Willis Lease Finance (WLFC) Q3 2024 earnings summary

Executive summary

• Q3 2024 pre-tax earnings reached $34.5 million, up 69% year-over-year, the second highest on record and highest when adjusted for long-term maintenance reserves.

• Total Q3 revenues were $146.2 million, up 38.3% year-over-year, driven by higher lease rent, maintenance reserve, and spare parts sales.

• Net income for Q3 2024 was $24.1 million, up from $14.6 million in Q3 2023; diluted EPS was $3.37, up 58% year-over-year.

• Portfolio expanded to 348 engines, 16 aircraft, and one marine vessel, with $2.44 billion in equipment held for operating lease as of September 30, 2024.

• Announced a $0.25 per share quarterly dividend, payable November 21, 2024.

Financial highlights

• Lease rent revenue increased 21.2% year-over-year to $64.9 million; maintenance reserve revenue up 32% to $49.8 million.

• Spare parts and equipment sales rose 223% year-over-year to $10.9 million, with 18.4% gross margins.

• Gain on sale of leased equipment was $9.5 million, up from $0.8 million in Q3 2023.

• Net income attributable to common shareholders was $24.1 million; diluted EPS was $3.37, up from $2.13 year-over-year.

• General and administrative expenses rose 50.8% year-over-year in Q3 2024, mainly due to higher personnel and share-based compensation costs.

Outlook and guidance

• Expect continued strong demand for engines and leasing due to supply chain issues, airlines extending fleet lives, and high interest rates.

• Significant upside remains in lease rates, especially for certain engine types.

• Order book for new engines totals about $400 million through 2027, with $426.7 million in purchase commitments.

• G&A margins expected to improve as stock-based compensation normalizes.

• New $1.0 billion, five-year revolving credit facility provides incremental capital for growth.