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."

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:

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:

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:

Net income decreased $19.7 million compared to the first quarter of 2023 primarily due to:

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.

(See cautionary statement regarding forward-looking information below.)

The discussion that follows includes forward-looking information. This outlook is provided for the purpose of providing information about current expectations for 2024. Forecast information has also been provided for 2025 and 2026 for Jazz. This information may not be appropriate for other purposes.

Chorus' forecast for the year ending December 31, 2024 has been updated from the fourth quarter 2023 forecast due to i) an expected increase in the foreign exchange rate from 1.3200 to 1.3400;  ii) reflect actual maintenance reserve releases in the first quarter of 2024 of $3.1 million and iii) additional anticipated aircraft sales. The revised forecast improved as follows:

The CPA provides a Fixed Margin to Jazz regardless of flying levels; therefore, any variations in flying are not expected to have any impact on Jazz's earnings. In addition, Jazz receives compensation for aircraft leased under the CPA that generates predictable Free Cash Flows. Jazz aircraft have amortizing debt that will be fully paid-off at the end of the original lease term under the CPA. At the end of each lease, Jazz will either extend the lease, sell or part-out each aircraft. Subsequent aircraft leases will continue to produce predictable Free Cash Flow at lower rates as the aircraft will be unencumbered.

RAL continues to execute on its asset light leasing strategy which consists of monetizing select on-balance sheet aircraft while growing its contractual fund management business. Maximizing cash flow generation from existing aircraft through lease term extensions is also a key element of RAL's business model.

Fund III is anticipated to close by the end of the 2024 year and is expected to have (i) a minimum of US $500.0 million in capital commitments and (ii) management fees and economic terms commensurate with those in Falko's existing investment funds.

Chorus intends to opportunistically trade RAL's wholly-owned or majority-owned aircraft including in connection with the windup of its 67.45% ownership in Ravelin Holdings LP by the tenth anniversary of the commencement of Fund I (2025). As of March 31, 2024, Ravelin Holdings LP held an interest in 38 aircraft with a net book value of US $374.5 million and secured debt of US $182.8 million. As asset sales occur, the related leasing revenues in RAL will decrease, which will be partially offset by lower depreciation and debt servicing costs and earnings from Falko managed funds.

Chorus participated in the Azul S.A. ("Azul") restructuring which was finalized on February 29, 2024. The transaction includes the settlement of certain accounts receivable with a carrying value of US $22.4 million at February 29, 2024 ("Existing AR"), held by RAL and the granting of certain modifications related to the operating leases with Azul ("Azul Restructuring").

In exchange for the Existing AR, RAL received new notes on February 29, 2024 with a carrying value of US $56.2 million ("New Notes"), inclusive of deferred revenue of US $33.8 million related to lease modifications, from Azul which are due at various dates beginning in March 2024 and ending in October 2027. In addition, certain of the New Notes may be settled, at Azul's option, in cash or through the issuance of Azul's publicly listed preferred shares. 

RAL's gross receivable, excluding long-term New Notes, primarily related to rent relief arrangements, may decrease from the March 31, 2024 balance of US $81.9 million to between US $60.0 million and US $65.0 million by the end of 2024 based on management's current repayment expectations.

RAL's gross receivable exposure is partially mitigated by security packages held of approximately US $18.0 million (December 31, 2023 - US $20.4 million).

Capital expenditures in 2024 are expected to be as follows:

Capitalized terms used but not defined in this news release have the meanings given to them in management's discussion and analysis of results of operations and financial condition ("MD&A") dated the date hereof, which is available on Chorus' website (www.chorusaviation.com) and under Chorus' profile on SEDAR+ (www.sedarplus.ca).

Chorus will hold an analyst call at 9:00 AM ET on May 7, 2024 to discuss the first quarter 2024 financial results. The call may be accessed by dialing 1-888-664-6392. The call will be simultaneously audio webcast via: https://app.webinar.net/N8kXnV73q21

This is a listen-in only audio webcast. 

The conference call webcast will be archived on Chorus' website at www.chorusaviation.com under Investors > Reports.  A playback of the call can also be accessed until midnight ET, May 14, 2024, by dialing toll-free 1-888-390-0541 and using passcode 126041 # (pound key).

NON-GAAP FINANCIAL MEASURESThis news release references several non-GAAP financial measures and ratios to supplement the analysis of Chorus' results. Chorus uses these non-GAAP measures to evaluate and assess performance. These non-GAAP measures are generally numerical measures of Chorus' financial performance, financial position, or cash flows, that include or exclude amounts from the most comparable GAAP measure. As such, these measures are not recognized for financial statement presentation under GAAP, do not have standardized meanings, may not be comparable to similar measures presented by other entities, and should not be considered a substitute for or superior to GAAP results. For further information on non-GAAP measures used in this news release, please refer to Section 18 (Non-GAAP Financial Measures) of the MD&A dated the date hereof, which is available on Chorus' website (www.chorusaviation.com) and under Chorus' profile on SEDAR+ (www.sedarplus.ca). Reconciliations of non-GAAP measures to their nearest GAAP measures are provided below.

Adjusted earnings available to Common Shareholders per Common Share is used by Chorus to assess performance and is calculated as Adjusted net income less non-controlling interest and Preferred Share dividends declared.

Leverage Ratio is used by Chorus as a means to measure financial leverage. Leverage Ratio is calculated by dividing Net debt by trailing 12-month Adjusted EBITDA. Management believes Leverage Ratio to be a useful ratio when monitoring and managing debt levels. In addition, as leverage is a measure frequently analyzed for public companies, Chorus has calculated the amount to assist readers in this review. Leverage Ratio should not be construed as a measure of cash flows. Net debt is a key component of capital management for Chorus and provides management with a measure of its net indebtedness.

Free Cash Flow is a non-GAAP measure used as an indicator of financial strength and performance. Chorus believes that this measurement is useful as an indicator of its ability to service its debt, meet other ongoing obligations and reinvest in the Corporation and return capital to Common Shareholders. Readers are cautioned that Free Cash Flow does not represent residual cash flow available for discretionary expenditures.

Free Cash Flow is defined as cash provided by operating activities less net changes in non-cash balances related to operations, capital expenditures excluding aircraft acquisitions and improvements plus net proceeds on asset sales (proceeds on disposal of property and equipment less the related debt repayments for the assets sold).

The following table provides a reconciliation of Free Cash Flow to cash flows from operating activities, which is the most comparable financial measure calculated and presented in accordance with GAAP:

Forward-Looking InformationThis news release includes forward-looking information and statements within the meaning of applicable securities laws (collectively, "forward-looking information"). Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "intend", "may", "plan", "potential", "predict", "project", "will", "would", and similar terms and phrases, including negative versions thereof. Such information may involve but is not limited to comments with respect to assumptions, strategies, expectations, planned operations or future actions. Forward-looking information relates to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and other uncertain events. Forward-looking information, by its nature, is based on assumptions, including those referenced below, and are subject to important risks and uncertainties. Any forecasts or forward-looking predictions cannot be relied upon due to, among other things, external events, changing market conditions and general uncertainties of the business. Such information involves known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to differ materially from those indicated in the forward-looking information and statements.

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.

Chorus Class A Variable Voting Shares and Class B Voting Shares trade on the Toronto Stock Exchange under the trading symbol 'CHR'. Chorus 5.75% Senior Unsecured Debentures due December 31, 2024, 6.00% Convertible Senior Unsecured Debentures due June 30, 2026, and 5.75% Senior Unsecured Debentures due June 30, 2027 trade on the Toronto Stock Exchange under the trading symbols 'CHR.DB.A', 'CHR.DB.B', and 'CHR.DB.C' respectively.  www.chorusaviation.com.

SOURCE Chorus Aviation Inc.

SOURCE: Chorus Aviation Inc.

Chorus Media Contact:  media@chorusaviation.com; Chorus Analyst Contact:
investorsinfo@chorusaviation.com

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