Thank you, operator, and good morning everyone. Joining me this morning are Carmele Peter, EIC's President; Darryl Bergman, our CFO; and David White, our VP of Aviation.

Our first quarter results call in May, we followed the unique format where we had several of our subsidiaries speak about the impact of COVID on their operations and what plan do they need to deal with it. This quarter marks the second report since the onset of the pandemic.

And we will return to a more traditional format which includes commentary from myself, our President and our CFO. On the Q1 call and in our Q1 report, we laid out our plan to manage in the COVID environment.

The plan includes the safety our customers, our employees and all stakeholders. It also included adopting our service offerings to meet the changing the needs of a public.

It included managing our cash resources due to challenging period to ensure we have the resources to take advantage of opportunities for long-term growth that are uncovered and finally we prepared for increased demand as the pandemic was better controlled in the future. The second quarter was less of planning and more about execution.

Putting plans into actions and we are very pleased with the progress that we've made. The majority of our revenue and earnings are driven by the aerospace and aviation segment as such there has been a tendency within the market to view EIC as a similar to traditional North American air carriers such as Air Canada or Delta.

This comparison is fundamentally flawed, as even within the aerospace and aviation segment, our operations are very diverse. With medevac, freight, freight trading, maritime surveillance, part sales and equipment leasing in addition to the passenger business.

In addition to this diversity within the segment, we have our manufacturing businesses, which operate in other diverse marketplaces. The value of this diversification strategy has never been more apparent than during this quarter.

The airline comparatives are dealing with ongoing passenger declines of over 80%, and they're describing their business in terms of how many millions of cash per day that is being lost. Our airlines experience passenger declines of over 90% at the beginning of the pandemic, but the essential nature of the service we provide has seen volumes recovered of 40% to 60% of normal depending on the geography of the operation.

We expect these levels to recover quickly when travel restrictions are reduced or lifted. Our return to pre-COVID levels will be described in weeks or months not years when the pandemic is finally brought under control.

Our revenues decreased 25% year-over-year to $244 million and EBITDA fell by 29% to $62 million. We remain profitable with adjusted net earnings of $0.16 per share.

When the pandemic began we chose to maintain our dividend of $0.19 per month to our shareholders, which made us an outlier in the aviation business as most cut or cancelled their dividend in its entirety; however, not only do we keep the dividend at previous levels, we committed to fund it and all sustaining capital investments from operations without decreasing our debt levels. I'm pleased to report that we not only met that commitment, we have significantly exceeded it.

Our payout ratio for the quarter was 78% on a free cash flow less maintenance capital expenditure basis, much stronger than the breakeven 100% payout ratio commitment. Tight management of both maintenance and growth initiatives together with strong working capital management and a stronger Canadian dollar has enabled us to reduce our secured debt net of cash by $40 million.

We paid our dividend, funded our capital investment and paid down debt. Our focus however was not just on surviving the pandemic, but rather was focused on returning to expansion when the pandemic is under control.

Subsequent to quarter end, we announced the closing of Window Installation Systems or WIS, a window [Indiscernible] located on the West Coast of the United States. WIS has served as the installer of Quest windows since it entered this market a decade ago.

The acquisition of this company is very similar to the purchase of AWI in the fall of last year. AWI is the installer of Quest products on the Eastern half of the United States.

These two transactions in addition to being significantly accretive to our shareholders are strategic as Quest as in Canada we will now have -- provide a single point of contact for all customers, for both the design and purchase of windows and for their installation. Installation makes up a significant portion of the window budget and by internalizing this function, Quest now benefits from the entire project on future contracts.

Provincial Aerospace together with its partner's local partner JetSupport was selected as the best bid in the Netherlands Maritime Surveillance contract. The opportunity calls for two adopted Dash-8 aircraft and the contract when executed will have a 10-year term together with two one-year options.

The contract is material financially and is expected to contribute immediately upon the planes going into service in late 2021. The award is also highly strategic as its PAL's first major surveillance contract in Europe.

It increases PAL's profile of the surveillance community and extends the streak of newer expanded contracts for the company. Work on the 2-Dash 8 aircraft is expected to begin later this year, when the aircraft earmarked for the enhanced government of Kansas fisheries contractor completed and put into service.

I am pleased to report that as of today the 20-day response period for this contract in the Netherlands has passed, and we will now proceed to negotiating the final terms of the contract with the government. The various components of our aerospace and aviation segment have fared quite differently during COVID, and I will speak briefly on each of them.

Carmel will have a little color on the future in her closing remarks. Our Medevac business both in Nunavut where we are the sole provider of service and in many provinces where we are one of several licensed operators saw a significant decline in demand of approximately one-third early in the pandemic.

Many Medevacs are used to transport patients who are not healthy enough to fly of a scheduled flight to the south for medical diagnostic appointments. Early in the pandemic, all but the most urgent of these trips were postponed and as such demand declined significantly.

Over ensuing months, the demand for service has returned to near pandemic levels. Our maritime surveillance contracts were largely unaffected by the pandemic.

While margins face some pressures from the cost of safety initiatives put in place to protect our employees, and to prevent workplace spread of the virus, small delays in the start of the fisheries contract and the ramp up of fixed-wing search and rescue contracts have experienced, but they are not material and non material issue. The Force Multiplier did not fly during the second quarter as governments focus on other pandemic issues.

Prior to the pandemic discussions were underway with a number of countries for deployments in the second quarter and beyond. Some of the discussions have been restarted and some shorter term deployments have already been scheduled for the third and fourth quarters.

Our freight business has been largely unaffected by the pandemic, and in fact in some markets it has led to an increase as the community members have remained at home; and not traveled to southern centers to shop. Some of this freight is delivered on combination aircraft with both passengers and freight on board.

The dramatic decline in passenger revenue led to a reduction in frequency of service to northern communities, which in turn resulted in alternate freight delivery mechanisms being required. Pure freight aircraft have lower margin than combination flights, and this did put some pressure on margins in spite of increased volumes.

Recent increases in passenger loads, however, have facilitated increased frequency, which has now alleviated this concern. Moncton Flight College was closed for a period during the second quarter as it was not considered an essential service by the provincial government.

It is back in service albeit at less than full capacity. The demand for international student training remains strong, but there could be some dislocation later this year if international travel was not available to take graduates home or bring the new students here.

Passenger volumes were very dramatically impacted by the pandemic, following by 90% in early April. And with only the most essential travel being allowed in an attempt to keep the virus out of remote communities.

As the pandemic has become under better control, volumes have increased although not evenly across the country. We are now operating at 40% to 60% of normal volumes.

Travel restrictions and quarantine requirements remain in place in some markets. Nunavut for example requires a 14-day quarantine for anyone who is returning to the territory from a trip to the south.

As these restrictions are lessened or removed, passenger volumes are expected to rise very quickly. Regional One, our aftermarket parts and leasing company has been the hardest hit of our subsidiaries.

R1 specializes in regional jets and large turboprop aircraft, which are operated by carriers around the world. It is very well publicized that airlines around the globe have dramatically reduced operations, and are flying far less, which has a direct and immediate impact on the need for parts engine and aircraft sales, as well as leasing.

We had begun to see an uptick late in the second quarter but the resurgence of the number of cases in the United States has neutered this short-term improvement. Carmel will come back to the outlook for Regional One in her comments, but material improvement in Regional One's results will not be seen until 2021 when Regional jet volumes increase.

Our manufacturing sector was impacted by the virus as the process changes required to keep employees safe and prevent the spread of COVID impacted margins. Demand was surprisingly strong across the segment with the exception of our Alberta and BC operations where demand was well below normal.

These operations in the two western most provinces make up a very small part of EIC's total less than 3%, and as such the impact was small. LD control, dent machine and stainless fabrication all performed strongly through the quarter, and the outlook remains positive.

Quest also performed well in the period, but dealt with the most dislocation as the result of the pandemic. COVID hit different parts of the continent at different times, and this resulted in construction job sites opening and closing at different times throughout the quarter.

We also dealt with production employees becoming ill with COVID through contact outside of our plant. Our first job was to reconfigure our production facilities to socially distance our employees to the greatest extent possible.

This was simpler in Dallas because of the size of a new plant, and much more challenging in Toronto where we did not have the extra space to spread into. We actually chose to close the Toronto plant briefly on three separate occasions in order to ensure the safety of our team.

Our order book remains robust and we continue to be bullish on the short medium and long-term outlook for Quest as evidenced by our recent acquisition of West. We expect there to be continued inefficiency from the adjustments to project schedules and COVID plan configuration in the near term, which will subside with the pandemic.

One last topic before I hand the call to Darryl for a more detailed look at the numbers. We have received approximately $29 million in CEWS payments from the federal government.

We have utilized these funds to maintain employees who would otherwise have had to lay off or terminate. It also enabled us to maintain a higher level of service in certain communities that would have been possible without the program.

It enabled us to do a better job of looking after our people and our customers. I will now hand the call off to Daryl who will walk you through the second quarter financials.

Thank you Mike and good morning, everyone. Within a quarter that was marred with the unprecedented challenges of having to deal with the continuing COVID-19 pandemic, the corporation through the actions of management and staff across all our EIC companies were able to maintain positive cash flow after capital requirements and payment of dividends; and reduce net debt in the most challenging quarter the corporation has ever faced.

This in turn is a testament that our distinct business model is sound even in the most difficult times. The financial results for Q2 2020 that I will summarize here to follow were negatively impacted by the COVID-19 pandemic.

I will caution that the comparability of current results with that of prior periods is materially impacted due to this unprecedented event, conclusions taking into account any comparability should be made carefully given the current circumstances affecting results. Before turning to the discussion on Q2 2020 financial results, I will leave with comments regarding the corporation's balance sheet and liquidity.

To begin, it is noteworthy to reiterate that the size of our corporation's credit facility as at June 30th was approximately $1.3 billion; in addition to that, the corporations can accesses another $300 million in an accordion feature should we choose to exercise it. Utilization of the corporate credit facility was $802 million at the end of the quarter.

This is a reduction of approximately $90 million from the quarter end of Q1 2020, which is comprised of a repayment of debt within the quarter and changes in foreign exchange on the US denominated debt. With the lower long-term debt and $66 million in cash on hand, net debt decreased by approximately $40 million in the quarter to $736 million, giving the corporation near-term access to $564 million in liquidity excluding the accordion.

As Mike noted, tight management of both maintenance and growth initiatives, together with strong working capital management and a stronger Canadian dollar have enabled us to reduce our net debt. In addition, it should be noted that the company has no long-term debt coming due before December 2022.

At the end of Q2 2020, our leverage ratios remain well within our covenant with lenders. Even with the current challenging environment, we are committed to the supporting principle of our business model, which has always been a strong focus on our balance sheet, with modest leverage and good liquidity.

Subsequent to the quarter, and the corporation amended it, the leverage ratio from a maximum of 4x to 5x for the fiscal quarter ending December 31, 2020 through September 30, 2021. The amendment was unanimously supported by our syndicate of lenders reflecting a strong support for and confidence in the corporation.

Given the corporation’s opportunistic DNA, the increase in the covenant was solely intended to provide the corporation with flexibility under the credit facility to drop further capital in the future to take advantage of opportunities that either a proven investment criteria as they present themselves. Inclusive of the impact of all announcements to date, management continues to expect to be within the original 4x covenant.

Management has also not changed its attitude towards or appetite for debt. Further on our balance sheet, we ended Q2 2020 with working capital of $339 million, which represents the current ratio of 2.28.

This compares to working capital of $308 million and the current ratio of 2.1 at the end of 2019. I will try to summarize discussion on financial results and where fulsome explanation of results can be found in our Q2 2020 MD&A.

In Q2, we generated revenue of $244 million, which is a decrease of $82 million or 25% from Q2 2019. Aerospace & Aviation segment revenue was down 41% from the comparative quarter in 2019 to $140 million.

Revenue from the legacy airlines and provincial decreased by $61 million. Passenger volume in the airlines was down as much as 90% early in the quarter stemming from the reduced demand as a result of COVID-19.

Passenger volumes gradually improved throughout the second quarter, operating at 40% to 60% of normal volumes with scale of improvement vary by geographic region, depending on travel restrictions and quarantine periods specific to the region. Cargo volumes remain strong after the onset of COVID-19.

The strength can largely be attributed to the communities that we service continuing to need essential goods and supplies. Medevac and charter operations were also impacted by COVID-19 factors early in the quarter, but gradually normalized to pre-COVID-19 levels towards the end of the quarter.

The impact of COVID-19 on the Aerospace segment was minimal due to the contractual nature of the work, except for the Force Multiplier Aircraft, which was idle during the second quarter while governments globally were focused on the pandemic. For Regional One, revenue decreased in the quarter compared to the same period last year by $39 million.

Regional One’s operations have greatly been impacted by COVID-19. Regional One’s business is dependent on traditional, regional air carriers and lower travels throughout the world has put pressure on all of its lines of business, including part sales, aircraft and engine sales, and lease revenues.

The sales and service revenue stream decreased by 49% in the quarter compared to the same quarter last year. The level of sales bottomed out at the beginning of the quarter, gradually improved throughout the quarter, and then stalled at the later stages of the quarter with the resurgence of the pandemic.

Aircraft and engine sales were down significantly from prior period as the airline looked to defer large purchases. Lease revenue decreased by $17 million or 71% in the current period due to a significant drop-off in customer demand and utilization of the corporation’s leased assets.

Turning now to our manufacturing segment, revenue grew by $17 million over the prior period. The total revenue for this segment was $104 million.

Quest was higher than the prior period reflecting the acquisition of AWI in the fourth quarter of 2019 with no comparative in the prior period and increased production at its Texas plant. AWI has consistently outperformed our expectations since acquisition including outperforming pre-COVID-19 forecasts during the second quarter of 2020.

The balance of this segment collectively experienced an increase due to the acquisition of LV Control in the fourth quarter of 2019. It should be noted that all of the EIC subsidiaries within the manufacturing segment were deemed essential businesses at the onset of the COVID-19 pandemic and have continued to operate.

That said, management measures were implemented to ensure the health and safety of staff because the impacts of COVID-19 have reduced efficiency and throughput despite robust demand. Moving to EBITDA, consolidated EBITDA was $62 million, down 29% or $25 million for the quarter compared to Q2 2019.

The primary contributing factor to the decrease can be attributed to the impact of COVID-19 on both segments. $4 million of the reduction in EBITDA was caused by a pending reassessment of certain input tax claims that related to several years for which a charge was booked in the second quarter of 2020.

While we have conservatively accounted for the reassessment in the quarter, the corporation does plan to pursue an appeal. EBITDA in the aerospace segment in the quarter was $47 million, a decrease of 41% compared to the prior year.

EBITDA generated by Legacy Airlines and Provincial decrease by $11 million. The corporation quickly adapted its operations to mitigate the impacts of COVID-19 travel restrictions and implemented cost reduction measures through scheduled frequency reductions, labor rationalizations and various reductions strategies and qualified for the Canadian Emergency Wage Subsidy CEWS program.

EBITDA from Regional One decreased by $21 million from the prior year. Contributing to the lower comparable is the decrease in revenue across all lines of business with the most significant being the $17 million reduction in high margin lease revenue.

In the manufacturing segment, EBITDA was $22 million, an increase of $6 million compared to the same quarter last year. The increase was driven by the same factors I noted for revenue.

Margins in the manufacturing segment continue to be impacted by lower efficiencies from social distancing protocols implemented in the plants and higher cost from sanitization and personal protective equipment. Turning to earnings.

In Q2 2020, the net earnings was $3 million, a decrease of $19 million compared to the prior period. The corporation generated lower EBITDA compared to the prior period as previously discussed, and which mostly explains the earnings variance from the prior period.

Net earnings per share decreased from $0.68 per share in the prior period to $0.08 per share for the current period. It should also be noted that in the period, the weighted average number of shares increased 8% over the prior period which have impacted the per share amount in the current period.

Adjusted net earnings were $6 million, a decrease of $21 million from the prior period. Adjusted net earnings per share were $0.16 per share, down from $0.83 for the prior period.

In Q2 2020, free cash flow was $42 million or $1.21 per share, a decrease of $23 million from the prior quarter. The main reason for the decrease is the decrease in EBITDA .Free cash flow less maintenance capital expenditures per share decreased by $0.35 per share to $0.73 per share in the quarter.

The corporation’s payout ratios in the quarter were negatively impacted by COVID-19. The payout ratio for the quarter was 78%, which is much stronger than our 100% payout ratio commitment.

And given that it occurred at the height of the pandemic lockdowns management believes it is a testament to the resilience of our business model and our subsidiary operations. We were able to generate sufficient positive cash flow to fund our capital needs, our dividends and pay down debt at the same time.

To allow for variations due to seasonality in the business, we continue to utilize the calculation of payout ratios on a 12-month trailing basis. The free cash flow less maintenance capital, less maintenance capital expenditure payout ratio on a 12-month trailing basis increased to 76% from 54%.

Before I pass the call on to Carmele, I would like to note that within the quarter the corporation reviewed all available programs and government aid in each jurisdiction in which it operates. In addition to the CEWS, which Mike noted, in the quarter for the corporation also received a modest support from the government of Nunavut in the form of a revenue guarantee, which allowed for the corporation to continue to provide a level of vital services to our Nunavut customers.

The Corporation chose not to participate in the payroll protection program in the United States. Without the subsidies and aid received, the Corporation would have side to offset a significant portion of the subsidies received by way of cost reductions through other means, such as significant reductions in workforce or as it pertains to airlines in frequency of service.

The federal government has recently announced a new bilateral program with the provinces and territories to support air service into isolated communities. We expect EIC airlines to qualify for this program but no details have been released on how to qualify or if the relative provinces will choose to participate.

We look forward to the details of this program being announced. That concludes my review of our financial results and comments.

I will now turn the call over to Carmele. Carmele?

Thanks, Darryl. Good morning, everyone.

I'm going to focus my comments on the outlook and the balance of the year for our various lines of business and EIC as a whole. Although no one can predict with any degree of certainty what the next chapter the COVID virus will bring, looking forward to the balance of 2020, we expect sequential, quarterly improvements in our consolidated results even as the CEW subsidy is phased out.

The level of recovery; however, will vary between business lines and geography. As Mike indicated, our schedule passenger volumes are currently about 40% to 60% of normal as many of the community service still have travel restrictions and quarantine periods in place.

As these restrictions are eased, passenger volumes will rebound quickly to historical levels as there is pent-up demand. This demand is driven by the fact that the underlying reason for movements in and out of the communities is essential or near essential travel, like medical travel, movement of health care workers, trades people, and resource sector workers.

The recovery we have seen to-date where we have rebounded from being 90% below normal in April when travel restrictions were the most severe to where we are now at about 40% to 60% of normal with only some of the communities opening up or easing restrictions provides a sense of the speed of recovery we expect. The slowdown in passenger travel has meant an increase in demand for freight for the reasons Mike explained.

This increased demand is expected to be sustained for the balance of the year even as communities open up, although the mix in cargo will likely revert back to more historical norms. During the height of the pandemic, almost all the cargo we moved was essential goods like groceries and mail.

As people start traveling out of their communities, there is likely to be some reduction in essential goods freight but an increase in the movement of discretionary items and construction materials. Charter work is nearing normal levels and, in some regions, exceeding historical volumes assisted by the work we secured from Indigenous Services Canada to move healthcare workers into the north in all 10 provinces and the resumption of various resource projects requiring movement of workers in and out of the camps.

Similarly, our medevac business has returned to more historical level as governments resume moving nonurgent medical patients who cannot travel for medical treatment on scheduled flights. We expect both of these trends to continue.

The aerospace division will continue to perform materially unaffected by COVID for the balance of 2020 and will be assisted by the resumption of operations of Force Multiplier after being idle in Q2 and the start of the new DFO contract towards the end of the year. The resiliency of the aerospace sector is perhaps most evident from the fact that the Netherlands surveillance contract tendering process was completed.

PAL Aerospace, together with its partner JetSupport Holdings, were selected as the successful bidder, and a contract will all be concluded in the middle of the pandemic. This contract solidifies PAL Aerospace as a leader in international ISR solutions and builds on expertise and operations in Canada, the Caribbean, the UAE, and now in the European aerospace markets.

Regional One is a subsidiary that has been hit the hardest and will be the slowest recover as it is dependent on the improvement of traditional regional carriers. The regional jet market is expected to return to service sooner than larger body aircraft.

For mainline carriers trying to restore their networks in the wake of pandemic, passenger volumes will be very low to begin. To minimize those losses during low demand, mainline charters will look to utilize regional aircraft.

The role of regional aircraft and recovery of the airline industry will create increased demand in regional aircraft parts and engines as customers look for economic parts solutions in ways to avoid expensive shop visits. Regional One is well positioned to be that solutions provider.

With the recent resurgence of new COVID cases throughout the world, the commencement of the recovery of the regional jet industry has stalled. We anticipate a measure of recovery for the balance 2020 with no material improvement until 2021.

However, with challenge comes opportunity. Regional One’s data-driven knowledge and discipline has always enabled it to acquire assets that are in the money such that the end-of-asset value is greater than the acquisition value.

However, the environment created by COVID-19 provides even greater opportunities to access assets at favorable values. The lower acquisition prices enhanced potential returns, providing greater cushion of time and flexibility to monetize the assets and create new opportunities for Regional One’s customers to step up into aircraft that they could not previously afford.

These investment opportunities will drive future growth. We expect demand overall in our manufacturing segment to remain strong, but with continued reduced demand and some projects deferrals due to the impact of COVID.

Our manufacturers have settled into the new norm of operating in a COVID environment and are focused on finding different ways to mitigate the impacts of the virus. This is included, for example, overhauling shift structures to retain social distancing but increase overall production hours.

Also, the recent acquisition of WIS together with the purchase of AWI late in 2019 now vertically integrates Quest in all of its markets and provides a strong foundation for further growth. Turning now to our CapEx outlook.

Our maintenance CapEx is primarily driven by our aerospace and aviation segment and moves in line with our scope of operations. As flight hours decreased, as they did in Q2, so did our maintenance CapEx.

This level of maintenance CapEx is expected to gradually increase over the balance of the year as our flight hours increased. Material growth to capital expenditures for the balance of 2020 are comprised of completion of a [doable] aircraft which will be operational by the end of the year and the acquisition and the start of the missionization of the two Dash-8 aircraft required for the start of the Netherlands coast guard contracts which are required to be completed in about 17 months.

No other material growth CapEx is expected. However, we will take advantage of opportunities if they arise.

Although there is much uncertainty in the world, a constant has been our business model and our execution of it. Our business model has developed to achieve – has been developed to achieve three objectives which we have set out in each and every MD&A since our inception.

Since the best predictor of the future is the past, I thought it’s useful to conclude this outlook section by seeing how we fare in achieving our objectives in the most difficult times and how this bodes for the future of the EIC. EIC’s first objective is to provide shareholders with stable and growing dividends.

Q2 was undoubtedly the most challenging quarter in our history, yet we were able to generate free cash flow from our operations and managed our working capital to not only pay all of our capital expenditures, our dividend, but also pay down our debt by more than $10 million and we are just getting stronger as is our confidence in our ability to continue paying the dividend. Our second objective is to maximize shareholder value through ongoing active monitoring of an investment in or offering subsidiaries.

What did we do in the midst of a pandemic? We secured a new long-term maritime surveillance contract in the Netherlands.

We invested in Q4 100 aircraft to meet the growing demand of a customer. We modified two Dash-8 aircraft, increased cargo capacity, just to name a few examples.

The strength of our balance sheet allows us to not simply focus on cost cutting to manage through the pandemic. It allows us to capture opportunities, to add shareholder value, and come out of this crisis well positioned for growth, and we will continue to invest in our companies to create shareholder value.

For example, we are assessing the void left by other air carriers, the opportunity to access new revenue streams with larger gains turbo-prop aircraft, and investigating and providing alternative service delivery models in the aerospace sector as governments look to outsource services to lower cost and reduce debt. The third objective is to continue to acquire additional businesses or interest therein to expand and diversify EIC’s investments.

We have done exactly that as is evidenced by our acquisition of WIS at the end of July. And the pandemic will not stop us from pursuing additional acquisitions whether that be stand-alone businesses, tuck-ins, or asset purchase opportunities at Regional One.

So what can you expect in the future? More of the same: continued tenacity in the execution of our business model and achievement of our objectives.

Finally, before moving on to questions, I want to thank all customers, shareholders, and stakeholders for their ongoing support and all the people who put themselves at risk to look after the rest of us. We would now like to open the call for questions.

Operator?

Thank you. Good morning, folks.

Just maybe turning back to the Government of Canada support announcement for remote communities. As part of that announcement, they also put out a, I guess, what they call a background document.

And just sort of connecting the dots, it really does look to impact a lot of your operations in Manitoba, Ontario, and Newfoundland. And I also get the impression that the Nunavut program that you've been running or participating in is maybe tied to this somehow.

Can you give us some more color on what you think that they're proposing? And I mean is this intended to be, call it, a direct subsidy, or is it more to treat the, I guess, the service as a utility and just kind of give you a minimum guaranteed return?

I think first of all, I got to admit that we haven’t seen the precise details. This is from discussions we’ve had over the last three or four months till this was put in place.

But the concept is they understand that we can’t stop flying to serve the communities because of the essential service. And they know that you can only lose money for so long flying to those communities.

So the idea is to provide some revenue or effective guarantees to make sure that you can afford to continue and provide the service. The plan we have to do that was similar to that in the past, that period the program expired at the end of the quarter, where they made sure that if we met a certain schedule, they would by certain number of tickets, and we did get some modest support amount of about $2 million or $3 million out of that program, we expect that the new program will be similar, but the challenges going to be is that it's meant as a bilateral program with each province.

So they've got to lay down these parameters with the province then we have to negotiate with each province. So while we're very excited to see this, we view this as we're just kind of getting started.

We got to talk to the governments how it's going to work. And I think it’ll be very important should we face a second wave.

And we see a decline in volumes again. Having this as a backstop will be very valuable.

Hopefully, if we don't see that, we'll outgrow this program very quickly because volumes will be such that we won’t require it.

All right. And the activity level would apply essentially in a lot of ways it's almost like you're running a CPA on behalf of them because you'd probably be indifferent to passenger to cargo and just maintain the support to the community is the way to think about it.

Yes. Exactly.

I mean as much as pound of passenger is about the same as a pound of freight, the beauty of the passenger is they go south and north, whereas freight largely goes just south to north and the planes aren't as full. So, the more active the passenger business is, the more efficient the business is.

Okay. Fair enough.

And then my other question is just on the quarterly cash flow. You made the comment about you're able to manage your working capital and cash flows in such a way that you're able to fund the dividend than your maintenance capital expenditures.

So, I guess a couple of questions about that. I mean, first of all, you received the huge payment in the quarter and just any thoughts around what that might do to Q3.

But as well certain companies have been telling us that they've received other benefits, tax deferrals things like that. So, I guess trying to think about the rest of the year, how should we be thinking about call it an unusual quarter of levers pulled to manage working capital and how that might unwind through the back half of the year?

Well, I think, yes, if we start with working capital, as the business grows we will undoubtedly have a growth in receivables because we're doing more business and I wouldn't expect to see any more funds generated from declines in working capital but we will stay on top of that to make sure that the build in working capital, to the extent there is one, is at a bare minimum. As it relates to other support, we really haven't taken advantage of any deferrals.

We paid those due or sort of as they’re due. We have taken advantage of this CEWS program.

It helped us maintain more employees than we otherwise could have, the skilled employees that you don’t want to lose, and it’s helped us not do that. We certainly expect to see that phase out over this quarter, or certainly finish down dramatically.

But the growth of the business is expected to more than offset that, and we’re expecting sequential improvements. So, we’re bullish on that.

And I think the final thing I’d like to point out is there were other programs with the option of tapping into. The most obvious one being the PPP program in the US.

And we qualified based on the pure rules of the program. We chose not to access it because the program was intended to support businesses that might not been able to get through the period without the support.

That was never the case with us. And we thought it was disingenuous to draw those funds.

And as a result, we chose not to. And so as we exit this, the way to support program is you only saw in EIC program, size program, and material at EIC.

Well, the relationship with the government of Nunavut has been awesome. They've been a great partner.

And that's a big part of how our comps been able to do what they do. But at an EIC level, that's a very modest sized program.

Okay. And just a follow up, so just sort of if I understand correctly, so the staffing levels that you maintain in Q2 that which were offset by the CEWS program, your expectation is the activity levels in Q3 will probably be able to absorb all that staffing kind of in a normal fashion.

So it’s a way to think about it then?

That would be the shortest answer of the day. Yes.

Good morning. So, I guess maybe a question on the restrictions that are still preventing a fair amount of the ramp-up in flying activity.

Do you have any sense of when some of these things are going to be eases like in Nunavut, for instance? And I guess there are even individual communities in Manitoba, for instance, that have restricted access.

What's your sense on when some of these things are going to start to ease up?

Discussions with the Government of Nunavut are ongoing. We believe they're going to go to a model in the near future so that weeks to a short number of months where they will test when people return to the community.

And that will -- and then they’ll quarantine within the community as opposed to quarantining in the south which will have a dramatic impact on the number of people flying that some time. I mean, it depends on what happens with the number of cases.

But the government intends to move forward with that, and our understanding is over the next 60-day kind of thing. Again, I'm speaking on behalf of somebody else and there's always a huge risk in doing that.

In terms of Manitoba, it’s highly -- same with Ontario. It's highly variable based on the community's experiences of the past.

Northwestern Ontario, as an example, experienced a very difficult time with the SARS outbreak a decade ago and, as a result, the restrictions in Northwestern Ontario would be far higher than they are in Manitoba. And so one is at the high end of that range, one is at the low end.

Having said that, as governments have come to grips with the fact that this is going to be about managing COVID, not eliminating it, I think you're going to see programs because to travel more simply, because the medical needs that those people are traveling for whether to go and see the therapeutic surgeon about their hip or go see the cardiologist, to go see the kidney doctor, those aren’t going away. And you can only defer those for a period of time.

And so, we expect that those volumes will continue to rise over the Q, the third quarter. They likely plateaued somewhat less than 100% of the normal because some of the fewer discretionary stuff may not come back to a period of things like fishing lodges and those kinds of things may not return until next year or some of that.

But we anticipate continued growth on those passenger loads sort of on a progressive basis over the ensuing period with the big asterisk that if something else happens with COVID it could change.

Okay. That’s helpful.

And just my second question related to Regional One and specifically on the aircraft leasing revenue I mean, obviously, down significantly year-over-year, I'm just wondering how you're accounting for that. I mean it looks to me like if you got an airline that's leasing one of the aircraft from Regional One that if they're not paying you you're not recording that as revenue.

Have I got that right or are you actually building some receivables in there somewhere from the deferred payments or anything like that?

The answer is no. We are not.

We are only recording revenue that we expect to receive and, in fact, our receivables if I were to look over Q1 and Q2 I'd say two-thirds of those aren’t even collected. Just to give you a sense of kind of how we're dealing with this.

But anyway as deferred does not get recorded.

Okay. Okay.

That's helpful. And maybe just quickly a third question.

Just on I guess the manufacturing margin in the quarter. I mean, obviously, there was some I guess some benefit from government subsidies in there.

But I'm just wondering what kind of a more normalized margin or sustainable margin might look like as you've acquired some businesses here that I think are, in the last six months or so, that are probably positively contributing to margin. So, just any commentary around sort of a go-forward manufacturing margin would be helpful.

Product mix is a huge part of that issue. The -- when you look at our manufacturing stuff, where we make things in factories, so whether it's a Ben Machine or a Quest or a Stainless Fabrication, those tend to be higher margins.

Some of the stuff we do in the field where we're doing service work for WesTower, for example, would be lower margins. So, product mix is a large driver of this.

The things we bought recently would tend to be towards the higher end of the margin structure whether it be the Glaciers or L.V. Controls.

And you're right. To the extent there is a benefit to the bottom line of the CEW, it would be in the manufacturers because demand remains strong for those, so we did have some benefit of CEW in there.

So that helped the margin profile in manufacturing in the quarter. We would expect from a big picture point of view that as things stabilize, we would see an improvement in margins over time from margins from operations simply because the amount of work that went into keeping our people safe, shutting down plants, COVID-proofing for a lack of a better term, is significant.

And I don't want to give anybody the misinformation that that’s somehow changing. That’s exactly where we’re staying.

We put a lot of effort to get to where we are. But in the future, as we get this nasty pandemic under control, we’ll be able to see some improvements in margins as we book more people into our factories.

That’s not expected in the near future, however.

And in the second quarter, we did experience what we’ll call some ebbing and flowing in particular requests, as we had some of the job sites shutting down because COVID like reopen and they shut down again. So, that was obviously challenging and the comments I made, one of the points, was that we're settle of into how we need to operate our manufacturing factories and as such our focus now is actually in improving efficiency.

So, this is the new norm, but how do we get better and we're starting to see some changes that are driving some increased efficiencies for us.

Just a couple for me. Can you Mike, can you reference the opportunity said the near-term, medium and long requests in your remarks?

I'm just wondering if you could speak to the near-term demand profile as you see it right now. Just trying to get a sense of how much dislocation might still be out there.

There have been a number of public companies reported the US recently on the building product side not perfect comps admittedly but they all seem to have very strong rebound built into their profiles and even through the quarter. So, just trying to get a sense for how that business is performing today relative to norm and so what you're seeing here for the balance of the year.

So, in the near term, our biggest challenge is simply just changes is the timing of certain projects that have been delayed or not delayed and making sure we can get those delivered on time and so, it's really just shifting of capacity. We were booked to a very high level of capacity before this happened and so, just keeping up is the challenge.

In the medium term, our order book is strong. There’s completion of new projects.

There are delays in terms of the final award with some of those, so you may see pockets in the next couple of years where the --…

As projects will push out that we’re seeing a bit of, what is a little more challenging is looking to medium term is the ability to pull in new work which was an easier task a year ago. So as we saw smooth production previously, to the extent when it gets pushed harder to fill, so you might, in the medium term, see a little bit of some pockets of us not being having the throughput that we’ve had in the past.

But the demand, long term, very strong. We're still just a coding a lot.

We don't see any reduction in that regard. So still fairly optimistic in this space.

And I mean the long-term part of it, Steve, is driven quite simply by densification of markets. And we've seen this through dislocation before in 2008-2009.

There wasn't a hiccup in travel as an example in terms of our building. The simple fact is that people want to live in major centers.

It's too expensive to build a low-level housing, so it's high-rise buildings which are our strength. So we're very bullish.

I don't think there's any greater evidence of that than investing $40 million plus in the purchase of WIS.

That’s a good segue, Mike. Just wanted to ask about the capability profile there now.

You've got -- you got AWI previously and now you’ve got WIS. I mean, do you need – is that done?

Like do you have the complement that you need now as a service profile for the US or do you need additional capabilities on the service side over time?

No. That covers everything off.

In Canada, we always look after our own installation. In the US, we use these to third-party companies.

And the beauty of this is as we expand into new cities, you'll recall, we're in a relatively limited number of markets with [class] the western seaboard and a little bit in the northeast. As we move into the Dallas’ and Houston’s and Miami’s of the world, our window installers will move with us.

Our experts from AWI and WIS will continue. So as we move into those markets, we’ll no longer have just the procurement part of the project but we’ll add the installation part of the project.

So each project will be worth more money.

Good morning, how are you?

It's good day.

Good. Congratulations on the quarter.

So my first question is just maybe another way of asking your prior line of questioning, and that would be, what would be -- what would reasonable expectations be if I'm thinking about you guys receiving aid in Q3 or in Q4 specifically in regard to the Canadian Emergency Wage Subsidy? I understand that you're expecting and already seeing a pickup in demand which would ultimately reduce that, but is the figure perhaps $5million or $10 million versus $29 million in Q2?

I'm just trying to get my head around it. Thank you.

The calculation for CEW is such an advanced math. We're still running different models on exactly how to qualify because you can claim in on an individual company basis, and you could claim it on a consolidated basis, and you could claim in under the old program and the new program.

I think it's safe to assume you'll see a decline in the range of half. My control is glaring at me right now for giving a number because it's really hard to determine exactly how it's going to work with the rules more than the number seeks out.

But there will be a material decline in Q3 and what's left in Q4 will be quite small. It’s not material.

So by the time we get to Q4 the amount is not material.

No. That's very helpful.

That's great .Exactly what I was looking for. Secondly, just in regard to the recent acquisition of the Window Installation Company.

As in the press release you provided the purchase price, but I was just wondering if you could give revenue EBITDA contribution or what we could expect. And I'm just -- I understand the vertical integration and complementary nature of the acquisition versus Quest and AWI.

But just wondering if you talk to me about your thought process of why purchase now especially when you were looking to rein in spending.

Okay. No, I'm not telling you really the EBITDA.

I will tell you that when we released AWI we told you those transactions were credos on a pure-equity basis. This transaction will be no different.

It's at the very low end of the multiples we pay because of the symbiotic nature of the two businesses. We're the natural buyer.

So you can work backwards off that and get a pretty good rest of it. The other thing we said when we bought AWI which is a much different year than the backlog of about three years pay us through the majority of the company.

So those are two sorts of nudges in the right direction. In terms of why now?

We were way down the road with this before COVID. When COVID hit, we literally paused because we were so busy trying to juggle the balls of this job is closed.

This job is open. Hurry up and catch up on this job or slow down on this job.

And as we got that under control, we give a little third-party due diligence to confirm what they thought the market would look like in months and years to come and it was directly in line with our thoughts. And so because we knew the people, because we negotiated a deal largely going into COVID, and because we can do the due diligence, because we’re doing what we do in the order book, there is no reason to not take advantage of the profitability of the projects and not close the deal now.

It strengthens the Quest. And it's a very unique deal in that it’s highly accretive from a financial point of view, but it’s also highly strategic in terms of allowing us to grow in the future, internalize processes, and quite frankly make it easier for our customers.

They know of a single point of contact. And if the windows aren’t installed on the right time, there is no debate about whether the while the installer’s late or the production was late, it's our fault no matter what it is.

So, it makes it easier for the customer, easier for us and makes it easier to pay the dividend with the returns.

It's also showcases the EIC business model quite well, in my view. There’s a couple different ways you can to deal with in a pandemic.

You can put your head down, focus on cost and use that as your sole tool to manage through it. That's not our view.

We have a balance sheet that's strong that enables us to seize opportunities. And for the reasons Mike stated, we felt comfortable.

We were able to do all the due diligence on this deal. And we knew it would be very accretive.

So, it was an opportunity that we took advantage of and if other opportunities like that arise, we will continue to take advantage of those opportunities and because that will continue to propel our growth going forward.

Perfect. That's great.

And I want to be cognizant of the time, but if you could just share perhaps the biggest takeaway or most significant surprise while working through this pandemic?

Everyone might have different answers here but I'll go first. To me, it's our people without a doubt.

How they stepped up, how they've effectively almost on the impossible and managing operations and putting themselves on the frontlines, given the nature of all the things that we do, products we make, it was coming up with ideas to be able to take care of needs that we have as a society whether that's the manufacturer of face shields or ID [pull], everyone stepped up. And we acted as a big family and we got through this successfully as these quarterly results show and we contributed to trying to minimize the impacts of the pandemic.

Yes. I have to agree with Carmele.

I think the biggest sense of pride takeaway is the cross collaboration within the organization as well. And just that overall effect of a family and making sure that as an overall company, our health is strong going forward.

[Indiscernible] I would like to know at what level of capacity or load factors do the legacy airlines breakeven on cash flow in the current fuel price environment.

That's an impossible question to answer because you got -- we’re profitable -- we were profitable in the airlines in the last quarter, with the very low levels because of the diversity of our product, with the medevac and the charters of the other things we do. On a pure scheduled basis, we're profitable now with the load factors we have in aggregate.

But in certain markets, we are significantly losing money where the load factors are. It's not as simple as saying at 48% of capacity; we make money because some have more freight than others, some have -- our business is too different to simplify it in that way, but as load factors climbed over 50%, we start to get closer and are making money out of pure scheduled basis.

We're make money in aggregate now because of our diversity.

Okay. Thank you.

I do have another question. What do you expect the cash flow before working capital and growth CapEx to be for the next two quarters?

We don't provide specific guidance like that. We have said sequentially, we expect results to improve in the third quarter, increases in EBITDA with maintenance CapEx remaining modest by historical standards, our well-outlined growth CapEx profile being -- essentially being limited to the two aerospace projects.

So we expect a continued improvement in that. If you look to Q4 is difficult with COVID, I mean it changes so fast.

But all things being equal, we’d expect continued improvement.

Hi, folks. Just a couple of questions on the Regional One.

I guess it's three questions in one part. Can you give some color on the current operating situations that their carrier customers particularly SkyWest?

And do you anticipate any changes to the partnership? As well, what strategy changes and cost measures can you take should COVID-19 continue to hit those regional airline customers?

Okay. With SkyWest, we retain a strong partnership.

The conversion of 700 to 550 has been slowed by this. But the main airlines, the underlying airlines that were looking to that strategy or still looking to that strategy.

So the implementation of it may be slowed, but the ultimate deployment of those aircrafts I don't believe is in jeopardy. SkyWest like all carriers is reducing its fleet, now there's some impact on some of the older aircraft we have with them.

It's not a material issue. In terms of the strategies we can deploy; the beauty of the Regional One model is as sale slow the amount of capital needs to go into it declines dramatically because we have the assets available there.

It generated positive cash flow in the quarter even though the regional airlines were very, very slow. We fully anticipate that there's going to be a supply and demand imbalance over the next couple of quarters in terms of people trying to liquidate assets because of financial difficulty.

We look forward to that because we understand the value of those assets better than anybody else. And we can buy them at prices that are advantageous.

We will do that. We have a small deal where we bought some Q400s at a price that was materially less that we would’ve paid six months ago, that we've already found homes for a significant portion of the planes we were purchasing.

So, Regional One is going to go through a period where it's smaller. There's absolutely no question about that.

But there’s also Regional carriers are not going away. There may be insolvencies in the business but if you’re going to fly from Cincinnati to Cleveland, you're still good at doing on a regional jet.

If you're going to go from Toronto to Montreal, you're still going to do it on a regional jet or a turboprop and as those recover, so will that business and it will recover faster than wide-body jet service. So, we are, in any way, concerned about the long-term health of this even the medium-term health.

But that is a short term, it doesn't absorb cash. It's not a cash bleed.

And we will rise through it and we'll look for opportunities to make us stronger when we come out.

And I can add a little bit more color -- okay. It's like the 550 program, we are still receiving lease payments, just to put some kind of reality to your question, and expect regardless of whether it's from the existing carriers or the program may shift that program for United, will remain.

Obviously, time will tell but that's what kind of industry thoughts are at the moment. On the cost side, I mean, it was pretty nimble our cost infrastructure at R One so we can adjust that and have adjusted that accordingly.

And when I look out and kind of see potential opportunities, when regional carriers start to fly again, they’re going to be looking for effective cost, ways to deal with maintenance, accessing parts, engines, they’re not going to want to spend $1 million to overhaul an engine, but they might lease something in a short term until they build up their maintenance reserves again. Those are all thing that's what we do with Regional One.

And scheduled charter is actually growing some momentum in the sense that people look to perhaps not want to travel on the typical scheduled service airline where you go to your major airport and there's obviously lots of other people there, that they want to go to private FBOs where they can get to the places they need to go to on aircraft that have fewer people than you would typically see. And so people are looking at maybe buying a CRJ900, but stripping out number seats.

Again, we're there to find solutions because that's what Regional One does. It's not run less or it's not just a part provider, it’s a solution provider.

So we're in discussion with many of our customers to be able to make sure we're there for them, to provide thoughts and options as to what they can do to be able to access the market that does exist.

That's great. That’s very useful.

Just another question on the little bit related to Regional One and aerospace. How does COVID-19 in [indiscernible] deterioration?

How does that change your longer term acquisition focus? Is it going to be more manufacturing-focused companies that are directly related to your current portfolio and make it – making manufacturing a larger part of the asset portfolio while aviation and aerospace are hampered or impaired?

I think the key parts to your question, I think if we start with the manufacturing piece first, I think it's likely they'll see more opportunities on that side simply because we’re a bigger portion of the aviation market already and the number of companies that meet our criteria are smaller. So, over time, yes, I think it's a reasonable assumption that you would see more acquisition on the manufacturing front.

The one part of the underlying question I would challenge though, on the aviation front, we’ve seem that some parts of this business have done very well through the pandemic and in fact, actually increase our diversity. So, whether it be maritime surveillance, medevac, submarine, we love those businesses and COVID has probably made us like them even more.

And so, we’re not scared away of investing in that segment. Having said that, there are probably less opportunities to do it.

So, if we get something that fits that would augment our -- as an example, our surveillance business, with a new technology or something, we would jump at that opportunity. But practically speaking, I think it's realistic that there are more opportunities on the manufacturing side.

Okay. Thanks Mike.

Just a couple of housekeeping questions. What's included in the growth CapEx for the first half of 2020 and I apologize if I missed it.

Your disclosure is more detailed. Have you encouraged CapEx for the two Netherlands Dash-8?

Is that included?

No. Not yet.

We just won the contract and you may see a touch of that at the end of Q3 but more likely that begins in Q4. Most of the growth CapEx relate to finishing the fisheries contract.

That's where the lion's share of the growth CapEx we have and that again, the start-up part of it has been delayed a couple months by COVID, but that – that still goes into the service what, late Q4?

Correct. Yes.

So, no material impacts on the start date. But most of the money we spent is getting ready for that contract.

Okay. Thanks.

And just final question. How's the Quest sales backlog and how long is it going to take to see revenue synergies with the acquisition?

I assume that part of it includes expansion into new markets.

Yes. We obviously, the new markets we're going to wait till we get through a little bit of this COVID stuff and things normalize.

The order book would probably be down marginally quarter-over-quarter simply because people aren’t finalizing projects. In terms of the inquiry work in intent basis that's actually up.

So it's really just variations in times of closing of that. The synergies of -- and I'd struggle with the word synergies of this because we're buying a service we didn't do before, so it's really mostly additive.

But essentially now every job, new job we booked we look at 30%, 40%, and 50% more than it was before because we have the installation part of that job. And so -- but with the nature of the order book being, what, help me here, Carmele, 18 to 24 months out.

Yes.

The new jobs we booked don't show up till then. Till then it’s the order book we repurchased as part of this to show up.

So it’s instantly in our results and the organic improvement of it helps as we book new jobs because of the order cycle that's probably 2022 sometime before you see it.

Sorry. That's 18 to 24 months for with or for the whole Quest number?

Well, these are all -- they’re all the same thing. Like the order profile, we got a job booked.

At a very short end, a year an advance, as a longer end, two years of advance. So what we're booking for now is until 2022 like in terms of new orders.

That's why new order book is so significant.

Yes. Hi, guys.

All right. Just one quick follow up on the Force Multiplier.

Mike, you had mentioned that that didn't fly in the period, but you had some short term duration contracts set up for the back half of the year. Just trying to get a sense for how much activity there is in sort of the options there for that aircraft into the back half.

Are you still booking additional deployments at this point to fill up the back half? I mean so how should we think about that as in incremental to what we saw at Q2 which was zero?

Sure. Steve, it’s Carmele.

I can take that question. So we're actually booked now to the end of the year, fully booked, with a government, Canadian government.

So, we are now looking into 2021. We're in discussion with a couple of different governments for its use that would be a longer term as we work through those details, but we're very comfortable obviously with having it fully utilized for the balance of the year.

Being no further questions, I’d like to thank everyone for participating in today's call. None too soon, I've lost the ability to speak.

So, we have a great day and look forward to speaking to you when we report Q3 in November.