Willis Lease Finance's Q4 2024: Navigating Contradictions in Engine Market Values and MRO Growth Plans

These are the key contradictions discussed in Willis Lease Finance Corporation's latest 2024Q4 earnings call, specifically including: Engine Market and Values, MRO Operations and Growth Plans, Engine Market Conditions and Pipeline, and Sustainability of Gain on Sale:



Strong Financial Performance:
- Willis Lease Finance Corporation reported total revenues of $569.2 million for 2024, up from $422.6 million in 2023. The company's pre-tax income was $152.6 million, a significant increase from $66.1 million in 2023.
- The growth in revenue and pre-tax income was driven by the ongoing strength of the core leasing business and the acquisition of nearly $1 billion in engines and aircraft, including 35% current technology assets and 65% future technology assets.

Maintenance Reserve Revenue Increase:
- Maintenance reserve revenues in 2024 were $213.9 million, up 60% year-on-year from $133.7 million in 2023. Short-term maintenance reserve revenues increased by 47.5% to $174.5 million.
- The increase was influenced by the growth of the overall portfolio, particularly the number of engines on short-term lease conditions, and the systematic contractual increase in usage rates on engines.

Strength in Engine Market and Sales:
- The company experienced a strong engine market, with difficulty in sourcing engines and a significant gain on sale margin of 26.3% in 2024 compared to 12.5% in 2023.
- The strong engine market was driven by scarcity in originating transactions and benefits from selling engines to third-parties, highlighting Willis's ability to originate transactions and its success in the market.

Dividend Payments and Shareholder Returns:
- Willis Lease Finance Corporation paid a third consecutive quarterly dividend of $0.25 per share in February 2025, demonstrating its capacity to return capital to shareholders while supporting growth and leverage targets.
- The company's ability to pay regular dividends reflects the health and cash flow characteristics of the business, supporting overall growth.