Chief Financial Officer
BURLINGAME, California, August 9, 2018 -- AeroCentury Corp. (the “Company”) (NYSE American: ACY), an independent aircraft leasing company, today reported a second quarter net loss of $81,000 million, or $(0.06) per share, compared to net income of $0.3 million, or $0.22 per share, for the first quarter of 2018 and net income of $0.4 million, or $0.25 per share, for the second quarter of 2017.
In the first six months of 2018, net income decreased 76% to approximately $0.2 million, or $0.17 per share, from approximately $1.0 million, or $0.67 per share, in the first six months of 2017.
The second quarter and first six months of 2018 included $0.6 million and $1.6 million, respectively, of other income resulting from payments received from a lessee of three aircraft that were returned to the Company during 2017. Such payments were received after the aircraft were returned and were applied toward unpaid maintenance reserves as well as amounts owed for unsatisfied return conditions of the applicable leases. The unpaid amounts were not booked as receivables 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 from this lessee as they are received and they are recorded in other income.
“In the second quarter, we continued on our path of modernizing our portfolio, purchasing two mid-life Dash 8-Q400 turboprop aircraft after having previously sold five older aircraft in late 2017 and early 2018. An unanticipated delay in closing our second quarter acquisitions resulted in a lag in reinvestment of the previous sales proceeds, and this created a short-term drag on our revenues in the first half of 2018. The short-term effect of potential lags in reinvestment is a necessary occasional consequence of dynamic and strategic portfolio management, and we believe it is more than outweighed by the potential long-term benefit of modernizing our portfolio in terms of value retention and asset marketability, and we remain committed to continuing on this path. The average age of aircraft we are holding for lease is now approximately 11 years,” said Michael Magnusson, President.
Mr. Magnusson also commented on the progress of the Company’s proposed acquisition by merger of JetFleet Holding Corp. (“JHC”), the corporation that has managed the Company’s operations and aircraft portfolio since the Company’s founding in 1997. “A special meeting of the Company’s stockholders to approve the Merger is scheduled for August 31, 2018, and is the final procedural step to be accomplished before we can consummate the Merger. Although the consummation of the Merger of the Company and JHC has taken somewhat more time than we originally anticipated, both companies remain fully committed to the transaction,” stated Mr. Magnusson.
Second Quarter Highlights
Second Quarter 2018 Comparative Data:
AeroCentury's portfolio currently consists of twenty-three 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 eleven customers operating in nine countries.
The following table shows the status of the Company's portfolio of aircraft and engines held for lease as of June 30, 2018, December 31, 2017, and June 30, 2017.
Please view PDF for tables by clicking here
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 path of modernizing its fleet, (b) the benefits of fleet modernization, and the potential for these benefits to outweigh the negative effect of lags in reinvestment, and (c) the Company's proposed acquisition of JHC. 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 ability of the Company to dispose of older aircraft on attractive terms, acquire younger aircraft on attractive terms, or generate greater revenues from a portfolio of younger aircraft, (b) unanticipated changes of value in the Company’s portfolio due to market changes or obsolescence, and (c) the failure of the Company’s acquisition of JHC to be consummated, as a result of the failure to satisfy conditions precedent 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 and Liquidity" 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 as of the date hereof and speak only as of such date. The Company does not intend, and assumes no obligation, to update any forward-looking statements made in this press release. For these reasons, readers are cautioned not to place undue reliance on forward-looking statements.
Use of Non-GAAP Financial Measures
To supplement the Company’s financial information presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this press release includes the non-GAAP financial measure of EBITDA. The Company defines EBITDA as net (loss)/income, plus depreciation expense, plus interest expense and plus (minus) income tax expense (benefit). The table below provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to GAAP measures such as net income or any other measure of financial performance calculated and presented in accordance with GAAP. Rather, the Company presents this measure as supplemental information because it believes it provides meaningful additional information about the Company’s performance for the following reasons: (1) this measure allows for greater transparency with respect to key metrics used by management, as management uses this measure to assess the Company’s operating performance and for financial and operational decision-making; (2) this measure excludes the impact of items management believes are not directly attributable to the Company’s core operating performance and may obscure trends in the business; and (3) this measure may be used by institutional investors and the analyst community to help analyze the Company’s business. The Company’s non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as the Company does.
(1) EBITDA is a non-GAAP measure. See below for its method of calculation and reconciliation to its most directly comparable GAAP measure, as well as other information about the use of non-GAAP measures generally, at the end of this press release.
(2) Information as of 6/30/18 and 12/31/17 includes one engine that had previously been installed on an aircraft that is now being parted out.