Discovery Air Inc. announces results for the quarter ended July 31, 2015

TORONTO, Sept. 11, 2015 /CNW/ - Discovery Air Inc. (the "Corporation") announced its financial and operating results for the three and six months ended July 31, 2015. The unaudited interim 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)			2015			2014		% change			2015			2014		% change
	Revenue	$	62,531		$	56,813		10%		$	104,946		$	97,896		7%
	EBITDA*	$	16,851		$	10,825		56%		$	19,272		$	9,866		95%
	Income (loss)	$	(587)		$	1,111		-153%		$	(5,041)		$	(6,625)		24%
	Basic and diluted income (loss) per share	$	(0.01)		$	0.03		-133%		$	(0.07)		$	(0.26)		73%
	Cash provided by (used in) operations	$	4,584		$	(2,506)		283%		$	(5,209)		$	(12,608)		59%
	Working Capital*	$	57,149		$	51,822		10%		$	57,149		$	51,822		10%
* See "Non-IFRS measures" below

Financial Highlights

• Consolidated revenues for the three months ended July 31, 2015 ("Current Quarter") increased 10%, in comparison to the three months ended July 31, 2014. The Aviation segment experienced increased activity (an 18% increase from the comparative period) primarily due to increased airborne training in Canada and the commencement of airborne training services to the German Armed Forces.
• Consolidated revenues for the six months ended July 31, 2015 ("Year-to-date") increased 7%, in comparison to the six months ended July 31, 2014. The Aviation segment experienced increased activity (an 18% increase from the comparative period) primarily due to increased forest fire suppression operations in North & South America and airborne training in Canada and Germany, partially offset by the continued decline in the mining and oil and gas sectors.
• EBITDA for the Current Quarter increased $6.0 million in comparison to the same period in the prior year, primarily due to increased flight hours and cost containment measures implemented in the second half of the prior fiscal year. 
• Year-to-date EBITDA increased $9.4 million in comparison to the same period in the prior year, primarily due to increased flight hours and cost containment measures.           
• Loss for the three months July 31, 2015 was $0.6 million compared to Income of $1.1 million for the same period in the prior year. The variance was mainly attributable to $6.5 million in losses on equipment recorded in the current quarter compared to $0.6 million of gains on equipment recorded in the comparative period, partially offset by increased EBITDA.
• Loss for the six months July 31, 2015 was $5.0 million compared to $6.6 million for the same period in the prior year. The variance was mainly attributable to $5.4 million in losses on equipment recorded in the current quarter compared to $0.6 million of gains on equipment recorded in the comparative period, partially offset by increased EBITDA.

"The second quarter results substantiate that even in the presence of market headwinds in some of our traditional sectors, Discovery Air is moving in the right direction" reported Jacob (Koby) Shavit, the Corporation's President and Chief Executive Officer.

"This is the third consecutive quarter with improved EBITDA with almost 100% increase in the six months year to date compared to the same period in the prior year.   This significant increase in EBITDA is the result of turning modestly improved revenue along with rigorous cost containment initiatives combined with agile efforts to increase our activities in new projects, into an improved bottom line.  The Corporation is operating efficiently during a down cycle in the mining and oil and gas sectors and is well positioned for growth when these industries recover.  The Corporation remains committed to strategic initiatives for long-term success in these sectors while pursuing vigorously international opportunities in Contracted Airborne Training Services."

"As we enter the second half of the fiscal year the Corporation will remain vigilant in monitoring and reacting to changes in demand in an effort to continue on a path of improved financial results."

Recent Developments

• On May 26, 2015, the Corporation renewed its operating line of credit ("Operating Line").  The Operating Line matures on June 30, 2017, and increases the borrowing limit to $30.0 million during the Corporation's peak season and $20.0 million outside of the peak season.
• On June 22, 2015, the Corporation announced that they had signed a non-binding letter of intent ("LOI") to sell substantially all the assets of Technical Services.  The Corporation is targeting a signed purchase agreement in the second half of the fiscal year ending January 31, 2016, however the transaction is contingent on the completion of due diligence and the satisfaction of certain conditions that are beyond the control of the Corporation.  The Corporation recognized an impairment loss of $2.0 million on the assets contemplated to be sold in the LOI during the three months ended July 31, 2015.
• The Corporation has continued efforts to streamline core assets and businesses during the current period.  Additional aircraft have been identified as available for divestiture. In the three months ending July 31, 2015, the Corporation reclassified three aircraft to assets held for sale and recognized an impairment loss of $2.4 million.

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 MD&A for the three and six months ended July 31, 2015, 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 consolidated financial statements and MD&A for the three and six months ended July 31, 2015, 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 consolidated financial statements and MD&A for the three and six months ended July 31, 2015 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-recurring 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.  "Working Capital" is current assets less current liabilities excluding current portion of loans and borrowings and operating line of credit. 

SOURCE Discovery Air Inc.

Sheila Venman, VP Human Resources & Communications, [email protected], 1-866-903-3247