Exchange Income Guides to CAD 1 Billion EBITDA in 2027

Exchange Income (TSE:EIF) guided adjusted EBITDA to CAD 1 billion–CAD 1.06 billion for 2027, more than 20% above the midpoint of its original 2026 guidance. The company also said it expects to finish the current year at or above the top of its previously issued CAD 890 million–CAD 920 million range.

For finance teams watching capital allocation signals, the guidance carries two explicit assumptions. CEO Mike Pyle said the outlook does not include unannounced acquisitions or contract wins, but does assume renewals of certain existing contracts that management considers part of the normal course of business.

What did the third quarter deliver?

The company reported more than CAD 1 billion in quarterly revenue for the first time in its history. Pyle said Exchange Income set records across key measures, including earnings, adjusted EBITDA, free cash flow and per-share results, with no material acquisitions affecting the period-over-period comparison.

The per-share records came despite an approximately 8% increase in the weighted share count, which management attributed to the conversion of convertible debentures (debt instruments convertible into equity). The company reported an adjusted net earnings payout ratio of 60% and a free cash flow less maintenance capital expenditures payout ratio of 52%.

How strong is the aviation pipeline?

President Jake Trainor said fourth-quarter revenue and profitability in Essential Air Services should 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 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, although revenue and margins can fluctuate depending on whether the business sells whole aircraft, engines or parts.

Regional One has received a capital request to buy two or three Boeing 737 aircraft. The company built 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 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 follow.

Is manufacturing keeping pace?

Chief Operating Officer Travis Muhr said manufacturing revenue and profitability should rise in both the fourth quarter and full-year 2027. Environmental Access Solutions benefits from demand for composite mats in the United States and rising rental volumes and rates in Canada.

Muhr said the number of Canadian mats on rent is approaching 2023 levels, although Pyle noted that pricing has not returned to those levels — roughly the gap between a busy fleet and a profitable one. Management expects larger projects to support further growth into 2028, and Pyle said the TerraPro acquisition provides access to inventory as demand grows.

The new composite mat plant in Saltillo, Mississippi, remains on time and on budget, 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. 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.

Tariffs affected the windows business and prompted some customers to defer orders at DryAir Manufacturing. Muhr said the Section 338 tariffs affecting DryAir have been removed from the relevant tariff codes, and the subsidiary is contacting customers about deferred orders.

What does the balance sheet allow?

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 came in at 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 expects higher manufacturing maintenance spending, primarily to expand rental fleets and replace equipment.

What is the M&A and dividend outlook?

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.

Exchange Income Corporation is a diversified, acquisition-oriented company operating in two segments: Aerospace & Aviation and Manufacturing. It targets already profitable, well-established companies with strong management teams, steady cash flow, niche markets and organic growth opportunities.