BC Ferries Releases First Quarter Results

Company records highest vehicle traffic levels in its 58-year history 

VICTORIA, Aug. 24, 2018 /CNW/ - Ferries released its first quarter results today for the three months ended June 30, 2018. The passenger traffic levels experienced during this period were the highest the company has experienced in over 20 years and the vehicle traffic levels were the highest ever recorded.

"Traffic across the system has grown and we are working hard to deliver the travel experience our customers expect," said Mark Collins, BC Ferries' President and CEO.  "However at these unprecedented traffic levels we know that some travellers and communities are seeing some delays. To address this, we've added even more extra sailings this summer for the increased demand while maintaining key operational targets like safety and on-time performance."

Net earnings for the first quarter of fiscal 2019 were $6.0 million, compared to net earnings of $17.3 million for the same quarter of the previous year. Net earnings decreased in this quarter due to BC Ferries' contributions to the April 1 fare reductions as well as more sailings at popular sailing times.

At the start of fiscal 2019 (April 1, 2018), the fares on all routes were reduced by 15 per cent with the exception of the three Metro Vancouver – Vancouver Island routes where they were held constant. The B.C. seniors' passenger discount was increased from 50 per cent to 100 per cent for travel Monday to Thursday. These initiatives are being partly funded by BC Ferries over two years.

Revenues increased by 1.5 per cent to $229.7 million in the quarter primarily as a result of the increased traffic levels, partially offset by a decrease in the average tariff per passenger and per vehicle due to the fare reductions.

"With traffic levels the highest our company has ever experienced we continue to add service where possible, resulting in higher operating expenses," said Collins. Operating expenses increased in the quarter by 7.8 per cent to $209.9 million as the company provided 352 additional round trips to meet the increase in demand, implemented schedule adjustments for the routes operating out of Horseshoe Bay terminal, and one-time reintroduction costs for the upgraded Spirit of British Columbia. These actions, important for the travelling public, resulted in an increase in labour, fuel consumption and training related costs.

The Spirit of British Columbia was returned to service on June 6, 2018 on the Tsawwassen – Swartz Bay route following a mid-life upgrade. The mid-life upgrade, which significantly reduces the vessel's emissions and operating costs, included the conversion of the engines to dual-fuel capable so it can operate on liquefied natural gas, as well as major upgrades to passenger amenities.

BC Ferries currently operates four vessels on liquefied natural gas, part of its Clean Tech Adoption Plan, which helps reduce carbon emissions and achieve greenhouse gas reductions.

"BC Ferries looks to the future, ensuring it has the vessels and infrastructure to deliver sustainable service," said Collins. "It's important to continue to reinvest in the assets and systems to ensure we have the resilience to meet increasing demand." Capital investments in the three months ended June 30, 2018 totalled $72.8 million, and include the Spirit Class mid-life upgrades, vessel major overhauls and inspections, and the new Island Class vessels currently under construction.

On July 10, 2018, BC Ferries confirmed the introduction of the direct service between Port Hardy and Bella Coola using the Northern Adventure beginning on September 16 through October 11, 2018. The Northern Sea Wolf, the vessel acquired for this service, has been delayed as a result of the extensive upgrades necessary to bring it up to BC Ferries and Transport Canada's standards of safety and reliability.

The company issued two Requests for Expressions of Interest (RFEOI) on July 26, 2018, to procure four 47-vehicle Island Class vessels and one 138-vehicle Salish Class vessel to replace aging fleet assets. The competitive bidding process is open to local, national and international shipyards, including consortiums, and local companies are encouraged to bid on these projects. This proposed capital expenditure requires approval from the BC Ferries Commissioner under Section 55 of the Coastal Ferry Act. Subject to a favourable decision by the Commissioner and BC Ferries' Board of Directors, BC Ferries envisages awarding contracts for these ferries by the end of 2018.

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. 

BC Ferries is one of the largest ferry operators in the world based on passengers transported annually and transportation infrastructure, and carried 22.0 million passengers and 8.7 million vehicles during the fiscal year ended March 31, 2018.  BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 24 routes, currently supported by 35 vessels and 47 terminals, and also manages other remote routes through contracts with independent operators.

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: traffic levels, the Spirit of British Columbia mid-life upgrade, and the multi-vessel procurement.  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.

NON-IFRS MEASURES
In addition to providing measures prepared in accordance with International Financial Reporting Standards (IFRS), we present certain financial measures that do not have any standardized meanings prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies. These supplemental financial 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.

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Financial Position (Unaudited)
(Expressed in thousands of Canadian dollars)

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Comprehensive Income (Unaudited)
(Expressed in thousands of Canadian dollars)

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of Canadian dollars)

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of Canadian dollars)

British Columbia Ferry Services Inc.
Condensed Interim Consolidated Statements of Cash Flows (Unaudited)
(Expressed in thousands of Canadian dollars) 

SOURCE British Columbia Ferry Services Inc.

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