Exchange Income (EIF) Q2 2024 earnings summary

Executive summary

• Achieved record Q2 revenue of CAD 661 million, up 5% year-over-year, and record adjusted EBITDA of CAD 157 million, up 7% year-over-year, driven by Aerospace & Aviation segment strength and robust order activity in manufacturing, especially in Multi-Story Window Solutions.

• Free cash flow reached CAD 101 million, a 3% increase, while net earnings declined to CAD 33 million due to higher interest and depreciation.

• Strategic acquisition of Duhamel expands Environmental Access Solutions in Quebec and Eastern Canada.

• Significant post-quarter order bookings in window solutions (over CAD 120 million) signal strong momentum into H2 2024.

• 2024 adjusted EBITDA expected at mid to upper end of CAD 600–635 million guidance.

Financial highlights

• Q2 revenue rose by CAD 33 million to CAD 661 million year-over-year; adjusted EBITDA increased by CAD 10 million to CAD 157 million.

• Net earnings were CAD 33 million (down from CAD 37 million); adjusted net earnings were CAD 38 million (down from CAD 43 million).

• Free cash flow was CAD 101 million, up from CAD 98 million; free cash flow less maintenance capex was CAD 52 million (vs. CAD 59 million prior year); payout ratio at 61%.

• Dividend payout ratio on free cash flow less maintenance capex at 61%, with dividends up 12% year-over-year.

Outlook and guidance

• Aerospace & Aviation expected to deliver another strong quarter, with continued growth in Essential Air Service and Medevac contracts.

• Manufacturing segment revenues anticipated to increase in H2 2024 as deferred projects convert to bookings, with strong customer inquiries and recent order uptick.

• Maintenance and growth capex to rise in line with adjusted EBITDA, especially in Aerospace & Aviation.

• Guidance reaffirmed for 2024 adjusted EBITDA at mid to upper end of range.