WLFC 10-K & 10-Q changes, risk factors and insider trading

Our operations and assets are subject to various U.S. federal, state and local laws and regulations, and non-U.S. laws and regulations related to the protection of the environment. We could incur substantial costs, including capital and other expenditures, to complycomplying with such requirements, as well as fines, penalties, or civil or criminal sanctions and third-party claims, if we were to violate or become liable under such laws or regulations. In addition, it is expected that the new U.S. administration will seek to enact changes to numerous areas of law and regulations currently in effect related to our industry. The nature, timing and economic effects of potential changes to the current legal and regulatory framework affecting our business under the newcurrent administration remain highly uncertain and may impact our results of operations, costs, or liabilities. There can be no assurance that any changes in laws, regulations or governmental policy will not have an adverse impact on our business.

The U.S. and other jurisdictions are imposing more stringent limits on the emission of nitrogen oxide, carbon monoxide, and carbon dioxide emissions from engines, consistent with ICAO standards. Although, these limits generally apply only to engines manufactured after 1999, new laws could be passed in the future that also impose limits on older engines, thereby subjecting our older engines to existing or new emissions limitations or indirect taxation. These limits may also impact growth levels in air travel. In 2005, the EU launched an Emissions Trading System limiting greenhouse gas emissions by various industries and persons, including aircraft operators. However, in an April 2023 directive, the European Parliament and European Council adopted components of the European Commission’s “Fit for 55” proposal, which will modify the ETS system by phasing out free emissions allowances for the aviation sector by 2026. The directive entered force in June 2023, and was required to be transposed into national law by member states by December 31, 2023. In addition, the ICAO has adopted the Carbon Offsetting and Reduction Scheme for International Aviation (“CORSIA”), a global market-based scheme aimed at reducing carbon dioxide emissions from international aviation that will become mandatory in 2027. At least 126 countries, including the United States, have indicated that they will participate in the voluntary phase-in of CORSIA from 2024 onwards. Limitations on emissions, such as the ETS and CORSIA, could favor the use of younger, more fuel-efficient aircraft, since they generally produce lower levels of emissions per passenger, which could adversely affect our ability to re-lease or otherwise dispose of less efficient older engines and aircraft on a timely basis, on favorable terms, or at all. Concerns over global warming, climate change, or other environmental issues could result in more stringent limitations on the operation of older, non-compliant engines and aircraft.

Our consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles (“GAAP”). in the United States. If there are future changes in GAAP with regard to how we and our customers must account for leases, it could change the way we and our customers conduct our businesses and, therefore, could have a potential adverse effect on our business.

Under most of our engine and aircraft leases, the lessee makes monthly maintenance reserve payments to us based on the asset’s usage and management’s estimate of maintenance costs. A certain level of maintenance reserve payments on the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL engines are held in related engine reserve restricted cash accounts. Generally, the lessee under long-term leases is responsible for all scheduled maintenance costs, even if they exceed the amounts of maintenance reserves paid. As of December 31, 2024,2025, 6556 of our leases comprising approximately 24%20% of the net book value of our on-lease assets do not provide for any monthly maintenance reserve payments to be made by lessees, and we can give no assurance that future leases of our engines or aircraft will require maintenance reserves. In some cases, including engine and aircraft repossessions, we may decide to pay for refurbishments or repairs if the accumulated use fees are inadequate.

We have, and expect to continue to have, various credit and financing arrangements with third parties. These financing arrangements are secured by all or substantially all of our assets. Our existing credit and financing arrangements require us to meet certain financial condition tests. Our revolving credit facility prohibits our purchasing or redeeming stock, or declaring or paying dividends on shares of any class or series of our common or preferred stock if an event of default under such facility has or will occur and remains uncured. The agreements governing our debt, including the issuance of notes by WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, and WEST VII,IX, as well as the loans under our senior secured warehouse credit facility, also include restrictive financial covenants. A breach of those and other covenants could, unless waived or amended by our creditors, result in a cross-default to other indebtedness and an acceleration of all or substantially all of our debt. We have obtained waivers and amendments to our financing agreements in the past, but we cannot provide any assurance that we will receive such waivers or amendments in the future if we request or require them. If our outstanding debt is accelerated at any time, we likely would have little or no cash or other assets available after payment of our debts, which could cause the value or market price of our outstanding equity securities to decline significantly and we would have few, if any, assets available for distributions to our equity holders in liquidation.

The relatively long life cycles of aircraft and jet engines can be shortened by world events, government regulation, or customer preferences. We seek to manage these risks by trying to anticipate demand for particular engine and aircraft types, maintaining a portfolio mix of engines that we believe is diversified and thatdiversified, will have long-term valuevalue, and will be sought by lessees in the global market for jet engines, and by selling engines and aircraft that we expect will experience obsolescence or declining usefulness in the foreseeable future.

Risks Related to Our Small SizeCompetition and Corporate Structure

Substantially all of our assets are pledged to secure our obligations to creditors. Our revolving credit and senior secured warehouse credit banks have a lien on all of our assets, including our residual interests in WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL. Due to WEST III’s, WEST IV’s, WEST V’s, WEST VI’s, WEST VII’s, WEST VIII’s, WEST IX’s, and WWFL’s bankruptcy remote structures, that interest is subject to the prior payments of WEST III’s, WEST IV’s, WEST V’s, WEST VI’s, WEST VII’s, WEST VIII’s, WEST IX’s, and WWFL’s debt and other obligations. Therefore, our rights and the rights of our creditors to participate in any distribution of the assets of WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL upon liquidation, reorganization, dissolution or winding up will be subject to the prior claims of WEST III’s, WEST IV’s, WEST V’s, WEST VI’s, WEST VII’s, WEST VIII’s, WEST IX’s, and WWFL’s creditors. Similarly, the rights of our shareholders are subject to satisfaction of the claims of our lenders and other creditors.

Charles F. Willis, IV, who is the founder of WLFC and currently serves as our Executive Chairman, has served as a Director since our establishment in 1985, served as Chief Executive Officer from 1985 until April 2022, served as President until July 2011, and has served as Chairman of the Board of Directors from 1996 until April 2022, when he became Executive Chairman.

Our business operations depend upon our key employees, including our executive officers. Loss of any of these employees, particularly our Executive Chairman, could have a material adverse effect on our business as our key employees have specialized knowledge of our industry and customers and would be difficult to replace.

We are the servicer and administrative agent for the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, and WEST VIIIX facilities and the servicer agent for WWFL, and our cash flows would be materially and adversely affected if we were removed from these positions.

We are the servicer and administrative agent with respect to engines in the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, and WEST VIIIX facilities and the servicer agent with respect to engines in WWFL. We receive monthly fees of 11.5% as servicer (3.5% of which is subordinated in each case) and 2.0% as administrative agent of the aggregate net rents actually received by WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, and WEST VIIIX on their engines. We receive monthly fees of 8.0% as servicer (3.5% of which is subordinated in each case) of the aggregate net rents actually received by WWFL for WWFL engines. We may be removed as servicer and or administrative agent of our WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL facilities by an affirmative vote of a requisite number of the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL note holders. Such vote could happen upon the occurrence of certain specified events as outlined in the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL servicing and or administrative agency agreements.

As of December 31, 2024,2025, we were in compliance with the financial covenants set forth in the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL servicing and or administrative agency agreements. There can be no assurance that we will be in compliance with these covenants in the future or will not otherwise be terminated as servicer and or administrative agent for the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and or WWFL facilities. If we are removed from such role with those facilities, our expenses would increase as our consolidated VIE’s WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL would have to hire an outside provider to replace the servicer and administrative agent functions, and we would be materially and adversely affected. Consequently, our business, financial condition, results of operations and cash flows would be adversely affected.

The following discussion and analysis of our financial condition and results of operations (the “MD&A”) is intended to help the reader understand the results of operations and financial condition of the Company. The MD&A is provided as a supplement to, and should be read in conjunction withwith, ourthe consolidated financial statements and related notes appearing elsewhereincluded in Part IV of this Annual Report.Report on Form 10-K and incorporated herein by reference.

General. Our core business is acquiring and leasing commercial aircraft and aircraft engines and related aircraft equipment pursuant to operating leases, all of which we sometimes collectively refer to as “equipment.” As of December 31, 2024,2025, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842 and investments in sales-type leases. As of December 31, 2024,2025, we had 7069 lessees in 37 countries. Our portfolio is continually changing due to acquisitions and sales. As of December 31, 2024,2025, we had $2,635.9$2,801.7 million of equipment held in our operating lease portfolio, $183.6$139.9 million of notes receivable, $31.1$30.6 million of maintenance rights, and $21.6$16.6 million of investments in sales-type leases, which represented, in aggregate, 354363 engines, 1620 aircraft, one marine vessel and other leased parts and equipment. As of December 31, 2024,2025, we also managed 277116 engines, aircraftengines and related equipment on behalf of otherthird parties.

Willis Aero is a wholly-owned and vertically-integrated subsidiary whose primary focus is the sale of aircraft engine parts and materials through the acquisition or consignment of aircraft engines. As of December 31, 2024,2025, we had $72.2$56.6 million in spare parts inventory. Willis Asset Management is a wholly-owned and vertically-integrated subsidiary whose primary focus is the engine management and consulting business.

In 2011 we entered into an agreement with Mitsui & Co., Ltd. to participate in a joint venture formed as a Dublin-based Irish limited company, WMES, for the purpose of acquiring and leasing jet engines. Each partner holds a 50% interest in the joint venture. WMES owned a lease portfolio of 5065 enginesengines, one aircraft, and other parts and equipment with a net book value of $328.9$575.3 million at December 31, 2024.2025. Our investment in the joint venture was $44.8$78.9 million as of December 31, 2024.2025.

In 2014 we entered into an agreement with CASC to participate in CASC Willis, a joint venture based in Shanghai, China. Each partner holds a 50% interest in the joint venture. CASC Willis acquires and leases jet engines to Chinese airlines and concentrates on meeting the fast-growing demand for leased commercial aircraft engines and aviation assets in the People’s Republic of China. CASC Willis owned a lease portfolio of foursix engines with a net book value of $37.3$50.4 million as of December 31, 2024.2025. Our investment in the joint venture was $17.9$21.6 million as of December 31, 2024.2025.

Leasing RelatedLeasing-Related Activities. Revenue from leasing of aircraft equipment is recognized as operating lease revenue on a straight-line basis over the terms of the applicable lease agreements. Where collection cannot be reasonably assured, for example, upon a lessee bankruptcy, we do not recognize revenue until cash is received. We also estimate and charge to income a provisionprovisions for bad debts and credit losses based on our experience in the business and with each specific customer and the level of past due accounts. The financial condition of our customers may deteriorate and result in actual losses exceeding the estimated allowances. In addition, any deterioration in the financial condition of our customers may adversely affect future lease revenues. As of December 31, 2024,2025, the majority of our leases were operating leases with the exception of certain failed sale-leaseback transactions classified as notes receivable under the guidance provided by ASC 842 and investments in sales-type leases. Under these leases, we retain title to the leased equipment, thereby retaining the potential benefit and assuming the risk of the residual value of the leased equipment.

Impairment may be identified by several factors, including, comparison of estimated sales proceeds or forecasted undiscounted cash flows over the life of the asset with the asset’s book value.value, as well as appraisals from third parties. If the forecasted undiscounted cash flows are less than the book value, the asset is written down to its fair value. When evaluating for impairment, we test at the individual asset level (e.g., engine or aircraft), as each asset generates its own stream of cash flows, including lease rents, maintenance reserves and repair costs.

If the forecasted undiscounted cash flows and fair value of our long-lived assets decrease in the future, we may incur impairment charges. Write-downs of equipment to their estimated fair values totaled $11.2$32.9 million for the year ended December 31, 2024,2025, primarily reflecting an adjustment of the carrying value of one airframe and 1128 engines. As of December 31, 2024,2025, included within equipment held for lease and equipment held for sale was $50.8$78.2 million in remaining book value of 1629 assets which were previously written down.

Write-downs of equipment to their estimated fair values totaled $4.4$11.2 million for the year ended December 31, 2023,2024, primarily reflecting an adjustment of the carrying value of fiveone enginesairframe and two11 airframes.engines. As of December 31, 2023,2024, included within equipment held for lease and equipment held for sale was $31.9$50.8 million in remaining book value of 1516 assets which were previously written down.

Lease Rent Revenue. Lease rent revenue consists of rental income from long-term and short-term engine leases, aircraft leases, and other leased parts and equipment. Lease rent revenue increased by $25.1$53.4 million, or 11.8%,22.4%, to $291.6 million for the year ended December 31, 2025 from $238.2 million for the year ended December 31, 2024 from $213.1 million for the year ended December 31, 2023.2024. The increase is primarily due to an increase in the average size of the portfolio as compared to that of the prior period,period offsetas bywell aas slightan decreaseincrease in average utilization from 83% to 85% (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) of equipment held in our operating lease portfolio, primarily as a result of the Company’s significant purchases of engines during December 2024, the majority of which were off-lease as of December 31, 2024.portfolio.

One customer accounted for approximately 13% of total lease rent revenue during the year ended December 31, 2025. Two customers accounted for approximately 11%11%, eacheach, of total lease rent revenue during the year ended December 31, 2024. One customer accounted for approximately 15% of total lease rent revenue during the year ended December 31, 2023.

As of December 31, 2025, the Company had $2,801.7 million of equipment held in our operating lease portfolio, $139.9 million of notes receivable, $30.6 million of maintenance rights, and $16.6 million of investments in sales-type leases. As of December 31, 2024, the Company had $2,635.9 million of equipment held in our operating lease portfolio, $183.6 million of notes receivable, $31.1 million of maintenance rights, and $21.6 million of investments in sales-type leases. As of December 31, 2023, the Company had $2,112.8 million of equipment held in our operating lease portfolio, $92.6 million of notes receivable, $9.2 million of maintenance rights, and $8.8 million of investments in sales-type leases. Average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) was approximately 83%85% and 84%83% for the years ended December 31, 20242025 and 2023,2024, respectively.

Maintenance Reserve Revenue. Maintenance reserve revenue for the year ended December 31, 20242025 increased $80.2$18.1 million, or 60.0%,8.4%, to $213.9$232.0 million from $133.7$213.9 million for the year ended December 31, 2023.2024. Long-term maintenance revenue was $44.5 million for the year ended December 31, 2025 compared to $39.4 million for the year ended December 31, 2024 compared to $15.4 million for the year ended December 31, 2023.2024. Long-term maintenance revenue is influenced by end of lease compensation and the realization of long-term maintenance reserves associated with engines coming off lease. Engines out on lease with “non-reimbursable” usage fees generated $174.5$187.5 million of short-term maintenance revenues for the year ended December 31, 20242025 compared to $118.3$174.5 million for the year ended December 31, 2023,2024, an increase of $56.2$13.0 millionmillion, or 47.5%.7.4%. The increase in short-term maintenance reserve revenue was influenced by an increase in the number of engines on short-term lease conditions, the timing of recognition of in-substance fixed payments, and the systematic, contractual increase in the hourly and cyclical usage rates on our engines.

Spare Parts and Equipment Sales. Spare parts and equipment sales for the year ended December 31, 20242025 increased by $6.7$68.4 million, or 33.1%,252.3%, to $27.1$95.5 million compared to $20.4$27.1 million for the year ended December 31, 2023.2024. Spare part sales were $37.7 million and $26.1 million for the years ended December 31, 2025 and 2024, respectively, an increase of $11.6 million or 44.4%. The increase in spare parts sales reflects the demand for surplus material that we are seeing as operators seek to extend the lives of their current generation engine portfolios. Equipment sales for the year ended December 31, 20242025 were $1.0$57.8 million forrelated to the sale of onefour engine.engines. There were no equipmentEquipment sales for the year ended December 31, 2023.2024 were $1.0 million related to the sale of one engine.

Interest Revenue. Interest revenue increased by $3.0$2.4 million, or 34.0%,20.6%, to $14.1 million for the year ended December 31, 2025, from $11.7 million for the year ended December 31, 2024, from $8.7 million for the year ended December 31, 2023.2024. The increase primarily reflects aninterest increaserevenue inrecognized on new notes receivable relatedthat towere entered into during the latter half of 2024. Notes receivable result from failed sale-leasebacks in which the Company was the buyer-lessor and on sales-type leases.buyer-lessor.

Gain on Sale of Leased Equipment. During the year ended December 31, 2025, we sold 38 engines, five airframes, and other parts and equipment from the lease portfolio for a net gain of $54.0 million. During the year ended December 31, 2024, we sold 35 engines, eight airframes, and other parts and equipment from the lease portfolio for a net gain of $45.1 million. During the year ended December 31, 2023, we sold 28 engines, one airframe, and other parts and equipment from the lease portfolio for a net gain of $10.6 million.

Maintenance Services Revenue. Maintenance services revenue predominantly represents fleet management, engine and aircraft storage and repair services, and revenue related to management of fixed base operator services to third-party customers. Maintenance services revenue remainedincreased relatively5.5% flatyear forover year, reflecting organic growth in the yearbusiness endedpartially Decemberoffset 31,by 2024.the sale of the fleet management business on June 30, 2025 to our joint venture WMES.

Other Revenue. Other revenue increased by $1.2$8.1 million, or 14.6%,89.0%, to $9.1$17.2 million for the year ended December 31, 20242025 from $7.9$9.1 million in 2023.2024. Other revenue consists primarily of managed service fee revenue related to the servicing of engines for the WMES lease portfolio. The increase for the year ended December 31, 20242025 compared to that of the prior year primarily reflects increased managed service revenue. These services include management of the WMES lease portfolio, which occurs on an ongoing basis, as well as marketing, procurement, and financing arrangement, which occurs on a transactional basis.

Depreciation and Amortization Expense. Depreciation and amortization expense increased $1.5$19.1 million, or 1.7%,20.7%, to $111.6 million for the year ended December 31, 2025 compared to $92.5 million for the year ended December 31, 2024 compared to $90.9 million for the year ended December 31, 2023.2024. The increase is primarily due to an increase in the size of our lease portfolio.portfolio, the timing of placing acquired engines on lease, and to a lesser extent, an increase in accelerated depreciation on older engine models.

Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales increased by $7.6$69.4 million, or 50.3%,million to $22.9$92.3 million for the year ended December 31, 20242025 compared to $15.2$22.9 million in the prior year period, reflecting the increase in spare parts and equipment sales. Cost of spare parts sales were $36.6 million and $22.8 million for the year ended December 31, 2025 and December 31, 2024, respectively, reflecting the increase in spare parts sales. Cost of equipment sales were $55.7 million for the year ended December 31, 2025, compared to $0.1 million for the year ended December 31, 2024.2024, Therereflecting werethe noincrease in equipment or cost of equipment sales for the year ended December 31, 2023.sales.

Cost of Maintenance Services. Cost of maintenance services increased by $3.3$3.4 million, or 15.6%,14.1%, to $27.9 million for the year ended December 31, 2025, compared to $24.5 million for the year ended December 31, 2024, compared to $21.2 million for the for the year ended December 31, 2023.2024. The increase is primarily related to an increase in personnel costs,costs as a result of expansion of our aircraft tear downdisassembly and repair services business, as well as an increase in facility related costs.services.

Write-down of Equipment. Write-downs of equipment to their estimated fair values totaled $32.9 million for the year ended December 31, 2025, primarily reflecting an adjustment of the carrying value of 28 engines. Write-downs of equipment to their estimated fair values totaled $11.2 million for the year ended December 31, 2024, primarily reflecting an adjustment of the carrying value of one airframe and 11 engines. Write-downs of equipment to their estimated fair values totaled $4.4 million for the year ended December 31, 2024, primarily reflecting an adjustment of the carrying value of two airframes and five engines.

Technical Expense. Technical expenses consist of the non-capitalized cost of engine repairs, engine thrust rental fees, outsourced technical support services, sublease engine rental expense, engine storage, and freight costs. These expenses decreasedincreased by $5.8$9.1 million, or 20.7%,40.8%, to $22.3$31.4 million for the year ended December 31, 2024,2025, compared to $28.1$22.3 million in 2023. The decrease is2024, primarily due to aan lowerincreased level of engine repair activity as compared to that of the prior period.

We generate significant cash flow from our core business as evidenced by our net cash provided by operating activities, which was $284.4$283.2 million in 2024.2025. Beyond cash provided through operations, we generally fund the growth of our business through a combination of equity and corporate borrowings secured by our equipment lease portfolio. Cash of approximately $1.3$1.7 billion and $625.7$1.3 millionbillion in the years ended December 31, 20242025 and 2023,2024, respectively, was derived from this borrowing activity. In these same time periods $840.0$1.2 millionbillion and $665.5$0.8 million,billion, respectively, was used to pay down related debt.

In October 2016, the Company sold and issued to DBJ an aggregate of 1,000,000 shares of the Company’s Series A Preferred Stock, $0.01 par value per share (the “Series AA-1 Preferred Stock”) at a purchase price of $20.00 per share. The net proceeds to the Company after deducting investor fees were $19.8 million.

In September 2017, the Company sold and issued to DBJ an aggregate of 1,500,000 shares of the Company’s Series A-2 Preferred Stock, $0.01 par value per share (the “Series A-2 Preferred Stock”) at a purchase price of $20.00 per share. The net proceeds to the Company after deducting issuance costs were $29.7 million.

ThePrior to issuing the new Series A Preferred Stock, the Company’s Series A-1 Preferred Stock accrued quarterly dividends at the rate per annum of 6.5% per share through October 15, 2023 and accrued at the rate per annum of 8.5% per share thereafterand through September 26, 2024. Thethe Series A-2 Preferred Stock accrued quarterly dividends at the rate per annum of 6.5% per share. During the years ended December 31, 20242025 and 2023,2024, the Company paid total preferred stock dividends of $3.5$5.7 million and $3.2$3.5 million, respectively.

Cash flows provided by operating activities were $284.4$283.2 million and $229.7$284.4 million in the years ended December 31, 20242025 and 2023,2024, respectively. The $54.7$1.2 million, or 23.8%,0.4%, increasedecrease in operating cash flows was primarily driven by a 60.0%$24.3 increasemillion decrease in maintenance reserve revenue, reflecting increased levels of usage fees resulting from high levels of travel and supply chain constraints. Additionally, payments received on sales-type leasesleases, increaseda $25.9period million,over andperiod changes in receivables contributed to $38.5$19.6 million of incremental operating cash flows as collections improved. Partially offsetting these increases in operating cash flows was a year over year $29.5 million declinedecrease in cash flows from changes in inventory,accounts reflecting investment in parts of high demand engine types,receivable, and a $27.0period over period $28.3 million declinedecrease in cash flows from changes in unearnedother revenueassets. drivenPartially byoffsetting the decreases was a period over period $44.5 million increase in long-termcash maintenanceflows revenuefrom recognition.changes in inventory. These changes reflect significant inventory purchases made in the prior year to meet the high demand for spare parts. Spare parts sales were $37.7 million and $26.1 million for the years ended December 31, 2025 and 2024, respectively, an increase of $11.6 million, or 44%, from 2024. Cash flows from operations are driven significantly by payments made under our lease agreements, which comprise lease revenue, security deposits, and maintenance reserves, and are offset by interest expense and general and administrative costs. Cash received as maintenance reserve payments for some of our engines on lease are partially restricted by our debt arrangements. The lease revenue stream, in the short term, is at fixed rates while a portion of our debt is at variable rates. If interest rates increase, it is unlikely we could increase lease rates in the short term and this would cause a reduction in our earnings and operating cash flows. Revenue and maintenance reserves are also affected by the amount of equipment off lease. ApproximatelyAverage 74%utilization (based on net book value of equipment held for operating lease, maintenance rights, and 84%,notes byreceivable bookand value,investments in sales-type leases net of ourallowances) assetswas wereapproximately on-lease as of December 31, 202485% and 2023, respectively. Our year-end 2024 on-lease rate was influenced by a large, late December 2024 purchase of nine off-lease Pratt & Whitney GTF Advantage™ engines. The average utilization rate83% for the years ended December 31, 20242025 and 2023 was approximately 83% and 84%,2024, respectively. If there is an increase in off-lease rates or deterioration in lease rates that are not offset by reductions in interest rates, there will be a negative impact on earnings and cash flows from operations.

Cash flows provided by financing activities for the year ended December 31, 2025 were $387.6 million and primarily reflected $1,661.0 million in proceeds from the issuance of debt obligations, partly offset by $1,221.5 million in principal payments on debt obligations, $19.3 million in cancellation of restricted stock units in satisfaction of withholding tax, $14.6 million in new debt issuance costs, and $8.7 million in common stock cash dividends paid. Cash flows provided by financing activities for the year ended December 31, 2024 were $445.0 million and primarily reflected $1,305.7 million and $13.1 million in proceeds from the issuance of debt obligations and preferred stock, respectively, partlypartially offset by $840.0 million in principal payments, $11.6 million in new debt issuance costs, and $10.7 million in common stock cash dividends paid. Cash flows used in financing activities for the year ended December 31, 2023 were $57.9 million and primarily reflected $665.5 million in principal payments and $9.4 million in new debt issuance costs, partly offset by $625.7 million in proceeds from the issuance of debt obligation.

In OctoberDecember 2023,2025, the Company and its direct, wholly-owned subsidiary WEST VII,IX, closed itsWEST IX’s offering of $410.0$392.9 million in aggregate principal amount of fixed rate notes. The notesWEST IX Notes were issued in two series, with the Series A Notes issued in an aggregate principal amount of $337.4 million and the Series B Notes issued in an aggregate principal amount of $55.5 million. The WEST IX Notes are secured by, among other things, WEST VII’sIX’s direct and indirect ownership interests in a portfolio of aircraft engines and airframes. The notesSeries A Notes and Series B Notes have a fixed coupon of 8.00%,5.16% and 5.70%, respectively, an expected maturity inof Octoberapproximately 2029,six years and a final maturity dateof in25 October 2048.years. The notesSeries A Notes and Series B Notes were issued at a price of 98.84814%99.99937% and 99.99686% of par.par, Principal on the notes is payable monthly to the extent of available cash in accordance with a priority of payments included in the indenture.respectively.

The assets of WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL are not available to satisfy the Company’s obligations other than the obligations specific to that WEST entity or WWFL. WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL are consolidated for financial statement presentation purposes. WEST III’s, WEST IV’s, WEST V’s, WEST VI’s, WEST VII’s, WEST VIII's, WEST IX's, and WWFL’s abilities to make distributions and pay dividends to the Company are subject to the prior payments of their debt and other obligations and their maintenance of adequate reserves and capital. Under WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL, cash is collected in restricted accounts, which is used to service the debt and any remaining amounts, after debt service and defined expenses, are distributed to the Company. Additionally, a portion of maintenance reserve payments and lease security deposits are formulaically accumulated in restricted accounts and are available to fund future maintenance events and to secure lease payments, respectively. The WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL indentures require that a minimum threshold of maintenance reserve and security deposit balances be held in restricted cash accounts.

At December 31, 2024,2025, we were in compliance with the covenants specified in our revolving credit facility, including the Interest Coverage Ratio requirement of at least 2.25 to 1.00, and the Total Leverage Ratio requirement of not greater than 4.504.25 to 1.00. The Interest Coverage Ratio, as defined in the credit facility, is the ratio of earnings before interest, taxes, depreciation and amortization and other one-time charges to consolidated interest expense. The Total Leverage Ratio, as defined in the credit facility, is the ratio of total indebtedness to tangible net worth. At December 31, 2024,2025, we were in compliance with the covenants specified in the WEST III, WEST IV, WEST V, WEST VI, WEST VII, WEST VIII, WEST IX, and WWFL indentures and servicing and other debt related agreements.

From time to timetime, we enter into contractual commitments to purchase engines directly from original equipment manufacturers. We are currently committed to purchasing six18 additional new LEAP-1B engines and 1528 additional new LEAP-1A engines for an aggregate total of $374.6$857.4 million by 2027.2030. Further, we are currently committed to purchasing six PW1133 engines for approximately $104.0 million in 2026. Our purchase agreements generally contain terms that allow the Company to defer or cancel purchase commitments in certain situations. These deferrals or conversionscancellations would not result in penalties or increased costs other than any potential increase due to the normal year-over-year change in engine list prices, which is akin to ordinary inflation.

We believe our equity base, internally generated funds andfunds, existing debt facilitiesfacilities, and access to capital markets are sufficient to maintain our level of operations through 2025.2026. A decline in the level of internally generated funds could result if the amount of equipment off-lease increases, there is a decrease in availability under our existing debt facilities, or there is a significant step-up in borrowing costs. Such decline would impair our ability to sustain our level of operations. We continue to discuss additions to our capital base with our commercial and investment banks. If we are not able to access additional capital, our ability to continue to grow our asset base consistent with historical trends will be impaired and our future growth limited to that which can be funded from internally generated capital.

At December 31, 2024,2025, $914.9$732.7 million of our borrowings were on a variable rate basis at various interest rates tied to one-month term SOFR. Our equipment leases are generally structured at fixed rental rates for specified terms. Increases in interest rates could narrow or result in a negative spread between the rental revenue we realize under our leases and the interest rate that we pay under our borrowings. Historically, we have entered into interest rate derivative instruments to mitigate our exposure to interest rate risk; such investments are not intended to speculate or trade in derivative products. As of December 31, 2024,2025, wethe haveCompany sixhad five interest rate swap agreements.agreements, with a total notional amount of $334.5 million. During 2021, the Company entered into four fixed-rate interest swap agreements, each having notional amounts of $100.0 million, two of which matured during the year ended December 31, 2024 and two of which had remaining terms of 13one monthsmonth as of December 31, 2024. One interest rate swap agreement was entered into during 2019, having a notional amount of $100.0 million, which matured during the year ended December 31, 2024.2025. During the year ended December 31, 2024, the Company entered into three fixed-rate interest swap agreements, each having notional amounts of $50.0 million, two of which were terminated during the year ended December 31, 2025 and withone of which had a remaining termsterm of 5341 months as of December 31, 2024.2025. During the year ended December 31, 2024, the Company also entered into one fixed-rate interest swap agreement, having a notional amount of $75.0 million. During the year ended December 31, 2025, this fixed-rate interest swap agreement was partially terminated, reducing its notional amount to $34.5 million. It had a remaining term of 41 months as of December 31, 2025. During the year ended 2025, the Company entered into one fixed-rate interest swap agreement, having a notional amount of $50.0 million, and with a remaining term of 5346 months as of December 31, 2024.2025. The derivative instruments were each designated as cash flow hedges at inception and recorded at fair value. The net fair value of the interest rate swaps as of December 31, 20242025 was $0.1 million, representing an asset of $0.4 million and a liability of $0.3 million, and reflected within Other assets and Accounts payable and accrued expenses on the Consolidated Balance Sheets, respectively. The net fair value of the interest rate swaps as of December 31, 20232024 was $11.0 million and $16.5 million, respectively, each representing an asset and reflected within Other assets on the Consolidated Balance Sheets.

Our core business is acquiring and leasing commercial aircraft and aircraft engines and related aircraft equipment pursuant to operating leases, all of which we sometimes collectively refer to as “equipment.” As of MarchJune 31,30, 2026, the majority of our leases were operating leases, with the exception of certain sale-leaseback transactions that do not meet lease criteria and are therefore classified as notes receivable under the guidance provided by Accounting Standards Codification (“ASC”) 842, Leases, and investments in sales-type leases. As of MarchJune 31,30, 2026, we had 7073 lessees in 4042 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of MarchJune 31,30, 2026, we had $2,760.5$2,783.4 million of equipment held in our operating lease portfolio, $65.6$89.3 million of notes receivable, $30.6and $83.6 million of maintenance rights, and $0.3 million of investments in sales-type leases, which represented 342334 engines, 2022 aircraft, one marine vessel, and other leased parts and equipment. As of MarchJune 31,30, 2026, we also managed 129145 engines, one airframe, and related equipment on behalf of other parties.

Three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025

Lease Rent Revenue. Lease rent revenue consists of rental income from long-term and short-term engine leases, aircraft leases, and other leased parts and equipment. Lease rent revenue increased by $9.6$4.9 million, or 14.2%,6.7%, to $77.4$77.1 million in the three months ended MarchJune 31,30, 2026, from $67.7$72.3 million for the three months ended MarchJune 31,30, 2025. The increase is due to an increase in the average size of the portfolio as compared to that of the prior year period as well as an increase in average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) of equipment held in our operating lease portfolio.period.

At MarchJune 31,30, 2026, the Company had $2,760.5$2,783.4 million of equipment held in our operating lease portfolio, $65.6$89.3 million of notes receivable, $30.6and $83.6 million of maintenance rights, and $0.3 million of investments in sales-type leases.rights. At MarchJune 31,30, 2025, the Company had $2,597.8$2,606.6 million of equipment held in our operating lease portfolio, $179.3$171.8 million of notes receivable, $25.2$34.7 million of maintenance rights, and $17.3$16.8 million of investments in sales-type leases. Average utilization (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) was approximately 85.8%85.0% and 79.9%87.2% for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Two customers accounted for approximately 12% and 11%, each, of the Company’s total lease rent revenue during the three months ended MarchJune 31,30, 2026, and two customers accounted for approximately 14%13% and 10%, each, of the Company’s total lease rent revenue during the three months ended MarchJune 31,30, 2025.

Maintenance Reserve Revenue. Maintenance reserve revenue increaseddecreased $0.7$4.3 million, or 1.2%,8.4%, to $55.5$46.5 million for the three months ended MarchJune 31,30, 2026, from $54.9$50.7 million for the three months ended MarchJune 31,30, 2025. We recognized $12.4$7.5 million in long-term maintenance revenue for the three months ended MarchJune 31,30, 2026, compared to $9.6$0.5 million in long-term maintenance revenue recognized in the prior comparable period as the maintenance reserves and end-of-lease payments for engines coming off lease exceedexceeded those in the prior comparable period. Long-term maintenance revenue is influenced by end-of-lease compensation and the realization of long-term maintenance reserves associated with engines coming off lease. Engines on lease with “non-reimbursable” usage fees generated $43.1$39.0 million of short-term maintenance revenues, compared to $45.3$50.2 million in the comparable prior period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.

Spare Parts and Equipment Sales. Spare parts and equipment sales increaseddecreased by $3.4$9.2 million, or 18.9%,30.2%, to $21.7$21.2 million for the three months ended MarchJune 31,30, 2026, compared to $18.2$30.4 million for the three months ended MarchJune 31,30, 2025. Spare parts sales were $10.3$11.1 million and $16.0$9.2 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, aan decreaseincrease of $5.8$1.8 million, or 35.9%,19.7%, compared to the same period in 2025. The decreaseincrease in spare parts sales reflects variations in the timing of sales to third-party customers and is not reflective of intra-company sales as the parts business provides used serviceable material across the broader Willis platform. Equipment sales for the three months ended MarchJune 31,30, 2026 were $11.4$10.1 million for the sale of threetwo engines.engines and one airframe. The trading profit on the sales of these engines was $5.7$5.0 million, representing a 50%49% margin. Equipment sales for the three months ended MarchJune 31,30, 2025 were $2.2$21.1 million for the sale of one engine.

Interest Revenue. Interest revenue decreased by $1.1$2.5 million, or 29.1%,67.6%, for the three months ended MarchJune 31,30, 2026, as compared to that of the three months ended MarchJune 31,30, 2025. The decrease was due to a lower balance of notes receivable and sales-type leases outstanding during the respective periods, partially attributable to the Company’s sale of 1112 notes receivable and sales-type leases to the Company’s investment fund partnership with Liberty Mutual Investments (“LMI”) (“LMI Fund”) during the threesix months ended MarchJune 31,30, 2026.

Gain on Sale of Leased Equipment. During the three months ended MarchJune 31,30, 2026, we sold 1421 engines from the lease portfolio for a net gain of $18.0 million. The $18.0 million gain was associated with gross sales of $60.0 million, representing a 30% margin. During the three months ended March 31, 2025, we sold seven engines, one airframe, and other parts and equipment from the lease portfolio,portfolio for $224.8 million less economic closing adjustments, resulting in a net gain of $4.4$32.0 million. During the three months ended June 30, 2025, we sold 14 engines, two airframes, and other parts and equipment from the lease portfolio for $91.1 million less economic closing adjustments, resulting in a net gain of $27.6 million.

Gain on Sale of Financial Assets. During the three months ended MarchJune 31,30, 2026, we sold 11one notesnote receivable andto investmentsthe inLMI sales-type lease assetsFund, for a net gain of $0.4$0.2 million. DuringThere was no gain on sale of financial assets during the three months ended MarchJune 31,30, 2025, we sold two investments in sales-type lease assets for a net gain of $0.4 million.2025.

Maintenance Services Revenue. Maintenance services revenue predominatelypredominantly represent fleet management, engine and aircraft storage and repair services, and revenue related to FBO services provided to third parties, such as refueling, maintenance, and hangar services. Maintenance services revenue increased by $4.2$1.0 million, or 74.9%,11.9%, to $9.8$9.0 million for the three months ended MarchJune 31,30, 2026, from $5.6$8.0 million for the three months ended MarchJune 31,30, 2025. The increase reflects growth in engine and aircraft storage and repair services partially offset by the lack of fleet management revenues in the current period due to the sale of that business in 2025.

Management and Advisory Fees. Management and advisory fees increased by $5.9$2.9 million to $7.9$5.5 million for the three months ended MarchJune 31,30, 2026, from $2.0$2.6 million for the three months ended MarchJune 31,30, 2025, primarily driven by $4.9$2.8 million of fees earned from the LMI Fund and the Blackstone Credit & Insurance (“BXCI”) (“BXCI Fund”) in the Company’s role as general partner. The LMI Fund and the BXCI Fund commenced operations in March 2026 and reimbursedApril formation2026, and other costs to the Company.respectively. Accordingly, the Company’s results for the three months ended MarchJune 31,30, 2026 reflect only a partial period of activity.operations associated with the BXCI Fund, including reimbursements received for formation and other costs incurred by the Company.

Depreciation and Amortization Expense. Depreciation and amortization expense increased by $5.2$1.5 million, or 20.6%,5.5%, to $30.2$29.1 million for the three months ended MarchJune 31,30, 2026, compared to $25.0$27.6 million for the three months ended MarchJune 31,30, 2025. The increase is primarily due to an increase in the size of our lease portfolio and the timing of placing acquired engines on lease.

Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales decreased by $0.9$13.0 million, or 5.9%,46.3%, to $14.4$15.1 million for the three months ended MarchJune 31,30, 2026, compared to $15.3$28.1 million for the three months ended MarchJune 31,30, 2025. Cost of spare parts sales were $8.8$9.9 million and $13.8$8.3 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, aan decreaseincrease of $5.1$1.6 million, or 36.6%,19.4%, reflecting the decreaseincrease in spare parts sales. Cost of equipment sales were $5.7$5.1 million and $1.5$19.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, reflecting the increasedecrease in equipment sales.

Cost of Maintenance Services. Cost of maintenance services predominately represent the costs of fleet management, engine and aircraft storage and repair services, and the management of fixed base operator services provided to third parties. Cost of maintenance services increased by $3.5$1.7 million, or 66.3%,20.1%, to $8.9$10.4 million for the three months ended MarchJune 31,30, 2026, compared to $5.3$8.6 million for the three months ended MarchJune 31,30, 2025, reflecting the increase in maintenance services revenue.

Write-down of Equipment. There was $1.1$4.9 million in write-downs of equipment for the three months ended MarchJune 31,30, 2026, reflecting the write-down of onefour engine.engines. There was $2.1$11.5 million in write-downs of equipment for the three months ended MarchJune 31,30, 2025, reflecting the write-down of fivesix engines.

General and Administrative Expenses. General and administrative expenses increased by $8.9$5.1 million, or 18.6%,10.2%, to $56.6$55.6 million for the three months ended MarchJune 31,30, 2026, compared to $47.7$50.4 million for the three months ended MarchJune 31,30, 2025. The increase was primarily reflectsdriven by the prior comparable period including $6.3 million in government grant receipts for the now discontinued sustainable aviation fuel project, along with the current period including a $12.5$2.7 million increase in legal fees primarily related to the Company’s financing and strategic initiatives. These increases were partially offset by a $3.4 million decrease in personnel costs, whichprimarily includedreflecting ana increase of $6.9$4.0 million reduction in share-based compensation andresulting anfrom increasechanges made to the structuring of $4.1new millionemployee inequity wages.awards Thefollowing increase in share-based compensation reflectsthe appreciation of the market value ofin the Company’s equitystock as well as share awards to new personnel to support continued growth of the Company. The increase in wages was driven by higher headcount to support the Company’s growth. Non-recurring project expense associated with the sustainable aviation fuels project declined $11.7 million due to the decision to cease investment in and pursue strategic alternatives.price. General and administrative costs for the three months ended MarchJune 31,30, 2026 also included $4.9$1.6 million of costs which were recharged to the LMI Fund and BXCI Fund, with the associated revenue of $4.9$1.6 million included in Management and Advisory Fees, and a $2.0 million increase in acquisition, financing and divestiture related expenses.Fees.

Technical Expense. Technical expense consists of the non-capitalized cost of engine repairs, engine thrust rental fees, outsourced technical support services, sublease engine rental expense, engine storage and freight costs. Technical expense increased by $3.5$2.4 million to $9.7$9.9 million for the three months ended MarchJune 31,30, 2026, compared to $6.2$7.5 million for the three months ended MarchJune 31,30, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.

Net Finance Costs. Net finance costs increased $7.6$1.5 million, or 23.6%,4.6%, to $39.7$35.1 million for the three months ended MarchJune 31,30, 2026, compared to $32.1$33.6 million for the three months ended MarchJune 31,30, 2025. The increase iswas primarily dueattributable to $7.0a $5.4 million in loss on debt extinguishment,extinguishment anrecognized increasein ofthe $7.2current period, with no comparable loss in the prior period, resulting from the Company’s refinancing and capital restructuring activities. Interest expense also increased by $6.9 million inand interest$5.1 expensemillion associatedon withthe Willis Engine Structured Trust VIII (“WEST VIII”) notes payable, which closed in June 2025, and an increase of $4.2 million in interest expense associated with Willis Engine Structured Trust IX (“WEST IX”) notes payable, respectively, which closedwere issued in June 2025 and December 2025. The loss on debt extinguishment was driven by the Company’s refinancing and capital restructuring. Additionally, derivative-related receipts were $0.9 million for the three months ended March 31, 2026, as compared to $2.4 million for the three months ended March 31, 2025, as certain swap positions were either terminated or ran off. These increases were partially offset by a decrease of $4.0$6.3 million decrease in interest expense associated withon the Company’s revolving credit facility, reflecting a decreaselower ofaverage $3.6outstanding balance during the three months ended June 30, 2025. Interest expense also declined by $5.4 million in interest expense associated withfor Willis Engine Structured Trust VII (“WEST VII”) notesand payable, a decrease of $2.6$3.9 million in interest expense associated with thefor Willis Warehouse Facility LLC (“WWFL”), andas a decrease of $2.7 million in interest expense associated with Willis Engine Structured Trust IV (“WEST IV”)those notes payable, as these debt instrumentspayable were paid down or terminated as part of the Company’s refinancing and capital restructuring.terminated.

Income Tax Expense. Income tax expense was $11.8$7.8 million for the three months ended MarchJune 31,30, 2026, compared to income tax expense of $8.4$13.9 million for the three months ended MarchJune 31,30, 2025. The effective tax rate for the firstsecond quarter of 2026 was 31.9%,20.5%, compared to 33.2%18.7% in the prior year period. The Company’s effective tax rate differed from the U.S. federal statutory rate of 21.0% primarily due to executive compensation exceeding $1.0 million as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”)., and a worthless stock deduction recognized on the Company’s foreign sustainable aviation fuel subsidiary, which resulted in an ordinary tax loss. The effective tax rate variance in the prior year period was also impacted by the sale of the Company’s entire issued share capital of BAML, for which no statutory tax was due on the gain recognized.

Adjusted EBITDA was approximately $123.8$120.7 million and $103.3$116.1 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and $244.6 million and $219.4 million for the six months ended June 30, 2026 and 2025, respectively. The increaseincreases in Adjusted EBITDA of $20.5 million waswere primarily driven by the changes noted in the Results of Operations section above. See below for the reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income attributable to common shareholders.

At MarchJune 31,30, 2026, the Company had $24.6$10.7 million of cash and cash equivalents and $196.0$161.5 million of restricted cash. We fund our operations primarily from cash provided by our leasing activities. We finance our growth through borrowings secured primarily by our equipment lease portfolio. Cash of approximately $127.0$803.0 million and $135.0$851.1 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively, was derived from our borrowing activities. In these same time periods, $577.4$1,182.9 million and $169.4$309.6 million, respectively, was used to pay down related debt. At MarchJune 31,30, 2026, the Company had approximately $1.3 billion of unused borrowing capacity on its credit facility.

Cash flows provided by operating activities were $56.7$134.2 million and $41.0$145.2 million for the threesix months ended MarchJune 31,30, 2026 and 2025, respectively. The $15.7$11.0 million, or 38.2%,7.6%, increasedecrease in operating cash flows was primarily driven by a period over period $10.0$9.9 million increasedecrease in cashaccounts flowspayable fromand changesaccrued expenses, as well as a period over period $8.1 million decrease in othermaintenance assets for the three months ended March 31, 2026.reserves. Cash flows from operations are driven significantly by payments made under our lease agreements, which comprise lease revenue, security deposits and maintenance reserves, and are offset by interest expense and general and administrative costs. Cash received as maintenance reserve payments for some of our engines on lease are partially restricted by our debt arrangements. The lease revenue stream, in the short term, is at fixed rates while a portion of our debt is at variable rates. If interest rates increase, it is unlikely we could increase lease rates in the short term, and this would cause a reduction in our earnings and operating cash flows. Revenue and maintenance reserves are also affected by the amount of equipment off lease. The average utilization rate (based on net book value of equipment held for operating lease, maintenance rights, and notes receivable and investments in sales-type leases net of allowances) for the threesix months ended MarchJune 31,30, 2026 and 2025 was approximately 85.8%85.4% and 79.9%,83.6%, respectively. If there is an increase in off-lease rates or deterioration in lease rates that are not offset by reductions in interest rates, there will be a negative impact on earnings and cash flows from operations.

Cash flows used in financinginvesting activities were $463.0$78.2 million for the threesix months ended MarchJune 31,30, 2026 and primarily reflected $577.4$401.9 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in principalthe payments,period), $4.5$42.5 million infor debtthe issuance costs,of notes receivable, and $3.1$39.6 million infor commonthe stockpurchase cashof dividendsinvestments paid,and contributions to joint ventures, partially offset by $127.0proceeds millionfrom insale of equipment (net of selling expenses) of $302.8 million, proceeds from debtsale obligations.of notes receivable (net of selling expenses) of $88.4 million, and proceeds from sale of investments of sales-type leases of $15.5 million. Cash flows used in financinginvesting activities were $38.1$2.2 million for the threesix months ended MarchJune 31,30, 2025 and primarily reflected $169.4$154.9 million infor principalthe paymentspurchase of equipment held for operating lease and $1.8for sale (including capitalized costs and prepaid deposits made in the period) and $17.1 million infor cashthe dividendspurchase paidof property, equipment and furnishings, which was primarily related to shareholdersleasehold of common stock,improvements, partially offset by $135.0proceeds from sale of equipment (net of selling expenses) of $141.9 million inand proceeds from debtsale obligations.of business of $23.1 million.

During the threesix months ended MarchJune 31,30, 2026 and MarchJune 31,30, 2025, the Company paid cash dividends of $3.1$6.2 million and $1.8$3.7 million, respectively, to shareholders of common stock.

The Company’s Series A Preferred Stock accrues quarterly dividends at the rate per annum of 8.35% per share. During each of the threesix months ended MarchJune 31,30, 2026 and 2025, the Company paid total preferred stock dividends of $1.4$2.7 million and $1.6$3.0 million, respectively.

At MarchJune 31,30, 2026, debt obligations consisted of loans totaling $2,253.7$2,320.9 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 3.1%2.5% and 8.0%. Substantially all of our assets are pledged to secure our obligations to creditors. For further information on our debt instruments, see Note 4 “Debt Obligations” in Part I, Item 1 of this Quarterly Report on Form 10-Q.

At MarchJune 31,30, 2026, we were in compliance with the covenants specified in our revolving credit facility, including the Interest Coverage Ratio requirement of at least 2.25 to 1.00, and the Total Leverage Ratio requirement of not greater than 4.25 to 1.00. The Interest Coverage Ratio, as defined in the credit facility, is the ratio of earnings before interest, taxes, depreciation and amortization and other one-time charges to consolidated interest expense. The Total Leverage Ratio, as defined in the credit facility, is the ratio of total indebtedness to tangible net worth. At MarchJune 31,30, 2026, we were in compliance with the covenants specified in the WEST III, WEST V, WEST VI, WEST VII, WEST VIII, and WEST IX indentures and servicing and other debt related agreements.

As of MarchJune 31,30, 2026, we had no material off-balance sheet arrangements or obligations that have or are reasonably likely to have a current or future effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Repayments of our gross debt obligations primarily consist of scheduled installments due under term loans and are funded by the use of unrestricted cash reserves and from cash flows from ongoing operations. The table below summarizes our contractual commitments at MarchJune 31,30, 2026:

From time to time we enter into contractual commitments to purchase engines directly from original equipment manufacturers. We are currently committed to purchasing 27 additional new LEAP-1A engines and 1815 additional new LEAP-1B engines for an aggregate total of $839.0$782.0 million by 2030. Further, we are currently committed to purchasing 11nine engines and threefour aircraft for approximately $225.2$256.7 million in 2026. The purchase obligations are subject to escalation based on the closing date of each transaction. Our purchase agreements generally contain terms that allow the Company to defer or cancel purchase commitments in certain situations. These deferrals or conversions would not result in penalties or increased costs other than any potential increase due to the normal year-over-year change in engine list prices, which is akin to ordinary inflation.