WLFC posts strong second quarter results

US lessor Willis Lease Finance Corporation (WLFC) has posted strong second quarter 2024 results. As a result, it has declared its first, regular quarterly dividend of 25 cents per share. The company's total revenues were up 38.6% to $151.1 million. The company said the core drivers to the increase in revenues were its lease rent and maintenance reserve revenues, which totalled a record of $118.8 million. Lease rent revenue was 2.7% to an approximate $55.9 million. Maintenance reserve revenue was $62.9 million, up from $35.4 million in the same period a year prior. Its gain on sale of lease equipment was up from $4.5 million in last year's second quarter to $14.4 million. The company said the current supply chain constraint environment has proven a tailwind for the company with airlines leveraging WLFC's leasing, parts and maintenance capabilities to avoid protracted engine shop visits. In the company's earnings call, WLFC CEO Austin Willis said: ""[The] incredible strain on the supply chain and has resulted in a need to lease in spare engines to keep airplanes flying that would otherwise likely be grounded. As an owner of assets, the supply and demand imbalance has worked to our favour."" ""We have been deliberate in the selection of engines and investment in our services businesses,"" Willis added in a statement. ""This strategy has distinguished us as a value added lessor."" He later added in the call: ""While we remain bullish on the long-term prospects of the current technology engines such as the CFM56-5b/7b and V2500, we are taking the opportunity to modernise the portfolio as we have done in the past."" Total expenses for the period were up 8.4% to $97 million. Its pre-tax income had tripled from approximately $19 million last year to $57.9 million in the quarter. Net income soared to $42.6 million, up from $13.8 million last year. As of June 30, 2024 its total assets were valued at $2.9bn, up from $2.7bn at the end of last year. Total liabilities at the end of the quarter were $2.4bn. Total redeemable preferred stock was approximately $50 million and shareholders' equity was $492.4 million. The company's total debt obligations were valued at $1.9bn at the end of the quarter. Taking into account interest payments under its debt obligations, its purchase obligations, and operating lease obligations, the company's total obligations were $2.8bn as of June 30, 2024. It held $5 million of cash and cash equivalents, as well as $142.9 million of unrestricted cash as of June 30, 2024. The company said it funds its operations primarily from cash via its leasing activities and finances its growth through borrowings secured primarily by its equipment lease portfolio. Cash flows from operations for the first half of the year were up 32% to $129.7 million. The company's CFO Scott Flaherty said this was driven by the growth and pre-tax earnings as ""the business enjoyed significant tax depreciation shields, slightly offset by growth and spare parts inventory as the company opportunistically purchased an attractive portfolio of engine parts earlier in the year"". As of June 30, 2024, its lease portfolio was $2.5bn, consisting of $2.3bn of equipment held in its operating lease portfolio, $115.5 million of notes receivable, $25.5 million of maintenance rights, and $6.2 million of investments in sales-type leases, which represented 344 engines, 12 aircraft, one marine vessel, and other leased parts and equipment.