Fourth quarter adjusted net income of $20.8 million, $0.17 per share
Record performance incentives earned in 2013
HALIFAX,
Feb. 20, 2014 /CNW/ - Chorus Aviation
Inc. ('Chorus') (TSX: CHR.B CHR.A CHR.DB) today announced its
fourth quarter and year end 2013 earnings.
Q4 2013 HIGHLIGHTS
- EBITDA of $48.9 million; EBITDA
margin of 11.8%.
- Operating income of $32.5
million.
- Adjusted net income1 of $20.8
million, or $0.17 per basic
share.
For the fourth quarter 2013, Chorus reported
earnings before interest, taxes, depreciation and amortization
('EBITDA1') of $48.9
million compared to $39.9
million in the same quarter 2012, an increase of
$9.0 million. Operating income was
$32.5 million, $7.3 million higher than the same period 2012.
Adjusted net income of $20.8 million
or $0.17 per basic share, was up by
$3.1 million or $0.03 per basic share over fourth quarter
2012.
"Our consistent profitability since becoming
publicly traded in 2006 has contributed significantly to the value
we provide to our shareholders, and we thank them for their support
throughout a challenging 2013," said Joseph
Randell, President and Chief Executive Officer, Chorus. "We
are pleased with our execution during the quarter which resulted in
increases in EBITDA, operating income, and adjusted net income. We
remain committed to perfecting our operational performance while
continuing to focus on reducing costs and improving efficiencies
which manifest themselves in these measures of our financial
performance."
Year end 2013 HIGHLIGHTS
- EBITDA of $186.9 million; EBITDA
margin of 11.2%.
- Operating income of $124.3
million.
- Adjusted net income of $84.7
million, or $0.69 per basic
share.
For the year ended December 31, 2013, EBITDA, operating income, and
adjusted net income were impacted by $9.9
million in voluntary employee severance costs which were
offset by savings of $2.7 million in
reduced salaries, benefits, training and other costs.
Operating income of $124.3 million
was down $3.1 million year-over-year
due to severance cost and the one-time Thomas Cook termination settlement of
$9.0 million recorded as revenue in
2012. In 2013, Chorus reported adjusted net income of
$84.7 million or $0.69 per basic share compared to an adjusted net
income of $94.6 million or
$0.76 per basic share in 2012, a
decrease of $9.9 million or
$0.07 per basic share, including the
above noted items.
"We are very pleased with our operational
performance in the quarter and full year 2013," continued Mr.
Randell. "For the last thirteen months we have maintained the
leading position amongst Canada's
largest airlines for on-time flight arrivals. Our operational
expertise generated a record level of performance incentive revenue
with approximately 88 percent of the available incentives earned -
an improvement of $1.3 million over
the annual performance incentive earned in 2012.
"Further, the success and the certainty of the
recent arbitration result have enabled us to complete the early
redemption of $60 million of our
convertible debentures.
"Looking ahead, we are confident that we will
continue to build on our successes in 2013 to strengthen our
competitive position as we progress through our strategic plans.
The team delivered terrific performance, and I'm certain their
efforts will contribute to the increased value we strive to create
for our shareholders," concluded Mr. Randell.
For reporting purposes, at each quarter and year
end, Chorus converts its US denominated debt into equivalent
Canadian dollars based on the prevailing exchange rate. The
exchange rate adjustments will not be realized and are not
reflective of Chorus' underlying US dollar currency exposure as it
manages its currency risk by billing related lease payments to
service such debt in US dollars under the Capacity Purchase
Agreement ('CPA'). In the fourth quarter of 2013, Chorus had an
unrealized foreign exchange loss of $12.1
million versus an unrealized foreign currency loss of
$3.3 million for the same period in
2012. For the full year 2013, Chorus recorded an unrealized foreign
currency loss of $22.8 million versus
a $5.6 million gain in 2012.
Financial Performance -Fourth Quarter 2013
Compared to Fourth Quarter 2012
Operating revenue increased from $411.7 million to $413.2
million, representing an increase of $1.5 million or 0.4%. Passenger revenue,
excluding pass-through costs, increased by $5.6 million or 2.2% primarily as a result of
rate increases made pursuant to the CPA with Air Canada, a higher
US dollar exchange rate and a $0.2
million increase in incentives earned under the CPA with Air
Canada; offset by decreased CPA Billable Block Hours. Pass-through
costs reimbursed by Air Canada decreased from $157.4 million to $153.0
million, a decrease of $4.4
million or 2.8%, which included a decrease of $5.1 million related to fuel costs. Other revenue
increased by $0.3 million.
Operating expenses decreased from $386.6 million to $380.8
million, a decrease of $5.8
million or 1.5%. Controllable Costs decreased by
$1.5 million, or 0.6%, and
pass-through costs decreased by $4.4
million or 2.8%. Voluntary employee severance costs of
approximately $1.2 million were
incurred for the three months ended December
31, 2013.
Salaries, wages and benefits increased by
$0.1 million, primarily as a result
of voluntary employee severance costs, wage and scale increases
under new collective agreements, lower capitalized salaries and
wages related to major maintenance overhauls, increased pension
expense resulting from a revised actuarial valuation and increased
incentive compensation expense; offset by a reduction in the number
of full time equivalent employees and decreased Block Hours.
Depreciation and amortization expense increased
by $1.7 million, primarily related to
the purchase of Q400 aircraft, increased capital expenditures on
aircraft rotable parts and other equipment, and increased major
maintenance overhauls; offset by certain assets having reached full
amortization and a change in the estimated residual value of the
Dash 8-100 and 300 aircraft.
Aircraft maintenance expense decreased by
$3.6 million as a result of decreased
Block Hours of $2.4 million, and
decreased other maintenance costs of $2.9
million; offset by an increase in the US dollar exchange
rate on certain material purchases of $1.7
million.
Aircraft rent decreased by $0.1 million primarily as a result of the return
of CRJ100 aircraft; offset by a higher US dollar exchange rate.
Other expenses decreased by $0.4 million primarily due to decreased general
overhead expenses.
Non-operating expenses increased by $7.1 million. This change was mainly
attributable to an increase of $7.5
million in foreign exchange (of which $8.8 million was related to an increase in
unrealized foreign exchange loss on long-term debt and finance
leases) and increased interest expense related to Q400 aircraft
financing of $0.9 million; offset by
an increase of $1.2 million in other
income related to non-repayable government assistance.
EBITDA1 was $48.9 million compared to $39.9 million in 2012, an increase of
$9.0 million or 22.7%, producing an
EBITDA margin of 11.8%. Standardized free cash flow was
$14.7 million.
Operating income of $32.5
million was up $7.3 million or
29.2% over fourth quarter 2012 from $25.1
million.
Net income for the fourth quarter of 2013 was
$8.8 million or $0.07 per basic share, a decrease of $5.7 million or 39.4% from $14.5 million. On an adjusted basis, net income
was $20.8 million or $0.17 per basic share, an increase of
$3.1 million or 17.5% from
$17.7 million. A reconciliation of
these measures to their nearest GAAP measure is provided in Chorus'
Management's Discussion and Analysis dated February 19, 2014.
Investor Conference Call / Audio
Webcast
Chorus will hold an analyst call at 9:30 a.m. ET on Thursday,
February 20, 2014 to discuss the fourth quarter and year end
2013 results. The call may be accessed by dialing
1-888-231-8191. The call will be simultaneously audio webcast
via: www.newswire.ca/en/webcast/detail/1289747/1422887 or in the
Investor Relations section at www.chorusaviation.ca. This is a
listen-in only audio webcast. Media Player or Real Player is
required to listen to the broadcast; please download well in
advance of the call.
The conference call webcast will be archived on
Chorus' Investor Relations website at www.chorusaviation.ca.
A playback of the call can also be accessed until midnight ET, February 27,
2014, by dialing (416) 849-0833 or toll-free 1-
855-859-2056, and passcode 35794766# (pound key).
1 Non-GAAP Financial
Measures
EBITDA
EBITDA (earnings before interest, taxes, depreciation, amortization
and obsolescence) is a non-GAAP financial measure commonly used
throughout all industries to view operating results before interest
expense, interest income, depreciation and amortization, gains and
losses on property and equipment and all other non-operating income
and expenses. Management believes EBITDA assists investors in
comparing Chorus' performance on a consistent basis without regard
to depreciation and amortization, which are non-cash in nature and
can vary significantly depending on accounting methods and
non-operating factors such as historical cost. EBITDA should
not be used as an exclusive measure of cash flow because it does
not account for the impact on working capital growth, capital
expenditures, debt repayments and other sources and uses of cash,
which are disclosed in the statement of cash flows which form part
of the financial statements.
ADJUSTED NET INCOME
Adjusted net income and adjusted earnings per share are calculated
by adjusting net income by the amount of any unrealized foreign
exchange gains and losses on long-term debt and finance
leases. During the fourth quarter of 2013, Chorus recorded a
$12.1 million loss in unrealized
foreign exchange on long-term debt and finance leases. These
adjustments more clearly reflect earnings from an operating
perspective.
Forward Looking Statements
This news release should be read in conjunction
with Chorus' audited consolidated financial statements for the
years ended December 31, 2013 and
December 31, 2012, and MD&A dated
February 19, 2014 filed with Canadian
Securities regulatory authorities (available at www.sedar.com).
Certain statements in this news release may
contain statements which are forward-looking. These forward-looking
statements are identified by the use of terms and phrases such as
"anticipate", "believe", "could", "estimate", "expect", "intend",
"may", "plan", "predict", "project", "will", "would", and similar
terms and phrases, including references to assumptions. Such
statements may involve but are not limited to comments with respect
to strategies, expectations, planned operations or future
actions.
Forward-looking statements relate to analyses
and other information that are based on forecasts of future
results, estimates of amounts not yet determinable and other
uncertain events. Forward-looking statements, by their nature, are
based on assumptions, including those described below, and are
subject to important risks and uncertainties. Any forecasts or
forward-looking predictions or statements cannot be relied upon due
to, amongst other things, changing external events and general
uncertainties of the business. Such statements involve known and
unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements to differ materially
from those expressed in the forward-looking statements. Results
indicated in forward-looking statements may differ materially from
actual results for a number of reasons, including without
limitation, risks relating to Chorus' relationship with Air Canada,
risks relating to the airline industry, energy prices, general
industry, market, credit, and economic conditions, competition,
insurance issues and costs, supply issues, war, terrorist attacks,
epidemic diseases, environmental factors, acts of God, changes in
demand due to the seasonal nature of the business, the ability to
reduce operating costs and employee counts, secure financing,
employee relations, labour negotiations or disputes, restructuring,
pension issues, currency exchange and interest rates, leverage and
restructure covenants in future indebtedness, dilution of Chorus
shareholders, uncertainty of dividend payments, managing growth,
changes in laws, adverse regulatory developments or proceedings,
pending and future litigation and actions by third parties. The
forward-looking statements contained in this discussion represent
Chorus' expectations as of February 20,
2014, and are subject to change after such date. However,
Chorus disclaims any intention or obligation to update or revise
any forward-looking statements whether as a result of new
information, future events or otherwise, except as required under
applicable securities regulations.
About Chorus
Headquartered in Halifax, Nova
Scotia, Chorus was incorporated on September 27, 2010 and is a dividend-paying
holding company which owns Jazz Aviation LP and a number of other
companies involved in aviation related businesses.
Chorus is traded on the Toronto Stock Exchange
under the trading symbols of CHR.A, CHR.B and CHR.DB.
For more information, visit
www.chorusaviation.ca
About Jazz
Jazz Aviation LP has a strong history in Canadian aviation with its
roots going back to the 1930s. Jazz is wholly owned by Chorus
Aviation Inc. and continues to generate some of the strongest
operational and financial results in the North American aviation
industry. As the largest regional airline in Canada, Jazz has a proven track record of
industry leadership and exceptional customer service, and has
leveraged that strength to deliver value to all its stakeholders.
The Company operates more flights and flies to more Canadian
destinations than any other airline, and currently has a workforce
of approximately 4,760 professionals highly experienced in the
challenging and complex nature of regional operations. Jazz
employees are an integral part of communities across our nation
with 20% of our workforce based in Atlantic Canada, 46% based in Central Canada, 33% based in Western Canada, and 1% in Northern Canada.
Under a capacity purchase agreement with Air
Canada, using the Air Canada Express brand, Jazz provides service
to and from lower-density markets as well as higher-density markets
at off-peak times throughout Canada and to and from certain destinations in
the United States. In the fourth
quarter of 2013 Jazz operated scheduled passenger service on behalf
of Air Canada with approximately 740 departures per weekday to 54
destinations in Canada and to 25
destinations in the United States.
With a fleet of 122 Canadian-made Bombardier aircraft, Jazz flies
more daily flights to more Canadian destinations than any other
airline.
Under the Jazz brand, the airline offers
charters throughout North America
with a dedicated fleet of five Bombardier aircraft for corporate
clients, governments, special interest groups and individuals
seeking more convenience. Jazz also has the ability to offer
airline operators services such as ground handling, dispatching,
flight load planning, training and consulting.
For more information, visit www.flyjazz.ca.
SOURCE Chorus Aviation Inc.