• Total Revenue (Q4 2024): $152.8 million
• Total Revenue (Full Year 2024): $569.2 million
• Pre-Tax Income (Q4 2024): $30.4 million
• Pre-Tax Income (Full Year 2024): $152.6 million
• Return on Equity (2024): 21%
• Core Lease Rent Revenues (2024): $238.2 million
• Interest Revenues (2024): $11.7 million
• Maintenance Reserve Revenues (2024): $213.9 million
• Spare Parts and Equipment Sales (2024): $27.1 million
• Gain on Sale of Lease Equipment (2024): $45.1 million
• Net Income Attributable to Common Shareholders (2024): $104.4 million
• Diluted Weighted Average Income Per Share (2024): $15.34
• Cash Flow from Operations (2024): $284.4 million
• Total Debt Obligations (Year-End 2024): $2.3 billion
• Leverage Ratio (Q4 2024): 3.48 times
• Quarterly Dividend (February 2025): $0.25 per share

• Warning! GuruFocus has detected 7 Warning Signs with WLFC.

Release Date: March 10, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Willis Lease Finance Corp (NASDAQ:WLFC) achieved a record year in 2024 with a pre-tax income of $152.6 million, up 127% from the previous year.
• The company reported a strong return on equity of 21%, marking its strongest year as a publicly traded company.
• WLFC successfully returned capital to shareholders through dividends, including a special dividend and regular quarterly dividends.
• The company acquired nearly $1 billion in engines and aircraft, focusing on future technology assets like LEAP and GTF engines.
• WLFC's ConstantThrust program continues to gain traction, providing significant savings for customers and creating value through efficient asset management.

Negative Points

• The company faced increased general and administrative expenses, rising to $146.8 million in 2024, driven by personnel costs and share-based compensation.
• Net finance costs increased to $104.8 million due to higher indebtedness and rising interest rates.
• The company experienced a $11.2 million write-down of equipment, with $10.4 million occurring in the fourth quarter.
• Gross margins for maintenance services were slightly negative at minus 1% due to the build-out of fixed base operator services.
• The absence of a test cell in WLFC's repair facilities may pose challenges in engine testing and availability of slots.

Q & A Highlights

Q: Can you update us on the engine market and what you're seeing in terms of values? Have they stabilized or continued to rise? A: Austin Willis, CEO: We've seen a strong engine market, both in whole engine assets and parts. There's some scarcity in originating transactions, but we've been successful in originating deals. Our pipeline is robust, and we're able to offer added advantages to customers, like the ConstantThrust transaction, which helps bridge maintenance gaps for airlines.

Q: Do you have a test cell for your repair shops, and what's the availability of slots like? A: Austin Willis, CEO: We do not have a test cell currently, but it's something we're considering. Availability varies; sometimes it's difficult to get a slot, other times it's more available.

Q: Regarding the 30 engines you announced in December, are you getting a significant discount compared to market prices? A: Austin Willis, CEO: I can't speak to specific discounts, but we've been successful in purchasing engines from OEMs and deploying them on lease or selling them.

Q: What is the difference between the fair market value and book value of your engine portfolio? A: Scott Flaherty, CFO: The disparity between market value and book value of our portfolio has increased to approximately $600 million, highlighting the appreciation of our long-term engine assets over time.

Q: What are the main factors driving take rates, and how do interest rates impact your portfolio? A: Austin Willis, CEO: We've been able to reprice our portfolio as interest rates increased. Our ability to adjust pricing has allowed us to navigate the changing interest rate environment effectively.

Q: Are you experiencing above-average extension rates on long-term leases? A: Austin Willis, CEO: Yes, extension rates are higher than historically, but we use this as an opportunity to reprice assets. We defer maintenance reserve income until the asset is returned.

Q: What is the current mix of your portfolio in terms of long-term and short-term leases? A: Austin Willis, CEO: The mix is fairly consistent with previous quarters, with a focus on modernizing our portfolio. As of year-end, 53% of our assets are future technology.

Q: How do you plan to implement durability kits, and what impact will they have on your MRO operations? A: Austin Willis, CEO: We plan to implement durability kits during future shop visits. While these kits may increase on-wing life, we expect this generation of equipment to have more shop visits, which we are well-positioned to handle.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.