Q4 2024 Chorus Aviation Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to the chorus fourth quarter and year end 'twenty 'twenty four financial results. At this time all participants are in a listen only mode. Following the presentation. We will conduct a question and answer session. If at any time during the call you Rick.
Operator: Good morning, ladies and gentlemen, welcome to the Chorus fourth quarter and year-end 2024 financial results. At this time, all participants are in a listen-only mode.
Operator: Following the presentation, we will conduct a question and answer session. If at any time during the call, you require immediate assistance, please press star zero for the operator.
Speaker Change: Wire immediate assistance. Please press Star Zero Party operator. This call is being recorded on Thursday February 'twenty 'twenty 'twenty four I would now like to turn the conference over to Tyrone Cody. Please go ahead Sir.
Operator: This call is being recorded on Thursday, February 20, 2024.
Tyrone Cotie: I would now like to turn the conference over to Tyrone Cotie. Please go ahead, sir.
Tyrone Cotie: Thank you, John, and good morning, everyone. I'm pleased to report on the fourth quarter. Hello and thank you for joining us today for our fourth quarter conference call and audio webcast.
Speaker Change: Thank you John and good morning, everyone I'm pleased to report on the fourth quarter.
Speaker Change: Hello, and thank you for joining us today for our fourth quarter conference call and audio webcast with me today from chorus start calling Cup, President and Chief Executive Officer, and Gary Osborne, Chief Financial Officer.
Tyrone Cotie: With me today from Chorus are Colin Copp, 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.
Speaker Change: We will begin today's call with a brief summary of the photo.
Speaker Change: Followed by questions from the analyst community.
Tyrone Cotie: As there may be forward-looking information 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 of operations of Chorus Aviation Inc. for the three months and the year ended December 31st, 2024, as well as the outlook and other sections of our MD&A where such statements appear.
Speaker Change: There may be forward looking information during the call I ask that you refer to the caution regarding forward looking statements and information found in our MD&A.
Speaker Change: This pertains specifically to the results of operations of Chorus Aviation, Inc. For the three months and the year ended December 31, 2024, as well as the outlook and other sections of our MD&A, where such statements appear.
Speaker Change: As a result of the share consolidation implemented on February 15, 2025, all per share figures in our disclosures have been disclosed to reflect the impact of the consolidation.
Tyrone Cotie: As a result of the share consolidation implemented on February 5th, 2025, all per share figures in our disclosures have been disclosed to reflect the impact of the consolidation. 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. Please refer to our MD&A for further information relating to the use of such non-GAAP measures and pro forma figures.
Speaker Change: 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.
Speaker Change: Please refer to our MD&A for further information related.
Speaker Change: Relating to the use of such non-GAAP measures and pro forma figures I'll now turn the call over to Colin Connolly.
Colin Copp: I'll now turn the call over to Colin. Thank you, Tyrone, and good morning, everyone. I'm pleased to report on the fourth quarter and our 2024 results.
Speaker Change: Yeah.
Colin Connolly: Thank you Tyrone and good morning, everyone.
Colin Connolly: I'm pleased to report on our fourth quarter and our 2024 results.
Colin Copp: There's been a period in which we've taken significant steps to unlock value for our shareholders and reposition the business for success going forward. On December 6, we closed the sale of our regional aircraft leasing segment and quickly took steps using the proceeds to reduce our debt and corporate financings. This included redeeming all our preferred shares, repaying our Series A debentures and launching redemption offers for our Series B and C debentures. These actions have resulted in a substantial reduction in our debt servicing costs and further reduced our leverage ratio from 3.3 to 3.4.
Colin Connolly: There's been a period in which we have taken significant steps to unlock value for our shareholders and reposition the business for success going forward.
Colin Connolly: On December six we closed the sale of our regional aircraft leasing segment.
Colin Connolly: Quickly took steps using the proceeds to produce to reduce our debt and corporate financings.
Colin Connolly: This included redeeming all of our preferred shares.
Colin Connolly: Paying our series 80 debentures and launching redemption offers for our series B and C debentures.
Colin Connolly: These actions have resulted in a substantial reduction in our debt servicing costs and further reduced our leverage ratio from $3 3.4.
Colin Connolly: Sure.
Colin Connolly: As per our plan.
Colin Copp: As per our plan, we have meaningfully strengthened Chorus' balance sheet, improved our financial metrics, and reduced our corporate costs, providing us greater flexibility and a solid foundation from which to return capital to our shareholders and fund targeted investments instead. At this time, our fourth quarter results were delivered in line with expectations with strong and steady cash flows, reflecting consistent execution in each of our businesses.
Colin Connolly: We have meaningfully strengthened courses balance sheet improved our financial metrics and reduced our corporate costs.
Abiding us greater flexibility and a solid foundation from which to return capital to our shareholders and fund targeted investments and steady growth.
Colin Connolly: At this time.
Colin Connolly: Our fourth quarter results were delivered in line with expectations with strong and steady cash flows.
Colin Connolly: Reflecting consistent execution in each of our businesses.
Colin Connolly: Yeah.
Colin Copp: Turning to the operating side. All of our subsidiaries have performed well in 2024 and are on plan to deliver as we move into 2025. The Jazz team has executed very well, delivering consistent, strong contracted earnings from the CPA, and notable year-over-year improvements in almost all operational methods. He was recently recognized as an Award of Excellence winner with Canada's Safest Employers. This was the eighth consecutive year Jazz accepted an award as one of Canada's safest employers.
Colin Connolly: Turning to the operating side.
Colin Connolly: All of our subsidiaries have performed well in 2024 and are on plan to deliver as we move into 2025.
Colin Connolly: The jazz team has executed very well delivering consistent strong contracted earnings from the CPA.
Colin Connolly: And notable year over year improvements in almost all operational metrics.
Speaker Change: Yes was recently recognized as an award of excellence winter with candidates safest employers.
Colin Connolly: This was the eighth consecutive year jazz accepted an award as one of Canada's safest employers.
Colin Copp: It's a testament to Jazz's commitment to safety. Hoysier had another record year, demonstrating their strong position within the Special Mission, Park Sales and Specialty MRO space. And they remain solidly on target to hit the 2025 growth plans as previously outlined.
Speaker Change: It's a testament to <unk> commitment to safety.
Speaker Change: <unk> had another record year.
Speaker Change: Demonstrating their strong position within the special mission part sales in specialty MRO space.
Speaker Change: And they remained solidly on target to hit the 2025 growth plans as previously outlined.
Speaker Change: Yeah.
Colin Copp: Further, we see significant potential in a repositioning Voyager for sustained growth well beyond 2025. while achieving our goal of $150 million in revenue over the next year. notably in 2024. Voyager meaningfully grew their part business and successfully built out their special mission support business with the Department of National Defense for the manned airborne intelligence surveillance and reconnaissance program. And they also expanded their air ambulance operations at Grand Manan Island. part of the Ambulance New Brunswick Provincial Air Ambulance Program. On the pilot recruitment side, Jazz welcomed its first class of new hire pilots from our Airline Pilot Training Academy, Cigna Aviation, in October of 2024.
Speaker Change: Further we see significant potential in our.
Speaker Change: Reposition or positioning Voyager for sustained growth well beyond 2025.
Speaker Change: While achieving our goal of $150 million in revenue over the next year.
Speaker Change: Notably in 2024.
Speaker Change: Whereas you're meaningfully grew their parts business and successfully built up your special mission support business with the department of that.
Speaker Change: For the manned airborne intelligence surveillance and reconnaissance program.
Speaker Change: And they also expanded their aim air ambulance operations at Grand Banana Island.
Speaker Change: As part of the ambulance, New Brunswick provincial Air Ambulance program.
Speaker Change: On the pilot recruitment side jazz welcomed its first class.
Speaker Change: You have new hire pilots from our airline pilot training Academy Cigna Aviation in October of 2024.
Colin Copp: The Cigna team continues to grow the business as planned. having commenced their seventh cohort at the beginning of Q1 2025. Cignet's pilot training capabilities to train airline-ready pilots from the ground up. and recent additions of top-notch talents to its team is helping to generate a solid flow of airline-ready first officers. At the same time, Cygnet is now moving forward and expanding its industry partnerships with other Canadian airlines and focusing on growing its free agent enrollment.
Speaker Change: Signet team continues to grow the business as planned.
Speaker Change: Having commenced their seventh cohort at the beginning of Q1 2025.
Speaker Change: Cigna pilot training capabilities to train airline ready pilots from the ground up.
Speaker Change: And recent additions of top notch talents to its team is helping to generate a solid flow of airline ready first officers.
Speaker Change: Same time Cigna.
Speaker Change: <unk> is now moving forward and expanding its industry partnerships with other Canadian airlines and focusing on growing its free agent enrollment.
Speaker Change: Turning to our shares for our model.
Colin Copp: Turning to our shares for a moment on February 5th, 2025. With strong shareholder support, Chorus consolidated its shares on the basis of one post-consolidation share for every seven pre-consolidation shares. The shares began trading on the TSX on a post-consolidation basis on February 10. We expect the higher price per share.
Speaker Change: On February five 2025.
Speaker Change: With strong shareholder support of course.
Speaker Change: Holiday that it shares on the basis of one post consolidation share for every seven pre consolidation shares.
The shares began trading on the <unk> on a post consolidation basis on February 10.
Speaker Change: We expect the higher price per share.
Colin Copp: Thank you very much. Since the launch of our NCAV in November of 2022, we've invested $46 million under that program. And we continue to monitor the market conditions and evaluate other opportunities to enhance return for our shareholders.
Speaker Change: Resulting from the consolidation will make our shares more attractive for investment for a wider range of potential investors.
Speaker Change: Since the launch of our <unk> and <unk>.
Speaker Change: November of 2022.
Speaker Change: We've invested $46 million under that program.
Speaker Change: And we continue to monitor the market conditions and evaluate other opportunities to enhance returns for our shareholders.
Speaker Change: And as we look forward of.
Colin Copp: And as we look forward, Chorus is well positioned, especially during this time of economic uncertainty, with a strong balance sheet, low leverage, and strong contracted cash flow. Our jazz business is anchored by its contract with Air Canada that runs to 2035. Voyager has diversified sales avenues. including its recent growth in parts sales and events.
Speaker Change: <unk> is well positioned especially during this time of economic uncertainty with a strong balance sheet low leverage and strong contracted cash flows.
Speaker Change: Our gas business is anchored by its contract with Air Canada is it runs to 2035.
Speaker Change: Voyager has diversified sales avenues.
Speaker Change: <unk> its recent growth in part sales in defense.
Speaker Change: And we believe the business profile positions us very well and provides flexibility as we work through any future market volatility.
Colin Copp: And we believe the business profile positions us very well and provides flexibility as we work through any future market volatility.
Speaker Change: And I would like to reiterate.
Colin Copp: And I'd like to reiterate... The creating shareholder value remains the key priority for our board, and for the management team as we move forward.
Speaker Change: They're creating shareholder value remains the key priority for our board and for the management team as we move forward.
Speaker Change: 2024 was a year of heavy lifting.
Colin Copp: 2024 was a year of heavy lifting. was significant change for Chorus.
Speaker Change: With significant change per course.
Colin Copp: And I'd like to close by thanking our employees across all our businesses for their unwavering focus.
Speaker Change: And I'd like to close by thanking our employees across all our businesses for their unwavering focus.
Speaker Change: And thank our shareholders and our board of directors for their support.
Colin Copp: We thank our shareholders and our board of directors for their support.
Gary Osborne: And now I'll pass it over to Gary and he'll take you through the financials. Thank you, Colin, and good morning.
Speaker Change: And then I'll pass it over to Gary.
Gary Osborne: Through the financials.
Gary Osborne: Thank you Colin and good morning.
Gary Osborne: As Colin mentioned, we completed a significant milestone in closing the sale of our leasing segment on December 6th. The aggregate consideration from the RAL sale was $2 billion, with net proceeds of US $607.7 million, which we used to repay all of the outstanding Series A debentures for $86.3 million. Redeem all of the Outstanding Preferred Chairs for U.S. $363 million. including a mullet of $63.3 million. We also repaid the amount outstanding under our operating credit facility. And on February 3rd, 2025, Chorus purchased for cancellation $81.6 million of the Series B and C DaVenture. As we close out 2024, our leverage now sits at 1.4, down from the 3.3 at the end of 2023.
Gary Osborne: Paul had mentioned we completed a significant milestone in closing the sale of our leasing segment on December six.
Gary Osborne: The aggregate consideration from the <unk> sale was $2 billion.
Gary Osborne: With net proceeds of U S $607 7 million, which we used to repay all the outstanding series, a debentures for $86 3 million.
Gary Osborne: So again all of the outstanding preferred shares for U S $363 million.
Gary Osborne: Including <unk> 60.
Gary Osborne: $63 3 million.
Gary Osborne: We also repaid the amount outstanding under operating credit facility.
Gary Osborne: And on February 3rd 2025 quarters.
Gary Osborne: <unk> purchased for cancellation $81 6 million of the series B and C debentures.
Gary Osborne: As we close out 2024, our leverage now sits at one four down from the three three at the end of 2023.
Gary Osborne: As we look forward at the year, we've made significant payments on monetizing aircraft loans, paid off our Series A debentures, and reduced the balance outstanding on our operating credit facility to nil. Our free cash flow generation remains strong, with $27.5 million generated in the fourth quarter of 2024, in line with the same period last year. We saw our 2024 annual free cash flow come in at $118.8 million. Moving forward, post the RAL sale, we will see improved cash flows related to reduced principal and interest payments on debt and removal of the preferred share dividend. We have been active under our NCIB program, purchasing $10 million in shares since the close of the RAL sale and continue and plan to continue with share buyback.
Gary Osborne: As we look forward at the year, we made significant payments on <unk> aircraft loans paid off our series, a debentures and reduce the outstanding or reduce the balance outstanding on our operating credit facility to nil.
Gary Osborne: Our free cash flow generation remains strong with $27 5 million generated in the fourth quarter of 2024 in line with the same period last year.
Gary Osborne: So our 2024 annual free cash flow came in at $118 8 million.
Gary Osborne: Moving forward there.
Gary Osborne: <unk> sale, we will see improved cash flows related to reduced principal and interest payments on debt and removal of the preferred share dividends.
Gary Osborne: Yeah.
Gary Osborne: We have been active under our NPI program purchasing $10 million in shares since the close of the <unk> sale and continue and plan to continue with share buybacks.
Gary Osborne: We are also focused on growing our business, reducing our corporate costs and improving our earnings. As we look at the fourth quarter, overall the results for our continuing operations were in line with our expectations. We saw a just-a-dip-a-dop coming in at $52.7 million for the quarter and $211.6 million for the year. Our adjusted earnings available to common shareholders came in at $0.39 for the quarter and $1.04 for the year. This, of course, does not reflect the full impact of the sale RAL and the repayment of corporate financings, which is outlined in our Post-Sale Pro Forma Non-Gap Financial Measures section of the MD&A.
Gary Osborne: We are also focused on growing our business, reducing our corporate costs and improving our earnings.
Gary Osborne: As we look at the fourth quarter overall the results for our continuing operations were in line with our expectations.
Gary Osborne: Adjusted EBITDA came in at $52 7 million for the quarter and $211 6 million for the year.
Gary Osborne: Our adjusted earnings available to common shareholders came in at 39 cents for the quarter and $1 four for the year. This of course does not reflect the full impact of the sale of <unk> and the repayment of corporate financings, which is outlined in our post sale pro forma non-GAAP financial measures section of the MD&A.
Gary Osborne: It was a busy quarter with the sale of the rail segment.
Gary Osborne: It was a busy quarter with the sale of the RAL segment, the redemption of the preferred shares, the repayment of the Series A debentures, and the repayment of the balance on our operating credit facility. In addition, we reported an impairment provisions of $10.5 million on Dash 8-300s that were non-operational in conjunction with our plan to now part these aircraft out. As reported in our MD&A, the actual and forecasted covered aircraft under the CPA for the years 2024 to 2026 goes from 114 to the 80 minimum covered aircraft. Included in this planned fleet production is the removal of nine owned Dash 8-400s, which we are now in the process of remarketing the nine Q-400s.
Gary Osborne: <unk> as a preferred shares to repayment of the series a debentures and the repayment of the balance on our operating credit facility. In addition, we recorded an impairment provisions of $10 5 million on dash eight three hundreds that were non operational in conjunction with our plan to now park. These aircraft out.
Gary Osborne: As reported in our MD&A, the actual and forecasted covered aircraft under the CPA.
Gary Osborne: For the years 2024 to 2026 goes from 114 to the 18th minimum cover aircrafts.
Gary Osborne: Included in this plan complete production is the removal of nine one dash eight four hundreds which are now in the process and we are now in the process of re marketing benign Q4 highlights.
Gary Osborne: In conclusion, I would like to reiterate what Colin said earlier. A strengthened balance sheet and improved cash flows provide our business with much greater flexibility now, and we are pleased with the progress we made this past quarter and year.
Gary Osborne: In conclusion, I would like to reiterate that Colin what Colin said earlier, our strengthened balance sheet and improved cash flows provide our business with much greater flexibility now and we're pleased with the progress we made this past quarter and year.
Gary Osborne: We're now ready to answer questions. Thank you.
Gary Osborne: We are now ready to answer questions.
Gary Osborne: Thank you ladies and gentlemen, we will now begin the question and answer session and if you wish to ask a question.
Operator: Ladies and gentlemen, we will now begin the question and answer session. And if you wish to ask a question, please press star and one on your telephone keypad and wait for your name to be announced. Once again, star and one if you wish to ask a question.
Gary Osborne: And one on your telephone keypad and wait for your name to be announced once again star one if you wish to ask a question.
Speaker Change: And we will now take our first question and this comes from the line of James Smug cargo from RBC capital markets. Your line is now open. Please go ahead.
James McGarragle: And we will now take our first question, and this comes from the line of James McGarragle from RBC Capital Markets. Your line is now open. Please go ahead.
Colin Copp: Hey, good morning, everyone, and thanks for having me on. I wanted to ask a question on the medium and longer-term strategy here. So, any opportunities outside of the CPA, any potential M&A you might be looking at, or any organic opportunities right now that you're looking at as being attractive, any colour you can provide there?
Speaker Change: Hey, good morning, everyone and thanks Robyn.
Gary Osborne: If you would ask the question.
Gary Osborne: Last question on the medium and longer term our strategy here so.
Gary Osborne: Any opportunities outside of the CPA.
Gary Osborne: Potential M&A, you might be looking at or.
Gary Osborne: Our organic opportunities right now that Youre looking at is being extracted any color you can provide there.
Colin Connolly: Yes, good morning, James column.
Colin Copp: Yeah, good morning, James, Colin. Look, it's a good question. And those are, you know, that's one of the key questions we've been getting really on the on the growth side, I think is one of the key ones and the others on the capital side as far as returning capital and what are we doing with our cash? So great question. Look, we've just gotten through the sale transaction, really getting the balance sheet cleaned up. So, we've been very focused on making sure we execute well on that. And I think we've done a great job of it, as we said we would.
Gary Osborne: Look it's.
Gary Osborne: Yes. Good question and those are that's one of the key questions we've been getting really on the on.
Gary Osborne: On the growth side I.
Gary Osborne: I think it is one of the key ones and the other is on the capital side as far as returning capital and what are we doing with our cash.
Gary Osborne: So great question.
Gary Osborne: Look we've just gotten through the <unk>.
Gary Osborne: Sale transaction really getting the balance sheet cleaned up so we've been very focused on making sure we execute well on that.
Gary Osborne: And I think we've done a great job of it as we said we would.
Gary Osborne: We were pretty clear on where we were headed.
Colin Copp: We were pretty clear on where we were headed. So, we've got that done. We're focused on the cash side here and making sure we've got a plan on the capital side, which we said all along we will get to and that's coming.
Gary Osborne: So we got that done.
Gary Osborne: We're focused on the.
Gary Osborne: The cash side here and making sure we've got a plan on the capital side, which we've said all along we will get to and that's coming.
Colin Copp: And on the growth side, on the short term, we're focused on the existing businesses and really looking at shoring them up and doing what we can to ensure they are very strong. So that will be the very nearing focus, and on a longer term, we're starting to think about the growth side and where do we see acquisition opportunities. You know, we're in the market looking. We have nothing really to report or to give you, but that is our long term growth. Our long term plan is to see some growth as we stabilize and get everything, get everything done that we've committed to here.
Gary Osborne: And on the growth side, we are really on the short term, we're focused on the existing businesses and really looking at touring them up and doing what we can to ensure they are very strong.
Gary Osborne: So that'll be that'll be the very nearing.
Gary Osborne: Focus on our longer term where we.
Gary Osborne: We're starting to think about the growth side, and where do we where do we see acquisition opportunities.
Gary Osborne: We're in the market looking and we have nothing really to report or to give you but that is our long term growth as our long term plan is to see some growth.
Gary Osborne: As we stabilize and get everything get everything done that we committed to here so pretty much on track just where maybe a little early to start talking about that as we just kind of get things cleaned up and.
Colin Copp: So pretty much on track, just we're maybe a little early to start talking about that as we've just kind of got things cleaned up. And, you know, I think the timing of it has been good for us for sure.
Gary Osborne: I think the timing of it has been good for us for sure.
Speaker Change: Okay. Thanks, Thanks for the color there and then just on the Air Canada their Investor day, They mentioned they were focusing on.
James McGarragle: Thanks for the call there.
James McGarragle: And then just on the Air Canada, they mentioned they were focusing on the A220s and the ERJs.
Gary Osborne: 20.
Gary Osborne: <unk>.
Colin Copp: Did you see any impact to you guys longer term there, or any risk to the use of the Q400s? And after that, I can turn the line over.
Gary Osborne: Did you see any impact.
Gary Osborne: Do you guys longer term there.
Gary Osborne: Any risks through the use of the data that the.
Gary Osborne: Q4 hundred right after that I'd like to turn the line over thank you.
Speaker Change: Yeah, Yeah. Another good question.
Colin Copp: Yeah, yeah, another good question. Look, yeah, the A220 is a pretty big airplane, right? And we have a history with Air Canada of them moving us around, and we've been on different routes.
Gary Osborne: Look yes.
Gary Osborne: <unk>.
Gary Osborne: Pretty big airplanes, and we have a history with air Canada.
Gary Osborne: Moving to surround and we've been on different routes.
Colin Copp: It's always kind of, you know, we can't speak for Air Canada at all, but it's always been this, about the right size airplane at the right time on the right route. So, you know, it's a bigger, significantly bigger airplane. Sure, there will be movement. There always has been movement and flexibility with us. That's one of the great advantages that we provide. The ability to move aircraft around the country and do different flying, depending on where the need is. Absolutely, a few things could change, but we don't see any impact or reduction in any way, as far a fleet goes.
As always we can't speak for Air Canada at all but it's always been this way.
And about the right size airplane at the right time on the right route so.
Gary Osborne: It's a bigger significantly bigger airplane.
Gary Osborne: Sure there will be movement, there always has been movement and flexibility with us that's one of the great advantages that we provide is.
Gary Osborne: The ability to move aircraft around the country and do different flying depending on where the need is so.
Gary Osborne: Absolutely a few things could change, but we don't see any impact or reduction in any way as far as the fleet goes.
Colin Copp: Routes are going to be flexible, and there may be some advantages coming out of it for us as well as they grow markets. Look, we're excited that Air Canada continues to grow, and we don't see anything from an impact perspective there at all.
Gary Osborne: Our roots are going to be flexible and there may be some advantages coming out of it for us as well as they grow market. So.
Gary Osborne: But we're excited that air Canada continues to grow and.
Gary Osborne: We don't see anything.
Gary Osborne: From a from an impact perspective, there at all.
Gary Osborne: Thank you.
Speaker Change: Thank you and the next question comes from the line of <unk> Gupta from Scotiabank. Your line is now open. Please go ahead.
James McGarragle: Thank you.
Ali: And the next question comes from the line of Konark Gupta from Scotia Bank. Your line is now open. Please go ahead.
Andy: Hi, this is Andy filling input.
Ali: Hi, this is Ali filling in for Konark. Good morning, everyone. My first question is on the CPA.
Speaker Change: Everyone.
Speaker Change: Good morning first question. My first question is on the CPA, what do you plan to do with any incremental unused aircrafts, if some or all CPA leases don't extend.
Colin Copp: What do you plan to do with any incremental unused aircraft if some or all CPA leases don't extend?
Colin Copp: Yeah, look, we've had that question a few times. And look, we're going to optimize the value of those assets. There's a whole bunch of options that could happen. We could extend some of our plans with Air Canada. We could sell the aircraft. We could use them in other operations. So we're looking at really optimizing the value, doing what's best for the shareholder from a return perspective with those assets. Obviously, if there are candidates, you know, if they can stay in the fleet, we will do that. But if not, there's lots of opportunities to get value out of those assets.
Speaker Change: Yes look we've had that question a few times.
Speaker Change: And look we're going to optimize the value of those assets.
Speaker Change: There's a whole bunch of auctions that could happen, we could extend some airplanes with air Canada, we could sell the aircraft we could use them in other operations. So we're looking at really optimizing the value of doing what's best for the shareholders from from a return perspective with those assets.
Speaker Change: Obviously, a fair candidates.
Speaker Change: If they can stay in fleet, we will do that but.
Speaker Change: If not there's lots of opportunities to.
Speaker Change: To get value out of those assets are great assets and.
Ali: They're great assets. And so it's going to depend. And it's really speculation to say what might happen to those aircraft over time. That makes sense.
Speaker Change: So it's going to depend.
Speaker Change: And it's really speculation to say what might happen to those aircraft it overtime.
Speaker Change: That makes sense. Thank you.
Ali: Thank you.
Ali: And maybe just one last one.
Speaker Change: And maybe just one last one as far as your of your growth aspirations do you see an opportunity to expand <unk> operations geographically on the west coast or even in the U S to M&A or organic.
Colin Copp: As part of your growth aspirations, do you see an opportunity to expand Voyager operations geographically on the West Coast or even in the U.S. through M&A or organically? Yeah, absolutely. There's there's growth opportunities there. You know, we've set a target that we talked about, the 150. We're working through that to make sure we were on track for that this year. And we're continuing, as I said. In my script there, we're continuing to now look at the next phase. How do we continue the growth path here? We see lots of opportunities. Exactly where they are and what they look like, I don't want to comment on because, again, it's kind of speculating on what might happen.
Speaker Change: Yes, absolutely there is growth opportunities there.
Speaker Change: We've set a target that we talked about the 150.
We're working through that to make sure. We are on track for that this year and.
Speaker Change: We're continuing as I said.
Speaker Change: In my in my script, there, we're continuing to now look at the next phase how do we how do we continue the growth path here, we see lots of opportunities exactly where they are and what they look like I don't want to comment on because again, it kind of speculating on what might happen, but for sure growth there we see.
Colin Copp: But for sure, growth there, we see beyond where we're at today and what we've given guidance on, for sure. And there could be opportunities in the US, could be in the West, could be in Central Canada, could be in a lot of different locations.
Speaker Change: Beyond where we're at today and what we've given guidance on.
Speaker Change: For sure.
There could be could be opportunities in the U S could be in the last could be in central Canada could be larger.
Speaker Change: Okay. Thanks, guys. Appreciate the time Thats all my questions.
Ali: Okay, thanks guys. I appreciate the time.
David Ocampo: That's all my questions. Thank you, and the next question comes from the line of David Ocampo from Konark Securities. Your line is now open. Please go ahead.
Speaker Change: Thank you and the next question comes from the line of David Ocampo from <unk> Securities. Your line is now open. Please go ahead.
David Ocampo: Hi, Thanks. Good morning, everyone. Just just wanted to follow up on Voyager line of questioning there, but maybe ask it a little bit differently.
David Ocampo: Thanks.
David Ocampo: Good morning, everyone. Just wanted to follow up on the Voyager line of questioning there, but maybe ask it a little bit differently. I think if you go back to your 23 investor day, you guys laid out that $150 million target, and I think pretty healthy margins on that. That was two years ago. So I'm just curious how much visibility you guys have going forward. Is it a business where you could start to project that in another two years? Maybe you're not comfortable laying out a number today, but just wanted to see how much visibility there is in that business as we move forward, as it is kind of your main growth driver going forward.
David Ocampo: I think if you go back to your 23 Investor Day, you guys laid out the $150 million target and I think pretty healthy margin on that.
David Ocampo: That was a that was two years ago. So I'm just curious how much visibility you guys have.
David Ocampo: Going forward is it a business where you could start to project and another two years, maybe maybe youre not comfortable laying out a number today, but just just wanted to see how much visibility there isn't that business as we move forward as it is kind of your main growth driver going forward.
Colin Copp: Yeah, okay, sure.
David Ocampo: Yeah, Okay sure. Good question again I think.
Colin Copp: Good question. Again, I think, you know, Look, we see the growth. We're working on that. I can't give you any numbers. I know Gary at some point here will come up with a decision on guidance as to what we'll provide you guys, and I think that's an important element. I appreciate that that's something you need to see. But there's no question that we see growth on a go-forward basis for Voyager beyond that 150. We'll be able to figure out hopefully in the in the months ahead here what that looks like, and you know how far that guidance goes out.
David Ocampo: Yeah.
David Ocampo: Look we see the growth we're working on that.
Speaker Change: I can't give you any numbers I know Gary at some point here, we'll come up with a with a.
Speaker Change: A decision on guidance as to what will provide the provide you guys and I think thats an important eliminate I appreciate that that's something you need to see.
Speaker Change: But theres no question that we see growth on a go forward basis for Voyager beyond that $1 50.
Speaker Change: We will be able to figure out hopefully in the in the months ahead here what that looks like in <unk>.
Speaker Change: That guidance goes out.
Colin Copp: I can't really comment on that.
Speaker Change: I can't really comment on that.
Gary Osborne: I don't know, Gary, if you want to add some color there. Yeah, no, I think we're, you know, we're very comfortable with the $150 million this year for Voyager. And, you know, we still see them growing. But as far as guidance goes, as Colin said, we'll make a decision on that in the future. But they're continuing to grow.
Speaker Change: I don't know.
Add some color there.
Colin Connolly: Yes, no I think we're very comfortable with the 100 $150 million this year for Voyager and we still see them growing but as far as guidance goes as Colin said, we'll make a decision on that in the future, but they're continuing to grow that's the main thing.
Gary Osborne: That's the main I guess, Gary, what gives you that confidence in the 150? It was a number of two years ago. Is it all just based on contracted business and there's really no hiccups or places where it could go wrong? It's a contracted business, for sure. They have a lot of that within their business. They work for the United Nations and others. They also have a lot of aircraft parts sales, as you know. They've been building that business and that continues to build, so we feel comfortable with that. It's just the general momentum they've built over the last year or two, and they continue.
Gary Osborne: I guess, Gary what gives you that confidence in the $1 50 is the number two years ago was it all just based on contracted business in there as well.
Colin Connolly: Hiccups, there are places where it can go wrong.
It's contracted business for sure they have they have a lot of that within their business. They work through United Nations and others. They also have a lot of aircraft part sales as you know.
Colin Connolly: <unk> been building that business and that continues to build so we feel comfortable with that and it's just the general momentum momentum they built over the last year or two and they continue and based on our forecast, we're still expecting a $150 million. So we're feeling pretty good about it.
Gary Osborne: Based on our forecast, we're still expecting $150 million, so we're feeling pretty good about it.
Speaker Change: Okay got you and then on the aircraft that are coming off lease with air Canada over the next few years, Gary are you able to provide how much of the net book value that is I think you guys provided an overall number.
Gary Osborne: Gotcha. And then on the aircraft that are coming off lease with Air Canada over the next few years, Gary, are you able to provide, you know, how much of the net book value that is? I think you guys provide an overall number. I'm just curious where that stands. We're not providing a net book value number, but we do expect to achieve net book. And some guidance to the market that somewhere between, you know, an average Q400 is worth today somewhere between $5 and $7 million U.S., so that's still a good number to use, but we're not disclosing the book value.
Colin Connolly: Just curious.
Colin Connolly: Yes.
Colin Connolly: We're not providing a net book value number, but we do expect to achieve net book in the past we've given.
Colin Connolly: Some guidance to the market that's somewhere between an average Q4 hundreds worth today somewhere between five and $7 million U S. So that's still a good number to use but we're not disclosing the book values.
Gary Osborne: OK. And there's no debt associated with that as the lease is expiring. That's right. Those nine aircraft have no data. Yes.
Speaker Change: Okay, and Theres no debt associated with that as the leases expiring.
Colin Connolly: Those nine aircrafts have no debt yes.
David Ocampo: Okay, that's it for me.
Okay.
Tim James: I'll turn the call over.
Colin Connolly: It for me I'll turn the corner.
Speaker Change: Thank you and the next question comes from the line of Tim James from TD Cowen. Your line is now open. Please go ahead.
Tim James: Thank you. And the next question comes from the line of Tim James from TD Cowen. Your line is now open. Please go ahead.
Tim James: Thanks.
Tim James: Good morning, everyone. Just returning to Voyager, if I could, revenue growth obviously very strong in the quarter, and I realize you don't want to get into specifics around margin, but could you just talk sort of generally about the moving parts within Voyager that would have impacted sort of the margin and profitability in that business? I know you've characterized it as around 25% EBITDA margins, if I'm not mistaken. I'm just wondering if with that kind of revenue growth, one would reach the obvious conclusion that maybe there's been some margin expansion, but just help me sort of realize if that's a good assumption or what are the drivers there?
Tim James: Hi, Thanks, good morning, everyone.
Tim James: Just returning to Voyager if I could revenue growth, obviously very strong in the quarter.
Tim James: And I really don't want to get into specifics around margin, but could you just talk sort of generally about the moving parts within Voyager that would've impacted sort of the margin and profitability in that business I know you've characterized it is around 25% EBITDA margins, if im not mistaking mistaken I'm just wondering if that kind of revenue growth one <unk>.
Tim James: Reached the obvious conclusion that maybe there's been some margin expansion, but just help me sort of.
Tim James: Realize if thats, a good assumption or if.
Tim James: What what are the drivers there.
Kevin: Yes, Tim it's Ger Kevin.
Gary Osborne: Yeah, Tim and Gary here.
Gary Osborne: On the revenue side, they've been achieving those margins. I think they were around 24% this year, and that's consistent with what I think we had on the investor day. So, they're continuing to see their margins as they expand the revenue base so they're holding. And they're seeing it in a lot of bases, parts is one of them. There's no question that the parts are doing very well, but they've also been improving their operations and expanding in their contracts. They've got the major contracts that Colin talked about earlier and others that have kicked in. So, they're doing well on the contracts, part sales, and executing on their business.
Gary Osborne: It's Gary here.
Gary Osborne: On the revenue side, they've been achieving those margins I think they were around 24% this year and that's consistent with what I think we had on the Investor day, So they're continuing to continuing to see their margins as they expand the revenue base of their holding and what youre seeing in a lot of basis parts is one of them. There is no question that the parks are doing.
Gary Osborne: Well, but they've also been improving their operations and expanding.
Speaker Change: In their contracts they've got the major contract I think that Colin talked about earlier than others.
Gary Osborne: In so doing well on the contracts part sales and executing on their business.
Speaker Change: Okay. That's helpful. Thank you.
Tim James: Okay, that's helpful.
Tim James: Thank you.
Colin Copp: Then, maybe just a more general question, is there anything you can provide in terms of opportunities, whether it's, you know, specifics or just generals in terms of more parts sales or, you know, operating aircraft or medevac contracts and just anything in terms of sort of as you look forward at future potential business development at Voyager, what types of opportunities are out there for that business? Yeah, and there is, you know, the one thing, the one reason why we're so bullish on them is because there are such a wide variety of opportunities that exist in all of those areas that you just mentioned, including the park side, we still see, you know, big potential in the park side.
Speaker Change: Then maybe just a more general question is there anything.
Speaker Change: You can provide in terms of opportunities, whether it's specifics or just generally in terms of more part sales or operating aircraft or medevac contracts and just anything in terms of sort of as you look forward that.
Speaker Change: Future potential business development at Voyager, what what types of opportunities are out there for that business.
Yes, Tim.
Speaker Change: It is.
Speaker Change: The one thing the one reason why we're so bullish on them is because there are such a wide variety of opportunities that exist in all of those areas that you just mentioned, including the parts side, we still see big potential in the parts side.
Colin Copp: And all of those things really align well with the strengths that Voyager has as far as their capabilities. So, I wouldn't say, you know, that there's one specific area. I think all three of those areas, even on the defense side, there were opportunities to bid on contracts that make a lot of sense for us and give us the capability to execute on. I think all those areas are all growth areas.
Speaker Change: And all of those things really align well with the strengths at Voyager has as far as their capability. So.
Speaker Change: I wouldn't say.
Speaker Change: There is one specific area I think all three of those areas even on the defense side doors.
Speaker Change: Opportunities to bid on contracts that make a lot of sense for us and give us the capability to execute on so.
Speaker Change: I think all of those areas are all growth areas and.
Tim James: They'll be part of the plan as we continue to push Voyager to the next level for sure. Okay, great. Thank you very much.
Speaker Change: There'll be part of the plan as we continue to push push voyage or to the next level for sure.
Okay, great. Thank you very much.
Speaker Change: Yeah.
Speaker Change: Thank you and there are no further questions at this time I would now like to hand, the call over back to Tyrone Cody. Please go ahead Sir.
Operator: Thank you.
Tyrone Cotie: And there are no further questions at this time. I would now like to hand the call over back to Tyrone Cotie. Please go ahead, sir.
Speaker Change: Well, thank you John and thank you all for taking part in today's call. Thank you for the questions have a good day.
Tyrone Cotie: Well, thank you, John, and thank you all for taking part in today's call. Thank you for the questions.
Operator: Have a good day. Thank you.
Speaker Change: Thank you. This concludes our conference for today. Thank you all for participating you may now disconnect.
Operator: This concludes our conference for today. Thank you all for participating.
Operator: You may now disconnect.
Speaker Change: Yes.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Okay.