Chorus Aviation Inc.

Good morning, ladies and gentlemen, and welcome to the Corus Second Quarter 2024 Financial Results Conference Call. At this time, our lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 14, 2024. I would now like to turn the conference over to Tyrone Cote, VP of Treasury Investor Relations. Please go ahead.

Thank you, Joanna. Hello and thank you for joining us today for our second quarter conference call and audio webcast. With me today from Chorus are Colin Kopp, President and Chief Executive Officer, and Gary Osborne, Chief Financial Officer. We will begin today's call with a brief summary of the results, followed by questions from the analyst community. As there may be some forward-looking discussion during the call, I ask that you refer to the caution regarding forward-looking statements and information found in our MD&A. This pertains specifically to the results and operations of Chorus Aviation, Inc., for the three months ended June 30th, 2024, as well as the outlook section and other sections of our MD&A where such statements appear. As a result of the agreement to sell the course regional aviation leasing segment, or RAL, the RAL segment has been reclassified to discontinued operations, and our regional aviation services segment, together with corporate, is now referred to as continued operations. Finally, some of the following discussion involves non-GAAP financial measures, including references to adjusted net income, adjusted EBT, adjusted EBITDA, leverage ratio, and free cash flow. This quarter, we have also provided certain of these measures on a pro forma basis to illustrate the financial impact of the disposition of the RAL segment on our capital structure. Please refer to the MD&A for further information relating to the use of such non-GAAP measures in pro forma figures. I'll now turn the call over to Colin Collin.

Thank you, Tyrone, and good morning, everyone. As we just recently reported out on the RAL sale transaction, I'll keep my comments short today. I'm pleased to report that our second quarter results with revised comparative figures, as Tyrone mentioned, reflect a strong, steady, and reliable business going forward, with our cash generation enabling us to further improve our leverage ratio. As we look forward, Jazz has approximately $1 billion in contracted revenue in the form of fixed fee and leasing revenue under its CPA for the term of the agreement, and Voyager is steadily growing. This quarter, both Jazz and Voyager delivered strong financial performance with a combined adjusted EBITDA of $51 million and $105 million year-to-date. Voyager delivered a $4.8 million increase in revenue over Q2 of 2023, demonstrating their ability to seize new opportunities. They purchased a King Air 200 in the second quarter of 2024 in support of their contract with Air Ambulance New Brunswick for the provision of fixed wing air ambulance services. I'm pleased with our results and the progress we've made with improving the financial position of the business. Through the quarter, we also bought back 1.4 million common shares under our NCIB. Turning for a moment to our recent announcement on the divestiture of Felco and our regional aircraft leasing business, the process continues to progress well with our shareholder meeting called to approve the transaction in just over a month scheduled on September 25th. I'm very pleased with the feedback we've received so far. from our shareholders and industry partners, which further reinforces the value creation of this transaction. We appreciate that it will take a few months for us to get through the various approvals and for the transaction to close and that it will also take time for the true value of our business to be reflected in our share price. It is well recognized that this transaction will enable us to significantly deleverage our capital structure, generate more predictable cash flow, and provide us with the flexibility to grow and return capital to common shareholders going forward. Benefits of this transaction cannot be overstated when you consider the strength of our go-forward cash flow and liquidity in combination with the simplification and improved flexibility of our business. On the debt side alone, we see a dramatic reduction in our pro forma leverage ratio to 1.5, And post-closing, we expect to eliminate substantially all corporate debt, giving us strong financial flexibility going forward. This will create the right conditions to allow us to grow at a steady pace and capitalize on accretive opportunities in the aviation and aerospace sector. I also recognize that our investors want to know more about the return of capital to shareholders. We appreciate your patience as we work towards the close of this transaction.