Good morning. Welcome to the Exchange Income Corporation's conference call to discuss the final results for the three and six month periods ended June 30th, 2021. The corporation's results, including the MD&A and financial statements, were issued on August 12th, 2021, 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 provision 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 MD&A for this quarter, the Risk Factors sections of the Annual Information Form, and Exchange's other filings with Canadian securities regulators. Except as required by Canadian securities law, Exchange does not undertake to update any forward-looking statements. Such statements speak only as 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 like to turn the call over to CEO of Exchange Income Corporation, Mike Pyle. Please go ahead, sir.
Thank you, operator. Good morning, everyone, and thank you for joining us today on EIC's second quarter results call. With me today are EIC's President, Carmele Peter, who will provide some operational insights from the quarter and review in additional detail the outlook for EIC, and our CFO, Darryl Bergman, who will provide a more detailed breakdown of EIC's second quarter financial results. I am pleased to be here today, not only to report on another strong quarter for EIC, but also to confirm that we are seeing optimistic signs across our business of a transition to a positive post-pandemic economy and a return to relative normalcy in our operations. We acknowledge that we have likely not heard the last of the COVID-19 pandemic, and there may be new challenges in the future.
EIC's exceptional performance through the pandemic has been defined by the remarkable efforts of our internal management teams, who have consistently found ways to safely deliver essential services for our customers while positioning us for the post-pandemic recovery. Our ability to draw on the diversity of our enterprise to maintain steady cash flow, honoring our dividend obligation to our investors while strengthening our balance sheet, and our unwavering focus on building the long-term future of our company through accretive acquisition and organic growth. You'll hear these three themes reflected throughout my remarks this morning. The second quarter, as this was the first time the comparative quarter was also fully impacted by the pandemic, offers an opportunity to reflect on how EIC has navigated COVID-19's challenges without compromising our foundations. Our results in that context are outstanding.
In the quarter, the company grew revenue by 32% to CAD 322 million and increased EBITDA by 31% to CAD 81 million. We increased net earnings per share by 450% to CAD 0.44, improved our adjusted net earnings per share by 231% to CAD 0.53 per share. We drove free cash flow, less maintenance capital expenditures, up 44% to CAD 37 million. On a per-share basis, this was up 34% to CAD 0.98. Perhaps most important and most tellingly, we improved the trailing 12 free cash flow, less maintenance capital expenditures payout ratio to 58% from 76%. These impressive financial results were achieved even while EIC received considerably less pandemic-related financial assistance from governments at a decline of more than CAD 14 million from the comparative period. Absent all government support in both periods, the company's EBITDA increased by an impressive 110% in the second quarter year-over-year.
Even though our operations remained impacted by the pandemic, our financial performance tracks closely against our Q2 2019 results, our last pre-pandemic second quarter. Both revenue and EBITDA closed within 10% of 2019 levels, while our free cash flow, less maintenance capital expenditure, is actually higher than 2019. Our payout ratio of 58% is the best we've achieved since the whole year of 2019, clearly demonstrating the ongoing sustainability of our dividend. I'd like to point out that 2021 versus 2019 isn't necessarily a clear apples to apples comparison for EIC. The company has completed three modest acquisitions in the intervening time and integrated those operations into our corporate family despite COVID's challenges. That said, the similarities in our current financial performance and our pre-COVID financial performance indicate that EIC has, to an extent, already recovered towards pre-pandemic levels by successfully adapting our operations to COVID's reality.
Our strong footing has the company well-positioned to exceed pre-pandemic financial performance in the near future. Although we clearly realize that additional pandemic challenges are possible and perhaps even likely. Our scheduled airline services are a great example of that positioning. EIC carriers were able to preserve our networks and continue serving our destinations over the course of the pandemic, a testament to the exceptional efforts of our operators. We believe our demonstrated reliability has given us a head start on recovery, which we have seen in part through Q2. Despite pandemic challenges, our operations have been characterized by slow, steady improvement in passenger numbers throughout the quarter, albeit heavily influenced by regional COVID case counts and associated travel restrictions. We're encouraged by significantly improved passenger volumes in the Atlantic region, which are trending towards pre-pandemic levels in the third quarter.
Similar improvements in Central Canada and Nunavut has been restrained, as an overwhelmed medical system has limited access to diagnostic appointments and elective treatments, thereby suppressing travel for medical procedures. That said, vaccination rates in the communities that the carriers serve are high, and we are confident travel will quickly rebound as the medical system pivots to accommodate traditional care. There is a significant backlog of patients awaiting treatment, and we expect pent-up demand to support robust demand for a protracted period as access normalizes. These patterns drive investments we're making into expanding our airline operations. Strong passenger traffic patterns and significant demand increases from our remote mining and freight customers are allowing the net additions of four larger gauge aircraft, ATR 72s and Dash 8-400s, by the end of this year. EIC's model has always supported opportunistic organic growth.
These investments in our fleet are another example of the company following the stringent criteria we've always used to assess opportunities and deploying our balance sheet as appropriate to accretively expand our existing business. Regional One continues to experience increased demand for parts and larger aircraft components as major airlines have ramped up flying operations to meet consumer demand generated by a rapid recovery in the United States. By contrast, our aircraft leasing business is historically focused on international markets, where recovery has lagged behind the trends in North America. Our expectation remains a return to pre-pandemic levels in future quarters as the global economy accelerates on pace with the vaccine rollout and progressive economic recovery. EIC's ISR and Medevac operations continue to provide valuable stability for the company, operating consistently at or near pre-pandemic levels for the balance of the previous 18 months.
This demonstrated resilience supports our decision to increase our overall position in the segment, making accretive investments of over CAD 100 million in the delivery of our Netherlands surveillance contract and in the acquisition of Carson Air, a transaction I'll return to later in my remarks. The company's manufacturing segment continues to experience strong demand while navigating pandemic challenges related to deferred projects and corresponding dislocation in production schedules. These challenges have been particularly acute at our Quest window operations, although robust demand for future projects will allow us to fully deploy in future quarters the investments we've made in new production and installation capacity. Through the operational ups and downs of the pandemic, we have maintained an unwavering focus on our balance sheet.
One of EIC's core principles since inception has been the maintenance of strong liquidity, empowering the company to move quickly to capture growth and investment opportunities without compromising the financial flexibility we've retained to successfully navigate the economic uncertainty. We've always followed the practice of actively identifying investment and acquisition opportunities. To support those activities, the company has undertaken a series of transactions to ensure we maintain access to the financial resources required to execute on our business model without limiting our ability to weather economic uncertainty or withstand disruptions to our operations. The first of these transactions was the completion of a share offering in the quarter, generating gross proceeds of CAD 88 million at a price of CAD 39.40 per share.
Following the offering, EIC announced a new issue of convertible debentures on July 12th, 2021, that generated gross proceeds of approximately CAD 144 million to be used to retire existing convertible debenture series that come due over the next two years. This offering closed on July 30th, 2021. On July 30th, 2021, we announced the redemption of the June 2023 debentures to be repaid on September 2nd, 2021, deploying approximately CAD 69 million of the proceeds of the recent offering, with the balance being temporarily deployed to reduce our senior debt facility until it is accessed to retire additional series in the future. Simultaneously, we have extended our CAD 1.3 billion syndicated debt facility to August of 2025. These transactions will allow EIC the financial freedom to be active in identifying opportunities for accretive growth and completing strategic acquisitions that fortify our business in the long term.
The first of these is the acquisition of Carson Air, announced on July 5th, for aggregate purchase price of CAD 61 million. The company, in addition to their established business lines in air cargo and pilot training, is British Columbia's leading provider of medevac services. I mentioned earlier the resilience EIC has seen in our own medevac services throughout the pandemic. Our analysis and experience tell us Carson is the ideal acquisition to grow our presence and expand our geographic coverage in that segment. Carson's proven management team, led by Kevin Hillier, has built a sterling reputation in the industry, and we are thrilled to welcome them to the EIC family of companies. When added to our existing medevac providers, Carson Air acquisition fortifies EIC's position as the premier provider of medical evacuation services in Canada.
We believe strongly in this business line and will continue to pursue strategic opportunities for growth, organically or through additional acquisitions in this space. Beyond the Carson Air acquisition, EIC has announced the execution of three non-binding letters of intent to acquire additional companies for aggregate considerations totaling approximately CAD 53 million. These are smaller tuck-in acquisitions capitalizing on synergies with existing operations, which we believe to be immediately accretive. The first of these additional acquisitions closed on August 11th, 2021 with the acquisition of Macfab Manufacturing for CAD 11 million. The company is very closely aligned with our Ben Machine operations and will immediately add capacity and efficiency to both businesses. We are excited about adding Macfab to our family. The remaining two transactions are undergoing final due diligence and barring unforeseen circumstances, are expected to close within the next 60 days.
Cumulatively, the Carson Air acquisition, Macfab Manufacturing acquisition, and the two remaining transactions in progress represent a deployment of approximately CAD 114 million to complete accretive acquisitions in 2021. Despite the uncertainty and operational challenges EIC has faced through the pandemic, these are exciting times for the company. We've demonstrated operational excellence time and again, preserving our operations without accepting compromise for the safety of our employees or for our customers. We've preserved our cash flow, safeguarding our dividend, and preserving the commitment we've maintained with our shareholders in that respect for over two decades. Perhaps most importantly, we have never allowed ourselves the luxury of short-term thinking. Making easy choices to manage for immediate challenges at the expense of future growth is not an approach we've ever tolerated at EIC.
Changing that philosophy during the pandemic would have undermined the growth trajectory we have now demonstrated an ability to maintain, despite these historically difficult times. Across the company, EIC has recorded significant operational accomplishments through COVID, and we've also added major contracts, completed accretive acquisitions, and strengthened our balance sheet to support yet more growth going forward, giving us lots to be excited about in the company's future. I want to thank our board, our management team, our employees, shareholders, and in fact, all stakeholders for believing in our vision, and I'm looking forward to seeing what the coming months will bring. I will now turn to Darryl to outline EIC's financial performance in greater detail.
Thank you, Mike, and good morning, everyone. As Mike noted in his remarks, EIC has continued to deliver solid financial performance through the second quarter of 2021, while progressively managing the ongoing challenges and unpredictability associated with the COVID-19 pandemic. Q2 marked the first full quarter that results from comparative periods were fully affected by the pandemic. As such, offers an opportunity to reflect on the improvements EIC has achieved in insulating our operations against pandemic fluctuations and delivering financial results comparable to pre-pandemic periods. Before turning to operational results, I would like to review the series of transactions Mike outlined earlier that EIC undertook in the quarter to fortify our balance sheet and support the deployment of capital to fund accretive acquisitions and investments.
EIC has been active over the last several months, using favorable markets to our benefit and setting financial cornerstones that will support our long-term success. To begin, within the quarter, as mentioned, EIC completed a CAD 88 million equity offering at a per-share price of CAD 39.40. Subsequent to quarter end, EIC closed its largest convertible debenture offering in company's history, CAD 144 million at seven years, 5.25%. Lastly, on August 6th, wrapped up an extension of the corporate credit agreement out to August 2025. I would add that both of these subsequent transactions were completed with applicable financing costs remaining constant. We have also called the debentures due in 2023. When the debentures due in 2022 are redeemed, we will have no debt due until 2025.
EIC is extremely appreciative of the continued strong support from both our banking syndicate and capital markets, which is evidenced with over-allotments on both the equity and debenture transactions being exercised, along with a very seamless turnaround on completing the extension of our credit facility. With the near-term plan in sight to have no maturing debt until 2025, increased liquidity, and a 12-month trailing free cash flow less maintenance CapEx payout ratio of 58%, EIC has established a foundation that provides us the necessary flexibility to persevere through potential challenges, whether it be a pandemic resurgence, recession conditions, hyperinflation, or other adverse conditions. Simultaneously, we have created additional financial flexibility, capable of supporting growth through additional acquisitions and reinvestment in our subsidiaries. Turning now specifically to EIC's results for Q2 2021. EIC has continually emphasized a strong focus on our balance sheet with modest leverage and good liquidity.
Our efforts in Q2 2021 support our commitment to this principle. The size of the corporation's credit facility as at June 30th remained unchanged at approximately CAD 1.3 billion, with the ability to access another CAD 300 million in an accordion feature should we choose to exercise it, giving the corporation combined access up to CAD 1.6 billion. As previously noted, subsequent to quarter end, we completed the extension of the current credit facility out four years to August 2025. The credit agreement remains materially the same, with pricing and covenants unchanged. At the end of the quarter, the corporation had readily available access to liquidity in cash and under its credit facility of CAD 900 million, including the accordion. With no material cash burn expected, the corporation's liquidity position continues to be very strong and stands set to support the growth needs of the corporation.
EIC's long-term debt, net of cash of roughly CAD 686 million, is a decrease of approximately CAD 40.5 million since December 31st, 2020. The corporation used the net proceeds from its bought deal equity offering to repay its credit facility, partially offset by using cash on hand to fund growth capital expenditures. Strengthening of the Canadian dollar since December 31st, 2020, also contributed to the decrease in long-term debt. The corporation targets leverage to be within a 1.5x-2.5x senior debt to EBITDA range. Q2 2021 leverage is near the top end of this target range, caused by the reduction in EBITDA front on from the impacts of COVID-19. Our current leverage ratio for quarter end is 2.41x , which is well below both the current credit facility covenant requirements of 5x , and notably the 4x requirement, which will come back into effect for year-end.
Further on our balance sheet, we ended the period with working capital of CAD 293 million, which represents a current ratio of 1.86. This compares to working capital of CAD 324 million and a current ratio of 2.10 at the end of 2020. As I turn to revenue and EBITDA, I will focus on highlighting key quarter-over-quarter changes. A detailed analysis of both can be found in the quarter's MD&A release on August 12th. In Q2 2021, EIC generated revenue of CAD 322 million, which is an increase of CAD 78 million or 32% from Q2 last year. Aerospace and Aviation segment revenue increased by CAD 58 million, while Manufacturing segment revenues increased by CAD 20 million. Aerospace and Aviation segment revenue was up 41% to CAD 198 million.
The comparative increase was driven largely by a comparison to a prior year that experienced significant decrease in passenger volumes and current period strength in passenger and charter revenues, and continued strength in our medevac and cargo operations. The corporation's rotary wing operations also delivered strong results in the quarter, driven by fire-related services, and demand for our ISR assets remained strong and continued as well to increase in revenues. Revenues at Regional One were up quarter-over-quarter, with an increase driven almost entirely by an increase in sales and service revenues. An accelerated return of travel in the United States has been positive, driving the increased sales and service revenue. Turning to our Manufacturing segment. Revenue grew by CAD 20 million over the prior period. The total revenue for the segment was CAD 124 million.
The segment continues to experience robust demand, slightly offset by reduced efficiencies as operations continue to incorporate essential COVID-19 health and safety measures. The acquisition of WISS in Q3 2020 also contributed to the period-over-period increase in revenues, with no comparative in the second quarter of 2020. Moving to EBITDA. Consolidated EBITDA was CAD 81 million, up 31% or CAD 19 million compared to the prior period. The increase was largely attributable to the Aerospace and Aviation segment, partly offset by a decrease in the Manufacturing segment and slightly higher head office costs. The consolidated increase was achieved despite overall government funding in the second quarter of 2021 decreasing by CAD 14 million compared to the prior period. When the government subsidies are excluded from the calculation for both periods, EBITDA increased by 110%.
EBITDA in the aerospace and aviation segment in Q2 2021 was CAD 69 million, an increase of CAD 22 million compared to the prior period. The drivers within the segment lending to increased EBITDA are largely the same as what drove revenue. The realization of cost reduction initiatives undertaken throughout the pandemic that took time to be fully realized, including scheduled frequency reductions, workforce rationalization, and various other strategies, were more meaningful in the quarter and also contributed to the quarter-over-quarter increase. In the manufacturing segment, EBITDA was CAD 20 million, a decrease of CAD 2 million compared to the prior period. The decrease in EBITDA compared to the prior period is attributable to the decrease in the subsidies received by the segment in 2021.
EBITDA at Quest was higher than the prior period, reflecting the acquisition of Wiss in the third quarter of 2020 with no comparative in the prior period. It's important to note that EIC's window installation businesses in the U.S. have continued to perform above our expectations since acquisition. Turning to earnings and free cash flow, Q2 2021 once again demonstrated EIC's ability to achieve positive earnings and positive cash flow over a period defined by economic uncertainty. Net earnings for the quarter were CAD 17 million and adjusted net earnings were CAD 20 million, both representing an increase of CAD 14 million over the prior period. The increase in EBITDA in the quarter, along with reductions in interest costs, contributed to the increase. An increase in depreciation on capital assets during the current period slightly offset improvements.
Mike had previously noted our improvements in net earnings, adjusted net earnings, and free cash flow per share. That said, it should be recognized that in the period, the weighted average number of shares increased by 7%, which partially offsets any increase on these per share results. In Q2 2021, free cash flow increased by 36% over the comparative period to CAD 57 million, or CAD 1.54 per share. These results are driven by increased EBITDA and partially offset by the higher current tax expense. Free cash flow, less maintenance capital expenditures payout ratio on a 12-month trailing basis remains a strong indicator of the corporation's ability to actively manage cash flows despite unpredictability in economic conditions. The 12-month free cash flow, less maintenance capital expenditures payout ratio improved to 58% at June 30th, 2021 from 76% in the comparative period.
This was achieved through the diligent management of cash flow in general and capital expenditures, specifically during the pandemic. The resulting 12-month trailing free cash flow, less maintenance capital expenditure payout ratio in the quarter is a significant achievement as it continues to trend back to pre-pandemic range and is only slightly higher than the comparative payout ratio at December 31st, 2019 of 57%. EIC's ability to return the payout ratio on a free cash flow, less maintenance capital expenditures basis back to pre-pandemic levels in the quarter is solid evidence the success we achieved in managing the challenges of the pandemic. We have diligently maintained our focus on cash flow, and we are continuing to fortify an already strong foundation for EIC that supports the future growth of the corporation through accretive acquisitions and internal investments. That concludes my review of our financial results.
I will now turn the call over to Carmele to share some thoughts on EIC's outlook for the coming months.
Thank you, Darryl. The bulk of my comments today will address the near-term outlook for EIC across our various lines of businesses. I will then share some longer-term observations about EIC. While we are, of course, encouraged by increased vaccination rates, easing restrictions, and gradual return to normalized operations, COVID-19 is not done with us yet and will continue to impact our businesses in the short term. Passenger volumes as we move out of Q2 and into Q3 continue to demonstrate positive momentum, although the speed of recovery is closely tied to geography. In the Maritimes, we are trending towards a return to pre-pandemic travel levels in the third quarter. While traffic in Nunavut and central Canada enters Q3 with passenger levels on average about 50% of 2019 levels, and although increasing, it is anticipated to take another couple of quarters to return to historical volumes.
This lower trajectory is the result of significant reduced access to medical diagnostics and other treatments due to COVID-19. As Mike indicated, there is significant pent-up demand, and as such, we are expecting to see significant sustained demand as access to treatment normalizes. EIC's charter aviation services continue to perform well in Q3, supported by significant demand in the resource sector and by the renewal of our contract with Indigenous Services Canada to facilitate the national movement of their nursing workforce to fly in First Nation communities. Similarly, cargo volumes have remained strong moving into Q3 and are trending to exceed historical levels for the period. We expect cargo demand to rationalize over time as passenger volumes trend towards pre-COVID levels. EIC's medevac operations are continuing their solid performance moving into Q3.
We expect the segment, now bolstered by the acquisition of Carson Air, to continue to generate strong returns through the balance of the year. The company's aerospace operations have also remained a source of tremendous stability for EIC through the year. Current programs continue to perform well, demand for contracted ISR hours is picking up with increased optimism that we are moving towards the end of the pandemic. For instance, PAL Aerospace's Force Multiplier on-demand ISR aircraft will be fully utilized in Q3. Regional One continues to meet strong demand in Q3 for parts, particularly for U.S. carriers redeploying regional aircraft to meet post-pandemic demand for travel, and is now seeing increased interest in aircraft and engine sales. As Mike indicated earlier, Regional One's aircraft leasing business has focused primarily on markets outside North America, where recovery has been slower.
We are not expecting a return to historical leasing levels for several quarters. In EIC's manufacturing segment, we continue to see and experience consistent, robust demand, which will be further bolstered with the acquisition of Macfab. While employee absenteeism and efficiencies in the segment have improved with increased vaccination rates, the impact of COVID-19 on supply chains is increasing, as is the challenges with labor shortages. This segment is proactively managing these challenges. As previously discussed, production gaps and reduced revenue at our Quest operations will persist for the balance of 2021 and into the first half of 2022 as a result of the pandemic-related project deferral. Long-term demand remains healthy, and Quest is seeing sales inquiries gradually return to pre-pandemic levels. Turning now to maintenance capital expenditures.
As flight hours increase as a result of returning demand for travel, a concurrent increase in maintenance capital expenditures will follow in the second half of 2021. This does not reflect a change in the structure of our maintenance capital investment strategy, and we fully expect the long-term expenditure trend to be consistent with 2019 levels and timing, adjusted for fleet expansion we have undertaken since that time. As for growth capital expenditures, our focus for the remainder of 2021 will be on the investment in the two surveillance aircraft required under the Netherlands contract, the construction of a new hangar required to meet obligations under our fixed-wing search and rescue contract, the addition of the Net four larger gauge aircraft referenced by Mike to service demand seen in our mining and freight customers, and the conversion of additional opportunistic purchasing opportunities uncovered by Regional One.
Regional One has executed on several asset acquisitions through the first half of 2021. We expect the pace of acquisitions to accelerate as the pipeline continues to provide sourcing opportunities at attractive prices. With the full understanding the pandemic is not yet over, evidenced by the emergence of variants of concern, reintroduction of precautionary protections in certain jurisdictions, and the uneven pace of global vaccine distributions, we are seeing in our business and through the behavior of our customers a sense that we are nearing the end of the pandemic. With that shift to post-pandemic operations in mind, I want to talk more globally about EIC's vision and its implications for the future of the company. We've never believed that EIC's success should be measured by what is achieved in any one quarter, but rather by what we have consistently demonstrated to be our ability to accomplish over time.
Positive results over time are the hallmark of EIC's corporate legacy. For the pre-pandemic five, 10, and 15 years since our inception, EIC has generated annualized total returns of 20%. While the pandemic has certainly impacted our returns, we haven't wavered in practicing the corporate values that have driven our success to this point. We don't focus on immediate results to the detriment of our future. We manage today, and we invest in tomorrow. We are agnostic to how we invest in tomorrow. It could be through acquisitions, organic growth, or a combination. We are driven by the opportunities and don't choose between whether to invest in this asset or this company, as we deploy capital, not allocate it. The evaluation is whether the opportunity meets our rigorous investment criteria.
Once we've identified an investment that meets our criteria, our strong balance sheet affords us the ability to quickly move and convert for the benefit of EIC and our shareholders. Knowing that our approach works has given us confidence to complete three accretive acquisitions during the pandemic, Wisk, Carson, and Macfab, proactively increase our liquidity and fortify our balance sheet to capitalize on additional opportunities for acquisition, make meaningful organic investments, like the investment to support the Netherlands contract, or a move into larger gauge aircraft to meet passenger and charter demand, invest over CAD 30 million on a net basis in building Regional One's capital assets, and forge new relationships with De Havilland Canada to develop and support a Dash 8 P-4 special mission aircraft, and with Viking to support the Twin Otter fire attack system.
By effectively managing our operations through the pandemic for the long term, following our principles for strategic investment and executing on opportunities that meet our criteria, we believe our collective efforts have positioned EIC to continue accomplishing great things for the future. We're excited to see what the next several quarters bring. Thank you for your time this morning, and we would now like to open the call for questions. Operator?
Thank you. Ladies and gentlemen, Your first question will be by Steve Hansen at Raymond James. Please go ahead. I believe he may have his line on hold. Next question will be from Chris Murray at AltaCorp Capital. Please go ahead.
Yeah, thanks, folks. Good morning. Just maybe turning back to your thoughts around the aviation business, and maybe trying to understand how Carson fits into this, in terms of the financial performance. I think going into the second half, there's a few things going on here. I'm wondering if you can talk about some of the new contract wins and how that might be impacting how we should think about the aviation performance in the second half. Also curious about how Carson, maybe even what's the contribution look like in seasonality there. As well, any thoughts around the rental business at Regional One would be helpful as well.
Okay. Starting with your questions about Carson. Carson entered our company right at the start of the quarter. We expect a full contribution from it, beginning in the third quarter. We didn't give specific earnings guidance from that company. We did say that it was accretive from the beginning. We've readily talked about the fact that we have a 15% return threshold on an unlevered basis. Given that the company's expected to exceed that, you can work back into the kind of contribution it will make. There's no material seasonality to the company's business at all. It provides two things. It's very well managed. It's an industry leader. It gives us access to the West Coast, which we don't have now. It helps bridge the gap.
There's other opportunities, whether it be in Canada's North, in the Yukon or the Northwest Territories or the prairies in Alberta or Saskatchewan. I think there's opportunities to grow organically or by acquisition in those end territories. I think that sort of covers off Carson. In terms of Regional One, the lease portfolio is stationed largely in Europe, which has begun the recovery, but much slower than the U.S. We view that lease portfolio normalizing over the ensuing, don't know exactly, three quarters, something like that, on a progressive basis over that period. Conversely, the parts business, I believe, will be back at traditional levels by the end of the year. It's largely a long way towards that now. The big thing we're seeing now that we didn't see in the second quarter is demand for full aircraft and engines. Bigger transactions.
How many of those we'll choose to execute on will be a discussion of margins and the best use of our assets. I anticipate that you'll see a normalization of that part of Regional One's business very quickly.
We're going to see, Chris, some, I think, strong demand for leasing on the engine side. As airlines ramp back up, MROs are getting full. Having ready access to engines is going to be a demand that we think will just increase as the quarters roll.
Okay, fair enough. Just any thoughts around the new contracts, like the fisheries business and that impact on the second half?
The fisheries will continue. We've had it since early in the year and we're operating at that level, and that will continue through the balance of the year. The Netherlands contract, we will deliver the planes early next year. You'll see that starting to contribute in the spring, summer of next year. Exact delivery dates aren't really set yet. We'll be continuing to invest in the Netherlands contract, and we'll be continuing to harvest under the fisheries contract. The Northern Search and Rescue contract is delayed slightly. The government hasn't accepted delivery of as many planes as we thought they would. It doesn't really impact us dramatically. We're busy setting up the infrastructure required to service those contracts, and it's a 25-year commitment. The delay of a month or two here or there is not material.
We are seeing in the back half some stronger demand for ISR flying, so whether that be Curaçao, UAE, or the DFO, and demand for Force Multiplier aircraft as well.
I think one of the challenges, Chris, you haven't specifically asked it, but it relates to what you're talking about, which is guidance going forward. The challenge we're having is just trying to understand when things normalize. We've seen a dramatic improvement in the Maritimes, a good improvement in Manitoba, and a slower improvement in Nunavut, largely by different factors of each of those regions. It's hard to say exactly what happens over the balance of the year. We're pretty comfortable that we're going to continue to meet and exceed the 2020 levels. Approach those 2019 levels. That's exciting for us because that's kind of a rough definition of normal. We're also pretty confident looking forward that our business is ready to generate CAD 400 million or so of EBITDA when we get to the new normal.
The hard part for us is knowing exactly what the start date of new normal is. Is it January 1st? Is it December 1st? Is it March of next year? We know we're looking at kind of a CAD 400 million run rate with the improvements we've made and the additions we've made since 2019. It's our intention to give more formalized guidance in November with our Q3 results. We're hoping we'll have a concrete enough view of the future to give our more normal level of guidance for fiscal 2022.
Okay. Well, that's helpful. A couple other kind of cleanup questions. Just thinking about tax for a second. I know that you've got the Regional One business domiciled in Ireland, and that certainly helps you with tax. Are there any issues that we should be thinking about for next year in terms of this new kind of international treaty on minimum tax rates that could impact you?
Actually, for next year, not so much, Chris. I think it actually comes into application in 2023. The minimum global tax issue is what you're referring to. Right now, what we're looking at is ascertaining how it's going to affect our business overall, not just in Ireland. There's a lot yet to do. I think there's some hiccups in Ireland still yet that Ireland's pushing back on. We're actively watching it, and certainly we'll be able to ascertain the impact here probably over the next quarter or two.
Okay, fair enough. I guess my last question, Mike, and I'll let you figure out how you want to answer this one. Probably in Q4, you've got the opportunity to start thinking about dividends. Certainly, you've got that line of sight, as you talked about, the pretty healthy EBITDA number. How do we think about dividend growth in the near and medium term at this point?
It's a good question, Chris. It's actually 1 that's relatively easy to answer because our view of dividends has always been the same since we started this. When we generate the cash flow to increase our dividends, we're going to increase our dividends. You've seen us strengthening our payout ratio over the last couple of quarters, and as we ramp up to a more normal level of operations, that should further improve. That will spur the discussion internally about when is the right time to increase our dividend. I think the 1 thing I can tell you, though, is we're not going to be receiving government support and increasing dividends at the same time. As the government support programs wane off, it'll increase our ability to look at those things, but we're not going to be doing both of those things at the same time.
All right. Fair enough. All right, guys, I'll pass the line. Thank you.
Thank you. Next question will be from Matthew Lee at Canaccord. Please go ahead.
Hi. Morning, all.
Good morning, Matt.
On the Carson Air acquisition, it looks like that really gives you a pretty solid Western Canadian market share of Medevac. Are there opportunities to expand beyond the current footprint, either organically or through acquisition?
Yeah, absolutely. There's significant Medevac programs in anywhere where there's isolated communities. The Yukon, the Northwest Territories, Northern Alberta, Northern Saskatchewan, and then there's some opportunities as well in the Maritimes, although we have a little bit more exposure there, and the programs aren't as big. Whether it be bidding on contracts, I think a good way to look at this is if you look at the history of Keewatin. Keewatin, when we bought the company in 2005, had half of one of the three major contracts. We did half of the work in Kivalliq. Over the ensuing sort of 10 years, we got the whole contract in Kivalliq, added the contract in Baffin, and then most recently added the contract, and I'm going to butcher the saying of this, in Kitikmeot in the west.
That now we hold all three contracts for the Government of Nunavut. We're experts in long, high-flight Medevacs. The stuff we do in Manitoba is a different product. They're much shorter flights. The Government still maintains a bigger presence in emergent kind of very high-risk patients, although we're capable of handling those. When we're flying out of places like Nunavut, those people are unstable, and they're in the air for hours. The medical programs that go with that are a really important part of the service you provide. Our ability to grow our service to the Government in Nunavut, I think, bears testament to our expertise in that area. Carson is a leading provider on the West Coast. Kevin and his team are held in exceptionally high regard across the industry.
For us to add a group like that and then open new beachheads across Western Canada for organic or acquisitive growth is super exciting for us. You've seen during the pandemic that the Medevac business has been highly resilient and reliable cash flows. It's a business we like and we want to expand our exposure to.
That's great color. Is there any regulatory reason why you couldn't own the entire market in Canada?
No, there isn't. The customers are very different by region, how the governments do it, how they contract it out. Manitoba, as an example today, is a licensing system where anybody who has a Medevac license can provide service to the government. They're talking about going to a contracted provider. It hasn't happened yet, whereas Nunavut is 100% a contracted provider. So if you go jurisdiction by jurisdiction, it's slightly different, but there's no reason we couldn't consolidate that market. Quite frankly, if we don't, I'm going to be disappointed.
We have experiences in all models, so nothing would be foreign to us.
That's great.
The advantage of being in all these places, Matt, is that we have excess capacity. An outbreak is a bad word to use these days with COVID. We have different respiratory things and other outbreaks in various places where additional capacity is required. The fact that we've got tens of Medevac planes around the country, we can redirect capacity to help out, and it provides a sense of security to the governments knowing we're going to be able to solve their problem regardless of what happens.
All right. Thanks, guys. Congrats again on a good quarter.
Thank you.
Thank you. Your next question will be from Cameron Doerksen at National Bank. Please go ahead.
Morning, Cameron.
Yeah. Good morning. Just wanted to go back to Chris's earlier question on Regional One and on the leasing part of the business. I see that you've added some more aircraft in Q2. I wonder if you could just maybe expand on where you've invested there, what type of aircraft. I'm just trying to get a sense of what the upside is on the business. I understand, obviously, you've got different potential uses for all those aircraft, presumably, most of the aircraft that are in that portfolio right now are not generating any revenue or cash flow. I guess what I'm wondering is if you can scale what the upside would be for that business once things recover and more of those aircraft get back to flying and generating revenue.
I'll let Carmele answer the hard part of the question, I'll take the easy part, which is when you look at the acquisitions in Regional One, it's important to look at that holistically. As part of our whole portfolio, we're constantly buying and selling, it ebbs and flows. I wouldn't look at it as a specific CAD 30 million investment this quarter because next quarter we may sell more than we buy. It bounces around. In terms of the leasing portfolio, they're not not generating any revenue. We've moved most of them to power-by-the-hour leases as opposed to monthly fixed prices. By doing that, the operators are paying us when they need the equipment, but not stuck with a payment that they're challenged with. That will ramp over the next ensuing quarters.
It won't be like a light switch coming on, but rather gradually improving. The leases switch back to a more traditional format. In terms of aircraft type and that, maybe I'll let Carmelle handle that one.
Sure. It's probably best described as more the same. Acquisitions were CRJ900s, some ERJ-145s, Q400s, and engines. I think in Q1, we also had some ERJ-190s. That gives you a flavor of the nature of the assets. It's obviously focused on the regional jet. That's where we see continued opportunity. With respect to leasing and what we see, just maybe a little bit more color there. Mike is right. We have many of our aircraft on power by the hour, but we're actually seeing that now transition into, I'll call more fulsome leases. We're starting to see or get in some deposits for other leases as activity picks up in non-North American jurisdictions, all tied to, quite frankly, vaccination rates. We're really seeing a close tie there.
We're going to, in our view, continue to see that demand, and it's a matter of deploying the assets in the best use, whether that's a combination through sales, leasing. That's why Regional One does as well as it does do, because of their ability to generate revenues on all different revenue streams, whether that is leasing or whether that's parting out or whether that is selling aircraft. It's that combination that's made it very successful. When leasing's down, there tends to be other revenue streams that make up for it. That's what you'll probably see on a go-forward basis.
Okay. No, that's very helpful. A second question quickly. I'm just wondering if you can update us on the expected decisions on the Curaçao surveillance contract renewal and also the Malaysia contract. Wondering if there's any update on when you expect to hear on those.
Sure. Curaçao, best and final offers are going in in Q3. We would hope to hear by the end of the year, so Q4. Malaysia, we believe that we'll have site visits from Malaysia later this year and hope to get a final decision from them end of this year. It could slip into the beginning of 2022. COVID has obviously had an impact on the length of time that it's taking to make some decisions. That's the general timeframe you can expect.
Excellent. That's very helpful. Thanks very much.
Thank you. Next question will be from Kevin Chiang at CIBC. Please go ahead.
Morning, Kevin.
Good morning. Thanks for taking my question, everybody. Maybe I could ask about how you look at deals moving forward. Obviously, I mean, it's been a big part of your growth profile. When I look at a company that, Mike, you mentioned is on pace to run rate CAD 400 million of EBITDA, how do I square that maybe with deal materiality? For example, you closed Macfab, CAD 11 million deal price, maybe a couple of CAD million of EBITDA. It does seem like for a company of your size that maybe you'd hunt for bigger fish, but maybe you could just help me understand the rationale of going after some of these smaller deals given the size of your company today.
Yeah. That's a good question, Kevin. You're going to get bifurcate the answer because there's 2 parts to it. One, on the bigger deals, our lack of ability to travel during COVID essentially meant that we weren't going to be prepared to write a CAD 100 million check where we didn't get to go and spend a bunch of time with management and know them inside and out. We pivoted internally, largely talking with our subsidiaries and saying, "What would make you better?" We took advantage of this opportunity, where we know people. A deal like Macfab, they're the best kind of deals from an accretive nature point of view because they're smaller, you buy them at appropriate multiples. More importantly, it's going to make Ben Machine more profitable. We've seen that Ben's almost doubled in profitability since we bought it.
It continues to grow. We have capacity issues. By adding a company like Macfab, we diversify our product offerings, and we have an instant additional capacity for our existing customers. It's not a case of one or the other, it's both. We've added people to our acquisition department. Adam's diversified our team, and we continue to add executives in that area. As travel's allowed back into the U.S. and is more easily done in Canada, you will see us attacking bigger deals as we have in the past. If we got a smaller deal, we would never buy a Macfab as a standalone. It's a great company. It has strong management, but you're right, it's just too small for us.
When you combine it with Ben Machine, it's not much different than buying CAD 10 million worth of new equipment that came with great management people. For us, it's just a way to continue to grow those businesses. I haven't given you a definitive answer other than to say we're going to do both. We postponed the bigger transactions simply because there was no efficient way for us to do them during the pandemic. As the pandemic wanes, I think you'll see us examining bigger deals. Almost look at the smaller acquisitions almost like growth CapEx. We're trying to grow an existing business, we're buying things that tuck into our existing stuff. You'll see that as Quest normalizes the power of our two installation companies. They've done so well during the pandemic.
As we continue to grow the order book there, you'll see the power of the vertical integration play. Those were medium-sized deals, not the Macfab-sized deals, but also not huge. The combination of all those opportunities is when you've got a 15% threshold, that's a high bar, and we need to look at all the ways we can get there and not focus on just one.
No, that's a great answer, and I appreciate the color there, Mike. Maybe, again, just on this CAD 400 million of run rate EBITDA that you see when things start to normalize. If I look at the math, I guess very simply, if I take kind of your Q2 results, annualize that, maybe throw in some of the acquisitions or LOIs you have, I kind of get a ballpark of, let's say, roughly CAD 350 million of EBITDA at a high level. If I look at how much your Regional One is still underperforming versus what you did in 2019, that seems to be the hole. Is that effectively the missing piece here that really to kind of get that incremental CAD 50 million, it just comes down to Regional One getting back there, close to a CAD 300 million revenue run rate?
Once you have visibility on that, you'll have more confidence in providing a CAD 400 million guide?
At the risk of getting dangerously close to providing you formal guidance, there's two or three ways we've come up with that number internally. Most of what we've done, to be honest, is taking a look at 2019, and we know what we generated there, CAD 320 million, CAD 325 million. Then we add on the things we know we've added since then, the new contracts which we didn't have then, this year's acquisitions, and return to normal of the other businesses. You get to that 400-ish range a number of different ways. The risk in extrapolating our Q2 is that while it's closer to normal, it's not normal yet. Perimeter is flying in this quarter at about 50% capacity. When you add that other 50% in, it does good things to our margins. Now, the remainder of the government support disappears and all those things.
There's ins and outs. To me, the easiest way to come up with what you think the number is precisely is to start off that CAD 325 million, add in the things we've told you about. A little organic growth. I think that CAD 400 million number becomes pretty clear. Again, the challenge we have isn't providing you what we think we're going to do in a normal environment. The challenge we have is when does normal start? If someone could tell me normal was starting on February 1st, I could give you guidance now. We're just reticent to try and predict the pandemic because I've only been wrong 18 times so far on when it's going to wane and what it's going to do. For us, we're hoping by November we'll have seen the impact of the fourth wave.
We'll have a better prediction of air traffic in general, which is the biggest driver. Our manufacturing businesses, with the exception of the holes in Quest schedule and some inefficiencies in our other business because of absenteeism, have been pretty reliable through this whole thing. They're pretty easy to forecast, quite frankly. It's more, when do my airlines get back to 100% and when does my lease revenue return to normal at Regional One? I just don't have enough general economic forecast ability to answer that yet. We're thinking in November we'll be able to give you that number.
No, I appreciate the color and comments there. I'll leave it there. I'll get back into queue. Thank you very much.
Thank you. Next question will be from Ryall Stroud at RBC. Please go ahead.
Good morning.
Good morning. Hi, everyone. Thanks for taking my questions. My first question is on Quest, I was wondering if you can expand a bit on some of the new inquiries and interest you're getting. Have any of these turned into bookings? If they have, would we see this impact in 2022 backlog in revenues at the segment next year?
The answer is yes. We have booked new orders out of the sort of post-crisis level of the pandemic. You see those at the end of 2022 and into 2023. Typically, if there's an average, it's probably about 18 months is when you see it booking to financial statements. That could be as low as 12 or as much as 24. The part that makes us feel confident is it's not one market that's recovering, it's multiple markets. There was this whole concept that no one's going to live in the city after COVID, it was the typical overreaction and extrapolation of a short-term event. Rental prices in Toronto, as an example, are rising again. The demand for units is going, we're quite frankly very confident in the medium term at Quest. We're confident in the short term.
It's just going to be bumpy because there's no way for us to fill a hole in October, as an example. There's no project we could get to plug it in. Everything we do is a custom project, so you can't build and put it in inventory because you don't know who's going to use it. We're going to struggle with that. We'll get through it, but coming out the backside, one of the great sometimes you're smart and sometimes you're lucky. I won't say which one this one is, but it's probably as much luck as brains, is where we've built that Dallas facility, it diversified our production capability and let us have different plants being affected in different ways at different times by the pandemic, which let us meet our customers' requirements.
The other thing we've learned is how effective being able to build a plant from the ground up is. As our leases expire in our Toronto facility, we'll be reconfiguring that in a way, shape, or form, so to set up the next wave of growth as things normalize and we make that plant more efficient. Quest has been a rapid growth business for us, and we really don't view that as changed by the pandemic.
The other kind of positive indicator which gives us kind of the optimism is that some of the projects that were put on hold or delayed are actually starting to come back now. That doesn't mean they come back immediately. There's a ramp-up period, and then by the time we get to the part where we're doing the windows, that is still a 12 months-ish window. Obviously that's a positive sign as well.
Okay. That's really helpful color and definitely good to hear. Just for my last question here. Looking at your outlook comments, it looks like growth CapEx at Regional One is expected to remain relatively elevated through the back half of this year. I just wanted to unpack what's driving this. Is it just being opportunistic on attractive opportunities in the market or in response to expectations for increasing customer in demand? Perhaps a combination of both? Curious to get your thoughts there.
Again, I'll take the easy part of this. Regional One is always an opportunistic kind of project. We look for opportunities, and it's our ability to monetize things in multiple ways that lets us perhaps see opportunities when others don't. I'm going to go one layer deeper into answering your question, and we see certain types of assets becoming already very much in demand. The movement of the CRJ700 being reconfigured into a 50-seat kind of aircraft has permeated demand for those aircraft. The engines that run those are very similar to the engines that fly on the CRJ900s as well. The engine demand for those is both quite high.
You're not only going to see us investing in aircraft in the balance of the year, I think you'll also see us divesting of certain assets where there's opportunities to make a gain where someone wants to make a permanent investment in an aircraft. I think you'll see increased churn as well as investment. In a given period, that could mean you sell more than you buy, or you buy more than you sell, depending on the timing. Over time, we intend to continue investing in this business.
What I would also add is, where we're seeing opportunities is as airlines line up to go back into full operation, there's some rationalization that's occurring. Some seats are now either dwindling or have completely stopped, and that is, as a result, causing some, we'll call opportunistic buys for us. They're not large fleets, they're not like the Lufthansa CRJ 700s. We bought 13 of them. They're here and there, and with the network that Regional One has, we're able to seize on those. The other thing that you'll probably see us do as well is invest in our own fleet. I've mentioned that we see a demand for engines. We may very well spend some money overhaul engines, so that we expand or extend their green time, and therefore the life on the leasing side of what we do with those assets.
Got it. That makes a lot of sense. That's it from me. Congrats on a great quarter. I'll pass the line. Thanks.
Thank you. Next question will be from Konark Gupta at Scotia Capital. Please go ahead.
Thanks, good morning, everyone.
Morning, Konark.
Morning, Mike. Maybe I can get you to provide us actually some guidance here. No, I'm just kidding. I'm trying to understand the seasonality here this year. I know we had a good summer, I guess, and then, maybe again, the Delta variant, and then whatever. This is coming back, fourth wave, et cetera. Do you anticipate, Mike, with all the contract wins and the recent acquisitions, do we see a little bit more pronounced seasonality in the second half of this year versus typically you saw pre-COVID?
No, I don't think so. What we've added is less seasonal business, like Carson as an example. Medevacs don't have a precise seasonality. They do vary quarter to quarter based on outbreaks of diseases and things, but they aren't like better in the winter, worse in the summer, and those kind of things. I think you'll see our results sort of track historical-
Seasonality
seasonality. I think the bigger effect will come from just how fast we can ramp, and that's where I talked about we expect to meet the kind of 2020 numbers. That means we're going to make a lot more money in the business because the back half of last year, if you look back, had significant amounts of government support which will have waned away this year. May not be zero, but it'll be close to that, and replaced with traditionally. We'll grow through that to the point where if the fourth wave isn't pronounced, you may see us meet 2019 or who knows? I would look at the seasonality of this, where Q3 is always seasonally the best quarter. Q2 and Q4 approximate a running average, and Q1 is always the worst.
The one thing that will be different in the back half of this year is just maintenance CapEx. Normally, we front-end load that into the first quarter when we're slower. With the pandemic, we didn't do that this year. As we ramp up our operations, you'll see the maintenance CapEx move directly with the revenue. We haven't deferred things, like not done them when they were due, but they haven't come due in the same way because we haven't flown as many hours. As the hours go up, we'll be overhauling engines, we'll be overhauling landing gear. It won't exceed historical norms. As we reach normal, maintenance CapEx will also reach normal. If you want to have quotation marks around normal, I'm using 2019 as normal.
That's good color, Mike. Thank you. Maybe for Darryl. There was a, I think, CAD 3.1 million gain on disposal of capital asset in the cash flow statement. I'm just wondering if that relates to any significant asset in the aviation side, or is it manufacturing?
It's aviation. This is a thing that frustrates me in our financial statements. We buy and sell planes all the time. The gain on which asset, whatever is immaterial, that's a normal part of our business. We'll have gains, and we'll have losses when we move a plane in and out of operations. It's part of what we do.
Okay, thanks. Just high level kind of thought here. The major airlines in domestic Canada, they are adding capacity quite significantly. Like Air Canada, WestJet, Porter, Sunwing, Transat, Flair, et cetera. You recently expanded some capacity into the Maritimes. How do you see that as maybe impacting your legacy airlines into the Maritimes, especially?
Yeah. Apples and apples. Part of the reason the other air carriers are adding capacity is because they took it out and permanently retired things during COVID. We didn't retire anything. All our stuff's going. We have added capacity in the Maritimes. We will add more capacity there, particularly up gauging some of our fleet from Dash 8-300s to Dash 8-400s. We're going to add more Dash 8-300 capacity in Central Canada to look after mining opportunities and freight opportunities. We'll be adding some ATR 72 capacity to look after, again, freight and mining contracts in the far north. I think I mentioned, we've got about a net increase in big gauge aircraft of an additional four through the balance of the year, and that's driven entirely by essentially contractual demand.
Specifically with respect to the Maritimes, in relation to your question, I view it as for the most part, complementary. Our PAL Airlines up in the Maritimes does a good job filling the needs that exist to move customers to larger centers for the majors, which is, for instance, why we have now interline agreements with both WestJet and Air Canada. Look at it as more as a solutions provider rather than this being competitive.
Hello? We can't hear anyone right now. I'm not sure if you can hear us, operator.
Yes, sir, we can hear you.
Okay. Maybe ask someone else for a question.
Sorry. I'm still Sorry, can't hear Pam, actually. Can I ask.
We were about to send medical assistance, Konark.
No, I was still on the line. I thought Pam dropped. That's okay. Maybe the last one before Tenneco. We're actually on the lease rates in Regional One. One of the traditional regional aircraft leasing companies in Canada, they recently announced that they have renegotiated leasing contracts with some of their customers, and the lease rates have come down quite significantly. Just wondering, your business at Regional One is a little bit different, but do you also see any pressure on lease rates at this time? Because it's being powered by the hour, it's not really material for you?
Yeah. I understand the comparison you're making, Konark. That truly is apples and watermelons. In our world, we're much shorter term leases. They're not finance leases. It's a very different marketplace. Quite frankly, we may expect the opposite of that to be true, particularly as it relates to engines. As ramp up is going, there's now, again, a shortage of MRO space to get overalls done, and access to engines on a timely basis may well yield to an increase in pricing in the short term rental and leasing market. I'm not at a stage where I'd like to predict that yet. I would say that we view the leasing prices in what we're doing as relatively stable as the market normalizes over the next two or three quarters.
Great. Thanks again for the questions, and good quarter. Thanks.
Thanks.
Thank you. Next question will be from Matthew Weekes at iA Capital Markets. Please go ahead.
Good morning.
Good morning. Thanks for taking my questions. I was just going to ask if you could maybe just provide a little bit more color on inflation in terms of where you're seeing the most impact in the business right now. I know there was some commentary that it's occurring in several places across the business, and maybe how you're managing that impact so far, whether it's through cost passthroughs or forward purchasing or things like that, and maybe where you're not able to pass through the impact as much.
I would suggest to you that we see it in a number areas, but the two main ones where we've seen material price changes is, first of all, in fuel in the aircraft business. I'm not sure I would call it inflation, though. It's kind of more a return to normal. We've seen oil prices return to the high 60%s, low 70%s, which is kind of where they were before we started this. We've seen a bounce back. Most of our contracts include direct fuel pricing, so we're able to contractually change pricing where appropriate. We have a dominant market position in most of the areas where we operate. To the extent we need to flow those through, we're able to do it. It sometimes takes us a while.
Because of our position, we make sure we talk to our clients and explain to them what's coming and why it's coming, and so that may delay us putting it through for weeks or months. It doesn't create much of a issue other than very short-term turbulence, and we're in good shape there. The other place where we see it is in some of the big commodities in our manufacturing, so steel prices and aluminum. On the steel side, it tends to be included in contracts where we have more room to move. The contract moves automatically. The aluminum prices are a little bit more of a problem because our window projects tend to be fixed price, and so we're eating some of those increases in certain places. We're being careful how we bid the future projects in light of those changes.
The financial statement impact is really limited to the commodity side and focused in the aluminum area. The steel stuff we're able to deal with and the jet fuel stuff we're able to deal with.
Okay. Thank you. That's helpful. That's it for me. I'll turn the call back.
Thank you.
Thank you.
Thank you. Next question will be from Nauman Satti at Laurentian Bank. Please go ahead.
Morning, Nauman.
Good morning. Hi. My first question is, this was a really tough year, I think a once in a generation event that happened. You guys adjusted pretty well. I'm just wondering if there were some lessons learned during this entire process and how some of the things you would do differently going forward within your business?
To be honest with you, Nauman, what the single biggest takeaway for us. Actually, there's two of them that come out of the pandemic we've dealt with. One is, we've always believed in being well capitalized and capitalized in advance of opportunities. When things shut down really hard in March of last year and other people in our industry or related industries were cutting dividends, we had the room and the liquidity to be able to manage our way through it. Our shareholders rely on our dividend, and so our balance sheet needs to match that commitment. You've seen our actions in the last quarter where we raised equity because we knew Adam was busy on the acquisition front and our subsidiaries were uncovering a ccretive opportunities to grow. We've invested money there. We will continue to do that.
We're going to make sure we always have the balance sheet to pay for tomorrow's project today. The other thing, and this may be somewhat counterintuitive, but the diversity of our management has been an absolute godsend as we've gone through this. That we have strong teams in each of our companies. They tend to be managed as separate silos. As we went through the pandemic, the ability to put those leaders together and share best practices and help each other out, particularly if we look at supply chain as an example, we've had times where we can't get a certain type of steel in a certain market, but our company in the other market can access it through their supplier. We're shipping steel around to meet customer demand. We're sharing aircraft assets to make sure we can deal with challenges.
A great example of that is the Indigenous Services Canada contract. For me, if I were to talk about two things we've taken out of it, is I'm more committed than ever to our balance sheet strategy, and I'm very proud of the fact that we have a diverse management team that we can weave together when we need to create corporate decisions. The stuff we've accomplished through this hasn't been corporate. It's been driven by the CEOs and their people in the field that have been able to bring us the opportunities and bring us the solutions. We've just made sure we got the money to pay for it.
We had that confidence in our people when we entered the pandemic, which is why we kept our dividend and our people showed that it was a right decision.
Okay. No, thank you. That's a very helpful color there. I appreciate it. Just maybe a last one, you spoke about your balance sheet as well. You've recently done almost four new acquisitions with two letter of intentions. I'm just wondering, are you still actively looking at new files as well, or is that a time where you sort of absorb these new acquisitions and then wait a bit and then get into the M&A landscape again, or are you still active on that front?
Well, I'll see if you can get Adam to give me an answer on that. We're actively looking.
He looks busy.
Adam, exactly. He looks busy. Yeah, no, we're still actively looking. The beauty of the stuff we've done recently is that it's mostly tuck-ins where it's becoming part of an operation. The Macfab guys are going to be working with our people at Ben. It really doesn't add any workload, does it, head office? We added Wisk. It worked as part of Quest, and the management team at Quest works with the management folks at Wisk on that business. We have capacity to be able to continue transactions. Dave White and his team in our aviation have a new reporting company in Carson, but that's really the only, in quotation marks, "new subsidiary" that's being managed directly by my head office team.
We have capacity, and it's a matter of finding things that we love, that we can buy at a price that we're prepared to pay.
Okay. That's fair. That's it from me. Thank you, and congrats on the quarter.
Thank you very much.
Thank you. Next question will be from Tim James at TD Securities. Please go ahead.
Morning, Tim.
Good morning, Mike. Thanks very much for the time. I have two quick questions. Well, actually, one's probably quick, one may not be. I'm just wondering if you can remind us of the assets involved in the potential Malaysian contract.
I'll let Carmele handle that one.
Sure. We bid it with Q400s, so the Dash 8-400 models are new aircraft. We're partnered with De Havilland exclusively on that bid. It's for 2 aircraft, is what the current program is for, with potential of more, many years down the road.
Okay, great. Thank you. I just want to return to Quest and go at it a little bit differently. If I think about the revenue coming out of Quest Toronto before the Dallas expansion was contemplated, and then I add in the Dallas and the capacity, which was significantly greater than Toronto, the capacity or the revenue potential from that facility, and I'm putting aside the additional sort of incremental acquisitions you've made since then. When can we think about that full revenue potential hitting its stride? Let's assume for a minute, in terms of the pandemic, the world kind of goes back to pretty much normal and starting in 2022.
Is your backlog and your line of sight and the way those facilities are operating now, do you think you hit that return to Toronto to pre-pandemic levels and get Dallas more or less up to its capacity by 2023? Is it potentially take more time than that?
I think in 2023, you'll see growth. I'm not sure that you'll see Dallas at capacity. That has the ability to be more than double the size of Toronto by itself. Building that level of order book will take time. To that is the pandemic reduced the number of people that we've got in the Toronto facility. We've effectively capped the Toronto facility at a lower number for the time being to make it a safe workplace. Until the governments get a better handle on the pandemic, I don't see that changing. One of the other things with Toronto as well that I mentioned is in the medium term, we've got two leases that come up there. It's highly likely we will recombine that into a 1 geographic space and improve the efficiency of that.
We haven't made those decisions yet, but my point being that we've got tons of capacity to deploy. There'll be a return to growth for sure, in the back half of next year and through 2023. We could effectively do triple the business that we did out of the Toronto plant by adding the Dallas plant to it because it was, in fact, more than double the capability in terms of size of Toronto. In terms of running into a ceiling, we've got a ways to go on that. In terms of seeing the growth in our financial statements, second half of next year and then really evident in 2023.
Okay. That's great. Thanks very much.
Thank you. At this time, I would like to turn the call back over to Mr. Pyle.
Well, that was a long call, but there was lots to talk about. I want to thank you all for joining us today. We're really excited about where we are and what we've accomplished, and I look forward to speaking to you again in November when hopefully we'll be able to provide you with some concrete guidance for 2022 and a return to normal. Thanks and have a great day. Stay safe, people.
Thank you, sir. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. At this time, we do ask that you please disconnect your lines.