Discovery Air Inc. Announces Results for the Quarter Ended October 31, 2014

TORONTO, Dec. 8, 2014 /CNW/ - Discovery Air Inc. (the "Corporation") announced its financial and operating results for the three and nine months ended October 31, 2014.  The unaudited 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 October 31								Nine months ended October 31
(thousands of Canadian dollars, except per share amounts)		2014			2013			% change		2014			2013			% change
	Revenue	$	58,560		$	64,985		-10%		$	156,456		$	180,888		-14%
	EBITDA*	$	14,367		$	15,394		-7%		$	24,233		$	34,222		-29%
	EBITDA Margin*	25%			24%					15%			19%
	Profit (loss)	$	2,926		$	3,050		-4%		$	(3,699)		$	3,484		-206%
	Basic earnings (loss) per share	$	0.09		$	0.21		-57%		$	(0.14)		$	0.23		-161%
	Diluted earnings (loss) per share	$	0.09		$	0.19		-53%		$	(0.14)		$	0.23		-161%
	Adjusted profit (loss) *	$	3,384		$	3,624		-7%		$	(3,707)		$	2,392		-255%
	Basic adjusted profit (loss) per share *	$	0.11		$	0.24		-54%		$	(0.14)		$	0.16		-188%
	Diluted adjusted profit (loss) per share *	$	0.11		$	0.21		-48%		$	(0.14)		$	0.16		-188%
	Cash provided by (used in) operations	$	6,005		$	14,995		-60%		$	(6,603)		$	6,887		-196%
	Working Capital*	$	60,432		$	50,800		19%		$	60,432		$	50,800		19%
* See "Non-IFRS measures" below

Financial Highlights

• Consolidated revenues for the three months ended October 31, 2014 ("Current Quarter") decreased 10%, in comparison to the three months ended October 31, 2013.  Consolidated revenues for the nine months ended October 31, 2014 ("Year-to-date") decreased 14%, in comparison to the nine months ended October 31, 2013.  The decline for both Current Quarter and Year-to-date was largely attributable to decreased flight hours due to lower resourced-based activity in our primary markets.
  
  
• EBITDA for the Current Quarter and Year-to-date declined by 7% and 29%, respectively, in comparison to the same periods in the prior year, stemming from decreased flight hours.
  
  
• Profit for the Current Quarter decreased to $2.9 million ($0.09 basic and diluted earnings per share) compared to $3.1 million ($0.21 basic earnings per share and $0.19 diluted earnings per share) in the same quarter in the prior year. Year-to-date loss was $3.7 million ($0.14 basic and diluted loss per share) compared to profit of $3.5 million ($0.23 basic and diluted earnings per share) in the comparative period.  The difference in the Current Quarter and Year-to-date is largely attributable to decreased EBITDA ($1.0 million decrease in the Current Quarter and $10.0 million decrease in the Year-to-date).

Recent Developments
On November 27, 2014, the Corporation's unsecured 8.375% debenture holders voted in favor of two amendments to the debentures.  As a result: a) the definition of "change of control" in the debenture indenture will be changed to allow for the Company's largest shareholder, Clairvest Group Inc., to increase its equity interest above 50% without requiring the Company to repurchase the Debentures; and b) the maturity date of the Debentures will be extended from June 30, 2016 to June 30, 2018, which extension is subject to the Company completing, prior to June 29, 2016, an equity offering of the Company's Class A common shares and/or Class B variable voting shares for a minimum aggregate net proceeds of $5,000,000. 

Subsequent to quarter end, an aircraft owned and operated by Air Tindi was forced to make an emergency landing shortly after taking off.  All five passengers on board, as well as the pilot, were safely and successfully rescued after the incident.  The damage to the aircraft is covered by insurance.

Commenting on the quarterly financial results, Jacob (Koby) Shavit, the Corporation's President and Chief Executive Officer stated, "This quarter saw the implementation of significant cost efficiency measures in our units in the north-west as we adapt to current market conditions and preserve our foundations to emerge even stronger when the market situation will improve. Our strategic vision remains unchanged and we are targeting long-term success in the Oil & Gas and Mining sectors while continuing our aggressive international growth with Contracted Airborne Training Services.

As we enter our planning phase for the next fiscal year we are focussed on implementing our long term strategy, maximizing profitability in each of our businesses and maintaining flexibility to react to changing market conditions."

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 quarter ended October 31, 2014, 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 quarter ended October 31, 2014, 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 October 31, 2014 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, [email protected], 1-866-903-3247