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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

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.


TSX:EIF - Post by User

Post by retiredcfon Feb 13, 2024 8:26am
266 Views
Post# 35877106

TD

TD

Exchange Income Corp.

(EIF-T) C$46.62

Q4/23 Preview

 

Event

Exchange Income will report Q4/23 results after market close on February 22, and

host a conference call at 8:30 a.m. ET on February 23. We forecast EBITDA of $148

million versus consensus of $143 million.
 

Impact: NEUTRAL

We are maintaining our BUY recommendation and $63.00 target price. We have

made minor adjustments to our forecasts to reflect updated currency, fuel, economic,

and other minor modelling updates, the net impact of which is relatively immaterial

to our forecasts. Our 2023 EBITDA forecast is near the midpoint of guidance,

whereas our 2024 forecast is slightly above. We continue to view Exchange

as an excellent opportunity for yield-focused investors who also appreciate its

diversification, prudent leverage, and M&A-driven growth potential.
 

We forecast that Aerospace & Aviation (A&A) will report 18% y/y revenue growth and

20% EBITDA growth in Q4/23. Organic growth, the PAL contract with Air Canada,

and R1 are expected to drive growth. We forecast a 40 bps improvement in A&A's

EBITDA margin to 26.2%, primarily due to fuel costs and our forecast for a larger

percentage of R1 sales coming from leasing revenue (higher margin relative to sales

and services revenue).
 

We forecast that Q4/23 Manufacturing revenue and EBITDA will increase 41%

and 20% y/y, respectively, based on 8% organic growth, and the acquisitions of

BVGlazing, Hansen Industries, and DryAir Manufacturing, partially offset by a decline

in Environmental Access Solutions. We forecast that EBITDA margin will decline 340

bps to 19.7% due to a particularly strong comparable quarter, cost-inflation pressure

and Environmental Access Solutions, partially offset by the recovery at Multi-Storey

Window Solutions.
 

We will focus on updates to timing and contributions from the recent Medevac

contract wins with the governments of B.C. and Manitoba, insights into capital

expenditure plans for 2024, Multi-Storey Window Solutions momentum, and any

signs that the economic environment is impacting business units.
 

TD Investment Conclusion

We believe Exchange's business diversification positions it better than less-

diversified peers to navigate economic conditions and that it represents a good

investment for yield-focused investors based on its forecast FCF and management's

track record of maintaining a disciplined approach to investments at accretive

valuations.

 
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