UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Date of Report (Date of Earliest Event Reported): March 2, 2016
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AEROCENTURY CORP.
_________________________________________
(Exact name of registrant as specified in its charter)
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Delaware
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94-3263974
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(State or Other Jurisdiction of incorporation)
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(I.R.S. Employer Identification No.)
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1440 Chapin Avenue, Suite 310
Burlingame, CA
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94010
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(Address of principal executive offices)
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(Zip Code)
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(650)-340-1888
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Registrant’s telephone number, including area code:
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Not Applicable
Former Name or Former Address, if changed since last report
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02: Earnings Announcement
On March 2, 2016, AeroCentury Corp. (the "Company") announced via press release the Company's unaudited operating results for its fourth quarter ended December 31, 2015. A copy of the Company's press release is attached hereto as Exhibit 99.1. This Form 8-K and the attached exhibit are provided under Item 2.02 of Form 8-K and are furnished to, but not filed with, the Securities and Exchange Commission.
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AEROCENTURY CORP. |
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| Date: March 3, 2016 |
By: |
/s/ Toni M. Perazzo |
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Title: Sr. Vice President - Finance |
Toni Perazzo
Acting President and Chief Financial Officer
(650) 340-1888
FOR IMMEDIATE RELEASE
AeroCentury Corp. Earns $6.4 Million, or $4.17 per Share, in 2015
Portfolio Utilization Improves to 96% in 4Q15 Boosting Earnings to $3.1 Million or $1.99 per Share
BURLINGAME, California, March 2, 2016 /PRNewswire/ -- AeroCentury Corp. (NYSE MKT: ACY), an independent aircraft leasing company, today reported earnings totaling $3.1 million, or $1.99 per diluted share, in the fourth quarter of 2015, compared to $1.3 million, or $0.81 per diluted share, in the third quarter of 2015, and $0.5 million, or $0.32 per diluted share, in the fourth quarter of 2014. The fourth quarter 2015 results reflect increased lease revenue due to improved utilization and higher gains from sales of aircraft.
Net income increased to $6.4 million, or $4.17 per diluted share, for the full year in 2015, compared to a net loss of $11.3 million, or ($7.32) per diluted share, for 2014. The 2014 results included $18.7 million of non-cash pre-tax write-downs on older equipment. All reported results are unaudited.
During the fourth quarter of 2015, the Company sold three aircraft for cash, which generated gains totaling $6.3 million. For all of 2015, the Company recorded gains totaling $12.0 million for the sale of nine aircraft, including five pursuant to sales-type finance leases.
Average utilization improved to 96% in the fourth quarter compared to 94% in the third quarter and 88% in the year-ago quarter. For the full years of 2015 and 2014, utilization was 92% and 82%, respectively.
"Neal Crispin, our Founder, Chairman and President since the Company's inception, passed away in January," said Toni Perazzo, Acting President and Chief Financial Officer. "His presence is greatly missed, and we are dedicated to carrying on his work and building on his legacy."
"Our niche in the aircraft leasing industry has gone through several cycles since we launched our business more than 25 years ago," Perazzo noted. "Increased competition in the acquisition market has led to higher aircraft prices and lower lease rates. Additional acquisitions are essential to the Company's continued success, and we carefully monitor market conditions and seek acquisition opportunities that make good economic sense."
Fourth Quarter 2015 Highlights (at or for the period ended December 31, 2015, compared to September 30, 2015 and December 31, 2014):
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·
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Average portfolio utilization increased to 96% during the fourth quarter of 2015, compared to 94% in the preceding quarter and 88% a year ago.
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·
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Total revenues were $12.7 million for the fourth quarter of 2015, an increase of 64% compared to $7.8 million in the preceding quarter, and an increase of 106% compared to $6.2 million in the fourth quarter a year ago.
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·
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Operating lease revenues declined 5% to $6.2 million in the fourth quarter of 2015 from $6.5 million in the preceding quarter, as a result of asset sales in the fourth quarter, the effect of which was partially offset by increased revenue from an asset that was off lease during the third quarter. Operating lease revenue increased 5% from $5.9 million in the fourth quarter of 2014 as a result of higher utilization.
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·
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Three aircraft were sold on a cash basis during the fourth quarter of 2015, generating $6.3 million in gains. During the preceding quarter, the Company sold three aircraft pursuant to sales-type finance leases, generating gains totaling $1.1 million. In the fourth quarter of 2014, two aircraft were sold generating gains totaling $0.2 million.
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·
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Total expenses increased to $7.9 million in the fourth quarter of 2015, up 34% from $5.9 million in the preceding quarter, primarily due to higher maintenance costs and non-cash impairment charges related to the Company's assets held for sale. Total expenses were up 45% from $5.4 million in the fourth quarter a year ago, primarily as a result of the impairment charges and a one-time waiver by JetFleet Management Corp., the management company for the Company, of its management fee of approximately $1.2 million in the 2014 quarter.
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·
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Operating margin and net margin increased to 38% and 24%, respectively, in the fourth quarter of 2015 from 25% and 16%, respectively, for the preceding quarter and 13% and 8%, respectively, in the fourth quarter of 2014.
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·
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Book value per share was $26.35 at December 31, 2015, up 6% from $24.75 per share at September 30, 2015, and up 17% from $22.58 per share a year ago.
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The following table shows the status of the Company's portfolio of aircraft and engines held for lease as of December 31, 2015, September 30, 2015 and December 31, 2014.
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December 31, 2015
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% of net book value
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September 30, 2015
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% of net book value
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December 31, 2014
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% of net book value
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Turboprop aircraft (*):
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|
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On lease
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13
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39
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%
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15
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42
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%
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20
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47
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%
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Off lease - re-leasing
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3
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6
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%
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3
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6
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%
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5
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5
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%
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Total turboprop aircraft
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16
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45
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%
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18
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48
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%
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25
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52
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%
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Regional jet aircraft:
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On lease
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8
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49
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%
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8
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47
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%
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8
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43
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%
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Off lease - re-leasing
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-
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-
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-
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-
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-
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-
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Total regional jet aircraft
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8
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49
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%
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8
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47
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%
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8
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43
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%
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Engines:
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On lease
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2
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5
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%
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2
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4
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%
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-
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-
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Off lease - re-leasing
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3
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1
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%
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3
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1
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%
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5
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5
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%
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Total engines
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5
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6
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%
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5
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5
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%
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5
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5
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%
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(*) Decreases from period to period reflect cash sales, sales pursuant to sales-type finance leases, and reclassifications of assets to held for sale.
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AeroCentury's portfolio currently consists of twenty-four aircraft and five engines held for lease and four aircraft that are held under sales-type finance leases. The Company also holds three aircraft for sale, which reflects the sale of two regional jet aircraft in February 2016. The Company's portfolio consists of ten different aircraft types. The current customer base comprises fourteen airlines operating worldwide.
At December 31, 2015, total assets were $181.0 million, compared to $197.7 million a year ago, reflecting asset sales during 2015.
AeroCentury is an aircraft operating lessor and finance company specializing in leasing regional aircraft and engines utilizing triple net leases. The Company's aircraft and engines are leased to regional airlines and commercial users worldwide.
Selected Financial Information
(in thousands, except share and per share data) (Unaudited)
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For the Three Months Ended
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For the Years Ended
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December 31,
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September 30,
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December 31,
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December 31,
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December 31,
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2015
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2015
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2014
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2015
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2014
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Operating lease revenue
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$
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6,186
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$
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6,511
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$
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5,915
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$
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25,467
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$
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21,913
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Gain on disposal of assets
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6,331
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1,095
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183
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11,970
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3,147
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Maintenance reserves revenue (1)
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-
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-
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-
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589
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3,394
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Other income
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230
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185
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101
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507
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252
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12,747
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7,791
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6,199
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38,533
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28,706
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Depreciation
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2,131
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2,282
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1,689
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9,062
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7,299
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Maintenance costs
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1,623
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197
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1,659
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4,661
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7,478
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Interest
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1,336
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1,459
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1,341
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6,141
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5,134
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Management fees
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1,321
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1,411
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-
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5,581
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3,865
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Provision for impairment
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1,135
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-
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218
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1,282
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18,737
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Professional fees and other
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331
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529
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510
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1,785
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3,439
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7,877
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5,878
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5,417
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28,512
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45,952
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Income/(loss) before income taxes
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4,870
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1,913
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|
782
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10,021
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(17,246
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)
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Income tax provision/(benefit)
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1,795
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658
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278
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3,583
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(5,952
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)
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Net income/(loss)
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$
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3,075
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$
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1,255
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$
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504
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$
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6,438
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$
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(11,294
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)
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Earnings/(loss) per share:
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Basic
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$
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1.99
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$
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0.81
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$
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0.33
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$
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4.17
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$
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(7.32
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)
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Diluted
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$
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1.99
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$
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0.81
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$
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0.32
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$
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4.17
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$
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(7.32
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)
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Shares used in per share computations:
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Basic
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|
1,543,257
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1,543,257
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1,543,257
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1,543,257
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1,543,257
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Diluted
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1,547,334
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|
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1,548,469
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1,552,620
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1,544,285
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1,543,257
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12/31/15
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9/30/15
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12/31/14
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Total assets (2)
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$
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181,025
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$
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191,310
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$
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197,671
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Total liabilities (2)
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$
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139,746
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$
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153,107
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|
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$
|
162,830
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Shareholders' equity
|
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$
|
41,279
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|
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$
|
38,203
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|
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$
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34,841
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(1) Maintenance reserves revenue is dependent upon the amount of reserves retained upon lease terminations.
(2) Reflects early adoption and retrospective application of Accounting Standards Update No. 2015-03, "Interest: Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs."
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