Mike Pyle - CEO Carmele Peter - President David Patrick - Interim CFO

Trevor Johnson - National Bank Mona Nazir - Laurentian Bank Kevin Chiang - CIBC Chris Murray - AltaCorp Capital Mark Neville - Scotiabank Theoni Pilarinos - Raymond James

Thank you, Operator. Good morning everyone.

Also with me today is Carmele Peter, our President, and Dave Patrick our Interim CFO, who will review our financial results in greater detail. We announced yesterday that Ted Mahood resigned as CFO to pursue other opportunities.

I would like to take this opportunity to thank Ted for his time and efforts at our Corporation. We are very pleased to announce that we have hired a CFO to replace Mr.

Mahood, who has extensive experience dealing with diversified, international public companies. We will be announcing the individual and providing further details after completing certain commitments to our existing employer which is expected to occur next week.

David will be acting as CFO in the interim, until our replacement is able to join us some time near the end of third quarter. David has been working under the CFO since 2007 and was previously the Assistant Vice President of Finance.

Historically, whenever we made significant year-over-year improvements to our financial results, the reason was typically due to a single major development such as an acquisition. Our performance in the second quarter was quite different.

There wasn't a single driver to our record results. Our growth was actually driven by a series of factors that tied back to the strategic decisions we have made to further diversify our operations, improve our profitability and invest in the future.

In particular, the steps we have taken over the last 12 months from divesting of WesTower U.S., acquiring Provincial Aerospace, and investing significantly in Regional One, a name a few contributed to record results across the number of our key financial metrics., In particular, consolidated revenue grew by 46% to $196.2 million. Consolidated EBITDA grew by 116% to $48.1 million.

Very importantly free cash flow less maintenance capital expenditures grew by 126% to $19.9 million. As a result, our payout ratio improved from 105% to 51%.

Basic net earnings per share increased to $0.58 from $0.06 last year. Adjusted net earnings were $16.5 million or $0.71 per share up from $3.14 million respectively.

Same-store increase in EBITDA of $12.1 million was 54% after moving Provincial Aerospace results, which have no comparative with the prior period. Well there are number of factors that contributed to our record results.

I want to take a couple of minutes to highlight some of the key ones. We were very pleased with the performance of our Legacy airlines, which consist of Perimeter, Keewatin, Clam Air, Bearskin, and Custom Helicopters.

Combined they grew revenue by 8% to $73 million, but it was their combined EBITDA growth of 59% that was most impressive. We have invested significantly over the past several years in new infrastructure and new equipment.

We have optimized flight schedules and streamlined operations and Legacy airlines benefited from lower fuel cost but they also had to deal with the weakening of the Canadian dollar for its aircraft related maintenance and parts. In addition, we experienced a return to more normal weather conditions.

Each of these was a contributing factor not only due to strong performance of our Legacy airlines, but to our record Q2 results. Regional One was also a key contributor to our record results in the second quarter contributing almost $27 million in revenue and close to $13 million in EBITDA.

It would be quite an understatement to say that Regional One has exceeded our expectations since we acquired it in 2013. Its growth was largely due to an expanded inventory of aircraft, engines and parts that makes available for sale or lease to regional carriers around the world, with access to more capital that we can provide as a parent company, Regional One is able to purchase more inventory and sustain and grow its performance in coming periods.

We had initially acquired Regional One to diversify our operation and to enter new markets. More strategically we bought the company to offset cost that we incur within our Legacy airlines for parts and equipment.

The strategic benefits of its acquisition grew in Q2 as it sales, which are denominated in U.S. currency helped us set the impact that the decline of the Canadian dollar have on our consolidated results.

It's the results of Regional One that are more than enough for reason to continue to invest into few other growth of its portfolio of aircraft related assets. Provincial Aerospace, which we acquired primarily, because it complemented a number of our existing businesses, while providing the opportunity to enter into new markets to its Maritime Surveillance Solutions, contributed more than $50 million of revenue and more than $13 million on EBITDA in Q2.

Provisional strong contributions, its positive outlook and the caliber of its management team are why we are hosting our Q2 Board of Directors meeting and today's call from its headquarters in St. Johns.

In spite of our record performance in Q2, it was not without its challenges. Once again showing the importance of diversification, the manufacturing segments in particular continue to experience soft product demand due to weak market conditions in the oil and gas sector.

Additionally, WesTower was confronted with supply disruptions that impacted the delivery and installation of cellphone towers with some of our major telecommunications customers. Our decision to focus on the fundamentals of our business model that is being disciplined with our acquisitions, diversified with our operations and loyal to our shareholders allowed us to overcome these challenges.

More strategically it allowed us to generate a record EBITDA results in the second quarter. In effect by going back to our roots, we are better positioned with ever before.

The strength of our business model, which has proven itself for more than a decade coupled with a positive conditions that have given us confidence in our ability to staying Q2s performance in the period they had are behind our Board's decision to approve a 10% increase in our dividend to $0.16 a month during $1.92 per year on an annualized basis. This dividend increase will commence with the August dividend paid in mid-September and marks the company's second increase in the past nine months and 10th over our revenue history.

This latest increase puts EIC in a lead group of dividend paying companies. I’ll provide more commentary on our outlook and our ability to sustain our growth through 2015 and beyond in my closing remarks.

I'd now like to turn the call over to David, who will review our Q2 financial performance in greater detail.

Thanks Mike, good morning everyone. In the interest of time, I will restrict my comments to Q2 results only.

I would also like to point out that our results are reflective of continuing operations that is to say without the performance of WesTower U.S., which was sold in quarter four of last year. The results for the current quarter in comparative period are presented in a consistent manner I should also remind everyone that WesTower Canada which we retained as part of the divestiture transaction is now a manufacturing segment entity.

Then machine products, which we acquired this July has also been added to the manufacturing segment and its contributions will be reflected starting with the Q3 results. The aviation segment which consist of our Legacy airlines, Regional One and Provincial have not been affected by any changes.

Turning now to our income statement consolidated revenue for quarter two was a $196.2 million up 46% from last year. The growth was due to a number of factors as referenced by Mike earlier.

The most notable be in the contributions made by Provincial which we acquired this past January. In quarter 2 Provincial generated $50.2 million in revenue.

Our consolidated revenue also grew as a result of the strong performance by Regional One. Our subsidiary that focuses on the sale and lease of aftermarket aviation parts, engines and aircraft.

Regional One grew it’s revenue in Q2 by 66% to $26.7 million. Regional Ones improved performance was due principally to an expanded inventory made possible by growth capital investments we previously made.

The monetization of the Lufthansa CRJ700 aircraft and it’s positive impact on revenue and profitability remains in its early stages and will grow throughout the remainder of this year and into next year. These are expected to generate consistent or improved returns when monetization takes place.

Our Legacy airlines grew revenue by 8% to $72.9 million. This growth is largely due to the return of favorable other factors.

Our consolidated revenue growth in the period was partially offset by declines experienced by the manufacturing segment entities particularly our Alberta operations, which experienced softer demand for their products as a result of slow oil and gas markets. WesTower Canada which experienced the revenue decline of 9% to $24.8 million was impacted by supply chain disruptions that has since been elevated.

On a segmented basis the aviation segment generated a $149.8 million in revenue up 80%. The manufacturing segment had revenue of $46.

4 million this is down 9% or $4.5 million from the comparable period. Given how the revenue split between the segments appears to be heavily skewed towards the aviation business.

I think it’s important to put this balance into perspective. Over the past year we have taken serious steps to diversify our operations.

So that no one subsidiary dominates our performance. The aviation segment is part of that with it’s diversification spread over several companies, industries, and geographical locations.

Q2s results are actually very indicative of how diversified we have become. Within the aviation segment we have multiple revenue streams and product lines.

We serve multiple markets and geographies. We sell aftermarket aviation equipment, lease aircraft, we provide suppression services.

We sell maritime surveillance solutions and we provide fixed based operation services. In other words we’re not just a passenger airline company.

Consolidated EBITDA was a record $48.1 million up 116% from the comparative period. The growth was due to factors already sided.

Most notably it was driven by the contributions made by Provincial, which generated EBITDA of $13.7 million in Q2 with no comparable. Regional One also had a strong EBITDA results in Q2 contributing $12.8 million an increase of 120% from last year.

EBITDA gains were also due to the strong performance of our Legacy airlines, which experienced EBITDA growth of 59% to $20.7 million contributing factors to these gains as already discussed included previous investments in growth CapEx initiatives, lower fuel cost, better optimization of passenger routes and return to more normal weather conditions. Partially offsetting these would be the weakening of the Canadian dollar that has resulted in higher cost for aircraft related maintenance and parts given that the US dollar is the common currency for these items and services.

It is important to note that even without including the additional Provincial the aviation segment is up 78% over Q2 2014. On a segmented basis the aviation segment increased EBITDA by 151% to $47.2 million it’s EBITDA margins were up to 31.5% from 22.6% last year.

The manufacturing segments EBITDA was $5.1 million down from $6.5 million it’s EBITDA margins declined to 10.9% from 4.8% in the comparative period. We reported net earnings of $13.4 million or $0.58 per basic share for Q2 2015.

These comparative net earnings of $1.3 million or $0.06 per basic share in 2014, adjusted net earnings for Q2 2015 were $16.5 million or $0.71 per basic share. These comparative adjusted net earnings of $3 million or $0.14 per basic share for 2014.

In calculating adjusted earnings the only significant adjustments relate to the acquisition cost and the amortization of asset intangibles after tax. Turning now to our other key financial metrics.

Free cash flow totaled $37.6 million up 99% free cash flow on a per share basis was a $1.63 up 90%. Free cash flow as maintenance CapEx was $19.9 million up 126% from $8.8 million in the comparative period.

On a basic per share basis Q2 was $0.86 up 115% from $0.40 per share last year. The growth in free cash flow was a result of the increased EBITDA that was partially offset by higher cash interest charges and higher cash taxes.

As significant as the improvements to our cash flow metrics were they were impacted by higher interest charges. Note the comparative periods included $1.6 million and $2.9 million for the 3 and 6 months in 2014 respectively, which was allocated to discontinued operations.

Beyond that interest was higher, because of increased draws against our credit facilities used to fund the purchase of Provincial and by the amount spent on growth CapEx. This investment, which was almost 100% higher than last year was largely focused on the growth of Regional One.

There was US $28.7 million of additional investments made into Regional One to further grow it’s asset at aircraft asset portfolio including the delivery of three CRJ700 aircraft. Since been acquired in April 2013 Regional One has consistently generated positive returns of approximately 19% on an invested capital.

Regional One continues to look for further operations for growth in addition to the CRJ700 aircraft that are yet to be delivered as well Provincial aerospace purchased the Dash 8 aircraft to replace an existing leased SAAB aircraft. With a second Dash 8 early in the third quarter to replace another leased SAAB aircraft.

This completes the fleet change for Provincial. Consistent with our performance across all financial metrics.

Our payout ratio in Q2 of 2015 improved to 51% from a 105% in 2014 of all of the improvements we made with our financial metrics this lower payout ratio clearly demonstrates the effectiveness of our strategy to restore more balance to our operations and strengthen our profitability. Turning now to our balance sheet, we ended Q2 with a net cash position of $33.2 million and net working capital of a $119.3 million.

This represents a current ratio of 1.69 to 1. These figures compared to a net cash position of $15 million and net working capital of $95.8 million or a current ratio of $1.93 to 1 as at December 31, 2014.

This concludes my review of the financial results. I will now turn the call back to Mike for some closing remarks.

Thank you, David. As you just termed we ended Q2 more diversified, more profitable and better position for continued growth both organically and through acquisitions than ever before.

We’re particularly bullish with our near-term outlook. In the aviation sector we’ve entered the second half of the year, which historically is always been stronger due to seasonality factors and generally higher demand especially for our cargo and scheduled passenger services within our Legacy airlines.

At the beginning of the third quarter we acquired all of the non-aircraft assets of First Air, in the Kivalliq region and assume responsibility for all schedule, freight, and charter operations in the region. The acquisition of First Air's Kivalliq operations will improve the service to the region by offering a better schedule, faster freight delivery, and competitive pricing, while resolving the chronic airline overcapacity that has been endemic throughout the region.

The company has contracted First Air to fly the Winnipeg Rankin Inlet row on our behalf as well Custom Helicopters is experiencing strong demand for it’s fire high margin fire suppression services given the relatively dry and hot summer we have had particularly into schedule, which has resulted in the increased number for us fires. Regional One has performed extremely well since we acquired it in April 2013 generating a 19% return on our investment.

We expect the company to sustain it’s performance the periods ahead. Given it’s strong record, positive outlook, we’ll continue to look to invest more capital into it in future periods.

Our outlook for Provincial is also very encouraging. Like our Legacy airlines demand for its passenger service is stronger in the second half of the year.

It’s aerospace division is also seeing increased sales opportunities for its maritime surveillance solutions as well as search and rescue services given the recent geopolitical balance around the world. Although the sales cycle for these opportunities can be long and the market can be very competitive Provincial is well positioned given it’s track record and excellent reputation as a provider of innovative solutions.

In the manufacturing segment our prospects of the second half of the year will be continue to be impacted by a number of unfavorable market conditions. While energy prices in particular will continue to put pressure on our Alberta operations and soften demand for our steel tanks and water pressure solutions.

While the low Canadian dollar may generate new sales opportunities for some entity such as Overlanders, which provides precision sheet metal products close to the US border, it will also grow margins for other subsidiaries given that parts, components and equipment are often purchased in U.S. dollars.

Despite some challenging conditions there’s some cause for optimism in the manufacturing segment WesTower, which is largely unaffected by oil prices and currency fluctuations has resulted supply chain issues noted for most of the first half of 2015. It continues to see strong demand its services coming from the increased sale of mobile devices and the continued rollout of 4G networks by telecommunications carriers.

A recent CRTC decision on the rates of carriers can charge may however, so this rollout and impact some new Tower construction plans for the telecommunication carriers. On a more positive note our decision to acquire Ben Machine Products at the beginning of the third quarter well plus said some of the headwinds the manufacturing is currently facing.

Ben Machine manufacturer's precision components and assemblies for the aerospace and defense sectors. While its acquisition price of $46 million is relatively modest in contrast to some of our recent transaction Ben Machine allows us to enter new markets and geographies largely unaffected by commodity prices.

We expect the company will deliver accretive revenue, EBITDA and free cash flow. Starting with the Q3 results over the longer term we remain very committed to growth through disciplined acquisition with our access through deployable capital we’ll take advantage of acquisition opportunities that meet our criteria and allows to further diversify our operations.

That being said, it's been a very busy perhaps several months with the acquisitions of Provincial, Ben Machine and the first Kivalliq operations for the combined value of approximately $300 million in addition to selling WesTower U.S. for approximately $200 million.

The past 12 months have taught us that following our business model generates positive results. As with the case of Ben Machine, our acquisition targets will have to meet very specific criteria.

First, the purchase price must be within our historical norms but more importantly, the targets will have to operate in niche markets, generate strong cash flow and have excellent management teams. We are not about to astray from what’s made us successful.

I would like to thank you very much for listening and we’d like to open the call to questions. Operator?

Just digging into the legacy airlines, a large kind of the organic move there, you mentioned a few things driving that decreased fuel prices, last year's CapEx and a normalized weather. Want to maybe give the hierarchy of those three things in terms of the order magnitude.

Just curious if you can give us some color on that.

Currently the single biggest factor is the investments we’ve made in previous years in rationalizing the fleet and ground assets. It’s made us much more efficient and you can see that in the margins that have been delivered.

The weather, it helped our helicopter business pretty significantly because last year there was virtually not fire fighting work and this year there were some but the helicopter business is relatively modest in the grand scheme of our operations. So, overall impact is not dramatic.

I think one of the great misconceptions though is the impact of fuel prices. Fuel is significantly lower than it was a year ago, and if you take a look at what we've benefited by that reduction in fuel Trevor, it’s about 2.25 million to $2.5 million a quarter, that’s our net profitability impact.

The reduction in fuel is actually more than that but there is a significant amount of our fuel price that actually has passed on to directly to customers. So the benefit falls into the customers as opposed to the airline.

But offsetting that is the impact of the Canadian dollar declining because virtually all aircraft parts are purchased in U.S. dollars.

And this would offset a little over half of the benefit of the lower oil fuel prices. So in aviation, the net impact of lower fuel prices and a lower Canadian dollar would have been something in the range of $2 million over the first half of the year.

I would point out that the lower fuel prices have had an even bigger impact on our Alberta operations and manufacturing where the sales are very soft at Water Blast and Jasper Tank, but offsetting that in a very positive way is the repatriation of the growing profits from Regional One and SFI at the lower Canadian dollar rate. So, net-net in aviation, the fuel has a very positive impact but its offset largely by the value of the Canadian dollar.

In terms of the maintenance CapEx spend in the quarter is a bit higher than you used to seeing, just curious if you can talk about what was driving that and maybe what would be a starting point for the back half of the year 2016 on a quarterly basis?

That was by far the highest maintenance CapEx we’ve ever had driven by couple of things. With the addition of Provincial, they fly a lot of aircrafts, so there is more aircraft to maintain and we had more maintenance events, overhauls and engines as you know from previous periods.

Those are kind of lumpy, when they are going to happen, and it doesn’t really follow a distinct pattern relative to the time of the year. It’s not like first quarter, second quarter.

It varies year to year. I would suggest that this quarter was probably $2, $3, $4 million higher than normal.

And then just last one I guess for this part of queue. Ben Machine's, curious just how would set beyond just the initial, obviously the economics behind just buying that business.

I'm guessing it's going to be Regional One where it can help a lot of your existing legacy businesses. Is that a fair assumption and may be can you just give a bit color on what those might be.

Yes, absolutely. Ben is a unique business because while it's in our manufacturing segment, it’s much more closely aligned with our aviation businesses.

They build parts that will be used in aerospace and whether that in [indiscernible] contract that the federal government is currently letting or other work we do, it will be able to work with Provincial and to a certain extend even with Regional One on upgrading aircraft where they will have access to their capabilities to help those other businesses grow more quickly. So it’s a manufacturer that’s really in the aerospace field.

Good morning. Just a couple of questions from me, we saw very strong results and strong EBITDA margin improvement.

I am just wondering how sustainable are these results going forward. And further more aside from the acquisition costs in the quarter are there any onetime items that have an impact or are not expected to be there going forward either positive or negative?

Mona, at a big picture level we believe these results are absolutely sustainable and more than that sustainable not just on a absolute level, but in terms of the trend of continuing growing profits. We haven't received all of the benefits yet of the investments we have made into our legacy airlines, our recent purchased first - after a phase in growth pace through last part of this year, we'll make a dramatic impact I believe in 2016.

And well we don’t give forward looking information, I think one of the easiest ways to take a look at where Q2 sits relative to a year's performance, is historically the second quarter has been in the range of about 27%, 28%, and 29% of our annual total profitability and we see no reason why that's not the case here. Obviously after adjust that for transactions that are done part of way through the year like Ben Machine, but I think the proportion of Q2 is in line with historical results.

In terms of one-time items there is virtually nothing in the quarter. We saw the couple of aircraft at Kivalliq that gave us $0.5 million EBITDA gain, but outside of that there is really no one -time items.

Okay perfect. You answered my second question on seasonality so that’s good.

And just on the CapEx, I know the previous question are asked about maintenance, but I am just wondering on the growth CapEx. Given the new entity and now also including Ben Machine products, is a $20 million level for growth CapEx - is that expected to remain stable or could that come down just thoughts on this.

It was a big quarter for $20 million for us because we have ramped up the size of Regional One and to be clear we bought a lot of CRJ700 some of tons over the last nine months and we are just starting to deal with those. We haven’t liquidated any of them.

We've reached a number of them and you’ll see returns from those in future period. And as we deal with those you’ll actually see a repatriation of capital from those.

So I clearly do not expect investments at the level of $20 million a quarter that’s not realistic. But the one thing I really want to make sure we emphasize here is I have been saying for over the last 24 to 30 months that the investments in our legacy airlines are coming to a close.

We have re-done the fleet, we have invested in ground infrastructure, and while there will always be project here and there, material investment in this area is not expected in the future and in fact if you look the growth investment in legacy airlines was modestly negative because of the liquidation of two aircraft in this quarter. You’ll continue to see us both for opportunities at Regional One.

And as it relates to Provincial, we completed their fleet change over with early in the third quarter with the purchase of one more Dash 8. And so I don’t anticipate material growth CapEx there as well.

So I think on a go forward basis with the exception of Regional One growth CapEx will be very modest. And quite frankly with the returns we generated in Regional One, we look for opportunities to put more money into that company.

And Mona just expand on your question regarding Ben machine. There is no expectations for anything large to come that way from the acquisition of them.

Okay thank you. And just lastly from me looking at aviations segments specifically and margin improvement 800 basis points year-over-year.

Do you have targets for your return on invested capital there. And how are we right now versus your targets and are you happy with the progress there?

That’s a loads of question Mona there’s a bunch sitting there quite honestly we are very happy with the progress we’ve made in our analysis of our Legacy airlines. We are ahead of our internal plans though we believe there is still more improvement to be gained albeit at a lower space.

We’ve harvested some of the low hanging fruit, but we continue to work on initiatives to grow that margin. I think it’s important and understand that you do have somewhat of a product mix issue in the drive in the margin increase as Regional One becomes a bigger piece of that overall pie and it has much higher margins.

Having said that the Legacy airlines margins have improved dramatically in the quarter and we would expect continued albeit probably at a slower pace improvements in margins going to go forward basis.

Hi, thanks for taking my question, maybe just to go back to the CapEx. May be throwing working capital in there, when I looked back historically and I know your company has changed significantly, but your total CapEx and your working capital drag in the first half of the year, I think is the highest has ever been.

I just want to get a sense I know it sounds like some of others are going to reverse the growth CapEx is going to reverse I presume the working capital will reverse, but I was wondering in terms of timeline how you see that trending over the next call it 6, 12, 18 months as you look to harvest the cash flow from some of these investments just to get a sense of how those line items trend?

First of all Kevin, the key thing to understand most of the working capital that’s going in relates to Regional One and when we buy assets there we buy either fixed assets or planes we are going to tear apart and sell as parts. So we buy a project, it may well end up as a fixed assets or something available for sales.

So these are growth of the core of the business and its not working capital in the traditional sense like where your are receivable also are up. And those things are up its more items that we have available for sale and it largely relates to the purchase of aircraft that we are buying and the aircraft that we are going to part out as opposed to being shown as fixed asset is shown as innovatory.

In the near-term in the next six months I’d expect that the growth in working capital and the investment in growth CapEx would be much more modest in Regional One and with plateau, but having said that if we have an opportunity for rough tanzo type deal or another deal, we would welcome that. The return on invested capital is also most 20% and it’s consistently been that.

And so what all you’re doing is just like making small acquisitions you are going to base of the company and providing yourself the opportunity to generate bigger profits in the future. So in the near-term I see that plateauing in the long-term I hope to invest more.

That’s helpful, maybe just for point of clarification is there like a minimum amount of growth CapEx you think your business will always invest and I know if another Lufthansa deal pops up you seem eager to want to obviously invest in that. But outside of those uncertainties is there minimum amount of growth CapEx so we should be thinking that always layers on top of your maintenance CapEx and then through a annual cycle is this a business that generally should be kind of working capital neutral in spite of some of the seasonality with Regional One?

If you assume that the EBITDA plateaus there won’t be any growth CapEx. Those go together that right.

The investment in inventory and investment in fixed assets go with a go so the net amount was recycled some of these things when we get bigger as an example with Lufthansa Kevin some of those aircraft are going to come in and be sold as complete aircraft, which will repatriate significant capital of one. It will be our goal to redeploy that capital into new assets.

But where that not to be reveal we would reduce our investment in the company and wait till they have something else. In terms of a core level of a growth CapEx I don’t think that’s a material number.

The growth CapEx of when there is an opportunity to grow this business its opportunistic and we will take those opportunities with the ability to do what we’ve done in the last six months and into Q3 as we complete the Lufthansa I think is a unique opportunity. I don’t envision it going it that way in the future.

And maybe just the last one from me here. As you’ve pointed out you’ve been very active on the M&A front.

Just trying to get a sense of how you think your capital structure evolves overtime if I do my math correctly here. It looks like post to Ben acquisition I think your available lines it’s around $70 million give or take and obviously you’ve drawn on that quite a bit as you made some of these recent acquisitions.

How do you think of your capital structure in terms of debt equity the converts out there sitting here today given some of the M&A you’ve done over the recent history?

Thanks that’s a really good question. We’ve always prided ourselves of having a sustainable balance sheet that helps you through if you have ever challenge.

And clearly in 2015. We have a challenge with WesTower and it was the strength of our balance sheet that let us fix it sell it maintain our dividend, it has no issues with our bank covenants and those kinds of things.

And so when you look at where our debt our secured bank debt is relative to EBITDA on a go forward basis I think that leverage is pretty close to as high as we’d like to see it without further growth. You’ve seen us clean our part and verticals by getting rid of two denominations of those and take them down from something like $260 million down to close to $200 million.

We’re very comfortable at that level. So if we were to grow again I think the next capital raise would be on the equity side, but we’d like to have a reason to do it.

You’re accurate in your thoughts on what capital we have available at this point. And we’re not there somewhere to deploy either reason to do it, but we’re big believer in secured debt in around that two times EBITDA level.

We’re prepared to take converts on beyond that. But the converts need to have long-terms and I would point out that virtually all of our converts in the past have turned into equity by the time they matured as with the ones that we just called and in July, which 90 something percent of them turned into equity.

Thanks for taking my question.

Thank you.

Hey guys good morning. So just look cleaning up a couple of other items.

I guess first of all can you talk a little bit about the small acquisition you did with First Air what the rationale behind that was and what that might do for you for margins in the Legacy business?

Sure the rationale was the within Kivalliq region a big portion of the flying is done for the Provincial the territorial government. And there is regulated in that sort of service levels, which end up greatly over servicing the market as a result there is more flying wing, tip to wing, tip with them with 40C planes into a community of 3 or 4 or 500 people twice a day.

You really have capacity to move the entire community every second day it’s probably too much and so as a result, while invested in kind of the planes which helped us we put ground facilities in and we control most of the freight business. There’s still an overcapacity issue in the market and by buying First Air’s business we’ve been able to put a better schedule in place as and there slight a different times of the day and now as opposed to two flights leaving at 9:00 am.

There’s other options throughout the day, we’ve increased the jet service Winnipeg to Rankin. So our customers get better service.

We’ve increased the level of direct freight service of Winnipeg to Rankin. So fresh and frozen food gets there faster in better shape and at competitive price.

And from our point of view we increase yield factors, which in it itself would release our profitability. And we’ll reduce maintenance CapEx, because with the actual number absolute number of hours we’re flying has declined.

Okay. That’s great.

Thanks that’s good color. Just as well just thinking about the long-term fixed wings search and rescue contract.

Any updates on how that proposal is progressing?

Yes the bids are due next month in September there has historically been some conjecture in the marketplace that that would be extended. We see no evidence of that point and so we anticipate making our bid maybe next 30 or 40 days.

And we remain cautiously optimistic it’s a very limited group of potential betters of two or three people. And we think we have at least as good an as anyone else, perhaps better.

Okay.

It is up from…

Sorry can I -

I’m just going to that it is a long process. So, once the bids are actually in there will be a significant amount of time for the government and the agencies reviewing the material to boutique the bids and access them.

Yeah I know it’s fair enough. But along those line, I guess thinking about, let’s assume that we get a decision probably sometime in 2016.

Any thoughts on what’s your investments going to have to be in the Joint Venture if you were to win the bid?

It depends on how the planes are owned it can be. We don’t think it’s a massive capital play in last quarter and own some of the assets and I really don’t want to get into that on for competitive reasons at this point.

For us, we’re not the manufacturers of the aircrafts those are coming. It is public that our partner is Airbus.

And so they would be looking after that. We would be adapting the aircraft and more importantly servicing them on a long run basis.

This is a contract that has decades in it. If we’re successful, because of the life span of those aircraft and so a lot of analysis have gone into it on our part, but for me it disclosed dollar figures would put us at a competitive disadvantage.

Okay great. And then just maybe returning a little bit to the question that, kind of, what’s kind of getting into leverage.

Do guys have a rough number of where your senior debt EBITDA would be kind of on a pro forma basis taken into account all the different acquisitions that you’ve done at this point?

Well, you’re asking me for a forward looking number which we typically don’t give but if you were to take the quarter and as I say, it’s historically something in the 28% of the year number and we’ve given you the impact of Ben Machine. We disclosed what it’s EBITDA was, I think you can work backwards to what the number is.

And I can tell you that it’s significantly higher than virtually every analyst has going into this quarter defined it as. But we are not going to give a forward looking hard number.

Okay, great. Thanks guys.

Hi, good morning guys. I guess first on Regional One, just trying to think about that business, because it’s obviously exceeded expectations.

So I guess, the way we are thinking about here is do we see a significant ramp in Q3, Q4 as you sort of monetize those programs and, sort of, get the new aircraft and sort of think about sort of, once you maybe sell those planes the EBITDA impact and you said you mentioned that sort of, repatriating the growth capital, but the impact on the EBITDA line and sort of, timeline is there.

Yeah. It’s hard for me to tell you when we’re going to sell an aircraft versus lease of an aircraft versus parted out.

The bottom line what I can tell you is in the near-term we expect continue to grow our bottom line, because we haven’t fully monetize those assets. Whether it be from lease part or sale point of view.

We would clearly like to redeploy the cash as it comes in from the sale of the asset and that will depend on what opportunities are available at that time Mark, but if you look it, we reached a level of profitability in Q2 that we don’t view as material based on the capital we already have in because the number of the asset aren’t generating anything yet. When you’re going to part out an aircraft, there is months of work to get the stuff off of the aircraft into inventory before you can sell it and I can tell you the other thing is that with the decline in jet fuel prices the demand for this aircraft is significantly higher than one would have anticipated with 2014 fuel prices.

And as a result we are dealing with more of the aircraft as full flying aircraft as opposed to parts than we thought we would when we started the project, which is what’s resulted in the higher investment, because instead of selling them off as parts we’re leasing them out as operating aircraft.

That’s a good color. So, when you do when these planes are sold, I think there’s some plane sold in the quarter, is there sort of a big EBITDA inflow?

Impacting one quarter.

That can be up. And it depends on the things like we occasionally sell a smaller aircraft where you could have a gain of an EBITDA margin on that of 50% or if you have a bigger aircraft where you sell it and you have an EBITDA margin of 10%.

It depends on the individual transaction and what it is you're selling.

And the sale of aircraft is a fairly common factor is what -- Don isolated that it only happens once a quarter or once a year or anything like that. It is frequent for these group for the Regional One team to buy and sell or think that they're going to sell a certain aircraft and then better lease terms come up for reasons like Mike said where the CRJ 700 are now more valuable to some of the operating airlines and before saw them as being too inefficient for fuel purposes.

Okay. That's very helpful.

And I know Legacy gave some good color so around seasonality for the I guess consolidated operations, but again looking at Q2, the last few years the Legacy business has been typically been a fairly decent proxy for Q3, Q4, but it sounds like you're seeing some growth and you haven't really realized the full benefits yet for the past investment. So is it a reasonable expectation or again that's sort of -- there is on an absolute basis growth over Q2 levels in the back half?

Yes, that would be modest. Q2 was a good quarter and we intend to and if you look at our aviation business, we started to see the first beginnings of this return improvement in Q3 of last year.

So from hereon we're up against slightly better comps. So the magnitude of the improvement may decline, but we're by no means finished improving the rate of return in those businesses.

And I want to be crystal clear about the fuel thing. There is a couple people who follow our company who have disproportionately weighted the fuel benefit.

I've explained you, not to you, but the call today that we're talking about $2.5 million of benefit in terms of bottom line a quarter and our improvement in profitability is several times that. So it isn’t just the fuel prices are down, so they're making more money.

Sure, sure.

Hi guys. I am just trying to take a look at your Regional One maybe in isolation it's obviously a very strong profit driver and I can tell why you're eager to reinvest in that, but if we kind of looked at it in isolation over a time period, I don't know what that time period is, but when would you see cash on cash returns that you don't invest any more capital in the business.

You put a lot and you've got a lot coming out in the future with these Lufthansa aircrafts, but if you didn't invest another penny and you just got those Lufthansa aircrafts take their course when would see cash flow from ops less all the investments in fixed capital and working capital? When would you see that come full cycle and repatriate 119% or whatever that figure would be.

Again I understand what you're asking me, but it depends on whether I sell the aircraft, this full aircraft or I lease them or I part them out. Typically the investments in Regional One have a payback in a two to three year period.

Some of them are much faster. As an example bought and sold two aircrafts in Q2, smaller aircraft.

We bought and sold them in the same quarter. Either aircraft if we were to part them out, can take us two or three or four years to fully sell all the parts from that aircraft.

So it's hard for me to give you a precise answer because it depends on the individual situation and it depends on whether the best return for us is leasing it, selling it or parting it out. But having said that, we will -- generally we will start to see cash return some of those things within a quarter or two of when you paid for them.

Okay. So I guess in the next couple of quarters we should see higher cash returns if we factor everything in?

Yes. Again depending on whether we lease them or sell them, but yes.

Okay. Thank you and then just on the legacy airline business, you've talked about how we haven't seen all of the benefits yet of reinvestment.

So it is possible that we could even see margins go higher from here?

I certainly hope so, yes.

Okay.

Again I want to caution people that we had a big jump in the last two quarters. The rate of increase is going to decline, but we anticipate further improvement in those businesses, particularly as the final investments we've made whether they be the last or the least aircraft we bought out of Provincial or the investment in the First Air acquisition show themselves over the next 12 months.

But the margin you have there today is the highest like trace back in my model. So I am just trying to understand what is the real driver there?

Is it just eliminating unprofitable roots or can you give us kind of like a one or two thing answer for how the margins have just jumped so dramatically.

I think you needed, they've improved. They haven't jumped that dramatically.

First of all you have to factor out the product mix issue because with aerospace and stuff, the profit margins at Provincial as an example are different than they are at Comair. And so you need to if you're going to look at versus history, you need to sort of split out Regional One and Provincial and we give you enough information to be able to do that.

The improvement within the legacy airlines is the result of better loading appropriate aircraft and that's really a big part of this instead of flying pure freighters and pure passenger aircraft we're flying combination aircraft which improve yield, lower fuel prices and then efficiencies on everything from how we purchase engines or overhaul them doing it as a growth or there is a number of combinations and strategies where we've taken advantage of synergies between airline. And quite frankly we expect to continue to do that although we've probably taken the easier projects first.

The bear skin restructuring app a year ago as well and we're starting to see the fruits of that restructuring and the refocus of certain routes that are the profitable ones that's another area.

That's an airline that went for generating low return on capital to approaching a 10% return on capital over a couple of years as a result of the re-org.

Okay. Thank you.

And just to clarify or so on the legacy airline business, we can expect to see margins go higher potentially with the [indiscernible] acquisition right. Again a capacity thing okay.

Yes.

And then finally on the Ben acquisition, what is the EBITDA range, can you quantify that, is it six to eight, it is less than five.

The EBITDA range in that…

EV, EBITDA multiple price range.

I know this will attract capital, the EBITDA would be in the slightly less than $10 million, $10 million-ish range. Is that right Carmele?

That's correct, yes.

Approximately $10 million and the maintenance reinvestment in that business is exceptionally low and it would be nominal. So the free cash flow generation is quite high.

Sorry, one last follow-up. I didn't see it anywhere in the release small, but just EBITDA from WesTower Canada in the quarter?

It's in the manufacturing number. I don't have the exact number in front of me.

I think it's about $2.5 million.

Okay.

Yes, no it is for the three months.

Okay. Thanks a lot guys.

Hi, just a couple of points of clarification, the margin you put up in manufacturing and apologies if you've addressed this already, 10.9%, just give us some of the softness, do you view that as a good run rate for the back half of the year or could we see some improvement on the back of that given I imagine some of the cost cutting you're doing in some of your more challenged divisions?

I would suggest you that you're not going to see a material improvement in the back half because Alberta continues to weaken from our experience. Since the election change, the change of government, the province has barely been a free fall in terms of investment in capital items from our experience and so we would expect Alberta to boom in softer perhaps even weaken somewhat.

Although other manufacturing entities should improve in the balance of the year, particularly in fabrication in the states whose order book has grown significantly in the last quarter. So I think it's more likely by the time that gets into production you're talking about Q4.

So if you're using the current level as a boiler plate I don't think you're far wrong.

Okay. And then not to beat the dead horse on Regional One, when you think of the Lufthansa investment you've made and obviously you've highlighted the high return on invested capital and the cycle time to recoup some of that cash, when you think of through a life cycle, is your preference to start harvesting that cash first before making a big investment into another Lufthansa kind of deal or does that not come into your decision making process whether you're harvesting the cash from a previous large investment before making another large investment?

As long as the investment is performing to our expectations, the first - as an example, we don’t we’re in the stage of that there’s no impact I mean that’s thinking in the next deal. We’re earning a return on capital.

It’s really important to understand folks that, we look at one of those planes and we say okay we could sell it repatriate the, whatever invested capital we have in that plane making up a number to $8 million invested in the plane, we could sell it, and turn the profit get the $6 million back that in some cases might be the best deal or maybe we can lease it out and we sit for two years make a great lease return and then part it out. And so we look at our total return on capital overtime where we make the investment decisions in each of those or maybe we’ll lease the engines out and sell the parts, it changes with everyone.

And that’s why you need to just continue to track the EBITDA regenerate versus take-off the maintenance CapEx and track that versus the total investment. So that's tracking at 19% quite frankly the bigger the investment number is, the bigger the profitability is, the bigger the return to our shareholder is.

That’s helpful commentary. Thank you very much.

Thank you. Ladies and gentlemen, there are no further questions.

I'd like to thank everyone for participating in today's call. We’re very excited about our second quarter and the continued growth it's generated.

And we look forward to updating you on our progress in coming periods. Thank you very much.