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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Aerocentury Corp | AMEX:ACY | AMEX | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 2.45 | 0 | 01:00:00 |
During 2020, the Company sold two aircraft that had been leased under operating leases. In addition, two lessees that had leased four aircraft pursuant to sales-type or direct financing leases exercised purchase options for the aircraft. Results for the fourth quarter and the year ended December 31, 2020 included impairment losses on most of the Company’s aircraft totaling $11.9 million and $28.8 million, respectively, based on third-party appraised or expected sales proceeds. During the same periods, the Company recorded bad debt expense of $0.3 million and $1.5 million, respectively, as a result of payment delinquencies and reductions in the appraised value of the Company’s two remaining aircraft subject to sales-type leases.
In the third quarter of 2019, the Company terminated the leases for, and repossessed, four aircraft from one of the Company’s lessees (“Repossessed Aircraft”), which had a substantial adverse impact on the Company’s 2019 and 2020 results. As a result of those events, the Company recognized maintenance reserves revenue of $17.0 million at the time of repossession, but also recorded impairment losses for the Repossessed Aircraft of $28.4 million during 2019, based on third-party appraised values or expected sales proceeds. In 2020, the loss of operating lease revenues from those aircraft and an additional $10.9 million of impairment losses also negatively impacted earnings.
Results for the year ended December 31, 2019 also included impairment losses totaling $2.6 million, based on third-party appraised values or expected sales proceeds, for three older turboprop aircraft, a spare engine and an older turboprop aircraft that has been sold in parts.
The results for the year ended December 31, 2019 included a $2.9 million bad debt allowance related to three finance leases secured by three aircraft, one of which aircraft was purchased by the lessee in January 2020. Although the Company recorded a bad debt allowance of $3.9 million during the third quarter of 2019, the Company reduced its allowance by $1.0 million during the fourth quarter of 2019 as a result of cash received during the quarter and anticipated cash that the Company received from the lessees in the first quarter of 2020.
Fourth Quarter 2020 Highlights and Comparative Data
Aircraft and Engine Portfolio
AeroCentury’s portfolio currently consists of eight aircraft, spread over four different aircraft types. Six of the aircraft, comprised of four regional jets and two turboprops, are held for lease. Two additional turboprops are financed under sales-type leases. The Company also has three turboprop aircraft, two of which are being sold in parts, and three regional jet aircraft that are held for sale. The current customer base includes five customers operating in four countries.
About AeroCentury: AeroCentury is an independent global aircraft operating lessor and finance company specializing in leasing regional jet and turboprop aircraft and related engines. The Company's aircraft are leased to regional airlines and commercial users worldwide.
Condensed Consolidated Statements of Income (in thousands, except share and per share data) (Unaudited)
For the Three Months Ended | For the Year Ended | |||||||||||||||
December 31, | September 30, | December 31, | December 31, | December 31, | ||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating lease revenue | $ | 3,072 | $ | 3,249 | $ | 4,789 | $ | 15,468 | $ | 25,609 | ||||||
Maintenance reserves revenue | - | 221 | - | 221 | 16,968 | |||||||||||
Finance lease revenue | - | - | 88 | 56 | 853 | |||||||||||
Net gain on disposal of assets | 124 | 20 | 5 | 133 | 327 | |||||||||||
Loss on sales-type finance leases | - | - | - | - | (171 | ) | ||||||||||
Other income | 302 | - | 1 | 278 | 13 | |||||||||||
3,498 | 3,490 | 4,883 | 16,156 | 43,599 | ||||||||||||
Provision for impairment | 11,931 | 439 | 6,084 | 28,752 | 31,007 | |||||||||||
Depreciation | 1,512 | 1,342 | 2,447 | 7,027 | 11,588 | |||||||||||
Interest | 3,326 | 3,020 | 3,559 | 16,819 | 11,303 | |||||||||||
Salaries and employee benefits | 510 | 499 | 618 | 2,044 | 2,368 | |||||||||||
Professional fees and other | 470 | 1,588 | 1,614 | 5,518 | 4,740 | |||||||||||
Bad debt expense | 333 | - | (1,009 | ) | 1,503 | 2,909 | ||||||||||
Maintenance costs | 56 | 78 | 478 | 302 | 851 | |||||||||||
18,138 | 6,966 | 13,791 | 61,965 | 64,766 | ||||||||||||
Loss before income tax (benefit)/provision | (14,640 | ) | (3,476 | ) | (8,908 | ) | (45,809 | ) | (21,167 | ) | ||||||
Income tax (benefit)/provision | (174 | ) | 605 | (1,867 | ) | (3,565 | ) | (4,508 | ) | |||||||
Net loss | $ | (14,466 | ) | $ | (4,081 | ) | $ | (7,041 | ) | $ | (42,244 | ) | $ | (16,659 | ) | |
Loss per share: | ||||||||||||||||
Basic | $ | (9.36 | ) | $ | (2.64 | ) | $ | (4.55 | ) | $ | (27.33 | ) | $ | (10.78 | ) | |
Diluted | $ | (9.36 | ) | $ | (2.64 | ) | $ | (4.55 | ) | $ | (27.33 | ) | $ | (10.78 | ) | |
Shares used in per share computations: | ||||||||||||||||
Basic | 1,545,884 | 1,545,884 | 1,545,884 | 1,545,884 | 1,545,884 | |||||||||||
Diluted | 1,545,884 | 1,545,884 | 1,545,884 | 1,545,884 | 1,545,884 | |||||||||||
Condensed Consolidated Balance Sheets(in thousands) (Unaudited)
ASSETS | ||||||
December 31, | December 31, | |||||
2020 | 2019 | |||||
Cash and cash equivalents | $ | 2,409 | $ | 2,350 | ||
Cash and cash equivalents held for sale | 346 | - | ||||
Restricted cash | - | 1,077 | ||||
Restricted cash held for sale | 2,346 | |||||
Accounts receivable | 257 | 1,140 | ||||
Finance leases receivable, net of allowance for doubtful accounts | 2,547 | 8,802 | ||||
Aircraft, net of accumulated depreciation | 45,763 | 108,369 | ||||
Assets held for sale | 38,147 | 26,036 | ||||
Property, equipment and furnishings, net of accumulated depreciation | 15 | 63 | ||||
Office lease right of use, net of accumulated amortization | 142 | 948 | ||||
Deferred tax asset | 1,151 | 518 | ||||
Prepaid expenses and other assets | 255 | 293 | ||||
Total assets | $ | 93,378 | $ | 149,596 | ||
LIABILITIES AND STOCKHOLDERS’ (DEFICIT)/EQUITY | ||||||
Liabilities: | ||||||
Accounts payable and accrued expenses | $ | 368 | $ | 736 | ||
Accrued payroll | 190 | 164 | ||||
Notes payable and accrued interest, net of unamortized debt issuance costs | 88,793 | 111,638 | ||||
Notes payable and accrued interest held for sale, net of unamortized debt issuance costs | 13,837 | - | ||||
Derivative liability | - | 1,825 | ||||
Derivative liability held for sale | 768 | - | ||||
Derivative termination liability | 3,075 | - | ||||
Lease liability | 172 | 337 | ||||
Maintenance reserves | 2,001 | 4,413 | ||||
Accrued maintenance costs | 46 | 446 | ||||
Security deposits | 716 | 1,034 | ||||
Unearned revenues | 1,027 | 3,039 | ||||
Deferred income taxes | - | 2,530 | ||||
Income taxes payable | 1 | 175 | ||||
Total liabilities | 110,994 | 126,337 | ||||
Stockholders’ (deficit)/equity: | ||||||
Preferred stock, $0.001 par value | - | - | ||||
Common stock, $0.001 par value | 2 | 2 | ||||
Paid-in capital | 16,783 | 16,783 | ||||
(Accumulated deficit)/retained earnings | (31,362 | ) | 10,882 | |||
Accumulated other comprehensive loss | (2 | ) | (1,371 | ) | ||
Treasury stock | (3,037 | ) | (3,037 | ) | ||
Total stockholders’ (deficit)/equity | (17,616 | ) | 23,259 | |||
Total liabilities and stockholders’ (deficit)/equity | $ | 93,378 | $ | 149,596 |
Use of Non-GAAP Financial Measures
To supplement the Company’s financial information presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”), this press release includes the non-GAAP financial measure of EBITDA. The Company defines EBITDA as net (loss)/income, plus depreciation expense, plus interest expense and plus/(minus) income tax provision/(benefit). The table below provides a reconciliation of this non-GAAP financial measure to its most directly comparable financial measure calculated and presented in accordance with GAAP. This non-GAAP financial measure should not be considered as an alternative to GAAP measures such as net (loss)/income or any other measure of financial performance calculated and presented in accordance with GAAP. Rather, the Company presents this measure as supplemental information because it believes it provides meaningful additional information about the Company’s performance for the following reasons: (1) this measure allows for greater transparency with respect to key metrics used by management, as management uses this measure to assess the Company’s operating performance and for financial and operational decision-making; (2) this measure excludes the impact of items management believes are not directly attributable to the Company’s core operating performance and may obscure trends in the business; and (3) this measure may be used by institutional investors and the analyst community to help analyze the Company’s business. The Company’s non-GAAP financial measures may not be comparable to similarly-titled measures of other companies because they may not calculate such measures in the same manner as the Company does.
For the Three Months Ended(in thousands) | |||||||||
December 31, | September 30, | December 31, | |||||||
2020 | 2020 | 2019 | |||||||
Reconciliation of Net loss to EBITDA: | |||||||||
Net loss | $ | (14,466 | ) | $ | (4,081 | ) | $ | (7,041 | ) |
Depreciation | 1,512 | 1,342 | 2,447 | ||||||
Interest | 3,326 | 3,020 | 3,559 | ||||||
Income tax provision/(benefit) | (174 | ) | 605 | (1,867 | ) | ||||
EBITDA | (9,802 | ) | 886 | (2,902 | ) |
(1) EBITDA is a non-GAAP measure. See below for its method of calculation and reconciliation to its most directly comparable GAAP measure, as well as other information about the use of non-GAAP measures generally, at the end of this press release.
Harold M. LyonsChief Financial Officer(650) 340-1888
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