Q2 2025 Willis Lease Finance Corp Earnings Call

Good day and welcome to the Willows. Please Finance Corporation, Q2 2025 earnings call.

Today's conference is being recorded.

We would like to remind you that during this conference, call management will be making for looking statements, including statements regarding our expectations related, to financial guidance, outlook for the company, and our expected investment and growth initi initiatives.

Please note, these forward-looking statements are based on current expectations and assumptions which are subject to risk and uncertainty.

As representatives of views, as of any subsequent date, WLFC undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.

These statements are subject to a variety of risks and uncertainties that could cause actual results to differ materially from expectations.

For further discussion of the material risks and other important factors that could affect Willis Lease Finance Corporation's financial results, please refer to its filings with the SEC, including, without limitation, Willis Lease Finance Corporation's most recent quarterly report on Form 10-Q, annual report on Form 10-K, and other periodic reports, which are available on the investor relations section of the Willis Lease Finance website at https://www.wlfc.com.

At this time, I would like to turn the conference over to Austin. Willis, chief executive officer, please go ahead.

Thank you operator and thank you all for joining us today to discuss our second quarter 2025 Financial results.

On our call today. I'm joined by Scott flare. Our Chief Financial Officer and Brian Hull our president.

First and foremost, I'd like to emphasize that this was a record setting quarter for the company.

We achieved our highest ever. Quarterly total revenue 195.5 million and increase of 29.4% over the same period last year.

This achievement highlights, the continued strength of the aviation Marketplace our platform and our portfolio.

Airlines increasingly rely on our leasing parts and maintenance solutions to avoid costly and time-consuming engine shop visits helping to drive the recurring revenues that are the foundation of our business.

Our steady performance has enabled us to expand our business while returning Capital to our shareholders.

1 year ago, we announced a policy of paying a common quarterly dividend and last week the board declared our fifth consecutive quarterly dividend of 25 cents per share.

Scott will provide a deeper look at our financials so I would like to turn to what we accomplished in the quarter.

The momentum from the beginning of the year continues, despite any lingering concerns related to tariffs, and the impact on trade and economic growth.

As we've said in the past,

We have designed a robust and durable business model that we believe can generate premium returns across the economic cycle and under a wide variety of market conditions.

Fundamentally the increase in expense of new engines makes leasing a compelling strategy for obtaining spare engines.

while our maintenance capabilities, offer an attractive alternative for airline operators relative to more conventional maintenance Solutions,

Additionally, our position as a leading engine focused, lessor is supported by our premium, differentiated asset portfolio, coupled with our integrated maintenance and materials capabilities, as well as our deep relationships with Aviation operators, oems and other key Market. Participants

We continue to see positive Trends and strengths in our core leasing business.

The yield of our portfolio as defined by lease and interest Revenue. Plus maintenance, Reserve Revenue divided by net Book value is in the High Teens

This is attributable to numerous factors not least of, which is our lease rental factor of 1.01%.

And the steady growth of our utilization from 82% at the end of June last year, to 86% at the end of March 2025, and to 88% at the end of June 2025.

Operationally.

The quarter's results are a testament to the dedication and expertise of our team and the successful execution of our strategic initiatives.

It's been a busy quarter for us. We purchased or sold 31 engines and 4 airframes. We completed our largest ever engine ABS which also achieved our tightest pricing today.

From our lean business system called sore. We received over 6 million dollars in Grant proceeds from the UK government for our staff initiative.

And we entered into a contract with saffron to build a test cell facility.

Our services are well aligned with the industry's direction of travel as more Airlines seek to avoid complexity in favor of a simple, operating model to drive efficiency and optimize their businesses.

Airlines increasingly rely on our leasing parts and maintenance solutions to achieve. Those objectives by avoiding costly and time-consuming Shop visits and maintaining large in-house, maintenance capabilities.

I'd like to go into more detail on some of these recent accomplishments.

earlier this year, we launched sore, our lean business system, built around strategy, operations, action, and results to ensure we scaled efficiently, while maintaining the high quality service and products, our customers expect

As we grow.

Sowore helps us expand operating margins, improve delivery timelines, and attract and retain top talent.

Over the past 9 months, we have identified and eliminated waste across critical processes. These efforts have already delivered measurable results. For example, an 85% reduction in time from engine acquisition to lease readiness.

And we are starting to see faster lease closings because of simplified workflows.

Our quarterly earnings, this period were influenced by a few distinct factors.

Changes in the way we Grant stock based compensation going forward.

The increase in our share price and its effect on our 2024. Stock-based Compensation Plan.

the transition to a new general Council and the sale of our Consulting business,

As announced earlier in the quarter, we incurred costs related to the departure of our previous general counsel.

Saying that I'm pleased to announce that Cliff Damron has been appointed GC.

Cliff joined us in 2024 from Carlile Aviation partners.

His experience in aviation and private equity and establishing investment, vehicles is proving invaluable as we look to grow our assets under management.

Collectively 2 of these items led to an increase in sgna in the second quarter. And I highlight these points to help investors look past these 1-off impacts that Scott will address in more detail shortly and focus on the continued strength of our underlying operating performance.

Additionally, we sold our Consulting and advisory business bridge and asset management to Willis mitsui. And Company, engine, support limited. Our existing joint venture with mitsui and Company.

We purchased this business in 2016 and has since grown it considerably in revenue and capabilities.

This business is an important part of our differentiated offering, and we rely upon their expertise to guide us on insourcing and maintenance risk.

Particularly as it pertains to constant thrust where we recently signed another agreement with Air India for 26, dfm 56-7 B engines.

we believe our close collaboration with mitsui in company, strengthens our platform overall, and the combined ownership will help drive further growth in both the Consulting business and the joint venture more generally,

This allows us to maintain the same strategic benefits. We enjoyed as 100% owners of the Consulting business in a way that drives a superior return to our shareholders by bringing in third-party equity and fees without diluting shareholders.

Subsequent to the quarter end in July. We announced that our subsidiary Willis Aviation Services, Limited secured a commitment from leading Leisure Airline jet2.com for 2 Base maintenance lines for the upcoming season.

Both maintenance lines will be carried out at our teesside facility reflecting the demand we referenced earlier and our commitment to serving that demand while creating skilled jobs in the UK Aerospace industry.

We look forward to updating you on our expansion, in the region in quarters and years to come.

A few other positive developments. I'd like to touch on are tariffs and taxes.

We are encouraged by what appears to be in agreement between the US and the EU to have a zero tariff policy between each for aircraft and aircraft parts of which engines qualify.

As well as ourselves, who historically have benefited from the frictionless movement of assets across borders.

Additionally.

Changes regarding the treatment of depreciation and interest in the big beautiful Bill are expected to benefit us over the long term.

Lastly, I'd like to, especially recognize the great work of our finance department and banks in executing West 8, our most recent and largest ABS, which closed during the second quarter and is priced inside of the other, Aviation leasing securitizations. Coming out around the same time.

This is a testament to the Market's confidence in our business and to our platform.

As we look ahead, we are confident that our operational excellence and commitment to Innovation will continue to position wlsc for further growth and value creation.

And with that, I'll hand it over to Scott, flare, our CFO, to discuss our financial performance in Greater depth.

thank you, Austin and good morning all

We closed out the first half of 2025 with a solid second quarter performance, where the business produced record quarterly revenues of 195.5 million up to 29% from the comparable period, in 2024 record earnings before taxes or EBT for the quarter of 74.3 million up, 28.3% from the comparable period in 2012.

24. Net income attributable to Common shareholders of 59 million for the quarter up 41.5% from the comparable period in 2024. And yes, another quarterly record for the business continued strong core lease rent and maintenance Reserve revenues, our trading profits. All enhanced by our vertically Integrated Service offerings as well as the recognized value creation Associated, through the sale of our Bridgend Asset Management consultancy business, to our Willis mitsui joint, venture where the key drivers to our profitability for the quarter.

Walking through the p&l, as it relates to the Top Line. Core lease rent revenue for the quarter was 72.3 Million up 29.4% from the prior comparable period and interest Revenue, which reflects interest income on long-term loan, like financing was 3.6 million up 59.8% from the prior comparable period, the relative growth we see from the comparable quarter in 2024 was driven by an increase in our equipment held for operating lease, which sits at 2.61 billion, as of June 30th 2025, as well as growth in our long-term loan, like financings portfolio. Our total owned portfolio is reflected on our balance sheet as equipment held for operating lease maintenance, right?

Notes receivable and investment in sales-type leases, which aggregate to $2.83 billion.

Average portfolio utilization was 87.2% for the quarter compared to 83% in the comparable period of 2024 utilization has been trending up and we ended the second quarter at a utilization rate of 88.3%. We discussed on our last earnings call, how we were getting our Q4 2024, new gtf, purchases on lease, and we are seeing the effects of our efforts in the p&l.

Lease rate factors for the portfolio were in line with the comparable period of 2024. At 1.0% maintenance Reserve revenues for the quarter were 50.7 million down 12.2 million from the prior comparable period but showing relative strength as you peel back the numbers.

Short-term maintenance Reserve revenues associated with the cyclical and hourly usage of our engines.

Came in at 50.2% or 4.4 million from the comparable quarter. In 2024, as we continue to see more engines, specifically of the current generation vintage out with short-term lease conditions and long-term maintenance. Revenues associated with engines coming off lease and the associated release of any maintenance Reserve liabilities came in at 0,

.5 million compared to 17 million in the comparable prior period.

21.1 million in the quarter representing the sale of 1 engine, where there was no equipment sales in the comparative prior period equipment sales represent, the pure trading of an asset that has not been placed on lease. These sales are reflected on a gross revenue basis. In our p&l margin on equipment sales were 6.4%, spare part, sales of 9.2 million, were up 3.1 million or 49.3% from the comparable period in 2024. Margins on spare part sales for the quarter came in at 9.8%.

Lossy our spare parts. Business provides valuable feedback.

In a tight parts market supporting both the Willis and our customers' fleets, the recycling of these spare parts often occurs at one of our two engine MRO facilities, which are located in Coconut Creek, Florida, and Bridgen, Wales.

Gain on sale of leased equipment. A net revenue metric was 27.6 million in the second quarter up 13.2 million or 91.2% from the comparable period.

This gain was associated with gross equipment sales of $91.1 million, less economic closing adjustments. Included in this gain was the sale of 14 engines and 2 airframes. The 30% margin realized on these sales is reflective of the unrealized value we have in our engine portfolio. Trading is an important part of our business and keeps our portfolio active, providing capital to build our portfolio.

Maintenance services Revenue, which represents Fleet Management engine and aircraft storage and repair services, and revenues related to management of fixed Base operator, Services increased by 1.3 million, to 8 million. In the second quarter of 2025 gross. Margins were a -7% as we are in the buildout stages of our aircraft line and Base maintenance business, our maintenance service offering,

Create lease opportunities for our business and enable a more efficient lease process through vertical integration.

On the expense side of the equation, depreciation, Amor was up 5.476% and new. All fleece assets going on initial lease which starts their depreciation cycle through the p&l to a lesser extent,

This increase was related to the depreciation associated with shop, visit Investments, which start a slightly more accelerated depreciation schedule, as shop, visit Investments are depreciated over a shorter time frame. Write down of equipment was 11.5 million. For the quarter representing impairment on 6 engines, 4 of which were moved to held for sale.

GNA was 50.4 million in the second quarter up, 15.7 million compared to 34.7 million in the comparable period. In 2024, increases in the overall GNA spend were mainly related to a 15 million dollar increase to Personnel expenses of which 12.6 million was due to share based compensation of this 12.6 million. 5.3 million was associated with the departure of our, former general counsel and an acceleration in his share vest things.

5.0 million was related to our April 2025 Grand, which was awarded under our prior ltea program and linked to 2024 performance.

For 2025, we have modified the ltea plan following the significant stock price appreciation in 2024 and have granted Awards in January of 2025, which are subject to service and ongoing performance-based metrics.

And $2.2 million of the increase was related to wage growth due to increased staffing associated with the growth of the business. An additional $2.2 million was due to increased legal fees. These cost increases were partially offset by the receipt of $6.3 million of government grant proceeds associated with our staff program, which we were awarded in October of 2024.

Support Services, sublease engine rental, expense engine storage and freight costs increased by 3 million to 7.5 million in the second quarter compared to 4.5 million. In the prior year period. This increase was primarily due to an increased level of engine repair activity,

Net Finance costs which were 33.6 million. In the second quarter compared to 24.6 million in the comparable period in 2024. The increase in costs was primarily related to an increase in indebtedness as total debt. Obligations increased from 1.95 billion. At June 2024 to 2.8 billion at June 2025, a significant portion of the increase in total balance sheet, debt was associated with the late, Q2 2025, ABS, Capital, raise, which will have a temporary effect on Leverage as well as restricted cash until such time as the beneficial interests in our engines associated with this, transaction are transferred to our new financing.

In the second quarter of the company, we recognized a $43 million gain on the sale of our Bridge End asset management consulting business to our joint venture, Willis Mitsui. This transaction allowed the company to recognize the substantial value created in our consulting business, which we purchased in 2016.

Build further substance in our JB partnership with mitsui and free up Capital to grow, our core leasing business, while still maintaining access to the Consulting capabilities of the bamel business through our 50% ownership interest in our Willis mitsui joint venture concurrent. With this sale we made an incremental 22.5 million investment in our Wills mitsui joint venture.

We also picked up $3.1 million in incredible earnings from our 50% ownership interest in our Wills Mitsui and Cassic Willis joint ventures.

EBT for the quarter was 74.3 Million up 28.3% from the comparable period in 2024 income tax expense was 13.9 million in ETR of 18.7%, which was influenced by the favorable tax treatment of our gain on the baml sale to Willis mitsui.

The company produced 59 million of net income attributable to Common shareholders, which factors in gap. Taxes and the costs of our preferred Equity diluted weighted average income per share was 8.43 in the second quarter of 2025.

Net cash provided by operating activities was $145.2 million in the first half of 2025, as compared to $129.7 million in the first half of 2024. The increase was predominantly related to a large disparity in working capital, as inventory went from a $40.7 million use of cash to an $8.9 million source of cash, partially offset by a $22 million decrease in payments on sales type leases and a $10.9 million decrease in cash flows from changes in accounts payable and accrued expenses. Cash flows from investing were a negative $2.2 million in the first half of the year. Contributing to this were $15.5 million of equipment purchases and $17 million of purchases of property, plant, and equipment, offset by $14.2 million of proceeds from the sale of equipment, as well as $23.

Million of net proceeds from our sale of the bamboo business.

On the financing and capital structure side of the business, the company completed its sixth Jelco financing in April for $19.8 million, bringing total Jelco financing at quarter end to approximately $125 million.

In June, the company, accessed the ABS market and raised its eighth. ABS financing West 8, raising 596 million in aggregate principal amount of fixed rate notes. This transaction was a 2 TR dead offering representing the largest, ABS financing. The company has done to date. The transaction was well over subscribed during its marketing and priced the tightest, spreads of the company has achieved today. Demonstrating a strong demand, our business model has generated in the structured debt markets.

Growing costs and extensions of the commitment period and final repayment date to May 3rd 2027 and May 3rd 2028 respectively.

As a specialty Finance Company, Willis lease regularly accesses the capital markets as we look to Source, competitively priced Capital to continue to grow our balance sheet and p&l

In may, we paid our fourth consecutive regular quarterly dividend of 25 cents per share.

Subsequent to quarter end. We declared our fifth consecutive regular quarterly dividend, which is expected to be. Paid on, August 2120, 2025 to stockholders of record at the close of business on August 12th 2025, we believe that our ability to pay a recurring dividend speaks to the health of the business and provides our shareholders with a moderate current cash shield on their investment while not degrading, the strong cash flow characteristic and Equity, growth of the business, which supports our overall growth.

With respect to leverage as defined as total debt obligations, net of cash and restricted cash to equity. Inclusive of preferred stock our leverage ticked lower to 2.96 times as compared to 3.48 times at year-end 2024.

The flexibility of our capital structure, our liquidity due to our 1 billion dollar credit facility in 500 million Warehouse facility as well as our current leverage profile provides us the flexibility to quickly and opportunistically assess the market as we look to continue to build our lease portfolio and provide the best and most Creative Solutions to our customers.

With that, I will now open the call to questions, operator.

Thank you. And if you would like to ask a question please, we can all by pressing star 1 on your telephone keypad. If you are using a speaker-phone, please make sure your mute function is turned off to allow your signal to reach our equipment.

Once again, that is star 1. If you would like to ask a question,

we'll now take a question from Hillary kokando with Deutsche Bank.

Hi. Hi, thank you so much for taking my questions. Um, I was, I was just curious, you know, this OEM production, you know, now, starting to improve a little bit. Are you seeing any impact on these days? You know, I think, I think the lead space on engines are still very strong but I've you know, I've heard some investors um express some concerns, you know about whether lease rate or peaking um or when do you you know or when that you know or when these things are expected to take kind of um if you have a feel for that um, and and you thought

Hey, Hillary, this is Austin. Uh, thanks for your question. So, you know, we've seen lease rates, increase about 9% uh relative to the same period last year and uh and about 2 to 4% uh, over the prior quarter. So I think lease rates are uh, are stabilizing in some cases, a little bit higher, in some cases, about the same in terms of production.

You know, we're, we're hoping that the, the O ends are kind of starting to sort things out, uh, and are going to be starting to produce the aircraft, um, uh, with more consistency. And I think that's what we're seeing broadly. You know, we don't expect to see any, any real negative pressure on lease rates because of that in the near term. Um, but you know, that's also why we've got about 54% of our portfolio in the Next Generation equipment. So, as the uh, as the, the, the pool of gtf and um, and leaked powered aircraft increases, that increases our Market to, to lease out those engines. Um, and then also, you know, as we start to see the phase out of the current generation technology, which we still think is a little ways off uh, we're pretty well, placed to execute or to, to exploit that with um, you know, with our programs like constant thrust that are really designed for uh, for aircraft to uh, transitions. So in general, you know, we're

We, we think the, uh, the lease rates are are, are, are good and, uh, and expected to, to be pretty strong for the foreseeable future.

With the environment or not.

Yeah, so we we are seeing that but it's it's a bit nuanced. So there's some aircraft that I believe the engines have been pulled off and the airframes are being parted out, but I think it's pretty limited. What we're seeing a little bit more of are Airlines uh, obtaining the elite or or otherwise aircraft, where they're pulling the engines off, temporary temporarily to support their own Fleet. Uh, we're acquiring some aircraft, uh, underwriting them on the basis of the engines. So, you know, in general, I think it's a positive. Uh, I think it it goes to the fact that there's so much demand for engines in the marketplace that people are doing whatever they can to, uh, uh, to obtain lift.

Thank you. That's very helpful. Thank you very much.

You bet. Thanks Hillary.

and as a reminder, that is star 1, if you would like to ask any question,

We'll take our next question from Eric Gregg with 4 tree island. Advisory

Uh, thanks, guys. Great quarter. Um, for quick questions here versus, um, you said the end of the quarter utilization rate was 88.3%. What was the...

Appreciate a quarter.

Scott, do you want to take that? Yeah, the average. The average utilization, um, rate for the quarter.

Yeah. The average utilization rate for the quarter was.

Yeah, it was 87 was was 87.2%.

at the end of the

At the end of at the end of the quarter that was quoted by by Austin. The utilization rate was was the 80%

Sorry Eric was your question. What was the utilization rate average for the quarter or the end of the last quarter I want? Could you repeat your question?

Looks like we looks like we dropped. It looks like maybe you can get back to your operator.

Eric is in the queue.

Okay, we can hear you now. Eric.

Okay, sorry, sorry. Um, yeah I I was, I think you said it was 88.3 at the end of the quarter. I just wanted to know if that was, you know, the high point and, and if these lower, that's great, um, I guess my other question so that I don't get blocked out here. Yeah, no, Eric, I think, I think that by the, by the Eric not

Yes, sorry, Eric not to interrupt you. I think, you know why the the the reason we quoted is, you know, we try to quote the average utilization in the periods as well as the end to just kind of speak to the trends, you know, over the last over the last year we've seen going back to when we picked up. A lot of gtfs in the fourth quarter we added High a higher off lease percentage and I think you kind of looked at the end of last year we were in the high 70s. Um we as we've gotten those assets on Leaf lease we've seen a utilization go up. So we just wanted to highlight that the average utilization of the quarter was lower than the utilization at the end of the quarter and you know the business is trending. Well in that regard.

Great great. My my other um questions are are these um what was the employee count? At the end of the quarter um how how is the bridge end sale? Going to impact income on a quarterly basis? And, and my final question is, um,

since uh, the

Quarter. And and is it this revenue is this is all about the cost of maintenance services is you know also inclusive of of your you know internal client as well as third-party. Um so those are my remaining questions. Thanks.

Sure, so I'll I'll try to check. I'll try to tick through those and you were a little you were a little choppy there. So I'll I'll try to get as many as possible Scott. If if if you don't mind, let me let me jump in on that. I we we lost some of your later questions but in terms of employee count, we're around 420.

Uh, and I, I think 1 of your questions was, uh, asking for a little bit of of color on the transaction between, uh, ourselves and the joint venture selling the the Consulting business is that correct?

Yeah, I was wondering how what's going to be ongoing revenue and operating income impact of selling that business.

No impact to us. Now, having that additional infusion of roughly 40 million of equity is going to have a pretty positive impact. When you take into account, our ability to to leverage it and buy uh, buy profit, uh, profit making equipment over time.

Great and and, uh, just to repeat in case you didn't, I was jumbled, the, the maintenance service revenues, this quarter were less than the cost of maintenance services. Um, I assume that the, the maintenance service revenues line item is is a third-party revenues, is the cost of maintenance services, third-party plus internal um, client related costs or is is is it the case that you you you're losing money on, you know, third-party maintenance services, um, on a on a gross margin. Sure. So

So, I'll, I'll answer, uh, part of the question. And then from the accounting side, I'll I'll hand it over to, uh, to Scott. Uh, so the the margins, uh, the the the difference in the margin for the maintenance services business is really attributable, uh, to the additional labor that we picked up, uh, During the period and that's, that's largely driven by the airframe business wasla. Um, I I think I mentioned, in my prepared remarks, that we secured a contract with jet, 2 for 2 additional lines.

And in order to secure that contract, we had to show that we had, uh, the labor force in place that was capable of, um, of servicing their aircraft. So that's really a lot of it is the buildup of that labor to, uh, uh, to support that contract with jet 2 and Scott did you want to touch on the, the other parts? Yeah, no. I I I think you answered it, Austin. I think that um, Eric, it's, you're you're, you're definitely, you're definitely seeing a little bit of the cost of the growth of that business in the early stages. So, um, that's why you've seen the change in margin, but obviously you've seen also, um, some growth in the Top Line there as well.

Thank you very much. Great quarter.

Thanks sir.

Well, not take our next question from will Waller with m3f Inc.

Hi. Thanks for taking my question it. Uh, you mentioned the maintenance Reserve revenue is 50.7 million in the current quarter and that was 50.2 million of that. That was uh, short-term maintenance, uh, Reserve Revenue. Um, I'm kind of curious the long term maintenance Revenue that you mentioned. There's only 500,000. If I look back at last quarter, that was 9.6 million. If I look back at a year ago, the same quarter, it was 17 million. When I look at the maintenance Reserve liability That Grew um, from last quarter being about 104 uh, 0.4.

Million up to 1, 1 3. 1 9.

The income statement and sort of the timing of that.

Hey, thanks will. Um, thanks for the question. I think you're the way you're thinking about the long-term maintenance Revenue relative to to lease extensions and and long-term re leases is generally correct. So for for the benefit of other investors, uh, long-term maintenance Reserve recognition generally occurs, when we have an engine that comes off of long-term lease. Uh, now, you know, part of that is Lumpy and part of that is due to extensions. I, I'd say we have seen a reasonable amount of extensions, but I think the, the bigger factor in the second quarter was more just to do with timing than anything else. Uh, we had, um, we had some long-term reserves come in a little bit later in some come in a little bit earlier. So I, I, I would be cautious to, uh, to focus too much on on lease extensions and, and more just um, the, the timing more than anything else. Uh, Scott, do you want to add to that?

Yeah, no. I I think the only thing I would add is that if you if you look at the core short-term recurring,

Maintenance Reserve, Revenue. You've seen that increase, you know, approaching 10% and really, as, as you know, the, the long-term piece is always associated with those engines coming coming off lease. So less engines less engines with those conditions Off Lease. I think you, you know, you noted the point that we build the maintenance Reserve so we're still obviously pulling dollars in um, on that front as well, not recognizing them yet through the p&l. But ultimately, we will be. And, and we're, we're very happy with the yields that are getting generated by the portfolio.

Question was probably kind of confusing but I you, you answered it exactly what I was. Uh, basically, what I was asking, I think you understood it. So thanks a lot for that. And then my last question is related to the, um, uh, the sustainable fuel project. You had the expenses that were were associated with some of the plans in the first quarter. Um, it sounded like you got some of that Grant Revenue in the second quarter and then I think there was a release that you got another Grant um uh that was awarded but just kind of curious on how the timing of that will work and if that's reported on the income statement and where that would flow through if it does or if it has

Sure so yeah correct. We we had and and as we said in the um, in our in our last call, we mentioned that

The Lion Share of the cost that we would incur um and that you'd see in the p&l would be would happen in that first in that first quarter of the year and we did receive

A grant. Um, we were awarded the Grant in October of last year and we received the and we received the proceeds for that Grant um slightly in excess of 6 million dollars, um, in the second quarter and and we recognize that um through through the p&l. Um in in that core in the quarter. Um, the other grant that you're referring to similarly, was awarded in in this quarter is a in dollars. It's a little north of

4 million dollars, and that will be recognized in the pnl, um, upon receipt. So, um, we don't have a color for you now on the receipt, but we stand by what we said in the past that we've seen the Lion Share of of material costs on the sap. Um, side come through and and those were predominantly in the first quarter and just just to add to that briefly, we're we're thrilled that the UK government has decided to, uh, to give us another Grant. And it's really just a testament to the project and their uh, their confidence in our ability to execute.

Great, thank you very much.

Thank you, will.

And it appears there are no further telephone questions at this time, I'd like to turn the conference back to our presenters for any additional or closing comments.

Thank you all for joining us today. Uh, we're thrilled with another great quarter and we look forward to talking to you next quarter.

Bye, bye.

And that does conclude today's conference for me. Thank you all for your participation. You may now disconnect