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.
