A CONCERTED effort to improve profitability at a number of its operations is starting to pay off for Winnipeg's Exchange Income Corp.
The diversified holding company, which owns four regional airlines in Manitoba and Central Canada and a number of industrial companies in Canada and the United States, has reported big increases in EBITDA (earnings before interest, taxes, depreciation and amortization) for its Calm Air and Region One airlines, and for its WesTower cellphone-tower construction and maintenance company.
Exchange Income CEO Mike Pyle said during a conference call with analysts Wednesday the company has made a strong effort to improve profitability at all three of those subsidiaries. And those efforts started to bear fruit in the second quarter of this year, he added.
WesTower saw its EBITDA soar by 169 per cent to $8.8 million, EBITDA for Regional One jumped by 60 per cent to $5.8 million and EBITDA for Calm Air rose by 46 per cent to $4.9 million.
Pyle said the success there helped offset the negative impact unusual weather had on its local regional airlines.
He explained the long, cold winter lengthened the winter-road season in Manitoba, which meant more freight was shipped by truck to northern communities and less by Exchange's regional airlines. And the wet spring and early summer meant there were virtually no forest fires in the region, which meant less demand for the airlines' helicopter services.
However, despite the EBITDA improvements, the company still saw its net income for the quarter drop to $4.1 million from $5.7 million in Q2 2013. The decline was blamed on a one-time, $1.3-million restructuring charge and a $700,000 depreciation within its Bearskin Airlines operations, which is also undergoing major changes to improve profitability.
But Pyle said Exchange officials are confident they'll soon begin to see EBITDA improvements at Bearskin, as well.
The CEO spent a good portion of Wednesday's conference call discussing the earnings gains at WesTower in a bid to refute concerns raised in two recent investment research reports.
The reports expressed concerns about WesTower's profitability and how that might affect Exchange Income's ability to maintain or increase dividend payments to its shareholders. Exchange Income share prices fell nine per cent in heavy trading one day last week after media reports surfaced about the analysts' reports.
Pyle said the huge jump in second-quarter EBITDA shows the profitability-improvement measures being undertaken are working.
-- Murray McNeill