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Exchange Income Corp
Symbol EIF
Shares Issued 34,730,840
Close 2020-03-17 C$ 22.71
Recent Sedar Documents

Exchange Income talks COVID-19, withdraws 2020 guidance

2020-03-18 09:50 ET - News Release

Mr. Mike Pyle reports

EXCHANGE INCOME CORPORATION PROVIDES UPDATE IN RESPONSE TO COVID-19 UNCERTAINTY

Exchange Income Corp., along with the rest of businesses throughout the world, is confronted with managing the impact of the COVID-19 outbreak. The company has a responsibility to its employees, customers and shareholders to take every necessary measure to limit the impact of this virus. This includes ensuring the health and safety of its stakeholders, while being fiscally responsible. Part of that responsibility is to ensure there is adequate communication at all levels of its organization, including to its shareholders.

First and foremost, the company and its subsidiaries have taken significant measures to prevent the spread of the virus and to contain any potential infection. It meticulously follows and where possible exceeds the guidance of the appropriate health authorities and best practices as it relates to the prevention and containment of communicable diseases. For its aviation companies, this includes an onboarding screening process, appropriate employee training, increased sanitization and disinfecting the aircraft after every flight. Exchange Income has the benefit of its collective expertise and resources across all its regional airlines to ensure all appropriate measures are taken. This enables the company to provide a level of control and prevention that would not be possible for each individual airline to implement. Throughout all its organizations, the company has implemented policies and procedures to minimize the impact of the virus. This includes screening individuals, compartmentalizing and separating its staff, creating redundancy in its infrastructure, limiting building access, sanitizing all operations and having employees work from home wherever possible. Exchange Income's subsidiaries were amongst the first airlines to adopt a preboarding questionnaire as part of its enhanced screening procedure to protect its employees, customers and communities. The company has received positive feedback from customers and the government on the efficacy of its enhanced procedures.

A key tenet of its business model is diversification. This is extremely valuable as it relates to the company's current environment. The company's operations are diversified across industry, customer and geography. While all its operations will undoubtedly be impacted by this virus, the extent will vary greatly.

Unlike major carriers, the company's airlines fly into remote northern communities, which, other than for the short winter road season, can for the most part only be accessed by air. As such, the company provides an essential service both in terms of the movement of products and individuals, and it is not impacted by economic cycles or discretionary spending. Moreover, as the winter road season comes to an end, the company's airlines become the only link into and out of the communities. It does not have international flights and therefore are not impacted by travel bans that have been imposed. The significance of these differentiations is that the company has not parked aircraft and it continues to fly into every community it served prior to the outbreak of the COVID-19 virus. While the company expects to see lower demand as communities seek to control passenger flow into their communities, the company fully expects to continue operations into all of its communities given the essential services it provides to support food security, health and commerce.

The company does not expect to see any significant impact on its maritime surveillance operations and its quite likely that demand will increase for its medical evacuation operations. Its international maritime surveillance operations are under contract and the company continues to fly at or above contracted levels. In addition, the company continues to bid on surveillance contracts for various international governments. As it relates to its medevac services, the company has been in contact with the government agencies to ensure it is positioned to provide needed service. The company is pro-actively bringing additional equipment into service to help its communities and government in case the need arises in the near future.

Regional One will be impacted by demand from the overall airline industry. The first impact will be on its leasing portfolio, followed by the demand for its aircraft parts and engines. Regional One is working closely with its customers to manage this anticipated change in demand and to support them in the current environment, including rescheduling payments for the lease portfolio. To the extent there is less flying by Regional One's lease customers, there will also be lower capital expenditures required at Regional One to maintain its fleet. The company remains confident in Regional One's business model in the medium and long term, and to that end will look for opportunities to grow the company's fleet at advantageous prices.

The company's manufacturing segment continues to operate, while meeting and exceeding current government recommendations to prevent spreading of the virus. Since the company has operations throughout Canada and the United States, it is possible local government-imposed restrictions could shut down a job or a facility on a case-by-case basis in the future. The company will continue to monitor the impacts of COVID-19 in its specific sectors and is prepared to adjust its plans as required.

Exchange Income included guidance for 2020 in its 2019 fourth quarter earnings release. The first two months of 2020 were in line or better than its guidance across each segment. The situation with the COVID-19 pandemic is changing rapidly and, as such, it is virtually impossible to predict the impact it will have on the economy in general and the company specifically. Therefore, notwithstanding the strength of its quarter-to-date results, the company is withdrawing guidance for 2020. When things stabilize, the company will update the market.

Exchange Income is well capitalized and currently has access to over $800-million in available capital. This gives the company plenty of liquidity to manage its operations, while also pursuing growth opportunities. This provides all its companies a benefit that is not often afforded to their competitors. As such, the company will continue to look for growth opportunities to support them. Exchange Income is extremely proud of the determination, effort and ingenuity shown across all levels of its organization. Its subsidiaries have great leaders throughout their organizations, and this has shown through in the current crisis. While this crisis is disruptive, the company is confident that its management, diversification, discipline and balance sheet, which has formed the foundation of Exchange Income's business model, puts the company in a position to succeed and come out a stronger company.

About Exchange Income Corp.

Exchange Income is a diversified acquisition-oriented company focused in two sectors: aerospace and aviation services and equipment, 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.

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