Willis Lease Finance Corporation WLFC reported third-quarter earnings of $3.37 per share, marking a significant increase from $2.13 per share in the same quarter of 2023.
The company generated total revenues of $146.2 million, a 38.3% year-over-year increase compared to $105.7 million in the third quarter of 2023, driven by growth in core leasing and maintenance reserve revenues.
Willis Lease Finance’s third-quarter results highlight its solid footing in the aviation leasing market. Strong revenue growth across core leasing and maintenance categories, coupled with gains from asset sales, positions the company well to capitalize on market needs. While it faces increased expenses from expansion initiatives and higher interest rates, the additional credit facility and preferred stock refinancing demonstrate proactive capital management.
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Key Business Metrics
Lease Rent Revenues
Lease rent revenues were a significant contributor, amounting to $64.9 million in the third quarter of 2024, up 21.2% from $53.6 million in the same period last year. This growth was supported by increased asset deployment and new lease agreements, demonstrating sustained demand for Willis Lease Finance’s services within the aviation sector.
Maintenance Reserve Revenues
Maintenance reserve revenues rose 32% year over year, reaching $49.8 million compared to $37.7 million in the third quarter of 2023. This increase was driven by high utilization rates of leased engines and other aviation assets.
Spare Parts and Equipment Sales
Revenues from spare parts and equipment sales saw substantial growth, increasing to $10.9 million in the third quarter of 2024 from $3.4 million in the year-ago quarter. This increase aligns with market trends of extending the operational lifespan of current-generation engines, which has elevated demand for surplus parts. Additionally, the company recorded $1 million from equipment sales for one engine in the quarter, a growth from no equipment sales in the prior-year quarter.
Gains on Sale of Leased Equipment
Gains from the sale of leased equipment were another revenue driver, totaling $9.5 million from the sale of 13 engines and other assets. This contrasts with a modest $0.8 million gain recorded in the third quarter of 2023, showcasing the company’s effective asset turnover and ability to capitalize on favorable secondary market conditions.
Overall Costs
Total expenses rose to $112.5 million, a 31.2% increase year over year, with general and administrative (G&A) expenses showing a notable rise of 50.8% to $40 million. This increase in G&A expenses reflects the company’s investments in capacity and resources necessary to sustain growth. Net finance costs increased by 46%, primarily due to higher interest expenses, reaching $27.8 million in the third quarter of 2024, up from $19.1 million a year earlier. The increase in interest expenses is associated with higher borrowing to fund equipment purchases and other capital-intensive initiatives.
Pre-Tax Income
Quarterly pre-tax income stood at $34.5 million, up 69.4% from $20.3 million in the prior-year period. This robust financial performance reflects continued demand in the aviation leasing market and the efficient scalability of the company’s integrated services and asset base.
Net Income
The company’s net income attributable to common shareholders surged to $23.1 million, a 67.9% improvement from the third quarter of 2023, reflecting robust operational efficiencies and a favorable leasing environment.
Balance Sheet Update (As of Sept. 30, 2024)
Willis Lease Finance held cash and cash equivalents totaling $5.8 million, a decrease from $7.1 million at the end of 2023.
The company’s total assets grew substantially to $3 billion, up from $2.7 billion as of Dec. 31, 2023.
Debt obligations also saw an increase, rising to $2 billion from $1.8 billion at year-end 2023.
Shareholders’ equity strengthened to $517.8 million, up from $439 million at the end of 2023.
Other Developments
In the third quarter of 2024, Willis Lease Finance completed several key financial initiatives to support its growth trajectory. On Sept. 27, 2024, the company refinanced its Series A preferred stock, increasing its equity by consolidating the Series A-1 and Series A-2 preferred stock into a $65 million Series A series with an 8.35% dividend rate. This move enhances the company’s capital structure, providing additional equity for expansion.
Moreover, the company entered into a new $1 billion, five-year revolving credit facility on Oct. 31, 2024, replacing an existing $500 million facility. This expanded facility provides Willis Lease Finance with the capital flexibility required to meet future demand and fund its growing lease portfolio. The company also declared a quarterly dividend of 25 cents per share, to be paid on Nov. 21, 2024, underscoring its commitment to returning value to shareholders.
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