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