Highlights:
- Generated strong Free Cash Flow1,2 of $32.4 million for the period ended September 30, 2024 primarily derived from
operating cash flows.
- Leverage Ratio1,2 improved to 3.0 at September 30, 2024 due primarily to long-term
debt repayments of $93.6 million
since December 31, 2023.
- Net income of $18.4 million.
- Net income from continuing operations2 of
$19.8 million.
- Adjusted Earnings available to Common
Shareholders1,2 of $11.9
million.
- Adjusted Earnings available to Common Shareholders of
$0.06 per Common Share,
basic.1,2
- Adjusted EBITDA1,2 of $53.9
million.
- Previously-announced sale of Chorus' Regional Aircraft Leasing
(RAL) segment is expected to significantly improve all of Chorus'
key adjusted metrics on a pro forma basis1,2,3 as
follows:
- Pro Forma Adjusted Earnings available to Common Shareholders
per Common Share, basic, from continuing operations $0.08 and 0.25 for the three and nine months
ended September 30, 2024,
respectively;
- Pro Forma Leverage Ratio of 1.5x at September 30, 2024; and
- Pro Forma Free Cash Flow of
$36.7 million and $104.0 million for the three and nine months
ended September 30, 2024,
respectively.
- Post-quarter end, announced fulfilment of all regulatory
conditions to the completion of the RAL sale.
- Today, announced renewal of Chorus' Normal Course Issuer Bid
(NCIB) for Common Shares.
|
_________________________
|
|
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
Pro Forma Financial Measures.
|
HALIFAX,
NS, Nov. 6, 2024 /CNW/ - Chorus Aviation Inc.
('Chorus') (TSX: CHR) today announced its third quarter 2024
financial results.
"Throughout the quarter, Chorus' businesses generated healthy
cashflows, and achieved ongoing improvements in our key financial
metrics and delivered in line with expectations," said Colin Copp, President and Chief Executive
Officer, Chorus. "Our aviation services businesses delivered strong
earnings, including those from Jazz's Capacity Purchase Agreement
(CPA) with Air Canada. Voyageur reported an increase in its revenue
over the prior quarter, demonstrating continued growth in its parts
sales and specialty business lines."
"At the end of the third quarter, Chorus improved its Leverage
Ratio to 3.0 from 3.3 at December 31,
2023, while generating Free Cash Flow of $32.4 million," said Mr. Copp. "Further, after
announcing the agreement to sell Chorus' RAL business, we took
several steps during the third quarter towards the completion of
the transaction, including the satisfaction of all regulatory
conditions. The transaction is expected to close by the end of this
year."
"Post-closing, the transaction positions us well to accelerate
value for our shareholders and provide the financial flexibility to
deliver on our core strengths in aviation services," commented Mr.
Copp. "On a pro forma basis, we expect to see significant
improvements in our financial measures, including Leverage and Free
Cash Flow after debt repayments."
"These improvements will enable us to implement a return of
capital program for our shareholders and fund steady growth,
post-completion of the sale," said Mr. Copp. "Ahead of that, and in
line with our ongoing focus on shareholders, today, we also
announced the renewal of our Normal Course Issuer Bid (NCIB) for
our Common Shares, reflecting our belief that Chorus' shares remain
under-valued, offering an attractive investment and use of
available funds."
Third Quarter Summary
In the third quarter of 2024, Chorus reported Adjusted EBITDA
from continuing operations of $53.9
million, a decrease of $3.1
million compared to the third quarter of 2023 primarily due
to:
- a decrease in aircraft leasing revenue under the CPA of
$4.3 million primarily due to a
change in lease rates on certain aircraft; and
- an increase in general administrative expenses attributable to
increased operations; partially offset by
- an increase in other revenue of $10.3
million primarily due to Voyageur's increased revenue in
parts sales, contract flying and MRO activity; and
- an increase in capitalization of major maintenance overhauls on
owned aircraft of $2.0 million.
Adjusted Net Income from continuing operations was $11.9 million for the quarter, a decrease of
$2.3 million compared to the third
quarter of 2023 primarily due to:
- a $3.1 million decrease in
Adjusted EBITDA as previously described; and
- an increase in depreciation expense of $3.5 million primarily attributable to a change
in depreciation estimates on certain aircraft and capital
expenditures; partially offset by
- a decrease of $2.5 million in
income tax expense;
- a decrease in net interest costs of $1.6
million; and
- a positive change in foreign exchange of $0.2 million.
- Net income from continuing operations decreased $19.1 million compared to the third quarter of
2023 primarily due to:
- the previously noted decrease in Adjusted Net Income of
$2.3 million;
- the Defined Benefit Pension Revenue recognized in 2023 of
$29.9 million (Air Canada agreed to
compensate Jazz for the one-time impact of the wage increase on the
Jazz defined benefit pension plan); and
- an increase in employee separation program costs of
$1.1 million; partially offset
by
- a positive change in net unrealized foreign exchange of
$5.9 million; and
- a decrease in income tax expense on adjusted items of
$8.4 million.
Year-to-Date Summary
Chorus reported Adjusted EBITDA from continuing operations of
$158.9 million for the nine months
ended September 30, 2024, a decrease
of $8.0 million compared to the same
prior year period primarily due to:
- a decrease in aircraft leasing revenue under the CPA of
$13.3 million primarily due to a
change in lease rates on certain aircraft;
- an increase in stock-based compensation of $2.2 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 $13.6
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 $4.1 million;
and
- an improvement in the Controllable Cost Guardrail of
$2.0 million.
- Adjusted Net Income from continuing operations of $35.7 million, a decrease of $5.6 million compared to the same prior year
period primarily due to:
- a $8.0 million decrease in
Adjusted EBITDA as previously described;
- an increase in depreciation expense of $10.4 million primarily attributable to a change
in depreciation estimates on certain aircraft and capital
expenditures; and
- a negative change in net foreign exchange of $0.3 million; partially offset by
- a decrease of $10.2 million in
income tax expense; and
- a decrease in net interest costs of $2.9
million.
- Net income from continuing operations of $33.7 million, a decrease of $39.7 million compared to the same prior year
period primarily due to:
- the previously noted decrease in Adjusted Net Income of
$5.6 million;
- the Defined Benefit Pension Revenue recognized in 2023 of
$29.9 million (Air Canada agreed to
compensate Jazz for the one-time impact of the wage increase on the
Jazz defined benefit pension plan); and
- a negative change in net foreign exchange of $12.2 million; partially offset by
- a decrease in income tax expense on adjusted items of
$8.1 million.
Consolidated Financial Analysis
This section provides detailed information and analysis about
Chorus' performance from continuing operations for the three and
nine months ended September 30, 2024 compared to the three and
nine months ended September 30, 2023.
|
(unaudited)
(expressed in
thousands of Canadian dollars)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2024
|
2023
|
Change
|
Change
|
2024
|
2023
|
Change
|
Change
|
|
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
|
(revised)(1)
|
|
|
|
(revised)(1)
|
|
|
|
Operating
revenue(2)
|
341,987
|
377,898
|
(35,911)
|
(9.5)
|
1,051,799
|
1,044,983
|
6,816
|
0.7
|
|
Operating
expenses
|
315,056
|
313,301
|
1,755
|
0.6
|
972,457
|
917,258
|
55,199
|
6.0
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
26,931
|
64,597
|
(37,666)
|
(58.3)
|
79,342
|
127,725
|
(48,383)
|
(37.9)
|
|
Net interest
expense
|
(8,810)
|
(10,456)
|
1,646
|
(15.7)
|
(26,906)
|
(29,842)
|
2,936
|
(9.8)
|
|
Foreign exchange gain
(loss)
|
6,218
|
149
|
6,069
|
4,073.2
|
(7,842)
|
4,699
|
(12,541)
|
(266.9)
|
|
Gain on property and
equipment
|
5
|
3
|
2
|
66.7
|
20
|
13
|
7
|
53.8
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax
|
24,344
|
54,293
|
(29,949)
|
(55.2)
|
44,614
|
102,595
|
(57,981)
|
(56.5)
|
|
Income tax
expense
|
(4,542)
|
(15,387)
|
10,845
|
(70.5)
|
(10,952)
|
(29,253)
|
18,301
|
(62.6)
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
19,802
|
38,906
|
(19,104)
|
(49.1)
|
33,662
|
73,342
|
(39,680)
|
(54.1)
|
|
Net loss from
discontinued operations, net of taxes
|
(1,392)
|
(21,758)
|
20,366
|
(93.6)
|
(183,515)
|
(3,857)
|
(179,658)
|
4,658.0
|
|
Net income
(loss)
|
18,410
|
17,148
|
1,262
|
7.4
|
(149,853)
|
69,485
|
(219,338)
|
(315.7)
|
|
Net (loss) income
attributable to non-controlling interest
|
(1,352)
|
553
|
(1,905)
|
(344.5)
|
1,039
|
2,310
|
(1,271)
|
(55.0)
|
|
Net income (loss)
attributable to Shareholders
|
19,762
|
16,595
|
(3,167)
|
(19.1)
|
(150,892)
|
67,175
|
(218,067)
|
(324.6)
|
|
Preferred Share
dividends declared
|
—
|
(8,799)
|
8,799
|
(100.0)
|
(17,827)
|
(26,486)
|
8,659
|
(32.7)
|
|
Earnings (loss)
attributable to Common Shareholders
|
19,762
|
7,796
|
11,966
|
153.5
|
(168,719)
|
40,689
|
(209,408)
|
(514.7)
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(3)
|
53,896
|
57,017
|
(3,121)
|
(5.5)
|
158,914
|
166,892
|
(7,978)
|
(4.8)
|
|
Adjusted
EBT(3)
|
16,576
|
21,342
|
(4,766)
|
(22.3)
|
46,923
|
62,682
|
(15,759)
|
(25.1)
|
|
Adjusted Net
Income(3)
|
11,943
|
14,249
|
(2,306)
|
(16.2)
|
35,737
|
41,289
|
(5,552)
|
(13.4)
|
|
(1)
|
The results of
discontinued operations (RAL segment) have been excluded from both
current and prior period figures in accordance with IFRS 5 to
conform to current period presentation. All amounts presented and
discussed in this release are from continuing operations unless
noted.
|
|
(2)
|
Air Canada agreed to
compensate Jazz for the one-time impact of the wage increase on the
Jazz defined benefit pension plan of $29.9 million which will be
repaid in 60 equal monthly payments beginning on December 1, 2023.
In accordance with IFRS, the associated impact of the wage scale
pension assumption change in the pension liability was charged
directly to other comprehensive income.
|
|
(3)
|
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.
|
Post Sale Pro forma Non-GAAP Financial Measures September 30, 2024
The pro forma financial information in this section is based on
the unaudited interim condensed consolidated financial statements
of Chorus for the three and nine months ended September 30,
2024 (the "Q3 2024 Statements") and has been prepared to
retroactively illustrate the financial impact of the Transaction on
Chorus had the Transaction closed on October
1, 2023 for the purposes of metrics which are based on the
trailing 12 months ended September 30,
2024 and December 31, 2023 for
all other metrics. The pro forma adjustments to the Q3 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, which is expected
prior to the end of 2024, Chorus plans 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 MOIC 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. 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.
Substantially all of Chorus' remaining debt is expected to
consist of amortizing term debt relating to aircraft operated by
Jazz 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.
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)
|
813,875
|
|
Redemption/Repayment:
|
|
|
Debentures(2)
|
243,750
|
|
Operating Credit
Facility(3)
|
60,000
|
|
Preferred
Shares(1)(4)
|
490,379
|
|
794,129
|
|
|
|
Net cash
remaining
|
19,746
|
(1) The net proceeds, net of transaction costs and
the Preferred Shares have been converted to CAD at 1.3499 which was
the exchange rate in effect at closing on September 30, 2024
from USD.
(2) Principal amount of the Debentures.
(3) Balance under the Operating Credit Facility at
September 30, 2024.
(4) Chorus will be required to pay a MOIC (net
of cash dividends paid) of $85.4
million (US $63.3 million) on
the redemption of the $405.0 million
(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 September 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
September 30,
2024
$
|
Nine
months
ended
September 30, 2024
$
|
|
Adjusted Earnings
available to Common Shareholders as reported
from continuing operations(1)(2)
|
11,943
|
17,910
|
|
Interest expense
savings, net of tax(3)
|
4,274
|
12,686
|
|
Preferred Share
dividends savings(4)
|
—
|
17,827
|
|
Pro Forma Adjusted
Earnings available to Common Shareholders
from continuing operations(1)
|
16,217
|
48,423
|
|
Pro Forma Adjusted
Earnings available to Common Shareholders
per Common Share, basic from continuing
operations(1)
|
0.08
|
0.25
|
|
(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.
|
|
(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 otherwise
noted.
|
|
(3)
|
The interest expense on
the Debentures and the Operating Credit Facility for the three and
nine months ended September 30, 2024 was $5.9 million and $17.4
million, respectively. The interest expense was tax effected using
a 27.0% tax rate.
|
|
(4)
|
The MOIC includes
Preferred Share dividends that would have otherwise been declared
for the three months ended September 30, 2024. If the Preferred
Shares are redeemed prior to May 3, 2025, the Corporation is
required to pay the holders thereof the liquidation preference plus
a 1.4x MOIC (less the aggregate of all dividends paid on the
Preferred Shares in cash).
|
Pro Forma Leverage Ratio
|
(unaudited)
(in thousands of
Canadian dollars)
|
September 30,
2024
$
|
|
Long-term debt and
lease liabilities (including current portion)(1)
|
661,198
|
|
Less:
|
|
|
Debentures(2)
|
(239,400)
|
|
Operating Credit
Facility(2)
|
(60,000)
|
|
361,798
|
|
Less:
|
|
|
Cash at September 30,
2024(1)
|
(23,666)
|
|
Cash remaining from
Transaction after corporate financings
repayments(3)
|
(19,746)
|
|
Pro Forma Adjusted
Net Debt(4)
|
318,386
|
|
Adjusted
EBITDA(1)(4)
|
213,557
|
|
Pro Forma Leverage
Ratio(4)
|
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 MD&A
are from continuing operations unless otherwise
noted.
|
|
(2)
|
Principal amount of the
Debentures and the balance outstanding under the Operating Credit
Facility at September 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 $19.7 million using
the September 30, 2024 USD to CAD foreign exchange rate of
1.3499.
|
|
(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.
|
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
September 30,
2024
$
|
Nine
months
ended
September 30,
2024
$
|
|
Free Cash Flow as
reported(1)(2)
|
32,447
|
91,305
|
|
Interest savings, net
of tax(3)
|
4,274
|
12,686
|
|
Pro Forma Free Cash
Flow(1)
|
36,721
|
103,991
|
|
|
|
|
Repayment on
long-term borrowings(2)(4)
|
(13,875)
|
(59,663)
|
|
Pro Forma Free Cash
Flow after repayment on long-term borrowings(1)(4)
|
22,846
|
44,328
|
|
(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.
|
|
(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 MD&A
are from continuing operations unless otherwise noted.
|
|
(3)
|
The interest expense on
the Debentures and the Operating Credit Facility for the three and
nine months ended September 30, 2024 was $5.9 million and $17.4
million, respectively. The interest expense was tax effected using
a 27.0% tax rate.
|
|
(4)
|
Excludes repayment of
$nil and $33.9 million on the Unsecured Credit Facility for the
three and nine months ended September 30, 2024,
respectively.
|
Pro Forma Adjusted Return on Equity
|
(unaudited)
(in thousands of
Canadian dollars)
|
Trailing
12-months
ended
September 30,
2024
$
|
|
Adjusted Earnings
Available to Common Shareholders as
reported(1)(2)
|
19,674
|
|
Add: Interest savings,
net of tax(3)
|
17,488
|
|
Add: Preferred Share
dividends declared
|
26,767
|
|
Pro Forma Adjusted
Earnings Available to Common Shareholders(2)
|
63,929
|
|
Average equity
attributable to Common Shareholders excluding cash
|
|
|
|
|
Average Shareholders'
equity as reported
|
966,524
|
|
|
|
Add (Deduct) items
to get to average equity attributable to Common Shareholders
excluding cash
|
|
|
Average
Non-controlling interest
|
(88,478)
|
|
Average Preferred
Shares
|
(187,609)
|
|
Average
Cash
|
(27,587)
|
|
Average Cash remaining
from Transaction after corporate financings
repayments(4)
|
(9,873)
|
|
652,977
|
|
Pro Forma Adjusted
Return on Equity(2)
|
9.8 %
|
|
(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 MD&A
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.
|
|
(3)
|
The interest expense on
the Debentures and the Operating Credit Facility for the trailing
12-months ended September 30, 2024 was $24.0 million. The interest
expense was tax effected using a 27.0% tax rate.
|
|
(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 MOIC upon the redemption of the Preferred
Shares) to be $19.7 million using the September 30, 2024 USD to CAD
foreign exchange rate of 1.3499.
|
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 September 30, 2024). The
forecast has changed as a result of updated foreign exchange rates.
The forecast has changed as a result of updated foreign exchange
rates, changes in assumptions on certain lease rates and lease
extensions.
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(3)
|
60,900
|
59,600
|
43,900
|
|
Aircraft leasing
under the CPA
|
|
|
|
|
Revenue(4)
|
132,000
|
116,000
|
100,000
|
|
Payment on long-term
debt and interest
|
96,000
|
77,000
|
67,000
|
|
Total Fixed Margin
and Aircraft leasing under the CPA less payment on long-term debt
and interest
|
96,900
|
98,600
|
76,900
|
|
Wholly-owned aircraft
leased under the CPA (end of period)(4)
|
48
|
45
|
39
|
|
Wholly-owned aircraft
leased under the CPA available for re-lease (end of
period)(4)
|
nil
|
3
|
9
|
|
(1)
|
The forecast uses a
foreign exchange rate of 1.3500 for 2024 (previously at 1.3400),
1.3200 for 2025 (previously at 1.2700) and 1.2900 for 2026
(previously at 1.2700) to translate USD to CAD.
|
|
(2)
|
Includes estimates for
future market lease rates for 12 Q400's for 2026 with contracted
lease extensions to 2030.
|
|
(3)
|
The Fixed Margin will
decrease to no less than $60.7 million in 2024, no less than $59.6
million in 2025 and no less than $43.9 million in 2026 with no
further changes thereafter.
|
|
(4)
|
Leases on six Dash
8-400s were extended to mid-2026.
|
Covered Aircraft
The forecasted Covered Aircraft under the CPA for the years 2024
to 2026 is as follows:
|
|
|
Change
|
|
Change
|
|
|
Forecast
2024
|
2025
|
Forecast
2025
|
2026
|
Forecast
2026
|
|
|
|
|
|
|
|
|
Dash 8-400
|
Aircraft Leased under
the CPA
|
34
|
(3)
|
31
|
(6)
|
25
|
|
Other Covered
Aircraft
|
5
|
(5)
|
—
|
—
|
—
|
|
|
39
|
(8)
|
31
|
(6)
|
25
|
|
|
|
|
|
|
|
|
CRJ900
|
Aircraft Leased under
the CPA
|
14
|
—
|
14
|
—
|
14
|
|
Other Covered
Aircraft
|
21
|
—
|
21
|
(5)
|
16
|
|
|
35
|
—
|
35
|
(5)
|
30
|
|
|
|
|
|
|
|
|
CRJ200
|
Aircraft Leased under
the CPA
|
—
|
—
|
—
|
—
|
—
|
|
Other Covered
Aircraft(1)
|
15
|
—
|
15
|
(15)
|
—
|
|
|
15
|
—
|
15
|
(15)
|
—
|
|
|
|
|
|
|
|
|
E175
|
Aircraft Leased under
the CPA
|
—
|
—
|
—
|
—
|
—
|
|
Other Covered
Aircraft
|
25
|
—
|
25
|
—
|
25
|
|
|
25
|
—
|
25
|
—
|
25
|
|
|
|
|
|
|
|
|
Total
|
Aircraft Leased under
the CPA(2)(3)
|
48
|
(3)
|
45
|
(6)
|
39
|
|
Other Covered
Aircraft(1)
|
66
|
(5)
|
61
|
(20)
|
41
|
|
|
114
|
(8)
|
106
|
(26)
|
80
|
|
(1)
|
The 15 CRJ200s are
currently non-operational under the CPA.
|
|
(2)
|
After 2026, the 39
owned Aircraft Leased under the CPA have lease expiry dates from
2027 to 2033. Air Canada will determine the composition of the
Covered Aircraft fleet on the condition that the fleet must have a
minimum of 80 aircraft with 75-78 seats. As leases in respect of
owned aircraft mature, the minimum 80 Covered Aircraft fleet will
be composed of owned aircraft with lease extensions and/or other
Covered Aircraft sourced by Air Canada.
|
|
(3)
|
Lease expiry dates for
owned aircraft are as follows: Dash 8-400's: six expiries in 2027;
seven expiries in 2028 and 12 expiries in 2030; and for CRJ900's:
five in 2028; eight in 2032 and one in 2033.
|
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)
|
14,000
|
to
|
19,000
|
|
|
Aircraft acquisitions
and improvements
|
18,500
|
to
|
23,500
|
|
|
44,500
|
to
|
59,500
|
|
|
(1)
|
The 2024 plan includes
between $11.0 million to $15.0 million of costs that are expected
to be included in and recovered through the 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). In this news release, the term
"shareholders" refers only to holders of Common Shares.
Investor Conference Call / Audio Webcast
Chorus will hold an analyst call at 9:00 AM ET on Thursday, November 7, 2024, to discuss the third
quarter 2024 financial results. The call may be accessed by dialing
1-888-510-2154. The call will be simultaneously audio webcast via:
https://app.webinar.net/D8kXBR91bQ6.
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, November 14, 2024, by dialing toll-free
1-888-390-0541 and using passcode 76863 # (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
September 30,
|
Nine months ended
September 30,
|
|
2024
$
|
2023
$
|
Change
$
|
2024
$
|
2023
$
|
Change
$
|
|
|
(revised)(1)
|
|
|
(revised)(1)
|
|
|
Net income
(loss)
|
18,410
|
17,148
|
1,262
|
(149,853)
|
69,485
|
(219,338)
|
|
Less: Net loss from
discontinued operations, net of taxes
|
(1,392)
|
(21,758)
|
20,366
|
(183,515)
|
(3,857)
|
(179,658)
|
|
Net income from
continuing operations
|
19,802
|
38,906
|
(19,104)
|
33,662
|
73,342
|
(39,680)
|
|
Add (Deduct) items
to get to Adjusted Net Income
|
|
|
|
|
|
|
|
Employee separation
program(2)
|
337
|
(803)
|
1,140
|
867
|
804
|
63
|
|
Defined Benefit
Pension Revenue(3)
|
—
|
(29,916)
|
29,916
|
—
|
(29,916)
|
29,916
|
|
Unrealized foreign
exchange (gain) loss
|
(8,105)
|
(2,232)
|
(5,873)
|
1,442
|
(10,801)
|
12,243
|
|
Tax (recovery) expense
on adjusted items
|
(91)
|
8,294
|
(8,385)
|
(234)
|
7,860
|
(8,094)
|
|
(7,859)
|
(24,657)
|
16,798
|
2,075
|
(32,053)
|
34,128
|
|
Adjusted Net
Income
|
11,943
|
14,249
|
(2,306)
|
35,737
|
41,289
|
(5,552)
|
|
Add (Deduct) items
to get to Adjusted EBT
|
|
|
|
|
|
|
|
Income tax
expense
|
4,542
|
15,387
|
(10,845)
|
10,952
|
29,253
|
(18,301)
|
|
Tax recovery (expense)
on adjusted items
|
91
|
(8,294)
|
8,385
|
234
|
(7,860)
|
8,094
|
|
Adjusted
EBT
|
16,576
|
21,342
|
(4,766)
|
46,923
|
62,682
|
(15,759)
|
|
Add (Deduct) items
to get to Adjusted EBITDA
|
|
|
|
|
|
|
|
Net interest
expense
|
8,810
|
10,456
|
(1,646)
|
26,906
|
29,842
|
(2,936)
|
|
Depreciation and
amortization excluding impairment
|
26,628
|
23,139
|
3,489
|
78,705
|
68,279
|
10,426
|
|
Foreign exchange
loss
|
1,887
|
2,083
|
(196)
|
6,400
|
6,102
|
298
|
|
Gain on disposal of
property and equipment
|
(5)
|
(3)
|
(2)
|
(20)
|
(13)
|
(7)
|
|
37,320
|
35,675
|
1,645
|
111,991
|
104,210
|
7,781
|
|
Adjusted
EBITDA
|
53,896
|
57,017
|
(3,121)
|
158,914
|
166,892
|
(7,978)
|
|
(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.
|
|
(3)
|
Air Canada agreed to
compensate Jazz for the one-time impact of the wage increase on the
Jazz defined benefit pension plan of $29.9 million which will be
repaid in 60 equal monthly payments beginning on December 1, 2023.
In accordance with IFRS, the associated impact of the wage scale
pension assumption change in the pension liability was charged
directly to other comprehensive income.
|
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.
Pro Forma Adjusted Earnings available to Common Shareholders per
Common Share is calculated as Adjusted Earnings available to Common
Shareholders plus anticipated interest savings on repayment of
corporate financings and Preferred Share dividends
declared.
|
(unaudited)
(expressed in
thousands of Canadian dollars, except per Share
amounts)
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2024
$
|
2023
$
|
Change
$
|
2024
$
|
2023
$
|
Change
$
|
|
|
(revised)(1)
|
|
|
(revised)(1)
|
|
|
Adjusted Net Income
from continuing operations
|
11,943
|
14,249
|
(2,306)
|
35,737
|
41,289
|
(5,552)
|
|
Add (Deduct) items
to get to Adjusted Earnings available to Common
Shareholders
|
|
|
|
|
|
|
|
Preferred Share
dividends declared
|
—
|
(8,799)
|
8,799
|
(17,827)
|
(26,486)
|
8,659
|
|
Adjusted Earnings
available to Common Shareholders - continuing
operations
|
11,943
|
5,450
|
6,493
|
17,910
|
14,803
|
3,107
|
|
Adjusted Earnings
available to Common Shareholders per Common Share, basic -
continuing operations
|
0.06
|
0.03
|
0.03
|
0.09
|
0.08
|
0.01
|
|
(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.
Pro Forma Leverage Ratio is calculated by dividing Net debt,
adjusted to remove the anticipated repayment of corporate
financings and net cash remaining from the Transaction, by trailing
12-month Adjusted EBITDA.
|
(unaudited)
(expressed in
thousands of Canadian dollars)
|
September 30,
2024
|
December 31,
2023
|
Change
|
|
$
|
$
|
$
|
|
|
(revised)(1)
|
|
|
Long-term debt and
lease liabilities (including current
portion)(2)(3)
|
661,198
|
1,755,580
|
(1,094,382)
|
|
Less:
|
|
|
|
|
Long-term debt and
lease liabilities (including current portion)
related to discontinued
operations(2)
|
—
|
(986,921)
|
986,921
|
|
Cash(1)
|
(23,666)
|
(85,985)
|
62,319
|
|
Cash related to
discontinued operations(1)(2)
|
—
|
55,432
|
(55,432)
|
|
Adjusted Net
Debt
|
637,532
|
738,106
|
(100,574)
|
|
Adjusted
EBITDA
|
213,557
|
221,535
|
(7,978)
|
|
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)
|
The September 30, 2024
balance does not include the Preferred Shares.
|
|
(3)
|
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).
Pro Forma Free Cash Flow is
defined as Free Cash Flow plus anticipated interest savings on
repayment of corporate financings.
Pro Forma Free Cash Flow after
repayment on long-term borrowings is defined as Free Cash Flow plus
anticipated interest savings on repayment of corporate financings
less repayment on long-term borrowings.
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
September 30,
|
Nine months ended
September 30,
|
|
2024
|
2023
|
Change
|
2024
|
2023
|
Change
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
|
(revised)(1)
|
|
|
(revised)(1)
|
|
|
Cash provided by
operating activities from continuing operations(2)
|
27,657
|
136,449
|
(108,792)
|
151,707
|
199,172
|
(47,465)
|
|
Add
(Deduct)
|
|
|
|
|
|
|
|
Net changes in
non-cash balances related to operations
|
12,725
|
(63,981)
|
76,706
|
(37,887)
|
(43,144)
|
5,257
|
|
Capital expenditures,
excluding aircraft acquisitions
|
(3,769)
|
(2,980)
|
(789)
|
(9,303)
|
(9,897)
|
594
|
|
Capitalized major
maintenance overhauls
|
(4,166)
|
(2,386)
|
(1,780)
|
(13,212)
|
(9,696)
|
(3,516)
|
|
Free Cash
Flow
|
32,447
|
67,102
|
(34,655)
|
91,305
|
136,435
|
(45,130)
|
|
(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)
|
Air Canada agreed to
compensate Jazz for the one-time impact of the wage increase on the
Jazz defined benefit pension plan of $29.9 million which will be
repaid in 60 equal monthly payments beginning on December 1, 2023.
In accordance with IFRS, the associated impact of the wage
scale pension assumption change in the pension liability was
charged directly to other comprehensive income.
|
Adjusted Return on Equity
Adjusted Return on Equity is a non-GAAP financial measure used
to gauge a corporation's profitability and how efficient it is in
generating profits. Adjusted Return on Equity is calculated based
on Chorus' Adjusted Net Income less non-controlling interest and
Preferred Share dividends declared divided by Average Shareholders'
equity excluding non-controlling interest, Preferred Shares and
cash.
Pro Forma Adjusted Return on Equity is calculated based on
Adjusted Earnings available to Common Shareholders plus anticipated
interest savings on repayment of corporate financings and Preferred
Share dividends declared divided by Average Shareholders' equity
excluding non-controlling interest, Preferred Shares, cash and
anticipated net cash remaining from the Transaction.
|
(unaudited)
(expressed in
thousands of Canadian dollars)
|
Trailing 12-months
ended
|
|
September
30,
|
December
31,
|
|
|
2024
|
2023
|
Change
|
|
$
|
$
|
$
|
|
|
(revised)(1)
|
|
|
|
|
|
|
Adjusted Net Income
from continuing operations(1)
|
46,441
|
51,993
|
(5,552)
|
|
Add (Deduct) items
to get to Adjusted Earnings available to Common
Shareholders
|
|
|
|
|
Preferred Share
dividends declared
|
(26,767)
|
(35,426)
|
8,659
|
|
Adjusted Earnings
available to Common Shareholders
|
19,674
|
16,567
|
3,107
|
|
|
|
|
|
|
|
|
|
Average equity
attributable to Common Shareholders excluding cash
|
|
|
|
|
Average Shareholders'
equity
|
966,524
|
1,274,446
|
(307,922)
|
|
Add (Deduct) items
to get to average equity attributable to Common Shareholders
excluding cash
|
|
|
|
|
Average
Non-controlling interest
|
(88,478)
|
(87,718)
|
(760)
|
|
Average Preferred
Shares
|
(187,609)
|
(375,217)
|
187,608
|
|
Average
Cash(1)
|
(27,587)
|
(24,926)
|
(2,661)
|
|
662,850
|
786,585
|
(123,735)
|
|
Adjusted Return on
Equity(1)
|
3.0 %
|
2.1 %
|
0.9 %
|
|
(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 MD&A
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 the remaining conditions precedent to completion of the
Transaction are satisfied; whether completion of the Transaction is
delayed or fails to complete; 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.