Exchange Income Corp T.EIF

Alternate Symbol(s): EIFZF | T.EIF.DB.J | T.EIF.DB.L | T.EIF.DB.M | T.EIF.DB.K

Industrials Airlines

Exchange Income Corporation is a Canada-based diversified acquisition-oriented company. The Company operates through two segments: Aerospace & Aviation and Manufacturing. The Aerospace & Aviation segment is comprised of three lines of business: Essential Air Services, Aerospace, and Aircraft Sales & Leasing. Its Essential Air Services includes both fixed wing and rotary wing operations. Aerospace includes its vertically integrated aerospace offerings that provide customized and integrated special mission aircraft solutions primarily to governments across the globe. Aircraft Sales & Leasing includes aftermarket aircraft, engine and parts sales and aircraft and engine leasing, along with aircraft management services. The Manufacturing segment is comprised of three lines of business: Environmental Access Solutions, Multi-Storey Window Solutions and Precision Manufacturing & Engineering. The Company also focuses on portable hydronic (glycol-based) climate-controlled equipment.

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Post by retiredcfon Feb 06, 2023 9:33am

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Post# 35268891

RBC

February 3, 2023

Exchange Income Corporation
Connecting The Dots: EIF flash read-through – SkyWest reports Q4 results

TSX: EIF | CAD 55.07 | Outperform | Price Target CAD 59.00

Sentiment: Neutral

Our take. SkyWest last night reported Q4 EPS of -$0.93 that came in below consensus $0.08. Results at SkyWest were negatively affected by a non-cash impairment charge on certain CRJ700 aircraft as well as accelerated expense on 21 leased CRJ aircraft that are in the process of being stored prior to the lease expiration. Key is that we view these issues as specific to SkyWest, as the company pointed to it having excess aircraft, and we therefore view the read-through for EIF as neutral to sentiment. In addition, SkyWest highlighted that the "demand for its engine leasing business is returning" and that it expects to "place several more engines under leases during 2023". We view the leasing business as an important driver of growth at Regional One, and note that the commentary on SkyWest's conference call aligned with our view for a slow recovery in leasing into next year. EIF remains on RBC's Canadian Small Cap Conviction List.

What happened? SkyWest reported Q4 results last night. See below for further details as it pertains to EIF.

SkyWest reported a $36MM non-cash impairment charge on ten CRJ700 aircraft that were placed under a held-for-sale arrangement
SkyWest reported an $11MM accelerated expense on 21 leased CRJ aircraft that are in the process of being stored prior to the lease expiration
Lease, airport services and other revenue was up +5.6% y/y