Michael C. Pyle
- Chief Executive Officer and Director at Intercontinental Exchange
Thank you, operator. Good morning, everyone, and thank you for joining us on today's call. Yesterday, we released our fourth quarter and annual results for 2022, bringing to an end one of EIC's most successful years in our 18-year history. I'm extremely pleased to announce that we have set records in virtually all financial metrics. Our strategy is our most important asset, and we executed on it in 2022 with a laser-like focus across the entire organization, which is evidenced by the strong results we issued yesterday. It's a simple strategy by proven companies with excellent management teams, invest in those companies and nurture their growth. The strategy is underpinned by four key principles. The first is the most fundamental of the strategy, provide a stable and growing dividend. To do that, the second and third principles are that we must be disciplined in our approach to finding and investing in accretive opportunities, which are in diversified industries to enable payment of that stable and growing dividend. The fourth principle is to stay committed to the communities our operations are privileged to serve and where our team employees live, work and play. While the strategies -- this strategy is simple. It is the key to our success and has been driven by consistent execution.
The strategy, coupled with our execution has generated outstanding returns through multiple economic crises and cycles from the financial crisis beginning in 2008 to the recent pandemic. Our exemplary results give us confidence in our ability to deliver against any backdrop. We have a lot to be proud of as an organization. However, in line with our other calls this year, we will attempt to keep our prepared comments as brief as possible to allow time for your questions. With me today is Richard Wowryk, our CFO, who will speak to financial results; and Carmele Peter, our President, who will expand further on our outlook for 2023. I will limit my discussions to the full 12-month 2022 results, while Richard will focus his remarks on the fourth quarter. For 2022, revenue increased by 46% to $2.1 billion. Adjusted EBITDA increased by 38% to $456 million. Free cash flow less maintenance capital expenditures grew by 20% to $176 million. On a per share basis, it grew by 10% to $4.36. Net earnings grew to $110 million and net earnings per share grew 48% to $2.72. Adjusted net earnings reached $133 million, up 55%, and adjusted net earnings per share were $3.29, up 42%. Payout ratio on a free cash flow less maintenance capital expenditure basis improved to 55% from 58% and other adjusted debt earnings basis improved to 73% from 99%. These improvements were notwithstanding two separate dividend increases totaling 11%, which increased our annual dividend rate to $2.52 per share.
These remarkable results are driven by both organic and new investments made in each of our aerospace and aviation and manufacturing segments, which I'll briefly highlight. After more than two years of operating in a pandemic environment, we were thrilled to be in a position to announce a 5% increase in our dividend in May of 2022 and a further 5% increase in our dividend was announced in August of 2022. These consistent increases to our dividend payment were made possible by the consistent execution of our strategy and exceptional performance of our operating subsidiaries, delivering essential and diversified service throughout the pandemic. Consistent performance has been the driver of EIC since our inception and has led to our 20% compounded annual return to shareholders. Key to reliable growth is our investment philosophy of being disciplined in ensuring our return on capital threshold is met. We are agnostic with respect to growth from investment in existing operations, including tuck-in acquisitions or investment in new large platforms. This means by which -- the means by which we deploy our capital varies year-to-year and ensure the growth is accretive to our bottom line and not just an increase in top line revenue.
We worked hard in the first quarter of 2022 on the due diligence for two such accretive but very different acquisitions. We are excited to successfully complete the diligence and announced the acquisitions in our second quarter. The first of those acquisitions, Advanced Paramedics located in Grande Prairie, Alberta is a tuck-in opportunity to complement our already successful world-class medevac business. Advanced Paramedic is the leader in providing medical support to air and ground ambulance in Northern Alberta. The pandemic emphasized how resilient our medevac operations were and with strong presence in the Maritimes, Manitoba, Nunavut and British Columbia, the purchase of Advanced Paramedics expanded our footprint into Alberta and will facilitate future growth into the balance of Alberta, Yukon and the Northwest territories. The second acquisition announced in '22 and the largest in our history was Northern Mat and Bridge. Northern Mat is the Canadian leader in providing temporary access solutions through the use of timber matting to remote and urban projects across Canada. When the projects are complete, the access roads are removed leaving very little, if any, residual impact on the land traveled. Timber matting allows for the elimination of temporary gravel roads and culverts, which are not easily removed and create long-lasting environmental damage. Northern Mat is the only matting company in Canada, which is vertically integrated and manufactures its own matting product. This vertical integration positioned the company to have its best year in its history in 2022.
Strong demand and long linear projects, particularly in the pipeline industry, which require a significant number of mats drove results for Northern Mat in addition to the short supply of mats in general, post-pandemic. The outlook for 2023 remains strong as well, but I will leave that to Carmele to elaborate on later in the call. In addition to the investments made in 2022, we also benefit from the investments that were made in previous quarters, including house delivery of two fully missionized Dash eight aircraft to the Netherlands Coast Guard. That 10-year contract was announced in 2020, and the aircraft successfully went into service near the end of 2022 and will provide their first full year revenue in 2023. The tuck-in acquisitions of Ryko and Telcon, that were made in 2021 to expand WesTower's operations ramped up over the year as the investment in 5G in Canada is accelerating. This expansion of an integrated service offering to the large telcos in Canada resulted in significant growth for WesTower year-over-year in 2022. Similarly, the tuck-in acquisition of Macfab in 2021 to Ben Machine facilitated additional production capacity and diversity to their customer base. In 2022, Ben Machine continued its growth as it realized synergies and capitalize on increased capacity from the acquisition.
The acquisitions of Carson Air and CTI both contributed for a full year in 2022 after being acquired in 2021. In our legacy operations, we continue to manage in a post-pandemic environment and focused on growth opportunities. We launched Trauma Flight, which is a partnership between Keewatin, our northern medevac provider and Custom, our rotary wing helicopter company. The launch of providing rotary wing medevac services to Northern Manitoba addresses a significant gap in providing emergency medical services to remote, hard-to-reach areas, giving residents in those areas equitable access treatment. Our passenger operations have proven to be very resilient throughout the pandemic, because of their essential nature and rebounded quickly when travel restrictions were removed earlier in the year. While passenger volumes in certain Central Canada and Nunavut markets have not quite yet returned to pre-pandemic levels going to the backlog for medical and diagnostic, diagnostic I'm sorry, appointment to the South. The overall charter and passenger volumes in Eastern Canada have been strong and exceed pre-pandemic levels. This demand has enabled us to expand our route network. Charter operations have been bolstered by new contracts we won in 2021 with increased demand from the natural resource sector in general. Regional One's business is multifaceted and has continued its post-pandemic recovery.
Part sales were above pre-pandemic levels and sale of large assets have also been well above pre-pandemic levels as airlines around the world look to effectively manage their fleets and cash flow while they navigate the recovery in the industry that's been plagued by travel restrictions and now pilot shortages. While recovery of Regional One has been slower than anticipated, specifically with respect to the leasing of aircraft, we have seen activity with its engine lease portfolio improve, and Carmele will speak to that in her remarks. While Quest continued to manage through production gaps in 2022 caused by pandemic disruptions. We saw the growth in their order book in each quarter that led to a new record level of projects in their pipeline. We are excited about the long-term prospects of the business and are exploring ways to deploy additional capital into Quest to further drive growth in the future. With these type of accretive investments in our subsidiaries, entrepreneurial spirit of our management teams and disciplined management allow us to deliver consistent value to our shareholders. Fundamental to ensuring we have the capital on hand to capitalize on investment opportunities when they arise is managing our balance sheet with the same discipline as we do, considering investment returns and attributes of management teams. While the markets in 2022 were turbulent, we were able to raise $115 million in common share equity at the highest price in our history.
Demand for the issue is strong and positioned us to quickly take advantage of investment opportunities in 2023. Sustainability, although I've not always involved with that, has always been at the top of mind for EIC since our inception and one of our guiding principles to our strategy. We manage our sustainability efforts, the same way we do other areas of our business. We are disciplined in our approach, manage the short term and focus on the long term. In 2022, we continue to advance our ESG-related programs, initiatives and other efforts, including our reporting. The focus on climate change is global, and there is a demand for climate-related disclosure that is consistent, comparable and useful for our shareholders. We are advancing our long-term and ongoing commitment to climate action in the short term, we are aligning our disclosure to this TCFD framework. Future climate reporting will evolve with our climate strategy and actions, however, setting targets or making promises that cannot be met because of a lack of suitable technology available at this time will not be considered.
Our aviation companies operated what is known as a hard-to-abate sector. Real progress to reduce our carbon footprint will require decarbonation of the aviation operations and not simply carbon offset initiatives. Decarbonation requires partnership and innovation, especially considering the north, harsh northern environments, our aircraft operate in and provide servicing. As we have in the past, with things like the development and innovation of multiblade propellers, the implementation of weight reduction programs, upgrading aviations to modern glass cockpits and up-gauging aircrafts to increase operational efficiency and thereby reduce fuel burn, we have in 2022, advanced discussions with a number of our suppliers and industry innovators in '22 to consider cleaner, alternate power and sustainable fuel surge sources for our aircraft. We look forward to sharing the results of these discussions as we move ahead. We are committed to playing our role and being leaders in pursuit of decarbonizing our fleet of aircraft that provide essential services to our northern customers. These new technology solutions take time to reach commercial availability. So in the short term, we have looked to make investments that could have an immediate impact on protecting our environment and improving agency efficiency, such as the temporary access solutions provided by Northern Mat that facilitate the construction of clean energy sources and the inefficiency of energy-efficient windows that are manufactured by Quest.
Giving back to our communities in the form of mutual economic benefits and special experiences for community members has been a core value of EIC as the companies we have acquired. In 2022, we continued with and expanded several existing programs and introduced new initiatives. Existing programs included celebrating the National Day for Truth and Reconciliation by collaborating with our Indigenous partners at the Winnipeg Blue Bomber Football Club to bring and host 1,000 Indigenous guests to CFL game. With the reduced travel subscriptions we were able to restart our Winnipeg Jets VIP experience, where in youth from our communities are hosted on an night show game to recognize academic accomplishments and promote staying in school, mental health and wellness. We engaged the First Nations University of Canada to provide reconciliation training that addresses the history and cultures of Indigenous communities in Canada and the history of residential schools and treaties around the country. 100% of our Board, executive and senior management completed the learning, and it will be rolled out to a larger group of employees in 2023 and beyond. We were excited to introduce the Atik Mason Pilot Pathway. It's a fully funded program that provides opportunity for Indigenous community members to build a career within the aviation industry. The program was designed in consultation with MKO and remove significant barriers for individual, Indigenous individuals wanting to pursue aviation careers, including cost, location and cultural differences. We were thrilled to celebrate 11 individuals completing the first step of their pilot training this year. I look forward to welcoming them back to Thompson in the spring of 2023 to continue their training. This program will also be expanded in 2023 to bring in additional Indigenous students. Lastly, we are excited to announce the expansion of our Perimeter terminal in Winnipeg. Construction will commence in 2020, '23. We consulted with the Indigenous communities we serve to design a terminal with specific -- their specific needs in mind. Based on those consultations, the new terminal will include elements such as culturally sensitive variance for elders and for children to await their flights. This is especially important when you consider much of their travel is often for medical-related appointments. Those consultations with Indigenous leaders also resulted in a decision plus by those leaders to name the terminal after the honorable Gary Filmon, our outgoing Board Chair, who is committed to serve in all of these communities throughout his entire career. Exiting the pandemic in 2022, gave us a new sense of energy. Our strategy is simple and it's proven. We know it works, and we intend to keep doing what we've always done. As the saying goes, if it's not broken, don't fix it. While economists continue to forecast some type of recession in North America and discussions centered on interest -- rising interest rates are fluid, we are not currently seeing any impacts from a slowdown in the economy on our lines of business.
While our subsidiaries will no doubt face challenges as they always have. Our diversified business model insulates our results somewhat as each operation will be impacted in different ways at different times. We have mitigated much of our interest rate risk by fixing approximately 60% of our debt and then diligently managing our balance sheet to stagger maturity of convertible debentures, none of which mature until 2025, and therefore are not subject to the interest rate risk in the near term. On the flip side, the increasing interest rates have been a positive development for our acquisition pipeline and the quality of deals we are pursuing. We often compete for target companies with financial acquirers who have a far higher appetite for leverage than we do at EIC. The higher cost of debt reduces what these companies can afford to pay for an acquisition and financing is more difficult to access. This has resulted in EIC being more competitive on our larger acquisitions and enhances our opportunities in the M&A market. Coupled with our strong balance sheet, this positioned EIC extremely well for accretive growth in 2023. We are excited about our future and intend to keep doing what we're doing because it works. I will now hand off the call to Richard, who will detail our fourth quarter results.