Chorus Aviation Inc. · TSX:CHR
Chorus Aviation — Investor Presentation (May 2024)
36 slides from Chorus Aviation's investor presentation, May 2024
Slide 1: Investor Presentation
TSX: CHR Investor Presentation May 2024
Slide 2: Contents
2 Contents 1. About Chorus 2. Key Investment Highlights 3. Business Groups 4. Summary Appendices 1. Other information 2. Jazz, Air Canada Express Operator 3. Falko, Leading Aircraft Asset Manager & Lessor 4. Voyageur, Speciality Service Provider
Slide 3: Notice to Reader
3 Notice to Reader CAUTION REGARDING FORWARD-LOOKING INFORMATION This presentation may include forward-looking information and statements within the meaning of applicable securities laws (collectively, “forward-looking information”). Forward-looking information may be identified by the use of terms
Slide 4: About Chorus
About Chorus 4 Chorus is a leading, global aviation solutions provider and asset manager, focused on regional aviation 7 362 USD $3.7 B 450+ 5000+ Businesses or Regional aircraft Assets owned, operated Customers worldwide Employees customers owned, operated and under management operating on every an
Slide 5: Exceptional roster of industry veterans
About Chorus 5 Colin Copp Gary Osborne Jolene Mahody Dennis Lopes President and Chief Executive Officer Chief Financial Officer Executive VP and Chief Strategy Senior VP, Chief Legal Officer & Corp. Officer Secretary We have an exceptional roster of industry 31 Years 31 Years 31 Years 10 Years veter
Slide 6: Q1 2024 Financial Highlights
About Chorus 6 Q1 2024 Financial Highlights Strong Free Cash Flow of $103.6 million, primarily derived from operating cash flows Leverage Ratio improved from 3.6x at December 31, 2023 to 3.4x at March 31, 2024 Adjusted EBITDA Adjusted Earnings available to Free Cash Flow Leverage Ratio ($ millions C
Slide 7: Our Lines of Business
About Chorus Our Lines of Business 7 Common platforms provide increased revenue and margin opportunity The largest regional The leading pure play regional A leading provider of An industry leading operator in Canada and aircraft asset manager and specialty charter, aircraft accredited training provi
Slide 8: Key Investment Highlights
8 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 9: Regional Aircraft - A Strong Asset Class
Core and resilient sector of aviation 9 Regional Aircraft - A Strong Asset Class • Well suited to uncertain demand environments; utilized both in up and down cycles 50% of world flights are less 45% of all airports are than 500 miles1 serviced exclusively by • Supported by core global operators; reg
Slide 10: Leading regional aviation solutions provider with diversified global presence
Regional aviation leader with a diversified global presence 10 We are a leading regional aviation solutions provider and asset manager with a diversified global presence
Slide 11: Chorus consistently generates Free Cash Flow: $1.4 B in the last 5 Years
Long-term contracted cash flows and high quality asset base 11 Chorus consistently generates Free Cash Flow: $1.4 B in the last 5 Years 400 $371M $331M 300 $259M $249M 200 $163M 100 0 2019 2020 2021 2022 2023 Free Cash Flow is a non-GAAP financial measure. Refer to the cautionary statement regarding
Slide 12: High-quality, well balanced and diversified asset base
Long-term contracted cash flows and high quality asset base 12 We have a high-quality, well balanced and We are diversified asset base geographically Based on book value1 of Chorus owned aircraft diversified with our businesses or Ejets² customers operating A220-300³ on all seven Dash 8-100, contine
Slide 13: Strategic shift to an asset light, Free Cash Flow focus
Strategic transformation unlocks value for common shareholders 13 Our business is strategically shifting to an asset light, Free Cash Flow focus 2006 - 2015 2016 - 2022 2023 + Service Provider & Growing Service Service Provider – CPA Aircraft Lessor Provider & Asset Manager • IPO in 2006 as income t
Slide 14: Significant embedded equity value in Falko aircraft
Strategic transformation unlocks value for common shareholders 14 Significant embedded equity value in Falko aircraft provides monetization opportunity As at December 31, 2023, Millions US $ $1,423 $711 Non-controlling Less interest & other aircraft debt $31 $743 Owned aircraft Embedded equity net b
Slide 15: Flexibility to deploy capital to maximize value
Strategic transformation unlocks value for common shareholders 15 We are creating Acquisition Opportunities flexibility to deploy capital to maximize value Capital Allocation for common De-leveraging Opportunities Co-investment in Funds shareholders Return of Capital Dividends Buy Backs Refer to the
Slide 16: Disciplined approach to capital allocation
Strategic transformation unlocks value for common shareholders 16 We will take a disciplined approach to capital allocation Target Accretive Growth and Return of Capital to Common Shareholders Our priorities will be: Capital Return Deleveraging Share Repurchase Dividends Growth Investment Our long-t
Slide 17: Attractive growth opportunities
Strategic transformation unlocks value for common shareholders 17 We have attractive growth opportunities Initiative Growth Opportunity Grow core services, focusing on recurring Defence and parts long-term contract-based cash flows sales Grow recurring asset management fees from Successor funds and
Slide 18: Growing aviation markets align with our business model and expertise
Strategic transformation unlocks value for common shareholders 18 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-term contract
Slide 19: Falko: Leading Asset Manager & Lessor
Business Group - Falko, Leading Aircraft Asset Manager & Lessor 19 Leading Asset Highly Favourable Market Strong Track Record Manager & Lessor Conditions • #1 pure play focused on regional • Significant and growing demand • Proven capabilities in capital aircraft leasing platform for regional aircra
Slide 20: Jazz: Leading Regional Operator
Business Group - Jazz, Main Air Canada Express Operator 20 Leading Regional Significant Contracted Minimal Downside Risk Operator Revenue • Largest regional operator in • CPA provides predictable • No commercial related risk Canada with 114 aircraft cash flow until 2035 • Reimbursed for substantiall
Slide 21: Voyageur: Leading Provider in Specialty Aviation
Business Group - Voyageur, Specialty Service Provider 21 Leading Provider in Targeting 35% Revenue Providing Multiple Aircraft Specialty Aviation Growth by 2025 1 Exit Strategies • Unique offerings including • Defence sector & aircraft parts • Maximizing aircraft values and engineering and modificat
Slide 22: Key Investment Highlights
Summary 22 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 v
Slide 23: Key Takeaways
Summary 23 Key Takeaways Strong Core Cash Flows Acceleration to Accretive Capital Asset Light Leasing Allocation Opportunities • Maintain long-term • Unlock embedded equity • Leverage our capabilities and contracted-service revenues value and generate strengths to grow funds under with limited comme
Slide 24: Appendices
24 Appendices
Slide 25: Jazz is the Main Air Canada Express Operator
Business Group - Jazz, Main Air Canada Express Operator 25 Jazz is the Main Air Canada Express Operator • Fixed fee defined until 2035 • Lease income from aircraft CPA in effect until 2035 • Incentives related to operational performance 114 72 450 8.9 M 4,500+ Aircraft Destinations in Canada Flights
Slide 26: Capacity purchase agreement model
Business Group - Jazz, Main Air Canada Express Operator 26 The capacity purchase agreement model is well used throughout North America and Europe Mainline operator purchases the capacity from the regional carrier Jazz Minimal Downside Risk Jazz Responsibilities No revenue risk, such as: • Ticket pri
Slide 27: Jazz is generally reimbursed for the costs it incurs to operate
Business Group - Jazz, Main Air Canada Express Operator 27 Jazz is generally reimbursed for the 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 de
Slide 28: Falko - A Market Leader in Regional Aircraft Asset Management
Business Group - Falko, Leading Aircraft Asset Manager & Lessor 28 Falko - A Market Leader in Regional Aircraft Asset Management Offices in the UK, Ireland and Singapore 222 USD $2.4B ~10,0001 USD $650B 1 41 Aircraft under Aircraft Value Forecasted aircraft Forecasted market value Global airline man
Slide 29: A Compelling Market Opportunity
Business Group - Falko, Leading Aircraft Asset Manager & Lessor 29 A Compelling Market Opportunity Forecast demand for Recent changes in the regional Combination of Falko and Chorus approximately 10,000 new aircraft aircraft leasing landscape leave leasing provides critical mass and a worth ~US $650
Slide 30: Falko Capital Fundraising Track Record
Business Group - Falko, Leading Aircraft Asset Manager & Lessor 30 Falko Capital Fundraising Track Record 2015 Fund I US $415 M Exceeded original 2019 Fund II US $650 M capital raising targets on Funds I and II 2024 Fund III In Progress Refer to Endnotes and the cautionary statement regarding forwar
Slide 31: Strong demand for regional aircraft driven by replacements
Business Group - Falko, Leading Aircraft Asset Manager & Lessor 31 Strong demand for regional aircraft is largely driven by replacements Total: 14,042 Fleet growth of +53% Growth 4,7092 New Deliveries Replacement ~10,9502 6,2422 Fleet 9,2021 2019 Fleet 3,0911 1. Source: Embraer Marketing Outlook 202
Slide 32: Illustrative Example of General Partner Returns
Business Group - Falko, Leading Aircraft Asset Manager & Lessor 32 Illustrative Example of General Partner Returns 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.
Slide 33: Voyageur - A Specialty Service Provider
Business Group - Voyageur, Specialty Service Provider 33 Voyageur - A Specialty Service Provider 38 450+ 350+ 200,000 Aircraft Customers Employees Sq. ft. facility in North Bay, Ontario
Slide 34: Working with other Chorus Companies
Business Group - Voyageur, Specialty Service Provider 34 Working with other Chorus Companies Specialty Speciality Contract Part Sales Defence MRO and Design Flying • Large facility supports aircraft transitions • Completed aircraft transitions from lessee to and storage lessee • Aircraft engineering
Slide 35: Endnotes
Endnotes 35 1. Key Economic Assumptions: Fund III is anticipated to close by the end of the 2024 year and is expected to have (i) a minimum of US $500.0 million in capital commitments and (ii) management fees and economic terms commensurate with those in Falko’s prior funds. The 2024 forecast is bas
Slide 36: Endnotes (continued)
Endnotes (continued) 36 10. Voyageur’s 2025 revenue growth assumptions are based on growing the core businesses of specialty MRO and specialty contract flying with its engineering capabilities, enabling the growth of core specialty services and increasing Voyageur’s used serviceable materials part s