Willis Lease Finance Corporation. NASDAQ WLFC - Common WLFCP -- 9% Preferred May 15, 2012

Transcription

1 Willis Lease Finance Corporation NASDAQ WLFC - Common WLFCP -- 9% Preferred May 15, 2012

2 Legal Disclaimer This presentation contains certain forward-looking statements within the meaning of the federal securities laws. These statements may be made as a part of this presentation or by reference to other documents we file with the SEC. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words anticipate, may, estimate, should, expect, plan, believe, intend, and similar words, or the negatives of those words, are intended to identify forward-looking statements. They also include statements containing a projection of revenues, earnings (loss), capital expenditures, dividends, capital structure or other financial terms. Certain statements regarding the following particularly are forward-looking in nature: our business strategy; future performance, developments, market forecasts or projections; and projected capital expenditures. All forward-looking statements are based on our beliefs, assumptions and expectations of our future economic performance, taking into account the information currently available. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include, but are not limited to: the effects on the airline industry and the global economy of events such as terrorist activity, changes in fuel prices and other disruptions to the world markets; trends in the airline industry, including growth rates of markets and other economic factors; risks associated with owning and leasing commercial engines and aircraft; changes in interest rates and availability of capital to us and to our customers our ability to continue to meet our customers changing demands; the market value of engines and other assets in our portfolio the risks set forth in Risk Factors included elsewhere in the prospectus. regulatory changes affecting commercial aircraft operators, aircraft maintenance, engine standards, accounting standards and taxes; our ability to successfully negotiate engine purchases, sales and leases, to collect outstanding amounts due and to repossess engines under defaulted leases, and to control costs and expenses; In light of these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of meeting or as of the date of any document incorporated by reference, as applicable. Such forward-looking statements are inherently uncertain, and actual results may differ from expectations. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 Investment Overview WLFC Leading spare jet engine lessor Strong management Assets of $1.1 billion Consistently profitable ROE of 5.6 % in 2011 As at April 30, 2012, trading at 58% of book value of $22.44 P/E 10.2 times 2011 EPS Market Cap of $120 million Repurchased 947,000 common shares at average share price of $12.31 since December 2009 Unless otherwise noted, all information referenced in this presentation represents data at

4 Willis Lease Leading Lessor of Spare Commercial Jet Engines Diversified international customer base Short and long term operating leases Portfolio of 193 owned ($974mm) and 29 third party-managed engines All major engine OEM s 61% for newest narrow body aircraft Average age of portfolio: 7 years Strong residual values Expanding portfolio management capabilities % of NBV - Lease Portfolio

5 Willis Lease Leading Lessor of Spare Commercial Jet Engines Significant recent financing events New $345mm 5 year revolving credit facility Nov-11 Increased size by $60mm and decreased margin by 75 bps (LIBOR bps) Engines purchases $540mm 5-year agreement with CFM Other OEMs Open market sale-leaseback transactions Aircraft part-out / engine harvesting Countercyclical Down cycles, airlines lease engines to conserve cash and dispose of owned spare engines through sale-leaseback transactions Up cycles, higher demand and usage 5

6 Willis Lease: Diversified Revenue Base 69 Lessees in 38 Countries Lease to Customers worldwide: Commercial airlines Maintenance, repair and overhaul facilities (MRO) Original Equipment Manufacturers (OEM) Cargo carriers 2011 Revenues by Geographic Region Operating leases: 30 days to 10 years Triple net operating leases Maintenance Taxes Insurance FAA or similar approved maintenance program 6

7 Willis Lease Engines as a Lease Asset Class Engine Leasing Dynamics Maintain their residual value Growing worldwide commercial fleet 120% 100% 80% Strong Asset Residual Values Half Life Aircraft Values Half Life Engine Maintenance Values Half Life Engine Core Values Trend towards leasing rather than owning for spare engine fleets Better and more flexible capital management for airlines OEM price hikes drives residuals 60% 40% 20% 0% Source: SH&E Engine share of total aircraft value increases over time as airframe loses value. 7

8 Willis Lease Strong Competitive Position Young Industry with Few Players Substantial Barriers to Entry Leased engines grew to >1,900 from <100 engines in 20 years * Leased engines are approximately 32% of total spare engine market, expected to grow to 40% by 2030 *Source: ICF SH&E estimate, June

9 Engine Leasing Competitive Landscape OWNED and LEASED Market Share INCLUDING Operator Owned Spares LEASED Market Share EXCLUDING Operator Owned Spares Source: ICF SH&E estimates,

10 Market Overview - Engine Leasing Growth Potential Estimated 2010 Projected 2030 Leased Spares 40% Other Spares 60% Total Spares 5,927 Total Spares 9,118 Engine Value $53 billion (1) Engine Value $118 billion (1) (1) Assumes average engine value of $9 million in 2010 and $13 million in 2030 Source: ICF SH&E estimates,

11 Willis Lease - Engine Portfolio has grown at 10.7% CAGR since 2005 $ in millions $1,000 WEST 2 CFM ABS Agreement WMES JV $900 $800 $700 $600 $500 $400 Follow-on equity offering SAIR group investment WEST 1 ABS / Preferred Offering $300 IPO $200 $100 $

12 Willis Lease Stable Financial Performance After strong years in , lower lease rates and utilization contributed to lower profitability in 2010 and 2011 Quarterly earnings volatility due to fluctuation in gain on sale, release of maintenance reserves and timing of engine repairs expenses Lower portfolio utilization 86% in 2010 and 2011 compared to 89% in 2009 and 93% in 2007 and 2008 $1.1 billion in total assets $175 $150 $125 $100 $75 $50 $25 $0 $28 $24 $20 $16 $12 $8 Lease rents Revenue Earnings Maintenance reserves Net Income Net to Common $ in millions 2011 EPS $1.28 $4 $

13 Willis Lease - Summary Recognized franchise Diversified lessee and asset base Solid financial condition Stable profitability Strong cash flow / Great collateral Good liquidity - $116mm available Excellent engine portfolio Diversified portfolio with exposure to newest generation narrowbody, widebody and regional engines Primary investment focus is engines supporting popular narrowbodies WEST ABS is established liquidity vehicle for present / future lenders Favorable long term leasing market conditions Growing airline fleets Trend towards leasing rather than owning 13