Willis Lease Finance Corporation Q1 FY2026 earnings call

Industry Macro Environment

• Since Iran conflict, no material impact on pricing or lease rates. Airlines reacting to higher fuel prices by reducing capacity, parking aircraft. Historically counter-cyclical, leasing solutions drive utilization. If fuel prices persist, parked aircraft may be retired, affecting midlife aircraft values. Well hedged with over 50% of engine portfolio in modern technology.

Quarter Performance

• Ended with $4.1 billion of assets under management. $1.5 billion of capital ready to deploy. Low net leverage of 2.7 times. First quarter adjusted EBITDA of $124 million and fully diluted earnings per share of $3.26, up from $2.21 in Q1 2025. Strong stock price appreciation due to underlying business strength and growth strategy.

Business Segments

• Leasing: Utilization up, lease rate factor similar for next-gen assets. Record lease rent revenue. Expanded Constant Thrust program with new purchase and leaseback agreement with Nauru Airlines.
• Willis Aviation Capital: Natural extension, manages over $2.7 billion of capital. Funded finance leases through Liberty Mutual Fund, began selling operating lease engines to Blackstone Fund.
• Services: Core strength. Services revenue growth. Invested in in-house technical capabilities, announced completion of first core engine restoration in Willis Engine Repair Center.

Leasing: Leasing utilization for the quarter was up to 86% from 80% year over year. Lease rate factor of on-lease assets was 1.04%. Recorded all-time high lease rent revenue of $77 million in Q1 2026. Willis Aviation Capital (WAC): Manages over $2.7 billion of committed or deployed capital. Funded approx $90 million of finance leases through Liberty Mutual Fund in Q1 2026. Began selling operating lease engines to Blackstone Fund in April 2026. Services: Services revenue of $10 million in Q1 2026 exclusive of intercompany sales. Engine and aircraft storage and repair services contributed to growth in maintenance services revenue which was $9.8 million in Q1 2026, up 74.9% from Q1 2025. Spare parts and equipment sales: Spare parts and equipment sales increased by 3.4 million or 18.9% to 21.7 million in Q1 2026 compared to Q1 2025. Gain on sale of leased equipment and financial assets: Aggregated to 18.4 million in Q1 2026, up 13.6 million from Q1 2025.

Forward-Looking Statements

• Well positioned to deploy capital across leasing and services. Attractive prospects supported by strong long-term fundamentals in aviation market. Committed to returning capital to shareholders with quarterly recurring dividend of 40 cents per share. Amended and extended revolving credit facility to $1.75 billion, providing liquidity and flexibility for growth. Continued to invest in top talent, particularly in Asia Pacific region.

Risks

• Impact of prolonged high fuel prices: Could lead to airline liquidity pressure, lower lease rates and values for midlife aircraft. Uncertainties in aviation market dynamics affecting asset values and lease rates. Geopolitical uncertainties could impact market volatility and business operations.

Q: Comment a bit more on asset management business, like the Blackstone funds and so on, what the management fee and incentive fee will look like A: In terms of the funds, we're not disclosing what the specific management fees are, but I can tell you that they're roughly in line with what's standard for discretionary funds, a percentage of the value of the assets managed, and then a percentage of the profitability via carried interest. We started deploying capital into Liberty Mutual in the first quarter, and you're really gonna start to see the fees from that come in when we deploy more capital over time. And with respect to Blackstone, I think you'll start to see fees kicking in here in the next quarter. And as I mentioned earlier on my prepared remarks, we started to deploy capital there in April, so just subsequent to the quarter. You know, I think we're probably going to see about $200 million from our balance sheet into the Blackstone portfolio, so that's a good starting point and then hopefully get the remainder deployed in relatively short order