Willis Lease Finance Corp. (WLFC, Financial) filed Quarterly Report for the period ended 2012-06-30.
Willis Lease Finance Corporation has a market cap of $117 million; its shares were traded at around $12.36 with a P/E ratio of 11.3 and P/S ratio of 0.8. Willis Lease Finance Corporation had an annual average earning growth of 11.8% over the past 10 years. GuruFocus rated Willis Lease Finance Corporation the business predictability rank of 3-star.
Lease Rent Revenue. Lease rent revenue for the three months ended June 30, 2012 decreased 7.2% to $23.8 million from $25.7 million for the comparable period in 2011. This decrease primarily reflects lower portfolio utilization in the current period and a decrease in the size of the lease portfolio, which translated into a lower amount of equipment on lease. The aggregate net book value of lease equipment at June 30, 2012 and 2011 was $970.0 million and $1,013.0 million, respectively, a decrease of 4.3%. The average utilization for the three months ended June 30, 2012 and 2011 was 82% and 83%, respectively. At June 30, 2012 and 2011, respectively, approximately 82% and 83% of equipment held for lease by book value was on-lease.
Lease Rent Revenue. Lease rent revenue for the six months ended June 30, 2012 decreased 9.6% to $47.9 million from $53.0 million for the comparable period in 2011. This decrease primarily reflects lower portfolio utilization in the current period and a decrease in the size of the lease portfolio, which translated into a lower amount of equipment on lease. The aggregate net book value of lease equipment at June 30, 2012 and 2011 was $970.0 million and $1,013.0 million, respectively, a decrease of 4.2%. The average utilization for the six months ended June 30, 2012 and 2011 was 83% and 86%, respectively. At June 30, 2012 and 2011, approximately 82% and 83%, respectively, of equipment held for lease by book value was on-lease.
Beginning in 2006 Island Air experienced cash flow difficulties, which affected their payments to the Company due to a fare war commenced by a competitor, their dependence on tourism which has suffered from the current economic environment as well as volatile fuel prices. The Board of Directors approved lease rent deferrals which were accounted for as a reduction in lease revenue in the applicable periods. Because of the question regarding collectability of amounts due under these leases, lease rent revenue for these leases have been recorded on a cash basis until such time as collectability becomes reasonably assured. After taking into account the deferred amounts, Island Air owed the Company $2.9 million in overdue rent and late charges. Effective as of May 3, 2011 the Company entered into a Settlement Agreement with Island Air which was approved by the Board of Directors, which provides that the overdue rent and late charges will be settled by the Company forgiving 65% of the claim and Island Air paying the remaining 35% of the claim as follows: $0.1 million on signing and $1.0 million over 60 months at 5% interest. A note receivable in the amount of $1.0 million and offsetting reserve was established. As cash is collected on this note, revenue will be recorded, with $0.1 million received in the six-month ended June 30, 2012. The Settlement Agreement was dependent on Island Air obtaining similar concessions from their other major creditors which have been obtained.
JT Power: The Company entered into two Consignment Agreements dated January 22, 2008 and November 17, 2008, with J.T. Power, LLC (J.T. Power), an entity whose sole shareholder, Austin Willis, is the son of our Chief Executive Officer, and directly and indirectly, a shareholder and a Director of the Company. According to the terms of the Consignment Agreement, J.T. Power was responsible to market and sell parts from the teardown of four engines with a book value of $5.2 million. During the six months ended June 30, 2012, sales of consigned parts were $7,100. Under these agreements, J.T. Power provided a minimum guarantee of net consignment proceeds of $4.0 million as of February 22, 2012. Based on current consignment proceeds, J.T. Power was obligated to pay $1.3 million under the guarantee in February 2012. On March 7, 2012, this guarantee was restructured as follows - quarterly payments of $45,000 over five years at an interest rate of 6% with a balloon payment at the end of this five year term. The Agreement provides an option to skip one quarterly payment and apply it to the balloon payment at an interest rate of 12%. The initial quarterly payment of $45,000 was received for the period ended June 30, 2012.
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Willis Lease Finance Corporation has a market cap of $117 million; its shares were traded at around $12.36 with a P/E ratio of 11.3 and P/S ratio of 0.8. Willis Lease Finance Corporation had an annual average earning growth of 11.8% over the past 10 years. GuruFocus rated Willis Lease Finance Corporation the business predictability rank of 3-star.
Highlight of Business Operations:
J.T. Power: The Company entered into two Consignment Agreements dated January 22, 2008 and November 17, 2008, with J.T. Power, LLC (J.T. Power), an entity whose sole shareholder, Austin Willis, is the son of our Chief Executive Officer, and directly and indirectly, a shareholder and a Director of the Company. According to the terms of the Consignment Agreement, J.T. Power was responsible to market and sell parts from the teardown of four engines with a book value of $5.2 million. During the six months ended June 30, 2012, sales of consigned parts were $7,100. Under these agreements, J.T. Power provided a minimum guarantee of net consignment proceeds of $4.0 million as of February 22, 2012. Based on current consignment proceeds, J.T. Power was obligated to pay $1.3 million under the guarantee in February 2012. On March 7, 2012, this guarantee was restructured as follows - quarterly payments of $45,000 over five years at an interest rate of 6% with a balloon payment at the end of this five year term. The Agreement provides an option to skip one quarterly payment and apply it to the balloon payment at an interest rate of 12%. The initial quarterly payment of $45,000 was received for the period ended June 30, 2012.Lease Rent Revenue. Lease rent revenue for the three months ended June 30, 2012 decreased 7.2% to $23.8 million from $25.7 million for the comparable period in 2011. This decrease primarily reflects lower portfolio utilization in the current period and a decrease in the size of the lease portfolio, which translated into a lower amount of equipment on lease. The aggregate net book value of lease equipment at June 30, 2012 and 2011 was $970.0 million and $1,013.0 million, respectively, a decrease of 4.3%. The average utilization for the three months ended June 30, 2012 and 2011 was 82% and 83%, respectively. At June 30, 2012 and 2011, respectively, approximately 82% and 83% of equipment held for lease by book value was on-lease.
Lease Rent Revenue. Lease rent revenue for the six months ended June 30, 2012 decreased 9.6% to $47.9 million from $53.0 million for the comparable period in 2011. This decrease primarily reflects lower portfolio utilization in the current period and a decrease in the size of the lease portfolio, which translated into a lower amount of equipment on lease. The aggregate net book value of lease equipment at June 30, 2012 and 2011 was $970.0 million and $1,013.0 million, respectively, a decrease of 4.2%. The average utilization for the six months ended June 30, 2012 and 2011 was 83% and 86%, respectively. At June 30, 2012 and 2011, approximately 82% and 83%, respectively, of equipment held for lease by book value was on-lease.
Beginning in 2006 Island Air experienced cash flow difficulties, which affected their payments to the Company due to a fare war commenced by a competitor, their dependence on tourism which has suffered from the current economic environment as well as volatile fuel prices. The Board of Directors approved lease rent deferrals which were accounted for as a reduction in lease revenue in the applicable periods. Because of the question regarding collectability of amounts due under these leases, lease rent revenue for these leases have been recorded on a cash basis until such time as collectability becomes reasonably assured. After taking into account the deferred amounts, Island Air owed the Company $2.9 million in overdue rent and late charges. Effective as of May 3, 2011 the Company entered into a Settlement Agreement with Island Air which was approved by the Board of Directors, which provides that the overdue rent and late charges will be settled by the Company forgiving 65% of the claim and Island Air paying the remaining 35% of the claim as follows: $0.1 million on signing and $1.0 million over 60 months at 5% interest. A note receivable in the amount of $1.0 million and offsetting reserve was established. As cash is collected on this note, revenue will be recorded, with $0.1 million received in the six-month ended June 30, 2012. The Settlement Agreement was dependent on Island Air obtaining similar concessions from their other major creditors which have been obtained.
JT Power: The Company entered into two Consignment Agreements dated January 22, 2008 and November 17, 2008, with J.T. Power, LLC (J.T. Power), an entity whose sole shareholder, Austin Willis, is the son of our Chief Executive Officer, and directly and indirectly, a shareholder and a Director of the Company. According to the terms of the Consignment Agreement, J.T. Power was responsible to market and sell parts from the teardown of four engines with a book value of $5.2 million. During the six months ended June 30, 2012, sales of consigned parts were $7,100. Under these agreements, J.T. Power provided a minimum guarantee of net consignment proceeds of $4.0 million as of February 22, 2012. Based on current consignment proceeds, J.T. Power was obligated to pay $1.3 million under the guarantee in February 2012. On March 7, 2012, this guarantee was restructured as follows - quarterly payments of $45,000 over five years at an interest rate of 6% with a balloon payment at the end of this five year term. The Agreement provides an option to skip one quarterly payment and apply it to the balloon payment at an interest rate of 12%. The initial quarterly payment of $45,000 was received for the period ended June 30, 2012.
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