From Chorus Aviation Inc
Q1 2020 Financial Highlights
- Net loss of $17.3 million, or $(0.11) per basic share; a period-over-period decrease of $50.7 million due to the change in unrealized foreign exchange of $55.1 million.
- Adjusted net income1 of $25.0 million, or $0.16 per basic share; an increase of $6.0 million quarter-over-quarter due to the growth in the Regional Aircraft Leasing segment offset by a reduction in the Regional Aviation Services segment.
- Adjusted EBITDA1 of $88.7 million; an increase of $14.0 million over first quarter 2019.
Recent Developments
- Increased cash and committed facilities to over $265 million through securing a two-year US$100.0 million unsecured revolving credit facility along with principal and interest payment deferrals for certain aircraft loans until September 30, 2020.
- Continued to focus on the health and safety of employees and passengers and accessed the Canada Emergency Wage Subsidy program for Jazz employees, mitigating significant employee reductions and supporting business resumption plans.
- Planning to commence operation of a Dash 8-400 Simplified Package Freighter under the Air Canada Express banner, allowing Chorus to transport loose load cargo like medical supplies, personal protective equipment and other goods needed to support the ongoing fight against COVID-19.
- Published Chorus’ first Corporate Sustainability Report, describing Chorus’ commitment to safety, our people, communities and the environment.
HALIFAX, May 14, 2020 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced first quarter 2020 financial results and measures to further strengthen the organization.
“Our company started this year in the strongest position in our history, having a strong balance sheet, customer base and growth prospects, stated Joe Randell, President and Chief Executive Officer, Chorus. “Our growth trajectory generated increases in adjusted net income and adjusted EBITDA of approximately 31.2% and 18.7%, respectively, quarter over quarter.”
“Our efforts today are focused on ensuring the well-being of our employees, reducing costs and bolstering our liquidity as we prepare for the lifting of travel restrictions. At a time of great stress and uncertainty, I’m inspired by the energy, resilience, and commitment of our employees. I thank them for their dedication under these very difficult conditions.”
“The Chorus team has overcome significant challenges in the past, and I’m confident this crisis will be no different. We have initiated several cost reduction measures, including capital expenditure reductions and deferrals, the temporary furlough of over 3,000 employees, and compensation reductions for our management, administrative employees and board of directors. We have a strong liquidity position, with combined cash and committed facilities of over $265 million2, providing liquidity to navigate through this period and emerge positively on the other side,” concluded Mr. Randell.
| 2 The liquidity of $265.0 million includes the US $100.0 million unsecured revolving credit facility. US dollars have been converted using a foreign exchange rate of $1.4187, the March 31, 2020 closing day rate from the Bank of Canada. |
Response to COVID-19
Cash and Liquidity Enhancements
As at March 31, 2020, Chorus had cash of $90.6 million inclusive of a $30.0 million draw from its $75.0 million committed facility with the opportunity to borrow up to a further $25.0 million on a demand basis. As at March 31, 2020, Chorus has provided letters of credit totaling $10.1 million that reduced the amount available under this facility.
On April 28, 2020, Chorus further strengthened its liquidity by obtaining a US$100.0 million unsecured revolving credit facility for general corporate purposes, repayable in two years.
Chorus is in the process of raising approximately US$30.0 to US$50.0 million in financing to be secured by up to four unencumbered aircraft. These financings are currently anticipated to close in the Company’s second quarter, subject to negotiation and execution of definitive agreements and the satisfaction of conditions precedent to closing. There can be no assurance that these conditions will be satisfied.
Chorus also suspended all future dividend payments and the Dividend Reinvestment Plan (‘DRIP’) until further notice following the payment of the March 2020 dividend on April 17, 2020. This is estimated to save approximately $55.0 million in annual cash dividend payments, considering a DRIP participation rate of 29%.
First Quarter Summary
In the first quarter of 2020, Chorus reported adjusted EBITDA of $88.7 million; an increase of $14.0 million or 18.7% relative to the first quarter of 2019.
The Regional Aircraft Leasing segment’s adjusted EBITDA increased by $16.5 million due primarily to the growth in aircraft earning leasing revenue.
The Regional Aviation Services segment’s adjusted EBITDA decreased by $2.5 million. The first quarter results were impacted by:
- a reduction in other revenue due to a decrease in third-party maintenance, repair and overhaul (‘MRO’) revenue and reduced contract flying; and
- increased general administrative expenses; offset partially by
- decreased stock-based compensation of $2.6 million due to the change in the share price inclusive of the change in fair value of the equity derivative contract known as a total return swap; and
- increased aircraft leasing revenue under the capacity purchase agreement (‘CPA’).
Adjusted net income was $25.0 million for the quarter, an increase of $6.0 million due to:
- the $14.0 million increase in adjusted EBITDA previously described;
- a change in realized foreign exchange losses and unrealized foreign exchange losses on working capital of $1.5 million; and
- a $0.9 million decrease in income tax expense resulting from a reduction in certain provincial tax rates and non-deductible expenses reduced by the increase in adjusted EBT1; partially offset by
- an increase in depreciation of $5.9 million primarily related to additional aircraft in the Regional Aircraft Leasing segment; and
- an increase in net interest costs of $4.5 million primarily related to additional aircraft debt in the Regional Aircraft Leasing segment.
Net income decreased $50.7 million due to the change in net unrealized foreign exchange losses on long-term debt of $55.1 million and increased employee separation program costs of $3.5 million offset by decreased signing bonuses of $2.0 million and the previously noted $6.0 million increase in adjusted net income.