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WILLIS LEASE FINANCE CORP (WLFC)·Q2 2025 Earnings Summary

Executive Summary

  • Record quarter: revenue $195.5M (+29.4% y/y), pre-tax income $74.3M, diluted EPS $8.43; utilization rose to 88.3% exit-rate (avg. 87.2%) .
  • Clear beat vs S&P Global consensus: Q2 revenue $191.85M* vs $134.00M* and Primary EPS $4.77* vs $2.57*; note limited coverage (1 estimate) and methodology differences from company GAAP EPS [GetEstimates]*.
  • One-offs materially boosted results: $43.0M gain on sale of U.K. consultancy to the WMES JV and $27.6M gain on sale of leased equipment; underlying operating income fell y/y on higher G&A and impairments .
  • Balance sheet/liquidity catalysts: $596M WEST VIII ABS priced in June; warehouse facility amended/extended post-quarter; leverage improved to 2.96x; $0.25 quarterly dividend declared (payable Aug 21, 2025) .

What Went Well and What Went Wrong

What Went Well

  • Strong core and trading: lease rent $72.3M (+29.4% y/y); short‑term maintenance reserve revenue $50.2M (+9.5% y/y); spare parts & equipment sales $30.4M (incl. $21.1M single engine sale); gain on sale of leased equipment $27.6M (30% margin) .
  • Portfolio health: utilization improved to 88.3% at quarter end (avg. 87.2%); management cited portfolio yield in the “high teens” and lease rate factor ~1.01% .
  • Strategic/financing moves: $43.0M gain from sale of consulting arm to WMES JV; $596M ABS with tightest pricing to date; leverage down to 2.96x; quarterly dividend maintained at $0.25 .
    “Quarter 2 was WLFC’s strongest quarter ever…record lease revenues, increased utilization and solid recurring reserves.” — CEO Austin Willis .

What Went Wrong

  • Operating income compression: income from operations fell 47.7% y/y to $28.3M on higher expenses; equipment write‑downs of $11.5M (six engines) .
  • Elevated G&A: $50.4M (+45% y/y) driven by $12.6M stock‑based comp (incl. ~$5.3M acceleration tied to GC departure) and higher legal fees; partially offset by $6.3M UK grant proceeds for SAF project .
  • Maintenance services margin pressure: revenue $8.0M with gross margin ~‑7% as WLFC built labor to support new Jet2 lines (early-stage expansion) .
  • Interest expense climbed 36.7% y/y to $33.6M amid higher debt and ABS timing (temporary restricted cash effect) .

Financial Results

Headline P&L (GAAP)

MetricQ2 2024Q1 2025Q2 2025
Revenue ($M)151.1 157.7 195.5
Income Before Taxes ($M)57.9 25.3 74.3
Net Income Attrib. to Common ($M)41.7 15.5 59.0
Diluted EPS ($)6.21 2.21 8.43

Consensus vs Actual (S&P Global basis)

MetricQ2 2025 EstimateQ2 2025 ActualSurprise
Revenue ($M)134.00*191.85*+57.85*
Primary EPS ($)2.57*4.77*+2.20*
# of EstimatesRev: 1*——
# of EstimatesEPS: 1*——
Notes: S&P “Primary EPS” and “Actual” figures may differ from company-reported diluted EPS due to methodology. Values retrieved from S&P Global.*

Revenue Composition

Revenue Line ($M)Q2 2024Q1 2025Q2 2025
Lease rent revenue55.9 67.7 72.3
Maintenance reserve revenue62.9 54.9 50.7
Spare parts & equipment sales6.2 18.2 30.4
Interest revenue2.3 3.9 3.6
Gain on sale of leased equipment14.4 4.4 27.6
Maintenance services revenue6.8 5.6 8.0
Other revenue2.7 2.6 2.9
Total revenue151.1 157.7 195.5

Margins (S&P Global)

MetricQ1 2025Q2 2025
EBITDA ($M)78.82*97.19*
EBIT ($M)53.79*69.64*
EBITDA Margin (%)51.37%*50.66%*
EBIT Margin (%)35.06%*36.30%*
Net Income Margin (%)11.00%*31.47%*
Values retrieved from S&P Global.*

Notable non-recurring/one-off items (Q2 2025)

ItemAmount ($M)Detail
Gain on sale of business43.0Sale of U.K. consulting business (BAML) to WMES JV
Equipment write-downs11.5Impairment on six engines; four moved to held-for-sale
Stock-based compensation impact (within G&A)12.6Includes ~$5.3M due to GC departure; $5.0M from April grant
UK grant proceeds recognized~6.3SAF-related grant recognized in Q2
Gain on sale of leased equipment27.6Sale of 14 engines & two airframes; ~30% margin

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Formal revenue/EPS guidanceFY/QuarterNoneNone—
DividendQ3 2025$0.25/shr$0.25/shr (payable Aug 21, 2025; record Aug 12)Maintained
Capital structuren/a—$596M ABS priced (June 6); warehouse facility amended/extended (post‑Q)Positive liquidity actions

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Tariffs/macroAbility to reprice portfolio as rates change; robust ROE Minimal direct tariff impact; some China noise faded US‑EU “zero-tariff” on aircraft/parts seen as positive Improving sentiment
Supply chain / test cellConsidering test cell; slot availability tight JV to build engine test facility in West Palm Beach Contract with Safran to build test cell facility Execution progressing
Product/programs (ConstantThrust)New >20 CFM56‑7B deal announced Air India Express deal (26 engines) highlighted Continued emphasis on ConstantThrust Growing adoption
Utilization / lease rates—Avg 79.9% → 86.4% exit; GTFs placed Avg 87.2%; 88.3% exit; lease rates ~+9% y/y, +2–4% q/q Strengthening
Capital structure$1B revolver; warehouse launched JOLCOs to ~$125M; leverage 3.31x $596M ABS; leverage 2.96x; warehouse amended Strengthened
SAF project—Front‑loaded Q1 costs; grant expected $6.3M grant booked; >$4M grant awarded Funding support increases
Operations / Lean——SOAR lean system driving faster readiness; 85% cycle-time reduction Efficiency gains

Management Commentary

  • “Quarter 2 was WLFC’s strongest quarter ever…record lease revenues, increased utilization and solid recurring reserves.” — CEO Austin C. Willis .
  • “Average portfolio utilization was 87.2%…lease rate factors ~1%…short-term maintenance reserves $50.2M up 9.5% y/y…gain on sale of leased equipment $27.6M…30% margin.” — CFO Scott Flaherty .
  • “Largest ever engine ABS…priced inside peers…market’s confidence in our platform.” — CEO on WEST VIII ABS .

Q&A Highlights

  • Lease rates: ~+9% y/y and +2–4% q/q; management not seeing near-term negative pressure as OEM production normalizes .
  • Parts/young aircraft: Some engines pulled and airframes parted out; overall demand for engines remains strong .
  • Maintenance reserves: Long-term MR recognized lumpy; Q2 LT MR only ~$0.5M vs $17M y/y; timing and extensions key drivers .
  • Maintenance services margin: Negative near-term due to labor build for Jet2 commitments; expected as business scales .
  • Headcount ~420; sale of consulting arm expected to benefit P&L via redeployment of equity into profit-making equipment .
  • Grants: ~$6.3M SAF grant recognized in Q2; additional >$4M awarded, to be recognized upon receipt .

KPIs and Operating Metrics

KPIQ2 2024Q1 2025Q2 2025
Utilization (avg)—79.9% 87.2%
Utilization (end of period)76.7% (YE24) 86.4% 88.3%
Short-term MR revenue ($M)45.9 45.3 50.2
Engines sold (gain on sale)7 (Q2’24) 7 (Q1’25) 14 (Q2’25)
Gain on sale of leased equip. ($M)14.4 4.4 27.6
Spare parts & equip. sales ($M)6.2 18.2 30.4
Spare parts margin——9.8% (quarter)
Equipment sales margin——6.4% (quarter)
Lease portfolio book ($B)2.872 (YE24) 2.820 2.830
Leverage (net debt to equity incl. pref)3.48x (YE24) 3.31x 2.96x
ABS issuance——$596M priced Jun 6
Cash / Restricted cash ($M)9.1 / 123.4 (YE24) 32.4 / 116.7 37.3 / 745.3
Dividend (common)—$0.25 declared (pay May 22) $0.25 declared (pay Aug 21)

Estimates Context

  • Q2 2025 S&P Global consensus: Revenue $134.0M* (1 est) vs actual $191.85M*; Primary EPS $2.57* (1 est) vs actual $4.77*; strong beat on both metrics. Values retrieved from S&P Global.*
  • Coverage remains thin (single estimate), increasing uncertainty around “consensus” surprise. Company-reported GAAP diluted EPS was $8.43 in Q2, reflecting differing EPS bases .

Key Takeaways for Investors

  • Core engine leasing momentum continues: record revenues, higher utilization, and robust short-term maintenance reserves underpin operating strength .
  • Results include meaningful one-offs (BAML sale gain, trading gains) that elevated EBT/EPS; underlying opex (G&A, impairments) rose and bears monitoring .
  • Balance sheet flexibility improved (ABS, warehouse, lower leverage), supporting continued portfolio growth without equity dilution; dividend maintained .
  • Near-term headwinds: maintenance services scaling pressure, higher interest expense, and potential MR timing lumps; however, management points to durability of core yields and stabilizing lease rates .
  • Strategic optionality increasing: ConstantThrust pipeline, test cell plans with Safran, and UK grants provide incremental growth and cost-offset levers .
  • Estimate resets: Given the beat and non-recurring impacts, Street models may raise revenue but should normalize EPS for one-offs; limited coverage tempers read-through [GetEstimates]*.

Notes:

  • All S&P Global metrics (GetEstimates/GetFinancials) are marked with an asterisk (*) and values retrieved from S&P Global.
  • Company financials, KPIs, and qualitative commentary are cited from WLFC’s Q2 2025 8‑K/press release, Q2 earnings call, and related releases: .
  • Prior-quarter/year comparisons sourced from Q1 2025 and 2024 materials: .