Exchange Income Corporation based in Winnipeg, Manitoba, reported its results for the three- and six-month period ended June 30, 2020. A diversified company with interests in aviation, aerospace and manufacturing, Exchange Income Corporation (EIC) reported a consolidated revenue decrease of 25 per cent to $244 million in the second quarter, but also noted it holds a stronger balance sheet with net debt reduction.
“I am very pleased with EIC’s second quarter results. The last three months have been the most turbulent and challenging societal and economic period in our lifetimes,” said Mike Pyle, CEO of EIC. “In particular, the aerospace and aviation industry, which represents the majority of our normalized earnings, has been significantly impacted. I have long-stated our unique, niche airline and aerospace markets and manufacturing diversification differentiate us from other, traditional aviation and aerospace companies, but the proof is in the pudding and it has never been more obvious than it is this quarter.”
Pyle continues to explain EIC’s balance-sheet position allowed it to pay shareholders a monthly $0.19 dividend while reducing net debt and funding all capital investments. After its second quarter was reported, EIC also closed its acquisition of Window Installation Specialists Inc. for US$45 million; and received preliminary notification of PAL Aerospace being awarded a 10-year Netherlands defence contract.
“As further evidence of our aviation and aerospace division’s resiliency and difference from other companies, our passenger operations have bounced back and are operating at 40 per cent to 60 per cent capacity, rebounding from the 10 per cent to 15 per cent they were at during the latter half of March,” said Pyle. “We fully anticipate these capacity levels will continue to increase as travel restrictions ease.”
Revenue generated by EIC’s Aerospace & Aviation segment decreased by $99 million to $139.9 million, which was partially offset by an increase of $16.7 million in its Manufacturing segment. EIC also notes its decreased passenger volume was partially mitigated by strong cargo volumes. Medevac and charter operations were impacted early in the quarter, according to the company, but have gradually normalized.
The company states its aerospace division was minimally impacted by COVID-19 owing to the contractual nature of the work, except for the Force Multiplier aircraft which was idle during the quarter as governments focused on fighting the pandemic. It has several missions scheduled for the remainder of the year.
Regional One’s revenue for the current period decreased by $38.5 million or 57 per cent, reports the company, noting its dependence on traditional regional air carriers.
“The uncertainties and upheaval of the second quarter will persist for some time to come. The world continues its fight against COVID-19; the U.S. Presidential election is drawing closer; and social unrest around the world, the subsequent protests and the reactions to the demonstrations by political leaders endures with no end in sight,” said Pyle. “Through all of this, I expect third quarter results will improve upon those of this recent quarter even as government assistance draws to a close. EIC and its management team will do what it has always done. We will remain focused on the tasks at hand and on the daily execution of our business plan to drive performance.”