
Exchange Income Corp
TSX:EIF

Exchange Income Corp
Exchange Income Corp, headquartered in Winnipeg, Canada, operates a diversified portfolio encompassing several industry sectors, primarily aviation and manufacturing. The company was founded in 2002 and has gradually carved out a unique niche by acquiring and nurturing a diverse array of businesses, each operating independently while benefiting from shared efficiencies. The aviation division includes a range of regional airlines providing essential passenger and cargo services, particularly in challenging environments like Northern Canada, where larger carriers are less inclined to venture. This strategic focus on niche markets ensures a steady revenue stream, as these services are often critical and less prone to economic cycles.
Complementing its aviation endeavors, the manufacturing segment offers an array of specialized products, from precision metal products to telecommunications infrastructure services. This diversification acts as a counterbalance to its aviation business, with revenues generated from long-term contracts and specialized product demand. By integrating these varied businesses under one corporate umbrella, Exchange Income Corp optimizes operational synergies, balances cyclical market risks, and sustains a robust flow of income. The company’s success hinges on its keen ability to recognize and integrate acquisitions that align strategically with its existing operations, thus generating shareholder value and ensuring consistent dividend payments. Through this astute business model, Exchange Income Corp not only thrives in its core sectors but also capitalizes on emerging opportunities within its chosen domains.
Earnings Calls
Exchange Income Corporation (EIC) delivered strong Q1 results with record metrics: revenue of $668 million, adjusted EBITDA of $130 million, and free cash flow of $81 million. Key drivers included gains in the Essential Air Services and Aircraft Sales businesses, which capitalized on increased demand. EIC reaffirmed its adjusted EBITDA guidance for fiscal 2025 at $690 million to $730 million, highlighting resilience amid economic uncertainty. The company is poised for further growth due to strong customer inquiries, although recent tariff risks have temporarily affected order conversions. EIC is enhancing liquidity with a credit facility increase from $2.2 billion to $3 billion, extending maturity to 2029.
Good morning, everyone. Welcome to Exchange Income Corporation's Conference Call to Discuss the Financial Results for the three months ended March 31, 2025. The corporation's results, including the MD&A and financial statements, were issued on May 12, 2025, and are currently available via the company's website or SEDAR+.
Before turning the call over to management, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements.
Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the quarterly and annual MD&A, the Risk Factors section of the Annual Information Form and EIC's other filings with Canadian securities regulators.
Except as required by Canadian securities law, EIC does not undertake to update any forward-looking statements. Such statements speak only as of the date made. Listeners are also reminded that today's call is being recorded and broadcast live via the Internet for the benefit of individual shareholders, analysts and other interested parties.
I would now like to turn the call over to the CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, Mr. Pyle.
Thank you, operator. Good morning and thank you for joining us on today's call. With me today is Richard Wowryk, our CFO, who will speak to our quarterly financial results, along with Jake Trainor and Travis Muhr, who will expand on our outlook for our two operating segments. Yesterday, we released our first quarter results for 2025. Our performance in the first quarter was incredibly strong.
We once again set first quarter high watermarks for all of our key metrics, including revenue, adjusted EBITDA, free cash flow, free cash flow less maintenance CapEx and adjusted net earnings. We are pleased to reconfirm our fiscal '25 adjusted EBITDA guidance of $690 million to $730 million, which excludes the financial results of Canadian North. EIC is a beacon of resilience and stability.
When other companies have either downgraded their guidance or eliminated their guidance entirely due to the economic uncertainty, we remain confident in our business model and the ability to generate results consistent with our previous guidance. During the quarter, we announced a binding purchase agreement for Canadian North, which we discussed during our year-end call. The regulatory process is very complex, and we remain confident that we will close the transaction.
However, due to the complexity uncertainty and our inability to forecast when we will receive regulatory approvals, we have not included these results of Canadian North in our guidance. Also, because of the nondisclosure agreement, which prohibits us releasing any of Canadian North's financial information, we cannot provide any additional financial information on the transaction during today's call.
The first quarter results has given us a great start to the year, and I remain confident in our resilient and stable business model. This confidence stems from the essential nature of goods and services that our subsidiaries provide, along with our past operating performance in times of uncertainty, whether it be the pandemic or the Financial Crisis in 2008, 2009. These record results were generated during the time I would describe as challenging.
During the quarter, we had uncertainty due to rapidly changing trade policy with Canada's largest and most important trading partner in the United States. We also had uncertainty of the Canadian election, coupled with continued geopolitical conflicts around the world. While cooler heads have seemingly prevailed, at least for now, there is still some risk of new tariffs, and we are continuing to monitor changes in policy at head office and in our subsidiaries.
To-date, I can confidently say that we are not directly exposed to tariffs that are currently in force. Our manufacturing subsidiaries are generally CUSMA compliant for goods shipped and sold south of the border. The greater risk is the unintended consequences of significant changes in foreign exchange rates or changes in business confidence. The foreign exchange volatility has seemed to level out more recently.
However, towards the end of the quarter, we did start to see an eroding of some business sentiment. This caused a slight reduction in the number of conversions from inquiries to orders, primarily in the manufacturing statement. This is due to the fact our customers wanted greater certainty when making purchasing or capital decisions. With cooler heads prevailing, we believe that those deferred purchases decisions will be executed in the shorter term as the risk continues to abate.
We are seeing a significant number of inquiries throughout our businesses during the quarter. The uncertainty has just resulted in a temporary decline in the latter part of the quarter in the quantum of inquiries and the conversion of them into fixed orders, but I believe this is a very short-term issue. I will let Rich focus on the financial results for the operating segments. However, prior to passing the call off, I wanted to chat about three items.
Firstly, subsequent to quarter end, we announced an amendment to our credit facility. The availability under the facility was increased to $3 billion from $2.2 billion, and the maturity was extended to April 30, 2029. This amendment was done with no changes -- no significant changes in terms or in pricing. This is a credit to Rich and his team to get this facility across the line in a time of market turbulence. But I want to make it clear; the enhanced facility does not change our conservative attitude on debt and leverage.
Our aggregate debt levels have been remarkably consistent for the last 20 years, and we don't plan to change that. The purpose of the upsize was to allow greater liquidity to execute on future acquisitions or contract wins and continued investment in growth capital expenditures. We have always made sure we have liquidity available to execute on opportunistic transactions, and this amended facility will allow us that in spades as we have well over $1 billion in available liquidity.
Secondly, you may notice that we slightly modified our MD&A based on feedback from some of our most significant shareholders and prospective investors. We are focusing on the numbers at the operating segment level and directional changes at the business line level to augment the data. This should help simplify our somewhat complicated group of companies. Finally, I want to give my regular update on the status of significant contract proposals that remain outstanding.
During the fourth quarter of 2024, we submitted our proposal to Australia -- the Australian Government for their maritime surveillance contract. Like Canada, the Australian Government just held their election on May 3 with the incumbent party, the Labor Party being elected. We expect to hear back from the government midway during the year as the government weighs the various options submitted by the three bidders.
As I previously commented, we believe we put together a very strong bid, and we expect to have as good a chance as any other bidder. Additionally, with the geopolitical climate, we continue to see significant interest from other countries for additional ISR assets, and we are working through government budgets and needs assessments.
Our second aircraft for the U.K. Home Office contract is in the final steps of being modified with the goal for it to start flying midway through this year. Overall, we are very proud of our collective results for the quarter. We're also very confident in the direction the company is headed and the opportunities for acquisition and organic growth. Jake and Travis will focus on the outlook for our segments for 2025.
I'll now pass the call over to Rich.
Thank you, Mike, and good morning. For the first quarter of 2025, revenue of $668 million, adjusted EBITDA of $130 million and free cash flow of $81 million and free cash flow less maintenance CapEx of $26 million were all first quarter high watermarks. Revenue in our A&A segment increased by $14 million or 4% to $382 million. Adjusted EBITDA increased by $8 million or 8% to $102 million.
The revenue and adjusted EBITDA increases were primarily related to the Essential Air Services and Aircraft Sales & Leasing business lines, which continued to post strong results period-over-period. Revenues and adjusted EBITDA within our Aerospace business line were lower due to the planned wind down of certain training programs prior to the start of new programs and contracts.
Additionally, one of our aerospace contracts changed from a performance-based logistics agreement to a time and materials arrangement, which results in more variability when comparing quarters. Looking at the Essential Air Services business line, the improvements were driven by three key factors: First, previous organic growth capital expenditures over the past number of years to both satisfy increased demand and contract wins in our medevac operations primarily related to the BC and Manitoba medevac contracts.
Secondly, our average load factors improved, which has a direct improvement on adjusted EBITDA. And third, the impact of the routes flown on behalf of Air Canada for which the comparatives did not have the full complement of routes. Our Aircraft Sales & Leasing business line increases were driven by continued improvement in leasing activity and robust parts demand. We are seeing significant demand in our Leasing business for the aircraft and even more so on the engine side.
Partially offsetting those increases was a reduction in large asset sales, which are more lumpy than our traditional parts business. Revenue in our Manufacturing segment increased by $53 million or 23% to $286 million. Adjusted EBITDA increased by $14 million or 50% to $41 million. Our Environmental Access Solutions business line had increased revenues and adjusted EBITDA, primarily driven by the acquisition of Spartan, which had significant demand for its composite mats.
The demand was so strong that we have indefinitely delayed a planned shutdown to upgrade certain equipment as we need to keep the plant producing composite mats to meet the current demand. Our team is currently investigating options to build a second plant based on the longer-term secular trends. Furthermore, we also saw an increase in the number of mats on rent, which is encouraging for future quarters.
As we signaled to the market and budgeted, our Multi-Storey Window Solutions business line revenue decreased along with adjusted EBITDA. The decreases are due to project delays and gaps in production. We have taken this opportunity to rationalize our manufacturing footprint such that when demand returns we will be able to produce the number of windows with reduced overhead, which should drive longer-term margins.
We have also made the strategic decision to retain experienced staff, which will be required when the backlog and related production start. We continue to see strong inquiries. However, due to the tariff risk, they have not converted to bookings at a pace consistent with the last half of 2024. Our Precision Manufacturing & Engineering business line had a strong quarter from a revenue and profitability perspective.
It was driven by customer demand across several industries, including telecommunications, technology, resource and data centers. Overall, net earnings were $7 million for the first quarter compared to $5 million in the prior year. The higher adjusted EBITDA was offset by depreciation and amortization due to the acquisition and growth capital investments and increase in interest costs due to the investment activity. Adjusted net earnings were $14 million compared to $10 million in the prior year.
Free cash flow was $81 million compared to $62 million in the prior year. Free cash flow less maintenance capital expenditures was $26 million compared to $23 million in the comparative period, all first quarter records. Maintenance capital expenditures in the first quarter of 2025 were higher by $17 million. However, we were below our internal expectations due to the timing of events. The simple average maintenance capital expenditures over the four quarters in fiscal 2024 was $62 million, and therefore, Q1 of 2025 is comparable to the average of last year.
However, Q1 in the prior year was an anomaly due to the timing of maintenance events in 2024. Growth capital expenditures during Q1 were $56 million and were primarily driven by acquisitions of engines and aircraft in our Aircraft Sales & Leasing business line to increase their leasing portfolio, coupled with modification expenditures incurred for the second aircraft for the U.K. Home Office and installation efforts for the Full Motion King Air simulator in Winnipeg.
From a working capital perspective, we had a nominal recovery of working capital during the quarter. We anticipate that working capital will continue to decline throughout the year as we have made several prepayments and inventory purchases in our Aircraft Sales & Leasing business line. Those purchases are expected to be monetized to the robust parts demand that we are experiencing.
There have been some delays in parting out aircraft and engines into their most valuable components due to the availability at MROs. We are actively managing our working capital and are working with each subsidiary team to convert the working capital into cash. Corporation's aggregate leverage, including both its senior credit facility and convertible debentures remained relatively consistent, decreasing from 3.36x at December 31, 2024, to 3.22x at March 31, 2025.
During the quarter, we called our Series K convertible debentures, which saw $78 million of the Series convert equity. Our aggregate leverage ratio is the lowest it's been since 2019. During the quarter, we announced that we amended and extended our syndicated credit facility. We welcomed an additional financial institution into the syndicate, and I am happy to report that the terms and pricing stayed consistent with our prior facility.
The new facility increases our availability to $3 billion and extends the maturity to April 2029. Currently, we have over $1 billion in available liquidity to deploy for new acquisitions or new growth capital expenditures. Consistent with Mike's comments, I want to reiterate that the increased revolver availability does not change our conservative view on debt or leverage. This facility just provides us with greater liquidity as and when needed.
In the past, we have found opportunities for investment, whether it be in acquisitions or organic growth during periods of economic unrest. Having this capacity in 2025 will allow us to continue to be opportunistic and identify accretive opportunities to grow our company. I want to take this opportunity to thank our syndicate of lenders for their continued support. Our M&A pipeline remains very strong. We are confident that our balance sheet is in a position that allows us to execute on future transactions.
I will now turn the call over to Jake, who will provide an update for 2025 outlook for Aerospace & Aviation.
Thank you, Rich. Overall, we're expecting another strong year of growth from our Aerospace & Aviation segment. The growth investments made in the past in addition to new opportunities, whether it be the Newfoundland & Labrador medevac contract or the second aircraft for the U.K. Home Office will all start to contribute to the profitability during the year. I'll specifically focus on the growth factors by business line.
Our Essential Air Service business will see growth driven by a multitude of factors when compared to prior period. These include the full year deployment of Q400 aircraft to provide services under our agreement with Air Canada. We also expect to continue to see strong load factors and growth across our network when compared to 2024.
Lastly, we expect continued growth in our medevac business with both the long-term Manitoba and BC medevac contracts continuing to contribute to financial results for the full fiscal year, along with enhanced pricing under the Government of Nunavut contract, which was announced in the third quarter of '24. As a reminder, the BC Medevac contract returns are expected to be muted until we redeploy the existing aircraft currently being used to service the contract.
Offsetting some of these gains is the impact of continued labor shortages and supply chain challenges. Although we're not seeing a worsening of these dynamics, these challenges still remain specifically on aircraft parts and consumables. Canadian North continues to not be included in our forward-looking guidance. The transaction requires complex regulatory approvals. And while we are confident that it will ultimately be approved, there is uncertainty as to the specific timeline.
As I commented in the year-end call, this acquisition is very strategic to EIC. The Canadian North routes are highly complementary to our existing routes as there's no overlap with our legacy airlines. In addition -- or excuse me, the addition of Canadian North will allow us to expand our geographies to be served to be all inclusive within Nunavut by adding the two regions we do not currently serve and will also allow expansion into the Northwest territories based on Canadian North's existing routes. It also provides the EIC companies with jet service and therefore, provides opportunities to future and current customers of our various airlines.
The Aerospace business lines' revenue and EBITDA are expected to decline for the second quarter due to the transition between the wind down of certain contracts in our training business and the timing of the start of new contracts, coupled with the change of one aerospace support contract from a performance-based logistics agreement to a time and materials arrangement, which means that the revenues and profitability will be more lumpy than in the past.
The decreases are expected to be offset partially by strong tempo flying for our surveillance contracts and the second aircraft going into service for the U.K. Home Office contract midway throughout the year. Our Aircraft Sales & Leasing business is also expected to experience growth, as Mike and Rich had talked about, the investment in both working capital for future part sales and investment in aircraft and engines within the leasing portfolio.
We continue to expect growth in the leasing revenues into 2025 as we place those aircraft and lease engines on lease. With the increase in inventory, we also anticipate greater parts sales throughout the year. On a long-term basis, we expect maintenance capital expenditures to increase in line with increases in adjusted EBITDA in our Aerospace & Aviation segment, which is the biggest driver of our consolidated maintenance CapEx.
As Richard mentioned, the prior year Q1 comparables were abnormally low due to timing of events and shop availability. This quarter's maintenance capital expenditures were below our internal expectations due to timing of events. However, it was more consistent with the simple average of total maintenance CapEx for 2024. Growth investments in 2025 include capital expenditures for 8 to 10 new King Air aircraft, which will be used in the BCEHS contract.
Certain of those aircraft were originally expected to be delivered in '24. However, due to the strike at the manufacturer, they are expected now to be received in 2025, with the first aircraft set to be received in June and a relatively regular cadence going forward. We also anticipate some capital expenditures related to the final modifications on the second U.K. Home Office aircraft, although the vast majority of these expenditures have already been occurred. And lastly, Regional One is always working on opportunistic aircraft and engine acquisitions, which may result in growth investments being made in the Aircraft Sales & Leasing business.
I'll now pass it off to Travis to provide some commentary on the Manufacturing segment.
Thanks, Jake, and good morning. We're anticipating continued growth in our revenues and profitability for our Manufacturing segment for the remainder of the year when compared to fiscal 2024. The growth is expected for two reasons. Firstly, we see the continuation of the strengthening business environment for many of our manufacturing segment subsidiaries, coupled with the annualized impact that Duhamel and Spartan in our Environmental Access Solutions business line.
All of the businesses within the Manufacturing segment were experiencing a strong level of customer inquiries in 2025. There have been some concern over the risk of tariffs in the shorter term, and we saw a small reduction from a customer booking perspective in the latter part of the quarter and into April when the U.S. trade policy was rapidly changing. But as the tariff situation stands today, we have not been directly impacted by tariffs. As Mike had commented, the vast majority of our products that we produce are Canada-U.S.-Mexico Agreement compliant.
And therefore, the greater risk of tariffs would relate to declining business sentiments and perhaps supply -- finding supply chain alternatives to guarantee supply. Our Environmental Access Solutions business line is expected to generate returns significantly higher than the comparative periods for the remainder of the year. As Rich and Mike had mentioned, Spartan had experienced very strong demand for its composite mat solutions and has effectively sold out of their manufacturing capacity for the near-term.
Also, the FODS Trackout product line is seeing strong demand. This demand, coupled with low resin prices has driven enhanced profitability. Due to the strong demand for its composite mats, we have indefinitely deferred the temporary plant shutdown that was planned to upgrade certain manufacturing equipments.
We have started down the path of actively evaluating a second plant as we see the long-term trends in the composite mat industry as the geographic and sector usage continues to expand and take market share from this traditional wood mat industry in the U.S. Furthermore, with the change in the U.S. administration and the Canadian election, we anticipate seeing increased demand in several sectors.
We have talked a lot about our bullish view on the transmission and distribution sector as electric grids have to be expanded and hardened for the new electricity demands. But more recently, we've also seen renewed interest and press coverage in pipeline and oil and gas sectors, which are legacy strengths for the wood and mat product line. As expected, our Multi-Storey Window Solutions business line revenue and adjusted EBITDA was lower than the comparative period.
We have signaled our expectations in the year-end call and the drivers remain the same for the remainder of the year. The period-over-period declines are expected due to the heightened interest rates in 2023 and into 2024 that resulted in reduced bookings and product manufacturing for 2025. As a reminder, projects generally booked will be manufactured 18 to 24 months after their booking date.
Secondly, for the projects scheduled for 2025, we anticipate margin pressures -- anticipated margin pressures due to the type of the projects booked. And lastly, there are operational integration costs as we continue to streamline the manufacturing footprint. We took the opportunity to bring together the manufacturing such that upon return to historical capacity, we'll be in much more efficient and lean because of the reduced overhead and optimized production processes.
Quoting in Canada and the U.S. continues to be extremely active. We remain very bullish on this business line as the longer-term fundamentals, which drive demand being an acute shortage of affordable housing remain incredibly strong. The Precision Manufacturing & Engineering business line is expected to improve from a revenue and profitability perspective for the remainder of the year compared to the prior year.
We're seeing strength across various sectors, including defense, telecommunications, technology, resource and data center industries. The anticipated maintenance CapEx are expected to be slightly higher than the prior year due to the timing of replacements and more specifically due to the anticipated growth in the Environmental Access Solutions and Precision Manufacturing & Engineering business lines.
We're also anticipating growth CapEx to be incurred in each of the business lines, but they should be relatively consistent with the prior year. The growth CapEx and Environmental Access Solutions business line will depend on the market dynamics as they continually reassess their fleet based on expected future market conditions. But we do expect an investment in fleet along with the buildup of mats for our composite rental fleet in the U.S.
I'll now pass the call back to Mike.
Overall, I'm very encouraged by the state of our business to start 2025. EIC as a company is characterized by resiliency and stability, and our results and outlook for 2025 represent those descriptors to [indiscernible]. We remain confident in the guidance we have provided the market.
Thank you for your time this morning, and we'd now like to open the call to questions. Operator?
[Operator Instructions] Your first question comes from the line of Matthew Lee from Canaccord Genuity.
I want to maybe touch on the manufacturing business. Revenue growth there, up 10% organic by my math. I think that's stronger than anyone really expected here. I suspect it's related to Environmental Services, but could you maybe talk about whether there are any kind of onetime items in the quarter? And maybe what differences you're seeing demand between the U.S. and Canada?
Sure. There was really no onetime or special contracts or things that would drive our revenue or our EBITDA. I think what you see across the board is continued strong demand for the products we produce. The matting business was strong in Canada and in the U.S. In Canada, we're happy to see the number of mats on rent increase, which is a great future indicator of the business.
The sale of mats, wood mats and that is part of our business, but it is much more intermittent and you'll get big orders and you'll go periods without orders. And so the core revenue driver is our mats on rent, and that's improving. We're currently in the slowest part of the year for that business because of the winter road restrictions coming off and there's -- during breakup, there's limitations. But the outlook is strong, particularly as we go later in the year in transmission and distribution.
If the Canadian Government follows through with its plans on pipelines, that's very bullish for the medium and longer term for our business. And then in the U.S., we've seen a continued increase in uptake in using composites versus wood mats. Wood mats are still the main dominant part of the marketplace. But as that moves towards composite mats, that's great for our business.
We were effectively sold out in the first quarter, and that's a condition that has continued through this quarter and into later in the year. We have decided to postpone the renovation of our plant, and we're fully looking at the ability of us to build a second plant to increase our production to take advantage of the market conditions. I'd also like to throw in that the Precision Metal was strong across the board. No big home runs, but consistent busy across the board.
If anywhere, we were concerned about tariffs; it was in this area because we do sell across the border directly and indirectly. But most of our stuff was CUSMA compliant. And as a result, we had very little tariff challenges. The Window business was slower, but no slower than what we thought it was going to be. And that's why we're so confident in our guidance in that where we've had a couple of challenges they were anticipated and in some areas, we're probably a little better than we thought we would be.
That's good color. On the Spartan, the second facility, is there any timeline on that? Is that kind of in 2025 CapEx plans or is that something more longer term?
Whether we get to it late this year or early next year, we're in the midst of designing and there's really a couple of decisions to be made about where we place it. That business is very -- requires access to plastic pellets, which are generally produced in the Texas, Louisiana area where the refineries are.
So we're considering building a plant in that market to reduce the transport cost of the raw materials or alternatively to keep it close to our customers where we have the other plant in Florida. That decision hasn't been made yet. And when it is, that will actually enable us to come up with a timeline. I'm hoping by the end of the next quarter, we'll be able to have much more color on when and where that plant is going.
Okay. That's great. And then maybe just [ hoping ] in the airline quickly. Revenue was a bit lower than expected, and I've seen you just change your disclosure a little bit. Can you just maybe help us understand what kind of revenue growth Regional One had this quarter versus maybe the rest of the airline business?
Yeah. Regional One was a star performer. We've talked for a few quarters about how the aircraft on lease and the engines on lease are growing. That continues to be the case, and we expect continued growth in the leasing portfolio in the balance of the year. The core of the business is parts sales. I mean we're parting out aircraft, and that's what drives the business, and it was really strong in the quarter, offset by -- somewhat by smaller big ticket sales.
Those are always lumpy, and they have a much bigger impact on revenue than they do on EBITDA because large ticket items tend to be big numbers, but low margins. And so you can see that because the Aviation business as a whole, margins strengthened and across the board, quite frankly, the same in manufacturing.
So the performance from Regional One explains a significant piece of what's going on in aviation. In the balance of aviation quite frankly, is strong as well. The real issue is just we had one aerospace contract that went from guaranteed in the air maintenance to maintenance on an ad hoc basis because it changes to what the customer wants. That will be fully offset as we go through the year by the other programs that come into play, particularly with the Home Office.
And I guess on the northern part of our business that we're [indiscernible] for, it's just more of the same. It continued to grow, grow consistently, enhance profitability, and we can't wait to add Canadian North to this. Canada now has a new government, which means today, we'll have a new Transport Minister, which means we'll have a group to be able to approve our transaction. And then we'll be able to give the market some guidance on what that's going to mean in '25 and more importantly, in full year '26.
Okay. That's helpful. I mean just from my perspective, I think it is helpful to get the split in the future between Regional One and the rest of the airline because those businesses are just so different. But yeah, I mean that's up to you guys, I guess.
And your next question comes from the line of James McGarragle from RBC Capital Markets.
This is [ Louis ] on for James. Can you give us some color on the policy change regarding the maintenance CapEx for Regional One overall? How should we be thinking about maintenance CapEx for the remainder of the year? Is it still in line with the increase in EBITDA?
Generally speaking, approximately, yes. It will increase maintenance CapEx slightly over time when we're busy like we are now. To explain this, I kind of got to go back and give you a multi-period explanation. So up until COVID, we had always used depreciation of our leased aircraft as a proxy for maintenance CapEx. So as planes were used up, we had to reinvest to maintain the ability to earn income.
When COVID came, the planes were sitting on the ground and depreciation was no longer a proxy for what we had to invest because the planes weren't being used up. So we switched at that point to using our actual cash investments in that fleet as a proxy because that was what we were spending to maintain the ability of the fleet to generate income.
However, as we've gotten busier and busier, cash doesn't always catch everything because there'll be some aircraft that we choose not to maintain and part out. And so that would -- we see a decline in the ability to generate income if we didn't replace those aircraft. So we've switched it now to where we're including in maintenance CapEx an hourly charge for whatever we're using up on the aircraft.
So the new methodology will automatically increase maintenance CapEx in times where we're flying a lot and decrease it in times when we're flying less. It isn't a big change philosophically other than we wanted something that automatically adapts to changes in the marketplace. And so now because the fleet is busier, it will result in a higher maintenance cost in the near-term, but it's supported by the growing revenues on that side.
Conversely, if we went into a big recession and that slowed, so would our maintenance reinvestment. And so it's in line with us wanting to be conservative in calculating maintenance CapEx so that if all we were to invest is maintenance CapEx, our ability to generate income wouldn't change.
Okay. And then you cited the calling of the debentures and the amended facility sets you up well for further acquisitions. Can you talk about the pipeline right now and where you see the most opportunity within your operating segments?
Yeah. It's a unique period in our M&A stuff. I would say we're actually looking at a fewer number of transactions, but the size and the quality of the transactions we're looking at is much higher. I would also say that the things we're looking at are very tangential to what we're already doing. So there's no new kind of we're not moving into a Window business or moving into the Matting business.
They're all things that are related to what we're doing. And if we're successful in ultimately coming to an acquisition, there'll be things that the market will likely go, oh, that makes sense. It fits in with this. And so I would say there's probably more on the aviation side right now, but that is really just happenstance. It's not like we're focusing there. It's where the good offers.
We have a couple of interesting opportunities that Adam and his team are very far into. So we'll see whether we can pull those off. And then we're also very excited about getting the Northern -- Canadian North deal across the line because that's going to give us coverage across all of the North and let us do what we do best, which is enhance the performance and enhance the service to the customer.
And your next question comes from the line of Steve Hansen from Raymond James.
Mike, can you speak just a little bit more to the timeline on the Aussie contract? You referenced the change in government there or I guess the [indiscernible] winning. How does that change the prospect sort of the process from your perspective? And just remind us where we're at from sort of a selection basis and what you sort of expect for the balance of the year?
Sure. The Australian contract has been a long process. We've been working on this for years. We've gone through expressions of interest, and they pared down the number of potential bidders to the point where when the bids went in last -- at the end of last year, there was three left.
The reelection of the Labor Party doesn't really change much from our point of view on our likelihood of winning because -- but what it does do is it probably accelerates the government's ability to make a decision.
And that's because it's the same people and in fact, the same minister responsible for this contract is in place. So we expect to hear something before we report to you with our Q2 results in August. It could be as rapidly as a week or two from now or as slow as a few months from now that governments do what governments do.
We remain cautiously optimistic. We're up against some good competitors. But I believe the bid we put together from a technical point of view is as good as any could be. And we're proud to be a Canadian supplier in the world market today. So that's not going to hurt us any either.
Fair enough. And I think you referenced it earlier, but has anything changed from your perspective around the ability to close Canadian North. You've obviously got a new government in place here we have Government in Canada, but no change from your perspective on the ability to close?
No. The process has gone well. We've done a lot of work with the Competition Bureau and with the Civil Service on the side of transport, both of which we've made good progress with. So if anything, I'm more confident in our ability to close. The timeline should become apparent reasonably quickly with what the Transport Minister ultimately decides.
And so we're looking forward to whoever that is getting into their job and hopefully finding our file on the desk pretty quickly. But there'll be a lot on the desk of any new Transport Minister. So it's hard for me to say exactly. But I would be at least as confident as it was when we announced the deal, probably more so.
And your next question comes from the line Cameron Doerksen from National Bank Financial.
Question on the Windows business. I'm just wondering if anything has kind of changed from your perspective with regard to kind of seeing an improvement in the revenue and in the profitability. I think the expectation was that would be more of a 2026 event.
I'm just wondering if anything has changed in the last couple of months just with all the uncertainty around trade and companies making or deferring investment decisions. Has anything changed on the kind of timeline where we might see an improvement in that business?
I don't think so yet. We had a slight slowdown in sort of the second half of the second quarter in terms of bids being awarded. Having said that, the stuff we're looking at is the same or more than it was before. And we're getting close on some opportunities in the U.S. which we hadn't seen during the ramp-up towards the end of last year.
So I would say, no, there's no real challenge. I mean that could change with the stuff that's going on with international freight. I will say that the tariff situation did cause one change for that business. And that change was we used to do work for both countries in both plants. And with the tariff stuff coming back into play, we had to go back to the game plan from 2017 when we decided to build the plant, which was we'll build American things in Dallas and we'll build Canadian things in Toronto.
During slow periods, that's not helpful because it doesn't let us balance our workflows. But as we ramp up, it will be relatively painless. And it puts us in a position where we can bid tariff-free. We like our Canadian competitors in the U.S. can't do that and our American competitors doing business in Canada can't do that. So it lets us take advantage of the situation. But in the near-term, the uncertainty doesn't help any.
Right. Okay. No, that's helpful. And the second question on, I guess, on M&A. Just wondering if you can talk a little bit about the rationale for acquiring Newfoundland Helicopters. I appreciate it's a small acquisition, but just the rationale there. And is rotary wing an area that you might look to expand on further? I guess you've got existing rotary operation, but now you've got two. Just wondering if that's an area of interest.
Yeah. I think the acquisition of Newfoundland Helicopters was very opportunistic. Custom operates there, and we do have assets there, but we didn't have enough assets to do all the things we were looking at doing. We've won the rotary wing part of the Newfoundland medevac contract, which requires more assets there.
And our First Nations partners particularly in Labrador, we're looking for enhanced service from rotary wing opportunities. So by bringing in a local player with a good reputation like Newfoundland Helicopters, it gives us greater assets and greater ability to make sure we look after the people. One of the things where you have a strong market position, if you don't do the job well, you're inviting competition.
And so we want to lock down our position as the sole provider of air transport in that area and adding Newfoundland helicopters will do that. I'm confident it will be a very accretive for its size acquisition. But again, when its $13 million, $14 million, there's a limit as to what that will actually do to our consolidated financial statement.
Right. Understood. So more of just a geographical opportunistic opportunity for you as opposed to increased scale in rotary wing across the country?
It reflects -- we are starting to grow our base of medevac rotary wing things. It started in Manitoba when Custom started trauma flights, which has been a very successful addition to what we do in Manitoba. The win in Newfoundland is a second area. And so I think you'll see our rotary wing tie to areas that are very specialized and where we have an opportunity. I don't think it's a big change in our strategy, but where we have a competitive advantage, we'll take advantage of it.
And your next question comes from the line of Krista Friesen from CIBC.
I was just wondering if you could speak to how you're thinking about prioritizing when it comes to the Matting business, the expansion with another plant as well as, I think previously, you talked about moving into the rental business for Spartan and that might be some sort of tuck-in acquisition. Just wondering which one takes priority at this time.
I would really describe that not as an either/or, but when we can -- when the opportunity presents itself. What's clear to us is the acceptance of the new Spartan 7 Mat. The XL has been remarkable. The fact that we have sold out of production really makes it simple for us that we need to increase that capacity to look after our customers, and we're going to do that.
And it's not a short-term anomaly. When we bought the company, we talked about the long-term movement towards matting, access matting in the transmission and distribution part of the electrical market. And that's just going faster than we thought it would. And the resilience of that new mat is making an even better product there.
So that's why we're confident in building another facility. If we could get into the distribution business by finding an appropriate rental company, we're still very interested in that. But there are almost two separate decisions. We're going to increase the size of our production. It's just when and how fast we can do it. And we will ultimately get in the rental business, but that's more dependent on when we find the right opportunity.
Okay, great. And then maybe just one more. On the Window business, it certainly sounds like the orders are picking up now. Can you give us a bit more detail on where geographically you're seeing strongest orders, if it's Canada or the U.S.?
In terms of new orders, it's been in Canada. It's a little different than the market typically has been. It used to be exceptionally Toronto-centric. And we've added stuff in Western Canada, in Vancouver, in Calgary. And so I would say that the newer stuff is diverse across Canada. There's opportunities in the U.S. that we're excited about as we've moved into new markets.
We're just working on our first -- completing our first project in Houston, our first Texas project. We're bidding on a couple of other things there. There's kind of renewed interest in a couple of opportunities in Southern California. And so I would say some of the optimism comes from the U.S. starting to catch up to Canada.
Toronto still has a lot of empty 500 square foot condos. But really, that's not where Canada's housing shortage is. It's for families and families don't live in 500 square foot condos. So ultimately, we're going to have to build apartments in Canada, which will be good for the business. And that goes together with some of the conversions and other specialty projects we're doing in the U.S.
And your next question comes from the line of Chris Murray from ATB Capital Markets.
Maybe this is more of a theoretical question. But thinking about the new government and some of the discussions it's had about where it wants to take some of its policy aims, there's been certainly a big discussion about expansion in the -- in military spending, trying to hit the 2% NATO target. But also we've seen announcements like an investment in a new Australian long-range radar, but also investments in infrastructure in Northern Canada being a focus as well.
Just thinking about what you guys have done with PAL off the East Coast and certainly where you're positioned right now, you have to think that you should be fairly well-positioned to be able to take advantage of some of that. But I was wondering if you could talk about your ability to scale in the North and to bring in additional military services for what's looking like probably a prolonged period of growth.
Yeah. You're absolutely bang on and you basically sort of espouse the investment thesis on Canadian North. We know when we're buying it, there's some things we got to do to it to make it operate like our existing businesses. But the simple fact is if Canada is going to meet our NATO requirements and improve our relationship with the U.S., we're going to have to help with the early defense up north.
That means we're going to have to build bases up there. That means people are going to be traveling up. That's all stuff that fits into our core business. Additionally, we think there's going to be additional office surveillance opportunities, whether it be in the far north where we are pitching ideas to the government or on the American border, where we have solutions, whether it be rotary wing.
And so I think the -- whether it's the scheduled more traditional part of the business or the ISR part of the business, both of them have very strong medium- and long-term opportunities here. The building of the bases, we're not going to pull the steel beams up there on an ATR, but the people that are going to go up there, whether it be the military people, the civilian construction people, they are all going to be on our aircraft. And that's why we want to be the supplier to Canada's North.
And the reason why I'm so confident this will be approved is because the consolidated operations between Canadian North and Calm Air will be able to give us the best level of service in a really spread out marketplace. In addition to what we've talked about with the military growing, I think you're also going to see enhanced searching for and ultimately production of rare earth minerals.
In the Eastern Arctic, there's a lot of them with the relative discourse with China, which is where most of them come from now, the opportunity to produce those in North America is going to become increasingly important. And again, that fits into the aircraft we have up there. So it all fits into a kind of a bullish medium term.
Okay. That's interesting. A slightly different question on cap structure. One of the questions I've had from a few investors now is around the plans around the DRIP, the dividend reinvestment plan. Just wondering, again, it probably had a purpose at its time when you were smaller, but as you're starting to get -- starting to grow larger balance sheet. Just wondering how you and the Board are thinking about the utility of maintaining it versus the dilution it creates.
Did you sneak into our boardroom, Chris? It's an active discussion about the DRIP. We like giving people access to turning it into stock. But the problem with it is it creates this massive dislocation every quarter end when people sort the stock to be able to take the DRIP dividend and turn it into cash.
And so we will be, as a Board revisiting our DRIP, potentially reducing the discount that's on it or eliminating it altogether. A decision hasn't been made yet, but your comments fit well into what the discussions that are going on within our Board about whether we've outgrown this and the dislocation it creates much like the convertible debentures do to the stock that maybe we just don't need this anymore. No decision has been made at this point yet, though.
Your next question comes from the line of Amr Ezzat from Ventum Capital Markets.
I've got a couple of ISR-related items I wanted to clarify. First, it looks like the language in the MD&A around the second U.K. ISR aircraft shifted slightly from mid-2025 to the latter part of 2025. Is that a delay in deployment or am I reading too much into the change in language? And second, on the support contract that shifted from performance-based to time and materials, can you speak to the margin implications there and whether this is something we should expect to see more of in the future?
Sure. It's Jake speaking. I'll talk to the first about the ISR. There's really been no timeline change at all. The aircraft is on schedule and getting ready for deployment. So I apologize for any confusion on that.
As it relates to the maintenance contract, our customer is still making decisions about the long-term way they want to do this. We're doing it under an interim model at this point. It clearly reduces our revenues because the planes are flying less. Ultimately, we'll see where that shakes out. But it's a maintenance contract. We've had it for a while.
We're the only ones who can really do it in a high utilization methodology. And so we'll see where that shakes out over the next quarter or two. But while the customer is deciding how to deal with it, it will reduce revenue and EBITDA in that segment, which was fully recorded in this quarter. And I would say it is factored into our guidance.
Fantastic. That's helpful. On the matting side, I know we beat it to death, but I'm just wondering, like with utilization running so high, are you seeing any pricing power emerge in the U.S. or is the competitive landscape keeping rates in check?
Then on the Canadian side, you did sound obviously extremely bullish on the new government's infrastructure and pipeline stance. But I'm wondering how would you characterize client discussions since the elections? Are you seeing concretely any greater visibility or it's still like early days?
In the U.S., we're a small player. There's three main players in this, and we'd be the smallest. I would argue with our new mat, we're the best, and you can see it in the take-up of what we're building. But we're not a market maker in that. Pricing is strong because there's not a lot available, even though input costs are lower at this point because of lower natural gas prices, which affects the price of resin. So it's bullish on that front. But I don't see us having any kind of market power to change pricing.
I believe pricing will remain stable because of the level of demand there is in the marketplace. In Canada, the discussion about new pipeline projects, East-West projects, exporting LNG are super bullish. That's the best business, that and electrical distribution are the most profitable business for the matting world. There's lots of discussions. There's lots of initial quoting and discussing of prices. Nothing has gone so we know when it's going to start.
I would suggest that the government change is probably more of a 2026 story in terms of our revenue as these projects would -- by the time they ramp up. But having said that, some of the things on the electrical distribution side ramp sooner than that, and we expect to see that stronger in the back half of the year. We just like to see a little rain, so it gets a little muddy in Alberta, so we could do a little more work with the oil and gas there. But by and large, the overall market dynamics are strong.
Yeah. And maybe this is Travis here. So there's been also a lot of like recent press. I think this morning, there's an article coming from the CEO from Trans Mountain talking about building new pipelines and sort of the importance of optimizing existing capacity, which does require sort of mat usage if you're adding additional loops in and things like that to increase capacity and utilization. So sort of very bullish on the short, medium and longer term with some of these announcements and press.
And your next question comes from the line of Konark Gupta from Scotiabank.
I want to kind of first kick off with the guidance clarification question. So I just want to make sure your guidance is unchanged, obviously, but you have embedded now there's no shutdown -- temporary shutdown of the Spartan plant in that. And it also embeds the contracts that you have already won and with some of the delays you talked about in terms of getting aircraft on time. And it seems like there's no Australia contract-related CapEx in the guidance. So do those things make sense?
Yeah, those are all correct. We -- clearly the fact that we're not shutting the plant down at Spartan is bullish, and that's not the way we budgeted at the start of the year. So those things help within the guidance, make us more confident in what we're doing. We don't revise the guidance for every little change in every business.
That's the advantage we've got on the diversity of our business model. In terms of Australia, you're correct. We've got all the costs of making the bid doing the presentation. So we have budgeted continued work on winning the contract. But the actual CapEx should we win would be in addition to what we've talked about. But conversely, so would all the revenue as we ramp up the business.
I see. Just on the Windows side of things, I wanted to ask you like what are we seeing here in the marketplace? I think it's not the first time, I guess, Windows business has seen some volatility, right? I mean it's been ongoing for some time and like COVID obviously convoluted things clearly. But your bookings are maybe stable to up.
You have a big backlog, obviously, that you built over the last few years. The production, you're not likely ramping up, it seems, I mean, given the inquiries are not converting to that degree. But what's the overarching kind of theme in the Windows business right now in the short term? Like what's impacting it?
It's really just the developers having the confidence to pull the trigger. Canada has historically been a condo market. And so they've typically been financed by people putting their deposits down, giving the developer the equity base to then use debt to complete the project. Changes in the market, changes in mortgage requirements, higher interest rates have made that harder to do, but it hasn't changed the demand for the product.
So we're seeing a shift towards apartment buildings. Those need to have confidence because those are long-term returns as opposed to a condo sale with the developers in and out. And so we haven't seen contracts being awarded at the rate we'd like to. We remain very bullish on what we're bidding. There's a lot of bids out there.
We've started to see stuff happening outside of Toronto. We've had wins in the last several months in Vancouver. We've had wins in Calgary. We've had wins -- some wins in Toronto, but we've also had stuff in Houston. We've had stuff in Nashville, and we're starting to see some life in the California market. So as those become better and better, what will happen is the density of our production improves. We get more flow through, the enhanced efficiency of what we've done with the plants will then become more evident when the employees are fully employed.
I talked a bit on our Q4 call that we haven't laid off people the way we would if we were a pure window business during this slower period because they're skilled employees and we don't want to lose them. And so to a certain extent, we're not maximizing our short-term profitability right now to make sure we're ready for the long-term surge when this comes.
Okay. That's helpful. And then last one before I turn over. On Spartan manufacturing, any sense on when is the earliest you are likely to transition the plant to the new product line, which might require a couple of months of shutdown? And when you talked about the second plant, like it's a sure shot deal, like you want to have it or that's like a TBD situation, you will see how demand goes?
No. What we decided is we're not going to shut down the plant in the foreseeable future. And we're going to go straight to building something more. The changes we could make by shutting it down and enhancing production still wouldn't solve the problem or I guess the opportunity is a better word than the problem.
And so really, we're pretty committed to the concept of building a second factory. The real discussion is there's internal debate about where it should go. And once we do that, then we can source the real estate and order the equipment. Building the plant is not rocket science. Now that we've built it once and it runs the way it is, we'll build a bigger version of what we have.
And so it won't be a matter of one replacing the other. It will be a matter of running two to keep up with demand. It's likely that the second plant would also be scalable. I suspect we'll take a bigger footprint than the equipment we put in initially so that if things continue to grow in the medium-term, we can add more capacity if we need it.
And your next question comes from the line of Jeff Fenwick from Cormark Securities.
I know we're late in the call, so I'll try to be quick here. One question was on ISR with the training contract that rolled off. I know you guys are participating in the Skyline opportunity there as well. So just when do you expect that next wave of opportunity in training to come on? And is that a similar size or larger or smaller opportunity? And is the margin comparable on that as well?
I'm not really going to comment on the margin piece of that because we're still negotiating with our partners at Skyline. The size of that opportunity is much bigger than the couple of contracts that have rolled off. We're a long way down the road with our partners, and I would anticipate that coming to fruition later on this year, next quarter or so. Those are very active discussions. That's a great opportunity. We've got some really good partners with CAE in that project. So we look forward to finalizing that and announcing it hopefully by the time we release our Q2 results.
Okay. And then just one on growth CapEx. You gave us some color on items that are feeding into this year. Can you just give us a bit of a sense of the cadence of the build? It sounds like the U.K. spend is largely sort of sunk at this point. King Airs are going to come on through the back half of the year. Like does it progressively build through the quarters then through the.
The King Airs, I mean, we've talked about the cost of those aircraft and you'll see 8 or 10 of them between midyear and the end of the year. My guess is it's more like 8. They haven't overperformed in delivering them. So you'll see a significant amount of investment in those in the second half of the year. The balance of the projects, though, will be largely complete by midyear. The Home Office aircraft is essentially complete. We're just tweaking it.
Jeff, it's Jake. The only caveat I'd put out there, again, is if Regional One opportunistically comes upon something -- we're open for business at any point.
Yeah. I mean, Regional One is impossible to forecast. When we find something, we'll jump at it. And then we're almost finished the installation of our simulator. We finished the new Passenger Lounge at Perimeter. So the other big projects are drawing to a close with the exception of the aircraft for the BC contract.
And your next question comes from the line of Tim James from TD Cowen.
I just want to return to the Window Systems business for a minute and just want to kind of think about this in terms of risk to the revenue from that business. Now you talked about the backlog strengthened in 2024, which takes 18 to 24 months to really benefit revenue, hence, the 2026 improvement as opposed to '25.
How solid are those bookings? Like I assume it's difficult for customers to change project timing kind of once the ball is rolling. And so in other words, that strengthening you're expecting in '26, how dependent is that on kind of this environment of uncertainty that we're dealing with in '25? Does it really matter what goes on this year? Are those things -- is that improvement in '26 pretty well in the books or is there much risk to it?
I mean we want to continue building the book, Tim. So I would be overstating things by saying there's no risk in that. Clearly, there's some risk. Projects can get delayed. I don't see much risk of cancellations. You lose one here or there, but it's not material. We stayed static over the quarter. Even the slower quarter here, our order book didn't decline in any material way.
And so I'm confident in the recovery in '26. The recovery could still be better if we keep booking stuff for the back half of the year. That will assist in that. But typically, once we put it in our order book, the project is going to go ahead, barring something unforeseen. It can happen, but that's not common.
Okay. That's helpful color. My second question, can we just sort of round out with just thinking about these great medevac contracts that you've won over the last year or two, BC, Manitoba, et cetera, the repricing. Can you just give us a sense for when those kind of hit full rate revenue and they sort of hit that -- I should say, that steady state, I guess, as you just kind of walk through the key ones that you've secured over the last couple of years?
Sure. So we're generating in terms of the Manitoba medevac contract, that's fully up and running. We -- partway through last year, we had the turboprops go. Towards the end of the year, we had the Jets go. And so that's fully contributing now. We're still lapping numbers that it wasn't [ in ]. The BC medevac contract, we're now flying all of it.
We're kind of belt and suspended it together because of the delays in the delivery of the aircraft in BC. The BC contract itself is expanding. We've had extra hours added an extra potential aircraft added to that. So that will continue to grow. The Newfoundland contract, we're not doing anything on yet. We're just finalizing the words.
We should start flying in a more meaningful way later in the year on that one, although I would say that it's more of a '26 bump and we'll get some of it towards the end of this year, but not a huge amount. And then the same for the BC -- I'm sorry, the Newfoundland Helicopter medevac contract towards the end of this year. On the -- switching gears to the maritime surveillance work. That plane will be in service this summer, the second one.
And we'll see what happens on that maintenance contract as well. The Nunavut medevac contract, which we do all of it now, the RFP was out just recently. I really can't comment much. We haven't got our teeth into it yet, but we've got a lot of infrastructure in the north, and I'm quite confident in our ability to retain and grow that contract. And our initial read of it, the new contract is going to be a bigger amount of work than what we're currently doing. So there'll be expansion in that opportunity.
And your next question comes from the line of Razi Hasan from Paradigm Capital.
Just a quick one. Could you guys just elaborate a little bit on the tariff impact on foreign exchange and where you're seeing some of that demand erosion you mentioned a bit earlier?
It wasn't so much demand erosion as it was just uncertainty. Guys were holding still on more awarding contracts and things. That seems to be improving now notionally. It was more like if you -- I'd just give an example of if someone is building an expansion of a factory and we're putting SFI tanks in it, when they actually pull the trigger to start the project.
And so not worried about what they're doing and not worried about our ability to win them. It just creates uncertainty as to when we book them into our schedules. I think now with the step down of the reciprocal tariffs a couple of weeks ago and now more recently with yesterday's news about the China arrangement, I think we're going to see these things sort of fade back into the woodwork. There's a second part of your question. What else did?
That was it. Appreciate it.
There are no further questions at this time. I would now hand the call back to Mr. Pyle for any closing remarks.
Thanks everybody for being here. I look forward to seeing some of you in an hour over at our Annual General Meeting. We're proud to show off our newly redone hangar over at Perimeter, where we took a 1930s war hanger from the government, refinished it. It's got beautiful Quest and BV windows, and it's got matting from both of our matting companies. So hopefully, some of you can come join us and see it. For those of you who can't, I look forward to talking to you again in August with our second quarter numbers. Have a great day.
Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.