry challenges creating high demand for spare engine leasing: original engine manufacturer (OEM) issues, supply chain disruptions, MRO bottlenecks, and skilled labor shortages[2] Consolidated Financial Statements The company's 2023 financial statements show substantial revenue and net income growth, supported by a stable asset base and increased shareholder equity Unaudited Consolidated Statements of Income For the full year 2023, total revenues increased 34.2% to $418.6 million, leading to a 585.5% increase in income before taxes and an over 18-fold increase in net income attributable to common shareholders Full Year Income Statement Highlights (in thousands) | Account | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | Total revenue | $418,555 | $311,927 | 34.2% | | Lease rent revenue | $213,138 | $162,571 | 31.1% | | Maintenance reserve revenue | $133,668 | $83,424 | 60.2% | | Total expenses | $354,333 | $302,072 | 17.3% | | Income before income taxes | $67,130 | $9,793 | 585.5% | | Net income attributable to common shareholders | $40,372 | $2,105 | 1,817.9% | Unaudited Consolidated Balance Sheets As of December 31, 2023, WLFC's total assets stood at $2.65 billion, with a stable equipment lease portfolio and an 8.5% growth in total shareholders' equity Balance Sheet Highlights (in thousands) | Account | Dec 31, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | Total assets | $2,652,344 | $2,575,217 | | Equipment held for operating lease, net | $2,112,837 | $2,111,935 | | Total liabilities | $2,163,417 | $2,120,640 | | Debt obligations | $1,802,881 | $1,847,278 | | Total shareholders' equity | $438,963 | $404,688 |