• Net income of $16.2 million, or $0.12 per basic share, inclusive of an unrealized foreign exchange loss of $12.6 million.
• Adjusted net income¹ of $29.4 million, or $0.21 per basic share.
• Adjusted EBITDA¹ of $84.6 million increased $18.8 million or 28.6% primarily due to increased revenue from aircraft leasing.
• Completion of the sixth Extended Service Program (‘ESP’) on a Dash 8-300 aircraft.
• Awarded two new contract flying missions for an international customer utilizing four CRJ-200s.
• Acquired two Dash 8-300 to build part sales inventory.

HALIFAX, Aug. 9, 2018 /CNW/ – Chorus Aviation Inc. (‘Chorus’) (TSX: CHR) today announced solid second quarter financial results for the period ended June 30, 2018.

“Our business delivered solid performance in the second quarter of this year,” said Joe Randell, President and Chief Executive Officer, Chorus.  Our financial performance in the quarter generated over $84.0 million in adjusted EBITDA, an $18.8 million or 28.6 % increase over second quarter 2017 due primarily to growth in aircraft leasing.  Adjusted earnings per basic share was $0.21.

“We continue to build our regional aircraft leasing business and have executed new term sheets with various customers for the acquisition of several regional aircraft that are either currently on lease or will be placed on lease pursuant to sale and lease back transactions. These term sheets remain subject to the negotiation and execution of definitive agreements; further details will follow as transactions are finalized,” continued Mr. Randell. “The pipeline of opportunities is strong, and I’m confident in the growth potential of our leasing business.”

“In the quarter, we completed our sixth extended service program on a Dash 8-300 which is now generating leasing revenue under the CPA, and the seventh aircraft is currently in production.  We won new flying contracts utilizing CRJ 200 aircraft in Sudan and the Democratic Republic of Congo. Customer demand for our parts division, Avparts, is encouraging.  We recently acquired two Dash 8 – 300s to build our available parts inventory and have parted out 10 aircraft to date. We generate healthy margins on this business and see potential for growth.

“The Chorus team remains committed to building additional shareholder value and I thank them for embracing our vision to deliver regional aviation to the world,” concluded Mr. Randell.

SECOND QUARTER 2018

Financial Performance – second quarter 2018 compared to second quarter 2017

In the second quarter of 2018, Chorus reported Adjusted EBITDA of $84.6 million versus $65.8 million in 2017, an increase of $18.8 million or 28.6%.

The $18.8 million increase in Adjusted EBITDA was primarily driven by:

• a $14.9 million increase due to the growth in third party regional aircraft leasing;
• increased aircraft leasing revenue under the CPA of $1.4 million;
• decreased stock-based compensation of $1.8 million; and
• a decrease of $0.7 million in other expenses.

Adjusted net income was $29.4 million for the period, an increase from 2017 of $2.5 million, or 9.3%.  The change was a result of the $18.8 million increase in Adjusted EBITDA previously described and $0.3 million increase in other income; offset by:

• an additional $7.4 million in depreciation, primarily related to new aircraft;
• a $6.1 million increase in income taxes; and
• interest costs of $3.1 million related to additional aircraft debt and Convertible Units.

Net income was $16.2 million for the period, a decrease of $24.9 million or 60.6% from the same period of 2017. The decrease was primarily due to quarter-over-quarter change in foreign exchange of $31.3 million, offset by the previously noted $2.5 million increase in the adjusted net income and decreased employee separation program costs of $3.9 million.

Year to date 2018 compared to year to date 2017

For the six months ended June 30, 2018, Chorus reported Adjusted EBITDA of $162.6 million versus $120.3 million in 2017, an increase of $42.3 million or 35.2%.

The $42.3 million increase in Adjusted EBITDA was primarily driven by:

• a $28.7 million increase mainly due to the growth in third party regional aircraft leasing;
• increased aircraft leasing revenue under the CPA of $3.6 million;
• decreased stock- based compensation of $4.0 million; and
• a reduction of $6.0 million in other costs, which includes decreased crew cycle and training costs, and other general overhead.

Adjusted net income was $55.9 million for the period, an increase from 2017 of $12.9 million, or 29.9%.  The change was a result of the $42.3 million increase in Adjusted EBITDA previously described and a $0.3 million increase in other income offset by:

• an additional $15.0 million in depreciation primarily related to new aircraft;
• a $5.8 million increase in income taxes; and
• interest costs of $8.9 million related to additional aircraft debt and Convertible Units.

Net income was $21.2 million for the period, a decrease of $46.8 million or 68.8% from the same period of 2017.  The decrease was primarily due to a year over year change in foreign exchange of $64.4 million; offset by the previously noted $12.9 million increase in the adjusted net income and decreased employee separation program costs of $4.7 million.

2018 OUTLOOK

(See cautionary statement regarding forward-looking information below)

Since the start of last year, Chorus has realized net proceeds of $303.0 million through the issuance of convertible debt units in March 2017 and the issuance of common shares¹ in March 2018.

When combined with anticipated debt financing at typical ratios of up to three times equity, this capital affords Chorus the ability to invest up to $1.2 billion in the acquisition of aircraft for its leasing business.

Approximately 50% of this capital has been invested to date and Chorus anticipates committing the balance by mid-2019 in new to mid-life aircraft with long-term leases to a diverse group of high quality customers located in geographies around the world.

Capital expenditures for 2018, excluding those for the acquisition of aircraft and the ESP, and including capitalized major maintenance overhauls, are expected to be between $44.0 million and $50.0 million.

Based on 2017-2018 winter schedule, the 2018 summer schedule and updated planning assumptions from Air Canada, Billable Block Hours under the CPA for 2018 are expected to be between 360,000 and 375,000 hours based on 116 Covered Aircraft as at December 31, 2018. The actual number of Billable Block Hours for 2018 may vary from this anticipated range due to many factors.

^{1 ‘Common shares’ refers to Chorus’ Class A Variable Voting Shares and Class B Voting Shares}