AeroCentury Corp (ACY, Financial) filed Quarterly Report for the period ended 2012-03-31.
Aerocentury Cp has a market cap of $17 million; its shares were traded at around $14.1 with and P/S ratio of 0.7. Aerocentury Cp had an annual average earning growth of 12% over the past 10 years.
The Company s net income increased by $3,603,800 in the quarter ended March 31, 2012 compared to the same period in 2011, due primarily to increased operating lease revenue and maintenance reserves revenue and decreased expenses for maintenance, general and administrative and insurance, the aggregate effect of which was partially offset by increased depreciation and interest expense.
Operating lease revenue increased by $1,702,500 in the quarter ended March 31, 2012 compared to the same period in 2011 primarily because of: (i) a $996,500 increase related to aircraft that were on lease in the 2012 quarter but off lease for all or part of the 2011 quarter; (ii) a $487,800 increase related to aircraft that were acquired and leased during the fourth quarter of 2011 and first quarter of 2012; and (iii) a $239,200 increase related to assets that were on lease in the 2012 and 2011 quarters but were subject to bad debt allowances for all or part of the 2011 quarter. The effects of these increases were partially offset by a decrease of $347,300 related to aircraft that were off lease for all or part of the first quarter of 2012, were sold during 2011, or were re-leased at lower rates.
During the quarters ended March 31, 2012 and 2011, $495,100 and $4,119,700, respectively, of the Company s maintenance expense for off-lease aircraft and maintenance performed by lessees were funded by non-refundable maintenance reserves that had been recorded as revenue when earned.
Economic downturns can affect certain regions of the world more than others. As the Company s portfolio is not entirely globally diversified, a localized downturn in one of the key regions in which the Company leases assets could have a significant adverse impact on the Company. Currently, 34%, 24%, 20% and 12% of the Company s lease revenue comes from the European, Caribbean, Asian and African regions, respectively, with six, two, four and two lessees, respectively. Therefore, Europe is currently the most significant market to the Company and a regional downturn that affects the financial health of European regional carriers could have a material adverse effect on the Company s financial results. In that respect, the current European financial crisis and its potential impact on the European economy is a substantial area of concern for the Company.
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Aerocentury Cp has a market cap of $17 million; its shares were traded at around $14.1 with and P/S ratio of 0.7. Aerocentury Cp had an annual average earning growth of 12% over the past 10 years.
Highlight of Business Operations:
The lease for one of the Company s aircraft contains a purchase option for the lessee for an amount substantially below the estimated residual value of the asset at the date for purchase under such option. Consequently, the Company considers the purchase option to be a “bargain purchase option” and has classified such lease as a finance lease for financial accounting purposes. The Company also had a second aircraft subject to a finance lease that terminated in June 2011 in connection with the disposal of the asset. The Company does not include the value, purchase price or accumulated depreciation of finance lease assets on its balance sheet. Instead, for any finance lease, the discounted present value of (i) future minimum lease payments (including the bargain purchase option) and (ii) any residual value not subject to a bargain purchase option are reported as a finance lease receivable. Rental revenue and depreciation expense are not recognized on finance leases. Rather, the Company accrues interest on the balance of the finance lease receivable based on the interest rate inherent in the lease. The Company s results for the quarters ended March 31, 2012 and 2011 included $23,400 and $144,300, respectively, of interest earned on finance leases recorded as other income.The Company s net income increased by $3,603,800 in the quarter ended March 31, 2012 compared to the same period in 2011, due primarily to increased operating lease revenue and maintenance reserves revenue and decreased expenses for maintenance, general and administrative and insurance, the aggregate effect of which was partially offset by increased depreciation and interest expense.
Operating lease revenue increased by $1,702,500 in the quarter ended March 31, 2012 compared to the same period in 2011 primarily because of: (i) a $996,500 increase related to aircraft that were on lease in the 2012 quarter but off lease for all or part of the 2011 quarter; (ii) a $487,800 increase related to aircraft that were acquired and leased during the fourth quarter of 2011 and first quarter of 2012; and (iii) a $239,200 increase related to assets that were on lease in the 2012 and 2011 quarters but were subject to bad debt allowances for all or part of the 2011 quarter. The effects of these increases were partially offset by a decrease of $347,300 related to aircraft that were off lease for all or part of the first quarter of 2012, were sold during 2011, or were re-leased at lower rates.
During the quarters ended March 31, 2012 and 2011, $495,100 and $4,119,700, respectively, of the Company s maintenance expense for off-lease aircraft and maintenance performed by lessees were funded by non-refundable maintenance reserves that had been recorded as revenue when earned.
Economic downturns can affect certain regions of the world more than others. As the Company s portfolio is not entirely globally diversified, a localized downturn in one of the key regions in which the Company leases assets could have a significant adverse impact on the Company. Currently, 34%, 24%, 20% and 12% of the Company s lease revenue comes from the European, Caribbean, Asian and African regions, respectively, with six, two, four and two lessees, respectively. Therefore, Europe is currently the most significant market to the Company and a regional downturn that affects the financial health of European regional carriers could have a material adverse effect on the Company s financial results. In that respect, the current European financial crisis and its potential impact on the European economy is a substantial area of concern for the Company.
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