Willis Lease(US:WLFC)2025-11-04 20:03Revenue Performance - Total revenue for the three months ended September 30, 2025, increased by 25.4% to $183.4 million compared to $146.2 million for the same period in 2024[120]. - Total revenue increased by $120.2 million, or 28.9%, to $536.6 million for the nine months ended September 30, 2025, compared to $416.4 million for the same period in 2024[137]. Lease and Maintenance Revenue - Lease rent revenue rose by 17.9% to $76.6 million, driven by an increase in the average size of the portfolio and higher average utilization, which was approximately 86.0% for Q3 2025 compared to 82.9% for Q3 2024[120][121]. - Lease rent revenue rose by $42.9 million, or 24.7%, to $216.6 million, driven by an increase in the average size of the portfolio and average utilization[137]. - Maintenance reserve revenue surged by 52.8% to $76.1 million, with long-term maintenance revenue significantly increasing to $29.5 million from $1.2 million in the prior year[123]. - Maintenance reserve revenue increased by $25.1 million, or 16.1%, to $181.7 million, with long-term maintenance revenue up by 61.0% to $39.5 million[140]. Sales and Services - Spare parts and equipment sales decreased by 50.3% to $5.4 million, reflecting timing variations in sales[124]. - Spare parts and equipment sales surged by $33.7 million, or 165.5%, to $54.0 million, reflecting strong demand for surplus material[141]. - Maintenance services revenue fell by 38.9% to $3.6 million, primarily due to the sale of the fleet management line of business[127]. - The company reported a net gain of $16.1 million from the sale of leased equipment during Q3 2025, compared to a net gain of $9.5 million in Q3 2024[126]. - Gain on sale of leased equipment increased to $48.2 million from $33.1 million, with 31 engines sold during the period[143]. Expenses and Costs - General and administrative expenses increased by 22.9% to $49.2 million, influenced by higher consultant and legal fees, as well as increased personnel costs[133]. - General and administrative expenses rose by $43.0 million, or 41.3%, to $147.3 million, largely due to increased personnel costs and consultant fees[151]. - Net finance costs rose by 33.5% to $37.1 million, primarily due to increased debt obligations and additional interest expenses related to new notes payable[135]. - Net finance costs increased by $27.4 million, or 36.4%, to $102.8 million, attributed to higher debt obligations and interest expenses[153]. Cash Flow and Investments - Cash flows from operating activities decreased by $7.4 million, or 3.4%, to $209.1 million, driven by lower payments on sales-type leases and changes in accounts receivable[159]. - Cash flows used in investing activities were $108.2 million for the nine months ended September 30, 2025, compared to $455.0 million for the same period in 2024, reflecting a significant decrease[160]. - Cash flows used in financing activities were $62.4 million for the nine months ended September 30, 2025, primarily due to $1,029.8 million in principal payments, offset by $1,005.1 million in proceeds from debt obligations[161]. Tax and Debt Obligations - Income tax expense for Q3 2025 was $18.9 million, with an effective tax rate of 43.7%, up from 30.1% in the prior year, influenced by changes in tax deductions[136]. - As of September 30, 2025, total debt obligations were $2,239.5 million, with interest rates ranging from approximately 3.1% to 8.0%[165]. - The company was in compliance with financial covenants, including an Interest Coverage Ratio of at least 2.25 to 1.00 and a Total Leverage Ratio not greater than 4.00 to 1.00[167]. - Interest payments under debt obligations are estimated at $394.4 million, with $99.9 million due in less than one year[169]. Future Commitments and Risks - The company has contractual commitments to purchase 30 additional LEAP-1A engines and 21 LEAP-1B engines for a total of $912.6 million by 2030[169]. - Approximately 70% of lease rent revenues for the nine months ended September 30, 2025, came from non-U.S. domiciled lessees, exposing the company to currency devaluation risk[176]. - For every one percent increase or decrease in interest rates on variable rate debt, annual interest expense would increase or decrease by $2.5 million[174].