The Canadian Investor - Franco-Nevada, TMX and Loblaws: Canada’s Quiet Compounders Deliver

Episode Date: May 14, 2026

In this episode of The Canadian Investor Podcast, we start with the latest U.S. inflation data and why higher energy prices could complicate the rate-cut narrative for markets. We also revisit GameStop’s rejected proposal for eBay and break down why Ryan Cohen’s compensation structure may help explain the push for a bold acquisition. We then look at a strong quarter from TMX Group, including the rebound in Canadian capital markets activity and its planned acquisitions of Cboe Canada and Cboe Australia. We also discuss Thomson Reuters, where the company continues to post solid organic growth while investors debate whether AI will be a long-term tailwind or disruption risk. We finish the episode with updates on Franco-Nevada’s record quarter, Loblaws’ continued strength in Canadian grocery, Exchange Income Corporation’s momentum in aviation and aerospace, and a brief look at GoEasy’s latest results following its recent credit issues. Tickers of stocks discussed: GME, EBAY, X, TRI.TO, FNV.TO, L.TO, EQB.TO, EIF, GSY.TO Subscribe to Our New Youtube Channel! Check out our portfolio by going to Jointci.com Our Website Canadian Investor Podcast Network Twitter: @cdn_investing Simon’s twitter: @Fiat_Iceberg Braden’s twitter: @BradoCapital Dan’s Twitter: @stocktrades_ca Want to learn more about Real Estate Investing? Check out the Canadian Real Estate Investor Podcast! Apple Podcast - The Canadian Real Estate Investor  Spotify - The Canadian Real Estate Investor  Web player - The Canadian Real Estate Investor Asset Allocation ETFs | BMO Global Asset Management Sign up for Fiscal.ai for free to get easy access to global stock coverage and powerful AI investing tools. Register for EQ Bank, the seamless digital banking experience with better rates and no nonsense.See omnystudio.com/listener for privacy information.

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Welcome back to the Canadian investor podcast. We've got a pretty full episode today with a mix of Mac. company earnings and a few interesting market stories. Yeah, and it's one of those episodes where there's a lot going on beneath the surface. We've got inflation data, capital markets activity, AI disruption questions, commodity tailwinds, and some pretty strong quarters from Canadian companies. We'll start with USCPI, obviously. This is a Canadian investing podcast, but what happens with inflation in the U.S. still matters a whole lot for markets, rate currencies, and investor sentiment. The latest print was

hotter and energy was a big part of that. Gasoline in particular was a major contributor. So the way I'd frame it is inflation looks much better if you exclude the categories people actually feel every day like food and energy. But for consumers, those are categories that matter most. And that matters because the whole market narrative has been built around inflation, continuing to cool and central banks having more room to ease. So if energy stays elevated, that complicates the story. Exactly. And then we'll touch on GameStop and eBay again, eBay officially rejecting GameStop's proposal, which was not exactly shocking. The offer never really made much sense. Yeah, that always felt like a strange one. And there was also

some confusion around GameStop's exposure to eBay. Is that right? Right. Ryan Cohen had talked about GameStop having the equivalent of a 5% stake, but it's important to point out that this was through derivatives like options. It's not the same thing as GameStop actually owning 5% of eBay's actual share. The other interesting piece here is Cohen's compensation structure at GameStop. He doesn't have a traditional salary as a CEO. His package is performance based only and tied to some very ambitious market cap and EBITA 3.000. targets. So there's definitely an incentive structure there that kind of helps explain why he might be pursuing a big, bold move like eBay, whether that makes sense for shareholders is a different question. Exactly. And we'll also touch on TMX group, which had a very strong quarter. This is one of those companies that gives you a pretty good read on the health of the Canadian capital markets. Revenue was strong, earnings were strong, and all the core segments of the business grew double digits. but the really interesting part was the capital formation segment,

which is tied to IPOs, equity raises, and listing fees. And when that part of the business is doing well, it usually tells you that the markets are more open, companies are more willing to raise capital, and investor sentiment is healthier. Exactly. And that segment can be very cyclical. So when it starts to pick up,

it's usually a sign that the capital markets are in much better shape. The other big news was TMX announcing the acquisition, of CBOE Canada and CBOE Australia. The Australian side probably has a smoother path, but the Canadian side could attract more regulatory attention just because TMX is already so dominant here in Canada. And that's the big question. TMX already owns so much of the Canadian exchange infrastructure,

so adding CBOE Canada is not exactly a small deal from a competition standpoint. Right, but overall it was a very good quarter. while there are some AI-related fears around parts of its recurring revenue business, those concerns look overblown, at least for now. Then we'll move to Thompson Reuters, which also had a solid quarter. Organic revenue growth was strong, especially across its three key segments, legal professional, corporates, and tax in accounting. Yeah, and this is kind of another company where AI is central to the story.

Definitely. On the both side, Thompson Reuters has trusted data, embedding customer relationships, and products where accuracy really matters. They're also leaning into what they call fiduciary grade AI, where the outputs need to be verifiable and reliable. But the bare case is still there. If AI tools or startups reduce the number of seats needed inside law firms, tax practices or corporate, corporate departments that could pressure the business over time. So it's really not as simple as saying that AI is automatically a good or bad thing for Thompson Reuters. Exactly. It could be a beneficiary, but there is still a pretty significant disruption risk here. Yeah, we'll also talk on Franco Nevada, which had a very strong quarter yet again.

Yeah, and that probably shouldn't be surprising given the move in precious metals, but the quarter was really impressive. The mining side of the business continues to carry the load. And if commodity prices stay anywhere close to the current levels, Franco Nevada could be very well positioned. And I think the balance sheet is also a pretty big part of the story here for sure. For sure, Franco is death-free and has a lot of available liquidity, which gives them a lot of flexibility.

In this type of commodity environment, there should be plenty of opportunities to deploy capital into new royalty and streams. That's always been one of the attractive parts of the Franco model. They can benefit from higher commodity prices today, but they also use the strong balance sheet to make deals that can help fund future growth. And then we'll talk about Loblaws. The quarter was very solid overall. Food, same store sales were positive.

Shoppers drug mart was strong. And the company continues to lean into discount banners like No Frills and Max C on the Quebec side as consumers keep looking for value. That value angle is still very important. Even if inflation is cooled from the peak, consumers are still pretty price sensitive right now. Exactly. Loblaws is also continuing to invest heavily in stores and distribution, and they raise the dividend once again. Another interesting item is the sell of PC Financial, which has now received the required

regulatory approval and is expected to close later this year. Part of the proceeds of that sale will go towards buybacks and part will be used to buy EQ bank shares. And then we'll finish with Exchange Income Corporation, which has had a big run over the last year or two here. Yeah, this is a company that does a little bit of everything, right? Yeah, it's a bit of a strange business to explain quickly. You've got aviation, Medevac services, flights to remote communities, manufacturing, specialty parts, and even things like high-rise window cleaning, but the star lately has been aerospace and aviation. The quarter was very strong and aviation more than offset some weakness in manufacturing.

And one of the interesting long-term tailwinds there is defense and Arctic sovereignty spending. Exactly. Exchange income has some exposure to specialty aviation, surveillance, and patrol aircraft. So with Canada spending more around Arctic security and NATO-related priorities, that could be a meaningful growth driver. The one to watch is leverage, which has moved to the upper side of management's range, but the acquisitions are contributing and management does sound confident. They didn't officially raise guidance, but they basically suggested that results could come in very strong if momentum continues. There is an old saying in investing. It's not about timing the market, but time in the market.

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you get professional diversification at a lower cost. Check out the asset allocation ETFs at bemoetifs.com. So overall, a lot to get into today. So we'll start off with inflation, GameStop and eBay, TMX, Thompson Reuters, Franco Nevada, Loblaws, and Exchange Income. So let's get started then in terms of the first one over here. So talking about U.S. inflation. So U.S. CPI, like we mentioned, the intro, won't put too much time into this one.

But mainly because it's a good indicator of where things may be going for Canada. Canadian CPI will be coming out next week. So it'll be interesting what direction it takes. Most likely we'll see an increase once again. It's also what the Bank of Canada was saying that they believe inflation will. be peaking in April, so we're getting April data. The inflation rose to 3.8% headline inflation year over year in the U.S. The increase versus Marsh alone month over month was 0.6%, so annualized that would be above 7%. Energy increased 17.9% with gasoline increasing 28.4%. Good goods prices rose

3.2% over a year, while they increased 0.5%. and sorry, I meant food prices, not goods prices. And the good news about US CPI is that if you don't need to eat and you don't need energy, then you can rest assured that CPI is only 2.8%. But I actually posted this on Twitter, and someone had a good question. I did some research.

So the CPI excluding food and energy, it does not exclude byproduct effects or second order effects, right? So the higher cost of transportation to get you your food that will be, you know, into the food itself or if you're looking at the higher, you know, certain goods that you're buying that are not necessarily food and energy that rely on inputs from gas and diesel, those costs will be going up. And it does not strip out that. It really just strips out those two categories. Oh, so the actual like raw numbers from energy and food, it would split out. But if it took more, yeah, yeah, that makes sense. I mean, it would be so difficult to do, honestly, like to strip out everything.

But I think it's just the reason why I wanted to talk about it, just to go and have an idea of what we might expect next week in Canada. Yeah. Yeah, and I wonder, I mean, I can't imagine we're getting any rate declines in the U.S. I mean, there's no way with 3.8%. Yeah. And I mean, we've seen a lot of companies, I mean, at least in my eyes here in Canada, that are kind of taking a hit from this. And we were talking about it before we were recording like WSP's down 6% today. We won't go over that quarter in this episode.

But it's, yeah, it's, I mean, if rates stay elevated in the United States, it poses kind of a lot of issues. And semiconductors are kind of shoring up the market right now because there's a lot of, I kind of read this would have been back in March, late March, but they mentioned that this was like for the S&P to sit at all time highs. it was also the most amount of stocks in the SP 500 that were in correction territory, like in history, when the markets were at all time highs. It's a wild market. Yeah, and we next Monday we'll be doing some listener questions, a mailbag episode. Oh, yeah. And one of the questions I'm actually touching on the returns and I'm comparing kind of the

SMP 500, the NASDAG, the SMP 500 equal weighted, and then the Dow Jones Industrial and the difference that you're seeing in terms of return between the Dow Jones, the equal weighted, and then the other two. So the SNP 500 and the NASDAQ is pretty wild. Even when you compare the equal weighted with the SNP 500, the divergence in the last few months have been pretty crazy. So it gives you an idea of how important those top companies. And a lot of them are tied to the semiconductor space have been really pulling RISUP upwards

for the index. Yeah, you've got a lot of real economy, I guess you could call it stocks that are not doing very well because the economy is not doing that well and you have 3.8% of inflation. So yeah, it's if you own a lot of these companies, they're probably in the gutter right now and it's really not all that surprising. And if you see the index at all time highs, like we'll kind of go over Monday what's driving it. But yeah, it's it's not traditional stocks. That's for sure. No, exactly. So now let's touch on the updated eBay offer. So this was a, uh, to be expected if I have to say I don't think anyone is is surprised to hear that eBay rejected the offer they posted it on the website as a joke I tweeted or posted on eggs that eBay's response was it's on our website yeah I didn't know if you were joking or not I didn't know if they actually I mean it is on the website too but I think it came out in the news as well so essentially they said in their response that the offer is not credible

or attractive so that's that's not really surprising I mean it just felt like a bit of a joke especially when you look at the interview on CNBC and of course he went on other more I guess friendlier platforms to him

because CNBC in the past has been pretty critical about GameStop as a whole I mean it's not like the business has done really well and another thing word noting here like we talked in the introduction is that Cohen, when he was saying he owns a stake, a 5% stake in eBay, it's more like of economic interest in eBay than shares. So it's not 5% of shares. It's much less than that. It owns the equivalent of a 5% stake through derivatives like option, which

means it does not own the 5% of shares. So it's very different because you don't have the same kind of sway on the board just because you own options. You know, a share gets a vote. A share gets a vote. an option does not get a vote. So that's really important to remember here. The other piece of information that I discovered on this over the last few days is Cohen's has no compensation as CEO of GME. And his compensation package is entirely performance base. It's pretty messed up when you start looking at it because he was accusing eBay of like

management being misaligned with shareholders. But then you start looking at his compensation deal. there are essentially the way it works is if he reaches a certain amount of market cap for GME plus a cumulative amount of EBTA then he can buy a whole slew of stock option of GME stock option at 266 per share of each tranche that he unlock so I think it's it starts at 20 billion plus two billion in EBITA and then it increases of by 10 billion every kind of slice of it so 30 billion and 3, 40 and 4 and so on. And to get it all, he has to get the market cap to 100 billion in market cap and 10 billion in the EBITA.

So what I think some people have been suggesting, and I agree with that, is that I think he's trying to be very creative to try and get this huge compensation package. And of course, it has to make sense and the stock price for GME has to go higher. but from what I saw, it seems like it does not like prevent him from trying some pretty creative stuff to get the market cap of the company higher, even if it means essentially a leverage buy out of eBay. That's in essence what it would be if GameStop actually bought them. Yeah, I mean, it kind of just encourages you to swing for the fences, I guess. And this is clearly a swing for the fences deal. I'm interested to see if they work with GameStop, like eBay, or if this is just like, they just think it's a joke and they're not going to reengage. I mean, I don't see how the deal is feasible.

Even if it is, it's going to be probably pretty detrimental to the current holders of GameStop because they need to issue, what, 200% more shares. I mean, it's just major dilution. Yeah. But even for the shareholders of eBay, like, Like, why would you really want that? Even if you use GameStop stores as like distribution hubs or whatever you want to call them, they're closing tons of stores too. So it's not like it makes a whole lot of sense from that perspective.

And eBay is up like 60% over the last year. So I'm pretty sure eBay shareholders are like pretty happy over the last little while. It's up 150% over the last three years and 92% in the last five years. years. So clearly it went down a bit, but over the last three years, some pretty phenomenal results for eBay. So I just don't know if there would even be a shareholder appetite for that. And I assume that most, the biggest chunk of the shareholder base for eBay is institutional. So I don't think they were probably impressed by his appearance on CNBC. And they're not stupid that, you know, the amount of debt that would be added to eBay would be pretty difficult to navigate to. Yeah, and I think one of the main things with eBay right now is like trading cards. I think they're seeing massive amounts of activity for like Pokemon cards, hockey cards, baseball cards, whatever maybe. That's like, I'm pretty sure that's been the biggest tailwind here for eBay,

which is just kind of a wild, wild story. I have personally never bought anything on eBay. I don't know. It's just like. I use, I used, but that was like 20 years ago. Yeah. Yeah, maybe like a long time ago. Yeah, I used to buy old, like, Celendion records for when she used to sing in French for like a dollar or two.

And then I'd sell them on eBay when I was a teenager. So I used to then, yeah, because she was like starting to get well known, you know, was after the Titanic. She was getting well known in the U.S. And collectors would pay like 15, 20, 25 bucks per. So pretty good profit margin here. But we'll have to see. I mean, we'll see whatever happens with this, if anything happens. but to me it sounded pretty ridiculous.

I guess I won't give it a 0% chance of happening, but pretty close to that. Do you want to talk to us about the TMX group now? Yeah, so TMX reported a very good quarter. Record revenue is up 16.5%. Earnings came in 32.7% higher. Topped estimates by over 14%. All of its core segments grew double digits. And as mentioned, this is kind of a, it's a very good company to gauge the overall health

of the Canadian markets because it does have a dominant moat on exchanges here in Canada. And the capital formation, this would be the segment that deals with, you know, companies going public, additional listing fees. So if companies want to issue more equity, sustaining fees, which would be the annual fees to stay on the index. So this grew by 28% year over year with additional listing fees growing by nearly 70%. And when the markets are good, this segment, I mean, it explodes for the most part. It did back during COVID as well. When the markets are kind of in the gutter and investor sentiment is not so high, this will struggle.

We've seen this back in what would it be 2022, 2023. The Canadian IPO market was very soft. And this is kind of because companies want to be raising additional equity or IPOing when they get max value. And I think the fact we're seeing this go up so much kind of gives you an indication that the Canadian markets are kind of healthy and well again. but I mean there is a bit of a caveat there. I didn't get time to dig into why this surge or whether the company even mentioned it or not. But if I were to guess like mining companies got to be a big chunk here, because if you think about it, a lot of these mining companies are trading at, you know, pretty crazy prices right now.

If you're going to issue equity, this is probably the time to do it. Or if you're going to go public as a mining company, this would probably be the time to do it. When we look to just equity volumes, like trading volumes, those were up 33.6%. And the most notable news, and this happened, I believe, before the quarter, it probably would have been, I can't remember when this was. It might have been a month ago now, but they're going to be acquiring CBOE Canada and CBOE Australia for around 410 million Canadian, I believe. It's not a one package deal. It's two acquisitions. So they each have to go through their own regulatory approval.

The Australia one, I don't see much issues. The Canadian one, there might be some issues. around 90% of publicly listed companies are on TMX exchanges. So they own the venture, they own the TSX, they own the Montreal Exchange, which is like the kind of the derivative market. TMX captures roughly 65 to 70% of all equity trading volume. So one of the main companies of the main drivers of this company over the last few years has been kind of a transition from a cyclical exchange-based company to a recurring revenue

machine really. They have trayport, which they acquired, I believe that would have been pre-COVID just before COVID started. This is a European energy platform and VETify, which is a US-based ETF indexing and data company. And they also have data links. This segment of the business is growing at a 12.9% clip and has some of the highest operating or sorry, yeah, highest operating margins in the business. It's not growing as fast as the equity side now. So it looks like the slower growing one. But again, you're talking about a very good market right now. So the equity side is obviously going to see some activity. But it was a great quarter.

The company's on a bit of a drawdown now. I mean, it's kind of at a V-shaped recovery here just due to a lot of AI fears in its recurring revenue area. But I think it's overblown. They've seen virtually zero levels of disruption less far in terms of churn or, you know, kind of replacement platforms for it. But yeah, pretty good quarter from them. Yeah. And I was just searching their transcript. and definitely mining has been pretty strong.

Yeah. Yeah, they mentioned it. I think they had a question during the conference call. So that makes sense. Speaking of mining, we have Franco, Nevada coming up here. Actually, we'll talk about Thompson Reuters first. Just kind of scroll down a bit too quickly in my document. So revenues grew organically 8%.

And for context, this is the stronger revenue growth that they've seen since 2021. So there's a lot of AI. fears. It's been on a big drawdown. I mean, it's down like more than 50%. I think over a pretty short period of time, maybe in the past year, roughly. Less than that. Like just off the left, 60% since July 2025. There you go. And the big three had 9% organic growth. The big three are legal professional revenues. Those were up 10%. So these are product tools for law firms and legal professional corporate revenues, which grew 11% tools for corporate customers like risk fraud tax accounting, and then the last of the big three tax and account revenues, which grew 14.5%

think of tools for tax professionals and auditors. And they continue to roll out AI solutions for their offerings, but they are definitely focusing on fiduciary grade AI. They realize that a lot of their customers, they want reliable data. And that's where the bulk came. probably comes in here is that their investments in AI partnerships and quality of their data produced just gets better and better. They really embrace AI, just makes their offerings even better. The bare case here is centered more around competitions from startups or LLMs where it could lead to a seat reduction or agents so less seats are required, some margin pressures if you have some of their customers that maybe they keep the tool but they

reduce the usage because of that or they only keep certain types of subscriptions. I'm assuming it's a subscription model that they use here or use its rates model. So there is a bull and bear case here and really they believe that AI needs to be verifiable and accurate. And that's really how they're building their tools. They are seeing more customers adopt their AI solutions and are working on agentic deep research product with a launch anticipated in Q3. And on the guidance side of things, they reaffirmed their 2026 outlook of organic growth

between 7.5% and 8% with the Big 3 segment that should be growing by around 9.5%. So still some solid growth here in line of what they're seeing essentially. They increase their dividend by 10% for the year and their payout ratio is just right around a 50%. So the quarter definitely looks good. guidance is solid. I think it all comes down to these potential AI disruption names where short to potentially medium term, the business looks solid, where I think investors are uncertain is, you know, when you start going out like three, two, three, four, five years and

beyond. I think that's where there is a lot of the drawdown is coming from and the valuations are taking hit, I mean, the multiple that it's trading at, Free Cashel or P has been cut in half. So I think that's what you're seeing with a lot of those software names, even if you're not seeing like the current guidance being bad or reflecting disruption. I think the market is just looking a bit further beyond, like beyond that two to three years timeframe and just not sure exactly what's going to happen. Yeah, I think with these software companies, with a lot of them, we, haven't really seen any level of disruption kind of show up in the results yet.

So I mean, a lot of people are kind of wondering like, why are these stocks not doing better? And I think as you mentioned, it's just like who knows what's going to happen in the future. I think with a lot of these companies too, especially something like Thompson Reuters, you kind of, like you kind of have to cannibalize yourself to a degree because you have to create these AI, you know, agents that can help the clients access data faster. but as a result, they don't need as many seats. You know, they can get away with fewer people on the platform, but you can't just sit there and not build something like this out because everybody else is building it out.

So I don't know how they navigate around that. There's a lot of situations where a lot of these companies can charge, kind of start to charge per task rather than per seat, but I don't know how a company like Thompson Reuters would would navigate around that, but I think that's another added issue. I mean, if you're in software companies, like I, you need a really long mentality here because I don't like even if operations aren't, you know, all that bad right now, I just don't see what's going to be the catalyst that sends these upwards. It's, especially with, you know, new tech coming out every day. Yeah, I think it all comes down

to, I guess, the stickiness of the product, which is really hard to tell right now and some of the about the actual software. We just really don't know. I mean, you can pick whichever one you want to pick, whether it's Thompson, Adobe. Constellation. Constellation. Like, you name your software company.

It's just very, very difficult to know exactly how things all evolve. And I think the market is saying, sure, it looks good short term. But this AI stuff has really evolved quite rapidly over the last few years. So who knows how good it will be in a couple years from now? and what kind of competitors will be able to be built to compete with those software in the matter of a year or two. And I know a lot of bulls will say, look, try to build a competitor to, you name your software stock with AI and, you know, using Claude Code, for example, okay, I get it. You can't do it in three weeks, but you can probably build something pretty solid within a year or two, right? Like even if you want something more complete.

So it's just, I'm just playing devil's advocate here. It'll be really interesting where things go. There is an old saying in investing. It's not about timing the market, but time in the market. The most successful investors aren't usually the ones trying to catch every top and bottom. They're the ones who spend the most time in the market. I've been a quest trade user for over five years, and the reason I stick with them is that they remove the friction of regular investing.

With no commissions on stock and ETF trades, you don't have to wait until you have thousands of dollars saved up to make a move. You can contribute small amounts regularly and keep your portfolio growing consistently, removing the stress of trying to time the market. And they keep making it easier to build a well-rounded portfolio. Soon, you'll be able to trade precious metals through Questrade, giving you even more ways to diversify. Questrade makes the whole process seamless, allow you. you to focus on what really matters your investment strategy, not trying to avoid fees. Ready to invest, head over to questray.com, open and fund your account with code TCI and receive $50. Conditions apply.

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And it must be honest, it's a good company told. Yes. I mean, it's putting up some absurd growth. Like, not surprising it was another record quarter, but it's still amazing all at the same time. Like, the company is growing at a near 80% pace year over year. Revenue, 77%. Adjusted EBDA, 84%.

earnings were up 122%. Free cash flow margin was just under 80%. I think 79.9%. Gold equivalent ounces sold came in 8% higher. Precious metals carrying the bulk of the load, 93.5% year-over-year bump in revenue. Energy is still struggling. It was up only 2.4%. But as we had mentioned, the price of oil, so I believe this quarter for Franco ended end of March. And I don't think oil started to kind of balloon as much as it did until April. I mean, I think it was heading

upwards, but Franco definitely hasn't felt it on that side of the business yet. I would imagine we see a big boost in Q2 on the oil and gas side. But mining is the bread and butter for this company makes up around 91% of total revenue. Energy is only around 9%. But I mean, you're going to see that 9% with some pretty big tail wins next quarter. The company completed five moves on the quarter. It looks like they spent close to $600 million in a single quarter. It's is pretty impressive. And not too much to report on the COBRA side from what I read. The mine is in small restart mode. They're getting all that or that was in there out. But Franco does not include any sort of restart from that mine in their guidance.

So if it does end up restarting, like, it's hard to tell if the market is priced in this, you know, fully because I'm pretty sure it will come back online. How long it takes is is kind of difficult to say now, but they're kind of like slowly restarting it now and could get like small elements of production, I believe in 2027. On the guidance front, they're assuming $4,500 an ounce gold. This kind of tells you management believes gold is going to continue to stay elevated. this is only around 5% below the current price. So. Yeah. And $75. Silver.

Yeah. And that's what I was like on the silver side, they're a bit more conservative because what is silver? Silver's like $88 an ounce probably right now. Yeah, but silver is more volatile. Yeah. So I can't understand that being more conservativeing there. Yeah.

So they're going around 12% from when I wrote this yesterday. It could be very different today. But anywhere from 12 to 15%, probably lower than current silver prices. So what this kind of tells you is that. If that commodity prices stay anywhere near the levels they're sitting at right now, Franco is probably going to come in ahead of guidance, especially because I'm pretty sure they believe that silver is going to drive a lot of a volume growth this year.

So, you know, that discount in terms of their guidance on silver prices, if it stays elevated, you're probably going to see some pretty big results. They expect volumes to come in anywhere from 11 to 24% higher. So there's quite a big gap there. The company has about $3.4 billion in available liquidity and is debt-free. They might carry a little bit of debt, but it's minuscule compared to, you know, cash flow generation. I imagine in this type of commodity environment, there is going to be a boatload of deals to be made. I mean, if we go back to TMX, all those mining companies looking for additional listing fees, like IPOing, stuff like that.

Like, there's got to be a ton of companies knocking on Franco's door for deals to be made because this company has a ton of money to do so. Yes. Yes. I mean, I would argue that this. environment is probably not as attractive for them because when you have prices that are this high that have run up significantly over the last year, it's much easier to attract capital, right? Because you have a lot more incentive with higher prices for investments where I would argue a company like Franco probably does the best when it's a sideways market in terms of the

price. Not necessarily in terms of returns, but in terms of attractive. and potential return on investment for those kind of deals. Maybe I'm wrong, but that's my contrarian mindset. I think it kind of depends on how badly these companies need the money. Because I mean, who knows what sort of deals Franco can lock in. You know, if they can, you know, give these companies financing for, you know, just a random number here, $2,500 US dollars an ounce that they can guarantee to buy it. Like, and they sign those deals long term and they stay elevated, that's pretty good.

I don't really understand that side of the market. Like, you know, maybe these companies will demand higher. But, I mean, you'd imagine with the balance sheet, with the liquidity, you know, they can provide a lot of financing. So these companies might be able to give up a little bit on the price. That's fair. I mean, I'll use a TMX example, right? They're getting a lot more IPOs because the companies are probably finding it much easier to IPO,

whether it's on the venture or the TSX. and they are probably getting plenty of capital interested in those mining junior miners or even if they're already producing. So that's why I'm, I don't know, I'm sure they, they're very, like, I don't, I'm not concerned that I think they'll just do deals if they make sense for them. I think that will do. But when you're in an environment where there's not that much capital interested in miners in mining companies, I feel like they can probably dictate the terms more because then it's

like, look, what's your, what? You can't get money elsewhere. Exactly. Yeah, that's fair. I mean, I haven't seen them spend $600 million on deals in quite a while. So obviously they're making a lot of moves. Yeah. But yeah, it was a great quarter.

I would imagine they got plenty of opportunities to finance. They just need to kind of pick and choose. Yeah. And then again, too, when you have an investor or someone looking to get a streaming or a royalty deal with you with Franco, Nevada, Like, I'm sure they also are able to provide other kind of value added to these deals, whereas a kind of other type of investor may not be able to provide the same kind of value outside of the actual financing because let's be honest, they have a whole lot of experience with that. So maybe, you know, a little bit like a Shark Tang Dragons then where you get a little less in terms of your

terms, but you pick whichever deal you think it'll provide the most added value outside of the financial value. Yeah, you list on an exchange, you ultimately, that's just what you have. You have a publicly traded ticker, whereas you, you know, you deal with Franco, you probably get, you know, a lot more perks cost on either side of things. I'd have to dig into that. But yeah, I would imagine they make a lot of deals. They got a lot of flexibility now, but it's a great quarter. Oh, yeah, they do. I mean, that's a business model, right? Like, yeah, I think people interested in this name, you have to realize that a lot of these deal would not, will not work out. Like, that's the whole business model is they kind of go by volume, but the ones that do work out

make up for all the ones that don't. So it's really that kind of model. Now next up here, Loblaws. So if there's a company that has more mixed emotions in Canada, I don't know if there is one. Like I see people who like really hate this business. I know people in my life that refuse to shop at any Loblaws property because they hate it so much. I just find it very fascinating to see all these divergence and opinions. And of course, I know, you know, it's not, you know, unfounded. There's been some scandals in the past with Loblaws if you think about the bread scandal. But I mean, it's not like, you know, all other grocers are angels as well. So that's where I, sometimes I get a little surprise with the, the kind of emotional response that Loblaws generates.

A lot of those very cringe worthy commercials. Yeah. They were terrible. Yeah. Yeah. Yeah. Yeah. Yeah.

I mean, they were kind of, back when inflation was really high, a lot of politicians kind of targeted these companies for the profits they made, even though, you know, their margins were effectively the same. They weren't, like, there was a lot of price gouging accusations. when in reality it was just a it was a massive shift of Canadian consumers coming to places like Loblo because they can't afford it elsewhere. So yeah,

that kind of put a bit of a stain on it as well. But yeah, you can get into the quarter. Yeah, exactly. I mean, at the end of the day, these are not very profitable margins. And I know that, you know, when you're thinking about people having trouble putting food on the table,

I definitely understand that, you know, how it can be emotional for a lot of people when it comes to loblaws or grocers in general. But I think it almost comes down to a discussion, well, do you want this to be kind of a business, a capitalist business that's run and the benefits and the downsides relating to that?

Or do you want them to almost have no profit, but then you also have other issues that can come up with, you know, maybe they just start exiting and we see more fragmentation, even potentially higher prices because they don't have the same amount of logistics and network and able to get that bulk pricing. So you have to keep in mind that there is it's never, it's always about tradeoffs. So I just want to just provide that additional context here.

But back to Loblaws here in their quarters. So revenues increase 4.2%. Food same store sales increased 2.4%. The shoppers drug mart same store sales increased 4.1. They said that consumers continue to look for value and look for sales, and they continue to invest in their discount banners, like we mentioned in the intro. For example, No Frill or Maxis in Quebec, with five new stores opening in Q1 and targeting about 30 new stores for the year. They also opened eight new drug stores during the quarter. They said that their internal food inflation, which whether you want to believe them or not, that's entirely up to you, was 2.6% in 2025, much lower.

of the CPI equivalent. And if you're interested in the CPI data, they'll usually mention that in the overview. So you'll have kind of food from home and then from away from home or food from restaurants. There's usually two categories that they'll give you because the inflation will usually not be the exact same. Or you have the big bucket food inflation

that incorporates everything. And then in terms of guidance, they expect the retail business to grow earnings faster than sales with adjusted EPS to grow, in the high single digits. So probably some efficiency that will happen over here, share buybacks as well. They also continue to invest aggressively in their store network and distribution centers and expect to span about $2.4 billion in capital expenditure this year alone.

They increased their dividend by 10% and the sale of PC financial as obtained all required regulatory approvals and expected to close in Q3 of this year. it's going to unlock about 600 million CAD in Canadian dollars in terms of the proceeds of the transaction. They'll use part of it for share buybacks and the balance will be used to buy EQ bank shares. So overall, pretty good quarter for Loblaws. Like obviously in terms of grocers as the business, strictly as a business, it's definitely the best run grocer in Canada. The other two as large as the other two are. Loblaws is definitely the best run one.

So pretty good quarter. In terms of the company, it's actually been trading sideways for a little bit. I don't know if you, yeah, in the past year, it's up about 12%. But then if you're looking the last six months, it's essentially flat. Same thing. Year to date, it's down 3%. So definitely has come down a little bit in valuation. Still trading on the higher end of valuation compared to historical norms.

I think usually if you can get it in the low 20s to high teens in terms of Ford P, you're starting to get a pretty reasonable price for Loblaws. It's come down, it's trading around 24 forward P here, but something to keep an eye on if you're looking for a kind of consumer staple that should do well in pretty much any kind of economic environment. Loblaws would definitely be one of them. But then again, it's not going to be a name that will probably destroy market returns, but you should be able to equal them or even maybe beat them a little bit in terms of total returns.

Yeah, it kind of depends on how fast food inflation continues to go up, because obviously you have that trade down from a lot of Canadian consumers. But we've seen both Dollerama and Lobblaw kind of take a step back. I mean, the best time to have accumulated these companies would have been when, you know, 9% inflation was hitting and the trade down started to occur. But just because they're drawing down now doesn't really mean they're bad companies. It's just they have some very tough year over year comparables to keep up with just because of, you know, years worth of growth pulled forward in 2022, 23, 24.

But yeah, I mean, good. In the last five years, so we're going back to Penn. times here. It just, it's destroyed the SMP 500. It's up 258% total returns. And the SMP 500 is up around like 93%. Yeah. It's been one of the best defensive companies to own in North America, not even just Canada alone, North America. Yeah, exactly. So now let's move on to Exchange Income Corp. I don't know too much about this company. So you, I'll be listening carefully here. I know it's a bit weird of a mismatch, but aside from that, let's hear what I'm going to say. It's been a wild run for Exchange Income Corp.

It's one I've kind of featured over at Stock Trades for three, four years now probably, and is regrettably one I did not own. Like, I did not end up buying it because it was more of an income play for quite a while, and it didn't really suit me. But I kind of knew the company was high quality. It definitely is high quality. And much like Franco, record results across the board, revenue was. up 30% year to date, adjusted EBIT at 27.6, earnings 117% free cash flow up 47.5%. If you, they kind of do a little bit of a weird free cash flow calculation. They take out maintenance, apex, things like that. Didn't grow as fast if you isolate that out, but it's still growing

faster than it ever has. And quick primer again, this company does a little bit of everything, which is also why a lot of people avoid this company because the business is so, you know, confusing. I mean, they do emergency Medivac service, uh, flights to remote areas, composite matting, high rise window cleaning, precision casts like they make pretty sure they make molds for like automobile parts. Like it's, it's wild the amount of like you could call it a conglomerate I guess to say. Yeah, I was going to say yeah. Yeah.

It's, uh, it's a birch sure of Canada. Yeah. I'm just kidding. So aerospace and aviation definitely this the star 60% year over your growth. Manufacturing actually declined. about 10% year over year. Tariffs are one of the big reasons. They said this is struggling, but aviation is like well, way making up for it.

Margins compressed a bit in the aviation segment, but that was mostly due to their Canadian North acquisition. This is a passenger plane company that that flies people to remote areas. When I used to fly up and back from, from Fort McMurray, we took Canadian North from Calgary to Fort Mac. They do a lot of flights like to the Arctic, things like that as well.

These passenger airline business, businesses have lower margins, so it's dragging on it, but it's the core business is still pretty solid. And the other huge tailwind, and is actually why the company is doing what it is right now is just increased NATO spending. I mean, exchange income does a lot of specialty surveillance and patrol planes in the Arctic and Canada is spending a ton of money on this right now. Unfortunately, they don't really separate this segment out, but management said, they pretty much said it's a massive growth driver for the company at this point in time. and this is one that used to yield in the mid 5% range.

So it was a high yielding stock monthly payer and a massive run-up. It only yields around 2.6% now. Their leverage is creeping up 3x net debt to EBITA. This is, I mean, not far off from telecom companies. I think they're like 3.5x. It's the upper end of management guidance. However, you know, they're making a lot of deals and a lot of the acquisitions they made are already contributing pretty meaningfully.

So it would probably be a simple switch. they can hit to kind of stop acquiring it and get that multiple down, pay the debt down, but it doesn't really seem like they're too concerned over this. And the company bumped guidance a few times in the past, but they held it steady this quarter. They said there's just too much uncertainty. However, what they did say is that results are going to come in above the midpoint and could very well exceed the high point. They just don't know with all the tariff issues, all that type of stuff.

So they don't want to commit to a full guidance range. But yeah, it's had a big run. I think it was, it has to have doubled over the last while here. It's at 106 and, yeah, 90% over the last year. So if you factor in the dividend, probably 92%, 92.5. But yeah, it's, it's all come over the last year. It was relatively flat for the last two or three. And then it's just launched up.

And I think it is because of that, you know, the specialty airline area of the business. Mm-hmm. Okay. Now that's a good over. review. I guess we have time just for a few minutes. A Go Easy reported. What was it yesterday? So recording this on May 13. Aftermarket. Just a few notes. I mean, we've talked enough about Go Easy in the last few months with, of course, essentially the company riding off a huge chunk of its loans and that were the underwriting had been done subpar. Anything that stood out for you for the news release.

I know we both looked at it pretty quickly. For me, it kind of looked in line with their guidance. Yes. They had provided when they released the results really last minute. But in hindsight, it was probably a good move from the perspective of them releasing the results like as late as they could because they probably had a good idea about Q1 at that point. So that the guidance that they provided, everything kind of fell through the guidance that they had provided. So it was in line with that. And I think the market would have really punished them if they had provided guidance,

but then the results were actually not in line with the guidance provided. So they probably had a good idea, which is a smart move when you're coming out with disastrous update on the business and not really good results with that special update they had. And then with the earnings that they had back at the end of March. But overall, it seemed to be in line with what they had guided. Yeah, I think if it came in worse, it would have been ugly. Like it's down 6% and I think that's because their provisions.

I think they hit everything. I don't think they guided to provisions, but they went up. I think they're over 10% now, potentially. I'm just. Yeah. Yeah. Yeah, they had to put, I think, yeah, close to 10%. And it was higher.

It was about 50 basis points higher than the previous quarter. I think if I remember correct, I assume that was their restated results as well. And the other thing is that they mentioned, I think a key line was that the macro environment they were forecasting is actually a bit worse than they had forecasted. So I think that is probably one line where investors are a bit kind of scared about them putting that in. So that was the other thing that I noticed that was of note. But aside from that, I didn't spend, I only spent about 10 minutes to look at it, but I didn't notice anything that was really out of white. Yeah, I think they guided to pretty much everything they hit outside of those maybe higher provisions, which I don't even think they guided to provisions. So I mean, there's not much to talk about because it was pretty much in line with what they expected, but it's still down 6%. It's under 30 bucks now. Just a crazy fall for this company. It's been wild. Yeah, exactly. And we'll keep an eye on it. Obviously, if something major would have happened, like let's say, you know, the company is on the.

brink of bankruptcy or they have some of those the financing or the revolving line of credits that are no longer available or say one of the some of the lenders just pulled those out of course like major news like that we'd go a bit more into detail but we've talked enough about it not too much in terms of changes you can go back to some of the podcast that we did a couple months ago if you want more information on it but aside from that was a fun episode it's nice to still have plenty of news and earnings to talk about. If there are companies that we missed, that we didn't do, not that we missed, but that we didn't do during the earnings season, that you'd like us to have a quick look, just to provide an

update, let us know, send us an email, go on Twitter, just reach out to us, and we can add it when we have some weeks that are a bit in-between earnings season. Always good to have content there. But aside from that, thank you, everyone, for the support. We'll be back on Monday with our regular episode. And of course, Dan Foch and I were for the Canadian macro investor. We do our live around noon on Fridays, sometimes 11, depending. It's more based on our schedule.

But we release it as a standalone podcast as well on Saturday. And Dan's mic should be fixed. So he's working on that. We had some feedback. People saying my audio was not loud enough. But it was his mic, his audio, that was messing up and then making mine sound like it was off. was good. His mind kept going on and off. So we're troubleshooting the issue, but it should be fixed for next Saturday. So thanks again for listening. We'll be back soon.

The Canadian Investor Podcast should not be construed as investment or financial advice. The host and guest featured may own securities or assets discussed on this podcast. Always do your own due diligence or consult with a financial professional before making any financial or investment decisions.