Chorus Aviation beats the Street
On February 16 Chorus Aviation reported it's fourth quarter and annual results.Chorus reported fourth quarter adjusted EBITDA of $60 million and annual adjusted EBITDA of $248 million.This was very close to the estimate made in Workathon on December 2016.But 5 to 6 financial websites all forecasted earnings(adjusted EBITDA) of $.84 to $.91 per share or earnings of about $90 to $100 million;all 6 websites underestimated Chorus' performance. Specifically operating income will be about $150 million with depreciation of less than $90 million and adjusted EBITDA of $248 million.How is it that Chorus beat the street?
C.P.A. Agreement
The new amended CPA agreement showed less revenue just as the street expected but adjusted EBITDA was up.Allowable expenses and revenues were down from 2015.However aircraft leasing revenues were up from the last year both within the CPA and with third parties.In fact, there was a 44% gain in aircraft leasing revenues to $99 million in 2016. There was no breakdown of revenues from Air Canada Express but his blog believes that there was a gain in revenues and earnings here that offset CPA revenue losses.This blog also believes that CPA revenues have come close to bottoming out and should be fairly steady in 2017.
New Subsidiaries
2016 was the year that Chorus started a number of new subsidiaries.Jazz Technical was started for third party maintenance business contracts;Voyageur Avparts was set up as a joint venture with Bombardier to resupply and repair Q400s and CRJ regional jets and Chorus Aviation Capital (with a $200 million debenture from Fairfax Capital) as a regional aircraft leasing company.Chorus Aviation Capital has already leased 4 CRJ 1000 aircraft to a subsidiary of Iberia Airlines.Jazz Technical has already had two third party maintenance contracts.These new subsidiaries are all expected to contribute in 2017.
2017 Outlook
Revenues under the CPA agreement have probably almost stabilized and this blog expects increases in revenues and earnings from Air Canada Express. No mention was made of revenues and earnings from Voyageur Airways and Chorus will continue to put new investment here.Investors can expect substantial revenues and earnings here in 2017.Jazz Technical has two contracts now and may get one or two more in 2017. Don't expect a strong contribution yet in 2017 but there will be a contribution.This blog does expect a healthy contribution from Chorus Aviation Capital which leases regional aircraft (chiefly the CRJ series) to third parties.Consequently overall this blog expects adjusted EBITDA of $240 to $275 million.The wild card here will be Air Canada Express.
Adjusted EBITDA is taken as the best measure of earnings and so e.p.s. for 2016 was about $2.05 per share.Dividends are now only $.48 per share and so the payout ratio is quite satisfactory.No mention was made of an increase in the dividend yet but if management sees it is on track to hit $250 million in adjusted EBITDA it may talk in 2017 of a dividend increase. use Blogdaleupsome for business solutions;use Blogdaleupsome for business solutions
C.P.A. Agreement
The new amended CPA agreement showed less revenue just as the street expected but adjusted EBITDA was up.Allowable expenses and revenues were down from 2015.However aircraft leasing revenues were up from the last year both within the CPA and with third parties.In fact, there was a 44% gain in aircraft leasing revenues to $99 million in 2016. There was no breakdown of revenues from Air Canada Express but his blog believes that there was a gain in revenues and earnings here that offset CPA revenue losses.This blog also believes that CPA revenues have come close to bottoming out and should be fairly steady in 2017.
New Subsidiaries
2016 was the year that Chorus started a number of new subsidiaries.Jazz Technical was started for third party maintenance business contracts;Voyageur Avparts was set up as a joint venture with Bombardier to resupply and repair Q400s and CRJ regional jets and Chorus Aviation Capital (with a $200 million debenture from Fairfax Capital) as a regional aircraft leasing company.Chorus Aviation Capital has already leased 4 CRJ 1000 aircraft to a subsidiary of Iberia Airlines.Jazz Technical has already had two third party maintenance contracts.These new subsidiaries are all expected to contribute in 2017.
2017 Outlook
Revenues under the CPA agreement have probably almost stabilized and this blog expects increases in revenues and earnings from Air Canada Express. No mention was made of revenues and earnings from Voyageur Airways and Chorus will continue to put new investment here.Investors can expect substantial revenues and earnings here in 2017.Jazz Technical has two contracts now and may get one or two more in 2017. Don't expect a strong contribution yet in 2017 but there will be a contribution.This blog does expect a healthy contribution from Chorus Aviation Capital which leases regional aircraft (chiefly the CRJ series) to third parties.Consequently overall this blog expects adjusted EBITDA of $240 to $275 million.The wild card here will be Air Canada Express.
Adjusted EBITDA is taken as the best measure of earnings and so e.p.s. for 2016 was about $2.05 per share.Dividends are now only $.48 per share and so the payout ratio is quite satisfactory.No mention was made of an increase in the dividend yet but if management sees it is on track to hit $250 million in adjusted EBITDA it may talk in 2017 of a dividend increase. use Blogdaleupsome for business solutions;use Blogdaleupsome for business solutions
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