Exchange Income (EIF) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 revenue of CAD 661 million (up 5% year-over-year), adjusted EBITDA of CAD 157 million (up 7%), and free cash flow of CAD 101 million, led by strong Aerospace & Aviation performance and robust order intake in manufacturing.

• Net earnings declined to CAD 33 million due to higher interest and depreciation, while adjusted net earnings were CAD 38 million.

• Strategic acquisition of Duhamel completed, expanding Environmental Access Solutions into Quebec and Eastern Canada.

• Management expects 2024 adjusted EBITDA at the mid to upper end of CAD 600–635 million, reflecting confidence in the diversified business model and recent contract wins.

• Aerospace & Aviation growth offset Manufacturing softness from project delays and economic uncertainty.

Financial highlights

• Q2 revenue increased by CAD 33 million year-over-year to CAD 661 million; adjusted EBITDA rose by CAD 10 million to CAD 157 million.

• Free cash flow reached CAD 101 million, up by CAD 3 million; free cash flow less maintenance capex was CAD 52 million (vs. CAD 59 million prior year).

• Net earnings were CAD 33 million (down from CAD 37 million); adjusted net earnings were CAD 38 million (down from CAD 43 million).

• Payout ratio for free cash flow less maintenance capex at 61% (vs. 57% prior year-end); adjusted net earnings payout ratio at 90%.

• Senior leverage ratio increased to 2.88x; current ratio at 1.77.

Outlook and guidance

• 2024 adjusted EBITDA expected at mid to upper end of CAD 600–635 million range.

• Aerospace & Aviation segment expected to deliver strong Q3 and Q4, with continued growth in Essential Air Service and Medevac contracts.

• Manufacturing segment anticipates revenue growth in H2 2024 as deferred projects convert to bookings, with strong order bookings in Multi-Story Window Solutions.

• Aircraft leasing business expected to surpass pre-pandemic run rates by year-end.

• Maintenance and growth capex to increase in H2 2024, driven by fleet expansion and contract wins.