- Revenues increased 27% to $191.7 million for the fiscal year ended January 31, 2012 ("Fiscal 2012").
- Revenues for the quarter ended January 31, 2012 ("Q4/12") increased 21% to $28.7 million.
- EBITDA* for Fiscal 2012 increased 9% to $46.4 million.
- EBITDA* loss was $5.0 million for Q4/12 compared to an EBITDA loss of $0.6 million for the same period last year.
- Net earnings for Fiscal 2012 were $11.8 million or $0.82 per share ($0.72 diluted) compared to net earnings of $5.1 million or $0.38 per share ($0.38 diluted) last year. Fiscal 2012 earnings reflect a tax-effected gain of $4.2 million on extinguishment of a $13.2 million related party debt in Q2/12 and a $1.9 million gain on the change in the fair value of the Corporation's embedded derivative.
- Loss for Q4/12 was $9.8 million or $0.67 per share ($0.67 diluted) compared to a loss of $6.1 million or $0.45 per share ($0.45 diluted) for the same period last year.
- Discovery Air Inc. (the "Corporation") restructured its balance sheet to extend its debt maturities and provide additional working capital, see details below.
YELLOWKNIFE, April 30, 2012 /CNW/ -
President and CEO's Comments
"Fiscal 2012 was an extremely busy year for Discovery Air" said Dave Jennings, President and CEO of Discovery Air Inc. "All of our operations drove revenues to our highest consolidated revenues to date. Equally important for the Corporation in Fiscal 2012 were the investments we made to support future growth. While much of the effort to prepare for those investments occurred over the course of the year, the costs associated with those investments were most evident in our fourth quarter results. We moved away from our typical wind-down in the fourth quarter and instead we maintained and deployed resources, especially in our Northern Services operations, to establish future revenue streams. Q4/12 included start-up costs incurred in our helicopter operation to acquire the ability to operate under Instrument Flight Rules and costs incurred in our fixed wing operation to set up infrastructure for a new medevac contract in Nunavut. We also incurred acquisition costs related to helicopter operations in British Columbia and in Chile. We expect to see our revenues and earnings increase in Fiscal 2013 as a result of those investments."
"We made significant strides in improving our debt structure during Fiscal 2012 and into Fiscal 2013. We extended the maturities and reduced the carrying cost of our debt by refinancing our $28.8 million debentures and, in early Fiscal 2013, refinancing our $34 million term loan. The refinancing of previous debt by means of the issue of Secured Debentures will also contribute significantly to improving our cash flow through interest payments in-kind. We will continue to seek opportunities to improve our debt structure in order to strengthen our ability to fund growth opportunities."
Additional Financial Highlights
- The Corporation's Fiscal 2012 consolidated revenues increased 27%, with the Northern Services and Government Services segments experiencing year-over-year revenue increases of 25% and 29%, respectively. Revenue growth was attributable primarily to demand for services provided by the Northern Services segment to its resource-based customers, a full year's revenue contribution from Discovery Air Technical Services Inc. ("Technical Services"), and increased demand for Top Aces Inc.'s ("Top Aces") airborne training and special mission services and Discovery Air Fire Services Inc. ("Fire Services") forest fire management services in Ontario. Q4/12 consolidated revenues increased 21%, reflecting the continuing trend noted in the Fiscal 2012 consolidated revenues results.
- Fiscal 2012 EBITDA increased 9%, resulting in an EBITDA margin of 24%. EBITDA margin was impacted by higher operating costs incurred to support increased business activity, business development expenses incurred to pursue near and long-term growth opportunities for the Corporation, and transaction and start-up costs incurred in connection with the establishment and acquisition of new businesses. The Corporation expects to generate increased revenues from its new business in Fiscal 2013. Q4/12 EBITDA loss of $5.0 million compared to EBITDA loss of $0.6 million reflects higher operating costs to support increased activity in Q4/12 and increased investment in operations.
- Earnings in Fiscal 2012 increased to $11.8 million ($0.82 per share), compared to $5.1 million ($0.38 per share) in the prior year. A significant part of the increase in earnings was attributable to a $4.2 million after tax gain on debt extinguishment realized in Q2/12 and a $1.9 million gain resulting from the mark-to-market adjustment relating to the Secured Debentures. Adjusting for these non-cash gains, adjusted earnings* in Fiscal 2012 was $5.6 million ($0.39 per share). Changes in adjusted earnings from Fiscal 2011 reflects the additional expenses noted above, higher amortization expense resulting from increased flight hours and increased finance costs due to a series of refinancing transactions throughout the year. Finance costs included a $1.1 million non-cash write off of deferred finance costs on debts that were extinguished during the year.
- The Corporation continued to pursue organic growth in Fiscal 2012 by expanding into new markets and securing significant customer contracts, notable examples include:
- The establishment of Discovery Air International Inc. to provide executive charter and medevac services originating from Western Canada with its fleet of Challenger 601 and Lear 35 jet aircraft;
- The acquisition of a majority stake in Aero Vision Technologies Inc., a provider of software solutions for the aviation market;
- The Corporation's joint venture partners were awarded multi-year contracts to provide aviation charter services for Diavik Mines Inc. and medevac services to the Government of Nunavut; and
- Top Aces' standing offer arrangements for Interim Contracted Airborne Training Services (ICATS) were extended to June 2013.
- The Corporation obtained new financing of $104.7 million, mainly comprised of $70 million secured convertible debentures ("Secured Debentures") issued during Q3/12 and $34.5 million unsecured convertible debentures ("Unsecured Debentures") issued during Q2/12. The new financing was primarily used to repay $85.3 million of existing indebtedness as well as fund working capital requirements and for general corporate purposes. The Corporation also repaid a $13.2 million related party indebtedness during Q2/12 with a payment of $2.9 million in cash plus the issuance of shares.
- The Unsecured Debentures issued in May 2011 have a maturity date of June 30, 2016 and accrue interest at the rate of 8.375% per annum payable on a semi-annual basis. The Unsecured Debentures are direct, unsecured obligations of the Corporation, subordinated to other indebtedness of the Corporation for borrowed money and rank equally with all other unsecured subordinated indebtedness. Holders of the Unsecured Debentures may elect, upon complying with certain procedures described in the indenture concerning such Unsecured Debentures, to convert their respective holdings into common voting shares ("Shares") at any time prior to the maturity date at a conversion price of $7.30 for Shares, subject to adjustment in certain circumstances.
- The Secured Debentures, issued in September 2011, have a maturity date of March 22, 2017, subject to adjustment by the holders of the Secured Debentures in the event that certain milestones are not achieved by the Corporation. The Secured Debentures accrue interest at the rate of 10.00% per annum, which is compounded annually and added to the adjusted principal amount of the Secured Debentures. The Secured Debentures are also convertible into 9,333,334 Shares for an effective issue price of $7.50 per Share, subject to certain adjustment provisions. The effective conversion price of the Secured Debentures increases at 10.00% per annum, and as a result, the original face amount of the Secured Debentures plus all accrued interest will continue to be convertible into 9,333,334 Shares (subject to customary anti-dilution adjustments). Upon maturity or redemption, the holders of the Secured Debentures may elect to either receive a lump-sum payment equal to the par value of the Secured Debentures, plus any accrued and unpaid interest thereon, or convert their Secured Debentures into Shares at the applicable conversion price.
- On February 2, 2012, Great Slave Helicopters Ltd. ("Great Slave") purchased 100% of Servicios Aèreos Helicopters.cl Ltda ("SAL") in Chile. In management's opinion, SAL is a good strategic fit with Great Slave's South American operations, providing helicopter services to domestic and multinational customers in Chile's mining, power construction, and forestry sectors. SAL has two main operating bases in central and southern Chile which currently operate a fleet of up to 10 intermediate and medium sized helicopters. The purchase price consisted of cash consideration of $2.5 million and contingent consideration ranging between $1.5 million and $4.5 million, payable in two installments on December 31, 2012 and on December 31, 2013.
- On February 20, 2012, a wholly-owned subsidiary of Great Slave entered into an asset purchase agreement to acquire the operating assets of Northern Air Support Ltd. ("NAS"). This acquisition, once completed, will fulfill Great Slave's search for a partner in the B.C. market. NAS is a charter company serving the western Canadian mining, forestry and oil and gas seismic sectors with bases in Kelowna, B.C. and Rocky Mountain House, Alta. The purchase price consists of cash consideration of $9.4 million. The completion of this transaction is subject to various conditions in favour of Great Slave's subsidiary.
- On March 26, 2012 the Corporation repaid the $34 million indebtedness owing to the Northwest Territories Opportunities Fund in full ten months prior to its February 1, 2013 maturity. To repay this loan the Corporation entered into two new credit facilities with a combined average interest rate of 5.2% and a $4.5 million bridge loan from a related party. The bridge loan lender is a related party, as it is a subsidiary of Clairvest Group Inc. whose affiliates and clients hold $55 million principal amount of Secured Debentures and have representation on the Corporation's Board of Directors. The bridge loan has a 90 day term and bears interest at 9.5% per annum and is secured by way of certain guarantees and real estate previously pledged as security for the $34 million indebtedness. No financing fees were payable in connection with the bridge loan, and the bridge loan is not convertible into securities of the Corporation.
Selected Financial Information
On February 1, 2011, the Corporation adopted International Financial Reporting Standards ("IFRS") for financial reporting purposes using a transition date of February 1, 2010. The consolidated financial statements for Fiscal 2012 and Q4/12, including required comparative information, have been prepared in accordance with IFRS 1, First-time Adoption of International Financial Reporting Standards as issued by the International Accounting Standards Board.
The table below summarizes selected financial information for the current and comparative periods:
|(thousands of dollars, except per share amounts)||Q4/12||Q4/11||YTD/12||YTD/11|
|Results of operations|
|Depreciation of property and equipment and intangible assets||$||5,246||$||4,162||$||21,092||$||19,791|
|Earnings and comprehensive earnings||$||(9,825)||$||(6,099)||$||11,752||$||5,141|
|Basic earnings per common share||$||(0.67)||$||(0.45)||$||0.82||$||0.38|
|Diluted earnings per common share||$||(0.67)||$||(0.45)||$||0.72||$||0.38|
|Financial position and liquidity|
|Total loans and borrowings||$||133,104||$||139,280||$||133,104||$||139,280|
|Cash from (used) in operations||$||9,635||$||9,811||$||24,951||$||20,953|
|Key non-IFRS performance measures*|
* References to "EBITDA" are to net earnings (loss) before finance costs, income taxes, depreciation of property and equipment and intangible assets and non-cash gain on extinguishment of debt and gains and losses resulting from the change in fair value of financial liabilities. EBITDAR" is EBITDA before aircraft lease cost. The EBITDA margin is EBITDA as a percentage of revenue. Management believes EBITDA and EBITDAR to be important measures as they exclude the effects of items which primarily reflect the impact of long-term investment decisions from the results of the Corporation's day-to-day operations. Management believes these measurements are useful to measure the Corporation's ability to service debt and to meet other payment obligations and as a basis for valuation. "Adjusted earnings (loss)" are net earnings (loss) excluding non-cash gain on extinguishment of debt and gains and losses resulting from the change in fair value of financial liabilities, net of related taxes.
Forward-looking information and statements are included in this earnings release. Please refer to the statement regarding forward-looking statements contained in the Corporation's Management's Discussion and Analysis for Fiscal 2012 and for Q4/12 which are incorporated herein by reference. Those statements provide an explanation as to what forward-looking statements are, and the specific factors, uncertainties and potential events that the Corporation has identified for the attention of readers. When relying on forward-looking information and statements to make decisions, investors and others should carefully consider these factors and other uncertainties and potential events.
The Corporation's consolidated financial statements and Management's Discussion and Analysis for Fiscal 2012 have been filed concurrently and are available on the Corporation's website at www.discoveryair.com and on SEDAR at www.sedar.com. The reader is encouraged to review the audited financial statements and Management's Discussion and Analysis for the year ended January 31, 2012 for more complete disclosure on the Corporation's financial condition and results of operations.
The Corporation's Class A common voting shares and unsecured convertible debentures trade on the Toronto Stock Exchange under the symbols DA.A and DA.DB.A, respectively.
For further information:
Sheila Venman, Investor Relations