Ex­change In­come hits ‘record’ re­sults

National Post (Latest Edition) - - FP INVESTING - Ge­off Zo­chodne gzo­chodne@ post­media.com Twit­ter: @ Ge­of­f­zo­chodne

Win­nipeg- based aerospace and avi­a­tion firm Ex­change In­come Corp. an­nounced Wed­nes­day that it had re­ported some of its best re­sults of all- time, a feat the north­ern air­line owner said was achieved while try­ing to ad­dress claims made about the com­pany by short- sell­ers.

Ex­change In­come said in its third-quar­ter re­sults that rev­enue was up 13 per cent com­pared to the same three months last year, reach­ing $253.4 mil­lion. Net earn­ings were $ 23.9 mil­lion, up 16 per cent from $ 20.6 mil­lion for the third quar­ter of 2016.

Ex­change In­come also said its EBITDA, ad­justed net e arn­ings per ba­sic share, free cash flow and free cash flow less main­te­nance cap­i­tal ex­pen­di­tures — of $ 72 mil­lion, 84 cents, $ 55.8 mil­lion and $ 36 mil­lion, re­spec­tively — “set all­time new quar­terly records.”

Mike Pyle, chief ex­ec­u­tive of Ex­change In­come, said Thurs­day on the com­pany’s con­fer­ence call that it had been “the best third quar­ter in our his­tory.”

Shares of Ex­change In­come opened up about 2.3 per cent higher Thurs­day morn­ing, at $ 34.91, be­fore fall­ing to $33.89 by mid­day.

Ex­change In­come said its div­i­dend pay­out ra­tio — which it pegs to f ree cash flow less the money it spends on main­te­nance — was 45 per cent for the quar­ter, down from 54 per cent for the same pe­riod last year, which Pyle said was “the strong­est level in a decade.”

“In fact, the pay­out ra­tio is the best quar­terly re­sult since we con­verted to a cor­po­rate struc­ture from an in­come trust, and as a re­sult, in­curred higher in­come tax costs,” Pyle said.

The com­pany has been sin­gled out this year by short-sell­ers skep­ti­cal about the div­i­dend.

Pyle ad­dressed the short­selling cam­paign on the con­fer­ence call.

“Dur­ing t he quar­ter, we en­gaged in more in­sti­tu­tional mar­ket­ing than would be typ­i­cal for the slower sum­mer months, as we at­tempted to clar­ify some of the mis­in­for­ma­tion be­ing spread by the short and dis­tort cam­paign,” he said.

In those meet­ings, Pyle said not all of its in­vestors and po­ten­tial in­vestors un­der­stood the busi­ness of an Ex­change In­come sub­sidiary, Regional One, a Mi­ami-based provider of en­gines, parts and planes. Pyle said it was thought Regional One re­quired “mas­sive” on­go­ing in­vest­ment to sus­tain its earn­ings.

“This is sim­ply not the case,” he said.

JOHN WOODS / NA­TIONAL POST FILES

Mike Pyle, CEO of Ex­change In­come Corp. reached out to in­sti­tu­tional in­vestors in re­ac­tion to short sell­ing.

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