Mr. Mike Pyle reports

OPERATIONAL EXCELLENCE AND ACQUISITIONS RESULT IN RECORD ANNUAL RESULTS FOR EXCHANGE INCOME CORPORATION

Exchange Income Corp. has released its financial results for the three- and 12-month periods ended Dec. 31, 2023. All amounts are in Canadian currency.

2023 Financial Highlights

• Generated record Revenue of $2.5 billion, an increase of $439 million or 21%.
• Earned consolidated Adjusted EBITDA1 of $556 million, a new record, that represents growth of $99 million or 22%.
• Record Net Earnings of $122 million compared to $110 million in the prior year.
• Produced record Adjusted Net Earnings1 of $144 million, or $3.20 per share compared to $133 million or $3.29 per share.
• Trailing Twelve Month Adjusted Net Earnings Payout Ratio1 of 80% compared to 73% in the prior year.
• Free Cash Flow1 record of $377 million compared to $332 million, an increase of $45 million or 14%.
• Free Cash Flow less Maintenance Capital Expenditures1 was a record of $202 million or $4.49 per share compared to $176 million or $4.36 per share.
• Trailing Twelve Month Free Cash Flow less Maintenance Capital Expenditures Payout Ratio1 was 57% compared to the prior year of 55%.
• Increase in the annualized dividend rate by 5% or $0.12 per annum to $2.64 per share.

Q4 Financial Highlights

• Generated record high Revenue of $657 million, an increase of $113 million or 21%.
• Earned record consolidated Adjusted EBITDA of $144 million, representing growth of $20 million or 16%.
• Free Cash Flow less Maintenance Capital Expenditures was a record $50 million, an increase of $10 million or 24%.
• Record Net Earnings of $29 million, an improvement of $2 million or 8%.
• Produced record Adjusted Net Earnings of $34 million, an improvement of $2 million or 5%.

CEO Commentary

Mike Pyle, CEO of EIC, commented, "I am very proud to announce our record results for fiscal 2023. We set annual records for each of our key performance indicators including Revenue, Adjusted EBITDA, Net Earnings, Adjusted Net Earnings, Free Cash Flow and Free Class Flow less Maintenance Capital Expenditures. While the historical annual results were impressive on a standalone basis, throughout 2023 we announced several significant contractual wins and acquisitions which point to an even stronger future.

To put these annual results into proper context, these were achieved despite supply chain challenges, inflationary pressures and high interest rates. With the contract wins and acquisitions announced, we are excited about our prospects as we move into 2024 and subsequent years.

We will be celebrating our 20-year anniversary since our first acquisition of Perimeter Aviation Limited on May 6, 2004. Back in 2004, our business purpose was threefold. Firstly, to deliver to our shareholders a stable and growing cash dividend. Secondly, to maximize the value associated with our portfolio of subsidiaries. Finally, to employ a disciplined acquisition strategy. I am happy to say that we have continued to excel in achieving all three tenets of our purpose. In November, we announced our 17th dividend increase since 2004. Because of our record financial results and business prospects our dividend was increased by 5% to $2.64 per share per annum. Looking back, we have achieved a cumulative growth rate of our dividend since inception of approximately 5% per annum which is an incredible achievement. During the year, we also announced several contract wins which will result in further growth for our portfolio of companies in 2024 and beyond. We previously announced the regional services contract with Air Canada, the British Columbia and Manitoba fixed wing medevac contracts, and the ISR support contract for the United Kingdom Home-Office. Lastly, we have successfully executed three strategic acquisitions during the year, Hansen Industries Ltd., BVGlazing Systems Ltd. And DryAir Manufacturing Corp. By all accounts, 2023 was a success and entirely consistent with that purpose set out in 2004.

We achieved record results in 2023 and invested in the future whilst retaining our commitment to a strong balance sheet," continued Mr. Pyle. "We take great pride in our balance sheet management and our prudent level of leverage. We will never overlook its importance. Our balance sheet management helps us achieve our purpose as a company and will be the backbone of our future growth."

1 Adjusted EBITDA, Adjusted Net Earnings, Free Cash Flow, Free Cash Flow less Maintenance Capital Expenditures, Maintenance and Growth Capital Expenditures, and the corresponding per share amounts and payout ratios are Non-IFRS measures.

Selected Financial Highlights

Review of 2023 Financial Results

Consolidated revenue for the year was $2.5 billion, which was an increase of $439 million or 21% over 2022. Consolidated Adjusted EBITDA for the year was $556 million, which was an increase of $99 million or 22% compared to last year.

Revenue in the Aerospace & Aviation segment grew by $161 million or 12% to $1.5 billion and Adjusted EBITDA generated by the Aerospace & Aviation segment increased by $78 million to $414 million, an increase of 23%. The most significant increases in revenue and profitability were related to increased passenger traffic and expanded routes along the East Coast, including those being operated on behalf of Air Canada. Revenues and profitability were also positively impacted by the Netherlands Coast Guard contract that began late in 2022 along with the United Kingdom Home-Office contract that was awarded in May 2023 for an 18-month period. The Aircraft Sales & Leasing business line also demonstrated continued improvements in the leasing business, which is expected to near pre-pandemic levels later on in 2024 on an annualized basis.

Revenue in the Manufacturing segment increased by $278 million or 39% to $1.0 billion and Adjusted EBITDA rose by $23 million or 15% to $181 million. The acquisitions of Hansen, BVGlazing and DryAir during fiscal 2023 were significant drivers of the increase in revenue and Adjusted EBITDA as they each met or exceeded expectations. The increase to Adjusted EBITDA was muted compared to the increase in revenue as the results for Environmental Access Solutions started to normalize to expected returns in the second quarter of 2023. Subsequent to the May 2022 acquisition of our Environmental Access Solutions business, it experienced the unique alignment of price, supply, demand and weather along with near practical capacity for the utilization of rental mats that continued into early 2023. Demand and pricing have moderated to more historical norms, however the business is continuing to perform in excess of the acquisition metrics upon which the deal was priced in 2023. The Manufacturing segment's operations continued their strong performance, resulting in increases in both revenue and Adjusted EBITDA over the prior year.

EIC recorded Net Earnings of $122 million compared to $110 million in the prior year or an increase of 12%. Furthermore, EIC recorded Adjusted Net Earnings of $144 million compared to $133 million in the prior year. The increases were muted by an interest expense increase of approximately $39 million compared to the prior year.

The Corporation generated Free Cash Flow of $377 million, a $45 million increase over $332 million in the prior year primarily due to the year's higher Adjusted EBITDA partially offset by an increase in interest expense as discussed above. Free Cash Flow less Maintenance Capital Expenditures was $202 million in 2023 compared to $176 million in 2022. The increase in Adjusted EBITDA was partially offset by an increase in Maintenance Capital Expenditures due to an increase in fleet size, hours flown and inflationary pressures on maintenance events. The Corporation's Trailing Twelve-Month Free Cash Flow less Maintenance Capital Expenditures payout ratio is 57% for the year compared to the prior year of 55%.

"2023 was a year that I would characterize as a continued normalization of the business from the pandemic. We are seeing the power of our diversification, and our strong results allowed us to increase our dividend for the 17th time in our history. Our payout ratio on a Free Cash Flow less

Maintenance Capital Expenditures basis remained consistent with the prior period in spite of an increase in interest expense of approximately $39 million," noted Richard Wowryk, EIC's Chief Financial Officer. "During 2023, we also fortified our balance sheet for future growth through amending, extending, and increasing the size of our credit facility to approximately $2 billion and completed a bought deal financing of common shares. Certain per share metrics temporarily declined, when compared to the prior year, primarily because of the bought deal offering and the returns related to the contractual wins impacting 2024 and beyond while the capital has been partly deployed. We are primed for future growth based on the foundation that has been built over the past number of years."

Carmele Peter, President of EIC, stated, "The past number of years have demonstrated the resiliency of our business model and the importance of our diversification. This has been demonstrated by our financial results during that time. That resiliency has allowed us to re-invest in our businesses through winning important long-term contracts which sets the stage for future growth and profitability for the Corporation. The execution under those new contracts, whether it be the new regional services contract with Air Canada or the new provincial medevac contracts, requires significant upfront planning time from our employees. Assets must be procured, and employees must be recruited prior to the start of any of the contracts. Our management teams have a history of executing on those contracts and providing the highest levels of service and performance to our customers and the communities we serve. All these efforts underpin the power of our people at EIC. The culture embedded in each organization results in a "can-do" attitude that has allowed us to excel. That same culture will power us into the future. On behalf of the executive team we wanted to recognize the over 8,500 employees at EIC."

Review of Q4 Financial Results

Revenue generated by the Corporation during the fourth quarter was $657 million, an increase of $113 million or 21% over the comparative period. Revenue in the Aerospace & Aviation segment increased by $45 million or 13% while revenue in the Manufacturing segment increased by $68 million or 34%. The reasons for the increases during the quarter are largely consistent with the drivers for the year-to-date increases.

Adjusted EBITDA generated by the Corporation during the fourth quarter was $144 million compared to $124 million in the fourth quarter of 2022, an increase of 16%. Adjusted EBITDA in the Aerospace & Aviation segment was up $21 million or 24% to $109 million compared to the prior period while Adjusted EBITDA in the Manufacturing segment decreased by $2 million or 3% to $45 million. The Adjusted EBITDA increase in the Aerospace & Aviation was consistent with the discussion on the annual results. The Adjusted EBITDA decline associated with the Manufacturing segment pertained to the normalization of the expected returns related to the Environmental Access Solutions business line mostly offset by improvements in our Multi-Storey Window Solutions business line and the acquisitions completed during 2023.

Outlook

Mr. Pyle concluded by saying, "We confirm our guidance for 2024 with an Adjusted EBITDA range of $600 million to $635 million, which is an increase of between 8% and 14% from our 2023 results. The strategies and investments required to deliver these results have already been put in place. All that remains is for our exceptional operational teams to execute on them, consistent with our track record for the past 20 years."

EIC's complete annual financial statements and management's discussion and analysis for the three and twelve month period ended December 31, 2023 can be found on the company's website or on SEDAR+.

Conference Call Notice

Management will hold a conference call to discuss its 2023 fourth quarter financial results on Friday, February 23, 2024 at 8:30am ET. To join the conference call, dial 1-888-886-7786 or 1-416-764-8658 (International). Please dial in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until March 1, 2024 at midnight. To access the archived conference call, please dial 1-877-674-7070 or 1-416-764-8692 (International) and enter the encore code 309545 followed by the number sign.

A live audio webcast of the conference call will be available on the company's website. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast. An archived replay of the webcast will be available for 90 days.

About Exchange Income Corporation

Exchange Income Corporation is a diversified acquisition-oriented company, focused in two segments: aerospace & aviation and manufacturing. The Corporation uses a disciplined acquisition strategy to identify already profitable, well-established companies that have strong management teams, generate steady cash flow, operate in niche markets and have opportunities for organic growth.

We seek Safe Harbor.