Crunching the numbers

Canadian and U.S. morning comments

July 6, 2017

EIF shares have been under pressure as of late on speculation of a potential short report. Today, a report was published. While the report raises a number of issues around certain business relationships, as well as potential concerns around the age of certain parts of its fleet (and required investment), safety record, general operations, etc., the purpose of this note is to address the company’s sources and uses of capital (since its IPO), and its ability to pay its dividend – which, in our opinion, is the main premise of the negative report. In summary, we estimate the company has generated sufficient OCF (and then some) to fund its dividend and sustain the business (i.e., fund maintenance capex), while using external sources of capital (i.e., and a portion of its OCF) to fund growth. Currently, the company has approximately $300 million of available capital, leaving it well capitalized to fund potential investments in growth, as well as upcoming maturities.

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