Exchange Income Corp. reports higher Q1 revenue

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This article was published 11/05/2023 (1228 days ago), so information in it may no longer be current.

Exchange Income Corp.’s diversification strategy is working like a charm these days.

The Winnipeg-based corporation that owns about 19 companies in the manufacturing and aviation and aerospace sectors reported revenue up 32 per cent and cash flow or EBITDA (earnings before interest, taxes, depreciation and amortization) up 45 per cent in the first quarter.

At the company’s annual meeting on Wednesday morning, company CEO, Mike Pyle, said, “We achieved this even though everything was not working perfectly.”

The meeting was held in the newly completed $12-million, 45,000-square-foot Calm Air hangar, built on site of the former home of the Royal Aviation Museum of Western Canada. (Calm Air is an EIC company.)

The new hangar was necessary because Calm Air’s old one right next door that is almost exactly the same size has been acquired by Provincial Aerospace Ltd. (PAL) another EIC company, based in St. John’s, N.L.

PAL needs that hangar to undertake heavy maintenance on a new fleet of 16 Airbus C295 fixed wing search and rescue (SAR) planes. PAL was part of the winning bid that was awarded that contract in 2016.

PAL’s contribution to the bid was to conduct all the heavy maintenance on the fleet for 26 years.

Calm Air’s new hangar was commissioned a couple of months ago. For the past couple of years it had been sharing the old hanger with PAL as it began outfitting and preparing for the arrival of the first of the Airbus search and rescue planes expected in July.

Jake Trainor, PAL’s CEO, said, “Over 20 years there will be several visits of each of the 16 aircraft.”

The new heavy maintenance facility, which will also undertake the four-to-six week overhauls of Calm Air’s fleet of 14 ATR 42 and ATR 72 aircraft, was a required element of PAL’s involvement in the Canadian Armed Forces new fixed wing SAR fleet.

It also increases Exchange Income Corp.’s physical footprint in Winnipeg. The company owns 19 operating companies including window curtain wall manufacturers Quest Window Systems and newly acquired BVGlazing Systems, both based in southern Ontario, Florida-based Regional One, an aircraft and aircraft parts leasing company, and Northern Mat & Bridge out of Calgary — four of its largest holdings.

Besides its 35-person head office operation, EIC’s Manitoba operating companies are limited to the aviation sector with names like Calm Air, Perimeter Aviation, Keewatin Air and Custom Helicopters.

The new hangar has already provided about 60 new jobs in the city and as it continues to ramp up could hit close to 100.

Gary Bell, CEO of Calm Air, said, “These are great jobs. Aerospace maintenance engineers make in excess of $80,000 per year.”

Trainor would not say how much it cost to fit out the maintenance hangar, but it’s already full of specialized equipment.

EIC may be about to make another significant capital investment in Winnipeg. The company announced that it has acquired a King Air full motion flight simulator, the first of its kind in Canada.

With a fleet of about 40 King Air planes — used mostly as medevac planes — across a few of its airlines, Pyle said he’s pretty sure it’s the largest such fleet in the world.

But he said the company has not decided if the huge, “north of $10-million” simulator will be housed in Winnipeg or B.C.

That decision could favour B.C. if another of EIC’s subsidiary, Kelowna-based Carson Air, wins a large medevac contract in B.C. that is expected to be announced any day.

“We’re all pretty antsy waiting to hear the result,” said Pyle.

That contract is province-wide, aggregating what had been a number of smaller regional contracts in the province. It will also mean Carson and EIC will need to buy about $200 million worth of new aircraft for that job.

On Wednesday, the company also announced that PAL won an 18-month contract to deploy its Force Multiplier aircraft — specially modified Dash 8 jets — with an as yet-unnamed European country. It further bolsters PAL’s reputation in the international market after winning a contract with the Netherlands in 2020 to provide and support maritime surveillance aircraft and services for the Netherlands Coastguard.

EIC’s record-setting first quarter results — revenue of $527 million and EBITDA of $97 million — was so good that management decided to revise its EBITDA guidance for the year from the previous range of $510 million to $540 million, to $540 million to $570 million. That’s up from $325 million in 2021.

“We beat the analysts and our own internal forecast materially,” Pyle said.

At the annual meeting, Pyle said that it was too far out to give proper guidance on 2024, but he said he believes EBITDA could surpass $600 million in 2024.

EIC shares closed up 4.08 per cent on Wednesday to close at $54.05. At one point in the day, shares were trading at $55.10, just a few cents shy of its 52-week high.

martin.cash@freepress.mb.ca