Exchange Income Corporation Posts Record Third Quarter Results Driven by the Diversification of its Business Model

WINNIPEG, Manitoba - Exchange Income Corporation (TSX: EIF) ('EIC' or the 'Corporation') a diversified, acquisition-oriented company focused on opportunities in the Aerospace & Aviation and Manufacturing segments, reported its financial results for the three and nine-months ending September 30, 2024.

All amounts are in Canadian currency.

Q3 Financial Highlights

Record quarterly revenues of $710 million, an increase of $22 million.

Record quarterly Adjusted EBITDA of $193 million, representing growth of $25 million over the prior period or an increase of 15%.

Record quarterly Free Cash Flow of $136 million compared to the prior period of $117 million, an increase of $19 million along with record Free Cash Flow per share of $2.86 compared to the prior period of $2.51.

Record Net Earnings of $56 million compared to the prior period of $50 million and Net Earnings per share of $1.18 compared to the prior period of $1.06.

Adjusted Net Earnings record of $61 million compared to the prior period of $55 million and Adjusted Net Earnings per share of $1.29 compared to the prior period of $1.19.

Free Cash flow less Maintenance Capital Expenditures record of $81 million compared to the prior period of $74 million and record Free Cash flow less Maintenance Capital Expenditures per share of $1.71.

Trailing Twelve Month Free Cash Flow less Maintenance Capital Expenditures Payout Ratio was 60% compared to the prior period of 58%.

Announced that the Corporation was the successful bidder to provide integrated fixed-wing and rotary air ambulance services for the Province of Newfoundland and Labrador.

Announced a new contract to provide airborne intelligence, surveillance and reconnaissance support for a domestic security agency in an allied European nation utilizing an existing aircraft along with an additional aircraft with augmented technical capabilities to be deployed during the contract.

Announced, subsequent to quarter end, the acquisition of Spartan Mat, LLC and its subsidiary Spartan Composites, LLC (collectively, 'Spartan') which is a strategic acquisition expanding our Environmental Access Solutions business line into the US and adding additional products for our Canadian operations.

Subsequent to quarter end, extended its medevac contracts with the Government of Nunavut into 2026 with enhanced pricing.

CEO Commentary

Mike Pyle, CEO commented, 'The third quarter performance was exceptionally strong, highlighted by our highest Free Cash Flow and Free Cash Flow less Maintenance Capital Expenditures per share metrics and our second highest Net Earnings per share in our history. Hitting these per share metrics amidst the interest rate environment backdrop and macroeconomic uncertainty illustrates the strength of the quarter and our strategy. The diversification of our business model was readily evident as our Aerospace & Aviation segment continued to set record metrics from a revenue and profitability perspective driven by previously announced contract wins, prior Growth Capital Expenditures and continued linear improvement in our leasing business within our Aircraft Sales & Leasing business line. Our Manufacturing segment has started to show signs of strength as the broader business environment is becoming more confident in the economic outlook. With the inflation pressures subsiding and interest rates on the decline in Canada and the United States, we are continuing to see near record levels of inquiries. We have started to see those inquiries being converted into firm committed orders during the past several months.

Our positive momentum on new contract announcements continued subsequent to quarter end. We announced that we were the successful proponent in the integrated fixed-wing and rotary air ambulance services for the Province of Newfoundland and Labrador. We have strategically grown our world class medevac business and have become the largest medevac provider in Canada. Subsequent to quarter end we extended our three separate medevac contracts with the Government of Nunavut into 2026 with enhanced pricing. We continue to have dialogue with other jurisdictions as contracts come up for proposal in their geographies. We also announced a new contract to provide ISR support for an allied European nation utilizing an existing aircraft and adding a second aircraft with augmented technical capability during the contract term. Furthermore, we concurrently announced, with our third quarter earnings release, the acquisition of Spartan. Spartan is a strategic acquisition for our Environmental Access Solution business. We previously communicated that strategically we wanted to expand into the US market and Adam and his team looked at numerous companies to achieve that objective but none met our specific and disciplined acquisition criteria until we met with Spartan.

We are excited about the future of each of our businesses. The fundamentals driving each of our business lines are robust and the positive momentum achieved with the successful execution on our most recent contract awards are driving the record key financial metrics, whether it be revenue, Adjusted EBITDA, Free Cash Flow, Free Cash Flow less Maintenance Capital Expenditures, Net Earnings and Adjusted Net Earnings. That positive momentum is continuing as we have several organic growth and acquisition opportunities being worked on by our various teams.' Adam Terwin, EIC's Chief Corporate Development Officer, commented 'We announced the acquisition of Spartan subsequent to quarter end. We previously discussed our desire to expand our Environment Access Solutions business line into the US and diversify our Canadian product line to include a composite mat solution. The acquisition of Spartan accomplishes both objectives and our collective teams are in the process of executing on those strategic initiatives. Spartan exhibited all the key attributes required by our disciplined acquisition strategy. They are a niche market player, as they are one of three primary manufacturers in the composite matting industry in North America. They have a strong management team, and their former owners and management team will continue on in their existing roles as they execute on their growth strategy which includes the recent launch of their new SYSTEM7-XTTM mat. Lastly, they generate strong cash flows and is accretive to our shareholders on a per share basis based on historical performance. We anticipate the impact on our Environmental Access Solutions business line to be even greater over the medium and longer term due to the growth of the United States market.'

Outlook

Mr. Pyle concluded by saying, 'Our diversification continues to show itself in consistent record setting financial performance and metrics. We continue to execute our disciplined acquisition and Growth Capital Expenditures strategies. Our subsidiaries announced a number of new contracts over the past two years and that positive momentum, coupled with an improving macro-economic environment, demonstrates why I believe our future is incredibly bright.

Our strategy has proven itself and allows us to provide guidance for fiscal 2025. We anticipate that Adjusted EBITDA will be between $690 to $730 million based on our recent contractual announcements, acquisitions to date and near-term organic opportunities. We have not deviated from our strategy since inception of the Company and we will continue to deliver dependable and consistent financial results for our shareholders.' EIC's complete interim financial statements and management's discussion and analysis for the three and ninemonths ending September 30, 2024 can be found at www.ExchangeIncomeCorp.ca or at www.sedarplus.ca.

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. For more information on the Corporation, please visit www.ExchangeIncomeCorp.ca.

Caution concerning forward-looking statements

The statements contained in this news release that are forward-looking are based on current expectations and are subject to a number of uncertainties and risks, and actual results may differ materially. These uncertainties and risks include, but are not limited to, external risks, operational risks, financial risks and human capital risks. External risks include, but are not limited to, risks associated with economic and geopolitical conditions, competition, availability of government funding for Indigenous health care, access to capital, market trends and innovation, risks associated with uninsured losses, climate risks, acts of terrorism, armed conflict, labour or social unrest, risks of a pandemic, the level and timing of defence spending, government-funded defence and security program risks and risks associated with environmental, social and governance. Operational risks include, but are not limited to, significant contracts and customers, operational performance and growth, laws, regulations and standards, acquisitions, concentration and diversification, access to parts and relationships with key suppliers, casualty losses, environmental liability, dependence on information systems and technology, international operations, fluctuations in sales prices and purchase prices of aviation related assets, warranties and performance guarantees, global offset and intellectual property risks. Financial risks include, but are not limited to, availability of future financing, income tax matters, commodity risk, risks related to foreign exchange, interest rates, credit facility and the trust indentures, dividends, unpredictability and volatility of securities pricing, dilution and other credit risk. Human capital risks include, but are not limited to, reliance on key personnel, risks related to employees and labour relations and conflicts of interest.

Except as required by Canadian Securities Law, Exchange Income Corporation does not undertake to update any forward-looking statements; such statements speak only as of the date made. Further information about these and other risks and uncertainties can be found in the disclosure documents filed by Exchange Income Corporation with the securities regulatory authorities, available at www.sedarplus.ca.

Contact:

Mike Pyle

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Pam Plaster

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