Chief Financial Officer
(BURLINGAME, CA) May 15, 2018 — AeroCentury Corp. (NYSE American: ACY), an independent aircraft leasing company, today reported first quarter earnings of $0.3 million, or $0.22 per share, compared to $6.02 million, or $4.25 per share for the fourth quarter of 2017 and $0.6 million, or $0.41 per share, for the first quarter of 2017.
First quarter 2018 included $1.1 million of other income resulting from cash received from the previous lessee of three aircraft that were returned to the Company during 2017. Such payments were for unpaid maintenance reserves as well as amounts due pursuant to the unsatisfied return conditions of the applicable leases and were not accrued by the Company at the time of lease termination based on management’s evaluation of the creditworthiness of the lessee. Therefore, the Company is accounting for payments as they are received and recorded in other income. Fourth quarter 2017 results included a $5.4 million tax benefit arising from the revaluation of the Company’s deferred tax liability prompted by the passage of the Tax Cuts and Jobs Act of 2017.
"In the first quarter, we continued on our path of modernizing our portfolio. As a result of the sale of two older turboprop aircraft, the average age of aircraft we are holding for lease is currently approximately 11 years," said Michael Magnusson, President.
Mr. Magnusson also commented on the progress on the proposed acquisition by the Company of JetFleet Holding Corp. (JHC), the corporation that has managed the Company’s operations and aircraft portfolio since the Company’s founding in 1997. "We have already received the permit for the issuance of shares of the Company’s stock in the transaction from the California Department of Business Oversight, and the shareholders of JHC have approved the transaction. Our next step will be obtaining the consent of the AeroCentury stockholders at a special meeting to be held in the coming weeks. The Company's stockholder approval is not required under Delaware or California corporate law and will be obtained solely to comply with the NYSE American stock exchange listing regulations for the shares of the Company's stock issued in the Merger. Although the consummation of the Merger of the Company and JHC has taken somewhat more time than we originally anticipated, both parties are fully committed to the transaction, and are both proceeding expeditiously to complete the necessary steps to consummate the acquisition," stated Mr. Magnusson.
First Quarter Highlights
First Quarter 2018 Comparative Data (at or for the periods ended March 31, 2018, December 31, 2017, and March 31, 2017):
AeroCentury's portfolio currently consists of twenty-one aircraft and one engine that are held for lease and nine aircraft that are held under sales-type or direct finance leases. The Company also has two turboprop aircraft that are held for sale, which are being sold in parts.
The Company's portfolio consists of eleven different aircraft types. The current customer base comprises ten customers operating in eight countries.
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About AeroCentury: AeroCentury is an independent global aircraft operating lessor and finance company specializing in leasing regional jet and turboprop aircraft and related engines. The Company's aircraft and engines are leased to regional airlines and commercial users worldwide.
This press release contains forward-looking statements within the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. All statements in this press release other than statements that are purely historical are forward-looking statements. Forward-looking statements in this press release include, without limitation, statements regarding (a) the Company’s priority of modernizing its portfolio by replacing older aircraft with younger mid-life aircraft, (b) the Company's acquisition of JHC, (c) any future potential accretion to earnings resulting from the Company’s acquisition of JHC, and (d) any effect of the Company’s acquisition of JHC on the Company's ability to raise capital in the future. The Company's beliefs, expectations, forecasts, objectives and strategies for the future are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements, including but not limited to (a) the inability of the Company to dispose of older aircraft on attractive terms, acquire younger aircraft on attractive terms, or the ability of the Company to generate greater revenues from a portfolio of younger aircraft, (b) the failure of the Company’s acquisition of JHC to be consummated, as a result of the failure of conditions precedent or otherwise, (c) the Company's inability to effectively perform for itself the management services previously performed by JetFleet Management Corp. at a cost less than the fees that would otherwise be payable pursuant to the Company’s management agreement with JHC, and (d) the Company's inability to raise capital on attractive terms, or at all, as a result of the failure of capital markets to recognize the anticipated benefits of the Company’s acquisition of JHC or otherwise. The forward-looking statements in this press release and the Company's future results of operations are subject to additional risks and uncertainties set forth under the heading "Factors that May Affect Future Results" in documents filed by the Company with the Securities and Exchange Commission, including the Company's quarterly reports on Form 10-Q and the Company's latest annual report on Form 10-K, and are based on information available to the Company on the date hereof. The Company does not intend, and assumes no obligation, to update any forward-looking statements made in this press release. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this press release.
1 Operating margin is a non-GAAP measure. Operating margin is calculated by dividing "Income before income taxes" by "Total revenue." See Additional Financial Information at the end of this press release for a reconciliation to its most directly comparable GAAP measure.
2 EBITDA is a non-GAAP measure. See Additional Financial Information below for its method of calculation and reconciliation to its most directly comparable GAAP measure at the end of this press release.