Chorus Aviation Inc. · TSX:CHR
Chorus Aviation — Investor Day (March 2023)
102 slides from Chorus Aviation's investor day presentation, March 2023
Slide 1: Investor Day 2023
INVESTOR DAY 2023 Colin Copp President and Chief Executive Officer
Slide 2: Chorus Board of Directors
Chorus Board of Directors 3 Karen Cramm, Gail Hamilton Stephen Hannahs Alan Jenkins Paul Rivett Board member since 2010 Board member since 2021 Board member since 2015 Board member since 2021 Board member since 2021 Amos Kazzaz David Levenson Marie-Lucie Morin Frank Yu Board member since 2020 Board
Slide 3: We Have an Exceptional Roster of Industry Veterans
4 Colin Copp Gary Osborne Jolene Mahody Dennis Lopes President and Chief Executive Chief Financial Officer Executive VP and Chief Senior VP, Chief Legal Officer Officer Strategy Officer & Corp. Secretary We Have an Exceptional Roster of Industry 30 Years 30 Years 30 Years 9 Years Veterans Jeremy Bar
Slide 4: Chorus Is A Leading, Global Aviation Solutions Provider
5 Chorus Is A Leading, Global Aviation Solutions Provider and Asset Manager, Focused on Regional Aviation INVESTOR DAY 2023
Slide 5: Business Overview
6 Business Overview INVESTOR DAY 2023 We have a global presence with interests in North America, Europe, Africa and Asia Public since 2006 TSX: CHR 7 357 US $3.7 B 240+ 5000+ Businesses or Regional aircraft Assets owned, Customers Employees customers owned, operated operated and under worldwide oper
Slide 6: Financial Highlights – 2022
7 Financial Highlights – 2022 1 INVESTOR DAY 2023 $1.6 B $441 M $93 M $0.48 Total Adjusted Adjusted Earnings Adjusted EPS Revenues EBITDA Available to Per Common Common Share2 Shareholders2 14.6% $371 M $280 M 4.4x Adjusted Free Cash Cash from Leverage Return on Flow Operations Ratio Equity 1. See N
Slide 7: Our Lines of Business
8 Our Lines of Business The largest regional The leading pure play A leading provider of An industry leading operator in Canada regional aircraft asset specialty charter, accredited training and the sole provider manager and lessor, aircraft modifications, academy preparing of regional air managing
Slide 8: Regional Aircraft Platforms are Common Across our Businesses
Regional Aircraft Platforms are 9 Common Across our Businesses Common platforms provide increased margin and revenue opportunity • Common equipment manufacturers and suppliers, yielding buying and negotiating power • Numerous airline and aviation customer relationships • Ability to offer MRO and par
Slide 9: Our Business is Evolving to Focus on Free Cash Flow
10 Our Business is Evolving to Focus on INVESTOR DAY 2023 Free Cash Flow 2006 - 2015 2016 - 2022 2023 + Service Provider Growing Service Service Provider – & Aircraft Lessor Provider & Asset CPA Manager IPO in 2006 as Strong cash flow Shift to asset light income trust with supported by leasing model
Slide 10: ~$2.6 B in future contracted revenue, ~$1.3 B in net asset value
11 ~$2.6 B in future contracted revenue ~$1.3 B in net asset value INVESTOR DAY 2023 1. See Notice to Recipients and Endnotes including endnotes 19, 20,26, and 27
Slide 11: Chorus is Trading at a Significant Discount to Book Value and Intrinsic Value
Chorus is Trading at a Significant Discount 12 to Book Value and Intrinsic Value of Common Shares $5.50 27% Discount to $4.00 Intrinsic Value 18% $3.30 Discount to Book Value 30 Day VWAP Book Value per Current Chorus Upside from Common Share Intrinsic Value Business 2022YE 2022YE Transformation INVE
Slide 12: Key Investment Highlights
13 Key Investment Highlights 1. Regional aviation is a core and resilient sector of aviation 2. Leading regional aviation solutions provider and asset manager with diversified global presence 3. Long-term contracted cash flows and high-quality asset base 4. Strategic transformation unlocks value for
Slide 13: Regional Aircraft - A Strong Asset Class
14 Regional Aircraft - A Strong Asset INVESTOR DAY 2023 Class • Well suited to uncertain demand environments; utilized both in up and down cycles • Supported by core global operators; stronger credits • Generally built to order, protecting asset values • Lease returns outperform those of narrowbody
Slide 14: Regional Aircraft Are Critical to Commercial Networks and Special Missions
Core and resilient sector of aviation 15 INVESTOR DAY 2023 Regional Aircraft Are Critical to Commercial Networks and Special Missions 50% of world flights 45% of all airports Link ~60% of the Government, defence, are less than 500 are serviced world’s communities1 aerial fire fighting, miles1 exclus
Slide 15: Global Aviation Recovery Continues and Demonstrates the Resilience of Regional Aircraft
Core and resilient sector of aviation 16 Global Aviation Recovery Continues and Demonstrates the Resilience of Regional Aircraft INVESTOR DAY 2023 Source: Cirium Schedules, Passenger Aircraft Only, data filed 6 October 2022, 2021/2022 change is over 2019 equivalent
Slide 16: We are a Leading Regional Aviation Solutions Provider and Asset Manager
17 We are a Leading Regional Aviation Solutions Provider and Asset Manager with Diversified Global Presence INVESTOR DAY 2023
Slide 17: Chorus Consistently Generates Free Cash Flows; $1.3 B in the Last 5 Years
Long term contracted cash flows and high quality asset base 18 Chorus Consistently Generates Free INVESTOR DAY 2023 Cash Flows; $1.3 B in the Last 5 Years 400 $371 M 300 259 M $249 M $237 M 200 $163 M 100 0 2018 2019 2020 2021 2022 1. See Notice to Recipients and Endnotes Significant cash flow gener
Slide 18: We Have A High Quality, Well Balanced and Diversified Asset Base
Long-term contracted cash flows and high-quality asset base 19 We Have A High Quality, Well We are Balanced and Diversified Asset Base geographically Based on book value of Chorus owned aircraft diversified with our businesses or customers A220-300 ATR 72 operating on all seven Dash 8 Ejets1 contine
Slide 19: Our Falko Acquisition Creates Opportunities to Significantly Grow Shareholder Value
Strategic transformation unlocks value for shareholders 20 INVESTOR DAY 2023 Our Falko Acquisition Creates Opportunities to Significantly Grow Shareholder Value Increased Scale High Quality Income Brookfield Investment Largest player focused Stable and contracted fees Strategic partner with deep sol
Slide 20: We Are Strategically Shifting to an Asset Light Management Leasing Model
Strategic transformation unlocks value for shareholders 21 We Are Strategically Shifting to an INVESTOR DAY 2023 Asset Light Management Leasing Model 2016-2022 Capital Intensive 2023+ Assets Managed on Balance Sheet Leasing Model Behalf of Others • Higher leverage • Reducing balance sheet • Lower fr
Slide 21: Falko Has a Proven History of Asset Sales, Generating ~$1 B in Gross Cash Flows
Strategic transformation unlocks value for shareholders 22 Falko Has a Proven History of Asset Sales, Generating ~$1 B in Gross $443 M Cash Flows $237 M $177 M $114 M Aircraft sold 75 36 30 44 Period 2011- 2013 2014-2016 2017-2019 2020-2022 Produced mid-teens+ gross IRR throughout pre-pandemic perio
Slide 22: We Are Creating Flexibility
Strategic transformation unlocks value for shareholders 23 We Are Acquisition Opportunities Creating Flexibility to Deploy Capital Co-investment Capital to De-leveraging Allocation Opportunities in Funds Maximize Shareholder Value Return of Capital Dividends Buy Backs INVESTOR DAY 2023 1. See Notice
Slide 23: We Have Attractive Growth Opportunities
Strategic transformation unlocks value for shareholders 24 We Have Attractive Growth Opportunities INVESTOR DAY 2023 Initiative Growth Opportunity Grow core services, focusing on Defence and recurring long-term contract-based parts sales cash flows. Grow recurring asset management Successor fees, in
Slide 24: Targeting Growth in Capital Under Management to Drive Recurring Fee Stream
Strategic transformation unlocks value for shareholders 25 We Are Targeting Growth in Capital INVESTOR DAY 2023 Under Management to Drive Recurring Fee Stream, in US $ 2026 - 2027 2022 $3 B 2015 $1 B $415 M Co-investment in funds with mid-teen targeted returns 1. See Notice to Recipients and Endnote
Slide 25: Growing Aviation Markets Align with Our Business Model and Expertise
Strategic transformation unlocks value for shareholders 26 INVESTOR DAY 2023 Growing Aviation Markets Align with Our Business Model and Expertise Our Business Model Our Strengths, Skills & Capabilities • Business-to-business and • Logistics specialists government • Deep technical expertise • Long-te
Slide 26: Randolph deGooyer
1 Randolph deGooyer President
Slide 27: Jazz has an Experienced Leadership Team with an Average of 30+ Years in Aviation
Jazz has an Experienced Leadership Team 2 with an Average of 30+ Years in Aviation Randolph deGooyer Marnie King Kirk Newhook Doug Clarke President VP, Airports VP, Employee Relations and VP, Finance and Business Operations Support Services 30 Years 33 Years 32 Years 16 Years Steve Linthwaite Anil M
Slide 28: Jazz is the Sole Air Canada Express Operator
3 Jazz is the Sole Air Canada Express Operator INVESTOR DAY 2023 • Fixed fee defined until 2035 • Lease income from aircraft CPA in effect until 2035 • Incentives related to operational performance 114 80 625 8.6 M 4,500+ Aircraft Destinations in Flights Passengers Employees Canada and USA operated
Slide 29: Key Performance Indicators - 2022
4 Key Performance Indicators - 2022 $66.3 M $148.9 M $2.1 M Fixed Fee Aircraft Leasing Incentive Revenue Revenue Revenue 48 6.6 years 6.8 years Owned Aircraft Weighted Weighted Average Leased into the Average Owned Lease Term of CPA Fleet Age Owned Aircraft 3.35 % 100% Weighted Average Cost of Fixed
Slide 30: Jazz is the largest regional airline in Canada
5 Jazz is the largest regional airline in Canada and operates more flights into more airports in Canada than any other airline. 1. See Notice to Recipients and Endnotes INVESTOR DAY 2023
Slide 31: Jazz provides Air Canada with efficient regional operations
6 • Scale and sole provider of services enables: • economies of scale • flexibility to respond quickly and efficiently to market changes and opportunities • Market competitive fees and costs • Long-term labour stability Jazz • Provides Air Canada with qualified pilots through the pilot flow agreemen
Slide 32: The Capacity Purchase Agreement Model is Well Used Throughout North America and Europe
7 The Capacity Purchase Agreement Model is Well Used Throughout North America and INVESTOR DAY 2023 Europe Mainline operator purchases the capacity from the regional carrier Jazz Minimal Downside Risk Jazz Responsibilities No revenue risk, such as: • Ticket prices • Aircraft operations • Passenger l
Slide 33: Jazz is Generally Reimbursed for the Costs it Incurs to Operate
8 Jazz is Generally Reimbursed for the INVESTOR DAY 2023 Costs it Incurs to Operate Cost Category Description Earnings Risk Pass-through Full reimbursement No impact Cost of non-controllable costs Reimbursement of controllable costs +/- $2M Annual unit rates developed based on planned Capex recaptur
Slide 34: Our Fixed Fee Does Not Vary with Flying Levels
9 Our Fixed Fee Does Not Vary with Flying Levels Flown Block Hours vs Fixed Fee $80 M 400,000 $70 M 350, 000 Fixed Fee (millions) $60 M 300, 000 Block Hours $50 M 250, 000 $40 M 77% of 2019 200, 000 level $30 M 150, 000 42% of 2019 $20 M level 100, 000 36% of 2019 level $10 M 50, 000 $0 0 2019 2020
Slide 35: CPA Contract Provides $1.4 B in Contracted Revenue to 2035
10 CPA Contract Provides $1.4 B in INVESTOR DAY 2023 Contracted Revenue to 2035 $773 M $622 M $439 M $389 M $389 M $384 M $384 M $287 M $269 M $183 M 2023-2025 2026-2035 Total 2023-2025 2026-2035 Fixed Fee Revenue Aircraft Leasing Revenue Aircraft Leasing Revenue Debt and Interest Payments
Slide 36: Key Takeaways for Jazz
11 Key Takeaways for Jazz INVESTOR DAY 2023 Leading Regional Significant Minimal Downside Operator Contracted Revenue Risk • Largest regional operator • CPA provides • No commercial related in Canada with 114 predictable cash flow risk aircraft until 2035 • Reimbursed for • Sole Air Canada Express •
Slide 37: Appendix
12 Appendix INVESTOR DAY 2023
Slide 38: Minimum Fleet Commitment Post 2025 Provides Added Leasing Upside
13 Minimum Fleet Commitment Post 2025 Provides Added Leasing Upside 2022 2023 – 2025 2026 - 2030 2031 - 2035 Chorus Leased Aircraft1 48 46 30 3 Chorus Leased Aircraft Expiries1 - 2 16 27 Chorus Aircraft Available for re-lease1 - 2 18 45 2026 - 2035 Minimum of 80 in the 75 – 78 seat range 1. Represen
Slide 39: Jazz is an Innovative Leader in Pilot Recruitment and Training
14 Jazz is an Innovative Leader in Pilot INVESTOR DAY 2023 Recruitment and Training Pilot flow agreement with Air Canada makes Jazz an employer of choice Partnerships with Premiere education and Offers the first pilot 13 colleges and training pathway for pilots program of its kind in flight schools
Slide 40: Jeremy Barnes
1 Jeremy Barnes Chief Executive Officer
Slide 41: A Market Leader in Regional Aircraft Asset Management
2 A Market Leader in Regional INVESTOR DAY 2023 Aircraft Asset Management Offices in the UK, Ireland and Singapore 212 US $2.3 B 8.6 YEARS 5.8 YEARS 44 Aircraft Aircraft Value Weighted Weighted Global airline under average average customers management aircraft age remaining lease term 1. See Notice
Slide 42: An Organization of Industry Experts
An Organization of Industry Experts 3 Jeremy Barnes Mark Hughes Sarah Dichlian Martin Brennan Chief Executive Officer Chief Commercial Officer Chief General Counsel Chief of Staff 40 Years 25 Years 30 Years 40 Years Richard Pitt James Greenstreet Bruce Peddle Ray Gorman EVP Commercial EVP Asset Mana
Slide 43: Key Performance Indicators - 2022
4 Key Performance Indicators - 2022 1 INVESTOR DAY 2023 CA $219.5 M 124 Adjusted EBITDA Owned or Majority Owned Aircraft US $2.3 B Assets Under CA $70.8 M 88 Management Adjusted EBT Aircraft Managed 1. See Notice to Recipients and Endnotes including endnotes 17 and 21
Slide 44: A Long Standing and Proven Track Record
5 A Long Standing and Proven Track Record Falko Falko completed Legacy and Founding of Falko fully completed US refinancing Acquisition BAE Asset Founding of deployed $255M ABS of “Fund II” Portfolio Management Orbis Capital Fund I transaction - US $390 M 1994 - 2011 - 1993 2001 2001 2011 2015 2015
Slide 45: A Compelling Market Opportunity
6 A Compelling Market Opportunity INVESTOR DAY 2023 Forecast demand for Recent changes in the Combination of Falko approximately 10,000 regional aircraft leasing and Chorus leasing new aircraft worth ~US landscape leave only a provides critical mass $650 B through 2040 few players focused on and a m
Slide 46: Strong Demand for Regional Aircraft Largely Driven by Replacement
7 Strong Demand for Regional Aircraft Largely Driven by Replacement Total: 14,042 Fleet growth of +53% Growth 4,709 New Deliveries Replacement ~10,950 6,242 Fleet 9,202 2019 Fleet 3,091 2019 2040 INVESTOR DAY 2023 *Source: Embraer Marketing Outlook 2022
Slide 47: There has Been a Major Change in the Leasing Landscape Since 2020
There has Been a Major Change in the 8 Leasing Landscape Since 2020 2 Top 10 Regional Lessors (number of aircraft) 339 Shifting to focus on narrowbody aircraft 1 212 AERCAP regional fleet post GECAS 123 acquisition 117 107 75 Further opportunity for 67 increased lease penetration from current level
Slide 48: Pipeline Overview
Pipeline Overview 9 2022 Origination Pipeline Analysis Falko is well-positioned 52 Deals Reviewed to exploit the current representing market conditions and has a current deal Investment Value of US pipeline of worth circa $3.4 B and US $1 B 298 Aircraft 1. See Notice to Recipients and Endnotes INVES
Slide 49: We Are an Active and Experienced Asset Manager
10 We Are an Active and Experienced INVESTOR DAY 2023 Asset Manager Acquired 3941 • Falko has a highly disciplined approach to investing Sold 185 • Since 2014 we have evaluated ~US $32 B of transactions and closed Leased 104 ~US $3 B Lease Extensions 118 Part out 28 2011 to 2022 – Transactions invol
Slide 50: Regional Leasing Returns Outperform the Broader Aircraft Leasing Market
11 Regional Leasing Returns Outperform the Broader Aircraft Leasing Market Falko has outperformed its peer group 1. Its returns are showing a rebound post pandemic 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Ascend Leasing Returns Index AerCap GECAS Nordic Aviation Capital TrueNoord Falko INVE
Slide 51: Falko Capital Fundraising Track Record
12 Falko Capital Fundraising Track Record 2015 Fund I US $415 M Exceeded original 2019 Fund II US $650 M capital raising targets on Fund I and II 2023 Fund III In Progress 1. See Notice to Recipients and Endnotes INVESTOR DAY 2023
Slide 52: Fund II – Fund Raising Highlights
13 Fund II – Fund Raising Highlights US $650 M c.60 US $454 M Total Drafts New capital of the capital 174 raised PPM raised Meetings 19 1,600+ New LPs 65% Due Onsite 20 diligence conversion rate Onsites questions 23 11 25+ Road Countries Due visited 11 show diligence Months in days questionnaires ma
Slide 53: Falko Fund III – Summary
14 INVESTOR DAY 2023 Falko Fund III – Summary Fund Name Target Gross Returns Expected # of Aircraft Falko Regional Mid-teens IRR; 1.5 – Aircraft Opportunities Circa 100 - 120 2.0x MOIC Fund III Fund Term and Fund Strategy Expected Timing investment Period Same as prior Expected to be Q2 10 Years; 5
Slide 54: Illustrative Example of GP Returns
Illustrative Example of GP Returns 15 Term Range Illustrative Example Duration Avg 10 Years 1 – 5 Years to Invest, 4 – 6 to Divest Fund Size US$500 – $800m US $650 M GP Commitment 5% – 15% US $25 M Fund Gross MOIC 1.5x – 2.0x 1.5x Fund Gross IRR Mid-teens 14% Fund Net IRR 8% - 12% 9% Carry Structure
Slide 55: Key Takeaways for Falko
16 Key Takeaways for Falko INVESTOR DAY 2023 Leading Asset Highly Favourable Strong Track Manager & Lessor Market Conditions Record • #1 pure play focused on • Significant and growing • Proven capabilities in regional aircraft leasing demand for regional aircraft capital raising, platform - US $650
Slide 56: Gary Gilbert
1 Gary Gilbert Vice President, Avparts
Slide 57: Voyageur Offers a Roster of Industry Veterans
2 Voyageur Offers a Roster of Industry Veterans Cory Cousineau Sara Tonks Ole Fisker President Chief Administrative Officer VP, Flight Operations and VP, Finance 29 Years 3 Years 31 Years Carl Kumpic Gary Gilbert Conor Sheridan Chas Eveson VP, Defence & Government VP, Avparts VP, Commercial Aircraft
Slide 58: Voyageur Overview
3 INVESTOR DAY 2023 Voyageur Overview Specialty Speciality Contract Part Sales Defence MRO and Design Flying 39 200+ 350+ 200,000 Aircraft1 Customers Employees Sq. ft. facility in North Bay, Ontario 1.See Notice to Recipients and Endnotes and endnote 17
Slide 59: Key Performance Indicators - 2022
4 Key Performance Indicators - 20221 >$100 M 71% Revenue2 % of Revenue under Contract CAD $135 M 24% 36 aircraft 3 Year Future Contracted Revenue Adjusted EBITDA Aircraft parted out 2023 - 2025 Margin 2018 - 2022 (one-year payback period) 1. See Notice to Recipients and Endnotes including endnote 26
Slide 60: Voyageur’s Customers
5 Voyageur’s Customers Parts Canadian DND United States DOD Swedish Ministry of Defence Defence Specialty MRO and Design United Nations World Food Ambulance Programme New Brunswick Specialty Contract Flying Transport Canada Dutch Ministry of Purolator Defence
Slide 61: Voyageur Revenue Growth Through Parts Sales
6 Voyageur Expects to Grow its Total Revenue to CAD $150 M by 2025 Through Parts Sales Growth Growth drivers: • Lack of OEM support US $474 M • Aircraft are in service longer • Airlines and MROs 2023 Addressable Market spending more on used serviceable parts 2% CAGR INVESTOR DAY 2023 1.See Notice to
Slide 62: Voyageur Revenue Growth Through Airborne ISR Defence Market
7 Voyageur Expects to Grow its Total Revenue to CAD $150 M by 2025 Through participating in Airborne ISR Defence market Growth drivers: • Coastal activities • Migration flow US $6.5 B • Higher NATO military budgets • Growing acceptance of 2023 Addressable Market contractors providing core services 6
Slide 63: Working with other Chorus companies
8 Working with other Chorus companies • Large facility supports aircraft • Completed aircraft transitions from transitions and storage lessee to lessee • Aircraft engineering modifications • Engineered and modified former and overhaul capabilities to CPA Dash-8 300 aircraft to support transition Pac
Slide 64: Key Takeaways
9 INVESTOR DAY 2023 Key Takeaways Leading Provider in Targeting 50% Providing Multiple Specialty Aviation Revenue Growth by Aircraft Exit 2025 Strategies • Unique offerings • Defence sector & • Maximizing aircraft including engineering aircraft parts sales and values and returns for and modification
Slide 65: Gary Osborne
1 Gary Osborne Chief Financial Officer INVESTOR DAY 2023
Slide 66: The Falko Acquisition has Driven Stronger Financial Results
2 The Falko Acquisition has Driven INVESTOR DAY 2023 Stronger Financial Results Strong improvements in all key financial measures with a clear path to further deleveraging Adjusted EBITDA Adjusted EPS Available Free Cash Flow Leverage Ratio +34% to Common Shareholders +128% -19% +30% $371.3 M 5.4 X
Slide 67: Chorus is Undervalued
3 Chorus is Undervalued Asset Monetization will Unlock Significant Value for Shareholders • Chorus current stock price is currently trading at a discount to book and intrinsic value per common share • Significant long-term contracted cash flows of $2.6 billion • Fixed assets, net of debt, of $1.3 bi
Slide 68: Chorus is Trading at a Significant Discount to Book Value and Intrinsic Value
Chorus is Trading at a Significant Discount 4 to Book Value and Intrinsic Value of Common Shares $5.50 27% Discount to $4.00 Intrinsic Value 18% $3.30 Discount to Book Value 30 Day VWAP Book Value per Current Chorus Upside from Common Share Intrinsic Value Business 2022YE 2022YE Transformation 1. Se
Slide 69: Significant Free Cash Flows Provide Opportunity for Allocation of Capital
5 Significant Free Cash Flows Provide Opportunity for Allocation of Capital Significant free cash flows used to reduce debt, return capital to shareholders and fuel growth through accretive investment $371 $260 - $330 Free Cash Flow Millions CAD$ $259 $249 Free cash flow timing $163 will vary due to
Slide 70: Significant Embedded Equity Value in Falko Aircraft Provides Monetization Opportunity
Significant Embedded Equity Value in 6 Falko Aircraft Provides Monetization Opportunity As at December 31, 2022, Millions US $ $1,590 $700 Less Non- aircraft debt controlling interest & $856 other Owned aircraft Embedded equity $341 net book value available to monetize 1. See Notice to Recipients an
Slide 71: Vision for Falko Business Model
7 Vision for Falko Business Model INVESTOR DAY 2023 US $3.0 B Asset Light Leasing Model • Reduced balance sheet exposure • Strong quality of earnings • Management fees - 1.0% - 1.5% • Fund Net IRR of 8.0% - 12.0% • Carry incentives up to 5% of Target Committed Capital Under committed capital Managem
Slide 72: Chorus Currently Trading Below Book Value
8 Chorus Currently Trading Below Book Value Book value per common share is primarily comprised of physical assets Book Value Available to Common Shareholders and Current Trading Value Price-to-Book Value $4.00 2.3x 18% Discount to Book Value $3.30 0.8x Book Value Per Chorus Chorus Common Share 30 Da
Slide 73: Trading Multiples Should Reflect Our Reduced Risk Profile
Trading Multiples Should Reflect Our 9 Reduced Risk Profile Price-to- EV / NTM Debt / Earnings EBITDA EBITDA 12.0x • $2.6 billion in future 7.7x contracted revenues with strong customers 3.1x • Deleveraging reduces future risk and changes company profile Falko Jazz/Voyageur Chorus Peer Group Peer Gr
Slide 74: Chorus Currently Trading Below Intrinsic Value
10 Chorus Currently Trading Below INVESTOR DAY 2023 Intrinsic Value Chorus’ shares trade at a significant discount in the market Jazz and Corporate Corporate Falko Total Voyageur Expenses Financing 11.0x Adjusted 7.0x Adjusted 7.0x Adjusted Value Per 6.8x Adjusted EPS Multiple2 EBITDA EBITDA Common
Slide 75: Significant Deleveraging De-risks Balance Sheet
11 Significant Deleveraging De-risks Balance Sheet and Increases Free Cash INVESTOR DAY 2023 Flow Available for Capital Allocation Timing of deleveraging will vary due to opportunistic asset sales Leverage Ratio 5.4x 4.4x 3.6x – 4.0x Target Range 2.5x – 3.5x 3.5x 3.5x 2.5x Y2021 Y2022 Y2023 Y2024+ P
Slide 76: Impact of Illustrative Business Transformation
12 Impact of Illustrative Business INVESTOR DAY 2023 Transformation Embedded aircraft equity value can be used to repay corporate debt and invest the remaining amount in accretive acquisitions and/or share buybacks Annual Impact on 2022 Adjusted Net Income Available to Common • Accretive acquisition
Slide 77: A Disciplined Approach to Capital Allocation
13 A Disciplined Approach to INVESTOR DAY 2023 Capital Allocation Target Accretive Growth and Return of Capital to Shareholders Our priorities will be: Capital Return Deleveraging Share Repurchase Dividends Growth Investment Our target of 2.5x To the extent Chorus’ Dividends considered Adjusted retu
Slide 78: Appendices
14 Appendices INVESTOR DAY 2023
Slide 79: Detailed Sum of the Parts Calculation
15 Detailed Sum of the Parts Calculation INVESTOR DAY 2023 Using indicative trading multiples based on analyst averages and peer group benchmarking Jazz and Corporate Corporate Falko Total Voyageur Expenses Financing 11.0x Adjusted 7.0x Adjusted Value Per 7.0x Adjusted Equates to 6.8x EPS Multiple1
Slide 80: Peer Group
16 Peer Group INVESTOR DAY 2023 Given the lack of pure-play peers for Chorus, we have identified a group of companies that we believe can be helpful when determining value. We have selected these companies because they either have some similar characteristics to aspects of our business – i.e. Capaci
Slide 81: EV/EBITDA and Debt/EBITDA Multiples
EV/EBITDA and EV / NTM EBITDA1 5-Year Debt/EBITDA 2018 2019 2020 2021 2022 Average 17 (1) Multiples SkyWest 5.4x 5.9x 6.1x 6.5x 5.7x 5.9x Exchange 6.4x 6.8x 7.6x 7.9x 7.2x 7.2x ATSG 5.6x 5.7x 6.0x 5.9x 5.4x 5.7x For the RAS segment Cargojet 10.8x 11.7x 14.3x 12.7x 8.8x 11.7x and corporate expenses A
Slide 82: Price to Equity (P/E) Multiples
Price to Equity 18 (1) (“P/E”) Multiples P / NTM EPS1 5-Year 2018 2019 2020 2021 2022 Average For the RAL segment Chorus believes a P/E Aercap 8.2x 7.3x 5.0x 9.0x 7.9x 7.5x multiple is the Airlease 8.9x 6.9x 6.9x 10.3x 8.2x 8.2x appropriate valuation BOC 7.4x 8.7x 6.8x 8.0x 8.1x 7.8x measure Average
Slide 83: Price to Book (P/B) Multiples
Book value of (1) 19 Price to Book (“P/B”) 1 common 2022 shareholder Aercap Airlease 0.8x 0.6x equity (“Book BOC 1.1x Value”) SkyWest 0.5x Air Canada nmf Chorus does not believe Mesa 0.2x that book value is an appropriate valuation Ares 7.6x Blackstone 8.3x measure for Chorus Brookfield 2.3x Carlyle
Slide 84: Illustrative Accretive Investment(s) CAD
20 Illustrative Accretive Investment(s) CAD INVESTOR DAY 2023 Key assumptions in modeling of the illustrative aviation services company transaction • Adjusted EBITDA: ~$100 million • Adjusted EBITDA Multiple Paid: 7.0x • Adjusted EBT ~$50.0 million - $62.5 million • Adjusted Net income available to
Slide 85: Support for Impact of Illustrative Business Transformation
21 Support for Impact of Illustrative Business INVESTOR DAY 2023 Transformation Monetization of assets, net of corporate debt repayments Annual Impact on 2022 Adjusted Net Income Available to Common Shareholders Corporate interest savings $21 - $26 million Additional preferred dividends ($11) – ($11
Slide 86: Illustrative Example of Fund Returns
22 Illustrative Example of Fund Returns INVESTOR DAY 2023 Term Range Illustrative Example Duration Avg 10 Years 1 – 5 Years to Invest, 4 – 6 to Divest Fund Size US $500 – $800 M US $650 M GP Commitment 5% – 15% US $25 M (3.8%) Fund Gross MOIC 1.5x – 2.0x 1.5x Fund Gross IRR Mid-teens 14% Fund Net IR
Slide 87: Illustrative Financial Statement Impacts
23 Illustrative Financial Statement Impacts INVESTOR DAY 2023 Financial Statement IFRS Accounting Basis & Related Commentary Illustrative Illustrative Categorization Math Annual Amount Co-investment returns Co investment returns are earned from equity investment in managed funds (e.g. US $25 M x 9%
Slide 88: Key Takeaways
INVESTOR DAY 2023 Key Takeaways
Slide 89: Key Takeaways
1 Key Takeaways INVESTOR DAY 2023 Strong Core Cash Acceleration to Accretive Capital Flows Asset Light Leasing Allocation Opportunities • Maintain long term • Unlock embedded • Leverage our capabilities contracted service equity value and and strengths to grow revenues with limited generate substant
Slide 90: Appendices
1 Appendices INVESTOR DAY 2023
Slide 91: Notice to Recipients
Notice to Recipients 2 PURPOSE OF THIS PRESENTATION This presentation is to be used solely as part of Chorus Aviation Inc. (“Chorus”) management’s investor relations program. This presentation does not constitute an offer or solicitation in connection with any securities. DATE OF FINANCIAL INFORMATI
Slide 92: Market and Industry Data
3 MARKET AND INDUSTRY DATA This presentation includes estimates regarding market and industry data that is prepared based on management's knowledge and experience in the markets in which we operate, together with information obtained from various sources, including publicly available information and
Slide 93: Non-GAAP Financial Measures
4 Non-GAAP Financial Measures Adjusted Net Income Adjusted net income and Adjusted net income per Share are used by Chorus to assess performance without the effects of unrealized foreign exchange gains or losses on long-term debt and lease liability related to aircraft, signing bonuses, employee sep
Slide 94: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) 5 Year ended December 31, (expressed in thousands of Canadian dollars) 2022 2021 $ $ Net income (loss) 51,917 (20,485) Add (Deduct) items to get to Adjusted net income Impairment provisions(1) 20,499 54,589 Restructuring expected credit loss provision(1)(2) 10
Slide 95: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) 6 Adjusted earnings available to Common Shareholders per Common Share Year ended December 31, (expressed in thousands of Canadian dollars) 2022 2021 $ $ Adjusted net income 118,842 63,890 Add (Deduct) items to get to Adjusted earnings available to Common Share
Slide 96: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) 7 Net Debt to Adjusted EBITDA Net debt to trailing 12-month Adjusted EBITDA (also referred to as "leverage ratio" in this presentation) is used by Chorus as a means to measure financial leverage. Leverage is not a recognized measure under GAAP, and therefore i
Slide 97: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) 8 Free Cash Flow Free Cash Flow is a non-GAAP measure used as an indicator of financial strength and performance. Chorus believes that this measurement is useful as an indicator of its ability to service its debt, meet other ongoing obligations and reinvest in
Slide 98: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) 9 Adjusted Return on Equity Adjusted Return on Equity is a non-GAAP financial measure used to gauge a corporation's profitability and how efficient it is in generating profits. Adjusted Return on Equity is calculated based on Chorus' Adjusted Net Income less n
Slide 99: Non-GAAP Financial Measures (continued)
Non-GAAP Financial Measures (continued) 10 Book value per common share Book value per common share is the ratio of equity available to common shareholders divided by the number of outstanding common shares. This figure represents the minimum value of a company's equity and measures the book value of
Slide 100: Endnotes
Endnotes 11 1. Book value per Common Share is calculated as equity less preferred shares and non-controlling interest, divided by the average number of Common Shares outstanding as of December 31, 2022. 2. Intrinsic value per Common Share is calculated by using indicative trading multiples based on
Slide 101: Endnotes (continued)
Endnotes (continued) 12 14. Embedded equity value in Falko aircraft is calculated as the difference between the owned aircraft net book value and the aircraft debt, and the non- controlling interest offset by other (aircraft accounted for as finance leases) as of December 31, 2022 converted from CAD
Slide 102: Endnotes (continued)
Endnotes (continued) 13 24. References to growth in or future expectations for fee revenues, including carried incentives and co-investment returns are illustrative only. Actual results may vary materially and are subject to market conditions and other factors and risks, as well as certain assumptio