Discovery Air Inc. announces results for the quarter ended July 31, 2013

TORONTO, Sept. 15, 2013 /CNW/ - Discovery Air Inc. (the "Corporation") announced its financial and operating results for the three and six months ended July 31, 2013.  The second quarter interim condensed consolidated financial statements and management discussion and analysis ("MD&A") will be available on SEDAR at www.sedar.com and on the Corporation's website at www.discoveryair.com.

Selected Financial Information		Three months ended July 31								Six months ended July 31
(thousands of Canadian dollars, except per share amounts)		2013			2012			% change		2013			2012			% change
	Revenue	$	72,308		$	74,225		-3%		$	115,902		$	127,158		-9%
	EBITDA*	$	21,017		$	23,292		-10%		$	18,827		$	32,159		-41%
	EBITDA Margin*		29%			31%					16%			25%
	Profit	$	9,239		$	8,935		3%		$	435		$	10,295		-96%
	Basic earnings per share	$	0.63		$	0.61		3%		$	0.03		$	0.71		-96%
	Diluted earnings per share	$	0.40		$	0.38		5%		$	0.03		$	0.50		-94%
	Adjusted Profit (loss)*	$	7,572		$	8,613		-12%		$	(1,232)		$	7,839		-116%
	Basic adjusted profit (loss) per share	$	0.52		$	0.59		-12%		$	(0.08)		$	0.54		-115%
	Diluted adjusted profit (loss) per share	$	0.35		$	0.37		-5%		$	(0.08)		$	0.42		-119%
	Cash from operations	$	5,360		$	4,458		20%		$	(8,108)		$	(1,042)		-678%
	Working capital	$	32,855		$	33,912		-3%		$	32,855		$	33,912		-3%
* See "Non-IFRS measures" below

 

Financial Highlights

• Revenues for the quarter ended July 31, 2013 ("Current Quarter") were $72.3 million, a 3% decrease from the comparative period, on lower flight hour activity from the resourced-based sector as well as lower forest fire management activity.  Increased airborne training services at Discovery Air Defence Services and increased maintenance, repair and overhaul activity at Discovery Air Technical Services partially offset the decrease.  Similarly, revenues for the six month period ended July 31, 2013 ("Year-to-date") decreased 9% from the comparative period on lower resource and forest fire management activity.
  
  
• Current Quarter EBITDA was $21.0 million compared to EBITDA of $23.3 million reported in the comparative period on lower revenues for the reasons described above.  Year-to-date EBITDA was $18.8 million compared to $32.2 million reported in the comparative period on weaker first quarter results.  Year-to-date net capital expenditures decreased to $6.9 million compared to $37.5 million in the comparative period thereby offsetting reduced cash inflows from the lower EBITDA.
  
  
• The Corporation recorded a quarterly profit of $9.2 million compared to $8.9 million in the second quarter of Fiscal 2013. Current Quarter profit included $1.6 million in gains arising from the sale of a subsidiary and the revaluation of contingent consideration to be paid for the purchase of Helicopters.cl SpA.  Excluding all non-cash gains, adjusted profit was $7.6 million compared to an adjusted profit of $8.6 million in the comparative period.
  
  
• Year-to-date profit was $0.4 million ($0.03 earnings per share - basic and diluted) compared to a profit of $10.3 million ($0.71 basic earnings per share and $0.50 diluted earnings per share) in the comparative period. Year-to-date profit was affected by lower first quarter results.
  
  
• The decrease in the Corporation's trailing twelve month EBITDA (primarily from lower than expected first quarter results) continues to exert pressure on the total debt leverage ratio covenant related to the secured convertible debentures.  To avoid any possibility of non-compliance with this covenant, the Corporation requested and received a waiver for the third quarter ending October 31, 2013.

Commenting on the financial results, Jacob Shavit, the Corporation's President and Chief Executive Officer stated, "Our second quarter results were consistent with last year.  Stronger results from airborne training offset weaker demand for our services in the resource-based market and lower forest fire activity.  As we enter into the second half of the year, we will be diligent in monitoring the seasonal demands for our services as well as continue to execute on various cost savings initiatives."

"I am extremely proud to note that our Defence Services group recently surpassed 40,000, accident free, flying hours in support of the Canadian Forces.  This is a major accomplishment.  We will build on our commitment to safety and our other core competencies to grow this business internationally.  We are working diligently to explore additional new opportunities for our services."

Conference Call
A conference call with analysts and other interest parties to review results of the second quarter of fiscal 2014 will be held on Monday, September 16, 2013 at 11:00 a.m. (Eastern Time).  The conference call may be attended by calling 1-888-231-8191.  Please dial in 15 minutes prior to the call start time to secure a line.  The conference call will be archived for replay approximately three hours following its conclusion on Discovery Air's website at www.discoveryair.com/investors.

Director Elections and Changes
The following individuals were elected to the board of directors of the Corporation (the "Board") at its annual and special meeting of the shareholders held on June 11, 2013 (the "Meeting"): James L. Goodfellow; General Raymond R. Henault, (Ret'd); Alan R. Hibben; G. John Krediet; Joseph D. Randell; Kenneth B. Rotman; and Brian J. Semkowski.  50.46% of the Corporation's issued and outstanding common shares were represented in person or by proxy at the Meeting, and each director received the support of no less than 97.25% of the shares voted. The report on voting results for the Meeting can be found on SEDAR at www.sedar.com.

On June 20, 2013, Alan Hibben resigned from the Board.  On July 8, 2013, Michael Grasty was appointed to the Board.

Forward-Looking Statements
Forward-looking information and statements are included in this earnings release.  Please refer to the statement regarding forward-looking statements contained in the Corporation's Management's Discussion and Analysis for the year ended January 31, 2013 and the second quarter ended July 31, 2013, which are incorporated herein by reference.  That statement provides an explanation as to what forward-looking statements are, and the specific factors, uncertainties and potential events that the Corporation has identified for the attention of readers.  When relying on forward-looking information and statements to make decisions, investors and others should carefully consider these factors and other uncertainties and potential events.

The Corporation's unaudited interim condensed consolidated financial statements and MD&A for the second quarter ended July 31, 2013, have been filed concurrently and are available on the Corporation's website at www.discoveryair.com and on SEDAR at www.sedar.com.  The reader is encouraged to review the unaudited interim condensed consolidated financial statements and MD&A for the quarter ended July 31, 2013 for more complete disclosure on the Corporation's financial condition and results of operations.

The Corporation's Class A common voting shares and unsecured convertible debentures trade on the Toronto Stock Exchange under the symbols DA.A and DA.DB.A, respectively.

Non-IFRS Measures
References to "EBITDA" are to net profit (loss) before finance costs, income taxes, depreciation of property and equipment and intangible assets, gains and losses on disposal of assets and extinguishment of debt, gains on acquisition and disposals, impairment losses, and gains and losses resulting from the change in fair value of financial liabilities. The EBITDA margin is EBITDA as a percentage of revenue.  Management believes EBITDA to be an important metric in measuring the performance of the Corporation's day-to-day operations. This measurement is useful in assessing the Corporation's ability to service debt and to meet other payment obligations, and as a basis for valuation. "Adjusted profit (loss)" is net profit (loss) attributable to shareholders of Discovery Air Inc. excluding non-cash gain on extinguishment of debt gains and losses on disposal of property and equipment, gains on acquisitions and disposals, and gains and losses resulting from the change in fair value of financial liabilities and impairment loss, net of taxes.

SOURCE: Discovery Air Inc.

Sheila Venman
[email protected]
1-866-903-3247