Willis Lease Finance Q2 Revenue Falls 21.7%, COVID-19 Damages Leasing Business



Willis Lease Finance reported Q2/20 total revenues of $75 million and pre-tax profit of $9.7 million. The company reported lower revenue in Q2/20 than the prior year period due primarily to the impact the COVID-19 pandemic has had on the aviation industry, generally leading to reduced revenues in the core leasing business. Aggregate lease rent and maintenance reserve revenues were $68.4 million for the quarter.

“We are pleased to have maintained profitability in the second quarter, with $9.7 million of reported pre-tax income, given the unprecedented impacts the COVID-19 pandemic has had on our industry,” Charles F. Willis, chairman and CEO of Willis Lease Finance, said. “As we have from the beginning of this event, we are working closely with our global customer base to provide tailored lease and service solutions while also maintaining a focus on the strength of our own balance sheet and liquidity.”

“At this point, our customers are fighting to survive what essentially has been the disappearance of a flying public,” Brian R. Hole, president of Willis Lease Finance, said. “We believe we are well-positioned, though, to support the recovery by leveraging our entire platform from available financing, hundreds of lease engines and aircraft, technical services, aircraft storage and maintenance, surplus material and a multitude of specialized programs, all of which are designed to drive out cost and help our customers return to profitability.”

Highlights From Q2/20

  • Total revenue was $75 million in Q2/20, marking a 21.7% decrease when compared with $95.8 million in the same quarter of 2019.
  • Lease rent revenue was $38.5 million in the quarter.
  • Maintenance reserve revenue was $30 million in Q2/20, an increase of $3.5 million, or 13.3%, compared with $26.5 million in the same quarter of 2019. Long term maintenance reserve revenue, which is influenced by end of lease compensation, increased to $27.2 million for Q2/20 compared with $6.7 million in the comparable prior period. Short term maintenance reserve revenue, which is influenced by lease asset usage, was $2.8 million for Q2/20 compared with $19.8 million in the comparable prior period.
  • Spare parts and equipment sales were $2.9 million in Q2/20 compared with $14.6 million during the same quarter of 2019.
  • Income before income taxes was $9.7 million in Q2/20 compared with $21.8 million in the same quarter of 2019, and was $18.3 million in the first half of 2020 compared with $49.6 million in the first half of 2019.
  • Willis Lease Finance’s equipment held for operating lease portfolio was $1.654 billion at June 30, 2020, compared with $1.651 billion at December 31, 2019.
  • The book value of lease assets Willis Lease Finance owns directly or through joint ventures was $2 billion at June 30, 2020. As of June 30, 2020, the company also managed 402 engines, aircraft and related equipment on behalf of third parties.
  • The company maintained $447 million of undrawn revolver capacity at June 30, 2020.
  • Under the company’s repurchase plan, Willis Lease Finance repurchased a total of 54,626 shares of common stock in Q2/20 for $1.5 million.
  • Diluted weighted average earnings per common share was $0.74 for Q2/20 compared with $2.66 in the similar period in 2019.
  • Book value per diluted weighted average common share outstanding increased to $58.56 at June 30, 2020, compared with $57.83 at December 31, 2019.

As of June 30, 2020, Willis Lease Finance’s $1.654 billion equipment held for operating lease portfolio consisted of 264 engines, 10 aircraft and 11 other leased assets. As of December 31, 2019, the company’s $1.651 billion equipment held for operating lease portfolio consisted of 263 engines, 10 aircraft and 11 other leased assets.

Willis Lease Finance leases large and regional spare commercial aircraft engines, auxiliary power units and aircraft to airlines, aircraft engine manufacturers and maintenance, repair and overhaul providers in 120 countries.

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