WILLIS LEASE FINANCE CORP

Previous wording

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 March 31, 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 March 31, 2026, we had 70 lessees in 40 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of March 31, 2026, we 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 March 31, 2026, we also managed 129 engines, one airframe, and related equipment on behalf of other parties.

Current wording

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 June 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 June 30, 2026, we had 73 lessees in 42 countries. Our portfolio is continually changing due to equipment acquisitions and sales. As of June 30, 2026, we had $2,783.4 million of equipment held in our operating lease portfolio, $89.3 million of notes receivable, and $83.6 million of maintenance rights, which represented 334 engines, 22 aircraft, one marine vessel, and other leased parts and equipment. As of June 30, 2026, we also managed 145 engines, one airframe, and related equipment on behalf of other parties.

Previous wording

At 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. At March 31, 2025, the Company had $2,597.8 million of equipment held in our operating lease portfolio, $179.3 million of notes receivable, $25.2 million of maintenance rights, and $17.3 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% and 79.9% for the three months ended March 31, 2026 and 2025, respectively.

Current wording

At June 30, 2026, the Company had $2,783.4 million of equipment held in our operating lease portfolio, $89.3 million of notes receivable, and $83.6 million of maintenance rights. At June 30, 2025, the Company had $2,606.6 million of equipment held in our operating lease portfolio, $171.8 million of notes receivable, $34.7 million of maintenance rights, and $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 85.0% and 87.2% for the three months ended June 30, 2026 and 2025, respectively.

Previous wording

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

Current wording

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

Previous wording

Maintenance Reserve Revenue. Maintenance reserve revenue increased $0.7 million, or 1.2%, to $55.5 million for the three months ended March 31, 2026, from $54.9 million for the three months ended March 31, 2025. We recognized $12.4 million in long-term maintenance revenue for the three months ended March 31, 2026, compared to $9.6 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 exceed 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 million of short-term maintenance revenues, compared to $45.3 million in the comparable prior period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.

Current wording

Maintenance Reserve Revenue. Maintenance reserve revenue decreased $4.3 million, or 8.4%, to $46.5 million for the three months ended June 30, 2026, from $50.7 million for the three months ended June 30, 2025. We recognized $7.5 million in long-term maintenance revenue for the three months ended June 30, 2026, compared to $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 exceeded 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 $39.0 million of short-term maintenance revenues, compared to $50.2 million in the comparable prior period. Short-term maintenance revenues are a proxy for flight time of our portfolio of engines.

Previous wording

Spare Parts and Equipment Sales. Spare parts and equipment sales increased by $3.4 million, or 18.9%, to $21.7 million for the three months ended March 31, 2026, compared to $18.2 million for the three months ended March 31, 2025. Spare parts sales were $10.3 million and $16.0 million for the three months ended March 31, 2026 and 2025, respectively, a decrease of $5.8 million, or 35.9%, compared to the same period in 2025. The decrease 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 March 31, 2026 were $11.4 million for the sale of three engines. The trading profit on the sales of these engines was $5.7 million, representing a 50% margin. Equipment sales for the three months ended March 31, 2025 were $2.2 million for the sale of one engine.

Current wording

Spare Parts and Equipment Sales. Spare parts and equipment sales decreased by $9.2 million, or 30.2%, to $21.2 million for the three months ended June 30, 2026, compared to $30.4 million for the three months ended June 30, 2025. Spare parts sales were $11.1 million and $9.2 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $1.8 million, or 19.7%, compared to the same period in 2025. The increase 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 June 30, 2026 were $10.1 million for the sale of two engines and one airframe. The trading profit on the sales of these engines was $5.0 million, representing a 49% margin. Equipment sales for the three months ended June 30, 2025 were $21.1 million for the sale of one engine.

Previous wording

Interest Revenue. Interest revenue decreased by $1.1 million, or 29.1%, for the three months ended March 31, 2026, as compared to that of the three months ended March 31, 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 11 notes receivable and sales-type leases to the Company’s investment fund partnership with Liberty Mutual Investments (“LMI”) (“LMI Fund”) during the three months ended March 31, 2026.

Current wording

Interest Revenue. Interest revenue decreased by $2.5 million, or 67.6%, for the three months ended June 30, 2026, as compared to that of the three months ended June 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 12 notes receivable and sales-type leases to the Company’s investment fund partnership with Liberty Mutual Investments (“LMI”) (“LMI Fund”) during the six months ended June 30, 2026.

Previous wording

Gain on Sale of Leased Equipment. During the three months ended March 31, 2026, we sold 14 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, resulting in a net gain of $4.4 million.

Current wording

Gain on Sale of Leased Equipment. During the three months ended June 30, 2026, we sold 21 engines and other parts and equipment from the lease portfolio for $224.8 million less economic closing adjustments, resulting in a net gain of $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.

Previous wording

Maintenance Services Revenue. Maintenance services revenue predominately 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 million, or 74.9%, to $9.8 million for the three months ended March 31, 2026, from $5.6 million for the three months ended March 31, 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.

Current wording

Maintenance Services Revenue. Maintenance services revenue predominantly 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 $1.0 million, or 11.9%, to $9.0 million for the three months ended June 30, 2026, from $8.0 million for the three months ended June 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.

Previous wording

Management and Advisory Fees. Management and advisory fees increased by $5.9 million to $7.9 million for the three months ended March 31, 2026, from $2.0 million for the three months ended March 31, 2025, primarily driven by $4.9 million of fees earned from the LMI Fund in the Company’s role as general partner. The LMI Fund commenced operations in March 2026 and reimbursed formation and other costs to the Company. Accordingly, the Company’s results for the three months ended March 31, 2026 reflect a partial period of activity.

Current wording

Management and Advisory Fees. Management and advisory fees increased by $2.9 million to $5.5 million for the three months ended June 30, 2026, from $2.6 million for the three months ended June 30, 2025, primarily driven by $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 and April 2026, respectively. Accordingly, the Company’s results for the three months ended June 30, 2026 reflect only a partial period of operations associated with the BXCI Fund, including reimbursements received for formation and other costs incurred by the Company.

Previous wording

Depreciation and Amortization Expense. Depreciation and amortization expense increased by $5.2 million, or 20.6%, to $30.2 million for the three months ended March 31, 2026, compared to $25.0 million for the three months ended March 31, 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.

Current wording

Depreciation and Amortization Expense. Depreciation and amortization expense increased by $1.5 million, or 5.5%, to $29.1 million for the three months ended June 30, 2026, compared to $27.6 million for the three months ended June 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.

Previous wording

Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales decreased by $0.9 million, or 5.9%, to $14.4 million for the three months ended March 31, 2026, compared to $15.3 million for the three months ended March 31, 2025. Cost of spare parts sales were $8.8 million and $13.8 million for the three months ended March 31, 2026 and 2025, respectively, a decrease of $5.1 million, or 36.6%, reflecting the decrease in spare parts sales. Cost of equipment sales were $5.7 million and $1.5 million for the three months ended March 31, 2026 and 2025, respectively, reflecting the increase in equipment sales.

Current wording

Cost of Spare Parts and Equipment Sales. Cost of spare parts and equipment sales decreased by $13.0 million, or 46.3%, to $15.1 million for the three months ended June 30, 2026, compared to $28.1 million for the three months ended June 30, 2025. Cost of spare parts sales were $9.9 million and $8.3 million for the three months ended June 30, 2026 and 2025, respectively, an increase of $1.6 million, or 19.4%, reflecting the increase in spare parts sales. Cost of equipment sales were $5.1 million and $19.8 million for the three months ended June 30, 2026 and 2025, respectively, reflecting the decrease in equipment sales.

Previous wording

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 million, or 66.3%, to $8.9 million for the three months ended March 31, 2026, compared to $5.3 million for the three months ended March 31, 2025, reflecting the increase in maintenance services revenue.

Current wording

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 $1.7 million, or 20.1%, to $10.4 million for the three months ended June 30, 2026, compared to $8.6 million for the three months ended June 30, 2025, reflecting the increase in maintenance services revenue.

Previous wording

Write-down of Equipment. There was $1.1 million in write-downs of equipment for the three months ended March 31, 2026, reflecting the write-down of one engine. There was $2.1 million in write-downs of equipment for the three months ended March 31, 2025, reflecting the write-down of five engines.

Current wording

Write-down of Equipment. There was $4.9 million in write-downs of equipment for the three months ended June 30, 2026, reflecting the write-down of four engines. There was $11.5 million in write-downs of equipment for the three months ended June 30, 2025, reflecting the write-down of six engines.

Previous wording

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 million to $9.7 million for the three months ended March 31, 2026, compared to $6.2 million for the three months ended March 31, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.

Current wording

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 $2.4 million to $9.9 million for the three months ended June 30, 2026, compared to $7.5 million for the three months ended June 30, 2025, primarily due to an increased level of engine repair activity as compared to that of the prior period.

Previous wording

Net Finance Costs. Net finance costs increased $7.6 million, or 23.6%, to $39.7 million for the three months ended March 31, 2026, compared to $32.1 million for the three months ended March 31, 2025. The increase is primarily due to $7.0 million in loss on debt extinguishment, an increase of $7.2 million in interest expense associated with 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, which closed in 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 million in interest expense associated with the Company’s credit facility, a decrease of $3.6 million in interest expense associated with Willis Engine Structured Trust VII (“WEST VII”) notes payable, a decrease of $2.6 million in interest expense associated with the Willis Warehouse Facility LLC (“WWFL”), and a decrease of $2.7 million in interest expense associated with Willis Engine Structured Trust IV (“WEST IV”) notes payable, as these debt instruments were paid down or terminated as part of the Company’s refinancing and capital restructuring.

Current wording

Net Finance Costs. Net finance costs increased $1.5 million, or 4.6%, to $35.1 million for the three months ended June 30, 2026, compared to $33.6 million for the three months ended June 30, 2025. The increase was primarily attributable to a $5.4 million loss on debt extinguishment recognized in the current 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 and $5.1 million on the Willis Engine Structured Trust VIII (“WEST VIII”) and Willis Engine Structured Trust IX (“WEST IX”) notes payable, respectively, which were issued in June 2025 and December 2025. These increases were partially offset by a $6.3 million decrease in interest expense on the Company’s revolving credit facility, reflecting a lower average outstanding balance during the three months ended June 30, 2025. Interest expense also declined by $5.4 million for Willis Engine Structured Trust VII (“WEST VII”) and $3.9 million for Willis Warehouse Facility LLC (“WWFL”), as those notes payable were paid down or terminated.

Previous wording

Income Tax Expense. Income tax expense was $11.8 million for the three months ended March 31, 2026, compared to income tax expense of $8.4 million for the three months ended March 31, 2025. The effective tax rate for the first quarter of 2026 was 31.9%, compared to 33.2% 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”).

Current wording

Income Tax Expense. Income tax expense was $7.8 million for the three months ended June 30, 2026, compared to income tax expense of $13.9 million for the three months ended June 30, 2025. The effective tax rate for the second quarter of 2026 was 20.5%, compared to 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.

Previous wording

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 million, or 14.2%, to $77.4 million in the three months ended March 31, 2026, from $67.7 million for the three months ended March 31, 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.

Current wording

Lease Rent Revenue. Lease rent revenue increased by $14.5 million, or 10.4%, to $154.5 million for the six months ended June 30, 2026, compared to $140.0 million for the six months ended June 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.

Previous wording

Gain on Sale of Financial Assets. During the three months ended March 31, 2026, we sold 11 notes receivable and investments in sales-type lease assets for a net gain of $0.4 million. During the three months ended March 31, 2025, we sold two investments in sales-type lease assets for a net gain of $0.4 million.

Current wording

Gain on Sale of Financial Assets. During the six months ended June 30, 2026, we sold 12 notes receivable and investments in sales-type lease assets for a net gain of $0.6 million. During the six months ended June 30, 2025, we sold two investments in sales-type lease assets for a net gain of $0.4 million.

Previous wording

General and Administrative Expenses. General and administrative expenses increased by $8.9 million, or 18.6%, to $56.6 million for the three months ended March 31, 2026, compared to $47.7 million for the three months ended March 31, 2025. The increase primarily reflects a $12.5 million increase in personnel costs, which included an increase of $6.9 million in share-based compensation and an increase of $4.1 million in wages. The increase in share-based compensation reflects appreciation of the market value of the Company’s equity 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. General and administrative costs for the three months ended March 31, 2026 also included $4.9 million of costs which were recharged to the LMI Fund, with the associated revenue of $4.9 million included in Management and Advisory Fees, and a $2.0 million increase in acquisition, financing and divestiture related expenses.

Current wording

General and Administrative Expenses. General and administrative expenses increased by $14.0 million, or 14.3%, to $112.2 million for the six months ended June 30, 2026 compared to $98.1 million for the six months ended June 30, 2025. The increase was primarily driven by a $9.1 million rise in personnel costs, including a $2.8 million increase in share-based compensation and a $6.6 million increase in wages. The higher share-based compensation reflects appreciation in the market value of the Company’s equity, as well as equity awards granted to new personnel to support the Company’s continued growth. The increase in wages was primarily attributable to higher headcount supporting the Company’s expanding operations. General and administrative expenses also increased due to a $4.8 million rise in legal fees primarily related to financing and strategic initiatives. These increases were partially offset by a $7.1 million decrease in consulting fees, primarily resulting from the Company’s decision to discontinue its sustainable aviation fuel project. General and administrative costs for the six months ended June 30, 2026 also included $6.5 million of costs which were recharged to the LMI Fund and BXCI Fund, with the associated revenue of $6.5 million included in Management and Advisory Fees.

Previous wording

Adjusted EBITDA was approximately $123.8 million and $103.3 million for the three months ended March 31, 2026 and 2025, respectively. The increase in Adjusted EBITDA of $20.5 million was 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.

Current wording

Adjusted EBITDA was approximately $120.7 million and $116.1 million for the three months ended June 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 increases in Adjusted EBITDA were 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.

Previous wording

At March 31, 2026, the Company had $24.6 million of cash and cash equivalents and $196.0 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 million and $135.0 million for the three months ended March 31, 2026 and 2025, respectively, was derived from our borrowing activities. In these same time periods, $577.4 million and $169.4 million, respectively, was used to pay down related debt. At March 31, 2026, the Company had approximately $1.3 billion of unused borrowing capacity on its credit facility.

Current wording

At June 30, 2026, the Company had $10.7 million of cash and cash equivalents and $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 $803.0 million and $851.1 million for the six months ended June 30, 2026 and 2025, respectively, was derived from our borrowing activities. In these same time periods, $1,182.9 million and $309.6 million, respectively, was used to pay down related debt. At June 30, 2026, the Company had approximately $1.3 billion of unused borrowing capacity on its credit facility.

Previous wording

Cash flows provided by operating activities were $56.7 million and $41.0 million for the three months ended March 31, 2026 and 2025, respectively. The $15.7 million, or 38.2%, increase in operating cash flows was primarily driven by a period over period $10.0 million increase in cash flows from changes in other assets for the three months ended March 31, 2026. 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 three months ended March 31, 2026 and 2025 was approximately 85.8% and 79.9%, 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.

Current wording

Cash flows provided by operating activities were $134.2 million and $145.2 million for the six months ended June 30, 2026 and 2025, respectively. The $11.0 million, or 7.6%, decrease in operating cash flows was primarily driven by a period over period $9.9 million decrease in accounts payable and accrued expenses, as well as a period over period $8.1 million decrease in maintenance 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 six months ended June 30, 2026 and 2025 was approximately 85.4% and 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.

Previous wording

Cash flows provided by investing activities were $79.9 million for the three months ended March 31, 2026 and primarily reflected proceeds from sale of equipment (net of selling expenses) of $71.4 million, proceeds from sale of notes receivable (net of selling expenses) of $71.6 million, and proceeds from sale of investments in sales-type leases (net of selling expenses) of $15.5 million, partially offset by $57.2 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $21.2 million for the purchase of investments and contributions to joint ventures. Cash flows provided by investing activities were $13.7 million for the three months ended March 31, 2025 and primarily reflected proceeds from sale of equipment (net of selling expenses) of $47.7 million, partially offset by $29.3 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $7.5 million for the purchase of property, equipment and furnishings.

Current wording

Cash flows used in investing activities were $78.2 million for the six months ended June 30, 2026 and primarily reflected $401.9 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period), $42.5 million for the issuance of notes receivable, and $39.6 million for the purchase of investments and contributions to joint ventures, partially offset by proceeds from sale of equipment (net of selling expenses) of $302.8 million, proceeds from sale 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 investing activities were $2.2 million for the six months ended June 30, 2025 and primarily reflected $154.9 million for the purchase of equipment held for operating lease and for sale (including capitalized costs and prepaid deposits made in the period) and $17.1 million for the purchase of property, equipment and furnishings, which was primarily related to leasehold improvements, partially offset by proceeds from sale of equipment (net of selling expenses) of $141.9 million and proceeds from sale of business of $23.1 million.

Previous wording

Cash flows used in financing activities were $463.0 million for the three months ended March 31, 2026 and primarily reflected $577.4 million in principal payments, $4.5 million in debt issuance costs, and $3.1 million in common stock cash dividends paid, partially offset by $127.0 million in proceeds from debt obligations. Cash flows used in financing activities were $38.1 million for the three months ended March 31, 2025 and primarily reflected $169.4 million in principal payments and $1.8 million in cash dividends paid to shareholders of common stock, partially offset by $135.0 million in proceeds from debt obligations.

Current wording

Cash flows used in financing activities were $430.7 million for the six months ended June 30, 2026 and primarily reflected $1,182.9 million in principal payments, $27.9 million in cancellation of restricted stock units in satisfaction of withholding tax, $11.5 million in debt issuance costs, and $6.2 million in common stock cash dividends paid, partially offset by $803.0 million in proceeds from debt obligations. Cash flows provided by financing activities were $507.1 million for the six months ended June 30, 2025 and primarily reflected $851.1 million in proceeds from debt obligations, partially offset by $309.6 million in principal payments and $18.7 million in cancellation of restricted stock in satisfaction of withholding tax.

Previous wording

During the three months ended March 31, 2026 and March 31, 2025, the Company paid cash dividends of $3.1 million and $1.8 million, respectively, to shareholders of common stock.

Current wording

During the six months ended June 30, 2026 and June 30, 2025, the Company paid cash dividends of $6.2 million and $3.7 million, respectively, to shareholders of common stock.

Previous wording

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.

Current wording

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

Previous wording

At March 31, 2026, debt obligations consisted of loans totaling $2,253.7 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 3.1% 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.

Current wording

At June 30, 2026, debt obligations consisted of loans totaling $2,320.9 million, net of unamortized issuance costs and note discounts, payable with interest rates varying between approximately 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.

Previous wording

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 18 additional new LEAP-1B engines for an aggregate total of $839.0 million by 2030. Further, we are currently committed to purchasing 11 engines and three aircraft for approximately $225.2 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.

Current wording

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 15 additional new LEAP-1B engines for an aggregate total of $782.0 million by 2030. Further, we are currently committed to purchasing nine engines and four aircraft for approximately $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.

Previous wording

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.

Current wording

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 $132.1 million by 2030. If such services are not completed by that date, performance may extend through 2035, with total costs not expected to exceed $172.7 million.