Q2 2024 Highlights: Generated strong Free Cash Flow1,2 of $28.2 million for the period ended June 30, 2024 primarily derived from operating cash flows. Leverage Ratio1,2 improved to 3.0 at June 30, 2024 primarily through long-term debt repayments of $79.7 million since December 31, 2023. Purchased and cancelled 1.4 million common shares under the current normal course issuer bid ('NCIB') during the quarter at a weighted average price of $2.15 per common share. Announced agreement to sell Regional Aviation Leasing ('RAL') segment (the 'Transaction') with closing expected by end of this year, subject to shareholder approval, regulatory approvals and other customary conditions to closing. Net loss of $180.6 million for the period ended June 30, 2024, inclusive of a previously disclosed $187 million impairment on discontinued operations.  Net income from continuing operations of $8.5 million for the period ended June 30, 2024. RAL transaction to eliminate $1.7 billion in financings4, including all RAL segment aircraft-related debt, substantially all Chorus' corporate debt, and US $300.0 million in Series 1 Preferred Shares ('Preferred Shares'). Post closing, the Transaction is expected to significantly improve all of Chorus' key adjusted metrics on a pro forma basis1,2,3 as follows: Pro Forma Adjusted Net Income available to Common Shareholders per Common Share, basic, from continuing operations1,2,3 $0.08 and $0.17 for the three and six months ended June 30, 2024, respectively; Pro Forma Leverage Ratio1,2,3 of 1.5x at June 30, 2024; and Pro Forma Free Cash Flow1,2,3 of $32.4 million and $67.3 million for the three and six months ended June 30, 2024, respectively. 1 These are non-GAAP financial measures or non-GAAP ratios that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information. 2 The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this press release are from continuing operations unless noted. 3 Refer to "Post Sale Pro Forma Non-GAAP Financial Measures June 30, 2024." 4 The $1.7 billion figure is pro forma at December 31, 2023 as described in Chorus' investor presentation dated July 30, 2024 in respect of the Transaction. HALIFAX, NS, Aug. 13, 2024 /CNW/ - Chorus Aviation Inc. ('Chorus') (TSX:CHR) today announced its second quarter 2024 financial results. "Chorus' second quarter results reflect consistent cash flows from our services businesses and an ongoing improvement in our leverage ratio, demonstrating strength in our key metrics," said Colin Copp, President and Chief Executive Officer, Chorus. "Chorus generated Free Cash Flow of $28.2 million and improved its Leverage Ratio1 to 3.0 at June 30, 2024." "We maintained focus on creating shareholder value throughout the quarter, buying back 1.4 million of our common shares under the NCIB. Our aviation services businesses continued to generate consistent and strong cash flows, Voyageur increasing its revenue by $4.8 million over the second quarter of 2023" commented Mr. Copp. "Importantly, at the end of July, we made an important announcement regarding the sale of our RAL segment which, when completed, will set the stage for Chorus' steady and sustainable future growth," said Mr. Copp. "After closing of the Transaction, those same metrics on a pro forma basis1 will see a dramatic improvement, including Adjusted Earnings Per Share, Leverage Ratio and Free Cash Flow after repayment of long-term borrowings." Mr. Copp concluded, "While we have seen consistent and steady progress over the last several quarters to help strengthen our balance sheet, the divestiture of the RAL segment will, when completed, unlock the embedded equity value in our business and provide the needed catalyst to enable us to invest in future growth and implement a sustainable return of capital program for our shareholders." Second Quarter Summary On July 30, 2024, Chorus announced it had entered into an agreement to sell its RAL segment. As a result of this Transaction, the RAL segment has been re-classified to discontinued operations, and Chorus' Regional Aviation Services segment. together with Corporate, is referred to herein as continuing operations. Once the transaction closes, Chorus will have one reportable operating segment and will no longer be required to disclose its results on a segmented basis. In the second quarter of 2024, Chorus reported Adjusted EBITDA2 from continuing operations of $51.0 million, a decrease of $2.4 million compared to the second quarter of 2023 primarily due to: a decrease in aircraft leasing revenue under the CPA of $4.6 million primarily due to a change in lease rates on certain aircraft; an increase in general administrative expenses attributable to increased operations; and an increase in stock-based compensation of $1.0 million due to an increase in the Common Share price offset by the change in fair value of the Total Return Swap; partially offset by an increase in other revenue of $4.9 million primarily due to Voyageur's increased revenue in parts sales, contract flying and MRO activity. 1 Refer to the section of this news release titled "Post Sale Pro forma Non-GAAP Financial Measures June 30, 2024". 2 These are non-GAAP financial measures or non-GAAP ratios that are not recognized measures for financial statement presentation under GAAP. As such, they do not have standardized meanings, may not be comparable to similar measures presented by other issuers and should not be considered a substitute for or superior to GAAP results. Refer to "Non-GAAP Financial Measures" for further information. Adjusted Net Income from continuing operations2 was $11.2 million for the quarter, a decrease of $0.4 million compared to the second quarter of 2023 primarily due to: a $2.4 million decrease in Adjusted EBITDA as previously described; and an increase in depreciation expense of $3.3 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; partially offset by a decrease of $3.5 million in income tax expense; a decrease in net interest costs of $1.0 million; and a positive change in foreign exchange of $0.9 million. Net income from continuing operations decreased $7.2 million compared to the second quarter of 2023 primarily due to: the previously noted decrease in Adjusted Net Income of $0.4 million; a negative change in net unrealized foreign exchange of $7.4 million; and a decrease in income tax recovery on adjusted items of $0.2 million; partially offset by a decrease in employee separation program costs of $0.8 million. Year-to-Date Summary Chorus reported Adjusted EBITDA from continuing operations of $105.0 million for the six months ended June 30, 2024, a decrease of $4.9 million compared to the same prior year period primarily due to: a decrease in aircraft leasing revenue under the CPA of $9.0 million primarily due to a change in lease rates on certain aircraft; an increase in stock-based compensation of $2.3 million due to an increase in the Common Share price offset by the change in fair value of the Total Return Swap; and an increase in general administrative expenses attributable to increased operations; partially offset by an increase in other revenue of $3.3 million primarily due to Voyageur's increased revenue in parts sales, contract flying and MRO activity; an increase in capitalization of major maintenance overhauls on owned aircraft of $2.1 million; and an improvement in the Controllable Cost Guardrail of $2.0 million. Adjusted Net Income from continuing operations of $23.8 million, a decrease of $3.2 million compared to the same prior year period primarily due to: a $4.9 million decrease in Adjusted EBITDA as previously described; an increase in depreciation expense of $6.9 million primarily attributable to a change in depreciation estimates on certain aircraft and capital expenditures; and a negative change in net foreign exchange of $0.5 million; partially offset by a decrease of $7.7 million in income tax expense; and a decrease in net interest costs of $1.3 million. Net income from continuing operations of $13.9 million, a decrease of $20.6 million compared to the same prior year period primarily due to: the previously noted decrease in Adjusted Net Income of $3.2 million; a negative change in net foreign exchange of $18.1 million; and a decrease in income tax recovery on adjusted items of $0.3 million; partially offset by a decrease in employee separation program costs of $1.1 million. Consolidated Financial Analysis This section provides detailed information about Chorus' performance from continuing operations for the three and six months ended June 30, 2024 compared to the three and six months ended June 30, 2023. (unaudited) (expressed in thousands of Canadian dollars) Three months ended June 30, Six months ended June 30, 2024 2023 Change Change 2024 2023 Change Change $ $ $ % $ $ $ % (revised)(1) (revised)(1) Operating revenue 351,218 327,454 23,764 7.3 709,812 667,085 42,727 6.4 Operating expenses 326,769 298,052 28,717 9.6 657,401 603,957 53,444 8.8 Operating income 24,449 29,402 (4,953) (16.8) 52,411 63,128 (10,717) (17.0) Net interest expense (8,805) (9,785) 980 (10.0) (18,096) (19,386) 1,290 (6.7) Foreign exchange (loss) gain (4,510) 2,001 (6,511) (325.4) (14,060) 4,550 (18,610) (409.0) Gain on property and equipment 15 10 5 50.0 15 10 5 50.0 Income before income tax 11,149 21,628 (10,479) (48.5) 20,270 48,302 (28,032) (58.0) Income tax expense (2,699) (5,949) 3,250 (54.6) (6,410) (13,866) 7,456 (53.8) Net income from continuing operations 8,450 15,679 (7,229) (46.1) 13,860 34,436 (20,576) (59.8) Net (loss) income from discontinued operations (189,023) 4,639 (193,662) (4,174.6) (182,123) 17,901 (200,024) (1,117.4) Net (loss) income (180,573) 20,318 (200,891) (988.7) (168,263) 52,337 (220,600) (421.5) Net (loss) income attributable to non-controlling interest (1,100) 1,267 (2,367) (186.8) 2,391 1,757 634 36.1 Net (loss) income attributable to Shareholders (179,473) 19,051 198,524 1,042.1 (170,654) 50,580 (221,234) (437.4) Preferred Share dividends declared (8,979) (8,816) (163) 1.8 (17,827) (17,687) (140) 0.8 (Loss) earnings attributable to Common Shareholders (188,452) 10,235 (198,687) (1,941.3) (188,481) 32,893 (221,374) (673.0) Adjusted EBITDA(2) 50,998 53,414 (2,416) (4.5) 105,018 109,875 (4,857) (4.4) Adjusted EBT(2) 14,061 17,963 (3,902) (21.7) 30,347 41,340 (10,993) (26.6) Adjusted Net Income(2) 11,222 11,659 (437) (3.7) 23,794 27,040 (3,246) (12.0) (1) The results of discontinued operations (RAL segment) have been excluded from both current and prior period figures to conform to current period presentation. All amounts presented and discussed in this news release are from continuing operations unless otherwise noted. (2)