Chief Financial Officer
BURLINGAME, California, March 18, 2019 -- AeroCentury Corp. ("AeroCentury" or the "Company") (NYSE American: ACY), an independent aircraft leasing company, today reported a fourth quarter net loss of $3.8 million, or $(2.48) per share, compared to a net loss of $4.5 million, or $(3.16) per share, for the third quarter of 2018 and net income of $6.0 million, or $4.25 per share, for the fourth quarter of 2017. Fourth quarter 2018 results reflect the combined operations of AeroCentury and its newly acquired subsidiary, JetFleet Holding Corp. ("JetFleet"), which was acquired on October 1, 2018. Fourth quarter 2017 results included a $5.4 million tax benefit from the revaluation of the Company’s deferred tax liability caused by the passage of the Tax Cuts and Jobs Act of 2017.
Net loss for the year ended December 31, 2018, was $8.1 million, or ($5.58) per share, as compared to net income of $7.4 million, or $5.10 per share, in 2017.
The results for the fourth quarter and the year ended December 31, 2018, included a settlement loss of $2.5 million in connection with the acquisition of JetFleet., the parent of the management company for the Company, which closed on October 1, 2018. The 2018 fourth quarter and full year results also included $1.0 million and $3.4 million, respectively, of net losses related to the sale of off-lease, older turboprop aircraft. The 2018 full year results also included impairment provisions totaling $3.0 million on five off-lease turboprop aircraft that were identified for sale, two of which were sold during the year, as well as $1.6 million of maintenance reserves revenue resulting from payments received from a lessee that returned three leased aircraft to the Company in 2017 which payments the Company has recorded as they were received.
"While the acquisition of JetFleet resulted in a $2.5 million settlement loss being recorded in the fourth quarter, we believe the acquisition provides the potential to lower overall management costs, and consequently is expected to be accretive to shareholders in the long term," stated Michael Magnusson, AeroCentury’s President. "Furthermore, the structure of a private company managing the business of a public company was a concern of potential equity investors, and bringing management in-house should help to eliminate those concerns and facilitate improved transparency of our business. In 2018, we continued to implement our strategy of selling off older assets in favor of acquiring newer ones, and this also had a substantial impact on earnings. As a result of our continuing portfolio modernization efforts, our portfolio of leased aircraft now has an average age of 11 years. The average aircraft value is $10.7 million, approximately double what it was 10 years ago. While the JetFleet acquisition and actions taken under our portfolio modernization program had a significant impact on our 2018 earnings, we believe they represent significant steps to better position AeroCentury for the future."
"Another major accomplishment was the restructuring of our acquisition financing, which started in 2018 and was completed in February 2019. We renewed and modified our revolving credit facility, which was previously due to expire at the end of May 2019, and extended its term to February 2023," Magnusson continued. "Working with our credit facility lenders, who recognized the value of the JetFleet acquisition and our portfolio modernization efforts, we were able to obtain modifications to our credit facility agreement that helped minimize the negative impact of those actions on the credit facility’s financial ratio covenants. In the same month, in order to free up capacity on our credit facility, we refinanced six of our aircraft with new non-recourse term loans."Fourth Quarter 2018 Highlights and Comparative Data
Aircraft and Engine Portfolio
AeroCentury’s portfolio currently consists of seventeen aircraft, spread over ten different aircraft types, and one engine that are held for lease and six aircraft that are held under sales-type or direct finance leases. The Company also has five turboprop aircraft that are held for sale, two of which are being sold in parts. The current customer base comprises eleven customers operating in nine 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 potential for the Company’s acquisition of JetFleet Holding Corp. to lower overall management costs, and thereby be accretive to shareholders in the long term, and (b) improving the transparency of the Company’s business by bring management in-house.
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) unanticipated increases in costs and expenses in connection with management of the Company; (b) a substantial change in the character of the aircraft portfolio or the status of aircraft lessees such that management of the portfolio would require additional expenditures of human and other resources. 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 "Management’s Discussion and Analysis of Financial Condition and Results of Operations—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.