VICTORIA, Nov. 25, 2016 /CNW/ - British Columbia Ferry Services Inc. (BC Ferries) announced its second quarter results today with net earnings of $95.2 million and $122.2 million for the three and six-month periods ended September 30, 2016, up from $84.5 million and $103.3 million for the three and six-month periods ended September 30, 2015. 

Due to the seasonality of ferry travel, BC Ferries typically generates net earnings in the first and second quarters, which are subsequently reduced by net losses in the last two quarters of the fiscal year.

 "Traffic numbers continued to increase during the summer, with many U.S. visitors taking advantage of our lower dollar and large numbers of Canadians taking staycations here in B.C.," said Mike Corrigan, BC Ferries' President and CEO. "It's important for us to achieve positive financial results, as we need to continuously invest in our infrastructure to provide safe and reliable marine transportation."   

"Our profits will help finance our new Salish Class vessels which will enter service next year, as well as the mid-life upgrade project for our two Spirit Class vessels including conversion to dual- fuel, so they can operate on natural gas or marine diesel," said Corrigan. "A major investment in the marine structures at our Langdale terminal is just one of the terminal projects currently underway, and the procurement process for two new 44-vehicle ferries is in progress."

Total revenue for the three-month period ended September 30, 2016 increased from $280.6 million to $298.9 million compared to the same period last year, mainly due to increases in traffic. Operating expenses increased from $182.1 million to $190.4 million compared to the same period last year. For the six months ended September 30, 2016, total revenue was $518.1 million, up from $489.6 million in the prior year. Operating expenses for the same period were $369.0 million, up from $358.0 million in the prior year.

Capital expenditures in the three and six-months ended September 30, 2016 totalled $24.3 million and $70.2 million, respectively. Projects included vessel upgrades and modifications, information technology investments, terminal marine structures, and terminal and building upgrades and equipment.

During the three months ended September 30, 2016, BC Ferries provided over 46,000 sailings. During this period, the company carried 7.4 million passengers and 2.7 million vehicles, an increase of 4.8 per cent and 5.1 per cent, respectively, compared to the same quarter in the prior year.

Significant events during or subsequent to the quarter included the August 19, 2016 announcement by the Board of Directors that BC Ferries' President and CEO Mike Corrigan would be stepping down from his role effective March 31, 2017, at the completion of his current contract. The Board of Directors has commenced an executive search to identify Mr. Corrigan's replacement, considering both internal and external candidates. 

On September 6, 2016, the Province announced its intent to start seasonal direct ferry service between Port Hardy and Bella Coola beginning in the summer of 2018. The new service will require the acquisition of a suitable vessel, having it approved by Transport Canada and modifying docks as necessary. An amendment to the Coastal Ferry Services Contract will need to be negotiated in respect of the specific service to be delivered and the service fees payable to BC Ferries.

On November 21, 2016, BC Ferries conditionally accepted the new intermediate vessel, the Salish Orca from Remontowa Shipbuilding S.A. of Gdansk, Poland. The vessel is scheduled to arrive in British Columbia in January 2017, and is expected to replace the 51-year old Queen of Burnaby on the Comox – Powell River route in the spring of 2017.

On November 22, 2016 and November 25, 2016, BC Ferries drew down $39 million and $6 million respectively for a total of $45 million, under the export loan agreement with KfW IPEX-Bank GmbH, to coincide with the contractual milestones for the Salish Orca. This amortizing loan will be repaid over a 12-year term and bear an annual interest rate of 2.09 per cent. The net proceeds from the loan will be used to partially finance the purchase of the Salish Orca.

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 based on passengers transported annually and transportation infrastructure, and carried 20.7 million passengers and 8.1 million vehicles during the fiscal year ended March 31, 2016.  BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 24 routes, currently supported by 34 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 Salish Class vessels, the Spirit Class mid-life upgrades, the minor vessel procurement process, the Langdale terminal project, the seasonal direct ferry service between Port Hardy and Bella Coola, and the loan agreement with KfW IPEX-Bank GmbH.  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.

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SOURCE British Columbia Ferry Services Inc.