Chorus Aviation continues down the transformation path
Chorus Aviation announced it's third quarter results on November 13 and says that they had a strong quarter.However it is difficult to discern because both regulated and unregulated operations are wrapped together.What is clear is that Chorus had an increase in EBITDA and adjusted net income over the second quarter.I have not compared this quarter to the same quarter last year because of the changes in 2013 resulting from the Capacity Purchase Agreement with Air Canada.A comparison with the first quarter is more meaningful.So there was a 10% increase in EBITDA and an almost 33% increase in adjusted net income together with a 15% increase in operating income.
Combined Operations
Chorus,in it's press release, combines regulated operations and unregulated operations.There are controllable costs and pass through costs and operating costs.It is hard to use these figures to get a measure of performance for either regulated or non-regulated operations.In addition, there is usually a significant gain or loss on foreign exchange;it is caused by payment of debt in U.S. dollars.But it is apparently covered under the C.P.A agreement and so is only a non-cash item.But it does confuse the reader.
Newer Operations
It appears that Chorus is cobbling together a non-regulated operation that earns a significant amount of income.There is airport handling and aircraft maintenance and they even bought a new maintenance company called Telesys.They had a maintenance operation in London but sold it and modified their Halifax operation.Now more maintenance revenues are probably coming in than when there were two separate operations.But how much is coming in is not yet clear.Chorus will need to break out the amount of income that is non-regulated.As a bigger earnings multiple will be obtained on non-regulated income.
Forecasts
My last blog in this space predicted earnings per share of $.85 for adjusted net income for the year.Chorus earned $.24 per share in this quarter and about $.60 for 9 months.It is on track to hit $.85 for the whole year (just as predicted in the last blog).Adjusted net income has all the financing and interest and exchange expenses removed.It is a good measure of free cash flow or what is available to distribute to shareholders. But a better measure of performance is EBITDA - before interest and depreciation are removed.EBITDA for this quarter was $.46 per share and an estimate for the year would be about $1.75.With the stock in the $4.60 area this is a quite low multiple of earnings as measured by the third quarter.
Combined Operations
Chorus,in it's press release, combines regulated operations and unregulated operations.There are controllable costs and pass through costs and operating costs.It is hard to use these figures to get a measure of performance for either regulated or non-regulated operations.In addition, there is usually a significant gain or loss on foreign exchange;it is caused by payment of debt in U.S. dollars.But it is apparently covered under the C.P.A agreement and so is only a non-cash item.But it does confuse the reader.
Newer Operations
It appears that Chorus is cobbling together a non-regulated operation that earns a significant amount of income.There is airport handling and aircraft maintenance and they even bought a new maintenance company called Telesys.They had a maintenance operation in London but sold it and modified their Halifax operation.Now more maintenance revenues are probably coming in than when there were two separate operations.But how much is coming in is not yet clear.Chorus will need to break out the amount of income that is non-regulated.As a bigger earnings multiple will be obtained on non-regulated income.
Forecasts
My last blog in this space predicted earnings per share of $.85 for adjusted net income for the year.Chorus earned $.24 per share in this quarter and about $.60 for 9 months.It is on track to hit $.85 for the whole year (just as predicted in the last blog).Adjusted net income has all the financing and interest and exchange expenses removed.It is a good measure of free cash flow or what is available to distribute to shareholders. But a better measure of performance is EBITDA - before interest and depreciation are removed.EBITDA for this quarter was $.46 per share and an estimate for the year would be about $1.75.With the stock in the $4.60 area this is a quite low multiple of earnings as measured by the third quarter.
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