Q2 2024 Highlights:
- Generated strong Free Cash Flow1,2 of $28.2 million for the period ended June 30, 2024 primarily derived from operating cash flows.
- Leverage Ratio1,2 improved to 3.0 at June 30, 2024 primarily through long-term debt repayments of $79.7 million since December 31, 2023.
- Purchased and cancelled 1.4 million common shares under the current normal course issuer bid ('NCIB') during the quarter at a weighted average price of $2.15 per common share.
- Announced agreement to sell Regional Aviation Leasing ('RAL') segment (the 'Transaction') with closing expected by end of this year, subject to shareholder approval, regulatory approvals and other customary conditions to closing.
- Net loss of $180.6 million for the period ended June 30, 2024, inclusive of a previously disclosed $187 million impairment on discontinued operations.
- Net income from continuing operations of $8.5 million for the period ended June 30, 2024.
- RAL transaction to eliminate $1.7 billion in financings4, including all RAL segment aircraft-related debt, substantially all Chorus' corporate debt, and US $300.0 million in Series 1 Preferred Shares ('Preferred Shares').
- Post closing, the Transaction is expected to significantly improve all of Chorus' key adjusted metrics on a pro forma basis1,2,3 as follows:
- Pro Forma Adjusted Net Income available to Common Shareholders per Common Share, basic, from continuing operations1,2,3$0.08 and $0.17 for the three and six months ended June 30, 2024, respectively;
- Pro Forma Leverage Ratio1,2,3 of 1.5x at June 30, 2024; and
- Pro Forma Free Cash Flow1,2,3 of $32.4 million and $67.3 million for the three and six months ended June 30, 2024, respectively.
|
1
|
These are non-GAAP financial measures or non-GAAP ratios that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
|
2
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this press release are from continuing operations unless noted.
|
|
3
|
Refer to "Post Sale Pro Forma Non-GAAP Financial Measures June 30, 2024."
|
|
4
|
The $1.7 billion figure is pro forma at December 31, 2023 as described in Chorus' investor presentation dated July 30, 2024 in respect of the Transaction.
|
HALIFAX, NS, Aug. 13, 2024 /CNW/ - Chorus Aviation Inc. ('Chorus') (TSX: CHR) today announced its second quarter 2024 financial results.
"Chorus' second quarter results reflect consistent cash flows from our services businesses and an ongoing improvement in our leverage ratio, demonstrating strength in our key metrics," said Colin Copp, President and Chief Executive Officer, Chorus. "Chorus generated Free Cash Flow of $28.2 million and improved its Leverage Ratio1 to 3.0 at June 30, 2024."
"We maintained focus on creating shareholder value throughout the quarter, buying back 1.4 million of our common shares under the NCIB. Our aviation services businesses continued to generate consistent and strong cash flows, Voyageur increasing its revenue by $4.8 million over the second quarter of 2023" commented Mr. Copp.
"Importantly, at the end of July, we made an important announcement regarding the sale of our RAL segment which, when completed, will set the stage for Chorus' steady and sustainable future growth," said Mr. Copp. "After closing of the Transaction, those same metrics on a pro forma basis1 will see a dramatic improvement, including Adjusted Earnings Per Share, Leverage Ratio and Free Cash Flow after repayment of long-term borrowings."
Mr. Copp concluded, "While we have seen consistent and steady progress over the last several quarters to help strengthen our balance sheet, the divestiture of the RAL segment will, when completed, unlock the embedded equity value in our business and provide the needed catalyst to enable us to invest in future growth and implement a sustainable return of capital program for our shareholders."
Second Quarter Summary
On July 30, 2024, Chorus announced it had entered into an agreement to sell its RAL segment. As a result of this Transaction, the RAL segment has been re-classified to discontinued operations, and Chorus' Regional Aviation Services segment. together with Corporate, is referred to herein as continuing operations. Once the transaction closes, Chorus will have one reportable operating segment and will no longer be required to disclose its results on a segmented basis.
In the second quarter of 2024, Chorus reported Adjusted EBITDA2 from continuing operations of $51.0 million, a decrease of $2.4 million compared to the second quarter of 2023 primarily due to:
- a decrease in aircraft leasing revenue under the CPA of $4.6 million primarily due to a change in lease rates on certain aircraft;
- an increase in general administrative expenses attributable to increased operations; and
- an increase in stock-based compensation of $1.0 million due to an increase in the Common Share price offset by the change in fair value of the Total Return Swap; partially offset by
- an increase in other revenue of $4.9 million primarily due to Voyageur's increased revenue in parts sales, contract flying and MRO activity.
|
1
|
Refer to the section of this news release titled "Post Sale Pro forma Non-GAAP Financial Measures June 30, 2024".
|
|
2
|
These are non-GAAP financial measures or non-GAAP ratios that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
Adjusted Net Income from continuing operations2 was $11.2 million for the quarter, a decrease of $0.4 million compared to the second quarter of 2023 primarily due to:
- a $2.4 million decrease in Adjusted EBITDA as previously described; and
- an increase in depreciation expense of $3.3 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; partially offset by
- a decrease of $3.5 million in income tax expense;
- a decrease in net interest costs of $1.0 million; and
- a positive change in foreign exchange of $0.9 million.
Net income from continuing operations decreased $7.2 million compared to the second quarter of 2023 primarily due to:
- the previously noted decrease in Adjusted Net Income of $0.4 million;
- a negative change in net unrealized foreign exchange of $7.4 million; and
- a decrease in income tax recovery on adjusted items of $0.2 million; partially offset by
- a decrease in employee separation program costs of $0.8 million.
Year-to-Date Summary
Chorus reported Adjusted EBITDA from continuing operations of $105.0 million for the six months ended June 30, 2024, a decrease of $4.9 million compared to the same prior year period primarily due to:
- a decrease in aircraft leasing revenue under the CPA of $9.0 million primarily due to a change in lease rates on certain aircraft;
- an increase in stock-based compensation of $2.3 million due to an increase in the Common Share price offset by the change in fair value of the Total Return Swap; and
- an increase in general administrative expenses attributable to increased operations; partially offset by
- an increase in other revenue of $3.3 million primarily due to Voyageur's increased revenue in parts sales, contract flying and MRO activity;
- an increase in capitalization of major maintenance overhauls on owned aircraft of $2.1 million; and
- an improvement in the Controllable Cost Guardrail of $2.0 million.
Adjusted Net Income from continuing operations of $23.8 million, a decrease of $3.2 million compared to the same prior year period primarily due to:
- a $4.9 million decrease in Adjusted EBITDA as previously described;
- an increase in depreciation expense of $6.9 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; and
- a negative change in net foreign exchange of $0.5 million; partially offset by
- a decrease of $7.7 million in income tax expense; and
- a decrease in net interest costs of $1.3 million.
Net income from continuing operations of $13.9 million, a decrease of $20.6 million compared to the same prior year period primarily due to:
- the previously noted decrease in Adjusted Net Income of $3.2 million;
- a negative change in net foreign exchange of $18.1 million; and
- a decrease in income tax recovery on adjusted items of $0.3 million; partially offset by
- a decrease in employee separation program costs of $1.1 million.
Consolidated Financial Analysis
This section provides detailed information about Chorus' performance from continuing operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023.
|
(unaudited)
(expressed in thousands of Canadian dollars)
|
Three months ended June 30,
|
Six months ended June 30,
|
|
2024
|
2023
|
Change
|
Change
|
2024
|
2023
|
Change
|
Change
|
|
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
|
(revised)(1)
|
|
|
|
(revised)(1)
|
|
|
|
Operating revenue
|
351,218
|
327,454
|
23,764
|
7.3
|
709,812
|
667,085
|
42,727
|
6.4
|
|
Operating expenses
|
326,769
|
298,052
|
28,717
|
9.6
|
657,401
|
603,957
|
53,444
|
8.8
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
24,449
|
29,402
|
(4,953)
|
(16.8)
|
52,411
|
63,128
|
(10,717)
|
(17.0)
|
|
Net interest expense
|
(8,805)
|
(9,785)
|
980
|
(10.0)
|
(18,096)
|
(19,386)
|
1,290
|
(6.7)
|
|
Foreign exchange (loss) gain
|
(4,510)
|
2,001
|
(6,511)
|
(325.4)
|
(14,060)
|
4,550
|
(18,610)
|
(409.0)
|
|
Gain on property and equipment
|
15
|
10
|
5
|
50.0
|
15
|
10
|
5
|
50.0
|
|
|
|
|
|
|
|
|
|
|
Income before income tax
|
11,149
|
21,628
|
(10,479)
|
(48.5)
|
20,270
|
48,302
|
(28,032)
|
(58.0)
|
|
Income tax expense
|
(2,699)
|
(5,949)
|
3,250
|
(54.6)
|
(6,410)
|
(13,866)
|
7,456
|
(53.8)
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
8,450
|
15,679
|
(7,229)
|
(46.1)
|
13,860
|
34,436
|
(20,576)
|
(59.8)
|
|
Net (loss) income from discontinued operations
|
(189,023)
|
4,639
|
(193,662)
|
(4,174.6)
|
(182,123)
|
17,901
|
(200,024)
|
(1,117.4)
|
|
Net (loss) income
|
(180,573)
|
20,318
|
(200,891)
|
(988.7)
|
(168,263)
|
52,337
|
(220,600)
|
(421.5)
|
|
Net (loss) income attributable to non-controlling interest
|
(1,100)
|
1,267
|
(2,367)
|
(186.8)
|
2,391
|
1,757
|
634
|
36.1
|
|
Net (loss) income attributable to Shareholders
|
(179,473)
|
19,051
|
198,524
|
1,042.1
|
(170,654)
|
50,580
|
(221,234)
|
(437.4)
|
|
Preferred Share dividends declared
|
(8,979)
|
(8,816)
|
(163)
|
1.8
|
(17,827)
|
(17,687)
|
(140)
|
0.8
|
|
(Loss) earnings attributable to Common Shareholders
|
(188,452)
|
10,235
|
(198,687)
|
(1,941.3)
|
(188,481)
|
32,893
|
(221,374)
|
(673.0)
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA(2)
|
50,998
|
53,414
|
(2,416)
|
(4.5)
|
105,018
|
109,875
|
(4,857)
|
(4.4)
|
|
Adjusted EBT(2)
|
14,061
|
17,963
|
(3,902)
|
(21.7)
|
30,347
|
41,340
|
(10,993)
|
(26.6)
|
|
Adjusted Net Income(2)
|
11,222
|
11,659
|
(437)
|
(3.7)
|
23,794
|
27,040
|
(3,246)
|
(12.0)
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(2)
|
These are non-GAAP financial measures that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
Post Sale Pro forma Non-GAAP Financial Measures June 30, 2024
The pro forma information in this section is based on the unaudited interim condensed consolidated financial statements of Chorus for the three and six-months ended June 30, 2024 (the "Q2 2024 Statements") and has been prepared to retroactively illustrate the financial effect of the Transaction on Chorus had the Transaction closed on July 1, 2023 for the purposes of metrics which are based on the trailing 12 months ended June 30, 2024 and December 31, 2023 for all other metrics. The pro forma adjustments to the Q2 2024 Statements are tentative, are not audited and are based on current management estimates and assumptions. Furthermore, since the pro forma information is based on historical financial results, it is not indicative of future financial results and should not be regarded as a forecast or projection of Chorus' future earnings, financial position or cash flows. Therefore, undue reliance should not be placed on the pro forma information. (See cautionary statement regarding forward-looking information below.)
Following the closing of the Transaction, Chorus expects to use the net proceeds of the Transaction to pay down or redeem its corporate financings, including the Preferred Shares, all of the Debentures and early redemption amounts (including the multiple on invested capital payable upon the redemption of the Preferred Shares) and the Operating Credit Facility. Following the closing of the Transaction, Chorus will redeem or make an offer to redeem (as applicable) the Debentures in accordance with the terms of the relevant indentures.
Importantly, following the closing of the Transaction, and the application of the net proceeds therefrom, substantially all of Chorus' remaining debt is expected to consist of amortizing term debt relating to aircraft operated by Jazz Aviation under the CPA with Air Canada, which is fully supported by the CPA out to 2035, and the Operating Credit Facility that can be drawn from time to time. Chorus' pro forma debt assumes that all of the holders of Series B Debentures and Series C Debentures tender in response to Chorus' redemption offer.
As a result of the redemption of the Preferred Shares, the significant debt reduction and reduction in interest and preferred dividend costs, the Transaction is expected to significantly strengthen Chorus' balance sheet and improve key financial metrics.
The following table provides a summary of the expected use of the net proceeds from the Transaction and repayment of corporate financings:
|
(unaudited)
(in thousands of Canadian dollars)
|
|
|
Summary of the Transaction
|
|
|
Net proceeds, net of transaction costs(1)
|
825,210
|
|
Redemption/Repayment:
|
|
|
Debentures(2)
|
243,750
|
|
Operating Credit Facility(3)
|
60,000
|
|
Preferred Shares(1)(4)
|
497,209
|
|
800,959
|
|
|
|
Net cash remaining
|
24,251
|
|
(1)
|
The net proceeds, net of transaction costs and the Preferred Shares have been converted to CAD at 1.3687 which was the exchange rate in effect at closing on June 30, 2024 from USD.
|
|
(2)
|
Principal amount of the Debentures.
|
|
(3)
|
Balance under the Operating Credit Facility at June 30, 2024.
|
|
(4)
|
Chorus will be required to pay a premium of US $63.3 million on the redemption of the US $300.0 million Preferred Shares.
|
The following Pro forma non-GAAP adjusted metrics reflect continuing operations and the effect of the anticipated repayment of corporate financings on the June 30, 2024 results.
Pro Forma Adjusted Earnings available to Common Shareholders per Common Share
|
(unaudited)
(in thousands of Canadian dollars, except per share amounts)
|
Three months
ended
June 30, 2024
$
|
Six months
ended
June 30, 2024
$
|
|
Adjusted Net Income available to Common Shareholders as reported from continuing operations(1)(2)
|
2,243
|
5,967
|
|
Interest expense savings, net of tax(3)
|
4,251
|
8,412
|
|
Preferred Share dividends savings
|
8,979
|
17,827
|
|
Pro Forma Adjusted Net Income available to Common Shareholders from continuing operations
|
15,473
|
32,206
|
|
Pro Forma Adjusted Earnings available to Common Shareholders per Common Share, basic from continuing operations
|
0.08
|
0.17
|
|
(1)
|
These are non-GAAP financial measures that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
|
(2)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(3)
|
The interest expense on the Debentures and the Operating Credit Facility for the three and six months ended June 30, 2024 was $5.8 million and $11.5 million, respectively. The interest expense was tax effected using a 27.0% tax rate.
|
Pro Forma Leverage Ratio
|
(unaudited)
(in thousands of Canadian dollars)
|
June 30, 2024
$
|
|
Net Debt as Reported(1)
|
676,278
|
|
Less:
|
|
|
Debentures(2)
|
(238,732)
|
|
Operating Credit Facility(2)
|
(60,000)
|
|
Pro Forma Net Debt
|
377,546
|
|
Less:
|
|
|
Cash at June 30, 2024(1)
|
(29,307)
|
|
Cash remaining from Transaction after corporate financings repayments(3)
|
(24,251)
|
|
Pro Forma Adjusted Net Debt
|
323,988
|
|
Adjusted EBITDA(1)(4)
|
216,677
|
|
Leverage Ratio
|
1.5
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(2)
|
Principal amount of the Debentures and the balance outstanding under the Operating Credit Facility at June 30, 2024.
|
|
(3)
|
Chorus anticipates the net cash remaining after the sale of the RAL segment less the pay down or redemption of its corporate financings including the Preferred Shares and all of the Debentures and early redemption amounts (including the multiple on invested capital payable upon the redemption of the Preferred Shares) to be $24.3 million using the June 30, 2024 USD to CAD foreign exchange rate of 1.3687.
|
|
(4)
|
These are non-GAAP financial measures that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
Pro Forma Free Cash Flow and Pro Forma Free Cash Flow after Repayment on Long-term Borrowings(3)
|
(unaudited)
(in thousands of Canadian dollars)
|
Three months
ended
June 30, 2024
$
|
Six months
ended
June 30, 2024
$
|
|
Free Cash Flow as reported(1)(2)
|
28,169
|
58,858
|
|
Interest savings, net of tax(3)
|
4,251
|
8,412
|
|
Pro Forma Free Cash Flow
|
32,420
|
67,270
|
|
|
|
|
Repayment on long-term borrowings(2)(4)
|
(22,231)
|
(45,788)
|
|
Pro Forma Free Cash Flow after repayment on long-term borrowings(4)
|
10,189
|
21,482
|
|
(1)
|
These are non-GAAP financial measures that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
|
(2)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(3)
|
The interest expense on the Debentures and the Operating Credit Facility for the three and six months ended June 30, 2024 was $5.8 million and $11.5 million, respectively. The interest expense was tax effected using a 27.0% tax rate.
|
|
(4)
|
Excludes repayment of $17.1 million and $33.9 million on the Unsecured Credit Facility for the three and six months ended June 30, 2024, respectively.
|
Pro Forma Adjusted Return on Equity
|
(unaudited)
(in thousands of Canadian dollars)
|
Trailing 12-months ended
June 30, 2024
$
|
|
Adjusted Net Income Available to Common Shareholders as reported(1)
|
13,181
|
|
Add: Interest savings, net of tax (2)
|
17,492
|
|
Add: Preferred Share dividends declared
|
35,566
|
|
Pro Forma Adjusted Net Income Available to Common Shareholders
|
66,239
|
|
(unaudited)
(in thousands of Canadian dollars)
|
|
|
Average equity attributable to Common Shareholders excluding cash
|
|
|
|
|
Average Shareholders' equity as reported
|
1,204,186
|
|
|
|
Add (Deduct) items to get to average equity attributable to Common Shareholders excluding cash
|
|
|
Average Non-controlling interest
|
(90,087)
|
|
Average Pro Forma Preferred Shares
|
(375,217)
|
|
Average Premium and foreign exchange on Preferred Shares(3)
|
(60,996)
|
|
Average Cash
|
(26,680)
|
|
Average Cash remaining from Transaction after corporate financings repayments(4)
|
(12,126)
|
|
639,080
|
|
Pro Forma Adjusted Return on Equity(5)
|
10.2 %
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(2)
|
The interest expense on the Debentures and the Operating Credit Facility for the trailing 12-months ended June 30, 2024 was $24.0 million. The interest expense was tax effected using a 27.0% tax rate.
|
|
(3)
|
Chorus will be required to pay a premium of US $63.3 million on redemption of the US $300.0 million Preferred Shares. The Preferred Shares premium has been converted to CAD at 1.3687 which was the exchange rate in effect at closing on June 30, 2024 from USD.
|
|
(4)
|
Chorus anticipates the net cash remaining after the sale of the RAL segment less the pay down or redemption of its corporate financings including the Preferred Shares and all of the Debentures and early redemption amounts (including the multiple on invested capital payable upon the redemption of the Preferred Shares) to be $24.3 million using the June 30, 2024 USD to CAD foreign exchange rate of 1.3687.
|
|
(5)
|
These are non-GAAP financial measures that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information.
|
Outlook
(See cautionary statement regarding forward-looking information below.)
The discussion that follows includes forward-looking information. This outlook is provided for the purpose of providing information about current expectations for 2024. Forecast information has also been provided for 2025 and 2026 for Jazz Aviation LP ('Jazz'). This information may not be appropriate for other purposes. Due to the planned sale of its' RAL segment, Chorus has removed consolidated guidance for 2024. Refer to Section 4 of the MD&A for Post Sale Pro forma non-GAAP Financial Measures June 30, 2024. Chorus' guidance for Jazz is unchanged.
The CPA provides a Fixed Margin to Jazz regardless of flying levels; therefore, any variations in flying are not expected to have any impact on Jazz's earnings. In addition, Jazz receives compensation for aircraft leased under the CPA that generates predictable Free Cash Flows. Jazz aircraft have amortizing debt that will be fully paid-off at the end of the original lease term under the CPA. At the end of each lease, Jazz will either extend the lease, sell or part-out each aircraft. Subsequent aircraft leases will continue to produce predictable Free Cash Flow at lower rates as the aircraft will be unencumbered.
|
Annual Forecast(1)
|
|
(unaudited)
(in thousands of Canadian dollars)
|
2024
$
|
2025
$
|
2026(2)
$
|
|
Fixed Margin
|
60,900
|
59,600
|
43,900
|
|
Aircraft leasing under the CPA
|
|
|
|
|
Revenue
|
130,000
|
113,000
|
93,000
|
|
Payment on long-term debt and interest
|
95,000
|
74,000
|
66,000
|
|
Total Fixed Margin and Aircraft leasing under the CPA less payment on long-term debt and interest
|
95,900
|
98,600
|
70,900
|
|
Wholly-owned aircraft leased under the CPA (end of period)
|
48
|
39
|
39
|
|
Wholly-owned aircraft leased under the CPA available for re-lease (end of period)
|
nil
|
9
|
9
|
|
(1)
|
The forecast uses a foreign exchange rate of 1.3400 for 2024 and 1.2700 for 2025 and 2026 to translate USD to CAD.
|
|
(2)
|
Includes estimates for future market lease rates for 12 Q400's for 2026.
|
Capital Expenditures
Capital expenditures in 2024 are expected to be as follows:
|
|
|
|
|
|
(unaudited)
(in thousands of Canadian dollars)
|
Annual Forecast 2024
$
|
|
|
|
Capital expenditures, excluding aircraft acquisitions
|
12,000
|
to
|
17,000
|
|
|
Capitalized major maintenance overhauls(1)
|
11,000
|
to
|
16,000
|
|
|
Aircraft acquisitions and improvements
|
17,500
|
to
|
22,500
|
|
|
40,500
|
to
|
55,500
|
|
|
(1)
|
The 2024 plan includes between $9.0 million to $13.0 million of costs that are expected to be included in Controllable Costs.
|
Use of Defined Terms
Capitalized terms used but not defined in this news release have the meanings given to them in management's discussion and analysis of results of operations and financial condition ("MD&A") dated the date hereof, which is available on Chorus' website (www.chorusaviation.com) and under Chorus' profile on SEDAR+ (www.sedarplus.ca).
Investor Conference Call / Audio Webcast
Chorus will hold an analyst call at 9:00AM ET on Wednesday, August 14, 2024 to discuss the second quarter 2024 financial results. The call may be accessed by dialing 1-888-664-6392. The call will be simultaneously audio webcast via: https://app.webinar.net/xJlrg5z4VAP
This is a listen-in only audio webcast.
The conference call webcast will be archived on Chorus' website at www.chorusaviation.com under Investors > Reports. A playback of the call can also be accessed until midnight ET, August 21, 2024, by dialing toll-free 1-888-390-0541 and using passcode 012206 # (pound key).
NON-GAAP FINANCIAL MEASURES
This news release references several non-GAAP financial measures and ratios to supplement the analysis of Chorus' results. Chorus uses these non-GAAP measures to evaluate and assess performance. These non-GAAP measures are generally numerical measures of Chorus' financial performance, financial position, or cash flows, that include or exclude amounts from the most comparable GAAP measure. As such, these measures are not recognized for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities, and should not be considered a substitute for or superior to GAAP results. For further information on non-GAAP measures used in this news release, please refer to Section 18 (Non-GAAP Financial Measures) of the MD&A dated the date hereof, which is available on Chorus' website (www.chorusaviation.com) and under Chorus' profile on SEDAR+ (www.sedarplus.ca). Reconciliations of non-GAAP measures to their nearest GAAP measures are provided below.
Adjusted Net Income, Adjusted EBT, Adjusted EBITDA
|
(unaudited)
(expressed in thousands of Canadian dollars)
|
Three months ended June 30,
|
Six months ended June 30,
|
|
2024
$
|
2023
$
|
Change
$
|
2024
$
|
2023
$
|
Change
$
|
|
|
(revised)(1)
|
|
|
(revised)(1)
|
|
|
Net (loss) income
|
(180,573)
|
20,318
|
(200,891)
|
(168,263)
|
52,337
|
(220,600)
|
|
Less: Net (loss) income from discontinued operations, net of taxes
|
(189,023)
|
4,639
|
(193,662)
|
(182,123)
|
17,901
|
(200,024)
|
|
Net income from continuing operations
|
8,450
|
15,679
|
(7,229)
|
13,860
|
34,436
|
(20,576)
|
|
Add (Deduct) items to get to Adjusted Net Income
|
|
|
|
|
|
|
|
Employee separation program(2)
|
523
|
1,317
|
(794)
|
530
|
1,607
|
(1,077)
|
|
Unrealized foreign exchange loss (gain)
|
2,389
|
(4,982)
|
7,371
|
9,547
|
(8,569)
|
18,116
|
|
Tax recovery on adjusted items
|
(140)
|
(355)
|
215
|
(143)
|
(434)
|
291
|
|
2,772
|
(4,020)
|
6,792
|
9,934
|
(7,396)
|
17,330
|
|
Adjusted Net Income
|
11,222
|
11,659
|
(437)
|
23,794
|
27,040
|
(3,246)
|
|
Add (Deduct) items to get to Adjusted EBT
|
|
|
|
|
|
|
|
Income tax expense
|
2,699
|
5,949
|
(3,250)
|
6,410
|
13,866
|
(7,456)
|
|
Tax recovery on adjusted items
|
140
|
355
|
(215)
|
143
|
434
|
(291)
|
|
Adjusted EBT
|
14,061
|
17,963
|
(3,902)
|
30,347
|
41,340
|
(10,993)
|
|
Add (Deduct) items to get to Adjusted EBITDA
|
|
|
|
|
|
|
|
Net interest expense
|
8,805
|
9,785
|
(980)
|
18,096
|
19,386
|
(1,290)
|
|
Depreciation and amortization excluding impairment
|
26,026
|
22,695
|
3,331
|
52,077
|
45,140
|
6,937
|
|
Foreign exchange loss
|
2,121
|
2,981
|
(860)
|
4,513
|
4,019
|
494
|
|
Gain on disposal of property and equipment
|
(15)
|
(10)
|
(5)
|
(15)
|
(10)
|
(5)
|
|
36,937
|
35,451
|
1,486
|
74,671
|
68,535
|
6,136
|
|
Adjusted EBITDA
|
50,998
|
53,414
|
(2,416)
|
105,018
|
109,875
|
(4,857)
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(2)
|
Included in operating expenses.
|
Adjusted Earnings available to Common Shareholders per Common Share
Adjusted Earnings available to Common Shareholders per Common Share is used by Chorus to assess performance and is calculated as Adjusted net income less non-controlling interest and Preferred Share dividends declared.
|
(unaudited)
(expressed in thousands of Canadian dollars, except per Share amounts)
|
Three months ended June 30,
|
Six months ended June 30,
|
|
2024
$
|
2023
$
|
Change
$
|
2024
$
|
2023
$
|
Change
$
|
|
|
(revised)(1)
|
|
|
(revised)(1)
|
|
|
Adjusted Net Income from continuing operations
|
11,222
|
11,659
|
(437)
|
23,794
|
27,040
|
(3,246)
|
|
Add (Deduct) items to get to Adjusted Earnings available to Common Shareholders
|
|
|
|
|
|
|
|
Preferred Share dividends declared
|
(8,979)
|
(8,816)
|
(163)
|
(17,827)
|
(17,687)
|
(140)
|
|
Adjusted Earnings available to Common Shareholders - continuing operations
|
2,243
|
2,843
|
(600)
|
5,967
|
9,353
|
(3,386)
|
|
Adjusted Earnings available to Common Shareholders per Common Share, basic - continuing operations
|
0.01
|
0.01
|
—
|
0.03
|
0.05
|
(0.02)
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
Leverage Ratio
Leverage Ratio is used by Chorus as a means to measure financial leverage. Leverage Ratio is calculated by dividing Net debt by trailing 12-month Adjusted EBITDA. Management believes Leverage Ratio to be a useful ratio when monitoring and managing debt levels. In addition, as leverage is a measure frequently analyzed for public companies, Chorus has calculated the amount to assist readers in this review. Leverage Ratio should not be construed as a measure of cash flows. Net debt is a key component of capital management for Chorus and provides management with a measure of its net indebtedness.
|
(unaudited)
(expressed in thousands of Canadian dollars)
|
June 30, 2024
|
December 31, 2023
|
Change
|
|
$
|
$
|
$
|
|
|
(revised)(1)
|
|
|
Long-term debt and lease liabilities (including current portion)(2)
|
676,278
|
1,755,580
|
(1,079,302)
|
|
Less:
|
|
|
|
|
Long-term debt and lease liabilities (including current portion) related to discontinued operations(2)
|
—
|
(986,921)
|
986,921
|
|
Cash(1)
|
(29,307)
|
(85,985)
|
56,678
|
|
Cash related to discontinued operations(1)(2)
|
—
|
55,432
|
(55,432)
|
|
Adjusted Net Debt
|
646,971
|
738,106
|
(91,135)
|
|
Adjusted EBITDA
|
216,677
|
221,535
|
(4,858)
|
|
Leverage Ratio
|
3.0
|
3.3
|
(0.3)
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
|
(2)
|
Long-term debt and lease liabilities related to discontinued operations of $986.9 million and cash of $55.4 million have been removed from December 31, 2023 for comparative purposes.
|
Free Cash Flow
Free Cash Flow is a non-GAAP measure used as an indicator of financial strength and performance. Chorus believes that this measurement is useful as an indicator of its ability to service its debt, meet other ongoing obligations and reinvest in the Corporation and return capital to Common Shareholders. Readers are cautioned that Free Cash Flow does not represent residual cash flow available for discretionary expenditures.
Free Cash Flow is defined as cash provided by operating activities less net changes in non-cash balances related to operations, capital expenditures excluding aircraft acquisitions and improvements plus net proceeds on asset sales (proceeds on disposal of property and equipment less the related debt repayments for the assets sold).
The following table provides a reconciliation of Free Cash Flow to cash flows from operating activities, which is the most comparable financial measure calculated and presented in accordance with GAAP:
|
(unaudited)
(expressed in thousands of Canadian dollars)
|
Three months ended June 30,
|
Six months ended June 30,
|
|
2024
|
2023
|
Change
|
2024
|
2023
|
Change
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
|
(revised)(1)
|
|
|
(revised)(1)
|
|
|
Cash provided by operating activities
|
55,834
|
22,770
|
33,064
|
124,050
|
62,723
|
61,327
|
|
Add (Deduct)
|
|
|
|
|
|
|
|
Net changes in non-cash balances related to operations
|
(20,890)
|
15,992
|
(36,882)
|
(50,612)
|
20,837
|
(71,449)
|
|
Capital expenditures, excluding aircraft acquisitions
|
(2,497)
|
(3,756)
|
1,259
|
(5,534)
|
(6,917)
|
1,383
|
|
Capitalized major maintenance overhauls
|
(4,278)
|
(3,711)
|
(567)
|
(9,046)
|
(7,310)
|
(1,736)
|
|
Free Cash Flow
|
28,169
|
31,295
|
(3,126)
|
58,858
|
69,333
|
(10,475)
|
|
(1)
|
The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted.
|
Forward-Looking Information
This news release includes forward-looking information and statements within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "potential", "predict", "project", "will", "would", and similar terms and phrases, including negative versions thereof. All information and statements other than statements of historical fact are forward-looking and by their nature, are based on various underlying assumptions and expectations that and are subject to known and unknown risks, uncertainties and other factors that may cause actual future results, performance or achievements to differ materially from those indicated in the forward-looking information. As a result, there can be no assurance that the forward-looking information included in this news release will prove to be accurate or correct.
Examples of forward-looking information in this news release include the discussion in the Outlook section, as well as statements and expectations regarding the Transaction, including the anticipated benefits that would result from the Transaction, and statements and expectations regarding the future performance of Chorus. Actual results may differ materially from those anticipated in forward-looking information for a number of reasons, including: whether Chorus' shareholders approve the Transaction; whether all conditions precedent, including all necessary regulatory approvals, to the Transaction are satisfied; Chorus' ability to realize the anticipated benefits of the Transaction, including the implementation of any capital return program for shareholders; the anticipated net proceeds from the Transaction; the anticipated use of proceeds from the Transaction; the potential impact of the announcement or completion of the Transaction on relationships, including with employees, suppliers, customers, investors and other providers of capital; changes in the aviation industry and general economic conditions; the emergence of disputes under the CPA; a deterioration in Air Canada's financial condition; any default by Chorus under debt covenants; asset impairments; changes in law; and the risk factors in the MD&A dated the date hereof, in Chorus' most recent Annual Information Form and in Chorus' public disclosure record available under its profile on SEDAR+ at www.sedarplus.ca.
The forward-looking information contained in this news release represents Chorus' expectations as of the date of this news release (or as of the date they are otherwise stated to be made) and is subject to change after such date. Chorus disclaims any intention or obligation to update or revise any forward-looking information as a result of new information, subsequent events or otherwise, except as required by applicable securities laws. Readers are cautioned that the foregoing factors and risks are not exhaustive.
About Chorus Aviation Inc.
Chorus is a global aviation solutions provider and asset manager, focused on regional aviation. Our principal subsidiaries are: Falko Regional Aircraft, the leading pure play regional aircraft asset manager and lessor, managing investments on behalf of third-party fund investors; Jazz Aviation, the largest regional operator in Canada and provider of regional air services under the Air Canada Express brand; Voyageur Aviation, a leading provider of specialty charter, aircraft modifications, parts provisioning and in-service support services; and Cygnet Aviation Academy, an industry leading accredited training academy preparing pilots for direct entry into airlines. Together, Chorus' subsidiaries provide services that encompass every stage of a regional aircraft's lifecycle, including: aircraft acquisition and leasing; aircraft refurbishment, engineering, modification, repurposing and transition; contract flying; aircraft and component maintenance, disassembly, and parts provisioning; and pilot training.
Chorus Class A Variable Voting Shares and Class B Voting Shares trade on the Toronto Stock Exchange under the trading symbol 'CHR'. Chorus 5.75% Senior Unsecured Debentures due December 31, 2024, 6.00% Convertible Senior Unsecured Debentures due June 30, 2026, and 5.75% Senior Unsecured Debentures due June 30, 2027 trade on the Toronto Stock Exchange under the trading symbols 'CHR.DB.A', 'CHR.DB.B', and 'CHR.DB.C' respectively. www.chorusaviation.com.
SOURCE Chorus Aviation Inc.
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