VICTORIA, Nov. 20, 2015 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) announced its second quarter results today with net earnings of $84.5 million and $103.3 million for the three and six-month periods ended September 30, 2015, up from $76.4 million and $90.3 million for the three and six-month periods ended September 30, 2014. 

"Due to the seasonality of ferry travel, we typically generate higher net earnings in the first and second quarters, which are subsequently reduced by net losses in the last two quarters of the fiscal year," said Mike Corrigan, BC Ferries' President and CEO.  "Traffic volumes are higher in the spring and summer months, and when traffic slows down in the fall and winter months, we begin our refit season, making substantial investments in our vessels and terminals to maintain our high levels of service."

Total revenue for the three-month period ended September 30, 2015 increased from $284.2 million to $292.5 million compared to the same period last year, mainly due to increases in traffic. Operating expenses increased marginally, from $192.6 million to $194.0 million compared to the same period last year. For the six months ended September 30, 2015, total revenue was $510.2 million, up from $497.3 million in the prior year. Operating expenses for the same period were $378.6 million, up from $375.1 million in the prior year.

"We have an ambitious capital plan to invest over $3 billion over the next 12 years to replace aging vessels, marine structures, information technology systems and other capital assets required for continued safe and reliable ferry service," said Corrigan. "Earnings are important so we can continue to invest in projects such as new fuel-efficient vessels and new technology systems that will offer customers opportunities for discounted fares at off-peak travel times, a model we are currently testing with our 50 per cent off vehicles promotion."

Capital expenditures in the three and six-months ended September 30, 2015 totalled $28.7 million and $65.3 million, respectively. Projects included terminal marine structures, vessel upgrades and modifications, information technology investments, and terminal and building upgrades and equipment.

During the three months ended September 30, 2015, BC Ferries provided over 45,000 sailings. During this period, the company carried 7.1 million passengers and 2.6 million vehicles, an increase of 3.4 per cent and 3.5 per cent, respectively, compared to the same quarter in the prior year.

Significant events during or subsequent to the quarter included the first steel cut on the third new Salish-Class vessel on July 1, 2015. The construction of the other two vessels started earlier in the year and is progressing on schedule. The three new vessels will be dual-fuel, capable of running on either diesel or liquefied natural gas (LNG). On July 28, 2015, BC Ferries announced the names of the new Salish-Class vessels, the Salish Orca, Salish Eagle and Salish Raven. These new ferries are scheduled for delivery in August 2016, November 2016 and February 2017.

On July 9, 2015, BC Ferries announced the three shipyards, including one British Columbian yard, shortlisted for the mid-life upgrades of its two largest ships, the Spirit-Class. The mid-life upgrades include the potential conversion of the Spirit of British Columbia and the Spirit of Vancouver Island to dual-fuel vessels, capable of running on diesel or LNG. These two vessels have been in service for over twenty years and have an expected service life of 45 years. The mid-life upgrade of the Spirit of British Columbia is expected to be completed by the spring of 2018 and the Spirit of Vancouver Island is expected to be completed the following year.

On September 16, 2015, the British Columbia Ferries Commissioner issued Order 15-03 which established the final price cap increases of 1.9 per cent for each of the four years of performance term four (PT4), commencing April 1, 2016. The order also requires a fuel management plan to be submitted prior to the start of PT4 setting out strategies for fuel procurement, minimizing fuel consumption and the transition to alternate fuels during PT4.

On November 19, 2015, BC Ferries officially took ownership of the new cable ferry, the Baynes Sound Connector, with the title transfer from Seaspan's Vancouver Shipyards. BC Ferries will now be conducting its own rigorous crew training and familiarization, as well as undergoing Transport Canada certification. The Baynes Sound Connector is expected to commence service between Buckley Bay on Vancouver Island and Denman Island by early February 2016.

BC Ferries' full financial statements, including notes and Management's Discussion and Analysis, are filed on SEDAR and will be available at www.sedar.com. 

Under contract to the Province of British Columbia, BC Ferries is the service provider responsible for the delivery of safe, efficient and dependable ferry service along coastal British Columbia.

BC Ferries is one of the largest ferry operators in the world, providing year-round vehicle and passenger service on 24 routes to 47 terminals, with a fleet of 35 vessels. In fiscal 2015, BC Ferries carried 19.8 million passengers and 7.7 million vehicles throughout coastal British Columbia.

FORWARD LOOKING STATEMENTS
This release contains certain "forward looking statements". These statements relate to future events or future performance and reflect management's expectations regarding our growth, results of operations, performance, business prospects and opportunities and industry performance and trends. They reflect management's current internal projections, expectations or beliefs and are based on information currently available to management. Some of the market conditions and factors that have been considered in formulating the assumptions upon which forward looking statements are based include traffic, the Canadian Dollar relative to the US Dollar, fuel costs, construction costs, the state of the local economy, fluctuating financial markets, demographics, tax changes, and the requirements of the Coastal Ferry Services Contract.

Forward looking statements included in this release include statements with respect to: capital expenditure levels, traffic levels, Salish-Class vessels, and Spirit-Class mid-life upgrades. In some cases, forward looking statements can be identified by terminology such as "may", "will", "should", "expect", "plan", "anticipate", "believe", "estimate", "predict", "potential", "continue" or the negative of these terms or other comparable terminology. A number of factors could cause actual events or results to differ materially from the results discussed in the forward looking statements. In evaluating these statements, prospective investors should specifically consider various factors including, but not limited to, the risks and uncertainties associated with: vendor non-performance; capital market access; interest rate, foreign currency, fuel price, and traffic volume fluctuations; the implementation of major capital projects; security, safety, and environmental incidents; confidential or sensitive information breaches; changes in laws; vessel repair facility limitations; economic regulatory environment changes; tax changes; and First Nation claims.

Actual results may differ materially from any forward looking statement. Although management believes that the forward looking statements contained in this release are based upon reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements. These forward looking statements are made as of the date of this release, and British Columbia Ferry Services Inc. assumes no obligation to update or revise them to reflect new events or circumstances except as may be required by applicable law.

In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain supplemental non-IFRS measures. These include, but are not limited to, vehicle and passenger traffic and number of sailings. These measures do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental non-IFRS measures are provided to assist readers in determining our ability to generate cash from operations and improve the comparability of our results from one period to another. We believe these measures are useful in assessing operating performance of our ongoing business on an overall basis.   

SOURCE British Columbia Ferry Services Inc.