Exchange Income Corp T.EIF.DB.L

Primary Symbol: T.EIF Alternate Symbol(s): EIFZF | T.EIF.DB.J | 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 Nov 10, 2023 6:59am

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Post# 35727767

RBC

November 9, 2023

Exchange Income Corporation
Q3 results in line; dividend hiked; 2024 guide below consensus

TSX: EIF | CAD 46.64 | Outperform | Price Target CAD 70.00

Sentiment: Neutral

Our view: EIF today reported in-line Q3 results, as Aviation came in above and Manufacturing below (versus our estimates). Management also hiked the dividend 5% (in line with our expectation), representing a forward yield of 6%. Key focus on the call tomorrow, however, will be on 2024 guidance of $600–635MM that was below consensus of $658MM. Overall, we are neutral on the results and 2024 guide, with a negative bias. Our negative bias stems from the fact that the guide came in below consensus, which could weigh on sentiment tomorrow. However, the guide at the midpoint represents +10% y/y EBITDA growth (EIF shares trade at 6.2x NTM consensus EBITDA, by the way), and it is our view that the guide likely incorporates a degree of conservatism. Moreover, the press release noted “further growth in 2025 as the [BC and Manitoba Medevac] contracts mature.” This suggests to us that we were building in EBITDA contribution from the BC and Manitoba Medevac business too soon and that the lower than expected guide therefore represents a deferral of EBITDA into 2025 as opposed to structurally weaker profitability. We plan to ask management about this on the call tomorrow, in addition to what run-rate Northern Mat results look like going forward.

Q3/23 results in line with consensus expectations. EIF reported Q3/23 adjusted EBITDA of $168MM, in line with consensus of $167M (RBCe: $169MM). See Exhibit 1.

Aviation EBITDA above. Aviation EBITDA of $124MM was ahead of our $116MM estimate.
Manufacturing EBITDA below. Manufacturing EBITDA of $54MM was below our $64MM estimate.
2024 guidance implies +10% growth y/y at the midpoint (versus consensus 2023). Management introduced 2024 guidance for adjusted EBITDA of $600–635MM, below consensus of $658MM (RBCe: $656MM). See Exhibit 2.

Conference call

• Friday, November 10, at 8:30AM ET • Dial-in: 1-888-396-8049