Chorus Aviation Q3 2026 Earnings Call Transcript

Quartr
Provided by Quartr
November 10, 2026

Key Takeaways

  • Positive Sentiment: Chorus raised its 2026 outlook to adjusted EBITDA of CAD 185–195 million and Free Cash Flow of CAD 110–120 million. It expects non-CPA revenue to grow to CAD 265–300 million in 2027, with SkyCare, KADEX and Voyageur contributing to diversification and growth.
  • Positive Sentiment: The company generated CAD 26.9 million of third-quarter Free Cash Flow and reduced its leverage ratio to 1.4 times, within its target range. It also returned CAD 19.2 million to shareholders during the quarter through dividends and buybacks.
  • Negative Sentiment: Third-quarter adjusted EBITDA fell CAD 3.9 million year over year to CAD 47.7 million, as growth in Voyageur and KADEX only partly offset contractual step-downs in the CPA business. Management said projected non-CPA growth should offset expected CPA declines next year.
  • Negative Sentiment: Management described defense and other contract opportunities as difficult to forecast and potentially lumpy; the 2027 non-CPA outlook does not assume major new contract wins. Any such wins could provide upside, but their timing and success remain uncertain.
AI Generated. May Contain Errors.
Earnings Conference Call
Chorus Aviation Q3 2026
00:00 / 00:00

Transcript Sections

Skip to Participants
Operator

Good morning, ladies and gentlemen, and welcome to the Chorus Aviation Inc. third quarter 2026 financial results, [Non-English content] conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Tuesday, November 10th, 2026. I would now like to turn the conference over to Matt LaPierre. Please go ahead.

Matt LaPierre
Matt LaPierre
Director of Treasury and Investor Relations at Chorus Aviation

Thank you, operator. Hello, and thank you for joining us today. With me today from Chorus are Colin Copp, President and Chief Executive Officer, and Gary Osborne, Chief Financial Officer. We will begin today's call with a brief summary of the results, followed by questions from the analyst community. As there may be some forward-looking discussion during this call, I ask that you refer to the caution regarding forward-looking statements and information found in the MD&A. This pertains specifically to the results and operations of Chorus Aviation Inc. for the period ended September 30th, 2026, as well as the outlook section and other sections of our MD&A where such statements appear. Finally, some of the following discussion involves non-GAAP financial measures, including references to adjusted net income, adjusted EBT, adjusted EBITDA, leverage ratio, and free cash flow.

Matt LaPierre
Matt LaPierre
Director of Treasury and Investor Relations at Chorus Aviation

Please refer to our MD&A for further information relating to the use of such non-GAAP measures. I'll now turn the call over to Colin Copp.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Good morning, everyone, and thank you for joining us today. I'd like to start with the acquisition of SkyCare Air Ambulance, which we announced a few weeks ago. We're very excited about this acquisition and what it means for Chorus. SkyCare is an excellent strategic fit, adding a well-established and complementary business with long-standing customer relationships and specialized aviation and medical capabilities. SkyCare has built an excellent reputation over the past 20 years through the professionalism and expertise of its aviation and medical teams, and we see meaningful opportunities to support its continued growth as part of Chorus while preserving the relationships, capabilities, and culture that have been central to its success. The acquisition also expands our presence in the North, a key area of focus as we continue to grow our business.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Aviation companies like SkyCare play an essential role in connecting northern and remote communities, providing access to healthcare, and supporting other critical services. SkyCare's established presence in Northern Ontario and Manitoba gives us a strong platform to build deeper relationships across the North, better understand the needs of these communities, and pursue additional growth opportunities over time. This acquisition is another example of our growth strategy in action. We are focused on acquiring high-quality businesses with experienced leadership teams, strong customer relationships, and specialized capabilities that complement and strengthen our existing operations. Our objective is to build a broader platform of complementary aviation, aerospace, and defense businesses that can grow together and create long-term shareholder value. To this regard, we're seeing significant momentum in our non-CPA business.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Revenue is expected to increase from CAD 135 million in 2025 to CAD 265 million-CAD 300 million in 2027 from part sales, contract flying, MRO, and other, representing more than a doubling of non-CPA revenue in just two years. With our strategy gaining traction, we see a clear path to continued strong growth beyond 2027. Turning to the quarter, Chorus delivered solid results and continued to make progress against our strategic priorities. Adjusted EBITDA for the quarter came in at CAD 47.7 million, adjusted net income per common share was CAD 0.68, and we declared a dividend of CAD 0.11 per share while maintaining a strong balance sheet and liquidity to grow the business.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

We delivered one aircraft in the quarter, bringing us to eight of the nine aircraft sold under the previously announced sales agreement, and we expect the remaining sale to close by year-end, bringing total proceeds from these transactions to approximately $62 million. As we execute on our strategy, disciplined capital allocation remains a key priority. During the quarter, we repurchased and canceled 615,000 common shares under our normal course issuer bid for CAD 16.8 million, bringing year-to-date NCIB repurchases to CAD 36.8 million. Over the past two and a half years, we've returned approximately CAD 120 million to shareholders through our SIB and NCIB share repurchase programs. We continue to view share repurchases as an attractive use of capital while preserving the flexibility to invest in growth.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Our pipeline of opportunities across our priority growth areas remains strong, with investments that meet our return criteria while adding complementary capabilities, relationships, and expertise. Together, these opportunities will further strengthen our aviation, aerospace, and defense platform and support long-term shareholder value creation. Our latest investor presentation provides a clear roadmap for Chorus, outlining where we are today, where we're going, and how we intend to deploy capital to create long-term shareholder value. Between 2026 and 2029, we expect to generate CAD 500 million-CAD 550 million of free cash flow and proceeds from aircraft sales. This capital gives us the flexibility to invest in attractive growth opportunities, return capital to shareholders, service debt, and maintain a strong balance sheet. Importantly, we remain disciplined in deploying capital with a mid-teen unlevered return target on our investments. Turning to the businesses, they all executed very well during the quarter.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

At Jazz, Doug and the team had a very productive quarter, reaching important milestones in both safety and labor relations. In September, Jazz successfully renewed its IOSA certification. It is an important endorsement of the airline safety management system and operating standards, and a reflection of the work employees do every day to operate safely. The team also made significant progress on the labor front. New collective agreements were ratified with flight dispatchers, crew schedulers, and flight attendants. Together, these three groups represent nearly 1,000 employees in Jazz's workforce. These agreements provide greater certainty for employees and the business while supporting the stable and reliable operation Jazz delivers for Air Canada. At Voyageur, Cory and the team made good progress in three key areas: aerial firefighting, defense, and aircraft part sales.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

The first Fireswift aircraft is now operational and has successfully completed demonstration flights and static displays for provincial and federal stakeholders across Canada. These engagements have given the team an opportunity to showcase the platform's capabilities and build awareness. A second Fireswift aircraft is expected to be delivered in the fourth quarter. On the defense side, Voyageur continues to advance the operational capabilities for the Flexrotor uncrewed aircraft system. Business development, regulatory approvals, and training activities are all moving forward, with an operational launch plan for the spring of 2027. Engagement remains strong with key stakeholders across a broad range of industry contacts. Also during the quarter, Voyageur completed the sale of two Dash 8-100 aircraft, further advancing its inventory monetization objectives and capital deployment strategies. At KADEX, John and the team have been growing the business, and it has performed very well since acquisition in April of this year.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

KADEX contributed approximately CAD 17.7 million of incremental part sales during the third quarter and CAD 34.1 million since its acquisition. Together with higher part sales at Voyageur, this growth is broadening our revenue base. KADEX has integrated extremely well into Chorus's platform. Its performance out of the gate validates our strategy of acquiring high-quality businesses at attractive returns, retaining strong management teams, and supporting those businesses as they grow. Lynne and the team at Cygnet continue to strengthen the pathways connecting professional flight training with employment opportunities across Canada's aviation industry. Cygnet's new North Bay base is now open, and the training is underway. The expansion increases Cygnet's training capacity and establishes an important new presence in Northern Ontario. During the quarter, Cygnet's 12th cohort began its training. The cohort includes cadets from all three Cygnet streams, Jazz Approach, Destination Porter, and the Free Agent Program.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

To date, Cygnet has delivered 40 first officers to Jazz, demonstrating the important role it plays in developing a strong and reliable pilot pipeline. Cygnet also celebrated the graduation of its first Free Agent candidate in September. The program provides graduates with pathways to participating operators, including North Star Air, Air Tindi, and Summit Air, while helping those airlines develop their pilot pipelines. At Elisen, Taif and Stéphan and the team are making progress on the contract with the Government of Québec involving air ambulance modifications to a Challenger 600 series aircraft, with a completion expected in the fourth quarter. Through their ongoing collaboration, Voyageur and Elisen are expanding their combined engineering systems integration and aircraft modification capabilities, creating new opportunities across Bombardier Challenger and Global aircraft platforms.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Frank and the team at SkyCare have been sharing the acquisition news with their employees and customers, and we are very pleased to officially welcome them to Chorus. Integration is now underway, with an early focus on bringing our teams together, strengthening connections across the group, and identifying opportunities for SkyCare's continued growth. As we continue to build our aviation, aerospace, and defense platform, we enter the final quarter of 2026 with considerable financial strength and flexibility, supported by a strong balance sheet, significant free cash flow, and a growing portfolio of specialized businesses. This positions us very well to pursue disciplined investments that drive growth and long-term shareholder value. Thank you, and I will now turn it over to Gary to take you through the financials.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Thank you, Colin, and good morning. We are pleased with our third-quarter results. The quarter reflected steady execution across the platform, solid earnings, consistent free cash flow, further deleveraging, and a disciplined capital allocation, including the return of CAD 19.2 million to shareholders through dividends and share repurchases. Voyageur and KADEX continue to produce solid growth. We sold another Dash 8-400 aircraft, exiting the CPA fleet, and on November 1, we closed the acquisition of SkyCare Air Ambulance. Looking at the quarter, adjusted EBITDA was CAD 47.7 million compared to CAD 51.6 million in Q3 last year. The CAD 3.9 million decrease reflects Voyageur and KADEX producing CAD 3.6 million more in the quarter on higher part sales, offset by previously communicated contractual CPA step-downs. Adjusted net income per share was CAD 0.68, up 13% from CAD 0.60 in Q3 2025.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Adjusted net income of CAD 15.1 million was flat, as a CAD 2.2 million aircraft sale gain and lower depreciation and interest offset by lower adjusted EBITDA. Buybacks cut weighted average shares by about 13% quarter-over-quarter, also helping our unit measures. Free cash flow was CAD 26.9 million, or CAD 1.21 per share, compared to CAD 33.2 million, or CAD 1.29 a share in Q3 2025. After CAD 16.1 million of scheduled amortizing term loan repayments, free cash flow was CAD 10.8 million. Our Leverage Ratio was 1.4x, an improvement from the 1.7x at year-end and the 1.5x last quarter, and remains comfortably within our target range of 1x-2x. KADEX, which we acquired on April 1, contributed CAD 17.7 million of revenue and CAD 0.8 million of net income in the quarter, inclusive of CAD 0.5 million of amortization of acquisition-related intangible assets.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Since closing, KADEX has contributed CAD 34.1 million of revenue and CAD 2 million of net income. KADEX's earnings continue to be in line with our acquisition plan, and we continue to be encouraged by how it is adding to both our earnings diversification and our parts and supply chain capabilities. We also continue to make progress on aircraft monetization. During the third quarter, we sold one Dash 8-400 for proceeds of CAD 10 million, resulting in a CAD 2.2 million gain on sale. Combined with free cash flow of CAD 26.9 million, we generated CAD 37.0 million of free cash flow and asset sales in the quarter. Eight of the nine aircraft have now been sold, including seven in 2026, for a total proceeds of CAD 68.4 million year-to-date.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

The remaining aircraft is expected to close by year-end, subject to customary closing conditions and the completion of contractual maintenance events, and will bring the expected cumulative net proceeds of the nine aircraft to slightly above the $62 million U.S. we had previously communicated. Turning to the capital allocation, we continue to execute against the 2026 to 2029 plan we outlined earlier this year. That plan includes up to $100 million in share buybacks, $40 million in dividends, $190 million of amortizing term loan repayments, and $170 million-$220 million of flexible capital allocation. During the quarter, we repurchased and canceled approximately 615,000 common shares under our NCIB, representing $16.8 million of share buybacks. year-to-date, we have repurchased and canceled approximately 1.46 million shares for $36.8 million. We also paid a quarterly dividend of $0.11 per share.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

When you combine the dividend and the buybacks, we returned $19.2 million to shareholders in the quarter and $44.3 million year-to-date, while still maintaining a strong balance sheet and the flexibility to support growth. Liquidity remains strong at $217.7 million at September 30, including $27.2 million of cash and $119.5 million of available credit. On November 1, we closed the acquisition of SkyCare Air Ambulance for a purchase price of approximately $40 million, representing a purchase multiple of 4.5 times SkyCare's unaudited 2025 EBITDA. At acquisition, Chorus funded $36.1 million, inclusive of a $4.1 million working capital adjustment from our operating credit facility and cash on hand. Our liquidity gives us meaningful flexibility as we continue to balance growth, shareholder returns, debt reduction, and disciplined investment in the business.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

We have updated our 2026 outlook to reflect the SkyCare acquisition, along with the stronger earnings and higher U.S. dollar exchange rate reflected in our year-to-date results. We now expect adjusted EBITDA of $185 million-$195 million and free cash flow of $110 million-$120 million in 2026. After $65 million of scheduled amortizing term loan repayments, we expect to generate between $45 million and $55 million of free cash flow after debt repayments.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

We expect non-CPA revenue from part sales, contract flying, MRO, and other to be from $200 million-$220 million for this year, 2026, and growing to $265 million-$300 million in 2027, with a combined EBITDA margin of approximately 20%. This revenue is based on our current businesses, including Voyageur, KADEX, and SkyCare. Further detail is contained in the outlook section of our MD&A and in our updated investor presentation. Overall, we are pleased with the quarter.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

The business continues to generate steady free cash flow. Our leverage improved to 1.4x and remains well within our target range, and we are executing on the capital allocation plan laid out earlier this year. KADEX continues to contribute, and we closed the SkyCare acquisition on November 1, demonstrating the increasing diversification of our business. Our increased 2026 outlook reflects this progress and our confidence in the underlying cash generation of the business. We are now ready to take your questions. We closed the SkyCare acquisition on November 1, demonstrating the increasing diversification of our business. Our increased 2026 outlook reflects this progress and our confidence in the underlying cash generation of the business. We are now ready to take your questions.

Operator

Thank you, ladies and gentlemen. We will now begin the question-and-answer session. Should you have a question, please press the star key followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star key followed by the number two. One moment, please, while we assemble the queue. All right, your first question comes from James McGarragle of RBC Capital Markets. Please go ahead.

James McGarragle
James McGarragle
Analyst at RBC Capital Markets

Hey, good morning, and thanks for having me on.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Hi, James.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Morning.

James McGarragle
James McGarragle
Analyst at RBC Capital Markets

Yeah, I had a question on the 2027 ex-Air Canada, the guidance, the CAD 265 million-CAD 300 million. If we look at that by itself, it implies roughly, call it a CAD 15 million increase to EBITDA year-over-year. So, how should we be thinking about the CPA now? Because with where consensus is, it kind of implies the CPA business is going to be down CAD 20 million-CAD 25 million year-over-year. So, not asking for any 2027 guidance, but just any directional color that you can share about how we should be thinking about that for when we're updating our models.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah. Hi, James. It's Gary here. When we look at the guidance we gave on the revenue, to your point, if you just do the 20% against the CAD 200 million-CAD 220 million last year, the CAD 265 million-CAD 300 million this year, you're in the CAD 13 million-CAD 16 million increase in the EBITDA, which essentially offsets any reduction we're going to expect to see in the CPA next year. If you look at the Jazz leasing, that is about CAD 14 million in our IR docs. We might be slightly up versus that. I think the key message is, I think we've replaced that reduction that we're seeing next year in the CPA. I think that's the takeaway from this. If you look at that piece, I think it's a pretty positive piece that we're able to fill in.

James McGarragle
James McGarragle
Analyst at RBC Capital Markets

Yeah, I appreciate the color there. On the Q3 EBITDA and the decrease versus Q2. Can you just talk about any of the one-off items, either positive or negative in Q3 that you would not expect to repeat looking ahead? Specifically, I wanted to ask about that CAD 3.6 million increase in Voyageur in the part sales. Was that a one-off, or is that more reflective of a strong demand backdrop? Just trying to understand how we should be thinking about a normalized run rate here on EBITDA going forward.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah. I think for Voyageur, they've had a good year. No question about that. We do see some strength in their business. When I look at from Q2 to Q3, or Q3 and then beyond, I would say we're pretty steady as we move ahead. I think what we've guided for the year of 2026 is conservative. Because we've seen where things can move around, but I can tell you Voyageur has been executing quite well on its part sales. KADEX has been executing well on its business. As far as how this plays out in Q4, we expect to have a decent Q4, but the business can be a little bit lumpy at times.

James McGarragle
James McGarragle
Analyst at RBC Capital Markets

I appreciate the color, and I'll turn the line over. Thank you.

Operator

Your next call comes from Daryl Young of Stifel. Please go ahead.

Daryl Young
Daryl Young
Analyst at Stifel

Hey, good morning, everyone. I just wanted to follow up on the 2027 outlook. I will blame you guys. You opened the door to us asking questions about next year. I wanted to get a sense of what sort of organic growth prospects are you including in your non-CPA revenues going into next year?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, it is Gary here again. I think a lot of it, we have got some parts growth, obviously, with KADEX and Voyageur. Voyageur does have some work that they have been doing with the aerial firefighting business that has started up, so we would expect a little bit of that next year too. So it is just generic organic growth in the business, and we are hoping still to hit on some defense and some other sides of the business, so that is not really included in this outlook at this stage. So, it is really what we kind of know and we can see. Generally speaking, we are seeing, I could think in the non-CPA business, we are seeing 5%-10% growth annually.

Daryl Young
Daryl Young
Analyst at Stifel

Okay, terrific. Looking at the SkyCare acquisition, I was hoping to get a little bit more color on the performance of that business historically, including things like the customer concentration, organic growth there, and what kind of synergies might you have with Voyageur's current contract flying operations? I am just wondering, obviously, the acquisition multiple looks quite attractive, but I am wondering if there is synergies that could make it look even better.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Yeah. Hi, it's Colin. When you think of them, you think of them as an air ambulance operator with a fairly strong contract with Ornge. That's a big part of what they do. That's, I'd say, the majority of their business. They also have a nice charter business that they're slowly building out, and that's an area that we're going to focus on with time here, that we think has got a lot of upside and potential to it. So, 22 aircraft, a strong operator, northern-based, a lot of experience and kind of IP around the air ambulance side of the world and business. When you think about the synergies, you can think about Voyageur obviously being one. You can think about Elisen being another on the engineering side.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

KADEX is a great example where OEM parts, all kinds of stuff related to consumables would be an opportunity, revenue opportunity for us there. Even Cygnet, when you think of pilots, is. There's quite a crossover and quite a few opportunities for us to look at as we grow that business out.

Daryl Young
Daryl Young
Analyst at Stifel

Okay. One last one on that, on the CapEx profile for SkyCare. Is there any sort of pending major fleet retooling that needs to happen or any CapEx that could be coming down the pipe?

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

No, there's nothing other than ordinary maintenance CapEx.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah.

Daryl Young
Daryl Young
Analyst at Stifel

Okay. I'll turn the line over. Thanks.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Yep. Thank you.

Operator

Your next question comes from Cameron Doerksen of National Bank Financial. Please go ahead.

Cameron Doerksen
Cameron Doerksen
Analyst at National Bank Financial

Yeah, thanks. Good morning. You mentioned, I guess, earlier that your 2027 kind of outlook on the non-CPA revenue doesn't really include any, I guess, new major defense wins. Maybe just update us on kind of what the opportunities you're seeing there for 2027. I mean, is there some potential contract opportunities here that could come in in 2027, or is that something that may, if you were to win it, maybe beyond that timeframe?

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Hi, Cameron. It's Colin. Yeah, there are We've talked about this quite a bit off and on, but, and certainly in the script there, we alluded to some of it. Flexrotor is a big piece of what they're working on right now, as well as the aerial firefighting side of things. Those are two big immediate ones as we look into next year that have a priority on them. There's several other contract opportunities that they're working on beyond that in the defense and other agency side of the business that are potentials. Very hard, as Gary and I certainly in the past have said, it's a lumpy business. You get good wins, and then you go a little while until you get your next big win. So it is definitely on that contract side of that business, it's a little lumpy.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

As you look into next year, we're very hopeful and optimistic that we will win a contract or two, and we'll continue to see them grow out that business, no question about it.

Cameron Doerksen
Cameron Doerksen
Analyst at National Bank Financial

Okay. No, that's helpful. Just on the balance sheet, the Series C Debentures obviously have gone current. I think in the past, maybe you've indicated that there was potential to refinance those maybe sometime late this year. Just any update there on what your plan is with those, and I guess, broadly speaking, refinancing opportunities?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, it's Gary here. Yeah, we do plan on refinancing those here as we move towards the end of the year. Anyway, we'll look at our options around that.

Cameron Doerksen
Cameron Doerksen
Analyst at National Bank Financial

Okay. That's something we should expect in the next month and a half or so?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, I would say.

Cameron Doerksen
Cameron Doerksen
Analyst at National Bank Financial

Perfect. Okay. No, that's great. I'll pass the line. Thanks very much.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Thank you.

Operator

Your next question comes from Tim James of TD Cowen. Please go ahead.

Tim James
Tim James
Analyst at TD Cowen

Thank you. Good morning. Just want to return to the Voyageur business and the revenue growth that you have outlined for 2027. Sounds like you are not sort of anticipating many wins in there. Just looking at the other side of it sounds like a fairly conservative number, I guess, on that front. Is a lot of the revenue that is included in that guidance range for 2027 already contracted, or is there much that still needs to be brought across the finish line to kind of get yourselves within that range? As part of that, is it possible to talk about the two or three sort of biggest incremental drivers, I am thinking on the organic side of revenue next year in terms of the contracts that you have and any of the initiatives underway? Just the ones that are going to drive that delta for next year.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, it is Gary here. On the revenue side, as we talked about, there is no major contract win forecasted in there. It is really how we see the business playing out right now. There is nothing significant of a big assumption that we put in there. It is really current run rate plus some reasonable growth and just continued execution. We would hope if we are able to execute on defense and things like that, there would be more upside to that forecast. But it is one that we can plan around, and I think as a market, you can plan on us being able to deliver that, and we would hope to obviously be better just as we have been this year.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Yeah, I will just add to Gary there. Look, when we look at the business, we are looking at it from the standpoint of what we can execute on for sure. We do see, we are very comfortable that we will see some modest growth there. As we add in some of these bigger opportunities, certainly that could change things fairly quickly. We do not have absolute certainty around any of those yet. Working on a lot of them. I think I am fairly comfortable to say that we are going to eventually get one or two of them in the next little while, but it is hard to forecast that stuff. As Gary says, we want to make sure that we are putting out numbers that we can execute and deliver on.

Tim James
Tim James
Analyst at TD Cowen

Okay, that is helpful. My second question, Gary, you mentioned just kind of round numbers, thinking about a 20% EBITDA margin for Voyageur, those businesses this year and next year. Now, you have got some decent revenue growth. Is the right way to think about the net impact being relatively stable margins? You have got a little bit of dilution from the acquisitions, but maybe there is some kind of organic margin expansion net-net. You are talking about kind of flat EBITDA margins. Is that a good way to think about what is going on with the margin trajectory of that business overall from 2026 to 2027?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, I think 20% is kind of the blended average. So if you really look at it, we had 24% with Voyageur, we disclosed that. If you take the purchase multiple on SkyCare, we are in the 19%, 20% range on EBITDA. Then KADEX has a lower EBITDA margin only because it does not have any depreciation. If you look at its EBITDA margin, it is 11%, but it does not have the CapEx in behind it, so it is a different profile. So if you blend it together, you get 20%. We would hope that we could improve on that as time goes on, Tim, but that is kind of the blended average right now. When we come out with our guidance next year for 2027, we will probably give a bit more around that.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

But it is just a simple blended average right now, and it is something, again, you can plan on. I think as the revenue grows based on the current profile, that 20% is going to make its way through in the EBITDA line. That is what we are trying to communicate, is that we do see some good EBITDA improvements in the non-CPA business next year.

Tim James
Tim James
Analyst at TD Cowen

Okay. That is super. Thank you very much. Those are all the questions I had.

Operator

Your next question comes from Konark Gupta of Scotiabank. Please go ahead.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

Thanks, and good morning, everyone.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Morning.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

Morning. Maybe just to take a step back on 2026 guidance first. What led you to increase the guidance? I mean, what were the attributes there? It seems like SkyCare is obviously incremental, but was KADEX also new in that? And was any other organic growth at Voyageur incremental to what you were expecting before?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, on the guidance, I think a couple things. One, we had SkyCare come in for a couple months, so that does add a little bit there. I think you do the math, it's CAD 60 million. I think KADEX has been producing quite well and on expectation, so we continue to see that, so we're feeling even more confident with that piece. And on Voyageur, they've had a good year so far. When we started to add it up all together, plus the performance within the CPA, which has been steady as always and whatnot, we looked at our guidance and said, "Yeah, it's time to move it up." Again, it takes time to make sure the trends are there, and we assessed it, and that's where we're at.

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

If you look at the guidance for this year, 2026, I think we're relatively conservative there too. But again, we've seen lumpiness in the business sometimes, but we feel confident with the quarter coming up.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

Okay. That's helpful, Gary. Sorry, just a clarification. In your guidance, would you typically bake in any stock-based compensation-related fluctuations, given the stock is obviously moving up here, might have some headwind?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Yeah, we would tend to try to do that. Just as a reminder, we do have a hedge on the stock, as you know, if you look through our statements, so that does mute some of the movement.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

Okay, perfect. Thanks. Just moving on SkyCare next. I mean, I understand obviously it is a great business. It is a market leader. But what was the rationale for you guys to step into something like air ambulance business? My understanding is, I mean, right now you do not have anything as substantial as SkyCare in the portfolio. Was it probably just a new avenue of growth for you, more than synergies? Was it just something that came out in the market and you guys wanted to take a look at that when it is attractiveness?

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Hi, Konark. It is Colin. No, look, we have been in the air ambulance business for a long time at Voyageur. If you look at our book over there, we have a lot of experience in that area. We have had a lot of experience on the engineering side as well with regards to air ambulance aircraft. This is not a new area for us. It is something we are very familiar with. It was a business opportunity that we went out and we found. It was not a transaction that was on the market. It was one that we stimulated internally through relationships to find an opportunity here. We are really excited about the management team. We have a very close and strong relationship with that team. Very strong players. It is a great business.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

We are pretty excited about it and adding it in, and it fits perfectly within the organization with lots of cross-revenue opportunities.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

That is good to hear. Thanks. On SkyCare, you talked about the organic side, I guess, and the cross-selling, but is it also a roll-up opportunity, or is there not much in that market where SkyCare is to acquire?

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

It's always possible for there to be expansion and things like that, but that's not typically how we're looking at our businesses. We're looking mainly at organic growth within SkyCare. A lot of these air ambulance operators operate within their region, their provinces typically. Not always, not exclusively, but that is generally the rule that you see if you look at them. So it becomes very much a stronghold for us in Northern Ontario, an operation like this.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

Okay, perfect. Thanks. Last one before I turn over. On CPA, I mean, the business is obviously stable from a fixed margin perspective. The aircraft leases, you have obviously sold and received nine aircraft back. So they have been exiting the fleet, and that obviously reduces your earnings from those aircraft and the CPA leases. If you look further out in your forecast for like 2027, 2028, and beyond, are you assuming any substantial lease renewals with Air Canada under the CPA, or that's still to be negotiated?

Gary Osborne
Gary Osborne
CFO at Chorus Aviation

Our guidance that we gave on the capital allocation from 2026 to 2029 assumes that the aircraft are renewed at market-based lease rates, which we get from various appraisers. So that's what we've assumed there, and so that's what's built up in that capital allocation.

Konark Gupta
Konark Gupta
Analyst at Scotiabank

Okay, perfect. Thanks. Appreciate the time.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Yeah.

Operator

As a reminder, if you would like to ask a question, please press star one. Your next question comes from Daryl Young of Stifel. Please go ahead.

Daryl Young
Daryl Young
Analyst at Stifel

Hey, sorry, just one quick follow-up on the M&A pipeline. You've obviously done two chunkier deals this past year. Anything else that we should be expecting as we move into next year? Is there still more you're working your way through?

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Hi, Daryl. It's Colin. Yeah, we can't really disclose much on that side, but I can tell you this in confidence, or not confidentially, in confidence, that the pipeline is strong. There are opportunities that we're working through right now that we feel very good about, that fit very well and fit all the parameters that we've talked about as far as return metrics and so on. We still see future growth as we move forward. I think I mentioned that in the script, and we feel fairly confident about 2027 with regards to the pipeline. There's no question about that.

Daryl Young
Daryl Young
Analyst at Stifel

Perfect. Thanks very much.

Colin Copp
Colin Copp
President and CEO at Chorus Aviation

Okay.

Operator

There are no further questions at this time. I will now turn the call back over to Matt LaPierre. Please continue.

Matt LaPierre
Matt LaPierre
Director of Treasury and Investor Relations at Chorus Aviation

Thank you, everyone, for joining. That concludes today's call. Please have a good day.

Operator

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect.

Executives
    • Matt LaPierre
      Matt LaPierre
      Director of Treasury and Investor Relations
    • Colin Copp
      Colin Copp
      President and CEO
    • Gary Osborne
      Gary Osborne
      CFO
Analysts
Powered by Quartr