Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2022 | May 09, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-15369 | |
Entity Registrant Name | WILLIS LEASE FINANCE CORP | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 68-0070656 | |
Entity Address, Address Line One | 4700 Lyons Technology Parkway | |
Entity Address, City or Town | Coconut Creek | |
Entity Address, State or Province | FL | |
Entity Address, Postal Zip Code | 33073 | |
City Area Code | 561 | |
Local Phone Number | 349-9989 | |
Title of 12(b) Security | Common Stock, $0.01 par value per share | |
Trading Symbol | WLFC | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 6,144,837 | |
Entity Central Index Key | 0001018164 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 | |
ASSETS | |||
Cash and cash equivalents | $ 14,105 | $ 14,329 | |
Restricted cash | 68,875 | 81,312 | |
Maintenance rights | 22,511 | 22,511 | |
Equipment held for sale | 10,873 | 6,952 | |
Receivables, net of allowances of $1,197 and $1,154 at March 31, 2022 and December 31, 2021, respectively | 42,598 | 39,623 | |
Spare parts inventory | 47,654 | 50,959 | |
Investments | 54,454 | 55,927 | |
Intangible assets, net | 1,173 | 1,188 | |
Notes receivable | 114,253 | 115,456 | |
Other assets | 70,715 | 51,975 | |
Total assets | [1] | 2,429,926 | 2,462,927 |
Liabilities: | |||
Accounts payable and accrued expenses | 32,358 | 26,858 | |
Deferred income taxes | 121,398 | 124,332 | |
Debt obligations | 1,759,126 | 1,790,264 | |
Maintenance reserves | 67,762 | 65,976 | |
Security deposits | 18,321 | 19,349 | |
Unearned revenue | 10,128 | 10,458 | |
Total liabilities | [2] | 2,009,093 | 2,037,237 |
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 shares issued at March 31, 2022 and December 31, 2021, respectively) | 49,826 | 49,805 | |
Shareholders’ equity: | |||
Common stock ($0.01 par value, 20,000 shares authorized; 6,488 and 6,531 shares issued at March 31, 2022 and December 31, 2021, respectively) | 65 | 65 | |
Paid-in capital in excess of par | 18,353 | 15,401 | |
Retained earnings | 333,365 | 355,388 | |
Accumulated other comprehensive income, net of income tax expense of $5,570 and $1,469 at March 31, 2022 and December 31, 2021, respectively | 19,224 | 5,031 | |
Total shareholders’ equity | 371,007 | 375,885 | |
Total liabilities, redeemable preferred stock and shareholders’ equity | 2,429,926 | 2,462,927 | |
Equipment Held For Operating Lease | |||
ASSETS | |||
Equipment held for operating lease, property, equipment, and furnishings, less accumulated depreciation | 1,951,448 | 1,991,368 | |
Property, Equipment, and Furnishings | |||
ASSETS | |||
Equipment held for operating lease, property, equipment, and furnishings, less accumulated depreciation | $ 31,267 | $ 31,327 | |
[1] | Total assets at March 31, 2022 and December 31, 2021, respectively, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Restricted cash $68,875 and $81,312; Equipment $1,197,953 and $1,226,395; Maintenance Rights $5,433 and $5,433; Inventory $— and $4,367; Notes receivable $90,145 and $90,868; and Other assets $5,248 and $4,775, respectively. | ||
[2] | Total liabilities at March 31, 2022 and December 31, 2021, respectively, include the following liabilities of VIEs for which the VIEs’ creditors do not have recourse to Willis Lease Finance Corporation: Debt obligations $1,176,975 and $1,197,922, respectively. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Receivables, allowances | $ 1,197 | $ 1,154 |
Redeemable preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Redeemable preferred stock, shares authorized (in shares) | 2,500,000 | 2,500,000 |
Redeemable preferred stock, shares issued (in shares) | 2,500,000 | 2,500,000 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 20,000,000 | 20,000,000 |
Common stock, shares issued (in shares) | 6,488,000 | 6,531,000 |
Accumulated other comprehensive loss, income tax benefit | $ 5,570 | $ 1,469 |
Restricted cash | 68,875 | 81,312 |
Maintenance rights | 22,511 | 22,511 |
Spare parts inventory | 47,654 | 50,959 |
Notes receivable | 114,253 | 115,456 |
Other assets | 70,715 | 51,975 |
Debt obligations | 1,759,126 | 1,790,264 |
Variable Interest Entity | ||
Restricted cash | 68,875 | 81,312 |
Equipment | 1,197,953 | 1,226,395 |
Maintenance rights | 5,433 | 5,433 |
Spare parts inventory | 0 | 4,367 |
Notes receivable | 90,145 | 90,868,000 |
Other assets | 5,248 | 4,775 |
Debt obligations | 1,176,975 | 1,197,922 |
Equipment Held For Operating Lease | ||
Accumulated depreciation | 526,243 | 524,968 |
Property, Equipment, and Furnishings | ||
Accumulated depreciation | $ 14,064 | $ 13,484 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
REVENUE | ||
Gain on sale of leased equipment | $ 2,298 | $ 0 |
Total revenue | 68,817 | 61,125 |
EXPENSES | ||
Depreciation and amortization expense | 21,809 | 24,141 |
Cost of spare parts and equipment sales | 4,862 | 3,809 |
Write-down of equipment | 21,117 | 1,867 |
General and administrative | 23,605 | 16,151 |
Technical expense | 5,646 | 1,310 |
Net finance costs: | ||
Interest expense | 16,883 | 15,019 |
Total net finance costs | 16,883 | 15,019 |
Total expenses | 93,922 | 62,297 |
Loss from operations | (25,105) | (1,172) |
Loss from joint ventures | (2,616) | (519) |
Loss before income taxes | (27,721) | (1,691) |
Income tax benefit | (6,520) | (359) |
Net loss | (21,201) | (1,332) |
Preferred stock dividends | 801 | 801 |
Accretion of preferred stock issuance costs | 21 | 21 |
Net loss attributable to common shareholders | $ (22,023) | $ (2,154) |
Basic weighted average loss per common share (in dollars per share) | $ (3.70) | $ (0.36) |
Diluted weighted average loss per common share (in dollars per share) | $ (3.70) | $ (0.36) |
Basic weighted average common shares outstanding (in shares) | 5,951 | 5,995 |
Diluted weighted average common shares outstanding (in shares) | 5,951 | 5,995 |
Lease rent revenue | ||
REVENUE | ||
Lease rent and maintenance reserve revenues | $ 38,125 | $ 31,520 |
Maintenance reserve revenue | ||
REVENUE | ||
Lease rent and maintenance reserve revenues | 14,834 | 19,812 |
Spare parts and equipment sales | ||
REVENUE | ||
Other sales and revenues | 6,630 | 4,566 |
Other revenue | ||
REVENUE | ||
Other sales and revenues | $ 6,930 | $ 5,227 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (21,201) | $ (1,332) |
Other comprehensive income: | ||
Currency translation adjustment | 53 | 2,832 |
Unrealized gain on derivative instruments | 17,151 | 6,497 |
Unrealized gain on derivative instruments at joint venture | 1,090 | 554 |
Net gain recognized in other comprehensive income | 18,294 | 9,883 |
Tax expense related to items of other comprehensive income | 4,101 | 2,216 |
Other comprehensive income | 14,193 | 7,667 |
Total comprehensive (loss) income | $ (7,008) | $ 6,335 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Redeemable Preferred Stock and Shareholders' Equity - USD ($) $ in Thousands | Total | Redeemable Preferred Stock | Common Stock | Paid in Capital in Excess of Par | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Balances, beginning of period (in shares) at Dec. 31, 2020 | 2,500,000 | 6,570,000 | ||||
Balances, beginning of period at Dec. 31, 2020 | $ 364,015 | $ 49,722 | $ 66 | $ 13,696 | $ 355,370 | $ (5,117) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (1,332) | (1,332) | ||||
Net unrealized gain (loss) from currency translation, net of tax expense | 2,197 | 2,197 | ||||
Net unrealized gain (loss) from derivative instruments, net of tax expense | $ 5,470 | 5,470 | ||||
Shares repurchased (in shares) | 0 | |||||
Shares issued under stock compensation plans (in shares) | 8,000 | |||||
Shares issued under stock compensation plans | $ 169 | 169 | ||||
Cancellation of restricted stock in satisfaction of withholding tax (in shares) | (1,000) | |||||
Cancellation of restricted stock in satisfaction of withholding tax | (47) | (47) | ||||
Stock-based compensation expense, net of forfeitures | 2,762 | 2,762 | ||||
Accretion of preferred shares issuance costs | (21) | $ 21 | (21) | |||
Preferred stock dividends | (801) | (801) | ||||
Balances, end of period (in shares) at Mar. 31, 2021 | 2,500,000 | 6,577,000 | ||||
Balances, end of period at Mar. 31, 2021 | 372,412 | $ 49,743 | $ 66 | 16,580 | 353,216 | 2,550 |
Balances, beginning of period (in shares) at Dec. 31, 2021 | 2,500,000 | 6,531,000 | ||||
Balances, beginning of period at Dec. 31, 2021 | 375,885 | $ 49,805 | $ 65 | 15,401 | 355,388 | 5,031 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net loss | (21,201) | (21,201) | ||||
Net unrealized gain (loss) from currency translation, net of tax expense | 41 | 41 | ||||
Net unrealized gain (loss) from derivative instruments, net of tax expense | $ 14,152 | 14,152 | ||||
Shares repurchased (in shares) | (52,780) | (53,000) | ||||
Shares repurchased | $ (1,842) | $ (1,800) | (1,842) | |||
Shares issued under stock compensation plans (in shares) | 10,000 | |||||
Shares issued under stock compensation plans | 165 | 165 | ||||
Stock-based compensation expense, net of forfeitures | 4,629 | 4,629 | ||||
Accretion of preferred shares issuance costs | (21) | $ 21 | (21) | |||
Preferred stock dividends | (801) | (801) | ||||
Balances, end of period (in shares) at Mar. 31, 2022 | 2,500,000 | 6,488,000 | ||||
Balances, end of period at Mar. 31, 2022 | $ 371,007 | $ 49,826 | $ 65 | $ 18,353 | $ 333,365 | $ 19,224 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Redeemable Preferred Stock and Shareholders' Equity (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Stockholders' Equity [Abstract] | ||
Net unrealized gain from currency translation adjustments, tax | $ 12 | $ 635 |
Net unrealized gain from derivative instruments, tax | $ 4,089 | $ 1,581 |
Preferred stock dividends (in dollars per share) | $ 0.32 | $ 0.32 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash flows from operating activities: | ||
Net loss | $ (21,201) | $ (1,332) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization expense | 21,809 | 24,141 |
Write-down of equipment | 21,117 | 1,867 |
Stock-based compensation expenses | 4,629 | 2,762 |
Amortization of deferred costs | 1,308 | 1,145 |
Allowances and provisions | 305 | (226) |
Gain on sale of leased equipment | (2,298) | 0 |
Loss from joint ventures | 2,616 | 519 |
Loss on disposal of property, equipment and furnishings | 0 | 40 |
Deferred income taxes | (7,035) | (484) |
Changes in assets and liabilities: | ||
Receivables | (3,280) | (11,988) |
Inventory | 3,407 | 980 |
Other assets | (863) | (934) |
Accounts payable and accrued expenses | 6,122 | (648) |
Maintenance reserves | 2,626 | 6,299 |
Security deposits | (462) | 135 |
Unearned revenue | (480) | 351 |
Net cash provided by operating activities | 28,320 | 22,627 |
Cash flows from investing activities: | ||
Proceeds from sale of equipment (net of selling expenses) | 17,255 | 0 |
Issuance of notes receivable | 0 | (39,801) |
Payments received on notes receivable | 1,203 | 958 |
Purchase of equipment held for operating lease | (24,220) | (26,510) |
Purchase of property, equipment and furnishings | (540) | (121) |
Net cash used in investing activities | (6,302) | (65,474) |
Cash flows from financing activities: | ||
Proceeds from debt obligations | 21,000 | 54,000 |
Principal payments on debt obligations | (53,257) | (24,617) |
Proceeds from shares issued under stock compensation plans | 165 | 169 |
Cancellation of restricted stock units in satisfaction of withholding tax | 0 | (47) |
Repurchase of common stock | (1,768) | 0 |
Preferred stock dividends | (819) | (819) |
Net cash (used in) provided by financing activities | (34,679) | 28,686 |
Decrease in cash, cash equivalents and restricted cash | (12,661) | (14,161) |
Cash, cash equivalents and restricted cash at beginning of period | 95,641 | 78,925 |
Cash, cash equivalents and restricted cash at end of period | 82,980 | 64,764 |
Net cash paid for: | ||
Interest | 15,057 | 12,344 |
Income Taxes | 213 | 170 |
Supplemental disclosures of non-cash activities: | ||
Transfers from Equipment held for operating lease to Spare parts inventory | 102 | 169 |
Transfers from Equipment held for operating lease to Equipment held for sale | 4,089 | 0 |
Transfers from Spare parts inventory to Equipment held for operating lease | 0 | 585 |
Accrued preferred stock dividends | 18 | 18 |
Accrued share repurchases | $ 73 | $ 0 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies The significant accounting policies of the Company were described in Note 1 to the audited consolidated financial statements included in the Company’s Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Form 10-K”). There have been no significant changes in the Company’s significant accounting policies for the three months ended March 31, 2022. (a) Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2021 Form 10-K, for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. Therefore, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2021 Form 10-K. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the condensed consolidated balance sheets, statements of income, statements of comprehensive income, statements of redeemable preferred stock and shareholders’ equity and statements of cash flows for such interim periods presented. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. These estimates and judgments are based on historical experience and other assumptions that management believes are reasonable and the inputs into management's estimates and judgment consider the economic implications of the COVID-19 pandemic on the Company’s critical and significant accounting estimates. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. The significant estimates made in the accompanying Unaudited Condensed Consolidated Financial Statements include certain assumptions related to intangible assets, long-lived assets, equipment held for sale, allowance for doubtful accounts, inventory and estimated income taxes. Actual results may differ materially from these estimates under different assumptions or conditions. Given the uncertainty in the rapidly changing market and economic conditions related to the COVID-19 pandemic, the Company will continue to evaluate the nature and extent of the impact to its business, results of operations and financial condition. (b) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including variable interest entities (“VIEs”), where the Company is the primary beneficiary in accordance with consolidation guidance. The Company first evaluates all entities in which it has an economic interest to determine whether for accounting purposes the entity is either a VIE or a voting interest entity. If the entity is a VIE, the Company consolidates the financial statements of that entity if it is the primary beneficiary of such entity's activities. If the entity is a voting interest entity, the Company consolidates the entity when it has a majority of voting interests in such entity. Intercompany transactions and balances have been eliminated in consolidation. (c) Risks and Uncertainties As a result of the COVID-19 pandemic, the Company had temporarily closed its headquarters and other offices, required its employees and contractors to predominately work remotely, and implemented travel restrictions, all of which represented a significant disruption in how the Company operates its business. In January 2022, the Company lifted travel restrictions and has also subsequently opened its corporate headquarters and other offices for employees and contractors to work from offices at their discretion. The Company has also taken various proactive actions in an attempt to mitigate the financial impact of the COVID-19 pandemic. The operations of the Company’s partners and customers have likewise been disrupted. The worldwide spread of the COVID-19 virus has resulted in a global slowdown of economic activity. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions, it has had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the ongoing COVID-19 pandemic has caused significant disruptions to the airline industry and has resulted in a dramatic reduction in demand for air travel domestically and abroad, which is likely to continue for the foreseeable future. Lower demand for air travel in turn presents significant risks to the Company, resulting in impacts which have adversely affected the Company’s business, results of operation, and financial condition. Lower demand for spare parts and engine and airframe leasing has negatively impacted collections of accounts receivable, caused the Company’s lessee customers to not enter into new leases, resulted in reduced spending by new and existing customers for leases or spare parts or equipment, resulted in lower usage fees, caused some of the Company’s customers to go out of business, and limited the ability of the Company’s personnel to travel to customers and potential customers. The Company is not able to evaluate or foresee the full extent of these impacts at the current time. Other than what has been reflected in the Unaudited Condensed Consolidated Financial Statements, the Company is not aware of any specific event or circumstance related to the COVID-19 pandemic that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the Unaudited Condensed Consolidated Financial Statements. In February 2022, Russia commenced a military action with Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against Russia. Further, the full impact of this action and related sanctions on the world economy is not determinable as of the date of these financial statements, and the specific impact on the Company’s financial condition, results of operations and cash flows is also not determinable as of the date of these financial statements. (d) Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted by the Company In July 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-05, “Lease (Topic 842): Lessors – Certain Leases with Variable Lease Payments” related to accounting for sales-type leases or direct financing leases with variable lease payments. This ASU is effective for interim and annual years beginning after December 15, 2021, with early adoption permitted. The Company adopted this guidance effective January 1, 2022 and the adoption had no impact to the Company’s consolidated financial statements and related disclosures. In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ” related to disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This ASU is effective for annual periods beginning after December 15, 2021, with early application permitted. The Company adopted this guidance effective January 1, 2022 and the adoption had no impact to the Company's consolidated financial statements and related disclosures. Recent Accounting Pronouncements To Be Adopted by the Company In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. ASU 2016-13 affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU 2016-13. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic 842 and Topic 326. In March 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326)” which eliminated the accounting guidance for Troubled Debt Restructurings by creditors and enhances disclosure requirements for certain loan refinancing and restructurings. The amendment also requires an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. The amendments in this ASU are effective for the Company on January 1, 2023, with early adoption permitted. The Company expects to adopt this accounting standard update effective January 1, 2023. The Company is evaluating the potential effects on the consolidated financial statements. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | Revenue from Contracts with Customers The following tables disaggregate revenue by major source for the three months ended March 31, 2022 and 2021 (in thousands): Three months ended March 31, 2022 Leasing and Spare Parts Sales Eliminations Total Lease rent revenue $ 38,125 $ — $ — $ 38,125 Maintenance reserve revenue 14,834 — — 14,834 Spare parts and equipment sales 202 6,428 — 6,630 Gain on sale of leased equipment 2,298 — — 2,298 Managed services 4,644 — — 4,644 Other revenue 2,168 176 (58) 2,286 Total revenue $ 62,271 $ 6,604 $ (58) $ 68,817 Three Months Ended March 31, 2021 Leasing and Spare Parts Sales Eliminations Total Lease rent revenue $ 31,520 $ — $ — $ 31,520 Maintenance reserve revenue 19,812 — — 19,812 Spare parts and equipment sales 85 4,591 (110) 4,566 Managed services 2,269 — — 2,269 Other revenue 2,937 56 (35) 2,958 Total revenue $ 56,623 $ 4,647 $ (145) $ 61,125 |
Equipment Held for Operating Le
Equipment Held for Operating Lease and Notes Receivable | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Equipment Held for Operating Lease and Notes Receivable | Equipment Held for Operating Lease and Notes Receivable As of March 31, 2022, the Company had $1,951.4 million equipment held for operating lease portfolio and $114.3 million notes receivable which represented 298 engines, twelve aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2021, the Company had $1,991.4 million equipment held for operating lease portfolio and $115.5 million notes receivable which represented 304 engines, twelve aircraft, one marine vessel and other leased parts and equipment. The following table disaggregates equipment held for operating lease by asset class (in thousands): March 31, 2022 December 31, 2021 Gross Value Accumulated Depreciation Net Book Value Gross Value Accumulated Depreciation Net Book Value Engines and related equipment $ 2,327,007 $ (515,549) $ 1,811,458 $ 2,368,496 $ (515,442) 1,853,054 Aircraft and airframes 137,214 (8,776) 128,438 134,370 (7,790) 126,580 Marine vessel 13,470 (1,918) 11,552 13,470 (1,736) 11,734 $ 2,477,691 $ (526,243) $ 1,951,448 $ 2,516,336 (524,968) 1,991,368 Notes Receivable During the three months ended March 31, 2022 and 2021, the Company recorded interest income related to the notes receivable of $2.1 million and $2.9 million, respectively, and is presented within Other revenue. The effective interest rates on our notes receivable ranged from 6.3% to 12.2% as of March 31, 2022 and 6.3% to 13.7% as of March 31, 2021. |
Investments
Investments | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Investments | InvestmentsIn 2011, the Company entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company, Willis Mitsui & Company Engine Support Limited (“WMES”) for the purpose of acquiring and leasing jet engines. Each partner holds a fifty percent interest in the joint venture and the Company uses the equity method in recording investment activity. As of March 31, 2022, WMES owned a lease portfolio, inclusive of a note receivable, of 37 engines and five aircraft with a net book value of $281.1 million. In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to participate in a joint venture named CASC Willis Engine Lease Company Limited (“CASC Willis”), a joint venture based in Shanghai, China. Each partner holds a fifty percent interest in the joint venture and the Company uses the equity method in recording investment activity. CASC Willis acquires and leases jet engines to Chinese airlines and concentrates on the demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. As of March 31, 2022, CASC Willis owned a lease portfolio of four engines with a net book value of $48.5 million. As of March 31, 2022 WMES CASC Willis Total (in thousands) Investment in joint ventures as of December 31, 2021 $ 39,069 $ 16,858 $ 55,927 (Loss) earnings from joint ventures (2,705) 89 (2,616) Foreign currency translation adjustment — 53 53 Other comprehensive gain from joint ventures 1,090 — 1,090 Investment in joint ventures as of March 31, 2022 $ 37,454 $ 17,000 $ 54,454 “Other revenue” on the Condensed Consolidated Statements of Income includes $0.5 million and $0.3 million of management fees earned during the three months ended March 31, 2022 and 2021, respectively, related to the servicing of engines for the WMES lease portfolio. There were no aircraft or engine sales to WMES or CASC Willis during the three months ended March 31, 2022 or 2021, respectively. Unaudited summarized financial information for 100% of WMES is presented in the following tables: Three Months Ended March 31, 2022 2021 (in thousands) Revenue $ 9,541 $ 4,761 Expenses 15,003 6,169 WMES net loss $ (5,462) $ (1,408) March 31, December 31, (in thousands) Total assets $ 298,487 $ 310,260 Total liabilities 219,605 225,917 Total WMES net equity $ 78,882 $ 84,343 The difference between the Company’s investment in WMES and 50% of total WMES net equity is primarily attributable to the recognition of deferred gains, prior to the adoption of ASU 2017-05, related to engines sold by the Company to WMES. |
Debt Obligations
Debt Obligations | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Debt Obligations | Debt Obligations Debt obligations consisted of the following: March 31, December 31, (in thousands) Credit facility at a floating rate of interest of one-month LIBOR plus 1.375% at March 31, 2022, secured by engines. The facility has a committed amount of $1.0 billion at March 31, 2022, which revolves until the maturity date of June 2024 $ 580,000 $ 590,000 WEST VI Series A 2021 term notes payable at a fixed rate of interest of 3.10%, maturing in May 2046, secured by engines and one airframe 271,544 273,723 WEST VI Series B 2021 term notes payable at a fixed rate of interest of 5.44%, maturing in May 2046, secured by engines and one airframe 37,720 38,022 WEST VI Series C 2021 term notes payable at a fixed rate of interest of 7.39%, maturing in May 2046, secured by engines and one airframe 17,535 18,158 WEST V Series A 2020 term notes payable at a fixed rate of interest of 3.23%, maturing in March 2045, secured by engines 266,784 272,909 WEST V Series B 2020 term notes payable at a fixed rate of interest of 4.21%, maturing in March 2045, secured by engines 37,066 38,004 WEST V Series C 2020 term notes payable at a fixed rate of interest of 6.66%, maturing in March 2045, secured by engines 15,282 16,342 WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines 254,366 262,260 WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines 38,885 38,885 WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines 221,174 223,815 WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines 32,195 32,195 Note payable at a fixed rate of interest of 3.18%, maturing in July 2024, secured by an aircraft 4,812 5,307 1,777,363 1,809,620 Less: unamortized debt issuance costs (18,237) (19,356) Total debt obligations $ 1,759,126 $ 1,790,264 One-month LIBOR was 0.45% and 0.10% as of March 31, 2022 and December 31, 2021, respectively. Principal outstanding at March 31, 2022, is expected to be repayable as follows: Year (in thousands) 2022 $ 56,504 2023 63,069 2024 642,236 2025 61,001 2026 281,327 Thereafter 673,226 Total $ 1,777,363 Virtually all of the above debt requires ongoing compliance with certain financial covenants, including debt/equity ratios, minimum tangible net worth and minimum interest coverage ratios, and other eligibility criteria including customer and geographic concentration restrictions. The Company also has certain negative financial covenants such as liens, advances, change in business, sales of assets, dividends and stock repurchases. These covenants are tested either monthly, quarterly or annually and the Company was in full compliance with all financial covenant requirements at March 31, 2022. |
Derivative Instruments
Derivative Instruments | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments | Derivative Instruments The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, predominantly one-month LIBOR, with $580.0 million and $590.0 million of variable rate borrowings at March 31, 2022 and December 31, 2021, respectively. As a matter of policy, management does not use derivatives for speculative purposes. As of March 31, 2022, the Company had five interest rate swap agreements. During the first quarter of 2021, the Company entered into four fixed-rate interest swap agreements, each having notional amounts of $100.0 million, two with remaining terms of 22 months and two with remaining terms of 46 months as of March 31, 2022. One interest rate swap agreement was entered into during 2019 which has a notional outstanding amount of $100.0 million with a remaining term of 27 months as of March 31, 2022. One interest rate swap agreement which the Company entered into in 2016 expired in April 2021. The derivative instruments were each designated as cash flow hedges at inception and recorded at fair value. The Company evaluated the effectiveness of the swap agreements to hedge the interest rate risk associated with its variable rate debt and concluded at the swap inception dates that each swap was highly effective in hedging that risk. The Company evaluates the effectiveness of the hedging relationships on an ongoing basis and concluded there was no ineffectiveness in the hedges for the period ended March 31, 2022. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate observable market data when evaluating the Company’s and counterparty’s risk of non-performance. Valuation of the derivative instruments requires certain assumptions for underlying variables and the use of different assumptions would result in a different valuation. Management believes it has applied assumptions consistently during the period. The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for all derivative instruments. The net fair value of the interest rate swaps as of March 31, 2022 was $24.4 million, representing an asset and is reflected within other assets on the condensed consolidated balance sheet. The net fair value of the interest rate swaps as of December 31, 2021 was $7.3 million, representing an asset of $8.0 million and a liability of $0.7 million, reflected within other assets and accounts payable and accrued expenses on the condensed consolidated balance sheet, respectively. The Company recorded interest expense of $0.3 million and $0.9 million during the three months ended March 31, 2022 and 2021, respectively, from derivative instruments. Effect of Derivative Instruments on Earnings in the Statements of Income and on Comprehensive Income The following tables provide additional information about the financial statement effects related to the cash flow hedges for the three months ended March 31, 2022 and 2021: Derivatives in Cash Flow Hedging Relationships Amount of Gain Recognized in OCI on Derivatives Three Months Ended March 31, 2022 2021 (in thousands) Interest rate contracts $ 17,151 $ 6,497 Total $ 17,151 $ 6,497 The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings or it is probable that the forecasted transaction will not occur. The ineffective portion of the hedges, if any, is recorded in earnings in the current period. Counterparty Credit Risk The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The counterparties for the interest rate swaps are large financial institutions that possessed investment grade credit ratings. Based on these ratings, the Company believes that the counterparties were credit-worthy and that their continuing performance under the hedging agreements was probable and did not require the counterparties to provide collateral or other security to the Company. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes Income tax benefit for the three months ended March 31, 2022 and March 31, 2021 was $6.5 million and $0.4 million, respectively. The effective tax rate for the three months ended March 31, 2022 and March 31, 2021, was 23.5%. and 21.2%, respectively. The Company's effective tax rates differed from the U.S. federal statutory rate of 21% largely due to executive compensation as defined in IRS code Section 162(m) and a discrete item recorded in the first quarter of 2022. The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. The Company’s tax rate is subject to change based on changes in the mix of assets leased to domestic and foreign lessees, state taxes, the amount of executive compensation exceeding $1.0 million as defined in IRS code Section 162(m) and numerous other factors, including changes in tax law. The Company qualified for the Employment Retention Credit (“ERC”) and recognized a credit of $0.7 million for the three months ended March 31, 2021 as a reduction to payroll tax. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties in contrast to a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision. Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments: • Cash and cash equivalents, restricted cash, receivables, and accounts payable : The amounts reported in the accompanying Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature. • Notes receivable : The carrying amount of the Company’s outstanding balance on its Notes receivable as of March 31, 2022 and December 31, 2021 was estimated to have a fair value of approximately $116.9 million and $117.7 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs). • Debt obligations : The carrying amount of the Company’s outstanding balance on its Debt obligations as of March 31, 2022 and December 31, 2021 was estimated to have a fair value of approximately $1,706.5 million and $1,827.4 million respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs). Assets Measured and Recorded at Fair Value on a Recurring Basis As of March 31, 2022 and December 31, 2021, the Company measured the fair value of its interest rate swap agreements based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique and has used creditworthiness inputs that corroborate observable market data evaluating the Company’s and counterparties’ risk of non-performance. The net fair value of the interest rate swaps as of March 31, 2022 was $24.4 million, representing an asset. The net fair value of the interest rate swaps as of December 31, 2021 was $7.3 million, representing an asset of $8.0 million and a liability of $0.7 million. The Company recorded interest expense of $0.3 million and $0.9 million during the three months ended March 31, 2022 and 2021, respectively, from derivative instruments. Assets Measured and Recorded at Fair Value on a Nonrecurring Basis The Company determines fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g. an offer to purchase) and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The Company uses Level 2 inputs to measure write-downs of equipment held for lease and equipment held for sale. Total Losses Three Months Ended March 31, 2022 2021 (in thousands) Equipment held for lease $ 21,117 $ 1,867 Total $ 21,117 $ 1,867 Write-downs of equipment to their estimated fair values totaled $21.1 million for the three months ended March 31, 2022, reflecting an adjustment of the carrying value of three impaired engines. Of this write-down, $20.4 million reflects the impairment of two engines located in Russia due to the Russia and Ukraine conflict and were expected to be unrecoverable as of March 31, 2022. The remaining $0.7 million write-down was in the ordinary course of business. As of March 31, 2022, included within equipment held for lease and equipment held for sale was $36.6 million in remaining book values of 24 assets which were previously written down. A write-down of $1.9 million was recorded during the three months ended March 31, 2021 reflecting an adjustment of the carrying value of one impaired airframe. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per common share is computed by dividing net income, less preferred stock dividends and accretion of preferred stock issuance costs, by the weighted average number of common shares outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the vesting of restricted stock using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is antidilutive. Additionally, redeemable preferred stock is not convertible and does not affect dilutive shares. There were 0.3 million anti-dilutive shares excluded from the computation of diluted weighted average earnings per common share for the three months ended March 31, 2022 and 2021, respectively. The following table presents the calculation of basic and diluted EPS (in thousands, except per share data): Three Months Ended March 31, 2022 2021 Net loss attributable to common shareholders $ (22,023) $ (2,154) Basic weighted average common shares outstanding 5,951 5,995 Potentially dilutive common shares — — Diluted weighted average common shares outstanding 5,951 5,995 Basic weighted average loss per common share $ (3.70) $ (0.36) Diluted weighted average loss per common share $ (3.70) $ (0.36) |
Equity
Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Equity | Equity Common Stock Repurchase Effective December 31, 2018, the Board of Directors approved the renewal of the existing common stock repurchase plan extending the plan through December 31, 2020 and amending the plan to allow for repurchases of up to $60.0 million of the Company's common stock until such date. Effective December 31, 2020, the Board of Directors approved the renewal of the existing common stock repurchase plan extending the plan through December 31, 2022. Repurchased shares are immediately retired. During the three months ended March 31, 2022, the Company repurchased a total of 52,780 shares of common stock for approximately $1.8 million at a weighted average price of $34.86 per share. No shares were purchased during the three months ended March 31, 2021. At March 31, 2022, approximately $43.0 million is available to purchase shares under the plan. Redeemable Preferred Stock Dividends: The Company’s Series A-1 Preferred Stock and Series A-2 Preferred Stock accrue quarterly dividends at the rate per annum of 6.5% per share. During the three months ended March 31, 2022 and 2021, the Company paid total dividends of $0.8 million, respectively, on the Series A-1 and Series A-2 Preferred Stock. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Stock-Based Compensation Plans | Stock-Based Compensation Plans The components of stock-based compensation expense were as follows: Three months ended March 31, 2022 2021 (in thousands) 2007 Stock Incentive Plan $ — $ 685 2021 Stock Incentive Plan 4,607 1,999 Employee Stock Purchase Plan 22 78 Total Stock Compensation Expense $ 4,629 $ 2,762 The significant stock compensation plans are described below. The 2007 Stock Incentive Plan (the “2007 Plan”) was adopted in May 2007. Under the 2007 Plan, a total of 2,800,000 shares were authorized for stock-based compensation available in the form of either restricted stock awards (“RSAs”) or stock options. The RSAs are subject to service-based vesting, typically between one The 2018 Stock Incentive Plan (the “2018 Plan”) was adopted in May 2018. Under the 2018 Plan, a total of 800,000 shares are authorized for stock-based compensation, plus the number of shares remaining under the 2007 Plan and any future forfeited awards under the 2007 Plan, in the form of RSAs. In November 2021, the 2018 Plan was amended and restated as the 2021 Stock Incentive Plan (the “2021 Plan”) to increase the number of shares reserved for issuance under the 2021 Plan by 1,000,000 shares. The RSAs are subject to service and performance-based vesting, typically between one As of March 31, 2022, the Company had granted 926,300 RSAs under the 2021 Plan and had 968,296 RSAs available for future issuance. The fair value of the restricted stock awards equaled the stock price at the grant date. The following table summarizes restricted stock activity during the three months ended March 31, 2022: Shares Balance of unvested shares as of December 31, 2021 560,608 Shares granted — Shares forfeited — Shares vested — Balance of unvested shares as of March 31, 2022 560,608 Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective November 10, 2021, 425,000 shares of common stock have been reserved for issuance. Eligible employees may designate no more than 10% of their base cash compensation to be deducted each pay period for the purchase of common stock under the ESPP. Participants may purchase no more than 1,000 shares or $25,000 of common stock in any one calendar year. Each January 31 and July 31 shares of common stock are purchased with the employees’ payroll deductions from the immediately preceding six months at a price per share of 85% of the lesser of the market price of the common stock on the purchase date or the market price of the common stock on the date of entry into an offering period. In the three months ended March 31, 2022 and 2021, 9,919 and 8,307 shares of common stock, respectively, were issued under the ESPP. The Company issues new shares through its transfer agent upon an employee stock purchase. |
Reportable Segments
Reportable Segments | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Reportable Segments | Reportable Segments The Company has two reportable segments: (i) Leasing and Related Operations which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines and other aircraft equipment and the selective purchase and resale of commercial aircraft engines and other aircraft equipment and other related businesses and (ii) Spare Parts Sales which involves the purchase and resale of after-market engine parts, whole engines, engine modules and portable aircraft components. The Company evaluates the performance of each of the segments based on profit or loss after general and administrative expenses. While the Company believes there are synergies between the two business segments, the segments are managed separately because each requires different business strategies. The following tables present a summary of the reportable segments (in thousands): Three Months Ended March 31, 2022 Leasing and Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 38,125 $ — $ — $ 38,125 Maintenance reserve revenue 14,834 — — 14,834 Spare parts and equipment sales 202 6,428 — 6,630 Gain on sale of leased equipment 2,298 — — 2,298 Other revenue 6,812 176 (58) 6,930 Total revenue 62,271 6,604 (58) 68,817 Expenses: Depreciation and amortization expense 21,782 27 — 21,809 Cost of spare parts and equipment sales 6 4,856 — 4,862 Write-down of equipment 21,117 — — 21,117 General and administrative 22,806 799 — 23,605 Technical expense 5,646 — — 5,646 Net finance costs: Interest expense 16,883 — — 16,883 Total finance costs 16,883 — — 16,883 Total expenses 88,240 5,682 — 93,922 (Loss) earnings from operations $ (25,969) $ 922 $ (58) $ (25,105) Three Months Ended March 31, 2021 Leasing and Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 31,520 $ — $ — $ 31,520 Maintenance reserve revenue 19,812 — — 19,812 Spare parts and equipment sales 85 4,591 (110) 4,566 Other revenue 5,206 56 (35) 5,227 Total revenue 56,623 4,647 (145) 61,125 Expenses: Depreciation and amortization expense 24,112 29 — 24,141 Cost of spare parts and equipment sales 6 3,817 (14) 3,809 Write-down of equipment 1,867 — — 1,867 General and administrative 15,557 484 110 16,151 Technical expense 1,310 — — 1,310 Net finance costs: Interest expense 15,019 — — 15,019 Total finance costs 15,019 — — 15,019 Total expenses 57,871 4,330 96 62,297 (Loss) earnings loss from operations $ (1,248) $ 317 $ (241) $ (1,172) Leasing and Spare Parts Sales Eliminations Total Total assets as of March 31, 2022 $ 2,375,485 $ 54,441 $ — $ 2,429,926 Total assets as of December 31, 2021 $ 2,415,635 $ 47,292 $ — $ 2,462,927 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions Joint Ventures “Other revenue” on the Condensed Consolidated Statements of Income includes management fees earned of $0.5 million and $0.3 million during the three months ended March 31, 2022 and 2021, respectively, related to the servicing of engines for the WMES lease portfolio. Other During 2020, the Board’s independent directors approved the Company’s agreement to a lease with our former Chief Executive Officer (“CEO”) in support of the Company’s marine vessel leasing business. That lease provided for a payment to our former CEO of $750 per day for the use of his tender in support of our vessel lease to a third-party lessee. The Company paid a total of $12,000 during the three months ended March 31, 2021 for usage of the tender. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying Unaudited Condensed Consolidated Financial Statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2021 Form 10-K, for interim financial information and in accordance with the rules and regulations of the Securities and Exchange Commission. Therefore, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2021 Form 10-K. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the condensed consolidated balance sheets, statements of income, statements of comprehensive income, statements of redeemable preferred stock and shareholders’ equity and statements of cash flows for such interim periods presented. Additionally, operating results for interim periods are not necessarily indicative of the results that can be expected for a full year. In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. These estimates and judgments are based on historical experience and other assumptions that management believes are reasonable and the inputs into management's estimates and judgment consider the economic implications of the COVID-19 pandemic on the Company’s critical and significant accounting estimates. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ materially from these estimates. The significant estimates made in the accompanying Unaudited Condensed Consolidated Financial Statements include certain assumptions related to intangible assets, long-lived assets, equipment held for sale, allowance for doubtful accounts, inventory and estimated income taxes. Actual results may differ materially from these estimates under different assumptions or conditions. Given the uncertainty in the rapidly changing market and economic conditions related to the COVID-19 pandemic, the Company will continue to evaluate the nature and extent of the impact to its business, results of operations and financial condition. |
Principles of Consolidation | Principles of ConsolidationThe accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including variable interest entities (“VIEs”), where the Company is the primary beneficiary in accordance with consolidation guidance. The Company first evaluates all entities in which it has an economic interest to determine whether for accounting purposes the entity is either a VIE or a voting interest entity. If the entity is a VIE, the Company consolidates the financial statements of that entity if it is the primary beneficiary of such entity's activities. If the entity is a voting interest entity, the Company consolidates the entity when it has a majority of voting interests in such entity. Intercompany transactions and balances have been eliminated in consolidation. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted by the Company In July 2021, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2021-05, “Lease (Topic 842): Lessors – Certain Leases with Variable Lease Payments” related to accounting for sales-type leases or direct financing leases with variable lease payments. This ASU is effective for interim and annual years beginning after December 15, 2021, with early adoption permitted. The Company adopted this guidance effective January 1, 2022 and the adoption had no impact to the Company’s consolidated financial statements and related disclosures. In November 2021, the FASB issued ASU 2021-10, “ Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance ” related to disclosures about transactions with a government that are accounted for by applying a grant or contribution accounting model by analogy. This ASU is effective for annual periods beginning after December 15, 2021, with early application permitted. The Company adopted this guidance effective January 1, 2022 and the adoption had no impact to the Company's consolidated financial statements and related disclosures. Recent Accounting Pronouncements To Be Adopted by the Company In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”). ASU 2016-13 revises the measurement of credit losses for financial assets measured at amortized cost from an incurred loss methodology to an expected loss methodology. ASU 2016-13 affects trade receivables, debt securities, net investment in leases, and most other financial assets that represent a right to receive cash. Additional disclosures about significant estimates and credit quality are also required. In November 2018, the FASB issued ASU 2018-19, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses.” This ASU clarifies receivables from operating leases are accounted for using the lease guidance and not as financial instruments. In April 2019, the FASB issued ASU 2019-04, “Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments.” This ASU clarifies various scoping and other issues arising from ASU 2016-13. In March 2020, the FASB issued ASU 2020-03, “Codification Improvements to Financial Instruments.” This ASU improves the Codification and amends the interaction of Topic 842 and Topic 326. In March 2022, the FASB issued ASU 2022-02, “Financial Instruments – Credit Losses (Topic 326)” which eliminated the accounting guidance for Troubled Debt Restructurings by creditors and enhances disclosure requirements for certain loan refinancing and restructurings. The amendment also requires an entity disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. The amendments in this ASU are effective for the Company on January 1, 2023, with early adoption permitted. The Company expects to adopt this accounting standard update effective January 1, 2023. The Company is evaluating the potential effects on the consolidated financial statements. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of disaggregation of revenue by major source | The following tables disaggregate revenue by major source for the three months ended March 31, 2022 and 2021 (in thousands): Three months ended March 31, 2022 Leasing and Spare Parts Sales Eliminations Total Lease rent revenue $ 38,125 $ — $ — $ 38,125 Maintenance reserve revenue 14,834 — — 14,834 Spare parts and equipment sales 202 6,428 — 6,630 Gain on sale of leased equipment 2,298 — — 2,298 Managed services 4,644 — — 4,644 Other revenue 2,168 176 (58) 2,286 Total revenue $ 62,271 $ 6,604 $ (58) $ 68,817 Three Months Ended March 31, 2021 Leasing and Spare Parts Sales Eliminations Total Lease rent revenue $ 31,520 $ — $ — $ 31,520 Maintenance reserve revenue 19,812 — — 19,812 Spare parts and equipment sales 85 4,591 (110) 4,566 Managed services 2,269 — — 2,269 Other revenue 2,937 56 (35) 2,958 Total revenue $ 56,623 $ 4,647 $ (145) $ 61,125 |
Equipment Held for Operating _2
Equipment Held for Operating Lease and Notes Receivable (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Leases [Abstract] | |
Operating Lease, Carrying Value of Assets Subject to Leases | The following table disaggregates equipment held for operating lease by asset class (in thousands): March 31, 2022 December 31, 2021 Gross Value Accumulated Depreciation Net Book Value Gross Value Accumulated Depreciation Net Book Value Engines and related equipment $ 2,327,007 $ (515,549) $ 1,811,458 $ 2,368,496 $ (515,442) 1,853,054 Aircraft and airframes 137,214 (8,776) 128,438 134,370 (7,790) 126,580 Marine vessel 13,470 (1,918) 11,552 13,470 (1,736) 11,734 $ 2,477,691 $ (526,243) $ 1,951,448 $ 2,516,336 (524,968) 1,991,368 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Investments [Abstract] | |
Schedule of investments | As of March 31, 2022 WMES CASC Willis Total (in thousands) Investment in joint ventures as of December 31, 2021 $ 39,069 $ 16,858 $ 55,927 (Loss) earnings from joint ventures (2,705) 89 (2,616) Foreign currency translation adjustment — 53 53 Other comprehensive gain from joint ventures 1,090 — 1,090 Investment in joint ventures as of March 31, 2022 $ 37,454 $ 17,000 $ 54,454 |
Summarized financial information | Unaudited summarized financial information for 100% of WMES is presented in the following tables: Three Months Ended March 31, 2022 2021 (in thousands) Revenue $ 9,541 $ 4,761 Expenses 15,003 6,169 WMES net loss $ (5,462) $ (1,408) March 31, December 31, (in thousands) Total assets $ 298,487 $ 310,260 Total liabilities 219,605 225,917 Total WMES net equity $ 78,882 $ 84,343 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of notes payable | Debt obligations consisted of the following: March 31, December 31, (in thousands) Credit facility at a floating rate of interest of one-month LIBOR plus 1.375% at March 31, 2022, secured by engines. The facility has a committed amount of $1.0 billion at March 31, 2022, which revolves until the maturity date of June 2024 $ 580,000 $ 590,000 WEST VI Series A 2021 term notes payable at a fixed rate of interest of 3.10%, maturing in May 2046, secured by engines and one airframe 271,544 273,723 WEST VI Series B 2021 term notes payable at a fixed rate of interest of 5.44%, maturing in May 2046, secured by engines and one airframe 37,720 38,022 WEST VI Series C 2021 term notes payable at a fixed rate of interest of 7.39%, maturing in May 2046, secured by engines and one airframe 17,535 18,158 WEST V Series A 2020 term notes payable at a fixed rate of interest of 3.23%, maturing in March 2045, secured by engines 266,784 272,909 WEST V Series B 2020 term notes payable at a fixed rate of interest of 4.21%, maturing in March 2045, secured by engines 37,066 38,004 WEST V Series C 2020 term notes payable at a fixed rate of interest of 6.66%, maturing in March 2045, secured by engines 15,282 16,342 WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines 254,366 262,260 WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines 38,885 38,885 WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines 221,174 223,815 WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines 32,195 32,195 Note payable at a fixed rate of interest of 3.18%, maturing in July 2024, secured by an aircraft 4,812 5,307 1,777,363 1,809,620 Less: unamortized debt issuance costs (18,237) (19,356) Total debt obligations $ 1,759,126 $ 1,790,264 |
Schedule or debt maturities | Principal outstanding at March 31, 2022, is expected to be repayable as follows: Year (in thousands) 2022 $ 56,504 2023 63,069 2024 642,236 2025 61,001 2026 281,327 Thereafter 673,226 Total $ 1,777,363 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of information about financial statement effects related to cash flow hedges | The following tables provide additional information about the financial statement effects related to the cash flow hedges for the three months ended March 31, 2022 and 2021: Derivatives in Cash Flow Hedging Relationships Amount of Gain Recognized in OCI on Derivatives Three Months Ended March 31, 2022 2021 (in thousands) Interest rate contracts $ 17,151 $ 6,497 Total $ 17,151 $ 6,497 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value hierarchy of assets measured on nonrecurring basis and gain (losses) recorded | The Company uses Level 2 inputs to measure write-downs of equipment held for lease and equipment held for sale. Total Losses Three Months Ended March 31, 2022 2021 (in thousands) Equipment held for lease $ 21,117 $ 1,867 Total $ 21,117 $ 1,867 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted EPS | The following table presents the calculation of basic and diluted EPS (in thousands, except per share data): Three Months Ended March 31, 2022 2021 Net loss attributable to common shareholders $ (22,023) $ (2,154) Basic weighted average common shares outstanding 5,951 5,995 Potentially dilutive common shares — — Diluted weighted average common shares outstanding 5,951 5,995 Basic weighted average loss per common share $ (3.70) $ (0.36) Diluted weighted average loss per common share $ (3.70) $ (0.36) |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Share-based Payment Arrangement, Noncash Expense [Abstract] | |
Schedule of components of stock compensation expense | The components of stock-based compensation expense were as follows: Three months ended March 31, 2022 2021 (in thousands) 2007 Stock Incentive Plan $ — $ 685 2021 Stock Incentive Plan 4,607 1,999 Employee Stock Purchase Plan 22 78 Total Stock Compensation Expense $ 4,629 $ 2,762 |
Summary of restricted stock activity | The following table summarizes restricted stock activity during the three months ended March 31, 2022: Shares Balance of unvested shares as of December 31, 2021 560,608 Shares granted — Shares forfeited — Shares vested — Balance of unvested shares as of March 31, 2022 560,608 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Summary of the reportable segments | The following tables present a summary of the reportable segments (in thousands): Three Months Ended March 31, 2022 Leasing and Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 38,125 $ — $ — $ 38,125 Maintenance reserve revenue 14,834 — — 14,834 Spare parts and equipment sales 202 6,428 — 6,630 Gain on sale of leased equipment 2,298 — — 2,298 Other revenue 6,812 176 (58) 6,930 Total revenue 62,271 6,604 (58) 68,817 Expenses: Depreciation and amortization expense 21,782 27 — 21,809 Cost of spare parts and equipment sales 6 4,856 — 4,862 Write-down of equipment 21,117 — — 21,117 General and administrative 22,806 799 — 23,605 Technical expense 5,646 — — 5,646 Net finance costs: Interest expense 16,883 — — 16,883 Total finance costs 16,883 — — 16,883 Total expenses 88,240 5,682 — 93,922 (Loss) earnings from operations $ (25,969) $ 922 $ (58) $ (25,105) Three Months Ended March 31, 2021 Leasing and Spare Parts Sales Eliminations Total Revenue: Lease rent revenue $ 31,520 $ — $ — $ 31,520 Maintenance reserve revenue 19,812 — — 19,812 Spare parts and equipment sales 85 4,591 (110) 4,566 Other revenue 5,206 56 (35) 5,227 Total revenue 56,623 4,647 (145) 61,125 Expenses: Depreciation and amortization expense 24,112 29 — 24,141 Cost of spare parts and equipment sales 6 3,817 (14) 3,809 Write-down of equipment 1,867 — — 1,867 General and administrative 15,557 484 110 16,151 Technical expense 1,310 — — 1,310 Net finance costs: Interest expense 15,019 — — 15,019 Total finance costs 15,019 — — 15,019 Total expenses 57,871 4,330 96 62,297 (Loss) earnings loss from operations $ (1,248) $ 317 $ (241) $ (1,172) Leasing and Spare Parts Sales Eliminations Total Total assets as of March 31, 2022 $ 2,375,485 $ 54,441 $ — $ 2,429,926 Total assets as of December 31, 2021 $ 2,415,635 $ 47,292 $ — $ 2,462,927 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue from Contracts with Customers | ||
Gain on sale of leased equipment | $ 2,298 | $ 0 |
Total revenue | 68,817 | 61,125 |
Lease rent revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 38,125 | 31,520 |
Maintenance reserve revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 14,834 | 19,812 |
Spare parts and equipment sales | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 6,630 | 4,566 |
Managed services | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 4,644 | 2,269 |
Other revenue | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 2,286 | 2,958 |
Operating Segments | Leasing and Related Operations | ||
Revenue from Contracts with Customers | ||
Gain on sale of leased equipment | 2,298 | |
Total revenue | 62,271 | 56,623 |
Operating Segments | Leasing and Related Operations | Lease rent revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 38,125 | 31,520 |
Operating Segments | Leasing and Related Operations | Maintenance reserve revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 14,834 | 19,812 |
Operating Segments | Leasing and Related Operations | Spare parts and equipment sales | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 202 | 85 |
Operating Segments | Leasing and Related Operations | Managed services | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 4,644 | 2,269 |
Operating Segments | Leasing and Related Operations | Other revenue | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 2,168 | 2,937 |
Operating Segments | Spare Parts Sales | ||
Revenue from Contracts with Customers | ||
Gain on sale of leased equipment | 0 | |
Total revenue | 6,604 | 4,647 |
Operating Segments | Spare Parts Sales | Lease rent revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 0 | 0 |
Operating Segments | Spare Parts Sales | Maintenance reserve revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 0 | 0 |
Operating Segments | Spare Parts Sales | Spare parts and equipment sales | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 6,428 | 4,591 |
Operating Segments | Spare Parts Sales | Managed services | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 0 | 0 |
Operating Segments | Spare Parts Sales | Other revenue | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 176 | 56 |
Eliminations | ||
Revenue from Contracts with Customers | ||
Gain on sale of leased equipment | 0 | |
Total revenue | (58) | (145) |
Eliminations | Lease rent revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 0 | 0 |
Eliminations | Maintenance reserve revenue | ||
Revenue from Contracts with Customers | ||
Lease rent and maintenance reserve revenues | 0 | 0 |
Eliminations | Spare parts and equipment sales | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 0 | (110) |
Eliminations | Managed services | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | 0 | 0 |
Eliminations | Other revenue | ||
Revenue from Contracts with Customers | ||
Other sales and revenues | $ (58) | $ (35) |
Equipment Held for Operating _3
Equipment Held for Operating Lease and Notes Receivable - Narrative (Details) $ in Thousands | 3 Months Ended | ||||||||
Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Mar. 31, 2022engine | Mar. 31, 2022aircraft. | Mar. 31, 2022marineVessel | Dec. 31, 2021USD ($) | Dec. 31, 2021engine | Dec. 31, 2021aircraft. | Dec. 31, 2021marineVessel | |
Lessor, Lease, Description [Line Items] | |||||||||
Notes receivable | $ 114,253 | $ 115,456 | |||||||
Number of leased assets | 298 | 12 | 1 | 304 | 12 | 1 | |||
Note Receivable | |||||||||
Lessor, Lease, Description [Line Items] | |||||||||
Interest income | $ 2,100 | $ 2,900 | |||||||
Minimum | Note Receivable | |||||||||
Lessor, Lease, Description [Line Items] | |||||||||
Note receivable, effective interest rate | 6.30% | 6.30% | |||||||
Maximum | Note Receivable | |||||||||
Lessor, Lease, Description [Line Items] | |||||||||
Note receivable, effective interest rate | 12.20% | 13.70% | |||||||
Equipment Held For Operating Lease | |||||||||
Lessor, Lease, Description [Line Items] | |||||||||
Equipment held for operating lease, property, equipment, and furnishings, less accumulated depreciation | $ 1,951,448 | $ 1,991,368 |
Equipment Held for Operating _4
Equipment Held for Operating Lease and Notes Receivable - Schedule of Carrying Values (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Engines and related equipment | ||
Lessor, Lease, Description [Line Items] | ||
Gross Value | $ 2,327,007 | $ 2,368,496 |
Accumulated Depreciation | (515,549) | (515,442) |
Net Book Value | 1,811,458 | 1,853,054 |
Aircraft and airframes | ||
Lessor, Lease, Description [Line Items] | ||
Gross Value | 137,214 | 134,370 |
Accumulated Depreciation | (8,776) | (7,790) |
Net Book Value | 128,438 | 126,580 |
Marine vessel | ||
Lessor, Lease, Description [Line Items] | ||
Gross Value | 13,470 | 13,470 |
Accumulated Depreciation | (1,918) | (1,736) |
Net Book Value | 11,552 | 11,734 |
Equipment Held For Operating Lease | ||
Lessor, Lease, Description [Line Items] | ||
Gross Value | 2,477,691 | 2,516,336 |
Accumulated Depreciation | (526,243) | (524,968) |
Net Book Value | $ 1,951,448 | $ 1,991,368 |
Investments - Additional Inform
Investments - Additional Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022USD ($)equipmentengineaircraft. | Mar. 31, 2021USD ($)equipment | Dec. 31, 2021USD ($) | |
Equipment Held For Operating Lease | |||
Schedule of Equity Method Investments [Line Items] | |||
Net book value of equipment held for operating lease | $ 1,951,448 | $ 1,991,368 | |
WMES | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest | 50.00% | ||
Number of engines in lease portfolio | engine | 37 | ||
Number of aircraft in lease portfolio | aircraft. | 5 | ||
WMES | Aircraft | |||
Schedule of Equity Method Investments [Line Items] | |||
Net book value of equipment held for operating lease | $ 281,100 | ||
CASC Willis | |||
Schedule of Equity Method Investments [Line Items] | |||
Ownership interest | 50.00% | ||
Number of engines in lease portfolio | engine | 4 | ||
Number of assets sold | equipment | 0 | 0 | |
CASC Willis | Equipment Held For Operating Lease | |||
Schedule of Equity Method Investments [Line Items] | |||
Net book value of equipment held for operating lease | $ 48,500 | ||
Other Income | WMES | Asset Management | |||
Schedule of Equity Method Investments [Line Items] | |||
Other sales and revenues | $ 500 | $ 300 |
Investments - Schedule of Inves
Investments - Schedule of Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Equity Method Investment Balances [Roll Forward] | ||
Investment in joint ventures at beginning of the period | $ 55,927 | |
(Loss) earnings from joint ventures | (2,616) | |
Foreign currency translation adjustment | 53 | |
Other comprehensive gain from joint ventures | 1,090 | $ 554 |
Investment in joint ventures at end of the period | 54,454 | |
WMES | ||
Equity Method Investment Balances [Roll Forward] | ||
Investment in joint ventures at beginning of the period | 39,069 | |
(Loss) earnings from joint ventures | (2,705) | |
Foreign currency translation adjustment | 0 | |
Other comprehensive gain from joint ventures | 1,090 | |
Investment in joint ventures at end of the period | 37,454 | |
CASC Willis | ||
Equity Method Investment Balances [Roll Forward] | ||
Investment in joint ventures at beginning of the period | 16,858 | |
(Loss) earnings from joint ventures | 89 | |
Foreign currency translation adjustment | 53 | |
Other comprehensive gain from joint ventures | 0 | |
Investment in joint ventures at end of the period | $ 17,000 |
Investments - Summarized Financ
Investments - Summarized Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Dec. 31, 2020 | ||
Income Statement [Abstract] | |||||
Revenue | $ 68,817 | $ 61,125 | |||
Expenses | 93,922 | 62,297 | |||
Net loss | (21,201) | (1,332) | |||
Statement of Financial Position [Abstract] | |||||
Total assets | [1] | 2,429,926 | $ 2,462,927 | ||
Total liabilities | [2] | 2,009,093 | 2,037,237 | ||
Total WMES net equity | 371,007 | 372,412 | 375,885 | $ 364,015 | |
WMES | |||||
Income Statement [Abstract] | |||||
Revenue | 9,541 | 4,761 | |||
Expenses | 15,003 | 6,169 | |||
Net loss | (5,462) | $ (1,408) | |||
Statement of Financial Position [Abstract] | |||||
Total assets | 298,487 | 310,260 | |||
Total liabilities | 219,605 | 225,917 | |||
Total WMES net equity | $ 78,882 | $ 84,343 | |||
[1] | Total assets at March 31, 2022 and December 31, 2021, respectively, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Restricted cash $68,875 and $81,312; Equipment $1,197,953 and $1,226,395; Maintenance Rights $5,433 and $5,433; Inventory $— and $4,367; Notes receivable $90,145 and $90,868; and Other assets $5,248 and $4,775, respectively. | ||||
[2] | Total liabilities at March 31, 2022 and December 31, 2021, respectively, include the following liabilities of VIEs for which the VIEs’ creditors do not have recourse to Willis Lease Finance Corporation: Debt obligations $1,176,975 and $1,197,922, respectively. |
Debt Obligations - Schedule of
Debt Obligations - Schedule of Notes Payable (Details) | 3 Months Ended | |
Mar. 31, 2022USD ($)airframe | Dec. 31, 2021USD ($) | |
Long Term Debt | ||
Gross amount of debt | $ 1,777,363,000 | $ 1,809,620,000 |
Less: unamortized debt issuance costs | (18,237,000) | (19,356,000) |
Total debt obligations | 1,759,126,000 | 1,790,264,000 |
Credit facility at a floating rate of interest of one-month LIBOR plus 1.375% at March 31, 2022, secured by engines. The facility has a committed amount of $1.0 billion at March 31, 2022, which revolves until the maturity date of June 2024 | ||
Long Term Debt | ||
Line of credit facility outstanding amount | $ 580,000,000 | 590,000,000 |
WEST VI Series A 2021 term notes payable at a fixed rate of interest of 3.10%, maturing in May 2046, secured by engines and one airframe | ||
Long Term Debt | ||
Fixed rate (as a percent) | 3.10% | |
Number of assets used to secure debt | airframe | 1 | |
Gross amount of debt | $ 271,544,000 | 273,723,000 |
WEST VI Series B 2021 term notes payable at a fixed rate of interest of 5.44%, maturing in May 2046, secured by engines and one airframe | ||
Long Term Debt | ||
Fixed rate (as a percent) | 5.44% | |
Number of assets used to secure debt | airframe | 1 | |
Gross amount of debt | $ 37,720,000 | 38,022,000 |
WEST VI Series C 2021 term notes payable at a fixed rate of interest of 7.39%, maturing in May 2046, secured by engines and one airframe | ||
Long Term Debt | ||
Fixed rate (as a percent) | 7.39% | |
Number of assets used to secure debt | airframe | 1 | |
Gross amount of debt | $ 17,535,000 | 18,158,000 |
WEST V Series A 2020 term notes payable at a fixed rate of interest of 3.23%, maturing in March 2045, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 3.23% | |
Gross amount of debt | $ 266,784,000 | 272,909,000 |
WEST V Series B 2020 term notes payable at a fixed rate of interest of 4.21%, maturing in March 2045, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 4.21% | |
Gross amount of debt | $ 37,066,000 | 38,004,000 |
WEST V Series C 2020 term notes payable at a fixed rate of interest of 6.66%, maturing in March 2045, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 6.66% | |
Gross amount of debt | $ 15,282,000 | 16,342,000 |
WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 4.75% | |
Gross amount of debt | $ 254,366,000 | 262,260,000 |
WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 5.44% | |
Gross amount of debt | $ 38,885,000 | 38,885,000 |
WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 4.69% | |
Gross amount of debt | $ 221,174,000 | 223,815,000 |
WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines | ||
Long Term Debt | ||
Fixed rate (as a percent) | 6.36% | |
Gross amount of debt | $ 32,195,000 | 32,195,000 |
Note payable at a fixed rate of interest of 3.18%, maturing in July 2024, secured by an aircraft | ||
Long Term Debt | ||
Fixed rate (as a percent) | 3.18% | |
Gross amount of debt | $ 4,812,000 | $ 5,307,000 |
Revolving credit facility | Credit facility at a floating rate of interest of one-month LIBOR plus 1.375% at March 31, 2022, secured by engines. The facility has a committed amount of $1.0 billion at March 31, 2022, which revolves until the maturity date of June 2024 | ||
Long Term Debt | ||
Line of credit facility, maximum borrowing capacity | $ 1,000,000,000 | |
LIBOR | Credit facility at a floating rate of interest of one-month LIBOR plus 1.375% at March 31, 2022, secured by engines. The facility has a committed amount of $1.0 billion at March 31, 2022, which revolves until the maturity date of June 2024 | ||
Long Term Debt | ||
Variable rate (as a percent) | 1.375% |
Debt Obligations - Schedule o_2
Debt Obligations - Schedule of Principal Outstanding (Details) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Debt Disclosure [Abstract] | ||
2022 | $ 56,504 | |
2022 | 63,069 | |
2023 | 642,236 | |
2024 | 61,001 | |
2025 | 281,327 | |
Thereafter | 673,226 | |
Total | $ 1,777,363 | $ 1,809,620 |
Derivative Instruments - Additi
Derivative Instruments - Additional information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022USD ($)agreement | Mar. 31, 2021USD ($)agreement | Dec. 31, 2021USD ($) | |
Derivative [Line Items] | |||
Interest expense | $ 16,883 | $ 15,019 | |
Interest rate contract | |||
Derivative [Line Items] | |||
Borrowings at variable interest rates | $ 580,000 | $ 590,000 | |
Number of interest rate swap agreements | agreement | 5 | ||
Number of interest rate swaps entered into | agreement | 4 | ||
Derivative, notional amount | $ 100,000 | ||
Net fair value of swap asset (liability) | 24,400 | 7,300 | |
Fair value of interest rate swap, asset | 8,000 | ||
Fair value of interest rate swap, liability | $ 700 | ||
Interest expense | $ 300 | $ 900 | |
2021 Swap Agreements, Group 1 | |||
Derivative [Line Items] | |||
Number of interest rate swap agreements | agreement | 2 | ||
Remaining maturity term | 22 months | ||
2021 Swap Agreements, Group 2 | |||
Derivative [Line Items] | |||
Number of interest rate swap agreements | agreement | 2 | ||
Remaining maturity term | 46 months | ||
2019 Swap Ageement | |||
Derivative [Line Items] | |||
Number of interest rate swap agreements | agreement | 1 | ||
Derivative, notional amount | $ 100,000 | ||
Remaining maturity term | 27 months | ||
2016 Swap Agreement | |||
Derivative [Line Items] | |||
Number of interest rate swap agreements | agreement | 1 |
Derivative Instruments - Cash f
Derivative Instruments - Cash flow hedges (Details) - Cash Flow Hedging - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Effects of derivative instruments | ||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | $ 17,151 | $ 6,497 |
Interest rate contracts | ||
Effects of derivative instruments | ||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | $ 17,151 | $ 6,497 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
Income tax benefit | $ (6,520) | $ (359) |
Effective tax rate (as a percent) | 23.50% | 21.20% |
Employment retention credit recognized, CARES Act | $ 700 |
Fair Value Measurements - Addit
Fair Value Measurements - Additional Information (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2022USD ($)engineequipment | Mar. 31, 2021USD ($)airframe | Dec. 31, 2021USD ($) | |
Derivative [Line Items] | |||
Fair value of notes receivable | $ 116,900 | $ 117,700 | |
Fair value of notes payable | 1,706,500 | 1,827,400 | |
Interest expense | 16,883 | $ 15,019 | |
Asset write-down | 1,900 | ||
Write-down of equipment | $ 21,117 | $ 1,867 | |
Number of assets impaired | 3 | 1 | |
Gain (loss) on sale of assets and asset impairment charges | $ 21,117 | $ 1,867 | |
Remaining book value | $ 36,600 | ||
Number of assets previously impaired | equipment | 24 | ||
Engines Located in Russia | |||
Derivative [Line Items] | |||
Write-down of equipment | $ 20,400 | ||
Number of assets impaired | engine | 2 | ||
Assets Impaired in the Ordinary Course of Business | |||
Derivative [Line Items] | |||
Write-down of equipment | $ 700 | ||
Interest rate contract | |||
Derivative [Line Items] | |||
Net fair value of swap asset (liability) | 24,400 | 7,300 | |
Fair value of interest rate swap, asset | 8,000 | ||
Fair value of interest rate swap, liability | $ 700 | ||
Interest expense | $ 300 | $ 900 |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring Basis (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Fair Value Disclosures [Abstract] | ||
Equipment held for lease | $ 21,117 | $ 1,867 |
Total | $ 21,117 | $ 1,867 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Earnings Per Share [Abstract] | ||
Shares not included in computation of diluted weighted average earnings per common (in shares) | 300 | 300 |
Net loss attributable to common shareholders | $ (22,023) | $ (2,154) |
Basic weighted average common shares outstanding (in shares) | 5,951 | 5,995 |
Potentially dilutive common shares (in shares) | 0 | 0 |
Diluted weighted average common shares outstanding (in shares) | 5,951 | 5,995 |
Basic weighted average loss per common share (in dollars per share) | $ (3.70) | $ (0.36) |
Diluted weighted average loss per common share (in dollars per share) | $ (3.70) | $ (0.36) |
Equity (Details)
Equity (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2018 | |
Class of Stock [Line Items] | |||
Repurchase of common stock authorized by Board of Directors | $ 60,000,000 | ||
Common stock repurchased (in shares) | 52,780 | 0 | |
Common stock repurchased, value | $ 1,842,000 | ||
Common stock repurchased, average price per share (in dollars per share) | $ 34.86 | ||
Remaining authorized stock repurchase amount | $ 43,000,000 | ||
Dividend rate (as a percent) | 6.50% | ||
Preferred stock dividends paid | $ 800,000 | $ 800,000 | |
Common Stock | |||
Class of Stock [Line Items] | |||
Common stock repurchased (in shares) | 53,000 | ||
Common stock repurchased, value | $ 1,800,000 |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Stock compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Stock-based compensation plans | ||
Stock compensation expense | $ 4,629 | $ 2,762 |
Employee Stock Purchase Plan | ||
Stock-based compensation plans | ||
Stock compensation expense | 22 | 78 |
2007 Stock Incentive Plan | ||
Stock-based compensation plans | ||
Stock compensation expense | 0 | 685 |
2021 Stock Incentive Plan | ||
Stock-based compensation plans | ||
Stock compensation expense | $ 4,607 | $ 1,999 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - Additional Information (Details) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Nov. 30, 2021 | Mar. 31, 2022 | Mar. 31, 2021 | Nov. 10, 2021 | |
Employee Stock Purchase Plan | ||||
Stock-based compensation plans | ||||
Number of shares authorized (in shares) | 425,000 | |||
Maximum percentage of cash compensation allowed to be deducted for the purchase of common stock by eligible employees | 10.00% | |||
Maximum number of shares to be purchased by employee in one calendar year (in shares) | 1,000 | |||
Maximum amount of shares to be purchased by employee in one calendar year | $ 25,000 | |||
Purchase price expressed as a percentage of the market price of the common stock on the purchase date or on the date of entry | 85.00% | |||
Shares issued (in shares) | 9,919 | 8,307 | ||
2007 Stock Incentive Plan | Restricted Stock | ||||
Stock-based compensation plans | ||||
Number of shares authorized (in shares) | 2,800,000 | |||
Stock options outstanding (in shares) | 0 | |||
2007 Stock Incentive Plan | Restricted Stock | Minimum | ||||
Stock-based compensation plans | ||||
Vesting period | 1 year | |||
2007 Stock Incentive Plan | Restricted Stock | Maximum | ||||
Stock-based compensation plans | ||||
Vesting period | 4 years | |||
2021 Stock Incentive Plan | Restricted Stock | ||||
Stock-based compensation plans | ||||
Number of shares authorized (in shares) | 800,000 | |||
The 2021 Stock Incentive Plan | ||||
Stock-based compensation plans | ||||
Number of additional shares authorized (in shares) | 1,000,000 | |||
The 2021 Stock Incentive Plan | Restricted Stock | ||||
Stock-based compensation plans | ||||
Shares granted to date (in shares) | 926,300 | |||
Number of shares available for future issuance (in shares) | 968,296 |
Stock-Based Compensation Plan_4
Stock-Based Compensation Plans - Restricted stock activity (Details) - Restricted Stock | 3 Months Ended |
Mar. 31, 2022shares | |
Number Outstanding | |
Balance of unvested shares at the beginning of the period (in shares) | 560,608 |
Shares granted (in shares) | 0 |
Shares forfeited (in shares) | 0 |
Shares vested (in shares) | 0 |
Balance of unvested shares at the end of the period (in shares) | 560,608 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2022USD ($)segment. | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | ||
Reportable Segments | ||||
Number of reportable segments | segment. | 2 | |||
Number of operating segments | segment. | 2 | |||
Revenue: | ||||
Gain on sale of leased equipment | $ 2,298 | $ 0 | ||
Total revenue | 68,817 | 61,125 | ||
Expenses: | ||||
Depreciation and amortization expense | 21,809 | 24,141 | ||
Cost of spare parts and equipment sales | 4,862 | 3,809 | ||
Write-down of equipment | 21,117 | 1,867 | ||
General and administrative | 23,605 | 16,151 | ||
Technical expense | 5,646 | 1,310 | ||
Interest expense | 16,883 | 15,019 | ||
Total net finance costs | 16,883 | 15,019 | ||
Total expenses | 93,922 | 62,297 | ||
(Loss) earnings from operations | (25,105) | (1,172) | ||
Total assets | [1] | 2,429,926 | $ 2,462,927 | |
Operating Segments | Leasing and Related Operations | ||||
Revenue: | ||||
Gain on sale of leased equipment | 2,298 | |||
Total revenue | 62,271 | 56,623 | ||
Expenses: | ||||
Depreciation and amortization expense | 21,782 | 24,112 | ||
Cost of spare parts and equipment sales | 6 | 6 | ||
Write-down of equipment | 21,117 | 1,867 | ||
General and administrative | 22,806 | 15,557 | ||
Technical expense | 5,646 | 1,310 | ||
Interest expense | 16,883 | 15,019 | ||
Total net finance costs | 16,883 | 15,019 | ||
Total expenses | 88,240 | 57,871 | ||
(Loss) earnings from operations | (25,969) | (1,248) | ||
Total assets | 2,375,485 | 2,415,635 | ||
Operating Segments | Spare Parts Sales | ||||
Revenue: | ||||
Gain on sale of leased equipment | 0 | |||
Total revenue | 6,604 | 4,647 | ||
Expenses: | ||||
Depreciation and amortization expense | 27 | 29 | ||
Cost of spare parts and equipment sales | 4,856 | 3,817 | ||
Write-down of equipment | 0 | 0 | ||
General and administrative | 799 | 484 | ||
Technical expense | 0 | 0 | ||
Interest expense | 0 | 0 | ||
Total net finance costs | 0 | 0 | ||
Total expenses | 5,682 | 4,330 | ||
(Loss) earnings from operations | 922 | 317 | ||
Total assets | 54,441 | 47,292 | ||
Eliminations | ||||
Revenue: | ||||
Gain on sale of leased equipment | 0 | |||
Total revenue | (58) | (145) | ||
Expenses: | ||||
Depreciation and amortization expense | 0 | 0 | ||
Cost of spare parts and equipment sales | 0 | (14) | ||
Write-down of equipment | 0 | 0 | ||
General and administrative | 0 | 110 | ||
Technical expense | 0 | 0 | ||
Interest expense | 0 | 0 | ||
Total net finance costs | 0 | 0 | ||
Total expenses | 0 | 96 | ||
(Loss) earnings from operations | (58) | (241) | ||
Total assets | 0 | $ 0 | ||
Lease rent revenue | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 38,125 | 31,520 | ||
Lease rent revenue | Operating Segments | Leasing and Related Operations | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 38,125 | 31,520 | ||
Lease rent revenue | Operating Segments | Spare Parts Sales | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 0 | 0 | ||
Lease rent revenue | Eliminations | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 0 | 0 | ||
Maintenance reserve revenue | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 14,834 | 19,812 | ||
Maintenance reserve revenue | Operating Segments | Leasing and Related Operations | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 14,834 | 19,812 | ||
Maintenance reserve revenue | Operating Segments | Spare Parts Sales | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 0 | 0 | ||
Maintenance reserve revenue | Eliminations | ||||
Revenue: | ||||
Lease rent and maintenance reserve revenues | 0 | 0 | ||
Spare parts and equipment sales | ||||
Revenue: | ||||
Maintenance reserve revenue | 6,630 | 4,566 | ||
Spare parts and equipment sales | Operating Segments | Leasing and Related Operations | ||||
Revenue: | ||||
Maintenance reserve revenue | 202 | 85 | ||
Spare parts and equipment sales | Operating Segments | Spare Parts Sales | ||||
Revenue: | ||||
Maintenance reserve revenue | 6,428 | 4,591 | ||
Spare parts and equipment sales | Eliminations | ||||
Revenue: | ||||
Maintenance reserve revenue | 0 | (110) | ||
Other revenue | ||||
Revenue: | ||||
Maintenance reserve revenue | 6,930 | 5,227 | ||
Other revenue | Operating Segments | Leasing and Related Operations | ||||
Revenue: | ||||
Maintenance reserve revenue | 6,812 | 5,206 | ||
Other revenue | Operating Segments | Spare Parts Sales | ||||
Revenue: | ||||
Maintenance reserve revenue | 176 | 56 | ||
Other revenue | Eliminations | ||||
Revenue: | ||||
Maintenance reserve revenue | $ (58) | $ (35) | ||
[1] | Total assets at March 31, 2022 and December 31, 2021, respectively, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Restricted cash $68,875 and $81,312; Equipment $1,197,953 and $1,226,395; Maintenance Rights $5,433 and $5,433; Inventory $— and $4,367; Notes receivable $90,145 and $90,868; and Other assets $5,248 and $4,775, respectively. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Chief Executive Officer | ||
Related Party Transaction [Line Items] | ||
Daily lease payment made to related party | $ 750 | |
Aggregate lease payment made to related party | $ 12,000 | |
WMES | Other Income | Asset Management | ||
Related Party Transaction [Line Items] | ||
Other sales and revenues | $ 500,000 | $ 300,000 |