Chorus Aviation Inc.

Good morning, ladies and gentlemen, and welcome to the Corus Aviation Second Quarter 2026 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. But anytime during this call, you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, August 5, 2026. I would now like to turn the conference over to Matt LaPierre. Please go ahead.

Thank you, operator. Hello, and thank you for joining us today. With me today from chorus are Colin Copp, President and Chief Executive Officer, and Gary Osborne, Chief Financial Officer. We will begin today's call with a brief summary of the results, followed by questions from the analyst community. As there may be some forward-looking discussion during this call, I ask that you refer to the caution regarding forward-looking statements and information found in our MD&A. This pertains specifically to the results and operations of Chorus Aviation Inc. for the period ended June 30th, 2026, as well as the outlook section and other sections of our MD&A where such statements appear. Finally, some of the following discussion involves non-GAAP financial measures including references to adjusted net income, adjusted EBT, adjusted EBITDA, leverage ratio, and free cash flow. Please refer to our MD&A for further information relating to the use of such non-GAAP measures. I'll now turn the call over to Colin Copp.

Good morning, everyone, and thank you for joining us today. I'm pleased to report that Chorus delivered strong second quarter financial results. and continues to make meaningful progress towards our strategic growth objectives. We are today a trusted Canadian partner with a global reach focused on growing our aviation, aerospace and defense platform to create sustainable long-term value for our shareholders. We continue to execute on our capital allocation plan generating $117.7 million in free cash flow and proceeds on aircraft sales in the first half of the year, including $72.6 million in the second quarter. This has allowed us to maintain a strong balance sheet with leverage at 1.5 and liquidity of $204 million that provides financial flexibility in our long-term capital allocation plan to invest in growth opportunities while continuing to return capital to our shareholders. A key milestone in our growth and diversification during the quarter was the completion of our acquisition of Cadix Aero Supply on April 1st. Since closing, the integration has progressed smoothly and the business continues to perform exceptionally well. During the quarter, CADEX contributed revenue of $16.4 million and net income of $1.2 million, including $0.5 million of amortization expense on acquisition-related intangible assets, which tracks ahead of our initial expectations. Gavix has expanded our aviation and aerospace platform, enhancing the quality and diversification of our earnings and strengthening the resilience of our cash flow profile. Our approach to capital allocation remains unchanged. During the quarter, we repurchase shares under our normal course issuer bid while also maintaining our quarterly dividend. Following the renewal of the NCIB earlier this year, we repurchased approximately $14.8 million of shares during the second quarter, bringing the total repurchases to approximately $20 million year-to-date. And since 2022, we've returned approximately $144 million to shareholders through our NCIB and two substantial issuer bids. We have executed as planned on the monetization of the 9-8-400 aircraft previously announced. Seven aircraft have now closed and being delivered, which include four aircraft transactions completed during the second quarter. The remaining two aircraft are planned to close by the fourth quarter of 2026. generating estimated net proceeds of approximately 14.4 million US dollars. Turning to the businesses, our subsidiaries have performed very well this quarter and continue to make inroads on several key strategic initiatives. The breadth of activity across our company highlights the unique capabilities we're building at Chorus. Doug and the team at JAS have been working hard on the Air Canada Express operation at Billy Bishop Toronto City Airport with the launch of service to Chicago, Washington, Dallas, and Boston during the quarter. And in June, JAS successfully completed its IOSA renewal audit, the global benchmark for airline safety management, and they look forward to the renewal. I'm also pleased to report that JAS recently reached a tentative agreement with its Canadian Airline Dispatchers Association, representing the company's 56 flight dispatchers. At Voyager, Corey and the team continue to drive several strategic growth initiatives, positioning the business to capitalize on Canada's growing defense and aerospace requirements. Progress continues on the Dash 8-300 Fireswift aerial firefighting program, with the first aircraft going through final certification and a second expected to be completed next quarter. Voyager has also expanded its aftermarket parts business by adding ATR and Boeing inventory and recorded its first sales of Boeing 757 parts during the quarter, adding two new platforms to the app parts market offerings. As well, their domestic charter operations remain strong, supporting wildfire response efforts across Canada, and Voyager has completed the sale of 2-8400 aircraft. Looking ahead, Voyager recently announced the purchase of a flex rotor uncrewed aircraft system from Airbus, becoming the first Canadian customer and operator of the platform. This represents an important milestone in Voyager's intelligence, surveillance, and reconnaissance capability and expansion into the uncrewed aircraft system market. In addition, Voyager and Airbus signed an MOU to identify and pursue opportunities to collaborate on the delivery of Flexrotor remotely piloted aircraft system services for commercial and government customers across Canada. We look forward to providing further updates as this exciting new capability develops. Voyager also announced a new engagement with 49North, an NDA space company focused on delivering advanced ISR solutions for Canadian government, defense, and security customers. Combining Voyager's special mission operations, maintenance, and training with 49's mission systems and data analytics capabilities positioned both organizations to support Canada's growing requirements in sovereignty, security and defense. At CADEX, John and the team completed a 10,000 square foot warehouse expansion at Peterborough Airport, significantly increasing capacity and consolidating inventory, shipping and receiving operations into a single location. The expansion doubles storage capacity, improves fulfillment speed for its growing demand, supports greater inventory levels in Canada, and enhances service for customers. The investment positions CADEX well for its next phase of growth, while further strengthening customer service and operational efficiency. For TAFE, Céphane, and the team at Ellison, work continues to progress on the Government of Quebec medevac program. The design review phase has been successfully completed and the aircraft is now being prepared for modifications. The project remains on schedule for completion by the end of the fourth quarter and continues to be an excellent example of the value that can be created through collaboration across the course group of companies, with Ellison and Voyager working together to deliver a specialized solution for the customer. At Cignet, Lynne and the team continued delivering high quality flight training and strengthening the pilot development pathways. A second destination porter cohort and the 12th JAZZ approach cohort will begin shortly. The innovative JAZZ approach program is another strong example of cross-course collaboration in action. JAS plays a critical role in the Canadian pilot career pathway through its flow agreement with Air Canada, which has enabled more than 1,700 pilots to transition from JAS to Air Canada over the past 10 years. Programs like JAS approach are essential to sustaining a pipeline of highly skilled, career-ready pilots for JAS and supporting the long-term health of the Canadian aviation industry. Cignet is also advancing plans for its new flight training base in North Bay, which will support expanded training capacity and deeper collaboration with Canadore College. Across the organization, our businesses are executing very well, delivering strong operational and financial performance while advancing strategic initiatives that support long-term value creation. We remain committed to discipline capital allocation in the pursuit of selective accretive acquisition opportunities that align with our course group of companies and investment criteria. We're encouraged by the opportunities we're seeing and continue to evaluate transactions that can strengthen and diversify our aviation, aerospace and defense business while generating attractive returns for our shareholders. Through this strategy, we're building a stronger and more diversified company and advancing our vision of being Canada's trusted partner and global leader in aviation, aerospace, and defense. I'll now turn it over to Gary to walk you through the financials.

Thank you, Colin, and good morning. We're pleased with our second quarter results. The quarter really shows the strength of the platform we're building with solid earnings, strong free cash flow, disciplined capital allocation, and good progress on growth. In particular, Voyager and KDEX helped offset the contractual step downs in the CPA with KDEX tracking ahead of our initial expectations. We continue to return capital to shareholders through dividends and share repurchases and we made further progress monetizing Dash 8-400 aircraft exiting the CPA fleet. Looking at the quarter, adjusted EBITDA was 50.7 million, essentially in line with last year. What is important here is the mix. Voyager and Cadix contributed an additional 6.5 million of adjusted EBITDA, primarily from higher part sales, which substantially offset the contractual step-downs in fixed margin and Leasing Revenue under the CPA. Adjusted net income per share increased to 83 cents, up 54% from Q2 2025. That reflects the earnings contribution I just mentioned, a $2.5 million gain on aircraft sales, along with lower depreciation and interest costs, and the benefit of our capital allocation activity, which reduced weighted average shares outstanding by approximately 13% Compared to the prior year. Free cash flow was $32.3 million, or $1.41 per share. On a per share basis, free cash flow was higher than last year, which is a good example of the compounding impact of our buybacks alongside with the cash generation of the business. Leverage, or adjusted net debt to adjusted EBITDA, was 1.5 times. Improving from 1.7 times at year end and remains comfortably within our targeted range of one to two times. As Colin noted, we closed the KDEX transaction on April 1st. KDEX contributed $16.4 million of revenue and $1.2 million of net income in the quarter, inclusive of half a million dollars of amortization of acquisition-related intangible assets. That bottom line contribution is ahead of our initial expectations and we're encouraged by how quickly CADEX is adding to both our earnings diversification and our parts and supply chain capabilities. We also made strong progress on aircraft monetization. Seven aircraft have now been sold to date, including four during the second quarter. Those sales generated 40.4 million proceeds in the quarter, and 58.4 million in the first half of this year and contributed to a $2.5 million gain on sale in Q2. Combined with free cash flow of $32 million, we generated $73 million of free cash flow and aircraft sale proceeds in the quarter, bringing the total for the first half of the year to $118 million. The two remaining aircraft are expected to close by the end of the year following completion of required engine work for expected net proceeds of approximately $14.4 million U.S. Turning to capital allocation, we continue to execute against the 2026 to 2029 plan we outlined earlier this year. That plan includes up to $100 million in share buybacks, $40 million in dividends, $190 million of amortizing term loan repayments, and 170 to 220 million of flexible capital allocation. During the quarter, we repurchased and canceled approximately 617,000 common shares under our NCIB program, representing $14.8 million of share buybacks. Year to date, we have repurchased and canceled approximately 845,000 shares, or $20 million. We also paid a quarterly dividend of $0.11 per share. When you combine the dividend and the buybacks, we returned $17.3 million to shareholders in the quarter, while maintaining a strong balance sheet and the flexibility to support growth. Liquidity remains strong at $204 million at June 30th. That gives us meaningful flexibility as we continue to balance growth, shareholder returns, debt reduction, and disciplined investment in the business. So overall, we're pleased with the quarter. The business continues to generate strong free cash flow, our leverage remains well within our target range, KDEX is off to a strong start, and we are continuing to execute on our capital allocation plan we laid out earlier this year. We also reaffirmed our full year guidance, which reflects our confidence in the underlying cash generation of the business. We are now ready to take your questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star zero followed by the number two. If you are using a speakerphone, please leave the handset before pressing any keys. One moment, please, for your first question. and your first question comes from Conrad Gupta of Scotiabank. Please go ahead, your line is open.

Thanks and morning everyone. Congrats on a good quarter. My first question is on Cadix. The very first quarter with you guys seems like it has outperformed your expectations in the very first quarter. Can you help us explain what led to the outperformance? You know, what's going better there was it all integration or just the sheer in-market exposure they have? So yeah, any thoughts there and how sustainable we should think for that business, that is?

Morning, Konark. It's Colin. Yeah, thanks for the comments. Yeah, look, we were pretty excited about KDEX from the beginning and we have a lot of ideas on what we can do with the business as well as sort of the leadership team there. It's performed exceptionally well on a current business base. There's been some integration opportunities where we're looking at internal cross-organization opportunities which are starting to develop. We're working our way through those things and there's several things to be done as we move forward there. And on top of that is really all the new areas that we're starting to look at, which is kind of a build-out strategy. I would say there's more opportunities in CADEX today for us to pursue than we can pursue right now. Our focus is just steady growth, working with them to continue to build that business out, continue to make smart decisions on how we invest and where we invest. We talked about their hangar, their expansion they just went through, so they increased some space there. So yeah, there's endless opportunities we see, and we're working our way through that. Obviously, the internal stuff is going to start to happen as we move forward, It takes a bit of time as we leverage those opportunities, but they're coming together nicely. So excited about the business, exceeding expectations, and really no end to what we can do with the business as we move forward.

Thanks for the call there, Colin. If we can switch gears to Voyager. You guys had signed, I think, a couple of MOUs. Recently, one with Airbus and another with 49 North. Can you explain, like, is there an overlap between those two MOUs? I mean, do you have to kind of work with both Airbus and 49 North together? Or can they be separate? And what kind of discussions are you having with potential customers? And like, what kind of role are you going to play in these MOUs?

Yeah, good question. Yeah, no, those agreements are not interchanged or exclusive in any way. They're not tied to each other and they're very separate. You know, if you think of 49 North, what Voyager brings to that book of business is different. They bring me kind of the operation and the maintenance and the support side. That's kind of a relationship build that, you know, is more of a team build where they're going to be working on initiatives and bids, bringing expertise from both sides of the business. So, you know, different, very different companies from that perspective that when they work together, have a huge opportunity to pursue all kinds of all kinds of bids when it comes to ISR. When you think of the flex rotor opportunity, It's a little different. We're talking there more about Voyager being the operator of the uncrewed drone. And it would be essentially a deployment opportunity for them where they would be looking after the deployment. They'd be out there flying the machine and doing whatever work needs to be done, whoever they're working for. and Airbus really is more in that regard is more, you know, kind of working with them to secure those opportunities. Great company to work with. You know, this machine is well known. It's got thousands and thousands of flight hours on it. It's in multiple deployment opportunities around the world. So, you know, we're excited about it. We think Canada is right. So does Airbus for this type of machine in order to give us kind of lower cost and higher technology capabilities. And there's several possibilities when you think about this. You know, generally speaking, You know, you're talking about defense opportunities. You're talking about surveillance opportunities. You're talking about forestry observation, firefighting observation, mapping. Those are the kind of things that you would see that government agencies where this drone gets deployed in.

Okay, that's a very good call. Thanks. And just a very quick one housekeeping on the final two aircraft that you're disposing. Any thoughts on what led to the delays there? I think you guys were expecting to wrap them up by the third quarter, I think. Now it's ending in Q4. Any thoughts on the delays? Thanks.

Yeah, it's the usual stuff. When it comes to aircraft and moving them between owners, there's always some little things that come up in timing, on maintenance, and so on. It's all normal course stuff. You saw a Throughout all of those sales, it takes, you know, there's some that get delayed a little bit and they pop into the next quarter. That's just, it's normal course, nothing unusual, no issues. You know, everything's been pretty much as planned.

Yeah, it's Gary here. It really just relates to waiting for some engines to come back from overhaul to deliver the aircraft. So that's all we're waiting for.

Perfect. Thanks for the time. I'll turn the line over.

Thank you. And your next question comes from James McGarely of RBC Capital Markets. Please go ahead. Your line is open.

Hey, congrats on a good quarter, and thanks for having me on. I just wanted to ask a question on the guide. you know there's a sizable Q2 beat but you know even though the high end of the range kind of implies a pretty meaningful step down in Q3 and Q4 so can you just talk about you know the primary swing factors in H2 that kind of kept you from increasing the guide is that FX or anything else that you can call out?

Sorry I'll let Gary take that one but I didn't hear the first part of the question I'm sorry.

I was just saying that there was a sizable Q2B and then the guidance even at the high end of the range implies a meaningful step down versus Q2 in Q3 and into Q4.

Gotcha. Okay, Gary, I'll let you take that. Yeah, no, really when we look at it, we are tracking towards the high end of the guidance. There's no question about it. We're not expecting any big step down in the remainder of the year. We do have the aircraft leasing on the CPA. We talked about that. We've given guidance on that. So that's baked in. I think it's just a bit of conservatism to see how the back end of the year plays out. But we feel very comfortable with it. And we expect in Q3 to have more to give on that. But there's really nothing, you know, that we expect really to hit us in the back end of the year. We expect Voyager to continue to perform. Cadix continue to perform the same as Jazz. So.

Okay, I appreciate the call there. And then on the new JAWS collective agreement, you know, you cite that as a cost headwind. Can you help us quantify the annual impact from that new agreement and the extent to that being recovered through the controllable cost agreement?

Gary, I'll let you cover that one too.

Yeah, so on the labor deal with the Calda there that we just completed. Yeah, all of that is covered under the Air Canada CPA agreement and within the Controllable Cost Guard Rail. So no issues there.

All right. Appreciate it.

I'll turn the line over.

Thank you. And your next question comes from Cameron Dorskin of National Bank. Please go ahead. Your line is open.

Yeah, thanks very much. Good morning. I wanted to ask, I guess, about the aircraft part sales. I mean, it does sound like the KNX business is, as you mentioned, running a little ahead of your expectations and I assume fairly steady through the year. Just can you maybe update us on your outlook for the Voyager part sales? I mean, it sounds like you've got a number of new programs there that are helping that. It tends to be, I guess, a lumpier business. So maybe just any thoughts on what we should expect in the second half of the year as far as part sales specific to the Voyager business.

Yeah, hi, Cameron. You know, we see this as a growth area, right? So we're continuing to focus on opportunities to push and grow in areas that make sense. So the broader the platform we can build, the more opportunities and flexibilities to invest and grow. So that's what you're really seeing us do on the HER and the Boeing side of things. You know, those were opportunities that make good economic sense and so we moved on them we're going to continue to do that and continue to build that out to a you know a broader platform over time we've stayed you know I'd say principally focused on the narrowbody and down type aircraft most of what we carry is regional aircraft today but it's really just us slowly building things out where it makes economic sense to do that and I would say that you know we will continue to see uh you know growth in that area for sure uh over the long run um it is lumpy there's no question about it we've seen that in the first quarter where we had you know some ups and downs and that's just the nature of the business um but overall if you if you take the longer view uh no question growth for sure okay that's helpful and maybe just a question on on labor um

Obviously, there's a lot of opportunities that you talked about perhaps on the defense side for your business. I'm just wondering, is the availability of labor or qualified people for those types of programs, is that a constraint at all for some of the programs you might bid on? I mean, there's obviously a number of other companies out there in Canada that are also pursuing similar type business. I'm just wondering if labor is one of those things that could constrain you or is it not an issue for you?

No. Yeah, it's a good question, but it's not. You know, we've been fortunate because we have a lot of critical size. You know, you get to a kind of a critical mass, a certain size of business where, you know, you can start to bring on expertise. And we've just recently brought on, you know, another new expert in this area that has, you know, tons of field experience and knowledge and. So for us to now grow this out slowly with time, we've had no problems bringing in the right expertise that can help build this out and do the training we need. There will be some training, and we've talked a little bit about that for the new flex rotor, but there's no constraint when you think of labor. And even if you think of Mazer, when they expanded Mazer in Trenton, You know, that was one of the questions we had and one of the things we had to do some research on to make sure we could get the qualified folks in the right location. And we've had no problems with that. It's more on the commodity side. When you get into the specialty stuff, I think it's quite easy. When you get into kind of the day-to-day maintenance or day-to-day flying airplanes or, you know, like in the commercial world, it's definitely more competitive and can be harder. But all of the specialty type and niche opportunities, especially in defense, we haven't seen a lot of problems with anything related to labor.

Okay, no, that's helpful.

I appreciate the time. Thank you.

Thank you. And your next question comes from Daryl Young of Stifle. Please go ahead. Your line is open.

Hey, good morning, everyone. I just wanted to touch on the flex rotor as well as potential longer-term autonomous firefighting aircraft and I guess just what you think the CAPEX requirements are going to be coming down the pipe. Presumably that's part of your discretionary capital in your multi-year plan. How does the revenue or economics of these arrangements differ from existing special mission flights that you're operating?

I'll tell you a high level on the initial go with Flexrotor. It's a very small investment for us. It's more kind of the work to get there. So we don't see this massive investment to get in here. This is a, you know, it's a reasonable investment and over time you build it out. But Gary's got some sense of it. They're doing a bunch of work on it. I'll let you, I'll let Gary give some comments as well.

Yeah, the ARP has, back to Colin's point, it's certainly covered in our CAPEX outlook and we haven't moved that for the year. So Darrell, it is covered in that piece. It's a modest investment. It gives us the ability to start the process of getting the capability on the RPAS piece. We have a lot of expertise at Voyager, so this allows them to develop that piece. As far as the margins go, those are to be defined, but they're good margins from what we can see in this business. It's really about building the capability right now, but we do expect down the road to actually get some revenue contracts in behind it and for it to produce some reasonable returns.

Got it. And then second question, just on the M&A front, a bit of a higher level question. We've seen a lot of defense-based partnerships between countries, between NATO nations. Is that opening any new M&A opportunities, potentially in geographies you maybe would not have considered historically, just given I think there's a shortage of folks with your capabilities and skills around modifications out there? So just curious if it's Changing your lens on geographic positioning.

Yeah, it's a good question because as time evolves, certainly we are, you know, especially if you think of, you know, Europe or even there's been opportunities in Australia. If you think about some of those other countries where exactly what you said, we're closely tied. Those things are starting to kind of slowly show up on the radar. You know, it's not something we're pursuing immediately or that we're looking at right now, but it's something we would look at as time progresses here to see how we can build things out. The one advantage to being a Canadian defense contractor is your access into A lot of countries and your ability to do things in many countries and Voyager has operated in many countries over the years and still does today in some. So it's a unique opportunity being a Canadian contractor. It really is. It gives you kind of leverage in a lot of ways and you're well received. So I think we're moving on that aspect of things as things kind of broaden and grow out. and we have really strong relationships into the U.S. Voyager has extensive relationships into the U.S. Matre is a good example where they're building the aerial firefighter for them. You know, that's a U.S. defense contractor essentially is what Matre is. And they have several others as well that they work with. There's lots of opportunities as time progress. Our focus right now is a little more organic on the defense side because we have quite a bit of capability, but I wouldn't rule out Once we move forward.

Got it.

A very helpful response and congrats on the good results, guys. Thank you.

Thank you. And your next question comes from the line of Tim James of TD County. Please go ahead. Your line is open.

Thank you very much for the time. Good morning. My first question, just around the annual guide, we've sort of touched on this a little bit here, but I just want to see if I can kind of round this off and make sure I'm understanding the full year outlook. So you're trending towards the top end of your EBITDA guide for the year. You mentioned KDEX is running a little better than expected. I know part sales in the second quarter were strong. Some of that, if not all of that, I'm not sure, was a delay, I think, from Q1. Can you characterize overall, is there anything or any particular business lines that you would point to as kind of pushing you towards the top end of your guidance? Or is it really just kind of, you know, conservatism maybe across all business lines in your original range that you provided?

Yeah, I think it's more on the conservatism side, Tim. Right now, we just need to see how the rest of the year comes out, but we do expect a good end to this year. Just where we're still within certainly the top end of that guidance, we decided to leave it where it's at. You look at where Voyager has been trending, if you look year-to-date, and you back out KDEX as performance or year-to-date numbers, you can see they're modestly up year-over-year as far as revenue goes, but I think what we need to remember there too is We've had the repositioning from the United Nations flights within there. So they're up nicely year over year on the revenue side. And we just want to see how that plays out. But we expect to continue to play out. And on the CADEC side, we continue to expect them to perform in a similar fashion as they are. So I think it's just let's see how the bulk of the year goes. But we do expect to be towards the top end of that.

Okay, that's helpful. Thank you. And then on the UN, I just wanted to ask, I know you've got a step down that's occurred or another one coming. I think actually your contract flying revenue was up sequentially in the quarter, Q2 versus Q1. Is there sort of another modest step down at some point coming related to that or is that already kind of embedded in your run rate revenues from that line?

No, that's a good question, Tim. There is another one coming. We've kind of talked about that. We're Thank you very much. Yep.

Thank you, and your next question comes from Christa Friesen of CIBC. Please go ahead, your line is open.

Hi, thanks for taking my question. Maybe just to follow up on some of the defense conversations that you've had on this call, can you speak to how big you think defense could become for course and maybe just the pace of some of these kind of defense contracts being awarded, is it slower or faster than you've been anticipating? Thank you.

Yeah, it's absolutely a good question. And it's speculative to really kind of zoom in on it. That's the challenge with it is you know if you look at what we're doing we have a lot of opportunities that they're working and they're working in a you know a vast range of different things across several organizations with partnerships and so on so that's what you're seeing us as build out there's no question that we're starting to see some activity with the government and things being awarded and so that's very positive the pace at which that's going is You know, maybe a little slower than I think industry would say than what we were anticipating. But it's, you know, it's still progressing. We're seeing lots of different things coming to the table and being awarded. So I would say, you know, yeah, it's going pretty much as planned. Voyager is doing everything they can right now to really focus in this area. There's lots of opportunities for them to work on. And there's no question over time. Some of these things are going to start to come to fruition. But I can't really give you any clear indication as to when that will be. And percentage growth, you know, if you start to think about growth, it's pretty hard to give you anything at this point. We haven't really put anything out. But Gary, I don't know if you have any comments on the growth side.

Yeah, no, I think you kind of hit it. It will be kind of lumpy and stepped and many more. Thank you.

in the defense area right now. Thank you.

Sure. That's another good one. We really, really like the position that we're in today because, number one, there's not a lot of competitors in Canada that are in the same position as Voyager and the offerings they have. I would say that there's probably one or two others that we compete against, which is a healthy thing, as we all know. One of the biggest things I think the industry in Canada is is is lacked is having that degree of competition, having that level of expertise growing in Canada. So we're very comfortable with the competition. You know, we expect that some of these new technologies will see more competitors pop out and you do see that. You know, especially on the R&D side with more and more drone operators and development and stuff like that, you know, R&D type stuff. But it's for Voyager, you know, there's a high degree of expertise there. There's a lot of years of experience. They've done a lot of deployments around the world. So they built a very niche business. that's very hard to replicate. The barriers to entry are really hard when it comes to the type of capability they have.

So we're in a very comfortable position.

Our expectation isn't to be an L3 Harris, but they have lots of opportunities to work with these larger defense companies to build out our business. So excited about it. Don't see a ton of competition in Canada. and I think in general, we're very comfortable with the ability to grow this business.

Thank you. I appreciate the color. Thank you. And we have a follow-up question from Connor Gupta. Please go ahead. Your line is open.

Thanks for the follow-up. I think I want to go back to your capital allocation discussion from the last few quarters. So when you laid out the framework back in February, I think you are tracking, I guess, pretty well on that. But just want to understand, you know, from M&A standpoint, so you had this flexible capital allocation bucket of $170 to $220 million. And I guess with Cadix and Ellison, you probably have burnt about 20% of that. And on the share buybacks, you have also done about 20% of the $100 million share. Do you see the flexible bucket giving you flexibility or enough flexibility to shift between M&A and incremental buybacks? Or that bucket, we should assume that that's mostly earmarked for M&A?

I'll just give you a high level and then let Gary chime in as well and get his view. I think, Connor, there is going to be some movement going forward, but what we've done there is we've provided as much clarity as we can on that flexible capital. I think we're going to stay pretty much on track and on plan, but you can't predict the future where opportunities lie. Our number one underlying goal, as we've said from day one, is we're going to deploy that capital to the absolute best ability we can to get the right returns and we've been clear in kind of laying out our returns and what our expectations are you know we've been I think we've been quite transparent on that and we've stuck to that we haven't come off that so you know I wouldn't expect a lot of variance right now we don't see it we see lots of opportunities we're still working our way through the Through the acquisition opportunities now, the pipeline, we still plan to continue with our share buybacks. Our dividend as well is something that we're thinking about and focused on and the board is evaluating on a regular basis. So I wouldn't suggest that there's any significant change to what we've laid out there, but Things change with time and we'll continue to evolve the business and the use of that capital in the most efficient way we possibly can. That's the key focus. Gary, I don't know what your thoughts are.

Yeah, Konark, it's Gary here. I think when you look at the $500 to $550 million in free cash flow and asset sales numbers and the flexible capital allocation within that, we have not allocated any of the flexible capital allocation to M&A at this point. We still have the capacity to borrow. As you know, we're well within our range, one and a half times net debt to adjusted EBITDA. So we have the borrowing capacity. When we purchased KDEX, we put it on our operating line. We subsequently essentially paid that off, but we have the borrowing capacity. So we've not committed to the flexible capital allocation being to M&A at this point. We're leaving all our options open. We have complete flexibility as to how we do that. And so back to Colin's point, We don't see any change to that forecast we've given at this stage, and we'll provide an update when it's appropriate, but we're tracking well within it.

I see. Makes sense. Thanks. And if I can squeeze in a second follow-up. On Billy Bishop expansion, I think the government shut down the expansion prospects there. If it were to come back again, what would be the expectations from you by Air Canada to help fulfill the expansion. And I mean, would you be able to fly the CRJs there or would you be able to diversify into some other jets?

Sorry, Conor, I apologize. My speakers are in fact good, but what was the first part of the question?

I get it was in regards to Air Canada, but sorry, I didn't quite get it.

Yes, so the Biller Bishop Airport, the Toronto City Airport, you know, they were trying to expand and there were proposals for that, but they got shot down right on those proposals. So I was just curious if the expansion opportunity comes back at the airport, how would you be able to participate in that? Like what would be the ask from Air Canada for you guys?

Yeah, I'll be honest, I don't know for sure, but there's no question we are their operator in there. We've spent a lot of time and a big investment in setting everything up and being a critical part of that business. So we would fully anticipate being there and expanding as they require on the commercial side, but I don't know what their plans would be if that would happen. I couldn't tell you. But certainly there'd be more flying I would fully anticipate for us. And we would obviously pursue that. The one thing with Air Canada and our relationship is our goal is to always build that business in any way we can. And we're very close to Air Canada. We spent our whole careers working with them. and we've got a long history and a good track record. So, you know, our goal with Air Canada and the CPA and the relationship between us is to continue to build that out over time. You know, we haven't seen a lot of growth opportunities in that recently, so we're focused in other areas right now. But when there's opportunities for us to work with Air Canada and grow the business and it makes sense, we're absolutely going to be all over that.

Yeah, that makes sense. Perfect. Thanks again for the time. You bet.

Thank you. And there are no further questions at this time. I would now like to turn the call back over to Colin and Gary for closing comments.

Thank you, everyone, for joining today. That concludes today's call. Please have a great day.

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