BC Ferries Releases Second Quarter Results

VICTORIA, BC, Nov. 20, 2020 /CNW/ - BC Ferries released its second quarter results today for the three and six months ended September 30, 2020. The COVID-19 global pandemic continues to have a significant impact on the company's operations and financial results.

BC Ferries' net earnings for the second quarter of fiscal 2021 were $37.8 million, $57.2 million lower than the same quarter of the previous year. Year-to-date, since April 1, 2020, net losses were $24.2 million, compared to net earnings of $107.2 million in the same period in the prior year, a decline of $131.4 million.

"COVID-19 continues to have a significant impact on the ferry system as we navigate through what is now the new normal with our employees, our customers and all British Columbians," said Mark Collins, BC Ferries' President and CEO. "Throughout the pandemic, our employees continue to provide lifeline service to coastal communities and I want to recognize their dedication and perseverance, which has been nothing short of inspiring."

Revenue for the quarter ended September 30, 2020, at $247.6 million, was down $81.7 million year-over-year. Revenue for the six months ended September 30, 2020 was $385.0 million, down $190.7 million over the same period in the prior year.

During the quarter, BC Ferries carried 5.5 million passengers and 2.5 million vehicles, a decrease of 29.0 per cent and 14.0 per cent respectively, compared to the same quarter in the prior year. Year-to-date, the company has carried 7.7 million passengers and 3.8 million vehicles, a decrease of 43.0 per cent and 28.7 per cent, respectively, compared to the same period in the previous year.

During the three months ended September 30, 2020, expenses from operations decreased $25.4 million or 11.5 per cent compared to the same period in the prior year. Year-to-date since April 1, 2020, expenses from operations decreased $62.1 million or 14.1 per cent and includes reduced labour costs, fuel consumption, maintenance, contracted services, depreciation expense, travel, non-safety related training and advertising. These cost reductions, while helpful, did not offset the decline in revenues as a significant portion of BC Ferries costs are fixed and do not meaningfully fluctuate with reduced traffic demand.

"Prior to COVID-19, our 12-year capital plan totalled $3.9 billion and included new vessels, upgrades and modifications for existing vessels, significant improvements at our fleet maintenance unit, major investments at terminals and renewal of information technology systems," said Collins. "Given the impact of the pandemic to our operations and financial position, we are reviewing all capital plans to identify opportunities to defer any expenditures that are not regulatory, security or safety related or operationally necessary. It's imperative that we scrutinize everything we do to preserve the long-term sustainability of the ferry system in the public interest."  

On September 18, 2020, the Federal and Provincial Governments announced that BC Ferries will receive $308 million under the Safe Restart Funding Program. Since the beginning of the pandemic, BC Ferries has been working closely with the Province to collaborate on strategic options to sustain the ferry system for the long term. BC Ferries submitted a detailed plan to meet the public interest and the interests of customers in the provision of safe, reliable and affordable ferry service. Earlier this month BC Ferries reached a formal agreement with the Province regarding the $308 million from the Safe Restart Funding Program. 

Capital expenditures in the three and six months ended September 30, 2020 totalled $25.7 million and $49.3 million respectively. Significant investments include the five new vessels currently under construction contracted in 2019, major vessel overhauls and inspections, IT upgrades and various other projects.

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 21.7 million passengers and 8.8 million vehicles during the fiscal year ended March 31, 2020. BC Ferries provides frequent year-round ferry transportation services to the west coast of Canada on 25 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, the requirements of the Coastal Ferry Services Contract, and the impact of the COVID-19 pandemic.

Forward looking statements included in this release include statements with respect to: the company's response to the COVID-19 pandemic, reductions in discretionary spending, our fixed costs, capital investments, and funding under the Safe Restart Funding Program.  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 Aboriginal rights and title 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.

Significant events second quarter fiscal 2021

Significant events during or subsequent to the Second Quarter of 2021 include the following:

• The Coastal Ferry Services Contract was initially amended in April 2020 for a 60-day period, expiring in early June and subsequently, extended through to September 7, 2020, to reflect temporary reduced service levels in response to the COVID-19 pandemic while maintaining the related ferry transportation fees.
  
  
• On September 9, 2020, BC Ferries issued a statement to inform customers that as of September 30, 2020, Transport Canada rescinded the temporary flexibility it granted to ferry operators allowing passengers to remain in their vehicles on enclosed decks. Transport Canada granted this flexibility in the spring in response to the COVID-19 pandemic.
  BC Ferries has implemented measures to mitigate risk to the travelling public and prevent the spread of the virus including additional cleaning, sanitization, physical distancing and mandatory wearing of face coverings while at the terminal and onboard the vessel.
  
  
• On September 18, 2020, the Federal and Provincial Governments announced that BC Ferries will receive $308 million under the Safe Restart Funding Program. Previously, on August 11, 2020, the Province had announced that BC Ferries is one of the entities included in the Federal Government's announced transit funding of $540 million in response to the impact of the COVID-19 pandemic. This transit funding is to be matched equally by the Province for a total funding envelope of $1.08 billion. BC Ferries reached a formal agreement with the Province regarding the $308 million from the Safe Restart Funding Program earlier this month.
  
  
• On September 22, 2020, BC Ferries launched its new mobile-friendly website, which lets customers easily book and manage their bookings online and delivers dynamically updated schedules and current conditions information. Features of the new website include dynamically generated, real-time daily and seasonal schedules available for all routes, as well as travel conditions at major terminals to provide greater travel certainty. Enhanced account management capabilities let customers manage all their bookings in one place, and add, change or cancel bookings with ease on their own. The new trip planner tool helps customers find sailings and calculate fares on any route before travelling.

SOURCE British Columbia Ferry Services Inc.