TRZ.B; TRZ.A (TSX)
- Revenues of $712.3 million, for an overall increase of 22.5% compared
- Best first quarter ever for Transat with a margin(1) of $24.7 million,
excluding the negative $9.7 million impact of new hedge accounting
standard, versus $14.0 million in 2006.
- Net income of $2.1 million, or $0.06 per share fully diluted
($8.6 million, or $0.25 per share fully diluted excluding the negative
impact of new hedge accounting standard) compared to $5.2 million and
$0.13 per share in 2006.
- Increase of $0.02 per share in quarterly dividend to $0.09 per share.
MONTREAL, March 14 /CNW Telbec/ - Transat A.T. Inc., one of the largest
integrated tourism companies in the world and Canada's holiday travel leader,
posted revenues of $712.3 million for the period ended January 31, 2007,
compared with $581.6 million in 2006-an increase of 22.5%. The Corporation
recorded a margin of $15.0 million, up 6.6% from $14.0 million in 2006. Net
income for the quarter stood at $2.1 million, or $0.06 per share on a fully
diluted basis, compared with $5.2 million ($0.13 per share on a fully diluted
basis) in 2006.
The decrease in net income was strongly impacted by two non-cash,
non-operational events. Firstly, the impact of the adoption of new accounting
standards related to hedge accounting, which, for the Corporation, came into
effect on November 1, 2006, and without which net income would have been
$8.6 million in the quarter. Following the adoption of the said new accounting
standards, the Corporation recorded an additional non cash aircraft fuel
expense of $9.7 million ($6.5 million after tax), representing the change in
the fair value of the forward contracts it uses to manage fuel price
fluctuation risks. Excluding the impact of these new accounting standards, the
Corporation recorded a significant improvement of its operating results
compared to the prior year as shown in the following table:
Impact of new accounting standards
2007 2006 Increase
As Impact Adjusted adjusted
reported of new versus
(In thousands accounting 2006
of dollars, standards
Margin 14,958 9,716 24,674 14,030 75.9%
Net income 2,132 6,510 8,642 5,168 67.2%
share 0.06 0.19 0.25 0.13 92.3%
Secondly, the results were negatively affected by the foreign exchange
impact on debt which resulted in a non-cash loss of $1.6 million in 2007
compared with a non-cash gain of $2.4 million in 2006.
"This is our best first quarter ever, and we are very satisfied with the
results. Demand for our products was up 20%, in a context of very intense
competition. Obviously, our teams did a good job attracting travellers. That
said, the outcome of the winter season depends on the second quarter, as we
may experience narrower margins compared to last year," stated Jean-Marc
Eustache, President and Chief Executive Officer of Transat A.T. Inc.
The Corporation's revenues were up $130.8 million from the first quarter
of 2006. The overall increase resulted mainly from revenue growth of 21.4% in
North America and 30.4% in Europe, and is primarily due to expanded business
activity, particularly in North America, as well as to acquisitions made in
fiscal 2006. Transat recorded a 20.0% quarter over quarter increase in
travellers as a result of a 20.9% rise in travellers in North America and an
11.8% rise in Europe. In 2006, the start of the season was affected by the
aftermath of Hurricane Wilma, which hit the Cancun area, slowing revenue
growth and narrowing margins. Excluding the impact of the new accounting
standards, the Corporation's consolidated margins improved from 2.4% in 2006
to 3.5% in 2007.
As at January 31, 2007, the Corporation had $242.2 million in cash and
cash equivalents, compared with $214.9 million at October 31, 2006. Working
capital was $105.6 million, compared with $97.6 million as at October 31,
Total debt(2) stood at $398.3 million at January 31, 2007, a decrease of
$9.4 million compared with October 31, 2006. The Corporation's net debt(3)
(obtained by deducting cash and cash equivalents not held in trust or
otherwise reserved from total debt) decreased from $192.9 million at October
31, 2006, to $156.1 million at January 31, 2007, a decrease of 19.0%.
First quarter highlights
In North America, margins decreased to 3.6% compared with 4.2% for the
same period in 2006 in North America. This decrease stems entirely from the
adoption of aforementioned new accounting standards, partially offset by
stepped-up business activity and the synergies resulting from the 2006
acquisitions. Excluding the application of the new standards, the margin would
have been 4.6%. The impact of these new accounting standards on Transat's
results relate to accounting only and do not impact cash flow. The Corporation
will continue to hedge its jet fuel purchases as intended by its risk
management policy. The Corporation does not use derivative financial
instruments for speculative purposes.
In Europe, both revenues and expenses increased compared with the
corresponding quarter of 2006. These increases stem primarily from greater
business activity and the euro's strength against the dollar. The Corporation
reported a negative margin of $7.1 million compared with a negative margin of
$7.2 million in 2006. This improvement would have been sharper were it not for
the euro's strength against the dollar.
On March 14, 2007, Transat's Board of Directors approved a $0.02 increase
in the quarterly dividend payable to holders of Class B Voting Share and Class
A Variable Voting Share. The quarterly dividend will now be $0.09 per share.
The next dividend payment will be made on April 15, 2007 to shareholders of
record as at March 31, 2007.
For the winter season, the Corporation expects demand to be higher than in
2006. However, in light of heightened competition and supply, Transat
anticipates narrower margins for the next quarter.
In Europe, bookings for the winter season are tracking ahead of their 2006
levels, and the Corporation expects a positive margin in the next quarter.
Transat A.T. Inc. is an integrated international tour operator with more
than 60 destination countries and that distributes products in over 50
countries. A holiday travel specialist, Transat operates mainly in Canada and
Europe, as well as in the Caribbean, Mexico and the Mediterranean Basin.
Montreal-based Transat is also active in air transportation, destination
services and distribution. (TSX: TRZ.B, TRZ.A)
First Quarter 2007 Conference Call: Wednesday March 14, 2007, 2.00 p.m.
Dial 1-866-898-9626 or 514-868-1042. Name of conference: Transat. Webcast
www.transat.com. The archived call will be available at 1-800-408-3053
or 514-861-2272 access code 3215421 pound sign, until April 11, 2007.
Transat prepares its financial statements in accordance with Canadian
generally accepted accounting principles ("GAAP"). We will occasionally refer
to non-GAAP financial measures in the news release. These non-GAAP financial
measures do not have any meaning prescribed by GAAP and are therefore unlikely
to be comparable to similar measures presented by other issuers. They are
furnished to provide additional information and should not be considered as a
substitute for measures of performance prepared in accordance with GAAP.
(1) Revenues less operating expenses (non-GAAP financial measure used by
management as an indicator to evaluate ongoing and recurring
(2) Debt plus off-balance sheet arrangements (non-GAAP financial measure
used by management to assess the Corporation's future liquidity
(3) Total debt less cash and cash equivalents not in trust or otherwise
reserved (non-GAAP financial measure used by management to assess its
Caution regarding forward-looking statements
This news release contains certain forward-looking statements regarding
the Corporation's expectation that travel reservations will continue to be
higher than the prior year, that margins will be narrowed, that the
Corporation expects the margins to be positive in Europe. In making these
statements, the Corporation has assumed that the trends in reservations will
continue throughout the remainder of the season and that margins will continue
to be impacted by the competitive environment. If these assumptions prove
incorrect, actual results and developments may differ materially from those
contemplated by the forward-looking statements contained in this press
release. Factors that could lead actual results to differ also include general
economic conditions, competition, extreme weather conditions, disease
outbreaks, war, terrorism, and other risks detailed from time to time in the
Corporation's continuous disclosure documents.
These forward-looking statements, by their nature, necessarily involve
risks and uncertainties that could cause actual results to differ materially
from those contemplated by these forward-looking statements. The Corporation
considers the assumptions on which these forward-looking statements are based
to be reasonable, but cautions the reader that these assumptions regarding
future events, many of which are beyond its control, may ultimately prove to
be incorrect since they are subject to risks and uncertainties that affect the
Corporation. For additional information with respect to these and other
factors, see the Annual Information Form and Annual Report for the year ended
October 31, 2006, filed with Canadian securities commissions. The Corporation
disclaims any intention or obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, other than as required by law.
For further information:
For further information: for media representatives: Pierre Tessier,
(514) 987-1616, ext. 4509; for financial analysts: François Laurin,
Vice-President, Finance and Administration and Chief Financial Officer, (514)
987-1660; Source: Transat A.T. Inc., www.transat.com