WILLIS LEASE FINANCE CORP

March 31, 2026

Unless the context requires otherwise, references to the “Company,” “WLFC,” “we,” “us” or “our” in this Quarterly Report on Form 10-Q refer to Willis Lease Finance Corporation and its subsidiaries.

1. Summary of Significant Accounting Policies

The significant accounting policies of the Company were described in Note 1 to the Audited Consolidated Financial Statements included in the Company’s 2025 Form 10-K. There have been no significant changes in the Company’s significant accounting policies for the three months ended March 31, 2026.

In March 2026, the Company commenced operations as general partner of an investment fund partnership. The Company accounts for its investment in the fund under the equity method of accounting and recognizes management and advisory fees in accordance with its existing revenue recognition policies.

(a)Basis of Presentation

The accompanying Unaudited Condensed Consolidated Financial Statements of the Company have been prepared in conformity with accounting principles generally accepted in the United States (“GAAP”), consistent in all material respects with those applied in the 2025 Form 10-K, for interim financial information and in accordance with the rules and regulations of the SEC. Therefore, they do not include all information and footnotes normally included in annual consolidated financial statements and should be read in conjunction with the consolidated financial statements and notes thereto included in the 2025 Form 10-K. In the opinion of management, the Unaudited Condensed Consolidated Financial Statements contain all adjustments (consisting principally of normal recurring accruals) necessary for a fair presentation of the Condensed Consolidated Balance Sheets, Statements of Income, Statements of Comprehensive Income, Statements of Redeemable Preferred Stock and Shareholders’ Equity, and Statements of Cash Flows for such interim periods presented. Operating results for interim periods are not necessarily indicative of the results that can be expected for a full year.

Certain reclassifications have been made to the prior year presentation to conform to the current year presentation. These reclassifications had no effect on the reported total revenue, income from operations, or net income. The following is a summary of the changes to the presentation in the Condensed Consolidated Statements of Income for the three months ended March 31, 2025:

•Management and advisory fees primarily consist of fees earned from the Company’s investment fund partnerships in its role as general partner and fees related to servicing the Willis Mitsui & Company Engine Support Limited (“WMES”) and third-party lease portfolios, including ongoing management and transactional services such as marketing and procurement. In prior periods, servicing fees were included in “Other revenue.” For the three months ended March 31, 2025, $2.0 million was reclassified to “Management and advisory fees,” with a corresponding decrease to “Other revenue.”

In accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. In preparing these Unaudited Condensed Consolidated Financial Statements, management has made its best estimates and judgments of certain amounts included therein, giving due consideration to materiality. These estimates and judgments are based on historical experience and other assumptions that management believes are reasonable and take into account the economic implications of factors such as changes in interest rates, inflation, and new or increased tariffs on the Company’s critical and significant accounting estimates.

The application of these accounting policies requires the use of judgment and assumptions regarding matters that are inherently uncertain; accordingly, actual results may differ materially from those estimates. Significant estimates reflected in the accompanying Unaudited Condensed Consolidated Financial Statements include, among others, those related to intangible assets, long-lived assets, equipment held for sale, allowances for doubtful accounts and credit losses, inventory, deferred in-substance fixed payment use fees included in “Unearned revenue” on the Condensed Consolidated Balance Sheets, the Company’s share of earnings or losses from equity method investments based on net asset value, which reflects changes in the fair value of the underlying investments, and income taxes.

Given the uncertainty surrounding future changes in interest rates, inflation, potential new or increased tariffs, and broader macroeconomic and geopolitical conditions, the Company will continue to evaluate the nature and extent of such impacts on its business, results of operations, and financial condition.

(b)Principles of Consolidation

The accompanying Unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its wholly owned subsidiaries, as well as VIEs, for which the Company is the primary beneficiary, in accordance with consolidation guidance. The Company evaluates all entities in which it has an economic interest to determine whether such entities are VIEs or voting interest entities (“VOEs”).

For entities determined to be VIEs, the Company consolidates the entity if it has a controlling financial interest, defined as the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. For entities determined to be VOEs, the Company consolidates the entity when it has a controlling financial interest, generally evidenced by ownership of a majority of the voting interests. Intercompany transactions and balances have been eliminated in consolidation.

(c)Risks and Uncertainties

The Company continues to monitor global macroeconomic and geopolitical conditions, including changes in interest rates, inflation, tariffs, ongoing conflicts, and the price of jet fuel, which may contribute to market volatility and potential disruptions to global aviation operations.

The duration and scope of these conflicts, including the potential for further regional escalation, remain uncertain and could adversely affect the global economy, financial markets, and our customers, which in turn could impact the Company. The ultimate extent of any such impacts will depend on future developments that are highly uncertain and not reasonably estimable at this time, and such impacts could persist for an extended period.

Other than what has been reflected in the Unaudited Condensed Consolidated Financial Statements, the Company is not aware of any specific event or circumstance that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the Unaudited Condensed Consolidated Financial Statements.

(d)Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted by the Company

In July 2025, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2025-05, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.” The ASU provides public entities with a practical expedient when estimating expected credit losses for accounts receivable and contract assets. The practical expedient assumes that current conditions of the balance sheet do not change for the remaining life of the asset. The Company adopted ASU 2025-05 as of January 1, 2026 on a prospective basis. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements To Be Adopted by the Company

In November 2024, the FASB issued ASU 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-04) Disaggregation of Income Statement Expenses.” The ASU requires public entities, on both an interim and annual basis, to disclose additional disaggregated information about specific expense categories in the notes to the financial statements. The ASU is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company expects to adopt this accounting standard update for the year ended December 31, 2027 and is currently evaluating the potential effects on the consolidated financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-10, “Accounting for Government Grants Received by Business Entities.” The ASU provides guidance on the recognition, measurement, presentation, and disclosure of government grants. The ASU is effective for fiscal years beginning after December 15, 2028, with early adoption permitted. The Company is currently evaluating the impact of adopting this new pronouncement.

In December 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270): Narrow-Scope Improvements.” The amendments in this ASU are effective for interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this new pronouncement.

(e)Government Grant Income

Historically, there was no specific guidance in GAAP that addresses the recognition and measurement of government assistance received by a business entity. In the absence of authoritative GAAP guidance, the Company considered the application of other authoritative accounting guidance by analogy and concluded that the guidance outlined in International Accounting Standard 20 – Accounting for Government Grants and Disclosures of Government Assistance (“IAS 20”) was the most appropriate. Under IAS 20, grant income is recognized to the extent that there is reasonable assurance that the Company will comply with the conditions attached to the grant, and the grant will be received.

During the three months ended March 31, 2026, the Company received approximately $1.0 million in government grant proceeds related to its hangar construction project at Teesside International Airport. The Company was awarded the grant in May 2025, the primary intent of which is job creation. As of March 31, 2026, all proceeds received in the quarter were recorded as a liability in “Accounts payable and accrued expenses” on the Condensed Consolidated Balance Sheets, as the associated conditions for recognition had not yet been met. During the year ended December 31, 2025, the Company received approximately $1.7 million in grant proceeds related to the same project. As of March 31, 2026, approximately $1.5 million of such proceeds remained recorded as a liability for the same reason. These amounts will be recognized as a reduction of personnel expenses within “General and administrative expenses” as qualifying jobs are created.

2. Equipment Held for Operating Lease and Notes Receivable

As of March 31, 2026, the Company had $2,760.5 million of equipment held in our operating lease portfolio, $65.6 million of notes receivable, $30.6 million of maintenance rights, and $0.3 million of investments in sales-type leases, which represented 342 engines,20 aircraft, one marine vessel, and other leased parts and equipment. 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, which represented 363 engines,20 aircraft, one marine vessel and other leased parts and equipment.

The following table disaggregates equipment held for operating lease by asset class (in thousands):

Notes Receivable and Investments in Sales-Type Leases

During the three months ended March 31, 2026 and 2025, the Company recorded interest revenue related to the notes receivable and investments in sales-type leases of $2.8 million and $3.9 million, respectively. During the three months ended March 31, 2026, certain of these assets were sold to the Company’s unconsolidated investment fund partnership, for which the Company recognizes its share of earnings under the equity method. The effective interest rates on the Company’s notes receivable and investments in sales-type leases ranged from 8.2% to 12.2% as of March 31, 2026 and 6.0% to 12.2% as of March 31, 2025.

3. Investments

Joint Ventures

In 2011, the Company entered into an agreement with Mitsui & Co., Ltd. to form a joint venture, Willis Mitsui & Company Engine Support Limited (“WMES”), a Dublin-based Irish limited company that acquires and leases jet engines. Each partner holds a 50% interest, and the Company uses the equity method in recording investment activity. As of March 31, 2026, WMES owned a lease portfolio of 73 engines andone aircraft, and other parts and equipment with a net book value of $655.6 million.

In 2014, the Company entered into an agreement with China Aviation Supplies Import & Export Corporation (“CASC”) to form a joint venture, CASC Willis Lease Company Limited (“CASC Willis”), a Shanghai-based Chinese limited company that acquires and leases jet engines to Chinese airlines. Each partner holds a 50% interest, and the Company uses the equity method in recording investment activity. As of March 31, 2026, CASC Willis owned a lease portfolio ofsix engines with a net book value of $50.9 million.

In March 2025, the Company entered into an agreement with independent MRO (Maintenance, Repair and Overhaul) provider, Global Engine Maintenance, to form Willis Global Engine Testing (“WGET”), a joint venture established to develop an engine test facility in West Palm Beach, Florida. The Company has a 70% membership interest in WGET; however, WGET is a VIE for which the Company is not the primary beneficiary, as decision-making authority over the activities that most significantly impact economic performance is shared between the partners. Accordingly, WGET is not consolidated, and the Company uses the equity method in recording investment activity. The Company’s maximum exposure to loss is limited to its investment of $3.9 million. In 2025, WGET entered into a contract for the design of the engine test facility. The Company anticipates its portion of the remaining committed amount, which will be funded through future contributions, to be approximately $30.6 million.

The following table presents a roll forward of the Company’s investments in joint ventures:

As of March 31, 2026 and as of December 31, 2025, the currency translation adjustment balance was $1.1 million and $1.4 million, respectively.

“Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $1.8 million and $1.2 million during the three months ended March 31, 2026 and 2025, respectively, related to the servicing of engines for the WMES lease portfolio.

During the three months ended March 31, 2026, the Company sold five engines to WMES for a total of $55.3 million, which resulted in a total gain of $15.3 million for the Company. During the three months ended March 31, 2025, the Company sold three engines andone airframe to WMES for $32.2 million, which resulted in a total gain of $1.6 million for the Company.

During the three months ended March 31, 2026 and March 31, 2025, the Company did not purchase any engines from WMES.

During the three months ended March 31, 2026 and March 31, 2025, the Company did not purchase or sell any engines to CASC Willis.

The Company subleasedtwo WMES engines to a third party, with WMES as head lessor. During the three months ended March 31, 2026, one lease was renewed for a noncancellable three-month term and the other continued on a month-to-month basis. Lease expense for the head lease, recorded in “Technical expense,” was $0.7 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, the Company paid WMES $0.7 million for fleet management services.

Investment Fund Partnerships

In December 2025, the Company entered into investment fund partnerships with Liberty Mutual Investments (“LMI”) and Blackstone Credit & Insurance (“BXCI”) (together, the “Funds”), referred to as the LMI Fund and the BXCI Fund, respectively. The LMI Fund is expected to invest up to $600 million in loan and loan-like aircraft engine financings and is supported by a warehouse debt facility, while the BXCI Fund is expected to deploy over $1 billion in assets similar to our lease portfolio, including current and next-generation aircraft engines.

The Company holds a general partnership interest in each Fund but is not the majority owner. The Company holds ownership interests of 10.0% and 17.5% in the LMI Fund and the BXCI Fund, respectively. The limited partners retain substantive kick-out rights, including the ability to liquidate the Funds by simple majority vote. Accordingly, under ASC 810, Consolidation, each Fund is a voting interest entity that the Company does not consolidate, and the Company accounts for its investments under the equity method.

The LMI Fund commenced operations in March 2026. The BXCI Fund had not commenced operations as of March 31, 2026.

The following table presents a roll forward of the Company’s investments in funds:

During the three months ended March 31, 2026, the Company sold 11 notes receivable and investments in sales-type leases to the LMI Fund, for a total of $87.2 million, which resulted in a total gain of $0.4 million for the Company.

The Company, as general partner of the Funds, may earn management and advisory fees and expense reimbursements. For the three months ended March 31, 2026, management and advisory fee income was $4.9 million and included in “Management and advisory fees” in the Company’s Condensed Consolidated Statements of Income. These fees primarily represented reimbursement of in-period expenses paid by the Company on behalf of the Funds. For the three months ended March 31, 2026, there was $0.2 million in amounts due from the Funds and included in “Due from affiliates” in the Company’s Condensed Consolidated Balance Sheets. There were no amounts due to the Funds.

In connection with the Funds, the Company’s maximum exposure to loss consists of the Company’s investment of $1.3 million and unfunded capital commitments of $43.4 million. A portion of the Company’s capital commitments is expected to be funded by certain executives and employees through participation arrangements with the Company totaling $10.0 million; however, the Company remains the primary obligor for the full amount of its commitment.

4. Debt Obligations

Debt obligations consisted of the following:

One-month term SOFR was 3.68% and 3.87% as of March 31, 2026 and December 31, 2025, respectively.

Certain notes payable totaling $168.1 million as of March 31, 2026 relate to failed sale-leaseback transactions secured byeight engines. During the three months ended March 31, 2026, the Company entered intotwo such transactions totaling $45.0 million. The Company has options to repurchase the underlying engines at predetermined prices ranging from $14.7 million to $19.3 million per engine, exercisable between July 2031 and March 2034.

In March 2026, the Company terminated its WWFL credit facility as well as amended and extended its existing revolving credit facility (Amendment No. 3), increasing total commitments from $1.0 billion to $1.75 billion and extending the maturity to April 2031.

In February 2026, the Company entered into Amendment No. 2 to the Credit Agreement. Amendment No. 2 among other things, excludes certain amounts from inclusion in “Total Debt” (as defined in the Credit Agreement) that is used for purposes of calculating the “Maximum Leverage Ratio” (as defined in the Credit Agreement).

Principal outstanding at March 31, 2026 is expected to be repayable as follows:

Virtually all of the Company’s debt requires ongoing compliance with certain financial covenants, including debt and tangible net worth ratios, minimum interest coverage ratios, and other eligibility criteria including asset type, customer and geographic concentration restrictions. The Company also has certain negative financial covenant obligations that relate to such items as liens, advances, changes in business, sales of assets, dividends and stock repurchases. Compliance with these covenants is tested either monthly, quarterly or annually, as required, and the Company was in full compliance with all financial covenant requirements at March 31, 2026.

5. Derivative Instruments

The Company periodically holds interest rate derivative instruments to mitigate exposure to changes in interest rates, predominantly one-month term SOFR, with $421.0 million and $732.7 million of variable rate borrowings at March 31, 2026 and December 31, 2025, respectively. As a matter of policy, management does not use derivatives for speculative purposes. As of March 31, 2026, the Company hadone interest rate swap agreement, with a total notional amount of $50.0 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 andtwo of which matured during the three months ended March 31, 2026. 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 andone of which was terminated during three months ended March 31, 2026. During the year ended December 31, 2024, the Company also entered intoone fixed-rate interest swap agreement, which had a notional amount of $75.0 million, was partially terminated during the year ended December 31, 2025, and was fully terminated during the three months ended March 31, 2026. During the year ended December 31, 2025, the Company entered intoone fixed-rate interest swap agreement, having a notional amount of $50.0 million, and with a remaining term of 43 months as of March 31, 2026. The derivative instruments were each designated as cash flow hedges at inception and recorded at fair value.

The following table displays the total notional amount of the Company’s outstanding fixed-rate interest swap agreements:

The Company evaluated the effectiveness of the swap agreements to hedge the interest rate risk associated with its variable rate debt and concluded at the swap inception dates that each swap was highly effective in hedging that risk. The Company evaluates the effectiveness of the hedging relationships on an ongoing basis and concluded there was no ineffectiveness in the hedges for the period ended March 31, 2026.

The Company estimates the fair value of derivative instruments using a discounted cash flow technique. Valuation of the derivative instruments requires certain assumptions for underlying variables and the use of different assumptions would result in a different valuation. Management believes it has applied assumptions consistently during the period. The Company applies hedge accounting and accounts for the change in fair value of its cash flow hedges through other comprehensive income for all derivative instruments that are effective and for which the related forecasted transaction is probable of occurring.

The following table displays the total pre-tax (gain) loss reclassified from accumulated other comprehensive income (“AOCI”) to earnings as a result of the terminations of the interest rate derivative instruments described above, as these forecasted transactions were no longer probable of occurring:

The following table displays the total fair value of the Company’s outstanding fixed-rate interest swap agreements in the Condensed Consolidated Balance Sheets:

The Company recorded an adjustment to interest expense of $(0.9) million and $(2.4) million during the three months ended March 31, 2026 and 2025, respectively, from derivative investments.

Effect of Derivative Instruments on Earnings in the Condensed Consolidated Statements of Income and of Comprehensive Income

The following table provides additional information about the financial statement effects related to the cash flow hedges for the three months ended March 31, 2026 and 2025:

The effective portion of the change in fair value on a derivative instrument designated as a cash flow hedge is reported as a component of other comprehensive income and is reclassified into earnings in the period during which the transaction being hedged affects earnings when it is determined to be improbable that the forecasted transaction will occur. The ineffective portion of the hedges, if any, is recorded in earnings in the current period.

Counterparty Credit Risk

The Company evaluates the creditworthiness of the counterparties under its hedging agreements. The counterparties for the interest rate swaps are large financial institutions that possess investment grade credit ratings. Based on these ratings, the Company believes that the counterparties are credit-worthy and that their continuing performance under the hedging agreements is probable and does not require the counterparties to provide collateral or other security to the Company.

6. Commitments, Contingencies, Guarantees and Indemnities

Other obligations

Other obligations, such as certain purchase obligations are not recognized as liabilities in the consolidated financial statements but are required to be disclosed in the footnotes to the financial statements. As of March 31, 2026, the Company had $1.1 billion in purchase commitments of equipment that are expected to be satisfied within five fiscal years. 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 cancellations 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.

In December 2020, the Company entered into definitive agreements for the purchase of 25 Pratt & Whitney aircraft engines. In connection with the purchase agreements, the Company is obligated to perform certain future overhaul and maintenance services, which are currently estimated to aggregate between $106.6 million and $131.9 million by 2030. If such services are not completed by that date, performance may extend through 2035, with total costs not expected to exceed $172.6 million.

7. Income Taxes

Income tax expense for the three months ended March 31, 2026 and March 31, 2025 was $11.8 million and $8.4 million, respectively. The effective tax rate for the three months ended March 31, 2026 and March 31, 2025 was 31.9% and 33.2%, respectively. The Company’s effective tax rates 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”).

The Company records tax expense or benefit for unusual or infrequent items discretely in the period in which they occur. The Company’s tax rate is subject to change based on changes in the mix of assets leased to domestic and foreign lessees, the proportion of revenue generated within and outside of each state, the amount of executive compensation exceeding $1.0 million as defined in Section 162(m) of the Code, and numerous other factors, including changes in tax law.

H.R. 1., also known as the One Big Beautiful Bill Act (“OBBBA”), was enacted on July 4, 2025. The legislation includes several provisions that may impact the timing and magnitude of certain tax deductions. Key provisions include the permanent extension of several business tax benefits originally introduced under the 2017 Tax Cuts and Jobs Act. The effective tax rate for the three months ended March 31, 2026 considers the enactment of OBBBA, which did not have a material impact to income tax expense. OBBBA is not expected to materially impact our 2026 annual effective tax rate.

8. Fair Value Measurements

The fair value of a financial instrument represents the amount at which the instrument could be exchanged in a current transaction between willing parties in contrast to a forced sale or liquidation. Fair value estimates are made at a specific point in time, based on relevant market information about the financial instrument. These estimates are subjective in nature and involve uncertainties and matters of judgment, and therefore cannot be determined with precision.

Accounting standards define fair value as the price that would be received from selling an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. Accounting standards establish a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value and also establishes the following three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:

•Cash and cash equivalents, restricted cash, receivables, and accounts payable: The amounts reported in the accompanying Condensed Consolidated Balance Sheets approximate fair value due to their short-term nature.

•Notes receivable: The carrying amount of the Company’s outstanding balance on its Notes receivable as of March 31, 2026 and December 31, 2025 was estimated to have a fair value of approximately $69.4 million and $138.6 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).

•Investments in sales-type leases: The carrying amount of the Company’s outstanding balance on its Investments in sales-type leases as of March 31, 2026 and December 31, 2025 was estimated to have a fair value of approximately $0.4 million and $16.9 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).

•Debt obligations: The carrying amount of the Company’s outstanding balance on its Debt obligations as of March 31, 2026 and December 31, 2025 was estimated to have a fair value of approximately $1,963.4 million and $2,419.8 million, respectively, based on the fair value of estimated future payments calculated using interest rates that approximate prevailing market rates at each period end (Level 2 inputs).

Assets Measured and Recorded at Fair Value on a Recurring Basis and a Nonrecurring Basis

As of March 31, 2026 and December 31, 2025, the Company measured the fair value of its interest rate swaps based on Level 2 inputs, due to the usage of inputs that can be corroborated by observable market data. The Company estimates the fair value of derivative instruments using a discounted cash flow technique. The net fair value of the interest rate swaps as of March 31, 2026 was $0.3 million, representing an asset and reflected within “Other assets” on the Condensed Consolidated Balance Sheets. The net fair value of the interest rate swaps as of December 31, 2025 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 Condensed Consolidated Balance Sheets, respectively. The Company recorded an adjustment to interest expense of $(0.9) million and $(2.4) million during the three months ended March 31, 2026 and 2025, respectively, from derivative investments.

Goodwill is assessed for impairment annually, at each year end by comparing the fair values of the reporting units to their carrying amounts. The Company first assesses qualitative factors to determine whether it is necessary to perform the quantitative goodwill impairment test.

On a quarterly basis, management monitors the lease portfolio for events which may indicate that a particular asset may need to be evaluated for potential impairment. These events may include a decision to part-out or sell an asset, knowledge of specific damage to an asset, or supply/demand events which may impact the Company’s ability to lease an asset in the future. On an annual basis, even absent any such ‘triggering event’, the Company evaluates the carrying value of the assets in our lease portfolio to determine if any impairment exists.

The Company determines fair value of long-lived assets held and used, such as Equipment held for operating lease and Equipment held for sale, by reference to independent appraisals, quoted market prices (e.g., an offer to purchase), estimated future cash flows, changes in market conditions, and other factors. An impairment charge is recorded when the carrying value of the asset exceeds its fair value. The Company uses Level 2 inputs to measure write-downs of equipment held for lease and equipment held for sale.

Write-downs of equipment to their estimated fair values totaled $1.1 million for the three months ended March 31, 2026, reflecting the adjustment of the carrying value ofone engine. Write-downs of equipment to their estimated fair values totaled $2.1 million for the three months ended March 31, 2025, reflecting the adjustments of the carrying values offive engines.

9. Earnings Per Share

Basic earnings per common share is computed by dividing net income, less preferred stock dividends and accretion of preferred stock issuance costs, by the weighted average number of common shares outstanding for the period. Treasury stock is excluded from the weighted average number of shares of common stock outstanding. Diluted earnings per share attributable to common stockholders is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Dilutive securities are common stock equivalents that are freely exercisable into common stock at less than market prices or otherwise dilute earnings if converted. The net effect of common stock equivalents is based on the incremental common stock that would be issued upon the vesting of restricted stock awards and non-qualified stock options using the treasury stock method. Common stock equivalents are not included in diluted earnings per share when their inclusion is anti-dilutive. Additionally, redeemable preferred stock is not convertible and does not affect dilutive shares.

There wereno anti-dilutive shares for the three months ended March 31, 2026. There were approximately 126,500 anti-dilutive weighted shares excluded in the computations of diluted weighted average earnings per common share for the three months ended March 31, 2025.

The following table presents the calculation of basic and diluted earnings per share (in thousands, except per share data):

10. Equity

Common Stock Repurchase

In December 2024, the Board of Directors (the “Board”) approved the renewal of the existing common stock repurchase plan which allows for repurchases of up to $60.0 million of the Company’s common stock, extending the plan through December 31, 2026. Repurchased shares are immediately retired. During the three months ended March 31, 2026 and 2025, no shares were repurchased under the plan. At March 31, 2026, approximately $39.6 million of common stock was available to purchase shares under the plan.

Redeemable Preferred Stock

The rights and privileges of the Series A Preferred Stock are described below:

Voting Rights: Holders of the Series A Preferred Stock do not have general voting rights.

Dividends: The Company’s Series A Preferred Stock accrues quarterly dividends at the rate per annum of 8.35% per share. During each of the three months ended March 31, 2026 and 2025, the Company paid total preferred stock dividends of $1.4 million and $1.6 million, respectively. As of March 31, 2026, the Company had approximately $1.1 million in preferred stock dividends accrued but not paid, or approximately $0.34 per share of the Series A Preferred Stock.

Liquidation Preference: The holders of the Series A Preferred Stock have preference in the event of any voluntary or involuntary liquidation, dissolution, or winding-up of the corporation, including a merger or consolidation. Upon such liquidation event, the Preferred Stockholders are entitled to be paid out of the assets of the Company available for distribution to its stockholders after payment of all the Company’s indebtedness and other obligations and before any payment shall be made to the holders of common stock or any other class or series of stock ranking on liquidation junior to the Preferred Stock an amount equal to $20.00 per share, plus any declared but unpaid dividends.

Redemption: The Series A Preferred Stock has no stated maturity date. The holders of the Series A Preferred Stock have the option to require the Company to redeem all or any portion of the Series A Preferred Stock for cash upon occurrence of any of the following: (i) a material breach of the Stock Purchase Agreement, (ii) changes in the ownership structure of the Company, including by means of a change of control transaction, (iii) incurrence of operating loss or ordinary loss by the Company for two consecutive fiscal years, (iv) the Company’s surplus is less than its liquidation value at certain specified measurement dates, (v) occurrence of a merger, consolidation, or sale of greater than 50% of the Company’s assets, or (vi) the occurrence of liquidity events as set forth in the Stock Purchase Agreement. The redemption price is $20.00 per share plus dividends accrued but not paid. The Company is accreting the Series A Preferred Stock to redemption value over the period from the date of issuance to the date first callable by the Series A Preferred stockholders (September 27, 2031), such that the carrying amount of the security will equal the redemption amount at the earliest redemption date.

11. Stock-Based Compensation Plans

The components of stock-based compensation expense were as follows:

Under the 2023 Incentive Stock Plan (the “2023 Plan”), stock-based compensation is in the form of restricted stock awards (“RSAs”). The RSAs are subject to either service-based vesting, which is typically betweenone andfour years, in which a specific period of continued employment must pass before an award vests, or performance-based vesting, which is typically betweenone andthree years. The expense associated with these awards is recognized on a straight-line basis over the respective vesting period, with forfeitures accounted for as they occur. As it relates to performance-based awards, accrual of compensation expense is based on the probable outcome of the performance condition. For any vesting tranche of an award, the cumulative amount of compensation cost recognized is equal to the portion of the grant‑date fair value of the award tranche that is actually vested at that date.

In November 2025, the Compensation Committee of the Board of Directions approved the grant of a non-qualified stock option to our Executive Chairman, to purchase up to 300,000 shares of the Company’s common stock. The option award vests infour equal annual installments and has asix-year term. The expense associated with this option is recognized on a straight-line basis over the vesting period.

As of March 31, 2026, the Company had granted 2,838,764 shares under the 2023 Plan and had 543,959 shares available for future issuance. The fair value of the RSAs equaled the stock price at the grant date.

The following table summarizes the restricted stock activity during the three months ended March 31, 2026:

Under the Employee Stock Purchase Plan (“ESPP”), as amended and restated effective November 2021,425,000 shares of common stock have been reserved for issuance. Eligible employees may designate no more than 10% of their base cash compensation to be deducted each pay period for the purchase of common stock under the ESPP. Participants may purchase the lesser of 1,000 shares or $25,000 of common stock in any one calendar year. Each January 31 and July 31, shares of common stock are purchased with the employees’ payroll deductions from the immediately precedingsix months at a price per share of 85% of the lesser of the market price of the common stock on the purchase date or the market price of the common stock on the date of entry into an offering period. During the three months ended March 31, 2026 and 2025,2,238 and 1,531 shares of common stock, respectively, were issued under the ESPP. The Company issues new shares through its transfer agent upon an employee stock purchase.

12. Reportable Segments

The Company hastwo reportable segments: (i) Leasing and Related Operations, which involves acquiring and leasing, primarily pursuant to operating leases, commercial aircraft, aircraft engines, and other aircraft equipment, the selective purchase and resale of commercial aircraft engines and other aircraft equipment, service and maintenance related businesses, and asset management and servicing activities, and (ii) Spare Parts Sales, which involves the purchase and resale of after-market engine parts, whole engines, engine modules, and portable aircraft components.

The Company’s Chief Operating Decision Maker (“CODM”) is Austin Willis, Chief Executive Officer. The CODM evaluates the performance and allocation of resources to each of the segments based on income or loss from operations. While the Company believes there are synergies between thetwo business segments, the segments are managed separately because each requires different business strategies.

Prior period segment information is presented on a comparable basis to the basis on which current period segment information is presented and reviewed by the CODM.

The following tables present a summary of the reportable segments (in thousands):

13. Related Party Transactions

Joint Ventures

“Management and advisory fees” on the Condensed Consolidated Statements of Income includes management fees earned of $1.8 million and $1.2 million during the three months ended March 31, 2026 and 2025, respectively, related to the servicing of engines for the WMES lease portfolio.

During the three months ended March 31, 2026, the Company sold five engines to WMES for a total of $55.3 million, which resulted in a total gain of $15.3 million for the Company. During the three months ended March 31, 2025, the Company sold three engines andone airframe to WMES for $32.2 million, which resulted in a total gain of $1.6 million for the Company.

During the three months ended March 31, 2026 and March 31, 2025, the Company didnot purchase any engines from WMES.

During the three months ended March 31, 2026 and March 31, 2025, the Company didnot purchase or sell any engines to CASC Willis.

The Company subleasedtwo WMES engines to a third party, with WMES as head lessor. During the three months ended March 31, 2026, one lease was renewed for a noncancellable three-month term and the other continued on a month-to-month basis. Lease expense for the head lease, recorded in “Technical expense,” was $0.7 million and $0.6 million for the three months ended March 31, 2026 and 2025, respectively.

During the three months ended March 31, 2026, the Company paid WMES $0.7 million for fleet management services.

During the three months ended March 31, 2026, the Company made a capital contribution of $19.5 million to WMES.

Investment Fund Partnerships

During the three months ended March 31, 2026, the Company sold 11 notes receivable and investments in sales-type leases to the LMI Fund, for a total of $87.2 million, which resulted in a total gain on sale of financial assets of $0.4 million for the Company. The LMI Fund is considered a related party as the Company serves as its general partner.

The Company, as general partner of the Funds, may earn management and advisory fees and expense reimbursements. For the three months ended March 31, 2026, the Company recognized management and advisory fee income of $4.9 million, which is included in “Management and advisory fees” in the Condensed Consolidated Statements of Income. These fees primarily represented reimbursement of in-period expenses paid by the Company on behalf of the Funds. As of March 31, 2026, amounts due from the Funds were $0.2 million and are included in “Due from affiliates” in the Condensed Consolidated Balance Sheets.

14. Subsequent Events

On April 29, 2026, the Board of Directors of the Company declared a quarterly dividend of $0.40 per share on the Company’s outstanding common stock. The dividend is payable on May 22, 2026 to stockholders of record at the close of business on May 11, 2026.