Q1 2025 Exchange Income Corp Earnings Call

Operator: Good morning, everyone.

Good morning, everyone. Welcome to exchange income Corporation's conference call to discuss the financial results for the three months ended March straight to 1025.

Operator: Welcome to Exchange Income Corporation's conference call to discuss the financial results for the three months ended March 31, 2025.

Operator: The corporation's results, including the MD&A and financial statements, were issued on May 12, 2025 and are currently available by the company's website or CDER Plus.

The corporation's results, including the M. D 88, and financial statements were issued on May 12, 2025, and it couldn't be available via the company's website or SEDAR.

Operator: Before turning the call over to management, listeners are cautioned that today's presentation and the responses to questions may contain forward-looking statements within the meaning of safe harbor provisions of Canadian provincial securities law. Forward-looking statements involve risks and uncertainties, and Ontario Lions should not be based 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.

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 safe Harbor provisions of Canadian provincial Securities laws.

These statements involve risks and uncertainties and in July and should not be placed on such statements.

Certain material factors or assumptions 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.

Operator: 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.

Fitments, please consult the quarterly and annual MD&A the risk factors section of the annual information form and E. S.

Other filings with Canadian Securities regulators, except as required by Canadian Securities Law.

You see it does not undertake to update any forward looking statements such statements speak only as of the date made.

Operator: 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.

Speaker Change: 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 Bell. Please go ahead Mr. Pyle.

Operator: I would like to turn the call over to the CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, Mr. Pyle. Thank you, operator.

Speaker Change: Thank you operator, good morning, and thank you for joining us on today's call with me today is Richard Weirich, our CFO, who will speak to our quarterly financial results, along with Jake Trainor and Travis Mayer, who will expand on our outlook for our two operating segments yeah.

Michael Pyle: Good morning, and thank you for joining us on today's call. With me today is Richard Wowryk, our CFO, who will speak to our quarterly financial results, along with Jake Trainor and Travis Muhr, who will expand on our outlook for our two operating segments. Yesterday, we released our first quarter results for 2025. Our performance in the first quarter was incredibly strong. We once again set first quarter high watermarks for all of our key metrics, including revenue, adjusted EBITDA, free cash flow, free cash flow, less maintenance, CapEx, and adjusted net earnings. We are pleased to reconfirm our fiscal 25 adjusted EBITDA guidance of $690 to $730 million, which excludes the financial results of Canadian North.

Speaker Change: Yesterday, we released our first quarter results for 2025, our performance in the first quarter was incredibly strong.

Speaker Change: We once again set first quarter high watermarks for all of our key metrics, including revenue adjusted EBITDA free cash flow free cash flow less maintenance Capex and adjusted net earnings.

Speaker Change: We were pleased to reconfirm, our fiscal 25, adjusted EBITDA guidance of $690 million to $730 million.

Speaker Change: This excludes the financial results of Canadian doors.

Michael Pyle: EIC is a beacon of resilience and stability. When other companies have either downgraded their guidance or eliminated their guidance entirely due to the economic uncertainty, we remain confident in our business model and the ability to generate results consistent with our previous guidance. During the quarter, we announced the Binding Purchase Agreement for Canadian North, which we discussed during our year-end call. The regulatory process is very complex, and we remain confident that we will close the transaction. However, due to the complexity and certainty and our inability to forecast when we will receive regulatory approvals, we have not recluded these results of Canadian North in our guidance.

Speaker Change: She is a beacon of resilience and stability when other companies have either downgraded the guidance or eliminated the guidance entirely due to the economic uncertainty we remain confident in our business model and the ability to generate results consistent with our previous guidance.

Speaker Change: During the quarter, we announced a binding purchase agreement for Canadian doors, which we discussed during our year end call.

Speaker Change: Tori process is very complex. So we remain confident that we will close the transaction. However, due to the complexity and uncertainty and our inability to forecast when we will receive regulatory approvals. We have not recorded these results if Canadian north in our guidance also because of the Nondisclosure.

Michael Pyle: Also, because of the non-disclosure agreement, which prohibits us from releasing any of Canadian North's financial information, we cannot provide any additional financial information on the transaction during today's call. The first quarter results has given us a great start to the year, and I remain confident in our resilient and stable business model. This confidence stems from the essential nature of goods and services that our subsidiaries provide, along with our past operating performance in times of uncertainty, whether it be the pandemic, or the financial crisis of 2008-2009. These record results were generated during a time I would describe as challenging.

Speaker Change: Your agreement, which prohibits US released any of Canadian noticed financial information, we cannot provide any additional financial information on the transaction during today's call.

Speaker Change: The first quarter results I was giving us a great start to the year and I remain confident in our resilient and stable business model. This.

Speaker Change: This confidence stems from the essential nature of goods and services that are subsidiaries provide along with our past operating performance in times of uncertainty whether it be the pandemic when the financial crisis of 2008 2009.

Speaker Change: These record results were generated during that time I would describe as challenging.

Michael Pyle: During the quarter, we had uncertainty due to rapidly changing trade policy with Canada's largest and most important trading partner in the United States. We also have uncertainty of the Canadian election, coupled with continued geopolitical conflicts around the world. While cooler heads have seemingly prevailed, at least for now, there is still some risk of new tariffs, and we are continuing to monitor changes in policy at head office and in our subsidiary. To date, I can confidently say that we are not directly exposed to tariffs that are currently enforced. Our manufacturing subsidiaries are generally CUSMA compliant. for goods shipped and sold south of the border.

Speaker Change: During the quarter, we added uncertainty due to rapidly changing trade policy with Canada's largest and most important trading partner in the United States.

Speaker Change: We also had that certainly if the Canadian election, coupled with continued geopolitical conflicts around the world.

Speaker Change: While cooler heads are seemingly per failed at least for now there is still some risk of new tariffs and we are continuing to monitor changes in policy and head office and at our subsidiaries.

To date I can confidently say that we are not directly exposed to tariffs that are currently enforced.

Speaker Change: Our manufacturing subsidiaries are generally see U S made compliance.

Speaker Change: For good ships and so south of the border the greater risk is the unintended consequences of significant changes in foreign exchange rates or changes in business confidence.

Michael Pyle: The greater risk is the unintended consequences of significant changes in foreign exchange rates or changes in business costs. The foreign exchange volatility has seemed to level out more recently. However, towards the end of the quarter, we did start to see an eroding of some business. This caused a slight reduction in the number of conversions from inquiries to orders primarily in the manufacturing state. This is due to the fact our customers want a greater certainty when making purchasing or capital decisions. With cooler heads prevailing, we believe that those deferred purchases decisions will be executed in the shorter term as the risk continues to abate.

Speaker Change: The foreign exchange volatility has seemed to have a lot more recently, however towards the end of the quarter. We did start to see it eroding a sub business sentiment.

Speaker Change: This caused a slight reduction in the number of conversations conversions from inquiries to orders primarily in the manufacturing statements.

Speaker Change: This was due to the fact that our customers wanted greater certainty when making purchasing or capital decisions with cooler heads prevail and we believe that those deferred purchases decisions will be executed in the shorter term. That's the risk continues to abate. We are seeing a significant number of inquiries throughout our businesses during the quarter.

Michael Pyle: We are seeing a significant number of inquiries throughout our businesses during the quarter. The uncertainty has just resulted in a temporary decline in the latter part of the quarter in the quantum inquiries and the conversion of them into fixed orders, but I believe this is a very short-term issue.

Speaker Change: The uncertainty is just resulted in a temporary decline in the latter part of the quarter in the quantity of inquiries or the conversion of that would be the fixed orders, but I believe this is a very short term issue.

Michael Pyle: I will let Rich focus on the financial results for the operating segments.

Speaker Change: I will let rich focus on the financial results for the operating centers. However, prior to passing the call offer wanted to chat about three items.

Michael Pyle: However, prior to passing the call off, I wanted to chat about three items. Firstly, subsequent to quarter end, we announced an amendment to our credit facility. The availability of the facility was increased to $3 billion from $2.2 billion, and the maturity was extended to April 30, 2029. This amendment was done with no changes, no significant changes in terms or in price. This is a credit to Richard's team to get this facility across the line in a time of market turbulence. But I want to make it clear, the enhanced facility does not change our conservative attitude on debt leverage.

Speaker Change: Firstly subsequent to quarter end, we announced an amendment to our credit facility.

Speaker Change: Availability under the facility was increased to $3 billion from $2 2 billion and the maturity was extended to April 30 of 2029.

Speaker Change: The amendment was gagging with no changes no significant changes in terms or pricing.

Speaker Change: This is a credit to Richard's team to get this facility across the line and the type of market turbulence, but I want to make it clear it has specific or do you just don't change our conservative attitude on debt leverage our aggregate debt levels have been remarkably consistent for the last 20 years and we don't plan to change.

Michael Pyle: Our aggregate debt levels have been remarkably consistent for the last 20 years, and we don't plan to change that. The purpose of the upsize was to allow greater liquidity to execute on future acquisitions or contract wins and continued investment in growth capital expenditures. We've always made sure we have liquidity available to execute on opportunistic transactions. And this amended facility will allow us that in spades, as we have well over a billion dollars in available liquidity.

Speaker Change: That.

Speaker Change: The purpose of the upsize was to allow greater liquidity to execute on future acquisitions, our contract wins and continued investment in growth capital expenditures.

Speaker Change: We have always made sure we have equivalent liquidity available to execute on opportunistic transactions and this amended facility will allow us that in spades as we are well over $1 billion in available liquidity.

Michael Pyle: Secondly, you may notice that we slightly modified our MD&A based on feedback from some of our most significant shareholders and prospective investors. We are focusing on the numbers at the operating segment level and directional changes at the business line level to augment the gap. This should help simplify our somewhat complicated group of companies.

Speaker Change: Secondly, you may notice that we slightly modified our MD&A based on feedback from some of our most significant shareholders and prospective investors.

Speaker Change: We're focusing on the numbers of the operating segment level and directional changes at the business line level to augment the gout. This should help simplify our somewhat complicated group of companies.

Michael Pyle: Finally, I want to give my regular update on the status of significant contract proposals that remain outstanding.

Speaker Change: Finally, I wanted to give my regular update on the status of significant contract proposals that remain outstanding.

Michael Pyle: During the fourth quarter of 2024, we submitted our proposal to Australia. The Australian Government for their Maritime Surveillance Contract. Like Canada, the Australian Government just held their election on May 3rd, with the incumbent party, the Labour Party, being elected. We expect to hear back from the government midway during the year as the government weighs the various options submitted by the three bidders. As I previously commented, we believe we put together a very strong bid and we expect to have as good a chance as any other bidder. Additionally, with the geopolitical climate, we continue to see significant interest from other countries for additional ISR assets, and we are working through government budgets and needs assessments.

Speaker Change: During the fourth quarter of 2024, we submitted our proposal to Australia.

Speaker Change: The Australian government for their maritime surveillance contract like Canada, Australia government just held their election on may 3rd with the incumbent party. The Labour Party being elected we expect to hear back from the government Big way during the year as the government ways various options submitted by the three bidders.

Speaker Change: As I previously commented we believe we've put together a very strong bids and we expect to have as good a chance as any other better. Additionally, with the geopolitical climate, we continue to see significant interest from other countries for additional ISR assets and we are working through government budgets and Dean's assessments.

Michael Pyle: Our second aircraft for the UK Home Office contract is in the final steps of being modified with the goal for it to start flying midway through this year.

Speaker Change: Our second aircraft for the U K home office contract is in the final steps are being modified with the Gulf rates across start flying midway through this year.

Michael Pyle: Overall, we are very proud of our collective results for the quarter. We're also very confident in the direction the company is headed and the opportunities for acquisition and organic growth.

Speaker Change: Overall, we are very proud of our collective results for the quarter. We're also very confident in the direction. The company is headed and the opportunities for acquisition and organic growth.

Michael Pyle: Jake and Travis will focus on the outlook for our segment. for 2025.

Speaker Change: Jacob Travis will focus on the outlook for our segments for 2025, I'll now pass the call over to rich.

Richard Wowryk: I'll now pass the call over to Rick. Thank you, Mike, and good morning. For the first quarter of 2025, revenue of $668 million, adjusted EBITDA of $130 million, and free cash flow of $81 million and free cash flow maintenance gap acts of $26 million were all first quarter high watermarks. Revenue in our ANA segment increased by $14 million or 4% to $382 million. Adjusted EBITDA increased by $8 million or 8% to $102 million. The revenue and adjusted EBITDA increases were primarily related to the essential air services and aircraft sales and leasing business lines, which continued to post strong results period over period.

Rich: Thank you, Mike and good morning for the <unk>.

Rich: First quarter revenue of $668 million, adjusted EBITDA of $130 million and free cash flow of 81 million in free cash flow to maintenance Capex of 26 million were all first quarter high watermarks where are you in.

Rich: Our A&H segment increased by $14 million or 4% to $382 million adjusted EBITDA increased by $8 million or 8% to 202 minutes revenue and adjusted EBITDA increases were primarily related to the essential air services and aircraft sales and leasing business lines, which continued to post strong results period over.

Rich: <unk>.

Richard Wowryk: Revenues and adjusted EBITDA within our aerospace business line were lower due to the planned wind-down of certain training programs prior to the start of new programs and contracts. Additionally, one of our aerospace contracts changed from a performance-based logistics agreement to a time and materials arrangement, which results in more variability when comparing quarters.

Rich: Revenues and adjusted EBITDA within our aerospace business line were lower due to the.

Rich: Planned wind down of certain training programs prior to the startup of new programs and contracts. Additionally, one of our aerospace contracts changed.

Rich: Aerospace logistics agreement, so timing materials arrangement, which results in more variability when comparing quarters.

Richard Wowryk: Looking at the essential air services business line, the improvements were driven by three key factors. First, previous organic growth capital expenditures over the past number of years to both satisfy increased demand and contract wins in our Medevac operations primarily related to the BC and Manitoba Medevac contracts. Secondly, our average load factors improved, which has a direct improvement on adjusted EBITDA. And third, the impact of the routes flown on behalf of our Canada for which the comparatives did not have the full complement of routes. Our aircraft sales and leasing business line increases were driven by continued improvement in leasing activity and robust parts demand.

Rich: Looking at the essential Air services business line improvements were driven by three key factors.

Rich: Previous organic growth capital expenditures over the past 30 years to both satisfy increased demand and contract wins in a matter of fact operations primarily related to the BCA, Manitoba medevac contracts secondly, our average load factors improved which has a direct improvement on adjusted EBITDA in the third.

Rich: The impact of the reps, calling on behalf of Air Canada for which the competitors did not have the full complement of routes.

Rich: Our aircraft leasing business line increases were driven by continued improvement in leasing activity and robust parts demand.

Richard Wowryk: We are seeing significant demand in our leasing business for the aircraft and even more so on the engine side. Partially offsetting those increases was a reduction in large asset sales, which are more lumpy than our traditional parts business. Revenue in our manufacturing segment increased by $53 million or 23% to $286 million adjusted EBITDA increased by $14 million or 50% to $41 million. Our Environmental Access Solutions business line had increased revenues and adjusted EBIT primarily driven by the acquisition of Spartan, which had significant demand for its composite mats. The demand was so strong that we have indefinitely delayed a planned shutdown to upgrade certain equipment, as we need to keep the plant producing composite mats to meet the current demand.

Rich: 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 of large asset sales, which are more lumpy than our traditional parts business.

Rich: Revenue in our manufacturing segment increased by $53 million or 23% to 286, nine adjusted EBITDA increased by $14 million or 50% to 41 million.

Rich: Our environmental access solutions business line.

Rich: The increased revenues and adjusted EBITDA were primarily driven by the acquisition of Spartan, which had significant demand for our composite mats. The demand was so strong that we are indefinitely delayed planned shutdown to upgrade certain equipment as we need to keep the plant producing talks it matched to meet the current demand.

Richard Wowryk: Our team is currently investigating options to build a second plant based on the longer-term secular trends. Furthermore, we also saw an increase in the number of mats on rent, which is encouraging for future quarters.

Rich: Our team is currently investigating options to build the second plant based on the longer term secular trends.

Rich: Are there more we also saw an increase in the number of mass in red which is encouraging for future quarters.

Richard Wowryk: As we signal to the market and budgeted, our multi-story Windows Solutions business line revenue decreased along with adjusted EBITDA. The decreases are due to project delays and gaps in production. We have taken this opportunity to rationalize our manufacturing footprint such that when demand returns, we will be able to produce the same number of Windows with reduced overhead, which should drive longer term margins. We have also made the strategic decision to retain experienced staff, which will be required when the backlog and related production starts. We continue to see strong inquiries. However, due to the tariff risk, they have not converted to bookings at a pace consistent with the last half of 2024.

Rich: As we signaled to the market and budgeted our multi storey window solutions business line revenue decreased along with adjusted EBITDA at the decreases are due to project delays and gaps in production.

Rich: Opportunity to rationalize our manufacturing footprint such that when demand returns, we will be able to produce a number of windows with reduced overhead which should drive longer term margins.

Rich: We have also made the strategic decision to retain experienced staff, which will be required when the backlog unrelated to production start.

Rich: We continue to see strong inquiries, however, due to the tariff rates they have not converted into bookings at a pace consistent with the last half of 'twenty 'twenty four.

Richard Wowryk: Our precision manufacturing and engineering business line had a strong border from a revenue and profitability perspective. It was driven by customer demand across several industries, including telecommunications, technology, resource, and data centers. Overall Net Earnings were $7 million for the first quarter compared to $5 million in the prior year. The higher adjusted EBITDA was offset by depreciation amortization through the acquisition and growth capital investments and increases in interest costs due to the investment activity. Adjusted net earnings were $14 million compared to $10 million in the prior year. Pre-cash flow is $81 million compared to $62 million.

Rich: Our precision manufacturing and engineering business line had a strong quarter for revenue and profitability perspective, it was driven by customer demand across several industries, including telecommunications technology resource in data centers.

Rich: Overall net earnings.

Rich: We're 70 million for the first quarter compared to $5 million in the prior year the higher adjusted EBITDA that was offset by depreciation and amortization to be acquisition and growth capital investments and increases in interest costs due to the investment activity.

Rich: Net earnings were 14 million compared to 10 million in the prior year.

Cash flow was $81 million compared to $62 million.

Richard Wowryk: in the prior year. Pre-taxable maintenance capital expenditures was $26 million compared to $23 million in the comparative period, all with first quarter records. Maintenance capital expenditures in the first quarter of 2025 were higher by $17 million, however, were below our internal expectations due to the timing of events. The simple average maintenance capital expenditures over the four quarters in fiscal 2024 was $52 million, and therefore Q1 of 2025 is comparable to the average of last year. However, Q1 in the prior year was an anomaly due to the timing of maintenance events in 2024. Growth capital expenditures during Q1 were $56 million and were primarily driven by acquisitions of engines and aircraft in our aircraft sales and leasing business line to increase their leasing portfolio, coupled with modification expenditures incurred for the second aircraft with the UK Home Office and installation efforts for the full motion King Air simulator in Winnipeg.

Rich: In the prior year free cash flow capital expenditures was 26 million compared to 23 million and fair to all.

Rich: All first quarter records.

Rich: Capital expenditures in the first quarter of 2005 were higher by 17, like however were below our internal expectations due to the timing of that.

Rich: Average maintenance capital expenditures over the four quarters in fiscal 'twenty Wake Forest City to man and therefore Q1. That's 2025 is comparable to the average last year. However, Q1 in the prior year was an anomaly due to the timing of maintenance events.

Rich: In 2024.

Rich: Gross capital expenditures during Q1 were $56 million and were primarily driven by acquisitions of engines and aircraft in our aircraft leasing business line the increase to the leasing portfolio, coupled with modification expenditures incurred for.

Rich: For the second aircraft with the UK home office and installation efforts for these full ocean King Air Stimulators.

Richard Wowryk: From a working capital perspective, we had a nominal recovery of working capital during the quarter. We anticipate that working capital will continue to decline throughout the year as we have made several pre-payments and inventory purchases in our aircraft, sales, and leasing business line. Those purchases are expected to be monetized to the robust parts demand that we are experiencing. There have been some delays in parting out aircraft and engines into their most valuable components due to the availability at our MROs. We are actively managing our working capital and are working with each subsidiary team to convert the working capital into cash.

Rich: From a working capital perspective, we had a novel nominal recovery of working capital during the quarter, we anticipate that working capital will continue as the clients throughout the year as we have made several prepayments and inventory purchases aircraft leasing business that those purchases are expected to be monetized in the whereabouts parts demand that we're experiencing there had been some of them.

Rich: Ladies and parting out aircrafts and engines into their most valuable components due to the availability at our borrows.

Rich: Actively managing our working capital and are working through with each subsidiary theme you.

You can work on working capital into cash.

Richard Wowryk: Corporation's aggregate leverage, including both its senior credit facility and convertible debentures, remain relatively consistent, decreasing from $3.36 at December 31, 2024, to $3.22 at March 31, 2025. During the quarter, we called our Series K convertible debentures, which saw $78 million of the Series convert to equity. Our aggregate leverage ratio is the lowest it's been since 2019.

Rich: Corporations aggregate leverage including its both its senior credit facility and convertible debentures remained relatively consistent.

Rich: Leasing from 336 at December 31, 2024 to $3 two two at March 31, 2025 during the quarter, we called our series J convertible debentures, which saw $78 million of the serious converts to equity are anchored aggregate leverage ratio is the lowest it's been since 2019.

Richard Wowryk: During the quarter, we announced that we amended and extended our syndicated credit facility. We welcomed an additional financial institution into the syndicate, and I'm happy to report that the terms and pricing stayed consistent with our prior facility. The new facility increases our availability to $3 billion and extends the maturity to April of 2029. Currently, we have over $1 billion in available liquidity to deploy for new acquisitions or new grown capital expenditures. Consistent with Mike's comments, I want to reiterate that the increased revolver availability does not change our conservative view on debt or leverage. This facility just provides us with greater liquidity as and when needed.

Rich: During the quarter, we announced that we amended and extended our syndicated credit facility. We welcomed an additional financial institution in the syndicate and I'm happy to report that the tariffs and the pricing stayed consistent with our prior facility.

Rich: The new facility increases our availability to $3 billion and extended the maturity to April 'twenty to play that.

Rich: Currently we have over 1 billion in available liquidity to deploy for new acquisitions or new growth capital expenditures.

Rich: With Mike's comments I want to reiterate that the increase the revolver availability does not change our conservative view on debt or leverage. This facility just provides us with greater liquidity as and when needed.

Richard Wowryk: In the past, we have found opportunities for investment, whether it be in acquisitions or organic growth during periods of economic unrest. Having this capacity in 2025 will allow us to continue to be opportunistic and identify accretive opportunities to grow our company.

Rich: In the past, we have found opportunities for investment whether it be it acquisitions or organic growth during periods of economic unrest, having this capacity in 2025 will allow us to continue to be opportunistic and identify accretive opportunities to grow our company.

Richard Wowryk: I want to take this opportunity to thank our syndicate of lenders for their continued support. Our M&A pipeline remains very strong. We are confident that our balance sheet is in a position that allows us to execute on future transactions.

Rich: To take this opportunity to thank our syndicate of lenders for their continued support.

Jay: Our M&A pipeline remains very strong we are confident that our balance sheet is in a condition that allows us to execute on future transactions I will now turn the call over to Jay who will provide an update for the 'twenty 'twenty four 'twenty five.

Jake Trainor: I will now turn the call over to Jake, who will provide an update for 2025 outlook for aerospace and aviation. Thank you, Rich. Overall, we're expecting another strong year of growth from our aerospace and aviation segment. The growth investments made in the past, in addition to new opportunities, whether it be the Newfoundland and Labrador Medevac contract or the second aircraft for the UK Home Office, will all start to contribute to the profitability during the year. I'll specifically focus on the growth factors by business line. Our essential air service business will see growth driven by a multitude of factors when compared to prior period.

Jay: Our outlook for aerospace aviation. Thank you rich overall, we're expecting another strong year of growth from our aerospace and aviation segment.

Jay: The growth investments made in the past in addition to new opportunities whether it be the Newfoundland and Labrador medevac contract or the second aircraft for the U K home office will all start to contribute to the profitability during the year.

Jay: I will specifically focus on the growth factors by business line.

Jay: Our essential Air service business will see growth driven by a multitude of factors when compared to prior period. These include the full year deployment of Q4 hundred aircraft to provide services under our agreement with Air Canada. We also expect to continue to see strong load factors and growth across our network when compared to 2024.

Jake Trainor: These include the full year deployment of Q400 aircraft to provide services under our agreement with Air Canada. We also expect to continue to see strong load factors and growth across our network when compared to 2024. Lastly, we expect continued growth in our Medivac business with both the long-term Manitoba and BC Medivac contracts continuing to contribute to financial results for the full fiscal year, along with enhanced pricing under the Government of Nunavut contract, which was announced in the third quarter of 2024.

Jay: Lastly, we expect continued growth in our <unk> business with both the long term, Manitoba D. C met at that contracts continuing to contribute to financial results for the full fiscal year, along with enhanced pricing under the government of Nunavut contract, which was announced in the third quarter of 24.

Jake Trainor: As a reminder, the BC Medevac contract returns are expected to be muted until we redeploy the existing aircraft currently being used to service the contract. Offsetting some of these gains is the impact of continued labour shortages and supply chain challenges. Although we're not seeing a worsening of these dynamics, these challenges still remain specifically on aircraft parts and consumables.

Jay: As a reminder, the BC medevac contract returns are expected to be muted until we redeploy the existing aircraft currently being used to service the contract.

Jay: Offsetting some of these gains as the impact of continued labor shortages and supply chain challenges, although we're not seeing a worsening of these dynamics. These challenges still remain specifically on aircraft parts of consumables.

Jake Trainor: Canadian North continues to not be included in our forward-looking guidance. The transaction requires complex regulatory approvals, and while we're confident that it will ultimately be approved, there is uncertainty as to the specific timeline. As I commented in the year-end call, this acquisition is very strategic to EIC. The Canadian North routes are highly complementary to our existing routes, as there's no overlap with our legacy airlines. In addition, or excuse me, the addition of Canadian North will allow us to expand our geographies to be served to be all-inclusive within Nunavut by adding the two regions we do not currently serve, and will also allow expansion into the Northwest Territories based on Canadian North's existing routes.

Jay: Canadian North continues to not be included in our forward looking guidance the transaction requires complex regulatory approvals and while we're confident that it will ultimately be approved there is uncertainty as to the specific timeline.

Jay: As I commented in the yearend call. This acquisition is very strategic to EIC. The Canadian North roots are highly complementary to our existing routes as there is no overlap with or legacy Airlines. In addition.

Jay: Gives me. The addition of Canadian North will allow us to expand our geographies to be served to be all inclusive within units that by adding the two regions. We do not currently served and will also allow expansion into the northwest territories based on Canadian north existing routes.

Jake Trainor: It also provides the EIC companies with jet service, and therefore provides opportunities to future and current customers of our various airlines. The decreases are expected to be offset partially by strong-tempo flying for our surveillance contracts and the second aircraft going into service for the UK Home Office contract midway throughout the year. Our aircraft sales and leasing business is also expected to experience growth, as Mike and Richard talked about the investment in both working capital for future part sales and investment in aircraft and engines within the leasing portfolio. We continue to expect growth in the leasing revenues into 2025 as we place those aircraft and lease engines on lease.

Jay: It also provides the EIC companies with jet service and therefore, it provides opportunities to future and current customers of our various airlines.

Jay: The aerospace business lines revenue and EBITDA are expected to decline for the second quarter due to the transition between the wind down of certain contracts in our training business and the timing of the startup of new contracts, coupled with the change of one aerospace support contract from a performance based logistics agreement to a time and materials arrangement, which means that.

Jay: The revenues and profitability will be more lumpy than in the past.

Jay: The decreases are expected to be offset partially by strong temple flying for our surveillance contracts and the second aircraft going into service for the U K home office contract midway through the year.

Jay: Our aircraft sales and leasing business is also expected to experience growth as Mike and Richard talked about the investment in both working capital for future part sales and investment in aircrafts and engines within the leasing portfolio.

Jay: We continue to expect growth in the leasing revenues into 2025, as we place those aircraft and lease engines on lease with.

Jake Trainor: With the increase in inventory, we also anticipate greater part sales throughout the year. On a long term basis, we expect maintenance capital expenditures to increase in line with increases in adjusted EBITDA in our aerospace and aviation segment, which is the biggest driver of our consolidated maintenance cap As Richard mentioned, the prior year Q1 comparables were abnormally low due to timing of events and shop availability. This quarter's maintenance capital expenditures were below our internal expectations due to timing of events. However, it was more consistent with the simple average of total maintenance capex for 2024. Growth investments in 2025 include capital expenditures for 8 to 10 new King Air aircraft, which will be used in the BCEHS contract.

Jay: With the increase in inventory, we also anticipate greater part sales throughout the year.

Jay: On a long term basis, we expect maintenance capital expenditures to increase in line with increases in adjusted EBITDA in our aerospace and aviation segment, which is the biggest driver of our consolidated maintenance Capex.

Jay: As Richard mentioned, the prior year Q1 comparable as were abnormally low due to timing of events and shop availability.

Jay: This quarter's maintenance capital expenditures were below our internal expectations due to timing of events. However, it was more consistent with the simple average of total maintenance Capex for 2024.

Jay: Growth investments in 2025 include capital expenditures for eight to 10, New King Air aircraft, which is which will be used in the BC EHS contract.

Jake Trainor: Certain of those aircraft were originally expected to be delivered in 24, however, due to the strike at the manufacturer, they're expected now to be received in 2025, but the first aircraft set to be received in June and a relatively regular cadence going forward. We also anticipate some capital expenditures related to the final modifications on the second UK Home Office aircraft, although the vast majority of these expenditures have already been occurred.

Jay: Certain of those aircrafts were originally expected to be delivered in 'twenty. Four however, due to the strike at the manufacturers are expected now to be received in 2025 with the first aircrafts set to be received in June and are regularly are relatively regular cadence going forward.

Jay: We also anticipate some capital expenditures related to the final modifications on the second U K home office aircrafts, although the vast majority of these expenditures have already been occurred.

Travis Muhr: And lastly, Regional One is always working on opportunistic aircraft and engine acquisitions, which may result in growth investments being made in the aircraft sales and leasing I'll now pass it off to Travis to provide some commentary on the menu.

Jay: And lastly, regional one is always working on opportunistic aircraft and engine acquisitions, which May result in growth investments being made in the aircraft sales and leasing business.

Jay: I'll now pass it off to Travis to provide some commentary on the manufacturing segment. Thanks.

Travis Muhr: Thanks, Jake, and good morning. We're anticipating continued growth in our revenues and profitability for our manufacturing segment for the remainder of the year when compared to fiscal 2024. The growth is expected for two reasons. Firstly, we see the continuation of the strengthening business environment for many of our manufacturing segment subsidiaries, coupled with the annualized impact of Duomel and Spartan in our environmental access solutions business line. All of the businesses within the manufacturing segment were experiencing a strong level of customer inquiries in 2025. There have been some concern over the risk of tariffs in the shorter term, and we saw a small reduction from a customer booking perspective in the latter part of the quarter and into April when the US trade policy was rapidly changing.

Travis Mayer: Thanks, Jake and good morning.

Travis Mayer: We're anticipating continued growth in our revenues and profitability for our manufacturing segment for the remainder of the year when compared to fiscal 2020 for.

Travis Mayer: The growth is expected for two reasons, firstly, we see the continuation of the strengthening business environment for many of our manufacturing segment subsidiaries, coupled with the annualized impact of do a mountain Spartan and our environmental access solutions business line.

Travis Mayer: All of the businesses within the manufacturing segment were experiencing a strong level of customer inquiries in 2025 there've been some concern over the risk of tariffs in the shorter term and we saw a small reduction from a customer booking perspective in the latter part of the quarter and into April when the U S trade policy was rapidly changing.

Travis Muhr: But as the tariff situation stands today, we have not been directly impacted by tariff. As Mike had commented, the vast majority of our products that we produce are Canada-U.S.-Mexico agreement compliance, and therefore the greater risk of tariffs would relate to declining business sentiments and perhaps finding supply chain alternatives to guarantee supply. Our Environmental Access Solutions business line is expected to generate returns significantly higher than the conservative periods for the remainder of the year. As Rich and Mike had mentioned, Spartan has experienced very strong demand for its composite solutions and has effectively sold out of their manufacturing capacity for the near term.

Travis Mayer: But as the tariff situation stands today, we have not been directly impacted by tariffs.

Travis Mayer: As Mike had commented the vast majority of our products that we produce are Canada U S. Mexico agreement compliance and therefore, the greater risk of tariffs would relate to declining business sentiment and perhaps supplies finding supply chain alternatives to guarantee supply.

Travis Mayer: Our environmental access solutions business line is expected to generate returns significantly higher than the comparative periods for the remainder of the year as.

Travis Mayer: As rich and Mike had mentioned Spartan had experienced very strong demand for its composite matting solutions and is effectively sold out of their manufacturing capacity for the near term.

Travis Muhr: Also, the FAW Trackout product line is seeing strong demand. This demand coupled with low resin prices has driven enhanced profitability. Due to the strong demand for its composite mats, we have indefinitely deferred the temporary plant shutdown that was planned to upgrade certain manufacturing equipment. We have started down the path of actively evaluating a second plant as we see the long-term trends in the composite mat industry as the geographic and sector usage continues to expand and take market share from the traditional wood mat industry in the U.S. Furthermore, with the change in the U.S. administration and the Canadian election, we anticipate seeing increased demand in several sectors.

Travis Mayer: Also the board tracker product line is seeing strong demand this.

Travis Mayer: This demand coupled with low resin prices has driven an enhanced profitability due.

Travis Mayer: Due to the strong demand for its composite mats, we even definitely deferred the temporary plant shutdown that was planned to upgrade certain manufacturing equipment. We have started down the path of actively evaluating a second plant as we see the long term trends in the composite mat industry as the geographic and sector usage continues to expand and take market share from the traditional wooden.

Travis Mayer: That industry in the U S.

Travis Mayer: Furthermore, with the change in the U S administration and the Canadian election, we anticipate seeing an increased demand in several sectors.

Travis Muhr: We have talked a lot about our bullish view on the transmission and distribution sector as electric grids have to be expanded and hardened for the new electricity demand. But more recently, we've also seen renewed interest in press coverage in pipeline and oil and gas sectors, which are legacy strengths for the Wooden Map product line. As expected, our multi-story window solution business line revenue and adjusted EBITDA was lower than the comparative period. We have signaled our expectations in the year-end call, and the drivers remain the same for the remainder of the year. The period-over-period declines are expected due to the heightened interest rates in 2023 and into 2024 that resulted in reduced bookings and product manufacturing for 2025.

Travis Mayer: We've talked a lot about our bullish view on the transmission and distribution sector as electric grids has to be expanded and hardened for the new electricity demands.

Travis Mayer: But more recently, we've also seen renewed interest in press coverage and pipeline and oil and gas sectors, which are legacy strengths for the wooden map product line.

Travis Mayer: As expected our multi story a bit of Windows solution business signed revenue and adjusted EBITDA was lower than the comparative period, we had signaled our expectations in the year end call and the drivers remain the same for the remainder of the year the.

Travis Mayer: Period over period declines are expected due to the heightened interest rates in 2023 and into 2024 that resulted in reduced bookings and product manufacturing for 2025.

Travis Muhr: As a reminder, projects generally booked will be manufactured 18 to 24 months after their booking date. Secondly, for the project scheduled for 2025, we anticipate margin pressures, anticipated margin pressures due to the type of projects booked. And lastly, there are operational integration costs as we continue to streamline the manufacturing footprint. We took the opportunity to bring together the manufacturing such that upon return to historical capacity, we'll be in a much more efficient and lean because of the reduced overhead and optimized production process. Quoting in Canada and the U.S. continues to be extremely active, we remain very bullish on this business line as the longer term fundamentals which drive demand being an acute shortage of affordable housing remain incredibly strong.

Travis Mayer: As a reminder.

Travis Mayer: <unk> generally books will be manufactured 18 to 24 months after their booking dates.

Secondly for the projects scheduled for 2025, we anticipate margin pressures.

Travis Mayer: Anticipated margin pressures due to the type of the projects booked and lastly, there are operational integration costs as we continue to streamline their manufacturing footprints.

Travis Mayer: We took the opportunity to bring together the manufacturing such that upon returned to historical capacity will be in a much more efficient and lean because of the reduced overhead and optimize production processes.

Travis Mayer: Quoting in Canada, and the U S continues to be extremely active we remained very bullish on this business line as the longer term fundamentals, which drive demand being an acute shortage of work of affordable housing remain incredibly strong.

Travis Muhr: 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 center industry. Anticipated maintenance CapEx are expected to be slightly higher than the prior year due to the timing of replacements, and more specifically, due to the anticipated growth in the environmental access solutions and precision manufacturing and engineering business line. We're also anticipating growth capex to be incurred in each of the business lines, but they should be relatively consistent with the prior year.

Travis Mayer: The 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.

Travis Mayer: We're seeing strength across various sectors, including defense telecommunications technology resource in data Center industries.

Travis Mayer: <unk> maintenance capex are expected to be slightly higher than the prior year due to the timing of replacements and more specifically due to the anticipated growth in the environmental access solutions and precision manufacturing and engineering business lines.

Travis Mayer: We're also anticipating growth capex to be incurred in each of the business lines, but they should be relatively consistent with the prior year.

Travis Muhr: The growth capex and environmental access solutions business line will depend on the market dynamics as they continually reassess their fleet based on expected future market conditions. But we do expect an investment in fleet along with the buildup of maps for a composite rental fleet in the US.

Travis Mayer: The growth Capex and environmental access solutions business line will depend on the market dynamics as they continually reassess their fleet based on expected future market conditions, but we do expect an investment in fleet along with the buildup of mats for our composite rental fleets in the U S. I'll now pass the call back to Mike.

Michael Pyle: I'll now pass the call back to Mike. Overall, I'm very encouraged by the state of our business to start 2025. EIC as a company is characterized by resiliency and stability, and our results and outlook for 2025 represent those descriptors to a T. We remain confident in the guidance we have provided the market.

Travis Mayer: Overall, I'm very encouraged by the state of our business to start 2025.

Travis Mayer: She is a company is characterized by resiliency and stability in our results and outlook for 2025 represents those descriptors to antique.

Travis Mayer: We remain confident in the guidance we've provided the market.

Michael Pyle: Thank you for your time this morning.

Travis Mayer: Thank you for your time this morning, and we'd now like to open the call to questions operator.

Operator: And we'd now like to open the call to questions.

Operator: Operator.

Travis Mayer: Thank you.

Operator: We will now conduct the question and answer session. If you do have a question, please press star followed by the number 1 on your touchtone phone. You will hear a tone acknowledging a request. Your questions will be pulled in the order they are received. Please ensure that you leave your handset, if you are using a speakerphone, before pressing any button.

Travis Mayer: We will now conduct a question and answer session. If you do have a question. Please press star followed by the number one on you touched on phone.

Speaker Change: Here at Cowen acknowledging your request your question sort of a fault in the order they are received.

Speaker Change: Essentially that you lift your handset if you're using a speaker phone before pressing Yankees one moment. Please for your first question.

Operator: One moment, please, for your first question.

Matthew Lee: Your first question comes from the line of Matthew Lee from Caneco Genuity. Please go ahead. Hey, morning, guys. Morning, Matt. Thanks for my question.

Speaker Change: Your first question comes from the line of Matt Journey from Canaccord Genuity. Please go ahead.

Matt Journey: Hey, Good morning, guys. Good morning, My question Yeah. Thanks, taking my question I.

Matthew Lee: I want to maybe touch on the manufacturing business. Revenue growth there up 10% organic by my I think that's stronger than anyone really expected here.

Matt Journey: I Wonder maybe touch on the manufacturing business revenue growth, they're up 10% organic by my math.

Speaker Change: That's China anyone really expected here.

Michael Pyle: You know, I suspect it's related to environmental services, but could you maybe talk about whether there are any kind of one-time items in the quarter and maybe what differences you're seeing in demand between the U.S. Sure, there was really no one time or special contracts or things that would drive our revenue or our EBITDA. I think what you see across the board is continued strong demand for the products we produce. The matting business was strong in Canada and in the US. In Canada, we're happy to see the number of mats on rent increase, which is a great future indicator of the business.

Speaker Change: I suspect is related to environmental services, but could you maybe talk about whether there are any kind of onetime items in the quarter and maybe what differences you are seeing demand between the U S and Canada.

Speaker Change: Sure there was really no one time or special contracts or things that would drive.

Speaker Change: Our revenue or our EBITDA.

Speaker Change: Thank you.

Speaker Change: You see across the board.

Speaker Change: Is is continued strong demand for the products we produce that.

Speaker Change: The mounting business was strong in Canada and in the U S and Canada, we're happy to see the number of masks on rent increase which is a great future.

Speaker Change: Future indicator of the business.

Michael Pyle: The sale of mats, wood mats in Canada is part of our business, but it is much more intermittent and you'll get big orders and you'll go periods without orders. And so the core revenue driver is our mats on rent and that's improving. We're currently in the slowest part of the year for that business because of the winter road restrictions coming off and there's during breakup, there's limitations, but the outlook is strong, particularly as we go later in the year in transmission and distribution. If the Canadian government follows through with its plans on pipelines, that's very bullish for the medium and longer term for our business.

Speaker Change: The sale of Mats would pass in Canada as part of our business, but it is much more intermittent and you'll get big orders and you'll go periods without orders.

Speaker Change: So.

Speaker Change: The core revenue driver is our mats are rented that's improving.

Speaker Change: We're currently in the slowest part of the year for that business because of the winter road restrictions coming often there's during breakup there's limitations are.

Speaker Change: But the outlook is strong, particularly as we go later in the year in transmission and distribution.

Speaker Change: If the Canadian government follows through with its plans on pipelines.

Speaker Change: Very bullish for the medium and longer term for our business.

Michael Pyle: And then in the US, we've seen a continued increase in uptake in using composites versus wood mats. Wood mats are still the main dominant part of the marketplace, but as that moves towards composite mats, that's great for our business. We were effectively sold out in the first quarter and that's a condition that has continued through this quarter and into later in the year.

Speaker Change: And then there's the U S. We've seen a continued increase in uptake in using competence composite versus wood mats wood mats are still the main dominant part of the marketplace, but that's not moves towards composite not so that's great for our business, we were effectively sold out.

Speaker Change: The first quarter.

Speaker Change: And that is a condition that has continued through this quarter and into later in the year.

Speaker Change: <unk>.

Michael Pyle: We have decided to postpone. renovation of our plant. And we're fully looking at the ability of us to build a second plant to increase our production to take advantage of the market conditions. I'd also like to throw in that the precision metal was strong across the board, no big home runs. But consistent busy across the board. We, if anywhere, we were concerned about tariffs. It was in this area because we do sell across the border directly and indirectly, but most of our stuff was Kusma. Unknown Executive, Amr Ezzat, Krista Friesen, Cameron Doerksen, James McGarragle, Jonathan Unknown Executive, Amr Ezzat, Krista Friesen, Cameron Doerksen, James McGarragle, Jonathan the window business was slower, but no slower than what we thought it was going to be.

Speaker Change: We have decided to postpone.

Speaker Change: Renovation of our plant and were fully we are looking at the.

Speaker Change: The ability of us to build a second plant to increase our production to take advantage of the market conditions.

Speaker Change: Also like to throw in the precision metal was strong across the board no big home runs but.

Speaker Change: Consistent busy across the board.

Speaker Change: If anywhere we work concerned about tariffs it was in this area because we do sell across the border directly and indirectly, but most of our stuff was cusmano comply.

Speaker Change: Compliant and as a result, we had very little tariff tariff.

Speaker Change: Challenges.

Speaker Change: The window business was slower, but no slower than what we thought it was going to be and that's why we're so confident in our.

Matthew Lee: And that's why we're so confident in our, in our guidance in that where we've had a couple of challenges, they were anticipated. And in some areas were probably a little better than we thought we would be. That's good color.

Speaker Change: In our guidance and that's where we've got a couple of challenges were anticipated and in some areas, we're probably a little better than we thought we would be.

Speaker Change: That's good color.

Michael Pyle: You know, on the Spartan, you know, the second facility, is there any, you know, timeline on that? Is that kind of in 2025 capex plans? Or is that something more longer whether we get to it late this year or early next year, we're in the midst of designing and there's there's really a couple decisions to be made about where we place it. That business is very requires access to plastic pellets, which are generally produced in the Texas, Louisiana area where the refineries are. So we're considering building a plant in that market to reduce the transport costs of the raw materials, or alternatively, to keep it close to our customers where we have the other plant in Florida.

Speaker Change: On the Spartan.

Speaker Change: The second facility is there any timeline on that is that kind of in 2025, capex plans or is that something more longer term.

Speaker Change: Whether we get to it late this year early next year, we're in the midst of designing and there's there's really a couple of decisions to be made about where we place it.

Speaker Change: That business is very reserve.

Speaker Change:

Speaker Change: It requires.

Speaker Change: Access to.

Speaker Change: Plastic pellets, which are generally produced in the Texas, Louisiana area, where the refineries are so we're considering building applying to that market to reduce the transport cost of the raw materials or alternatively to keep it close to our customers, where we have the other plants in Florida that decision.

Matthew Lee: That decision hasn't been made yet. And when it is, that will actually enable us to come up with a timeline. I'm hoping by the end of the next quarter, we'll be able to have much more color on when and where that plant's going. Okay, that's that's great.

Speaker Change: It hasn't been made yet and why that is that will actually enable us to come up with a timeline I'm, hoping by the end of the next quarter, we'll be able to have much more color on when and where that plant's going.

Matthew Lee: And then maybe just stopping the airline quickly, you know, revenue was a bit lower than expected.

Speaker Change: Okay. That's great and then maybe just something in the airlines quickly revenue was a bit lower than expected and our senior just changing disclosure a little bit.

Michael Pyle: And I've seen you just change your disclosure a little Can you just maybe help us understand what kind of revenue growth that Regional 1 had this quarter versus maybe the rest of the airline? Yeah, Regional One was a star performer. We've talked for a few quarters about how the aircraft on lease and the engines on lease are growing. That continues to be the case. And we expect continued growth in the leasing portfolio in the balance of the year. The core of the business is parts We're parting out aircraft, and that's what drives the business, and it was really strong in the quarter, offset somewhat by smaller big-ticket sales.

Speaker Change: Can you just help us understand what kind of revenue growth I really don't want to add this quarter versus maybe the best airline business.

Regional one what was the star performer.

Speaker Change: <unk>.

Speaker Change: We've talked for a few quarters about how the aircrafts on lease and the engines on lease or growing that continues to be the case.

Speaker Change: And we expect continued growth in our leasing portfolio and the balance of the year.

Speaker Change: The core of the business is part sales.

Speaker Change: We're parting out aircraft in that that's what drives the business and it was really strong in the quarter.

Speaker Change: Offset by somewhat by smaller big ticket sales those are always lumpy and they have a much bigger impact on revenues as they do on EBITDA, because large ticket items tend to be big numbers, but low margins and so you can see that it gives the aviation business as a whole.

Michael Pyle: Those are always lumpy, and they have a much bigger impact on revenue than they do on EBITDA, because large-ticket items tend to be big numbers but low margins. And so you can see that, because the aviation business as a whole, margins strengthened and across the board, quite frankly, the same in manufacturing. So the performance from regional one explains a significant piece of what's going on in aviation. The balance of aviation, quite frankly, is strong as well. The real issue is just we had one aerospace contract that went from guaranteed in-the-air maintenance to maintenance on an ad hoc basis, because it changes what the customer wants.

Speaker Change: Margins strengthened.

Has the board quite frankly, the same in manufacturing so.

Speaker Change: No.

Speaker Change: The <unk>.

Speaker Change: Performance from regional one explains a significant piece of what's going on in aviation.

Speaker Change: Yes.

Speaker Change: The balance of aviation quite frankly is strong as well the real issue is just we had one aerospace contract that went from guaranteed in the air maintenance too.

Speaker Change: On maintenance on an AD hoc basis, because it changes what the customer wants.

Michael Pyle: That will be fully offset as we go through the year by the other programs that come into play, particularly with the home office.

Speaker Change: That will be fully offset as we go through the year by.

Speaker Change: The other programs that come into play, particularly with the.

Speaker Change: The home office so.

Matthew Lee: And I guess on the northern part of our business that we're best known for, it's just more of the continued to grow, grow consistently, enhance profitability, and we can't wait to add Canadian North to this. Canada now has a new government, which means today we'll have a new transport minister, which means we'll have a group to be able to approve our transaction, and then we'll be able to give the market some guidance on what that's going to mean in 2025, and more importantly in full year 2026. Okay, that's helpful.

Speaker Change: And I guess on the northern part of our business that we're best known for.

Speaker Change: It's just more of the same but continued to grow grow consistently enhanced profitability and we can't wait to add Canadian north to this.

Speaker Change: Canada now has a new government, which means today, we'll have a new transport minister, which means we'll have a group to be able to approve our transaction and then we'll be able to give the market. Some guidance on what that's going to mean in 'twenty five and more importantly in full year 'twenty six.

Speaker Change: Okay. That's helpful. I mean, just from my perspective, I think it is helpful to get the split in the near future between the regional one and the rest of the airline because those business are just so different.

Matthew Lee: I mean, just from my perspective, I think it is helpful to get the split in the future between the regional one and the rest of the airline, because those businesses are just so different, but But yeah, I mean, that's up to you guys, I guess. Thanks, I appreciate it. Thanks, Bob.

Speaker Change: But yes, I mean, that's up to you guys I guess, thanks, Alan I appreciate any color.

Speaker Change: Thanks, Matt.

Speaker Change: Thank you and your next question comes from the line of James Mechanical but might we see capital markets. Please go ahead.

James McGarragle: And your next question comes from the line of James McGarragle from RBC Capital Market. Please go ahead.

Louis: Good morning. This is Louis on for James.

Speaker Change: Good morning. Good morning. This is Louis on for James.

Louis: Hi Rose Can you give us some some color on the policy change regarding the maintenance CapEx for Regional 1? Overall, how should we be thinking about maintenance CapEx for the remainder of the year? Is it still in line with the increase in EBITDA? Generally speaking, approximately, yes. It will increase maintenance capex slightly over time when we're busy like we are now.

Speaker Change: Hi, Louis.

Speaker Change: Can you give us some some color on the policy change regarding the maintenance Capex for regional one overall, how should we thinking how should we be thinking about maintenance capex for the remainder of the year because it's still in line with the increase in EBITDA.

Speaker Change: Generally speaking approximately yes it will.

Speaker Change: We'll increase maintenance capex slightly overtime when were busy like we are now to.

Michael Pyle: To explain this, I kind of got to go back and give you a multi-period explanation. So, up until COVID, we had always used depreciation of our lease aircraft as a proxy for maintenance capex. So, as the planes were used up, we had to reinvest to maintain the ability to earn income. When COVID came, the planes were sitting on the ground and depreciation was no longer a proxy for what we had to invest because the planes weren't being used up. So, we switched at that point to using our actual cash investments in that fleet as a proxy because that was what we were spending to maintain the ability of the fleet to generate income.

Speaker Change: To explain this I kind of got to go back and give you a.

Speaker Change: A multi period explanation so up until Covid, we had always used depreciation of our leased aircraft as a proxy for maintenance capex. So as the planes were used up we had to reinvest to maintain.

Speaker Change: The ability to earn income.

Speaker Change: When COVID-19 came the planes for sitting on the ground and depreciation was no longer a proxy for what we do invest because the planes work being used up so we switched at that point to using our actual cash investments in that fleet as a proxy because that was what we were spending to maintain.

Speaker Change: The ability of the fleet to generate income however, as we've got busier and busier.

Michael Pyle: However, as we've gotten busier and busier, cash doesn't always catch everything because there'll be some aircraft that we choose not to maintain and part out. And so, we see a decline in the ability to generate income if we didn't replace those aircraft. So, we've switched it now to where we're including in maintenance capex an hourly charge for whatever we're using up on the aircraft. So, the new methodology will automatically increase maintenance capex in times where we're flying a lot and decrease it in times when we're flying less. It isn't a big change philosophically other than we wanted something that automatically adapts to changes in the And so it's in line with us wanting to be conservative in calculating maintenance capex so that if all we were to invest is maintenance capex, our ability to generate income wouldn't change.

Speaker Change: Cash doesn't always catch everything because there'll be some aircraft that we choose not to maintain and part out and so that would we still see a decline in the ability to generate income. If we did replace those aircraft. So we switched it down to where were including in maintenance Capex.

Speaker Change: <unk> and hourly charge for whatever we're using up on the aircraft. So the new methodology will automatically increase maintenance Capex at times, where we're flying a lot and decrease it in times when were flying less of.

Speaker Change: It.

Speaker Change: It isn't a big change philosophically other than we wanted something that automatically adapt to changes in the marketplace and so now because the bar.

Speaker Change: Our fleet is busier. It will result in a higher maintenance cost in the near term, but it's supported by the growing revenues outside Conversely, if we went into a big recession and that slowed so what our maintenance reinvestment.

Speaker Change: And so it's in line with us wanting to be.

Speaker Change: Conservative and calculating maintenance capex, so that if all we were to invest as maintenance capex, our ability to generate income would change.

Speaker Change: Okay.

Louis: Okay, thanks for the color on that.

Speaker Change: Okay. Thanks for the color on that and then you decided the calling of the debentures and the amended facilities sets you up well for further acquisitions can you talk about the pipeline right now and where you see the most opportunity within your operating segments.

Michael Pyle: And then you cited the calling of the debentures and the amended facility sets you up well for further acquisitions. Can you talk about the pipeline right now and where you see the most opportunity within your operating segment? Yeah, it's a unique period in our M&A stuff. I would say we're actually looking at a fewer number of transactions, but the size of the quality of the transactions we're looking at is much higher. I would also say that the things we're looking at are very tangential to what we're already doing. So there's no new kind of we're not moving into a window business or moving into the batting business.

Speaker Change: Yeah, it's it's a unique period in our M&A stuff.

Speaker Change: I would say, we're actually looking at a fewer number of transactions, but the size of the quality of the transactions. We're looking at is much higher.

Speaker Change: I would also say that the things we're looking at are very tangential to what we're already doing so theres no do kind of we're not moving into a window business are moving into.

Michael Pyle: They're all things that are related to what we're doing. And if we're successful, and ultimately coming to an acquisition, there'll be things that the market will likely go, Oh, that makes sense. It fits in with this. And so I would say there's probably more on the aviation side right now. But that is really just happenstance. It's not like we're focusing there. It's where the good offers, we have a couple of interesting opportunities that Adam and his team are very far into. So we'll see whether we can pull those off. And then we're also very excited about getting the Canadian North deal across the line, because that's going to give us coverage across all the North and let us do what we do best, which is enhance the performance and enhance the service to the customer.

Speaker Change: The battery business, they're all things that are related to what we're doing and if we're successful and ultimately coming to an acquisition there'll be things that the market will likely go up all that makes sense it fits in with this and so.

Speaker Change: I would say, there's probably more on the aviation side right now, but that is really just happenstance, it's not like we're focusing there. It's worth a good offers we have a couple of interesting opportunities that are out of it and his team are are very far into so we will see whether we can pull those off and then we're also very excited about getting.

Speaker Change: Got the doors and J.

Speaker Change: J D in north deal across the line because that's gonna give us coverage across all the doors and let US do what we do best which is enhance the performance and enhance the service to the customer.

Speaker Change: Yeah.

Michael Pyle: Thanks for the color, Mike.

Speaker Change: Thanks, Thanks for the color Michael I'll turn the line over.

Louis: I'll turn the line over.

Operator: Thank you.

Speaker Change: Thank you.

Steve Hansen: And your next question comes from the line of Steve Hansen from Raymond James. Please go ahead. Good morning, Steve.

Speaker Change: Thank you and your next question comes from the line of Steve Hansen from Raymond James. Please go ahead.

Speaker Change: Good morning, Steve.

Steve Hansen: Good morning, guys. Thanks for the time, Mike can you speak just a little bit more to the timeline on the Aussie contract. He referenced the change in government there are I guess.

Steve Hansen: Mike, can you speak just a little bit more to the timeline on the Aussie contract? You referenced the change in government there, or I guess the incumbents winning? You know, how does that change the prospects or the process from your perspective? And just remind us where we're at from sort of a selection basis and what you expect for the balance of the year? Sure. Yeah. The Australian contract has been a long process. We've been working on this for years. We've gone through expressions of interest, and they've pared down the number of potential bidders to the point where when the bids went in last, at the end of last year, there was three left.

Speaker Change: Cummins winning.

Speaker Change: How does that change the prospects or the process from your perspective, and just remind us where we're at from sort of a selection basis and what you.

Speaker Change: You have to expect for the balance of the year.

Speaker Change: Sure.

Speaker Change: The Australian contract, there's been a long process, we've been working on this for years.

Speaker Change: We've gone through expressions of interest and they pared down the number of potential bidders to the point, where when the bids went in last at the end of last year. There was three three left.

Speaker Change: <unk>.

Michael Pyle: The re-election of the Labour Party doesn't really change much from our point of view on our likelihood of winning, but what it does do is it probably accelerates the government's ability to make a decision, and that's because it's the same people and in fact the same minister responsible for this contract is in place. So we expect to hear something before we report to you with our Q2 results in August. It could be as rapidly as a week or two from now or as slow as a few months from now. Governments do what governments do. We remain cautiously optimistic.

Speaker Change: The reelection of the labor.

Speaker Change: Party doesn't really change much from our point of view on our likelihood of winning because.

Speaker Change: But what it does do is it probably accelerates the government's ability to make a decision and that's because it's the same people and in fact, the same minister responsible for this contract is in place. So we expect to hear something before we report to you with our Q2 results in August.

Speaker Change: It could be it could be as.

Speaker Change: As rapidly as a week or two from now or as slow as a few months from now governments do what governments do.

Speaker Change: We remain cautiously optimistic we're up against some good competitors, but I believe the bid we put together from a tactical point of view is as good as any could be end up.

Michael Pyle: We're up against some good competitors. But I believe the bid we put together from a technical point of view is as good as any could be. And we're proud to be a Canadian supplier in the world market today. So that's not going to hurt us any either. Fair enough.

Speaker Change: We're proud to be a Canadian supplier in the world market today. So.

Speaker Change: That's not going to hurt us any either.

Michael Pyle: And I think you referenced it earlier, but has anything changed from your perspective around the ability to close Canadian North? We've obviously got a new government in place. here in Canada, but no no change from your perspective on the ability to close. No, the process has gone well. We've done a lot of work with the Competition Bureau and with the Civil Service on the side of transport, both of which we've made good progress with. So, if anything, I'm more confident in our ability to close. The timeline should become apparent reasonably quickly with what the transport minister ultimately decides.

Speaker Change: Fair enough and I think you've referenced it earlier, but has anything changed.

Speaker Change: From your perspective around the ability to close Canadian North you've obviously got into government place.

Speaker Change: I read that the government of Canada, but no no change from your perspective or the ability to close.

Speaker Change: No. The process is going well, we've got a lot of work with the competition Bureau AD with the civil service on the side of transport both of which we made good progress with so.

Speaker Change: If anything I'm I'm I'm more confident in our ability to close.

Speaker Change: The timeline should become apparent.

Speaker Change: <unk> quickly with what the transport Minister ultimately decides and so we're looking forward to whoever that is getting into their job and hopefully finding our file on the desk pretty quickly, but there'll be a lot on the desk of any new transport Minister. So it's hard for me to say exactly but I would be.

Steve Hansen: And so we're looking forward to whoever that is getting into their job, and hopefully finding our file on the desk pretty quickly. But there'll be a lot on the desk of any new transport minister, so it's hard for me to say exactly. But I would be... at least as confident as it was when we announced the deal, probably more so. I think I appreciate it very much.

Speaker Change: And we used this confidence as it was what we announced the deal probably more so.

Speaker Change: Okay I appreciate that guys. Thanks.

Cameron Doerksen: Thank you. And your next question comes from the line of Cameron Doerksen from National Bank Financial.

Speaker Change: Thank you and your next question comes from the line of Cameron Dark Sam from National Bank Financial. Please go ahead.

Cameron Doerksen: Please go ahead. Morning, Cap. Yeah, thanks.

Speaker Change: Good morning camp.

Cameron Doerksen: Good morning as well. Question on the on the Windows business. You know, I'm just wondering if anything has kind of changed from your perspective with regard to kind of seeing an improvement In the revenue and in the profitability, I think the expectation was that would be more of a 2026 event. I'm just wondering if anything has changed in the last couple of months, just with, you know, all the uncertainty around trade and Companies making or deferring investment decisions. If anything changed on the kind of timeline where we might see an improvement in that. I don't think so yet.

Cameron Dark: Yeah. Thanks, good morning as well.

Speaker Change: A question on the on the Windows business.

Speaker Change: I'm just wondering if anything has kind of changed from your perspective with regard to kind of seeing an improvement.

Speaker Change: In the revenue and the profitability I think the expectation was that would be more of a 2026 event I'm. Just wondering if anything has changed in the last couple of months just with.

Speaker Change: All of the uncertainty around trade and <unk>.

Speaker Change: <unk> speaking.

Speaker Change: Or deferring investment decisions. If it has anything changed on the kind of timeline, where we might see an improvement in that business.

Speaker Change: Okay.

Speaker Change: I don't think so yes, we had.

Michael Pyle: We had a slight slowdown in sort of the second half of the second quarter in terms of bids being awarded. Having said that, the stuff we're looking at is the same or more than it was before. And we're getting close on some opportunities in the US, which we hadn't seen during the ramp up towards the end of last year. So I would say no, there's challenge. I mean, that could change with the stuff that's going on with international trade. I will say that the tariff situation did cause one change for that business. And that change was we used to do work for both countries in both plans.

Speaker Change: A slight slowdown in sort of the second half of the second quarter in terms of bid.

Speaker Change: Bids being awarded.

Speaker Change: Having said that the stuff. We're looking at is the same or more than it was before and we're getting close on some.

Speaker Change: Opportunities in the U S.

Speaker Change: We hadn't seen during the ramp up towards the end of last year. So I would say no there's no real.

Speaker Change: Challenge I mean that could change with the stuff that's going on with international trade I will say that got the tariff.

Speaker Change: Situation did.

Speaker Change: Cause one change for that business and that change was we used to do our work for both countries and both plants.

Michael Pyle: And with the tariff stuff coming back into play, we had to go back to the game plan from 2017 when we decided to build the plant, which was, we'll build American things in Dallas and we'll build Canadian things in Toronto. During slow periods, that's not helpful because it doesn't let us balance our workflows. But as we ramp up, it will be relatively painless. And it puts us in a position where we can bid tariff-free. Our Canadian competitors in the US can't do that. And our American competitors doing business in Canada can't do that. So it lets us take advantage of the situation.

Speaker Change: And with the terrorists stuff coming back into play we have to go back to the game plan from 2017, when we decided to build the plant, which was we'll build American things in Dallas simple build Canadian things in Toronto.

Speaker Change: During slow periods, that's not helpful. Because it doesn't let us balance our workflows, but as we ramp up it will be relatively painless and it puts us in a position where we could bid tariff free we like our Canadian competitors in the U S got to do that and our American competitors doing.

Speaker Change: Is this a candidate I can't do that so it lets us.

Speaker Change: Take advantage of the situation but.

Michael Pyle: But in the near term, the uncertainty doesn't help.

Speaker Change: In the near term.

Speaker Change: The uncertainty doesn't help us.

Cameron Doerksen: Right, okay, no, that's helpful.

Speaker Change: Right, Okay no that's helpful.

Cameron Doerksen: And the second question on, I guess, on M&A.

Speaker Change: Second question on I guess on an M&A.

Michael Pyle: Just wondering if you can talk a little bit about the rationale for acquiring Newfoundland helicopters. I appreciate it's a small acquisition, but just the rationale there and, you know, is rotary wing an area that you might look to expand on further? I guess, so you've got existing rotary operation, but now you've got two, just wondering if that's an area of Yeah, I think the acquisition of Newfoundland Helicopters was very opportunistic. Custom operates there and we do have assets there, but we didn't have enough assets to do all the things we were looking at doing. We've won the rotary wing part of the Newfoundland-Medevac contract, which requires more assets there.

Just wonder if you could talk a little bit about the rationale for acquiring a Newfoundland helicopters I. Appreciate it's a small acquisition, but just the rationale there and its rotary wing an area that you might look to expand on further I guess, so you've got existing murdering operation, but now you've got you've got to just wondering if that's an area of interest.

Speaker Change: Yeah.

Speaker Change: I think the the the acquisition do you feel on helicopters was very opportunistic.

Speaker Change: Custom operates there and we do have assets there, but we didn't have enough assets to do all the things we were looking at doing we've won the rotary wing.

Speaker Change: Part of the new funded out of that contract, which requires more assets there and our first nations partners, particularly in Labrador, where looking for enhanced service from rotary wing opportunities so by bringing in a local player with a good reputation like do from Llanelli copter as it gives us greater assets a greater ability.

Michael Pyle: And our First Nations partners, particularly in Labrador, we're looking for enhanced service from rotary wing opportunities. So by bringing in a local player with a good reputation like Newfoundland Helicopters, it gives us greater assets and greater ability to make sure we look after the people. One of the things where you have a strong market position, if you don't do the job well, you're inviting competition. And so we want to lock down our position as the sole provider of air transport in that area and adding Newfoundland Helicopters will do that. I'm confident it will be a very accretive for its size acquisition, but again, when it's $13, $14 million.

Speaker Change: City to make sure we look after the people what are the things where you have a strong market position. If you don't do the job well, you're inviting competition and so we wanted to lock down our position as the sole provider of air transport in that area and adding new filling line in helicopters, we'll do that.

Speaker Change: I'm confident it will be a very accretive for its size acquisition, but again, when it's $13 million to $14 million.

Cameron Doerksen: Excuse me, there's a limit as to what that will actually do to our consolidated financial statement. Right. Understood.

Speaker Change: Excuse me, there's a limit as to what that will actually do door and consolidated financial statements.

Speaker Change: [laughter].

Speaker Change: Understood.

Michael Pyle: So, more of a, you know, just a geographical opportunistic, you know, opportunity for you as opposed to... scale and rotary wing across. It reflects we are starting to grow our base of MEDEVAC rotary wing things. It started in Manitoba when Customs started trauma flights, which has been a very successful addition to what we do in Manitoba. The wind in Newfoundland is a second area. And so I think you'll see our rotary wing type areas that are very specialized and where we have an opportunity I don't think it's a big change in our strategy, but where we have a competitive advantage, we'll take advantage of it.

Speaker Change: Just a a geographical or opportunistic to you.

Speaker Change: The opportunity for you as opposed to.

Speaker Change: <unk> scale and rotary wing across the country.

It reflects we are starting.

Speaker Change: To grow our base of <unk>.

Speaker Change: Batter back rotary wing things, where it started at Manitoba when customers started trauma flight, which has been a very successful addition to what we do in Manitoba winded, Newfoundland, there's a second area and so the.

Speaker Change: I think you'll see our R. A rotary wing type areas that are very specialized and where we have an opportunity I don't think it's a big change in our strategy, but where we have a competitive advantage.

Speaker Change: We will take advantage of it.

Cameron Doerksen: Make sense.

Cameron Doerksen: I'll pass the line. Thanks very much for the time.

Speaker Change: Okay makes sense I'll pass along thanks very much for the time.

Operator: Thank you.

Thank you.

Krista Friesen: And your next question comes from the line of Krista Friesen from CIBC. Please go ahead. Morning, Krista.

Speaker Change: Thank you and your next question comes from the line of Christopher <unk> from CIBC. Please go ahead.

Speaker Change: Good morning, Chris.

Krista Friesen: I was just wondering if you could speak to how you're thinking about prioritizing when it comes to the matting business, the expansion with another plant, as well as I think previously you've talked about moving into the rental business for Spartan and that might be some sort of tuck in acquisition. Just wondering which one takes priority at the moment. I would really describe that not as an either-or, but when the opportunity presents itself. What's clear to us is the acceptance of the new Spartan 7 math, the Excel, has been remarkable. The fact that we have been sold out of production really makes it simple for us that we need to increase that capacity to look after our customers, and we're going to do that.

Speaker Change: I was just wondering if you could speak to how you're thinking about prioritizing when it comes to the mining business. The expansion with another plant as well is I think previously you talked about.

Speaker Change: Into the rental business first Spartan and that might be some sort of tuck in acquisition and I'm, just wondering which one takes priority at this time.

Speaker Change: I would really describe that not as an either or but when we can when the opportunity presents itself, what's clear to us is.

Speaker Change: The acceptance of and do a Spartan seven bass. The EXL has been remarkable the fact that we are sold out of production.

Speaker Change: Really makes it simple for us that we need to increase that capacity to look after our customers and we're going to do that and it's not a short term anomaly. When we bought the company we talked about the long term movement towards matting access madigan, the transmission and distribution part of the electrical market and that's just.

Michael Pyle: It's not a short-term anomaly. When we bought the company, we talked about the long-term movement towards access matting in the transmission and distribution part of the electrical market. That's just going faster than we thought it would. The resilience of that new math is making an even better product there. That's why we're confident in building another facility.

Speaker Change: Going faster than we thought it would.

Speaker Change: And the resilience of that new MA is making it an even better product. There. So that's why we're calling for it to building another facility.

Michael Pyle: If we could get into the distribution business by finding an appropriate rental company, we're still very interested in that, but they're almost two separate decisions. We're going to increase the size of our production. It's just when and how fast we can do it. We will ultimately get in the rental business, but that's more dependent on when we find the right opportunity.

Speaker Change: If we could get into the distribution business by finding a inappropriate rental company, we're still very interested in that but there they're almost two separate decisions, we're going to increase the size of our production, it's just when and when and how fast we can do it.

Speaker Change: And we will ultimately get into rental business, but that's more dependent on when we find the right opportunity.

Krista Friesen: Great, thank you.

Speaker Change: Okay, great. Thank you and then maybe just one more.

Krista Friesen: And then maybe just one more on the window business. It certainly sounds like the orders are picking up now. Can you give us a bit more detail on where we are?

Speaker Change: The window business. It certainly sounds like the the orders are picking up now can you give us a bit more detail on where.

Michael Pyle: Thank you. Geographically, you're seeing strongest orders if it's Canada or the U.S. In terms of new orders, it's been in Canada. It's a little different than the market typically has been. It used to be exceptionally Toronto-centric. We've added stuff in Western Canada, in Vancouver, in Calgary. I would say that the newer stuff is diverse across Canada. There's opportunities in the US that we're excited about as we've moved into new markets. We're just completing our first project in Houston, our first Texas project. We're bidding on a couple of other things there. There's a renewed interest in a couple of opportunities in Southern California.

Speaker Change: Geographically, we're seeing strong disorders, if it's Canada or the U S.

Speaker Change: Oh in terms of new orders, it's been in Canada.

Speaker Change: It's a little different than the market typically has been it used to be exceptionally Toronto centric and we've added staff in western Canada that exact coover in Calgary.

Speaker Change: And so I would say that the newer stuff is diverse across Canada.

Speaker Change: There's opportunities in the U S that are.

Speaker Change: We are excited about as we've moved into new markets. We are just working on our first completing our first project in Houston, Our first Texas project, we're bidding on a couple of other things there. There's a kind of renewed interest in a couple of opportunities in southern California, and so I would say some of the.

Michael Pyle: I would say some of the optimism comes from the US starting to catch up to Canada. Toronto still has a lot of empty 500 square foot condos. But really, that's not where Canada's housing shortage is. It's for families. And families don't live in 500 square foot condos. So ultimately, we're going to have to build apartments in Canada, which will be good for the business. And that goes together with some of the conversions and other specialty projects we're doing in the US.

Speaker Change: [noise] optimism comes from the U S starting to catch up to Canada.

Speaker Change: <unk> still has a lot of empty 500 square foot condos, but really that's not where cans are as housing shortages. It's for families and families don't live in 500 square foot condos. So ultimately we're gonna have to build apartments in Canada, which will be good for the business.

Speaker Change: And that goes together with some of the conversions and other specialty projects, we're doing in the U S.

Krista Friesen: Great, thank you. That's helpful.

Speaker Change: Great. Thank you that's helpful I'll pass the line.

Krista Friesen: I'll pass the Thank you.

Chris Murray: Thank you and your next question comes from the line of Chris Murray from <unk> Capital markets. Please go ahead.

Chris Muray: And your next question comes from the line of Chris Muray from APB Capital Markets. Please go ahead. Morning, Chris. Good morning.

Chris: Yeah, Chris.

Chris Muray: Um, you know, maybe this is a more theoretical question, but but thinking about the new government and some of the discussions it's had about where it wants to take some of its policy aims, you know, there's been certainly a big discussion about expansion in the in military spending, trying to hit the 2% NATO target. But also, you know, we've seen announcements like an investment in a new Australian long range radar, but also, you know, investments in infrastructure in northern Canada being a focus as well. You know, just thinking about, you know, what you guys have done with PAL off the east coast, and you know, certainly where you're positioned right now, you have to think that you should be fairly well positioned to be able to take advantage of some of that.

Chris Murray: Good morning.

Chris: Maybe this is more of a theoretical question, but thinking about the <unk>.

Chris: New government and some of the discussions <unk> had about where it wants to take so much policy aims you know theres been a certainly a big discussion about expansion in the AR.

Chris: In military spending I'm trying to hit the 2% NATO target, but also we've seen announcements like that an investment in a new Australia and long range radar, but also investments in infrastructure in northern Canada being a focus as well I'm just thinking about you know what you guys have done with Pal off the east Coast and you know.

Chris: Certainly we're in a position right now.

Chris: You have to think that you should be fairly well positioned to be able to take advantage of some of that but I was wondering if you could talk about your ability to scale in the north and to bring in additional military services for what's looking like a probably a prolonged period of growth.

Michael Pyle: But I was wondering if you could talk about, you know, your ability to scale in the north, and to bring in additional services for what's looking like probably a prolonged period of growth. Yeah, you're absolutely bang on. And you basically sort of espoused the investment thesis on Canadian North. We know when we're buying it, there's some things we got to do to it to make it operate like our existing businesses. But the simple fact is, if Canada is going to meet our NATO requirements and improve our relation with the US, we're going to have to help with the early defense up north.

Chris: Yeah, you're you're absolutely Bang on and you basically sort of a spouse or the investment thesis on on Canadian North we know what we're buying it to some things we got to do it to make it operate like our existing businesses, but the simple fact is is it Canada is going to meet our NATO requirements and.

Chris: And improve our relationship with the U S. We're gonna have to help with the early defense up north that means we got to build basis up there that means people are gonna be traveling up that's all stuff that fits into our core business. Additionally, we think there's going to be additional offers surveillance opportunities whether it be at the <unk>.

Michael Pyle: That means we're gonna have to build bases up there. That means people are going to be traveling up. That's all stuff that fits into our core business. The building and the bases, we're not going to pull the steel beams up there on an ATR, but the people that are going to go up there, whether it be the military people, the civilian construction people, they're all going to be on our aircraft. And that's why we want to be the supplier to Canada's North. And the reason why I'm so confident this will be approved is because the consolidated operations between Canadian North and Comair will be able to give us the best level of service in a really spread out market.

Chris: Far north where we're pitching ideas to the government or on the American border, where we have solutions, whether it be rotary weaker flu season, and so I think I think the weather.

Chris: Whether it's the schedule more traditional part of the business or the ISR part of the business both of them have very strong medium and long term opportunities here.

Chris: <unk>.

Chris: The building of the base is we're not going to pull the steel beams up there on an ATR with the people that are going to go up there.

Chris: Whether it be the military people a civilian construction people, though we're all going to be on our aircraft and that's why we wanted to be the supplier of the kidney that it is north and the reason why I'm. So confident this will be approved is because the kids the consolidated operations between Canadian North in Cob.

Chris: There will be able to give us the best level of service in a really spread over marketplace. In addition to what we've talked about with the military are growing.

Michael Pyle: And in addition to what we've talked about with the military growing, I think you're also going to see enhanced searching for and ultimately production of rare earth minerals. In the Eastern Arctic, there's a lot of them with relative discourse with China, which is where most of them come from. Now the opportunity to produce those in North America is going to become increasingly important. And again, that fits into the aircraft we have up there. So it all fits into a kind of a bullish medium term. Okay, that's, that's interesting.

Chris: I think you're also going to see enhanced searching for and ultimately production of rare Earth minerals.

Speaker Change: Eastern the eastern Artic Theres a lot of the with.

Relative discourse with China, which is where most of that come from now the opportunity to produce those in North America is going to become increasingly important and it gave that fits into the aircraft. We have up there. So it all fits into a a kind of a bullish medium term.

Speaker Change: Okay. That's that's interesting.

Chris Muray: Um, you know, just a slightly different question on cap structure. One of the questions I've had from a few investors now, is around the plans around the DRIP, the Dividend Reinvestment Plan.

Speaker Change: You know just having different question on cap structure, one of the questions I've had from a few investors now is around the plans around the drip the dividend reinvestment plan.

Michael Pyle: Um, you know, just wondering, you know, again, it probably had a purpose at its time when you were smaller, but as you're starting to get to, and starting to grow, you know, larger balance sheet, just wondering, you the board are thinking about the utility of maintaining it versus the dilution to create?

Speaker Change: I'm just wondering you know again, it probably had a purpose of edits time, when you were smaller, but as you're starting to get to and starting to grow larger balance sheet.

Speaker Change: I'm just wondering.

Speaker Change: How are you and the board are thinking about the utility of maintaining it.

Speaker Change: Versus the dilution that creates.

Michael Pyle: You sneak into our boardroom, Chris. It's an active discussion about the DRIP. We like giving people access to turning it into stock. But the problem with it is it creates this massive dislocation every quarter end when people short the stock to be able to take the DRIP dividend and turn it into cash. And so we will be as a board revisiting our drip, potentially reducing the discount that's on it or eliminating it altogether. A decision hasn't been made yet. But your comments fit well into what the discussions that are going on within our board about whether we've outgrown this and the dislocation it creates, much like the convertible ventures do to the stock that maybe we just don't need this anymore.

Speaker Change: Did you sneak into our boardroom kras.

Speaker Change: It's an active discussion about the drip are.

Speaker Change: We like giving people access to turning it into stock, but the problem with it is is it creates this massive dislocation every quarter and when people are short the stock to be able to take the drip dividends and turn it into cash and so we.

Speaker Change: We will be as a board.

Speaker Change: Revisiting our.

Speaker Change: Our drip potentially reducing.

Speaker Change: The discount that's on it or eliminate it altogether decision hasn't been made yet but by your comments.

Speaker Change: Well into what the discussions that are going on within our board about whether we've outgrown this and the dislocation it creates much like the convertible debentures due a.

Speaker Change: So the stock that may be we just don't need us anymore.

Michael Pyle: No decision has been made at this point yet.

Speaker Change: No decision has been made at this point yet.

Chris Muray: Okay, I'll leave it there.

Speaker Change: Okay I'll leave it there thanks.

Operator: Thank you.

Amr Ezzat: Once again, should you have a question, please press star followed by the one on your telephone keypad.

Speaker Change: Thank you once again should you have a question. Please press star followed by the one on your telephone Keypad. Your next question comes from the line of Amir is that from venture capital markets. Please go ahead.

Amr Ezzat: Your next question comes from the line of Amr Ezzat from Ventum Capital Markets. Please go ahead. Good morning. Thanks for taking my questions. I've got a couple of ISR related items I wanted to clarify. First, it looks like the language in the MD&A around the second UK ISR aircraft shifted slightly from mid-2025 to the latter part of 2025. Is that a delay in deployment or am I reading too much into the change in language? Second, on the support contract that shifted from performance-based to time and materials. Can you speak to the margin implications there and whether this is something we should expect to see more of in the future?

Amir: Good morning, Thanks for taking my questions.

Amir: I've got a couple of ISR related items I wanted to clarify first it looks like the language in the M D N a around the.

Amir: The second U K SAR aircrafts shifted slightly from mid 2025 to the latter part of 2025.

Amir: Is that a delay in deployment or am I reading too much into the change in language in seconds.

Amir: On the support contract that shifted from performance based or time and materials.

Amir: Can you speak to the margin implications there and whether this is something we should expect to see more of in the future.

Jake Trainor: Sure.

Jake Trainor: It's Jake speaking. I'll talk to the first about the ISR. There's really been no timeline change at all. The aircraft's on schedule and getting ready for deployment. So I apologize for any confusion on that. As it relates to the maintenance contract, our customers are still making decisions about the long-term way they want to do this. We're doing it under an interim model at this point. It clearly reduces our revenues because the planes are flying less. Ultimately, We'll see where that shakes out. But it's a maintenance contract. We've had it for a while. We're the only ones who can really do it.

Amir: Sure. It's James speaking I'll talk to the first about the ISR Theres really been no.

Amir: Line change at all.

Amir: Aircrafts on schedule in and getting ready for deployment so I.

Amir: I apologize for any confusion on that.

Amir: As it relates to the the maintenance contract Ah the customer is still making decisions about the long term way. They wanted to do this we're doing it under an interim model at this point it clearly reduces our revenues because the planes are flying loss.

Amir: Ultimately.

Amir: We will see where that shakes out, but it's not.

Amir: It's a maintenance contract we've had it for a while we're the only ones who can really do it and Oh.

Amr Ezzat: a high a high utilization methodology. And so we'll see where that shakes out over the next quarter or two. But while we're while the customers deciding how to deal with it, it will reduce revenue and even that segment, which was fully recorded in this quarter, and I would say is, is factored into our guidance. Fantastic, that's helpful.

Amir: A high a high utilization methodology, and so we'll see where that shakes out over the next quarter or two but while we're while the customers deciding how to deal with it it will reduce revenue and EBITDA in that segment, which was fully recorded in this quarter and I would say is it is factored into our guidance.

Fantastic. That's helpful argue me, adding side I know, we beat it to death, but I'm just wondering like what utilization running so high are you seeing any pricing power emerge in the U S or is the competitive landscape.

Michael Pyle: On the matting side, I know we beat it to death, but I'm just wondering, like with utilization running so high, are you seeing any pricing power emerge in the U.S. or is the competitive landscape keeping rates in check? Then on the Canadian side, you did sound obviously extremely bullish on the new government's infrastructure and pipeline stance, but I'm wondering how would you characterize client discussions since the elections? Are you seeing concretely any greater visibility or is it still like early days? In the US, we're a small player. There's three main players in this and we'd be the smallest.

Amir: Keeping rates in check and then on the Canadian side, you you did sound, obviously extremely bullish on the new governments infrastructure and pipeline stance, but I'm wondering how would you characterize client discussions since the elections are are you seeing concretely any greater visibility or is still like early.

Amir: Days.

Speaker Change: In the U S. A we're a small player. There's three main players the message we'd be the smallest I would argue with aren't new map, where the vast and you can see it in the take up of what we're building, but we're not a market maker in that pricing is strong because there's not a lot.

Michael Pyle: I would argue with our new map, we're the best. And you can see it in the take up of what we're building. But we're not a market maker in that pricing is strong because there's not a lot available, even though input costs are lower at this point because of lower natural gas prices, which affects the price of resin. So it's bullish on that front. But I don't see us having any kind of market power to change pricing. I believe pricing will remain stable because of the level of demand there is in the marketplace.

Speaker Change: Bailable, even though input costs are are are lower at this point because of lower natural gas prices are.

Speaker Change: Which affects the price of resin so it's bullish on that front.

Speaker Change: But I don't I don't see us, having any kind of market power power to change pricing I believe pricing will remain stable because of the level of demand there is in the marketplace.

Travis Muhr: In Canada, The The discussion about new pipeline projects, East West projects, exporting LNG are super bullish. That's that's the best business, not an electrical distribution of the most profitable business for the batting world. There's lots of discussions. There's lots of initial quoting and discussing of prices. Nothing is gone. So we know when it's going to start. I would suggest that the government change is probably more of a 2026 story in terms of our revenue as these projects would by the time they wrap up. But having said that, some of the things on the electrical distribution side ramp sooner than that, and we expect to see that stronger in the back half of the year.

Speaker Change: In Canada.

Speaker Change: The.

Speaker Change: The discussion about do pipeline projects East West projects exporting LNG are super bullish that that's the best business not in our electrical distribution for that have been the most profitable business for them adding.

Speaker Change: Our world.

Speaker Change: There's lots of discussions there's lots of additional quoting in discussing prices nothing is going on.

Speaker Change: So we know when it's going to start.

Speaker Change: I would suggest that the government changes probably more of a 2026 story in terms of our revenue as these projects would by the time, they wrap up but having said that some of the things on the electrical distribution side.

Speaker Change: Ramp sooner than that and we expect to see that stronger in the back half of the year.

Speaker Change: <unk>.

Travis Muhr: We just like to see a little rain so it gets a little muddy in Alberta so we could We could do a little more work with the oil and gas there By and large the overall market dynamics are strong Yeah, maybe it's Travis here. And so there's a you know, there's been also a lot of like recent press I think this morning there's a there's an article coming from the CEO from Trans Mountain talking about building new pipelines And sort of the importance of you know, optimizing these existing capacity, which which does require sort of mat usage You know if you're adding additional loops in and things like that to increase capacity and utilization so sort of very bullish on The short medium and longer term with some of these announcements and press Fantastic.

Speaker Change: We just like to see a little rain. So it gets a little muddy in Alberta. So we could we could do a little more work with the oil and gas there.

Speaker Change: By and large the overall market dynamics are strong.

Speaker Change: And maybe it was Travis here and so there's a there's been also a lot of like recent press I think this morning, there's a there's an article coming from the CEO from Trans Mountain is talking about building, new pipelines and sort of the importance of optimizing existing capacity, which which does require sort of mat usage, you know if you're adding additional loops.

Speaker Change: And and things like that to increase our capacity and utilization so sort of very bullish on.

Speaker Change: The short medium and longer term with some of these announcements and Empress.

Operator: Thank you. I'll pass the line. Thank you.

Speaker Change: Fantastic. Thank you I'll pass the line.

Speaker Change: Thank you and your next question comes from the line of <unk> from Scotiabank. Please go ahead.

Konark Gupta: And your next question comes from the line of Konark Gupta from Scotiabank. Please go ahead. Morning, Konark. Morning, Mike and team. Thanks for taking my question.

Corrado: Good morning Corrado.

Speaker Change: Morning, Mike and team Thanks for taking my question I.

Konark Gupta: You know, I want to kind of first kick off with the guidance clarification question. So just want to make sure your guidance is unchanged, obviously, but you have embedded now, there's no shutdown, temporary shutdown of the Spartan plant in that. And it also embeds the contracts that you have already won. And with some of the delays you talked about in terms of getting aircraft on time, and it seems like there's no Australia contract related to CAPEX in the guidance. So do those things make sense? Yeah, those are all correct. Clearly, the fact that we're not shutting the plant down at Spartan is bullish, and that's not the way we budgeted at the start of the year.

Speaker Change: I want to kind of first kickoff with the with a guidance clarification question. So I just want to make sure your guidance. It's unchanged. Obviously, you, but you have embedded no Ah there's no shut down temporarily shut down all the Spartan plant in that and it also embeds a contra.

Speaker Change: Correct.

Speaker Change: That you have already won and some with some of the delays you've talked about end up so getting aircraft on time and and it seems like Theres No Australia contract related capex in the guidance. So like do you do those things make sense.

Speaker Change: Yeah. Those are all correct. We are we are like clearly the fact that we're not shutting the plant down at Spartan is bullish and that's not the way we budget at the start of the year. So those things help within the guidance make us more confident in what we're doing we don't revise the guidance for every little change in every business. That's the advantage we've got on the.

Michael Pyle: So those things help within the guidance, make us more confident in what we're doing. We don't revise the guidance for every little change in every business. That's the advantage we've got on the diversity of our business model. In terms of Australia, you're correct. We've got all the costs of making the doing the presentation. So we have budgeted continued work on winning the contract, but the actual CapEx, should we win, would be in addition to what we've talked about. But conversely, so would all the revenue as we wrap up. I see.

Speaker Change: The diversity of our of our business model.

Speaker Change: In terms of Australia, you're correct, we got all the costs. So they seem to be doing a presentation. So we outside you did continued work on on on winning the contract, but the actual capex I.

Speaker Change: Should we win would be in addition to what we've talked about but Conversely, so with all the oh sort of all the revenue.

Speaker Change: We ramp up the business.

Speaker Change: I see okay. Thanks for clarification there.

Konark Gupta: Again, thanks for the clarification there.

Konark Gupta: On the Windows side of things, I wanted to ask you, what are we seeing here in the marketplace? I think it's not the first time, I guess, Windows business has seen some volatility, right? I mean, it's been ongoing for some time and COVID obviously convoluted things clearly. But your bookings are maybe stable to up. You have a big backlog, obviously, that you built over the last few years. The production, you're not likely ramping up, it seems, I mean, given the inquiries are not converting to that degree. But what's the overarching kind of, you know, theme in the Windows business right now in the short term?

Speaker Change: On the Windows side of things I wanted to ask you like whoa.

Speaker Change: What are we seeing here are in the marketplace. You know I think it's not it's found the first time I guess you know windows business has seen some volatility right I think it's been ongoing for some time like Covid. Obviously, you can look at things clearly, but your bookings are maybe stable to up but you have a big backlog.

Speaker Change: You know obviously that you built over the last few years production are you not likely ramping up it seems I mean, given the inquiries are not converting to that degree but.

Speaker Change: What what's the overarching kind of team and in the Windows business right number one what's what's impacting it.

Michael Pyle: Like, what's the impact? It's really just the developers. https://www.youtube.com.uk changes in the market, changes in mortgage requirements, higher interest rates have been that harder to do, but it hasn't changed the demand for the product. So we're seeing a shift towards apartment buildings. Those need to have confidence because those are long-term returns, as opposed to a condo sale with the developers in and out. And so we haven't seen a contracts being awarded at the rate we'd like to. We remain very bullish on what we're bidding. There's a lot of bids out there. We've started to see stuff happening outside of Toronto.

Speaker Change: It's really just the developers are.

Speaker Change: Having the confidence to pull the trigger.

Speaker Change: <unk> 10, and that has historically been a condo market and so they've typically been financed by people putting their deposits down giving the developer of the equity base to then use that to complete the project.

Speaker Change: Changes in the market changes in mortgage requirements higher interest rates, a bead that harder to do but it hasn't changed the demand for the product. So we're seeing a shift towards apartment buildings.

Speaker Change: Those need to have confidence because you're those are long term returns as opposed to a condo seller with the developers in and out and so.

Speaker Change: We haven't seen.

Speaker Change: Contracts being awarded at the rate, we'd like to we remain very bullish on what we're bidding there's a lot of bids out there we started to see stuff happening outside of Toronto, We've had wins in the last Ah.

Michael Pyle: We've had wins in the last several months in Vancouver. We've had wins in Calgary. We've had some wins in Toronto, but we've also had stuff in Houston. We've had stuff in Nashville. And we're starting to see some life in the California market. So as those become better and better, what'll happen is the density of our production improves. We get more flow through. The enhanced efficiency of what we've done with the plants will then become more evident when the employees are fully employed. I talked a bit on our Q4 call that we haven't laid off people the way we would if we were a pure business during this slower period, because they're skilled employees and we don't want to lose them.

Speaker Change: Several bonds at Vancouver, we've had wins in Calgary.

We've had some wins in Toronto, but we've also had stuff at Houston, We've got stuff in Nashville, and we're starting to see some life in the California market. So as those become better and better what'll happen is the density of our production improves we got where it got more flow through enhanced efficiency.

Speaker Change: What we've got with the plants will that become more evident when the employees are fully employed I talked a bit on our Q4 call. We haven't laid off people. The way we would if we were a pure we'd go business during the slower period, because they're skilled employees and we don't want to lose them and so to a certain extent, we're not <unk>.

Michael Pyle: And so to a certain extent, we're not maximizing our short-term profitability right now to make sure we're ready for the long-term surge when this comes.

Speaker Change: Our short term profitability right now to make sure we're ready for the long term surge wasn't as comps.

Michael Pyle: Okay, that's helpful. Sure.

Speaker Change: Okay, No that's fair.

Michael Pyle: And then last one, before I turn over on Spartan Manufacturing, any sense on when is the earliest you are likely to transition the plant to the new product line, which might require a couple of months of shutdown? And when you talked about the second plant, like it's a short, short deal, like you want to have it or that's like a TBD situation? though what we've decided is we're not going to shut down the plant in the foreseeable future and we're going to go straight to building something more. The changes we could make by shutting it down and enhancing production still wouldn't have solved the problem, or I guess the opportunity is a better word than the problem.

Speaker Change: Oh sure and then.

Speaker Change: Last one before I kind of world partner manufacturing them in any any sense on when is the earliest youre likely to transition the plant to the new product line, which might require a couple of months of shutdown in a minute.

Speaker Change: Talk about the second plan to like it for short shot deal in there like you want a habit or that's like a D. V. D situations you, you'll see how demand goes.

Speaker Change: Though.

Speaker Change: We've decided we're not going to shut down the plant in the foreseeable future and we're going to go straight to building something more that the changes we could make by shutting it down and enhancing production starwood to solve the problem or the against the opportunity is a better word that the problem and so really right.

Michael Pyle: And so really... we're pretty committed to the concept of building a second factory. The real discussion is there's internal debate about where it should go. And once we do that, then we can source the real estate and order the equipment. It's building the plants, not rocket science. Now that we've built it once and it runs the way it is, we'll build a bigger version of what we have. And so it won't be a matter of one replacing the other, it'll be a matter of running two to keep up with demand. It's likely that the second plant would also be scalable.

Speaker Change: We're pretty committed to the concept of building a second factory. The real discussion is there's internal debate about where it should go and once we do that then we can source the real estate and order the equipment. It's building a plant it's not rocket science now do we built at once and Uh Huh.

Speaker Change: It runs the way it is we'll build a bigger version of what we have and so it won't be a matter of one replaces the other it'll be a matter of running two to keep up with demand.

Speaker Change: It's likely that the second plant would also be scalable I suspect it will take a bigger footprint.

Michael Pyle: I suspect we'll take a bigger footprint that the equipment will put in initially, so that if things continue to grow in the medium term, we can add more capacity if we need. Right, right. Makes sense.

Speaker Change: The equipment will put in initially so that if things continue to grow in the medium term, we can add more capacity if we need it.

Speaker Change: Right right makes sense perfect. Thanks for the time thank you.

Michael Pyle: Perfect. Thanks for the time.

Speaker Change: Yeah.

Jeff Fenwick: Thank you, and your next question comes from the line of Jeff Fenwick from Kormark Securities, please go ahead. I know we're late in the call, so I'll try to be quick here. One question was on ISR with the training contract that rolled off. I know you guys are participating in this guy along. there as well.

Speaker Change: Thank you and your next question comes from the line of Jeff Fenwick from Cormack Securities. Please go ahead.

Well.

Mike Bell: Hi, I am Hi, Mike I know, we're late in the call. So I'll try to be quick here. One one question was on ISR with the training contract that rolled off.

Speaker Change: I know you guys are participating in the skyline.

Speaker Change: Opportunity there as well so just when do you expect that next wave of opportunity in train to come on in and is that a similar size or larger or smaller opportunity and is the margin comparable on that as well.

Michael Pyle: When do you expect that next wave of opportunity and training to come on and is that a similar size or larger or smaller opportunity and is the margin comparable? I'm not really going to comment on the margin piece of that because we're still negotiating with our partners at Skyline. The size of that opportunity is much bigger than the one with the couple of contracts that have rolled off. a long way down the road with our partners, and I would anticipate that coming to fruition later on this year, next quarter or so. Those are very active discussions.

Speaker Change: I'm not really going to comment on the margin piece of that because we're still negotiating with that.

Speaker Change: With our partners at Skyline.

Speaker Change: The size of that opportunity is much bigger than that than the one of the couple of contracts that have rolled off.

Speaker Change: We're.

Speaker Change: So long way down the road with our partners and I would anticipate that coming to fruition later on this year.

Speaker Change: Next quarter or so.

Speaker Change: Those are very active discussions.

Michael Pyle: That's a great opportunity.

Speaker Change: That's a great opportunity we've got some really good partners with CAE is that projects that we look forward to finalizing that and announcing it hopefully by the time, we release, our Q2 results.

Michael Pyle: We've got some really good partners with CAE in that project, so we look forward to finalizing that and announcing it, hopefully, by the time we release our Q2 results.

Michael Pyle: Thanks and then just one on growth capex, you gave us some color on it. Just give us a bit of a sense of the cadence of the bill that it sounds like.

Speaker Change: Okay. Thanks, and then just one on growth Capex that you gave us some color on on items that are feeding into this year can you just give us a bit of a sense of the cadence of the build it sounds like the UK spend is largely a sort of sunk at this point King airs we're gonna come on through the back half of the year like this does it progressively build up through the quarters then.

Michael Pyle: Transcripts provided by Transcription Outsourcing, LLC. The King Airs, I mean, we've we've talked about the cost of those aircraft and you'll see eight or 10 of them between mid year and the end of the year. My guess is it's more like eight. They haven't over they haven't overperformed in delivering them so that you'll see a significant amount of investment in those in the second half of the year. The balance of the projects though, will be largely complete by mid year. The home office aircraft is essentially complete. We're just tweaking it.

Speaker Change: Sure.

Speaker Change: The King airs.

Speaker Change: We've talked about the cost of those aircrafts that you'll see eight or 10 of them between mid year at the end of the year I. My guess is it's more like eight.

Speaker Change: They have been over there have been over performed in.

Speaker Change: In delivering them, so that you'll see a significant amount of investment to nose.

Speaker Change: In the second half of the year the balance of the projects, though will be largely complete by mid year.

Speaker Change: The home office aircraft is essentially complete we're just tweaking it.

Jake Trainor: Jeff, it's Jake. The only caveat I'd put out there, again, is if Regional 1 opportunistically comes upon something, you know, we're open for business at any point. Yeah, I mean, Regional 1 is impossible to forecast. When we find something, we'll jump at it. And then we're almost finished the installation of our simulator. We've finished the new passenger lounge at Perimeter. So the other big projects are drawing to a close, with the exception of the aircraft for the BC concept.

Speaker Change: Jeff and shape, the only caveat I'd put out there again is at regional one opportunistically comes upon something.

Speaker Change: Open for business at any point, yeah, I mean regional one's impossible to forecast when we find something we'll jump at it and then we're almost finished the installation of our simulator, we finish to do passenger lounge at parameter. So the other big projects are drawing to a close with the exception of the of the aircraft for the BC contract.

Speaker Change: Okay.

Michael Pyle: Thanks, I'll pass. Thank you.

Speaker Change: Okay. That's helpful color. Thanks, I'll pass it along.

Speaker Change: Thank you and your next question comes from the line of beam Gene spent teeny Cowen. Please go ahead.

Tim James: And your next question comes from the line of Tim James from TD Cowen. Please go ahead. Thanks very much. Good morning, everyone.

Speaker Change: Thanks, very much good morning, everyone.

Tim James: I just want to return to the window systems business for a minute and just want to kind of think about this in terms of risk to the revenue from that business. Now, you talked about the backlog strengthened in 2024, which takes 18 to 24 months to really benefit revenue, hence the 2026 improvement as opposed to 2025. How solid are those bookings? Like, I assume it's difficult for customers to change project timing kind of once the ball is rolling. And so, in other words, that strengthening you're expecting in 2026, how dependent is that on kind of this environment of uncertainty that we're dealing with in 2025?

Speaker Change: Well I just want to return to the window systems business for a minute and just want to kind of think about this in terms of risk to the revenue from that business. I know you talked about the backlog strengthened in 2024, which you know.

Speaker Change: It takes 18 to 24 months to really benefit revenue, hence the 'twenty 'twenty six improvement as opposed to 25.

Speaker Change: How solid or are those bookings.

Speaker Change: I assume it's difficult for customers to change project timing kind of once the ball is rolling in so in other words that strengthening you're expecting in 'twenty six how dependent is that on kind of this environment.

Speaker Change: [noise] of uncertainty that we're dealing with and twenty-five does it really matter what goes on this year are those things you know is that improvement in 'twenty six pretty well in the books or is there much risk to it.

Michael Pyle: Does it really matter what goes on this year or those things? Is that improvement in 2026 pretty well in the books or is there much risk to it? I mean, we want to continue building the book, Tim, so it... I would be overstating things by saying there's no risk in that. Clearly, there's some risk. Projects can get delayed. I don't see much risk of cancellations. You lose one here or there, but it's not material. We stayed static over the quarter. Even the slower quarter here, our order book didn't decline in any material way. So I'm confident in the recovery in 26.

Speaker Change: Yeah, I mean, we want to continue building the booked him. So yeah, I would be overstating things by saying, there's no risk in that clearly theres some risk projects can get delayed.

Speaker Change: I don't see much risk of cancellations, you lose one here or there, but it's not material.

Speaker Change: We stayed static over the quarter.

Speaker Change: Even the slower quarter here, our order book didn't decline materially in any material way and so I'm confident in the recovery in 'twenty six.

Michael Pyle: The recovery could still be better if we keep booking stuff for the back half the year. That will assist in that. But typically, once we put it in our order book, the project is going to go ahead barring something unforeseen. It can happen, but that's not common.

Speaker Change: Recovery could still be better if we keep booking stuff for the back half of the year.

Speaker Change: [noise] downhole assisted not but typically once we put it in our order book. The project is going to go ahead barring something unforeseen it.

Speaker Change: It can happen, but that's not common.

Tim James: Okay, that's helpful, Culler.

Speaker Change: Okay. That's that's helpful color.

Michael Pyle: My second question, can we just sort of round out with just thinking about these great Medevac contracts that you've won over the last year to BC, Manitoba, etc., the repricing. Can you just give us a sense for when those kind of hit full rate revenue? And they sort of hit that that where I should say that steady state, I guess, was as you just kind of walk through the key ones that you've secured over the last couple of years. Sure. So we're generating in terms of the Manitoba Medevac contract, that's fully up and running. Partway through last year, we had the turboprops go.

Speaker Change: My second question can we just sort of round out with just thinking about these discrete medevac contracts that are up.

Speaker Change: That you've won over the last year or two P C, Manitoba et cetera other repricing.

Speaker Change: Can you just give us a sense for when those kind of hit full rate revenue.

Speaker Change: And then they sort of hit that that where I should say that steady state I guess was it just kind of walk through the key ones that you've secured over the last couple of years.

Speaker Change: Sure. So we're generating in terms of the Manitoba medevac contract, that's fully up and running we are.

Speaker Change: Partway through last year, we had the turboprops go towards the end of the year, we had the jets go and so that's fully contributing now.

Michael Pyle: Towards the end of the year, we had the jets go. And so that's fully contributing now. We're still lapping numbers that it wasn't in. The BC Medevac contract, we're now flying all of it. We're kind of belted and suspended it together because of the delays. in the delivery of the aircraft in BC. The BC contract itself is expanding. We've had extra hours added and extra potential aircraft added to that, so that will continue to grow.

Speaker Change: Still lapping numbers then it wasn't dead.

Speaker Change: The BC them out of that contract, we're now flying all of it.

Speaker Change: The belts and suspenders it together because of the delays at all.

Speaker Change: Is the.

Speaker Change: Delivery of the aircraft in D C.

Speaker Change: The B C contract itself is expanding we've added extra hours added an extra potential aircraft added to that so that will continue to grow.

Michael Pyle: The Newfoundland contract we're not doing anything on yet. We're just finalizing the words. We should start flying in a more meaningful way later in the year on that one, although I would say that it's more of a 26-month. We'll get some of it towards the end of this year, but not a huge amount. And then the same for the Newfoundland Helicopter Mad Max contract towards the end of this year.

Speaker Change: The Newfoundland contract, we're not doing anything on yet we're just finalizing the words, we shouldn't start flying in a more meaningful way later in the year on that one although I would say that it's more of a 'twenty six bump then we'll get some of that towards the end of this year, but not a huge amount and then.

Speaker Change: The same for the a b C or I'm, sorry, the Newfoundland helicopter amount in that contract towards the end of this year the AR, but the on the switching gears to the.

Michael Pyle: On the switching gears to the maritime surveillance work, that plane will be in service this summer, the second one. And we'll see what happens on that maintenance contract as well. The new MEDEVAC contract, which we do all of it now, the RFP was out just recently. I really can't comment much. We haven't got our teeth into it yet, but we've got a lot of infrastructure in the north, and I'm quite confident in our ability to retain and grow that contract. And our initial read of it, the new contract is going to be a bigger amount of work than what we're currently doing.

Speaker Change: <unk>.

Speaker Change: Maritime surveillance work that plane will be in service. This summer the second one and we'll see what happens on that maintenance contract as well.

Speaker Change: They do not have a contract, which we do all of it now with the RFP was out just recently, but I really can't comment much we havent got our teeth into it yet but.

Speaker Change: We've got a lot of infrastructure in the door should I'm quite confident in our ability to retain and grow that contracted.

Speaker Change: Our initial read of it the new contracts going to be a bigger amount of work. That's what we're currently doing so there'll be expansion of that opportunity.

Razi Hasan: So there'll be expansion in that opportunity. Okay, that's helpful. Thanks very much. Thank you.

Speaker Change: Yeah.

Speaker Change: Okay. That's helpful. Thanks very much.

Speaker Change: Thanks.

Speaker Change: Yeah.

Razi Hasan: And your next question comes from the line of Razi Hasan from Paradigm Capital. Please go ahead. Good morning. Thanks for taking my question. Just a quick one.

Speaker Change: Thank you and your next question comes from the line of Friendliness.

Speaker Change: Paradigm capital. Please go ahead.

Speaker Change: Hey, good morning, Thanks for taking my question just a quick one could you guys just elaborate little bit on the tariffs impact on on on foreign exchange and where you're seeing some of that demand erosion, you mentioned a bit earlier.

Razi Hasan: Could you guys just elaborate a little bit on the tariff impact on foreign exchange and where you're seeing some of that demand erosion you mentioned a bit earlier? It wasn't so much demand erosion as it was just uncertainty guys were holding still on more awarded contracts and things. That seems to be improving now notionally. And it was more like if you just give an example of if someone's building an expansion of a factory, and we're putting SFI tanks in it when they actually pull the trigger to start the project. And so not worried about what they're doing and not worried about our ability to win them.

Speaker Change: It wasn't so much demand erosion as it was just uncertainty you guys were holding still on.

Speaker Change: More awarded.

Speaker Change: Awarded contracts and things.

Speaker Change: That seems to be improving now notionally.

Speaker Change: Yeah. It was more like if you just give an example.

Speaker Change: One's building and expansion of our factory and we're putting SFA tank, so that when they actually pull the trigger to start the project and so not worried about what they're doing and not worried about our ability to win them. It just creates uncertainty as to when we book them into our schedules.

Razi Hasan: It just creates uncertainty as to when we book them into our schedules. I think now, with the step down of the reciprocal tariffs a couple weeks ago, and now we're recently with yesterday's news about the China arrangement, I think we're going to see these things sort of fade back into the woodwork. There's second part of your question. Did you ask me? I'm sorry. That was it. Appreciate it. Okay. Thank you.

Speaker Change: I think now.

Speaker Change: With the step down of the reciprocal tariffs a couple of weeks ago and now more recently with yesterday's news about the.

Speaker Change: The China arrangement I think we're going to see these things sort of feedback into the woodwork.

Speaker Change: The second part of your question.

Speaker Change: What else did you.

Speaker Change: So that was that was that was it I appreciate it.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Thank you.

Operator: There are no further questions at this time. I will now hand the call back to Mr. Pyle for any closing remarks. Thanks for everybody for being here. I look forward to seeing some of you in an hour over at our annual general meeting. We're proud to show off our newly redone hangar over at Perimeter where we took a 1930s war hangar from the government, refinished it. It's got beautiful quested BV windows and it's got matting from both of our matting companies. So hopefully some of you could come join us and see it. For those of you who can't, I look forward to talking to you again in August with our second quarter numbers.

Speaker Change: There are no further questions at this time I would now hand, the call back to Mr file for any closing remarks.

Speaker Change: Thanks for everybody for being here I look forward to seeing some of you in an hour over at our annual General meeting, we're proud to show off our newly redone a hangar over at perimeter, where we took out a 19 thirties war hanger from the government refinished. It. It's got beautiful question B V windows at that Scott.

Speaker Change: Matting for both of our mounting companies. So hopefully some of you can come join us and see it for those of you who can't I look forward to talking to you again in August with our second quarter numbers I have a great day.

Michael Pyle: Have a great day. Thank you. And this concludes today's call. Thank you for participating. You may all disconnect.

Speaker Change: Thank you and this concludes today's call. Thank you for participating you may all disconnect.

Speaker Change: [noise].