Willis Lease Finance Stock Down 9% Despite Q4 Earnings Rising Y/Y

Shares of Willis Lease Finance Corporation WLFC have declined 9.2% since the company reported its earnings for the quarter ended Dec. 31, 2024. This compares to the S&P 500 index’s 3.6% decline over the same time frame. Over the past month, the stock has fallen 15.1% compared with the S&P 500’s 9.1% decline.

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Willis Lease Finance reported earnings per share (EPS) of $2.81 in the fourth quarter of 2024, up from $1.53 a year ago. 

The company’s revenues came in at $152.8 million, marking a 33.7% increase from $114.3 million in the prior-year quarter. Lease rent revenues rose 24.4% year over year to $64.6 million in the fourth quarter, while maintenance reserve revenues surged 54.8% to $57.4 million. Gain on sale of leased equipment more than doubled to $11.9 million, reflecting higher sales volumes and strong asset pricing.

Net income attributable to common shareholders for the fourth quarter stood at $19.6 million, a 95.5% increase from $10 million in the year-ago quarter.

Business Performance and Key Metrics

The company’s lease portfolio expanded significantly in 2024, growing to $2.9 billion from $2.2 billion in the previous year. The portfolio now comprises 354 engines, 16 aircraft and other assets, with increased investments in next-generation technology such as LEAP and GTF engines.

Willis Lease Finance delivered record results in 2024, with total annual revenue reaching $569.2 million, up 36% from $418.6 million in 2023. For the full year, EPS was $15.34, more than doubling from $6.23 in 2023.

Maintenance reserve revenues were a key growth driver, reaching $213.9 million in 2024, up 60% from $133.7 million in 2023. Short-term maintenance revenues accounted for $174.5 million, a 47.5% increase year over year, as the company benefited from a rising number of short-term lease agreements. Spare parts and equipment sales also grew 33.1% to $27.1 million, reflecting higher demand for surplus materials.

Management Commentary and Strategic Focus

CEO Austin Willis highlighted the company's success in profitably, deploying nearly $1 billion in capital throughout 2024. The firm acquired a mix of current and future technology assets, further positioning itself for long-term growth. Management also pointed to its flywheel business model as a key differentiator in the aviation leasing market, enabling strong asset turnover and optimized returns.

The company’s engine leasing business continues to benefit from industry-wide maintenance constraints, with airlines seeking alternative solutions to manage aging engine fleets. Willis Lease’s "Constant Thrust" program, which allows airlines to replace unserviceable engines with leased alternatives, was expanded in the fourth quarter with a new deal covering more than 20 CFM56-7B engines.

Factors Driving Financial Performance

Higher lease rental revenues and maintenance reserve income were primary drivers of the strong quarterly and annual results. The company’s ability to capitalize on strong demand for spare engines, as well as its successful sales strategy for leased equipment, contributed to significant revenue gains.

On the cost side, general and administrative (G&A) expenses rose 43.2% year over year in the fourth quarter to $42.5 million, driven by higher personnel costs and share-based compensation. Interest expenses climbed 32% to $29.4 million in the quarter due to rising debt levels and higher average interest rates. Total debt obligations increased from $1.8 billion in 2023 to $2.3 billion at the end of 2024, contributing to net finance costs of $104.8 million for the full year.

Other Developments

In October 2024, Willis Lease refinanced and expanded its credit facility, increasing it from $500 million to $1 billion. This move improved the company’s financial flexibility and provided additional liquidity to support future acquisitions and leasing operations.

Additionally, the company continued its commitment to returning capital to shareholders, paying its third consecutive quarterly dividend of 25 cents per share in February 2025. This follows a special dividend of $1 per share issued in the second quarter of 2024.

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