January 10, 2024
NAV CANADA today released its financial results for the three months ended November 30, 2023.
In the first quarter of fiscal 2024, the Company saw air traffic levels, as measured in weighted charging units(1), increase 7.4% on a year over year basis. The Company’s revenue for the first quarter of fiscal 2024 was $464 million, compared to $435 million over the same period in fiscal 2023.
The Company had positive free cash flow(2) of $98 million in the first quarter of fiscal 2024 as compared to $127 million in the same period in fiscal 2023. The decrease in positive free cash flow is driven by higher cash outflows for operating expenditures, primarily due to higher compensation costs, along with higher capital expenditures as compared to the first quarter of fiscal 2023. The Company ended the quarter with a cash balance of $685 million.
“Thanks to the efforts of our employees, NAV CANADA is progressing towards its strategic goals in areas of technology, corporate social responsibility, and culture, while continuing to prioritize safety. In the past few months, we reached several milestones including formally committing to Science-Based Target initiatives (SBTi) and winning a CANSO Global Safety Achievement Award,” said Raymond G. Bohn, President and CEO. “In addition, NAV CANADA’s balanced approach to fiscal management is supporting industry through a recently announced adjustment to our service charges, while continuing to rebuild our financial resilience.”
Operating expenses for the first quarter of fiscal 2024 were $381 million as compared to $348 million over the same period in fiscal 2023, primarily due to higher compensation costs as a result of both higher wages and increased staffing levels.
Net other income and expenses for the first quarter of fiscal 2024 were a net expense of $17 million as compared to $26 million over the same period in fiscal 2023, as a result of lower interest expense and higher interest income.
The Company had net income (before net movement in regulatory deferral accounts including rate stabilization) of $66 million in the first quarter of fiscal 2024 as compared to $61 million for the first quarter of fiscal 2023.
The Company is subject to legislation that regulates its approach to setting charges. The timing of the recognition of certain revenue and expenses recovered through charges is recorded through movements in regulatory deferral accounts. The net movement in regulatory deferral accounts for the first quarter of fiscal 2024 was an expense of $45 million as compared to an expense of $71 million over the same period in fiscal 2023. This change in regulatory deferrals is primarily due to a decrease in favourable rate stabilization adjustments of $21 million and a $5 million net increase in adjustments required to align the accounting recognition of certain transactions to the periods in which they will be considered for rate setting. As at November 30, 2023, the rate stabilization account had a balance of $285 million to be recovered from customers through future customer service charges.
The Company’s Financial Statements and Management's Discussion and Analysis for the three months ended November 30, 2023 can be found at:
NAV CANADA is a private, not-for-profit company, established in 1996, providing air traffic control, airport advisory services, weather briefings and aeronautical information services for more than 18 million square kilometres of Canadian domestic and international airspace. The Company is internationally recognized for its safety record, and technology innovation.
(1) Weighted charging units represent a traffic measure that reflects the number of billable flights, aircraft size and distance flown in Canadian airspace and is the basis for movement-based service charges, which comprise the vast majority of the Company’s revenue.
(2) Free cash flow is a non-GAAP financial measure used by the Company to enhance the overall understanding of its financial and operating performance. Non-GAAP financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures presented by other issuers. The Company defines free cash flow as cash generated from operations, less capital expenditures (net of government grants received), investments in regulatory assets, investments in Aireon LLC and equity related investments and principal payment of lease liabilities. Management places importance on this indicator as it assists in measuring the impact of its investment program on the Company’s financial resources and provides users with a more stable indication of the Company’s ability to meet its debt obligations and continue to invest in the air navigation system.
This press release contains certain forward-looking statements that are subject to important risks and uncertainties. Actual results may differ materially from the results indicated in these statements for a number of reasons. NAV CANADA disclaims any intention to update any forward-looking statements.