Mike Pyle - CEO Carmele Peter - President Tammy Schock - CFO David Patrick - EVP, Finance

Mona Nazir - Laurentian Bank Kevin Chiang - CIBC Konark Gupta - Macquarie Derek Spronck - RBC Capital Markets Mark Neville - Scotiabank Chris Murray - AltaCorp Capital

Thank you, operator. And good morning everyone.

With me today are Carmele Peter, EIC’s President; Tammy Schock, our CFO; and David Patrick, our Executive Vice President of Finance. Tammy was appointed CFO last fall and will review our financial results in greater detail, following my opening remarks.

2015 was a pivotal year in our Company’s history. We generated record results across almost every financial measure that we use to gauge the performance and the strength of our business.

Most notably, revenue grew by approximately 50% to $807 million. EBITDA increased by 90% to $179 million.

Free cash flow less maintenance CapEx grew by over a 100% that was 112% to $74 million, on a basic per share basis it climbed 90% to $3.02. And perhaps most impressive of all, we improved our payout ratio to 60%.

The 60% payout ratio is after increasing our distributions by 10% in December to $0.16 per share per month or $1.92 per share on an annualized basis. This dividend increase marked the 10th time over the last 12 years and put EIC in a very exclusive group of dividend paying companies.

It is also worth noting that the lowering of our payout ratio to 60% occurred while we grew the average outstanding number of shares by over 11%. The increase in our share base, I should point out, was mainly due to a $75 million bought deal financing whose proceeds were reduced to reduce our debt and strengthen our balance sheet and provide future liquidity for ongoing transactions and also the conversion of debentures by investors into stock and as a result, the closing of three acquisitions during the year.

Reducing our payout ratio to 60% and increasing the dividend by 10% against this backdrop of activities should give everyone a clear indication of how remarkable 2015 truly was for EIC and our shareholders. Our success in 2015 was driven by a strategic plan that we implemented late in 2014.

This plan focused on core fundamentals of what has made EIC successful and more specifically has allowed us to regularly grow our dividend and distributions to shareholders. Our plan was based on four key objectives.

Firstly, become more effectively diversified through a strategic divestiture and disciplined acquisitions. Secondly, fuel organic growth opportunities through strategic investment in our existing subsidiaries.

Three, improve profitability, particularly in our Legacy airlines through restructuring and efficiency initiatives. And finally, strengthen our balance sheet by reducing our debt.

Achieving any of these objectives that we set for ourselves in 2015 would have been a cause for a celebration, given some of the economic volatility we’ve experienced. The faster we achieved and surpassed all of our goals speaks to the strength of our business model and to our ability to execute.

Our goal of becoming more diversified was achieved through all of the acquisitions we closed in 2015, our first was Provincial Aerospace Limited, which closed at the beginning of January. With $244 million purchase price, it was a largest acquisition in Company’s history and it was also the most impactful.

We acquired Provincial because it was accretive to our results and was well-positioned as a leader in its niche markets. It complemented a number of our existing businesses such as scheduled air services and fixed base operations.

The company also provided us the opportunity to enter new markets through its aerospace division, which provides maritime surveillance solution to customers in North America, the Caribbean and the Middle East. Provincial, as I’ve mentioned before, is in itself a diversified company.

Provincial’s performance to-date has been very encouraging. In 2015, it contributed more than $200 million in revenue and approximately $55 million in EBITDA, totals that were very much consistent with our expectations.

The acquisitions of Ben Machine and First Air’s Kivalliq operations were considerably smaller but important nonetheless. Acquiring Ben Machine allowed us to expand our manufacturing segment into new geographical and product markets.

Just as important, the acquisition allowed us to offset some of the challenges that the manufacturing segment is experiencing, particularly in Alberta, due to weak oil demand. Ben Machine’s revenue and EBITDA contributions since being acquired in July were also in line with our expectations.

Earlier, I mentioned that fuelling organic growth opportunities was a key objective for 2015. We largely achieved this through the $45 million of net growth capital investments we made in Regional One.

These investments allowed Regional One to add 11 CRJ700 aircraft to its existing portfolio of aircraft. We’ve specifically taken a blended approach to monetizing our portfolio of these CRJ700s.

In 2015, Regional One sold two of these aircrafts, leased out six, parted out three and currently has two more available for sale or lease. This blended approach allows Regional One to generate a maximum return possible for each asset by monetizing into the highest use customer.

This approach combining higher margin leases of whole aircraft or aircraft engines with outright sale of parts or full aircraft, assisted Regional One in generating significant revenue and EBITDA growth, spurring our consolidated record results for 2015. To say that Regional One has exceeded our expectations since we acquired it in 2013 would be an understatement.

Regional One’s strong results in 2015 are particularly impressive, given that it is still in the early stages of monetizing its portfolio of CRJ700 aircraft acquired from Lufthansa. I should remind everyone that in addition to a standalone profitability and return on capital, one of the reasons that we acquired Regional One was to offset the price we paid for aviation equipment and aftermarket parts for our Legacy airlines and more recently for Provincial.

The strategic benefits of Regional One’s acquisition grew in the second half of 2015, as its sales which are in U.S. currency, helped to offset the impact that weak Canadian dollar had on our consolidated results.

The reason is that virtually all aircraft parts and components are effectively priced in U.S. dollars.

In effect, Regional One acts as a natural hedge to currency fluctuations. This hedge was especially important, given the considerable drop that the Canadian dollar experienced over the second half of 2015 and helped to protect our profits.

Our goal of increasing profitability was largely centered on improving the performance of our Legacy airlines. For new followers of the EIC, this group includes Calm Air, Perimeter, Bearskin, Keewatin and Custom Helicopters.

These companies, I should point out, are different from traditional aviation companies and that they service very niche markets and are basically a provider of essential passenger, cargo and medevac services to remote parts of Manitoba, Ontario and Nunavut. Lower fuel costs obviously helped to drive EBITDA improvements in 2015, but they weren’t the predominant factor.

The impact on our bottom line from the fuel price change is very different from carrier to carrier. Some, such as Calm and Keewatin, purchased a large portion of their fuel in Nunavut, which has not experienced any material change in fuel price.

While others have contracts where fuel price changes are automatically passed on to the customer. We have invested significantly over the past several years in new infrastructure and revamping our fleet.

We have also optimized flight schedules and streamlined operations. In addition, we experienced a return to normal weather conditions in Q2 and Q3 that resulted in higher demand for fire-suppression services, provided by our Custom Helicopters company.

Each of these was a contributing factor, not only to the strong performance of our Legacy airlines but to also to our record consolidated results in 2015. Despite of our record performance in 2015, it was not without challenges.

The manufacturing segment in particular continued to experience soft product demand due to weak market conditions, especially in the oil and gas sector. We offset some of the drag on that performance that weak commodity prices had on our manufacturing segment, through the acquisition of Ben Machine.

Our ability to fully withstand depressed market conditions facing our manufacturing segment and not have our consolidated results impacted, was due to our business model. Being diversified, operating in niche markets with very -- with multiple revenues streams and generating steady results proved to be a very effective in 2015.

The soundness of our business model will allow us to save this performance through 2016. I’ll now provide more commentary on our outlook in my closing remarks.

But for now, I’ll turn the call over to Tammy, who will review our financial results in greater detail.

Thanks Mike. Good morning everyone.

In the interest of time, I am going to focus the majority of my comments on Q4. However, first, I’ll lead off with some highlights of our annual results.

I’ll also quickly point out that our results include the contributions of Provincial which we acquired in January and Ben Machine Products which we acquired in July, as such, 2014 includes no comparative amounts for these businesses. Consolidated revenue for 2015 was $807 million, this is an increase of $265 million or about 50% from 2014.

Our aviation segment was $276 million higher than the prior year. This growth was due to the acquisition of Provincial with a full year of results, Regional One experiencing continued strong demand for its aftermarket parts, engines and aircraft, and contributions stemming from the acquisition of First Air’s non-aircraft assets in the Kivalliq region.

Revenue in our manufacturing segment decreased by approximately $11 million or 5% due to challenges being experienced, particularly in Alberta. The impact of these challenges were partially offset by the positive inclusion of Ben Machine’s results in the last half of the year.

EBITDA increased by $85 million or 90% to a $179 million. EBITDA in our aviation segment was $172 million, a 116% increase.

In our manufacturing segment, EBITDA decreased by 11% to $23 million, the drivers behind this are consistent with the drivers behind our increased revenue for the year. Net earnings was $40 million, an increase of $52 million compared to 2014.

Adjusted net earnings increased 249% to $52 million or $2.09 basic per share for 2015 compared to $15 million or $0.67 basic per share for 2014. Adjustments included in the calculation of adjusted net earnings for both years include those relating to acquisition costs and amortization of intangibles.

Impacting just the comparative period is restructuring cost incurred and the settlement charge of $23 million with the CRA. Free cash flow less maintenances CapEx was up 112% to $74 million; on a basic per share basis, this was $3.02 compared to a $1.59 in the prior year.

This resulted in basic per share payout ratio of 60% compared to 106% in the prior year. As noted by Mike, this payout ratio reflects both, higher dividends and a higher number of shares outstanding.

Dividends for 2015 were $1.82 per share compared to $1.69 per share in 2014, an increase of 7%. I’ll now comment on our fourth quarter financial results.

Revenue for Q4 was $225 million up $86 million or 62% from Q4 2014. Consistent with the themes outlined earlier, our growth in Q4 was due to the strong performance of the aviation segment and was largely driven by the contributions made by Provincial, Regional One, as well as the First Air transactions.

On a segmented basis, the aviation segment generated revenue in Q4 2015 of $174 million, up 100% from Q4 2014. In 2015, the aviation segment generated 78% of EIC’s revenues compared to 63% in Q4 2014.

Given our overall diversification strategy, I’ll provide some additional perspective on the contribution of the aviation segment in a moment. The manufacturing segment generated in Q4 2015 -- revenue in Q4 2015 of $50 million, this is down 3% from Q4 2014.

Our Alberta operations in particular were negatively impacted by declining oil and gas prices, resulting in significantly lower product demand in each of its operations. The contributions made by Ben Machine, which we acquired in July, partially offset the overall decline experienced by the other manufacturing segment entities.

EBITDA for the fourth quarter was $46 million, up 76% from Q4 2014. The increase was due primarily to the acquisition of Provincial, the strong performance at Regional One as a result of the larger portfolio of aircraft assets, and sales that are denominated in U.S.

currency as well as improvement at the Legacy airlines. Partially offsetting this growth in our Legacy airlines was the unusually mild and unsettled weather in the central and northern regions of Canada where our Legacy airlines operate.

These weather conditions contributed the higher levels of fog and lead to an exceptional number of flight cancellations, which negatively impacted EBITDA. The aviation segment overall increased its EBITDA by 100% to $44 million.

Its EBITDA margins were 25.3% which is consistent with the prior year. The manufacturing segment’s EBITDA was relatively flat; its EBITDA margins were also relatively flat at 13.4% in the current period versus 13.2% in the prior year.

Unfavorable market conditions for manufacturing segment entities were partially offset by Ben Machine’s contributions. Given our earlier comments about our objective of becoming more effectively diversified, I would like to put the overall growth and proportion of EBITDA contributed by the aviation segment into perspective.

While our growth in 2015 has been generated by entities that are included in our aviation segment, the reality is that our growth has not been driven by a single entity, nor is it driven by passenger flight services only. The aviation segment is made up of multiple product and service lines that generate multiple revenue streams by serving a number of geographies.

To elaborate, we sell after market aviation equipment, we lease aircraft, we provide fire-suppression services, we sell maritime surveillance solutions, we provide medevac services to remote communities, we provide fixed base operations services, and we provide passenger flight services. So, we do have a significant degree of diversification within our aviation segment.

Earnings: Consolidated earnings from our continuing operations for the fourth quarter were $10 million or $0.36 basic per share. These compare to a consolidated net loss of $18 million or $0.79 basic per share last years.

Last year’s net loss includes the impact of a non-cash charge of $23 million, resulting from the agreement we reached with CRA. Free cash flow totaled $36 million, up 60% from last year.

On a basic per share basis, free cash flow was a $1.31, up 31%. Free cash flow less maintenance CapEx was $20 million, up 75%.

On a basic per share basis, free cash flow less maintenance CapEx was $0.74, up 42%. Our per share payout ratio, which is based on free cash flow less maintenance CapEx, was 65% for the fourth quarter, this compared to 83% in Q4 2014.

The improvement was consistent with the factors that Mike outlined in his comments. Turning now to our balance sheet.

We ended the year in a net cash position of $15 million and net working capital over $135 million, this represents the current ratio of 1.74 to 1. These compared to a net cash position of $15 million and net working capital of $96 million or a current ratio of 1.93 to 1 at December 31, 2014.

We also increased our credit facilities to $500 million Canadian plus U.S. $50 million in the fourth quarter, providing us with additional financial flexibility.

This concludes my review of our financial highlights. And I will turn the call back to Mike for some closing remarks.

Thanks, Tammy. As you have heard, we ended 2015 more diversified, more profitable, and better positioned for continued growth, both organically and through acquisitions than ever before.

While challenging market conditions for a portion of our manufacturing segment persist, mainly because of volatile oil and gas prices, our ability to withstand these pressures gives us confidence in our outlook. More specifically, we expect that Regional One will sustain its performance in the periods ahead.

The positive outlook is based on the fact that we are still at the early stages of monetizing its fleet of CRJ700 aircraft. As already mentioned, Regional One is taking an opportunistic approach with its inventory.

It’s aircraft are either sold, leased for script [ph] for parts depending on the customer sales opportunity that generates a maximum return. Equally important, Regional One will continue to act as a natural hedge, given that their sales are in U.S.

currency, offsetting foreign exchange translation impacts that we incur from the purchase of equipment price in U.S. dollars.

Our outlook for Provincial is also very encouraging. Its aerospace division is also seeing increased sales opportunities for its maritime surveillance solutions as well as search and rescue services, given the recent geopolitical developments around the world.

Although the sales cycle for these opportunities can be long and the market very competitive, Provincial is well-positioned, given its track record and excellent reputation as a provider of innovative solutions. This track record resulted in a Provincial Aerospace’s signing a five-year agreement that will generate additional revenue estimated in excess of $150 million with the customer in the UAE over the next five years.

A similar sales opportunity exists close to home. Provincial is part of the consortium bidding on the fixed wing search and rescue proposal from the government of Canada for services throughout the country.

Within our Legacy airlines, we anticipate solid performance throughout 2016. Our past infrastructure investments coupled with fleet renewal and grown optimization efforts position us very well for continued organic growth.

In contrast to some airlines that are experiencing negative impact due to volatile market conditions in the Alberta market, our airlines have no exposure to this market. As mentioned earlier, our Legacy airlines primarily service Manitoba, Nunavut and Ontario.

Provincial airlines is also not affected by the negative conditions in the Alberta marketplace as it principally serves Newfoundland, Labrador, Quebec and parts of Atlantic Canada. While the decline in oil prices has impacted the maritime regions by reducing offshore drilling operations, it is not as the same level of impact that it has had in the Alberta marketplace.

Any weakness in Provincial’s airline operations is expected to offset by the strength of its aerospace business. While the manufacturing segment is facing strong headwinds, we do have some bright spots.

Ben Machine, which is largely unaffected by currency and commodity price issues, is experiencing strong demand for its precision components as assemblies used in aerospace and defense projects. Turning to our acquisition strategy, our outlook on the acquisition front is also positive.

We remain very committed to grow through disciplined acquisition. As a result of the expanding credit facility and the $75 million bond equity financing completed this fall, we now have access to sufficient capital to enable us to meet our criteria and further diversify our operations.

As was the case with the almost $300 million worth of acquisitions that we’ve completed this year, our acquisition targets will have to meet very specific criteria. First, the purchase price will have to be within our historical norms and more importantly, the targets will have to operate within niche markets, generate strong cash flows, and have excellent management teams.

I would like to take one moment to clarify misconception about EIC, held by a number of investors. While a significant portion of the revenue, free cash flow and earnings of EIC are generated by our airline businesses, the aviation sector of EIC has very little in common with larger public company carriers.

On a macro level, similar to the major airlines, all airlines benefit from lower fuel costs and are hurt by the value of the Canadian dollar but this is where the comparison ends. We’re not exposed to the Alberta market where the general economy as most of our customer are transporting between remote communities in the far north where air travel is considered an essential service.

Furthermore, fuel costs and currency changes are significantly offset by the natural hedges created by our various other non-airline subsidiaries. As such, the recent decline of our stock -- in our stock of approximately 15% since year-end is very difficult to explain.

Our Q4 and fiscal 2015 results are excellent. Our outlook is strong and is unchanged from the end of 2015.

Our dividend is growing, our payout ratio is strong and our balance sheet allows us to act quickly when the opportunities are available. The recent decline in our stock is not in line with these fundamentals, which I reiterate have in no way weakened over the last 55 days.

Thank you very much for listening. And I’d now like to open the call to questions.

Operator?

Firstly, just on the EBITDA margin. Last quarter, you stated that 25% was a new norm and sustainable.

Could you comment on the seasonality in Q4 and the part that played in slightly lower sequential margins, particularly in the aviation segment with start [ph] delays due to fog? And how do we think about margins into 2016 especially in light of additional cost reductions which you anticipate?

I think when you look at our margins in the aviation business, two things you have to take into account, Mona. One of the product mix issue between the more aerospace like businesses of Regional One and maritime surveillance part of Provincial was typically attract higher margins versus the pure passenger business in the Legacy airlines, so that can impact things.

But when we look at Q4 specifically, what happened was we had a number of communities in northern Manitoba and in central Nunavut where we couldn’t reach for days in a time and in some I think it was almost as long as a week, where we couldn’t get in because fog was too low to the ground that we couldn’t bring the aircraft in. So, to enable us to meet our customers’ demands especially on Christmas, you can’t say your Christmas gift is not getting there because it was foggy.

We had to bring in outsiders to help us. And amongst others, like we brought in cargo, jet used their 767 to haul big volumes of freight.

And what happens when we are using those, that’s a very low margins product. We do have to make sure our customers are happy.

And so, we still have the revenue from moving that product, if at virtually no margin. And as a result, I think that’s why you see a slight decline from what you would have expected in aviation margins.

But, I still give the caution that if Regional One were to have a bigger or smaller quarter in a given period, it could affect things far more positively or negatively from the target you discuss.

And then just secondly, turning to PAL, you have a number of near-term growth opportunities. I am just wondering, if you could comment on the $150 million contract in the UAE; how it’s provided over the five years, if it occurred [ph] additional interest from other countries on defense, any update of the timing for the fixed wing search and rescue program?

And lastly, just on the, Voisey’s Bay mine extension, which I think you mentioned in the MD&A?

Sure. Mona, it’s Carmele.

Let me try and answer those questions. So, the first one, in relation to our new PBL[ph] contract, which is a five-year contract.

You can expect those revenues to be fairly even over the five years. There is a slight uptick in the first couple years as we build up the necessary inventory that’s required for the project but otherwise it’s fairly consistent.

The fixed wing timing, there is no prescribed timing for when we might expect to hear. Our expectations would be no earlier than the end of the year.

So that’s what we are looking for. And sorry, Mona.

Can you just give me the last question again?

Yes, just in the MD&A, you mentioned Voisey’s Bay mine and how you expect additional revenue opportunities, just given that’s been extended out?

Yes, absolutely. That’s the project which is continuing to proceed.

So, we expect to be able to increase our charter capabilities in relation to that. We hope to have that come on in the next several months.

Maybe just trying to Regional One and some of the opportunities outside of the CRJ contract with Lufthansa. I guess we have been seeing and reading just how airlines are holding on to the older planes a little bit longer, given the lower fuel price environment or they are tapping into the used aircraft market.

And I am just wondering, are you seeing that impact of supply of potential aircraft into Regional One at this point in time, or maybe tapping an immaterial impact? Your thoughts that would be helpful.

Absolutely, Kevin, your description is accurate. The low fuel price environment reduces the need to get rid of older, less fuel efficient aircraft as quickly, and so they stay in service longer.

And that has a double edged impact in that market because some of the planes that would have become parts, stay as flyers. And then you need parts to keep those planes in the air.

So, what that has done has increased the competition for the purchase of those aircraft, and on the other side strengthened the sales price as you get -- when we liquidate portfolio position. I think it’s something you will see in the prolonged -- stick with us for quite a while because the fuel environment, it doesn’t need to be $30 crude for this to be a phenomenon, this would be going on at $60 crude.

And so, I think you will see that for a prolonged period. Having said that, these planes do have defined lifecycles before overhaul.

And as these planes get to overhaul, I still believe you will see a significant amount of them come out of service because of the cost of a major overhaul to keep it as a flying planed for a prolonged period.

And if my math is correct, it looks like in Q4, you had effectively zero growth CapEx in the fourth quarter. And just when you look out into 2016, I know through 2015 you talked about growth CapEx coming in here just because you’ve obviously made some significant investments over the past 12 to 18 months.

Could you help us, as we look out into 2016, how you think about CapEx and if you could potentially break it down between a maintenance and growth? And then maybe just adding to that, it looks like the acquisition of Ben Machines may have impacted working capital, being a bit of drag on a full year basis in 2015, just how we should be thinking about working capital turning around in 2016, as you integrate Ben Machines more fully into your organization?

There is a few questions there, I’m going to start with maintenance CapEx. Maintenance CapEx, as you know, are kind of spotty in our business because it depends on when we do overhauls of aircraft, and so it can be lumpy quarter-to-quarter.

I would suggest you that because we’ve reached a mature state of our fleet and the number of planes flying and the type of planes flying, if you were to a look at a rolling average of the last four quarters or the last six quarters, do we get a number that is a reasonable proxy for what you can expect going forward. Again, on average, you will see bumps and valleys in that.

As an example, we try to view as much maintenance CapEx in the first quarter as we can, because it’s our slower period with which roads open. And I think that would be the case in this year.

But in terms of the level of maintenance CapEx, I think it’s mature subject to whatever impacts ongoing decline of the dollar has. I think history is a very good predictor for you.

In terms of growth CapEx, because we’ve finished most of the projects in the airlines, I think the main driver of growth CapEx would be the opportunities uncovered at Regional One. And that tends to be opportunistic by its nature, it depends on what we stumble into and negotiations we’re successful in.

And while I would not expect it to return to the levels in the beginning of last year, I also would not expect it to be stagnant like it was in the fourth quarter. So, I would be looking at a modest level of growth CapEx and again with some variability depending on our opportunistic nature of that business.

You asked me one more about...

Yes, just working capital. It looks like in the MD&A, it seems like Ben Machines might have been a bit of a drag or towards the yearend there, just wondering how we should be thinking about working capital in 2016?

I’m going to hand the floor down to David, he is with us here.

Yes, working capital, it will have -- again, currency plays an impact on that, not from a true cash flow perspective but it will show a change in it, in particular as our U.S. entities are all getting converted over, in particular with Regional One.

And as that portfolio of assets grows or declines, depending on what’s being sold or being moved maybe from full a aircraft into part it out, pieces of the aircraft, you will see a shift, if and when that happens. So, in regards to -- I think you commented briefly on Ben Machine.

Ben Machine is very efficient in what they have from a working capital perspective. And yes, they do have some fluctuations.

But traditionally, what they produce, goes out the door and they don’t hold the whole significant amount of kind of finished goods in that regards. They are very efficient, as I said.

Their net working capital number would be insignificant...

Okay. That’s very helpful.

I’ll leave it there. Thank you very much everybody.

Hi, guys. Good morning and thanks for taking my question.

Good quarter. So, my first question is on WesTower.

I guess the revenue was kind of soft throughout the year. And, I am just wondering what’s your outlook on WesTower for this year unlike in terms of how do we expect and when do we expect the stability in revenue or EBITDA to come.

And I’m assuming the margins would improved in 2015, only because you switched from more capital kind of tower building to sort of upgrade work. So, would you expect margins to improve further this year with the lower revenue in 2016?

I think there were three separate things going on when you talked about WesTower. First of all, regulatory environment has changed where the government is mandating that they share -- the companies share towers which limits the amount of new construction.

Secondly, we’re in kind of a low period in terms of technology trade-out. We’re coming close to the end of 4G but we haven’t started 5G.

And so, what we’re seeing is a lot of infill kind of work where small box technology, small pieces of equipment are being added on smaller pools. And you are quite right that that tends to be much more labor driven.

I think you will see margin solidifies through the year. But I do think it will tend to be another slower year in that business just because of the general macro environment.

Again, the company is getting used to the legislative environment and we get closer to the ramp up for 5G, which is likely to come out sometime in 2017 or 2018.

Okay, thanks for that Mike. Second question on -- sort of big picture question.

The aviation segment is I think almost about three-fourth of your business in terms of revenue today and versus less than two-third in 2014, if you exclude the WesTower U.S. Now, does that concern you because of the diversification goals that you have in mind, and what initiatives do you plan to undertake to fix this?

Yes. I think it’s a really good question.

But I think the answer is little bit different to what’s your looking for. The challenge is the way we report, not the way we operate.

In Tammy’s report, she talked about the wide variety of things we do. When people think of aviation, virtually everybody thinks of a passenger getting on our plane and flying somewhere, maybe our more advanced customer thinks of us putting on some food and shipping it to a northern store.

But our offering of services is far more depth than that. Yes, we do service northern community.

We provide medevacs; we operate fixed base operations. But most importantly, we operate aerospace businesses where we are providing aftermarket parts around the world from Regional One to airlines in every part of the world.

And with our maritime surveillance business and Provincial, we’re involved in completely different markets whether it’s tracking icebergs for the oil fields or watching for drug running in Curacao or military defense stuff in UAE, we’re in a wide variety of different markets. And one of the things we talked about internally is whether our statements still are reader the best insight possible into that.

And as a result, we’re currently investigating changing our reporting on a go forward basis from two segments to three segments, which will better identify the different businesses we are in and show the customer that while we have stopped this related aviation, it’s very diversified within that group and is driven by completely different cycles. If I were to go back two years where we had a big piece cell tower construction, over half of our business was that company and over 40% of it was one customer.

Now, we have significant amount of our business in aviation, but it’s everything from flying a medevac in Nunavut to a search and rescue mission in Newfoundland to leasing a CRJ in India to doing patrolling in the Gulf for submarines in the Middle East. So, I don’t think diversity is a challenge, I think it’s in fact a strong asset.

And we are working on better ways to communicate that and perhaps better ways to present our financial statements, so it’s easier to understand.

Are you seeing any further synergies or vertical integration opportunities to be had with PAL or have you squeezed most of those out already?

If we’re going to limit it to PAL, we’re largely -- I mean we always started the overall process and so there will be more of what we’re doing. But I think the synergy stuff is more driven by some of the other back-end things we’re doing across our legacy group.

As recently as January, we opened a joint charter capability, so that when people call, we can look after any opportunity basically in North America from two seats to 75 seats with our planes as opposed to trying to do that individually. We’re in the midst of our parts purchasing on a consolidated basis.

Just think of two, I don’t…

Yes, and the other thing -- Derek, it’s Carmele, that Provincial specifically allowed us to do is it gave us that critical mass to give us pretty significant buying power, as a collective group for airlines. So, we’re kind of in the infancy of being able to fully utilize that to obviously reduce cost and that will obviously allow us to do or help deal with profitability and drive some further efficiencies out of the group as a whole.

Well these be as material or are you able to quantify it or…?

Too early right now to quantify it. Obviously there’ll be savings.

Material, I think you’d have to wait for another year to kind of flush out exactly what we can drive there.

I think it’s safe to say, the way I’ve been comfortable answering that is we have material margin improvements in 2015, I expect further margin improvements in 2016, but I don’t expect the scale of the improvement in 2016 to match what we did in 2015.

Just moving onto the acquisition market that -- how is that shaping up for you right now and what sort of acquisition capacity are you comfortable with?

In terms of what, by capacity? Help me with what the question, where are you going?

Well, just off the balance sheet, like what sort of levels that you’d be willing to deploy on an acquisition, utilizing your balance sheet…

I mean for us to deploy $200 million for the right opportunity is something we could do very quickly, understanding Derek that most deals we do are going to have an equity component to the vendor. So, that’s going to vary it.

It depends on the pricing in a transaction. But the bottom line is what we always want to do is have enough money on hand to fund the next deal.

And the biggest deal we’ve ever done is about $240 million for Provincial and we could fund that today again. And if were to do that, we then tweak our balance sheet afterward and see what other capital we needed.

But we’ve put ourselves in a position that, should a big opportunity come, we can move or quite frankly if it’s a series of smaller opportunities. We’ve only done one deal over $100 million and that was the Provincial deal.

So, the likelihood of really two of those in a row I think is pretty small. But, we have the capability, should that arrive.

I think distressed markets creating any sort of new opportunities that might be anticipated?

That’s a really good question. And the answer is yes, but maybe not in the way people would anticipate.

Our head office is 16 people, so we don’t do turnouts. So, where the distress helps us is some of the private equity people.

And quite frankly the access to capital in the U.S. may tighten up a little bit, which makes our purchase prices slightly more competitive than they are in the buoyant frothy markets that we had a year ago.

And so, I think we will see an increase of the opportunities that we see, and it may help us a little bit on the pricing. But, we just aren’t equipped to buy anything that’s broken unless it fits directly into something we already own.

We buy companies that are already working well, so turnarounds don’t fit us.

I am just trying to back some numbers here in the aviation business. And again, it looks like, based on commentary that the legacy business, there was a fairly material step-down in margin and EBITDA from Q2, Q3.

I guess you described it as sort of weather and the challenges that that brings, so nothing structural or macro related. I mean is that correct I guess the way we are seeing this?

Yes, it’s part of the normal cycle; it was exacerbated with the bad weather. And so, one of the things you see in Q4 every year is there is a tremendous increase in the amount of freight that goes north.

People go both directions, freight only goes north. And so, when you have stuff going up for Christmas, I think drives our revenues higher in Q4, it’s at a lower margin because you don’t have anything on that return trip.

And you offer that more freight the way you can sit on our economy aircraft. So, part of the seasonal and that was exacerbated by the fact that we had some weather challenges.

I think the other thing that’s important to understand is during the third quarter, we bought additional business in the Kivalliq market and which Calm Air is now servicing. It was a lot of volume which we didn’t have the infrastructure in place to deal with.

We are in the process of finalizing that now whether that be with hangers we had to equip or apartments we had to have, so people could stay there, so that we could do the service there. That’s starting to come to completion, and cash investment is completed.

And I think you will see further growth in margin from that business over the next 24 months, as we digest that extra revenue that we purchased last year.

Okay, but nothing -- again it sounds -- any issues sort of sound temporary. Okay.

Yes, there is no -- there’s been no change in the business in any way that would create an adverse margin reaction.

Right, okay. For Regional One, and again I appreciate the difficulty in I guess forecasting the business going forward, just given the different layers of revenue or different avenues of revenues come in.

But I guess to think about this business sort of what you did in Q4 and where your avenues, your day program. I was assuming sort of no further divestitures of those aircraft.

I guess is the right way to think about the business sort of Q4 less $15 million sort of a run rate for ‘16, again assuming you don’t sell any of those aircraft, which is probably an unrealistic assumption?

Q4, what -- say that again, Q4 less…

Less $15 million, I guess, I think is what you said to the sale of the two aircraft?

Again, if you look at it from a revenue point of view, like you say, I run the business and I am not sure I can forecast the revenue because of the differences between when we lease aircraft and sell aircraft. I think the -- if you are looking at the free cash flow or the EBITDA, we have not fully digested and started to generate revenue from all the growth out CapEx that we did in 2015.

So, I think it’s reason to expect continued growth in Regional One through 2016, based on what we have already invested. And then, if you forecast further growth CapEx, you would then layer on a further return on capital; if you don’t invest further growth CapEx, you would see a plateau.

And I guess just on the growth CapEx, you gave some color earlier. Can you just remind us for the Provincial contract in the Middle East, is there any capital required for that?

No.

Okay. I maybe just sneak last question in here.

You mentioned this from the past, but can you just remind us of the sensitivities to a fuel price and FX, I know they’re largely offsetting but again just to help us think about that?

Tammy?

Yes, I can take that one. If you just look at our Legacy airlines where the majority of that fuel price impact would be felt, for the year, if you look at our fuel cost from a pure rate perspective, it was about $10 million less than the prior year.

Now, in Q4 that same number was around $2 million. If you look at what’s actually followed through to our earnings, you have to consider the impact of FX, which does offset that benefit to a large degree and so it ends up -- the $10 million for the year ends up falling down to about $2.3 million benefit on our free cash flow, when you factor in the impact of various parts, pilot trainings things like that on our expenses.

Does that answer your question?

Just turning to looking at the dividend. It’s interesting, Mike, looking at your payout ratio, the way you generate it, probably amongst the lowest you’ve had in quite some time.

So, I was a little surprise that not a lot of discussion around increases. Is there anything that you are seeing right now but maybe we’re not accounting for that guidance, gives you guys pause on not getting too aggressive with dividend increases at this point or is that something maybe that will the board will consider at Q1?

Yes, Chris. There is really nothing from what we see point of view that concerns us on the payout ratio.

I think the reason why nothing is has been done the short-term is we just had a 5% followed by a 10% increase in the last sort of 12 months, and the 10% was just a little over a quarter ago. So, I think when you’re seeing this level of performance and payout ratio is in the 60% range, it’s something that will definitely be a topic of discussion at our board meeting.

Okay. Because typically the thought is still the target around an 80% payout ratio?

We’ve never given a formal target. But I think the way I explain when I do presentations is that when it gets over 80%, that’s too close for comfort for us.

We want to make sure that in any kind of economic environment that dividend is reliable. And then when you get down in the 70s, we are pretty comfortable.

And we get to the 60s, it’s time to look and see if it’s time to give our shareholders a rate.

Okay, cool. And then just maybe a couple of quick cleanup questions.

Just you kind of alluded to the segmentation and this is something that we’ve been talking about for a while. Assuming that it would be probably logical if we’re going to do something in Q1, I think the discussion before was the sort of lump together post how the Regional One and probably Ben Machine into an aerospace group, is that still sort of what you are thinking about doing?

Generally, yes. I haven’t got the precise details of exactly how we’ll do it but generally speaking, we would move aerospace into a separate piece.

And then whether we would move part of PAL or all of PAL or whether we move Ben, those are still moving pieces in the equation. Clearly Regional One and the aerospace part of PAL will be in there; whether anything else is, is not a decision that’s been made.

And then just one more cleanup, just the fixed wing search and rescue contract, that’s a fairly large contract, you’ve got some big partners in that even though it’s about a year out, if we think about the magnitude of that contract. If you guys were to win that, is there any requirement for you to put up some pretty major CapEx or investment either in equipment or have a financial partner or guarantees or anything like that?

There may be some letters of credit for certain things, but generally speaking, no. Because the aircraft are coming from somewhere else, so we’re involved in the support of the aircraft, the way the bid has been done, we have very little upfront cost.

We could, depending on it, because it’s such a long contract, and I don’t have in front of me, but I think it’s 20 something years, 26 years. We may ultimately choose the purchase, so build some facilities for it as opposed to paying rent for 25 years.

But our model is built on not meeting to that. So, the short answer is really there is no capital requirements that we need to worry about.

Okay, great. Thank you.

A quick follow-up, and I can take it offline if you don’t have the numbers handy. I just wanted to have kind of quick updates on the revenue and EBITDA contributions from Regional One, Ben Machine and First Air in the fourth quarter or 2015?

I think whatever is in there is what we are prepared to share. They were in line with expectation.

We’re trying -- we create some competitive pressures for us disclosing company by company. So, we are going to group those on a segment basis.

And on Regional One, can you give us some sense how many aircraft you would have leased in 2015?

Well, they were leased throughout the year. At the end of the year, we had two that were sort of available for sale or available for lease.

We have three that are in the process of being taken apart. And I say that’s a process because it doesn’t happen overnight.

We have to take them apart, catalogues them, certain parts get overhauled and put into inventory. And then we’ve sold two, I believe and the balance of six I think are under lease.

Okay. Thanks a lot.

Thank you.

Given that there’s no further questions, I’d like to thank everyone for participating in today’s call. 2015 was a huge year for EIC.

We’ve delivered results for our shareholders and we sit on the precedence of further growth with the strong balance sheet. I look forward to updating you on our progress in the coming periods.

Thank you very much.