Achieves first quarter targets, increases guidance
Q1 2024 Highlights:
- Free Cash Flow of $102.1 million, compared to $73.1 million for Q1 2023, primarily derived from operating cash flows and net proceeds of $38.0 million related to the sale of two A220-300s, one ATR72-500 and two engines.
- Leverage Ratio improved to 3.4 at March 31, 2024 from 3.6 at December 31, 2023, primarily through long-term debt repayments of $134.6 million since December 31, 2023.
- Net income of $12.3 million, compared to $32.0 million for Q1 2023.
- Adjusted Earnings available to Common Shareholders of $11.8 million, compared to $21.5 million for Q1 2023.
- Adjusted Earnings available to Common Shareholders of $0.06 per Common Share, basic, compared to $0.11 for Q1 2023.
- Adjusted EBITDA of $109.1 million, compared to $118.1 million for Q1 2023.
- Purchased and cancelled 938,216 Common Shares under the current NCIB during the quarter.
- Purchased one King Air 350 in the first quarter of 2024 and leased it to the Canadian Department of National Defence as an addition to Voyageur’s existing contract for in-service-support of the manned airborne intelligence surveillance and reconnaissance (MAISR) program.
- Falko executed a sale and purchase agreement with Nordic Aviation Capital to acquire a portfolio of 24 Embraer aircraft on behalf of Fund II.
HALIFAX, NS, May 6, 2024 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced its first quarter 2024 financial results.
“Throughout the first quarter, Chorus continued to perform well and delivered results in line with our guidance. We made solid progress on debt reduction and generation of cash flows from operations and asset sales,” said Colin Copp, President and Chief Executive Officer, Chorus. “Chorus generated Free Cash Flow of $102.1 million compared to $73.1 million in Q1 2023, and improved its Leverage Ratio to 3.4 at March 31, 2024 from 3.6 at December 31, 2023.”
“We expect continued strong cash generation and are increasing our 2024 guidance for consolidated Adjusted EBITDA and Free Cash Flow, as well as the majority of guidance for RAL, including net proceeds from asset sales,” commented Mr. Copp.
“Improving value for our shareholders is our top priority. We acknowledge the pace of transitioning our leasing business to an asset light model has been slow. As such, we have been working hard for several months to explore options to accelerate the monetization of the asset value in our leasing business,” said Mr. Copp.
“Between November 2022 and March 2024, we repurchased and cancelled 10.5 million shares, representing 5.2% of the outstanding shares at the time of the NCIB launch in 2022,” continued Mr. Copp. “In the first quarter of 2024, the average price for shares we purchased under the NCIB was $2.06. At our current market price, we intend to continue to utilize our NCIB.”
First Quarter Summary
In the first quarter of 2024, Chorus reported Adjusted EBITDA of $109.1 million, a decrease of $9.0 million compared to the first quarter of 2023.
The RAL segment’s Adjusted EBITDA was $55.0 million, a decrease of $6.6 million compared to the first quarter of 2023 primarily due to:
- a decrease in lease revenue of $9.9 million primarily due to lower market lease rates on re-leased aircraft, lower maintenance reserve releases and the sale of aircraft in 2024; and
- increased general administrative expense; partially offset by
- a decrease in expected credit loss (“ECL“) provisions of $3.1 million due to improved credit ratings on certain lessees; and
- an increase in the net gain on sale of assets of $3.0 million.
The RAS segment’s Adjusted EBITDA was $62.4 million, a decrease of $1.5 million compared to the first quarter of 2023 primarily due to:
- a decrease in aircraft leasing revenue under the CPA of $4.5 million primarily due to a change in lease rates on certain aircraft; and
- a decrease in other revenue of $1.6 million primarily due to Voyageur’s decreased revenue in parts sales, contract flying and MRO activity; partially offset by
- an improvement in the Controllable Cost Guardrail of $2.0 million; and
- an increase in capitalization of major maintenance overhauls on owned aircraft of $1.9 million.
Corporate Adjusted EBITDA was $(8.4) million compared to $(7.4) million in the first quarter of 2023 primarily due to an increase in stock-based compensation of $1.2 million due to the change in fair value of the Total Return Swap offset by a decrease in the Common Share price.
Adjusted Net Income was $24.1 million for the quarter, a decrease of $6.7 million compared to the first quarter of 2023 primarily due to:
- a $9.0 million decrease in Adjusted EBITDA as previously described;
- an increase in depreciation expense of $4.7 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; and
- a negative change in foreign exchange of $2.0 million; partially offset by
- a decrease of $5.1 million in income tax expense;
- a decrease in net interest costs of $3.0 million; and
- a positive change in the fair value on investments and derivatives of $0.9 million.
Net income decreased $19.7 million compared to the first quarter of 2023 primarily due to:
- the previously noted decrease in Adjusted Net Income of $6.7 million; and
- a negative change in net unrealized foreign exchange of $14.6 million; partially offset by
- a decrease in lease repossession costs of $1.6 million.
Consolidated Financial Analysis
This section provides detailed information about Chorus’ performance for the three months ended March 31, 2024 compared to the three months ended March 31, 2023.
| (unaudited)(expressed in thousands of Canadian dollars) | Three months ended March 31, | |||
| 2024 | 2023 | Change | Change | |
| $ | $ | $ | % | |
| Operating revenue | 426,184 | 415,252 | 10,932 | 2.6 |
| Operating expenses | 376,348 | 353,349 | 22,999 | 6.5 |
| Operating income | 49,836 | 61,903 | (12,067) | (19.5) |
| Net interest expense | (22,454) | (25,458) | 3,004 | (11.8) |
| Foreign exchange (loss) gain | (12,652) | 4,031 | (16,683) | (413.9) |
| Gain on fair value of investments and derivatives | 3,065 | 1,892 | 1,173 | 62.0 |
| Income before income tax | 17,795 | 42,368 | (24,573) | (58.0) |
| Income tax expense | (5,485) | (10,349) | 4,864 | (47.0) |
| Net income | 12,310 | 32,019 | (19,709) | (61.6) |
| Net income attributable to non-controlling interest | 3,491 | 490 | 3,001 | 612.4 |
| Net income attributable to Shareholders | 8,819 | 31,529 | (22,710) | (72.0) |
| Preferred Share dividends declared | (8,848) | (8,871) | 23 | (0.3) |
| (Loss) earnings attributable to Common Shareholders | (29) | 22,658 | (22,687) | (100.1) |
| Adjusted EBITDA | 109,061 | 118,056 | (8,995) | (7.6) |
| Adjusted EBT | 29,927 | 41,789 | (11,862) | (28.4) |
| Adjusted Net Income | 24,107 | 30,824 | (6,717) | (21.8) |
About Chorus Aviation Inc.
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.