Exchange Income Corp T.EIF

Ink Research

[retiredcf]

June 2, 2023

Morning Report: Exchange Income officer buys as stock hits a month-end air pocket

Exchange Income (EIF) is focused on the aviation, aerospace, and manufacturing areas with the objective of providing shareholders with dividends. The company was born out of the income trust era, a period when companies made use of tax rules that have since been repealed which facilitated relatively high dividend payouts. Exchange Income made the switch to a traditional corporation in 2009 and has relied on acquisitions to expand and diversify its overall business. Today, its Aerospace & Aviation segment consists of Essential Air Services, Aerospace, and Aircraft Sales & Leasing. Its manufacturing segment is made up of Environmental Access Solutions, Multi-Storey Window Solutions, and Precision Manufacturing & Engineering. Its most recent acquisition closed on May 1st when it acquired VGlazing which designs and makes windows and doors for multi-storey building projects in Canada and the US.

Capital raising is a critical part of the company's strategy to grow via acquisitions. According to Refinitiv, its total-debt-to-total-equity ratio based on Q1 (ended March 31st) is 184.6%, above the market average of 68.4%. The company currently pays a $0.21 per share monthly dividend which is good for a prospective yield of 4.86%. According to the company, its trailing 12-months adjusted net earnings payout ratio was 75% as of Q1. Also according to Refinitiv, EPS has been on the rise. As of Q1, trailing 12-months EPS was $2.60, up from $1.68 a year earlier. On May 31st, the stock fell 3.8%. It is not clear to us why. There was no news issued by the company on the evening of May 30th or during the month-end trading day. Chief Administrative Officer Travis Muhr bought the pullback, and he was joined by CFO Richard Wowryk who also bought shares on the day.