0001018164-26-000053
SEC filingRevenue grew 23.2% to $194.3M driven by gains on equipment sales and management fees; Adjusted EBITDA up 19.8%.
For the three months ended March 31, 2026, Willis Lease Finance Corporation reported total revenue of $194.3 million, a 23.2% increase from $157.7 million in the prior-year period. The growth was driven by a significant surge in gain on sale of leased equipment ($18.0 million, +304.8%) and management and advisory fees ($7.9 million, +302.2%), which included $4.9 million from the newly formed LMI Fund. Lease rent revenue, the largest component, grew 14.2% to $77.4 million, supported by a larger portfolio and higher average utilization of 85.8% versus 79.9% in Q1 2025. Net income attributable to common shareholders rose 52.9% to $23.7 million, while Adjusted EBITDA increased 19.8% to $123.8 million.
Revenue diversification is evident across segments. Lease rent revenue remains the core driver, but gains on equipment sales and management fees contributed disproportionately to growth. Spare parts and equipment sales increased 18.9% to $21.7 million, with equipment sales of three engines generating a 50% margin. Maintenance services revenue jumped 74.9% to $9.8 million on higher repair activity. Interest revenue declined 29.1% to $2.8 million due to lower notes receivable balances following the sale of 11 assets to the LMI Fund. The LMI Fund, which began operations in March 2026, is expected to be a recurring source of management fees, though the current period included formation cost reimbursements.
Management highlighted a strong liquidity position with $1.3 billion of unused borrowing capacity as of March 31, 2026. The company is committed to purchasing 27 LEAP-1A and 18 LEAP-1B engines for $839 million by 2030, along with 11 engines and three aircraft for $225 million in 2026. While interest rate and tariff uncertainties are noted, management does not currently believe tariffs have a material impact. The successful launch of the LMI Fund provides an additional capital partnership channel. The company's ability to maintain high utilization rates and execute on asset sales will be key to sustaining momentum.
As of March 31, 2026, total debt stood at $2.254 billion, a decrease of $447 million from $2.700 billion at December 31, 2025, driven by $577.4 million in principal repayments partially offset by $127 million in new borrowings. The revolving credit facility was amended to increase commitments to $1.75 billion and extended to April 2031, while the WWFL credit facility was terminated. Inventory (spare parts) was $56.3 million, and unearned revenue (including deferred in-substance fixed payments) was $32.9 million. Cash and equivalents are not disclosed in notes but restricted cash (VIE) was $196.0 million.
Equipment purchase commitments total $1.1 billion, all expected to be satisfied within five fiscal years. Additionally, future maintenance services obligations related to Pratt & Whitney engine agreements are estimated between $106.6 million and $131.9 million through 2030, with a maximum of $172.6 million if extended through 2035. The company also has unfunded capital commitments of $43.4 million to investment fund partnerships.
Two reportable segments: Leasing and Related Operations (core business) and Spare Parts Sales. Leasing segment revenue grew 30% YoY to $184.3 million, driven by engine sales gains and management fees, while spare parts revenue declined 6.4% to $17.6 million. Leasing segment operating margin was 18.3%, versus 0.8% for spare parts. Segment assets were $3.45 billion (Leasing) and $56.3 million (Spare Parts) at March 31, 2026.
Operating cash flow (CFO) of $56.7M comfortably exceeded net income of $25.1M, reflecting strong non-cash add-backs (depreciation $30.2M, stock comp $13.8M) and a large gain on equipment sale ($18.0M). However, CFO was dampened by a significant working capital outflow of $27.1M in accounts payable and accrued expenses, and a $3.4M increase in receivables. Capex intensity rose sharply: total equipment and PP&E purchases of $60.7M nearly matched CFO, implying negative free cash flow before other investing activities. Investing cash flow was positive ($79.9M) due to heavy asset sales ($71.4M equipment, $71.6M notes receivable), indicating portfolio recycling. Financing cash flow was deeply negative ($-463.0M) driven by $577.4M in debt principal payments partially offset by $127.0M in new debt proceeds and $4.5M in dividends. The large debt reduction reflects deleveraging, but the company ended the period with $220.6M cash, down from $546.9M. Key anomalies: a $7.0M loss on debt extinguishment and a $3.1M accretion of deferred costs. Overall, CFO quality is decent but capex demands and debt repayments strain liquidity.