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Discovery Air Inc. announces results

Sept. 15, 2009, London, Ont., – Discovery Air Inc. recently announced its financial results for the three and six months ended July 31, 2009.


September 15, 2009
By Administrator

Sept .15, 2009, London, Ont., – Discovery Air Inc. recently announced
its financial results for the three and six months ended July 31, 2009.

The table below summarizes selected financial information for these
periods ending July 2009 as well as the comparative periods ending July 2008.

Dollars (thousands)
Except per share amounts
3 Months
July 2009
3 Months
July 2008
6 months
July 2009
6 months
July 2008
Results of operations: Unaudited Unaudited Unaudited Unaudited
Revenue operating expenses: $45,733 $59,050 $71,299 $89,804
Earnings before undernoted items: $19,149 $19,621 $20,987 $21,936
Interest expense: $3,824 $3,186 $7,323 $6,211
Amortization: $3,405 $3,214 $6,803 $6,331
Relocation of corporate office: $318   $1,491  
Financing transaction costs:     $830  
Net earnings and comprehensive income: $8,004 $8,869 $2,883 $6,169
Earnings per common share:        
Basic: $0.06 $0.07 $0.02 $0.05
Diluted: $0.06 $0.07 $0.02 $0.05
Financial position and liquidy        
Total assets     $269,072 $409,279
Total long-term debt     $142,246 $142,121
Cash provided by operations: $9,177 $6,396 $2,742 $3,286
Working capital     $23,946 $5,675
Key non-gap performance measures        
Adjusted earnings: $8,229 $8,869 $3,936 $6,169
Ebitdar: $21,229 $24,422 $23,247 $29,079
Adjusted Ebitdar: $21,547 $24,422 $24,738 $29,079
Ebitda: $18,831 $19,621 $19,496 $21,936
Ebitda margin:  41%  33%  27%  24%
Adjusted Ebitda: $19,149 $19,621 $20,987  $21,936
Adjused Ebita margin:  42%   33%  29%  24%

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" are net earnings adjusted for goodwill and intangible assets impairment charge, relocation of corporate office charge and related income taxes provision (recovery). "Adjusted EBITDA margin" is the level of Adjusted EBITDA expressed as a percentage of revenues.

Financial Highlights

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  • The Corporation recorded $8.0 million in earnings for the quarter in an environment where revenue levels continued to be adversely impacted by the current weak economic environment as well as weather conditions.
  • Consolidated revenues continued to be impacted by the dramatic slowdown in resource sector activity. Revenue and earnings in the most recent quarter were also impacted by weak forest fire market conditions that existed during July in some of the major geographic fire markets serviced by the Corporation. July and August are typically the peak periods of revenue and earnings for the Corporation's forest fire suppression services. These negative factors were partially offset by higher demand for airborne training services that resulted from the Corporation's increased investment in its Alpha jet fleet. The mix of these factors resulted in consolidated revenues for the quarter and year-to-date being 23% and 21% lower than the comparative period last year.
  • The Corporation's management focused on closely managing the level of expenses in all of its businesses and particularly those businesses that are being adversely impacted by weak economic conditions. As a result, consolidated operating expenses for the quarter were 33% lower than the previous year. Year-to-date, the Corporation was able to reduce its costs by 26% compared to the prior year.
  • The Corporation reported EBITDA for the quarter and year-to-date of $18.8 million and $19.5 million respectively, representing a year over year decrease of 4% and 11% respectively. Adjusted EBITDA, which adjusts for the non-recurring corporate office relocation charge, was $19.1 million and $21.0 million for the quarter and year-to-date respectively, representing a year over year decrease of 2% and 4% respectively.
  • Year-to-date Adjusted EBITDA margin improved from 24% last year to 29% in the current year. Despite the notable decline in the current year's revenues to date, the Corporation was able to minimize the full impact of the lower revenues to earnings by streamlining its operating costs in anticipation of the lower revenues expected in the resource sector base. Also contributing to the current year increase in Adjusted EBITDA margin was the favourable overall mix of consolidated revenues by aircraft type.
  • The Corporation's management continued to actively monitor and manage external factors that could adversely impact its working capital and balance sheet liquidity.