YELLOWKNIFE, June 11 /CNW/ -
President and CEO's Comments
Discovery Air continues to benefit from its diverse line of services and our strategy going forward is to expand our diversity as a means to achieve our Overarching Objective. I am pleased that the Northern Services segment of our business showed significant improvement over last year's comparable quarter, which offset a temporary shortfall in the Government Services segment as compared to last year's Q1. While there is early tangible evidence of an economic turnaround in the North, I am most pleased with our team in the North's ability to seize the opportunity to successfully seek out new revenue sources. Our team has gone beyond our traditional markets and has found ways to expand our services for our customers. No greater example can be found than our helicopter operations beginning operations in Peru this quarter.
Coming into fiscal 2011, we are in a significantly stronger cash flow and liquidity position compared to the same period a year ago. Our cash flow from operations was $2.1 million higher than a year ago and at the end of the current quarter we drew $6.7 million less on the operating line of credit than at the same time a year ago. This affords us a greater opportunity not only to fund our traditional businesses entering into our peak season but also to fund new growth opportunities.
We hope to see a continued economic upswing in the markets we serve; however, in order for us to achieve our Overarching Objective it will require our organization to actively seek untapped opportunities regardless of market conditions. Our hope is that we begin seeing tangible evidence of this emphasis on new markets in the upcoming quarters.
- Consolidated revenues of $25.9 million for Q1 2011 represent a 1%
year over year increase from Q1 2010. While year over year revenues
were similar, Q1 2011's revenue composition reflects a substantial
change from Q1 2010. The Corporation's Northern Services segment
recorded a 32% increase in revenues due largely to a significant
increase in demand for services from its resource-based customers.
Resource-based revenues increased by 87% from the prior period. The
Corporation also benefited from a year over year increase in demand
for airborne forest fire management and suppression services during
the current quarter. Quarterly revenues in the Government Services
segment decreased by 25% due to reduced flight hour demand from the
Department of National Defence and Canadian Forces. Revenue from this
customer is subject to month to month variability due to short-term
shifts in priorities within a year, and the flight hour demand in the
first quarter is not necessarily indicative of flight hour demand
over the full year.
- The Corporation's Q1 2011 EBITDA of $1.5 million increased from $0.7
million in Q1 2010. The positive variance was attributable to the
Corporation incurring in the comparative quarter last year $1.2
million in relocation costs. Adjusted EBITDA, which normalizes for
these non-recurring costs, was $1.5 million in Q1 2011 compared to
$1.8 million in Q1 2010. The negative variance was largely
attributable to lower revenues from the Government Services segment.
- The Corporation's loss of $3.9 million in Q1 2011 represents a $1.2
million positive variance from Q1 2010, attributable to the
relocation costs noted above and to a one-time financing charge of
$0.8 million incurred in Q1 2010 to establish an operating line of
credit, and to fees to amend existing long-term debt arrangements
related to covenant reporting.
- The Corporation continues to closely monitor its costs, working
capital and levels of capital investments to ensure liquidity is
maintained at a level sufficient to fund operations and desirable
capital expenditures. As at Q1 2011, working capital of $13.7 million
improved from Q1 2010's working capital balance of $11.9 million due
to reduced draws on the Corporation's operating line of credit.
- On June 9, 2010, the Corporation successfully renewed its operating
line of credit for a twelve month term. Conditions were substantially
consistent with those previously applicable, except for an amendment
to include a stand-by fee of 75 basis points per annum on amounts
authorized but not drawn; and an amendment to include a prepayment
fee of $156,000 payable if the facility is paid in full on or before
December 9, 2010.
The table below summarizes selected financial information for the current and comparative quarters:
(thousands of dollars,
except per share amounts) Q1 2011 Q1 2010
Results of operations
Revenue $ 25,914 $ 25,566
Operating expenses $ 24,401 $ 23,728
Earnings before undernoted items $ 1,513 $ 1,838
Interest expense $ 3,658 $ 3,499
Amortization $ 3,368 $ 3,398
Relocation of corporate office $ 51 $ 1,173
Financing transaction costs $ - $ 830
Loss $ (3,924) $ (5,121)
Basic and diluted loss per common share $ (0.03) $ (0.04)
Financial position and liquidity
Total assets $ 263,721 $ 268,333
Total long-term debt $ 145,291 $ 144,137
Cash provided by operations $ (9,815) $ (11,919)
Working capital $ 13,666 $ 11,936
Key non-GAAP performance measures*
Adjusted loss $ (3,888) $ (4,293)
EBITDAR $ 3,008 $ 2,017
Adjusted EBITDAR $ 3,059 $ 3,190
EBITDA $ 1,462 $ 665
EBITDA Margin 6% 3%
Adjusted EBITDA $ 1,513 $ 1,838
Adjusted EBITDA Margin 6% 7%
* References to "EBITDA" are to net earnings before interest, financing
transaction costs, income taxes, depreciation and amortization (except
for amortization of rotable and overhauled components which are treated
as operating expenses), goodwill and intangible asset impairment charge,
and non-controlling interest. "EBITDAR" is EBITDA before aircraft lease
cost. "Adjusted EBITDA" is EBITDA adjusted for relocation of corporate
office charge. "Adjusted EBITDAR" is EBITDAR adjusted for relocation of
corporate office charge. "Adjusted earnings (loss)" is net earnings
(loss) adjusted to exclude charges arising from impairment of goodwill
and intangible assets, relocation of corporate office and related income
tax recovery. "Adjusted EBITDA margin" is Adjusted EBITDA expressed as a
percentage of revenues.
The Corporation's interim financial statements and Management's Discussion and Analysis for the quarter ended April 30, 2010 have been filed concurrently and are available on Discovery Air's website at www.discoveryair.com and on SEDAR at www.sedar.com. The reader is encouraged to review the interim financial statements and Management's Discussion and Analysis for more complete disclosure on Discovery Air's financial condition and results of operations.
Discovery Air's Class A common shares and debentures trade on the Toronto Stock Exchange under the symbols DA.A and DA.DB respectively.
SOURCE Discovery Air Inc.
For further information: For further information: Rolf S. Dawson, Vice President Corporate Finance and Administration, Rolf.Dawson@discoveryair.com, (867) 873-5350, Extension 304; Sheila Venman, Investor Relations, firstname.lastname@example.org, 1-866-903-3247