Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2018 | Nov. 05, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | WILLIS LEASE FINANCE CORP | |
Entity Central Index Key | 1,018,164 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Common Stock, Shares Outstanding | 6,208,941 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q3 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 | |
ASSETS | |||
Cash and cash equivalents | $ 8,436 | $ 7,052 | |
Restricted cash | 155,420 | 40,272 | |
Equipment held for operating lease, less accumulated depreciation of $392,444 and $368,683 at September 30, 2018 and December 31, 2017, respectively | 1,590,482 | 1,342,571 | |
Maintenance rights | 14,763 | 14,763 | |
Equipment held for sale | 40,931 | 34,172 | |
Operating lease related receivables, net of allowances of $1,823 and $949 at September 30, 2018 and December 31, 2017, respectively | 24,777 | 18,848 | |
Spare parts inventory | 24,409 | 16,379 | |
Investments | 44,438 | 50,641 | |
Property, equipment & furnishings, less accumulated depreciation of $8,770 and $7,374 at September 30, 2018 and December 31, 2017, respectively | 26,245 | 26,074 | |
Intangible assets, net | 1,430 | 1,727 | |
Other assets | 33,865 | 50,932 | |
Total assets | [1] | 1,965,196 | 1,603,431 |
Liabilities: | |||
Accounts payable and accrued expenses | 40,879 | 22,072 | |
Deferred income taxes | 87,142 | 78,280 | |
Debt obligations | 1,392,113 | 1,085,405 | |
Maintenance reserves | 88,986 | 75,889 | |
Security deposits | 28,591 | 25,302 | |
Unearned revenue | 7,264 | 8,102 | |
Total liabilities | [2] | 1,644,975 | 1,295,050 |
Redeemable preferred stock ($0.01 par value, 2,500 shares authorized; 2,500 shares issued at September 30, 2018 and December 31, 2017, respectively) | 49,533 | 49,471 | |
Shareholders' equity: | |||
Common stock ($0.01 par value, 20,000 shares authorized; 6,230 and 6,419 shares issued at September 30, 2018 and December 31, 2017, respectively) | 62 | 64 | |
Paid-in capital in excess of par | 2,319 | ||
Retained earnings | 269,664 | 256,301 | |
Accumulated other comprehensive income, net of income tax expense of $273 and $83 at September 30, 2018 and December 31, 2017, respectively | 962 | 226 | |
Total shareholders' equity | 270,688 | 258,910 | |
Total liabilities, redeemable preferred stock and shareholders' equity | $ 1,965,196 | $ 1,603,431 | |
[1] | Total assets at September 30, 2018 and December 31, 2017, respectively, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Cash $393 and $130; Restricted cash $155,420 and $40,272; Equipment $1,054,258 and $657,333; and Other assets $834 and $20,090, respectively. | ||
[2] | Total liabilities at September 30, 2018 and December 31, 2017, respectively, include the following liabilities of VIEs for which the VIEs’ creditors do not have recourse to Willis Lease Finance Corporation: Debt obligations $919,026 and $577,056, respectively. |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) shares in Thousands, $ in Thousands | Sep. 30, 2018 | Dec. 31, 2017 |
Equipment held for operating lease, accumulated depreciation (in dollars) | $ 392,444 | $ 368,683 |
Operating lease related receivable, allowances (in dollars) | 1,823 | 949 |
Property, equipment & furnishings, accumulated depreciation (in dollars) | $ 8,770 | $ 7,374 |
Par value | $ 0.01 | $ 0.01 |
Shares authorized | 2,500 | 2,500 |
Shares issued | 2,500 | 2,500 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 20,000 | 20,000 |
Common stock, shares issued | 6,230 | 6,419 |
Accumulated other comprehensive loss, income tax expense (in dollars) | $ 273 | $ 83 |
Restricted cash | 155,420 | 40,272 |
Other assets | 33,865 | 50,932 |
Debt obligations | 1,392,113 | 1,085,405 |
Variable Interest Entity [Member] | ||
Cash | 393 | 130 |
Restricted cash | 155,420 | 40,272 |
Equipment | 1,054,258 | 657,333 |
Other assets | 834 | 20,090 |
Debt obligations | $ 919,026 | $ 577,056 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
REVENUE | ||||
Lease rent revenue | $ 46,984 | $ 33,474 | $ 129,710 | $ 95,045 |
Revenue | 19,370 | 20,370 | 56,855 | 64,212 |
Spare parts and equipment sales | 8,354 | 9,294 | 21,701 | 41,273 |
Gain on sale of leased equipment | 1,256 | 174 | 2,142 | 4,684 |
Other revenue | 2,010 | 2,549 | 5,762 | 6,439 |
Total revenue | 77,974 | 65,861 | 216,170 | 211,653 |
EXPENSES | ||||
Depreciation and amortization expense | 19,861 | 16,142 | 55,600 | 48,786 |
Cost of spare parts and equipment sales | 5,848 | 7,148 | 16,537 | 32,121 |
Write-down of equipment | 1,215 | 6,226 | 4,793 | 19,668 |
General and administrative | 18,124 | 14,308 | 50,517 | 40,574 |
Technical expense | 2,290 | 2,605 | 9,199 | 7,345 |
Interest expense | 17,885 | 14,220 | 46,617 | 36,398 |
Total expenses | 65,223 | 60,649 | 183,263 | 184,892 |
Earnings from operations | 12,751 | 5,212 | 32,907 | 26,761 |
Earnings from joint ventures | 506 | 3,040 | 1,569 | 6,055 |
Income before income taxes | 13,257 | 8,252 | 34,476 | 32,816 |
Income tax expense | 3,583 | 2,960 | 9,359 | 13,367 |
Net income | 9,674 | 5,292 | 25,117 | 19,449 |
Preferred stock dividends | 819 | 344 | 2,431 | 988 |
Accretion of preferred stock issuance costs | 21 | 9 | 62 | 25 |
Net income attributable to common shareholders | $ 8,834 | $ 4,939 | $ 22,624 | $ 18,436 |
Basic weighted average earnings per common share (in dollars per share) | $ 1.50 | $ 0.82 | $ 3.80 | $ 3.04 |
Diluted weighted average earnings per common share (in dollars per share) | $ 1.47 | $ 0.80 | $ 3.72 | $ 2.97 |
Basic weighted average common shares outstanding (in shares) | 5,900 | 6,055 | 5,960 | 6,068 |
Diluted weighted average common shares outstanding (in shares) | 6,004 | 6,184 | 6,083 | 6,215 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Condensed Consolidated Statements of Comprehensive Income | |||||
Net income | $ 9,674 | $ 5,292 | $ 25,117 | $ 19,449 | |
Other comprehensive (loss) income: | |||||
Currency translation adjustment | (530) | 294 | (762) | 620 | |
Unrealized gain on derivative instruments | 221 | 164 | 1,636 | 160 | |
Net (loss) gain recognized in other comprehensive income | (309) | 458 | 874 | 780 | |
Tax benefit (expense) related to items of other comprehensive income | 70 | (158) | (197) | (270) | |
Impact from adoption of ASU 2018-02 | [1] | 59 | |||
Other comprehensive (loss) income | (239) | 300 | 736 | 510 | |
Total comprehensive income | $ 9,435 | $ 5,592 | $ 25,853 | $ 19,959 | |
[1] | Reflects the stranded tax effects from change in tax rate as a result of the early adoption of ASU 2018-02 which has been reclassified to retained earnings. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
Cash flows from operating activities: | ||
Net income | $ 25,117 | $ 19,449 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 55,600 | 48,786 |
Write-down of equipment | 4,793 | 19,668 |
Stock-based compensation expenses | 4,004 | 3,228 |
Amortization of deferred costs | 4,143 | 3,639 |
Allowances and provisions | 1,022 | 282 |
Gain on sale of leased equipment | (2,142) | (4,684) |
Gain on insurance settlement | (1,288) | |
Income from joint ventures | (1,569) | (6,055) |
Deferred income taxes | 9,359 | 13,367 |
Changes in assets and liabilities: | ||
Receivables | (6,951) | (220) |
Distributions received from joint ventures | 5,540 | 1,880 |
Spare parts inventory | (27,537) | 7,021 |
Other assets | (3,173) | (1,692) |
Accounts payable and accrued expenses | 13,472 | (687) |
Maintenance reserves | 16,431 | 1,706 |
Security deposits | 3,519 | 6,651 |
Unearned revenue | (838) | 990 |
Net cash provided by operating activities | 100,790 | 112,041 |
Cash flows from investing activities: | ||
Proceeds from sale of equipment (net of selling expenses) | 51,600 | 53,849 |
Distributions received from joint ventures | 190 | |
Purchase of equipment held for operating lease | (320,186) | (177,263) |
Purchase of property, equipment and furnishings | (1,574) | (493) |
Net cash used in investing activities | (269,970) | (123,907) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt obligations | 616,439 | 485,700 |
Debt issuance cost | (6,068) | (7,473) |
Principal payments on debt obligations | (306,800) | (448,237) |
Interest bearing security deposits | (3,261) | |
Proceeds from shares issued under stock compensation plans | 292 | 177 |
Cancellation of restricted stock units in satisfaction of withholding tax | (1,252) | (747) |
Repurchase of common stock | (14,459) | (3,546) |
Proceeds from the issuance of preferred stock | 29,700 | |
Preferred stock dividends | (2,440) | (891) |
Net cash provided by financing activities | 285,712 | 51,422 |
(Decrease)/Increase in cash, cash equivalents and restricted cash | 116,532 | 39,556 |
Cash, cash equivalents and restricted cash at beginning of period | 47,324 | 32,374 |
Cash, cash equivalents and restricted cash at end of period | 163,856 | 71,930 |
Net cash paid for: | ||
Interest | 44,990 | 31,932 |
Income Taxes | 1,074 | 346 |
Supplemental disclosures of non-cash activities: | ||
Purchase of aircraft and engines | 3,600 | 2,931 |
Transfers from Equipment held for operating lease to Equipment held for sale | 6,995 | 36,285 |
Accrued preferred stock dividends | $ 819 | $ 988 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 1. 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 2017 Annual Report on Form 10-K (“2017 Form 10-K”). There have been no significant changes in the Company’s significant accounting policies for the nine months ended September 30, 2018. (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”) 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 2017 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 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. 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 goodwill, intangible assets, long-lived assets, equipment held for sale, estimated income taxes and stock-based compensation. Actual results may differ from these estimates under different assumptions or conditions. (b) Reclassifications In conjunction with our review of the fourth quarter of 2017, the Company reclassified scrap inventory write-offs and inventory lower of cost or market write-downs that were previously presented within Write-down of equipment to the Cost of spare parts and equipment sales line item. The three and nine month periods ended September 30, 2017 were impacted by an adjustment of $0.7 million and $2.6 million, respectively, with the adjustment reflected as an increase to Cost of spare parts and equipment sales and a decrease to Write-down of equipment. These reclassified items had no effect on the reported results of operations, financial condition or statements of cash flows. (c) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including VIEs where the Company is the primary beneficiary in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest firstly to determine whether for accounting purposes the entity is a variable interest entity or 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 the entities’ activities. If the entity is a voting interest entity the Company consolidates the entity when it has a majority of voting interests. Intercompany transactions and balances have been eliminated in consolidation. (d) Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted by the Company In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 amends the accounting guidance on revenue recognition. The amendments in this accounting standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes 1) identifying the contract(s) with a customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when (or as) the performance obligations are satisfied. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the standard amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, sales of real estate) to be consistent with the standard’s guidance on recognition and measurement (including the constraint on revenue). The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract. The Company adopted ASU 2014-09 and its related amendments (collectively known as Accounting Standards Codification (“ASC”) 606) effective on January 1, 2018 using the modified retrospective approach applied only to contracts not completed as of the date of adoption . Please see Note 2 "Revenue from Contracts with Customers" for the required disclosures related to the impact of adopting this standard and a discussion of the Company's updated policies related to revenue recognition and accounting for costs to obtain and fulfill a customer contract. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments a consensus of the Emerging Issues Task Force) to improve the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update provides guidance on specific cash flow classification issues including the following: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Prior GAAP did not include specific guidance on these eight cash flow classification issues. The Company adopted the guidance effective January 1, 2018 and utilizing the cumulative earnings approach on a retrospective basis, reclassified $1.9 million of distributions from joint ventures during the nine months ended September 30, 2017 from cash flows from investing activities to cash flows from operating activities. The remaining provisions of this update did not have a material impact on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” that eliminates “Step 2” from the goodwill impairment test. The Company has made the election to early adopt ASU 2017-04 as of January 1, 2018 and the standard was applied on a prospective basis, as required. The adoption of this standard did not have an impact on the consolidated financial statements or the related disclosures. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new guidance became effective for the Company on January 1, 2018 and was applied on a prospective basis, as required. The adoption of this standard did not have an impact on the consolidated financial statements or the related disclosures. In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” to address stakeholder concerns about the guidance in current GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The ASU must be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The Company made the election to early adopt ASU 2018-02 as of January 1, 2018 (the period of adoption) and recorded a reclassification of $59 thous and between Other comprehensive income and Retained earnings as of January 1, 2018. In September 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” which requires cloud computing arrangements in a service contact to follow the internal-use software guidance provided by ASC 350-40 in determining the accounting treatment of implementation costs. ASC 350-40 states that only qualifying costs incurred during the application development stage may be capitalized. The Company made the election to early adopt ASU 2018-15 on a retrospective basis, and during 2018 has capitalized $1.0 million in cloud computing arrangement implementation costs. There was no prior period impact related to the adoption of ASU 2018-15. Recent Accounting Pronouncements To Be Adopted by the Company In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU is targeted at simplifying the application of hedge accounting and aims at aligning the recognition and presentation of the effects of hedge instruments and hedge items. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2019 and is currently evaluating the potential impact adoption will have on the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessors will account for leases using an approach that is substantially equivalent to existing GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective transition. The Company plans to adopt this guidance effective January 1, 2019 utilizing the lessor practical expedient and is currently evaluating the potential impact adoption will have on the consolidated financial statements and related disclosures. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contracts with Customers | |
Revenue from Contracts with Customers | 2. Revenue from Contracts with Customers As of January 1, 2018, the Company adopted ASU 2014-09 and all subsequent ASUs that modified ASC 606. While only a portion of the Company’s revenues is impacted by this guidance as it does not apply to contracts falling under the leasing standard, as part of the implementation process the Company performed an analysis to identify accounting policies that needed to change and additional disclosures that are required. The Company considered factors such as customer contracts with unique revenue recognition considerations, the nature and type of goods and services offered, the degree to which contracts include multiple performance obligations or variable consideration, and the pattern in which revenue is currently recognized, among other things. All revenue streams applicable to the new standard (Spare parts and equipment sales and Managed services which is reflected within Other revenue) were evaluated by management. The Company considered recognition under the new standard and concluded the timing of the Company’s revenue recognition will remain the same. The Company has also evaluated the changes in controls and processes that are necessary to implement the new standard, and no material changes were required. The following table disaggregates revenue by major source for the three and nine months ended September 30, 2018 (in thousands): Leasing and Three months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Leasing revenue (2) $ 67,240 $ — $ — $ 67,240 Gain on sale of leased equipment (3) 1,150 106 — 1,256 Spare parts and equipment sales — 8,354 — 8,354 Managed services 1,124 — — 1,124 Other revenue — 274 (274) — Total revenue $ 69,514 $ 8,734 $ (274) $ 77,974 Leasing and Nine months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Leasing revenue (2) $ 188,984 $ — $ — $ 188,984 Gain on sale of leased equipment (3) 1,917 225 — 2,142 Spare parts and equipment sales — 21,701 — 21,701 Managed services 3,297 — — 3,297 Other revenue — 1,596 (1,550) 46 Total revenue $ 194,198 $ 23,522 $ (1,550) $ 216,170 (1) Represents revenue generated between our reportable segments. (2) Leasing revenue is recognized under the lease accounting guidance in ASC 840 Leases, and therefore qualifies for the scope exception under ASC 606. (3) Gain on sale of leased equipment is accounted for under ASC 610-20, Gains and losses from the derecognition of nonfinancial assets. Leasing revenue Revenue from leasing of engines, aircraft and related parts and equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Revenue is not recognized when cash collection is not reasonably assured. When collectability is not reasonably assured, the customer is placed on non-accrual status and revenue is recognized when cash payments are received. Under the terms of some of the Company’s leases, the lessees pay use fees (also known as maintenance reserves) to the Company based on usage of the leased asset, which are designed to cover expected future maintenance costs. Some of these amounts are reimbursable to the lessee if they make specifically defined maintenance expenditures. Use fees received are recognized in revenue as maintenance reserve revenue if they are not reimbursable to the lessee. Use fees that are reimbursable are recorded as a maintenance reserve liability until they are reimbursed to the lessee, the lease terminates, or the obligation to reimburse the lessee for such reserves ceases to exist, at which time they are recognized in revenue as maintenance reserve revenue. Certain lessees may be significantly delinquent in their rental payments and may default on their lease obligations. As of September 30, 2018, the Company had an aggregate of approximately $5.0 million in lease rent and $2.1 million in maintenance reserve receivables more than 30 days past due. Inability to collect receivables or to repossess engines or other leased equipment in the event of a default by a lessee could have a material adverse effect on the Company. The Company estimates an allowance for doubtful accounts for lease receivables it does not consider fully collectible. The allowance for doubtful accounts includes the following: (1) specific reserves for receivables which are impaired for which management believes full collection is doubtful; and (2) a general reserve for estimated losses based on historical experience. Gain on sale of leased equipment The Company regularly sells equipment from its lease portfolio. This equipment may or may not be subject to a lease at the time of sale. The gain or loss on such sales is recognized as revenue and consists of proceeds associated with the sale less the net book value of the asset sold and any direct costs associated with the sale. To the extent that deposits associated with the engine are not included in the sale, any such amount is included in the calculation of gain or loss. Spare parts sales The Spare Parts Sales reportable segment primarily engages in the sale of aircraft engine parts and materials through the acquisition or consignment of engines from third parties. The parts are sold at a fixed price with no right of return. In determining the performance obligation, management has identified the promise in the contract to be the shipment of the spare parts to the customer. Title passes to the buyer when the goods are shipped, and the buyer is responsible for any loss in transit, and the Company has a legal right to payment for the spare parts. Management has determined that physical acceptance of the spare parts to be a formality in accordance with ASC 606-10-5-86 and as the Company is not obliged to perform additional services under these arrangements, the shipment of the spare parts is the performance obligation. The spare parts transaction price is a fixed dollar amount and is stated on each purchase order for a fixed amount by total number of parts. Spare parts revenue is based on a set price for a set number of parts as defined in the purchase order. The performance obligation is completed once the parts have shipped and, as a result, all of the transaction price is allocated to that performance obligation. Management has determined that it is appropriate for the Company to recognize spare parts sales at a point in time (i.e., the date the parts are shipped) under ASC 606. Additionally, there is no impact to the timing and amounts of revenue recognized for spare parts sales related to the implementation of ASC 606. Equipment Sales Equipment sales represent the selective purchase and resale of commercial aircraft engines and other aircraft equipment. The Company and customer enter into an agreement which outlines the place and date of sale, purchase price, payment terms, condition of the asset, bill of sale, and the assignment of rights and warranties from the Company to the customer. Management has identified the promise in the equipment sale contract to be the transfer of ownership of the asset. Management believes the asset holds standalone value to the customer as it is not dependent on any other services for functionality purposes and therefore is distinct within the context of the contract and as described in ASC 606-10. As such, management has identified the transfer of the asset as the performance obligation. The transaction price is set at a fixed dollar amount per fixed quantity (number of assets) and is explicitly stated in each contract. Equipment sales revenue is based on a set price for a set number of assets, which is allocated to the performance obligation discussed above, in its entirety. The Company has determined the date of transfer to the customer to be the date the customer obtains control and title over the asset and the date which revenue is to be recognized and payment is due. As such, there is no impact to the timing and amounts of revenue recognized for equipment sales related to the implementation of ASC 606. Managed Services Managed Services revenue predominantly represents fleet management and engine storage services which may be combined on a single contract with a customer. Fleet management services are performed for a stated fixed fee as agreed upon in the services agreement. Engine storage services are for a fixed monthly fee. For a contract containing more than one performance obligation, the allocation of the transaction price is generally performed on the basis of the relative stand-alone selling price of each distinct good or service in the contract. The result of allocation consideration on this basis is consistent with the overall core principal of ASC 606 (to recognize revenue in an amount that depicts the consideration to which the Company expects to be entitled in exchange for the promised goods or services). As each of the services provided within the contract have separate prices, the Company allocates the stated price to its related performance obligation described above. Management has determined each of the revenue elements contain performance obligations that are satisfied over time and therefore recognizes revenue over time in accordance with ASC 606-10-25-27. The Company will continue utilizing the percentage-of-completion method (input method) for recognizing Fleet Management services and will calculate revenues based on labor hours incurred. Additionally, as is required by ASC 606-10-25-35, as circumstances change over time, the Company will update its measure of progress to reflect any changes in the outcome of the performance obligation. Engine storage services will continue to be recognized on a monthly basis utilizing the input method of days passed. Therefore, there is no impact to the timing and amounts of revenue recognized for Managed Services related to the implementation of ASC 606. Amounts owed for Managed services are typically billed upon contract completion. At January 1, 2018, $0.4 million of unbilled revenue associated with outstanding contracts was reported in Other Assets, all of which was recognized by September 30, 2018. At September 30, 2018, unbilled revenue was $0.8 million and the Company expects it to be fully recognized by March 31, 2019. Additionally, Managed services are presented within the Other revenue line in the condensed consolidated statements of income. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2018 | |
Investments | |
Investments | 3. Investments The Company is a partner with Mitsui & Co., Ltd. in a joint venture based in Dublin, Ireland — Willis Mitsui & Company Engine Support Limited (“WMES”) which acquires and leases jet engines. Each partner holds a fifty percent interest in the joint venture and the Company uses the equity method in recording investment activity. WMES owned a lease portfolio of 35 engines and one aircraft with a net book value of $266.1 million as of September 30, 2018. The Company is a partner with China Aviation Supplies Company Ltd. (“CASC”) in a joint venture named CASC Willis Engine Lease Company Limited (“CASC Willis”), which is based in Shanghai, China. The Company holds a fifty percent interest in the joint venture and 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. CASC Willis owned a lease portfolio of four engines with a net book value of $52.8 million as of September 30, 2018. Nine Months Ended September 30, 2018 WMES CASC Willis Total (in thousands) Investment in joint ventures as of December 31, 2017 $ 36,014 $ 14,627 $ 50,641 Earnings (losses) from joint ventures 1,831 (262) 1,569 Deferred gain on engine sale (1,280) — (1,280) Distribution (5,730) — (5,730) Foreign currency translation adjustment — (762) (762) Investment in joint ventures as of September 30, 2018 $ 30,835 $ 13,603 $ 44,438 “Other revenue” on the Consolidated Statements of Income includes management fees earned of $0.6 million and $0.5 million during the three months ended September 30, 2018 and 2017, respectively, and $1.8 million during the nine months ended September 30, 2018 and 2017, respectively. These fees related to the servicing of engines for the WMES lease portfolio. During the nine months ended September 30, 2018, the Company sold two engines to WMES for $23.2 million. During the nine months ended September 30, 2017, the Company sold two engines to WMES for $14.8 million. There were no engine sales to CASC Willis during the nine months ended September 30, 2018. During the nine months ended September 30, 2017, the Company sold one engine to CASC Willis for $11.2 million. Summarized financial information for 100% of WMES is presented in the following tables: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands) (in thousands) Revenue $ 9,987 $ 12,286 $ 26,633 $ 32,146 Expenses 8,408 6,366 22,762 20,820 WMES income before income taxes $ 1,579 $ 5,920 $ 3,871 $ 11,326 September 30, December 31, 2018 2017 (in thousands) Total assets $ 284,988 $ 246,309 Total liabilities 211,981 165,228 Total WMES net equity $ 73,007 $ 81,081 |
Debt Obligations
Debt Obligations | 9 Months Ended |
Sep. 30, 2018 | |
Debt Obligations | |
Debt Obligations | 4. Debt Obligations Debt obligations consisted of the following: September 30, December 31, 2018 2017 (in thousands) Credit facility at a floating rate of interest of one-month LIBOR plus 2.0% at September 30, 2018, secured by engines. The facility has a committed amount of $890.0 million at September 30, 2018, which revolves until the maturity date of April 2021 $ 466,000 $ 491,000 WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines 326,759 — WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines 46,680 — WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines 279,382 289,295 WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines 39,953 41,370 WEST II Series A 2012 term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines 243,221 259,022 Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft 11,388 12,720 Note payable at a variable interest rate of one-month LIBOR plus 2.25%, matured in January 2018, secured by engines — 10,336 1,413,383 1,103,743 Less: unamortized debt issuance costs (21,270) (18,338) Total debt obligations $ 1,392,113 $ 1,085,405 Principal outstanding at September 30, 2018, is repayable as follows: Year (in thousands) 2018 $ 13,812 2019 55,380 2020 54,980 2021 (includes $466.0 million outstanding on revolving credit facility) 521,217 2022 (includes $173.8 million outstanding on WEST II Series A 2012 term notes) 207,733 Thereafter 560,261 Total $ 1,413,383 On August 22, 2018, Willis Engine Structured Trust IV (“WEST IV”), a direct, wholly-owned subsidiary of the Company closed its offering of $373.4 million in aggregate principal amount of fixed rate notes (the “WEST IV Notes”). The WEST IV Notes were issued in two series, with the Series A Notes issued in an aggregate principal amount of $326.8 million and the Series B Notes in an aggregate principal amount of $46.7 million. The WEST IV Notes are secured by, among other things, WEST IV’s direct and indirect interests in a portfolio of 55 engines and one airframe. The Series A Notes have a fixed coupon of 4.75%, an expected maturity of approximately eight years and a final maturity date of September 15, 2043. The Series B Notes have a fixed coupon of 5.44%, an expected maturity of approximately eight years and a final maturity date of September 15, 2043. The Series A Notes were issued at a price of 99.99504% of par and the Series B Notes were issued at a price of 99.99853% of par. Principal and interest on the WEST IV Notes are payable monthly to the extent of available cash in accordance with a priority of payments included in the Indenture. Proceeds from asset sales by WEST IV will be used, at WEST IV’s election subject to certain conditions, to reduce WEST IV’s debt or to acquire other engines or airframes. As of September 30, 2018, $373.4 million of the WEST IV Notes were outstanding. The assets of WEST IV are not available to satisfy the Company’s obligations other than the obligations specific to WEST IV. WEST IV is consolidated for financial statement presentation purposes. WEST IV’s ability to make distributions and pay dividends to the Company is subject to the prior payments of its debt and other obligations and WEST IV’s maintenance of adequate reserves and capital. Under WEST IV, cash is collected in a restricted account, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of the maintenance reserve payments and lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. The Company maintains a revolving credit facility to finance the acquisition of aircraft engines for lease as well as for general working capital purposes. The $890 million revolving credit facility has an accordion feature which would expand the entire credit facility up to $1 billion. The interest rate is adjusted quarterly, based on the Company’s leverage ratio, as calculated under the terms of the revolving credit facility. Virtually all of the above debt requires ongoing compliance with the covenants of each financing, 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 or quarterly and the Company was in full compliance with all financial covenant requirements at September 30, 2018. |
Derivative Instruments
Derivative Instruments | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments | |
Derivative Instruments | 5. Derivative Instruments The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, in particular one-month LIBOR, with $466.0 million and $501.3 million of borrowings at September 30, 2018 and December 31, 2017, respectively, at variable rates. As a matter of policy, management does not use derivatives for speculative purposes . During 2016, the Company entered into one interest rate swap agreement which has a notional outstanding amount of $100.0 million, with a remaining term of 31 months as of September 30, 2018. The fair value of the swap at September 30, 2018 and December 31, 2017 was $2.8 million and $1.1 million, respectively, representing a net asset. The Company recorded a gain of $0.1 million and a loss of $0.1 million in the three months ended September 30, 2018 and 2017, respectively, and a gain of $0.2 million and a loss of $0.5 million during the nine months ended September 30, 2018 and 2017, respectively, from derivative instruments. 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 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. 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 and nine months ended September 30, 2018 and 2017: Amount of Gain Recognized Location of Gain (Loss) Amount of Gain (Loss) Recognized in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Three Months Ended September 30, Income Three Months Ended September 30, Relationships 2018 2017 (Effective Portion) 2018 2017 (in thousands) (in thousands) Interest rate contracts $ 221 $ 164 Interest expense $ 113 $ (117) Total $ 221 $ 164 Total $ 113 $ (117) Amount of Gain Recognized Location of Gain (Loss) Amount of Gain (Loss) Recognized in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Nine Months Ended September 30, Income Nine Months Ended September 30, Relationships 2018 2017 (Effective Portion) 2018 2017 (in thousands) (in thousands) Interest rate contracts $ 1,636 $ 160 Interest expense $ 182 $ (517) Total $ 1,636 $ 160 Total $ 182 $ (517) The derivatives were designated in a cash flow hedging relationship with the effective portion of the change in fair value of the derivative reported in the cash flow hedges subaccount of accumulated other comprehensive income. 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 is recorded in earnings in the current period. However, these are highly effective hedges and no significant ineffectiveness occurred in the periods presented. Counterparty Credit Risk The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The counterparty for the interest rate swap was a large financial institution in the United States that possessed an investment grade credit rating. Based on this rating, the Company believes that the counterparty was creditworthy and that their continuing performance under the hedging agreement was probable, and did not require the counterparty to provide collateral or other security to the Company. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2018 | |
Income Taxes | |
Income Taxes | 6. Income Taxes Income tax expense for the three and nine months ended September 30, 2018 was $3.6 million and $9.4 million, respectively. Income tax expense for the three and nine months ended September 30, 2017 was $3.0 million and $13.4 million, respectively. The effective tax rate for the three and nine months ended September 30, 2018 was 27.0% and 27.1%, respectively. The effective tax rate for the three and nine months ended September 30, 2017 was 35.9% and 40.7%, respectively. The 2018 tax rate reflects the enactment of the Tax Cuts and Jobs Act of 2017 (the “Act”) which made significant changes to the Internal Revenue Code. Changes include, but are not limited to, a corporate tax rate decrease from 35% to 21% effective for tax years beginning after December 31, 2017. 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, the proportions of revenue generated within and outside of California, the amount of executive compensation exceeding $1.0 million as defined in IRS code 162(m) and numerous other factors, including changes in tax law. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Fair Value Measurements | 7. 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, other than in 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, operating lease related receivables, and accounts payable : The amounts reported in the accompanying Consolidated Balance Sheets approximate fair value due to their short-term nature. · Debt obligations : The carrying amount of the Company’s outstanding balance on its Debt obligations as of September 30, 2018 and December 31, 2017 was estimated to have a fair value of approximately $1,416.6 million and $1,090.0 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 September 30, 2018 and December 31, 2017, the Company measured the fair value of its interest rate swap of $100.0 million (notional amount) 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 interest rate swap agreement had a net fair value of $2.8 million and $1.1 million as of September 30, 2018 and December 31, 2017, respectively. For the nine months ended September 30, 2018, $0.2 million was realized through the income statement as a decrease in interest expense. For the nine months ended September 30, 2017, $0.5 million was realized through the income statement as an increase in interest expense. 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 used Level 2 inputs to measure write-downs of equipment held for lease, equipment held for sale and spare parts inventory as of September 30, 2018 and December 31, 2017. Assets Written Down to Fair Value Total Losses September 30, 2018 December 31, 2017 Nine Months Ended September 30, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2018 2017 (in thousands) (in thousands) Equipment held for lease $ — $ 5,619 $ — $ 5,619 $ — $ 23,255 $ — $ 23,255 $ (3,434) $ (9,019) Equipment held for sale — 2,110 — 2,110 — 39,261 — 39,261 (1,359) (10,649) Spare parts inventory — 934 — 934 — 5,336 — 5,336 (2,169) (2,575) Total $ — $ 8,663 $ — $ 8,663 $ — $ 67,852 $ — $ 67,852 $ (6,962) $ (22,243) A write-down of $4.8 million was recorded during the nine months ended September 30, 2018 for four engines and six airframe parts packages. The engines were written down due to a management decision to part-out the engines, in which the net book values exceeded the estimated proceeds. The airframe parts packages were held for consignment sales with third party vendors, in which the net book values exceeded the estimated proceeds. A write-down of $19.7 million was recorded during the nine months ended September 30, 2017 for seven engines and three aircraft for which their leases ended or were modified in the period. Management evaluated the equipment return condition, end of lease compensation, accumulated maintenance reserves and expected future proceeds from part out and sale to record its initial best estimate of impairment. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share | |
Earnings Per Share | 8. 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 no anti-dilutive shares during the three months ended September 30, 2018 or 2017. There were 0.2 million and 925 anti-dilutive shares excluded from the computation of diluted weighted average earnings per common share during the nine months ended September 30, 2018 and 2017, respectively. The difference between average common shares outstanding to calculate basic and assuming full dilution is due to restricted stock issued under the 2007 Stock Incentive Plan. The following table presents the calculation of basic and diluted EPS: Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands) (in thousands) Net income attributable to common shareholders $ 8,834 $ 4,939 $ 22,624 $ 18,436 Basic weighted average common shares outstanding 5,900 6,055 5,960 6,068 Potentially dilutive common shares 104 129 123 147 Diluted weighted average common shares outstanding 6,004 6,184 6,083 6,215 Basic weighted average earnings per common share $ 1.50 $ 0.82 $ 3.80 $ 3.04 Diluted weighted average earnings per common share $ 1.47 $ 0.80 $ 3.72 $ 2.97 |
Equity
Equity | 9 Months Ended |
Sep. 30, 2018 | |
Equity | |
Equity | 9. Equity Common Stock Repurchase In September 2012, the Company announced that its Board of Directors authorized a plan to repurchase up to $100.0 million of its common stock over the next 5 years. The Board of Directors reaffirmed the repurchase plan in October 2016 and extended the plan to December 31, 2018. Repurchased shares are immediately retired. During the nine months ended September 30, 2018, the Company repurchased a total of 423,629 shares of common stock for approximately $14.5 million under this program, at a weighted average price of $34.27 per share. At September 30, 2018, approximately $14.8 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 nine months ended September 30, 2018, the Company paid total dividends of $2.4 million on the Series A-1 and Series A-2 Preferred Stock. For additional disclosures on the Company’s Redeemable Preferred Stock, refer to Note 10 in the 2017 Form 10-K. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation Plans | |
Stock-Based Compensation Plans | 10. Stock-Based Compensation Plans The components of stock-based compensation expense for the three and nine months ended September 30, 2018 and 2017 were as follows: Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 (in thousands) (in thousands) 2007 Stock Incentive Plan $ 1,392 $ 1,134 $ 3,957 $ 3,193 Employee Stock Purchase Plan 27 20 47 35 Total Stock Compensation Expense $ 1,419 $ 1,154 $ 4,004 $ 3,228 The 2007 Stock Incentive Plan (the “2007 Plan”) was adopted on May 24, 2007. Under this 2007 Plan, a total of 2,800,000 shares are authorized for stock based compensation available in the form of either restricted stock awards (“RSA’s”) or stock options. The RSA’s are subject to service-based vesting, typically between one and four years, where a specific period of continued employment must pass before an award vests. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date. There are no stock options outstanding under the 2007 Plan. The 2018 Stock Incentive Plan (the “2018 Plan”) was adopted on May 24, 2018. Under this 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 RSA’s. The RSA’s are subject to service-based vesting, typically between one and four years, where a specific period of continued employment must pass before an award vests. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date. As of September 30, 2018, the Company has granted 2,883,414 RSA’s under the 2007 Plan. Of this amount, 169,144 shares were cancelled and returned to the pool of shares which could be granted under the 2018 Plan resulting in a net number of 885,730 shares available for future issuance. The fair value of the restricted stock awards equaled the stock price at the grant date. As of September 30, 2018, the Company has not granted RSA’s under the 2018 Plan. The following table summarizes restricted stock activity during the nine months ended September 30, 2018: Shares Restricted stock at December 31, 2017 328,122 Shares granted 267,454 Shares forfeited (2,400) Shares vested (167,870) Restricted stock at September 30, 2018 425,306 Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective April 1, 2018, 325,000 shares of common stock have been reserved for issuance. Eligible employees may designate not more than 10% of their cash compensation to be deducted each pay period for the purchase of common stock under the Purchase Plan. Participants may purchase not 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 nine months of 2018 and 2017, respectively, 11,284 and 11,485 shares of common stock were issued under the ESPP. The Company issues new shares through its transfer agent upon employee stock purchase. |
Reportable Segments
Reportable Segments | 9 Months Ended |
Sep. 30, 2018 | |
Reportable Segments | |
Reportable Segments | 11. 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 and airframe 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. During the second quarter of 2018, the Company moved certain sales of leased equipment to the Spare Parts Sales segment from the Leasing and Related Operations segment and had no change in the determination of operating segments. In accordance with ASC 280-10, the Company has restated prior period information presented below to reflect this change in composition of its reportable segments. The following tables present a summary of the reportable segments (in thousands): Leasing and Three months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 46,984 $ — $ — $ 46,984 Maintenance reserve revenue 19,370 — — 19,370 Spare parts and equipment sales — 8,354 — 8,354 Gain on sale of leased equipment 1,150 106 — 1,256 Other revenue 2,010 274 (274) 2,010 Total revenue 69,514 8,734 (274) 77,974 Expenses: Depreciation and amortization expense 19,771 90 — 19,861 Cost of spare parts and equipment sales — 5,848 — 5,848 Write-down of equipment 1,215 — — 1,215 General and administrative 17,003 1,121 — 18,124 Technical expense 2,290 — — 2,290 Interest expense 17,885 — — 17,885 Total expenses 58,164 7,059 — 65,223 Earnings from operations $ 11,350 $ 1,675 $ (274) $ 12,751 Leasing and Nine months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 129,710 $ — $ — $ 129,710 Maintenance reserve revenue 56,855 — — 56,855 Spare parts and equipment sales — 21,701 — 21,701 Gain on sale of leased equipment 1,917 225 — 2,142 Other revenue 5,716 1,596 (1,550) 5,762 Total revenue 194,198 23,522 (1,550) 216,170 Expenses: Depreciation and amortization expense 55,336 264 — 55,600 Cost of spare parts and equipment sales — 16,537 — 16,537 Write-down of equipment 4,793 — — 4,793 General and administrative 47,181 3,336 — 50,517 Technical expense 9,199 — — 9,199 Interest expense 46,617 — — 46,617 Total expenses 163,126 20,137 — 183,263 Earnings from operations $ 31,072 $ 3,385 $ (1,550) $ 32,907 Leasing and Three months ended September 30, 2017 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 33,474 $ — $ — $ 33,474 Maintenance reserve revenue 20,370 — — 20,370 Spare parts and equipment sales — 9,294 — 9,294 Gain on sale of leased equipment 22 152 — 174 Other revenue 2,538 247 (236) 2,549 Total revenue 56,404 9,693 (236) 65,861 Expenses: Depreciation and amortization expense 16,056 86 — 16,142 Cost of spare parts and equipment sales (2) — 7,148 — 7,148 Write-down of equipment (2) 6,226 — — 6,226 General and administrative 13,387 921 — 14,308 Technical expense 2,605 — — 2,605 Interest expense 14,220 — — 14,220 Total expenses 52,494 8,155 — 60,649 Earnings from operations $ 3,910 $ 1,538 $ (236) $ 5,212 Leasing and Nine months ended September 30, 2017 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 95,045 $ — $ — $ 95,045 Maintenance reserve revenue 64,212 — — 64,212 Spare parts and equipment sales 19,300 21,973 — 41,273 Gain on sale of leased equipment 4,463 221 — 4,684 Other revenue 6,314 697 (572) 6,439 Total revenue 189,334 22,891 (572) 211,653 Expenses: Depreciation and amortization expense 48,526 260 — 48,786 Cost of spare parts and equipment sales (2) 14,623 17,498 — 32,121 Write-down of equipment (2) 19,668 — — 19,668 General and administrative 38,008 2,566 — 40,574 Technical expense 7,345 — — 7,345 Interest expense 36,398 — — 36,398 Total expenses 164,568 20,324 — 184,892 Earnings from operations $ 24,766 $ 2,567 $ (572) $ 26,761 (1) Represents revenue generated between our operating segments. (2) The amounts herein include reclassifications of scrap inventory write-offs and lower of cost or market write-downs that were previously presented within Write-down of equipment to the Costs of spare parts and equipment sales expense line item. The three and nine months ended September 30, 2017 were impacted by a reclassification of $0.7 million and $2.6 million, respectively, reflected as an increase to Cost of spare parts and equipment sales and a decrease to Write-down of equipment. Leasing and Related Operations Spare Parts Sales Eliminations Total Total assets as of September 30, 2018 $ 1,919,003 $ 46,193 $ — $ 1,965,196 Total assets as of December 31, 2017 $ 1,556,406 $ 47,025 $ — $ 1,603,431 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2018 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transaction During the third quarter of 2018, the Company’s Chief Executive Officer utilized the WASI spare parts warehouse to temporarily store personal equipment and has reimbursed the Company $450 as of September 30, 2018 for such usage. On September 12, 2018, in a transaction approved by an independent committee of the Board of Directors, the Company purchased 88,000 shares of common stock directly from the Company’s Chief Executive Officer. The agreed and paid price per share was $34.2972, the volume weighted average price on September 12, 2018. During the nine months of 2018, the Company accrued approximately $44,000 of expenses payable to Mikchalk Lake, LLC, an entity in which our Chief Executive Officer retains an ownership interest. These expenses were for lodging and other business related services. These transactions were approved by the Board’s independent Directors. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2018 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | (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”) 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 2017 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 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. 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 goodwill, intangible assets, long-lived assets, equipment held for sale, estimated income taxes and stock-based compensation. Actual results may differ from these estimates under different assumptions or conditions. |
Reclassifications | (b) Reclassifications In conjunction with our review of the fourth quarter of 2017, the Company reclassified scrap inventory write-offs and inventory lower of cost or market write-downs that were previously presented within Write-down of equipment to the Cost of spare parts and equipment sales line item. The three and nine month periods ended September 30, 2017 were impacted by an adjustment of $0.7 million and $2.6 million, respectively, with the adjustment reflected as an increase to Cost of spare parts and equipment sales and a decrease to Write-down of equipment. These reclassified items had no effect on the reported results of operations, financial condition or statements of cash flows. |
Principles of Consolidation | (c) Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, including VIEs where the Company is the primary beneficiary in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest firstly to determine whether for accounting purposes the entity is a variable interest entity or 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 the entities’ activities. If the entity is a voting interest entity the Company consolidates the entity when it has a majority of voting interests. Intercompany transactions and balances have been eliminated in consolidation. |
Recent Accounting Pronouncements | (d) Recent Accounting Pronouncements Recent Accounting Pronouncements Adopted by the Company In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” (“ASU 2014-09”). ASU 2014-09 amends the accounting guidance on revenue recognition. The amendments in this accounting standard update are intended to provide a more robust framework for addressing revenue issues, improve comparability of revenue recognition practices, and improve disclosure requirements. Under the new standard, revenue is recognized when a customer obtains control of promised goods or services and is recognized in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. The principles in the standard should be applied using a five-step model that includes 1) identifying the contract(s) with a customer, 2) identifying the performance obligations in the contract, 3) determining the transaction price, 4) allocating the transaction price to the performance obligations in the contract, and 5) recognizing revenue when (or as) the performance obligations are satisfied. The standard also requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In addition, the standard amends the existing requirements for the recognition of a gain or loss on the transfer of nonfinancial assets that are not in a contract with a customer (for example, sales of real estate) to be consistent with the standard’s guidance on recognition and measurement (including the constraint on revenue). The FASB also subsequently issued several amendments to the standard, including clarification on principal versus agent guidance, identifying performance obligations, and immaterial goods and services in a contract. The Company adopted ASU 2014-09 and its related amendments (collectively known as Accounting Standards Codification (“ASC”) 606) effective on January 1, 2018 using the modified retrospective approach applied only to contracts not completed as of the date of adoption . Please see Note 2 "Revenue from Contracts with Customers" for the required disclosures related to the impact of adopting this standard and a discussion of the Company's updated policies related to revenue recognition and accounting for costs to obtain and fulfill a customer contract. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments a consensus of the Emerging Issues Task Force) to improve the diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The update provides guidance on specific cash flow classification issues including the following: (1) debt prepayment or debt extinguishment costs; (2) settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; (3) contingent consideration payments made after a business combination; (4) proceeds from the settlement of insurance claims; (5) proceeds from the settlement of corporate-owned life insurance policies, including bank-owned life insurance policies; (6) distributions received from equity method investees; (7) beneficial interests in securitization transactions; and (8) separately identifiable cash flows and application of the predominance principle. Prior GAAP did not include specific guidance on these eight cash flow classification issues. The Company adopted the guidance effective January 1, 2018 and utilizing the cumulative earnings approach on a retrospective basis, reclassified $1.9 million of distributions from joint ventures during the nine months ended September 30, 2017 from cash flows from investing activities to cash flows from operating activities. The remaining provisions of this update did not have a material impact on the Company’s consolidated statements of cash flows. In January 2017, the FASB issued ASU 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,” that eliminates “Step 2” from the goodwill impairment test. The Company has made the election to early adopt ASU 2017-04 as of January 1, 2018 and the standard was applied on a prospective basis, as required. The adoption of this standard did not have an impact on the consolidated financial statements or the related disclosures. In May 2017, the FASB issued ASU 2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting,” that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The new guidance became effective for the Company on January 1, 2018 and was applied on a prospective basis, as required. The adoption of this standard did not have an impact on the consolidated financial statements or the related disclosures. In February 2018, the FASB issued ASU 2018-02, “Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income” to address stakeholder concerns about the guidance in current GAAP that requires deferred tax liabilities and assets to be adjusted for the effect of a change in tax laws or rates with the effect included in income from continuing operations in the reporting period that includes the enactment date. The amendments in this update allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act of 2017. The ASU must be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the U.S. federal corporate income tax rate in the Act is recognized. The Company made the election to early adopt ASU 2018-02 as of January 1, 2018 (the period of adoption) and recorded a reclassification of $59 thous and between Other comprehensive income and Retained earnings as of January 1, 2018. In September 2018, the FASB issued ASU 2018-15, “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract” which requires cloud computing arrangements in a service contact to follow the internal-use software guidance provided by ASC 350-40 in determining the accounting treatment of implementation costs. ASC 350-40 states that only qualifying costs incurred during the application development stage may be capitalized. The Company made the election to early adopt ASU 2018-15 on a retrospective basis, and during 2018 has capitalized $1.0 million in cloud computing arrangement implementation costs. There was no prior period impact related to the adoption of ASU 2018-15. Recent Accounting Pronouncements To Be Adopted by the Company In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” The ASU is targeted at simplifying the application of hedge accounting and aims at aligning the recognition and presentation of the effects of hedge instruments and hedge items. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company plans to adopt this guidance effective January 1, 2019 and is currently evaluating the potential impact adoption will have on the consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)” (“ASU 2016-02”). The FASB issued ASU 2016-02 to increase transparency and comparability among organizations recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. Under ASU 2016-02, lessors will account for leases using an approach that is substantially equivalent to existing GAAP for sales-type leases, direct financing leases and operating leases. Unlike current guidance, however, a lease with collectability uncertainties may be classified as a sales-type lease. If collectability of lease payments, plus any amount necessary to satisfy a lessee residual value guarantee, is not probable, lease payments received will be recognized as a deposit liability and the underlying assets will not be derecognized until collectability of the remaining amounts becomes probable. ASU 2016-02 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted, and must be adopted using a modified retrospective transition. The Company plans to adopt this guidance effective January 1, 2019 utilizing the lessor practical expedient and is currently evaluating the potential impact adoption will have on the consolidated financial statements and related disclosures. |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Revenue from Contracts with Customers | |
Schedule of disaggregation of revenue by major source | The following table disaggregates revenue by major source for the three and nine months ended September 30, 2018 (in thousands): Leasing and Three months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Leasing revenue (2) $ 67,240 $ — $ — $ 67,240 Gain on sale of leased equipment (3) 1,150 106 — 1,256 Spare parts and equipment sales — 8,354 — 8,354 Managed services 1,124 — — 1,124 Other revenue — 274 (274) — Total revenue $ 69,514 $ 8,734 $ (274) $ 77,974 Leasing and Nine months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Leasing revenue (2) $ 188,984 $ — $ — $ 188,984 Gain on sale of leased equipment (3) 1,917 225 — 2,142 Spare parts and equipment sales — 21,701 — 21,701 Managed services 3,297 — — 3,297 Other revenue — 1,596 (1,550) 46 Total revenue $ 194,198 $ 23,522 $ (1,550) $ 216,170 (1) Represents revenue generated between our reportable segments. (2) Leasing revenue is recognized under the lease accounting guidance in ASC 840 Leases, and therefore qualifies for the scope exception under ASC 606. (3) Gain on sale of leased equipment is accounted for under ASC 610-20, Gains and losses from the derecognition of nonfinancial assets. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Investments | |
Schedule of investments | Nine Months Ended September 30, 2018 WMES CASC Willis Total (in thousands) Investment in joint ventures as of December 31, 2017 $ 36,014 $ 14,627 $ 50,641 Earnings (losses) from joint ventures 1,831 (262) 1,569 Deferred gain on engine sale (1,280) — (1,280) Distribution (5,730) — (5,730) Foreign currency translation adjustment — (762) (762) Investment in joint ventures as of September 30, 2018 $ 30,835 $ 13,603 $ 44,438 |
Summarized financial information | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands) (in thousands) Revenue $ 9,987 $ 12,286 $ 26,633 $ 32,146 Expenses 8,408 6,366 22,762 20,820 WMES income before income taxes $ 1,579 $ 5,920 $ 3,871 $ 11,326 September 30, December 31, 2018 2017 (in thousands) Total assets $ 284,988 $ 246,309 Total liabilities 211,981 165,228 Total WMES net equity $ 73,007 $ 81,081 |
Debt Obligations (Tables)
Debt Obligations (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Debt Obligations | |
Schedule of notes payable | September 30, December 31, 2018 2017 (in thousands) Credit facility at a floating rate of interest of one-month LIBOR plus 2.0% at September 30, 2018, secured by engines. The facility has a committed amount of $890.0 million at September 30, 2018, which revolves until the maturity date of April 2021 $ 466,000 $ 491,000 WEST IV Series A 2018 term notes payable at a fixed rate of interest of 4.75%, maturing in September 2043, secured by engines 326,759 — WEST IV Series B 2018 term notes payable at a fixed rate of interest of 5.44%, maturing in September 2043, secured by engines 46,680 — WEST III Series A 2017 term notes payable at a fixed rate of interest of 4.69%, maturing in August 2042, secured by engines 279,382 289,295 WEST III Series B 2017 term notes payable at a fixed rate of interest of 6.36%, maturing in August 2042, secured by engines 39,953 41,370 WEST II Series A 2012 term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines 243,221 259,022 Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft 11,388 12,720 Note payable at a variable interest rate of one-month LIBOR plus 2.25%, matured in January 2018, secured by engines — 10,336 1,413,383 1,103,743 Less: unamortized debt issuance costs (21,270) (18,338) Total debt obligations $ 1,392,113 $ 1,085,405 |
Schedule or principal outstanding | Year (in thousands) 2018 $ 13,812 2019 55,380 2020 54,980 2021 (includes $466.0 million outstanding on revolving credit facility) 521,217 2022 (includes $173.8 million outstanding on WEST II Series A 2012 term notes) 207,733 Thereafter 560,261 Total $ 1,413,383 |
Derivative Instruments (Tables)
Derivative Instruments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Derivative Instruments | |
Schedule of information about financial statement effects related to cash flow hedges | Amount of Gain Recognized Location of Gain (Loss) Amount of Gain (Loss) Recognized in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Three Months Ended September 30, Income Three Months Ended September 30, Relationships 2018 2017 (Effective Portion) 2018 2017 (in thousands) (in thousands) Interest rate contracts $ 221 $ 164 Interest expense $ 113 $ (117) Total $ 221 $ 164 Total $ 113 $ (117) Amount of Gain Recognized Location of Gain (Loss) Amount of Gain (Loss) Recognized in OCI on Derivatives Reclassified from from Accumulated OCI into Income Derivatives in (Effective Portion) Accumulated OCI into (Effective Portion) Cash Flow Hedging Nine Months Ended September 30, Income Nine Months Ended September 30, Relationships 2018 2017 (Effective Portion) 2018 2017 (in thousands) (in thousands) Interest rate contracts $ 1,636 $ 160 Interest expense $ 182 $ (517) Total $ 1,636 $ 160 Total $ 182 $ (517) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Fair Value Measurements | |
Schedule of fair value hierarchy of assets measured on nonrecurring basis and gain (losses) recorded | Assets Written Down to Fair Value Total Losses September 30, 2018 December 31, 2017 Nine Months Ended September 30, Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total 2018 2017 (in thousands) (in thousands) Equipment held for lease $ — $ 5,619 $ — $ 5,619 $ — $ 23,255 $ — $ 23,255 $ (3,434) $ (9,019) Equipment held for sale — 2,110 — 2,110 — 39,261 — 39,261 (1,359) (10,649) Spare parts inventory — 934 — 934 — 5,336 — 5,336 (2,169) (2,575) Total $ — $ 8,663 $ — $ 8,663 $ — $ 67,852 $ — $ 67,852 $ (6,962) $ (22,243) |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Earnings Per Share | |
Basic and Diluted EPS | Three Months Ended September 30, Nine Months Ended September 30, 2018 2017 2018 2017 (in thousands) (in thousands) Net income attributable to common shareholders $ 8,834 $ 4,939 $ 22,624 $ 18,436 Basic weighted average common shares outstanding 5,900 6,055 5,960 6,068 Potentially dilutive common shares 104 129 123 147 Diluted weighted average common shares outstanding 6,004 6,184 6,083 6,215 Basic weighted average earnings per common share $ 1.50 $ 0.82 $ 3.80 $ 3.04 Diluted weighted average earnings per common share $ 1.47 $ 0.80 $ 3.72 $ 2.97 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Stock-Based Compensation Plans | |
Schedule of components of stock compensation expense | Three months ended September 30, Nine months ended September 30, 2018 2017 2018 2017 (in thousands) (in thousands) 2007 Stock Incentive Plan $ 1,392 $ 1,134 $ 3,957 $ 3,193 Employee Stock Purchase Plan 27 20 47 35 Total Stock Compensation Expense $ 1,419 $ 1,154 $ 4,004 $ 3,228 |
Summary of restricted stock activity | Shares Restricted stock at December 31, 2017 328,122 Shares granted 267,454 Shares forfeited (2,400) Shares vested (167,870) Restricted stock at September 30, 2018 425,306 |
Reportable Segments (Tables)
Reportable Segments (Tables) | 9 Months Ended |
Sep. 30, 2018 | |
Reportable Segments | |
Summary of the reportable segments | Leasing and Three months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 46,984 $ — $ — $ 46,984 Maintenance reserve revenue 19,370 — — 19,370 Spare parts and equipment sales — 8,354 — 8,354 Gain on sale of leased equipment 1,150 106 — 1,256 Other revenue 2,010 274 (274) 2,010 Total revenue 69,514 8,734 (274) 77,974 Expenses: Depreciation and amortization expense 19,771 90 — 19,861 Cost of spare parts and equipment sales — 5,848 — 5,848 Write-down of equipment 1,215 — — 1,215 General and administrative 17,003 1,121 — 18,124 Technical expense 2,290 — — 2,290 Interest expense 17,885 — — 17,885 Total expenses 58,164 7,059 — 65,223 Earnings from operations $ 11,350 $ 1,675 $ (274) $ 12,751 Leasing and Nine months ended September 30, 2018 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 129,710 $ — $ — $ 129,710 Maintenance reserve revenue 56,855 — — 56,855 Spare parts and equipment sales — 21,701 — 21,701 Gain on sale of leased equipment 1,917 225 — 2,142 Other revenue 5,716 1,596 (1,550) 5,762 Total revenue 194,198 23,522 (1,550) 216,170 Expenses: Depreciation and amortization expense 55,336 264 — 55,600 Cost of spare parts and equipment sales — 16,537 — 16,537 Write-down of equipment 4,793 — — 4,793 General and administrative 47,181 3,336 — 50,517 Technical expense 9,199 — — 9,199 Interest expense 46,617 — — 46,617 Total expenses 163,126 20,137 — 183,263 Earnings from operations $ 31,072 $ 3,385 $ (1,550) $ 32,907 Leasing and Three months ended September 30, 2017 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 33,474 $ — $ — $ 33,474 Maintenance reserve revenue 20,370 — — 20,370 Spare parts and equipment sales — 9,294 — 9,294 Gain on sale of leased equipment 22 152 — 174 Other revenue 2,538 247 (236) 2,549 Total revenue 56,404 9,693 (236) 65,861 Expenses: Depreciation and amortization expense 16,056 86 — 16,142 Cost of spare parts and equipment sales (2) — 7,148 — 7,148 Write-down of equipment (2) 6,226 — — 6,226 General and administrative 13,387 921 — 14,308 Technical expense 2,605 — — 2,605 Interest expense 14,220 — — 14,220 Total expenses 52,494 8,155 — 60,649 Earnings from operations $ 3,910 $ 1,538 $ (236) $ 5,212 Leasing and Nine months ended September 30, 2017 Related Operations Spare Parts Sales Eliminations (1) Total Revenue: Lease rent revenue $ 95,045 $ — $ — $ 95,045 Maintenance reserve revenue 64,212 — — 64,212 Spare parts and equipment sales 19,300 21,973 — 41,273 Gain on sale of leased equipment 4,463 221 — 4,684 Other revenue 6,314 697 (572) 6,439 Total revenue 189,334 22,891 (572) 211,653 Expenses: Depreciation and amortization expense 48,526 260 — 48,786 Cost of spare parts and equipment sales (2) 14,623 17,498 — 32,121 Write-down of equipment (2) 19,668 — — 19,668 General and administrative 38,008 2,566 — 40,574 Technical expense 7,345 — — 7,345 Interest expense 36,398 — — 36,398 Total expenses 164,568 20,324 — 184,892 Earnings from operations $ 24,766 $ 2,567 $ (572) $ 26,761 (1) Represents revenue generated between our operating segments. (2) The amounts herein include reclassifications of scrap inventory write-offs and lower of cost or market write-downs that were previously presented within Write-down of equipment to the Costs of spare parts and equipment sales expense line item. The three and nine months ended September 30, 2017 were impacted by a reclassification of $0.7 million and $2.6 million, respectively, reflected as an increase to Cost of spare parts and equipment sales and a decrease to Write-down of equipment. Leasing and Related Operations Spare Parts Sales Eliminations Total Total assets as of September 30, 2018 $ 1,919,003 $ 46,193 $ — $ 1,965,196 Total assets as of December 31, 2017 $ 1,556,406 $ 47,025 $ — $ 1,603,431 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | ||
Impact from adoption of ASU 2018-02 | [1] | $ 59 | ||
Reclassification | ||||
Increase to cost of spare parts and equipment sales | $ 700 | $ 2,600 | ||
Decrease to Write-down of equipment | $ (700) | $ (2,600) | ||
[1] | Reflects the stranded tax effects from change in tax rate as a result of the early adoption of ASU 2018-02 which has been reclassified to retained earnings. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Recent Accounting Pronouncements Adopted by the Company | |||
Distributions received from joint ventures | $ 190 | ||
Distributions received from joint ventures | 5,540 | $ 1,880 | |
ASU 2016-15 | |||
Recent Accounting Pronouncements Adopted by the Company | |||
Distributions received from joint ventures | (1,900) | ||
Distributions received from joint ventures | $ 1,900 | ||
ASU 2018-15 | |||
Recent Accounting Pronouncements Adopted by the Company | |||
Capitalized costs | $ 1,000 | $ 0 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers - Disaggregates revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Revenue from Contracts with Customers | ||||
Leasing revenue | $ 67,240 | $ 188,984 | ||
Gain on sale of leased equipment | 1,256 | $ 174 | 2,142 | $ 4,684 |
Revenue | 19,370 | 20,370 | 56,855 | 64,212 |
Total revenue | 77,974 | 65,861 | 216,170 | 211,653 |
Spare parts and equipment sales | ||||
Revenue from Contracts with Customers | ||||
Revenue | 8,354 | 21,701 | ||
Managed services | ||||
Revenue from Contracts with Customers | ||||
Revenue | 1,124 | 3,297 | ||
Other revenue | ||||
Revenue from Contracts with Customers | ||||
Revenue | 46 | |||
Operating Segments | Leasing and Related Operations | ||||
Revenue from Contracts with Customers | ||||
Leasing revenue | 67,240 | 188,984 | ||
Gain on sale of leased equipment | 1,150 | 22 | 1,917 | 4,463 |
Revenue | 19,370 | 20,370 | 56,855 | 64,212 |
Total revenue | 69,514 | 56,404 | 194,198 | 189,334 |
Operating Segments | Leasing and Related Operations | Managed services | ||||
Revenue from Contracts with Customers | ||||
Revenue | 1,124 | 3,297 | ||
Operating Segments | Spare Parts Sales | ||||
Revenue from Contracts with Customers | ||||
Gain on sale of leased equipment | 106 | 152 | 225 | 221 |
Total revenue | 8,734 | 9,693 | 23,522 | 22,891 |
Operating Segments | Spare Parts Sales | Spare parts and equipment sales | ||||
Revenue from Contracts with Customers | ||||
Revenue | 8,354 | 21,701 | ||
Operating Segments | Spare Parts Sales | Other revenue | ||||
Revenue from Contracts with Customers | ||||
Revenue | 274 | 1,596 | ||
Eliminations | ||||
Revenue from Contracts with Customers | ||||
Total revenue | (274) | $ (236) | (1,550) | $ (572) |
Eliminations | Other revenue | ||||
Revenue from Contracts with Customers | ||||
Revenue | $ (274) | $ (1,550) |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Additional Information (Details) - USD ($) $ in Millions | Sep. 30, 2018 | Jan. 31, 2018 |
Revenue from Contracts with Customers | ||
Lease rent receivables past due | $ 5 | |
Maintenance reserve receivables past due | 2.1 | |
Unbilled revenue associated with outstanding contracts | $ 0.8 | |
Other Assets | ||
Revenue from Contracts with Customers | ||
Unbilled revenue associated with outstanding contracts | $ 0.4 |
Investments (Details)
Investments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)engineaircraft | Sep. 30, 2017USD ($)engine | Dec. 31, 2017USD ($) | May 25, 2011 | |
Investments | ||||||
Net book value of equipment held for operating lease | $ 1,590,482 | $ 1,590,482 | $ 1,342,571 | |||
Investment in WMES joint ventures at beginning of the period | 50,641 | |||||
Earnings from joint venture | 1,569 | |||||
Deferred gain on engine sale | (1,280) | |||||
Distribution | (5,730) | |||||
Foreign Currency Translation Adjustment | (762) | |||||
Investment in WMES joint ventures at end of the period | 44,438 | 44,438 | ||||
Other revenue | 2,010 | $ 2,549 | $ 5,762 | $ 6,439 | ||
WMES | ||||||
Investments | ||||||
Number of engines in lease portfolio | engine | 35 | |||||
Number of aircraft in lease portfolio | aircraft | 1 | |||||
Net book value of equipment held for operating lease | $ 266,100 | $ 266,100 | ||||
Ownership interest (as a percent) | 100.00% | 100.00% | 50.00% | |||
Investment in WMES joint ventures at beginning of the period | $ 36,014 | |||||
Earnings from joint venture | 1,831 | |||||
Deferred gain on engine sale | (1,280) | |||||
Distribution | (5,730) | |||||
Investment in WMES joint ventures at end of the period | $ 30,835 | $ 30,835 | ||||
Number of engines sold to third party | engine | 2 | 2 | ||||
Proceeds from sale of engine | $ 23,200 | $ 14,800 | ||||
Condensed Consolidated Statements of Income | ||||||
Revenue | 9,987 | 12,286 | 26,633 | 32,146 | ||
Expenses | 8,408 | 6,366 | 22,762 | 20,820 | ||
WMES net income | 1,579 | 5,920 | 3,871 | 11,326 | ||
Condensed Consolidated Balance Sheets | ||||||
Total assets | 284,988 | 284,988 | 246,309 | |||
Total liabilities | 211,981 | 211,981 | 165,228 | |||
Total WMES net equity | 73,007 | 73,007 | $ 81,081 | |||
WMES | Asset Management | ||||||
Investments | ||||||
Other revenue | 600 | $ 500 | $ 1,800 | $ 1,800 | ||
CASC Willis | ||||||
Investments | ||||||
Number of engines in lease portfolio | engine | 4 | |||||
Net book value of equipment held for operating lease | $ 52,800 | $ 52,800 | ||||
Ownership interest (as a percent) | 50.00% | 50.00% | ||||
Investment in WMES joint ventures at beginning of the period | $ 14,627 | |||||
Earnings from joint venture | (262) | |||||
Foreign Currency Translation Adjustment | (762) | |||||
Investment in WMES joint ventures at end of the period | $ 13,603 | $ 13,603 | ||||
Number of engines sold to third party | engine | 0 | 1 | ||||
Proceeds from sale of engine | $ 11,200 |
Debt Obligations (Details)
Debt Obligations (Details) $ in Thousands | Aug. 22, 2018USD ($)engineNotesSeriesaircraft | Sep. 30, 2018USD ($) | Dec. 31, 2017USD ($) |
Principal outstanding repayable | |||
2,018 | $ 13,812 | ||
2,019 | 55,380 | ||
2,020 | 54,980 | ||
2,021 | 521,217 | ||
2,022 | 207,733 | ||
Thereafter | 560,261 | ||
Total | 1,413,383 | $ 1,103,743 | |
Less: unamortized debt issuance costs | (21,270) | (18,338) | |
Total debt obligations | 1,392,113 | 1,085,405 | |
Credit facility at a floating rate of interest of one-month LIBOR plus 2.0% and maturity date of April 2021 | |||
Long Term Debt | |||
Maximum borrowing capacity under credit facility | $ 890,000 | ||
Fixed rate (as a percent) | 2.00% | ||
Principal outstanding repayable | |||
Total | $ 466,000 | 491,000 | |
WEST IV | |||
Long Term Debt | |||
Number of series notes | NotesSeries | 2 | ||
Aggregate principal amount | $ 373,400 | ||
Principal outstanding repayable | |||
Total | $ 373,400 | ||
Number of engines pledged as collateral | engine | 55 | ||
Number of airframes provided as collateral for debt | aircraft | 1 | ||
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% | ||
Notes issues at price of par (as percentage) | 99.99504% | ||
Aggregate principal amount | $ 326,800 | ||
Maturity term | 8 years | ||
Principal outstanding repayable | |||
Total | $ 326,759 | ||
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% | ||
Notes issues at price of par (as percentage) | 99.99853% | ||
Aggregate principal amount | $ 46,700 | ||
Maturity term | 8 years | ||
Principal outstanding repayable | |||
Total | $ 46,680 | ||
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% | ||
Principal outstanding repayable | |||
Total | $ 279,382 | 289,295 | |
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% | ||
Principal outstanding repayable | |||
Total | $ 39,953 | 41,370 | |
WEST II Series A 2012 term notes payable at a fixed rate of interest of 5.50%, maturing in September 2037, secured by engines | |||
Long Term Debt | |||
Fixed rate (as a percent) | 5.50% | ||
Line of credit facility outstanding amount | $ 173,800 | ||
Principal outstanding repayable | |||
Total | 243,221 | 259,022 | |
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft | |||
Principal outstanding repayable | |||
Total | $ 11,388 | 12,720 | |
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft | Minimum | |||
Long Term Debt | |||
Fixed rate (as a percent) | 2.60% | ||
Note payable at fixed interest rates ranging from 2.60% to 2.97%, maturing in July 2024, secured by an aircraft | Maximum | |||
Long Term Debt | |||
Fixed rate (as a percent) | 2.97% | ||
Note payable at a variable interest rate of one-month LIBOR plus 2.25%, matured in January 2018, secured by engines | |||
Long Term Debt | |||
Fixed rate (as a percent) | 2.25% | ||
Principal outstanding repayable | |||
Total | $ 10,336 | ||
Revolving credit facility | |||
Long Term Debt | |||
Maximum borrowing capacity under credit facility | $ 890,000 | ||
Amount of debt available under accordion feature | 1,000,000 | ||
Line of credit facility outstanding amount | $ 466,000 |
Derivative Instruments - Intere
Derivative Instruments - Interest rate swap agreement (Details) - Interest rate contract $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)item | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
Derivative instruments | |||||
Borrowings at variable interest rates | $ 466 | $ 466 | $ 501.3 | ||
Number of interest rate swap agreements | item | 1 | 1 | |||
Notional amount outstanding | $ 100 | $ 100 | 100 | ||
Remaining maturity term | 31 months | ||||
Gain (loss) recorded to net finance costs | 0.1 | $ (0.1) | $ 0.2 | $ (0.5) | |
Net fair value of swap liability | $ 2.8 | $ 2.8 | $ 1.1 |
Derivative Instruments - Cash f
Derivative Instruments - Cash flow hedges (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Effects of derivative instruments | ||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | $ (309) | $ 458 | $ 874 | $ 780 |
Cash Flow Hedging | ||||
Effects of derivative instruments | ||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | 221 | 164 | 1,636 | 160 |
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income (Effective Portion) | 113 | (117) | 182 | (517) |
Cash Flow Hedging | Interest rate contract | Interest expense [Member] | ||||
Effects of derivative instruments | ||||
Amount of Gain Recognized in OCI on Derivatives (Effective Portion) | 221 | 164 | 1,636 | 160 |
Amount of Loss (Gain) Reclassified from Accumulated OCI into Income (Effective Portion) | $ 113 | $ (117) | $ 182 | $ (517) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Income Taxes | |||||
Income tax expense | $ 3,583 | $ 2,960 | $ 9,359 | $ 13,367 | |
Effective tax rate (as a percent) | 27.00% | 35.90% | 27.10% | 40.70% | |
Statutory federal income tax expense (as a percent) | 21.00% | 35.00% |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Dec. 31, 2017 | |
Fair value of notes payable | $ 1,416.6 | $ 1,090 | |
Assets at fair value | 2.8 | 1.1 | |
Increase in interest expense | $ 0.5 | ||
Change in fair value recorded in earnings | 0.2 | ||
Interest rate contract | |||
Derivative, Notional Amount | $ 100 | $ 100 |
Fair Value Measurements - Nonre
Fair Value Measurements - Nonrecurring Basis (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2018USD ($)engineaircraft | Sep. 30, 2017USD ($)engineaircraft | Sep. 30, 2018USD ($)engineaircraft | Sep. 30, 2017USD ($)engineaircraft | Dec. 31, 2017USD ($) | |
Assets at fair value and gains (losses) recorded | |||||
Equipment held for sale | $ 40,931 | $ 40,931 | $ 34,172 | ||
Assets at fair value | $ 2,800 | 2,800 | 1,100 | ||
Increase (decrease) in asset write-down | $ 4,800 | ||||
Number of engines | engine | 4 | 7 | 4 | 7 | |
Number of aircraft | aircraft | 6 | 3 | 6 | 3 | |
Asset write-down | $ 1,215 | $ 6,226 | $ 4,793 | $ 19,668 | |
Engine and aircraft | |||||
Assets at fair value and gains (losses) recorded | |||||
Asset write-down | 19,700 | ||||
Nonrecurring | |||||
Assets at fair value and gains (losses) recorded | |||||
Equipment held for lease | 5,619 | 5,619 | 23,255 | ||
Equipment held for sale | 2,110 | 2,110 | 39,261 | ||
Spare parts inventory | 934 | 934 | 5,336 | ||
Assets at fair value | 8,663 | 8,663 | 67,852 | ||
Total losses on equipment held for lease | (3,434) | (9,019) | |||
Total losses on equipment held for sale | (1,359) | (10,649) | |||
Total losses on spare parts inventory | (2,169) | (2,575) | |||
Total losses on assets | (6,962) | $ (22,243) | |||
Nonrecurring | Level 2 | |||||
Assets at fair value and gains (losses) recorded | |||||
Equipment held for lease | 5,619 | 5,619 | 23,255 | ||
Equipment held for sale | 2,110 | 2,110 | 39,261 | ||
Spare parts inventory | 934 | 934 | 5,336 | ||
Assets at fair value | $ 8,663 | $ 8,663 | $ 67,852 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Earnings Per Share | ||||
Shares not included in computation of diluted weighted average earnings per common | 0 | 0 | 200,000 | 925 |
Net income attributable to common shareholders | $ 8,834 | $ 4,939 | $ 22,624 | $ 18,436 |
Basic weighted average common shares outstanding (in shares) | 5,900,000 | 6,055,000 | 5,960,000 | 6,068,000 |
Potentially dilutive common shares | 104,000 | 129,000 | 123,000 | 147,000 |
Diluted weighted average common shares outstanding | 6,004,000 | 6,184,000 | 6,083,000 | 6,215,000 |
Basic weighted average earnings per common share (in dollars per share) | $ 1.50 | $ 0.82 | $ 3.80 | $ 3.04 |
Diluted earnings common share (in dollars per share) | $ 1.47 | $ 0.80 | $ 3.72 | $ 2.97 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2018 | Dec. 31, 2012 | |
Common Stock Repurchase | ||
Repurchase of common stock authorized by Board of Directors | $ 100 | |
Number of years for repurchase of common stock | 5 years | |
Common stock repurchased, value | $ 14.5 | |
Remaining authorized stock repurchase amount | $ 14.8 | |
Common Stock | ||
Common Stock Repurchase | ||
Common stock repurchased (in shares) | 423,629 | |
Series A-1 Preferred Stock | ||
Common Stock Repurchase | ||
Dividend rate (as a percent) | 6.50% | |
Preferred stock dividends paid | $ 2.4 | |
Series A-2 Preferred Stock | ||
Common Stock Repurchase | ||
Dividend rate (as a percent) | 6.50% | |
Preferred stock dividends paid | $ 2.4 | |
Dutch Auction | ||
Common Stock Repurchase | ||
Weighted average price per share (in dollars per share) | $ 34.27 |
Stock-Based Compensation Plan_2
Stock-Based Compensation Plans - Stock compensation expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2018 | Sep. 30, 2017 | Sep. 30, 2018 | Sep. 30, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock compensation expense | $ 1,419 | $ 1,154 | $ 4,004 | $ 3,228 |
The 2007 plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock compensation expense | 1,392 | 1,134 | 3,957 | 3,193 |
Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock compensation expense | $ 27 | $ 20 | $ 47 | $ 35 |
Stock-Based Compensation Plan_3
Stock-Based Compensation Plans - 2007 Stock Incentive Plan (Details) - shares | May 24, 2007 | Sep. 30, 2018 | May 10, 2010 |
The 2007 plan | |||
Stock-based compensation plans | |||
Number of shares authorized | 2,800,000 | ||
Restricted stock, forfeited, and returned to pool | 169,144 | ||
Number of shares available | 885,730 | ||
Employee Stock Purchase Plan | |||
Stock-based compensation plans | |||
Number of shares authorized | 325,000 | ||
Restricted Stock | The 2007 plan | |||
Stock-based compensation plans | |||
Stock options outstanding (in shares) | 0 | ||
Number of shares awarded | 2,883,414 | ||
Restricted Stock | 2018 Plan | |||
Stock-based compensation plans | |||
Number of shares authorized | 800,000 | ||
Minimum | Restricted Stock | The 2007 plan | |||
Stock-based compensation plans | |||
Vesting period | 1 year | ||
Minimum | Restricted Stock | 2018 Plan | |||
Stock-based compensation plans | |||
Vesting period | 1 year | ||
Maximum | Restricted Stock | The 2007 plan | |||
Stock-based compensation plans | |||
Vesting period | 4 years | ||
Maximum | Restricted Stock | 2018 Plan | |||
Stock-based compensation plans | |||
Vesting period | 4 years |
Stock-Based Compensation Plan_4
Stock-Based Compensation Plans - Restricted stock activity (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2018 | Sep. 30, 2017 | |
The 2007 plan | ||
Number Outstanding | ||
Number of shares available | 885,730 | |
The 2007 plan | Restricted Stock | ||
Number Outstanding | ||
Balance at the beginning of the period (in shares) | 328,122 | |
Shares forfeited | (2,400) | |
Shares vested | (167,870) | |
Balance at the end of the period (in shares) | 425,306 | |
The 2007 plan | Restricted Stock | Awards Vesting Over Less Than One Year | ||
Number Outstanding | ||
Shares granted | 267,454 | |
Employee Stock Purchase Plan | ||
Number Outstanding | ||
Shares issued | 11,284 | 11,485 |
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 | 1,000 | |
Maximum amount of shares to be purchased by employee in one calendar year (in dollars) | $ 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% | |
2018 Plan | Restricted Stock | ||
Number Outstanding | ||
Shares granted | 0 |
Reportable Segments (Details)
Reportable Segments (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2018USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2018USD ($)segment | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | ||
Reportable Segments | ||||||
Number of reportable segments | segment | 2 | |||||
Number of operating segments | segment | 2 | |||||
Revenue: | ||||||
Lease rent revenue | $ 46,984 | $ 33,474 | $ 129,710 | $ 95,045 | ||
Revenue | 19,370 | 20,370 | 56,855 | 64,212 | ||
Revenue From Sale Of Spare Parts | 8,354 | 9,294 | 21,701 | 41,273 | ||
Gain on sale of leased equipment | 1,256 | 174 | 2,142 | 4,684 | ||
Other revenue | 2,010 | 2,549 | 5,762 | 6,439 | ||
Total revenue | 77,974 | 65,861 | 216,170 | 211,653 | ||
Expenses: | ||||||
Depreciation and amortization expense | 19,861 | 16,142 | 55,600 | 48,786 | ||
Cost of spare parts and equipment sales | 5,848 | 7,148 | 16,537 | 32,121 | ||
Write-down of equipment | 1,215 | 6,226 | 4,793 | 19,668 | ||
General and administrative | 18,124 | 14,308 | 50,517 | 40,574 | ||
Technical expense | 2,290 | 2,605 | 9,199 | 7,345 | ||
Interest Expense | 17,885 | 14,220 | 46,617 | 36,398 | ||
Total expenses | 65,223 | 60,649 | 183,263 | 184,892 | ||
Earnings from operations | 12,751 | 5,212 | 32,907 | 26,761 | ||
Total assets | [1] | 1,965,196 | 1,965,196 | $ 1,603,431 | ||
Operating Segments | Leasing and Related Operations | ||||||
Revenue: | ||||||
Lease rent revenue | 46,984 | 33,474 | 129,710 | 95,045 | ||
Revenue | 19,370 | 20,370 | 56,855 | 64,212 | ||
Revenue From Sale Of Spare Parts | 19,300 | |||||
Gain on sale of leased equipment | 1,150 | 22 | 1,917 | 4,463 | ||
Other revenue | 2,010 | 2,538 | 5,716 | 6,314 | ||
Total revenue | 69,514 | 56,404 | 194,198 | 189,334 | ||
Expenses: | ||||||
Depreciation and amortization expense | 19,771 | 16,056 | 55,336 | 48,526 | ||
Cost of spare parts and equipment sales | 14,623 | |||||
Write-down of equipment | 1,215 | 6,226 | 4,793 | 19,668 | ||
General and administrative | 17,003 | 13,387 | 47,181 | 38,008 | ||
Technical expense | 2,290 | 2,605 | 9,199 | 7,345 | ||
Interest Expense | 17,885 | 14,220 | 46,617 | 36,398 | ||
Total expenses | 58,164 | 52,494 | 163,126 | 164,568 | ||
Earnings from operations | 11,350 | 3,910 | 31,072 | 24,766 | ||
Total assets | 1,919,003 | 1,919,003 | 1,556,406 | |||
Operating Segments | Spare Parts Sales | ||||||
Revenue: | ||||||
Revenue From Sale Of Spare Parts | 8,354 | 9,294 | 21,701 | 21,973 | ||
Gain on sale of leased equipment | 106 | 152 | 225 | 221 | ||
Other revenue | 274 | 247 | 1,596 | 697 | ||
Total revenue | 8,734 | 9,693 | 23,522 | 22,891 | ||
Expenses: | ||||||
Depreciation and amortization expense | 90 | 86 | 264 | 260 | ||
Cost of spare parts and equipment sales | 5,848 | 7,148 | 16,537 | 17,498 | ||
General and administrative | 1,121 | 921 | 3,336 | 2,566 | ||
Total expenses | 7,059 | 8,155 | 20,137 | 20,324 | ||
Earnings from operations | 1,675 | 1,538 | 3,385 | 2,567 | ||
Total assets | 46,193 | 46,193 | $ 47,025 | |||
Eliminations | ||||||
Revenue: | ||||||
Other revenue | (274) | (236) | (1,550) | (572) | ||
Total revenue | (274) | (236) | (1,550) | (572) | ||
Expenses: | ||||||
Earnings from operations | $ (274) | (236) | $ (1,550) | (572) | ||
Reclassification | ||||||
Expenses: | ||||||
Write-down of equipment | 700 | 2,600 | ||||
Increase to cost of spare parts and equipment sales | 700 | 2,600 | ||||
Decrease to Write-down of equipment | $ (700) | $ (2,600) | ||||
[1] | Total assets at September 30, 2018 and December 31, 2017, respectively, include the following assets of variable interest entities (“VIEs”) that can only be used to settle the liabilities of the VIEs: Cash $393 and $130; Restricted cash $155,420 and $40,272; Equipment $1,054,258 and $657,333; and Other assets $834 and $20,090, respectively. |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 3 Months Ended | |
Sep. 30, 2018 | Sep. 12, 2018 | |
Chief Executive Officer | ||
Related Party and Similar Transactions | ||
Amounts of utilization and reimbursed | $ 450 | |
Repurchased price | $ 34.2972 | |
Number of shares repurchased | $ 88,000 | |
Mikchalk Lake LLC | ||
Related Party and Similar Transactions | ||
Expenses payable | $ 44,000 |