EIFZF - Exchange Income Corporation (EIFZF) Q1 2024 Earnings Call Transcript

2024-05-10 15:05:25 ET

Exchange Income Corporation (EIFZF)

Q1 2024 Results Conference Call

May 09, 2024 08:30 AM ET

Company Participants

Mike Pyle - CEO

Rich Wowryk - CFO

Carmele Peter - President

Conference Call Participants

Steven Hansen - Raymond James

Cameron Doerksen - National Bank Financial

James McGarragle - RBC Capital Markets

Krista Friesen - CIBC

Matthew Lee - Canaccord Genuity

Konark Gupta - Scotiabank

Tim James - TD Cowen

Chris Murray - ATB Capital

Presentation

Operator

Good morning, everyone. Welcome to the Exchange Income Corporation's Conference Call to discuss the Financial Results for the three months ended March 31, 2024. The Corporation's results, including the MD&A and financial statements were issued on May 7, 2024, and are currently available via the company's website on 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 the 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 sections of the Annual Information Form and EIC's other filings and Canadian securities regulators.

Except as required by Canadian securities law, EIC does not undertake to update any forward-looking statements such as statements speaks 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. And I would like to turn the call over to the CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, sir.

Mike Pyle

Thank you, operator. Good morning, everyone, and thank you for joining us on today's call. Yesterday was the 20th anniversary of our IPO and the completion of our first acquisition of Perimeter. And I will talk about the history of EIC and what makes us successful shortly. Yesterday, we also released our first quarter results for 2024. In announcing our results, we reported several records for our first quarter financial results, and this set the foundation for the remainder of the year.

We set records for revenue, adjusted EBITDA, free cash flow and free cash flow less maintenance capital expenditures. Subsequent to the quarter end, we also completed the extension and upsize of our Corporation's credit facility to CAD 2.2 billion, which includes a new CAD 200 million social loan tranche. The social loan is one of the first syndicated social loans in Canada and is in alignment with the social loans principally established globally.

This was a great achievement by Rich and his team as this provides us with significant liquidity to fuel our growth, whether via organic growth or acquisition, which I will touch on later in today's call. Our results demonstrate the success of our strategy. Firstly, we buy proven companies with excellent management teams.

Secondly, we invest in those companies and nurture their growth. And lastly, in doing so, we can provide stable and growing dividends for our shareholders. This strategy has been the blueprint for our success for the past 20 years and is even more relevant today. The secret sauce is the disciplined nature of our acquisitions and investments in growth capital in our businesses and operational execution by our underlying subsidiaries. EIC preserves the cultures in our acquired entities and creates an environment where their management and employees can thrive.

With me today is Rich Wowryk, our CFO, who will speak to our financial results; and Carmele Peter, our President, who will expand on our outlook for the second quarter and beyond.

I will limit my discussion to some of the key consolidated performance indicators, and Rich will delve into the results by segment and provide some further insights on our financial performance. For our first quarter, revenue increased 14% to CAD 602 million. Adjusted EBITDA also increased by 14% to CAD 111 million. Net earnings were CAD 5 million compared to the prior year of CAD 7 million. Net earnings per share were CAD 0.10 per share compared to $0.16 in the prior year. Free cash flow less maintenance capital expenditures grew by CAD 4 million or 19% and to CAD 23 million.

Adjusted net earnings were CAD 10 million compared to CAD 12 million in the prior period, and adjusted net earnings per share were CAD 0.20 compared to CAD 0.27. The payout ratio on our free cash flow less maintenance capital expenditure basis remained very strong from a historical perspective at 58% even with 3 dividend increases in the last 20 months. We are very pleased with these results, and they show the resiliency and the diversification of our business model....

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