AeroCentury Corp (ACY, Financial) filed Quarterly Report for the period ended 2012-09-30.
Aerocentury Corporation has a market cap of $19.4 million; its shares were traded at around $13.1 with a P/E ratio of 6 and P/S ratio of 0.8. Aerocentury Corporation had an annual average earning growth of 12% over the past 10 years.
Operating lease revenue increased by $884,100 in the quarter ended September 30, 2012 compared to the same period in 2011 primarily because of a $474,700 increase related to aircraft that were on lease in the 2012 quarter but off lease for all or part of the 2011 quarter and a $1,265,700 increase related to aircraft that were acquired and leased during the fourth quarter of 2011 and first nine months of 2012. The effects of these increases were partially offset by a decrease related to aircraft that were off lease for all or part of the third quarter of 2012 or were sold during first nine months of 2012 and a decrease related to accrued rent on aircraft for which collection is in doubt and therefore not reflected in income until collected.
During the quarters ended September 30, 2012 and 2011, $211,700 and $1,189,200 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.
Operating lease revenue increased by $3,573,200 in the nine months ended September 30, 2012 compared to the same period in 2011 primarily because of: (i) a $2,462,900 increase related to aircraft that were acquired and leased during the fourth quarter of 2011 and first nine months of 2012; (ii) a $2,078,800 increase related to aircraft that were on lease in the 2012 period but off lease for all or part of the 2011 period; and (iii) a $470,500 increase related to assets that were on lease in the 2012 and 2011 periods for which the Company recorded a reduction in operating lease revenue in the 2011 period due to uncertainty about the collectability of the related receivables. The effects of these increases were partially offset by a decrease of $1,838,600 related to aircraft that were off lease for all or part of the first nine months of 2012, were sold during 2011 or the first nine months of 2012, or were re-leased at lower rates.
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, 25%, 25%, 25% and 16% of the Company s lease revenue comes from the European, Caribbean, African and Asian regions, respectively, with five, two, two and four lessees, respectively. Consequently, the ongoing 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 Corporation has a market cap of $19.4 million; its shares were traded at around $13.1 with a P/E ratio of 6 and P/S ratio of 0.8. Aerocentury Corporation 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 lessee purchase option at a price substantially below the asset s estimated residual value at the exercise date for the 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 was terminated in June 2011 as a result of 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 recognized interest earned on finance leases as “other income” in the amount of $21,800 and $25,000 in the quarters ended September 30, 2012 and 2011, respectively, and $67,800 and $219,300 in the nine months ended September 30, 2012 and 2011, respectively.Operating lease revenue increased by $884,100 in the quarter ended September 30, 2012 compared to the same period in 2011 primarily because of a $474,700 increase related to aircraft that were on lease in the 2012 quarter but off lease for all or part of the 2011 quarter and a $1,265,700 increase related to aircraft that were acquired and leased during the fourth quarter of 2011 and first nine months of 2012. The effects of these increases were partially offset by a decrease related to aircraft that were off lease for all or part of the third quarter of 2012 or were sold during first nine months of 2012 and a decrease related to accrued rent on aircraft for which collection is in doubt and therefore not reflected in income until collected.
During the quarters ended September 30, 2012 and 2011, $211,700 and $1,189,200 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.
Operating lease revenue increased by $3,573,200 in the nine months ended September 30, 2012 compared to the same period in 2011 primarily because of: (i) a $2,462,900 increase related to aircraft that were acquired and leased during the fourth quarter of 2011 and first nine months of 2012; (ii) a $2,078,800 increase related to aircraft that were on lease in the 2012 period but off lease for all or part of the 2011 period; and (iii) a $470,500 increase related to assets that were on lease in the 2012 and 2011 periods for which the Company recorded a reduction in operating lease revenue in the 2011 period due to uncertainty about the collectability of the related receivables. The effects of these increases were partially offset by a decrease of $1,838,600 related to aircraft that were off lease for all or part of the first nine months of 2012, were sold during 2011 or the first nine months of 2012, or were re-leased at lower rates.
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, 25%, 25%, 25% and 16% of the Company s lease revenue comes from the European, Caribbean, African and Asian regions, respectively, with five, two, two and four lessees, respectively. Consequently, the ongoing European financial crisis and its potential impact on the European economy is a substantial area of concern for the Company.
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