Exchange Income Corporation Aktie

Good morning, everyone, and welcome to the Annual General and Special Meeting of the shareholders of Exchange Income Corporation. It's great to see so many here, particularly those who have been shareholders since the establishment of our company. My name is Don Streuber and as Director and Chair of the Board of Directors, I will act as Chair of this meeting.

Before we begin, I would also like to take a moment to review some important safety information. Emergency exits, please familiarize yourself with the nearest emergency exit. The primary exits are in the north corner not over the wings, but in the north corner or the door that you entered in from over there. In the event of an evacuation, please proceed calmly to the nearest exit and move to the designated muster point outside. The muster point is on the corner of Ferry Road.

Fire alarms and equipment. If the fire alarm sounds, we will stop the meeting immediately and evacuate the building. Fire extinguishers are located at every exit and only personnel trained should use them. No smoking or vaping are permitted indoors at any time. If you notice any hazards or unsafe conditions, please report them right away to any staff member. Your safety is our priority. Thank you for your attention and cooperation and do not look for an oxygen mask to drop from the ceiling.

Before we begin, I would like to also take the time to acknowledge that this meeting is taking place on the indigenous ancestral lands on Treaty 1 territory. The Red River Valley is also the birthplace of the Métis. We acknowledge that our water is sourced from Shoal Lake 40 First Nation and we respect and give honor to the Indigenous People's history on this land and recognize First Nations, Méti, Inuit Peoples' ongoing contribution in our neighborhoods and communities today. I will lead us through the formal part of the agenda, and then we will have a presentation by our CEO, Mike Pyle, on the company's progress during the past year, after which we will have an opportunity to answer questions from registered or beneficial shareholders.

For those of you attending virtually instructions on how to use and to ask questions and the voting procedure will appear on your screens. As with any technology, unexpected glitches may occur, but our service providers for this platform at Lumi are very experienced at running this type of meeting and will help us out, if any, issues arise.

I would like to offer a very special welcome to the mentees from, I believe, it's 16 of our businesses that are coming here to join us today. And I would also like to offer a very special thank you to the team at Perimeter as well as Custom Helicopters for getting this room ready and providing us with some show and tell for after the meeting. Please take the time to ask the questions and to just look at some of this new equipment that's been out for your enjoyment and information.

The meeting will now come to order, and I will ask Dianne Spencer to act as Secretary of the meeting; and Kristine Calesso and Jennifer Villareal of the TSX Trust Company to act as scrutineers. Everyone present in person should now be registered with the scrutineers and all proxies should have been deposited. If not, please do so now.

The Secretary has confirmed to me that the notice calling this meeting of shareholders was filed on SEDAR+ on March 6, 2026, and the record date for the determination of shareholders entitled to receive notice of and to attend and vote at the meeting was March 31, 2026. The scrutineers have provided the chair with a report and the Chair adopts the scrutineer's report confirming that there are present by proxy of a sufficient number of persons holding a sufficient number of shares entitled to sufficiently vote at the meeting to constitute a quorum.

Voting delegates and any other person attending a meeting of the shareholders may address the meeting when there is a call to discuss a motion before the meeting. Should you wish to address the Chair on any motion, please raise your hand and the Chair will call upon you. Or for those attending virtually, please type in your question or comment in the message section and the moderator will read the question aloud.

Notice having been mailed as required and a quorum being present, I declare that this meeting is duly constituted for the transaction of business, and the polls are now open for all resolution matters with voting required for 4 of them.

We will conduct the votes on the matters before us by poll. On a poll, every shareholder entitled to vote on the matter has 1 vote in respect of each share entitled to be voted on the matter and held by the shareholder. The poll will be open for all resolutions at the same time. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your vote. If you have already voted in advance of the meeting and do not wish to change your vote, you do not need to vote again during the meeting.

Finally, we would like to remind you that our answers to your questions and our presentation may contain forward-looking information. By its nature, the information contains forecast assumptions and expectations about future outcomes, which are subject to the risks and uncertainties discussed more fully in our public disclosure filings.

We will now go through each of the items on the agenda in turn. The first item, financial statements, is to receive and consider Exchange Income Corporation's consolidated financial statements for the period ended December 31, 2025, together with the auditor's report on these statements. The financial statements and auditor's report on them were included with the material sent out giving notice of this meeting and available on SEDAR+ and the corporation's website.

Nicky Murray of PricewaterhouseCoopers audit partner for the EIC audit, is in attendance here today. Unless there are any questions of management or the auditors, we will take the financial statements and auditor's report as received and considered.

The second item of business is to appoint the auditors of Exchange Income Corporation for the ensuing year and to authorize the directors to fix the remuneration of the auditors. Would a voting delegate please make the motion.

Mr. Chair, I move to resolve that PricewaterhouseCoopers LLP be appointed auditors of Exchange Income Corporation to hold office until the next Annual General Meeting or until their successors are duly appointed and the directors be authorized to fix the auditor's remuneration.

Mr. Chair, I second the motion. You've heard the motion by Richard Wowryk, seconded by Travis Muhr. Is there any discussion of this motion?

No. Mr. Chair, there is no discussion at this time.

Thank you, Madam, operator. As there is no discussion, I will now call for a vote on the motion before the meeting. All those in favor, please signify by raising your hand. Any contrary? Would all virtual voting delegates please enter your votes in Lumi.

The third item of business is the election of directors of Exchange Income Corporation for the ensuing year. As we did not receive any other nominations in compliance with our advanced notice bylaw, I declare the nominations closed. And I will now entertain a motion to consider an ordinary resolution to elect 11 directors to hold office until the next general meeting of the shareholders or their earlier removal or resignation. Brad Bennett, Gary Buckley, Polly Craik, Barb Gamey, Bruce Jack, Duncan Jessiman, Carmele Peter, Michael Pyle, Melissa Sonberg, Donald Streuber and Edward Warkentin have been nominated for the election as directors of EIC. Would a voting delegate please make the motion?

Mr. Chair, I move to resolve that Brad Bennett, Gary Buckley, Polly Craik, Barb Gamey, Bruce Jack, Duncan Jessiman, Carmele Peter, Michael Pyle, Melissa Sonberg, Donald Streuber and Edward Warkentin be elected as directors.

Mr. Chair, I second the motion.

You have heard the motion by Richard Wowryk and seconded by Travis Muhr. Is there any discussion of this motion?

Mr. Chair, there is no discussion at this time.

Thank you. As there is no discussion, I now call for a vote on the motion before the meeting. All those in favor, please signify by raising your hand. Any contrary? Would all virtual voting delegates, please enter your votes in Lumi.

The fourth item of business is to approve the fifth amended and restated shareholder rights plan of the corporation. A summary of the key features of the fifth amended and restated shareholder rights plan of the corporation was included in the corporation's management information circular dated April 6, 2026, and a copy of the fifth amended and restated shareholder rights plan may be obtained by contacting the corporation at the address set forth at the end of the Management Information Circular or on SEDAR+ at www.sedarplus.com. Would a voting delegate please make that motion?

Mr. Chair, be it resolved that, as an ordinary resolution of the shareholders of Exchange Income Corporation, the shareholder rights plan of the corporation be continued the fifth amended and restated shareholder rights plan agreement to be made as of May 12, 2026, between the corporation and TSX Trust Company as rights agent, which amends and restates the fourth amended and restated shareholder rights plan agreement dated May 10, 2023, be and is hereby authorized and approved. And any one director or officer of the corporation be and is hereby authorized for and on behalf of the corporation to execute, deliver and file such documents and do all such things as such persons considers necessary or advisable to give effect to the foregoing resolution.

Mr. Chair, I second the motion.

You have heard the motion by Richard Wowryk and seconded by Travis Muhr. Is there any discussion of this motion?

Mr. Chair, there is no discussion at this time.

As there is no discussion, I now call for a vote on the motion before the meeting. All those in favor, please signify by raising your hand. Any contrary? Would all virtual voting delegates please enter your votes in Lumi.

The fifth item of business is to approve on an advisory basis, the corporation's approach to executive compensation. As described in the corporation's management information circular dated April 6, 2026, the corporation's compensation policies and procedures are based on the principle of pay for performance. The Board believes they align the interest of the corporation's executive team with the long-term interest of shareholders. Would a voting delegate please make this motion?

Mr. Chair, be it resolved that on an advisory basis and not to diminish the role and responsibilities of the directors of Exchange Income Corporation, the shareholders of the corporation accept the approach to executive compensation disclosed in the management information circular delivered in advance of the Annual General Meeting of Shareholders of the corporation.

Mr. Chair, I second the motion.

You've heard the motion by Richard Wowryk and seconded by Travis Muhr. Is there any discussion of this motion?

Mr. Chair, there is no discussion at this time.

As there is no discussion, I now call for a vote on the motion before the meeting. All those in favor, please signify by raising your hand. Any contrary? Would all virtual voting delegates please enter your votes in Lumi.

We will now take a short pause to answer any questions that have been submitted and to permit any registered shareholder or proxy holder who has not already done so to record their votes on Lumi on the motions before the meeting. Having received no questions, I will close the poll in 30 seconds. Can somebody sing the Jeopardy song?

I have now received the preliminary scrutineers' report. With respect to the election of directors, I'm advised by the scrutineer that each of the proposed nominees has been duly elected. With respect to the resolutions to appoint the auditors, approved the fifth amended and restated shareholders' rights plan of the corporation and approve on an advisory basis, the corporation's approach to executive compensation, I am advised by the scrutineer that these resolutions have been duly carried. The detailed results of this meeting will be announced in a press release and will be included in a voting report to be filed on SEDAR+ as soon as practical after this meeting. Is there any further business to be conducted at this meeting? If not, I will entertain a motion to terminate this meeting.

Mr. Chair, I move to terminate the meeting.

Mr. Chair, I second the motion.

You have heard the motion by Richard Wowryk and seconded by Travis Muhr. Is there any discussion of this motion?

Mr. Chair, there is no discussion at this time.

Your turn. Please welcome Mike Pyle, CEO of Exchange Income Corporation.

We'll start with a brief video Pam has put together about the company, and then we'll talk a little bit about last year. what's happened in the first quarter of this year and some of the things that have helped us get there.

[Presentation]

Before I start, this popped up on one of the LinkedIn pages of one of our employees. And kind of jumped off the page, someone's put together a list of the 25 largest airlines in the world by market cap. When we started in 2004 with our purchase of Perimeter flying metros into Shamattawa or St. Theresa Point, I really didn't think that there'd be a day where we would be the only Canadian company on the list and in the top 25 airlines in the world.

Now the shareholders in this room know we're a lot more than an airline. But to be grouped with the biggest in the world shows you what's been accomplished here over the last 20-plus years as we've added great companies and then the teams there have grown those businesses. It's something that we're really proud of that we're on that biggest stage while sticking to exactly what we promised our shareholders back when we started in 2002. So what have we accomplished? 18 dividend increases over the life of the company. And I think that's significant because we've been giving lots of advice from our investment bankers and that help us to say what we should do in the flavor of the day.

There's times when dividends are sexy. There's times when growth is sexy. There's times when deep value is where you want to be. We've been the same thing for 20 years. That's a company that delivers a reliable, growing dividend to our shareholders, but not just the dividend, we give you growth beside it. So you could see that chart, it doesn't go straight up because there are some periods when things aren't very good, like you could see during COVID, we didn't increase the dividend because it wasn't prudent to do it. And then '22, '23, when we came out, we were rocking and we increased it more than once a year. And so the Board is very cognizant of raising dividends when we have the money to be able to do it.

But having our shareholders be able to know that's a core value to us as a company, and they can rely on that check every month and the fact that next year, that check will probably be a little bigger. Interesting numbers. We've now paid over $1 billion in dividends to our shareholders.

If we were only going to have one chart to show you, I think this is the one I would use. This shows our returns for -- since we started 15, 10, 5, 3 and 1-year period. And you could see that it's typically right around 20%. But more importantly, compare that to the TSX or the Aristocrat fund. And the Aristocrat fund is one of the highest profile dividend funds in Canada, which has remarkably successful companies. I'm proud we're a part of it. But in -- we're at least 2x in most periods and a lot of times closer to 3x the return of that index. And by doing that over the long period we have, it shows you that it's not one great decision that's been made or one big contract somebody's won or one really good decision. It's a business model where we buy great companies and empower management teams and then stay out of their way.

You could see some of the CEOs in the room here. I hope you get a chance to say hi and talk to them about their individual businesses. But the magic of EIC isn't what we do to the companies when we buy them. It's what we don't do to the companies when we buy them. We don't think that all of a sudden because we own a matting company that we know more than the stars and the matting companies we own, we clearly don't. Our job is to provide capital, provide support and then let our superstars control the game. And this chart, I think, tells you that, that business strategy works.

This is another way of looking at the same sort of thing. If you had thrown $1 into our stock in 2004, it would be worth slightly less than $6,000 at the end of last year. Comparatively, if you've throw it into the TSX, you'd have $6. And if you were to run this chart now, it's closer to $7,000 than it is to $6,000.

So just going quickly over our results for last year. You could see a big jump in our revenue. That was largely driven by a few key contract wins and the acquisition of Canadian North. I'm going to come back to Canadian North in a bit, but I would tell you that is longest acquisition process in the history of Man. We started talking to them in 2007, and it only took us 18 years to get the deal done. But we're so proud of that as part of EIC because now we are the dominant player in the North. And with all the great things that are happening in Canada's North, the commitment of the new government to the north, if you want to go there, I don't know which EIC plane you're going to fly on, but you're going to fly on one of our planes. And so what we're doing now is a fraction of what we'll be doing in the future.

You could see our EBITDA has grown pretty much on the same track. If you look at 2020, the trough during COVID, about just under 300, and we're now 3x that size. That's a pretty dramatic growth in 6 years. This shows the same thing on a per share basis. It's not as dramatic because we've always invested in our balance sheet and making sure we've got equity so that our leverage stays reasonable, and that it's reliable, and we don't have to worry about our banks changing their mind, at all-time highs last year in EPS and in free cash flow per share. And when we pop forward to the next quarter, you're going to see a much more dramatic increase in that.

So here's Q1. Last year, we had revenues of $668 million. This year, $200 million more than that. Adjusted EBITDA moved from $130 million to $166 million. And what I would point out just as an aside is if you look at 2020, we made $67 million in EBITDA in that first quarter. Our increase this year was half of that. And so the rate of growth isn't slowing down. It's, in fact, accelerating.

Here, you see -- remember, I talked just a few minutes ago about how on a per share basis, the increases were smaller, and it's because of the investments we made in our balance sheet where we converted all the convertible debentures into equity, bumped up our equity box by $400 million, and that increases the number of shares. But the profitability of our growth is such that we've made twice as much in the first quarter in terms of earnings as we did last year. And we're up about almost 50% on the free cash flow basis.

But where the rubber hits the road with these numbers is what's our payout ratio look like? We always talk about how we want to reduce our payout ratio while at the same time as increasing our dividend. Shareholders in here will know we bumped it by about 5% in November at the same time as we took all that equity on. So we increased the number of shares outstanding, increased the dividend per share. And I'm ecstatic to tell you that our adjusted EPS payout ratio is the lowest it's been in the history of EIC. We're down to 67% payout ratios.

And on a free cash flow basis, not quite the all-time record, we're going to need another quarter or 2, but we're down to 57%. That's just a couple of quarters after we increase the dividend and after we added the equity. So that puts us in the spot where come November, management might suggest to the Board, we do it again. And if we keep performing like this, I'm pretty confident we'll continue to have the support of the Board to do those things. And it's really about the earnings and the growth come first, and then we share the rewards with our shareholders.

So let's talk a little bit about what we're going to do this year that's going to drive us to our guidance we've given the market of $825 million to $875 million. I should point out that on our conference call this morning, I told the market that originally, we had said $825 million to $875 million. And then in February, we bumped it to kind of the mid-upper range, which was $850 million to $875 million. And on our call this morning, we said we now believe we're at the top end range, which is significant growth off of last year's $750 million.

What's going to fuel that growth? How are we going to get there? Well, it's growth of our medevac program. In Manitoba here with the highly acute medevac program that we signed with the province of Manitoba that's now fully operational. It's the Newfoundland medevac program, which will kick into full force sort of midyear here. It will be the growth of our Nunavut contract and an expected long-term extension of that. And in addition to this, it's what's going on with our BC program. Notwithstanding challenges we had in getting all our airplanes from our manufacturer. Our team at Carson has found a way to keep our government customer not just satisfied but happy, and we will be taking our final delivery this summer and have the full ramp of that project as well. And so medevac, which is the most -- one of the most reliable sources of revenue we have, it's not affected by inflation. It's not affected by unemployment. It's not affected by fuel prices. It's just a strong, reliable source of revenue where we do a great job.

Northern routes are going to be a big part of this. We've added Canadian North. And so in the first and second quarter of this year, we don't have a comparative for Canadian North. So that gives us a big jump in our numbers. But beyond that, with the investment in Canada's North, we've seen passenger numbers growing significantly in our Nunavut business, not just in Canadian North, but in Calm Air as well.

And so we're just on the description I used in our conference call, we're not even in the first inning of that growth where they just threw out the honorary first pitch of that game. And that growth is going to grow, and you're going to see that over the next decade as the Canadian government invests in new runways for the F-35s to land on new military bases. Private enterprise invests in new mining and critical mining opportunities. And so we're just at the beginning of this. You're going to see that northern routes on listing for the next 3 or 4 years as we talk maybe longer than that, but as we have this meeting every year.

Maritime Surveillance continues to grow. The demand for this around the world is remarkable. The uncertainty that's been created by the change in policy in the American government, where they're less reliant on NATO, less reliant on partners, more stand-alone has made other countries step up and say we're going to look after ourselves. And we've been the benefactor of that, particularly with new operations in Europe. A couple of years ago, we won in the Netherlands. We won in Great Britain. We announced that we've been selected to work with Greenland, and we're in discussions in other countries.

I want to deal a little bit with -- we announced that we weren't the winner in Australia. I don't know why we didn't win. And we frankly, we don't even know who won or if anyone won. They just told us it wasn't us. And the idea that this should be dramatic or a big problem, I really think is incorrect. We've talked about the growth of maritime surveillance, and we're not going to win every contract that's out there.

But the proof is we won one already, another one, and we're going to win more. And this is a long-term, highly profitable part of our business. And we're excited about it. We're not going to get everyone. And if we do get everyone, we're probably not bidding the right price. There are competitors who are good at this, but we're really good at it. And with the expansion of our stuff in Europe, the potential to do it in Northern Canada, I think you'll see us in other European countries in years to come.

Aircraft sales and leasing. Our Regional One business is booming. It's grown dramatically because of investments in aircraft we've made in prior years. Our leasing revenue is way up. Hank and his team have been in front of the curve in terms of buying things before everyone realized we need them. The shortage of engines and the shortage of certain types of aircraft is going to continue to drive this in the future. We've got our eyes on the horizon because of the crazy oil prices and more importantly, potentially fuel shortages has had no impact on Hank's business so far. But we're -- we have our eye on it.

We've also got the checkbook for Ritchie that if there is uncertainty in the business and there's assets become available, the best deals we do are in uncertain times. I've told a number of you about Hank came to me during the middle of COVID and said he wanted to buy a fleet of Q400 aircraft, which weren't exactly in vogue at the time. And I kind of looked like, do we really need to do this? And Hank said, "No. We got to do this." And so I listened and unfortunately, all those aircraft are gone. And we bought them for the price of about half an engine today. And so it's what you can buy in bad times that drives this business in good time. So hopefully, the market doesn't slow down. But if the market does slow down, we're going to be super active and take advantage of it.

We added MACH 2 to the family earlier this year. We've talked about for a long time that we'd love to expand our portfolio outside of regional jets and big turboprops. MACH 2 is in that market. They're a small player, but they are similar to Regional One in that they are very good at buying older aircraft, parting them out and earning special returns.

With Regional One's model, the market information on bigger jets from Canadian North and from MACH 2, it's going to give us the second booster of our rocket as we move into other types of aircraft over ensuing years. Now like Regional One, we're not going to jump into this boldly and take on too much risk. We want to make sure we know exactly what the value of the things we're buying is. So it will be a slow steady climb. But many of you are long-term shareholders will remember in the late '20 teens, we weren't really in the ERJ market. We are a Bombardier company. So sold CRJs. We dipped our toes into that. And today, we would do at least as much business in ERJs as we do in CRJs. I think you'll see that as we move into the 737s and ultimately, the wide-body jets in the future.

Finally, matting solutions. The Northern Mat acquisition in 2022 has been amazing for EIC. They're the dominant player in Canada. We bought them just as we are heading into the back end of a super cycle with long linear projects in the company greatly outperformed what we bought it off of. The last couple of years have been more in quotation marks normal and that there weren't a ton of long-run linear projects. That has turned. We've heard everybody talk about how the utilities are investing in new distribution capacity and new production capacity to look after driving electric cars and to look after data centers. Well, every one of those new distribution lines needs matting to -- for the construction equipment to drive on. So we're ecstatic about what Canada looks like.

And a little over a year ago, we bought Spartan, the composite manufacturer in the U.S. The U.S. market is a little ahead of Canada in that the electrical projects are well underway. Not that they're nearing completion. There's decades worth of work in that business. And we've essentially been sold out since the beginning of last year. And so I'm excited that we're building a new plant. It's on time, on budget. We're building it in Saltillo, Mississippi. If anybody has been there, I think you're the only one. But it fits us for what we do access to raw materials and access to the people we need and we're ecstatic that, that will be open next summer.

Finally, it's not on here, but we've really seen an uptick in our -- in the balance of our manufacturing business. Early in the year, it was slow, and I was a little concerned that we might be going through a lull. And in February, it was like someone turned on a light switch, whether it's our stainless steel tank business in Springfield, Missouri, where we took the biggest order in our history to build the cooling system for a data center at over USD 20 million for a single project or whether it's our precision metal manufacturing businesses, Ben Machine in Ontario, where we're doing incredible high-tech tool work for space projects for the F-35 spike fighter or our manufacturing businesses in Southern B.C., where we're building racking and things for data centers or our WesTower business, doing a full bunch of laying of the cable for these data centers or our pressure system business in Alberta.

The backlog is at record highs and growing. And so the future truly is bright. And I say that with one of our segments is -- has gone through a tough time, our Windows business. Darwin and my team out in Toronto have done a great job of realigning our costs, streamlining our production. And we know we're going to build apartments. We know it's the cheapest place for people to live. So it's a matter of time until that returns.

And when it does, it's going to add $50 million or $60 million more to what we're doing here with no investment because we already own the equipment, we own the buildings, and we've kept the people. So it's kind of our ace in the hole. One of our founding directors, Dunc and I have a running joke where Dunc says, "Wouldn't it be great if we could get them all going at the same time?" And then I tell them, well, the business model is designed that they don't all go in exactly at the same time because then they could all not go at the same time. So it shows you we're hitting record results with one cylinder not firing. And that cylinder will come back, and it will add to the growth in the future.

So I'm going to talk 2 or 3 really quick case studies and then I'll answer any questions if you have them. Canadian North is the dominant player in the east part of the Arctic and the West part of the Arctic. Calm Air was the dominant player in the central part of the Arctic. And Canadian North went through a challenging merger with First Air, sorry, I've got a brain tumor just before COVID. And COVID made that merger even more difficult of the pressure on companies to keep their employees and do things like that. And so it was a great opportunity for us to pick up an airline that has great people, a great tradition and wonderful market share, combine it with Calm Air to cover the whole north. And I think the proof of that was our customer, the government in Nunavut most would be concerned that, hey, these guys are consolidating the business.

Now we've got one big supplier. They were so happy that we had accomplished this and put 2 great airlines together that we got a new 10-year contract on a negotiated basis, which solved some of the aviation inflation challenges we had and put us on the path to grow. We're working on streamlining operations, seeing what we could do between the 2 airlines to continue to make them more profitable, but it's very clear in our in our financial results that Canadian North has been a huge part of our growth and is a huge part of the future as the North takes greater precedence in Canadian economic development.

So Canadian North was an acquisition. These 3 are examples of making investments into businesses we already own. We talked about Spartan, which my management team has done a phenomenal job of keeping that plant going 24 hours a day, 7 days a week and eking out every composite mat they can. But we're nowhere near meeting the demand of our customers. So we're building this new factory, which will more than triple our capacity. It's an investment that's about $60 million, if I remember correctly the budget. And we expect that it will be up and we'll be testing product next summer, and we'll be in production by the end of the year. And with the demand we have there, that's going to fuel our '27 and '28 growth.

PAL, you see it across the board. PAL is actually a mini EIC. And when I say mini, they're bigger than we were for most of our history. But they're involved in the scheduled airline like Calm and Perimeter and Canadian North. They're a feeder for Air Canada, where we do stuff on a tariff basis for them. And we're big players in the aerospace business.

Well, we've invested in that company consistently. It's 5x the size it was when we bought it and growing. And we bought planes for the Air Canada contract. We've invested in new maritime surveillance aircraft. I can't wait to win another maritime surveillance contract and buy some more planes there. But it shows that if you put capital in the hands of people who know what they're doing, you reap rewards.

And then finally, MACH 2, I talked about already. It's really -- it's an acquisition, but it's really buying capabilities for Regional One. Regional One needs that knowledge of the parts, the knowledge of the product and put it into the engine that it is and how it attacks the market. And so that's going to give us the ability to grow that business in the future.

If you walk away with a couple of things out of this is our business model works. We're not changing our business model, and our business model is based on putting money into the hands of people that are smarter than the people at head office.

Finally, one thing I want to touch on before question and answers is most of the stuff I've talked about is dollars and cents and finance. What we've accomplished at EIC is way more than that. A few years ago, we started the program of digging First Nations children in to the reconciliation game at the [ Bomber ] Stadium. And we brought in 1,000 kids. And I still remember when Wade Miller, the President of the Bombers came to me and said, "Mike, you guys got to step up. We haven't played for a year." And in the past, we had brought in one community a game. So 20, 30, 40, 50 people to a game, not too hard to manage logistically. And I boldly shot off without thinking we'll do 1,000 for that game. I walked back to my office and I told Pam and she looked at me and said, we don't have enough capacity to move 1,000 people.

But we found a way the airlines brought in extra planes. We shared it, and it is a testament to what we do in terms of investing back into our communities. And it's a proud moment when you look at that orange end to the stadium with all those kids in orange Bomber gear, which is kind of an oxymoron for a team that was blue, but it shows up in the stadium.

Well, we kind to put the rest of the CFL to shame. My real job was being the chair of the Bombers. And so I was chirping at some of the other teams that they needed to step up their game and follow us. And over the ensuing 2 or 3 years, every team now has some version of what we do for Reconciliation Day. And it's different with every team depending on what the First Nations component is of their fan base, where they get them from.

And this year, with the acquisition of Canadian North, I'm so proud to announce it's not just a Winnipeg story anymore. We're going to do it in Edmonton, and we're going to do it Ottawa. Canadian North is going to bring the people down from those communities, and we are going to make a difference in people's lives.

And then that is -- we've taken one step further into economic reconciliation with Atik Mason program where we're now graduating 30 or 40 pilots a year, which are going into our base. And on one hand, we're giving opportunities to First Nations people who didn't have that chance before. But on the other hand, it's incredibly selfish because we're getting pilots that get to service their own community. They don't run away to go to a job at Air Canada. They're proud to fly the St. Theresa point or Goose Bay or Rankin Inlet. And it's a big investment. I'm really thankful that the Board backed us on investing. We're spending north of $5 million a year on that program, but we're graduating pilots and we're making a difference.

And the reason I wanted to close with this is that being socially responsible and being profitable don't compete with one another. They go together. And I'm really proud of what we've done at EIC. So if there's any questions, glad to answer them. If not, we can have a sandwich and chitchat.

Last word? Okay. Thank you very much, people. We'll see you soon.

Good morning, everyone. Welcome to Exchange Income Corporation's First Quarter Conference Call to discuss the financial results for the 3 months ended March 31, 2026. The Corporation's results, including the MD&A and financial statements, were issued on May 11, 2026, 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 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 and 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 in today's call. With me today are Richard Wowryk, who will highlight our financial results, along with Jake Trainor and Travis Muhr, who will expand on our outlook. Yesterday, we released our first quarter results for fiscal '26. Our collective performance for the period was incredibly strong. The results continue to demonstrate the importance of our resilient and stable business model. And looking at the macro environment, the quarter was marked by volatility, high geopolitical activity and trade uncertainty and rapidly rising fuel prices, and yet our businesses set records in every key metric.

What is even more encouraging was the momentum that was generated within our business lines as we exited the quarter. We saw significant strength against -- across virtually all our business lines. Having a strong Q1 with accelerating momentum gives me significant confidence in updating our guidance. While we did not change our goalposts for the quarter as they remain from $825 million to $875 million, we now anticipate that we will be near the upper end of the range, which is a very positive signal. Should current strength continue, we may revisit the top end of the range in future quarters.

On the balance sheet front, we advanced key initiatives that further strengthened our balance sheet. During the quarter, we announced our investment-grade corporate credit rating and issued $600 million of 4.324% secured -- unsecured notes. Originally, we had planned to do an issuance of $400 million. But due to strong demand, we upsized the offering to $600 million. The notes were also issued on March 13, which was right in the middle of the geopolitical conflict with Iran. The timing of our issuance, coupled with the demand is external validation of our business model, the dependability of our results that we talk about each quarter and the year-end. At the end of the year, we had over $2 billion in available liquidity.

Liquidity is important in our business model as it allows us to act decisively when attractive opportunities arise, both on the acquisition front or for organic growth capital investment. I don't want Adam and his team to be constrained by market conditions or have deal execution risk. However, to be clear, this additional capital does not change our conservative view on leverage or change our disciplined acquisition metrics and strategies. Rather, the available liquidity allows us to be incredibly opportunistic in the marketplace.

Our leverage continues to be at or near 15-year lows and having 5-year unsecured notes provide us with significant real cash interest savings when compared to available swap rates. Further, based on today's yield curves, the savings are even more material.

EIC is a shining example of how a diversified and resilient business can navigate periods of uncertainty and continue to thrive. Our overall results were driven by a 30% increase in revenue to $867 million in the quarter. Adjusted EBITDA increased 27% to $166 million. The increases are even more impressive when you consider the translation impact of U.S. dollar results declined by approximately 5% when compared year-over-year. In our Aerospace & Aviation segment, the increases were driven by the acquisitions of Canadian North and Mach2, stronger passenger loads, solid medevac performance, growth investments in the fleet, stronger tempo flying under our ISR contracts and the addition of a second aircraft to the U.K. Home Office contract.

Canadian North has continued to meet our expectations of profitability and culturally is a great fit with our other air operators. Our maintenance capital expenditures continue to be elevated in the first quarter and will remain elevated for the next quarter or 2. However, that was expected and previously communicated to the market.

Our Aircraft Sales & Leasing business continues to see robust demand and increasing rental rates for leased aircraft and engines. Parts sales and whole aircraft sales continue to be very strong with significant aircraft monetization occurring during the first quarter based on opportunistic sales.

There has been a lot of news about airlines adjusting schedules in response to the price of jet fuel, which was driven by the supply-related uncertainty tied to Iran and other geopolitical events. The customers leasing our aircraft and engines have not been materially impacted to date. Management is proactively monitoring the market and engaging customers to manage any risk. That being said, market volatility also creates several opportunities for our business line, and we remain ready to execute on any opportunistic transactions that may result from parts purchases or the purchase of engines or aircraft.

Lastly, we continue to receive a strong level of inbound interest from governments around the world regarding our world-class ISR capabilities. We recently announced that our proposed ISR bid in Australia was not selected. We have not received detailed feedback regarding our submission or received confirmation who was the successful bidder. As I previously commented, the Australia contract is just one of many that we were actively pursuing. That being said, we are very excited to announce that Air Greenland contract for 2 missionized surveillance aircraft is nearing completion.

This contract was directly sourced opportunity and the PAL Aerospace team had been working hard at securing the project based on a long-standing relationship with Air Greenland. The contract with Air Greenland is one of many solutions that our team has been actively pursuing. We continue to pursue other multiple opportunities in Canada and Europe. We remain confident in our solutions and put forward nationally and internationally, and we'll provide updates as information becomes available.

Our Manufacturing segment declined from a revenue and profitability perspective. However, when you look beneath the hood, the real story emerges. The first quarter for the Manufacturing segment was all about momentum, and that was gained in both the Environmental Access Solutions and Precision Manufacturing and Engineering business lines.

Towards the end of the quarter and after the end of the quarter, we saw customer inquiries being booked into firm fixed orders and record amounts of orders in some of the individual businesses. For example, our stainless steel tank manufacturer recorded its largest ever order for stainless steel tanks for a data farm in the United States. The order was in a magnitude of twice their previous largest single order in their long successful history.

Our Environmental Access Solutions business continued to see step-based improvements in the number of mats on rent in the Canadian operations as we exited the quarter. The demand backlog for our U.S. operation's composite mats remains extremely robust with the majority of our existing production capability being sold out for 2026. The second state-of-the-art plant in Saltillo, Mississippi is progressing on time and on budget. The facility will significantly increase our manufacturing capacity so that we can meet demand for the best-in-class composite mats. From a broader industry perspective, there have been numerous announcements regarding transmission and distribution expansion along with potential new pipelines and oil and gas development. In the medium and longer term, we see significant tailwinds for the business line and remain very bullish about the business returning to historical highs like we experienced in 2022.

Our Multi-Story Windows business line moderated consistent with our expectations. We are seeing some positive indicators at various levels of government when they talk about speeding up approvals and reducing development fees. The demand for affordable housing continues, and we are seeing some successes in various geographies around North America. However, the supply and demand imbalance hangover -- the supply and demand imbalance hangover driven by investor-focused condo development in Toronto and Vancouver continues. We have also been impacted by tariffs in the year-over-year comparatives. Although the quantum of tariffs is not material to EIC overall, it is less than $10 million on an annualized basis.

During the anticipated moderation in our business, our teams have executed on key initiatives, including reducing the physical footprint of our manufacturing and improving efficiencies within the plants and aligning our capabilities in Canada and the U.S., all of which are now virtually complete. So when the demand inevitably rises, we will be in a position to produce more windows at a lower cost. I remain very confident in this business line. As we return to historical norms in the future, the increase in revenue and profitability will fall directly to the bottom line as all of the investments have been made with the exception of investment in working capital when sales rise.

Rich will highlight the key metrics for the 3 months ended March 31. But before I turn the call over, I wanted to talk to the additions at the C-suite level at head office. My mantra for EIC has always been that culture isn't the most important thing. It's the only thing. The culture at EIC is very unique and maintaining that culture long into the future is important for our continued success. The additions to the executive team of Carm, Marly and Garth are important as they understand what makes EIC successful, and they will help us grow and expand. All 3 have been with EIC for a number of years and are top performers. We welcome them to the executive ranks, and they will continue to drive the EIC culture as we continue the growth trajectory that has made us successful in achieving a 20% return per annum returns for our shareholders over the past 21 years. In addition, Travis and Darwin have expected -- have accepted expanded roles within the C-suite. Jacob Travis will focus on the outlook for our segments for the second quarter and the remainder of the year.

I will now pass the call over to Rich, who will talk about some of the key highlights from the MD&A and financial statements.

Thank you, Mike, and good morning, everyone. For the first quarter, revenue was $867 million, adjusted EBITDA was $166 million. Free cash flow was $120 million. Free cash flow maintenance CapEx was $41 million and adjusted net earnings and net earnings were $34 million and $28 million, respectively, which represented increases of 139% and 287%, respectively.

Earnings and adjusted net earnings per share were $0.50 and $0.61, respectively, which were increases of 257% and 118%. Free cash flow per share increased by 33% to $2.14, while free cash flow maintenance CapEx increased by 46% to $0.73 per share. The per share metric increases were even more impressive as the weighted average shares outstanding increased by 11% compared to the prior quarter primarily due to the conversion of convertible debentures in 2025 and acquisitions executed.

All the absolute key performance indicators were first quarter high watermarks. The Aerospace & Aviation results were driven by strong profitability at each of the business lines due to the acquisitions of Canadian North and Mach2, strong load factors at our various air operators, strong demand for leases, parts and whole aircraft and engines at our Aircraft Sales & Leasing business line and the impact of the second aircraft for the U.K. Home Office in Aerospace that started in the fourth quarter of 2025, along with higher tempo flying under various ISR contracts.

Our Manufacturing segment revenues and profitability decreased. But as Mike noted, it was a period of accelerating momentum as the quarter closed and continued strengthening after quarter end. In our Canadian Environmental Access Solutions operations, we saw strong results from math on rent. However, profitability was similar to the prior year as 2025 had strong demobilization and mat movement operations, which were unusual with the normal seasonality of the business. In our U.S. operations, there was continued robust demand for our composite matting solutions. The accelerating demand trends being strengthening Canadian rentals and strong U.S. composite sales continued subsequent to quarter end. During the quarter, we incurred $2.5 million in growth capital expenditures on the new U.S. composite mat manufacturing plant. The project is on time and on budget based on the estimated $60 million budget.

Our Multi-Story Window solutions business line continued to moderate as expected. The moderation of the business is related to our past project delays and deferrals associated with developer uncertainty. Our teams have completed initiatives, which will increase the efficiency of the plant. Affordable housing continues to be a theme. And when volumes ramp back up, we will be in a position to produce more windows at a reduced cost compared to our prior operations. Precision Manufacturing Engineering had a first quarter whereby results and activities gained more and more momentum as we exited the quarter. While first quarter results were relatively consistent with the comparative, the positivity amongst the group is as high as it has ever been due to the significant customer orders at the end of the quarter and into the second quarter.

Maintenance capital expenditures for the first quarter were $79 million and were higher than the comparative period by $23 million due to the addition of Canadian North, increased utilization of the Aircraft Sales & Leasing fleet and general increase in fleet size within our Aerospace & Aviation segment. Growth capital expenditures during the first quarter were $40 million and were primarily driven by 3 King Air's aircraft deliveries for the BC EHS contract in our Essential Air services, coupled with investments made by Air Canada -- made for the Air Canada expanded commercial agreement and aircraft modifications and other investments for the Newfoundland and Labrador medevac contract.

From a cash flow and working capital perspective, we had a very strong result as the investment in working capital was nominal when compared to the growth in our financial results. Corporation's aggregate leverage remains near historic lows. During the quarter, we announced that EIC has achieved an investment-grade corporate rating with a BBB low rating and a stable outlook from DBRS.

We issued $600 million of bonds, which were significantly oversubscribed at an interest rate of 4.324%, which provides significant interest savings compared to other financing products, including 5 years money through interest rate swaps at the time of issuance. With the further increase in risk-free rates, the savings today are even more significant. With over $2 billion in available liquidity, we have significant dry powder to execute on acquisitions and invest in our current businesses for future growth. Having available liquidity is critical for EIC as it lets us to be an opportunistic acquirer while minimizing deal execution risk for Adam and his team.

Our philosophy for acquisitions and growth capital investments has not changed, but having a strong balance sheet and available financing means that we can execute on sizable transactions when the opportunities arise. Our M&A pipeline remains very strong. Adam and his team executed on a strategic investment in the first quarter with Mach2. We've always wanted to diversify our cash flows and provide another avenue for growth for Regional One. Regional One has built the data infrastructure and architecture that is capable of scaling into other aircraft types. And now with the Canadian North 737 data and the narrow-body and wide-body data for Mach2, along with the experienced personnel at Mach2, we can realize on significant opportunities in that space.

The 737 and narrow-body business is the world's largest aftermarket parts and leasing business, and therefore, we have a unique opportunity to leverage the strengths -- leverage our strengths to create meaningful returns for that business line long in the future. In terms of other acquisition opportunities, our pipeline includes opportunities in both segments, which are similar to our existing businesses. We have a great foundation of businesses and to the extent that we find ancillary opportunities to expand our competitive moats, we are always interested in those accretive opportunities.

As a reminder on the seasonality of our business, the first quarter is our seasonally slowest quarter because of the impact of winter roads and weather-related impacts for our air operators, coupled with reduced demand for our Environmental Access Solutions business line in Canada as the ground is frozen and doesn't require the same level of matting protection. The third quarter experienced the highest level of activity across our businesses and the second and fourth quarter would approximate the average for the year. The first quarter set a solid foundation for the remainder of the year.

I will now turn the call over to Jake, who will provide an update for the second quarter and remainder of 2026 for our Aerospace & Aviation segment.

Thank you, Rich. Overall, we're expecting another strong year of growth from our Aerospace & Aviation segment as the trends highlighted in Mike and Rich's sections are expected to continue through fiscal 2026. The growth investments made in the past, including the second aircraft for the U.K. Home Office, the acquisition of Mach2, the commencement of the Newfoundland and Labrador medevac contract midway through 2026 and the expansion of the Air Canada commercial agreement will all contribute to the increase in revenues and profitability.

I will specifically focus on the growth factors by business line. Our Essential Air service business line will see growth driven by a multitude of factors when compared to the prior period. The most significant impact will be the inclusion of Canadian North in the second quarter with no comparative in the prior year. We also expect that the strong load factors experienced in Q1 and growth across our network will continue into the second quarter and throughout the remainder of the year.

Other increases include the expansion and extension of the Air Canada commercial agreement, which will see the aircraft starting to fly midway during the year. Lastly, we expect continued growth in our medevac business, including the start of the Newfoundland and Labrador medevac contract, which is anticipated to start operations in mid-2026. Offsetting some of these gains is the continued inflationary pressures on labor, aircraft parts, consumables and overhead expenses.

The Aerospace business line is expected to see growth due to the continued strong flying tempos for the second quarter and for the remainder of the year, along with the financial impact of the second aircraft for the U.K. Home Office, which will have quarter-on-quarter effects as that aircraft started operations in the fourth quarter of 2025.

As Mike mentioned, we're excited about our work with Air Greenland and the Danish government. Building on our relationship with Air Greenland, we have been selected as their missionization partners. There are still some details to be worked out with the Danish government when it forms, but we're planning a 2-aircraft surveillance program complete with an integrated ground center based on CarteNav's AIMS-C4 mission system. Obviously, subject to sovereign negotiations, this creates an exciting opportunity where we now have much of the Arctic and North Atlantic covered by nations using the CarteNav system. I'm trying to paint a picture here where we have Canada, Greenland, the U.K. and the Netherlands in the North Sea environment, covered by the CarteNav operating -- CarteNav system operating for friendly nations. This concept falls directly in line with our Prime Minister's message of collective defense, shared security and resilience with other Arctic and Nordic nations. Separate and aside from this, we're also actively engaged with a number of opportunities emerging in Canada, Europe, the U.S. and Asia.

Our Aircraft Sales & Leasing business is also expected to experience growth as the investments made in aircraft and engines during 2025 are leased to customers. As Mike commented, there is a potential risk of fuel shortages impacting our lessees. However, to date, we're not aware of any material impacts. Wherever there is volatility in the aviation market, history has shown that it does not -- it does create unique opportunities. Aircraft Sales & Leasing remains an opportunistic buyer and stands ready to complete transactions that are accretive to our portfolio. The demand for Regional One and Mach2 remains robust as evidenced by increasing lease rates and shortages of critical parts across the industry, and we expect that trend to continue.

On a long-term basis, we expect maintenance capital expenditures to increase consistently with the increases in the adjusted EBITDA in our Aerospace & Aviation segment, which is the biggest driver of our consolidated maintenance CapEx. We anticipate an increase over Q2 2025 due to the inclusion of Canadian North, coupled with increased flying due to our recent investment in aircraft over the past few years. Lastly, we continue to invest in deferred maintenance at Canadian North and anticipate those investments to continue for 2026.

Growth capital expenditures are expected for the second quarter and for the remainder of fiscal 2026. We anticipate receiving the last King Air for the BC EHS contract around June or July of this year. There will be CapEx related to the modifications of aircraft for the Newfoundland and Labrador medevac contract, along with the acquisition of aircraft for the Air Canada expanded commercial agreement during the second quarter. 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. So looking at the second quarter and the remainder of 2026 from the manufacturing point of view, we saw significant momentum in our business lines as discussed by Mike in his introductory comments. We expect that Q2 manufacturing results will be stronger from a revenue and profitability perspective, and that trend will continue for the remainder of the year. Our Multi-Story Windows business line continues to experience strong level of inquiries. As we expected, performance has moderated during 2026, and that will continue throughout the year on a relative basis with the comparative periods.

Tariffs impacted Q1 2026 versus the 2025 comparative. It's important to highlight that the recently announced U.S. government changes about how tariffs are calculated will add additional costs for goods shipped from Canada to the U.S. Previously, it was based on aluminum content and now it is computed based on the value of goods shipped. We're able to mitigate the tariffs with our capability to manufacture windows in the U.S. We're starting to see positive commentary from various levels of government to encourage development of affordable housing through reduced or frozen development charges and faster approval processes. Further, we continue to see positive signs in various regions around the U.S. and in Western Canada. However, developers remain on the sideline due to excess supply of small investor-focused condo units, especially in Toronto and Vancouver.

Our Environmental Access Solutions business line is expected to generate stronger returns for the second quarter and for the remainder of the year. We saw continued step-based improvement in the number of mats on rent as we exited the quarter and the demand for our composite matting remains robust, and the plant continues to operate at maximum capacity with the vast majority of 2026 output already sold. Our Canadian operations are expected to be a major driver for the business as we started to see strong results in the fourth quarter from a rental perspective, and that continued during the first quarter of 2026 and will continue into the second quarter.

Further, we anticipate that long linear projects will commence in the latter half of 2026 or into early 2027 across several industries, including transmission and distribution, pipeline and oil and gas. The medium- and longer-term prospects of the business are very robust as there will be material investments in transmission and distribution across North America due to growing electricity demand from homes, vehicles and more importantly, AI and data farms.

The Precision Manufacturing and Engineering business line is expected to improve from a revenue and profitability perspective for the second quarter and for the remainder of the year based on significant momentum achieved. This business line is very diversified with exposure to the defense industry, technology industries, including data farms and telecommunications, and those specific industries are driving the growth vectors of this business line. As Mike had mentioned, we've been receiving record forward bookings in certain of the businesses, and that will drive the year-over-year results for the remainder of 2026.

The anticipated maintenance capital expenditures are expected to be higher than the prior year due to the timing of replacement activities because of the demand profile for the business line. We're also anticipating growth CapEx to be incurred for each of the business lines, but they should be relatively consistent with 2025 with the exception of Environmental Access Solutions. Growth capital expenditures will be outlaid for the new state-of-the-art composite plant as well as further investment in the Canadian rental fleet based on expected market demand. I'll now pass the call back to Mike.

Thank you. The first quarter of 2026 was a very strong start to the year and has allowed me to update our guidance to be near the high end of our previously disclosed range. I'm extremely confident in the future of our company. EIC is at the intersection of a number of critical themes and trends. We remain true to our principles and our business strategies, and those will continue to drive our long-term success. Thank you for this time -- your time this morning, and we would now like to open the call for questions. Operator?

[Operator Instructions] And your first question comes from the line of Matthew Lee from Canaccord Genuity.

I know it's a bit early to have this conversation, but just given the momentum you're seeing in A&A and the fact that it sounds like manufacturing should improve sequentially each quarter, did you guys have any conversations about raising that guidance beyond the $875 million range? Is that just conservatism or maybe something I'm missing?

You got bugs in our office, Matt? Yes, there was a lot of discussion about what the right number was for our guidance. And at the end of the day, we decided to move our sort of guidance to the top end of the range and not move the range. And the reason for that was really simple. The uncertainty in Iran is causing jumps and starts with oil supply and with oil prices. And while it has had no impact in our Regional One business to date, and we see no -- nothing imminent, we didn't want to increase our target and then have something dramatic happen there and then have to back it back down. So you're bang on, the trends you're seeing with our business, it's not hard to add up to a number that's higher than $875 million. We we'll promise that once the world situation settles down just a little bit.

Okay. That's helpful. But in my understanding, that you guys generally pass across fuel costs. So if that's the case, kind of what's the biggest area of risk that could prevent you from reaching that $875 million or exceeding that? And then maybe what businesses do you think could be most impacted?

Yes. You're bang on, Matt. We really don't have much of an impact on our business from increasing fuel prices. We have the ability to pass those on to our customers. And the fact that we're an essential service, demand doesn't change much with fuel price surcharges. I think our biggest concern would be if fuel shortages got so bad in certain parts of the world that they stop flying or flew less, that would reduce demand for parts. So it's really more a matter of fuel supply in certain parts of the world.

North America really doesn't have a potential fuel shortage. We make enough in North America to look after ourselves. So we don't see that as an issue. It's more just of a worldwide aviation potential issue if there were a shortage of fuel.

Yes. Matt, it's Jake. Keep in mind, Regional One leases aircraft across the globe. So that's the exposure.

And to be clear, we've had no issues thus far.

Exactly. There's no indication. But again, just out of conservatism.

And your next question comes from the line of Steve Hansen from Raymond James.

Mike, I wanted to go back to your comments around the accelerating momentum on manufacturing. I think you and Travis had some good commentary there, and there's some mention of record orders. I mean I just wanted to ask specifically, like what do you think is driving that? And I think the bigger question is, do you think that's a sustainable thing through the balance of the year? The outlook commentary seem to suggest that, but I'm just trying to understand the underlying drivers a bit better. And maybe if you could just give a little bit of additional context around how you're seeing that from the customer side of things.

Yes. I mean the interesting thing, Windows aside, we're seeing it across the board in all of our manufacturing. In the matting business, in the U.S., it's clearly driven by transmission and distribution. The utilities needs to increase capacity. And we're just in the beginnings of that. That's going to go on for years, if not decades. And so I have no concern about the long-term nature of that. In Canada, we're probably 1.5 years behind the Americans, and we're starting to see those projects, particularly in Eastern Canada. And there isn't a day that doesn't go on without discussion of a new pipeline, whether it's the President of the U.S. talking about expanding the pipeline there or us going to the coast with natural gas or bitumen. So that's very strong.

And then when we look at some of the other manufacturers, like our stainless business, that's never really had a role in data centers before. All of a sudden, the farms they're building are so large that they need actual refrigerant and they used to cool them with air, now they're cooling them with water. We're getting massive orders to deal with that. We're actually at a stage where we're sharing production capacity because we can't keep up in our existing plants. And so the window companies have shared some space, both in Canada and the U.S. with our manufacturing guys to allow us to keep up with the demand.

You also see it in our precision metal guys in Ontario, Ben Machine. They're building some stuff that's super high precision driven by space demand, if you can believe that. We're building satellite equipment. It's across the board. And the interesting thing is it's accelerating, not -- it's not like it's been good. To be honest with you, in January, I thought it was a little bit slow, and I was a bit concerned about our manufacturing business with the exception of matting. It's been strong all year. And since then, it's just one thing after another, and we're busy trying to find enough equipment and enough geography to put the equipment into.

And maybe, Steve, I'll add on top of that. So we've talked over the last year or so about the strong level of inquiries. And what we were just seeing is customers were punting that decision down the road. And I think recently in the U.S., there was a small and large business survey where you saw capital goods orders increased in March. And to be honest, that's what we really saw. So those historical inquiries and decisions are now coming to fruition. And we believe that it's going to continue throughout 2026 because there is a built-up pent-up demand for the goods and services provided by those business lines.

And Steve, we've got a couple of other dynamics driving this. One of them is, I call it reshoring of some of the production, and that's in line with what Mike was talking about, some of the space work we're doing, but it's also with some of the aircraft manufacturers. We're making more aircraft parts domestically than we had in the past. And then the second driver is, again, we've mentioned about the data centers and some of the manufacturing. But part and parcel with that is some of -- with our wireline services, we're seeing more uptick in ploughing fiber and putting -- installing long-distance fiber, which again is the connectivity between the data farms.

And your next question comes from the line of James McGarragle from RBC Capital Markets.

Also Carmine and Marly, great to see the promotions for you guys. I just wanted to ask on how you're thinking about growth into 2027. I'm not asking for 2027 guidance, but on the aerospace side, we have Skyline, Greenland, further Canadian North integration, higher returns from the BC aircraft. So can you just kind of help us frame how should we be thinking about the growth there?

And then on the manufacturing side, we've got the new plant, new projects in matting, a potential recovery in windows. Just trying to piece all those things together and just trying to frame how we should be thinking about the 2027 outlook.

Yes. I'll do my best to avoid numbers here because we haven't given 2027 guidance. But we're really bullish on '27 simply because of the capital we've already invested. You're going to see, as an example, the Newfoundland medevac contract give us a full year of revenue. You're going to see the continued growth of the matting business. I think that's super exciting in Canada. We have great visibility when you start to bid the projects in advance. And we're a big player in the market. We don't win all of them, but we win -- we certainly win our fair share. And with the amount of stuff we're bidding, I'm highly confident we'll have more mats on rent in '27 than we do in '26, and we'll have more in '26 than we did in '25. So I see growth there.

You've got the [ fast ] business, that will add in the future in '26 or '27, I'm sorry. The continued integration of Canadian North is going to continue to help as we move forward with our combi aircraft model and the things we're doing there. And I think the other thing that maybe we should talk a little bit about, and I'm a bit surprised we're seeing it already, but our passenger loads in Nunavut are growing, and they're growing faster than the birth rate, which is not normal. And I think that's the very beginnings of -- as the government is investing in the north that people are traveling up, whether it be professionals or construction workers or all those things. The way up there is on our aircraft. And so we're seeing a bump there, and I anticipate that will continue on.

And then we've expanded our work on the medevac business. So as that grows, we'll have all the planes in place in BC. We're in discussions with them to grow the number of routes we're flying for them in addition to what we're already doing. And so there's a whole bunch of things. And then, of course, the Air Canada contract as well. Those routes will all be flying by then. So we're in a position where there's a whole bunch of what I would call structural growth that's already paid for. And Adam doesn't sit on his hands for very long. So I'm pretty sure we'll have some other stuff come from that. So while I'm not promising anything, that $1 billion number isn't far away.

I appreciate the color. And then just one quick follow-up here. On the contingent consideration gain from Canadian North, can you just kind of talk about what drove that downward revision to the earn-out estimate? Anything there from the growth trajectory change versus your original deal assumptions? I guess we usually see that when something is going wrong. So any color you can provide there?

Yes. I really appreciate the question because unequivocally, the progress at Canadian North is well in excess of our -- even our most rosy forecast when we bought the company. Things are going great. We had an earn-out number based on resigning a contract for the Northern Charter business related to the natural resource part of their business. One of the projects has been delayed. And as a result, the company wasn't able to enter into the new contract, which meant that we didn't have to pay out under that piece of the earnout. It was something that our acquisition team identified as a risk.

Now I don't think that business has gone anywhere. We talked about when we bought the company, we weren't -- we had to make sure we were making money in the charter operations and say we've made great progress there since we started. But the gain relates to one payment we don't have to make simply because there was a contract that couldn't be signed within the time frame it needed to be signed within for us to have to pay the vendor. So it was a pickup based on the delay of that contract. In no way does it reflect a disappointment or any underperformance of the acquisition, quite the opposite.

And your next question comes from the line of Krista Friesen from CIBC.

I was just wondering if we could dig in a little bit more just on the jet fuel side. Based on the contracts that you have where you can pass it through, what's the sort of lag that we should expect there?

Yes. It's less than a month. In places like Manitoba or the Maritimes where it's largely done at market, we can pass it on as quickly as we can go tell with the customer. And there's presold tickets. So there is some impact, but it's nominal. In most of our medevac contracts or our Nunavut contract, this month's fuel is next month's price. So you get a 30-day lag on some of that stuff. But conversely, when it stabilizes or ticks down, we get a 30-day pickup. You could see in the first quarter, even though fuel ran up pretty hard in the back end of the period, like from the end of February to the end of March, the margin compression was minimal.

And on the ISR business, most of that is billed straight through to the government. We don't even actually pay the fuel bills. The government pays the fuel bills direct. So there's zero lag on that.

Okay. That's helpful. And then maybe just wondering if you can give us a little bit more color on the integration of Mach2. It seems like it's been off to a pretty good start despite you having only acquired it very recently. So any additional color there and the demand that you're seeing?

Yes. We built -- we just finished, in fact, yesterday, an expansion of our offices at Regional One, which will allow Mach to join them in the same facility. We're busy entering Mach's data into Regional One's proprietary database that we've built, which will help us pick our spots. And it's really important to understand as we dip our toes in the 737 market, we're not getting into leasing long term, those kinds of things. Those are finance games for banks.

We're taking aircraft at the edges that are nearing the end of their life, and we'll start by parting them out. And ultimately we'll lease out pieces of them. But it's Regional One's model combined with Mach's industry knowledge and EIC's access to capital. Plus, we're a natural consumer for some of those parts with our Canadian North business. They fly 737s. And so the more we buy from ourselves, the more we learn the market.

And your next question comes from the line of Cameron Doerksen from National Bank.

Mike, you talked a little bit earlier about starting to see a pickup in some of the passenger activity into Nunavut. So my question, I guess, is how you see things evolving there over the long term as far as demand for air and aviation into the north. I mean we've seen the federal government, I think, since the last call announce a fairly significant investment in new infrastructure. We've seen some support for some new resources projects in the north. Are you at the stage yet where you're actually having some conversations with governments or with potential resources customers about supporting some of the growth there? And do you have any kind of like time line where you might see more of a pickup in activity? I mean, obviously, you're seeing it already, but maybe a more substantial pickup in activity based on some of these investments that are going into the North.

Yes. I mean there's a wide range. The government stuff is underway. We're in discussions with them on a number of things, whether it be surveillance work, whether it be other projects. There's going to be things that we don't directly do, like building military bases, those kind of things. We've seen an increased demand for charters up there already. We're in discussions for the iron ore development in Baffinland. There's increased exploration for critical minerals on Baffin Island out of Iqaluit. It's pretty pervasive across. It's hard for me to give you a -- well, this is the second quarter of 2027 or anything. There'll be things -- it's building.

I'm shocked that we saw it in our passenger numbers this fast. We did not anticipate this. Because we fly in enough different places where it's an essential service, we can take a look at its volumes compared to, say, the First Nations in Manitoba. And when we see a marked difference in increase in revenues, we know what it's tied to. And so we're at the beginnings of that. They haven't started building the new runways they promised. They haven't started building the new buildings they promised or the military bases they promised. So we're not even in the first inning. They might have thrown out the ceremonial first pitch, but that's about where we are in the baseball game.

Okay. No, that's helpful. And if I could just quickly follow up, I guess, just on the executive appointments and some of the realignment with roles at the senior management level. Obviously, congratulations to everybody for that. I'm just wondering, I guess, what -- from a realignment of roles with Darwin and Travis, like I guess what's the objective? What's their mandates with, I guess, the sort of the new roles that they have?

As we grow, there's more and more -- as we add new businesses, there's more financial oversight required on budgeting, forecasting and those kinds of things. And Travis has a remarkable background in that area. So he'll take on additional responsibilities on that part. And Darwin is really our acquisition whisper, bringing people into EIC and teaching them how to function in a new conglomerate.

He has been remarkable in his period here, and he will continue to focus on that. He'll still have operational responsibilities. But we're asking him to do more on the integration side, and Travis will do more on the numbers, budgeting, forecasting side. The bigger we get, the more Ritchie gets grumpy if he gets numbers he doesn't expect. So we're working on the forecasting to keep Ritchie happy.

And your next question comes from the line of Jeff Fenwick from ATB Cormark.

Mike, I wanted to start off first on the CapEx, maintenance CapEx. You provided some good commentary there at the beginning of the call. But when I looked at the last couple of quarters here, a bit of a step down into Q1 versus where you were at Q4. I'm just trying to get a sense of what's the right -- maybe those are the goalposts we should be looking at for this year? Have you kind of settled into maybe a more normalized maintenance CapEx now that Canadian North is more settled in the mix now? Or how should we think about that?

Yes. I would say that Q1 was lower than I would have anticipated. The slots we could get for engines and some of those things resulted in less stuff getting done in January. I think that's a little bit of an anomaly. The rolling 12s are really the better forecasters of what's going. Q4 was higher. Q2 is going to be higher again.

We do have some stuff that will roll through this year that was kind of deferred things in Canadian North. But that's -- it will remain elevated through the balance of the year. And Q1 was just probably abnormally light just because there were a couple of engine events that got pushed because we couldn't get slots. So they're sitting on our floor waiting to get them overhauled.

Okay. That's helpful. And then I just wanted to ask about the Air Greenland agreement there. You said that you had a pre-existing relationship with them. Was that on the leasing front? Or maybe you could just characterize that for us? And was this like a cross-sell opportunity because of that relationship?

Thanks, Jeff. It really was a cross-sell opportunity. PAL, just given the proximity to Greenland on the East Coast, has done the heavy maintenance for Air Greenland Dash-8 fleet for years. So with that preexisting relationship and whether it was our technical expertise over time, and that's how that conversation started.

Okay. And then I did want to ask, I saw an announcement on PAL Aerospace's website about receiving some funds from the Regional Defense Investment Initiative. It wasn't a huge amount, but maybe you could just articulate how that fits in with the ongoing discussions what the dollars there were for and how that was -- how that came to be.

Sure. That was through the -- as I said, the Defense Initiative, and that was really to support the research and development with regards to CarteNav, some of the modifications to the Dash 8-400 that we're looking at, obviously, within Canada and some other jurisdictions around the world. So again, that's the federal government's efforts to try to develop capacity in our country, both for internal and export purposes.

And I guess we should read that as a strong indicator that they want to work for you on larger contracts going forward, fair to say?

Well, absolutely. They recognize, obviously, we're -- PAL is a huge employer in Atlantic Canada, a world leader in technology. A lot of positives that the HAL Dash-8 obviously is a Canadian aircraft. So tons of Canadian content in there, Pratt & Whitney engines. So again, it's just that global attempt at the Canadian government to reinforce Canadian competitiveness and generate the capability at home.

And I think the other thing I just want to jump in here on is, I'd be honest if I didn't say I wasn't a little bit frustrated when we announced, Australia, that we weren't successful there, but we had won in Greenland. And I think there's a few people who didn't understand -- the ISR market is huge. We're not going to win everyone we bid on, but we're going to win some of them. And we're building a beachhead in Europe and the Nordic countries that provide tons of growth with us working now with the Danes in Greenland, in the Netherlands in Great Britain, hopefully in Canada.

There's other countries that are going to be tied into that joint defense and Canada's new tighter relationship with Europe. And while I'm -- we are in discussions. Now that I'm under NDAs that I can't describe who with. I think there's very much a trend emerging here as us as a leader in that marketplace and working with different parts of the government. I mean the irony is, in Canada our contract is with the fisheries department, notwithstanding most of the work we do isn't for the fisheries anymore, or in the Netherlands we're working with the Coastguard and the marines. In Britain, we're working with people trying to limit illegal immigration through Homeland Security.

It's different departments in each of these governments. But as they start talking more and more, the ability to have software that talks to one another and then share their data with their partners in other countries puts us in a great spot. And that's why I'm so bullish on the longer-term version of ISR, not what we win this month or next quarter. We might do something like that, but it's more about the longer-term market we're developing where we are now compared to where we were 5 years from now is remarkable, and that's going to continue to grow.

Yes. That's great color. And then maybe just one last one, bigger picture here on the M&A front. With so much balance sheet capacity now, does that change the lens or the focus of where you're targeting opportunities? I mean you can obviously write much larger checks on the back of that. Do you start to look outside of even North America, if you saw like an interesting airline that fit your parameters or something like that? Like how is that evolving now?

The short answer to that is yes. The slightly longer, I think, more relevant answer to that is that one of the -- we're not the highest payer for acquisitions. We're competitive. We never pay enough to convince someone to sell just because of what we're going to pay. We pay market. But we want to make it easy to deal with them. So liquidity has always been a huge part of our strategy. Rich has done a great job with our bond deal and with our new bank deal. So we've got the capital available.

But I want to be clear that we're not changing our parameters of what we're paying. The ability to pay doesn't mean you should pay more. The fact that we're trading higher doesn't mean we should pay more.

Now if we found a great company that was really large, was accretive, something we wanted, would we pay right down to our 15% return? Sure. But we're not going to do 12% deals just because we have capital. I want to assure people that we've gotten a 20% return for 20 years by sticking to what we do, and we'll stick to what I do. We do.

We've added people to Adam's department, and it probably means we got to do more $100 million deals. I'd love to do $500 million deals. There aren't that many of them. So we will remain active, and we'll stick with what's made us successful. Hopefully, just do more of it.

And then the other piece, quite frankly, is investing in our business. If we had won Australia, that could easily have been $0.5 billion investment. If we win in Canada, that could be in the hundreds of millions. And so you got to have the liquidity to be able to back your opportunities.

[Operator Instructions] And your next question comes from the line of Konark Gupta from Scotiabank.

Congrats on everybody's appointments here. Maybe the first one, I guess, going back to the matting business. In the first quarter, it seems like the U.S. matting business was up from last year. The Canadian demand was flattish, but the EBITDA in that business line, matting, was flat. I'm trying to understand what is the real mix issue here.

It's even a touch more nuanced than what you talked about. But let's start with the U.S. It did about the same as it did last year in round numbers, but that is actually a stronger performance than you think because coming into 2025 we had material inventory on the ground of finished goods. This year, we had no inventory going into the year. We had sold it all in Q4. And so we were able to reach the same number simply by tweaking the plant and getting a little more production out of it.

The team at Spartan have done a remarkable job of maximizing what we can produce. And the redetermining step right now in Spartan is just how many mats can we make. We can sell everything we can make. We can sell more than what we've got now. I can't wait to open that second plant so we can keep up.

In Canada, while the number -- the aggregate return looks similar, that's very misleading. We had a bunch of decommissioning work, which by its nature doesn't continue. So it strengthened Q1 of last year. But the number of mats on rent was much lower than it is now. So we know where our revenue is going forward. And we know the other stuff we've bid going forward.

And so while we -- the quality of earnings is what I would say is, in Northern Mat was much better this year year-over-year, even though the numbers are very similar and makes us bullish going forward because if -- and I'm not going to use real numbers for competitive reasons, but say we had 20,000 mats on rent at the end of last year -- in the last first quarter, and I had 40,000 now, day 1 of Q2 starts much stronger than where we started last year. And so that's why we're confident in talking about growth.

Now there's lots of room to go. We got lots of mats. And where we talked in our outlook that we're probably going to build some more, we think we're going to need more inventory for our rental pool. And I think you'll see us invest in that in Q2 and beyond. But when you look at the results, notwithstanding EBITDA is flat, the business isn't flat.

I think the other thing to point out is that the U.S. -- the Canadian dollar was materially weaker this year -- sorry, yes, materially weaker this last year. So the translation of Spartan's results, which make up a larger portion because of the seasonality for the Canadian operations in Q1 were impacted this year by foreign exchange rates.

Which was millions of dollars just in that business.

Okay. That's very helpful color. And just on the guidance for this year, I want to understand the key puts and takes, I guess. This $25 million increase from the midpoint to the high end, call it, is it mostly coming from the large asset sales? I mean, it seems like they are doing very well. And obviously they are lumpy too, right? So how would you parse out the large asset sales versus underlying strength in some of the other areas of the business?

Yes. I would say that the -- I think the large asset sales disproportionately affect your revenue and they give you some EBITDA, and it's a part of our -- of how we make money. But the core parts of the business are parts and leasing. And our leasing revenue is -- makes up most of the growth in terms of EBITDA. And that's why it's a higher quality growth. I always caution people about worrying too much about revenue in the aftermarket business because of large asset sales. The key driver of the business is parts sales, which are remarkably predictable and our leasing revenue. And the reason the leasing revenue is going up is because we invested a bunch of money last year. And so we're putting those planes into service, and we anticipate them staying there.

And quite frankly, if there is any uncertainty in the business going forward, we've told Hank the checkbook's ready to be aggressive and go get the stuff because it's very hard to buy equipment in a bull market. And so if there are any slowdowns in certain parts of the year, we'll be glad to step in and build our company on that weakness.

Okay. That's clear, Mike. And last one, if I may. On the S232 tariffs, I just want to understand it a little bit more. The change that was implemented by the U.S. government on April 6 was there will be a 25% duty on full customs value of derivative products. Previously it was just 50% duty on the metal content. What parts of the businesses would be subject to this tariff? I think it seems like window business, you have some transaction cross-border. I don't think you have much stainless business cross-border from Canada to U.S. at least. Any sense on the S232 implications for your business?

Yes. I think I can really simplify this. The basic thing is Windows is the only business that's impacted by it. Virtually everything else we do is CUSMA. And so they transfer back and forth on a tariff-efficient basis. In Windows, there's no doubt that change cost us money. We used to be able to ship windows across the border and pay tariffs based on the metal part of the window. Now under the new rules is we pay the tariff based on the entire value of the window. And so it makes it virtually impossible to make money manufacturing in Canada and selling in the U.S.

Now fortunately, for us, we've got plants in both countries. So we just have simplified our production. American windows are built in the U.S. and Canadian windows are built in Canada. But even with that, that tariff program creates some challenges because virtually all of the aluminum starts in Canada and gets extruded in Canada. And so whether we build a window in Canada or the U.S., the extrusions come from Canada, not because we are have an aversion to buying aluminum in America, it's because they don't have any. And so when it crosses the border, even when we build in the U.S., we're still paying tariffs on our raw material, the aluminum.

Having said that, so does everybody else. It's not a competitive disadvantage. We actually have a competitive advantage against our Canadian competitors like State who are big sellers into the U.S. Well, they got to manufacture it in Canada. So they have a way bigger problem than we do. But all that being said, the tariffs still cost us money, and they still make the business less efficient. So we're looking forward to when that gets straightened out, even though it does give us a competitive advantage in the U.S.

And your next question comes from the line of Gary Ho from Desjardins Capital Markets.

Sorry, I jumped on the call late. So I just want to put a finer point on the data center discussions, and we're seeing data center build-out green shoots across multiple industries. There's some mention in the MD&A and I think Q&A so far. Maybe can you elaborate on what you're seeing across the portfolio companies? And do you see this as a bubble at all? Or is there long-term opportunities that you can potentially pursue on the M&A side?

I'll take the last question first about whether it's a bubble. I think unequivocally, it's elevated. We've gone through surges in businesses before. And I think at some point, whether it's 5 years from now or 7 years from now, we will see this business mature. And that's why I think it's so fundamental. We see some of our competitors abandoning their core areas to jump both feet into this. And while we're growing and taking advantage of the data center business, in each of our businesses, we're making sure we don't lose track of our core customers.

In terms of the areas we're seeing the opportunity, there's 4 main areas we're seeing it other than the growth of the electrical grid because the growth of the electrical grid grabs our matting business. That notwithstanding because the growth in the electrical grid is more than data centers. It's electric cars, it's all kinds of things. And that's going to keep going. We don't see that as a bubble at all. So excluding the matting business, we are doing cooling systems for these massive server farms.

And I said earlier in the call, we had an order, the biggest we've ever had in stainless fabrication, north of USD 2 million for one facility. We're doing fiber ploughing where we're digging and burying big, massive fiber cables, not like the sort of baseball size cable you see going into people's houses and those kinds of things. These are a foot or more wide, and we're building long trenches of these and burying the stuff from Northern Alberta down to the U.S. border. We're building racking to put computers on. And we're also, strange enough, they're actually using some of our FODS at the construction sites, some of the matting. So we see it across a number of our businesses.

Guys, did I miss anything there?

Yes. And maybe I'd add on like, it also creates opportunities for our hydronic heating company as odd as you may think that is, but for concrete curing as well as commissioning the chillers. You have to test the chillers and so you have to put a load on the chillers. So that creates opportunities for that business line.

As Mike had mentioned, we also see others putting -- realigning their customers and focusing on data centers, which creates ancillary opportunities for us to continue grabbing market share in more traditional areas as well. So it's a net positive we see from an overall perspective across our portfolio of companies.

Yes. There's also, we're actually doing a job for the first time. I think it was the first building cladding that we're doing, the Window guys are doing but without glass. So we're putting up obviously metal cladding on buildings, which again is just pivoting a little bit our Windows team into other lines of business, but we're seeing that as well, so.

That's part of the technology we've put into our window factories that let us build. It started with high-rise apartments or condos where they've got to make things interesting, they're using aluminum largely or ceramic cladding to make the building look interesting instead of using stone, Well, we could take that and actually clad an entire building in it.

Right.

So it's one of the new areas we're working on.

Okay. Great. And then my second question, AI has been very topical. It's now even trickled into industrials and manufacturing companies. Management teams talking about AI helping with dynamic pricing, et cetera. Just curious if your team has spent time on this and how we can improve operations and/or efficiencies, whether that's in head office or within your portfolio companies?

We have groups of teams within our various businesses looking at how it's applicable. I would say that we probably have at the lower end of most companies of what we can do with AI. It's very human being centric, whether you're flying a plane, doing maintenance, building pipelines, building, like the things we do all require people. Where we do see some of the AI capabilities is in places like CTI, where we can build better, faster training systems by utilizing AI to help us do it, or in our ISR systems, there's a lot of stuff where AI can provide better, stronger, faster data. So it's buried inside.

So really what we see AI as in most of our cases is improving the quality or the speed or the capability of our product. It's not the cost reduction that you see some other people talking about. I mean, you could fly airplanes today without pilots. That technology exists. But we don't think that's happening anytime soon. And so it's really not impacting the operations.

Do we use AI to work on parts and what things we could change the schedules for repairs and stuff? Absolutely, but it still requires people to go turn the wrenches. And so for us, it's not as big a driver as it is in some businesses.

I would say it's not disrupting our businesses. It's improving our businesses sort of at the forefront on the administrative side, whether it be in the Windows companies with quoting and making things more efficient. But our businesses are durable, and they will not be disrupted by AI. It's an ancillary and a net positive for us. But we are looking at it from an administrative perspective and how to do things more efficiently and better.

Yes. I mean it's the first time I think one of the investing acronyms has really hit us, but the whole halo investing idea of high assets, low obsolescence really, really speaks to almost everything we do outside of ISR and training.

And essential demand, all 3.

Yes.

I think an area where we see the benefit of it, and we've been doing it for a number of years, just using the predictive abilities of AI to help with safety and developing our own internal safety management system on the aviation side to really ensure that we're doing everything we can, and we're at the forefront of safety and making sure that anything that we can do to make sure our people are safer, we're investing money in. So that was probably our first foray into it.

And your next question comes from the line of Tim James from TD.

My first question, just regarding the M&A environment. Mike, I'm just wondering if you could comment what you're seeing in terms of competition out there for M&A. Is there any sort of retrenchment in the number of companies that are competing for businesses? Are buyers more inclined to pay up here? Or are they -- is the opposite happening and they're getting a little bit less aggressive? I'm just wondering sort of from a pricing standpoint, what you're seeing in the market.

It's hard to make this comment across every segment because it's very product area specific. Generally speaking, we still see less deals than we saw pre-COVID. There's less lower quality transactions. And so the top of the funnel is smaller. But having said that, the quality of the things we're looking at is better. And I think Adam and his team have done an exceptional job on improving our capabilities, working with our subsidiaries to kind of find our own acquisitions, looking at competitors, looking at suppliers, looking at geographic expansion and approaching people who may have thought they were for sale and working on transactions. Mach2 is a good example. Canadian North is a good example, where those are businesses that we found determined were a good fit with us.

Where the issue of pricing really comes in is when we get something that's unrelated to us. And private equity is aggressive, but I would say no more or less aggressive than they have been for the last 2 years since we've come out of COVID.

Okay. My second question, just turning to Multi-Story Window solutions. It's a long lead business. Can you look towards 2027 and just provide any kind of early thoughts on -- with the book of business you've got today, and I realize that the kind of interest rate environment and everything can kind of impact things. But as you look at that year, given what you know today and what's in the backlog, I mean, could 2027 be another down year? Could it be flat? Could it be up? Just what are your early thoughts there?

I think it's most likely to be flat to marginally better. This year or this last quarter, if you strip out the difference in the exchange rate, we -- our book-to-bill was flat, and that's progress. We're really starting to see little pockets of strength in the U.S. It's getting better faster than Canada. And so I think we will see improvements in the bookings. We'll talk again in 3 months and we'll see whether we're above even on the book-to-bill, which is the best indicator for the future because bear in mind, like when we take an order, it's generally 12 to 18 months before it's in our numbers in terms of revenue.

The slower part, quite frankly, is still Toronto. Like the glut there is slowing development, but there's still big demand for multi-bedroom apartments. And so the developers have to get their head around how they build those. And we're really bullish about the government's plans with HST and development fees because you can get -- that can add up to a 20% difference in their building costs. And that's a real difference in building a long-term asset.

And the one other thing you're seeing, and we mentioned that with the data centers, is just a mix of both the moving towards more commercial and institutional style buildings plus some product mix in terms of -- we talked about the panels for the data centers. So again, we're diversifying away from pure residential high-rise build into some other areas that is certainly gives us a little bit more brighter horizon.

And your next question comes from the line of Razi Hasan from Paradigm Capital.

Most have been answered, but just 2 quick ones here. On the aerospace side, Mike, could you maybe just talk about other contracts that are up for bidding? I think in the past you mentioned Great Britain. So any color on anything that's actively up for bidding at this point?

This is difficult now because there's, a lot of the countries are trying to avoid the Australia situation where it's very public and they are comfortable with that process, particularly in places where they aren't RFPs. So what I would say is that there's opportunities. The greatest spot is in Europe. It's not the only spot, but I would say the most active and the farthest along discussions would be European and Canadian, although there is some stuff in Asia, but less developed.

Jake, anything?

Yes. You mentioned just briefly about the U.K. Home Office, and that's something we have disclosed. We responded to an RFP in 2025. We're expecting the results of the RFP in kind of mid to later part of '26, and we're the incumbent there. So again, that's -- we've got a great partnership with the U.K. Home Office, and we're, again, feeling good about our position, but anything can happen.

Okay. That's great. And then maybe just one for Travis. I just want to confirm, I think the growth CapEx for '26, did you say it was going to be in line with '25 levels? Just want to get that right.

No, likely to be higher, and that's really driven by -- in the manufacturing side by the new Spartan plant, the composite plant in the U.S. And then as we talked about with the accelerating demand profiles for the Canadian operations for Environmental Access Solutions, there'll likely be investment in the fleet just because of the demand signals we're seeing.

The growth CapEx in the aviation, there's less projects than there were last year. We've got the Air Canada project where we're buying planes, but we're coming finally to a close on BC medevac contract. I wish I was in the plane manufacturing business where I could deliver things 3 years late and people would still love you, but we're coming to the end. So those CapEx have ended.

And I don't know if everyone noticed, but we put out a press release in Kuwait a few days ago. They finally were certified on all types of King Airs in our full movement simulator. So that's going to be great for our own pilots, but also for other Canadian pilots that they don't have to go down to Texas or Kansas to get their training done. And it's also great for CapEx because I get to stop paying for installing it. So that's exciting for the future piece as well.

And your last question comes from the line of Michael Goldie from BMO.

To the extent that you can, can you unpack Australia a bit more and share what you learned through that process? Were there any capabilities or solutions that you realize could be valuable to add to the portfolio over time?

I think you were in my Board meeting yesterday because I got the exact same question from my Board Chair. The short answer is I can't because they haven't even made it public who won yet or what they've awarded, whether they awarded a whole contract, part of the contract, whether they extended a piece of it, we just don't know. So by the time we get to our Q2 meeting, I'll be able to answer that a lot more intelligently because all -- what we've gotten from Australia, and this is not exaggeration or hyperbole, is a 3-line letter saying, "Thank you for your bid. We will not be proceeding at this time. If you'd like to meet with us, please let us know." And so we've let them know. And that's really all we know.

We believe we know who won, but it's conjecture. It's not fact. So it's hard for me to answer that for you. We will know, and we will share the issue once we have it, but I don't want to guess.

Okay. And then for my second question, within R1, has the macro started to impact the value of assets yet? And how much longer do you think energy prices need to remain elevated for discounted opportunities to start appearing? And then how have asset values performed in past energy shocks?

So far there's been no impact. We've seen nothing. There's a worldwide shortage of engines on many of the planes we use, the CF34 and stuff, and that has not changed at all. And as airlines like United want to move into the 550 model and things like that, the demand is super high. So I don't see anything in the near term. I think you'd have to see fuel shortage. I don't think prices will do it. I think it's fuel shortages that would cause a problem where people can't fly and then levered airlines have trouble and then that would create asset purchasing opportunities. We're not there yet. And it's part of the reason we're still bullish on the rest of the year. We've seen no deterioration in our lease portfolio at all.

And just to make one comment, in the past, historically, energy shocks will typically drive or shrink purchases of new aircraft, which drive demand for used aircraft, which is our portfolio, used aircraft, solutions for engines and whatnot. So again, that further adds color to Mike's comments here.

And maybe one other thing. So in this market, it is also a very relationship-driven market. So Hank has very strong relationships with numerous fleets around the world. And coupled with, as Rich and Mike talked about, our liquidity that we have available, like we're able to execute on transactions on a moment's notice, which gives us a massive strategic advantage compared to some of our other competitors in that regional market. So we're...

And we're prepared to buy without knowing what we're going to do with them yet. One of the great trades the company made was during COVID, an airline wanted to get rid of all their Q400s. And Hank brought me the deal and I went, during COVID, I think, "We really want to put this much money out during this much turmoil?" And he talked me into it, we bought them. I only wish I had told them to go find some more. We bought planes for the price of about half an engine today. And so when those opportunities come, that's where that liquidity risk provides, helps a ton.

And if I can squeeze in one more. Like are you using AI yet in R1 data? I imagine there's just so much information and there's an opportunity to better sort through it with this technology and find opportunities.

Yes. I mean the key -- the whole piece on AI is you have to have the right data to mine. And it's not a third-party process with them. We've built a massive, our own proprietary system, which is -- I mean, it was -- we didn't call it AI, but it's effectively AI that we built where we build the data. I mean our guys literally know where every engine on a Bombardier 700, 900 is in the world. We know roughly when they're going to need to be overhauled. We know where all the ERJs are and what the parts value is. And that is what drives why we can get the returns we get in Regional One.

And it's also the reason why we bought Mach1 -- Mach2, I'm sorry. They've got access to information on other models that we have never been smart enough yet and didn't have the data to participate in. Well, that will let us grow ourselves into those and grow the effective size of the swimming pool we can compete in.

There are no further questions at this time. I will now hand the call back to Mr. Pyle for any closing remarks.

I'd like to thank all of you for joining us today. It was fun to talk about a quarter like that. And I really hope I get to see a lot of you in a couple of hours at our AGM, a couple of videos and some fun stuff to talk about. So I'll either see you this morning or we'll talk again when the second quarter is done. Have a great day.

And this concludes today's call. Thank you for participating. You may all disconnect.

Good morning, everyone. Welcome to Exchange Income Corporation's conference call to discuss the financial results for the 3 and 12 months ended December 31, 2025. The corporation's results, including the MD&A and financial statements, were issued on February 24, 2026, 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 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 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 are Richard Wowryk, our CFO, who will highlight our financial results, along with Jake Trainor and Travis Muhr, who will expand on our outlook. Yesterday, we released our year-end results for 2025. Our annual performance in 2 words was incredibly strong. Our results set historical records for revenues, adjusted EBITDA, free cash flow, free cash flow less maintenance capital expenditures, net earnings and adjusted net earnings, both on an absolute basis and more importantly, on a per share basis.

We also exited the year with no convertible debt on our balance sheet. We strategically wanted to simplify our financial structure, and we were able to redeem all outstanding convertible debentures during the year, with the vast majority of the convertible debentures being converted into equity, leading us to our lowest leverage levels in 15 years. Per share records and a delevered balance sheet in the same year is a difficult task.

We are proud of this accomplishment. Furthermore, last week, we announced an investment-grade credit rating. This is an impressive achievement as it is a confirmation by DBRS on the stability and the diversity of our business. We now have the capability to issue long-term fixed rate bonds as a layer in our capital structure, which will provide a more permanent form of fixed rate financing at generally lower interest rates. However, I want to be perfectly clear, this does not change our conservative view on leverage.

Rather, it is another tool for us to utilize debt effectively as we continue to grow EIC via either acquisition or growth capital expenditures. As I look back over 2025, these record results were generated during a year where global growth was subdued due to rising trade tensions and political uncertainty.

Monetary policy was adjusted in both Canada and the United States to stimulate growth as inflationary pressures have begun to subside. Supply chains experienced significant disruptions due to United States tariff actions, international shipping delays due to geopolitical events and several climate-related disruptions, including significant wildfire activity in Northern Manitoba and elsewhere.

There was also economic bright spots, including the surge in artificial intelligence investments and businesses with strong fundamentals and competitive moats showed their value. EIC is a shining example of how a diversified and resilient business can navigate periods of uncertainty and continue to thrive. We executed on our strategic initiatives and the proof is in the pudding with our annual results.

Our overall results were driven by 20% increases in adjusted EBITDA in each of our segments. In our Aerospace and Aviation segment, the increase was primarily due to the highly strategic acquisition of Canadian North on July 1. Canadian North continued to meet and, in fact, exceed our expectations of profitability and culturally has been a great fit with our other air operators.

Our maintenance capital expenditures experienced in the first 6 months were elevated. However, that was expected as we increased the anticipated increased maintenance capital expenditures for the first 12 months of ownership and then a return to normal maintenance CapEx in the future.

The Aerospace and Aviation segment was also driven by strong yields in our passenger business, even though there was a temporary reduction in revenue and margins in the second quarter due to the significant wildfire season. We also saw overall strength in our rotary business with fire suppression work, coupled with continued strong performance in our medevac businesses as the scope in our contracts continues to expand.

Our aircraft sales and leasing business continues to see robust demand and increasing rental rates for leased aircraft and engines. Parts sales and whole aircraft sales continue to be very strong as well as the demand for regional aircraft remains robust. Lastly, our aerospace business line saw the impact of the second aircraft commencing operations in the U.K., which led to strong Q4 gains over the comparative period.

We also continue to see numerous inquiries from various parties around the world for our ISR experience. Recently, Canada released its defense industrial strategy, which aligns greatly with the activities of EIC and our aerospace business. EIC has pitched a Made in Canada solution for Arctic security and sovereignty, which aligns with this industrial strategy.

Our Made in Canada team spans multiple provinces and territories with existing indigenous partnerships. We continue to have active discussions with various leaders and decision-makers and are hopeful that our proposal will be successful. I also want to provide an update on the status of the Australia ISR bid. We recently extended our bid for a second time to early April as the bid would have technically expired this month.

We continue to believe that we submitted a very strong bid and are waiting for the government of Australia to finish their analysis and come to a conclusion. Our Manufacturing segment had a strong fourth quarter results from both a revenue and profitability perspective. Our Environmental Access Solutions business had a strong finish to the year with net rentals and sales driving the results in Canada. Canada also has strong growth prospects in the later part of '26 as large linear projects are anticipated to need matting solutions.

Our composite matting business in the U.S. continued to have favorable customer feedback on the System 7XT mat. During our due diligence, we were very impressed with the testing and the capabilities. However, real-world experience has even exceeded those high expectations. Due to the significant demand signals and the overall confident matting business taking more market share from the traditional wood mat business in the U.S., we announced a state-of-the-art plant in the Southeast U.S.

I'm pleased to announce that the plant will be built in Saltillo, Mississippi, and we anticipate the plant will be operational in the mid- to later part of 2027 so that we can execute on our strategic objectives for the North America wide matting business. Our multistory window solution business had somewhat of a stronger quoting season and booked some sizable projects in various jurisdictions in the U.S. and Western Canada. However, 2025 remained a difficult year.

As we anticipated and previously disclosed, the reduced profitability was due to the competitive pressures and lower bookings experienced in earlier years. However, the team made progress on reducing our overhead and combining the physical footprint of the business, which will serve us well in the future. We will also continue to retain our experienced staff.

When the business turns, we will be ready to capitalize and meet the pent-up demand that exists for affordable housing. Our Precision Manufacturing and engineering business led a strong first quarter as we continue to see positive demand signals within numerous underlying businesses. Business sentiment continues to improve. We see that our customers have accepted some uncertainty as the new normal and have been releasing purchase orders, resulting in increased sales activity in the back half of 2025, which drove strong results for the fourth quarter. Rich will highlight the key metrics for both the 3 months and the full year ended December 31.

But before I turn the call over, I wanted to talk about the recent recognition of our business model and our share price. During the year, our market capitalization has increased substantially and today stands at well over $5.5 billion. The market capitalization and the underlying results are lagging indicators of the sustainable, resilient business model that we have built.

We have a fantastic foundation of underlying subsidiaries with cultures and people that contributed to achieving these results. Our business model and principles have not changed for over 20 years. We know that we are set up for an accelerating growth profile in the future, and our head office and management teams could not be more excited. Jake and Travis will focus on the outlook for our segments for 2026. However, before I pass over the call, I wanted to speak about our 2026 guidance.

While we have not changed our guidance range issued at the end of Q3, we announced 2 contracts since the prior guidance was issued, that being the Air Canada commercial agreement and the acquisition of Mach2. Both are accretive to our shareholders. And accordingly, we have updated our guidance by telling people we have a bias from the mid to the upper end of the $8.25 to $8.75 guidance range.

I will now pass the call over to Rich.

Thank you, Mike, and good morning, everyone. For the fourth quarter, revenue was $930 million. Adjusted EBITDA was $216 million. Free cash flow was $165 million. Free cash flow less maintenance CapEx was $68 million and adjusted net earnings and net earnings were $58 million and $52 million, respectively. Earnings and adjusted earnings per share were $0.94 and $1.06, respectively, which were increases of 62% and 33% over the prior period.

Free cash flow per share increased by 30% to $3, while free cash less maintenance CapEx increased by 38% to $1.24. The per share metric increase is remarkable because the weighted average shares outstanding increased by 14% during the fourth quarter compared to the prior period due to conversion of convertible debentures during the year, shares issued from our acquisitions.

All the key performance indicators were fourth quarter high watermarks. These results were driven by both segments with 27% and 38% period-over-period increases in adjusted EBITDA for our A&A and Manufacturing segments, respectively. The Aerospace and Aviation results were driven by strong profitability at each of the business lines due to the acquisition of Canadian North, strong load factors at our various air operators, strong demand for leases and parts at our aircraft sales and leasing business line and the start of operations of the second aircraft for the U.K. home office in Aerospace, along with higher tempo flying under various contracts.

Our Manufacturing segment profitability was driven by strong rental and mat sales within our Canadian Environmental Access Solutions operations, along with continued robust demand for our composite matting solutions in the U.S. operations. Lastly, Precision Manufacturing and Engineering had a strong fourth quarter, driven by underlying strength in telecommunications, data center and hydronic heating solution sales.

Construction has commenced on a second state-of-the-art manufacturing facility for our U.S. composite matting business. Growth capital expenditures of approximately $4 million were made in 2025, and we anticipate that production should start up in mid- to late 2027. Estimated cost for the new facility is up to USD 60 million, and the expected returns are significantly above our required return threshold.

We are seeing significant demand for our System 7XT mat, but further noting that composite mats are replacing traditional wood and mat market share in the U.S. is driving excitement within our management team. Maintenance capital expenditures in the fourth quarter of 2025 were $97 million and were higher than the comparative period due to the acquisition of Canadian North and the timing of maintenance events in our Aerospace and Aviation segment.

Growth capital expenditures during Q4 were $134 million and were primarily driven by acquisitions of engines and aircraft in our aircraft sales and leasing business line to increase their leasing portfolio, coupled with King Air aircraft deliveries for the BC Medevac contract in our Essential Air services business line.

From a cash flow and working capital perspective, we had a strong finish at the end of the year with a reduction in our net investment in working capital and a positive impact on our cash flow from operations, driven by efforts from our subsidiary management. Last year, we highlighted that certain government receivables were uncharacteristically behind historical collection patterns and those were resolved within 2025.

Further, due to the reduced level of output within our multistory window solutions business line, we were able to return significant working capital during the year. We actively manage our working capital and worked with each subsidiary team to convert working capital from 2024 into cash, and we're very happy with the performance throughout 2025. The corporation's aggregate leverage is at historic lows. We had the goal of simplifying our capital structure and achieved that goal during 2025, which looking back was an incredible feat.

More than 90% of the convertible debentures were converted into equity of the corporation. For 2026 and beyond, the only dilutive instruments on our balance sheet relate to deferred shares, which will simplify our dilutive EPS. After year-end, we announced that EIC has achieved an investment-grade credit rating with a BBB low rating with a stable outlook from DBRS.

With the credit rating, we can access bond markets in the future and could utilize bonds as a fixed rate long-term form of financing. Based on the rate environment today, this would also reduce interest costs. We exited fiscal 2025 with an overall leverage ratio of 2.73, which is the lowest it has been in approximately 15 years. This also does not include the pro forma impact of growth capital expenditures for which a full year return has not yet been fully reflected in our financial statements, such as the U.K. Home Office second aircraft is one example.

We've previously discussed that there is a time lag between making those investments and the timing of the adjusted EBITDA increases. With over $300 million of capital deployed by year-end, we anticipate meaningful returns in the years to come, which have been incorporated into our 2026 guidance.

Our M&A pipeline remains very strong. Adam and his team executed on a strategic investment in the first quarter of 2026 with Mach2. We have always wanted to diversify our cash flows and provide another avenue for growth. We had looked at a number of narrow-body and commercial businesses. However, none of them met our stringent investment criteria based on their management teams, their niche focus or financial metrics.

Fortunately, we found Mach2, which met all of those criteria. Regional One has built the data infrastructure and architecture that is capable of scaling into other aircraft types. And now with the Canadian North 737 data and the narrow-body and wide-body data for Mach2 and experienced personnel at Mach2, we can realize on significant opportunities in that space.

Mach2 is situated very near our Regional One business and the management team is well known to our Regional One management team. 737 and narrow-body business is the world's largest aircraft aftermarket parts and leasing business. And therefore, we have a unique opportunity to leverage our strengths to create meaningful returns for that business line long into the future.

In terms of other acquisition opportunities, our pipeline includes opportunities in both segments, which are similar to our existing businesses. We have a great foundation of businesses and to the extent that we can find ancillary opportunities to expand our competitive moats, we're always interested in those accretive opportunities.

As a reminder on the seasonality of our business, the first quarter is our seasonally slowest quarter because of the impact of winter roads and weather-related impacts for our air operators, coupled with reduced demand for our Environmental Access Solutions business line as the ground is frozen and doesn't require the same level of matting protection.

Third quarter experiences our highest level of activity across our businesses and the second and fourth quarters would approximate the average per annum results. Collectively, 2025 was a foundational year for EIC. We simplified our capital structure and executed on all of our strategic initiatives. We added Canadian North in a highly strategic acquisition.

And after year-end, we announced Mach2 and our investment-grade credit rating. We are confident that our balance sheet is in a position that allows us to execute on future transactions and the foundation has been laid for future accelerated growth.

I will now turn the call over to Jake, who will provide an update for the 2026 outlook for Aerospace and Aviation.

Perfect. Thank you, Rich. Overall, we're expecting another strong year of growth from our Aerospace and Aviation segment as the trends highlighted by Mike and Rich are expected to continue into fiscal '26. The growth investments made in the past, in addition to the contractual wins, whether it be the second aircraft for the U.K. home office, the commencement of the Newfoundland and Labrador Medevac contract midway in 2026 or the expansion of the Air Canada commercial agreement and increased routes that we've been experiencing will all contribute to the increase in revenues and profitabilities.

I will specifically focus on the growth factors by business line. Our Essential air service business line will see growth driven by a multitude of factors when compared to the prior period. The most significant impact will be the inclusion of Canadian North for a full fiscal year.

Other increases include the expansion and extension of the Air Canada commercial agreement, which will see aircraft starting to fly midway during the year. We also anticipate stable load factors across our network when compared to 2025.

Lastly, we expect continued growth in our medevac business, including the start of the Newfoundland and Labrador medevac contract, which is anticipated to start operations in mid-2026.

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, the challenges still remain specifically on aircraft parts, consumables and overall costs, which are experiencing significant inflationary pressures.

The aerospace business line is expected to see growth due to strong flying tempos for our surveillance and aircraft going into service for the U.K. home office, which will have year-on-year effects as that aircraft only started operations in the fourth quarter of 2025. Our aircraft sales and leasing business is also expected to experience growth as the investments made in aircraft and engines are leased to customers. There is always a lag between investment and cash flow generation as such, aircraft have to be readied and the lease contracts executed.

Regional One remains an opportunistic buyer and stands ready to complete transactions that are accretive to the portfolio. The demand for Regional One and Mach2 remains robust as evidenced by increasing lease rates and shortages of critical parts across the industry, and we expect that trend to continue in 2026.

On a long-term basis, we expect maintenance capital expenditures to increase consistently with increases in adjusted EBITDA in our Aerospace and Aviation segment, which is the biggest driver of our consolidated maintenance CapEx. We anticipate an increase over 2025 due to the full year inclusion of Canadian North, coupled with increased flying due to our recent investment in aircraft over the past few years.

Lastly, we continue to invest in deferred maintenance at Canadian North and anticipate those investments to continue in the front part of the year. Growth capital investments -- or excuse me, expenditures in 2025 include the 3 remaining new King Air aircraft for the BC EHS contract. Regional One is always working on opportunistic aircraft and engine acquisitions, which may result in growth investments being made in the aircraft and sales business line.

Before I pass it off to Travis, the other theme that I've been speaking about at external events and conferences, which is EIC's exposure to the defense and security as well as dynamics within that industry. The recently released Canadian defense industrial strategy is a clear and welcome call to action.

When government focuses on an outcome it needs such as capability, readiness, availability or serviceability, industry will do what we do best: invest, integrate partners, manage risk and deliver. That's a model that we've proven around the world, and it's a model that Canada is now rightly setting out to use here at home. The strategy named 10 sovereign capabilities to be prioritized, of which many of these align with our EIC core competencies. These include aerospace, digital systems, in-service support, specialized manufacturing and training and simulation, among others.

The defense industrial strategy aligns with our communications with officials within the government over the past year. And EIC obviously has defense and security ties within our aerospace activities, including in-service support and our ISR operations. However, we do have a number of other opportunities, which may not be as obvious.

Our specialized manufacturing companies are already engaged in providing parts for defense and space-related applications. Another important capability that EIC can bring to bear is our unique infrastructure in the North. We are the leading experts in Northern aviation and operating in harsh Arctic climates. As people and goods are transported to the north to support enhanced defense activities, it will be a positive tailwind to our air operators.

And finally, EIC and its training capacities, including MFC training and CTI can help solve training and development gaps. CarteNav, which is PAL's mission system, has a fully developed command and control digital system capabilities, which are world-class and utilized by several countries around the world for security purposes.

I'll now pass it off to Travis to talk about some of the commentary on the manufacturing segment and some of the other opportunities within defense and security within manufacturing.

Thanks, Jake. Our Manufacturing segment is also uniquely capable of providing solutions to the government. As the north is developed, there'll be a need to expand the transmission and distribution along with opportunities for long linear projects as resources get developed, which will provide further tailwinds for our Environmental Access Solutions business line.

Our Precision Manufacturing and Engineering business line has several subsidiaries which have positive exposures to defense and security. Our West Tower business has over 35 years of installing towers and infrastructure into remote and demanding areas. There are numerous opportunities to install radar towers and other infrastructure across the north, and we have unique capabilities due to our scale, manufacturing capability and industrial technology benefits experience.

Ben Machine already provides its precision CNC machining and welding of high-precision short-run critical components for defense and space companies across North America and around the world. Our hydronic heating company, DryAir, provides solutions for hydronic heating and hot water applications, which should also be critical for concrete curing and heating alternatives in the north.

Looking at 2026 from a manufacturing point of view, we're anticipating materially consistent results overall when compared to 2025 due to changes within our business lines for 2 reasons. Firstly, we see the continuation of the strengthening business environment for many of our Precision manufacturing and engineering subsidiaries, coupled with a positive outlook for our Environmental Access Solutions business line.

All the businesses within our Manufacturing segment were experiencing a strong level of customer inquiries in 2025, and we saw that strength converted to sales when looking at the fourth quarter results for both Precision Manufacturing and Engineering and Environmental Access Solutions.

Our multistory business -- windows business line has also experienced strong level of inquiries. Performance was as expected in the fourth quarter with period-over-period declines due to the type of projects, production gaps and tariffs.

Of note, the recent Supreme Court case on tariffs does not impact that business line as the primary source of tariffs were the Section 232 tariffs on aluminum and steel, which remain in place today. The business line for 2026 will continue to be impacted by project gaps and reduced margins due to the demand environment in prior year bookings because of high interest rates and developer uncertainty.

We're starting to see some improvement in various regions around the U.S. and Western Canada. However, developers remain on the sideline due to the excess supply of small condo units, especially in Toronto and developer cost uncertainties.

Our Environmental Access Solutions business line is expected to generate higher returns in fiscal 2025. Demand for our composite matting remains robust, and the plant continues to operate maximum capacity consistent with 2025. Our Canadian operations are expected to be a major driver for the business as we start to see strong results in the fourth quarter from a rental and mat sales perspective.

Further, we anticipate that long linear projects will commence in the latter half of 2026 across several industries, including transmission and distribution, pipeline and oil and gas. The longer-term prospects of the business remain very robust as there will be material investments in transmission and distribution across North America due to growing electricity demands from homes, vehicles and more importantly, AI and data centers.

The Government of Canada major projects office is focused on strategic nation building investments, which provide significant tailwinds in the longer term. This will result in continued strength for the business line into 2027 and beyond. The Precision Manufacturing and Engineering business line is expected to improve from a revenue perspective, but due to changes in project mix, profitability is expected to be materially consistent with 2025.

The fourth quarter was a very strong quarter for the business due to product mix and delivery of hydronic heating units, which were deferred from earlier in the year, and we continue to see a strong quoting environment across the various companies. This business line is very diversified with exposure to the defense industry, technology industries, including data centers and telecommunications.

The anticipated maintenance CapEx are expected to be slightly higher than the prior year due to the timing of replacement activities. We're also anticipating growth CapEx to be incurred in each of the business lines, but they should be relatively consistent with 2025 with the exception of Environmental Access Solutions where growth capital expenditures will be outlaid for the new state-of-the-art composite plant as discussed by Rich as well as investments in Canadian rental fleet based on market dynamics and anticipated projects.

I'll now pass the call back to Mike.

Thanks, Travis. 2025 and our strategic initiatives have been -- have set the foundation for EIC for the future. 2025 was an incredible year for our business as we set records in all of our key metrics. I am extremely confident in the future of our company.

EIC is at the intersection of a number of critical themes and trends. We have remained true to our principles and what has made us successful for the past 20 years plus will continue to accelerate that success in the future. Thank you for your time this morning, and we would now like to open the call to questions. Operator?

[Operator Instructions] Your first question is from Steve Hansen from Raymond James.

First question, it relates to the matting business. It sounds like it has inflected here from previous levels. Just given some of your commentary about rebuilding the fleet in Canada and the growth CapEx, is it fair to say that visibility is improving through the balance of the year and into '27? I'm just trying to make sure we didn't have sort of a onetime or 1 quarter sort of bump in the business or just trying to understand that it's got better visibility going forward.

It's a good question, Steve. The matting business -- our comments are sort of the sum total of 2 things. We had some abnormal project delays during the first part of 2025, particularly on integrity digs and some pipeline work that are regular things we do every year and didn't get done earlier in the year. In Q4, we returned to normal in that area. So that generated some improvement in this quarter and will help us into the beginning of next year. We have more mats on rent now than we did at this point last year.

But I think the real story is in what's coming. We have a number of T&D projects in Eastern Canada that we're bidding on, and we will win our share of those. And the number of pipeline projects that are at the bidding stage or being awarded to general contractors. And while it's unlikely those generate revenue in the first half of next year, you'll start to see that in the back half of '26. And I think in '27, we're hitting back into a super cycle of the business, much like we did when we went -- when we originally purchased it in 2021 or 2022.

Okay. Very helpful. And just a quick second one for me is just on the Mach2. I was just hoping you could maybe frame sort of the size of the market opportunity that you're stepping into here, recognizing that it's obviously a much larger set of aircraft out there. But then I guess, secondarily, how do you expect to approach that market from sort of a cadence perspective and tipping your toes in or growing more aggressively? How do you envision the growth profile evolving there?

That's a really good question, Steve. The Mach2 is part of our strategy. It's not our whole strategy for moving into the narrow-bodies and wide-bodies. Just to back up, Regional One's secret sauce and the reason they're so phenomenally good at narrow at the regional jet turboprop market is they understand who the customers are, what products they need and the value of those assets. So when we're buying aircraft, we buy them with margin in before we lease them, before we do anything.

And so we've always coveted the 737 market in particular because it's so huge relative to the regional jet market. But it's important to understand that most of the 737 market is an OEM market. When you're talking about a 737 MAX or those things, those are bought from the manufacturer. They're leased by finance companies. What we do when we lease aircraft is we're burning up green time. We're not a finance lessor. And so most of that -- the newer versions of those aircraft really don't apply to us. Where our opportunities lies as those aircraft age, the value of parts may exceed the value of the plane as pieces. And the knowledge with the team at Mach2, the skills of the people that work there, combined with the knowledge we're drawing from Canadian North's experience in the 737 business will let us dip our toe in there.

I think it's safe to say that we're going to walk before we run here. There's a big comparison that if we went back 8 or 9 years in Regional One, we really didn't participate in the ERJ market, the Embraer market. And we were given a couple of opportunities. We slowly dipped our toes in. And now we do almost as much work in the ERJs as we do in the CRJs.

I think you'll see a similar movement in the 737s where we'll invest in greater parts inventories, greater depth, develop our knowledge and then slowly move into it. It's not something that you should anticipate a light switch. I think it's a slow, steady growth and bringing in the expertise we got from Mach2 will accelerate that from what we could have done on our own.

Your next question is from James McGarragle from RBC Capital Markets.

Congrats on the strong Q4 here. I got one for Jake here though on the Canadian defense opportunity. So obviously, some pretty big announcements recently. So can you just kind of give us an update on some of the conversations that you're having in Ottawa and what you see as the opportunity set for exchange here over the next couple of years?

Sure. Thanks, James. A couple of things you got to keep in mind. Some of the big procurements that the government is working on are kind of generational when you're looking at shipbuilding, submarine acquisition, wrestling with the fighter jet issues. So again, there's some of those massive procurements that obviously, that's not our wheelhouse of activities. But what is, is defense and security in the North. And we're seeing -- in terms of opportunity sets, obviously, the ISR capability is one that, as we've announced, we've engaged with the Canadian government.

But more broadly beyond that, there is -- and we're seeing it now in just terms of some of the volumes of the logistics support, the travel, the support to greater attention for folks in the north. They're traveling up to the north. That's certainly one. Some of the resource development that, again, comes with enhanced attention on defense and security around the critical minerals. We're seeing that.

And then the last piece, and Travis touched on it briefly, was looking at some of our other subsidiaries where there's a general sense of renewal of infrastructure. So whether it's additional towers or maintenance of towers, and that's not only defense and security, that's with our air navigation provider, our ATC system. There's just, as I said, a general overview or a requirement to continue investing in infrastructure that we're going to see touch a number of our businesses across the portfolio. So again, something that we're truly excited about.

Appreciate the color. And then on -- just on the projected return thresholds for Canadian North, when you acquired it, you mentioned the returns would be a little bit below into '26. We should see those things improve. We saw the update on the -- you have to help on the pricing side, given that agreement you signed last year. But can you just give us an update on how things are tracking operationally against some of those return targets that you guys have internally? And then just a little bit more generally, what's the opportunity, what's the capacity in Canadian North to kind of take advantage of some of this Arctic sovereignty investment longer term? And I'll turn the line over after that.

Thanks, James. When you look at Canadian North, I think it's safe to say that we had ambitious goals for the company. We had great faith in the management team there and that when teamed up with EIC, we could create some impressive results. And it's clearly exceeded our internal expectations. The EBITDA we're generating, we've made more changes and accomplished more than we anticipated at this point in the process.

And so when you look at what we need to do from an earnings point of view to get to our 15% return, we're ahead of where we thought we would be. The part that will still take us through next year is the deferred maintenance stuff where we're catching up on some of the overhauls and stuff where they have used rentals as opposed to overhauls. And so that will continue through this year.

In terms of capacity, there's room for year-over-year growth, which we expect. But if we get to the point where we're building a military base or there's a new mine or there's those things, the incremental investment in a couple of extra aircraft is modest relative to the returns because we own all of the fixed base infrastructure. Canadian North is well underway to building a new freight hub in Ottawa, which is nearing completion now. In fact, that was the majority of the growth CapEx we incurred in that company last year. It's nearing completion. So I would say that the infrastructure of the business to grow is there. As it grows more and more, we'll add aircraft to meet the demand.

The one piece I would say that's a little bit different than that would be on the charter business. The first phase of liquid natural gas plant business is complete, and that you saw that come to a close in Q4. The balance of the charter business continues, although as I said several times, that's at much tighter margins that we're really interested in participating in. So we're in great discussions with our customers.

If we're successful on renegotiating those contracts at their maturity, we'll continue in that. If not, we won't. And just as a reminder, we didn't pay anything for that part of the business. Those are the only aircraft in EIC that are leased, and we bought the Canadian North business for asset value. So we may be able to redeploy some of those leased assets into the core business if we needed to, to augment our capacity.

And Mike, it's -- one other point I'd just like to add to add a bit of color is the other critical angle that we've got is the human capital. We're one of the largest employers in the north. We have incredible relationships with the Inuit and the indigenous partners out there.

And again, just understanding the time and space constraints, building a workforce that is able to perform in a harsh environment is a significant -- one of the moats that Mike was talking about earlier. That's a significant challenge for anybody. So again, that's something that we can continue to scale, and it's a big opportunity for us.

Your next question is from Cameron Doerksen from National Bank Financial.

So I guess maybe my question on the balance sheet. Obviously, you've got the investment-grade credit rating, which is great. But I'm just sort of wondering, big picture, how you'd sort of like to see the structure of the balance sheet longer term. I mean, obviously, there's an opportunity to do a fixed interest rate debt deal here. But I guess, how would you like to see the split of the business kind of longer term between raising some debt in the public markets versus the credit facility? And maybe a corollary to that is what sort of interest rate savings do you think you might be able to achieve if you do tap the capital markets for debt?

I'll take most of that, and then I'll give Richie the hard part, which is the savings part. I think it's really important to understand why we're excited about the bond market. We have tons of liquidity. Our current facility is $3.5 billion, and we've got about $1.25 billion of dry powder. So even with Adam's capability and investing money that we're in good shape there.

What the bonds bring us is a fixed rate piece to our balance sheet. We've always had convertibles since our inception, and those served as a big part of our fixed rate exposure. Now with bonds at a far lower rate than convertibles ever were and quite frankly, at a lower rate, depending on term, of course, than our floating rate, I think you'll see over time, bonds make up a significant piece of our capital structure.

In the past, we've used interest rate swaps to give ourselves exposure to fixed rates. The bond market is far cheaper than the swap market today. And so I think you'll see us grow that. And one of my personal phobias is when you get into refinancing risk when you have big pieces of paper. And so I like to stagger those over a number of years. And I think over time, as our bond part of our financing matures, you'll see us doing that with different lengths of bonds to make sure that we are unduly impacted depending on what's happening 5 years from now when a bond comes in.

And I guess the other thing that's really important that our shareholders rely on us for is we've maintained a very consistent level of debt since our inception. Bonds don't change that. It reduces our reliance what we used to have on convertible debentures and it reduces our reliance on our operating facility, but it doesn't change the aggregate level of debt we're comfortable carrying.

Yes. I think, Cam, just to answer your question on savings. It really depends kind of where you're anchoring to. So if you're anchoring obviously to kind of the convertible debenture market, those savings are very meaningful, especially when you include kind of the amortization of the cost of that transaction. So you're 1.5%.

If you're comparing it to our credit facility on a variable basis, that suggest that's less comparable in that it's a 4-year facility versus in the bond market, something that's 5 or 7 years. But even on a 5-year fixed basis versus a 4-year floating basis, you'd have some savings on the fixed side. But I think where the comparison versus the credit facility is more meaningful is, as Mike noted, as the debentures we completed those redemptions, but also we have 2 interest rate swaps that are maturing in April of 2026.

We've started to ramp up our review of extending those. And when you compare the interest rate swap market versus the bond market, those savings when you're thinking about something of term in 5 years in the bond market versus the swap market, you are saving -- it's not as large of a delta versus the convertibles, but it is still meaningful savings for that certainty of term. So we're excited about it. And we'll still pick up some savings versus the floating, but it's really versus the other capital alternatives that we have to achieve a portion of fixed rate debt where the savings are more material.

When you look at the fact that we basically carried about a turn of EBITDA on average over our history in convertible debt. And those were in round numbers, the low 6s in terms of interest rates plus the cost of raising versus a bond probably in the very low 4s with very little cost of raising. You're talking about something in the range of 200 basis points versus our historical capital structure, and that's a meaningful difference on our cost of capital.

Okay. No, that's super helpful color on that. And just maybe one quick follow-up for Richard. Just, I guess, on the working capital, you had a big, I guess, positive swing in Q4. It looked like a big change in the accounts receivable. Just wondering what that was. And I guess maybe any thoughts around working capital expectations for 2026?

Yes, for sure, yes. So this is consistent with kind of the messaging that we've been giving throughout 2025, but also with the messaging that we gave for 2024. There were a number of government accounts that were kind of well behind our collection patterns in 2024, and we rectified those by working with our partners throughout 2025. And as we always do, we work to develop processes to make sure we don't end up back there. So that was significantly successful during the period. We talked about kind of the multistory window solutions. There's some drawdown of working capital there because of business volumes. And the other thing that we talked about throughout 2024 and early 2025 is just Regional One taking advantage of certain buying opportunities and finding the right place to sell those assets. And just the size of assets that we had purchased throughout 2024, late 2024 and early 2025, the timing of those sales resulted in kind of temporary bumps in working capital. And it isn't something that we apologize for. Regional One will be opportunistic. And if the intention is to resale the assets relatively quickly, those will sit in inventory. And we'll continue to undertake those types of investments as they generate the returns that Regional One does. So -- and to your question on 2026, we haven't provided something formally, but we would expect marginal increases in working capital throughout 2026 just based on the growth in the business. We'll continue our laser focus on working capital throughout the year as we've shown successes throughout 2025 and try to parlay those into other wins. But I wouldn't expect a repeat of 2025. It was driven by a couple of things that we've talked about for kind of the last 12 to 18 months.

Your next question is from Matthew Lee from Canaccord Genuity.

Maybe we can start with the step-up in manufacturing margin we saw this quarter. Can you maybe just break down how much of that mix or how much of that is mix versus the performance of the individual businesses? And then just maybe some guideposts as to how you're thinking about margin expansion in '26 and then '27?

Sure. In the fourth quarter, it's more driven by product mix than a major change in the business. Fiscal 2024, the fourth quarter was a very tough period for DryAir, our heating systems company. Conversely, 2025 was a very good fourth quarter. So you've got a delta of a better-than-normal year versus a worse-than-normal year that helped support margins. We had increased rental activity at our Canadian matting business, which is strong for margins.

And when we look at that, taking that forward, it's not dramatic in the first half of next year. But as the year progresses, as the rental, the fleet gets more and more deployed, the rental business is higher-margin business, which drives the aggregate margin across the segment. The other thing I'd point out is that the composite matting business ran flat out in the fourth quarter, and we did -- we had just got it the year before, and it wasn't quite running at the same level. So that strengthens it.

There's not much of a delta coming up in that. The business is selling every mat it can make, and we anticipate that for the balance of '26 until the new plant opens in '27, which again should be good for margins as we go forward there because the SG&A with the business won't ramp at the same rate as revenues will when the new plant comes online.

So if I'm understanding that on a holistic level, kind of further margin expansion from efficiencies in '26 and then '27 further ramp as the capacity comes online and of course, Quest starts to recover.

Quest recovers and the -- I think we're heading into the beginning of a new super cycle in the Canadian matting business. The amount of bidding we're looking at on the pipeline business, but more so the transmission and distribution business, I think we're going to see that business being very busy as we head into the back end of next year and into 2027. So I think that's also very bullish for margins as we go into '27.

Understood. And then maybe on the ISR front, obviously, a lot of talk about Australia amongst investors. But can you maybe talk about the conversations you're having with other countries and how those conversations have changed as the geopolitical environment has evolved in the last couple of months?

I think what's changed in the geopolitical environment is 2 things. And Canada is kind of a poster child for it. One is, in the past, there was kind of do I really need to do this and the reliance on the group of NATO and a reliance on the Americans, the position of the U.S. President telling countries they need to help look after themselves has been great for this business. And the uncertainty politically. You can see it, as an example of Greenland. I mean, the talk that NATO partners dispute area of land is not something we've seen in a long time.

And so the demand we're seeing from countries wanting to look after themselves is very heightened. And it's across the board. We're in discussions in a lot of places that I'm not at liberty to discuss. But I can say it's like countries to what we do.

In the last 5 years, we've added work in the Netherlands. We've added work in Great Britain. We've expanded and lengthened our contract in the Caribbean. We're in discussions. I said we've talked to Greenland about their opportunities. We've been very public on the fact that we've had discussions with the government of Canada in providing them with a northern surveillance solution. So it's pretty pervasive and across the board.

Wins tend to be choppy. You don't know exactly when a government is going to come to conclusion. Australia is a great example of that. The Australians are very sophisticated from a bidding point of view, and this process has been going on for over 5 years. We're surprised that it hasn't come to a conclusion yet, but it's going to. And we certainly aren't going to win every opportunity, but we are going to win some of them.

And the magnitude of these projects, whether it's a hypothetical 10-plane deal in Australia or something smaller than Canada or something in that 2 or 3 plane range in European countries, all of those fit directly into our sweet spot. And if we're having this call a year from now, I'm pretty confident that we're going to announce some exciting stuff by then.

Your next question is from Krista Friesen from CIBC.

Maybe just to follow up on Matt's question there. As you think about the number of opportunities for your ISR business over the next 12 to 18 months, would it be fair to say that as you think about the opportunities for debt, it's mostly going to be prioritized towards future potential contracts? Or are you still very much open to other M&A?

I think if I said to you that I was prioritizing my capital for ISR, Adam would beat me up when I got back to the office. We're kind of -- because they're driven by different parts of our company and different people, they don't really compete for capital so much as if we're successful on both the acquisition front and on earning new contracts, our leverage will creep up. And if it creeps up, we'll use equity if as and when we need it. But we're in a spot right now, Krista, where our leverage is the best it's been since like 2010, I think, at 2.73x and with $1.5 billion -- $1.25 billion, I'm sorry, of dry powder and maybe the opportunity in the bond market. I think we're in a great spot from a liquidity point of view. But I really want to be clear, we're not going to trade off opportunities. We're going to take them all, and we'll just make sure they're appropriately financed.

One of our great strengths is if you look back over history, we've always had a balance sheet that lets us thrive in bad markets. So whether it was in 2009, where we were a $60 million market cap company, and we did a $60 million deal right in the middle of the markdown or when we had some silliness with a short attack during 2017, we grew dramatically or even in COVID, we maintained our dividend and did a couple of acquisitions and pay down debt.

So we're fixated on maintaining the right level of leverage. And Rich's job is to make sure we have the right level of liquidity. And so we aren't really trading off one against the other. Acquisitions are a little harder to predict when we're going to be successful. But we typically get a couple of them across the line, and I see no reason why this year would be any different.

Okay. Great. And then maybe just on the Air Canada announcement earlier this year, clearly, a strong vote of confidence in PAL Airlines. Are you able to share a little bit more detail on the cadence of deploying these additional aircraft with Air Canada?

Jake, do you want to take that?

Yes, for sure. Thanks, Mike. Great question, Krista. Again, you got to appreciate that we're -- as we continue to expand that offering, we've got to bring crews in. We've got to train. We're buying aircraft because we don't have them sitting on the shelf.

So from that announcement, our intent is mid-2026 is when they're going to start being reflected in the scheduled operation. So -- and the other point I want to say is this is a significant vote of confidence as you stated, because it's only an extension -- it's not only an expansion of the number of aircraft, it's an extension of the entire package of aircraft with Air Canada by a further 4 years. So again, tremendous stability and again, strength in partnership.

Your next question is from Konark Gupta from Scotiabank.

One. It's Nate Britto, actually filling in for Konark Gupta. Just have a couple of questions. Are there any areas within the EIC portfolio where you are in advanced stages of AI adoption? And are there any subsidiaries that may significantly benefit from AI investments around the globe?

We don't have kind of quantum AI projects that are materially changing the business. There is incremental investment being made in things, everything from airplane maintenance, airplane security and other things like that. But there's nothing that's really a quantum leap from AI. We do tend to use our head office team to help our subsidiaries deploy when they see an opportunity.

Maybe one of the biggest benefactors from AI would be our CTI training business in the U.S. We spend a lot of time utilizing AI in the training and then training our customers on the use of AI in their business. And so probably the biggest impact would lie at CTI.

Okay. That's very helpful. And just as an addition, I would just ask, in terms of your M&A pipeline, how are sellers' expectations these days? And do you think the manufacturing end market has more opportunities than aviation?

I think it depends on how you look at that. The -- because there are rules in aviation about where you could operate, what ownership you can have in other countries. So by definition, aviation is more limited than manufacturing because manufacturing doesn't have those.

Having said that, the areas where we're active in aviation have tremendous growth opportunities in the medium term. We've talked a lot about what's happening in Canadian North. We've talked about in ISR. We've talked about our continued desire to grow our air ambulance medevac business. We're already the biggest in Canada, and we intend to continue to grow that business. So if we talk about the overall macro, I would say there's more opportunities in manufacturing. But if you look sort of closer to home and the things that are bolt-on and things that are close to what we do, I would view them as very similar.

I think you'll see a significant continued growth in the matting business. The opportunity in the U.S., the movement towards composite matting is real. It's long term. It's worldwide. And our product is quite simply the best. And so we're going to get that plant up and running, and we'll start taking on, whether it be rental opportunities, selling outside of the U.S., expanding our geographic coverage.

We were ecstatic that we had a number of our mats used in the oil patch. And typically, the oil patch are the hardest on mats, and that's why wood matting has historically been what's used there. And we've had great success with our mat on a couple of projects there.

Your next question is from Razi Hasan from Paradigm Capital.

Can you maybe just talk about the margin implications for the Aerospace business, training versus ISR? And going forward, do you expect the Aerospace business to have a higher contribution than it did in 2025? And if so, just what are the puts and takes there?

So the big macro you brought up first is bang on is that the margins in anywhere where we own the aircraft are always higher because of the capital deployed. So our training business is a very low capital business. Our return on investment is great, but our EBITDA margins are much, much lower. As we grow the ISR business, it tends to be the highest or near the highest of our aviation businesses from a gross margin point of view. So the growth of that will be good for margins. For competitive reasons, I'm not going to get too detailed about what those are, but they're commensurate with the risks and the capital we put forward on those aircraft.

Okay. That's helpful. And then maybe just switching gears just on Canadian North. As much as you can speak to, can you just maybe walk through the revenue contribution from Canadian North? It looks like the segment was much stronger than we had estimated. So I just want to make sure we're modeling it properly. Any color there would be helpful.

I don't have those numbers in front of me. What I would say is that maybe one of my guys can grab and see if they can pull up while I'm talking. But the -- you have to break Canadian North into 2 pieces, the regular business in the North, which is very similar to what Com Air does, which would have very similar margins to the balance of our Northern aviation. And then you have the charter business. And I'm not talking about the charters within the far north. I'm talking about the charter business servicing the oil patch and servicing the natural gas projects. In those cases, those margins are much lower.

So as we make some of the changes in the Canadian North business and merging some of the purchasing capabilities and those things with EIC, you will see a continued improvement in gross margins at Canadian North and the margins continue to improve with the full price increase that was in the new contract with the government of Nunavut taking effect because when we took the contract, we signed the contract, there's a whole bunch of tickets that were already outstanding under the old pricing. And so the full impact is just showing up now. So that's part of the reason you saw increases in margins in that period.

And just -- while we don't normally disclose subsidiary by subsidiary financial information within our ICFR disclosure within the MD&A, there is a note that aggregates revenue for Newfoundland Helicopters and Canadian North from a revenue perspective. So you can pull what the 6-month impact was for those 2 entities. Canadian North is materially all of it based on the size of the deal. The one thing I would caution, though, is when you just think about projecting that into the future is that as we've noted, the LNG contract wound down in the fourth quarter of 2025 here. And so just multiplying that by 2 and saying that's what revenue is going to be in 2026 would be overstating the impact of those charter revenues because of where that contract is.

[Operator Instructions] And your next question is from Amr Ezzat from Ventum.

Congrats on a very strong year. I've got just one very maybe conceptual question for you guys on guidance. So you guys reiterated 2026 with a bias to the upper end following Mach2 and Air Canada. But as I think about the defense and sovereign themes that you guys discussed in your prepared remarks, can you help us distinguish what's structurally embedded in your current 2026 run rate versus what would represent an incremental upside. And I do understand that you guys don't include any sort of ISR wins. But specifically, are you seeing stronger activity levels in defense adjacent parts of the portfolio that support the base case independent of ISR contract wins?

Yes. It's a really good question. The simple way to look at it is our guidance is always based on what we know. So it's based on contracts we've won, investments we've made. And so when we looked at our guidance after the 2 things we've announced, the Mach2 and the Canadian North acquisition, we thought do we change our guidance based on this. And because neither of them were full years in the current year. And if you added what the portion of the year that we had to our internal budget, it would get us over the top of the range that we have, but closer to the top of it. We decided to move within the guidance we've given as opposed to replacing the guidance.

In terms of opportunities and things we're seeing in defense, we haven't really included anything in there other than what we either have or very highly confident we will have in that guidance. So as we succeed on some of these defense initiatives, whether it be ISR or maybe it's West Tower building radar towers in the north or any number of those things or quite frankly, the development of a critical minerals mine in a Callaway.

Those things would be additive to what's in the budget. We try not to predict what's coming in, and then you can get very choppy results versus your guidance. We want to make sure people can rely on what we predict. And so as a result, we really don't put much in there for positive wins that we aren't sure of yet.

Understood. What I'm hearing is it seems conservative.

Those are your words, I'm not...

Yes, these are my words, exactly. If you allow one more follow-up, and I'm not sure you could answer this, like can you -- do you guys like quantify or can you quantify how much of your manufacturing, whether it's revs or EBITDA are exposed to defense and probably very hard to answer, but...

It's really hard to quantify that. What I would say is when you take defense/investment in the north because the investment in the North is going to be much more than just ISR or a military base. The investment in the north is going to be developing in critical minerals. It's going to be work on the Northwest passage. It's going to be nation building. There's discussion of pipelines across there to Churchill. All of those provide dramatic opportunity for us. We are the north to steal the Raptors statement in terms of we now -- with the acquisition of Canadian North, we own the infrastructure to do whatever people need us to do up there. And that's something that we're -- to be honest with you, we're just cutting our teeth on. When we bought the company, we bought it based on what we knew it does, not what we think it can do in the future. And so I really believe the opportunity in Nunavut and the Northwest Territories in Yukon, we're just starting.

The only thing I'd add...

Go ahead, Richard.

The one thing that I'd add is that it's a growing part. And we're leveraging the collective expertise across all of our organizations to work through bidding processes with our manufacturing folks who may not have the same experience going through large government procurement processes. So we are cross-leveraging resources and experiences from subsidiaries that have that experience to increase our exposure to the kind of the defense world on the manufacturing side.

Yes. I was just going to -- I was going to expand the fact that while some of our businesses don't have direct defense exposure today, every one of our businesses had the opportunity to, whether it's the exposure to the infrastructure that is going to need to be built, whether it was the services provided to enhance defense and security or direct activity on behalf of the various government agencies for defense and security. So again, it's probably less about what specific percentage exists today and more about the roadmap of opportunities we're looking at moving forward.

Understood. And I do agree. I think it's a very underappreciated part of your business.

There are no further questions at this time. Please proceed.

I want to thank everyone for joining us this morning. I don't generally comment on stock price and those kind of things, but this is an exciting morning as the early trading has pushed our stock over the $6 billion market cap for the first time. So it's a good way to start the week. Thanks, everybody, and I look forward to talking to you with our Q1 results and at our AGM in May. Have a great day.

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Good morning, everyone. Welcome to Exchange Income Corporation's conference call to discuss the financial results for the 3 and 9 months ended September 30, 2025. The corporation's results, including the MD&A and financial statements, were issued on November 6, 2025 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 upon 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 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 as 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 CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, sir.

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 speak about our outlook for our two operating segments.

Yesterday, we released our third quarter results for 2025, which were very strong overall. We set all-time quarter high watermarks for all of our key financial metrics, including revenue, adjusted EBITDA, net earnings, adjusted net earnings, free cash flow and free cash flow less maintenance capital expenditures. We also set highs for our basic and fully diluted share metrics for virtually all of our KPIs, despite the fact that our share count has significantly increased during the past 12 months due to the redemption of 3 classes of our convertible debentures, coupled with the shares issued for our acquisitions. This demonstrates the performance of our underlying businesses.

Subsequent to quarter end, we called our last remaining convertible debenture, which was originally due in 2029. And by the first week of December, we will have no convertible debentures in our capital structure. In short, our balance sheet is simplified, delevered and very liquid with total leverage near all-time lows. Rich will talk to the record financial metrics later in the call, but I wanted to delve further into the more significant quarterly highlights along with some of the forward-looking remarks included in our 2026 guidance.

The third quarter was the first period which included the financial results from the highly strategic acquisition of Canadian North. The acquisition cemented our position as the foremost expert in Northern aviation, and the results during the quarter were consistent with our expectations. The profitability and the passenger cargo business of Canadian North are reasonably similar and will ultimately match that of Calm Air and our other air operators. As I previously communicated, Canadian North also has a large charter operation that flies on paved runways and utilizes 737 aircraft with a much lower margin profile than the Northern Air operations, which explains some of the outsized increases in revenues.

The majority of the aircraft serving up the business are leased. And therefore, as these contracts wrap up, we will be evaluating that specific business component to assess its returns and see whether they meet our requirements.

Taking a step back, the integration of the business is proceeding consistent with our plan that was developed during the due diligence process. The new long-term air services agreement provides future profitability and certainty as the contract is modified both up and down for aviation-specific inflation factors. Significant process has started in adjusting the cost structure of the underlying operations, including the renegotiation of buyer arrangements. Our other air operators and aircraft sales and leasing have been working with Canadian North to identify operating efficiencies along with the purchase of spare parts and engines to improve the liability of the fleet long into the future.

The inclusion of the 737 fleet provides Regional One an opportunity to attend 737 university, learning about the value of its parts and may provide it with another engine and parts business-like an opportunity in the future. Overall, I'm very happy with the progress made to date, and we expect by the latter course of 2026 the profitability and free cash flow returns of Canadian North will meet our requisite requirements.

The remainder of our Aerospace & Aviation segment had a very strong quarter. The second quarter did have some challenges associated with wildfire activity in Manitoba and Ontario. However, the load factors returned partway through the third quarter and the underlying business was performing very strong during the quarter and as we exited the quarter. We remain very positive about each of the business signs within the segment. And our aircraft sales and leasing continued to see step-based improvement in their aircraft and engine leasing portfolio, and we made some significant investments into the fleet that we'd signaled during the second quarter call.

The business line also had a number of opportunities to sell whole aircraft and engines during the third quarter. Those large sales are generally at higher dollar values but with lower margins than our traditional part business, and it provides further evidence of the demand for aircraft sales and leasing single-aisle turboprop jet niches. Our Aerospace business continues to see significant demand signals both domestically and internationally. We are at the intersection of a number of megatrends in Canada.

The focus on meeting NATO defense spending targets, coupled with Northern sovereignty means there are tremendous opportunities for EIC as a whole. Our infrastructure in the North is second to none. And as we already perform ISR services for the federal government along the East and West Coast, we believe there are opportunities to expand these services into the North. We know that the government is facing human capital and infrastructure shortages. With our relationships with indigenous communities, coupled with our Northern aviation expertise and infrastructure, we believe that we are uniquely suited to provide a solution to the government.

We are excited about this opportunity along with the opportunities immediately before us with other countries. Our Netherlands and U.K. operations have positioned us as a global expert in ISR, and countries are actively calling us to inquire about our services.

The megatrends are also providing us with tailwinds in our other business lines. Focus on critical minerals, resources and precious metals is anticipated to drive demand for fly-in, fly-out services in our air operators, coupled with the demand for our Environmental Access Solutions business line as companies will be required to build access roads to protect ecologically sensitive areas. Furthermore, the focus on artificial intelligence and data center is driving demands within the transportation sector.

Our North American electrical grid system requires significant maintenance, improvements and enhancements to handle electrification requirements of the future, whether it be from data center demands or from households or transportation. This is a tailwind for both the Canadian wooden and U.S. composite operations in our Environmental Access Solutions business line.

We continue to see significant demand in composite matting. We have effectively sold out all of our production into 2026 because of the demand of our best-in-class System7-XT mat. We're in the final stages of selecting a location and are actively negotiating with a lessor for the installation of a new state-of-the-art plant. We anticipate the plant will be up and running in about 18 to 24 months and will require an investment of approximately $60 million. The demand for composite matting is ever increasing due to its advantages over wood mats and transformation at distribution sector. coupled with increased transition from wooden mat users across the United States.

Lastly, data centers and AI are also driving demand in our Precision Manufacturing and Engineering businesses as we provide ancillary products, including cooling stainless steel tanks, hydraulic load cell testing capabilities, chip and wireline services.

We have been transparent that our Multi-Storey Window business continues to be the most challenged business line due to the impact of aluminum tariffs, deferrals and projects and our strategic decision to retain skilled workers and staff over the shorter term. We are still seeing elevated number of inquiries. However, developers remain uncertain in booking projects as they're awaiting government clarification on interest rates and anticipated reductions in development costs. Capital exists developing these projects. However, the capital remains on the sidelines until these uncertainties further abate.

The long-term economics demonstrate the need for affordable housing across North America, and we are seeing a shift from condo projects to apartments in Canada. We are still bullish on the longer-term trends and we are seeing positive developments in certain markets across the continent. These challenges in this business line are included in our current financial results and are also included in our 2026 guidance.

Looking back at the quarterly record results, these were generated while there continue to be significant uncertainty in various markets. However, EIC as a group of company is at the foremost of a number of emerging trends. When Adam and team buy companies, we focus on the sustainable niches and their management teams. Our secret sauce at EIC is maintaining the culture at these companies and unleashing the entrepreneurial spirit that made these companies successful prior to joining the EIC family. Because of that, I'm excited that our future opportunities as each management team is energized to execute on the many strategic opportunities that are before us.

I will let Rich focus on the financial results for the operating segments. However, before passing off the call, I wanted to update you on contract opportunities. During the fourth quarter of 2024, we submitted our proposal to the Australian government for their maritime surveillance contract. We previously anticipated here in the results by the end of the third quarter as their May election delayed the bid evaluation process for a period of time. We have recently been advised that the evaluation process is not yet complete.

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. Due to the timing of getting the assets ready for the contract to start in 2028. We still anticipate the government will have to make a decision by early 2026. As I mentioned, this contract would be a home run of sorts. However, in my prepared remarks, there are a number of other opportunities that would approximate the size of Australia. I'm happy to report that our second aircraft for the U.K. Home Office has been fully modified and has started flying missions in the fourth quarter.

Flying with a strong tempo, we have received great feedback from the U.K. and other countries who have utilized the aircraft. We crossed another milestone of being a $4 billion equity market cap during the quarter. As we continue to grow and tell our story, investors will see the immense amount of opportunity before us. We are still the same company. We will be very disciplined in our acquisition and organic growth investments. I'm very proud of the progress made by our various teams, and I'm excited about the future of EIC.

Due to the strength of our underlying results and per share metrics, we have made the decision to increase our dividend from $2.64 per annum to $2.76 per annum. This increase in dividend is consistent with our stated commitment to our shareholders to provide stable and growing dividend and is ultimately driven by the increases in profitability and free cash flow, along with our outlook for the future.

The dividend increase of 5% continues to represent a lower proportion of our earnings as our earnings and adjusted net earnings grew by approximately 25% on a year-to-date basis and grew by 17% on a year-to-date basis on a per share basis. As such, less than 1/3 of the capital generated by this profitability was directed to increased dividends, thereby reducing our payout ratio. Lastly, the dividend protects the purchasing power of our shareholders due to inflationary effects held by all.

The demand for our services and products is robust. Jake and Travis will focus on the outlook for our segments for the balance of 2025. However, before passing the call over, I want to speak about our 2026 guidance. We anticipate that our adjusted EBITDA will be between $825 million and $875 million for fiscal '26. This estimate is based on the portfolio of companies that exist today and do not include any new acquisitions, significant contracts or significant growth capital expenditures other than what exists today. We have a track record of executing on our strategic initiatives in the past and we are confident in the future. I also wanted to reconfirm our guidance for 2025 with an adjusted EBITDA range of $7.25 to $7.65 with a bias to the midpoint of the lane.

I will now pass the call over to Rick.

Thank you, Mike, and good morning, everyone. For the third quarter of 2025, revenue of $960 million, adjusted EBITDA of $231 million, free cash flow of $171 million, free cash flow less maintenance CapEx of $88 million, net earnings of $69 million and adjusted net earnings of $76 million were all quarterly high watermarks for EIC's quarter. Almost all of the third quarter per share metrics were also quarterly high watermarks, which is even more impressive when you take into account the additional shares that were issued over the past 12 months for the convertible debenture conversions and acquisitions.

Revenue in our Aerospace & Aviation segment increased by $247 million or 57% to $680 million. Adjusted EBITDA increased by $46 million or 30% to $202 million. Revenue growth outpaced adjusted EBITDA growth due to changes in product mix at our Aircraft Sales & Leasing business where they monetize certain large aircraft and engine sales during the quarter along with the inclusion of Canadian North's charter revenue, for which adjusted EBITDA margins are lower than our Northern Air operators passenger and cargo businesses.

Looking at the Essential Air Services business line, the improvements were driven by a couple of key factors: the acquisition of Canadian North, increased demand, contract scope and price increases in our medevac contracts and improved load factors after the wildfires subsided and operations normalized. Our Aerospace business line revenues were consistent with the prior period and profitability was slightly lower due to changes in product mix.

Our Aircraft Sales & Leasing business line increase in revenue and profitability was driven by continued improvement in leasing activity and robust parts demand. We also saw significant increases in large asset sales compared to the prior period. As a reminder, those assets are generally lower margin and lumpier than our traditional parts business.

Revenue in our Manufacturing segment increased by $3 million or 1% to $279 million. Adjusted EBITDA decreased by $6 million or 12% to $45 million. Our Environmental Access Solutions business line had increased revenues and adjusted EBITDA driven by the acquisition of Spartan, which continues to have a significant demand for its composite mats. As previously discussed, the Spartan team is in the final stages of designing a new plant as the longer-term secular demands have demonstrated our need to increase capacity.

In the Canadian market, we saw a decrease in adjusted EBITDA due to customer deferrals and projects into the fourth quarter and into 2026. As expected, our Multi-Storey Window Solutions business revenue and profitability decreased due to customer deferrals and related production gaps. Profitability was further negatively impacted by aluminum tariffs. We are continuing to see significant activity. During the quarter, we booked a number of projects. However, the geography and pace of bookings continues to be sporadic as there's developer uncertainty to anticipated changes in government regulations and further clarity on interest rate environment, including mortgage rates.

Our Precision Manufacturing and Engineering business line had another solid 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 $69 million for the third quarter, which was an increase of $13 million or 23%. The higher EBITDA partially offset by increased depreciation and amortization through the Canadian North acquisition, which was expected due to the significant asset backing and growth in capital investments made over the past number of periods. Earnings per share increased to $1.32 per share compared to $1.18 in the prior period.

Adjusted net earnings were $76 million compared to $61 million in the prior year with an increase in adjusted net earnings per share from $1.29 to $1.46 per share. Free cash flow was $171 million compared to $136 million in the prior year. Free cash flow per share increased from $2.86 to $3.30 per share. Free cash flow less maintenance capital expenditures was $88 million compared to $81 million in the comparative period. Main capital expenditures during the third quarter of 2025 were $83 million compared to the prior year of $55 million.

On a 9-month basis, main capital expenditures were $205 million compared to $142 million in the prior year. Q1 the prior year was an anomaly on the low end due to the timing of maintenance events. The increase in the current year is due to three parts: first, the elevated maintenance capital expenditures at Canadian North as we expected and previously disclosed; secondly, the timing of events occurring; and lastly, the changes in the policy based on utilization of aircraft and engines in Aircraft Sales & Leasing as a discussed in the first quarter, which saw us switch to a more conservative policy as fleet utilization increased.

Growth capital expenditures during the third quarter were $128 million compared to the prior year at $93 million. The third quarter growth CapEx primarily related to Carson Air, the construction of an Ottawa hangar for Canadian North and the execution of growth capital purchases at Aircraft Sales & Leasing. We noted during the second quarter, a significant amount of deposits were made, and we executed on certain of those transactions during the quarter, which more than offset negative growth CapEx from the second quarter.

From a working capital perspective, we had a recovery of approximately $3 million and investment of $37 million for the 3 and 9 months ended respectively. Subsequent to quarter end, we collected two large receivables totaling approximately $25 million. We are actively managing our working capital and working with each subsidiary team to convert working capital into cash. Our corporation aggregate leverage, assuming that the convertibles of interest called subsequent to quarter end materially convert, would be 2.89x. Our aggregate leverage ratio remains historic lows and well within our target.

We continue to have significant liquidity available to us. Our balance sheet is very strong and including cash on hand and the accordion feature within the credit facility, we have approximately $1.2 billion of capital available to be deployed. This allows us to execute on growth opportunities and acquisitions that are accretive and meet our disciplined financial metrics. Our view of leverage and our disciplined approach to acquisitions and organic growth investments have been constant over the years and they will continue to serve us well into the future.

Within our third quarter results, the preliminary purchase equation for Canadian North has been included. As discussed previously, the acquisition is significantly asset-backed. Preliminary goodwill that is recorded is entirely attributed to deferred taxes. Hard assets account for more than 100% of the purchase price. This level of asset backing drove depreciation up materially in the quarter.

I will now turn the call over to Jake who will provide an update for the 2025 remaining outlook for Aerospace & Aviation.

Perfect. Thank you, Rich. Travis and I once again split up the outlook section. I'll focus on Aerospace & Aviation segment and Travis will provide context on our Manufacturing activities.

Overall, we're expecting a strong last quarter of growth from a revenue and adjusted EBITDA perspective from our Aerospace & Aviation segment for several key reasons. The most significant driver is the acquisition of Canadian North. The Canadian North operations met our internal expectations for the third quarter, and we anticipate continued performance during the fourth. Our integration activities have been progressing in accordance with our plans and timelines. We should start to see further improvement in operating margins as we move into 2026.

There will be further investment in maintenance capital expenditures on the fleet, including spare parts, engines and overhauls during the next few quarters. Secondly, we anticipate further strengthening of results due to growth capital investments made for the contractual wins announced over the past few years, including contributions from the U.K. Home Office second aircraft, which has started operations early in the fourth quarter. The operating returns associated with the fixed wing Newfoundland & Labrador medevac contract operations will start becoming evident in mid-2026.

Our Essential Air Services business line will see growth driven by a multitude of factors when compared to the prior Q4. The first and most significant will be the addition of Canadian North. We also anticipate strong load factors and growth across our network. And lastly, we expect continued growth in our medevac business because of strong yields, coupled with increased scope and price compared to last year. We have received 7 of the 12 new King Air 360s to date with another aircraft expected in the fourth quarter, and we'll use the previous BC aircraft to redeploy through our other operations, including the Newfoundland & Labrador fixed-wing medevac operations, which will further enhance our returns.

Offsetting some of these gains is the impact of continued labor shortages and supply chain challenges. We're not seeing a worsening of these dynamics. However, the challenges still remain specifically on aircraft parts and consumables.

The Aerospace business lines revenue and EBITDA are expected to increase in the fourth quarter relative to the prior year driven by the second aircraft deployed onto the U.K. Home Office contract and continued strong tempo of flying for other owned ISR assets. Our Aircraft Sales and Leasing business is also expected to experience growth as we start to lease out assets acquired during the quarter. When we deploy capital in this manner, it does take a period of time to ready the aircraft and enter into lease contracts with customers. Furthermore, we continue to see very strong demand for parts sales and whole aircraft and engine sales. The environment for Aircraft Sales & Leasing remains.

Taking a step back, I want to focus on the strategic benefits of Canadian North transaction for the longer term for EIC as a whole. We believe that the Canadian North infrastructure and aviation assets, coupled with our existing operations provide us with a unique offering to meet the development needs of the North. As the Canadian government renews its focus on development and security at North, EIC's comprehensive portfolio, including advanced aerospace capabilities, sovereign Arctic aviation, medevac solutions, defense enabling infrastructure and in-country defense manufacturing as well as our extensive network of partnerships with indigenous communities uniquely position the company to lead and support these critical initiatives. We're having discussions with the government and our customers about how EIC can support them.

We expect maintenance capital expenditures to increase for a number of reasons. Firstly, due to the addition of Canadian North, we noted that the first year returns are expected to be muted due to higher-than-normal maintenance CapEx expenditures required. When we negotiated the purchase price, we took into account the projected maintenance capital expenditures and it ultimately was factored into our purchase price.

Secondly, maintenance capital expenditures are expected to increase in line with increases in adjusted EBITDA for our Aerospace & Aviation segment. Additionally, increases in maintenance capital expenditures related to our Aircraft Sales & Leasing business due to continued strengthening of utilization in our lease portfolio and the impact of the more conservative change to the calculation of maintenance capital expenditures adopted in 2025.

Lastly, this quarter's maintenance CapEx expenditures in Essential Air Services were below our internal expectations due to the timing of certain maintenance events.

Growth investments in the remainder of 2025 include capital expenditures for one new King Air aircraft, which we use in the BC medevac contract. The remaining aircraft for this contract have been pushed into 2026 due to the manufacturer delays. Regional One has placed deposits on certain aircraft assets and anticipate executing on aircraft and engine transactions during the fourth quarter.

I'll now pass it off to Travis to provide some commentary on the Manufacturing segment.

Thanks, Jake. We're anticipating continued growth in our revenues and profitability for the Manufacturing segment for the fourth quarter compared to the prior year. This growth is expected for two reasons. Firstly, we're seeing our customers normalizing the fact that uncertainty will continue to persist in the economy. However, investments and purchases will be required to maintain industrial capacity and, therefore, we anticipate the recognition of sales that were pushed from earlier in the year. The second is the continued strong results from Spartan in our Environmental Access Solutions business line as Spartan was acquired in early November 2024 and they continue to see significant demand for their products.

All of the businesses within the Manufacturing segment continue to experience strong levels of customer inquiries. The impact of the tariffs has resulted in reduced business confidence, which has deferred customer investment purchase decisions throughout 2025. To be clear, we have not been directly impacted by the tariffs, except for the aluminum tariffs impacting our Multi-Storey Window Solutions business line during the second and third quarters. The vast majority of our products that we produce are compliant and therefore, the broader risk of tariffs relates to the declining business confidence and supply chain changes, which do take some time to effect.

Our Environmental Access Solutions business line is expected to generate returns higher than the comparative periods for the fourth quarter. Spartan continues to experience very strong demand for its composite mat solutions, and we are anticipating that they will continue to sell into their manufacturing capacity based on feedback received from their customers on their System7-XT and FODS mats. Due to the strong demand for its composite mats, we are finalizing a location and final pricing to build the second state-of-the-art plant, as discussed by Mike. We see long-term positive trends in the composite mat industry as the geographic and sector usage continues to expand and take market share away from the traditional wood map industry in the United States.

We've seen some deferrals and project start dates in Canada, and we anticipate those projects commencing in the fourth quarter and into 2026. We've 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, whether it be from data centers, vehicles or homes. With the Build Canada mantra of the federal government and fast tracking of nation-building projects, we also see several tailwinds for the traditional oil and gas and pipeline business within that business line.

As expected, our Multi-Storey Window Solutions business line revenues and adjusted EBITDA will be lower than the comparative periods. The period-over-period declines are expected due to the heightened interest rates in 2023 and into 2024 that resulted in reduced project manufacturing for 2025. Secondly, for the project scheduled for 2025, we anticipated margin pressures due to the type of projects booked coupled with production gaps. We've integrated the manufacturing capacity in Canada by combining manufacturing facilities and have made the strategic decision to retain skilled staff during this downturn. We also highlighted that the business line was negatively impacted by tariffs during the quarter.

As discussed in our reporting, we cannot alter the supply chains in the short term. In the longer term, we'll be able to mitigate the tariffs and optimize production. Quoting in Canada and the U.S. continues to be very active across several geographies. As discussed at last quarter's call, we were successful in booking well over $100 million of new projects across various geographies and project types within the business line. We remain very bullish on this business line as the longer-term fundamentals, which drive demand being an acute shortage of affordable housing, remains very strong across several geographic regions in Canada and the U.S. This shortage has been highlighted by several government officials on both sides of the border.

The Precision Manufacturing and Engineering business line is expected to improve from a revenue and profitability perspective for the fourth quarter compared to the prior year. We're seeing strength across various sectors, including telecommunications, technology, resource and data centers industries along with sector tailwinds in the defense industry. We're anticipating growth capital expenditures to be incurred. So the growth capital expenditures in the Environmental Access Solutions business line will depend on the market dynamics. However, we do anticipate investments due to the demand expectations in 2026 due to the revised project start dates and anticipated opportunities.

I'll now pass the call back to Mike.

We're very encouraged about the state of our business. EIC lies at the intersection of a number of positive and sustainable tailwinds in the Canadian and global economy, which will drive our results long into the future. Our 2026 guidance represents the collective investments we have made in our business. However, to be clear, it does not include any amounts related to future acquisitions, new contracts or significant growth capital expenditures for new contracts. EIC will continue to be a company characterized by resiliency and stability as the core of who we are we buy great companies and help unlock entrepreneurial power within those businesses.

Thank you for your time this morning. And we would now like to open the call to questions. Operator?

[Operator Instructions] And your first question will be from Steve Hansen at Raymond James.

Frankly, it feels like there's a couple of ways for you to benefit from Canada's new focus on North, be it military or otherwise. How do we think about, though, the government overlay with all this and the timing? What I'm trying to understand is ultimately is like where do you think we'll start to see the benefits first and over sort of what time frame?

That's a tough question to start the morning, Steve. We do the maritime surveillance for Canada on the East and West Coast. Canada has historically not felt the need to surveil the North. That's clearly changed. All 3 political parties in Canada have talked about the need for military bases and the need to look after the North. With our acquisition of Canadian North, we now have the infrastructure across Canada's arctic to enable us to move very quickly to stand up maritime surveillance operations.

We've met with the government. I would say that the discussions have been very positive. I would suggest that there's support across the government, whether it be in the PMO, the Defense Minister, the Procurement Minister or I think, more significantly, in the Canadian military. They acknowledge that they're stretched with all the other things they're doing, the future strike fighters, the Canadian -- the search and rescue planes. They can't take on new project. And so the advantage we bring on this is we will bring them a service. All they've got to do is tell us how much and when.

And so while it's difficult for me to make a prediction for a government, I think this is something that's actionable within weeks or months, not years. And so for us to be able to announce something next year, I think, is a reasonable time line. Again, this is dependent on the government. So we're not sure we're active working with them but we're excited about the opportunity. And quite frankly, one of the things we love about it is we've built all the information technology conduits to deliver the data to the government and to the departments of the government.

So our ability to stand this up would be much easier than, for example, when we went into the Netherlands or when we went into Britain where we had to build that infrastructure or if we will win in Australia. It's really just a bolt-on in Canada. So the next year, I think, is a reasonable target to hear something on that.

But the other thing I'd point out is it's much more than that. It's not just the IFRS. We're going to build -- we don't have anywhere to land the F-35s up North. We need to build runways. We need to build military bases. Well, as the people and professionals that are going to go into those communities, they're going to be coming in, whether it be on Calm Air, if they're building in Rankin or in Canadian North if they're building in Yellowknife or building in [indiscernible]. And so we're going to see part of the benefit of this through our scheduled airlines.

You're also going to see it as more and more development of particularly critical minerals that exist in Nunavut. The charter operations to bring employees in and out of those are also going to be done through our bases and our dominant position in the North. I would like to say that when we started discussions with Canadian North over a year ago, closer to 2 years ago, we saw this coming with the movement towards a much greater investment in defense. But we did -- we saw it just based on the pure business, the pure stuff that we're used to doing for the last 50 years up there. The addition of this turns what was a good deal into a great deal for us.

Steve, it's Jake. One other comment I think just outside of the defense and security initiatives by the Canadian government. You hear a lot of discussion in the budget about infrastructure and nation building. Again, we have very positive exposure whether that's pipelines, whether that's port infrastructure. A lot of the building that's related to, let's call it, the nonspecific defense matters, we have positive exposure to. So again, we're feeling very good about a number of the initiatives and working with the Canadian government and obviously the provincial governments as well.

Appreciate the color. And hopefully, we can get going on building some stuff. Just one follow-up for me is just around the Regional One. It's been active there's constraints in the system still and you've made some additional investments there. Is that a business that will continue to have opportunities through next year? It sounds like the broad thematics there are quite strong. But I just want to get a sense for how your thoughts are in the '26 on that business specifically.

Yes. Regional One has become such a player in the market it's in. Their growth in terms of whether it's part sales, which are very predictable and reliable quarter-to-quarter, whether it's leases which are also very reliable quarter-to-quarter, or whether it's the stuff that's a little bit more lumpy like we had this quarter. Maybe I'll just touch on something here that our revenue in Regional One in this quarter was up about 70% year-over-year because of sales of full aircraft. And those bounce around but the margins on those kinds of sales are lower. And so when you look at our overall margin profile for the whole company, margins aren't down in aviation. It's just product mix.

We're selling -- in this quarter, we happen to sell more full aircraft, which have good profit in them, but they're lower margins than if I sell the planes in pieces. And so when you look at Regional One, don't extrapolate that kind of revenue growth. But the core EBITDA growth, which takes into account earnings in all 3 segments, is going to continue to grow. Our market position is going to grow. And while I wouldn't promise you this for 2026, it will start there.

The ability to trade the 737 marketplace is coming. We just bought 20 years of data from Canadian North about the value of every part on those planes and we're now selling parts to ourselves. Canadian North is taking Regional one to 737 University, very similar to what we did when we moved into the Embraer portfolio about 10 years ago. You're going to see the opportunity for a massive amount of growth in the future in Regional One as we internalize the knowledge required to be a trader in the parts of the 737. And we'll use the business model that's proven so successful in Regional One over the last 10 years.

I'd point out for the people who don't know it, we bought Regional One in 2013, and it was doing about $16 million in EBITDA. We'll be close to 10x that this year in Canadian dollars, and we'll continue to see that grow in the future.

Next question will be from Cameron Doerksen at National Bank.

I guess I want to have, I guess, a little more detail on the 2026 guide. I mean, obviously, you've got very good visibility. So I would say, high confidence, not to put words in your mouth, high confidence in the low end of that range. I guess, what gets you to the higher end of the guidance range? Like what has to happen with the various businesses to get you to that 875 level?

It's really the high end would be driven probably by acceleration in the Canadian environmental matting space. We see a whole bunch of very positive trends there. There's a super cycle beginning, formatting with the things that need to be done for T&D work, and -- so the T&D, transmission and distribution of electrical power. So there's earnings power there. There's also massive earnings power sitting in the window business. The window business, it's essentially breaking even.

It's not making a material contribution. That business will make $50 million plus just in a normal market, not in a strong market. And there's easily another $20 million or so available in the Canadian matting business. So just those two things would take you above the top end of the range. And continued improvement and wins in contracts because, quite frankly, we fully anticipate winning things that aren't in the guidance we give. We tried to be consistent and not guessing what we're going to win before we get it.

And so to get beyond that, more contract wins, whether it be an ISR or in medevac or even more charter work in our Aviation business could push us up and beyond that.

And the other thing that Jake talked about in his prepared remarks is just the timing it takes between acquisition and deployment of certain leased assets, the Regional Ones. So as that -- if you deploy those assets sooner than you expected, that would help. And as we've seen over the last 18 months, step-based improvements in our lease occupancy rates at Regional One. If you had continued improvement in that above what we're expecting, that would also drive you closer to the top end of the range.

Next question will be from James McGarragle at RBC.

So just on the '26 outlook, you mentioned it doesn't include M&A, any contract wins or any incremental growth CapEx, but you alluded to a lot of those things in the press release and in your prepared remarks. So just following up there specifically on M&A and some of Adam's comments in the press release. Can you just talk about what the pipeline looks like now? And anything that we could expect early in '26 that could potentially represent some upside to the guidance you gave?

Yes. I mean, I'm really a little disappointed in Adam. We closed Canadian North and he hasn't done anything since. So we'll get them off his a** and working again. I'm, of course, being fictitious. We've got a couple of interesting things ticking in aviation, things that are tangential to what we do. I think if we're successful, they would be kind of like the market's reaction to Canadian North or that makes a lot of sense, we should have saw that coming. Nothing though, James, like we're going to close in the next 30 days. We're busy working on a couple of things. We're excited about it, but nothing imminent.

I think the other thing that's super exciting for us, James, is when you look at where our balance sheet is compared to where we were 12 months ago, we have significant capacity. Adam and his team do a really great job of finding really great deals for us, and we've positioned ourselves to be able to act on that quickly without needing to access the equity markets. Pro forma, our leverage is the lowest it's been in well over a decade, and we're very excited about the transformation of our balance sheet over the last 12 months and where that positions us to execute on the opportunities we see in front of us and the ones we hope we continue to uncover.

And I think just one more thing as it relates to the balance sheet, James. I appreciate this is a very long-winded answer. But with the reduction in leverage and the continued growth of the business, I think that puts us in a strong position to tap the bond market in the future should we want further funding beyond our banks syndicate. The interest rates in the bond market are lower than what we pay. And I believe that we would be viewed as investment grade. So that's something we'll work on in the next year about getting that in place.

But I would point out also that the strength of our performance has brought in international banks looking to join our syndicate, whether they be from the United States or even Asia. So our ability to grow the syndicate in line with our business is also there. So we're not dependent on the public debt markets to grow either. So it's a super exciting spot for us with our balance sheet because we have so many options to fund growth when the right contracts come like in Australia win, like ISR for the Canadian government, those kinds of things. We're in a position where we can pull the trigger so fast.

And just to follow up. You mentioned ISR. Obviously, the Australia, you talked about some opportunities in Canada and in the U.K. But can you just talk about the opportunity more generally? Because in the past, you've kind of flagged some other opportunities in Europe. So kind of where you see that going in the next couple of months and in the next couple of years and how you're positioned to maybe potentially have some wins outside of that Australia, outside of some of the Canadian opportunities that you've spoken about.

Yes. James, it's Jake, and I can take that question. Again, two parts. First, there's opportunities with existing contracts. In every ISR contract that we have, we're in discussions in either expanding scope or scale of those contracts in terms of duration. Secondly, we're in discussions and well down the path with a couple of European governments, one, I'd like to say that we're close. And again, as Mike said, when this comes out, hopefully announced, it will sit there in the markets, well, yes, this makes sense. Absolutely.

So we're excited about that. We're talking to folks in Southeast Asia as well. Unfortunately, the instability in the world drives demand for greater situational awareness and thus ISR activities globally. So we're well positioned for that, whether it's directly positioned with aircraft or with sales of our software system on to unmanned aircraft vessels, land vehicles. So again, we're excited about the opportunities broad-based across that sector.

Next question will be from Matthew Lee at Canaccord Genuity.

Maybe back on Manufacturing. Just it feels like margins have been a little bit lower this year than we're used to seeing, especially given the success in the high-margin mat business. And I'm not holding to anything, but when you think about the medium term, where do you think the EBITDA margins of that business should be? And what has to happen to get there?

I think over the medium term, you'll see material increase in the margins. It's really going to come from a couple of places. When the leasing of -- or the rental of mats in the Canadian market expands towards the end of next year, that's a very high-margin business. And so you'll see that drive margins. And then the other thing, quite frankly, is the window business. Right now, it has three big challenges. One, the work we booked in a couple of years ago, it's soft. It's at lower margins. Two, we're not efficiently running the plant at full capacity. And three, we're carrying people that we don't need based on today's level. So as that returns to normal, you will see us add tens of millions of dollars in margin EBITDA, and that basically flows through straight to the bottom line because there's no new capital required.

And so that drives the top line, drives increases in the margin line and it drives the EBITDA line. Those two things will be the main drivers, I think. When things were tough, to keep our people working, we took lower margin work in the window business knowing what was going on in the industry, wanting to keep our production. And people have left the industry. So as this turns back up, there's going to be less players and we're the best equipped one to deal with it. So -- and one of the things I really want to make sure people understand is EIC was built on the concept that not everything is going to be perfect at the same time. And so we're hitting targets. We're increasing dividends. I mean, we had 17% increase in earnings per share this quarter even with all the new shares from the conversion of the strengthening of our balance sheet with windows basically not in a position to help.

That's not going to be the same all the time. I can tell you at the beginning of COVID when the airline struggled, the window business carried us. And so you're going to see -- and you put on the window business, some more growth in the matting business drive the margins as we go forward. And whether that's -- that's likely not early next year, but it's coming out of next year into '27. And those lower margins in '26 are fully factored in to the guidance we've given.

Yes. And maybe just to add on the Access Solutions business. So that one is really, as we talked about, is like the deferral of projects that pushed out from Q3 into the fourth quarter and into early 2026. So we do anticipate sort of the expansion of margin as those mats go on rent. And then the long-term tailwinds about sort of the nation building and all that's going to require access matting. So very excited about the future.

Okay. That's helpful. And then maybe just a quick one, maybe for Rich. A philosophical question on maintenance and growth CapEx. When you think about refreshing the fleet for Canadian North, to me, it seems like it's to capture incremental revenue. So how do you think about that so that the new fleet of maintenance and growth CapEx?

Maybe I'll jump in, Rich is just calculating something. When you look at Canadian North -- he's pulling up our actual numbers. The Canadian North investment, we knew that under the previous ownership, they made the decision to defer cash investments. And so they were renting engines instead of overhauling engines. They were doing -- so their planes were fully safe and fully maintained but they weren't doing them on a contractive basis because of capital restrictions. And so we've got engines overhaul. We've got landing gear overhaul. And that stuff is, by our definition, purely a maintenance CapEx. Now it's actually absolutely, in an absolutely transparent world, it's maintenance CapEx that we would have done over the last 2 years, not now. We're going to catch up.

And that's why I said we're going to take a little bit of a period to get to our 15% because we're going to make those investments. When we bought the company, we knew those investments were required. And so there's not a surprise here, but it's part of the process. But you're also hitting on a key other factor. There's opportunities within Canadian North to switch to a more of a combi fleet, get rid of some pure freighter aircraft and replace those with combination passenger/freight aircraft. That will take some investment. And to the extent we do that, we would view that as a growth CapEx because it's going to generate new revenue because of that investment.

It's not big dollars and we're not -- because bear in mind, you're going to trade off pure freighter capacity to buy the combi capacity. So there will be the investment in some aircraft, but that would flow through our growth line in the future. That's not part of the maintenance CapEx that was really factored into the purchase price when we bought the company.

I think the one other thing I would just point out when we're talking about capital, that's really pointed to your growth and maintenance split that Mike has already talked about, but just certain investment decisions that they've made over a period of time because of their capital-constrained nature, specifically finance leasing certain assets, we'll buy those out and did that during the third quarter. And just deploying our balance sheet, having a lower cost of capital than they had provided us with the opportunity to be a little more efficient.

But to Mike's point, the growth versus maintenance split, when we look at that, we've looked at it consistently with how we've looked at our ongoing businesses and notwithstanding that we had to take it on the chin a little bit for 6 to 9 months here. We thought that was an appropriate way to disclose it so that folks didn't think there was additional growth coming out of something that was really getting their fleets into a spot to drive that consistent cash flow.

The next question will be from Krista Friesen at CIBC.

I just wanted to touch on, I mean, obviously, there's a lot in the budget as it relates to the North and to defense. But do you have any comments around the accelerated depreciation in the budget and if that's something that you guys are excited about?

Yes. I mean, the accelerated depreciation of the budget will let us maybe take on a couple of projects that might not have hit the threshold the way we wanted them to. So I'm not in a position to give you specifics yet. We've only had a couple of days with this and we've locked our rockstar tax department led by [ Marley ] into a room and they're working on a couple of these things. But it's very exciting for us that the government wants money to go back in to the Canadian economy and they want to be specifically Canadian.

And I just want to harken back to that ISR opportunity here because when you look at our ability to surveil, we would take a Canadian-made aircraft, the 2400. We put Canadian-made equipment on that aircraft. We'd adapted in Canadian facilities. We'd fly it with Canadian pilots out of Canadian facilities with investment from Inuit partners because this is taking place in the North. So I'm not sure we can have a better fit with what the government is trying to do than our ISR opportunity. And quite frankly, there is no one else in the country who could do this.

And I think one thing, Krista, just to point out, when we think about returns on an investment that we look at, we're always looking at a 15% unlevered pretax return. So while this won't change the way the returns that we're generating because we're going to continue to look at them the same way we always have since our inception, it will make the economics better for us to get the tax deduction faster.

Right. Okay. That makes sense. And then maybe just another one on the budget. I noticed there were comments there around Northern medical access. Is that something -- like will you guys play a role in that? Or are there conversations that you've had there?

The discussions thus far are preliminary. But to be honest with you, I wouldn't suggest that we play a role, I would suggest we play the role. We have been the sole provider of medevac services to the Government of Nunavut for decades. And we're in the midst of negotiations now on a new long-term contract with enhanced services, intense care for the Northern people. And so yes, we will be smack out in the middle of that.

I appreciate the color. Congrats on the quarter. .

Thank you.

Next question will be from Tim James at TD Cowen.

My first question around, again, Canadian North. And Mike, you talked earlier on about kind of the charter business and the contribution from that here in the third quarter. It sounds like it was fairly meaningful. How do you factor -- and it sounds like you're kind of going through a bit of a review on the plan for that business and how strategically it fits over the long term. How do you think about or factor that decision into your guidance for next year? Or not to say that it's maybe material, but when we think about the guidance range, it probably has enough of an impact on that. Could you just discuss what's factored into that when you think about 2026?

Yes. I mean, it's a really good question, Tim. The charter business in Canadian North is different than our charter business anywhere else. This is long-run 737 pavement-to-pavement that WestJet could do it, Air Canada could do it, Nolinor could do it. There's lots of people that could do it. And as a result, it's much more commodity-like. The margins are very small. And the contracts are old. And because the contracts are old, everyone knows what aviation inflation has been, the returns on the old contracts are very thin.

But at the same time, like the first LNG project is coming to a close. And so that means revenue from that will decline. That's factored into next year. But the margin impact is de minimis. Now we are in discussions with the people in terms of the second phase of LNG. And we could do that at a price that is acceptable, we will continue to do it. But the aircraft release, and if we can't do it at a return that matches what EIC wants to do, we don't need to do this business. We effectively didn't pay for it. And the reason I say that is we paid asset value and most of the aircraft that are utilized in this business are these aircraft.

So if we didn't win it at the right price, we would just move out of it. We'd have no losses and no write downs. There's nothing. But it's a big opportunity if our team is successful in negotiating new contracts to generate new EBITDA that isn't reflected. So it's got an upside, not really a downside. Did I answer your question?

That's helpful. That is helpful, yes. My next question, just want to confirm two things quickly here, actually. The 2026 guidance came up earlier. You're not assuming any M&A in there or any sort of incremental growth CapEx. But does that guide take into account EBITDA from currently planned growth CapEx? I'm assuming that's the case, but not any unplanned additional growth CapEx that you may kind of announce or plan in the future. Is that the way to think about it?

Yes. It includes the stuff that we're underway with this year. So we're just finished off our flight simulator for our King Airs in Winnipeg. That's going to generate revenue next year. So that's in there but it's paid for. It includes the Newfoundland contract of the medevac contract. It includes the additional aircraft that we've added to our leasing portfolio in Regional One, ones that are completed and the ones that will close during the fourth quarter. So there's nothing in there for growth beyond the start of the year. Whatever we add to that will be additive to the guidance.

One of the things we like to do, and this is very cultural within EIC, and I appreciate we might be a bit of an outlier on this in the public markets, is I don't want my team's feeling any pressure that we need to X dollars to get to our budget. We don't have to invest anything to get to our budget other than our maintenance CapEx and finishing the projects we've already started. So when we get, for example, the Spartan plant up and going, that's going to cost us $60 million or-so, but that's 100% additive to the guidance when it gets up and running. It's not a 2026 example.

Adam has no targets for acquisitions. He has returns he needs to generate when he finds one. But that way, when we talk to the markets, it's not about something we haven't done yet. And it's part of the reason I believe we've been quite reliable in hitting the numbers we've told the market about. It's because we base our promises based on what we know we have, not what we aspirationally think we will. Having said all that, we aspirationally expect we're going to do some things that aren't in this number.

I think the other thing, just we talked about it earlier in the call, but just for avoidance of doubt here. From a growth CapEx perspective, for next year, we still also have the 4 aircraft that will be delivered for the Carson Air contract. And those aircraft that they're displacing will be rolled into the Newfoundland contract.

Okay. I assume the EBITDA coming from that is in the guide for '26?

That is correct. That's in the guide because it's a project we already announced.

Okay. Very quickly, Mike, you cited earlier kind of a $50 million approximate sort of normal business for systems and $20 million for matting. This was in reference to a question earlier. Is that in reference to EBITDA? Is that those two dollar figures you were talking about in very round numbers, I realized, it was an EBITDA reference?

Yes. I mean, yes, but it's also effectively an EBIT number because we're already paying the dollar already. And there's really -- the only net cost would be your working capital costs because you're going to have receivables. But other than that, that ramp up -- and quite frankly, the number in the window business will ultimately be more than that with the synergies that have been created by Darwin and the teams at Quest and BV by streamlining production. You'll see that when those plants start running anywhere near capacity.

And just to clarify, those numbers are additive to where we are now, not the run rate for that business.

Okay. Sorry, I'm going to try and sneak one more in. Mike, you're highlighting kind of the opportunity that you see coming in trading in the 737 market for Regional One, Should we think about that market -- and obviously, that's a huge sort of potential market. How do you think about the margin profile of trading in that platform versus the regional platforms that you focused on to date? I mean, is it any different? Or does it not really matter in that type of business?

That's a great question. And the short answer is we're not there yet. We're going to sell to ourselves first, figure out what we can do. We're going to build up what we could buy, 737 that. This is not something we'll jump on. It's not like cliff diving, we're going to jump in and go all the way we want. It's more like stepping in the kiddie pool. We'll get our ankles wet first and we'll grow, and it's exactly how we did it with the Embraers.

The model we have at Regional One is going to work with the 737s. But the key thing that's made Regional One so good with Hank and the team is they make sure they know what the exit is before we get in. We always know we can make a profit by parting these things out. We're not there yet on the 737. But we now have a whole bunch of data we didn't have before. And quite frankly, the size of that market so big. The parts stuff will be more efficiently priced, which probably means slightly lower margins, but the ability to gain market share in a massive segment like that, is so exciting.

And I mean, quite frankly, Hank Gibson, the guy who runs Regional, once spent 15 years in the Boeing world. He had -- this isn't his first rodeo. So this is something I think you'll hear us talking about for the next 20 quarters as we slowly grow this business.

Next question will be from Jeff Fenwick of Cormark Securities.

I wanted to focus back on the ISR conversation. And maybe first, just, Mike, you offered up some commentary that it's relatively easier to put that effort to work with the Canadian government in a relatively short term. So I guess just help us understand that. Is it a case where this isn't about putting out another RFP, but maybe there's an opportunity just to amend the existing sort of contracting that you have with the government is kind of the key to moving it along?

Again, I got to be really careful that I don't tell the government what they're doing, but we have proposed something through them without an RFP. And there are certain ways the government could do new projects without RFPs if they hit certain thresholds, largely driven by how Canadian they are and whether there would be multiple people capable of doing it or not. And we think we hit most of the -- well, not most, all of the criteria to do this without an RFP. But to be clear, the federal government hasn't told us that's what they're doing. We're in [indiscernible]. I mean, you're closer to that than I am.

Yes. Keep in mind in the budget, it was just announced with the formation of the new defense investment agency, and that's the clear mandate of that organization, how to put capital to work faster than in previous practice. So you've got to appreciate that was only really formed 30 days ago. And obviously, we've been in contact with the bureaucracy and the government ministers responsible for that. So we're encouraged by the initial steps the government has made. They're making the right signals. But again, we're somewhat at the mercy of them as a pacing function.

Okay. That's helpful commentary. And then, Jake, I wanted to circle back just on the one comment you made reference to potentially providing some solutions in the ISR into the unmanned vehicles. So when I kind of survey the industry, there's clearly a big focus on the opportunity in drones as being a cost-effective solution for a lot of different countries around the world. So on the one hand, I guess you could view that as a competitor to the sort of solutions you've been putting out today. But I know that the CarteNav is a pretty flexible platform. So maybe there's an opportunity there as well. Like how do you kind of balance those two things in the context of that drone market?

Sure. So great question, Jeff. And I think drones are a solution -- is part of the solution. It's a tool in the box. And if I look back 10 years ago, there was a lot of commentary about the manned aircraft are going to be substituted by unmanned. And that's really not the case. What we're seeing today employed in a lot of regions is what's called a system of systems, that really is a woven network of satellite information of manned aircraft and of unmanned aircraft. And it's really taking the data of all the platforms, merging that data and taking the data and creating insights.

And that really is what CarteNav, our software product, is great at. We're using that in the U.K. Home Office, for example, where it's a layered approach to generating the insights needed for decision-makers. And so while we see each type of platform is good at certain things, they're not good at others. And that combination of things, particularly in a marine environment where you've got long space and time constraints or in Canada's North, the same thing. So it's going to be a combination of all. We're excited, again, by the employment of CarteNav on certain unmanned systems, but we don't feel necessarily any of the manned platforms are a threat. It's all part of the similar solution.

I think that a way to look at this is when you look at freight delivery. Within the cities, you've got couriers who are running around in Priuses handing envelopes. You've got the Amazon vans with the big high roof handling packages. And then you've got semi-trailers and planes moving it from city to city. One doesn't replace the other. They're all parts of the system. Drones and fixed-wing aircraft each have their area where they're better. When you're flying into a dangerous place, if you could do it without a person that's an advantage.

And I was just going to say the comment thread through it all is the information generated and the information handling system, and that's what CarteNav's creating at. And that's where we're seeing significant adoption across all segments.

Next question will be from Konark Gupta at Scotiabank.

I wanted to first clarify a few things on the 2026 guide. So good to see another ton, by that $100 million EBITDA growth back to back. Seems it's mostly driven by the Aviation segment. Is that a fair characterization? I mean, Manufacturing might grow a little bit but not too much as compared to Aviation.

That's absolutely fair, Konark.

Okay. And seasonality wise, do you think -- I mean, this year has been very similar to last year. '26, do you see any significant changes in seasonality?

The interesting thing is Canadian North is exactly the same cycles as Calm Air, Perimeter, PAL all the other one of our airlines. So Q1 is always going to be the weakest. Q3 is always going to be the best. The only thing that has changed that a little bit is Spartan, it doesn't really have a slow first quarter. If anything, they have a slower Q3, Q4 because it's so hot in the South, it actually slows some of the work. But with the exception of the Spartan, the seasonality of our business really hasn't changed.

Okay. And the windows business, I know and I appreciate the challenges I think you guys have been facing for the last little while here. I hate to be devil's advocate on this one. But when -- what will take you to make a tough call on this one?

What would -- I think tough calls, I didn't believe it. EIC is doing really well with windows not contributing, but they're not hurting us any. We're not losing money. It's not like we're feeding it. And if I wanted to shrink it down to make it even more cost-efficient, we can lay people off, we could do stuff. But the simple fact is if you look at the competitive landscape in that business, the number of companies that have left the business is dramatic. And we're not going to not build high-rise apartments for people in big cities.

In Canada, this is the result of a hangover of building 500 square foot condos that people were buying and renting out. The market didn't build what the users needed. They built what was easy to finance. And we have a hangover, and that hangover is not over yet. That hangover is not nearly as bad in the U.S. And that's why we see more life right now in the U.S. than we do in Canada. But ultimately, that's coming, Konark. And if I got to wait 12, 24 months to get there, the $50 million in EBITDA that I know one can make in that business is a big prize for no net investment.

I'm not going to trade out of it for the sake of not having to talk about it each quarter. Our business model is based on being able to carry things when it's a challenge. And I believe I've got the best management team there is in the window business. So I'm prepared to wait.

And maybe a couple of other things, Konark. So like we are strong believers in the business, but we are seeing positive demand signals in certain geographies, whether it's sort of in U.S. or certain cities across Canada, Oftentimes, we're very focused on the Toronto market, but there is a lot of positivity in some of the other markets across Canada, where we're seeing lots of opportunities in projects. So we are starting to see that turn. It's just a bit of a function of how fast it's turned. And can we get developer costs down. Interest rates are coming down.

So we are seeing some of the big demand drivers existing. And as Mike talked about in the call, we are also seeing in Canada a big shift similar to other geographies moving to rentals as opposed to condos, which is a different form of financing. But we think that the capital exists there. People are just waiting on the sidelines to book the projects because we're seeing a huge number of inquiries continue.

And ultimately, this just comes back to EIC's strategy and how we've conducted our businesses over 20-plus years. In the early days of COVID, no one was asking us whether we were going to sell our Aviation businesses because they were challenged and windows was carrying the day. And ultimately, we're at the low point of the market. It will come back. And we're excited when that when it does, we'll generate returns that fall right to the bottom line. And ultimately, there may be another challenge. At that point in time, we'll deal with it the same way we always have, focusing on the long term and making decisions so that we're profitable over the long term, not maximizing short-term profitability at the expense of the long term.

If you look at Calm Air in sort of 2011 and 2012 period, it was a lot worse than this is. We were feeding that business. And now it's amongst my best performing airlines. And so this really is part of the EIC model. Not everything is going to work at once. But quite frankly, it doesn't need to.

And the last point I'd make is the fact that we have confidence in the management team. As Mike said, we feel we have the best windows management team out there. And as we look at things like infrastructure build, schools, hospitals, we're seeing them pivot towards that direction. So again, we hired good management teams. We acquire companies with good management teams and expect them to captain the ship through a little bit of rough water. And we're there to support them.

Okay. No, those are very insightful comments, and clearly you have seen that strategy work. So all the best for that. And if I can just ask one more quick before I turn over. In the budget, obviously, there's a lot of great things, I think, for you guys to talk about. But one thing I kind of noticed there as well, I think these guys are also looking to build some sort of all-season roads up north. And I know you have a bunch of airlines doing sort of work and seasonality. This is more pronounced, right, during the summertime. But what do you think about that being a small risk to your business up there in the North?

There are certain places where they will probably build all season roads. It's exceptionally difficult. And it's not a project that's built in 1 year or 2 or 5. You're talking -- some of these are decade-long projects, where they're going to get built, how they're going to get built. Just as an example, and this is just an anecdotal example. There's been discussions of building a road to Churchill. Well, they're having trouble getting the rail line functional because the permafrost is melting and it's turned into a bog.

And so the railway keeps sinking into the ground. Building roads over that's exceptionally difficult. And so undoubtedly, if the government is committed to this, there will be some of that done. But we don't view that as being a material piece of our business. Some of the places we fly are so remote the cost per person of building a road is prohibitive.

And not to mention a very difficult environment, you can imagine snow clearing thousands of kilometers of roads between communities that, as Mike pointed out, have very low population density. It's something that we just don't see that will necessarily be a factor.

Next question will be from Amr Ezzat at Ventum.

Just to press on the guidance. I mean, you guys announced it shortly after the federal budget, and that included all the good stuff you mentioned, new defense spending, critical mineral spending and so on. Just to clarify, were any of these tailwinds embedded in your guidance? Or should we treat it as a clean base case with upside tied to procurement activity materializing?

That's the easiest question of the day. Yes. It doesn't include any of those things and that's the base case, that as these things become operationalized, they'll be additive to this guidance.

Love to hear that. And then if you'll allow, just one follow-up. On the Canadian North charter operation, I mean, I think we all know that the returns are thin like you guys mentioned, old contracts are rolling off. But can you walk us through the framework you're using to evaluate whether that business is worth keeping, especially how you weigh your return thresholds versus strategic access and customer stickiness.

It's a bit of an art form as it relates to charters because we don't own the assets. They're leased. So we're not putting the capital out. But quite frankly, we look at it the same way. If we own that aircraft, are we getting our 15% return? And that's kind of the way we factor lease payments in that. At the end, is that enough to do the work. I mean, the good part is within Canadian North, it provides good jobs. It spreads our overhead over more flights. So there's lots of good things about it.

But the advantage is in the way we acquire Canadian North, we said, look, we've got to fix this up so that the returns match their assets. And we knew that LNG 1 was coming to an end. We knew that. And it's quite clear LNG 2 is getting done. And we have great relationships with those people, and so we're very optimistic that we'll be successful in being able to do this. But as I mentioned earlier, this business is the most commodity-like of anything we did. We could be replaced by Nolinor, we could be replaced by Porter. We could be replaced by anyone who could fly a jet spot to spot. There's facilities in there.

It's not the hard business the Canadian North does everywhere else when they look after Inuit people in remote communities where it's an essential service. This is much different. It's much more akin to what Air Canada does than to what we do. Now we have some advantages because of our First Nations ownership of the communities and those kinds of things that help us. But quite frankly, it will be disciplined. If it makes economic sense, we'll do it. If it doesn't, we won't. And because of the way we bought it, there's no downside.

And then I think you could see it, it's not really a charter question but it relates to the Canadian North thing. It's very seldom that we buy something that's 100% asset-backed, including an adjustment for deferred taxes. And so that's why you see higher depreciation in the statements perhaps than some of the analysts are because we don't often buy things that have that much asset backing. But in the long run, that makes it way better because we own everything we've got. We don't need to make investments. We just maintenance CapEx, which we've talked to you about. So this Canadian North business is such a great fit for EIC. And whether we do the charter work or not, we'll see. We'd like to. We're going to try to. But if we can't, we still got everything we paid for.

Fantastic. No, I appreciate that color. Congrats again on the quarter and I'll pass it on.

Thank you.

Next question will be from Chris Murray of ATB Capital Markets. .

Just this is more of a, I guess, a semantic question or a thought process question around the balance sheet. So Mike, you mentioned that you're kind of working through getting to an investment-grade rating. Historically, I'm thinking about you guys have always been thought of as sort of a diversified financial company. What are the rating agencies telling you about what's going to be required for you to get that investment grade? Is it going to be kind of end markets you're supporting? Is it going to be leverage levels?

And really, how do you think about what that does? Because a lot of the time, what happens in the debt market drives what we're going to think about in the equity markets longer term. So just thinking about how to think about the company over the next 3 to 5 years as it evolves.

I got to be very careful how I answer this question because we have had discussions with the rating agencies. I'd start by saying we're confident that we will fit into the investment-grade window. I think the thing that really helps us with the rating agency is the percentage of our business that's tied to government contracts or to dominant-market positions where it's an essential service. You see our investment-grade argument is made in 2020.

When other people in the aviation space or the manufacturing space got crushed, our EBITDA fell by 10% and then was back up immediately in the following year. I think it's the resilience and the reliability of our cash flow stream. And then, quite frankly, we have a 20-year track record of discipline on the amount of leverage we place on those types of contracts. And so that, combined with the -- I guess, the way I can describe it is we've grown up and outgrown our convertible debentures. They've been great to us. We didn't get the Series N because I didn't like them. They were great. They want to sell equity at a future price.

The ones we're calling now are only, I think, 3 years old, and the stock price was in the $40s at the time we did it, low $40s. We're selling equity at $60. So they'd be good to us. But as we've gotten bigger, we will be able to access the bond market that are materially lower than what we paid for convertibles and give us a much more "traditional balance sheet" for a material public company.

Yes, I think the other thing, Chris, when we talk about having the conversations and what we need to make us successful in that endeavor is really telling the EIC story we tell every day anyway. We're not a traditional airline. We don't fly point-to-point in Southern centers where there's material competition risks. And that story moves you away from an airline's rating methodology into a different rating methodology, where our leverage profile is considered conservative.

And it's really -- to Mike's point, we have a 20-plus year track record of maintaining leverage in a band that is viewed as conservative or modest. And I think it's that track record and reinforcing that track record with the rating agency that we prefund things in the equity market if we need to do something. And we don't go slash and raise leverage to 4.5x and promise to pay it down over a period of time with cash flow. And I think it's really that track record that really drives equity story that will be just compelling in the debt markets as well.

Okay. To that point, and I guess, the next piece of this question is just even looking at the equity stack. I know you've always had the NCIB kind of as more of a defensive tool, looking at some of the history. But is there a point where you start just starting to buy back stock, expectations that if you do get that re-rating, maybe the stock you're buying back today is going to be less expensive than it would be in the future? Especially you've managed to put out a fair amount of dilution with all the converts. But with that being said, just any thoughts around that? And if you can also maybe talk about the DRIP as well and where that sits, that would be great.

That's a good question. And it's one, which is going to be weird for me, I have a relatively short answer. We look at buying back stock as the alternative to deploying the money on future projects. As long as I've got things I can do with the money, whether it be Australia, the Government of Canada, an acquisition for Adam, the plant for Spartan, that's the first place our money goes. If I don't have enough of those and I've got some left, we will use it to buy back, stock but only when I don't have the ability to use that as the base for my growth.

We are looking at the DRIP. It creates uncertainty every quarter because people short the dividend and play games with it to get to the 2% discount. Is that right, Rich? 3% discount. So we are looking at whether maybe we've outgrown that, maybe we don't need it anymore. No decision has been made at this point and not only me, until we get to our year-end Board meetings. But there's definitely at the very least a thought that maybe we've outgrown the premium that we pay on the DRIP.

Next question will be from Gary Ho at Desjardins Bank Capital Markets.

Just one question for me. So you talked about the build-out of a second facility for your composite mat business, $50 investment. Just any color in terms of the increase in composite mat production with the second facility? And what are your thoughts on offering these through a rental leasing model? And maybe talk about geographies that this new facility could open up/

I'll start with the last one first. We're going to be in that Southeast corner of the U.S., somewhere between the resin factories in Louisiana and Texas and Florida, where we are now. So I think you'll see us in Mississippi, Louisiana, those kinds of places. We're very close. I really had hoped to announce on this call where it was going. We haven't finalized a lease so I don't want to limit my negotiating capability by saying exactly where it is. But it will be somewhere because, well, those mats are used across the U.S. Our customer base is more East Coast driven. And so we want to stay close to the resource we need to make it, which is the resin and close to our customers because mats are heavy. And shipping them, I'd rather not.

In terms of the lease portfolio concept, that's part of the reason we're building this, as we'd like to eventually build out our rental mat business like we have in Canada. It's impossible to do right now because we're selling every mat we can make. And I'm not going to not sell something as we're the smallest guys in this business. In the U.S., there's really 3 manufacturers, and we'd be the smallest but we're also the fastest growing. We want market acceptance so we'll continue to put the product out.

And when we build this factory, it's quantum bigger. It's capacity will be, depending how many ships you assume, 2, 3x the size, perhaps even more than that. than our existing factory, although we certainly won't go from nothing to full blast in that factory. We'll phase it in over time. But we definitely would like to take some of the stress off our Florida plant. The people we have there are doing a phenomenal job of running the plant 24 hours a day, 7 days a week. That's not something that you do. And so the sooner we could get some additional capacity into the system, the better.

Next question will be from Razi Hasan at Paradigm Capital.

Just two quick ones. On Canadian North, can you disclose what percentage of the revenue comes from the charter business?

It varies period to period, but just let me -- I've got to see out here. It would be a 1/4?

Okay. Great. And lastly, if we think about the Aerospace business representing about, whatever, 11% of 2024 revenue. Given your comments on defense spending and all of the potential that can come with that, are you able to maybe frame how large a piece of the pie the business plan can become? Do you think it can double from where it is in terms of the revenue contribution? Or just any color on how big this can get.

Okay. This is a complicated question, Razi, because what we give you in guidance is based on what we know, not based on what we could do. If we are successful in a couple of the negotiations we're in, the revenue from this business could double easily. It could be more than that. Australia in and of itself would do that. The Government of Canada would be a huge piece, the discussions that we're in Greenland or in other European countries. And bear in mind, none of that's in the sort of $850 million number at the midpoint of the guidance we've given you. That's all additive if as and when we win.

And the one point I'd make is just keep in mind, depending on the nature of the contract and the types of assets that are required to service those, there might be a delay while we modify the aircraft. So again, as Rich spoke to the delay between deploying capital and seeing returns, Australia is a good example where we're deploying capital for a couple of years and the contract doesn't start generating revenue into '28. So you've got a bit of a delay and a lag until you see some of the material gains through that. And as Mike said, we've not put that in our '26 guide.

And just because you referenced the revenue disclosure that's in the MD&A, the one piece that I'll just point out is that that's a percentage of revenue at a point in time. Even if the revenue within the Aerospace side doubled, we don't find to stop growing our other businesses. So it's not like that's going to go from 11 to 22. You're going to see growth within the other businesses. In absolute dollars, it could kind of double as Mike said. But you would still see growth within our other businesses. So that percentage wouldn't grow at the same rate.

Next question will be from Michael Goldie at BMO Capital Markets.

On the Northern Canada opportunity, both from an Aerospace and Essential Air perspective, how much of this would be new aircraft versus increased utilization of existing equipment? And then for the new piece, like what would the time line be to get assets up and running?

Let's break that into the two types of business. So the ISR business would be all new aircraft. We don't have -- we just deployed the last one we built in England. So those ones would be all new aircraft. The timeline could be, depending on how many, could be as short as 12 months, could be as long as 24 or 30 months, depending on how many. We can build a lot of them but our system is basically built on 1 or 2 at a time, not 4 at a time.

So it depends on how big a contract would be. But I think on all but Australia world, it's 12 to 18 months to get them up and running, although your first aircraft may be flying before the other ones go in. It's probably a phased approach. It's not like we'll wait until we have all 4 until we fly anything. You'll start flying as soon as the first one is ready.

On the regular part of our traditional airline, we have capacity in that business to add volume without investing something. And then as it comes, it'd be kind of step, like we've got X number of ATRs. We add one more, we add two more. And so there's not a big investment coming in that. There's no investment coming in the near term. And then if we decide to make an investment to move towards the combi stuff that I talked about earlier in the call, that would be a new investment, but that would come with efficiencies immediately.

Yes. And the other thing I'd say is the benefit of scale as we have multiple airlines operating similar aircraft is we have that ability to start to smooth some of those step changes. And we've got examples where we've got two of our airlines involved in servicing a specific customer where, as it ramps up, we're employing smaller aircraft from one operator for the bulk of the contract, larger aircraft to another. And then as the shoulder hits on the downside, it reverts back to the original. That gives us a real advantage to other competitors as opposed to having to go buy a bespoke asset to engage, and it might not be optimized for the volume through the contract.

Okay. And then obviously, as you've added assets, D&A up 18% quarter-over-quarter. Can you remind us how we should think about that as we go into 2026, what assets will be coming online and how that could trend?

Yes. I mean, most of the stuff that's on is in. Now what's different is, as Rich mentioned, we got 4 more of the aircraft for the BC medevac contract. I think round numbers, those are about $10 million a piece, closer to $15 million after they're fully modified for medevac and stuff. So there's probably $60 million worth of assets there. And then the variable is quite simply how many assets Regional One buys to put into their lease portfolio. We describe them every quarter and how much we bought.

But it's highly variable. Earlier this year, we actually had negative growth investment for a quarter where we sold more assets that we purchased. And so that can bounce around. So you got to kind of look at the trailing 12 in terms of the investment to work on the D&A number of that. And I think where it was hard to do on this was we don't often do asset deals. Like the Canadian North was essentially we bought $200 million worth of stuff. And so it was all depreciable, and I think that was a higher number than people thought when they did it.

No any further questions, Mike.

Okay. Well, it sounds like we're done. We really appreciate everyone taking the time and listening to us today. We're ecstatic about what's coming. We've given good guidance for 2026, and I can't wait to increase it. So have a great day and enjoy it.

Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we ask that you please disconnect your lines. Have a good weekend.

Good morning, everyone. Welcome to Exchange Income Corporation's conference call to discuss the financial results for the 3 and 6 months ended June 30, 2025. The corporation's results, including the MD&A and financial statements, were issued on August 11, 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 the safe harbor provision 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. Thank you. 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 about our quarterly financial results, along with Jake Trainor and Travis Muhr, who will speak about our outlook for our 2 operating segments. Adam Terwin and Dave White are also on the call and will be available to respond to any specific questions on Canadian North and the long-term air services agreement that was announced subsequent to quarter end.

Yesterday, we released our second quarter results for 2025. Our performance in the second quarter continued to be very strong for each of our key financial metrics. Once again, we set Q2 high watermarks for each of our key metrics, including revenue, adjusted EBITDA, free cash flow, net earnings and adjusted net earnings. In fact, our revenues of $720 million were the highest achieved in any quarter in our history.

Subsequent to quarter end, we announced the closing of the Canadian North transaction. Equally important was the signing of the agreement with the government of Nunavut for our long-term services, whereby Canadian North and Calm Air will be the sole provider of their services for all 3 regions in Nunavut. The Canadian North acquisition is highly strategic for EIC as adding its infrastructure and assets and management team ensure that EIC has a unique value proposition for our customers and the government of Canada. Jake will talk further about some of the opportunities that exist for EIC with Canadian North as part of the family.

We also updated our 2025 EBITDA guidance and increased the range to $725 million to $765 million, which now includes the financial results of Canadian North. The seasonality of Canadian North is relatively consistent with our other Essential Air businesses. As a reminder, we previously noted that the returns being free cash flow less maintenance CapEx will be muted in the short term, but are expected to meet our return expectations by the end of 2026.

These record results were generated during a time of uncertainty with business sentiment being weak at the start of the quarter due to the uncertainty related to trade policies and geopolitical events. This quarter, however, is another example of how diversified and resilient our businesses are in times of uncertainty. EIC continues to generate strong returns even when the world is experiencing difficult times.

The impact of tariffs was not material to EIC overall. However, it did negatively impact our multistory window solutions business line as they more than -- the tariffs more than offset the productivity and profitability gains we achieved from our integration activities. We continue to be bullish on the long-term fundamentals within that business line, and we are reviewing all options to mitigate the tariffs as we move forward through manufacturing decisions and changes in our supply chain.

Ultimately, I believe that Canada and the U.S. will come to an agreement and hopefully will have reduced tariffs in the longer term as the 2 economies are so directly intertwined. Our remaining subsidiaries did not experience any direct impact from the tariffs other than reduced business sentiment, which deferred some purchasing decisions from our customers during the quarter. We are still seeing significant number of inquiries throughout the businesses, especially as we exited the quarter.

As customers realize that this trade environment is now the new norm, I believe that business sentiment will gradually improve and the number of firm orders will continue with a step-based improvement, especially now that legislation has passed in the U.S., which provides accelerated tax deductibility. Subsequent to quarter end, several of our manufacturing entities received purchase orders, including our multistory window solutions business line, which booked approximately $100 million in new projects. We expect that this positive momentum will continue throughout our various business lines.

Our results were also impacted by the forest fires experienced across Canada. Most importantly, my heart goes out to these who have been displaced from their communities and from their homes. EIC was there to support these communities in evacuation efforts, and we are currently providing capacity to repatriate the community members back home. Our rotary wing operations were also very busy in fire suppression work.

The impact on the communities is first and foremost on our thoughts. However, it did impact our quarter as well. The evacuation flights provide a short-term improvement to our charter operations. However, it subsequently had a negative impact on our scheduled service and medevac operations in those communities, which are no longer populated. I will let Rich focus on the financial results for the operating segment.

However, prior to passing off the call, I wanted to provide some context on a couple of items. We will continue to have significant liquidity available to us. We had drawn the funds for the Canadian North acquisition prior to quarter end, which is why the cash balance was in excess of normal amounts. Our leverage ratios continue to be at the low end of the historical range, and our balance sheet continues to be very strong, which will allow us to execute on organic growth opportunities and/or acquisitions.

I also wanted 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 the Australian government for their maritime surveillance contract. We previously anticipated hearing the results of the award by July. However, the May election in Australia delayed the bid evaluation process. And therefore, we anticipate hearing on the results sometime in the third quarter.

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, within the geopolitical climate, we continue to see significant interest from several other countries for additional ISR assets, and we are working with several governments in developing solutions to their needs and have several discussions with those involved in the procurement process.

Our second aircraft for the U.K. home office contract has been fully modified and is waiting regulatory certification in the U.K. and is expected to start flying later this month. We crossed and significantly exceeded another milestone being the $3 billion equity market capitalization. Our collective team is very proud of this achievement, and it's a recognition of our business model.

The year-to-date results are a very strong start to the year and continue to show the strength of our business model, which is starting to be reflected in our share price. The demand for our services and products is very robust. Jake and Travis will focus on the outlook for our segments for the remainder of 2025. Lastly, we will provide the market with our expected adjusted EBITDA guidance for 2026 at our third quarter conference call in November, consistent with our past practice. I will now pass the call over to Rich.

Thank you, Mike, and good morning. For the second quarter of 2025, revenue of $720 million, adjusted EBITDA of $177 million, free cash flow of $123 million, net earnings of $40 million and adjusted net earnings of $47 million were all second quarter records. Revenue in our Aerospace and Aviation segment increased by $28 million or 7% to $455 million. Adjusted EBITDA increased by $13 million or 10% to $148 million.

Looking at the Essential Air Services business line, the improvements were driven by a couple of key factors. First, historic 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 drove increases in revenue and profitability, including enhanced scope in multiple markets.

Second, the quarter experienced strong firefighting activities, which resulted in evacuation flight and rotary ring fire suppression. Lastly, while load factors were strong in the first part of the quarter, scheduled service and medevac volumes experienced decline in the latter part as a result of Northern communities being displaced temporarily and not requiring services.

Our aerospace business line revenues and profitability were lower due to the planned wind down of certain training programs prior to the start of new programs and contracts. Additionally, one of the aerospace contracts changed from a performance-based logistics agreement to a time and materials arrangement, which results in more variability when comparing quarters. Our aircraft sales and 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 log asset sales to the prior period. Those sales are generally lower margin transactions and more lumpy than our traditional parts and leasing business.

Revenue in our manufacturing segment increased by $31 million or 13% to $265 million. Adjusted EBITDA increased by $9 million or 26% to $44 million. Our Environmental Access Solutions business line had increased revenues and adjusted EBITDA driven by the acquisition of Spartan, which had significant demand for its composite maps. As previously discussed, the Spartan team is evaluating several existing locations to have our second plant based on the longer-term secular trends.

In the Canadian market, we saw a decrease in adjusted EBITDA due to a change in product mix as we saw greater mat sales compared to rental mats as certain rental mat projects were deferred into the latter portion of 2025 and into 2026. As expected, our multistory window solutions business revenue decreased due to customer deferrals and related production gaps. Profitability was further negatively impacted in the short term by aluminum tariffs. We have taken steps to mitigate the impact of tariffs, including changes in supply chain. However, those take some time to identify and set up new suppliers to meet demand and quality requirements.

Subsequent to the end of the quarter, we did see instances of being instances of inquiries being converted into bookings with over $100 million in bookings. We are encouraged that booking trends will continue to improve in the back half of the year due to the geopolitical trade risks becoming more normalized and businesses willing to deploy capital. Our Precision manufacturing and engineering business line had another solid 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 $40 million for the second quarter, which was an increase of $7 million or 23%. The higher adjusted EBITDA and reduced interest expense was offset by increased depreciation and amortization due to the acquisition of growth capital investments and increased acquisition costs related to the Canadian North transactions because of its complexity.

Earnings per share increased to $0.78 per share compared to $0.69 in the prior quarter. Adjusted net earnings were $47 million compared to $38 million in the prior year, with an increase in adjusted net earnings per share from $0.80 to $0.92 per share. Free cash flow was $123 million compared to $101 million in the prior year. Free cash flow per share increased from $2.13 to $2.40 per share, while free cash flow maintenance capital expenditures was $57 million compared to $52 million and on a per share basis increased from $1.11 to $1.12.

Maintenance capital expenditures in the second quarter of 2025 were $66 million compared to the prior year of $48 million. On a 6-month basis, maintenance capital expenditures were $122 million compared to $88 million in the prior year. Q1 in the prior year was an anomaly on the low end due to the timing of maintenance events. The increase in the current year is due to the timing of events, coupled with the policy based on utilization of aircraft and engines within aircraft sales and leasing as discussed in the first quarter. Growth capital expenditures during the second quarter were $5 million compared to $45 million in the prior year.

The second quarter was lower than anticipated as we expect based on current opportunities within aircraft sales and leasing that growth capital expenditures will be incurred in the third quarter, which will reverse the negative second quarter growth capital expenditures. From a working capital perspective, we had an investment of approximately $40 million -- the investment was driven by growth in the business, coupled with deposits of approximately $20 million for assets within our aircraft sales and leasing business line.

Subsequent to the end of the quarter, we collected a material government receivable of approximately $19 million to bring the aging of government receivables more in line with historical norms. We are actively managing our working capital and are working with each subsidiary team to convert working capital to cash.

The corporation's aggregate leverage, including both its senior credit facility and convertible debentures decreased from 3.36% at December 31 to 3.21% at June 30. Our aggregate leverage ratio remains near historical norms and well within our target. Our M&A pipeline remains strong, along with our liquidity to execute on acquisitions and organic growth initiatives.

Maintaining a strong balance sheet has been a hallmark of ESP and allows us to be opportunistic organically and through acquisition. when the right opportunities present themselves. That being said, the liquidity does not change our view on leverage, and we plan to maintain our leverage within our historical range. I will now turn the call over to Jake, who will provide an update for the 2025 remaining outlook for the Aerospace and Aviation segment.

Thank you, Rich. Travis and I once again split up the outlook section, and I'll focus on the Aerospace and Aviation segment. Travis will provide context on the Manufacturing segment. Overall, we're expecting a strong last 6 months from a revenue and adjusted EBITDA perspective from our Aerospace and Aviation segment for several key reasons.

The most significant will be the inclusion of the operating results of Canadian North due to the completion of the acquisition on July 1. Taking a step back, the Canadian North seasonality is relatively consistent with our Essential Air Services operations with their second and fourth quarters being relatively similar the third quarter being the strongest and the first quarter is the seasonally weakest due to demand and weather factors.

Secondly, we anticipate strengthening results due to growth capital investments made for the contractual wins announced over the past several years, including contributions from the U.K. home office and second aircraft, which is expected to start flying in late August upon regulatory approval. I'll discuss the specific growth factors by business line. Our Essential Air Services will see growth driven by a multitude of factors when compared to the prior period. The first and most significant will be the addition of Canadian North.

We also anticipate strong load factors and growth across our legacy networks when compared to 2024. We had experienced strong load factors in Q1 and in early Q2 and then those were replaced by evacuation flights in Manitoba and Northern Ontario due to wildfires. The load factors, specifically in Manitoba were then reduced in the latter portion of the quarter as communities that were displaced and therefore, revenue and profitability of scheduled services were negatively impacted. During the last 6 months of the year, we do anticipate a normalization of results.

Lastly, we expect continued growth in our medevac business because of increases in scope compared to the prior year. We anticipate receiving approximately 8 to 10 of the new King Air 360 aircraft under the BC Medevac contract by year-end, which will allow us to redeploy the pre-existing aircraft throughout our other operations, including the Newfoundland and Labrador fixed wing medevac operations.

Offsetting some of these gains is the impact of continued labor shortages and supply chain challenges, -- we're not seeing a worsening of these dynamics. However, the challenges still remain specifically on aircraft parts and consumables as well as on aircraft maintenance labor. The Aerospace business lines' revenue and EBITDA are expected to increase as the prior year comparables in the third and fourth quarters have started to reflect the wind down of training contracts and the conversion of the aerospace support contract from a performance-based logistics agreement to a time and materials arrangement.

These increases are expected to be driven by the second aircraft deployed onto the U.K. home office contract and continued strong tempo flying for owned ISR assets. Our aircraft sales and leasing business is also expected to experience growth, as Rich talked about the investment in both working capital for future parts sales and investment in aircraft and engines within the leasing portfolio anticipated within the third quarter. We continue to expect growth in the leasing revenues as we place those aircraft and engines on lease. With the increase in inventory, we also anticipate greater parts sales throughout the year, assuming we can access MRO slots.

Taking a step back, I wanted to focus on the strategic benefits of the Canadian North transaction for the longer term for EIC as a whole. We believe that the Canadian North infrastructure and aviation assets, coupled with our existing operations provide us with a unique offering to meet the development needs of the North.

As the Government of Canada renews its focus on development, security and sovereignty within the North, EIC's comprehensive portfolio, including advanced aerospace solutions, sovereign Arctic aviation, defense enabling infrastructure, in-country defense manufacturing and our extensive network of partnerships with indigenous communities and businesses uniquely position the company to lead and support these critical initiatives. We will proactively have discussions with the government and our customers about how EIC can support them in achieving their NATO targets and development in the North.

We expect maintenance CapEx expenditures to increase for a number of reasons. Firstly, due to the addition of Canadian North, we noted that the first year returns are expected to be muted due to higher-than-normal maintenance CapEx expenditures required. When we negotiated the purchase price, we took into account the projected maintenance CapEx expenditures and negotiated a corresponding reduction in the purchase price. Secondly, maintenance capital expenditures are expected to increase in line with increases in our adjusted EBITDA in our Aerospace and Aviation segment.

Thirdly, increases in maintenance capital expenditures related to our aircraft and sales and leasing business due to continued strengthening of utilization within our lease portfolio. And lastly, this quarter's maintenance capital expenditures in Essential Air Services were below our internal expectations due to the timing of events, which are expected to be caught up in subsequent quarters. Growth investments in the remainder of 2025 include capital expenditures for 8 to 10 new King Air aircraft, which will be used in the BC Medevac contract. We have received 5 of these aircraft by the end of August.

Lastly, Regional One has placed deposits on certain aircraft assets and anticipates executing aircraft and engine transactions during the third and fourth quarters. The business had negative growth capital expenditures during the second quarter, which was an anomaly due to the timing of the execution of opportunities. As a reminder, transactions are only executed if they meet the same financial metrics as applied for acquisitions. I'll now pass it off to Travis to provide some commentary on the Manufacturing segment.

Thanks, Jake, and good morning. We are anticipating continued growth in our revenues and profitability for our Manufacturing segment for the remainder of the year when compared to 2024. This growth is expected for 2 reasons. Firstly, we see the normalization of the business environment for many of our segment subsidiaries, coupled with the annualized impact of Spartan in our Environmental Access Solutions business line.

All of the businesses within the Manufacturing segment were experiencing a strong level of customer inquiries at the start of 2025 with some softness experienced as the tariffs were implemented. The tariff uncertainty saw a small reduction from a customer booking perspective in the second quarter, but the business sentiment has been gradually improving as customers began to access the risk landscape. Overall, as Mike had mentioned, as the tariff situation stands today, we have not been directly impacted by the tariffs, except for the aluminum tariffs impacting the multistory window solutions business line during the quarter.

The vast majority of our products that we produce are Canada, U.S.A., Mexico compliant and therefore, the broader risk of tariffs would relate to declining business sentiment and supply chain changes, as Richard commented, which do take some time to implement. Our Environmental Access Solutions business line is expected to generate returns higher than the comparative period for the remainder of the year.

Spartan continues to experience very strong demand for its composite mat solutions, and we anticipate that they will continue to sell out their manufacturing capacity based on feedback received from customers and testing on the System 7 XT mat. Also, the FO track product line is seeing very strong demand. Due to that demand, we are actively assessing various location alternatives to build a state-of-the-art plant. We see long-term positive trends in the composite mat industry as the geographic and sector usage continues to expand and take market share from the traditional wood mat industry in the U.S.

Although we've seen some deferrals in project start dates for our Mat and Bridge solutions business in Canada, we anticipate those projects commencing in the latter part of 2025 and into 2026, which should drive an uptick in mat and bridge rentals. We've 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 demand, whether it be for electric vehicles or data centers. We also see several tailwinds for the traditional oil and gas and pipeline sectors.

As expected, our multistory window solutions business line revenue and adjusted EBITDA is expected to be lower than the comparative periods. We have signaled our expectations in the year-end and first quarter call and the drivers remain the same for the remainder of the year.

The period-over-period declines are expected due to: one, the heightened interest rate environment that existed in 2023 and 2024 that resulted in reduced project manufacturing for 2025 as projects booked will be manufacturing in 18 to 24 months after the booking date generally. Secondly, for projects scheduled for 2025, we anticipate margin pressures due to the type of projects booked, coupled with production gaps. We have integrated the manufacturing capacity in Canada by combining certain manufacturing facilities and are seeing the fruits of those activities as we did not profitability increase and benefits. However, those are more than offset by the tariffs.

As discussed in our reporting, we cannot alter our supply chains in the short term, and therefore, we're subject to the aluminum tariffs during the quarter. In the longer term, we'll be able to mitigate the impact and optimize production. Quoting in Canada and the U.S. continues to be very active, and we're seeing bookings subsequent to year-end. We are successful in booking approximately $100 million of new projects, and we anticipate this trend to continue as developers become more comfortable with the economic environment we are in.

We remain very bullish on this business line as the longer-term fundamentals which drive demand being an acute shortage of affordable housing remains very strong across several geographic regions in Canada and the U.S. Our precision manufacturing and 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 centers.

We are anticipating growth capital expenditures to be incurred in each of the business lines, but that should be relatively consistent with the prior year. The growth capital expenditures in the Environmental Access Solutions business line will depend on the market dynamics as they continually reassess their fleet based on expected market conditions, but we do expect an investment in fleet along with the buildup of mat to realize those opportunities for the latter part of 2025 and into 2026. I'll now pass the call back to Mike.

Thanks, Travis. I'm very excited about our future. We are guided by our past values and our various business lines are set up to realize significant tailwinds for the future. We have the right collection of businesses, the right management teams and our 20-year past provides evidence on our ability to strategically execute on those opportunities as EIC as a company is characterized by resiliency and stability and our record results and outlook for 2025 is a continuation of those trends.

Before we move on to questions, I'd like to take a brief moment to thank Carmele Peter for her work at EIC. Over a year ago, we announced that she would be retiring from management and moving to our Board of Directors. From that time, along with Adam and our team, she was leading our investigation and negotiation of the Canadian North acquisition. She agreed to stay in our President's role until the deal was completed or abandoned.

The Canadian North acquisition was completed effectively July 1, along with the negotiation of a long-term contract with the government of New shortly thereafter. As per her usual performance, along with Adam and the team, she all expectations on getting this transaction closed. This acquisition will drive our growth in 2026 and beyond. Carmele, thank you for all you have done for EIC during your time here as President. Your contributions have been fundamental to our success.

Carmele's responsibilities have been absorbed by our senior team, including Jake, Travis, Adam, Darwin, and Rich. I am pleased to announce that Jake, who has served as CEO of PAL during its period of rapid growth has moved to EIC as our new President; and Calvin Ash, a long-time executive of PAL, has taken over as the CEO of the PAL Group. The strength and depth of our management team are very important during senior management retirements. Our focus on succession planning has served us well. Thank you for your time this morning, and we'd now like to open the call for questions. Operator?

[Operator Instructions] [Technical Difficulty] Your next question comes from the line of James McGarragle from RBC Capital Markets.

Are you guys able to hear me?

James, we can hear you. I'm glad someone got through. You can ask lots of questions.

Yes. So congrats on a great quarter and Jake, congrats on the new role. But I just wanted to ask on the Canadian North deal now that it's closed. Can you just give us an update on the CapEx plans for the rest of the year? Just want to get a sense of how we should be modeling that for the rest of 2025 and into 2026.

That's a really good question. When we announced the deal, we said that it was going to take us probably through the end of next year to get to our 15% return threshold, and that was based on 3 items. One was getting the revenues where we needed to get them for the business to be profitable. And we're very pleased that we signed the long-term contract with the government of Nunavut. So we have a tick in that box sooner than we thought we would.

Second piece is taking some costs out of the business by utilizing best practices with our aviation businesses. And we're underway on that. We've had early wins. Rich and his team, for example, have negotiated a new credit card agreement, which will save us $1 million a year. So they're not all that fast, but -- and we're changing things. Calvin and his team are looking at combi, looking at how we run our routes. We have a regional one by our parts. So over the next sort of 1.5 years, you'll see the costs come down.

And then finally, the main piece to getting to 15% was we knew going into this transaction that there was a bunch of maintenance capital work, particularly some engines that needed to be overhauled. And you will see much higher than normal maintenance CapEx over the next 4 quarters in particular. Quite frankly, we thought about how we might work that into the purchase price by increasing the purchase price and having the vendor give it, but we weren't sure we could get the work done in time.

So when we looked at the purchase price, there's effectively part of what we're paying is some extra maintenance CapEx in the first part of what we see. So you'll see higher than normal maintenance CapEx for the next year or so as I don't want to say catch up because that implies that Canadian North were doing their maintenance CapEx and they most certainly were just by happen stance and how things come together, there's a lot of overhauls and engine overhauls that need to be done. So you'll see that upfront. But I'm pleased to say that the operating performance is ahead of our modeling significantly because of the early cost savings and the new contract with the government.

Okay. I appreciate the color. Then you've been flagging in the past couple of quarters some opportunity to redeploy some assets from BC into the Newfoundland deal as you get some of these aircraft, it seems like these aircraft are coming in the back half of the year. So should we expect a pretty sizable improvement in margin in the next few quarters? Obviously, for 2025, that's going to be reflected in the updated guide. But is there an opportunity to kind of continue to drive some improvement there into 2026?

Yes. Your general statement is correct. The -- with Newfoundland, the fact that we're using other planes changes our return on capital more than it changes our margins per se. Like as we -- as that contract goes into effect and we use assets we already own, we're going to earn a return on things without having to expand new capital. So that's exactly what we were looking for when we got the contract in BC because the fleet there was perfectly fine. The government wanted new aircraft, Jake?

Yes. And James, just to give you a little more color, there's going to be some aircraft modifications needed just for configuration changes as they come out of service from BC and go into service in Newfoundland, which you won't see them start to contribute until early '26.

[Operator Instructions] Your next question comes from the line of Chris Murray from ATB Markets.

Hopefully, you can hear me okay. So just turning back to the guidance, the $35 million increase in the guidance. If you could maybe help us understand how that comes together. How much of that is the contribution from Canadian North -- how much of that -- it looks like some stronger margins in the aviation businesses, maybe offset a little bit by manufacturing. So maybe you can just give us some color on how to think about how that stack lines up.

Yes. Most of the increase would be explained by Canadian North. The number would have been bigger, quite frankly, Chris, if it weren't for the continued forest fires. We've had some of our biggest communities in Northern Manitoba empty for 3, 4, 5 weeks. And when that's the case, we aren't flying there.

So that $35 million would have been -- would have had at least a 4 is the first number if we had anything remotely close to a normal forest fire year, -- this is a year like we've never seen before in the 50 years of operating in the North, so 50 years plus. So to circle back to your question, it's general strength in our overall business, offset by the forest fires and then most of the growth would be coming from Canadian North.

Okay. That's helpful. And then turning back to Canadian North. Maybe this is the uncomfortable question, but part of the thought process, I think, or at least as outside reserves when we saw Canadian North merge with First Air, there was a bit of a discussion about how effective that has been. I know you -- I'm kind of thinking about your path forward. I know you talked about some SG&A costs, things like the credit cards. It seems like there's a maintenance bulge in there. But can you talk about streamlining kind of the operation?

And I appreciate it's sensitive given a lot of the moving parts here. But can you just talk a little bit about your opportunity to drive some of these costs out of the business? And when you talk about the reduction below your kind of 15% threshold, is that really tied more to kind of, call it, an EBIT margin? Or is that tied more to like the fact that you're going to be higher -- just higher CapEx do? I'm just trying to understand the kind of the balance of where the issues lie.

Yes, that's a really good question. So let's break it into pieces. The operating improvement was going to be driven by revenue and that box is ticked. -- we don't intend to make material changes to passenger prices for the general public. The government contract had not reflected changes to aviation inflation for a significant period. So that's caught up in that contract. So that piece is looked after.

The operating improvement then is based on costs. And I would again break that into 3 pieces. There's kind of the G&A improvement and things like the credit card, but that's just an example. There's streamlining some of the accounting systems and sort of bringing them in line with EIC standards, which will make some more effective -- the next big one we'll achieve later this quarter is moving them on to our global insurance plan, which as a group, we buy at much cheaper prices than smaller airlines do.

And then you will see the next piece will be the purchasing of parts through Regional One, taking advantage of our group buying capability, which will drive down their operating costs. And then the last piece, which is the part that's slightly more complicated, will be moving their fleet from pure freighter and pure passenger aircraft to a combination of combi aircraft and pure freighters.

There are certain markets that will always require pure freighters. But most of the places that fly out of the Eala could be more effectively serviced with a combination of passenger seats and freight on each plane. So we don't need to buy new aircraft or anything. You don't need to worry about big capital expenditures. But we will need to take some time to adapt the aircraft and make changes to how they're configured. That's a relatively modest expenditure, probably more in the hundreds of thousands or million dollar range than anything significant, but it will take a while, and it will take some changes in how we route the aircraft and those things. So that will take a slightly longer period.

And then because of the maintenance CapEx, we knew about that is going to be higher in this period, that delays our 15% return simply because the way we define that is EBITDA minus maintenance CapEx and maintenance CapEx will be high for the next few quarters. I would say we're ahead of track on the EBITDA part of the game. Our operations, I would say, are improving more rapidly than we anticipated in our business model. We've got some great people at Canadian North who are eager to take advantage of some of our buying power and some of our opportunities. And the CapEx will take care of itself over a reasonably modest period.

And Mike, one thing I might build on Chris' question there. And Chris, it's Adam. And I think you hit on accurately just going back to the history and the fact that there was a merger that was right after the merger, COVID happened, and I think it's been fairly well known there was some changeover at the CEO level. So the fact that the merger happened and then COVID and a little bit of instability at the top, bringing the 2 airlines together probably what's challenged.

And to your point, there is opportunities now with EIC's expertise, long-term ownership and the fact now that we have this long-term agreement with the government of Nunavut helps for long-term planning that there is also that ability to also drive additional synergies within that operation. So that -- to your point, there is that opportunity as well.

Okay. And then just maybe quickly, Mike, historically, when we think about maintenance CapEx as a proportion of revenue in the aviation business, we've always thought -- we've always sort of seen it on average and yet it can be lumpy, but about 12% of revenue. Is that what we should be thinking? Because I appreciate these are all 737-200s and larger aircraft, but is that about the right level of magnitude to think about as you get to that 15% number?

Yes. It will vary period to period. Their maintenance CapEx as a percentage of revenue should be very similar to what we experienced in our other airlines. They -- in addition to the 737s, they operate a significant fleet of ATRs and which are exactly the same aircraft. In fact, actually a slightly newer version of them that TomAir operates. So your thought process is correct, although it will be higher than that over the next 3 or 4 quarters, while certain things are done.

We tend to want to do things earlier rather than later. And so we don't have aircraft out of service during busy periods. And so with our capital structure, we can do that. I don't want anyone walking away with maintenance CapEx is going up if they weren't doing the maintenance. No, that's not the issue. The thing was there's just a whole bunch of things by timing that engines can't do at the same time and where they may have been leasing a replacement now we're going to actually overhaul it and replace it or buy a new engine.

So we knew about that upfront. And in our mind, it was part of the $200 million in addition to the $200 million we were paying. And when you look at -- even with just the early stage 6-month number that most of that increase relates to Canadian North, you can see that the EBITDA multiple we purchased this was very attractive.

Okay. That's helpful. And if I could just squeeze a third one in. You did make the comment, I think, in the script that you'll be looking at a new factory for the matting business that's going better and sort of the decision has been made to go ahead with that. Can you kind of give us any update on expectations of where that should be cited? And any expectations for capital spending as we go into next year?

The idea is it's going to be in the Southeast U.S. We're still working between -- there's really kind of 4 states at this point we're looking at. It could be in Florida with the other plant. It could be in Texas, and it could be in Alabama or it could be in Mississippi. Those are the 4 places we're down to.

Give me one more quarter to give you a budget for it because what we're really working on right now is how big a plant do we build. do we build this so that we can expand it again without moving. And I think that's where we're going. So it's hard for me to give you a budget because we're still working on the business model. But I would hope by the time we report in November, we'll be able to tell you that we set up a location. We signed some purchase orders, and we've got a budget, and we'll be able to give you a rough start-up date as well.

But in rough numbers, we think it's at least an 18-month project to get the plant up and running. It could be as long as 2 years, depending on what the wait times are for some of the equipment. It's very unique, very heavy pressing equipment to make the composite mats. So I wish we could -- could operate it tomorrow. The demand is there and demand is not going anywhere. So we're prepared to make the investment. We just want to make sure we do it right. It's a big investment for Spartan.

[Operator Instructions] And your next question comes from the line of Cameron Doerksen from National Bank Financial.

Just a follow-up, I guess, on Chris' question just on the matting business. Obviously, it sounds like Spartan mat's doing very well. In your prepared remarks and in the MD&A, there was also some commentary about the Canadian matting business and we struck a little more optimistic tone on increased activity there. Can you just maybe discuss the visibility you have on how that business is looking over the next number of quarters?

Yes. It was slower in Q2 than we would have anticipated because of the delay of some of the newer projects, particularly some of the pipeline and transmission line integrity work that we do in the East. It was postponed. We're starting to see that start in the third quarter. But the sheer number of projects that are under consideration and are going to get in the ground over the next 6 months, 12 months is remarkable.

Hydro One has talked about, I forget was the second new distribution lines they've got to build. They're talking about this natural gas work. There's oil and gas pipelines, there's oil and gas digging. There's -- I mean, it's virtually all parts of the linear part of that business are bullish in the medium term. It's still going to take us whether it's the end of this quarter, beginning of next quarter, and we'll start to see that stuff go. And a lot of it is tied kind of in with the infrastructure work that our Prime Minister has talked about.

But it's beyond that, it's utility work, even in Manitoba and Saskatchewan, Manitoba Hydro has announced a major program working on maintenance of the 2 bipolar lines, which will create work. There's work in Saskatchewan. There's work in BC. We're very bullish about the medium term on that business. Again, it's probably not a Q3 hit, but they'll start later in the year and into next year. And the medium term looks great in Canada, which matches what we're already seeing in the U.S.

Okay. That's super helpful. And maybe just a second question for me. Just, I guess, on the aerial surveillance opportunities. I mean you mentioned, I guess, a Q3 decision, hopefully here on the Australian contract. Can you just maybe discuss, if you can, any more details on what other opportunities are out there? I mean, I'm thinking also potentially in Canada with increased defense spending and focus on the north, there's potentially some opportunities for that business there as well.

I have to be careful about being too specific because there's negotiations ongoing on a number of things. But I will say that we've spoken in the past about inquiries in Gerland, inquiries from other countries in Europe, discussions with the Canadian government about additional work for them. I'd point out we've had to work on the coasts of Canada for 40-some years, just recently extended that for another long-term contract, where we will discuss about other work with the government of Canada. And there's other work potentially down in the Southern Pacific other than the Australian contract.

And so I'm concerned sometimes that because of the size of the Australian contract, the discussions get somewhat fixated on it. And that's a hit or miss either we win or we don't, but it's one contract. It's the biggest one, but there's opportunities all over the place. I'd be very surprised if we don't announce some successes before the year is over. Now those are things that are unlikely to impact this year's revenue. By the time we win the contract and buy the parts and those kinds of things. But we are very active in a number of markets. Jake, is that miss anything?

Yes. No, that's fair. And unfortunately, instability in the world drives the demand for the type of services we provide through the surveillance work. And there's robust pipeline and inquiries from just about every geographic region we're operating in.

And your next question comes from the line of Krista Friesen from CIBC.

Congrats on the quarter. Maybe if I can just follow up on the matting questions there. It certainly sounds like a lot of opportunity in Canada. How do you feel about your supply of mats and being able to keep up with that demand?

We are currently managing production so that we don't buy them too soon. One of the advantages that we have at Northern Mat is because we're vertically integrated, we make our own construction decisions, and we have very strong inventory levels of timber. So we can start and stop kind of when we need to. Because Q2 was slower, we slowed our production in that period.

As we see this coming, it's likely we will start up. We operate more than one facility. It's likely our second facility will ramp later this year. So I have very little concerns about our ability to have enough mats in the world. The addition of [indiscernible] has been great for us in the East. They've increased our relations with Hydro-Quebec. We sold them a bunch of mats in the last quarter. We're looking at other opportunities with them.

And the one other thing I would point out that's bullish for the business, particularly once we get past Q3 is when the transcontinental pipeline was completed, there was a lot of used mats in the marketplace all over the place. And some of our competitors jumped on those and then used very cheap mats as a means to discount their way into the marketplace.

And that's a good strategy for very short periods of time, but the used mats coming off a pipeline project had very short lifespan. And we're starting to see that expire. And so the relative health of our portfolio versus perhaps some of the others is going to put us in a great spot as the ramp-up comes because we'll be able to provide the mats the customers need.

So one other things I would add is in the M&A, we talked about just some of the investments that they had made in new mat inventory during the quarter and in anticipation of mat sale demand for new mats. But if we got into a spot where the leasing demand accelerated earlier than expected, we would have the optionality to deploy those into our lease fleet or our rental fleet to make sure that we're meeting customer demands on the rental side. So that buildup and the planning that they do as a team to make sure that we're ahead of market demand positions us well for the back half of the year.

Okay. Great. And then maybe just shifting gears to Canadian North and congrats on being able to renegotiate that contract so quickly. Are there other large contracts like that, that you'll be looking to renegotiate, I guess, over the next 6 months here?

Not really as it relates to Canadian North. I'm excited that Dave White and the team at Keewatin are negotiating the RFP on the medevac business for Nunavut. And I'm confident that we will continue to serve as the sole provider of medevac services in the North, but that contract is under negotiation. Maybe by the time we come in November, we'll have something more to share on that. But within Calm Air or Canadian North itself, most of the stuff has been dealt with in terms of contracts.

It was really the aviation inflation was so high over the last couple of years and the previous contract really didn't capture that. And the government in Nunavut is, I would suggest you, perhaps the most progressive in understanding the cost of operating in their area. And so we sat down and talked to them, we went back and forth about the best way to minimize costs and the best way to accurately forecast. But one of the things that's in this contract that we haven't had in the past that's historically been tied to fuel prices and CPI.

Well, CPI can overstate or understate aviation inflation significantly. The new contract, while a portion of it or the increases relate to CPI, it's more specifically driven by aviation wages, parts costs and exchange rates. And when you put those together, what that means is that the contract will be much more dynamic, both upwards and downwards depending on what happens with aviation inflation, which means both the airline and our customer are going to be well taken care of because we don't have to have proxies. We actually have real hard numbers for adjusting the cost of the service.

Mike, if I can just add to that, that aviation inflation formula is very, very important to this and forward-looking as this is a 10-plus 5-year contract, a couple of years extension in there. So we're really looking at the forward future of where we're going and how to have a successful contract with our partners in for a long, long time.

And your next question comes from the line of Konark Gupta from Scotiabank.

Yes, first of all, congrats to Carmele and Jake and Cal for the respective changes and the new future in the careers. So congrats. Maybe first on the capital side of things, Mike. Your business is obviously growing or expanding all across, broadly speaking. You have lot of subsidiaries that have growth aspirations and they need capital as well as you have, obviously, some of these major contracts that you talked about like Australia, for example, and some others maybe.

How do you -- like I know the short answer to this, the return on investment benchmarks you have. But how do you kind of balance out or how do you kind of prioritize the capital allocation to these businesses now considering, obviously, I mean, I know you have headroom on the leverage ratio with your covenants. But I mean, you still have a lot of, I would say, like capital ask is much higher, I guess, than perhaps the cushion that you might have on the leverage side.

You're betting on about the demand for capital. I mean your statement is absolutely correct. But the way I would answer is our work is what fits our model, what do we want to do? And assuming we want to do it, we really don't view it as a competition between Pam's project and Richards project. They're both individually reviewed and they meet the standard. But the real test then becomes for us is where does the capital come from? How do we fund these things? And so -- which the test of that becomes our leverage ratio.

And when I speak to our investors, one of the pages in our deck shows our historical leverage ratios. And we're at the lower end of our historical aggregate debt. When I talk about aggregate, I'm talking about secured debt with our bank and convertibles. We had 2 sets of convertibles that we've called that turned into equity. The next set is over 25% in the money, so it's callable at any moment. So as we need equity in the short term, the convertibles will provide that. In terms of liquidity, we have sat with our bank facility.

I think I mentioned this before, but I'd be one of the few Canadian businesses that says the Canadian banks are pretty good at what they do. We're well looked after by our debt syndicate of Canadian banks and a couple of banks out of the U.S. And so we're sitting with $1 billion of liquidity, more than that -- a little more than that perhaps. And we have equity available to us from those convertible debentures when needed. And we're working on now, we will probably, at some point, get a debt rating so that if we needed to tap the bond markets in the future, we would do that.

But we would only do it with our historical levels of debt. And when we talk about historical levels, I'm talking about debt-to-EBITDA ratios. -- we've been dogmatic about staying in a band. And if you look at it, with the exception of a little bump up during 2020 when EBITDA went down because of COVID, we've stayed in that band for our 20 years. We're not going to change that. So our access to capital is sufficient, barring some change to be able to fully take advantage of the opportunities in front of us.

For us to continue to generate 20% plus returns for our shareholders, we need to invest capital. And so when my guys bring me good opportunities, I'm glad to give Rich the problem of which part are we going to take it out of. And if at some point in the future, we need an equity, we raise it. We've raised equity at continually higher prices over our history. The last batch, I think we did was at $52 or $53. We're now 25%, 30% higher than that, 40% higher than that.

But having said all that, we don't need any equity. We don't view that as imminent or even in the medium term. But if we did, I have no reticence to do it to maintain a balance sheet. So circling back to the end of your thing, the more good opportunities we have, the better, and we'll fund it with a balance sheet that looks like the balance sheet today.

And from our perspective, Konark, it's super exciting to see those opportunities coming up from the subsidiaries because that's part of what our secret sauce is keeping our vendors engaged and keeping them for the long term. And it's those sorts of opportunities and having the capital to deploy that keeps them excited about the business and helps us generate those returns Mike is talking about over an extended period of time.

So from our perspective, seeing those opportunities come up are an extremely positive thing. And to Mike's point, we'll find out how to get the capital to make sure that we continue to generate the returns we've proven that we can.

That's great color. Makes sense.

Our guys who -- and this is a real-life example. The guys have proven they can invest money and grow. Regional One, we bought it did $16 million in EBITDA the year we bought it. It's going to be 10x that big this year. And that's because those guys know who the best money. So when we talked about growth CapEx being negative in Q2, pure happened stance that nothing closed in that quarter. But if you look a little deeper, we had $20 million in deposits on transactions, and I can tell you there's more coming. And so when Hank calls me and says, "Hey, I got some ERJ 175s or I got some CRJ900s or Q400s, we're glad to write the check because that just fuels our future growth.

And just on second one, maybe on the portfolio. I mean, you always have like I think the advantage or disadvantage perhaps whatever you want to call it, of a diverse portfolio is that some of the businesses will work strongly and some might be weaker for a moment and then things might flip flop, right? So I mean there's always some puts and takes.

I mean if you look at the windows business over the last, I would say, 4 or 5 years, maybe or 5 years, I mean, COVID and tariffs and then like some other issues, interest rate, etc., like all those factors have had exogenous impacts on the Quest business or our windows business. At some point, I mean, like I know the demand is great and all that, but obviously, like we're not obviously seeing that flow through in the earnings, the quarterly earnings at this point, right, for the last many quarters.

At any point, like would you feel like -- I mean, yes, sure demand is fine, but then this is it, and we don't probably need as big of an asset, so we need to either shrink or sell or do something. I mean, like is there a possibility at least in consideration of strategic opportunities to optimize the portfolio?

That -- I mean, we look at that stuff on a regular basis. And if we see that it's plateaued or there isn't something we can do it, the suggestions you make are stuff we would look at directly. We're nowhere near that in the window business. It frustrates me a little bit right now because we worked so hard to bring those plants together. We closed the Quest plant. It's now all in the DV facilities. We've done stuff that's improved our margins. And then the tariffs in the U.S. like just wiped out everything we did all at once now.

So we've changed how we manufacturing. We used to be location agnostic. We built stuff for Canada and the U.S., and we built stuff for the U.S. and Canada, depending on what fit our production schedules. Well, instantly, we couldn't do that. And overnight, we have to build in the country we're using it for. So that means right now, our Dallas plant is very slow. Our Canadian plant is actually reasonably busy. And so we're dealing with those. We would do what you're suggesting, but I would tell you, we're nowhere near that conclusion on that business.

And I think the best pieces I can give you is Calm Air, if you went back a decade, was my weakest airline in terms of return on capital and most of the financial metrics. If you look at it today, it's at or very near the top. And these things go through cycles. And the beauty of why EIC succeeds when perhaps some others don't is we don't have to make short-term decisions.

I have more people in my windows business than I would have if I was only in the windows business. The strength of my aviation business unequivocally is subsidizing the window business right now. But at the beginning of COVID, the opposite was true. At the beginning of COVID, the window business carries some of the other assets. We don't have a lack of confidence in it. In fact, quite the opposite, I'm very confident in it. But the analysis you're talking about is done all the time. And if we need to do something, we will. Right now, we really don't see that in the future, but it is something that we look at.

Yes. And it's not specific to the windows business, right? We understand that we are live in the marketplace and an overperforming subsidiary might -- you might need to make that assess on an overperforming subsidiary as well because someone may be willing to pay you more than you think it's worth.

So it's not specific to the windows business either. But and even talked about that, Konark, like that long-term view that Mike talked about is incredibly important, whereas we are also seeing competitors fail and competitors close their plant, which improves our long-term outlook on those businesses just because they can have greater market share and greater pricing power. So we constantly evaluate each of the businesses, but that longer-term outlook provides us a significant advantage in the future.

Okay. That's very helpful color. And just a quick clarification as a follow-up, maybe on the guidance. I think you mentioned to Chris, I think the $35 million incremental would have been higher had it not been forest fires. I'm just trying to get the math right as we kind of contemplate you guys hitting $800 million EBITDA mark at some point, I guess. Are we looking at probably mid- to high 700s perhaps without the forest fires? Is that the idea? Or it would have been more or less like $5 million, $10 million more had it not been forest fires?

I think the forest fires are more in the $10 million-ish challenge than the other. And I know you're trying to get me to give you a 2026 number. We'll give you what in November. But I will tell you that there is embedded growth that's going to come for stuff we've already paid for. The planes that are going to come out of Carson and go into PAL are going to generate income. I've already paid for the second plane for Britain, that's going to generate income. And so I'm hoping we stay in the 700s about as long as the longer period of time as the stock stays in the 60s.

And your next question comes from the line of Gary Ho from Desjardins Capital Markets.

I want to touch on M&A a little bit. I know you just closed Canadian North acquisition and several growth projects on the go. I think you also mentioned M&A pipeline continues to be active across both segments. So where are you spending your time on? And what do you get excited about? Maybe talk about preference for tuck-ins versus more platform type opportunities and maybe leverage off Konark's question there on the windows segment, if I can flip that around and that you guys take a longer-term view -- are you more opportunistic acquirers as well buying good businesses at cyclical troughs and perhaps attractive valuations? Maybe chat about that.

Okay. So I'll take your second question first. In terms of being an opportunistic buyer, I would tell you an unequivocal yes. We view ourselves as being independent thinkers, and we've done deals that when they first came into us, we couldn't figure out why they were a business.

Regional One would be a great example of that. My acquisition fellow at the time brought it to me and I didn't have any idea why I wanted to be in that business. He was it was a good business. I turned it down. He brought it back again. I turned it down the second time and finally go beat with come with me and if you still don't like it, I'll stop presenting it to you.

And I went and met with them literally 45 seconds into the discussions with Jerome and his team, I realized what a great business this was. And we are competing with private equity, we had a model of investing in that business as opposed to reaping cash out of it that made us a successful buyer. And now we look at today, and it would be 10x the size of what we bought it off.

So yes, we view ourselves as opportunistic. In terms of what we prefer, whether it's platforms or tuck-ins, I'm not sure we have a preference. I would suggest to you that we see a lot more maybe tuck-ins or businesses that are tangential to what we're in. So if we found another medevac business or we saw with the parts business or when we added the glazers to our window business or if there was an aerial firefighting business as an example, that would be something we would love to have.

And so most of the things we look at today tend to be related to what we do, but they're typically bigger than what I would classify as a tuck-in. Today, what we're looking at is virtually everything Adam and his team have is very related to something we have. I think I was told by a couple of my significant long-term investors when we bought Canadian North. -- that makes sense. I should have known that was coming. And I think if we're successful on some of those deals that we're working on, I think that would be the market's reaction.

I would caution that there's nothing imminent. We're not like at the 10-yard line ready to score here, where Adam and his team are working hard on some opportunities and some of these projects, specifically where we're in a negotiated settlement as opposed to an auction takes some time. But we -- Adam and his team remain busy, and it's both manufacturing and aviation assets.

Just to build on what Mike is saying in terms of being opportunistic and being open-minded to opportunities that were not necessarily directly in that niche within the manufacturing segment or within the Aviation segment, we look to acquire a very specific type of company with a great leader and a good management team and really focus on the long-term fundamentals of that business, given our business plan to own that company for a very, very long time and also to empower the management team there.

So being open-minded and opportunistic allows us to have a broader scope of those types of companies. At the same time, given some of the uncertainty that we had last year within both elections within the U.S. and then Canada this year, followed by some of the other uncertainty tied to the geopolitics and some of the economic positions, you often see that there's ebbs and flows of acquisition opportunities and what we call marketed deals coming in. Our ability to have those 2 funnels, one of the marketed deals and then one of the strategic deals allows us to be a lot more active on a consistent basis.

And I'd say that one of the exciting things when we buy a new company and for that owner coming on is the idea that EIC likes to continue to grow those businesses, including strategic acquisitions. And so we're consistently working with all our subsidiaries when they view there's an opportunity to go uncover opportunities to help them expand their overall operations. And as you can see, that's what our last 4 acquisitions have been. They've been all strategic opportunities.

Okay. Great. Makes sense. And then maybe just a quick follow-up. On the long-term service agreement, I think the government Nunavut has an option to purchase a stake in Canadian North. Maybe just talk about the reasoning. And do you have a preference one way or another?

The discussions about -- typically, a long-term agreement like that with the government in Nunavut would have been done through an RFP. And there was discussions and there was reasons for both of us to want to do it quickly. And one of the things we said, look, if you're -- we want to prove to you that we're good partners, and we're negotiating this in good faith. And part of that was if you want to be our partner, join in, you got to pay the capital like we have, and you could join.

And I think the government in Nunavut took comfort in the fact that we were prepared to share the deal with them. And if the deal wasn't fair, we wouldn't have shared it. And so we aren't capital constrained. And so I don't think I would say that I want them to participate, but I'm not adverse to it. I mean having your biggest customer in a territory like that, that's going to be growing and is going to be a big part of our future strengthens our business. So I think it's really more about whether the government in Nunavut wants to deploy the level of capital they need to be our partner.

And if they do, we're glad to have them. It's crystal clear in the operating agreements while they have Board representation and those kinds of things, operating control of how you run an airline lines with EIC. That's what we do. We're prepared to have a partner that we talked about things with, but operating decisions need to stay with us. Jake.

And I think it's much more indicative of the degree of partnership that we have with the government of Nunavut in developing the critical infrastructure in the North. So rather than a financial matter.

I think that we might have had a bigger challenge providing that option to some other provincial or territorial governments than we did with Nunavut. They are remarkably literate from an operating -- about their operating environment. They know how fundamental aviation is the go to the territory. And so they make a good partner.

Perhaps not all of the territories or provinces we operate in governments are as exposed to aviation and as such would be more challenged to be a partner. Nunavut is well situated to be our partner should they choose to. I suspect that will be something that will be decided by the next government in Nunavut. They have an election coming this fall. And so I would be very surprised if any decision was made before that election, and they have a year to decide.

Your next question comes from the line of Amr Ezzat from Ventum Financial.

Congrats on the quarter. Just a quick one. Well, this is Andrej, first of all, on behalf of Amr. But on the Australia Maritime Surveillance bid, given the scale, what's the realistic share of the contract you could control if successful? And how do any local content requirements factor into your economics, operational structure or partnership?

The contract is probably -- while the government does have the right to split it, I would suggest that's highly unlikely. The technology of the aircraft talking to one another having 2 different companies with different software would be remarkably difficult. In fact, I think one of our competitive advantages is our aircraft run the same software that we own that the helicopter ISR running. So I don't think there's any likelihood that it gets split. I think it's a win or a loss. In terms of local content, do you want to take that, Jake?

Yes. I mean we have committed and required to set up operations in Australia, knowing the time and space that's not something that can be run remotely. And it will have a full operation set up to support a very significant aircraft operation down in Australia.

Okay. Great. And shifting to Canadian North, you pointed out in the MD&A that the Canadian North infrastructure as a potential enabler for Arctic defense and security opportunities. Could you speak a little bit more about that? And maybe from a practical standpoint, any steps you can take to monetize that?

Yes. I mean what you're going to see, I think, in the North is 2 main themes of growth. One is we've seen the value of critical minerals. Nunavut is blessed with a lot of them. And so as those become a strategic asset that we want to have as a country and with our NATO partners and our American partners, you're going to see development of those. Well, that means bringing in people and equipment and stuff into flying locations, which is exactly what we do, whether it's Calm Air Canadian North.

And then the other piece relates more to national defense. We're going to need to build facilities in the North. We're built buying the F-35 Joint Strike Fighter. We don't have hangers for them. We don't have runways in enough places for them. And so the government is going to build those. And while I don't think we'll be hauling up a cement on our ATRs, we will be hauling up the people and rotating crews and doing all that stuff, which is going to create demand for our scheduled services.

And because of the infrastructure we have there, it's exceptionally difficult for someone to do that at a better price than we can for the government simply because we've got hangers. We've got facilities. And if someone else wants to try and take that from us, their costs are going to be far higher than ours are. So we're excited about the ability to lever the government's investments in defense with our scheduled airline.

And then on top of that, it's not really so much a Canadian North story as it is a PAL story, but the opportunities for other things like expanding the surveillance we do on the East and West Coast to our Northern Coast. I think there's things like that, that you will see discussions of perhaps expanding our role in the Northern search and rescue program where we already provide the maintenance and overhaul capability for the aircraft, which were recently purchased from Airbus. I think -- all of those are growth opportunities for us where we can partner with the government's intent on increasing our investment in defense and do it cheaper and faster than the government can do itself.

Thanks for the color. I’ll pass the line.

Operator, before we jump on to the next call, Steve Hansen sent me the question, which is, what's the quantum of maintenance and growth CapEx we should expect this year? I'm not sure I can answer that with a specific number other than to say, as it relates to Canadian North, the free cash flow we'll generate will be -- won't be a huge number in the first 2 or 3 quarters because of the maintenance CapEx, although our -- the EBITDA we're generating is improving and some of the cost stuff we're doing is ahead of schedule. Growth CapEx, I hope there's a lot of it.

Right now, it's really limited to finishing off the purchases of the King Airs for the BC Medevac contract, which will allow us to deploy their aircraft to Newfoundland with only a cost of modifying them, which is relatively modest. And then we have significant investments Regional One for the balance of the year, and that could be in the $50 million to $100 million range, depending on which transactions we close, but there's a bunch of stuff we're bullish on.

Quite frankly, that market today, it's easier to sell it than it is to buy in. And so when we get the right opportunities, we're all over them. So in general, maintenance CapEx will be heavy in the balance of this year and into next year. No surprises that was part of our due diligence. We knew that was coming. We talked about hitting a 15% return by the end of next year. We are more confident than ever that we'll do that, both by increasing revenue, decreasing costs and then ultimately normalizing maintenance CapEx over a period of time. I hope I answered what you were looking for, Steve. Operator?

Your next question comes from the line of Razi Hasan from Paradigm. Please go ahead.

Just 2 small ones here. On the windows business, is it fair to say that we should begin to see results from the $100 million in new projects you mentioned flow through in mid-2027 if the world stays the same way? Is that a fair assessment?

Yes. I mean each project is slightly different, but on average, that's about right. I mean the thing is $100 million is a good number for this last month or so, but we burn -- we burn that much out of our book every quarter, more than that actually. And so that -- while it's a good start and it's encouraging, we still got some work to do to get the actual order taking to where we want it to be. But it's a positive sign. And one of it was in a market, I'm not going to disclose where it was a market that was difficult in the U.S. for a period of time. So it's exciting to land a significant sale in a market that had been difficult for a while.

Okay. Great. And then maybe just lastly, on the Australian contract, I'm not sure if you mentioned, but can you disclose how many bidders were in the process or how many bidders are left or any idea there?

Right now, we know -- we suspect it's not a published thing. We suspect that there's about 4 bidders that we're submitting. Obviously, the incumbent and ourselves, we feel are the key challenges for this. But as I said, we anticipate there were 4 bidders.

There are no further questions at this time. I will now hand the call back to Mr. Mike Pyle for any closing remarks.

Thank you to everybody for joining us today. It's an exciting day. We look forward to talking to you again in November. Have a great day, everyone.

And this concludes today's call. Thank you for participating. You may for participating.