WINNIPEG, March 18, 2020 /CNW/ - Exchange Income
Corporation (TSX: EIF) (the "Corporation" or "EIC"), along with the
rest of businesses throughout the world, is confronted with
managing the impact of the COVID-19 outbreak. We have a
responsibility to our employees, customers, and shareholders to
take every necessary measure to limit the impact of this virus.
This includes ensuring the health and safety of our stakeholders,
while being fiscally responsible. Part of that responsibility is to
ensure there is adequate communication at all levels of our
organization, including to our shareholders.
First and foremost, our organization and every subsidiary has
taken significant measures to prevent the spread of the virus and
to contain any potential infection. We meticulously follow and
where possible exceed the guidance of the appropriate health
authorities and best practices as it relates to the prevention and
containment of communicable diseases. For our aviation companies,
this includes an onboarding screening process, appropriate employee
training, increased sanitization, and disinfecting the aircraft
after every flight. EIC has the benefit of our collective expertise
and resources across all our regional airlines to ensure all
appropriate measures are taken. This enables us to provide a level
of control and prevention that would not be possible for each
individual airline to implement. Throughout all our organizations,
we have implemented policies and procedures to minimize the impact
of the virus. This includes screening individuals,
compartmentalizing and separating our staff, creating redundancy in
our infrastructure, limiting building access, sanitizing all
operations, and having employees work from home wherever possible.
EIC subsidiaries were amongst the first airlines to adopt a
preboarding questionnaire as part of our enhanced screening
procedure to protect our employees, customers, and communities. We
have received positive feedback from customers and the government
on the efficacy of our enhanced procedures.
A key tenet of our business model is diversification. This is
extremely valuable as it relates to our current environment. Our
operations are diversified across industry, customer, and
geography. While all our operations will undoubtedly be impacted by
this virus, the extent will vary greatly.
Unlike major carriers our 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 we provide an
essential service both in terms of the movement of products
and individuals and we are not impacted by economic cycles or
discretionary spending. Moreover as the winter road season comes to
an end our airlines become the only link into and out of the
communities. We do not have international flights and therefore are
not impacted by travel bans that have been imposed. The
significance of these differentiations is that we have not parked
aircraft and we continue to fly into every community we served
prior to the outbreak of the COVID-19 virus. While we expect to see
lower demand as communities seek to control passenger flow into
their communities, we fully expect to continue operations into all
of our communities given the essential services we provide to
support food security, health and commerce.
We do not expect to see any significant impact on our maritime
surveillance operations and its quite likely that demand will
increase for our medevac operations. Our international maritime
surveillance operations are under contract and we continue to fly
at or above contracted levels. In addition we continue to bid on
surveillance contracts for various international governments. As it
relates to our medevac services we have been in contact with the
government agencies to ensure we are positioned to provide needed
service. We are proactively bringing additional equipment into
service to help our 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 their fleet. We remain
confident in Regional One's business model in the medium and
long-term, and to that end will look for opportunities to grow our
fleet at advantageous prices.
Our Manufacturing segment continues to operate, while meeting
and exceeding current government recommendations to prevent
spreading of the virus. Since we have operations throughout
Canada and the US, it is possible
local government-imposed restrictions could shut-down a job or a
facility on a case by case basis in the future. We will continue to
monitor the impacts of COVID-19 in our specific sectors and are
prepared to adjust our plans as required.
EIC included guidance for 2020 in its 2019 fourth quarter
earnings release. The first two months of 2020 were in line or
better than our 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 EIC specifically. Therefore, notwithstanding
the strength of our quarter to date results, we are withdrawing
guidance for 2020. When things stabilize we will update the
market.
EIC is well capitalized and currently has access to over
$800 million in available capital.
This gives us plenty of liquidity to manage our operations, while
also pursuing growth opportunities. This provides all our companies
a benefit that is not often afforded to their competitors. As such,
we will continue to look for growth opportunities to support them.
We are extremely proud of the determination, effort, and ingenuity
shown across all levels of our organization. Our subsidiaries have
great leaders throughout their organizations, and this has shown
through in the current crisis. While this crisis is disruptive, we
are confident that our management, diversification, discipline, and
balance sheet, which has formed the foundation of EIC's business
model, puts us in a position to succeed and come out a stronger
company.
About Exchange Income Corporation
Exchange Income Corporation is a diversified
acquisition-oriented company focused in two sectors: aerospace
& 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. For more
information on the Corporation, please visit
www.ExchangeIncomeCorp.ca. Additional information relating to the
Corporation, including all public filings, is available on SEDAR
(www.sedar.com).
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, the dependence of Exchange Income 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, the risk of shareholder liability,
competitive pressures (including price competition), changes in
market activity, the cyclicality of the industries, seasonality of
the businesses, poor weather conditions, foreign currency
fluctuations, legal proceedings, commodity prices and raw material
exposure, dependence on key personnel, and environmental, health
and safety and other regulatory requirements. Except as required by
Canadian Securities Law, Exchange 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.sedar.com.
SOURCE Exchange Income Corporation