BC Ferries Releases First Quarter Results

Traffic showing signs of improvement while pandemic continued to impact Q1 results

VICTORIA, BC, August 19, 2021 /CNW/ - BC Ferries released its first quarter results today for the three months ended June 30, 2021. In the first three months, vehicle and passenger traffic increased 37 per cent and 40 per cent respectively, compared to the same period in the prior year. 

While these increases are significant, ongoing travel restrictions limited passenger and vehicle traffic growth, with the company experiencing declines in revenue, earnings and cash from operations, compared to a pre-COVID period. Vehicle and passenger traffic was lower by 27 per cent and 46 per cent respectively, compared to the same period in fiscal 2020, a pre-COVID time.

In the three months ended June 30, 2021, revenues increased $91.8 million compared to the same period in the prior year, primarily as a result of the Safe Restart Funding, increases in traffic volumes and net retail sales. In the three months ended June 30, 2021, net earnings were $4.7 million, representing an increase of $66.7 million compared to a net loss of $62.0 million in the same period in the prior year. 

"Traffic was stronger in this quarter than the same period last year but still well below expectations given the impacts of the third wave of COVID-19. Throughout the period, BC Ferries continued to provide lifeline service to coastal communities and we are pleased to see positive momentum with the return of summer leisure travel," said Mark Collins, BC Ferries' President and CEO.

In December 2020, BC Ferries received $308 million through the Safe Restart Program, a federal-provincial initiative intended to help provinces and territories safely restart their economies. BC Ferries, on behalf of the coastal ferry system and its users, is appreciative of the contributions from both the federal and provincial governments so the company can connect communities, deliver essential goods and help restore tourism in the destinations it serves. 

The goals of the federal-provincial Safe Restart Program are to mitigate the impact of revenue losses and COVID-19-related spending, to help restore the level of annual earnings required to maintain service levels, and to keep fare increases to affordable levels through March 31, 2024. Maintaining this level of earnings supports the public interest in long-term sustainability, reliability and affordability of the ferry system.

Safe Restart Funding of $60.0 million was applied towards BC Ferries' operating losses in the three months ended June 30, 2021. Without the Safe Restart Funding of $60.0 million, revenues in this period would have been $169.2 million and net losses would have been $55.3 million.

The company continues to modernize the fleet with four more battery-electric hybrid Island Class vessels and one more liquefied natural gas fuelled Salish Class vessel. Capital expenditures in this quarter totalled $38.7 million and included new vessels, major overhauls and inspections, marine ramp structure upgrades, hardware upgrades and various other projects. It is vital for BC Ferries to invest in capital projects to ensure the ferry system is safe and reliable.

BC Ferries' full financial statements, including notes, and Management's Discussion and Analysis are filed on SEDAR and will be available at www.sedar.com. 

BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 13.1 million passengers and 6.7 million vehicles during the fiscal year ended March 31, 2021. BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 25 routes, currently supported by 35 vessels and 47 terminals, and also manages other remote routes through contracts with independent operators.

FORWARD LOOKING STATEMENTS
This news release contains certain "forward looking statements". These statements relate to future events or future performance and reflect management's expectations regarding our growth, results of operations, performance, business prospects and opportunities, and industry performance and trends. They reflect management's current internal projections, expectations or beliefs and are based on information currently available to management. Some of the market conditions and factors that have been considered in formulating the assumptions upon which forward looking statements are based include traffic, the value of the Canadian Dollar relative to the US Dollar, fuel costs, construction costs, the state of the local economy, fluctuating financial markets, demographics, tax changes, the requirements of the Coastal Ferry Services Contract, and the impact of the COVID-19 pandemic.

Forward looking statements included in this release include statements with respect to: the impact of the COVID-19 pandemic, the impact of the federal-provincial Safe Restart Funding, and capital expenditures.  In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, prospective investors should specifically consider various factors including, but not limited to, the risks and uncertainties associated with: vendor non-performance, capital market access, interest rates, foreign currency, fuel price, and traffic volume fluctuations, the implementation of major capital projects, security, safety, and environmental incidents, confidential or sensitive information breaches, changes in laws, vessel repair facility limitations, economic regulatory environment changes, tax changes, and Indigenous rights and claims.

Actual results may differ materially from any forward looking statement. Although management believes that the forward looking statements contained in this release are based upon reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this release, and British Columbia Ferry Services Inc. assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by applicable law.

NON-IFRS MEASURES
In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain financial measures that do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental financial measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance of our ongoing business on an overall basis.

SIGNIFICANT EVENTS FIRST QUARTER FISCAL 2022

Significant events during or subsequent to fiscal 2022 include the following:

• On April 1, 2021, BC Ferries implemented average tariff increases of 2.3 per cent in accordance with the British Columbia Ferries Commissioner's Order 19-04 dated September 30, 2019 and in accordance with the Safe Restart Funding Agreement.
  
  
• On June 15, 2021, the Province lifted travel restrictions implemented on April 23, 2021 which denied travel to customers travelling for non-essential reasons on routes crossing regional zones as defined by the Province in a Ministerial Order. BC Ferries' principal priorities continue to be the safety of its' passengers and employees aboard the ferries and in all workplaces, and adhering to provincial and federal guidelines as the company provides essential ferry service. BC Ferries is closely following the COVID-19 directives and guidance provided by the Province and Transport Canada. BC Ferries continues with measures to mitigate risk including additional cleaning and sanitization.
  
  
• On July 15, 2021, the company announced that due to current fuel market conditions, effective August 1, 2021, the fuel rebate will be 0.5 per cent on average on all routes, with the exception of the Northern Routes, which will remain at 1.5 per cent until further notice. The 1.5 per cent fuel rebate had been in place on all routes since April 1, 2020.
  
  
• On July 22, 2021, the third of six new Island Class vessels arrived in Canada from Damen Shipyard Galati in Romania, with the fourth of six arrived in Canada on August 13, 2021. These vessels made the transatlantic journey under their own power in approximately 60 days. On July 31, 2021, the fifth of six vessels departed Romania for Canada with the last of the six new Island Class vessels expected to depart Romania for Canada late in the second quarter of fiscal 2022. The arrival of these new vessels will allow Quadra Island and Gabriola Island to each be serviced by two Island Class vessels. These new Island Class vessels are expected to enter service in the spring of 2022. The new vessels are outfitted with hybrid diesel-electric propulsion and have a capacity of up to 400 passengers and crew and approximately 47 vehicles.
  
  
• On July 26, 2021, the Commissioner issued Order 21-01, conditionally approving BC Ferries' application for a major capital expenditure for the Island Class electrification program. On May 28, 2021, the company submitted an application to the Commissioner under Section 55 of the Coastal Ferry Act seeking approval of a major capital expenditure. In the application, the proposal is to upgrade the six existing Island Class vessels with associated terminals to enable the vessels to operate predominantly in full battery-electric mode. This major capital expenditure requires funding to proceed and BC Ferries is seeking federal funding to accelerate the program to provide shore charging infrastructure and to change the vessels from hybrid-diesel-electric to battery-electric operations.
  
   
• On August 2, 2021, the Northern Expedition returned to service. On June 3, 2021, the Northern Expedition was removed from service and required extensive repairs to both the vessel's main engines. During this period, BC Ferries modified the northern routes from a summer to a winter schedule with the Northern Adventure covering service and supplemented with a barge service.

SOURCE British Columbia Ferry Services Inc.

Media Contact: BC Ferries, Communications, Victoria: [phone]; Customer Contact: Victoria: [phone], Toll-free: 1-888-BCFERRY (1-888-223-3779)

Related Links

http://www.bcferries.ca