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Willis Lease Finance CorporationNASDAQ
WLFC -– Common
WLFCP -- 9% Preferred
May 15, 2012
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Legal Disclaimer
This presentation contains certain forward-looking statements within the meaning of the federal securities laws. These statements may be made as a part of this presentation or by reference to other documents we file with the SEC. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words ‘‘anticipate,’’ ‘‘may,’’ ‘‘estimate,’’ ‘‘should,’’ ‘‘expect,’’ ‘‘plan,’’ ‘‘believe,’’ ‘‘intend,’’and similar words, or the negatives of those words, are intended to identify forward-looking statements. They also include statements containing a projection of revenues, earnings (loss), capital expenditures, dividends, capital structure or other financial terms. Certain statements regarding the following particularly are forward-looking in nature:
• our business strategy;• future performance, developments, market forecasts or projections; and• projected capital expenditures.
All forward-looking statements are based on our beliefs, assumptions and expectations of our future economic perform-ance, taking into account the information currently available. These statements are not statements of historical fact. Forward-looking statements are subject to a number of factors, risks and uncertainties, some of which are not currently known to us, that may cause our actual results, performance or financial condition to be materially different from the expectations of future results, performance or financial position. Our actual results may differ materially from the results discussed in forward-looking statements. Factors that might cause such a difference include, but are not limited to:
• the effects on the airline industry and the global economy of events such as terrorist activity,• changes in fuel prices and other disruptions to the world markets;• trends in the airline industry, including growth rates of markets and other economic factors;• risks associated with owning and leasing commercial engines and aircraft;• changes in interest rates and availability of capital to us and to our customers• our ability to continue to meet our customers’ changing demands;• the market value of engines and other assets in our portfolio• the risks set forth in ‘‘Risk Factors’’ included elsewhere in the prospectus.• regulatory changes affecting commercial aircraft operators, aircraft maintenance, engine standards, accounting standards and taxes;
• our ability to successfully negotiate engine purchases, sales and leases, to collect outstanding amountsdue and to repossess engines under defaulted leases, and to control costs and expenses;
In light of these risks, uncertainties and assumptions, you are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of meeting or as of the date of any document incorporated by reference, as applicable. Such forward-looking statements are inherently uncertain, and actual results may differ from expectations. We are not under any obligation, and we expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.
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Investment Overview – WLFC
� Leading spare jet engine lessor
� Strong management
� Assets of $1.1 billion
� Consistently profitable
� ROE of 5.6 % in 2011
� As at April 30, 2012, trading at 58% of book value of $22.44
P/E 10.2 times 2011 EPS
Market Cap of $120 million
� Repurchased 947,000 common shares at average share price of
$12.31 since December 2009
Unless otherwise noted, all information referenced in this presentation represents data at 3-31-12
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Willis Lease – Leading Lessor of Spare Commercial Jet Engines
� Diversified international customer base
� Short and long term operating leases
� Portfolio of 193 owned ($974mm) and 29
third party-managed engines
All major engine OEM’s
61% for newest narrow body aircraft
Average age of portfolio: 7 years
Strong residual values
� Expanding portfolio management
capabilities
% of NBV - Lease Portfolio 3-31-12
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Willis Lease – Leading Lessor of Spare Commercial Jet Engines
� Significant recent financing events
New $345mm 5 year revolving credit facility – Nov-11
• Increased size by $60mm and decreased margin by 75 bps (LIBOR + 275 bps)
Engines purchases
$540mm 5-year agreement with CFM
Other OEMs
Open market – sale-leaseback transactions
Aircraft part-out / engine harvesting
� Countercyclical
Down cycles, airlines lease engines to conserve cash and dispose of owned
spare engines through sale-leaseback transactions
Up cycles, higher demand and usage
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Willis Lease: Diversified Revenue Base – 69 Lessees in 38 Countries
Lease to Customers worldwide:
�Commercial airlines
�Maintenance, repair and overhaul facilities (MRO)
�Original Equipment Manufacturers (OEM)
�Cargo carriers
Operating leases:
�30 days to 10 years
�Triple net operating leases
Maintenance
Taxes
Insurance
�FAA or similar approved maintenance program
2011 Revenues
by Geographic Region
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Willis Lease – Engines as a Lease Asset Class
0%
20%
40%
60%
80%
100%
120%
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Source: SH&E
Engine Leasing Dynamics
� Maintain their residual value
� Growing worldwide commercial fleet
� Trend towards leasing rather than
owning for spare engine fleets
� Better and more flexible capital
management for airlines
� OEM price hikes drives residuals
Strong Asset Residual Values
Half Life Aircraft Values
Half Life Engine Maintenance Values
Half Life Engine Core Values
Engine share of total aircraft value increases over time as airframe loses value.
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Willis Lease – Strong Competitive Position
Young Industry with Few Players
� Substantial “Barriers to Entry”
� Leased engines grew to >1,900 from
<100 engines in 20 years *
� Leased engines are approximately 32%
of total spare engine market, expected
to grow to 40% by 2030
*Source: ICF SH&E estimate, June 2011
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Engine Leasing – Competitive Landscape
OWNED and LEASED
Market Share INCLUDING Operator Owned Spares
LEASED
Market Share EXCLUDINGOperator Owned Spares
Source: ICF SH&E estimates, 2011
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Market Overview - Engine Leasing Growth Potential
Other
Spares
60%
Leased
Spares
40%
Estimated
2010Projected
2030
Total Spares – 5,927 Total Spares – 9,118
Engine Value – $118 billion (1)Engine Value – $53 billion(1)
(1) Assumes average engine value of $9 million in 2010 and $13 million in 2030
Source: ICF SH&E estimates, 2011
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
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Willis Lease - Engine Portfolio has grown at 10.7% CAGR since 2005
$ in millions
IPO
WEST 1 ABS / Preferred Offering
CFM Agreement
WEST 2ABS
Follow-on equity offering
SAIR group investment
WMESJV
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$0
$4
$8
$12
$16
$20
$24
$28
2007 2008 2009 2010 2011
Earnings
Net Income
Net to Common
Willis Lease – Stable Financial Performance
�After strong years in 2008-09, lower
lease rates and utilization contributed to
lower profitability in 2010 and 2011
Quarterly earnings volatility due to
fluctuation in gain on sale, release of
maintenance reserves and timing of
engine repairs expenses
�Lower portfolio utilization
86% in 2010 and 2011 compared to 89% in
2009 and 93% in 2007 and 2008
�$1.1 billion in total assets
�2011 EPS $1.28
$0
$25
$50
$75
$100
$125
$150
$175
2007 2008 2009 2010 2011
Revenue
Lease rents Maintenance reserves
$ in millions
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Willis Lease - Summary
� Recognized franchise
Diversified lessee and asset base
� Solid financial condition
Stable profitability
Strong cash flow / Great collateral
Good liquidity - $116mm available
� Excellent engine portfolio
Diversified portfolio with exposure to newest generation narrowbody, widebody and regional engines
Primary investment focus is engines supporting popular narrowbodies
WEST ABS is established liquidity vehicle for present / future lenders
� Favorable long term leasing market conditions
Growing airline fleets
Trend towards leasing rather than owning