Willis Lease Finance Corporation (NASDAQ: WLFC) today reported third quarter total revenues of $70.6 million and pre-tax profit of $6.0 million. The Company reported lower revenue in the third quarter of 2020 as compared to the prior year period, primarily due to the impact of the COVID-19 pandemic. The slowdown in global travel has led to a reduction in aircraft and engine utilization as well as a reduction in demand for aircraft and engine spare parts which keep airline fleets in operation. For the third quarter of 2020, aggregate lease rent and maintenance reserve revenues were $62.3 million and spare parts sales were $2.9 million.
“We are pleased to have produced $6.0 million of pre-tax profit in the third quarter as we manage through the substantial impact the pandemic continues to have on our industry,” said Charles F. Willis, Chairman and CEO. “We are working closely with our global customers and partners to develop and provide capital solutions in an evolving marketplace. I believe that our liquidity, and ability to provide unique customer solutions in trying times will position the Company well for the eventual recovery and beyond."
“The fear of COVID-19 and related government travel restrictions continue to deprive airlines of a flying public,” said Brian R. Hole, President. “But as our customers begin to settle into the pandemic-affected landscape, we believe our multi-faceted role in providing liquidity options for airlines, helping them reduce costs by avoiding maintenance spend and also assisting their efforts to plan for the future will become even more important.”
Third Quarter 2020 Highlights (at or for the periods ended September 30, 2020, as compared to September 30, 2019, and December 31, 2019):
- Total revenue was $70.6 million in the third quarter of 2020, a 41.3% decrease when compared to $120.4 million in the same quarter of 2019.
- Lease rent revenue was $30.0 million in the third quarter of 2020.
- Maintenance reserve revenue was $32.3 million in the third quarter of 2020, a decrease of $6.9 million, or 17.5%, compared to $39.2 million in the same quarter of 2019. Long term maintenance reserve revenue, which is influenced by end of lease compensation, increased to $30.6 million for the third quarter of 2020, compared to $19.9 million in the comparable prior period. Short term maintenance reserve revenue, which is influenced by our customers' usage of assets we lease to them, was $1.7 million for the third quarter of 2020 compared to $19.2 million in the comparable prior period.
- Spare parts and equipment sales were $2.9 million in the third quarter of 2020, compared to $24.4 million during the same quarter of 2019. The 2019 quarter included equipment sales of $9.4 million, primarily reflecting the sale of two engines.
- Income before income taxes was $6.0 million in the third quarter of 2020, compared to $31.1 million in the same quarter of 2019 and was $24.3 million year-to-date 2020, compared to $80.7 million year-to-date 2019.
- Our aggregate lease assets, inclusive of our equipment held for operating lease and notes receivable, at September 30, 2020 and 2019 was $1.776 billion and $1.666 billion, respectively, which is a 6.6% year-over-year increase and also includes a transition to next generation technology.
- The book value of lease assets we own directly or through our joint ventures, including our notes receivable, was $2.1 billion at September 30, 2020. As of September 30, 2020, the Company also managed 408 engines, aircraft and related equipment on behalf of third parties.
- The Company maintained $482 million of undrawn revolver capacity at September 30, 2020.
- Under the Company's repurchase plan, the Company repurchased a total of 800 shares of common stock in the third quarter of 2020 for $19,500.
- Diluted weighted average earnings per common share was $0.35 for the third quarter of 2020, compared to $3.81 in the similar period in 2019.
- Book value per diluted weighted average common share outstanding increased to $59.74 at September 30, 2020, compared to $57.83 at December 31, 2019.
As of September 30, 2020, the Company's $1.617 billion equipment held for operating lease portfolio and $159.6 million notes receivable represented 258 engines, nine aircraft, 10 other leased parts and equipment and one marine vessel. As of December 31, 2019, the Company's $1.651 billion equipment held for operating lease portfolio and $38.1 million notes receivable represented 263 engines, 12 aircraft, 10 other leased parts and equipment and one marine vessel.