Michael Pyle - Chief Executive Officer Tamara Schock - Chief Financial Officer

Mona Nazir - Laurentian Bank Securities Steven Hansen - Raymond James David Tyerman - Cormark Securities Inc. Raveel Afzaal - Canaccord Genuity Chris Murray - Alta Corp Capital Konark Gupta - Macquarie Capital Derek Spronck - RBC Capital Markets Mark Neville - Deutsche Bank Cameron Doerksen - National Bank Financial Scott Thompson - CIBC Shawn Levine - TD Securities

Thank you, operator. Good morning, everyone.

Also with me are Carmele Peter, EIC’s President, Tammy Schock, our CFO, who will review our financial results in greater detail in a few moments; and Dave White our VP of Aviation. We’re very happy to be with you this morning to discuss the first quarter results for 2018 and update you on a number of initiatives which will enable us to continue to grow in the future.

We had a strong first quarter with a 20% increase in revenue and 25% increase in EBITDA, and a 55% increase in net earnings. But that's only part of the story.

As a public company there is focus on the most recent financial results. But as a management team we focus most of our time on the longer term.

What makes this quarter so significant is the number of acquisitions and initiatives which are being completed or initiated. It is this longer-term focus which is enabled the company to grow profitably over the last 14 years, and will facilitate further profitable growth in the future.

Tammy will go into our financial results in greater detail in a few moments, but here is a quick overview of the metrics. Revenue grew 20% to $266 million, EBITDA grew 25% to $54 million, and net earnings rose 55% to $8.6 million.

Net earnings per share increased 50% to $0.27. Adjusted net earnings jumped by 64% to $0.41 a share.

The trailing 12 tail ratio improved to 69% from 71% when calculated on a free cash low less maintenance capital expenditures basis, and to 77% from 82% when calculated as a percentage of adjusted net earnings. Both of these improvements were in spite of a monthly dividend increase in the first quarter.

Revenue and earnings and EBITDA were all first quarter records for the company. Since the middle of the fourth quarter, we've completed two acquisitions.

Quest and Moncton Flight College and made a significant investment in a third with Wasaya Airways. MFC closed near the end of the first quarter and Wasaya closed subsequent to the end of the quarter.

So their impact on the first quarter results was not significant. Quest however closed in November and its results show why we are so excited to add to the EIC family.

You'll recall that when we announced the purchase of Quest, we stated the initial $85 million purchase price of the company was based on an annual historical EBITDA of $50 million. The purchase price could rise to $100 million should certain performance targets be met.

The contributions from Quest have exceeded our most optimistic forecast. In the quarter and half we've owned the company.

It is contributed EBITDA of over $10 million. While profitability does vary from project to project as therefore simply extrapolating these results may not provide an accurate forecast for the year.

It is safe to say that the company is performing well and is expected to generate the full earn out to the vendors long before the new plant opens. One of the key strength of the Quest transaction was the size of the order book when we purchased the company.

At over $200 million it ensured that the plant would be busy and would generate viable revenue. In the six months we've owned the company we've seen growth in the order book and I am pleased to tell you that it is now reached $300 million.

There are many opportunities for the company that we've not been able to act on because of our capacity limitations. We've therefore decided to open the second manufacturing location which will be located in Texas and will more than double our manufacturing capacity.

We expect the capital cost to the facility to be approximately C$20 million and for it going to production in early 2019. We announced to close the acquisition of Moncton Flight College in the first quarter.

MFC is one of the world's leading flight schools offering intense pilot training in a university like setting, allowing pilots to achieve full certification in approximately one year. The extent of the worldwide pilot shortage has been well covered in the media as recently as last week Embraer's airline announced that they would be grounding 20 wide-body Jets until at least September.

At least partially because of a shortage of pilots. The pilot shortage is driven by both fleet expansion and retirement of existing pilots.

This shortage is expected to continue for several years at least. The situation in Canada is likely to worsen as transport Canada's announced plans to shorten pilot workdays to reduce fatigue and improve safety.

The acquisition of MFC is desirable as a profitable standalone entity with robust growth prospects. It also provides an eternal source of pilots for our airlines.

We completed the transaction with Wasaya where we took an equity position recapitalize the airline. This has increased our reach into Northwestern Ontario, has improved our relationships with the first nations of this area and will enable Wasaya as well as EIC wholly owned airlines provide a better, more integrated service to the customer with enhanced schedules, utilizing combined resources well in time improve both the efficiency of both operations.

We completed it a new $1 billion credit facility with an extended term, more flexible covenants and a reduced interest rate. Tammy will discuss this facility in greater detail in a moment, but I want to briefly focus on two things.

Firstly, the new facility with a syndicate of 11 banks provides EIC with access to capital will move quickly whenever a suitable opportunity is uncovered. Our syndicate was very supportive of our business model and in fact offered a larger facility that we have chosen to accept.

Several syndicate members have financed EIC for over a decade and others since inception. The precision of a facility that is a third larger than our previous facility, with greater flexibility and lower pricing, there's witness to their support of our business model and the results we have generated.

Secondly, a larger facility does not signal change in our attitude toward leverage. We maintain the strong balance sheet with conservative leverage and substantive liquidity since our inception.

The larger $1billion- facility simply provides flexibility to move quickly on an acquisition, share buyback or other opportunities should they present themselves. Our attitude towards leverage has not changed since inception, and it's not changing now.

I will now hand the call over to Tammy for a more in-depth look at our financial results.

Thank you, Mike and good morning, everyone. Consolidated revenue for Q1 was $266 million, which is up and a $43.5 million, or 20% from Q1 last year.

Of the entries $12.8 million was generated in our Aerospace and Aviation segment, and $30.7 point million in our Manufacturing segment. The Aerospace and Aviation segment generated $189.8 million in revenue, an increase of 7%.

Revenue in the Legacy Airlines and Provincial increased by $12.3 million or 10%, and this reflects increased volumes and therefore passenger revenues in the Manitoba and Kivalliq markets. The benefit of the Kitikmeot medevac contract and increased charter revenue as a result of increased capacity provided to our Legacy Airlines by Provincial.

Provincial's revenue was positively impacted by the acquisition of Moncton flight College, activity in [Indiscernible] and higher modification service revenue. Revenue generated by Regional One was essentially flat in Canadian dollars.

Revenues generated in US dollars were up by 6%. The increase was driven by growth in sales and service revenue and included the sale of a larger aircraft a CRJ700 during the quarter.

Lease revenue decreased by approximately $3 million in the first quarter. The decrease is associated with some of the recently purchased CRJ900 being in between leases as leases that were in place at the time of the purchase have expired and are now being remarketed.

Manufacturing had revenue of $76.2 million, up 68% or $30.7 million from Q1 last year. The largest contributor to the increase is Quest which was acquired on November 14, 2017.

Also contributing to the increase is the collective growth in all of our other manufacturing entities. Consolidated EBITDA was $54 million, up 25% or $10.7 million in the quarter from quarter one last year.

The growth was driven by organic growth and acquisitions in both of our operating segments. EBITDA in our Aerospace and Aviation segment was $46.7 million, up 9% from the prior year.

EBITDA contributed by the Legacy Airlines and Provincial increased by $5.9 million or 29%. The increase was driven by increased revenue and the benefit of aircraft purchases in previous periods by synergies obtained through capacity sharing and reduced third-party charter costs, and other operational efficiencies.

Costs in our aviation businesses continue to be impacted by increased fuel prices; however, the impact of this to our earnings has been largely mitigated through our ability to adjust pricing and contracts at pass-through fuel costs to our customers. Regional ones EBITDA in US was $16.8 million, which is consistent with Q1, 2017.

The stronger Canadian and cost incurred in Regional Ones Canadian operations which are associated with servicing EIC's Canadian airlines resulted in a decrease in EBITDA in Canadian dollars of about $2 million. In the Manufacturing segment, EBITDA grew by a 166% to $12.5 million.

The acquisition of Quest drove $7.3 million of this entry. Quest's first quarter performance is ahead of the expectations that we set when we did the acquisition.

EBITDA from the remaining entities in the manufacturing segment was also up in comparison to the prior year. Foreign currency rates did create him headwinds for us in the translation of our foreign subsidiaries into Canadian.

Had we used exchange rates that were consistent with those prevailing in the first quarter of 2017, EBITDA would have been about $1 million higher. Our Canadian subsidiaries also have exposure to the US dollar, however, because there are a variety of US dollar inflows and outflows such as cost associated with aircraft parts and US dollar revenue contracts that certain subsidiaries have, the net exposure in relation to our Canadian subsidiaries is not typically large.

And it is not this quarter either. So the decline noted above is flowing from the translation of Regional One and Stainless.

We reported net earnings of $8.6 million or $0.27 per share. These compared to net earnings of $5.6 million or $0.18 per share in Q1, 2017.

Earnings per share reflect an increase of 1% in the average shares outstanding during the quarter. The improvement was driven by factors that I've already cited including the strong performances of both of our operating segments.

Interest costs increased by $3.3 million as a result of increased benchmark interest rates and increase in our outstanding debt. Depreciation increased by $3.7 million as a result of capital asset purchases throughout 2017 and also the amortization of intangible assets has increased by approximately $2 million primarily to the intangible assets that we recorded when we acquired Quest.

Income tax expense decreased by $300,000 and the effective rate of tax decreased to 19.5% from 29.7%. We have had a shift in earnings between tax jurisdictions that positively impacted income tax expense, and we also benefited from the reduction in US tax rates that were passed at the end of 2017.

On an adjusted basis net earnings were $12.9 million or $0.41 per share for Q1, 2018. This compares to $7.8 or $0.25 per share for the comparative period.

Adjusted net earnings excluded the amortization of intangibles net of taxes which has increased as a result of the acquisition of Quest. With Quest, we acquired a significant order backlog.

We use both adjusted earnings based payout ratios and a free cash flow less maintenance CapEx based ratio to make decisions around our dividends. Our trailing 12-month payout ratio on an adjusted earnings basis was 77% down from 82%.

This improvement reflects the entries and adjusted earnings which were in excess of our increase in our dividend. Our free cash flow less maintenance CapEx payout ratio trailing 12-month payout ratio improved from 71% to 69%.

Free cash flow for the quarter was $40.6 million, up 20%. Free cash flow on a per share basis was a $1.29 which is up from a $1.09 per share last year.

Investments and the maintenance of our capital assets which primarily aircraft related assets increased by $3.3 million in the first quarter to $30.8 million, $7.9 million of this total is related to depreciation on Regional One's portfolio of aircraft and engines, which is in line with the first quarter in 2017. The Legacy Airlines and Provincial had $21.5 million in maintenance capital expenditures.

We have continued with our strategy of completing as much maintenance as possible during the seasonally slower first quarter. In the first quarter of 2017, the bulk of our maintenance work related to large aircraft maintenance in 2018 a significant portion of the work was related to schedule into engine events.

Growth capital expenditure in the quarter totaled $2 million. We do not expect growth capital expenditures to be lower in 2018 overall.

At the current time our plant expenditures for the remainder of -- I should say we do expect our growth capital expenditures to be lower in 2018 overall. At the current time of our plant expenditures for the remainder of 2018 includes the new plant in Texas for Quest and aircraft and ground facilities for Keewatin to service its medevac contract in the Baffin region of Nunavut.

During the quarter, we completed our acquisition of Moncton Flight College. The purchase price includes an initial payment of $25 million and the issuance of common shares valued at $6 million plus a multi-year earn out if certain performance targets are met.

The maximum earn out that can be achieved is $20 million. Subsequent to the quarter end in April 2018, we completed our partnership transaction with Wasaya group.

EIC is invested $25 million in Wasaya of which $12 million is an equity investment and $13 million is a loan. During the quarter, $2 million of the $13 million was funded with the remainder being funded subsequent to quarter end.

The equity investment in Wasaya will be accounted for using the equity method and will be included in other assets on our balance sheet. Turning now to the balance sheet.

We ended the quarter with a net cash position of $14.4 million, and working capital of $260.6 million, which represents a current ratio of 2.28 to 1. This compares to a net cast cash position of $72.3 million and working capital of $240 million resulting in a current ratio of 1.91 to 1 at the end of the 2017.

The increase in our cash position at December 31st, 2017 was entirely related to the impending redemption of our 2012 series of debentures. Those debentures were due in September 2019 and were redeemed early on January 11, 2018 for approximately $57 million.

The increase in our working capital at March 31st, 2018 in comparison to December 31st is primarily related to an increased in Quest's working capital because of its growth in business volume, and its expansion into the US. An increase in accounts receivable and Regional One due to the sale of an aircraft with extended terms also drove an increase.

The receivable is secured by a letter of credit. During the first quarter, we redeemed the seven year 5.5% convertible debentures which were due in September 2019.

This redemption was funded with a portion of the proceeds of the $100 million five-year 5.25% debentures that were issued in December 2017. Subsequent to the quarter end, the credit facility was amended to increase its size by $250 million and extend its term to May 2022.

At the same time, pricing was amended favorably and the covenants were within the facility were amended to allow us greater flexibility to take advantage of growth opportunities quickly. The debenture offering reflected a strong level of investor demand and the up sizing of our credit facility reflected a high level of lender confidence in EIC.

The company's balance sheet and capital resources are strong. Our leverage ratios are well within our target range and the available both capacities within our credit facility now sits at approximately $360 million.

So we are very well positioned to take advantage of growth opportunities when they are identified. That concludes my comments on the financial results.

And I'll turn the call back to Mike.

Thanks Tammy. We were excited about the balance of 2018.

When we released our Q4, 2017 results, we provided the market with guidance into what we expected for 2018. Through one quarter of the year, we are well on our way to meeting that guidance.

We said that we expect EBITDA and adjusted net earnings per share to grow by between 10% and 20%. This amounts to an increase of $0.25 to $0.50 a share for the full year.

In the first quarter, we have delivered an increase of $0.16 and as such we're on track to meet this guidance. I should point out, however, that simply extrapolating this improvement for four quarters would be inappropriate.

The financial results of the comparative period in 2017 were the weakest in fiscal 2017 and as such a bigger improvement than the first quarter reflects a more -- a return to a more normal operating environment in our northern aviation business. The second quarter of 2017 was just the opposite, with the strongest results for the year taking into account the seasonality of our business.

We confirm our guidance that we expect adjusted EPS and EBITDA to each grow by 10% between and 20% this year. During our Q4 conference call, we also stated that we expected a significant decline in the level of total capital expenditures versus what was invested in 2017.

Maintenance capital expenditures were in line with expectation and our outlook remains the same. That they will be slightly above 2017 levels in 2018.

In line with our new strategy of doing as much maintenance and investment to the first six months of the year when demand in the airline is lower, we expect that maintenance investment will follow the same pattern as last year. Growth capital expenditures, however, are expected to be far below the levels experienced in 2016 and 2017.

This is not because of a change in strategy, but rather is driven by the opportunities that are on the horizon. We pride ourselves on being opportunistic and moving quickly with the situation warrants.

As such investment in growth capital could change quickly, but as of now is expected to be very modest. Growth capital expenditures were low in the first quarter as small programs at Provincial were essentially offset by debt divestiture in Regional One.

The net divestitures of Regional One were a timing anomaly and we anticipate that modest investment to the company through the balance of the year. The purchase of a fleet of ERJ145 aircraft in the second quarter will see the net divestiture the first quarter reverse in the second quarter.

Investment levels are expected, however, to remain well below 2017 levels in 2018. At this time the only major growth initiative is for the new plant for Quest.

We are negotiating a lease for a 300,000 square foot facility in the Dallas area. We've placed orders for the manufacturing equipment and expect the $20 million facility to begin operations in early 2019.

We will also be making a much more modest investment in aircraft and a hangar for the new Keewatin contract in the Baffin region. The contract is increased in scope with additional base for real station crews and aircraft.

We are also cautiously optimistic about the renewal of our remaining medevac contracted the Kitikmeot region. The government is in the final stages of adjudicating this contract.

It will announce its award soon. The force multiplier surveillance aircraft we often display at our Investor Day last year is now essentially complete.

We're in the final stages of approval with Transport Canada and are in discussions with a number of governments around the world about deploying the aircraft and expect it will begin work rather late the second quarter or early in the third. Interests of the capabilities of this aircrafts were being very high and we are optimistic that this will translate into revenue opportunities this year.

We have completed three transactions in the last six months with the purchase of Quest, MFC and their investment in Wasaya. We remain very active on the acquisition fronts with a number of our interesting opportunities in both aviation and manufacturing in Canada.

Our team, however, has been focused on closing an early integration of the recent transactions and as such most of the opportunities under investigation are in early stages. We do not anticipate including any transactions in the near term.

We are excited about the start to the year. We achieve significant growth in the first quarter with materiel improvements in all metrics.

A particular significance of the improvement in our payout ratio in spite of an increase in our dividend. The ratios approved were calculated on a free cash flow, less maintenance capital investment basis or an adjusted debt earnings basis.

We were not surprised by this improvement. We have followed the same model for 14 years for one simple reason.

It works. The volatility of our stock price is frustrating, but we are confident that in the long run stocks are valued based on their financial performance, and we are confident in our ability to continue to deliver reliable, sustainable, profitable growth.

On behalf of our Board, management and our employees, I would like to take a moment to thank all of our stakeholders for their ongoing support. We would now like to open the call to questions.

Operator?

Good morning and congratulations on the very strong quarter. So my first question is just in regard to the growth CapEx and you did touch on this it was de minimis in the quarter versus the $59 million last year and just looking at the cumulative growth CapEx spent over the last four quarters, we've seen in over 60% reduction.

You've stated that you expect this to continued reduction on a year-over-year basis as we move through the year. I'm just trying to connect the dots and we haven't seen that significant drop-off or any drop-off in the Regional One revenue.

So I'm just wondering if you could speak to the current portfolio and what we could expect from R1 over the next few quarters and how much of a drop-off in growth CapEx could we see? Thank you

Well it's opportunistic Mona. We do have -- we did completed transaction in this quarter where we've invested in a number of ERJ145 4aircraft, but in terms of the purchase of big fleets and I think the two big ones in the period you're talking about would have been the purchase of the fleet of CRJ700 from Lufthansa or the purchase of a number of CRJ900 from a couple of different airlines.

We don't see anything like that in the near term in the horizon. So investment while positive in Regional One will be in a much lower level than historically.

The other thing I touch on is just as it relates to the existing lease portfolio you saw a slight drop off versus last year and the decline versus thee full-year. Results really --results of a number of factors.

One we have some of our CRJ900 that came with stub leases that are off lease. We have -- and we're in the process of putting those out.

It's taken us a little longer than we had hoped but we'll get the mode on lease. Secondarily, we have some that are leased on a power by the hour basis where the utilization was lower the first quarter that should improve in the second quarter.

And finally one of the --I think things that are not well understood about the lease revenue is it's not just rental revenues that's in there. It includes things like lease return fees.

When a lease - when a plane is at the end of the lease many of them have return conditions where a lease need -- the plane needs to be brought back to a certain condition before it's returned. In a case where we have a plane that we intend to part out we may well negotiate a deal with the lessee where they don't need to do the overhaul in return for a certain payment.

And those payments are irregular but they're included in the lease pay and in the leased line of our financial statements. And that means that that least number is going to bounce around a little bit depending on which quarters we incur those.

And I think it's included in our information that we had a material lease return fee of I think about $1.6 million last year that didn't exist in this year's first quarter. So, yes, I think I hope that covers off what you're asking me.

Yes. And that actually touches my -- I was going to go into my next questioning the returns of your lease portfolio versus you know why it is seemingly higher than industry averages.

So I think you started to touch on that. Is there anything else you wanted to add?

Yes. I think that's really important Mona.

The part of the challenge with the short and distort thing that we're facing is people who either don't understand our model or choose not to understand our model. Our lease business is part of the liquidation of the aircraft.

We're not a finance leaser who takes a new aircraft leases it out over 15 years to get their capital back and earns spread on the interest rate. We're dealing with planes that are approaching the end of their life and have varying lease maturities.

And so included in our lease revenue is more than just the rent on the aircraft. It's also in a number of the cases where a traditional finance lease would have a lease overall reserve where the lessee is paying into a balance sheet account so that the money is available for when it needs to be overhauled, because in order for the lessor to get their money back that plane has to be overall the number of times to be able to have the life to generate the returns to pay off the lease.

In our case, most of the times we don't intend to overhaul the plane at the end of that period. We're just going to part it up to as a result that extra revenue that comes from the lease overall reserve that we don't maintain as a reserve we take in as revenue.

So that materially affects the profitability of the lease. And then finally as I talked a little bit earlier on some of the leases with where we bought where the lease was a longer -term lease that's coming to a close day of lease return conditions, where we will often let them buy out the return condition instead of actually doing the work.

They can make a payment to us in which case that flow through there as well. Comparing us to a finance company in terms of leases is roughly the equivalent of asking why an apartment is cheaper than renting a smaller hotel room on a per night basis.

They're not the same business. If you lease a car it costs less than if you're a rent a car in the daily basis because when you rent a car in the daily basis there's a whole bunch of other charges that go through the line.

Its apples and oranges and we have to generate a higher return because we're doing things that are different. We don't have a long-term 10-year return on these leases.

We have to churn the assets and turn them more quickly as a result we have a higher return on a percentage basis.

Okay, thank you. That was helpful.

As just a number of quiet questions around that subject and then just lastly for me before I step back in queue. I'm just wondering if you could touch on Quest.

We saw very strong performance there $7.3 million in EBITDA contribution versus kind of a $15 million in annualized contribution. When you did purchase it I understand that the business can be lumpy and you stated as such a just a couple of minutes ago I'm wondering if you could touch on whether any special or large contracts or anomalies that contributed to the Q1 result.

No. There was -- I mean we -- one of the businesses is the sum of a series of contracts that run through buildings can be $3 million to $10 million in size depending on how many floors and what's involved.

And so the quarter was successful for two reasons. One we were able to run $25 million in revenue through the plan, which only happens if we can time up our projects ideally.

So there's no downtime in the plan between projects. And then secondarily we have said in the past that our US work has a higher margin than our Canadian work.

And we had a higher proportion of US work in the first quarter. So that resulted in a beat of even our internal forecast that was at the high end of our expectation.

And as such I wouldn't extrapolate $7 million directly, but there are no big weird things that went through the quarter. It reflects the growth in the business from a run rate of about $60 million in revenue when we bought it to if you're in extrapolate to quarter a $100 million that explains a big portion of the increase in profitability.

And if you have the mix of US versus Canada for the quarter versus when you bought it?

We do not -- that's not something where we publish Mona.

Yes, good morning, guys. Just a quick one on the Quest to follow up.

The new facility that's coming up in Texas in early 2019, I'm just trying to understand a bit better the cadence that we should expect out of that facility is that what comes up. Can you give us some context around the capacity of the facility and the revenue opportunity considerate that it was it a clone to the existing facility and now that should impact revenue growth in 2019 and 2020 for Quest?

Yes. That's a good question, Steve.

The facility will be slightly bigger than our existing facility. So its ultimate production capacity will be higher than what we have in Toronto, but I would caution against the idea that when you open it you turn on a switch.

And it goes from nothing to full capacity. We're cautious as to how many orders we are taking for the initial quarter or two as we wrap it up.

And to avoid any kind of execution risk as we start the plant. But we -- the opportunities we've seen Steve are such that we're very confident we'll be able to fill the plant reasonably quickly.

But you will see a relatively modest contribution in terms of revenue and likely minimal bottom line at the start of the year. And you'll see that wrap-up quarter-over-quarter as we put more load through the plant.

And as we get up to normal operating efficiency.

Okay, that's helpful. And so just to be clear then the Q1 then sort of the initial startup phase with minimal contribution referred to and then ramping through Q2 and three consecutively?

Right. And then we'll give guidance as to how full the plant is and how close we are to so though we have say that we're running near capacity and we're booking into 2020 already so.

The other advantage that this plant provides us is the ability to go out and further sell and with the capacity constraints that we currently have with the single plant, as we look out to customers were unable to fulfill their orders having this additional capacity coming online in 2019 helps that customers --satisfy that customer demand.

Understood. Just a quick word on the Moncton opportunity.

I'm trying to understand this a little bit better I mean I'm certainly familiar with the pilot shortage issue and what that means internationally. And even domestically but you've described a change to the TransCanada regs that I wasn't familiar with and I'm just understand two things.

One is what is your actually capacity to grow at Moncton? What kind of limitations would you have on growth relative to demand?

And then secondarily is what is the opportunity internationally versus domestically? Like we really focus on the domestic opportunity here first and then there are opportunities to grow with international clients or just trying to give it a better understanding of what that growth profile looks like and what your limitations might be.

Yes. I'll start with the second question first.

Moncton is largely an international player. Currently most of the revenue would be generated by international students.

In Canada a typical student is someone who comes in and they're paying us for their training just like a student going to university, whereas a much of our international business we would contract with the airline who would bring in a 10, 20, 30, 40, 50 students at a time who we would then train up on behalf of the airline. And the contractual basis we have demand that's very strong for the foreseeable future.

The rate determining step really isn't infrastructure. It's really not aircraft that's us very easy to do and relatively inexpensive.

It's just making sure that we maintain enough trainers to actually do the training and it's kind of one of the oxymoron of what's going on with flight training right now with flight pilots in general right now is the shortage creates less training people because they move on to traditional flying jobs. So we're working on programs to grow our number of trainers which will facilitate the growth of that business.

But the revenue is focused internationally. The synergy in terms of our own airlines is focused locally, where we're going to work on building our own pilot strings to fill gaps as we lose pilots to bigger airlines.

That's helpful. And just one last one if I may is Mike you mentioned I think at the outset your willingness to entertain further buybacks with the added flexibility about financially spot price has been frustrating I mean how do you feel about the allocation of capital to buybacks.

Just sort of general philosophy here going forward. It's been part of your strategy in the past but not a big one frankly and so do you have a greater appetite for buybacks given the relative performance of the stock recently or how should we think about?

Thanks.

Yes. I mean if you look at what we were generating when the stock was over $40 a year and a bit ago.

Our profits are materially higher than they were then in the stocks 25% lower than it was. We think the valuation today is the best opportunity we have.

And so we'll take a look at various options in terms of buying back our stock if it's if it trades at these levels. We think ultimately the proofs in the pudding and we've now delivered four really strong quarters in a row.

And we expect the stock will perform but to the extent that it trades at these levels I'm really not true there's a better investment opportunity for us than our stock. So I think yes you can expect us to be relatively active on that.

Good morning, very good quarter. Just a couple quick questions.

First on the Quest just I'm going back to what is kind of a normal rate since it was a really good quarter. If we use the growth in revenue that you suggested Mike going from 60 to 100 and just use that as a driver relative to the original $15 million would that be a good proxy for kind of the run rate right now in a normal annual rate so up to $25 million roughly?

$25 million David in all honesty is absolute capacity in our plant and we needs everything to time up in terms of bud ending projects one to the next. So like I say we did $25 million this quarter.

I don't want to say that with one plant we can do that every quarter, but conceptually the direction you're going in that we've got that material increase in production is a reasonable starting basis for where you are. I just think $25 million may not be what we can achieve every quarter.

Projects don't timeout perfectly if there's a two-week gap between projects or they overlap in a way that over time is more expensive, where it's always difficult to extrapolate when you're running an absolute capacity. That extrapolation gets a lot easier when the plant opens next the beginning of next year.

We actually a surplus capacity so it's our opportunities that drive the revenue as opposed to our ability to throughput it through the plant.

Okay, that's helpful, thanks Mike. And then second question just on the working cap in the quarter and use quite a bit in the quarter and I saw the explanation on the Quest growth and the timing on the CRJ sale.

So just wondering for the year what we should think? I would think the CRJ will reverse the Quest I'm less clear on so do we - do you think you're going to use material working cap in the year based on the plans that you have right now?

The short answer is no. Where there's growth like Quest is clearly growing and as it grows we've got higher receivables, higher inventory that we've talked about the sort of scope of that growth in the grand scheme of yes I see that's not a material number.

You're absolutely right on the aircraft. The terms are for later this year.

There's absolutely no credit risk. It's secured by a letter of credit but that will reverse later in the year.

There's nothing structure over the business for the working capital to grow materially. And may be let Tammy jump in.

Just one other comment on Quest is during the quarter and likely continuing into the second quarter. They're making deposits on equipment for that new facility.

And until we actually take delivery of that equipment that those deposits fit in our working capital. So we'll see that come out towards once we start taking delivery in the second half of the year.

Okay so would that be enough to make us expect negative working cap in Q2 also? A - Michael Pyle Our Q2 wrap up seasonally, yes, so there's always a seasonal impact, but if you take a longer-term impact I don't see, I think you'll see if we get back to December of next year all things being equal will repatriated to $10 million on the aircraft, will have repatriated that growth in the prepaids which you can see right on the balance sheet.

And you will still see some growth as it relates to the receivables inventory from the growth of Quest. And the other bots I'd put around this is if Regional One gets the opportunity to buy some great inventory, we're certainly going to do that; that's our business, and so it will jump around a quarter-to-quarter.

But there is no plan for a material build of inventory over that period.

And when I --and working capital in other businesses I think the biggest factor that we're seeing in Legacy Airlines is one of timing, and there's something that we've seen that has influenced it in the last year is the timing of large fuel purchases, where we have to do that in big bulk levels into the Arctic region.

Okay, so just on that it's there -- were there a lot in Q1 or they're going to be a lot in some quarter in the future that we should be aware of?

I think yes I think if you look at the quarterly changes they shouldn't be different than last year's right. Like in terms of which quarters are up and down in terms of the seasonality of the business.

Okay and then just last question for me. The tax rate it's a lot lower I see the explanations they sound sustainable.

So is that a new good rough level for run rate?

Yes, we like -- our expectation is that our effective tax rate should run around 20% to 22%. The biggest influencer there if we bounce outside of that range is the mix of parts, US parts revenue compared to Irish lease revenue.

If the proportion changes in a quarter you'll see a little wobble there but it should be around 20% to 22% I'm expecting.

Guys a few questions. First of all I understand that the leasing business is lumpier compared with the parts and services business, but is there any seasonality in the leasing business that you can point to?

I don't think there's seasonality as it relates to leasing per se, but on our power by the hour leases with the customer we actually have those aircraft with they have seasonality in their business. And as a result when they're busier the power by the hour leases generate more revenue, and seasonally the first quarter is a slower part of that business.

And to be clear it's not just the power by the hour issue that's with our lease portfolio. We do have some 900 step part time lease at this moment.

And we will deal with that that's a normal part of the ebbs and flows of our business went through it with 700 when we bought it from Lufthansa. And over the rest balance of the year we'll lease those aircraft up.

And you'll see that flow through the lease revenue, but there is a seasonal factor as it relates to power by the hour leases.

Thank you for that. And then is there some range that you can provide us for growth CapEx for Q2 as it relates to Regional One because I know you guys buying -- have bought some ERJ?

We expected growth CapEx and I can only tell you about what I know about now Raveel. And Hank is famous for calling me with Mike guess what I just found.

But assuming I don't get a phone call from Hank, our growth CapEx will be modest. It'll be positive in the second quarter, but it's not a big number based on what we have now.

And thank you for providing us with color on 2018 maintenance CapEx. Is there anything you can tell us with respect to 2019 exclude Regional One of course that's going to vary based on its leasing business?

But when you look at the Legacy Provincial can you speak to the maintenance CapEx as you what you see it now for 2019 versus 2018?

Yes. We would expect that there be a modest decline in CapEx in 2019 just the way the schedule falls with the number of heavy overalls and the number of engine events.

Particularly in one or two of the subsidiaries, it results in a lower level of maintenance investment, not dramatically so but our reduction in 2019 versus 2018. Again as you pointed out Regional One is a wild card if we buy a bunch of more aircraft in that business depreciation will go up and so the maintenance CapEx.

But based on the status quo we would expect a decline.

And just finally can you speak about the impact on the fuel prices? How you see this impacting the legacy margins for the remainder of the year?

When the stuff moves rapidly like it did at the beginning of the quarter, it takes us a little bit to implement a price increase. We have to be very sensitive as to how we put those into First Nations communities who don't see the change and get the rest of us see the price of our gas going up every day.

So we realize that's what's happening, understand in most of the communities we serve as their fuel goes in once a year, and the price is constant. And so it takes us a little bit to implement the change, but on the other hand when we implement a change if once we've told our customers it tends to stick.

And that's why even in the first quarter I think Tammy can correct if I'm wrong, but I think it was less than a $0.25 million net cost after our --as the recoveries we have from both the direct flow through contracts and the surcharges we put in place. And so we will have a drag a little bit in Q2 as we implement the fuel price surcharges.

But it's less of an impact on us than it would be on a WestJet or Air Canada where the ability to float through isn't as direct as we have. Ours is more timing issues.

Now this certain routes and certain places where that's not the case but the vast majority of our business we have the ability to raise prices. It's simply a matter of how long it takes to do and doing it in a manner that explains it to our customers and is respectful to our customers.

Thanks, good morning, folks. Mike just thinking about the ERJ so I guess a couple pieces of this.

So that's a fairly large fleet. Any --just so I understand is that going to be like right CapEx or will that be the typical mix of working capital and CapEx to fund that acquisition?

In terms of where they're going to show up on our balance sheet you mean, Chris?

Yes as they were as it--

It wasn't - yes, we're still working on the final split of what we're going to do with them, but I think about half of them a little over half of that we're going to end up buying. Whether that means we resell them as whole aircraft or lease they and about half that we're probably going to end up getting parted out.

Okay. And thinking about the Embraer models I mean historically you talked about the fact that you were able to take the smaller CRJ100 and 200 then turn that into 700 and 900 leasing program.

Any opportunities to work with Embraer in a similar fashion to start moving up into larger aircraft and maybe moving a different line into the lease portfolio? I know you looked at acquiring businesses that did this before and it looks like you're kind of growing a capability on the Embraer aircraft but I guess I always a concern you've always said is it's about really understanding the aircraft at a part level.

That's the art of this.

Yes I think maybe I'll just let you do the conference calls. You're exactly right on what you said that's a fair description of our opinion of things.

We've dipped our toes in the Embraer and we worked with a European Bank on liquidating a number of these aircraft. And we've developed some knowledge on them and we've now dipped our toe in directly with the purchase of the 145.

So we are looking at other models. We're not going to sprint into that we'll gain our knowledge and moving slowly and how the engines work is very different than it works especially in some of the models than it does on the CRJ's where the Embraer engines on certain other things are harder to deal with than they are in the CRJ's.

But we definitely view there to be an opportunity in the arbitrage of these aircraft. And I think you see that in our purchasing that we've moved into it and I would anticipate over in future periods you'll see us diversifying our portfolio with the addition of more of this type of aircraft.

Okay and then just maybe a broader question just thinking about growth rates you sort of talked about the fact that you're going to be a little conservative on acquisition for next a while, feels like you've got adequate capital to go do stuff but is the decision of to slowdown is that some sort of change in the way you guys are thinking about allocating capital? Or is it kind of functions where you're on the pipeline in terms of acquisitions is just difficulty identifying other opportunities?

Just some thoughts around that because it feels like growth is going to slow over the next few quarters.

We in terms of closing things in the near term there that's correct it is absolutely unequivocally not a change in strategy, and quite frankly it's really also not on the acquisition front the lack of opportunities. We've closed three transactions in just over a quarter and with our internal capacity, understand that whether we do a $25 million deal or $150 million deal, the level of diligence and the work required is the same.

And so our team has been focused on the end stages of the deals we've been doing. They're now jump back in and working on opportunities and letters of intent and expressions of interest.

And there's no change in our appetite. I just want it to be clear with the market that because we've been so focused on closing and integrating what we have there's nothing that's nearing the end stage of that process, but there's no change in our strategy and there's no change in our appetite for that.

The same would also go for growth CapEx. If somebody found me a fleet the CRJ700 is like the Lufthansa one, I'll sprint to the bank to write the check.

But we have to have the right opportunities. We've always been disciplined in what we do.

And at this point there aren't any in the future --in the near future. But in no way would I take that as a change in our strategy or our desire to grow simply just a practical limitation because of how much stuff we've completed in the last few weeks.

Adams just finished napping after all those deals. Can't get his sleep back, so no Chris we will be busy again.

Okay so just maybe as a clean up kind of to that question so if you think about the new credit facility which expanded $200 million and your leverage levels. Historically, where's your comfort level on dry powder right now?

Where we like there we have 350 or 360 and out.

In capacity, yes, 360.

And So I'd say our leverage levels it would --it depends on how we grow and how we deploy it. We're not changing how we fund things.

And so we've got money to do deals as they come or to buy back equity at these levels. There's really nothing has changed.

Our appetite for leverage is unchanged over 14 years. And I don't see it changing now.

And if the opportunities come we're going to jump on them. We've got a couple of debentures that mature in the next year or two and hopefully those will convert into equity and give us fuel for further growth as well there.

Good morning, and thanks for taking my question. On the guidance Mike you guided 10% to 20% EBITDA growth for the full year and obviously you have seen 25% in the Q1, right.

Now you're telling that there's some kind of like puts and takes so I mean like we should not expect 25%, do we extrapolate it right but is there any kind of business or asset where you are being sort of more conservative than you should be?

I don't think so I mean there's no material change in any of the businesses. Like I said we talked about we have a few leases 900 that are under lease when those get going that will ramp up as well.

But when we looked at the aggregate we knew that if you just look at our year that we're up against in aggregate 10% to 20% what that meant that in real simple terms that's $25 million to $50 million in EBITDA and $0.25 to $0.50 in earnings. We're still comfortable with that.

We knew that Q1 was the easiest comparative. We know that Q2 is the hardest comparative.

We know Q3 and Q4 about average. Bottom line is we're very comfortable with the guidance we gave.

And if I were to speak generally and don't ask me what our forecasts are because we won't tell you, but I will tell you that we're marginally ahead of our internal forecasts through the first quarter. We are happy where the --

That's great to hear, Thanks. And on the Regional One.

Can you talk about how the leasing business is shaping out in terms of the customer base or the lease terms especially with the introduction of Embraer's 145 and the pending CRJ900?

Well the 900 like you say those of --if I refer --it taken us a little longer to lease out than we'd hoped, but that's not uncommon when we get into a new platform. The 900 are new, they're slightly more expensive and as a result our customer bases are just growing into those.

And so it will take us a few quarters but we'll get it cleaned up the ERJ would be more at the other end of the spectrum. Those are much less expensive aircraft and so there are a number of carriers in different parts of the world that are interested in those.

We have some of them under lease already. I'm not in a position to say how many, but we have some of them under lease so we expect we will have some more in the near term.

And some of those aircraft will be more effective as parts, and so some of the fleet we purchased will be parted out and number will be leased. And yes I wouldn't be surprised if we sell a few of them as well as operating aircraft, that's kind of a break up, those are-- those fit into our customer base fairly directly because they're inexpensive aircraft whereas 900 are at the higher end of the price, and the lease term for our customer base.

Okay, that's great. And lastly on the Alberta market so the oil price seems to be also going up here significantly over the last few months, and that definitely impact the airlines on a short-term basis, but with this material Alberta operations are you seeing any material benefits in terms of being customer orders or the spot market demand and that's kind of being driven by the oil price or the energy market?

The short answer is yes. It is getting better.

It's getting better slowly quarter-over-quarter. It's a little bit different than the last two oil shots we saw in 2007, where it rebounded really fast; it was more like a fee recovery.

This is more of a slow climb but we saw a material improvement last year in the second half the year in that business. And that has continued into the current year in Alberta.

So we're not too pre oil price decline levels yet, but we're seeing material improvement quarter-over-quarter.

Thanks, just moving on to the ERJ045. Are they -- how old are the aircraft?

Are they fairly old 145 that you purchased? And did you buy them all from one source or was it from multiple sources?

I don't have the ages in front of me. I can get that for you, but it was a single purchase of a fleet from a bank.

Tat the bank had taken them back and we bought the entire fleet.

Okay and just looking at the CRJ900 because you mentioned that the ERJ145 you could part out and perhaps with the CRJ900 do you have the opportunity to part those out or will it be essentially getting them into a lease if we can't get them to lease maybe sell the whole aircraft altogether. A - Michael Pyle Bang on Chris.

The CRJ900 is still too valuable, Derek I'm sorry.

Yes. It's okay.

I've been called worse.

I want to get to question 15 I get a little sloppy. The 900 the value of the aircraft like as a flyer is too high that the value of the aircraft exceeds the sum of its parts, and so it means that when we buy those and part of the reason we bought them is because it's the natural progression from our clients who had 200.

So we've seen the move from 200 to 700, they are moving from 700 to 900. So you're bang on that we're going to need to lease those out or sell them.

We have no real desire to sell them, its part of the process. I wish that we have leased them about a couple of months faster than we have.

It's not the end of the world. And quite frankly that is for us the secret sauce is that we're diversified.

We have some planes that we thought we'd lease out that aren't leased out. And our EBITDA still went up by 25%.

Our earnings still went up by 50%. And so I'm not overly worried about the fact that those planes are slow, but you're bang on in your assessment that the planes are too valuable to part them out.

So we will lease them up and get them out whereas the ERJs that we purchased could be done either way. The size of the fleet is such that I wouldn't want a part of a fleet that big all at once because it'd take me a while to sell it all.

But we have a nice combination of fliers where we'll lease them and there may be some that we sell or not. And there was something we part out so that really is the at the sweet spot of our business.

It's a different aircraft type, but it's the sweet spot of what we do in arbitrage.

Yes just getting back to CRJ's, you are going to keep in mind it's pretty consistent as what we referred to our step up strategy, which Mike talked about a bit where we've had our customers go from the 200 to 700. Well the next progression is 900 so what that allows us to do is migrate them to the 900 to get those leased up, and at that point the 700 can be torn down if there's a demand, significant demand for those parts.

So it's all part of the overall way that we monetize the value of our complete assets.

Can you get the same returns though presumably the CRJ900 would be then more of a traditional lease versus the more traditional strategy of Regional One, where you're squeezing out the last kind of lease life out of the aircraft and then utilizing it for parting?

Chris, I did it again, you realize your second name Chris there. Derek you're bang on.

In the near term as we lease those out to get them down to a value or we can part them out, the lease returns are the more valuable the aircraft the lower the percentage rate return we're going to generate. That's absolutely correct.

But ultimately as those aircraft age, the knowledge we gain, the customer base, the part capability to sell will enable the returns on those to expand, but you're right if I buy a 200 that I either lease out or part out I expect my percentage return to be higher than I do on 900.

Okay and just a couple more for myself. You've sold a couple of not a whole lot but a few aircrafts over the last couple quarters.

And for Regional One so it was gone for 43 to 39 but the engines have gone up materially. Are they two separate line items or when you're selling the aircraft are you taking the engines and taking the engines off the aircraft --

When we are selling the aircraft we're selling them with engines. The reason why engines may go up with aircraft go down is if we part out an aircraft, we maintain we make the engines may still have values released out as opposed to part it out.

So you can take a plane, tear it down and lease out the engines and so the pool of engines is independent of the aircraft. To my knowledge we've never sold an aircraft without engines on it.

Yes, it's a good point, all right, and then just a couple more quickly I saw in the annual information form some union collective bargaining agreements potentially. Am I correct on that and is it material and/or B how do you feel about the potential for the renegotiating a new agreement?

We're in discussions with a number of our unions. I am very pleased with how it's going.

We're at the final stages in three or four of them, three of them that were just in the final signature stages. So we've been able to work well with our unions.

We have couples that are earlier stages of discussions but the important part of the tone and tenor of them is great. I don't anticipate any problems at all.

Okay and then just finally on your leverage, your net debt to senior debt to EBITDA. Is that your upper end of your target may be a little bog depending on what level of EBITDA you're looking at?

On an absolute level that has grown and if you include the convertibles it's at a decent level from an absolute perspective. Do you think about the de-leveraging at all or you're pretty comfortable around the sustainability around the EBITDA that you're comfortable with the absolute level of debt and you still have enough powder in the keg I guess to transact?

How do you think about debt and where you're at and your potential leverage?

We will be slightly over the average just a tinge over our 14-year average. If you look at our guidance of 10% to 20% up for the year that gives you something like 275 to 300.

It leaves our convertibles we have less than a turn of debt in those, and we're slightly over two in terms of our secured debt. So we're right at that sort of 3x aggregate debt.

We're comfortable with that level. It sort of been that same sort of goal posts we've had since we started.

And it bounces around and when we raise equity and when debentures convert can bump that around up and down and free cash flow opportunities. But we're very comfortable with our balance sheet.

We're very comfortable with our liquidity. And you see our payout ratio declining and with our payout ratio declining that means we generate more free cash flow that effectively reduces leverage.

So grand scheme of things we're very comfortable with where we are. And we've got the liquidity of the new facility that should Adam come with a deal I can't refuse.

I won't have to refuse.

Hey, thanks. Just a few follow-ups at this point.

Just in the Quest, when you bought this business it was called $15 million revenues per quarter with a bit of 25% margin. This quarter it sounds $25 million revenue at about 30% margin.

Those are sort of the rough goal posts you use for this business at this point sort of pre expansion.

Yes, that's reasonable, again like I said this was a good quarter. I can't guarantee that we'll run that through the plant every quarter, but it was a good quarter.

Okay at this point are you running in a --

So mix of Canadian and US market can tweak the margin a little bit quarter -to- quarter.

Yes. That makes sense.

And just on the sort -- you mentioned sort of capacity constraints. Are you running into issues, are you pushing your lead times or any major issues there?

No just in terms of -- we're not going to take orders that we don't have a slot for in our plant. And so we are running into -- we've turned down material projects that we were awarded that we just -- they took too long to decide and as a result we couldn't take the order because I have no capacity in the border they wanted it two quarters they asked for so that's why it's so urgent for us they get that plant up and running because quite frankly we're only in a limited number of markets with that company.

We're in the sort of west coast across Canada and then limited markets in that Eastern Midwest. There are places like Houston and Florida and Nashville and places where we have no presence yet, and we'd love to go there so we're excited about the opportunity of adding to our production capacity.

Okay and on the Wasaya transaction should we think about that sort of an investment multiple sort of like past investments in your business or M&A or shorter terms are it sort of more strategic just to build all your footprint there?

In the short term it was more strategic. In the longer term the multiples are outlined.

It was really an opportunity we say is greatest asset was their relationship with their shareholder First Nations and they had a relationship in that area that strength enabled us to work with them. And then by integrating our fleets in terms of schedules so that you can interconnect airline to airline, which you couldn't do before, we'll improve the service.

And that will ultimately significantly improve the performance of not only our airline, but Wasaya as well, but that's a work in process. They've really just opened up a whole new door for us into Northwestern and then ultimately Northeastern Ontario as well.

Okay and maybe just on the jet fuel just to be clear have you announced or you have pushed those price adjustments through or are it -- it's a Q2 event or Q2, Q3? Just wasn't clear on that.

We have put some through already and we're in the midst of doing a second round. When we put them through it's really a matter of communicating with the First Nations communities.

And going explain to the council, hey, our fuel price is up X, we're putting a $5 surcharge on the tickets. It'll start in 30 days of this is why we've done it.

It's not like a communication with the general market like, yes, he is going to go talk about it. We're talking with the specific First Nations because if you look at it in a lot of the places we're flying to Mark, we have a dominant market position.

And the last thing we ever want to be seen as is taking advantage of that.

I think it's worth pointing out as well that we have a large volume of business where we are contractually able to pass through fuel prices. So we bear no risk in that part of the business.

Yes. Perfect example so things like our Nunavut passenger contract with the Nunavut government.

We --just quarterly and so we do have a lag so for a few --couple of months we get stuck with the bill, but we know ultimately your work shadow when the price falls off. We also have a lag on the reduction.

So net, net it's more just a timing issue than it is of an actual decline in pure profitability.

Okay but they mean the Q1 impact I guess for others so that was fairly minimal so --

It was minimal. So it was coupling hundred grand.

Hey, good morning. I guess just truly one quick one for me I guess on the medevac contracts you renewed I guess one of the two that was up and the scope expansion there I'm just wondering on the sort of the second one that you're waiting to hear from.

And it sounds like you're pretty confident of winning that as well. But would that also be a scope expansion?

That was on bid more on it as is basis. They already had multiple places we operate out of there wasn't a single-- a single base already.

So I don't see a material change in the scope. I mean I'm predicting what somebody's going to do in that.

So I don't want to say anything with certainty, but were we're cautiously optimistic on winning that. We've had that contract for almost three decades.

So I'm confident but it's not done until it's done.

Right, of course, yes. And maybe just to squeeze in a second one you're just maybe you can give us an update on the force multiplier.

I mean you mentioned that you're pretty confident you're going to have some customers for that I guess second half the year. Just maybe update us on where things stand there as far as customer interest in and prospects?

Yes. To me I'm kind of like a kid at Christmas with force multiplier.

We've got the final certifications. We're going through with transport, and transports were great, they're working with us but it's a one-off project.

So the certification of that aircraft is labor-intensive and it never goes quite as fast as you wanted to. We're confident that we are a few weeks away, couple weeks, three weeks, and five weeks from final certification.

And no one's going to give us a purchase order till the certification is completed. But we have a number of opportunities in North America and other places to put that out.

And so we haven't generated $1 yet but we're very excited about that project. And we're pretty confident we're going to have some good hours for that in the second half the year.

Hi, guys, after 20 questions I guess I'm kind of at the bottom of the barrel. And most of my questions have been answered.

Just wondering if you can talk about the non Quest portion of the manufacturing business? What the quarter looked like and what the outlook is please?

In the aggregate it was really good. We had growth in terms of revenue in all the businesses.

And although one of them had material EBITDA growth, the one that did was Stainless Fabrication. We had one project that we had some projects, a field project that had very low margins, which we will complete up this quarter.

But the order books are the best they've been in a very long time. We expect continued growth in all of them.

Good morning, thanks, all of my questions are really have been asked and answered. Just one follow-up on the on the Quest expansion is the decision to more than double capacity there is that based to a small degree on alleviating some of the capacity constraints at the Toronto facility based on the current backlog or is it more to support the expansion opportunities that you're seeing in the southern US?

And also what gives you the confidence in being able to fill the capacity at the new plant relatively quickly?

Well, what give us the confidence are just the inquirers we're seeing and the opportunities. As a manufacturer, you don't like to turn down projects and we've had to do that because we don't have capacity right now.

We are now booking things into the new facility, Shawn. So it's hard for me to say definitively whether it was just that we couldn't fit it in the other plant.

Once we've made the commitment to build the facility, we started taking orders to fill it up. So we have more on the books that we could run through our existing plant now.

And that will continue to grow as we take orders for that facility. But I do want to be cautious that you don't turn a plant on and it runs at 100% efficiency.

There's a ramp up time and we'll build what we flow through that plant through the year. And I'm in no way telling you that that's going to be instantly adding capacity there.

We don't have orders for both plants to be adding capacity. But I am optimistic that we're going to be able to continue to grow the order book.

I mean we went from a little over to $200 million to $300 in backlog in our order book at the same time as we produced something in the range of $40 million worth of product. So that gives you an idea of how much -- how many new orders we've taken in that period.

Thank you everybody. I appreciate the opportunity to talk to you today.

For those of who you're in the Winnipeg area, please come see us. We've got our AGM today.

And we'll be there and we can talk to you one on one and meet you. If not, I look forward to talking to you again after our second quarter in August.

Have a great day. And go Jet.