WLFC's Q1 Earnings Decline Y/Y on Rising G&A Costs, Stock Down 10%

Core Insights - Willis Lease Finance Corporation (WLFC) shares have declined 9.5% since reporting earnings for Q1 2025, underperforming the S&P 500 index which dipped only 0.2% during the same period [1] - The company reported a net income of $2.21 per share for Q1 2025, down from$3.00 per share in Q1 2024, despite achieving record revenues of $157.7 million, a 32.5$119.1 million in the prior year [2][3] - Net income attributable to common shareholders fell 22.5% to $15.5 million from$20 million in Q1 2024, primarily due to increased operating and finance costs [2] Revenue and Operating Highlights - Lease rent revenue increased by 28.1% year over year to $67.7 million, while maintenance reserve revenues rose 25$54.9 million, contributing to a total of $122.6 million in core recurring revenues, up from$96.8 million a year earlier [3] - Spare parts and equipment sales surged to $18.2 million from$3.3 million, partly due to a one-time $7 million transaction [3] - Interest revenues climbed 73.4$3.9 million, but gains on the sale of leased equipment dropped 51.8% to $4.4 million due to fewer profitable asset dispositions [3] Cost and Expense Analysis - Total expenses rose 45.7$133.8 million, driven by a 61.3% increase in general and administrative costs to $47.7 million, largely due to consulting fees for the sustainable aviation fuel initiative [4] - Interest expense surged nearly 40$32.1 million, reflecting higher debt levels and cost of capital [6] - Costs related to spare parts and equipment sales grew more than sixfold to $15.3 million, contributing to a 19.2$2.2 million in equipment sales related to one engine and $4.4 million in gains from the sale of seven engines and one airframe [7] - The company declared a second-quarter dividend of 25 cents per share, payable on May 22, 2025 [7]