Exchange Income Corporation Posts Record Third Quarter Results Driven by the Diversification of its Business Model
The Corporation Posts Quarterly Records for Key Financial Metrics including Revenue of
Q3 Financial Highlights
-
Record quarterly revenues of
$710 million , an increase of$22 million . -
Record quarterly Adjusted EBITDA of
$193 million , representing growth of$25 million over the prior period or an increase of 15%. -
Record quarterly Free Cash Flow of
$136 million compared to the prior period of$117 million , an increase of$19 million along with record Free Cash Flow per share of$2.86 compared to the prior period of$2.51 . -
Record Net Earnings of
$56 million compared to the prior period of$50 million and Net Earnings per share of$1.18 compared to the prior period of$1.06 . -
Adjusted Net Earnings record of
$61 million compared to the prior period of$55 million and Adjusted Net Earnings per share of$1.29 compared to the prior period of$1.19 . -
Free Cash flow less Maintenance Capital Expenditures record of
$81 million compared to the prior period of$74 million and record Free Cash flow less Maintenance Capital Expenditures per share of$1.71 . - Trailing Twelve Month Free Cash Flow less Maintenance Capital Expenditures Payout Ratio was 60% compared to the prior period of 58%.
-
Announced that the Corporation was the successful bidder to provide integrated fixed-wing and rotary air ambulance services for the
Province of Newfoundland and Labrador . - Announced a new contract to provide airborne intelligence, surveillance and reconnaissance support for a domestic security agency in an allied European nation utilizing an existing aircraft along with an additional aircraft with augmented technical capabilities to be deployed during the contract.
-
Announced, subsequent to quarter end, the acquisition of
Spartan Mat, LLC and its subsidiarySpartan Composites, LLC (collectively, “Spartan”) which is a strategic acquisition expanding our Environmental Access Solutions business line into the US and adding additional products for our Canadian operations. -
Subsequent to quarter end, extended its medevac contracts with the Government of
Nunavut into 2026 with enhanced pricing.
CEO Commentary
Our positive momentum on new contract announcements continued subsequent to quarter end. We announced that we were the successful proponent in the integrated fixed-wing and rotary air ambulance services for the
We are excited about the future of each of our businesses. The fundamentals driving each of our business lines are robust and the positive momentum achieved with the successful execution on our most recent contract awards are driving the record key financial metrics, whether it be revenue, Adjusted EBITDA, Free Cash Flow, Free Cash Flow less Maintenance Capital Expenditures, Net Earnings and Adjusted Net Earnings. That positive momentum is continuing as we have several organic growth and acquisition opportunities being worked on by our various teams.”
Selected Financial Highlights
(All amounts in thousands except % and share data)
|
Q3 2024 |
Q3 2023 |
% Change |
YTD 2024 |
YTD 2023 |
% Change |
Revenue |
|
|
3% |
|
|
7% |
Adjusted EBITDA |
|
|
15% |
|
|
12% |
Net Earnings |
|
|
13% |
|
|
-% |
per share (basic) |
|
|
11% |
|
|
(7%) |
Adjusted Net Earnings |
|
|
11% |
|
|
(2%) |
per share (basic) |
|
|
8% |
|
|
(8%) |
Trailing Twelve Month Adjusted Net Earnings Payout Ratio (basic) |
87% |
78% |
|
87% |
78% |
|
Free Cash Flow |
|
|
16% |
|
|
9% |
per share (basic) |
|
|
14% |
|
|
1% |
Free Cash Flow less Maintenance Capital Expenditures |
|
|
9% |
|
|
3% |
per share (basic) |
|
|
7% |
|
|
(4%) |
Trailing Twelve Month Free Cash Flow less Maintenance Capital Expenditures Payout Ratio (basic) |
60% |
58% |
|
60% |
58% |
|
Dividends declared |
|
|
7% |
|
|
12% |
Review of Q3 Financial Results
Consolidated revenue for the quarter was
Revenue generated by the Aerospace & Aviation segment increased by
Manufacturing segment revenue increased by
EIC recorded Net Earnings of
“During the quarter we continued to give back to the communities in which we serve. We celebrated the National Day for Truth & Reconciliation by welcoming over 1,000 Indigenous guests to a Winnipeg Blue Bomber football game. We also celebrated with two groups of Indigenous pilots as part of our Indigenous Pilot Pathway program. 2024 was a continuation of our Indigenous Pilot Pathway pilot training in
On a broader basis, we are seeing that the macroeconomic uncertainty is subsiding with interest rates on the decline in
Outlook
Our strategy has proven itself and allows us to provide guidance for fiscal 2025. We anticipate that Adjusted EBITDA will be between
EIC’s complete interim financial statements and management’s discussion and analysis for the three and nine- months ending
Conference Call Notice
Management will hold a conference call to discuss its 2024 third quarter financial results on
A live audio webcast of the conference call will be available at www.ExchangeIncomeCorp.ca and www.newswire.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 90 days.
About
Caution concerning forward-looking statements
The statements contained in this news release that are forward-looking are based on current expectations and are subject to a number of uncertainties and risks, and actual results may differ materially. These uncertainties and risks include, but are not limited to, external risks, operational risks, financial risks and human capital risks. External risks include, but are not limited to, risks associated with economic and geopolitical conditions, competition, availability of government funding for Indigenous health care, access to capital, market trends and innovation, risks associated with uninsured losses, climate risks, acts of terrorism, armed conflict, labour or social unrest, risks of a pandemic, the level and timing of defence spending, government-funded defence and security program risks and risks associated with environmental, social and governance. Operational risks include, but are not limited to, significant contracts and customers, operational performance and growth, laws, regulations and standards, acquisitions, concentration and diversification, access to parts and relationships with key suppliers, casualty losses, environmental liability, dependence on information systems and technology, international operations, fluctuations in sales prices and purchase prices of aviation related assets, warranties and performance guarantees, global offset and intellectual property risks. Financial risks include, but are not limited to, availability of future financing, income tax matters, commodity risk, risks related to foreign exchange, interest rates, credit facility and the trust indentures, dividends, unpredictability and volatility of securities pricing, dilution and other credit risk. Human capital risks include, but are not limited to, reliance on key personnel, risks related to employees and labour relations and conflicts of interest.
Except as required by Canadian Securities Law,
Appendix A
Adjusted EBITDA, Adjusted Net Earnings, Free Cash Flow, and Maintenance and Growth Capital Expenditures are not recognized measures under IFRS and are, therefore, defined below.
Adjusted EBITDA: is defined as earnings before interest, income taxes, depreciation, amortization, other non-cash items such as gains or losses recognized on the fair value of contingent consideration items, asset impairment, and restructuring costs, and any unusual non-operating one-time items such as acquisition costs. It is used by management to assess its consolidated results and the results of its operating segments. Adjusted EBITDA is a performance measure utilized by many investors to analyze the cash available for distribution from operations before allowance for debt service, capital expenditures, and income taxes. The most comparable IFRS measure, presented in the Corporation’s Statements of Income as an additional IFRS measure, is Operating profit before Depreciation, Amortization, Finance Costs, and Other.
|
Three Months |
Three Months |
Nine Months |
Nine Months |
|||||||
Adjusted EBITDA |
$ |
192,914 |
$ |
167,751 |
$ |
461,010 |
$ |
411,904 |
|||
Depreciation of capital assets |
|
64,707 |
|
54,106 |
|
181,806 |
|
151,646 |
|||
Amortization of intangible assets |
|
5,538 |
|
5,638 |
|
16,709 |
|
15,867 |
|||
Finance costs - interest |
|
34,225 |
|
29,262 |
|
95,743 |
|
83,139 |
|||
Depreciation of right of use assets |
|
10,276 |
|
10,561 |
|
29,669 |
|
27,267 |
|||
Interest expense on right of use liabilities |
|
2,044 |
|
2,077 |
|
6,076 |
|
5,406 |
|||
Acquisition costs |
|
1,549 |
|
1,631 |
|
4,098 |
|
5,599 |
|||
Other |
|
- |
|
- |
|
- |
|
(951) |
|||
Earnings before taxes |
$ |
74,575 |
$ |
64,476 |
$ |
126,909 |
$ |
123,931 |
Adjusted Net Earnings: is defined as Net Earnings adjusted for acquisition costs, amortization of intangible assets, interest accretion on acquisition contingent consideration, accelerated interest accretion on convertible debentures, and non-recurring items. Adjusted Net Earnings is a performance measure, along with Free Cash Flow less Maintenance Capital Expenditures, which the Corporation uses to assess cash flow available for distribution to shareholders. The most comparable IFRS measure is Net Earnings. Interest accretion on contingent consideration is recorded in the period subsequent to an acquisition after the expected payment to the vendors is discounted. The value recorded on acquisition is accreted to the expected payment over the earn out period. Accelerated interest accretion on convertible debentures reflects the additional interest accretion recorded in a period that, but for the action to early redeem the debenture series, would have been recorded over the remaining term to maturity. This interest reflects the difference in the book value of the convertible debentures and the par value outstanding.
The Corporation presents an Adjusted Net Earnings payout ratio, which is calculated by dividing dividends declared during a period, as presented in the Corporation’s Financial Statements and Notes, by Adjusted Net Earnings, as defined above. The Corporation uses this metric to assess cash flow available for distribution to shareholders.
Three Months Ended |
|
|
2024 |
|
|
2023 |
||||||
Net Earnings |
|
|
|
|
$ |
55,885 |
$ |
49,523 |
||||
Acquisition costs (net of tax |
|
|
|
|
|
|
1,417 |
1,596 |
||||
Amortization of intangible assets (net of tax |
|
|
|
|
|
|
4,070 |
4,144 |
||||
Adjusted Net Earnings |
|
|
|
|
|
|
$ |
61,372 |
$ |
55,263 |
Nine Months Ended |
|
|
2024 |
|
|
2023 |
||||||
Net Earnings |
|
|
|
|
$ |
93,061 |
$ |
93,280 |
||||
Acquisition costs (net of tax |
|
|
|
|
|
|
3,266 |
5,341 |
||||
Amortization of intangible assets (net of tax |
|
|
|
|
|
|
12,281 |
11,662 |
||||
Adjusted Net Earnings |
|
|
|
|
|
|
$ |
108,608 |
$ |
110,283 |
Free Cash Flow: for the year is equal to cash flow from operating activities as defined by IFRS, adjusted for changes in non-cash working capital, acquisition costs, principal payments on right of use lease liabilities, and any unusual non-operating one-time items. Free Cash Flow is a performance measure used by management and investors to analyze the cash generated from operations before the seasonal impact of changes in working capital items or other unusual items. The most comparable IFRS measure is Cash Flow from Operating Activities. Adjustments made to Cash Flow from Operating Activities in the calculation of Free Cash Flow include other IFRS measures, including adjusting the impact of changes in working capital and deducting principal payments on right of use lease liabilities.
Three Months Ended |
|
2024 |
|
2023 |
|||||||
Cash flows from operations |
|
|
|
$ |
124,971 |
$ |
117,257 |
||||
Change in non-cash working capital |
|
|
|
|
|
19,931 |
7,362 |
||||
Acquisition costs (net of tax |
|
|
|
|
|
1,417 |
1,596 |
||||
Principal payments on right of use lease liabilities |
|
|
|
|
|
(10,203) |
(9,072) |
||||
|
|
|
|
|
|
|
$ |
136,116 |
$ |
117,143 |
Nine Months Ended |
|
2024 |
|
2023 |
|||||||
Cash flows from operations |
|
|
|
$ |
216,477 |
$ |
183,469 |
||||
Change in non-cash working capital |
|
|
|
|
|
107,507 |
112,500 |
||||
Acquisition costs (net of tax |
|
|
|
|
|
3,266 |
5,341 |
||||
Principal payments on right of use lease liabilities |
|
|
|
|
|
(28,701) |
(26,457) |
||||
|
|
|
|
|
|
|
$ |
298,549 |
$ |
274,853 |
Free Cash Flow less Maintenance Capital Expenditures: for the year is equal to Free Cash Flow, as defined above, less Maintenance Capital Expenditures, as defined below.
The Corporation presents Free Cash Flow less Maintenance Capital Expenditures per share, which is calculated by dividing Free Cash Flow less Maintenance Capital Expenditures, as defined above, by the weighted average number of shares outstanding during the period, as presented in the Corporation’s Financial Statements and Notes.
The Corporation presents a Free Cash Flow less Maintenance Capital Expenditures payout ratio, which is calculated by dividing dividends declared during a period, as presented in the Corporation’s Financial Statements and Notes, by Free Cash Flow less Maintenance Capital Expenditures, as defined above. The Corporation uses this metric to assess cash flow available for distribution to shareholders.
Maintenance and Growth Capital Expenditures: Maintenance Capital Expenditures is defined as the capital expenditures made by the Corporation to maintain the operations of the Corporation at its current level, and, prior to the onset of COVID-19, depreciation recorded on assets in the Corporation’s aircraft leasing pool. Other capital expenditures are classified as Growth Capital Expenditures as they will generate new cash flows and are not considered by management in determining the cash flows required to sustain the current operations of the Corporation. While there is no comparable IFRS measure for Maintenance Capital Expenditures or Growth Capital Expenditures, the total of Maintenance Capital Expenditures and Growth Capital Expenditures is equivalent to the total of capital asset and intangible asset purchases, net of disposals, on the Statement of Cash Flows.
|
|
Three Months Ended |
||||||||||
CAPITAL EXPENDITURES |
Aerospace & Aviation |
Manufacturing |
Head Office |
Total |
||||||||
|
Maintenance Capital Expenditures |
$ |
45,043 |
$ |
9,468 |
$ |
404 |
$ |
54,915 |
|||
|
Growth Capital Expenditures |
91,232 |
1,948 |
- |
93,180 |
|||||||
Total Net Capital Additions and Intangible Asset purchases, per Statement of Cash Flows |
$ |
136,275 |
$ |
11,416 |
$ |
404 |
$ |
148,095 |
||||
|
|
Three Months Ended |
||||||||||
CAPITAL EXPENDITURES |
|
Aerospace & Aviation |
Manufacturing |
Head Office |
Total |
|||||||
|
Maintenance Capital Expenditures |
$ |
35,324 |
$ |
7,402 |
$ |
76 |
$ |
42,802 |
|||
|
Growth Capital Expenditures |
66,088 |
15,027 |
- |
81,115 |
|||||||
Total Net Capital Additions and Intangible Asset purchases, per Statement of Cash Flows |
$ |
101,412 |
$ |
22,429 |
$ |
76 |
$ |
123,917 |
|
Nine Months Ended |
||||||||||
CAPITAL EXPENDITURES |
Aerospace & Aviation |
Manufacturing |
Head Office |
Total |
|||||||
Maintenance Capital Expenditures |
$ |
120,440 |
$ |
21,307 |
$ |
686 |
$ |
142,433 |
|||
Growth Capital Expenditures |
174,922 |
2,374 |
10 |
177,306 |
|||||||
Total Net Capital Additions and Intangible Asset purchases, per Statement of Cash Flows |
$ |
295,362 |
$ |
23,681 |
$ |
696 |
$ |
319,739 |
|||
|
Nine Months Ended |
||||||||||
CAPITAL EXPENDITURES |
|
Aerospace & Aviation |
Manufacturing |
Head Office |
Total |
||||||
Maintenance Capital Expenditures |
$ |
103,948 |
$ |
18,610 |
$ |
439 |
$ |
122,997 |
|||
Growth Capital Expenditures |
172,680 |
28,798 |
- |
201,478 |
|||||||
Total Net Capital Additions and Intangible Asset purchases, per Statement of Cash Flows |
$ |
276,628 |
$ |
47,408 |
$ |
439 |
$ |
324,475 |
Investors are cautioned that Adjusted EBITDA, Adjusted Net Earnings, Free Cash Flow, and Maintenance Capital Expenditures and Growth Capital Expenditures should not be viewed as an alternative to measures that are recognized under IFRS such as Net Earnings or cash from operating activities. The Corporation’s method of calculating Adjusted EBITDA, Adjusted Net Earnings, Free Cash Flow, and Maintenance Capital Expenditures and Growth Capital Expenditures may differ from that of other entities and therefore may not be comparable to measures utilized by them. For additional information on the Corporation’s Non-IFRS measures, refer to Section – Dividends and Payout Ratios and Section 12 – Non-IFRS Financial Measures and Glossary of the Corporation’s MD&A, which is available on SEDAR+ at www.sedarplus.ca.
1 Adjusted EBITDA, Adjusted Net Earnings, Free Cash Flow, Free Cash Flow less Maintenance Capital Expenditures, Maintenance and Growth Capital Expenditures, and the corresponding per share amounts and payout ratios are Non-IFRS measures. See Appendix A for more information.
View source version on businesswire.com: https://www.businesswire.com/news/home/20241107519310/en/
For further information, please contact:
Chief Executive Officer
(204) 982-1850
MPyle@eig.ca
Vice President,
(204) 953-1314
PPlaster@eig.ca
Source: