Chorus posts fourth quarter under the old C.P.A. agreement(with Air Canada)
On February9,2015 Chorus Aviation posted it's fourth quarter and year-end results.Q4 results were okay but the year-end results were almost stellar.Chorus showed us that Q4 adjusted EBITDA was $50 million or $.45 per share while adjusted net income was $24 million or $.20 per share.Both were up slightly from the same quarter in 2013.The year-end results looked better.Adjusted EBITDA was $204 million and operating income was $138 million;this compared to $187 million and $124 million for 2013.
Financial highlights
Chorus had an eventful year as measured by financial metrics.It completed the early redemption of it's $60 million convertible debenture issue.Plus it repurchased 2.3 million shares while increasing it's dividend.In addition, it bought and will take delivery of 6 Q400 aircraft.The Q400s have lower operational costs and more seat capacity so will help to increase revenue in 2015.These facts together with their solid increase in adjusted EBITDA make for a pretty good year.2015 is looking like it will be a good one also.
2015 is Looking good
The old agreement with Air Canada ended on December 31,2014.Now both parties are governed by the new amended agreement.However under the old agreement Chorus increased it's net income so that it could raise the dividend to $.48 annually.It's adjusted net income is such that the payout ratio is only 67% of adjusted net income.This is a healthy ratio for industrial stocks.Also the way it looks the amended C.P.A. agreement should produce more(not less) revenue in the first years.The agreement will be changed from a "cost plus 12.5% markup to a fixed fee arrangement".This mechanism allows for a mechanism to have cost reductions.Also the aircraft will earn a fixed fee (or a lease fee) regardless of how much it has flown.Also Chorus is compensated for additional services such as airport operations;this is called an infrastructure fee.Over the 11 year period the number of aircraft will be gradually reduced and leasing revenue can fall as much as 9%.This reduced revenue is expected in only the last few years.
An earlier Blog
An earlier blog in Blogdaleupsome made several predictions and some of them came true.Firstly the earlier blog advised Chorus to give it's investors a better breakdown of regulated and non-regulated revenues and income.This advice Chorus ignored if they even read about it.The latest quarterly results have very little useful breakdowns.Information on revenues coming from outside the C.P.A agreement are sparse and not reliable.However I cobbled together, in Q3, both revenue sources and predicted adjusted EBITDA per share of $1.75 per share and adjusted net income of $.85 per share for the year-end.This was very close to actual results of $.78 per share of adjusted net income and $1.71 per share of adjusted EBITDA per share.
The 2015 Forecast
Again it must be stressed that it is difficult to forecast with no breakdown of regulated and non-regulated operations and income.Secondly Chorus now has to abide by the new amended C.P.A. agreement.But with the new aircraft operating and the new agreement this blog predicts that both regulated and non-regulated revenues will be higher.Regulated revenues will,of course, include the infrastructure fee revenues.Also some of the older aircraft will be replaced by the new Q400s with more seat capacity.This might generate adjusted EBITDA of $215 to $230 million for 2015 or $1.85 to $1.90 per share and adjusted net income of $.95 to $1.05 per share.If correct this may allow for another small dividend increase.And this prediction does not count on any revenue from the new agreement with Bombardier.
Financial highlights
Chorus had an eventful year as measured by financial metrics.It completed the early redemption of it's $60 million convertible debenture issue.Plus it repurchased 2.3 million shares while increasing it's dividend.In addition, it bought and will take delivery of 6 Q400 aircraft.The Q400s have lower operational costs and more seat capacity so will help to increase revenue in 2015.These facts together with their solid increase in adjusted EBITDA make for a pretty good year.2015 is looking like it will be a good one also.
2015 is Looking good
The old agreement with Air Canada ended on December 31,2014.Now both parties are governed by the new amended agreement.However under the old agreement Chorus increased it's net income so that it could raise the dividend to $.48 annually.It's adjusted net income is such that the payout ratio is only 67% of adjusted net income.This is a healthy ratio for industrial stocks.Also the way it looks the amended C.P.A. agreement should produce more(not less) revenue in the first years.The agreement will be changed from a "cost plus 12.5% markup to a fixed fee arrangement".This mechanism allows for a mechanism to have cost reductions.Also the aircraft will earn a fixed fee (or a lease fee) regardless of how much it has flown.Also Chorus is compensated for additional services such as airport operations;this is called an infrastructure fee.Over the 11 year period the number of aircraft will be gradually reduced and leasing revenue can fall as much as 9%.This reduced revenue is expected in only the last few years.
An earlier Blog
An earlier blog in Blogdaleupsome made several predictions and some of them came true.Firstly the earlier blog advised Chorus to give it's investors a better breakdown of regulated and non-regulated revenues and income.This advice Chorus ignored if they even read about it.The latest quarterly results have very little useful breakdowns.Information on revenues coming from outside the C.P.A agreement are sparse and not reliable.However I cobbled together, in Q3, both revenue sources and predicted adjusted EBITDA per share of $1.75 per share and adjusted net income of $.85 per share for the year-end.This was very close to actual results of $.78 per share of adjusted net income and $1.71 per share of adjusted EBITDA per share.
The 2015 Forecast
Again it must be stressed that it is difficult to forecast with no breakdown of regulated and non-regulated operations and income.Secondly Chorus now has to abide by the new amended C.P.A. agreement.But with the new aircraft operating and the new agreement this blog predicts that both regulated and non-regulated revenues will be higher.Regulated revenues will,of course, include the infrastructure fee revenues.Also some of the older aircraft will be replaced by the new Q400s with more seat capacity.This might generate adjusted EBITDA of $215 to $230 million for 2015 or $1.85 to $1.90 per share and adjusted net income of $.95 to $1.05 per share.If correct this may allow for another small dividend increase.And this prediction does not count on any revenue from the new agreement with Bombardier.
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