"Our operating lease portfolio increased to $196.5 million, up 47% from June 30, 2016 and 20% from a year ago," said Toni M. Perazzo, Chief Financial Officer. "In the third quarter, we purchased two 100-seat Bombardier CRJ-1000 regional jet aircraft manufactured in 2010 on lease to Air Nostrum, one of the leading regional carriers in Europe. We also acquired two 86-seat Bombardier CRJ 900 aircraft on lease with Adria Airways, a current customer. These purchases were completed in the latter part of the third quarter, so the full effect of these transactions is not reflected in our third quarter results.""We also continued to execute on our strategy to modernize our aircraft portfolio in the quarter. We sold two older turboprop aircraft pursuant to sales-type finance leases generating gains of $1.2 million. We also disposed of an older aircraft pursuant to a lessee purchase option in a sales-type finance lease," Perazzo continued. Third Quarter 2016 Highlights (at or for the periods ended September 30, 2016, June 30, 2016, and September 30, 2015):
- Average portfolio utilization, as a percentage of net book value of assets held for lease, was 93% during the third quarter of 2016, compared to 91% in the second quarter of 2016 (which was previously reported as 93% in our earnings release for the second quarter of 2016), and 94% in the year ago quarter.
- Total revenues were $7.4 million for the third quarter of 2016, compared to $7.3 million in the preceding quarter, and $7.8 million in the third quarter a year ago.
- Operating lease revenues increased 23% to $6.1 million in the third quarter of 2016 from $4.9 million in the preceding quarter as a result of aircraft acquisitions during the third quarter. Operating lease revenues declined 7% from $6.5 million in the year-ago quarter, primarily as a result of the change in the composition of leased assets.
- Two aircraft were sold, pursuant to sales-type finance leases, generating $1.2 million in gains in the third quarter of 2016, compared to gains totaling $2.2 million in the preceding quarter, primarily as a result of insurance proceeds related to the accidental loss of an aircraft. Three aircraft were sold on sales-type finance leases during the third quarter of 2015, generating $1.1 million in gains.
- Total expenses decreased 3% to $6.6 million from $6.8 million in the preceding quarter, due to lower maintenance costs and professional fees. The preceding quarter included a provision for impairment. The effects of these decreases were partially offset by increased depreciation, interest expense, and bad debt expense in the third quarter. Expenses increased by 13% in the third quarter of 2016 from $5.9 million in the year ago quarter, reflecting higher maintenance and bad debt expense. The effects of these increases were partially offset by lower interest expense, professional fees and management fees.
- Operating margin and net margin were 11% and 7%, respectively, in the third quarter of 2016, compared to 6% and 4%, respectively, for the preceding quarter, and 25% and 16%, respectively, in the third quarter of 2015.
- Book value per share was $27.15 at September 30, 2016, compared to $26.81 per share at June 30, 2016 and $24.75 per share at September 30, 2015.
- Liquidity available from the revolving credit facility was $39.9 million at September 30, 2016, compared to $71.2 million at June 30, 2016. The decrease in liquidity reflects the purchase of four aircraft during the third quarter. The credit facility may be expanded by an additional $30.0 million.
|AIRCRAFT AND ENGINES HELD FOR LEASE|
|September 30, 2016||% of net book value||June 30, 2016||% of net book value||September 30, 2015||% of net book value|
|Total turboprop aircraft||12||24||%||14||39||%||18||48||%|
|Regional jet aircraft:|
|Total regional jet aircraft||12||73||%||8||55||%||8||47||%|
|(*) Decreases from period to period reflect cash sales, sales pursuant to sales-type finance leases, the accidental loss of an aircraft, and reclassifications of assets to held for sale.|
At September 30, 2016, total assets were $224.4 million, up 17% from $191.3 million a year ago, reflecting the net effect of aircraft purchases and sales during the past twelve months, and the accidental loss of one aircraft.AeroCentury is a global aircraft operating lessor and finance company specializing in leasing regional jet and turboprop aircraft and related engines. The Company's aircraft and engines are leased to regional airlines and commercial users worldwide.
|Selected Financial Information|
|(in thousands, except share and per share data) (Unaudited)|
|For the Three Months Ended||For the Nine Months Ended|
|September 30,||June 30,||September 30,||September 30,||September 30,|
|Operating lease revenue||$||6,074||$||4,935||$||6,511||$||17,054||$||19,282|
|Finance lease revenue||200||187||184||572||275|
|Gain on disposal of assets||3||2,146||-||2,149||460|
|Gain on sales-type finance leases||1,166||42||1,095||1,214||5,179|
|Maintenance reserves revenue (1)||-||-||-||-||589|
|Provision for impairment||-||246||-||321||148|
|Professional fees and other||385||653||529||1,564||1,454|
|Bad debt expense||573||263||-||836||-|
|Income before income taxes||814||465||1,913||1,963||5,151|
|Income tax provision||284||166||658||701||1,788|
|Earnings per share:|
|Shares used in per share computations:|
|September 30,||June 30,||December 31,||September 30,|
|(1) Maintenance reserves revenue is dependent upon the amount of reserves retained upon lease terminations.|
Toni PerazzoChief Financial Officer(650) 340-1888