Willis Lease Finance Corporation · NASDAQ:WLFC
Willis Lease Finance — Investor Presentation (October 2024)
32 slides from Willis Lease Finance's investor presentation, October 2024
Slide 1: Willis Lease Finance Corporation Company Overview
Willis Lease Finance Corporation Company Overview October 2024 1
Slide 2: Disclaimer
Disclaimer This presentation does not constitute an offer to any person or to the public generally to subscribe for or otherwise acquire any securities. This presentation has been prepared solely for informational purposes and is not intended to serve as the basis for any investment decision. This p
Slide 3: Today’s Presenters
Today’s Presenters Austin C. Willis Scott B. Flaherty Hagen Disch CEO EVP & CFO Treasurer 3
Slide 4: Table of Contents
Table of Contents 1. Willis Lease Finance: The Premier Independent Aircraft Engine Platform 2. Engines: The Most Desirable Asset in Aviation 3. In-Demand Portfolio & Reliable Funding Structure 4. Recent & Continued Successes 5. Strong & Resilient Financial Performance 4
Slide 5: Willis Lease Finance: The Premier Independent Aircraft Engine Platform
Willis Lease Finance: The Premier Independent Aircraft Engine Platform 5
Slide 6: Willis Lease Finance at a Glance
Willis Lease Finance at a Glance What WLFC Does Key Highlights Willis Lease Finance Corporation (“WLFC”) uses its vertically integrated platform of aircraft engines, loan products, and services businesses to solve airline planning, financing, and maintenance needs 344 owned and 222 Engine & aircraft
Slide 7: WLFC Is a Unique Opportunity in Aviation
WLFC Is a Unique Opportunity in Aviation Pioneer and market leader in the most desirable sector of commercial aviation Services-enhanced leasing strategy enables WLFC to provide liquidity, assets and reduced maintenance expenses to customers Cradle to grave engine capabilities allows Willis to extra
Slide 8: WLFC’s Services-Enhanced Leasing Strategy Enables Differentiated Offerings to Customers
WLFC’s Services-Enhanced Leasing Strategy Enables Differentiated Offerings to Customers Services provide greater control over lifecycle of owned and managed assets through parts, maintenance and planning (“WERC”) (“WASI”) Engine Maintenance Facilities (US / UK) Engine & Aircraft Leasing & Trading E
Slide 9: WLFC Has a Long-Term Winning Strategy that Drives Premium Returns
WLFC Has a Long-Term Winning Strategy that Drives Premium Returns WLFC underwriting is an analytical process that relies upon: WLFC for rent and reserve rates WAML for estimated maintenance expense WASI for part-out valuation WERC & WASL to perform maintenance Typical Lessor WLFC Purchase Pr
Slide 10: Seasoned Leadership Team
Seasoned Leadership Team 365+ years of industry experience Charles F. Willis, IV Austin C. Willis Brian R. Hole Scott B. Flaherty Dean M. Poulakidas Garry A. Failler Executive Chairman CEO President EVP & CFO EVP & General Counsel Chief Technical Officer 56 Years 21 Years 21 Years 37 Years 19 Years
Slide 11: Highly Profitable & Growing Engine Platform
Highly Profitable & Growing Engine Platform WLFC Portfolio Growth WLFC Profitability Average Spread to 5-Year Treasury: ~900 bps Average (excluding COVID-19)(5) Spread to 5-Year Treasury: ~1500 bps $3,000 $2,790 1,000 30.0% $2,451 $2,518 $2,495 900 26.5% (1) $2,500 $2,218 800 25.0% Net Book Value ($
Slide 12: Engines: The Most Desirable Asset in Aviation
Engines: The Most Desirable Asset in Aviation 12
Slide 13: Aviation Demand Is Resilient
Aviation Demand Is Resilient Demand for air transport is closely tied to economic activity, but Global Air Revenue Passenger Miles are currently lagging Global GDP growth Passenger Traffic Tracks Global GDP Growth 9/11 SARS Financial Crisis Brexit / Covid-19 Ukraine Trade Wars Conflict 200 $120 CAGR
Slide 14: Engines Retain Value Through Life Cycle and Are Resistant to Volatility
Engines Retain Value Through Life Cycle and Are Resistant to Volatility Engine Life Cycle Ongoing maintenance rebuilds value WLFC Focus and operational capabilities to level Phase 1: Value increases due to comparable to brand new engines annual escalation rates for Phase 1: As a result, value
Slide 15: Demand is Growing, and WLFC is the Premier Full-Service Engine Platform
Demand is Growing, and WLFC is the Premier Full-Service Engine Platform Industry requires spare engines equal to ~10% of installed engines, or ~6,700 spare engines Leased Proportion of Spare Engines in Global Fleet(1) ~35% of global spare engine fleet is leased Expected (~2,300 engines) and expe
Slide 16: Engine Supply Chain Issues Are a Tailwind for Leased Engine Demand
Engine Supply Chain Issues Are a Tailwind for Leased Engine Demand There's a shortage of aircraft, a shortage of engines and a shortage of spare parts… The durability of new technology engines is not as good as its predecessors. Together with our partners, we have had the ability to predict the dema
Slide 17: Willis Lease Continues to Execute, and Investors Have Started to Notice
Willis Lease Continues to Execute, and Investors Have Started to Notice A Record 2024… …Sets the Stage for Future Growth YTD Stock Price Performance WLFC ecosystem of assets and services businesses is resulting in May 3, 2024 May 3, 2024 June 19, 2024 August 1, 2024 September 27, additional invest
Slide 18: Willis Lease Compares Favorably on Key Metrics Relative to Closest Public Peer
Willis Lease Compares Favorably on Key Metrics Relative to Closest Public Peer… Services Of f ered Engine and aircraf t leasing trading and management Next-generation engine leasing & services x Maintenance services End-of -lif e solutions & disassembly x Rather than utilizing Used servi
Slide 19: …While Valuation Has Significant Upside
…While Valuation Has Significant Upside EV(1) / LTM EBITDA(2) Price / LTM GAAP EPS 54.0x 60.0x 48.0x 46.3x 48.0x 42.0x 45.4x 36.0x Avg: 36.9x 36.0x 30.0x 24.0x Avg: 19.8x 24.0x 18.0x 12.0x 12.0x 9.7x Avg: 7.5x 10.8x Avg: 9.6x 6.0x 0.0x 0.0x Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Sep-23 Dec-23 Mar-24 Jun
Slide 20: In-Demand Portfolio & Reliable Funding Structure
In-Demand Portfolio & Reliable Funding Structure 20
Slide 21: Attractive Portfolio of High-Quality Assets
Attractive Portfolio of High-Quality Assets Diversified current generation, in-demand narrowbody aircraft engine portfolio producing a consistent global lease revenue stream Focus on Most In-Demand Assets… … And Well-Diversified Globally New Technology engines grew from 38% in June 2023 to 43% of th
Slide 22: Focus on Engine Types and Host Aircraft
Focus on Engine Types and Host Aircraft A diverse portfolio of engines supporting current aircraft fleets worldwide with continuous & active management keeping the portfolio in line with the latest industry standards WLFC portfolio evolution over last 18 years 35% 30% 25% 20% 15% 10% 5% 0% June-24 D
Slide 23: Diverse Customer Base
Diverse Customer Base Long-standing relationships with the world’s biggest companies in over 120 countries Other Lessees Flag Carrier of France Flag Carrier of Argentina Flag Carrier of Kazakhstan (BB+) Flag Carrier of New Zealand Flag Carrier of Mexico (Baa1) Flag Carrier of Canada (BB / Ba2) Flag
Slide 24: Capital Base with Diverse, Global Resources
Capital Base with Diverse, Global Resources Proven access to debt capital markets with a large pool of reliable banks Willis Lease(1) $500 Million Structured $65 Million Other $61 Million Revolving Credit Debt Preferred Discrete JOLCO Facility Equity(2) Borrowings Financings $500 Million $191 Millio
Slide 25: Recent & Continued Successes
Recent & Continued Successes 25
Slide 26: Continued Successes – Program Strategy
Continued Successes – Program Strategy Air India - 34 CFM56-5B SLB with ConstantThrust® Leveraged full platform to provide Air India a more cost-efficient solution than an expensive fleet shop visit WLFC’s large engine portfolio was uniquely positioned to execute Lease rents and healthy short-
Slide 27: Recent Successes – New Technology Demand
Recent Successes – New Technology Demand Pratt & Whitney Engine Leasing (“PWEL”) GTF Deal In June 2024, WLFC acquired 15 new technology Pratt & Whitney GTF engines from PWEL Transaction is valued at ~$400mm Engines directly leased back to PWEL Pratt & Whitney’s GTF engine offers up to 17% lo
Slide 28: Strong & Resilient Financial Performance
Strong & Resilient Financial Performance 28
Slide 29: Resilient & Consistent Utilization & Lease Rates
Resilient & Consistent Utilization & Lease Rates Portfolio quality supports strong and resilient performance across cycles Very Resilient Utilization(1) Trends 100.0% 95.1% 93.3% 93.0% 90.6% 91.5% 89.7% 90.0% 90.1% 89.6% 89.0% 88.9% 88.2% Avg: 87.3% 90.0% 86.7% 86.0% 85.9% 86.7% 82.4% 83.1% 84.0% 83
Slide 30: Strong Revenue Growth Momentum
Strong Revenue Growth Momentum WLFC portfolio and utilization growth drives year-over-year top line growth WLFC Revenue by Sources ($mm) Gain on 12.7% 12.1% 16.0% 14.9% 18.9% 4.7% 14.2% 29.4% Sale % $550 $490 $500 $450 $409 $419 $400 $348 $350 $312 $275 $289 $300 $274 $250 $200 $150 $100 $50 $0 2017
Slide 31: Demonstrated Profitability Over Time
Demonstrated Profitability Over Time Revenue ($mm) EBITDA ($mm)(2) $400 $600 $490 $305 $500 $419 $300 $409 $239 $233 $400 $348 $312 $194 $275 $289 $274 $200 $176 $300 $164 $159 $149 $200 $100 $100 $0 $0 (1) 2017 2018 2019 2020 2021 2022 2023 LTM (1) 2017 2018 2019 2020 2021 2022 2023 LTM Pre-Tax Inc
Slide 32: Leverage Trends Continue to Improve
Leverage Trends Continue to Improve Historical Leverage 5.0x 4.5x Slight uptick in leverage for PWEL deal at the end of Q2 2024, offset by strong earnings Total Debt / Equity(1) 4.0x Debt / Equity ratio of 3.64x(1) at 3.64x Q2 2024 3.5x Net Debt / Equity ratio of 3.36x(1)(2) at Q2 2024 3.0x 2.
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