Willis Lease Finance Reports 11.4% Y/Y Decrease in Total Revenues in Q2/21
AUG 5, 2021 - 6:54 am
Willis Lease Finance reported Q2/21 total revenues of $66.5 million and a pre-tax loss of $1.9 million. For the three months ended June 30, the company recorded aggregate lease rent and maintenance reserve revenues of $49.7 million and spare parts and equipment sales of $3.6 million. The company reported lower revenue in the second quarter when compared to the prior year period, which, according to Willis Lease Finance, was primarily due to the COVID-19 pandemic’s impact on global travel and, consequently, worldwide fleet utilization.
“The industry continues to feel the effects of the global pandemic despite significant progress in the development and roll-out of COVID-19 vaccines,” Charles F. Willis, chairman and CEO of Willis Lease Finance, said. “While we are disappointed with our current financial results, we continue to position the company for future performance by partnering with key customers on a variety of opportunities and building the company’s long-term capital base with the successful completion of our WEST VI asset-backed securitization.”
“Unlike COVID’s initial impact on the aviation industry, which was severe and immediate, the recovery is happening much more slowly,” Brian R. Hole, president of Willis Lease Finance, said. “But the recovery is underway and we are focused on what we can control: helping our customers rebuild with long-term capital solutions, spare engine programs that allow airlines to defer maintenance spend, a wide variety of asset management services and technical support for aircraft and engines.”
Willis Lease Finance completed a $336.7 million WEST VI notes offering secured by, among other things, the interests in 29 aircraft engines and one airframe. This financing was the company’s seventh financing from its WEST platform. The offering has an expected maturity of eight years and a blended yield of 3.55%.
The company entered into definitive agreements with Scandinavian Airlines for the purchase and long-term leaseback of 20 V2500 aircraft engines, which are expected to fully close by September.
Total revenue for the company was $66.5 million in Q2/21, marking an 11.4% decrease when compared with the $75 million recorded in the same quarter of 2020.
Lease rent revenue was $32.4 million in Q2/21 compared with $38.5 million in Q2/20.
Maintenance reserve revenue was $17.3 million in the Q2/21, marking a decrease of 42.4% compared with $30 million in the same quarter of 2020. The decline in maintenance revenue was primarily influenced by lower long-term maintenance revenue, which is associated with engines returning from long-term lease. Long-term maintenance reserve revenue was $14.8 million in Q2/21 compared with $27.2 million in the comparable prior period.
The company recognized a $6.3 million asset transition fee in Q2/21 as a result of the close-out of an engine transition program.
Other revenue increased to $6.9 million, or 58.1%, in Q2/21 compared with $4.4 million in Q2/20, primarily reflecting interest income from notes receivable and other service-related fees.
Losses before income taxes were $1.9 million in Q2/21 compared with income before income taxes of $9.7 million in Q2/20.
Willis Lease Finance’s aggregate lease assets, inclusive of its equipment held for operating lease and notes receivable, at June 30, 2021, was $2,085.6 million and at June 30, 2020, was $1,824.1 million, marking a 14.3% year-over-year increase.
Diluted weighted average (loss) earnings per common share were $0.12 for Q2/21 compared with $0.74 in Q2/20.
Book value per diluted weighted average common share outstanding increased to $60.37 at June 30 compared with $59.40 at Dec. 31, 2020.
As of June 30, Willis Lease Finance’s $1.89 billion equipment held for operating lease portfolio and $195.6 million notes receivable represented 300 engines, eight aircraft, one marine vessel and other leased parts and equipment. As of Dec. 31, 2020, the company’s $1.887 billion equipment held for operating lease portfolio and $158.7 million notes receivable represented 291 engines, eight aircraft, one marine vessel and other leased parts and equipment.
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