Scotia commentaryLatest Research (9 November 2018) Exchange Income Corporation is an acquisition-oriented company with operating subsidiaries in the aviation and industrial manufacturing end-markets.
OUR TAKE: EIF delivered in-line Q3 results, with adjusted EBITDA coming in at $79 million. The company also provided preliminary 2019 guidance, which calls for low-single- to high-double-digit growth in EBITDA, without requiring incremental investment in working capital or growth capex. Management also pointed to possible upside to the guidance, should the company be awarded the contract(s) for a number of RFPs to which it responded. We have made relatively minor adjustments to our estimates, which call for 9% growth in EBITDA in 2019E. Our one-year target is unchanged at $45/share. Of note, the company's dividend payout ratio (as a percentage of OCF, before working capital investments) now sits in the low 60s, which we have declining to approximately 50% in 2019E - well into the range where the company has historically revisited (i.e., raised) its dividend in the past.