Exchange Income (TSE:EIF) expects adjusted EBITDA to reach at least CAD 1 billion in 2027, as demand for aviation services, aircraft parts and environmental matting supports growth across its businesses.
The company forecast adjusted EBITDA of CAD 1 billion to CAD 1.06 billion for 2027, more than 20% above the midpoint of its original 2026 guidance. For the current year, management said it expects to finish at or above the top of its previously issued CAD 890 million to CAD 920 million range.
Chief Executive Officer Mike Pyle said the outlook does not include unannounced acquisitions or contract wins. The forecast does assume renewals of certain existing contracts that management considers part of the normal course of business.
Exchange Income reported more than CAD 1 billion in quarterly revenue for the first time in the third quarter. Pyle said the company also set records across key measures, including earnings, adjusted EBITDA, free cash flow and per-share results. He said there were no material acquisitions affecting the period-over-period comparison.
Per-share earnings records came despite an approximately 8% increase in the weighted share count, which management attributed to the conversion of convertible debentures. The company reported an adjusted net earnings payout ratio of 60% and a free cash flow less maintenance capital expenditures payout ratio of 52%.
Aviation demand and aircraft investments
President Jake Trainor said the company expects fourth-quarter revenue and profitability in Essential Air Services to exceed the year-earlier period, supported by strong passenger load factors and demand for cargo, charter and medevac services. The expanded Air Canada commercial agreement should also contribute, with all but one aircraft deployed.
In 2027, the Air Canada agreement is expected to reach full operating tempo, while the Newfoundland and Labrador medevac contract ramps up, Trainor said. He cautioned that inflation in labor, aircraft parts, consumables and overhaul costs would offset some gains.
Pyle identified aircraft sales and leasing subsidiary Regional One as one of the largest drivers of the quarter’s EBITDA improvement. Demand for engines and parts remains strong, he said, although the business’s revenue and margins can fluctuate depending on whether it sells whole aircraft, engines or parts.
Regional One has received a capital request to buy two or three Boeing 737 aircraft, Pyle said. The company has been building its knowledge of that market through Canadian North, a 737 operator, and parts supplier MACH 2. Pyle said 2027 guidance includes a modest amount of additional capital spending at Regional One but is largely driven by investments already made.
In aerospace, Exchange Income signed definitive agreements with SkyAlyne covering its work on the Future Aircrew Training program. Aircraft modifications are expected to begin in 2027, with most modification and missionization work occurring in the first five years of the 25-year, CAD 750 million contract. Training and in-service support will follow.
Matting demand strengthens as windows remain soft
Chief Operating Officer Travis Muhr said manufacturing revenue and profitability are expected to rise in both the fourth quarter and full-year 2027. Environmental Access Solutions is benefiting from demand for composite mats in the United States and rising rental volumes and rates in Canada, he said.
Muhr said the number of Canadian mats on rent is approaching 2023 levels, although Pyle noted that pricing has not returned to those levels. Management expects larger projects to support further growth into 2028. Pyle said the TerraPro acquisition also provides access to inventory as demand grows.
Exchange Income’s new composite mat plant in Saltillo, Mississippi, remains on time and on budget, according to management, with production expected in the fourth quarter of 2027.
The Multi-Storey Window Solutions business recorded its third consecutive quarter with a positive bookings-to-bill ratio, but executives cautioned that pricing remains competitive and the Southern Ontario condominium market is still soft. Muhr said the business has diversified into other regions and institutional projects and expects a slight improvement in revenue and EBITDA in 2027.
Muhr also said tariffs had affected the windows business and prompted some customers to defer orders at DryAir Manufacturing. He said the Section 338 tariffs affecting DryAir had been removed from the relevant tariff codes and that the subsidiary was contacting customers about deferred orders.
Liquidity and capital spending
Chief Financial Officer Richard Wowryk said Exchange Income had more than CAD 2 billion in available liquidity and a leverage ratio of 2.64 times EBITDA, its best in 15 years. Growth capital spending totaled CAD 210 million in the first nine months of 2026.
Third-quarter maintenance capital expenditures were CAD 95 million in aerospace and aviation and CAD 8 million in manufacturing. Some spending deferred from the first half moved into the third quarter, Wowryk said.
Trainor expects aviation maintenance spending to increase in 2027 in line with EBITDA growth, citing parts shortages, a larger fleet and greater aircraft utilization. Muhr also expects higher manufacturing maintenance spending, primarily to expand rental fleets and replace equipment.
Pyle described the acquisition pipeline as robust and said the company will generally focus on opportunities adjacent to existing businesses. He also expects the payout ratios for free cash flow less maintenance capital expenditures and net earnings to fall below 50% and 60%, respectively, in 2027, while the company continues to grow its dividend.
About Exchange Income (TSE:EIF)
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.
