Wednesday, 9 May 2018

Chorus Aviation announces solid first quarter earnings

Chorus Aviation announced solid first quarter financial results for the period ended March 31, 2018, last week. Here are some of the key numbers.....
Net income of $5.1 million, or $0.04 per basic share, inclusive of an unrealized foreign exchange loss of $18.0 million.
Adjusted net income1 of $26.5 million, or $0.21 per basic share.
Increase in Adjusted EBITDA1 of $23.6 million or 43% primarily driven by increased revenue from aircraft leasing.
Completed equity raise of approximately $112.0 million in gross proceeds.
Completed leasing transaction with Dublin-based CityJet for two CRJ900s.
Implemented Dividend Reinvestment Plan offering a 4% discount.
Completed the fifth Extended Service Program ('ESP') on a Dash 8-300 aircraft.
Jazz Airport Services employees, representing approximately 15% of Jazz's workforce, ratified a new collective agreement with a term to January 2022.
  

"The strong fundamentals of our business delivered solid performance in the first quarter of this year," said Joe Randell, President and Chief Executive Officer, Chorus. "We concentrated on maintaining the momentum achieved in 2017, supporting our vision of delivering regional aviation to the world. Our goal is to acquire new to mid-life, marketable aircraft with brand-name regional airlines that provide a diversified exposure to assets, customers and geographic markets. We were very pleased to welcome Dublin-based CityJet to our growing portfolio of strong regional carriers, bringing our current tally to 10 lessees in less than 16 months.

"In the quarter we successfully completed an equity raise that yielded approximately $107.0 million in net proceeds, bringing the total amount of capital raised to just over $300.0 million since the start of 2017. This capital positions us well to further invest in the growth of our leasing business. We have ongoing active negotiations and continue to have many good opportunities to assess, using our prudent approach.

"Our financial performance in the quarter generated $78.0 million in adjusted EBITDA, a $23.6 million or 43.0% increase over first quarter 2017 due primarily to growth in aircraft leasing.  Adjusted earnings per basic share was $0.21, an increase of $0.08 or 61.5%.

"We were also pleased to complete the fifth extended service program on a Dash 8-300 aircraft that is now contributing to the leasing revenue stream under the CPA with Air Canada. I'd also like to acknowledge our Airport Services group who ratified a new collective agreement that is in effect until January 2022. The Chorus team remains committed to building additional shareholder value and I thank them for their hard work and professionalism,' concluded Mr Randell.

FIRST QUARTER 2018

Financial Performance – first quarter 2018 compared to first quarter 2017

In the first quarter of 2018, Chorus reported adjusted EBITDA of $78.0 million versus $54.4 million in 2017, an increase of $23.6 million or 43.4%. 

The $23.6 million increase in adjusted EBITDA was primarily driven by:

a $13.8 million increase mainly due to the growth in third-party regional aircraft leasing;
increased aircraft leasing revenue under the Capacity Purchase Agreement ('CPA') with Air Canada of $2.3 million;
decreased stock-based compensation of $2.2 million;
decreased operating costs related to a $1.3 million increase in capitalized labour and maintenance costs on owned aircraft for major maintenance overhauls; and
a decrease of $4.9 million in other expenses, offset by a decline of $0.9 million in CPA performance incentive revenue.
Adjusted net income was $26.5 million for the period, an increase from 2017 of $10.4 million, or 64.5%. The change was a result of the $23.6 million increase in adjusted EBITDA previously described, plus a $0.2 million decrease in income taxes, partially offset by:

$5.8 million of interest costs related to increased aircraft debt and convertible units; and
$7.6 million of additional depreciation primarily related to new aircraft.
Net income was $5.1 million for the period, a decrease of $21.9 million or 81.3% from the same period of 2017. The decrease was due primarily to changes in unrealized foreign exchange losses of $32.2 million, offset by the previously noted $10.4 million increase in the adjusted net income.


Various Financial Measures

(unaudited)
Three months ended March 31,
2018
2017
Change
Change
(expressed in thousands of Canadian dollars)
$
$
$
%
Operating revenue
347,550
319,761
27,789
8.7
Operating expenses
302,635
291,666
10,969
3.8
Operating income
44,915
28,095
16,820
59.9
Non-operating (expenses) income
(33,797)
5,176
(38,973)
(753.0)
Income before income taxes
11,118
33,271
(22,153)
(66.6)
Income tax expense
(6,066)
(6,308)
242
(3.8)
Net income
5,052
26,963
(21,911)
(81.3)
Add (Deduct) items to get to Adjusted net income(1)




Unrealized foreign exchange loss (gain)
17,974
(10,415)
28,389
(272.6)

Foreign exchange gain on cash held for deposit
(4,712)
4,712
100.0

Employee separation program
3,459
4,263
(804)
(18.9)

21,433
(10,864)
32,297
(297.3)
Adjusted net income(2)
26,485
16,099
10,386
64.5
Add (Deduct) items to get to Adjusted EBITDA(1)



Net interest expense
13,805
8,014
5,791
72.3

Income tax expense
6,066
6,308
(242)
(3.8)

Depreciation and amortization
29,655
22,049
7,606
34.5

Foreign exchange loss
2,026
1,750
276
15.8

(Gain) loss on disposal of property and equipment
(8)
187
(195)
(104.3)

51,544
38,308
13,236
34.6
Adjusted EBITDA(2)
78,029
54,407
23,622
43.4


(1)
These items are excluded because they affect the comparability of our financial results, period-over-period, and could potentially distort the analysis of trends in business performance.

(2)
This is a non-GAAP measure.  Refer to Section 16 – Non-GAAP Financial Measures.



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