Exchange Income Corporation

. . . . . . © transcript Emily Beynon Thank you. . . Thank you. Thank you.

Good morning, everyone. Welcome to Exchange Income Corporation's first quarter conference call to discuss the financial results for the three months ended March 31, 2026. The corporation's results, including the MD&A and financial statements, were issued on May 11, 2026 and are currently available via the company's website or Cedar Plus. Before turning the call over to management, listeners are cautioned that today's presentation and responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and injury reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations, and about material factors or assumptions applied in making forward-looking statements, please consult the quarterly and annual MD&A and the risk factors section of the annual information form and EIC's other filings with Canadian securities regulators. Except, as required by Canadian securities law, EIC does not undertake to update any forward-looking statements. Such statements speak only as of the date made. Listeners are also reminded that today's call is being recorded and broadcast live via the Internet for the benefit of individual shareholders, analysts, and other interested parties. I would like to turn the call over to the CEO of Exchange Income Corporation, Mike Powell. Please go ahead, Mr. Powell.

Thank you, Operator. Good morning, and thank you for joining us in today's call. With me today are Richard Waurick, who will highlight our financial results, along with Jake Traynor and Travis Muir, who will expand on our outlook. Yesterday, we released our first quarter results for fiscal 26. Our collective performance for the period was incredibly strong. The results continue to demonstrate the importance of our resilient and stable business model. And looking at the macro environment, the quarter was marked by volatility, high geopolitical activity and trade uncertainty, and rapidly rising fuel prices. and yet our businesses set records in every key metric. What is even more encouraging was the momentum that was generated within our business lines as we exited the quarter. We saw significant strengths across virtually all our business lines. Having a strong Q1 with accelerating momentum gives me significant confidence in updating our guidance. While we did not change our goalposts for the quarter as they remain from 825 to 875, we now anticipate that we will be near the upper end of the range, which is a very positive signal. Should current strength continue, we may revisit the top end of the range in future quarters. On the balance sheet front, we advanced key initiatives that further strengthened our balance sheet. During the quarter, we announced our investment-grade corporate credit rating. and issued 600 million of 4.324% unsecured notes. Originally, we had planned to do an issuance of 400 million, but due to strong demand, we upsized the offering to 600 million. The notes were also issued on March 13th, which was right in the middle of the geopolitical conflict with Iran. The timing of our issuance, coupled with the demand, is external validation of our business model. the dependability of our results that we talked about each quarter and the year end. At the end of the year, we had over $2 billion in available liquidity. Liquidity is important in our business model as it allows us to act decisively when attractive opportunities arise, both on the acquisition front or for organic growth capital investment. I don't want Adam and his team to be constrained by market conditions or have deal execution risk. However, To be clear, this additional capital does not change our conservative view on leverage or change our disciplined acquisition metrics and strategies. Rather, the available liquidity allows us to be incredibly opportunistic in the marketplace. Our leverage continues to be at or near 15-year lows, and having the five-year unsecured notes provide us with significant real cash interest savings when compared to available swap rates. Further, based on today's yield curves, the savings are even more material. EIC is a shining example of how a diversified and resilient business can navigate periods of uncertainty and continue to thrive. Our overall results were driven by a 30% increase in revenue at $867 million in the quarter. Adjusted EBITDA increased at 27% to $166 million. The increases are even more impressive when you consider the translation impact of US dollar results declined by approximately 5% when compared year over year. In our aerospace and aviation segment, the increases were driven by the acquisitions of Canadian North and Mach 2, stronger passenger loads, solid medevac performance, growth investments in the fleet, stronger tempo flying under our ISR contracts, and the addition of a second aircraft to the UK Home Office contract. Canadian North has continued to meet our expectations of profitability and culturally is a great fit with our other air operators. Our maintenance capital expenditures continue to be elevated in the first quarter and will remain elevated for the next quarter or two. However, that was expected and previously communicated to the market.