Results demonstrate strengthened balance sheet
and progress on key strategic priorities
Annual Highlights:
- Adjusted EBITDA of $458.7
million, compared to $441.0
million for 2022.
- Strong Free Cash Flow of $331.4
million, primarily derived from operating cash flows.
- Achieved Leverage Ratio target for 2023, improving from 4.4 at
December 31, 2022 to 3.6 at
December 31, 2023.
- Net income of $106.1 million,
compared to $51.9 million for
2022.
- Adjusted earnings available to Common Shareholders of
$57.9 million, compared to
$92.9 million for 2022.
- Jazz entered into a new agreement with its pilots to address
the changing wage environment and enhance pilot capacity.
- Falko concluded 57 aircraft transactions in 2023, including new
leases, lease extensions, sale and leasebacks and purchase of
aircraft with leases attached, utilizing third party capital.
- Falko executed a sales agreement for two aircraft in support of
the asset light strategy for net proceeds of US $21.9 million.
- Voyageur had its best year ever with strong growth in parts
sales and specialty MRO and defence, while securing long-term
contracts for defence and air ambulance services.
Q4 Financial Highlights:
- Net income of $36.6 million,
compared to $45.9 million for Q4
2022.
- Adjusted earnings available to Common Shareholders of
$8.8 million, compared to
$22.3 million for Q4 2022.
- Adjusted earnings available to Common Shareholders of
$0.05 per Common Share, basic,
compared to $0.11 for Q4 2022.
- Adjusted EBITDA of $116.7
million, compared to $129.5
million for Q4 2022.
HALIFAX,
NS, Feb. 22, 2024 /CNW/ - Chorus Aviation Inc.
('Chorus') (TSX: CHR) today announced its fourth quarter and
year-end 2023 financial results.
"We executed and made steady progress on key aspects of our
strategy, delivering on the 2023 financial guidance. That led to
strong adjusted EBITDA and Free Cash Flows, allowing for the
repayment of over $340 million in
debt and a reduction in our Leverage Ratio from 4.4x to 3.6x," said
Colin Copp, President and Chief
Executive Officer, Chorus. "Looking forward, we are forecasting
strong Free Cash Flows in 2024, which will further contribute to
our deleveraging goals. We recognize that robust cash generation
and a strengthened balance sheet are essential to our future growth
and value creation for our shareholders."
"Jazz continued to generate predictable earnings and cash flows
under its long-term contract with Air Canada, while Voyageur made
meaningful strides with two consecutive years of record growth in
parts sales, defence and specialty MRO segments," commented Mr.
Copp. "With the recovery in regional aircraft leasing markets and
related improvements in airline credits, Falko successfully
completed fifty-seven aircraft transactions in 2023; and
additionally, signed letters of intent for a further thirty
aircraft transactions. Additionally, the execution of a sales
agreement for two aircraft for net proceeds of US $21.9 million helped advance our asset light
strategy. Going forward, we continue to look for optimal
opportunities to sell aircraft assets as valuations
strengthen."
"Throughout 2023, Chorus' businesses demonstrated progress,
contributing to our overall strategy," said Mr. Copp. "Looking
ahead, with our significant skills and deep experience across all
aspects of aviation, Chorus is well-positioned for growth as an
industry leader."
Fourth Quarter Summary
In the fourth quarter of 2023, Chorus reported Adjusted EBITDA
of $116.7 million, a decrease of
$12.8 million compared to the fourth
quarter of 2022.
The RAL segment's Adjusted EBITDA was $62.1 million, a decrease of $5.4 million compared to the fourth quarter of
2022 primarily due to:
- a decrease in the net gain on sale of assets of $8.2 million related to the sale of wholly-owned
aircraft in 2022;
- a decrease in lease revenue of $7.0
million due to the sale of wholly-owned aircraft in 2022 and
lower market lease rates on re-leased aircraft; and
- increased general administrative expense; partially offset
by
- a decrease in ECL provisions of $11.9
million related to improved credit ratings on certain
lessees.
The RAS segment's Adjusted EBITDA was $61.3 million, a decrease of $6.2 million compared to the fourth quarter of
2022 primarily due to:
- a decrease in aircraft leasing revenue under the CPA of
$3.3 million, primarily due to a
change in lease rates on certain aircraft offset by a higher US
dollar exchange rate;
- a decrease in other revenue of $2.0
million primarily due to Voyageur's decrease in parts sales
and contract flying offset by an increase in MRO activity; and
- a decrease in capitalization of major maintenance overhauls on
owned aircraft of $1.7 million;
partially offset by
- a decrease in general administrative expenses.
Corporate Adjusted EBITDA was $(6.7)
million compared to $(5.4) million in the fourth
quarter of 2022 primarily due to an increase in stock-based
compensation of $1.2 million due
to an increase in the Common Share price offset by the change in
fair value of the Total Return Swap.
Adjusted net income was $20.2
million for the quarter, a decrease of $11.6 million compared to the fourth quarter of
2022 primarily due to:
- a $12.8 million decrease in
Adjusted EBITDA as previously described; and
- an increase in depreciation expense of $3.0 million primarily attributable to capital
expenditures incurred in 2022 on re-leased aircraft as well as a
change in depreciation estimates on certain aircraft; partially
offset by
- a decrease in net interest costs of $4.5
million.
Net income decreased $9.2 million
compared to the fourth quarter of 2022 primarily due to:
- the previously noted decrease in Adjusted net income of
$11.6 million;
- a change in net unrealized foreign exchange of $21.3 million; and
- an increase in impairment provisions of $4.9 million primarily related to the planned
repossession of two aircraft from one lessee; partially offset
by
- a change in realized foreign exchange on the settlement of
intercompany loans of $26.4 million;
and
- a decrease in lease repossession costs of $2.1 million.
Annual Summary
Chorus reported Adjusted EBITDA of $458.7
million for 2023, an increase of $17.6 million compared to the same prior
year period.
The RAL segment's Adjusted EBITDA was $237.1 million, an increase of $17.6 million compared to the same prior year
period primarily due to:
- an increase in lease revenue of $26.5
million due to four additional months of lease revenue
versus the same period in 2022 for Falko, the release of end of
lease ("EOL") compensation and maintenance reserves of
$13.9 million and a higher US dollar
exchange rate offset by a decrease in lease revenue due to the sale
of wholly-owned aircraft in 2022 and recovered claims in the Virgin
Australia and Aeromexico bankruptcies recorded in 2022 of
$10.9 million; partially offset
by a decrease in net gain on sale of assets of $10.9 million related to the sale of wholly-owned
aircraft in 2022.
The RAS segment's Adjusted EBITDA was $249.3 million, an increase of $0.5 million compared to the same prior year
period primarily due to:
- an increase in other revenue of $5.0
million primarily due to Voyageur's increase in parts sales
and MRO activity offset by a decrease in contract flying; and
- a decrease in general administrative expenses; partially offset
by
- a contracted decrease in Fixed Margin of $3.0 million; and
- a decrease in capitalization of major maintenance overhauls on
owned aircraft of $4.0 million.
Corporate Adjusted EBITDA was $(27.7)
million compared to $(27.2) million in 2022, primarily
due to:
- an increase in stock-based compensation of $1.7 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
- a decrease in general administrative expenses related to
salaries, wages and benefits, professional fees, and travel
expenses.
Adjusted net income of $98.0
million, a decrease of $20.8
million compared to the same prior year period primarily due
to:
- an increase in depreciation expense of $25.3 million primarily attributable to capital
expenditures incurred in 2022 on re-leased aircraft as well as a
change in depreciation estimate on certain aircraft and four
additional months of depreciation for Falko;
- an increase of $13.5 million in
income tax expense primarily due to derecognition of deferred tax
assets on repossessed aircraft and certain non-deductible expenses;
and
- a change in net foreign exchange of $2.9
million; partially offset by
- a $17.6 million increase in
Adjusted EBITDA as previously described;
- a decrease in net interest costs of $2.3
million; and
- an increase of $1.0 million on
the fair value of investments.
Net income of $106.1 million, an
increase of $54.2 million compared to
the same prior year period primarily due to:
- the Defined Benefit Pension Revenue of $29.9 million;
- a change in realized foreign exchange on the settlement of
intercompany loans of $26.4
million;
- a decrease in lease repossession costs of $14.3 million;
- a change in net foreign exchange of $13.1 million;
- a decrease in restructuring ECL of $10.4
million; and
- a decrease in strategic advisory fees of $8.5 million; partially offset by
- the previously noted decrease in Adjusted net income of
$20.8 million;
- an increase in income tax expenses on adjusted items of
$18.4 million; and
- an increase in impairment provisions of $10.1 million.
Consolidated Financial
Analysis
This section provides detailed information and analysis about
Chorus' performance for the three months and year ended
December 31, 2023 compared to the three months and year ended
December 31, 2022. It focuses on Chorus' consolidated
operating results and provides financial information for Chorus'
operating segments.
|
(unaudited)
(expressed in
thousands of Canadian dollars)
|
Three months ended
December 31,
|
Year ended December
31,
|
|
2023
|
2022
|
Change
|
Change
|
2023
|
2022
|
Change
|
Change
|
|
$
|
$
|
$
|
%
|
$
|
$
|
$
|
%
|
|
|
|
|
|
|
|
|
|
|
Operating
revenue
|
421,452
|
439,755
|
(18,303)
|
(4.2)
|
1,681,075
|
1,595,804
|
85,271
|
5.3
|
|
Operating
expenses
|
368,130
|
367,150
|
980
|
0.3
|
1,449,309
|
1,407,538
|
41,771
|
3.0
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
53,322
|
72,605
|
(19,283)
|
(26.6)
|
231,766
|
188,266
|
43,500
|
23.1
|
|
Net interest
expense
|
(24,307)
|
(28,809)
|
4,502
|
(15.6)
|
(98,498)
|
(100,843)
|
2,345
|
(2.3)
|
|
Foreign exchange gain
(loss)
|
19,556
|
14,146
|
5,410
|
38.2
|
23,091
|
(13,612)
|
36,703
|
(269.6)
|
|
Gain on property and
equipment
|
—
|
16
|
(16)
|
100.0
|
13
|
172
|
(159)
|
(92.4)
|
|
Gain (loss) on fair
value of investments
|
1,114
|
440
|
674
|
153.2
|
3,555
|
(133)
|
3,688
|
(2,772.9)
|
|
|
|
|
|
|
|
|
|
|
Income before income
tax
|
49,685
|
58,398
|
(8,713)
|
(14.9)
|
159,927
|
73,850
|
86,077
|
116.6
|
|
Income tax
expense
|
(13,064)
|
(12,546)
|
(518)
|
(4.1)
|
(53,821)
|
(21,933)
|
(31,888)
|
(145.4)
|
|
|
|
|
|
|
|
|
|
|
Net income
|
36,621
|
45,852
|
(9,231)
|
(20.1)
|
106,106
|
51,917
|
54,189
|
104.4
|
|
Net income attributable
to non-controlling interest
|
2,443
|
650
|
1,793
|
275.8
|
4,753
|
3,027
|
1,726
|
57.0
|
|
Net income attributable
to Shareholders
|
34,178
|
45,202
|
(11,024)
|
(24.4)
|
101,353
|
48,890
|
52,463
|
107.3
|
|
Preferred share
dividends
|
(8,940)
|
(8,913)
|
(27)
|
0.3
|
(35,426)
|
(22,902)
|
(12,524)
|
54.7
|
|
Earnings attributable
to Common Shareholders
|
25,238
|
36,289
|
(11,051)
|
(30.5)
|
65,927
|
25,988
|
39,939
|
153.7
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA(1)
|
116,736
|
129,542
|
(12,806)
|
(9.9)
|
458,666
|
441,046
|
17,620
|
4.0
|
|
Adjusted
EBT(1)
|
34,328
|
44,956
|
(10,628)
|
(23.6)
|
143,639
|
150,937
|
(7,298)
|
(4.8)
|
|
Adjusted net
income(1)
|
20,208
|
31,826
|
(11,618)
|
(36.5)
|
98,048
|
118,842
|
(20,794)
|
(17.5)
|
|
|
|
(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
the "Non-GAAP Financial Measures" section of this news release for
more 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. This
information may not be appropriate for other purposes.
Chorus Consolidated
|
(in thousands of
Canadian dollars)
|
Actual
2023
$
|
2024
Forecast(1)
$
|
|
|
|
|
|
|
Adjusted
EBITDA(2)
|
458,666
|
350,000
|
to
|
400,000
|
|
Free Cash
Flow(2)
|
331,423
|
290,000
|
to
|
340,000
|
|
Leverage
Ratio(3)
|
3.6
|
3.1
|
to
|
3.5
|
|
|
|
(1)
|
The forecast uses a
foreign exchange rate of 1.3200 for 2024 to translate USD to
CAD.
|
|
(2)
|
The forecast is based
on projected earnings under existing contracts, expected asset
sales in 2024, and future market lease rates for lease renewals and
extensions.
|
|
(3)
|
The forecast is based
on the contractual nature of Chorus' earnings, amortizing debt
repayments, and expected asset sales. Deleveraging amounts will
vary from quarter-to-quarter depending on the timing and quantum of
asset sales.
|
Jazz
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.
|
Actual
|
Forecast
|
|
(in thousands of
Canadian dollars)
|
2023
$
|
2024(1)
$
|
2025(1)
$
|
2026(1)(2)
$
|
|
Fixed
Margin
|
63,280
|
60,700
|
59,600
|
43,900
|
|
Aircraft leasing
under the CPA
|
|
|
|
|
|
Revenue
|
148,889
|
128,000
|
113,000
|
93,000
|
|
Payment on long-term
debt and interest
|
123,658
|
94,000
|
74,000
|
66,000
|
|
Wholly-owned aircraft
leased under the CPA (end of period)
|
48
|
48
|
39
|
39
|
|
Wholly-owned aircraft
leased under the CPA available for re-lease (end of
period)
|
nil
|
nil
|
9
|
9
|
|
Total Fixed Margin
and Aircraft leasing under the CPA less payment on long-term debt
and interest
|
88,511
|
94,700
|
98,600
|
70,900
|
|
|
|
(1)
|
The forecast uses a
foreign exchange rate of 1.3200 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.
|
RAL
RAL continues to execute on its asset light leasing strategy
which consists of monetizing select on-balance sheet aircraft
assets while growing its contractual fund management business.
Maximizing cash flow generation from existing assets through lease
term extensions is also a key element of RAL's business model.
|
(in thousands of
Canadian dollars)
|
Actual
2023
$
|
2024
Forecast(1)
$
|
|
Operating
revenue(2)
|
281,464
|
215,000
|
to
|
235,000
|
|
Depreciation and
amortization excluding impairment(3)
|
115,935
|
100,000
|
to
|
110,000
|
|
Net interest
expense(3)
|
57,845
|
48,000
|
to
|
52,000
|
|
Gain on the fair
value of Fund II investment(4)
|
3,569
|
5,000
|
to
|
10,000
|
|
Gross proceeds on
asset sales(2)
|
720
|
100,000
|
to
|
150,000
|
|
Net proceeds on
asset sales(2)
|
720
|
30,000
|
to
|
52,500
|
|
|
-
|
|
|
|
|
|
(1)
|
The forecast uses a
foreign exchange rate of 1.3200 for 2024 to translate USD to CAD
revenue.
|
|
(2)
|
The forecast reflects:
a) the expected sale of nine CRJ900 engines; b) the sale of two
A220-300's on lease with airBaltic on January 23, 2024; and c)
certain assumptions and estimates for future market lease rates
related to new and extended leases. The forecast does not include
end-of-lease compensation or maintenance reserve releases. Actual
2023 includes $13.9 million of end-of-lease compensation and
maintenance reserve releases.
|
|
(3)
|
The depreciation
excluding impairment and net interest expense forecast is based on
the normal amortization of aircraft and long-term debt and the
expected sale of assets in 2024.
|
|
(4)
|
The forecasted gain on
fair value of the Fund II investment is based on expectations
related to the trading and general financial condition of the
investment to compute the value of the discounted cash
flows.
|
Fund III is anticipated to close by the end of the 2024 year and
is expected to have (i) a minimum of US $500.0 million in capital commitments and (ii)
management fees and economic terms commensurate with those in
Falko's prior funds.
Chorus intends to opportunistically trade RAL's wholly-owned or
majority-owned aircraft including in connection with the windup of
its 67.45% ownership in Ravelin Holdings LP by the tenth
anniversary of the commencement of Fund I (2025). As of
December 31, 2023, Ravelin Holdings
LP held an interest in 39 aircraft with a net book value of US
$382.8 million and secured debt of US
$189.0 million. As asset sales occur,
the related leasing revenues in RAL will decrease, which will be
partially offset by lower depreciation and debt servicing costs and
earnings from Falko managed funds.
RAL Receivables
RAL is participating in the Azul S.A. ("Azul")
restructuring which is expected to be finalized before the end of
March 2024. The transaction includes
the exchange of certain accounts receivable ("Existing AR")
held by RAL and the granting of certain modifications related to
the operating leases with Azul ("Azul Restructuring").
In exchange for the Existing AR RAL will receive new notes
("New Notes") from Azul which are due at various dates
beginning in 2024 and ending in 2027. In addition, certain of the
New Notes may be settled, at Azul's option, in cash or by the
issuance of Azul's publicly listed preferred shares. The New Notes
will be initially recognized at an aggregate estimated fair value.
No material gain or loss is anticipated on the exchange of the
Existing AR for the New Notes.
RAL collected approximately 97% of the value of its lease
revenue billed in the fourth quarter of 2023 when giving effect to
the expected repayment terms of the Azul Restructuring
agreement.
RAL's gross receivable, primarily related to rent relief
arrangements,1 may decrease from the December 31, 2023 balance of US $108.2 million to between US $90.0 million and US $95.0
million by the end of 2024 based on management's current
repayment expectations.
RAL's lease deferral receivable exposure is partially mitigated
by security packages held of approximately US $20.4 million (December 31, 2022 - US $17.1 million).
|
1
|
Following the onset of
the COVID-19 pandemic, RAL received requests from many of its
customers for some form of temporary rent relief, as they coped
with an unprecedented reduction in demand for passenger air
travel.
|
Capital Expenditures
Capital expenditures in 2024, are expected as follows:
|
(expressed in
thousands of Canadian dollars)
|
|
|
|
|
|
Actual
2023
|
Forecast
2024(1)
|
|
$
|
|
$
|
|
|
Capital expenditures,
excluding aircraft acquisitions
|
15,251
|
16,000
|
to
|
21,000
|
|
Capitalized major
maintenance overhauls(2)
|
15,776
|
5,000
|
to
|
10,000
|
|
Aircraft acquisitions
and improvements
|
12,136
|
12,500
|
to
|
17,500
|
|
43,163
|
33,500
|
to
|
48,500
|
|
|
|
(1)
|
The 2024 plan includes
reconfiguration costs on aircraft and certain aircraft improvements
which have been converted to Canadian from US dollars using a
foreign exchange rate of 1.3226, the December 31, 2023 closing day
rate from the Bank of Canada.
|
|
(2)
|
The 2024 plan includes
between $5.0 million to $9.0 million of costs that are expected to
be included in Controllable Costs. Actual 2023 includes $6.1
million which are 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 9:00
AM ET on February 23, 2024 to
discuss the fourth quarter and year-end 2023 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/jdWqZ3BJpV6
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, March 1,
2024, by dialing toll-free 1-888-390-0541 and using passcode
660924 # (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
December 31,
|
Year ended December
31,
|
|
2023
$
|
2022
$
|
Change
$
|
2023
$
|
2022
$
|
Change
$
|
|
|
|
|
|
|
|
|
Net
income
|
36,621
|
45,852
|
(9,231)
|
106,106
|
51,917
|
54,189
|
|
Add (Deduct) items
to get to Adjusted net income
|
|
|
|
|
|
|
|
Impairment
provisions(1)
|
4,917
|
—
|
4,917
|
30,591
|
20,499
|
10,092
|
|
Restructuring expected
credit loss provision(1)(2)
|
—
|
—
|
—
|
—
|
10,353
|
(10,353)
|
|
Employee separation
program(1)
|
638
|
203
|
435
|
1,442
|
2,296
|
(854)
|
|
Strategic advisory
fees(1)
|
—
|
—
|
—
|
—
|
8,524
|
(8,524)
|
|
Defined Benefit
Pension Revenue(3)
|
—
|
—
|
—
|
(29,916)
|
—
|
(29,916)
|
|
Lease repossession
costs(1)
|
2,151
|
4,242
|
(2,091)
|
13,800
|
28,059
|
(14,259)
|
|
Unrealized foreign
exchange loss (gain)
|
3,374
|
(17,887)
|
21,261
|
(5,768)
|
7,356
|
(13,124)
|
|
Realized foreign
exchange gain on intercompany loan(4)
|
(26,437)
|
—
|
(26,437)
|
(26,437)
|
—
|
(26,437)
|
|
Tax (recovery) expense
on adjusted items(2)
|
(1,056)
|
(584)
|
(472)
|
8,230
|
(10,162)
|
18,392
|
|
(16,413)
|
(14,026)
|
(2,387)
|
(8,058)
|
66,925
|
(74,983)
|
|
Adjusted net
income
|
20,208
|
31,826
|
(11,618)
|
98,048
|
118,842
|
(20,794)
|
|
Add (Deduct) items
to get to Adjusted EBT
|
|
|
|
|
|
|
|
Income tax
expense
|
13,064
|
12,546
|
518
|
53,821
|
21,933
|
31,888
|
|
Tax expense (recovery)
on adjusted items(2)
|
1,056
|
584
|
472
|
(8,230)
|
10,162
|
(18,392)
|
|
Adjusted
EBT
|
34,328
|
44,956
|
(10,628)
|
143,639
|
150,937
|
(7,298)
|
|
Add (Deduct) items
to get to Adjusted EBITDA
|
|
|
|
|
|
|
|
Net interest
expense
|
24,307
|
28,809
|
(4,502)
|
98,498
|
100,843
|
(2,345)
|
|
Depreciation and
amortization excluding impairment
|
54,593
|
51,557
|
3,036
|
207,414
|
182,114
|
25,300
|
|
Foreign exchange
loss
|
3,507
|
3,741
|
(234)
|
9,114
|
6,256
|
2,858
|
|
Gain on disposal of
property and equipment
|
—
|
(16)
|
16
|
(13)
|
(172)
|
159
|
|
Loss on fair value of
investments
|
1
|
495
|
(494)
|
14
|
1,068
|
(1,054)
|
|
82,408
|
84,586
|
(2,178)
|
315,027
|
290,109
|
24,918
|
|
Adjusted
EBITDA
|
116,736
|
129,542
|
(12,806)
|
458,666
|
441,046
|
17,620
|
|
|
|
(1)
|
Included in operating
expenses.
|
|
(2)
|
In the second quarter
of 2022, Chorus recognized a deferred tax asset on certain adjusted
expenses related to repossessions of aircraft and lease
restructurings in FIL's aircraft portfolio. In the second quarter
of 2023, Chorus recognized a provision against the deferred tax
asset as the aircraft have not yet been re-leased.
|
|
(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.
|
|
(4)
|
Realized foreign
exchange gain relates to the extinguishment of intercompany loan
receivables in the fourth quarter of 2023. During the term of these
intercompany loan receivables the unrealized foreign exchange gain
or loss was recognized on the loan receivable. The intercompany
loan payable was recorded in one of Chorus' subsidiaries with a USD
functional currency such that the foreign exchange offset was
recognized in exchange differences on foreign operations in other
comprehensive income. The elimination of the realized foreign
exchange from adjusted net income reflects the economics of the
intercompany transaction.
|
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
December 31,
|
Year ended December
31,
|
|
2023
$
|
2022
$
|
Change
$
|
2023
$
|
2022
$
|
Change
$
|
|
Adjusted net
income
|
20,208
|
31,826
|
(11,618)
|
98,048
|
118,842
|
(20,794)
|
|
Add (Deduct) items
to get to Adjusted earnings available to Common
Shareholders
|
|
|
|
|
|
|
|
Net income
attributable to non-controlling interest
|
(2,443)
|
(650)
|
(1,793)
|
(4,753)
|
(3,027)
|
(1,726)
|
|
Preferred Share
dividends declared
|
(8,940)
|
(8,913)
|
(27)
|
(35,426)
|
(22,902)
|
(12,524)
|
|
Adjusted earnings
available to Common Shareholders
|
8,825
|
22,263
|
(13,438)
|
57,869
|
92,913
|
(35,044)
|
|
Adjusted earnings
available to Common Shareholders per Common Share -
basic
|
0.05
|
0.11
|
(0.06)
|
0.30
|
0.48
|
(0.18)
|
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.
|
(unaudited)
(expressed in
thousands of Canadian dollars)
|
December 31,
2023
|
December 31,
2022
|
Change
|
|
$
|
$
|
$
|
|
Long-term debt
(including current portion)
|
1,755,580
|
2,030,276
|
(274,696)
|
|
Less:
|
|
|
|
|
Cash
|
(85,985)
|
(100,027)
|
14,042
|
|
Net
debt
|
1,669,595
|
1,930,249
|
(260,654)
|
|
Adjusted
EBITDA
|
458,666
|
441,046
|
17,620
|
|
Leverage
Ratio
|
3.6
|
4.4
|
(0.8)
|
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
December 31,
|
Year ended December
31,
|
|
2023
|
2022
|
Change
|
2023
|
2022
|
Change
|
|
$
|
$
|
$
|
$
|
$
|
$
|
|
Cash provided by
operating activities
|
21,143
|
81,633
|
(60,490)
|
299,675
|
279,512
|
20,163
|
|
Add
(Deduct)
|
|
|
|
|
|
|
|
Net changes in
non-cash balances related to operations
|
62,912
|
(9,772)
|
72,684
|
62,055
|
(28,773)
|
90,828
|
|
Capital expenditures,
excluding aircraft acquisitions
|
(4,340)
|
(9,766)
|
5,426
|
(15,251)
|
(15,914)
|
663
|
|
Capitalized major
maintenance overhauls
|
(6,080)
|
(3,017)
|
(3,063)
|
(15,776)
|
(15,974)
|
198
|
|
73,635
|
59,078
|
14,557
|
330,703
|
218,851
|
111,852
|
|
Net proceeds on asset
sales(1)
|
720
|
79,586
|
(78,866)
|
720
|
152,468
|
(151,748)
|
|
Free Cash
Flow
|
74,355
|
138,664
|
(64,309)
|
331,423
|
371,319
|
(39,896)
|
|
|
|
(1)
|
On January 23, 2024,
Chorus sold two aircraft held for sale at December 31, 2023, for
net proceeds on asset sales of US $21.9 million.
|
Forward-Looking
Information
This news release includes forward-looking information and
statements. Forward-looking information and statements are
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. Such
information and statements may involve but are not limited to
comments with respect to assumptions, strategies, expectations,
planned operations or future actions. Forward-looking information
and 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
information and statements, by their nature, are based on
assumptions, including those referenced below, and are subject to
important risks and uncertainties. Any forecasts or forward-looking
predictions or statements cannot be relied upon due to, among other
things, external events, changing market conditions and general
uncertainties of the business. Such information and statements
involve known and unknown risks, uncertainties and other factors
that may cause actual results, performance or achievements to
differ materially from those indicated in the forward-looking
information and statements.
Examples of forward-looking information and statements in this
news release include the discussion in the Outlook section, as well
as statements regarding expectations as to Chorus' future liquidity
and financial strength and contracted revenues, Chorus' future
growth and competitive position, the growth of Falko's asset
management business, the transition of Chorus' leasing
business to an asset light leasing model, the generation of cash
flows from asset sales and potential deployment of those proceeds
to enhance returns to Shareholders and/or invest in accretive
growth opportunities, the completion of pending or planned
transactions (including the successful close of Falko's Fund III),
Jazz's efforts to increase flying capacity under the CPA, and
expectations with regard to Share purchases under the NCIB. Actual
results may differ materially from results indicated in
forward-looking information for a number of reasons, including if:
any one or more of the key assumptions described in the Outlook
section fails to materialize; Chorus is unable to realize the
anticipated benefits of the Falko Acquisition, including the
transition to an asset light leasing model; Falko is unable to
successfully launch Fund III on the terms currently contemplated or
at all; Chorus (including any of its subsidiaries) is unable to
attract and retain the type and number of human resources it needs
to operate its business; new COVID-19 variants and/or new pandemic
or endemic diseases emerge and restrictive measures are implemented
to minimize their public health impacts; the effects of the
COVID-19 pandemic continue to adversely impact the financial health
of Chorus' contractual counterparties; general economic conditions
(including inflation and interest rates) worsen, or general
conditions for the aviation industry deteriorate; payments cease
(in whole or in part) under the CPA and/or aircraft lease
agreements with Chorus' customers; disputes emerge under the CPA
and/or aircraft lease agreements; Chorus defaults under any of its
debt covenants; asset impairments and/or provisions for ECL are
required; changes in law are made (including regulations relating
to climate change) which adversely affect Chorus' business or
assets; transactions (including financings) referenced in this news
release or in Chorus' public disclosure record fail to conclude on
the terms currently contemplated or at all; and/or one or more of
the risk factors referenced in Chorus' most recent Annual
Information Form, the risk factors in Section 8 Capital Structure
and Section 10 Risk Factors of the MD&A and in the
Corporation's public disclosure record available under its profile
on SEDAR+ at www.sedarplus.ca materializes. The forward-looking
statements contained in this news release represent Chorus'
expectations as of the date of this news release (or as of the date
they are otherwise stated to be made) and are subject to change
after such date. Chorus disclaims any intention or obligation to
update or revise such statements to reflect 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.