MIKE PYLE, PRESIDENT & CEO. INVESTOR PRESENTATION November 2013 EXCHANGE INCOME CORPORATION TSX: EIF

Transcription

1 MIKE PYLE, PRESIDENT & CEO INVESTOR PRESENTATION November 2013 EXCHANGE INCOME CORPORATION TSX: EIF

2 FORWARD-LOOKING STATEMENTS The statements contained in today s presentation 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, the dependence of the Corporation on the operations and assets currently owned by it, the degree to which its subsidiaries are leveraged, the fact that cash distributions are not guaranteed and will fluctuate with the Corporation s financial performance, dilution, restrictions on potential future growth, competitive pressures (including price competition), changes in market activity, the cyclicality of the industries, seasonality of the businesses, poor weather conditions, and foreign currency fluctuations, legal proceedings, commodity prices and raw material exposure, dependence on key personnel, and environmental, health and safety and other regulatory requirements. Further information about these and other risks and uncertainties can be found in the disclosure documents filed by the Corporation with the securities regulatory authorities, available at 2

3 AT OUR CORE DISCIPLINED to our acquisition and business model DEPENDABLE with steady financial results LOYAL to shareholders 3

4 INVESTMENT HIGHLIGHTS Acquisition-oriented company with disciplined strategy Diversified business model focused on aviation and manufacturing sectors generating cash flows from various industries and geographic regions Strong, consistent financial performance combining organic and accretive growth with steady cash flows Dependable high yield has increased 8 times since 2004 Approximately $160 million available for future acquisitions 4

5 ACQUISITIONS IT S HOW WE GET 5

6 DISCIPLINED ACQUISITION CRITERIA Established niche businesses with strong cash flows In defensible markets with barriers to entry Ability to retain key management Immediately accretive Plans for future growth Typically valued at 5X EBITDA We look for the right company in the right market at the right price with the right management team 6

7 Largest acquisition to-date; completed April 2013 Sales and leasing of after-market parts and fleet equipment to regional carriers around the world US$94.9M Purchase Price Further diversification of revenue streams and cash flows coming from various geographical markets PROVIDES PROXY FOR VERTICAL INTEGRATION INTO MAJOR EXPENSE CATEGORY 7

8 DIVERSIFICATION WORKS 11 operating subsidiaries Across 2 segments With global sales Limits exposure and increases opportunities for growth ACTS AS A HEDGE AGAINST ECONOMIC VOLATILITY 8

9 AVIATION SEGMENT ESSENTIAL PASSENGER, MEDEVAC AND FREIGHT SERVICES FOCUSED ON SERVING ISOLATED NORTHERN COMMUNITIES 3 RD LARGEST PASSENGER FLEET IN CANADA AFTER-MARKET PARTS AND FLEET EQUIPMENT SUPPORT FOR REGIONAL CARRIERS WORLDWIDE 9

10 MANUFACTURING SEGMENT SPECIALTY AND PRECISION CUSTOM STEEL MANUFACTURING AND RELATED SERVICES WIDE RANGE OF CUSTOMERS IN TELECOM, FOOD, OIL & GAS, CHEMICAL AND DAIRY SECTORS THROUGHOUT NORTH AMERICA 10 10

11 WESTOWER Designs, builds, maintains and services towers for the telecom industry. $427M Revenue Contribution for % Increase over 2011 BUILD-OUT OF MULTI-YEAR TURF CONTRACT WITH AT&T WIRELESS MOBILITY CONTINUES TO DRIVE REVENUE GROWTH 11

12 SHAREHOLDER RETURNS Monthly dividend distributions of $0.14 per share (or $1.68 annualized) $400 $350 EIF vs. S&P Performance S&P TSX Composite Index - Total Return EIF Total Return Almost 100 consecutive months of dividend distributions including several increases $300 $250 $200 $150 $100 Current yield of 8.5% based on November 14 th share price ($19.68) $50 $- Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 STEADY AND DEPENDABLE 12

13 Q3 FINANCIAL & OPERATIONAL HIGHLIGHTS Q3 was an exception - first unprofitable quarter in 5 years Revenue grew 21% to $267.3 million; EBITDA declined to $15.6 million Profitability impacted by margin pressures at WesTower US Positive contributions from Regional One (acquired April 2013) New senior executive team appointed at WesTower 13 13

14 Third Quarter Financials Q3 REVENUE Q3 YTD REVENUE $267.3M $762.6M (C$ millions) $220.8M (C$ millions) $569.1M % Growth +34% Growth Organic growth driven by WesTower; Accretive growth due to Regional One 14

15 Third Quarter Financials Q3 EBITDA Q3 YTD EBITDA (C$ millions) (C$ millions) $58.2M -49% Decline -16% Decline Decline due to $11M change in estimate expense recorded entirely in Q3 and external advisor costs (Q3 $1.6M & YTD $4.9M) 15

16 Third Quarter Financials Q3 FCF LESS MAINTENANCE CAPEX Q3 YTD FCF LESS MAINTENANCE CAPEX (C$ millions) (C$ millions) $21.9M -67% Decline -33% Decline Decline due to $11M change in estimate expense recorded entirely in Q3 and external advisor costs (Q3 $1.6M & YTD $4.9M) 16

17 CAPITAL STRUCTURE EIF Share Price Performance Recent share price $19.68 (Nov 14, 2013 close) 52-week low and high $16.75 $29.25 Shares outstanding 21,588,127 (Sep 30, 2013 outstanding) Average volume (3-months) 67,417 11/ /2013 Market capitalization Enterprise value $424.9 Million $826.1 Million (approx.) MEMBER OF CANADIAN DIVIDEND ARISTOCRATS INDEX Top institutional investors Analyst coverage Black Rock; Scotia Capital; Picton Mahoney; Stone Asset; Galileo Funds, Canaccord Genuity; CIBC; Cormark; Laurentian Bank; National Bank Financial; Raymond James; Scotia Bank; Stonecap 17

18 BOARD OF DIRECTORS & MANAGEMENT Directors Hon. Gary Filmon, P.C., O.C., O.M. Chairman Management Michael Pyle, President & Chief Executive Officer Duncan Jessiman, Q.C. Executive Vice-Chairman Donald Streuber, F.C.A. Chair, Audit Committee Gary Buckley Chair, Compensation Committee Michael Pyle President & Chief Executive Officer Brad Bennett, O.B.C. Serena Kraayeveld, F.C.A., ICD.D Chair, Corporate Governance Committee Edward Warkentin, LL.B. Duncan Jessiman, Q.C. Executive Vice-Chairman Adam Terwin, C.A., C.F.A. Chief Financial Officer Carmele Peter, LL.B. Chief Administrative Officer Darwin Sparrow, Vice-President & Chief Operating Officer, Manufacturing Gary Beaurivage, Vice-President & Chief Operating Officer, Aviation Michael Swistun Director of Acquisitions William Wehrle Jeffrey Olin 18

19 LOOKING AHEAD Margin improvement at WesTower US Ongoing roll-out of WesTower s turf contract with AT&T and growth opportunities Expansion of Regional One s portfolio of sales & lease assets Access to approximately $160M in capital for future acquisitions Continued disciplined approach to acquisitions 19

20 QUESTIONS? MIKE PYLE PRESIDENT AND CEO

21 APPENDIX Supplemental Information - Acquisition timeline financial results 21

22 ACQUISITION TIMELINE

23 DIVERSIFIED RESULTS Total Revenue FY2012: $800.6M +120% growth since FY2011 Manufacturing Segment $520.2M Aviation Segment $280.4M +2% growth since FY MARKED BY STRONG ORGANIC GROWTH 53.9% Organic Revenue Growth 17.7% Organic EBITDA Growth 23

24 DIVERSIFICATION DELIVERS REVENUE EBITDA (C$ millions) (C$ millions) +57% Growth +26% Growth GENERATED RECORD RESULTS 24

25 DIVERSIFICATION DELIVERS NET EARNINGS FREE CASHFLOW LESS MAINTENANCE CAPEX (C$ millions) (C$ millions) +29% Growth +33% Growth GENERATED RECORD RESULTS 25