Good day, and welcome to the Willis Lease Finance Corporation Fourth Quarter 2025 Earnings Call. Today's call is being recorded. We would like to remind you that during this conference call, management will be making forward-looking statements, including statements regarding our expectations related to financial guidance, outlook for the company and our expected investment and growth initiatives. Please note these forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties. These statements reflect WLFC's views only as of today. They should not be relied upon as representative of views as of any subsequent date, and WLFC undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events. These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations. For further discussion of the material risks and other important factors that could affect WLFC's financial results, please refer to its filings with the SEC, including, without limitation, WLFC's most recent quarterly report from Form 10-K, annual report from -- I'm sorry, quarterly report on Form 10-Q, annual report on Form 10-K and other periodic reports, which are available on the Investor Relations section of WLFC's website at https://www.wlfc.global/investor-relations. At this time, I'd like to turn the call over to Austin Willis. Please go ahead.

Thank you, operator, and thank you all for joining us today to discuss Willis Lease Finance Corporation's Fourth Quarter 2025 Financial Results. On our call today, I'm joined by Scott Flaherty, our Chief Financial Officer. I encourage you to view our accompanying presentation illustrating details from our prepared remarks. We finished the year with strong performance, delivering record revenues for the fourth quarter of $193.6 million, a 27% increase year-over-year. For the full year, we achieved record revenues of $730.2 million, a 28% increase and record earnings before tax of $160.6 million, reflecting the growing demand for our products and services and the strength across the aviation market as our global airline partners continue to rely upon Willis' leasing and services solutions to keep their fleets operating reliably and cost effectively. In addition to the revenue numbers described above, I would like to highlight our adjusted EBITDA of $459 million. We felt that highlighting EBITDA while adjusting for selected items would give investors a look at the immense cash-generating capability of our enterprise. We saw strong utilization of our lease portfolio throughout the year, averaging 85%, up from 83% in 2024, while retaining an average lease rental factor in excess of 1% per month. Utilization is affected by engines that are in maintenance and engines that we keep off lease to support programs like Constant thrust. Our consistent business performance and confidence in the strength of the aviation market has enabled WLFC to return capital to our shareholders. Accordingly, we recently declared a recurring dividend of $0.40 per share, reflecting our continued commitment to delivering long-term total returns to our shareholders. The aviation market has become engine-centric. Engines are a critical constraint to both new aircraft deliveries as well as maintaining an operational aircraft fleet. While there is some optimism…

Thank you, Austin, and good morning all. 2025 was another record year for Willis Lease. Revenues of $730.2 million, up 28.3% from 2024 and record earnings before tax or EBT of $160.6 million for the year. Adjusted EBITDA, a new metric we are reporting, highlighting the strength of the cash flow of the Willis Enterprise was $459.1 million, up 16.6% from $393.7 million in the prior year. Walking through the P&L, record revenues driven by core lease rent revenues of $291.6 million and interest revenues of $14.1 million. Growth in these line items reflects our increased total portfolio size of $3 billion at year-end 2025. Our total owned portfolio is presented on our balance sheet as equipment held for operating lease, maintenance rights, notes receivable and investment in sales-type leases. In 2025, the company purchased equipment, including capitalized shop visit costs totaling $524.6 million. This growth was partially offset on the balance sheet by $215.6 million of equipment book value sales, $106.3 million of lease portfolio asset depreciation, $41.5 million of asset transfers into held for sale, $32.9 million of impairment write-downs and $23.1 million of payments received against our outstanding notes receivable and sales type leases. Maintenance reserve revenues for the year were $232 million, up $18.1 million or 8.4% from 2024. As you peel back the numbers, you can see that $44.5 million of these maintenance reserve revenues were long-term maintenance reserves associated with engines coming off long-term lease, up from $39.4 million in the prior year. In 2025, we had 19 assets come off long-term lease compared to 20 assets in 2024. $187.5 million of our maintenance reserve revenues were short-term maintenance reserves compared to $174.5 million in 2024. This continued strong cash flow is representative of the demand for our portfolio, the number of engines on…

Thank you, Scott. Putting it all together, 2025 was a terrific year from a performance perspective. But more importantly, we laid the groundwork for a long-term strategy using Willis Aviation Capital to accelerate growth in both assets under management as well as through our services businesses. Thank you all for joining us today. And with that, I'll hand it back to the operator for Q&A.

[Operator Instructions] We'll take our first question from [ Zach Peslin ] with Buckley Capital.

Can you talk a little bit about your plans for seeding the Blackstone portfolio? How much of your own engines do you think you might end up selling into that entity?

Zach, good to hear from you. So we're not going to disclose specific amounts but I will say that we do have a small seed portfolio that we intend to move over into both Blackstone and Liberty Mutual. But the lion's share of the assets that we expect to populate in these funds will be from origination in the marketplace.

Got it. And then the assets that you would be seeding those funds with would there be a gain on sale associated with those, I'm assuming, if they're trading below fair market value?

Yes. I mean I'd say it's consistent with other asset sales we see in the marketplace generally.

Got it. And -- but you're not going to give the sort of direction or specificity around what percentage of the portfolio you might be selling into that?

Sure. Zach, it's Scott. No, we're not going to give an exact number. But as Austin said, there's materiality to the portfolio. And as I mentioned in my earlier comments about the value of the portfolio when we look at the maintenance adjusted market values and the premium to the book values, we would expect to continue to see gains on the movement of those assets.

Got it. That's helpful. And then I guess maybe just a follow-up on that for the engines that you will be buying for those portfolios, can you maybe talk about your competitive advantages in sort of sourcing those engines and buying at full market prices?

Sure. So it's consistent with our business model generally. We've got a good relationship with the OEMs, and we do have an order book with CFMI for LEAP engines. That's one source. Another source is buying from other leasing companies where we think we've got a value add on the power plant side. And that's -- a lot of that is aircraft for engine strategy. And then lastly is programs. We've been very successful at originating high-volume, low-priced assets for programs because we're adding more value than simply the dollars that we're spending to acquire the asset. It's really helping them defer maintenance long term. So those are some key areas for us, and we expect to continue originating through those pathways.

We'll take our next question from Will Waller with M3F.

As it relates to Willis Aviation Capital and the Blackstone investment, you mentioned a $1 billion number. I'm curious if you can utilize the access that you guys have had to the asset-backed securities market to then lever that. You guys are probably pretty unique in that you have a much lower cost of funds given the success you've had and the history you've had in the asset-backed securities market. So just curious if that $1 billion could then be leveraged kind of as you've done with your own capital in the past or how you're looking at that?

Sure. Thanks for the question. I think one thing to note is when we talk about $1 billion plus, we're talking about $1 billion plus of metal. And therefore, the fund or the equity dollars themselves will be less than the $1 billion. And that $1 billion plus does contemplate the leverage on those assets. And yes, we are a regular issuer into the ABS market. So I wouldn't be surprised if ultimately debt financing was structured in a way that was not dissimilar from what you've seen historically.

Okay. Great. And then on the appraised value number, your stated equity is -- common equity is about $662 million. You mentioned the appraised value in excess of what you carry them on the books at of your equipment is about $700 million. You then also mentioned the maintenance dynamic. Would that be reflected in the maintenance reserve liability related to long-term leases where you haven't had those engines come back off lease or you'd add that in as well?

Sure. What I talked about was the $700 million, and that was looking at the disparity in the maintenance adjusted market value, the exercise that we go through every year on our entire portfolio and the book value of our assets adjusted for the maintenance reserves, right? Ultimately, those maintenance reserves will come back into the value of the assets. What I said on top of that, and I did not quantify, was that we do have engines that are on long-term lease conditions that maybe are not paying a maintenance reserve have an end-of-lease component or have a contractual return condition to come back following a full shop visit, that would all be incremental value above and beyond the $700 million disparity.

Okay. Great. And then your order book, there's nothing being factored into that for the order book. So the order book, if you have saved prices for options to acquire LEAP engines at below current market value prices, that wouldn't be included in that $700 million as well, correct?

Correct. Correct.

Okay. Great. And then as it relates to your long-term maintenance revenue, that number was down in the fourth quarter. I realize it's lumpy given you only account for that as you actually get the -- as you get the engines back in your possession. I see that maintenance reserve liability increased by about $13.3 million from the third quarter of 2025 to the fourth quarter of 2025. Would it be safe to assume that had you gotten those back, your earnings would have almost been double what you reported, correct?

Sure. So I think you're highlighting a good point, right? The long-term maintenance reserve component is lumpy. We had in the fourth quarter of we had approaching $15 million in the fourth quarter of 2025, we had approximately $5 million. But when you look for the full year, we had in 2025, almost $45 million compared to $39 million or approaching $40 million in 2024. That is lumpy over time. But consistently, we see growth as the portfolio builds. So I think that is something, if you're thinking about modeling, it really has to normalize over time.

Yes. And to reiterate what Scott is saying, if you look at the annualized numbers for '24 and '25, the percentage or the proportion of long term relative to short term is pretty consistent.

Okay. Great. And then just 1 or 2 more quick ones. We saw an 8-K that you repurchased some shares during the fourth quarter. What are your views on share repurchases given it looks like you'll be going more towards an asset-light model where I'm guessing capital -- the need for all the cash and the capital that you're generating may not be as significant going forward. How are you looking at repurchases?

So I'll first challenge the asset-light terminology. I think -- I know it sounds a bit tongue in cheek, but I would probably call us asset medium. We've been the beneficiaries of owning assets on balance sheet for 40-plus years. And I think we've shown that we're good at it, and it serves us quite well. So we're going to continue to grow to the extent that we can with respect to leverage. I do think you're right, there is an opportunity to deploy the existing capital in Blackstone and Liberty Mutual and potentially not deploy as much on balance sheet but that's not necessarily the strategy for us now. We're really pursuing growth on all fronts.

Okay. And then lastly, the engines that you guys wrote down related to Russia, we've seen most companies like AerCap and Air Lease recapture a lot of that value in the form of insurance claims. Are you guys -- do you still have any sort of insurance claims pending on that price? We haven't seen anything? Just kind of curious as to an update on that.

Yes. We do. And for that reason, I can't go into too much detail. But I think if you look at some of the judgments that we've seen both in Europe and in the U.S., we feel pretty confident in what the recovery is going to look like but I'll kind of leave it there.

Thank you. That will conclude our question-and-answer session. At this time, I'd like to turn the call back over to Austin Willis for any additional or closing remarks.

Only to say thank you for joining us today, and thank you for being shareholders. 2025 was a great year, and we look forward to 2026.

Thank you. That will conclude today's call. We appreciate your participation.