Selected Q1 2018 information:
Net income of $5.1 million, or $0.04 per basic share, inclusive of an unrealized foreign exchange loss of $18.0 million.
Adjusted net income1 of $26.5 million, or $0.21 per basic share.
Increase in Adjusted EBITDA1 of $23.6 million or 43% primarily driven by increased revenue from aircraft leasing.
Completed equity raise of approximately $112.0 million in gross proceeds.
Completed leasing transaction with Dublin-based CityJet for two CRJ900s.
Implemented Dividend Reinvestment Plan offering a 4% discount.
Completed the fifth Extended Service Program ('ESP') on a Dash 8-300 aircraft.
Jazz Airport Services employees, representing approximately 15% of Jazz's workforce, ratified a new collective agreement with a term to January 2022.
HALIFAX, May 4, 2018 /CNW/ - Chorus Aviation Inc. ('Chorus') (TSX: CHR) today announced solid first quarter financial results for the period ended March 31, 2018.
"The strong fundamentals of our business delivered solid performance in the first quarter of this year," said Joe Randell, President and Chief Executive Officer, Chorus. "We concentrated on maintaining the momentum achieved in 2017, supporting our vision of delivering regional aviation to the world. Our goal is to acquire new to mid-life, marketable aircraft with brand-name regional airlines that provide a diversified exposure to assets, customers and geographic markets. We were very pleased to welcome Dublin-based CityJet to our growing portfolio of strong regional carriers, bringing our current tally to 10 lessees in less than 16 months.
"In the quarter we successfully completed an equity raise that yielded approximately $107.0 million in net proceeds, bringing the total amount of capital raised to just over $300.0 million since the start of 2017. This capital positions us well to further invest in the growth of our leasing business. We have ongoing active negotiations and continue to have many good opportunities to assess, using our prudent approach.
"Our financial performance in the quarter generated $78.0 million in adjusted EBITDA, a $23.6 million or 43.0% increase over first quarter 2017 due primarily to growth in aircraft leasing. Adjusted earnings per basic share was $0.21, an increase of $0.08 or 61.5%.
"We were also pleased to complete the fifth extended service program on a Dash 8-300 aircraft that is now contributing to the leasing revenue stream under the CPA with Air Canada. I'd also like to acknowledge our Airport Services group who ratified a new collective agreement that is in effect until January 2022. The Chorus team remains committed to building additional shareholder value and I thank them for their hard work and professionalism,' concluded Mr. Randell.
FIRST QUARTER 2018
Financial Performance – first quarter 2018 compared to first quarter 2017
In the first quarter of 2018, Chorus reported adjusted EBITDA of $78.0 million versus $54.4 million in 2017, an increase of $23.6 million or 43.4%.
The $23.6 million increase in adjusted EBITDA was primarily driven by:
a $13.8 million increase mainly due to the growth in third party regional aircraft leasing;
increased aircraft leasing revenue under the Capacity Purchase Agreement ('CPA') with Air Canada of $2.3 million;
decreased stock-based compensation of $2.2 million;
decreased operating costs related to a $1.3 million increase in capitalized labour and maintenance costs on owned aircraft for major maintenance overhauls; and
a decrease of $4.9 million in other expenses, offset by a decline of $0.9 million in CPA performance incentive revenue.
Adjusted net income was $26.5 million for the period, an increase from 2017 of $10.4 million, or 64.5%. The change was a result of the $23.6 million increase in adjusted EBITDA previously described, plus a $0.2 million decrease in income taxes, partially offset by:
$5.8 million of interest costs related to increased aircraft debt and convertible units; and
$7.6 million of additional depreciation primarily related to new aircraft.
Net income was $5.1 million for the period, a decrease of $21.9 million or 81.3% from the same period of 2017. The decrease was due primarily to changes in unrealized foreign exchange losses of $32.2 million, offset by the previously noted $10.4 million increase in the adjusted net income.
2018 OUTLOOK
(See cautionary statement regarding forward-looking information below)
Chorus is committed to building additional shareholder value by growing regional aircraft leasing revenue, pursuing additional growth opportunities and strengthening the foundational contract flying segment.
Since the start of last year, Chorus has realized net proceeds of $303.0 million through the issuance of convertible debt units in March 2017 and the issuance of common shares1 in March 2018.
When combined with anticipated debt financing at typical ratios of up to three times equity, this capital affords Chorus the ability to invest up to $1.2 billion in the acquisition of aircraft for its leasing business.
Approximately 50% of this capital has been invested to date and Chorus anticipates investing the balance in 2018 to mid-2019 in new to mid-life aircraft with long-term leases to a diverse group of high quality customers clients located in geographies around the world.
Capital expenditures for 2018, excluding those for the acquisition of aircraft and the ESP, and including capitalized major maintenance overhauls, are expected to be between $44.0 million and $50.0 million. Capital expenditures for ESP and aircraft acquisitions as announced at March 31, 2018, expected to be between $81.0 million and $84.0 million in 2018, and excludes future capital for aircraft acquisitions.
Based on 2017-2018 winter schedule, the 2018 summer schedule and updated planning assumptions from Air Canada, Billable Block Hours under the CPA for 2018 are expected to be between 360,000 and 375,000 hours based on 116 Covered Aircraft as at December 31, 2018. The actual number of Billable Block Hours for 2018 may vary from this anticipated range due to many factors.