Exchange Income Corporation Q4 2025 Earnings Call Transcript

Exchange Income Corporation (NYSE: ICE) Q4 2025 Earnings Call dated Feb. 25, 2026

Presentation

Operator

Good morning, everyone. Welcome to Exchange Income Corporation’s Conference Call to discuss the Financial Results for the 3 and 12 Months Ended December 31, 2025. The corporation’s results, including the MD&A and financial statements, were issued on February 24, 2026, and are currently available via the company’s website or SEDAR+.

Before turning the call over to management, listeners are cautioned that today’s presentation and the responses to questions may contain forward-looking statements within the meaning of the safe harbor provisions of Canadian provincial securities laws. Forward-looking statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements.

For additional information about factors that may cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements, please consult the quarterly and annual MD&A, the Risk Factors section of the annual Information Form and EIC’s other filings with Canadian securities regulators. Except as required by Canadian securities law, EIC does not undertake to update any forward-looking statements. Such statements speak only as of the date made.

Listeners are also reminded that today’s call is being recorded and broadcast live via the Internet for the benefit of individual shareholders, analysts and other interested parties.

I would now like to turn the call over to the CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, Mr. Pyle.

Michael Pyle — Chief Executive Officer

Thank you, operator. Good morning, and thank you for joining us on today’s call. With me today are Richard Wowryk, our CFO, who will highlight our financial results, along with Jake Trainor and Travis Muhr, who will expand on our outlook.

Yesterday, we released our year-end results for 2025. Our annual performance in two words was incredibly strong. Our results set historical records for revenues, adjusted EBITDA, free cash flow, free cash flow less maintenance capital expenditures, net earnings and adjusted net earnings, both on an absolute basis and more importantly, on a per share basis.

We also exited the year with no convertible debt on our balance sheet. We strategically wanted to simplify our financial structure, and we were able to redeem all outstanding convertible debentures during the year, with the vast majority of the convertible debentures being converted into equity, leading us to our lowest leverage levels in 15 years. Per share records and a delevered balance sheet in the same year is a difficult task. We are proud of this accomplishment.

Furthermore, last week, we announced an investment-grade credit rating. This is an impressive achievement as it is a confirmation by DBRS on the stability and the diversity of our business. We now have the capability to issue long-term fixed rate bonds as a layer in our capital structure, which will provide a more permanent form of fixed rate financing at generally lower interest rates. However, I want to be perfectly clear, this does not change our conservative view on leverage. Rather, it is another tool for us to utilize debt effectively as we continue to grow EIC via either acquisition or growth capital expenditures.

As I look back over 2025, these record results were generated during a year, where global growth was subdued due to rising trade tensions and political uncertainty. Monetary policy was adjusted in both Canada and the United States to stimulate growth as inflationary pressures have begun to subside.

Supply chains experienced significant disruptions due to United States tariff actions, international shipping delays due to geopolitical events and several climate-related disruptions, including significant wildfire activity in Northern Manitoba and elsewhere. There was also economic bright spots, including the surge in artificial intelligence investments and businesses with strong fundamentals and competitive moats showed their value.

EIC is a shining example of how a diversified and resilient business can navigate periods of uncertainty and continue to thrive. We executed on our strategic initiatives and the proof is in the pudding with our annual results. Our overall results were driven by 20% increases in adjusted EBITDA in each of our segments.

In our Aerospace and Aviation segment, the increase was primarily due to the highly strategic acquisition of Canadian North on July the 1st. Canadian North continued to meet and, in fact, exceed our expectations of profitability and culturally has been a great fit with our other air operators.

Our maintenance capital expenditures experienced in the first six months were elevated. However, that was expected as we increased the anticipated increased maintenance capital expenditures for the first 12 months of ownership and then a return to normal maintenance capex in the future.

The Aerospace and Aviation segment was also driven by strong yields in our passenger business, even though there was a temporary reduction in revenue and margins in the second quarter due to the significant wildfire season. We also saw overall strength in our rotary business with fire suppression work, coupled with continued strong performance in our medevac businesses as the scope in our contracts continues to expand.

Our aircraft sales and leasing business continues to see robust demand and increasing rental rates for leased aircraft and engines. Parts sales and whole aircraft sales continue to be very strong as well as the demand for regional aircraft remains robust. Lastly, our aerospace business line saw the impact of the second aircraft commencing operations in the U.K., which led to strong Q4 gains over the comparative period. We also continue to see numerous inquiries from various parties around the world for our ISR experience.

Recently, Canada released its defense industrial strategy, which aligns greatly with the activities of EIC and our aerospace business. EIC has pitched a Made in Canada solution for Arctic security and sovereignty, which aligns with this industrial strategy. Our Made in Canada team spans multiple provinces and territories with existing indigenous partnerships. We continue to have active discussions with various leaders and decision-makers and are hopeful that our proposal will be successful.

I also want to provide an update on the status of the Australia ISR bid. We recently extended our bid for a second time to early April as the bid would have technically expired this month. We continue to believe that we submitted a very strong bid and are waiting for the government of Australia to finish their analysis and come to a conclusion.

Our Manufacturing segment had a strong fourth quarter results from both a revenue and profitability perspective. Our Environmental Access Solutions business had a strong finish to the year with net rentals and sales driving the results in Canada. Canada also has strong growth prospects in the later part of ’26 as large linear projects are anticipated to need matting solutions.

Our composite matting business in the U.S. continued to have favorable customer feedback on the System 7XT mat. During our due diligence, we were very impressed with the testing and the capabilities. However, real-world experience has even exceeded those high expectations. Due to the significant demand signals and the overall confident matting business taking more market share from the traditional wood mat business in the U.S., we announced a state-of-the-art plant in the Southeast U.S. I’m pleased to announce that the plant will be built in Saltillo, Mississippi, and we anticipate the plant will be operational in the mid to later part of 2027 so that we can execute on our strategic objectives for the North America wide matting business.

Our multistory window solution business had somewhat of a stronger quoting season and booked some sizable projects in various jurisdictions in the U.S. and Western Canada. However, 2025 remained a difficult year. As we anticipated and previously disclosed, the reduced profitability was due to the competitive pressures and lower bookings experienced in earlier years. However, the team made progress on reducing our overhead and combining the physical footprint of the business, which will serve us well in the future. We will also continue to retain our experienced staff. When the business turns, we will be ready to capitalize and meet the pent-up demand that exists for affordable housing

Our Precision Manufacturing and engineering business led a strong first quarter as we continue to see positive demand signals within numerous underlying businesses. Business sentiment continues to improve. We see that our customers have accepted some uncertainty as the new normal and have been releasing purchase orders, resulting in increased sales activity in the back half of 2025, which drove strong results for the fourth quarter. Rich will highlight the key metrics for both the three months and the full year ended December 31st.

But before I turn the call over, I wanted to talk about the recent recognition of our business model and our share price. During the year, our market capitalization has increased substantially and today stands at well over CAD5.5 billion. The market capitalization and the underlying results are lagging indicators of the sustainable, resilient business model that we have built. We have a fantastic foundation of underlying subsidiaries with cultures and people that contributed to achieving these results.

Our business model and principles have not changed for over 20 years. We know that we are set up for an accelerating growth profile in the future, and our head office and management teams could not be more excited. Jake and Travis will focus on the outlook for our segments for 2026. However, before I pass over the call, I wanted to speak about our 2026 guidance.

While we have not changed our guidance range issued at the end of Q3, we announced two contracts since the prior guidance was issued, that being the Air Canada commercial agreement and the acquisition of Mach2. Both are accretive to our shareholders. And accordingly, we have updated our guidance by telling people we have a bias from the mid to the upper end of the CAD8.25 to CAD8.75 guidance range.

I will now pass the call over to Rich.

Richard Wowryk — Chief Financial Officer

Thank you, Mike, and good morning, everyone.

For the fourth quarter, revenue was CAD930 million. Adjusted EBITDA was CAD216 million. Free cash flow was CAD165 million. Free cash flow less maintenance capex was CAD68 million and adjusted net earnings and net earnings were CAD58 million and CAD52 million, respectively. Earnings and adjusted earnings per share were CAD0.94 and CAD1.06, respectively, which were increases of 62% and 33% over the prior period.

Free cash flow per share increased by 30% to CAD3, while free cash less maintenance capex increased by 38% to CAD1.24. The per share metric increase is remarkable because the weighted average shares outstanding increased by 14% during the fourth quarter compared to the prior period due to conversion of convertible debentures during the year, shares issued from our acquisitions.

All the key performance indicators were fourth quarter high watermarks. These results were driven by both segments with 27% and 38% period-over-period increases in adjusted EBITDA for our A&A and Manufacturing segments, respectively.

The Aerospace and Aviation results were driven by strong profitability at each of the business lines due to the acquisition of Canadian North, strong load factors at our various air operators, strong demand for leases and parts at our aircraft sales and leasing business line and the start of operations of the second aircraft for the U.K. home office in Aerospace, along with higher tempo flying under various contracts.

Our Manufacturing segment profitability was driven by strong rental and mat sales within our Canadian Environmental Access Solutions operations, along with continued robust demand for our composite matting solutions in the U.S. operations. Lastly, Precision Manufacturing and Engineering had a strong fourth quarter, driven by underlying strength in telecommunications, data center and hydronic heating solution sales.

Construction has commenced on a second state-of-the-art manufacturing facility for our U.S. composite matting business. Growth capital expenditures of approximately CAD4 million were made in 2025, and we anticipate that production should start up in mid to late 2027. Estimated cost for the new facility is up to USD60 million, and the expected returns are significantly above our required return threshold.

We are seeing significant demand for our System 7XT mat, but further noting that composite mats are replacing traditional wood and mat market share in the U.S. is driving excitement within our management team.

Maintenance capital expenditures in the fourth quarter of 2025 were CAD97 million and were higher than the comparative period due to the acquisition of Canadian North and the timing of maintenance events in our Aerospace and Aviation segment.

Growth capital expenditures during Q4 were CAD134 million and were primarily driven by acquisitions of engines and aircraft in our aircraft sales and leasing business line to increase their leasing portfolio, coupled with King Air aircraft deliveries for the BC Medevac contract in our Essential Air services business line.

From a cash flow and working capital perspective, we had a strong finish at the end of the year with a reduction in our net investment in working capital and a positive impact on our cash flow from operations, driven by efforts from our subsidiary management. Last year, we highlighted that certain government receivables were uncharacteristically behind historical collection patterns and those were resolved within 2025.

Further, due to the reduced level of output within our multistory window solutions business line, we were able to return significant working capital during the year. We actively manage our working capital and worked with each subsidiary team to convert working capital from 2024 into cash, and we’re very happy with the performance throughout 2025.

The corporation’s aggregate leverage is at historic lows. We had the goal of simplifying our capital structure and achieved that goal during 2025, which looking back was an incredible feat. More than 90% of the convertible debentures were converted into equity of the corporation.

For 2026 and beyond, the only dilutive instruments on our balance sheet relate to deferred shares, which will simplify our dilutive EPS. After year-end, we announced that EIC has achieved an investment-grade credit rating with a BBB low rating with a stable outlook from DBRS. With the credit rating, we can access bond markets in the future and could utilize bonds as a fixed rate long-term form of financing. Based on the rate environment today, this would also reduce interest costs

We exited fiscal 2025 with an overall leverage ratio of 2.73, which is the lowest it has been in approximately 15 years. This also does not include the pro forma impact of growth capital expenditures for which a full year return has not yet been fully reflected in our financial statements, such as the U.K. Home Office second aircraft is one example.

We’ve previously discussed that there is a time lag between making those investments and the timing of the adjusted EBITDA increases. With over CAD300 million of capital deployed by year-end, we anticipate meaningful returns in the years to come, which have been incorporated into our 2026 guidance.

Our M&A pipeline remains very strong. Adam and his team executed on a strategic investment in the first quarter of 2026 with Mach2. We have always wanted to diversify our cash flows and provide another avenue for growth. We had looked at a number of narrow-body and commercial businesses. However, none of them met our stringent investment criteria based on their management teams, their niche focus or financial metrics. Fortunately, we found Mach2, which met all of those criteria.

Regional One has built the data infrastructure and architecture that is capable of scaling into other aircraft types. And now with the Canadian North 737 data and the narrow-body and wide-body data for Mach2 and experienced personnel at Mach2, we can realize on significant opportunities in that space. Mach2 is situated very near our Regional One business, and the management team is well known to our Regional One management team. 737 and narrow-body business is the world’s largest aircraft aftermarket parts and leasing business. And therefore, we have a unique opportunity to leverage our strengths to create meaningful returns for that business line long into the future.

In terms of other acquisition opportunities, our pipeline includes opportunities in both segments, which are similar to our existing businesses. We have a great foundation of businesses and to the extent that we can find ancillary opportunities to expand our competitive moats, we’re always interested in those accretive opportunities.

As a reminder on the seasonality of our business, the first quarter is our seasonally slowest quarter because of the impact of winter roads and weather-related impacts for our air operators, coupled with reduced demand for our Environmental Access Solutions business line as the ground is frozen and doesn’t require the same level of matting protection. Third quarter experiences our highest level of activity across our businesses and the second and fourth quarters would approximate the average per annum results.

Collectively, 2025 was a foundational year for EIC. We simplified our capital structure and executed on all of our strategic initiatives. We added Canadian North in a highly strategic acquisition. And after year-end, we announced Mach2 and our investment-grade credit rating. We are confident that our balance sheet is in a position that allows us to execute on future transactions and the foundation has been laid for future accelerated growth.

I will now turn the call over to Jake, who will provide an update for the 2026 outlook for Aerospace and Aviation.

Jake Trainor — President

Perfect. Thank you, Rich. Overall, we’re expecting another strong year of growth from our Aerospace and Aviation segment, as the trends highlighted by Mike and Rich are expected to continue into fiscal ’26.

The growth investments made in the past, in addition to the contractual wins, whether it be the second aircraft for the U.K. Home Office, the commencement of the Newfoundland and Labrador Medevac contract midway in 2026 or the expansion of the Air Canada commercial agreement and increased routes that we’ve been experiencing will all contribute to the increase in revenues and profitabilities.

I will specifically focus on the growth factors by business line. Our Essential air service business line will see growth driven by a multitude of factors when compared to the prior period. The most significant impact will be the inclusion of Canadian North for a full fiscal year. Other increases include the expansion and extension of the Air Canada commercial agreement, which will see aircraft starting to fly midway during the year. We also anticipate stable load factors across our network when compared to 2025.

Lastly, we expect continued growth in our medevac business, including the start of the Newfoundland and Labrador medevac contract, which is anticipated to start operations in mid-2026. Offsetting some of these gains is the impact of continued labor shortages and supply chain challenges. Although we’re not seeing a worsening of these dynamics, the challenges still remain specifically on aircraft parts, consumables and overall costs, which are experiencing significant inflationary pressures.

The aerospace business line is expected to see growth due to strong flying tempos for our surveillance and aircraft going into service for the U.K. Home Office, which will have year-on-year effects as that aircraft only started operations in the fourth quarter of 2025. Our aircraft sales and leasing business is also expected to experience growth as the investments made in aircraft and engines are leased to customers.

There is always a lag between investment and cash flow generation as such, aircraft have to be readied, and the lease contracts executed. Regional One remains an opportunistic buyer and stands ready to complete transactions that are accretive to the portfolio. The demand for Regional One and Mach2 remains robust as evidenced by increasing lease rates and shortages of critical parts across the industry, and we expect that trend to continue in 2026.

On a long-term basis, we expect maintenance capital expenditures to increase consistently with increases in adjusted EBITDA in our Aerospace and Aviation segment, which is the biggest driver of our consolidated maintenance capex. We anticipate an increase over 2025 due to the full year inclusion of Canadian North, coupled with increased flying due to our recent investment in aircraft over the past few years.

Lastly, we continue to invest in deferred maintenance at Canadian North and anticipate those investments to continue in the front part of the year. Growth capital investments — or excuse me, expenditures in 2025 include the three remaining new King Air aircraft for the BC EHS contract. Regional One is always working on opportunistic aircraft and engine acquisitions, which may result in growth investments being made in the aircraft and sales business line.

Before I pass it off to Travis, the other theme that I’ve been speaking about at external events and conferences, which is EIC’s exposure to the defense and security as well as dynamics within that industry. The recently released Canadian defense industrial strategy is a clear and welcome call to action. When government focuses on an outcome it needs such as capability, readiness, availability or serviceability, industry will do what we do best: invest, integrate partners, manage risk and deliver.

That’s a model that we’ve proven around the world, and it’s a model that Canada is now rightly setting out to use here at home. The strategy named 10 sovereign capabilities to be prioritized, of which many of these align with our EIC core competencies. These include aerospace, digital systems, in-service support, specialized manufacturing and training and simulation, among others.

The defense industrial strategy aligns with our communications with officials within the government over the past year. And EIC obviously has defense and security ties within our aerospace activities, including in-service support and our ISR operations. However, we do have a number of other opportunities, which may not be as obvious. Our specialized manufacturing companies are already engaged in providing parts for defense and space-related applications.

Another important capability that EIC can bring to bear is our unique infrastructure in the North. We are the leading experts in Northern aviation and operating in harsh Arctic climates. As people and goods are transported to the north to support enhanced defense activities, it will be a positive tailwind to our air operators.

And finally, EIC and its training capacities, including MFC training and CTI can help solve training and development gaps. CarteNav, which is PAL’s mission system, has a fully developed command and control digital system capabilities, which are world-class and utilized by several countries around the world for security purposes.

I’ll now pass it off to Travis to talk about some of the commentary on the manufacturing segment and some of the other opportunities within defense and security within manufacturing.

Travis Muhr — Chief Administrative Officer

Thanks, Jake. Our Manufacturing segment is also uniquely capable of providing solutions to the government. As the north is developed, there’ll be a need to expand the transmission and distribution along with opportunities for long linear projects as resources get developed, which will provide further tailwinds for our Environmental Access Solutions business line.

Our Precision Manufacturing and Engineering business line has several subsidiaries, which have positive exposures to defense and security. Our West Tower business has over 35 years of installing towers and infrastructure into remote and demanding areas. There are numerous opportunities to install radar towers and other infrastructure across the north, and we have unique capabilities due to our scale, manufacturing capability and industrial technology benefits experience.

Ben Machine already provides its precision CNC machining and welding of high-precision short-run critical components for defense and space companies across North America and around the world. Our hydronic heating company, DryAir, provides solutions for hydronic heating and hot water applications, which should also be critical for concrete curing and heating alternatives in the north.

Looking at 2026 from a manufacturing point of view, we’re anticipating materially consistent results overall when compared to 2025 due to changes within our business lines for two reasons. Firstly, we see the continuation of the strengthening business environment for many of our Precision manufacturing and engineering subsidiaries, coupled with a positive outlook for our Environmental Access Solutions business line.

All the businesses within our Manufacturing segment were experiencing a strong level of customer inquiries in 2025, and we saw that strength converted to sales when looking at the fourth quarter results for both Precision Manufacturing and Engineering and Environmental Access Solutions.

Our multistory business — windows business line has also experienced strong level of inquiries. Performance was as expected in the fourth quarter with period-over-period declines due to the type of projects, production gaps and tariffs. Of note, the recent Supreme Court case on tariffs does not impact that business line as the primary source of tariffs were the Section 232 tariffs on aluminum and steel, which remain in place today.

The business line for 2026 will continue to be impacted by project gaps and reduced margins due to the demand environment in prior year bookings because of high interest rates and developer uncertainty. We’re starting to see some improvement in various regions around the U.S. and Western Canada. However, developers remain on the sideline due to the excess supply of small condo units, especially in Toronto and developer cost uncertainties.

Our Environmental Access Solutions business line is expected to generate higher returns in fiscal 2025. Demand for our composite matting remains robust, and the plant continues to operate maximum capacity consistent with 2025. Our Canadian operations are expected to be a major driver for the business as we start to see strong results in the fourth quarter from a rental and mat sales perspective.

Further, we anticipate that long linear projects will commence in the latter half of 2026 across several industries, including transmission and distribution, pipeline and oil and gas. The longer-term prospects of the business remain very robust as there will be material investments in transmission and distribution across North America due to growing electricity demands from homes, vehicles and more importantly, AI and data centers. The Government of Canada major projects office is focused on strategic nation building investments, which provide significant tailwinds in the longer term. This will result in continued strength for the business line into 2027 and beyond.

The Precision Manufacturing and Engineering business line is expected to improve from a revenue perspective, but due to changes in project mix, profitability is expected to be materially consistent with 2025. The fourth quarter was a very strong quarter for the business due to product mix and delivery of hydronic heating units, which were deferred from earlier in the year, and we continue to see a strong quoting environment across the various companies. This business line is very diversified with exposure to the defense industry, technology industries, including data centers and telecommunications.

The anticipated maintenance capex are expected to be slightly higher than the prior year due to the timing of replacement activities. We’re also anticipating growth capex to be incurred in each of the business lines, but they should be relatively consistent with 2025 with the exception of Environmental Access Solutions where growth capital expenditures will be outlaid for the new state-of-the-art composite plant as discussed by Rich as well as investments in Canadian rental fleet based on market dynamics and anticipated projects.

I’ll now pass the call back to Mike.

Michael Pyle — Chief Executive Officer

Thanks, Travis. 2025 and our strategic initiatives have been — have set the foundation for EIC for the future. 2025 was an incredible year for our business as we set records in all of our key metrics. I am extremely confident in the future of our company. EIC is at the intersection of a number of critical themes and trends. We have remained true to our principles and what has made us successful for the past 20 years plus will continue to accelerate that success in the future.

Thank you for your time this morning, and we would now like to open the call to questions. Operator?

Question & Answers

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question is from Steve Hansen from Raymond James. Your line is now open.

Michael Pyle — Chief Executive Officer

Good morning, Steve.

Steve Hansen — Analyst, Raymond James

Hey, good morning, guys. Thanks for your time. First question, it relates to the matting business. It sounds like it has inflected here from previous levels. Just given some of your commentary about rebuilding the fleet in Canada and the growth capex, is it fair to say that visibility is improving through the balance of the year and into ’27? I’m just trying to make sure we didn’t have sort of a onetime or one quarter sort of bump in the business or just trying to understand that it’s got better visibility going forward. Thanks.

Michael Pyle — Chief Executive Officer

It’s a good question, Steve. The matting business — our comments are sort of the sum total of two things. We had some abnormal project delays during the first part of 2025, particularly on integrity digs and some pipeline work that are regular things we do every year and didn’t get done earlier in the year. In Q4, we returned to normal in that area. So that generated some improvement in this quarter and will help us into the beginning of next year. We have more mats on rent now than we did at this point last year.

But I think the real story is in what’s coming. We have a number of T&D projects in Eastern Canada that we’re bidding on, and we will win our share of those. And the number of pipeline projects that are at the bidding stage or being awarded to general contractors. And while it’s unlikely those generate revenue in the first half of next year, you’ll start to see that in the back half of ’26. And I think in ’27, we’re hitting back into a super cycle of the business, much like we did when we went — when we originally purchased it in 2021 or 2022.

Steve Hansen — Analyst, Raymond James

Okay. Very helpful. And just a quick second one for me is just on the Mach2. I was just hoping you could maybe frame sort of the size of the market opportunity that you’re stepping into here, recognizing that it’s obviously a much larger set of aircraft out there. But then I guess, secondarily, how do you expect to approach that market from sort of a cadence perspective and tipping your toes in or growing more aggressively? How do you envision the growth profile evolving there? Thanks.

Michael Pyle — Chief Executive Officer

That’s a really good question, Steve. The Mach2 is part of our strategy. It’s not our whole strategy for moving into the narrow-bodies and wide-bodies. Just to back up, Regional One’s secret sauce and the reason they’re so phenomenally good at narrow at the regional jet turboprop market is they understand who the customers are, what products they need and the value of those assets. So when we’re buying aircraft, we buy them with margin in before we lease them, before we do anything. And so, we’ve always coveted the 737 market in particular because it’s so huge relative to the regional jet market.

But it’s important to understand that most of the 737 market is an OEM market. When you’re talking about a 737 MAX or those things, those are bought from the manufacturer. They’re leased by finance companies. What we do when we lease aircraft is we’re burning up green time. We’re not a finance lessor. And so, most of that — the newer versions of those aircraft really don’t apply to us.

Where our opportunities lies as those aircraft age, the value of parts may exceed the value of the plane as pieces. And the knowledge with the team at Mach2, the skills of the people that work there, combined with the knowledge we’re drawing from Canadian North’s experience in the 737 business will let us dip our toe in there.

I think it’s safe to say that we’re going to walk before we run here. There’s a big comparison that if we went back eight years or nine years in Regional One, we really didn’t participate in the ERJ market, the Embraer market. And we were given a couple of opportunities. We slowly dipped our toes in. And now we do almost as much work in the ERJs as we do in the CRJs.

I think you’ll see a similar movement in the 737s, where we’ll invest in greater parts inventories, greater depth, develop our knowledge and then slowly move into it. It’s not something that you should anticipate a light switch. I think it’s a slow, steady growth and bringing in the expertise we got from Mach2 will accelerate that from what we could have done on our own.

Operator

Thank you. Your next question is from James McGarragle from RBC Capital Markets. Your line is now open.

Michael Pyle — Chief Executive Officer

Good morning, James.

James McGarragle — Analyst, RBC Capital Markets

Hey, good morning. Thanks for having me on. Congrats on the strong Q4 here. I still got one for Jake here though on the Canadian defense opportunity. So obviously, some pretty big announcements recently. So can you just kind of give us an update on some of the conversations that you’re having in Ottawa and what you see as the opportunity set for exchange here over the next couple of years?

Jake Trainor — President

Sure. Thanks, James. A couple of things you got to keep in mind. Some of the big procurements that the government is working on are kind of generational when you’re looking at shipbuilding, submarine acquisition, wrestling with the fighter jet issues. So again, there’s some of those massive procurements that obviously, that’s not our wheelhouse of activities. But what is, is defense and security in the North. And we’re seeing — in terms of opportunity sets, obviously, the ISR capability is one that, as we’ve announced, we’ve engaged with the Canadian government.

But more broadly beyond that, there is — and we’re seeing it now in just terms of some of the volumes of the logistics support, the travel, the support to greater attention for folks in the north. They’re traveling up to the north. That’s certainly one. Some of the resource development that, again, comes with enhanced attention on defense and security around the critical minerals. We’re seeing that.

And then the last piece, and Travis touched on it briefly, was looking at some of our other subsidiaries where there’s a general sense of renewal of infrastructure. So whether it’s additional towers or maintenance of towers, and that’s not only defense and security, that’s with our air navigation provider, our ATC system. There’s just, as I said, a general overview or a requirement to continue investing in infrastructure that we’re going to see touch a number of our businesses across the portfolio. So again, something that we’re truly excited about.

James McGarragle — Analyst, RBC Capital Markets

Appreciate the color. And then on — just on the projected return thresholds for Canadian North, when you acquired it, you mentioned the returns would be a little bit below into ’26. We should see those things improve. We saw the update on the — you have to help on the pricing side, given that agreement you signed last year. But can you just give us an update on how things are tracking operationally against some of those return targets that you guys have internally?

And then just a little bit more generally, what’s the opportunity, what’s the capacity in Canadian North to kind of take advantage of some of this Arctic sovereignty investment longer term? And I’ll turn the line over after that. Thank you.

Michael Pyle — Chief Executive Officer

Thanks, James. When you look at Canadian North, I think it’s safe to say that we had ambitious goals for the company. We had great faith in the management team there and that when teamed up with EIC, we could create some impressive results. And it’s clearly exceeded our internal expectations. The EBITDA we’re generating, we’ve made more changes and accomplished more than we anticipated at this point in the process.

And so, when you look at what we need to do from an earnings point of view to get to our 15% return, we’re ahead of where we thought we would be. The part that will still take us through next year is the deferred maintenance stuff, where we’re catching up on some of the overhauls and stuff where they have used rentals as opposed to overhauls. And so, that will continue through this year.

In terms of capacity, there’s room for year-over-year growth, which we expect. But if we get to the point where we’re building a military base or there’s a new mine or there’s those things, the incremental investment in a couple of extra aircraft is modest relative to the returns because we own all of the fixed base infrastructure.

Canadian North is well underway to building a new freight hub in Ottawa, which is nearing completion now. In fact, that was the majority of the growth capex we incurred in that company last year. It’s nearing completion. So I would say that the infrastructure of the business to grow is there. As it grows more and more, we’ll add aircraft to meet the demand.

The one piece I would say that’s a little bit different than that would be on the charter business. The first phase of liquid natural gas plant business is complete, and that you saw that come to a close in Q4. The balance of the charter business continues, although as I said several times, that’s at much tighter margins that we’re really interested in participating in. So we’re in great discussions with our customers.

If we’re successful on renegotiating those contracts at their maturity, we’ll continue in that. If not, we won’t. And just as a reminder, we didn’t pay anything for that part of the business. Those are the only aircraft in EIC that are leased, and we bought the Canadian North business for asset value. So we may be able to redeploy some of those leased assets into the core business if we needed to, to augment our capacity.

Jake Trainor — President

And Mike, it’s — one other point I’d just like to add to add a bit of color is the other critical angle that we’ve got is the human capital. We’re one of the largest employers in the north. We have incredible relationships with the Inuit and the indigenous partners out there. And again, just understanding the time and space constraints, building a workforce that is able to perform in a harsh environment is a significant — one of the moats that Mike was talking about earlier. That’s a significant challenge for anybody. So again, that’s something that we can continue to scale, and it’s a big opportunity for us.

James McGarragle — Analyst, RBC Capital Markets

Appreciate it. Thank you.

Operator

Thank you. Your next question is from Cameron Doerksen from National Bank Financial. Your line is now open.

Michael Pyle — Chief Executive Officer

Good morning, Cam [Phonetic].

Cameron Doerksen — Analyst, National Bank Financial

Yeah. Good morning, everyone. So I guess maybe my question on the balance sheet. Obviously, you’ve got the investment-grade credit rating, which is great. But I’m just sort of wondering, big picture, how you’d sort of like to see the structure of the balance sheet longer term. I mean, obviously, there’s an opportunity to do a fixed interest rate debt deal here. But I guess, how would you like to see the split of the business kind of longer term between raising some debt in the public markets versus the credit facility? And maybe a corollary to that is what sort of interest rate savings do you think you might be able to achieve if you do tap the capital markets for debt?

Michael Pyle — Chief Executive Officer

I’ll take most of that, and then I’ll give Richie the hard part, which is the savings part. I think it’s really important to understand why we’re excited about the bond market. We have tons of liquidity. Our current facility is CAD3.5 billion, and we’ve got about CAD1.25 billion of dry powder. So even with Adam’s capability and investing money that we’re in good shape there.

What the bonds bring us is a fixed rate piece to our balance sheet. We’ve always had convertibles since our inception, and those served as a big part of our fixed rate exposure. Now with bonds at a far lower rate than convertibles ever were and quite frankly, at a lower rate, depending on term, of course, than our floating rate, I think you’ll see over time, bonds make up a significant piece of our capital structure. In the past, we’ve used interest rate swaps to give ourselves exposure to fixed rates. The bond market is far cheaper than the swap market today. And so, I think you’ll see us grow that.

And one of my personal phobias is when you get into refinancing risk when you have big pieces of paper. And so, I like to stagger those over a number of years. And I think over time, as our bond part of our financing matures, you’ll see us doing that with different lengths of bonds to make sure that we are unduly impacted depending on what’s happening five years from now when a bond comes in.

And I guess the other thing that’s really important that our shareholders rely on us for is we’ve maintained a very consistent level of debt since our inception. Bonds don’t change that. It reduces our reliance what we used to have on convertible debentures and it reduces our reliance on our operating facility, but it doesn’t change the aggregate level of debt we’re comfortable carrying.

Richard Wowryk — Chief Financial Officer

Yeah. I think, Cam, just to answer your question on savings. It really depends kind of where you’re anchoring to. So if you’re anchoring obviously to kind of the convertible debenture market, those savings are very meaningful, especially when you include kind of the amortization of the cost of that transaction. So you’re 1.5%. If you’re comparing it to our credit facility on a variable basis, that suggest that’s less comparable in that it’s a four-year facility versus in the bond market, something that’s five years or seven years. But even on a five-year fixed basis versus a four-year floating basis, you’d have some savings on the fixed side.

But I think where the comparison versus the credit facility is more meaningful is, as Mike noted, as the debentures we completed those redemptions, but also we have two interest rate swaps that are maturing in April of 2026. We’ve started to ramp up our review of extending those. And when you compare the interest rate swap market versus the bond market, those savings when you’re thinking about something of term in five years in the bond market versus the swap market, you are saving — it’s not as large of a delta versus the convertibles, but it is still meaningful savings for that certainty of term. So we’re excited about it. And we’ll still pick up some savings versus the floating, but it’s really versus the other capital alternatives that we have to achieve a portion of fixed rate debt where the savings are more material.

Michael Pyle — Chief Executive Officer

When you look at the fact that we basically carried about a turn of EBITDA on average over our history in convertible debt. And those were in round numbers, the low 6s in terms of interest rates plus the cost of raising versus a bond probably in the very low 4s with very little cost of raising. You’re talking about something in the range of 200 basis points versus our historical capital structure, and that’s a meaningful difference on our cost of capital.

Cameron Doerksen — Analyst, National Bank Financial

Okay. No, that’s super helpful color on that. And just maybe one quick follow-up for Richard. Just, I guess, on the working capital, you had a big, I guess, positive swing in Q4. It looked like a big change in the accounts receivable. Just wondering what that was. And I guess maybe any thoughts around working capital expectations for 2026?

Richard Wowryk — Chief Financial Officer

Yeah, for sure, yes. So this is consistent with kind of the messaging that we’ve been giving throughout 2025, but also with the messaging that we gave for 2024. There were a number of government accounts that were kind of well behind our collection patterns in 2024, and we rectified those by working with our partners throughout 2025. And as we always do, we work to develop processes to make sure we don’t end up back there. So that was significantly successful during the period. We talked about kind of the multistory window solutions. There’s some drawdown of working capital there because of business volumes.

And the other thing that we talked about throughout 2024 and early 2025 is just Regional One taking advantage of certain buying opportunities and finding the right place to sell those assets. And just the size of assets that we had purchased throughout 2024, late 2024 and early 2025, the timing of those sales resulted in kind of temporary bumps in working capital. And it isn’t something that we apologize for. Regional One will be opportunistic. And if the intention is to resale the assets relatively quickly, those will sit in inventory. And we’ll continue to undertake those types of investments as they generate the returns that Regional One does.

So — and to your question on 2026, we haven’t provided something formally, but we would expect marginal increases in working capital throughout 2026 just based on the growth in the business. We’ll continue our laser focus on working capital throughout the year as we’ve shown successes throughout 2025 and try to parlay those into other wins. But I wouldn’t expect a repeat of 2025. It was driven by a couple of things that we’ve talked about for kind of the last 12 months to 18 months.

Cameron Doerksen — Analyst, National Bank Financial

Okay. No that make sense. Thanks very much. I’ll pass the line now.

Operator

Thank you. Your next question is from Matthew Lee from Canaccord Genuity. Your line is now open.

Michael Pyle — Chief Executive Officer

Good morning, Matt.

Matthew Lee — Analyst, Canaccord Genuity

Hey [Indecipherable] guys. Hey, thanks for taking the question. Maybe we can start with the step-up in manufacturing margin we saw this quarter. Can you maybe just break down how much of that mix or how much of that is mix versus the performance of the individual businesses? And then just maybe some guideposts as to how you’re thinking about margin expansion in ’26 and then ’27?

Michael Pyle — Chief Executive Officer

Sure. In the fourth quarter, it’s more driven by product mix than a major change in the business. Fiscal 2024, the fourth quarter was a very tough period for DryAir, our heating systems company. Conversely, 2025 was a very good fourth quarter. So you’ve got a delta of a better-than-normal year versus a worse-than-normal year that helped support margins.

We had increased rental activity at our Canadian matting business, which is strong for margins. And when we look at that, taking that forward, it’s not dramatic in the first half of next year. But as the year progresses, as the rental, the fleet gets more and more deployed, the rental business is higher-margin business, which drives the aggregate margin across the segment.

The other thing I’d point out is that the composite matting business ran flat out in the fourth quarter, and we did — we had just got it the year before, and it wasn’t quite running at the same level. So that strengthens it. There’s not much of a delta coming up in that. The business is selling every mat it can make, and we anticipate that for the balance of ’26 until the new plant opens in ’27, which again should be good for margins, as we go forward there because the SG&A with the business won’t ramp at the same rate as revenues will when the new plant comes online.

Matthew Lee — Analyst, Canaccord Genuity

So if I’m understanding that on a holistic level, kind of further margin expansion from efficiencies in ’26 and then ’27 further ramp as the capacity comes online and of course, Quest starts to recover.

Michael Pyle — Chief Executive Officer

Quest recovers and the — I think we’re heading into the beginning of a new super cycle in the Canadian matting business. The amount of bidding we’re looking at on the pipeline business, but more so the transmission and distribution business, I think we’re going to see that business being very busy, as we head into the back end of next year and into 2027. So I think that’s also very bullish for margins as we go into ’27.

Matthew Lee — Analyst, Canaccord Genuity

Understood. And then maybe on the ISR front, obviously, a lot of talk about Australia amongst investors. But can you maybe talk about the conversations you’re having with other countries and how those conversations have changed as the geopolitical environment has evolved in the last couple of months?

Michael Pyle — Chief Executive Officer

I think what’s changed in the geopolitical environment is 2 things. And Canada is kind of a poster child for it. One is, in the past, there was kind of do I really need to do this and the reliance on the group of NATO and a reliance on the Americans, the position of the U.S. President telling countries they need to help look after themselves has been great for this business. And the uncertainty politically.

You can see it, as an example of Greenland. I mean, the talk that NATO partners dispute area of land is not something we’ve seen in a long time. And so, the demand we’re seeing from countries wanting to look after themselves is very heightened. And it’s across the board. We’re in discussions in a lot of places that I’m not at liberty to discuss. But I can say it’s like countries to what we do.

In the last five years, we’ve added work in the Netherlands. We’ve added work in Great Britain. We’ve expanded and lengthened our contract in the Caribbean. We’re in discussions. I said we’ve talked to Greenland about their opportunities. We’ve been very public on the fact that we’ve had discussions with the government of Canada in providing them with a northern surveillance solution. So it’s pretty pervasive and across the board.

Wins tend to be choppy. You don’t know exactly when a government is going to come to conclusion. Australia is a great example of that. The Australians are very sophisticated from a bidding point of view, and this process has been going on for over five years. We’re surprised that it hasn’t come to a conclusion yet, but it’s going to. And we certainly aren’t going to win every opportunity, but we are going to win some of them.

And the magnitude of these projects, whether it’s a hypothetical 10-plane deal in Australia or something smaller than Canada or something in that two or three plane range in European countries, all of those fit directly into our sweet spot. And if we’re having this call a year from now, I’m pretty confident that we’re going to announce some exciting stuff by then.

Matthew Lee — Analyst, Canaccord Genuity

Yeah. We’ll look forward to it. I’ll pass the line.

Operator

Thank you. Your next question is from Krista Friesen from CIBC. Your line is now open.

Michael Pyle — Chief Executive Officer

Good morning, Krista.

Krista Friesen — Analyst, CIBC

Hey, good morning. Thanks for taking my question. Maybe just to follow up on Matt’s question there. As you think about the number of opportunities for your ISR business over the next 12 months to 18 months, would it be fair to say that as you think about the opportunities for debt, it’s mostly going to be prioritized towards future potential contracts? Or are you still very much open to other M&A?

Michael Pyle — Chief Executive Officer

I think if I said to you that I was prioritizing my capital for ISR, Adam would beat me up when I got back to the office. We’re kind of — because they’re driven by different parts of our company and different people, they don’t really compete for capital so much as if we’re successful on both the acquisition front and on earning new contracts, our leverage will creep up. And if it creeps up, we’ll use equity if as and when we need it.

But we’re in a spot right now, Krista, where our leverage is the best it’s been since like 2010, I think, at 2.73 times and with CAD1.5 billion — CAD1.25 billion, I’m sorry, of dry powder and maybe the opportunity in the bond market. I think we’re in a great spot from a liquidity point of view. But I really want to be clear, we’re not going to trade off opportunities. We’re going to take them all, and we’ll just make sure they’re appropriately financed.

One of our great strengths is if you look back over history, we’ve always had a balance sheet that lets us thrive in bad markets. So whether it was in 2009, where we were a CAD60 million market cap company, and we did a CAD60 million deal right in the middle of the markdown or when we had some silliness with a short attack during 2017, we grew dramatically or even in COVID, we maintained our dividend and did a couple of acquisitions and pay down debt.

So we’re fixated on maintaining the right level of leverage. And Rich’s job is to make sure we have the right level of liquidity. And so, we aren’t really trading off one against the other. Acquisitions are a little harder to predict when we’re going to be successful. But we typically get a couple of them across the line, and I see no reason why this year would be any different.

Krista Friesen — Analyst, CIBC

Okay. Great. Thank you. And then maybe just on the Air Canada announcement earlier this year, clearly, a strong vote of confidence in PAL Airlines. Are you able to share a little bit more detail on the cadence of deploying these additional aircraft with Air Canada?

Michael Pyle — Chief Executive Officer

Jake, do you want to take that?

Jake Trainor — President

Yeah, for sure. Thanks, Mike. Great question, Krista. Again, you got to appreciate that we’re — as we continue to expand that offering, we’ve got to bring crews in. We’ve got to train. We’re buying aircraft because we don’t have them sitting on the shelf. So from that announcement, our intent is mid-2026 is when they’re going to start being reflected in the scheduled operation.

So — and the other point I want to say is this is a significant vote of confidence as you stated, because it’s only an extension — it’s not only an expansion of the number of aircraft, it’s an extension of the entire package of aircraft with Air Canada by a further four years. So again, tremendous stability and again, strength in partnership.

Krista Friesen — Analyst, CIBC

Perfect. Thanks. I’ll pass the line.

Operator

Thank you. Your next question is from Konark Gupta from Scotiabank. Your line is now open.

Michael Pyle — Chief Executive Officer

Good morning, Konark.

Nathan Britto

Good morning. This is — hey, good morning. It’s Nate Britto, actually filling in for Konark Gupta. Just have a couple of questions. Are there any areas within the EIC portfolio, where you are in advanced stages of AI adoption? And are there any subsidiaries that may significantly benefit from AI investments around the globe?

Michael Pyle — Chief Executive Officer

We don’t have kind of quantum AI projects that are materially changing the business. There is incremental investment being made in things, everything from airplane maintenance, airplane security and other things like that. But there’s nothing that’s really a quantum leap from AI. We do tend to use our head office team to help our subsidiaries deploy when they see an opportunity.

Maybe one of the biggest benefactors from AI would be our CTI training business in the U.S. We spend a lot of time utilizing AI in the training and then training our customers on the use of AI in their business. And so probably the biggest impact would lie at CTI.

Nathan Britto

Okay. That’s very helpful. And just as an addition, I would just ask, in terms of your M&A pipeline, how are sellers’ expectations these days? And do you think the manufacturing end market has more opportunities than aviation?

Michael Pyle — Chief Executive Officer

I think it depends on how you look at that. The — because there are rules in aviation about where you could operate, what ownership you can have in other countries. So by definition, aviation is more limited than manufacturing because manufacturing doesn’t have those. Having said that, the areas where we’re active in aviation have tremendous growth opportunities in the medium term. We’ve talked a lot about what’s happening in Canadian North. We’ve talked about in ISR. We’ve talked about our continued desire to grow our air ambulance medevac business. We’re already the biggest in Canada, and we intend to continue to grow that business.

So if we talk about the overall macro, I would say there’s more opportunities in manufacturing. But if you look sort of closer to home and the things that are bolt-on and things that are close to what we do, I would view them as very similar. I think you’ll see a significant continued growth in the matting business. The opportunity in the U.S., the movement towards composite matting is real. It’s long term. It’s worldwide. And our product is quite simply the best.

And so, we’re going to get that plant up and running, and we’ll start taking on, whether it be rental opportunities, selling outside of the U.S., expanding our geographic coverage. We were ecstatic that we had a number of our mats used in the oil patch. And typically, the oil patch are the hardest on mats, and that’s why wood matting has historically been what’s used there. And we’ve had great success with our mat on a couple of projects there.

Nathan Britto

Okay. Thank you for all the help and I’ll pass the line.

Operator

Thank you. Your next question is from Razi Hasan from Paradigm Capital. Your line is now open.

Razi Hasan — Analyst, Paradigm Capital

Good morning. Thank you for taking my questions. Can you maybe just talk about the margin implications for the Aerospace business, training versus ISR? And going forward, do you expect the Aerospace business to have a higher contribution than it did in 2025? And if so, just what are the puts and takes there?

Michael Pyle — Chief Executive Officer

So the big macro you brought up first is bang on is that the margins in anywhere where we own the aircraft are always higher because of the capital deployed. So our training business is a very low capital business. Our return on investment is great, but our EBITDA margins are much, much lower.

As we grow the ISR business, it tends to be the highest or near the highest of our aviation businesses from a gross margin point of view. So the growth of that will be good for margins. For competitive reasons, I’m not going to get too detailed about what those are, but they’re commensurate with the risks and the capital we put forward on those aircraft.

Razi Hasan — Analyst, Paradigm Capital

Okay. That’s helpful. And then maybe just switching gears just on Canadian North. As much as you can speak to, can you just maybe walk through the revenue contribution from Canadian North? It looks like the segment was much stronger than we had estimated. So I just want to make sure we’re modeling it properly. Any color there would be helpful.

Michael Pyle — Chief Executive Officer

I don’t have those numbers in front of me. What I would say is that maybe one of my guys can grab and see if they can pull up while I’m talking. But the — you have to break Canadian North into two pieces, the regular business in the North, which is very similar to what Com Air does, which would have very similar margins to the balance of our Northern aviation. And then you have the charter business. And I’m not talking about the charters within the far north. I’m talking about the charter business servicing the oil patch and servicing the natural gas projects. In those cases, those margins are much lower.

So as we make some of the changes in the Canadian North business and merging some of the purchasing capabilities and those things with EIC, you will see a continued improvement in gross margins at Canadian North and the margins continue to improve with the full price increase that was in the new contract with the government of Nunavut taking effect because when we took the contract, we signed the contract, there’s a whole bunch of tickets that were already outstanding under the old pricing. And so, the full impact is just showing up now. So that’s part of the reason you saw increases in margins in that period.

Richard Wowryk — Chief Financial Officer

And just — while we don’t normally disclose subsidiary by subsidiary financial information within our ICFR disclosure within the MD&A, there is a note that aggregates revenue for Newfoundland Helicopters and Canadian North from a revenue perspective. So you can pull what the six-month impact was for those two entities. Canadian North is materially all of it based on the size of the deal.

The one thing I would caution, though, is when you just think about projecting that into the future is that as we’ve noted, the LNG contract wound down in the fourth quarter of 2025 here. And so just multiplying that by two and saying that’s what revenue is going to be in 2026 would be overstating the impact of those charter revenues because of where that contract is.

Razi Hasan — Analyst, Paradigm Capital

That’s very helpful. Thanks. I’ll pass the line.

Richard Wowryk — Chief Financial Officer

Thank you. [Operator Instructions] And your next question is from Amr Ezzat from Ventum. Your line is now open,

Amr Ezzat — Analyst, Ventum

Good morning, everyone and congrats on a very strong year. I’ve got…

Michael Pyle — Chief Executive Officer

Good morning.

Amr Ezzat — Analyst, Ventum

Thanks. I’ve got just one very maybe conceptual question for you guys on guidance. So you guys reiterated 2026 with a bias to the upper end following Mach2 and Air Canada. But as I think about the defense and sovereign themes that you guys discussed in your prepared remarks, can you help us distinguish what’s structurally embedded in your current 2026 run rate versus what would represent an incremental upside. And I do understand that you guys don’t include any sort of ISR wins. But specifically, are you seeing stronger activity levels in defense adjacent parts of the portfolio that support the base case independent of ISR contract wins?

Michael Pyle — Chief Executive Officer

Yeah. It’s a really good question. The simple way to look at it is our guidance is always based on what we know. So it’s based on contracts we’ve won, investments we’ve made. And so, when we looked at our guidance after the 2 things we’ve announced, the Mach2 and the Canadian North acquisition, we thought do we change our guidance based on this. And because neither of them were full years in the current year. And if you added what the portion of the year that we had to our internal budget, it would get us over the top of the range that we have, but closer to the top of it. We decided to move within the guidance we’ve given as opposed to replacing the guidance.

In terms of opportunities and things we’re seeing in defense, we haven’t really included anything in there other than what we either have or very highly confident we will have in that guidance. So as we succeed on some of these defense initiatives, whether it be ISR or maybe it’s West Tower building radar towers in the north or any number of those things or quite frankly, the development of a critical minerals mine in a Callaway. Those things would be additive to what’s in the budget. We try not to predict what’s coming in, and then you can get very choppy results versus your guidance. We want to make sure people can rely on what we predict. And so, as a result, we really don’t put much in there for positive wins that we aren’t sure of yet.

Amr Ezzat — Analyst, Ventum

Understood. What I’m hearing is it seems conservative.

Michael Pyle — Chief Executive Officer

Those are your words, I’m not…

Amr Ezzat — Analyst, Ventum

Yes, these are my words, exactly. If you allow one more follow-up, and I’m not sure you could answer this, like can you — do you guys like quantify or can you quantify how much of your manufacturing, whether it’s revs or EBITDA are exposed to defense and probably very hard to answer, but…

Michael Pyle — Chief Executive Officer

It’s really hard to quantify that. What I would say is when you take defense/investment in the north because the investment in the North is going to be much more than just ISR or a military base. The investment in the north is going to be developing in critical minerals. It’s going to be work on the Northwest passage. It’s going to be nation building. There’s discussion of pipelines across there to Churchill. All of those provide dramatic opportunity for us.

We are the north to steal the Raptors statement in terms of we now — with the acquisition of Canadian North, we own the infrastructure to do whatever people need us to do up there. And that’s something that we’re — to be honest with you, we’re just cutting our teeth on. When we bought the company, we bought it based on what we knew it does, not what we think it can do in the future. And so, I really believe the opportunity in Nunavut and the Northwest Territories in Yukon, we’re just starting.

Richard Wowryk — Chief Financial Officer

The only thing I’d add…

Jake Trainor — President

Go ahead, Richard.

Richard Wowryk — Chief Financial Officer

The one thing that I’d add is that it’s a growing part. And we’re leveraging the collective expertise across all of our organizations to work through bidding processes with our manufacturing folks who may not have the same experience going through large government procurement processes. So we are cross-leveraging resources and experiences from subsidiaries that have that experience to increase our exposure to the kind of the defense world on the manufacturing side.

Jake Trainor — President

Yeah. I was just going to — I was going to expand the fact that while some of our businesses don’t have direct defense exposure today, every one of our businesses had the opportunity to, whether it’s the exposure to the infrastructure that is going to need to be built, whether it was the services provided to enhance defense and security or direct activity on behalf of the various government agencies for defense and security. So again, it’s probably less about what specific percentage exists today and more about the roadmap of opportunities we’re looking at moving forward.

Amr Ezzat — Analyst, Ventum

Understood. And I do agree. I think it’s a very underappreciated part of your business. Thanks an congrats again. I’ll pass the line.

Michael Pyle — Chief Executive Officer

Thank you.

Operator

Thank you. There are no further questions at this time. Please proceed.

Michael Pyle — Chief Executive Officer

I want to thank everyone for joining us this morning. I don’t generally comment on stock price and those kind of things, but this is an exciting morning as the early trading has pushed our stock over the CAD6 billion market cap for the first time. So it’s a good way to start the week. Thanks, everybody, and I look forward to talking to you with our Q1 results and at our AGM in May. Have a great day.

Operator

[Operator Closing Remarks]