WILLIS LEASE FINANCE CORP Q4 FY2024 earnings call

• Willis has a history of industry firsts, such as creating the first independent engine leasing platform in the early 1980s, etc. - 2024 was a fantastic year, with 2024 being the strongest year as a publicly traded company with an industry-leading ROE of 21%. - In 2024, acquired nearly $1 billion in engines and aircraft, including 35% current technology assets and 65% future technology assets. - Held an Analyst Day in December, introducing the flywheel business model. - Outlined three aftermarket maintenance and services strategies: traditional MRO route, module optimization and exchange, constant thrust service, and signed a new constant thrust deal for over 20 CFM56-7B engines.

In the fourth quarter of 2024, total revenues were $152.8 million and pre-tax income was $30.4 million. For full year 2024, total revenues were $569.2 million and pre-tax income was $152.6 million. Core leasing business was the driver. Maintenance reserve revenues for the year were $213.9 million, up 60% from 2023. Long-term maintenance reserve revenues were $39.4 million, up from $15.4 million in 2023. Short-term maintenance reserve revenues were $174.5 million, up 47.5% from 2023. Spare parts and equipment sales to third-parties were $27.1 million in 2024, up 33% from 2023. Gain on sale of lease equipment was $45.1 million in 2024 with a 26.3% margin, compared to $10.6 million in 2023 with a 12.5% margin.

• Returned capital to shareholders, paying a third consecutive quarterly dividend of $0.25 per share in February. - Completed a series of financings and refinancings in 2024, including the third JOLCO financing, first engine warehouse financing for $500 million, etc. - Targets net leverage in the low-3s, recognizing leverage may tick slightly higher when executing on growth opportunities.

Forward-looking statements are based on current expectations and assumptions subject to risks and uncertainties. Actual results could differ materially from expectations. Risks can be found in Form 10-Q, 10-K and other periodic reports on the Investor Relations section of WLFC's website.

Q: Louis Raffetto from Wolfe Research asked about the engine market and values, and the repair shops.

A: Austin Willis responded that there's a strong engine market, a robust pipeline for originating transactions, and they don't have a test cell but are looking into it.

Q: Eric Gregg from Four Tree Island Advisory asked about engines announced, delivery periods, repair kits, MRO growth, and JV earnings.

A: Austin Willis and Scott Flaherty responded regarding engine delivery periods, repair kits, MRO growth, and JV earnings trends.

Q: Unidentified Analyst asked about fair market value vs book value of the engine portfolio.

A: Scott Flaherty responded that there's a significant disparity between the fair market value and book value of the engine portfolio.

Q: Sergey Glinyanov from Freedom Broker asked about maintenance reserves and take rates.

A: Scott Flaherty and Austin Willis responded regarding maintenance reserve trends and take rate drivers.

Q: Will Waller from M3F asked about long-term lease extensions.

A: Austin Willis responded that the rate of long-term lease extensions is higher than historically and they reprice when extending.