Thank you, operator. Good morning, everyone.

Joining me this morning are Carmele Peter, EIC’s President; Darryl Bergman, our CFO; and David White, our EVP of Aviation. Back in September we hosted back to back Investor Day’s at our Quest Window plants in Mississauga, Ontario and Dallas, Texas.

The purpose was to showcase the multiple operations and provide a better understanding of Quest product offerings and to show the progress of the ramp up of Texas facility. I would personally like to take a moment to thank everyone that attended and everyone that help make this event a success.

Now I’d like to take a few minutes to discuss some of the highlights of what was another very strong quarter for EIC. We remain focused on the successful execution of our strategy, creating long-term value through accretive acquisition and organic growth by investing in and growing our impressive portfolio of subsidiary companies.

And again, we achieved all time quarterly highs in most financial metrics including revenue, EBITDA and earnings. We generated adjusted EPS of $1.03, which is a new milestone for us and it was the first time in the company’s history that our adjusted net earnings exceeded $1 per share for a quarter.

$1.03 per share was an increase of 10% over the same period last year. EPS grew even more rapidly climbing 17% to $0.90 for the quarter.

I will leave it to Darryl to discuss our financial performance for this quarter in detail, but I would like to stress the nine months in 2019 with excellent results are the culmination of a strong contributions from many players in our diversified group of subsidiary companies. The importance of this diversification was highlighted in the quarter, as we generated these record setting financial results despite temporary headwind.

Regional One lost a significant customer to bankruptcy, which resulted in a bad debt expense of approximately $6 million. Regional One works with smaller carriers around the world, and as a result accepts a higher level of risk.

It is this risk tolerance, however, that helps us drive above the average industry returns. Well, there is an elevated level of risk, we’re adept at managing it and this is the first material write-off we have incurred since acquiring the company over six years ago.

Our investments in maintenance CapEx can be vary from quarter-to-quarter depending on the timing of aircraft and engine overhauls. As we discussed during the first and second quarter conference calls of 2019, we benefited from a lower level of maintenance investment in the first six months of this year because of the timing of certain engine overhauls.

This reversed itself in Q3, were maintenance capital investment exceeded last year’s level by approximately $7.5 million. This was completely in line with expectation and the investment maintenance capital for the first nine months of this year is up only slightly at 6%, which is well below the growth in revenue of 10% and EBITDA of 15%.

We guided that maintenance CapEx will increase in rate similar to the growth of the overall company. We are somewhat better than this guidance for nine months and the increase in Q3 is entirely the result of normal quarter-to-quarter variation.

The increase in quarterly maintenance investment combined with the write-off at Regional One resulted in a slight increase in the free cash flow, less maintenance capital expenditures payout for the quarter. The quarterly payout ratio increased to 49% from 42%, excluding the impact of the write-off at R1, the payout ratio has been relatively unchanged from 2018 even with the increase in dividends in August 2019 and the increase in maintenance capital expenditures, I just described.

The trailing 12 months payout ratio, however improved to 57% from 62% a year ago. The adjusted net earnings payout ratio improved on both the quarterly and trailing 12 month basis to 55% from 58% and 72% from 75% respectively.

We are beginning to reap the benefits of some of the investments made in prior periods. The strong performance in the Aviation sector where EBITDA grew by 16% is a good example.

The Force Multiplier went in to service and generated its first meaningful revenue and has now completed assignments for both the Canadian and American governments. It is now on an extended mission into the first quarter of 2020.

We also began the new general aviation services contract for the Provincial government at Manitoba. And the ramp up of the fixed-wing search and rescue contract continued in the third quarter.

Well, the amount of work being completed under this contract continues to grow, it will not make a mature runaway until 2023 when all of the aircraft are in service and the overhaul cycle has begun. Other projects, however, are not yet at the revenue stage.

Two examples would include the joint venture with SkyWest deploying CF34-8 engines on leased other airlines and the new contract that Provincial has entered into with the Canadian department of fisheries. The SkyWest joint venture has signed leases with Legacy Airlines and deliveries have begun, but significant work must be completed by Legacy to upgrade the aircraft before the revenue stream begins, which will be phased in and should be in full run rate by the end of the second quarter of 2020.

As it pertains to the fisheries contract, we continued to operate under the old agreement until September of 2020 with a larger aircraft required for the new contract will go into service as the revenue will increase. Perhaps the most significant investment that is not yet contributing to our bottom line is the new Quest facility in Dallas, Texas.

We are very proud of this state-of-the-art facility and enjoyed the opportunity to show it off at our Investor Day. We made a decision to make sure that the product of the new plant matches the quality of that generated in our Toronto plant.

And therefore, began by testing 100% of the finished goods that were produced. We have been very happy with the results of this testing and have recently cut it to 25%.

It will take a few more quarters to reduce the testing to the level we have in Toronto, but we want to make sure there are no declines in service from our customer’s point of view. This should not come as a surprise to most of you as we have always prided ourselves on picking for long view of investments, and are not focused on short-term results.

We expect that the plan will move to profitability in either Q4 of this year or Q1 of next year and we’ll ramp it’s profitability from there. We were hard at work during the third quarter with four separate transactions that will assist with and ensure our continued growth in 2020 and beyond.

All of these transactions have now closed. Firstly, we completed the acquisition of two more solid companies with robust growth potential.

L.V. Control and Advanced Window, Inc.

both companies aligned with our strategic focus of acquiring profitable, well run companies in niche markets. We completed an offering of common shares – EIC common shares that was very oversubscribed and allowed the underwriters to exercise full over allotment option, breaking the gross proceeds to $80.5 million.

Earlier this week, we announced a new credit facility that significantly increases our credit capacity, while reducing our borrowing costs and relaxing covenants, making the facility much more flexible at EIC. I will leave the details to Darryl.

But suffice it to say, when combined with the equity offering, our balance sheet is even stronger than it was. And we have plenty of capital to attack any opportunity on a cost effective basis.

L.V. Control is it dominant Western Canadian electrical systems integrator in the agricultural, material handling space with a solid margin profile.

It services include maintaining grain, unloading elevators, systems grade by quality and put it in silos automatically applying credits to farmers’ accounts and updating inventory positions and financial statements. They have a long record of profitability and strong relationships with many of Canada’s largest great companies.

The acquisition of Advanced Window’s is a vertical integration play for Quest. As they are currently a very important partner for Quest in the eastern half of the United States.

Quest is responsible for stalling and total windows in it’s Canadian market, while customers utilize third-parties to install the windows in the USA? The acquisition of AWI will allow Quest to vertically integrate and provide a single point of contact for customers in this market area.

Not only will they simplify things for our customers, it will allow Quest to share the growth not only the production of windows, but also the growth of the installation business. While, significantly smaller than the L.V.

acquisition, the ability to integrate our Eastern USA operations make it no less exciting. In both acquisitions, the proven existing management teams have committed to stay on and run the businesses for EIC.

Both of these acquisitions closed in October and we expect each of them to be immediately accretive to earnings and cash flow. I will provide some color on our view of the future later in the call.

But for now, I’d like to turn the call over to Darryl, who will discuss our third quarter financial results. I will update you on our outlook later in the call.

Darryl?

Thank you, Mike and good morning, everyone. As I’ve noted on previous calls, our 2019 financial results include the impact of IFRS 16, comparability to results from prior periods with respect to EBITDA, net earnings and adjusted net earnings are impacted.

Consolidated Q3 was a strong quarter for EIC. We generated revenue of $355.2 million, which is up $47 million or 15% over third quarter of last year.

Of the increase $39.9 million was generated in our Aerospace and Aviation segment and $7.1 million comes from our Manufacturing segment. Aerospace and Aviation segment revenue was up 18% to $266.5 million for the quarter with all components of the Legacy Airlines and Provincial and Regional One positively contributing.

The revenue from the Legacy Airlines and Provincial increased by $15.9 million, this increase can be attributed to the Force Multiplier aircraft being deployed on several missions and higher volumes in Newfoundland and Labrador and Quebec, which was due to activity in the natural resource sector, increased passenger and medevac volumes in the Kivalliq and increased passenger revenue in the Manitoba market. The Regional One’s revenue increased in the third quarter 2019 compared to the prior period by $24 million.

As we report revenues at Regional One are comprised of two main streams, which includes sales and service revenue and lease revenue. Within the quarter Regional One had a higher than average volume of whole aircraft and engine sales, which is reflected in the sales and service revenue.

That said, sales and service revenue increased by $22.5 million to $64.2 million also contributing to the increase in revenue at Regional One was an increase in parts sales. As it pertains to lease revenues at Regional One, the higher utilization of aircraft within the portfolio and an increase in the number of assets in the portfolio on lease compared to comparative period, resulted in a $1.6 million increase in the quarter versus the comparative period.

Turning now to our Manufacturing segment. Revenue grew by $7.1 million for the third quarter versus the comparative period.

The total revenue for this segment was $88.7 million. The segment benefited from Quest being a big contributed to their revenue growth as well as an increase in custom manufacturing, high levels of defense spending worldwide, increased spending from our telecommunications companies across Canada and operational efficiencies.

Before moving on to EBITDA, I will stop here to mention that looking forward to the fourth quarter, results from both our recent acquisitions L.V. Control manufacturing and AWI will be incorporated in our Manufacturing segment reporting.

Moving to EBITDA consolidated EBITDA was up $9.8 million, or 12%, to $89 million for the third quarter of 2019 versus last year. This includes the $6 million one-time bad debt write-off at our Regional One – because of an airline customer bankruptcy, which decreased EBITDA during this period.

I will add a comment at the end of my report with regards to this write-off. Despite the write-off, EBITDA performance during the quarter was very strong, which is a testament to EIC’s diversified investment strategy working as it is intended.

EBITDA in the Aerospace & Aviation segment in the third quarter of 2019 was $82 million, an increase of $11.1 million compared to the prior period. EBITDA generated by the Legacy Airlines and Provincial increased by $12.8 million.

The increase in EBITDA for the Legacy Airlines was driven largely by the same underlying contributors as noted in – with the increased revenue previously discussed and cost savings associated with operational efficiencies, such as, capacity sharing across airlines, investment in additional aircraft to reduce third-party charter costs and fuel surcharges that were implemented later in Q3 in the prior period and remain in effect. Again, our EBITDA grew despite industry-related labour challenges.

Industry-wide labour shortages resulted in continued higher overtime, contractor and training costs. The implementation of EIC’s Life in Flight program will help mitigate the impact moving forward but we acknowledged that this will take some time to take full effect.

EIC is also developing similar strategies to address maintenance in labour changes – sorry challenges. EBITDA in Regional One was down slightly in the third quarter of 2019 versus the prior period by $1.7 million.

Excluding the impact of the one-time $6 million bad debt write-off, EBITDA increased by $4.3 million over the prior period. In the Manufacturing segment, EBITDA was $12.5 million, a decrease of $1.5 million in the third quarter of 2019 versus the prior period.

A main driver of this decrease, were cost associated with the ramp-up at Quest’s New Dallas facility, where management continues to proceed balancing production with important quality of requirements and risk management. The balance of the Manufacturing segment collectively experienced growth and EBITDA.

The segment benefited from an increase in custom manufacturing, high levels of the defense spending worldwide, increased spending from telecommunications companies across Canada and operational efficiencies. Growth capital expenditures made in the current and previous periods enabled the segment to respond to increased demand from customers, resulting in increased EBITDA.

Turning to earnings. Net earnings in the period was also strong, coming in at an all time quarterly high of $29 million, which is an increase of $4.8 million to the prior period a year ago.

Net earnings per share increased by 17% in comparison to the prior period to $0.90, this is an all time quarterly high. It should be noted that in the period, the weighted average number of shares increased by 3% partially offsetting the increase in net earnings.

We had adjusted net earnings of $33.1 million for the third quarter of 2019, representing an increase of $3.5 million or 12% compared to the prior period. As Mike mentioned, EIC reached a new milestone with regards to adjusted earnings per share, seeing it increased to above $1.

In the quarter, adjusted net earnings per share increased to $1.3 compared to $0.94 in Q3 of last year. During the quarter of 2019 free cash flow improved by 5% over the prior period to $67.2 million or $2.08 per share.

The main reason for this increase is the $9.8 million or 12% increase in EBITDA, partially offset by the principal payments on right of use lease liabilities. Free cash flow is impacted by the one-time bad debt write-off previously noted.

Excluding the write-off, free cash flow increased by 13% in the quarter over the period – prior period. Free cash flow less maintenance capital expenditures fell 13% to $1.14 [Audio Dip] a share from $1.31 per share in Q3 2018.

The decrease can be attributed to again the impact of the one-time bad debt write-off at Regional One, and an increase in maintenance capital expenditures in the quarter compared to the prior period. Maintenance CapEx expenditures were higher by approximately $7.5 million in the quarter as expected.

As earlier, anticipated expenditures were reallocated to the back half of 2019. On a quarterly comparative, our adjusted net earnings payout ratio improved to 55% from 58% in the prior period.

The free cash flow less maintenance capital expenditure payout ratio increased to 49% from 42%. If we were to exclude the one-time bad debt write-off at Regional One comparative free cash flow less maintenance capital expenditure payout ratio would have been essentially flat to the prior period.

Also effecting the current period would be the dividend increase and increased maintenance capital expenditures in the current period. As a refresher, we have noted in previous call, the trailing 12-month payout ratio on an adjusted net earnings and free cash flow less maintenance capital expenditure basis is a better barometer of payout ratios, given the seasonality of our aviation operations.

On an adjusted net earnings basis, the trailing 12-month payout ratio improved to 72% from 75% the prior period, while on a free cash flow less maintenance capital expenditure basis, it improved to 57% from 62%. The improvement in free cash flow less maintenance capital expenditure payout ratio was driven by the increase in the cash flow generated by the company through the 12-month trailing period.

Looking at working capital during the third quarter, the Corporation experienced the cash inflow from working capital of $2.6 million, compared to a cash outflow of $44 million in the prior period. During the third quarter of 2019, Regional One monetized several assets resulting in a decrease in working capital.

In the prior year, Regional One invested significantly in its inventory of assets for resale, including two large aircraft, which resulted in a large investment in working capital. This difference highlights the nature and very timing of Regional One’s sales and investment cycle.

The inflow from the monetization of Regional One’s assets in the third quarter of 2019 was partially offset by the investment in working capital required to support the Corporation’s remaining subsidiaries, during the Corporation’s busiest quarter, particularly at airline. Our leverage ratios remain within our target range and well within covenants with our lenders.

In addition, now with the new credit agreement under our belt, we have approximately $600 million of available capital and another $300 million. In addition to that, in an accordion feature should be choose to exercise it.

Subsequent to the end of the quarter, we announced and completed two significant financing activities that further demonstrate EIC’s ability to opportunistically access capital and add even greater strength to our ability to execute on our business model of accretive acquisitions and investment in the organic growth of our subsidiaries. At the end of October, we closed an equity offering with a syndicate of banks, which consisted of a bought deal that resulted in gross proceeds of $80.5 million.

This offering was well received by the market and was well over subscribed, indicating strong support and competence in the Company’s ability to execute its strategy. The net proceeds of the offering were $76.5 million and were used to repay debt drawn earlier in the month to complete the acquisition of LV Control and AWI.

Also this week, we announced, EIC has entered into a new credit facility. We were extremely pleased with our banks syndicate in turning this around quickly and for their ongoing support with this investment grade equivalent credit agreement, which gives us more favorable pricing, more flexible covenant, an extended four-year term and increases the facility from $1 billion to approximately $1.3 billion.

In addition, the accordion feature is increased from $100 million to $300 million, which at EIC’s option to execute would provide the company access to a facility of $1.6 billion. Further, the new credit agreement provides improved pricing on both amounts borrowed under the facility and standby charges paid for the unutilized portion of the facility.

The Company’s maximum leverage ratio has been increased from 3.25 times to four times and the maturity of the facility is now November 5, 2023. Before I pass the call back to Mike, I would like to make a couple of concluding comments.

First, with respect to the bad debt write-off at Regional One for the airline bankruptcy, the write-off was first experienced in EIC’s six-year history with Regional One. While, the write-off is unfortunate, management continues on an ongoing basis to actively manage and monitor all credit exposures.

Regional One competes in a market that is characterized by higher risk. That said, this higher risk also drives higher returns.

It’s important to know that due to management’s ongoing monitoring, it allows them to take quick action once the bankruptcy was imminent and all aircraft, other assets were recovered and returned immediately to be redeployed as soon as possible. And my final comment, I will – we’ll be with respect to the new credit facility.

It is important to know that, it has taken EIC 15 years to utilize approximately $700 million of credit. The fact that we have now have access up to an additional $900 million should in no way be viewed as a change in our balance sheet strategy.

Our aggregate leverage has stayed quite constant over the 15 years and we don’t intend to change that now. That concludes my review of our financial results and comments for the third quarter of 2019.

I will now turn the call back to Mike to provide comments on our outlook for the balance of the year. Mike?

Thanks, Darryl. At the risk of repeating ourselves, I think it is very important to reiterate that we have absolutely no intention to change our appetite for debt.

For over 15 years, we have maintained a balance sheet those remarkably consistent in terms of leverage and that has served us well in strong and difficult markets alike, and is allowed us to take advantage of opportunities whenever they are available. The acquisition of Calm Air in early 2009, during the financial crisis is a good example of this.

There is no doubt that this new facility is a significant improvement from our previous facility, as it reflects the banking syndicates’ view of EICs credit quality. It does provide access to more capital at lower pricing with far more flexible covenants, which will help fuel our growth in the future.

But it is no way signals change to our strategy. The third quarter was a microcosm of EIC strategy at many levels.

I would like to take a brief moment to explain how this is the case. For those of you followed the company for a while, this will not be new information.

For those who are newer to the story, it will show how the consistent implementation of our business model has led to a 50-year 5% CAGR dividend and the stock that has grown fivefold over that period. We produced record results in the third quarter, achieving an adjusted net earnings of $1.03 per share, a full 10% better than our previous high.

This headline number, however, does not give a clear picture by itself. This performance was achieved in spite of an unusual write-off at R1, our losses at a new Quest facility as we slowly and methodically rapid into production, which are offset by a gain on contingent consideration.

The diversity of our subsidiary operations allowed us to set new earnings highs, at the same time, as tackling these issues. We have built a strong portfolio of operations that are not directly correlated and allowed for resilience, if challenges in a part of our company are occurred.

Quite simply, diversity works. We also continued to invest in the future both through growing our subsidiaries and through accretive acquisition.

We added additional assets to R1, who continue to generate strong return. We continued to invest in additional equipment to Provincial for the new Department of Fisheries contract, which goes into effect later at 2020.

And we executed on our plan during the Quest plant online in such a matter that our customers will see the same high quality product, they’re used to from our Toronto facilities. In addition to investing in the future, we realize the benefits of past investments as projects such as the Force Multiplier went into service and began to contribute meaningfully to our results.

We continued to grow through acquisition with the purchase of LV Control and AWI, both are accretive transactions, and we’ll grow and strengthen our manufacturing segments. LV will give us exposure to the agricultural economy and AWI will vertically integrated to Quest enhancing our return on Quest’s future growth.

We strengthened our balance sheet with an equity offering and a new debt facility. We were pleased with the response to these capital initiatives as both were materially oversubscribed and bear witness to our ability to access the capital market whenever needed for the business.

In short, I am very happy with the quarter. Yes, we generated record earnings.

But quite frankly that is just the tip of the iceberg. We are now three quarters of the way through the year and I am pleased to confirm that we are comfortable with our previous guidance for the year.

We’re in the midst of our 2020 budget process and are not yet ready to provide formal guidance for this period. But I am able to tell you that we anticipate the growth in 2020 will match and likely exceed that in 2019.

We will provide formal guidance to the market while we report our year end results in February. Finally, before moving onto questions, I want to thank all of our customers, employees, shareholders, and all stakeholders for their ongoing support.

We would now like to open the call to questions. Operator?

Thank you for taking my call, and congratulations on another strong quarter. Speaking about your 2019 EBITDA guidance now are you – you just said that you are able to meet that guidance.

Now are you factoring in this bad debt expense? Also the ramp-up at Quest, and you still think you can meet this 10T to 15% EBITDA guidance?

Can you just provide us with some more color on that?

Absolutely. There’s no doubt that our $6 million hit will move us closer to the lower end of our guidance, because that wasn’t factored in when we provide the guidance.

But the continued growth in things like Force Multiplier, enhanced profitability in our airlines who are really hitting their stride, improvements in Quest in the fourth quarter, while the U.S. plant will be contributing in any meaningful way at that point, we’ll be closer to it.

And as such, we’re comfortable and getting into that range of the 10% to 15% growth year-over-year. Remembering, of course, that doesn’t include $20 million in increased EBITDA from the IFRS 16.

So the growth is really 10% to 15% plus an additional $20 million.

Got it. And how you’re factoring in the M&A into that guidance range?

M&A will help somewhat in the fourth quarter. But those are – those deals – those companies are project oriented and we’re only getting a part of a quarter.

So the amount they’re going to contribute will be modest in that period. So it’s not a big impact on the results.

It makes sense. And then just moving onto Force Multiplier, congratulations on the strong demand that you are witnessing for this on-demand surveillance plane.

Now what type of metrics are you guys using before you determine whether this is a product type that you want to expand more and get more Force Multiplier out there in the marketplace?

Were you sitting in at our board meeting? I think I answered this exact question yesterday.

It’s really what we want to see as the consistency of demand. We have a lot of anecdotal demand and it took us a few months to figure out how to get the governments to be able to use it when they want to.

We now have the plane out until later in the first quarter and potentially longer than that. And to the extent that the demand remains resilient and particularly if we can got more than one customer wanting it at the same time.

And quite frankly, there are those discussions ongoing as we speak. That would see us add another or more than one more to the fleet in this short term rental market.

The interesting thing with it is the planes may not be identical. We may have the Force Multiplier that we built is a Dash-8 platform.

We may build another one of those. We may have built a smaller plane or we may build a plane that’s more like the ones we built for the Government of UAE, which have been more equipment on them.

It really depends on the specificity of the demand we have. And just one other thing, while we’re on the Force Multiplier, that I want to point out.

This is the way to understand EIC. We announced that more than two years ago.

It took us a while to build it. We had that certified and then we had – once we got it certified, it took us away a long time to get to figure out how the governments could utilize it, because it’s expensive on a per hour basis.

But look, it is now contributing in a meaningful way. And so we’re making these investments, we’re not making them for what’s going to happen in the next 15 minutes.

And that’s why when you look at Quest and people will ask me like, well, why is it taking six months to ramp it up? Because we’re doing it the right way, we didn’t build it for the next 10 minutes.

We built it for the next 10 years. And my team there, we just finished a tour there yesterday are just doing an exemplary job of building a state-of-the-art facility and we’re excited, where that’s going to give us in 2020 quite frankly and beyond.

Thank you for that. And then you guys mentioned that you guys intend to keep your net debt to EBITDA at pretty consistent level.

But now with the substantial increase in your credit facility, are you guys looking at much larger acquisitions than you have in the past? Does that change that the scale of the acquisitions that you guys will look at now versus this previously?

The short answer to that Raveel is no. It doesn’t change what we’re looking at.

We’ve looked at bigger transactions in the past, where we bought PAL, an example. It was an acquisition that was well over $200 million.

We were very close on another acquisition in the manufacturing side that was of that size earlier, this year that we decided not to do. So we continue to look at those.

But the key thing with the facility is sometimes you got to move fast to be able to pose these things. And we’re now in a position with the access to capital.

We have – in 50 years, we’ve invested $700 million. We now have access to $900 million.

So we could do whatever we think is the right deal with the capital we have. But it’s important to understand it’s not going to be done by levering up the balance sheet in the long term.

If we have to move fast to close something, maybe we’ll use it at that rebalance the credit facility or the balance sheet afterwards. But our commitment is to remain in that sort of 2.5 to 3.5 times of aggregate debt to EBITDA, including our convertible debentures.

Yes, Raveel. If I am – it’s Darryl.

I might add also on the new debt facility. Again, it’s more a matter of also timing when you access the market.

So when we looked at it, we looked at how competitive we could get rates and lions of this point in time and it was an opportunistic time for us to do that. So that’s why we were able to do it this quarter.

Hi. This is Amina speaking for Konark Gupta.

You mentioned that the Regional One bad expense, you received all the aircrafts back. Is it a one-time expense?

Or do you plan on writing down the customer? And how many aircrafts are there?

And when do you plan to anticipate deploying the aircrafts to others?

Yes. There’s a few questions buried in there.

First of all, the aircrafts are fully recovered. So we don’t need to write down anything else as it relates to the transaction.

The aircraft, there’s five of them that were on a service with that airline. There are active discussions with a number of airlines to place those.

And I anticipate those being in place by the end of the year or certainly by the first quarter of next year. We’re in active discussions on that.

So no further write down from this and the plane should be redeployed shortly.

Okay. I do have a question on the Canadian operations Quest.

There’s incremental growth to support. When do you plan on achieving the steady state?

Well. In the steady state really is it related to the Canadian, I don’t think.

I think you’re asking me what the – correct me if I’m wrong. I think you’re asking me when Quest will reach a steady state?

Yes.

I really – I’m hoping nowhere soon. So the business continues to grow.

We built the plant with tons of extra capacity in terms of profitability. We’ll be there next year.

But there won’t be as – certainly hoping there’s not going to be a steady state. Marty has promised me that the demand continues to grow.

And quite frankly, our leases are up in Toronto. We mentioned this on our Investor Day that the leases are up in a couple of years and it’s highly likely that you’ll see us redo our Toronto manufacturing facility into a single building with more square footage at that time.

So I really don’t see a steady state or a plateau anytime in the near future.

Thank you. I don’t have any more questions.

Good morning folks. Hey, Mike just, I – Amina asked you a question a little differently, because we think about 2020.

And as you said, your expectation is there that you’ll see the growth. Is it fair to think that you’ve got everything in the portfolio today already kind of locked and loaded?

So we’re not talking about any sort of excess investments that are going to need to make or anything like that for growth or any sort of acquisition growth? So like basically that’s your baseline number, is that a fair way to think about it?

Absolutely. The only thing, Chris that we would continue to dusk in, there’s still going to be $10 million or $20 million, $20 million-ish for the continued of the CFO contract that’s start until September.

So we’re building that in. We already have the contract that the investment won’t be finished till sort of midpoint to next year.

But absent that everything else is locked, loaded and paid for it.

Okay. And then just kind of thinking about some of the stuff that’s maybe not super transparent.

The SkyWest agreement, if you can talk a little bit about that and also kind of curious about with CRJ production shutting down. How you guys are seeing kind of the market value for some of the aircraft to Regional One and where do you kind of move from here?

I mean just on parts and stuff like that? And just – does that actually make it more attractive at this point?

Or does it start raising some supply issues for you?

Yes. In the medium term and by that I mean multiple years, it really is no impact.

The challenge that we have in Regional One’s business today is not a lack of demand. It’s more a lack of supply.

The planes have continued to reuse their strong demand around the world. Even the 200, which are the oldest of the CRJ fleet are in strong demand.

The challenge is that no one anticipated those planes still being in service. So there’s a shortage of overhaul availability for the engine.

And so that will be the key. The rate determining step is access to enter the free time or access to overhaul capability.

So in terms of the shutdown in the CRJ production that could impact something 10 or 15 years from now, but in the near term, the demand for those aircraft is so strong, that we don’t anticipate that really doing much to our business. I would point out the announcement of one of the major U.S.

airlines, as recently as yesterday, about the move to the CRJ550, which is sort of a hybrid, which is taking the 700 and reducing the number of seats in it, putting more comfortable configuration, allowing it to be operated with a single flight attendants. And that’s just starting.

And quite frankly, that’s where our SkyWest joint venture got nine airlines per se. But that CRJ550 adjustment is where our aircraft to – I’m sorry, with SkyWest are going.

So those are long, I’ll pause and see if I actually answered the question.

Yes. The other thing I point out Chris, is that as we’ve announced the SkyWest JV engines together with our airframes have a 10-year lease, which are being saved during this quarter.

So that reflects the demand that exists together with the parts, of course, they’d be required over that timeframe.

Good morning. I was just wondering if you could provide an update on the outstanding RFPs and if there’s anything in 2020 that you expect a bit on?

There – in terms of the ones we’ve talked about before, the Government of Manitoba won – the government has signaled that now that the election is over, they’re going to reactivate the medevac one and we would anticipate, David, we award of that sometime next year.

We might hear something late this year or early next year. It’d be a good best of them.

We were uncertain yet whether they’re going to have us revise our bids for things that have changed in sort of a multiple quarters sets the bids are submitted. Or if they’re just going to go off what’s submitted.

But we anticipate that we’ll come to a conclusion shortly. The other thing is our Provincial subsidiary is regularly bidding on other RFPs.

I think over the next quarter, you’ll hear about it. I’m not in a position to release it at this point.

But some partnerships on a couple of significant Canadian and/or other government opportunities, where we’re going to partner with other industry players, not unlike the fixed week search and rescue contract where we partnered with Airbus. Opportunities like that, and they’re in Canada, they’re in Australia, they’re in New Zealand, they’re in the Netherlands.

And so I’m not in a position where I can announce anything specifically other than to say we’re excitedly exploring opportunities both on our own and with partners in those areas.

Great. And my last one here is just a quick one.

You’ve talked briefly already about the bad debt expense, but Darryl, do you guys have provision for any of those at all in the income statements?

I think if I despite speaking, sorry. I think, if I hadn’t said you correctly, do we provision, we do for smaller things that we believe that the RDR situation from the information we had given that the airline was going to be recapitalized.

And so when it wasn’t it exceeded our provision.

Okay. That’s great.

I’ll hand the call over.

Yes, thanks. Good morning.

So I just falling on that – on the bad debt expense. I just wanted – wondering what’s the customer concentration at Regional One?

Like, what would be your largest customer in terms of percentage?

I’m not sure that in terms of the parts business, there’s – we’ve customers all over the world that’s very widely diverse. In terms of the lease environment, Argo would have been one of our biggest lines – five aircraft.

We would have similar sizes and a few other airlines a lead to the U.S., Nordica. But it, too, is fairly widely help.

Okay. And then I just wanted to ask so you note that you had higher than average volumes of aircraft engine sales in the current period.

One, I guess, could you describe kind of what that was? And then secondly, does that pull any sales from future quarters or what?

Maybe just kind of some more color on that would be appreciated.

Yes. When you look at excludes put the leases aside at Regional One.

We’re selling just to really break this into two pieces. Part sales where we’re taking an aircraft, breaking it into smaller parts and those are quite predictable, growing on a regular basis but aren’t lumpy.

The sale of engines and aircraft are based on are their opportunistic transactions. So if you sell some, did you pull it from another period while once you saw that you can’t sell it again?

So on some level, I guess that’s correct. But it’s more about when do we get a price that we think it’s worth it in the market that we’re going to take the lease itself and sell the piece.

And our inventory levels go up and down. We’re buying all the time as well.

And so we’re replacing those assets with other assets. But we’ve said multiple times on these calls, don’t try to predict which quarter we’re going to sell an airplane.

As an example, we sold, you can correct me, if I’m wrong, Though the CRJ – sorry, we sold one of those in the quarter. That’s a big number.

We don’t sell one of those every quarter. We sold a number of those ERJs that where we bought, I believe it was 26 or 28, of them all at once a couple of years ago.

We’ve now sold off most of that fleet and we sold a number of those in the quarter. It’s just clearly opportunistic.

It happens when it happens and that’s why the revenue – the top line is hard to predict in R1. But remember the margins on a full aircraft sale are nowhere near the percentages that you get on a parts sale.

And so while revenue may jump by $20 billion, we don’t get commence or an increase in EBITDA with $20 million in revenue. It’s a much smaller percentage on the bigger transactions.

And one thing to – remember the R1 I mean, what they’re really good at is, is buying. The ERJ portfolio that we acquired a while ago is a good example of that.

What we’re seeing now is strong demand for the ERJ platform. And we were able to take advantage of that this quarter until a number of those aircraft.

And you’ll see with R1, good buys and then they know their market and they know when to sales and monetize.

Okay. And then just lastly, I wanted to ask on Quest, I noticed that or maybe I missed it.

But I didn’t see a backlog this time around, I guess, do you want to comment on that or whether you’ll be closing that going forward or whether – maybe just comment on what you see there.

Well, it’s not my intention to give like a running total update. But I can tell you that it’s consistent and growing slightly in the quarter.

Okay. All right.

Thanks very much.

We’re a bit cautious until we get that plant fully available to make many promises. The opportunities at Quest greatly exceed our ability to fill them at this time.

So it’s really a matter of convincing ourselves how fast we can get that plant going as fast as with a high quality production. And until that we aren’t going to take orders we can’t sell.

Yes. Good morning, guys.

Just very quickly two high level questions for me. First, Mike, you guys have put a lot of capital into these internal growth projects in recent years and now in recent weeks you’ve got a twin acquisition.

Should we read anything into that? I know, you’ve commented in the past that acquisitions have been more expensive lately with capital out there.

Should we expect M&A to become more significant going forward or should we still expect a combination of internal growth driven projects as well?

That’s a great question. The M&A in U.S.

still is generally speaking in prices, that are outside of our comfort zone. So the opportunities in the U.S.

that are a price we’re prepared to do are still limited. In Canada, I don’t think they’re cheaper, but they were always a little bit more reasonably priced.

And so you’ll continue to see us active in that market. And with the new credit facility, with the amount of money we’ve raised, I don’t think we stand by fees.

If we did think we could deploy some of that over the short to medium term. But the key thing is it’s always going to be about – we’re going to take advantage of internal opportunities and external opportunities, just taking advantage.

It’s not really directly your question, but I’m going to have something to do that. In terms of when we’re investing in these things, it’s the future we’re looking to.

When you look at what we’ve got, we talked about we intend to 50% growth this year. I said that we expect to meet or exceed that next year.

It’s kind of locked and loaded. We invest one year for the future years.

So we have a full year next year of Force Multiplier. We’ve got the kickoff of the fisheries contract, we’ve got an expanded fixed-wing search and rescue contribution.

We’ve got the rollout of revenue out of the SkyWest partnership. And next year is not special.

That’s how we grow our business. We invest now for future returns and it’s not really driven quarter-to-quarter, but the beauty of it is when you do take a long-term perspective, it actually shows up quarter-to-quarter.

Sure. No, that’s helpful.

And just to follow-up on the L.V. Control in particular.

It clearly represents a step out from an industry standpoint into the ag space, material handling and logistics in particular. I’m just curious if that is a one-time transaction like you’ve done in past or is there complimentary deals like Advanced with Quest that we could see going forward?

I guess, just trying to understand the broad opportunity that how comfortable you are with ag, generally speaking.

Yes. We’ve talked for a long time about getting into ag.

I think people would definitely do it for a long time, heard me say ag a lot of times for anything actually happen. L.V.

Control’s, we love because it has exposure to ag but not with the season to season, the cyclicality because they’re dealing with big grain companies who allocate their capital over numbers of years and set up projects. So we love it and that it’s exposed to ag, but it’s not as cyclical as some other ag things are.

And are there other opportunities? There are.

Prices in ag still are higher than they are in other businesses. So, I would be cautious in guidance that we’re going to get those done, but we’re actively looking at other opportunities in the space.

Okay. Very helpful.

That’s it for me. Thanks.

Good morning, Nauman.

Good morning, everyone. So just my first question for Force Multiplier, so your Legacy business, I saw it grew by 10% or $15.9 million.

Is it fair to say that most of it is from Force Multiplier?

No, I wouldn’t say most of it. I would say it’s perhaps the one of the largest contributors to that growth.

But the operations at our Legacy Airlines were all strong in the quarter. And so one of the things we’ve got a lot better is sharing capacity between our airlines.

And on any given day you could have a COG doing a flight for perimeter or Powell take a plane across the elbow with a busy period in another airline. So part of it comes from that.

Part of it comes from the fact that in Q3 last year we were dealing with a rapid spike in fuel prices at the time. And it takes us a bit of time to catch up in getting the fuel surcharge in place.

Fuel prices have now plateaued and the surcharges are in place. So that’s also an profitability, but make no doubt.

There’s also increased revenue we’re seeing in our in-service support services both locally here in Canada as well as in the UAE and our operations down there, which were a contributor for the quarter.

Thank you. That’s a great color.

And just a on your credit facility, in your prepared remarks, you mentioned that there is a cost reduction. If you could share how much is that.

And the second one, I think you also mentioned that, banks have started to view your credit profile better than what before. If you could share, if there’s any structural change in the collateral structure of that secured debt line as well.

I’ll answer your first question with respect to the collateral part. Yes, there is a change.

We have a lot less restrictive security requirements under it. While it’s not unsecured, I would call it the next best thing, simple GSA over the assets of the corporation.

So it’s a lot more relaxed security. With respect to the cost reduction, again, as we mentioned, there’s a number of different elements that we go into that.

Just general pricing has gone down about 25 basis points and we also have reductions in standby charges as well. Also costs related to – having in the previous credit agreement, having to incur costs do leans on assets and all that, every time we did something have gone away as well.

I would jump in and just add one thing to what Darryl said, the key improvement on the collateral side is that historically the guarantees provided by all our operators were supported by security instruments in those companies. And now the guarantees of our subsidiaries aren’t secure, which when you take a look at a company, take Regional One as an example that sells planes on certainly a monthly basis, if not bore.

When we buy those, the bank would have put security on the plane each time. Now we sold that, we’d have to take it off.

We pay our lawyers, we pay the banks lawyers. This deal is good for us and bad for the legal community.

Fair enough. And just one last one in terms of your Manufacturing segment other than Quest, if you could provide an update on the other businesses and how well they are doing?

In comparison to last year at an aggregate, it was a good quarter. Our Ben Machine business, precision metal guys and Ontario continued to do very well and grow quarter over quarter.

Alberta is challenged. I’m not sure that it’s more challenged than it was before, but it certainly consistently challenged.

So it would be on the lower end of the performance scale. And then I guess the other one is, SFI.

We’ve seen a bit of a decline in the award of work. There’s lots to bid, this is almost identical to what happened the year leading up to the last presidential election.

And then immediately following the election, there was a boom in terms of the amount of work allotted. And we would anticipate that as well.

Well SFI is clearly a small part of our business. It would be slightly less busy than it was in the past.

Although opportunities we’re looking at remain strong.

Good morning. Thanks for taking my questions.

Mike, when you look at your portfolio of companies, do you feel that you have the right balance from a counter cyclical perspective?

Generally speaking, yes. I mean, the airline stuff we do, our flying in the aviation business really is just not tied to the economy in anyway.

There’s a little bit in Newfoundland that where we would be flying that’s affected by the general health. But, the general health of the economy there, it has been challenging for a bit.

Most of our flying is essential services refined to first nation’s communities. And the beauty of that business is it’s the same whether – Canadian CAD 65 or CAD 85, CAD 50 or CAD 150.

So we like the stability of that. Some of our manufacturing would be more exposed to the general economy.

But even with that, things like banner more tied to the military economy than they are the general overall economy. And then we are excited.

I don’t want to overplay it because L.V. is not a not a huge acquisition, but it’s one we’re really proud of having and it gives us a little bit of exposure into ag economy, which again is completely different than the other thing.

So, when you look over 15 years, we’ve had periods of time where aviations carried the company and tough manufacturing times conversely, you get a new competitor in aviation and manufacturing. So yes, we are – I think our portfolio gives us stability first and foremost.

The other thing I’d point out is, regional segment of our revenue, which is contracted. And we’ve recently renewed many of those contracts from – Mike spoken about a few DFO.

A couple of years ago we got the fixed-wing search and rescue contract, which is in a way 20 plus year contracts. We’ve renewed our government Nunavut medical transfer contract, we’ve secured a medevac contracts are all in Nunavut for several years.

So all of those obviously are steady state contracts that are of course, not cyclical.

Okay. No, that’s great color.

Then you mentioned a little bit around the geopolitical environment and macro environment because that just more cautionary type of language or are you seeing anything right now that in any particular area that’s given you a little bit more caution than the normal?

Largely only as it relates to stainless fabrication. Last big business to business transactions, but on materiality basis at EIC, I don’t have numbers in front of me, but they would be something like 1% or 2%, maybe 2.5% of our overall business.

So it’s not a material exposure.

Okay. And when you’re thinking about a potential acquisition here going forward, would it be – are you thinking more around a completely different business that would add additional diversification?

Or would you be looking more towards enhancing some of the existing kind of end markets that your portfolio is currently involved in?

Put in the bud first before answer the question the bud is, we’re opportunistic. So if something comes up, I reserve the right to change my mind.

But at this point, the things we’re looking at are quite clearly related to other businesses we’re in.

Good morning, Shaun.

Good morning, Mike. The report indicates that you guys expect Q4 lease revenue to be down in Q4 related to the customer bankruptcy.

I’m just wondering if you can quantify that.

It depends on some discussions we’re having now, whether the planes are going to fly here shortly. But it’s low single digits in terms of millions of dollars.

I’m really not prepared to give you a precise number of what I’m in negotiations. But it’s not a big number.

Okay. It sounds based on your earlier comments that, you wouldn’t expect such an impact in Q1 2020?

I would anticipate those planes will be flying by then.

Okay. And then just a question on Quest, I know it’s still fairly early days in the ramp of the Dallas facility.

But overall has the speed and I know those expenses that you expected for the ramp up in line with your expectations?

I would say that we had a couple of equipment issues with stuff as it was brought over and started affected the ramp up of the plant at the beginning. We had some stuff damaged in transport, which put us a couple of bucks behind our plan.

And we sort of stayed a couple of months behind. But I would point out, we built this, we haven’t started a big plant like that before.

And if we’re going to make a mistake – we’re going to make a mistake on the side of going too slow as opposed to going too fast. The worst thing I could do is have window show up for the 45th floor in Oakland and have them leak and destroy our relationship with the developer where we’ve done 10 projects for them before.

We’ll slowly ramp it. We’re making progress, we’re up to 180 something or 190 employees in the facility and we’re increasing that every week.

And people could say, well, why don’t you do it faster? Well, we got train the employees and having two people being trained by one person, just impugns what the one person can get done.

So we’ll do it slowly and build that, Joe [indiscernible] our GM there is doing an awesome job and we’re happy with where we are. We’re excited about getting it going faster, no doubt.

But it’s on track.

Yes. I think Mike, just to come on that too, the one softer side to that too is also the safety component.

As you ramp up quickly, you want to make sure you’re doing it safely as well.

And that’s a good point Darryl. We have done – we have a big sign up in there of dates, that’s our last accident and for now we’ve been able to say it’s been a year and we haven’t had any and that’s something we’re very proud of.

Yes. That’s great.

And then just kind of housekeeping question. Maintenance CapEx guidance, I think, formal guidance is still for growth in line with the overall business.

You mentioned and reported year-to-date up 6%. I’m just wondering, should we continue to expect a pretty significant year-over-year increase in Q4 or…

There’ll be some increase? I don’t know, pretty significant.

It’s hard for me to do this precisely because it depends on when certain engine things get redone where we get the knock for the manufacturer. So I would expect the Q4 would be slightly higher than last year, but I wouldn’t anticipate a huge difference.

Okay, great. Thank you.

Thank you, operator. I appreciate everyone participating today.

It was a very exciting quarter and probably even more exciting last five weeks since the quarter ended. Look forward to talking to you again soon in February where we report our full year results.

Have a great day.