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."
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.
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.
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. |
(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. |
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 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 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 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. |
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).
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).
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 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 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 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. |
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.
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.
Chorus Media Contact: [email protected]; Chorus Analyst Contact: [email protected]
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