BURLINGAME, Calif.,
Nov. 13, 2014 /PRNewswire/
-- AeroCentury Corp. (NYSE MKT: ACY), an independent aircraft
leasing company, today reported its operating results for the third
quarter ended September 30, 2014.
Effective as of January 1,
2014, the Company adopted an alternate method of accounting
for non-refundable maintenance reserves and certain lessor
maintenance costs. In order to provide a meaningful
comparison for third quarter 2014 results, the September 30, 2013 and December 31, 2013 results stated below and in the
accompanying tables were calculated as if the new method of
accounting were in effect throughout the applicable periods ending
on those dates.
The Company reported a net loss of $8.2
million, or ($5.34) per
diluted share, for the third quarter of 2014, compared to net
income of $4.0 million, or
$2.53 per diluted share, for the
third quarter of 2013. The Company reported a net loss of
$11.8 million, or ($7.64) per diluted share, for the first nine
months of 2014, compared to net income of $9.2 million, or $5.78 per diluted share, for the first nine
months of 2013.
Total revenues were $6.6 million
and $22.5 million for the third
quarter and nine months ended September 30,
2014, respectively, compared to total revenues of
$12.5 million and $32.6 million, respectively, for the same periods
a year ago.
Operating lease revenues were higher in the third quarter and
nine months ended September 30, 2014,
compared to the same periods a year ago primarily as a result of
increases in operating lease revenue from assets purchased during
2013 and 2014. The effect of these increases was partially
offset by the effect of assets that were on lease in the 2013
periods but off lease for all or a portion of the 2014 periods and
asset sales during 2013 and 2014.
Maintenance reserves revenue is dependent upon the amount of
reserves retained at lease terminations. As a result of the
aircraft returned to the Company during each period, maintenance
reserves revenue was lower in the third quarter of 2014 and nine
months ended September 30, 2014
compared to the same periods a year ago.
The Company recorded a net gain from the sale of three aircraft
in the third quarter of 2014 and recorded a net gain in the third
quarter of 2013 from the sale of two aircraft. The Company
had previously sold four aircraft and an engine in the first half
of 2014. During the first half of 2013, the Company recorded a gain
on an engine finance lease and sold two aircraft.
Total expenses increased by $13.0
million and $21.8 million,
respectively, in the third quarter and first nine months of 2014 as
compared to the same periods in 2013.
During the second quarter ended June 30,
2014, the Company recorded a $6.8
million impairment charge based on current market appraisals
related to its five off-lease Fokker 100 aircraft that were being
held for lease. During the third quarter, the Company
reclassified these aircraft and a Fokker 50 aircraft to held for
sale on the Company's balance sheet and recorded impairment charges
of $8.5 million for the Fokker 100
aircraft and $0.3 million for the
Fokker 50 aircraft, based on the Company's estimated realizable
value net of disposal costs. During the third quarter, the Company
also recorded an impairment charge of $2.9
million for its two Fokker 100 aircraft that are on lease,
based on current market appraisals. During 2013, the Company did
not record any impairment charges.
The Company's maintenance expenses were higher in the third
quarter and nine months ended September 30,
2014 than in the same periods of 2013, primarily as a result
of increases in maintenance performed by the Company on off-lease
aircraft.
The Company's interest expenses were higher in the third quarter
and nine months ended September 30,
2014 than in the same periods of 2013, primarily as a result
of a higher average outstanding debt balance.
The Company's professional fees and other expenses were higher
in the third quarter and nine months ended September 30, 2014 than in the same periods of
2013, primarily as a result of expenses incurred in connection with
the return of six aircraft and two engines by one of the Company's
customers when it ceased operations in the second quarter of 2014,
as well as the accrual of goods and services tax related to four of
the Company's aircraft that are leased to a customer in
Papua New Guinea.
Currently, the Company's portfolio consists of five aircraft
engines and thirty-seven aircraft, covering nine different aircraft
types. The Company's customer base consists exclusively of
regional carriers – eleven different airlines operating
worldwide.
AeroCentury is an aircraft operating lessor and finance company
specializing in leasing regional aircraft and engines utilizing
triple net leases. The Company's aircraft and engines are
leased to regional airlines and commercial users worldwide.
(see tables following)
|
AeroCentury
Corp.
|
|
Selected Financial
Information
|
|
(in thousands, except
share and per share data)
|
|
(Unaudited)
|
|
|
For the Three
Months
Ended September
30,
|
For the Nine
Months
Ended September
30,
|
|
2014
|
2013(1)
|
2014
|
2013(1)
|
|
Revenues and other
income:
|
|
|
|
|
|
|
|
|
|
|
Operating lease
revenue
|
$ 4,815
|
$4,368
|
$ 15,998
|
$13,941
|
|
Maintenance reserves
revenue
|
-
|
6,146
|
3,394
|
13,866
|
|
Net gain on disposal
of assets
|
1,809
|
1,985
|
2,964
|
4,148
|
|
Other
income
|
1
|
38
|
152
|
644
|
|
6,625
|
12,537
|
22,508
|
32,599
|
|
Expenses:
|
|
|
|
|
|
|
|
|
|
|
Provision for
impairment in value of aircraft
|
11,719
|
-
|
18,519
|
-
|
|
Depreciation
|
1,731
|
1,804
|
5,610
|
5,377
|
|
Management
fees
|
1,205
|
1,058
|
3,865
|
3,231
|
|
Maintenance
costs
|
2,173
|
1,414
|
5,820
|
4,884
|
|
Interest
|
1,225
|
966
|
3,793
|
3,034
|
|
Professional fees and
other
|
1,136
|
913
|
2,929
|
2,134
|
|
19,189
|
6,155
|
40,536
|
18,660
|
|
(Loss)/income before
income tax provision
|
(12,564)
|
6,382
|
(18,028)
|
13,939
|
|
Income tax
(benefit)/provision
|
(4,317)
|
2,361
|
(6,230)
|
4,764
|
|
Net
(loss)/income
|
$ (8,247)
|
$4,021
|
$(11,798)
|
$ 9,175
|
|
(Loss)/earnings per
share:
|
|
|
|
|
|
Basic
|
$ (5.34)
|
$ 2.61
|
$ (7.64)
|
$ 5.95
|
|
Diluted
|
$ (5.34)
|
$ 2.53
|
$ (7.64)
|
$ 5.78
|
|
Weighted average
shares used in
(loss)/earnings per share computations:
|
|
|
|
|
|
Basic
|
1,543,257
|
1,543,257
|
1,543,257
|
1,543,257
|
|
Diluted
|
1,543,257
|
1,590,164
|
1,543,257
|
1,587,329
|
|
Summary Balance Sheet
(Unaudited):
|
September
30,
2014
|
December
31,
2013(1)
|
September
30,
2013(1)
|
|
Total
assets
|
$176,526
|
$164,634
|
$152,933
|
|
Total
liabilities
|
$142,189
|
$118,499
|
$105,967
|
|
Stockholders'
equity
|
$ 34,337
|
$ 46,135
|
$ 46,966
|
|
|
|
(1)
|
Effective January 1,
2014, the Company adopted an alternate method of accounting for
maintenance reserves and lessor maintenance obligations to: (i)
recognize non-refundable maintenance reserves as liabilities for
deposits against future maintenance reimbursements of maintenance
reserves received in the normal course of ongoing leases; (ii)
recognize reimbursements from such collected reserves as
disbursements against the liability when claims are submitted for
payment against previously collected maintenance reserves; (iii)
reflect as liabilities non-refundable reserves received by the
prior lessor upon acquisition of an aircraft which are claimable by
the lessee when maintenance is performed; (iv) recognize as income
non-refundable reserves not refunded to lessees upon termination of
the lease and return of the aircraft to the Company in accordance
with all lease return requirements; and (v) record lessor
maintenance obligations as liabilities upon acquisition of an
aircraft subject to a lease under which the Company assumes the
prior lessor's obligation to pay a portion of a first-time
maintenance event. The selected financial information for the three
months and nine months ended September 30, 2013 and as of December
31, 2013 reflects the retrospective application of the alternate
method of accounting in accordance with ASC 250, Accounting
Changes and Error Corrections.
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SOURCE AeroCentury Corp.