Willis Lease Finance Q2 Earnings Call Highlights

Key Points

• Willis Lease Finance reported solid Q2 2026 results with $194 million in revenue, $38.1 million in earnings before tax, $120.7 million in adjusted EBITDA and $1.31 in diluted EPS. Earnings before tax declined year over year because the prior period included a $43 million one-time gain.
• Assets under management grew 21% to approximately $4.4 billion, led by an almost 80% increase in the Willis Aviation Capital platform to $1.4 billion. The company also has about $1.3 billion available for deployment and agreed to acquire a portfolio containing 12 aircraft and 13 engines for $379 million.
• Lease-rent revenue rose 6.7% despite utilization easing to 85%, while equipment-sale gains increased to $32 million. Willis also expanded maintenance services, issued $200 million of convertible notes, and declared its ninth consecutive quarterly dividend following a three-for-one stock split.

Willis Lease Finance NASDAQ: WLFC reported second-quarter 2026 revenue of $194 million, earnings before tax of $38.1 million and adjusted EBITDA of $120.7 million, as the aircraft-engine leasing company expanded assets under management and continued building its asset-management platform.

Net income attributable to common shareholders was $28.7 million, or $1.31 per diluted share. Earnings before tax declined from $74.3 million a year earlier, when results included a $43 million one-time gain from the sale of the company’s WAML fleet-management business to its Willis Mitsui joint venture.

“We are pleased to have continued strong momentum from earlier in the year and are reporting another quarter of solid financial and operational performance,” Chief Executive Officer Austin Willis said.

Assets Under Management Rise 21%

Total assets under management increased 21% year over year to about $4.4 billion in the second quarter, from roughly $3.6 billion in the same period of 2025. Assets on Willis Lease Finance’s balance sheet represented 67% of total assets under management.

The company’s Willis Aviation Capital, or WAC, asset-management business grew to $1.4 billion of assets under management, an increase of nearly 80% from a year earlier. Willis said it has largely completed the process of seeding portfolios into its Blackstone and Liberty Mutual funds, as well as its Mitsui joint venture, and expects future fund growth to come primarily through third-party market purchases.

Willis said it has approximately $1.3 billion of additional capital available to deploy through its discretionary funds, excluding capital raised through joint ventures and its own corporate capital structure. Net debt-to-equity leverage, including preferred stock, stood at 2.78 times at the end of the quarter.

During June, the company acquired the entities owning three Airbus A330-300 aircraft leased to China Airlines and EVA Air. In July, it signed definitive documentation to acquire private-equity entities that own 12 additional commercial aircraft and 13 aircraft engines. The July portfolio transaction was valued at $379 million, according to CFO Scott Flaherty.

Leasing Revenue Grows as Utilization Holds Near 85%

Lease-rent revenue increased 6.7% year over year to $77.1 million. Average lease-portfolio utilization was 85%, compared with 87.2% in the year-earlier period, while the average lease rate increased to 1.03% from 1.0%.

Willis said its portfolio continues to shift toward newer-generation engines. Modern-technology engines, including LEAP, GTF and GEnx models, accounted for about 60% of the consolidated portfolio’s net book value, including the company’s balance sheet and WAC assets.

Management said demand for these engine types should remain strong as Airbus A320neo and Boeing 737 MAX aircraft production rises and the engines mature. Willis expects more frequent off-wing maintenance as scheduled removals for performance restoration and life-limited-parts replacement accelerate.

The company also expects older CFM56 and V2500 engines to remain important contributors, though it said it is being selective about asset purchases as those platforms mature. Austin Willis said the company’s ConstantThrust offering and its maintenance approach, which emphasizes “hospital shop visits” rather than full overhauls, could help customers transition to newer technology.

Maintenance Reserves and Equipment Sales

Maintenance-reserve revenue fell to $46.5 million from $50.7 million a year earlier. Short-term maintenance reserves declined to $39 million from $50.2 million, partly because the number of engines on short-term lease conditions fell 4.9% as the portfolio shifted toward newer engines generally leased on longer terms.

Flaherty said certain operators reduced flight hours and cycles during April and May amid higher fuel prices. However, the company saw a recovery in aircraft operating tempo and related reserve revenue toward the end of the quarter as a ceasefire took hold in Iran and fuel prices declined.

Long-term maintenance-reserve revenue increased to $7.5 million from $0.5 million in the prior-year quarter, including $6.8 million associated with one V2500 engine coming off a long-term lease.

Gain on sale of leased equipment totaled $32 million, up from $27.6 million a year earlier. The gain was tied to sales of 21 engines and other parts and equipment for $224.8 million before economic closing adjustments. Fourteen of the engines were sold as part of a seed portfolio for the Blackstone fund.

In response to an analyst question, Flaherty said the $32 million gain represented a 14.2% margin and that the company’s annual appraisal process indicates its overall portfolio is valued at about 20% above book value. He cautioned that realized results can vary by individual asset.

Services Expansion, Financing and Dividend

Maintenance-services revenue rose 11.9% to $9 million, driven by growth in engine and aircraft storage. The segment reported a negative gross margin of $1.4 million, which Flaherty attributed to the seasonality of base-maintenance activity.

Willis recently signed a major engine-storage agreement with Pratt & Whitney following nearly a year of inspections and quality audits, Austin Willis said. The company is also in advanced discussions to establish another engine-repair center in Asia.

In May, Willis issued $200 million of 2.5% convertible senior notes due 2031 and used proceeds to reduce borrowings on its $1.75 billion revolving credit facility. The notes have a split-adjusted conversion price of $89.60 per share, representing a 40% premium at issuance, Flaherty said.

The company completed a three-for-one stock split effective July 21. Its board also declared a quarterly dividend of $0.133 per share on a split-adjusted basis, payable Aug. 21 to shareholders of record Aug. 11. The payment marks the company’s ninth consecutive recurring quarterly dividend.

About Willis Lease Finance (NASDAQ:WLFC)

Willis Lease Finance Corporation NASDAQ: WLFC is an independent global provider of aircraft engine leasing, trading and aftermarket services. Founded in 1991 and headquartered in the United States, the company specializes in offering short- and long-term operating leases for jet engines and auxiliary power units. Through its broad engine portfolio, Willis Lease Finance supports a wide range of commercial aircraft across various operators, including major airlines, regional carriers and other leasing companies.

In addition to leasing solutions, Willis Lease Finance offers comprehensive engine trading and asset management services.

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