Q1 2022 Atco Ltd Earnings Call

Thank you for standing by this is the conference operator welcome to the <unk> Co Ltd first quarter 2022 results conference call and webcast.

Welcome to the ADCO Limited first quarter 2022 results conference call and webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press...

As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation, there will be an opportunity to ask questions.

To join the question queue you May Press Star then one on your telephone keypad.

Should you need assistance during the conference call you may signal, an operator by pressing star zero.

I'd now like to turn the conference over to Mr. Colin Jackson Senior Vice President Finance Treasury risk at sustainability. Please go ahead Mr. Jackson.

Thank you. Good morning, everyone. We're pleased you could join us for at Kohl's first quarter 2022 Conference call with me today is executive Vice President and Chief Financial and investment Officer Katie Patrick.

you. Good morning, everyone. We're pleased you could join us for Atco's first quarter 2022 conference call. With me today is Executive Vice President and Chief Financial and Investment Officer Katie Patrick and President of Atco Structures, Adam Beattie.

President of Atco structures, Adam Beatty.

The call today will begin with some opening comments from Katie on recent company developments and financial results.

The call today will begin with some opening comments from Katie on recent company developments and financial results, followed by an update from Adam on our global structures business.

Led by an update from Adam on our global structures business.

After these prepared remarks, we will take questions from the investment community.

After these prepared remarks, we will take questions from the investment community.

Please note that a replay of the conference call and a transcript will be available on our website at <unk> dot com and can be found in the investors section under the heading events and presentations.

Please note that a replay of the conference call and a transcript will be available on our website at atco.com and can be found in the investors section under the heading events and presentation.

I would like to remind you all that our remarks today will include forward looking statements that are subject to important risks and uncertainties.

I'd like to remind you all that our remarks today will include forward-looking statements that are subject to important risks and uncertainties.

For more information on these risks and uncertainties. Please see the reports filed by Atco with Canadian Securities regulators.

For more information on these risks and uncertainties, please see the reports filed by ATCO with Canadian security regulators.

And finally I'd also like to point out that during this presentation. We may refer to certain non-GAAP measures such as adjusted earnings adjusted earnings per share and capital investment. These measures do not have any standardized meaning under <unk> and as a result, they may not be comparable to similar measures presented in.

And finally, I'd also like to point out that during this presentation, we may refer to certain non-GAAP or segment measures, such as adjusted earnings, adjusted earnings per share, and capital investment.

These measures do not have any standardized meaning under IFRS. And as a result, they may not be comparable to similar measures presented in other entities.

Other entities.

And now I'll turn the call over to Katie Patrick for opening remarks.

And now I'll turn the call over to Katie Patrick for her opening remarks.

Thanks, Paula and good morning, everyone.

Thank you all very much for joining us today for our first quarter 2022 conference call.

We also achieved adjusted earnings of $134 million or $1 17 per share in the first quarter of 2022. This is $15 million or <unk> 13 per share higher than the first quarter of 2021.

This is $15 million or $0.13 per share higher than the first quarter of 2021.

This $15 million of growth came primarily from the strong performance of our Canadian utilities investment.

And also higher space rental and workforce housing activities within our structures.

and also higher space rental and workforce housing activity within ACCO structure.

See you saw its adjusted earnings growth of $28 million from $191 million in the first quarter of last year to $219 million in the first quarter of this year.

The ACA level this translated into year over year earnings growth to see a $15 million.

At the ACO level, this translated into year-over-year earnings growth from CU of $15 million.

This strong performance was primarily driven by growth from our Alberta based distribution utilities, which entered the final year of their second PBR cycle.

This strong performance was primarily driven by growth from our Alberta-based distribution utilities, which entered the final year of their second PBR cycle.

Energy also supported.

Year over year earnings growth contributing a full quarter of operations to earnings in 2022.

Luma Energy also supported CEU's year-over-year earnings growth, contributing a full quarter of operations to earnings in 2020.

Before we go any further I would like to comment on the AUC proceeding and settlement proposal, which Brian spoke about earlier on the Seawell call.

Before we go any further, I would like to comment on the AUC proceeding and settlement proposal, which Brian spoke about earlier on the CUL call.

We acknowledge that we made administrative and regulatory arris and recognize that the seriousness steps.

We acknowledge that we made administrative and regulatory errors, and recognize that these serious missteps that have impacted

And that has impacted customer trust.

I already is rebuilding this trust as we bring this matter to a close.

Our priority is rebuilding this trust as we bring this matter to a close.

And delivering exceptional service for the customers we have the honor of survey.

and delivering exceptional service for the customers we have the honor of serving.

For absolute clarity now the original costing question, nor any penalties related to these hubs are will be in the future impacting customer range.

For absolute clarity, neither the original cost in question, nor any penalties related to these, have or will be in the future impacting customer

Moving back to our results our structured investments delivered $3 million a year over year earnings growth and a total adjusted earnings contribution of $16 million in.

Moving back to our results, our structured investment delivered $3 million of year-over-year earnings growth and a total adjusted earnings contribution of $16 million in this past quarter.

In this past quarter.

In line with our strategy the growth growth was driven by strong performance in space rentals across many geographies.

In line with our strategy, the growth was driven by strong performance in space rentals across many geographies.

I'm very happy to have another voice for you to hear on our call today.

I'm very happy to have another voice for you to hear on our call today. Adam Beattie, our President of Aqua Structures, is here with me and will give an update on his business, recent contract wins, and his long-term strategy.

Adam Beatty President of Atco structures is here with me and will give an update on his business recent contract wins and his long term strategy.

I'll turn the call over to Adam.

Thank you Katie and good morning, everyone as Katie alluded to as structures business carried the momentum built in 2021 into a great first quarter of 2020 to.

Thank you, Katie, and good morning, everyone. As Katie alluded to, our structures business carried the momentum it built in 2021 into a great first quarter of 2022.

Beyond the exceptional sustained performance of our Spice rentals fleet in the period. We also had a few key project successes, notably we secured a contracting carozza Australia for the construction of a workforce housing facility related to the Pluto LNG expansion being undertaken by Woodside.

Beyond the exceptional sustained performance of our space rentals fleet in the period, we also had a few key project successes.

Notably, we secured a contract in Karratha, Australia for the construction of a workforce housing facility related to the Pluto LNG expansion being undertaken by Woodside Energy.

<unk> energy.

On this project at cost structures will work with Bechtel, a longtime repeat customer to provide accommodations for the two and a half thousand workers involved in the construction of the Pluto LNG expansion.

On this project, ACCO Structures will work with Bechtel, a long-term repeat customer, to provide accommodations for the two and a half thousand workers involved in the construction of the Pluto LNG expansion.

This brownfield expansion, we will see the construction of a second natural gas processing trying increasing capacity for the facility and will be a significant driver of earnings for us in 2022 and 2023.

This brownfield expansion will see the construction of a second natural gas processing train, increasing capacity for the facility and will be a significant driver of earnings for us in 2022 and 2023. The first quarter of 2022 also saw us complete an additional 550-person camp expansion for the Trans Mountain Expansion Project in Blue River, British Columbia.

First quarter of 2022 also saw US complete an additional 550 person camp expansion for the Trans Mountain expansion project in Blue River British Columbia.

Announced in the fourth quarter of 2021. The camp was successfully completed in the first quarter of 2022 and will remain rented into 2023.

Announced in the fourth quarter of 2021, the camp was successfully completed in the first quarter of 2022 and will remain rented into 2023.

The event the advancement of these projects help signal the restarting of major projects that will largely delight or postponed due to COVID-19, pandemic and indicate strengthening economic activity levels in major infrastructure projects.

The advancement of these projects help signal the restarting of major projects that were largely delayed or postponed due to COVID-19 pandemic and indicate strengthening economic activity levels in major infrastructure projects.

Major projects like the Pluto two expansion project in Australia are an important business line and we excel at executing these large scale multifaceted workforce housing projects on behalf of our industrial clients <unk> continues to be the prominent modular accommodation provider.

Major projects like the Pluto 2 expansion project in Australia are an important business line and we excel at executing these large-scale multi-faceted workforce housing projects on behalf of our industrial clients. ACCO continues to be the prominent modular accommodation provider to LNG projects globally, executing seven major projects within the last decade. However, our business is more than just major projects.

LNG projects globally executing seven major projects within the last decade. However, our business is more than just major projects.

A key strategic focus of the Atco structures business in recent years has been the growth and expansion of our core business tied to a spice rentals and workforce housing product categories. These business lines delivered stable and less cyclical earnings contributions for the business.

A key strategic focus of the ACCO Structures business in recent years has been the growth and expansion of our core business. Tied to our space rentals and workforce housing product categories, these business lines deliver stable and less cyclical earnings contributions for the business.

Year over year, we have improved key performance metrics within that space rental segment, including high unit counts utilization and average rental rates. Similarly.

Year over year, we have improved key performance metrics within our space rental segment, including high unit counts, utilisation and average rental rates. Similarly, we've worked to refine that workforce housing fleet size and configuration to drive high utilisations and average rental rates.

We've worked to refine that workforce housing fleet size and configuration to drive high utilization and average rental rates. This has included decentralizing our structure to better leverage our localized styles branches and manufacturing facilities to more effectively made at customers' needs and access new markets.

This has included decentralising our structure to better leverage our localised sales branches and manufacturing facilities to more effectively meet our customers' needs and access new markets.

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While we often headline the exciting and large projects with we are privileged to work on the majority of our long term sustainable earnings stems from our stable core business segment.

While we often headline the exciting and large projects we are privileged to work on, the majority of our long-term sustainable earnings stems from our stable core business sector.

By continuing to build out these segments, we can deliver stronger and more stable structures earnings that allows us to leverage our expertise to capitalize on more cyclical project activity as the economy picks up.

By continuing to build out these segments, we can deliver stronger and more stable structures earnings that allows us to leverage our expertise to capitalise on more cyclical project activity as the economy picks up.

Finally, I'll briefly touch on inflationary and supply chain considerations that are now are at the front of mind for everyone and.

Finally, I'll briefly touch on inflationary and supply chain considerations that I know are at the front of mind for everyone.

As the World continues to emerge from the pandemic, we continue to manage these challenges and opportunities in a day to day business like we did in 2021 to date, we're primarily saying. These factors result in project extensions as opposed to margin compression in our business a byproduct as being the <unk>.

As the world continues to emerge from the pandemic, we continue to manage these challenges and opportunities in our day-to-day business like we did in 2021. Today, we're primarily seeing these factors result in project extensions as opposed to margin compression in our business.

Increasing demand for rental and style of air.

A by-product has been the increasing demand for rental and sale of our existing fleet products. 22,000 units that are instantaneously deployable and not subject to constraints.

Our existing slate products 22000 units that are instantaneously deployable and not subject to constraints.

Our procurement manufacturing and project management teams have done a great job to mitigate these risks by negotiating favorable contracts with suppliers and clients where.

Our procurement, manufacturing and project management teams have done a great job to mitigate these risks by negotiating favourable contracts with supplies and clients.

Where we have seen input cost increase we've generally been able to manage these through escalation clauses in contracts and shorter term quite validity periods structures priority to source locally and a vertically integrated production facilities have allowed us to directly manage supply chain reliability and pricing.

Where we have seen input costs increase, we've generally been able to manage these through escalation clauses in contracts and shorter term, quote, validity periods.

Structure's priority to source locally and have vertically integrated production facilities have allowed us to directly manage supply chain reliability and pricing into our commercial position.

Into our commercial positions.

That being said these factors that these are factors that will be continuing to watch and manage closely.

That being said, these are factors that we'll be continuing to watch and manage closely.

I'll now pass it back over to Katie to provide an update on the other <unk> businesses.

I'll now pass it back over to Katie to provide an update on the other ACCO businesses.

Thank you Adam.

I'll now turn to the results from <unk>, we continued to experience strong performance from this business.

We signed new contracts and also drove additional earnings from existing contracts in the period.

We signed new contracts and also drove additional earnings from existing contracts in the period.

This quarter <unk> delivered earnings of $4 million, which was an impressive $3 million a year over year earnings growth.

This quarter, Aquafrontex delivered earnings of $4 million, which was an impressive $3 million of year-over-year earnings growth.

This increase came from higher occupancy and short term work request at the site C and Trans mountain camps. These.

This increase came from higher occupancy and short-term work requests at the Site C and Trans Mountain Camps.

These additional work request tend to be short term in nature.

These additional work requests tend to be short-term in nature, but contribute additional earnings and show the further value we can provide customers outside of our core contract scope.

Contribute additional earnings and show the further value, we can provide customers outside of our core contracts scopes.

As mentioned on our fourth quarter call <unk> to its <unk> joint venture on a seven year contract from the government of Canada to operate and maintain the north warning system.

As mentioned on the fourth quarter call, Atcofrontec, through its Nasdaq joint venture, won a seven-year contract from the Government of Canada to operate and maintain the North Warning System.

I'm happy to announce that the contract commenced on April one with the transition well underway.

I'm happy to announce that the contract commenced on April 1st, with the transition well underway.

<unk> expects to assume full custody and control of the system by August 1st.

Nasdaq expects to assume full custody and control of the system by August 1. Next, I'd like to touch on our Neltume Ports investment. Neltume continues to provide a solid base of earnings data.

Next I'd like to touch on I'll now two main ports investment.

Now to May continues to provide a solid base of earnings.

Unprecedented levels of global supply chain for a while.

Now to me had a strong first quarter and solid business increased earnings by $1 million year over year.

Now, Tume had a strong first quarter that saw the business increase earnings by $1 million year-over-year.

This increase in earnings.

It's driven by higher volumes across the portfolio of sports.

This increase in earnings was driven by higher volumes across the portfolio of ports, resulting from favorable weather conditions compared to the prior year.

Nothing from favorable weather conditions compared to the prior year.

Overall, Apple had a great first quarter.

Overall, Apto had a great first quarter that saw us deliver strong year-over-year earnings growth in all of our investments.

Pos deliver strong year over year earnings growth in all of our investments.

This while advancing numerous aspects of our corporate strategy.

this while advancing numerous aspects of our corporate strategy.

We're well positioned heading into the remainder of the year and excited to leverage the work we've done to date as we continue advancing our portfolio strategy.

We're well positioned heading into the remainder of the year. I'm excited to leverage the work we've done to date as we continue advancing our portfolio strategy.

Finally, we are pleased to announce that our 2021 sustainability report will also be released later today.

Finally, we are pleased to announce that our 2021 Sustainability Report will also be released later today.

This report demonstrates our continued focus on energy transition.

This report demonstrates our continued focus on energy transition.

Climate change and environmental stewardship operational reliability and resilience.

climate change and environmental stewardship, operational reliability and resilience.

And community and indigenous relations I would encourage everyone to take a look at the report on our website.

people and community, and Indigenous relations. I would encourage everyone to take a look at the report on our website.

That concludes my prepared remarks, I will now turn the call back to Colin.

That concludes my prepared remarks. I will now turn the call back to Colin.

Thank you Katie and thank you Adam for joining us in the interest of time, we ask that you limit yourself to two questions. If you have additional questions you're welcome to rejoin the queue I.

Thank you, Katie, and thank you, Adam, for joining us. In the interest of time, we ask that you limit yourself to two questions. If you have additional questions, you are welcome to rejoin the queue. I will now turn it over to the conference coordinator for questions. Thank you. To join the question queue, you may press star, then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any key.

I will now turn it over to the conference coordinator for questions.

Thank you.

The question queue, you May Press Star then one on your telephone keypad.

You hear a tone acknowledging your request.

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Webcast participants are welcome to click on the SMA question tab near the top of the webcast frame. Your question. The Atco Investor Relations team will follow up with you by email after the call.

Once again anyone on the conference call, who wishes to ask a question May Press Star one at this time.

The first question comes from Ben Pham with BMO.

Please go ahead.

Hi, Thanks, I wanted to go back to that.

Let me comment on our cost structures in them.

I'm wondering if you talk to the Pluto expansion and it sounds like a U K.

comment on aqua structures, and I'm wondering, you talked about the Pluto expansion, and it sounds like a...

Can you comment on your backlog.

At the moment, what what Youre seeing there maybe more specific of how it compares maybe last year to year before is it.

at the moment, what you're seeing there being more specific and how it compares to maybe last year or the year before, is it, are you bidding on a lot of opportunities? It's more just get a sense of direction where the backlog is.

Are you bidding on a lot of opportunities, it's more just to get a sense of direction, where where the backlog is.

Okay.

Yes. Thank you Ben for the question.

Our backlog at the moment is different in each geography, but at primary geographies of Canada. The U S and Australia has quite a strong backlog of activity in both manufacturing and construction.

Yes, thank you, Ben, for the question. Our backlog at the moment is different in each geography, but our primary geographies of Canada, the US and Australia has quite a strong backlog of activity in both manufacturing and site construction.

So I would say it would be.

So I would say it would be certainly on par, if not higher than last year's activity.

Certainly on par if not higher than last year's activity.

Okay.

Finding maybe theres also in terms of sizing you got these these more bigger ones like the Pluto LNG.

Okay, and are you finding maybe there's also in terms of sizing, you've got these more bigger ones like the Pluto and LNG Canary, like you're seeing more of that come up on your queue?

LNG, Canada like you have you're seeing more more of that come up on your Q.

I would say on both.

Skiles, certainly the larger infrastructure projects.

I would see on both scales, certainly the larger infrastructure projects.

Continuing.

So we're seeing the large project seemed a lot to the Pluto project, they've got continuation or they've re commenced activity, but with them come a lot of lot of smaller activity, that's driven around at coral base business. There, we're seeing a lot of small infrastructure activity.

are continuing. So we're seeing the large project, similar to the Pluto project,

they've got continuation or they've recommenced activity. But with them come a lot of smaller activity that's driven around our core or base business there. We're seeing a lot of small infrastructure activity that's starting to become more active post-COVID.

That's starting to become more active post COVID-19 .

Okay.

My follow up to his his really yet.

And maybe my follow-up too is really at what point do you...

Point to you.

Do you need or did you actually required to start spending capex and building out your fleet more can you just show a lot of room to take on more and more projects.

need or did you actually require to start spending cap back?

filling out your fleet more, can you show a lot of room to take on more projects?

We have a fairly aggressive capital plan already in place with a spice rentals business that is being undertaken in the majority of our markets.

We have a fairly aggressive capital plan already in place with our space rentals business that's being undertaken in the majority of our markets. And so we have good access to capital and we have a good production backlog of committed capital that's being released to our business units so they can more instantaneously be deployed to the projects that we're actively working on or pursuing.

And so we have good access to capital and we have a good production backlog of committed capital that's being released to our business units. So they can more instantaneously.

Be deployed to the projects that we're actively working on.

Oh pursuing.

Okay. That's great. Okay. Thank you.

The next question comes from Maurice Choy with RBC capital markets.

The next question comes from Maurice Choi with RBC Capital Markets.

Please go ahead.

Thanks, and good morning.

Okay.

I'll go back to a comment you made Adam about generating more sustainable earnings moving forward over the past two years in 2020 in 2021, and then I'll recorded earnings that average around $55 million a year, which obviously is.

Thanks, and good morning. Let's just go back to a comment you made, Adam, about generating more.

sustainable earnings moving forward. Over the past few years in 2020 and 2021, S&L recorded earnings that average around $55 million a year, which obviously is a.

Stark contrast to 2017.

thought contrast to 2017. As you look at your business, some parts of it are more predictable than others.

As you look at your business.

Some parts of it are more predictable than others.

Or would you classify I guess the mix between what sustainable within that 55 million in what is a little bit more one off ish that could surprise to the upside.

How would you classify, I guess, the mix between what's sustainable within the $55 million and what is a little bit more one-off-ish? That could surprise to the upside.

Hi.

Thank you for the question Morris.

I think quite simply we look at at our core base business is built around that spend spice rentals and rental workforce housing activity that floats between about two thirds and three quarters of our earnings contribution.

Thank you for the question, Maurice. I think, quite simply, we look at our core-based businesses built around that space rentals and rental workforce housing activity. That floats between about two-thirds and three-quarters of our earnings contribution.

Pretty consistently and has done over the last three years.

pretty consistently and has done over the last three years.

Great.

And.

The follow up to that is obviously.

Great. And the follow-up to that is, obviously, you know, you've had a lot of success.

You've had a lot of success related to.

Diversifying our customer base, but you're still remains quite exposed to MGM resorts based sectors.

diversifying a customer base, but you still remain quite exposed to energy and resource-based sectors.

Yes.

He has a stronger environment and greater focus towards any security Unfortunately, because of the war.

as you see the stronger environment and greater focus towards energy security, unfortunately, because of the war, have you seen a marked change in, I guess, the diversity of your

Have you seen a mark change in.

I guess the diversity of your.

Customers in.

I guess, even the geography, so that users.

Okay.

Okay.

Yes, <unk> I think we're very well diversified against the resource and energy sector now we put considerably a considerable energy over the last five years about diversifying away from those markets more driven not general infrastructure project activity.

Yes, Maurice, I think we're very well diversified against the resource and energy sector now. We've put considerable energy over the last five years.

about diversifying away from those markets, more driven off general infrastructure project activity and a lot of that has been geographical dispersion, moving away from resource-based areas and more into metropolitan urban type environments.

A lot of that has been geographical dispersion.

Moving away from resource based areas and more into metropolitan urban type environments.

And we've seen a lot of positive activity from that strategic mode.

and we've seen a lot of positive activity from that strategic move.

Sorry could you repeat the second part of the question Morris.

But I'm just trying to understand whether or not you are seeing more activity on the energy side energy resource side or are you.

But I'm just trying to understand whether or not, you know, you're seeing more activity on the energy side, energy resource side, or you, you know, still see better response from the other non.

So assume better response from the non.

And then she resource sector.

Yes, we are seeing both activity in both areas at the moment I would say.

Yes, we're seeing activity in both areas at the moment, I would say. We're certainly seeing commodity price performance drive some interest, both in Australia and Canada, and to a lesser extent, places like South America, Chile.

We're certainly seeing commodity price performance drive some interest both in Australia, and Canada and two.

To a lesser extent places like South America Chiller.

Great and my final question just follow up on a comment about <unk>.

Great. And my final question, just to follow up on a comment about, you know, not too made performing well, obviously there is, relatively strong amount of liquidity at the.

<unk> made performing.

Well, obviously there is.

Relatively.

Strong amount of liquidity at the mill to me reports level.

Your comment about the ability to deploy that and expand that.

Any comment about the ability to deploy that and expand the presentation?

Good presence of the.

Underlying company.

Sure Yeah, Thanks, Bruce D.

They continue to have a significant amount of capital on their balance sheet from our initial investment and I would say that the project pipeline is.

Sure, thanks Maurice. They continue to have a significant amount of capital on their balance sheet from our initial investment and I would say that the project pipeline is probably the deepest that we've seen since we entered that investment.

Probably the deepest deepest that we've seen since we entered that investments.

We're working a lot of opportunities.

In South America, diversifying outside of Chile, as well in the U S and the U S market, which was identified as a place for expansion. So I think.

We're working a lot of opportunities both in South America, diversified outside of Chile, as well in the U.S. market, which we've identified as a place for expansion. So I think not in the very near term is there clear opportunities for deployment of that capital. Most of the things we're looking at have a little bit of a longer tenure to them, but there's definitely a strong pipeline of potential opportunities to grow that business.

Not in the very near term is there a clear opportunities for deployment of that capital most of the things. We're looking at have a little bit of a longer tenure to them, but there is definitely a strong pipeline of potential opportunities to grow that business.

Great. Thank you very much.

The next question comes from Linda <unk> with TD Securities.

The next question comes from Melinda Azurgulis with TD Securities.

Please go ahead.

Thank you.

Upon your anal toomey opportunities can you help us understand if any of those opportunities that might be potentially accelerated through.

Thank you. I just want to follow up on your Nultumi opportunities. Can you help us understand if any of those opportunities might be potentially accelerated through Nultumi?

Acquisition.

And if you expect over time that your interest in now to me to remain stable or potentially get.

acquisitions, and if you expect over time that your interest in Neltoon Leeds to remain stable or potentially get diluted or dialed up, and at what point might you have the scale and the expertise to consider potentially port investments outside of Neltoon Leeds?

Diluted or dialed up and at what point might you have the scale and the expertise to consider potentially port investments outside of now to me.

Yes.

Yeah. Thanks Linda.

I would say to your first question of is there opportunities to move faster with M&A. We continue to look at M&A opportunities and as you know those will be.

Yeah, thanks Linda. I would say to your first question of is there opportunity to move faster with M&A, we continue to look at an M&A opportunity. As you know, those will be, you know, somewhat difficult to predict into the future, but there are some of those in the pipeline right now and they could provide opportunity for quicker earnings advancement.

Somewhat difficult to predict into the future, but there are some of those in the pipeline right now and they could provide opportunity for quicker earnings advancement.

In terms of our long term position, there and whether we intend to be diluted or go up in iron ownership investment I would say that certainly dilution is not our intention we liked that investment and we are happy with our current stake in.

In terms of our long-term position there and whether we intend to be diluted or go up in our ownership investment, I would say that certainly dilution is not our intention. We like that investment and we are happy with our current stake and any potential increase in ownership obviously would have to...

Any potential increase in ownership, obviously would have to be a discussion amongst the partners and what opportunities lie in front of us.

via discussion amongst the partners and what opportunities lie in front of us.

And I think your last question there was whether we have any intention to try and drive toward investments outside of note to me and honestly, we're very happy with our partnership they have clear operator ship skilled.

I think your last question there was whether we have any intention to try and drive port investments outside of Nel Tumi and honestly we're very happy with our partnership. They have clear operatorship skills and I think most of the things that we would explore in that space would be in partnership with Ultimor and to the Nel Tumi.

And then I think most of the things that we would explore in that space would be in partnership with <unk> tomorrow and to the <unk> investment.

Thank you and just maybe as an even bigger question around your platforms.

Thank you. And just maybe as an even bigger question around your platforms, your company has added some platforms around ports. You've got your core structures and logistics business. At what point might you consider becoming more active in real estate or potentially assessing the merits of other platforms, or is that more of a blue-sky, lower-priority initiative?

Your company as you.

<unk> added some platform around ports.

Got your cost structures and logistics business you know what.

Point might you consider becoming more active in real estate or potentially assessing the merits of a of other platforms or is that more of a blue sky a lower priority.

Initiative right now without com.

Yeah, no absolutely not not a lower priority, we continue to look for opportunities to diversify both by growing some of the other investments we have outside of Cu.

Yeah, no, absolutely not. Not lower priority. We continue to look for opportunities to diversify.

both by growing some of the other investments we have outside of CU and potentially adding new platforms for growth. We have some smaller ones of course that we are, I would say, incubating and trying to continue to drive growth out of. But for a new platform, we look for opportunities to build on that core base of earnings, similar earnings to CU that provide dividends and cash flow, as well as some that might provide higher growth opportunities.

And potentially adding new platforms for growth we have some smaller ones of course that we are I would say incubating and trying to continue to drive growth out of.

But for a new platform.

We look for opportunities to build on that core base of earnings similar earnings to Cu that provide dividends and cash flow as well as some that might provide higher growth opportunities. So we're looking at both of those quite actively in.

Those are not a low priority initiatives for us.

So we're looking at both of those quite actively and those are not low-priority initiatives for us.

Right now.

Thank you.

The next question comes from Mark Jarvi with CIBC capital markets. Please.

The next question comes from Mark Jarvie with CIBC Capital Markets.

Please go ahead.

Thanks, So first question for items stock on on those structures and logistics business.

Thanks. First question for Adam is back on the structures and logistics business. In terms of the front deck and then structures, how would you say the contrast compare in terms of the ability to pass through any inflation and just pricing trends? And then follow up, how would you say overall do you see operating leverage right now for that business in terms of like how much?

Sales of the <unk> and then structures how would you say that the contract compare in terms of the ability to pass through any inflation in this pricing trend and then.

Follow up how would you see overall do you see operating leverage right now for that business in terms of like how much.

Could you see margin expansion, if you do grow the topline revenues.

Could you see margin expansion if you do go to the top line and see the revenues?

Okay.

Thanks, Mark I'll just confirm.

Those questions. So firstly.

A roundhouse structures and logistics passing through any inflationary cost to customer, but yes. This is linda.

those questions. So firstly, around how structures and logistics are passing through any inflationary cost to customer basis? Yeah, just whether or not there's any differences in the path through the ability to pass through on the Fontech side versus the structures side.

Yeah, just whether or not there's any differences in the past or the ability to pass through on the contract side versus the structures side.

Right.

Whether or not they're seeing.

If they're equally strong in term of paas passenger cost or if one better positioned right now.

Whether or not they're seeing, if they're equally strong in terms of passenger costs, or if one better positions right now.

I think they are both fairly equally.

I think there's because the logistics business. So the fronting business is more focused on man hours or labor input. They have good mechanisms to control that pass through.

I think they're both fairly equally. I think there's, because the logistics business or the front-tech business is more focused on men, hours or labour imports, they have good mechanisms to control that pass-through under their contracts. And in structures, I think because we have that large base-structure.

Under their contracts and in structures I think because we have that large base.

Business performance a lot of it is the assets are already owned.

business performance. A lot of it is the assets are already owned.

That's that's very easy to control that contractually and also otherwise from contracts. We have some very good escalation clauses a lot of the majority of our contracts are actually short term long term and the longer term contracts, where we have a longer cycle to deliver a project. We have good mechanisms built within those.

So that's very easy to control that contractually. And also, otherwise, in contracts, we have some very good escalation causes. A lot of, the majority of our contracts are actually short-term, not long-term. And the longer-term contracts, where we have a longer cycle to deliver a project, we have good mechanisms built within those contracts. So they're very different businesses, but I think their ability to manage that through is consistent.

Contracts, so they're very different businesses, but I think their ability to manage that through.

It is consistent.

And then in the operating.

Just get you to repeat the second question again marketplace, just just in terms of operating leverage whether or not as you grow the business on the top line. How do you see that playing through in terms of margins or do you think there's not really much of an opportunity to expand margins and expand the top line.

Just to get you to repeat the second question again, Mark, please. Just in terms of operating leverage, whether or not, as you grow the business on the top line, how do you see that playing through in terms of margins, or do you think there's not really that much of an opportunity to expand margins if you expand the top line?

Well I think it organically expand margins because as the pricing in the market increases with inflation of new new customer demands our existing slate, which is significantly large actually rides that price increase and theres no additional capital outlay.

Well, I think it organically expands margins because as the pricing in the market increases.

with inflation and new customer demands, our existing fleet which is significantly large

actually rides that price increase and there's no additional capital outlay. So we actually get a benefit through that mechanism of having our existing fleet.

So we actually get a benefit.

Through that mechanism of having our existing flight ride the frac sand market increase or margin increase if not expanded our heightened.

ride the same market increase or margin increase, if not expanded or heightened, as that moves through in our core business.

As that moves through in our core business.

Okay.

Coming back to some of the other opportunities that go with it.

Okay. And Katie, coming back to some of the other opportunities that was asked by Linda on her last question. Now, obviously, at the Canadian Utilities level, they're quite interested in exploring a lot of different energy transition, R&G, hydrogen and renewables. Are there any sort of projects along that?

As part of Lyndon on her last question, obviously, it 15 until these level, they're quite interested in exploring a lot of different energy transition RMG hydrogen and renewables.

Are there any sort of projects along that.

The area that maybe fit with <unk> that youre seeing and maybe it could be a fit for Alcoa is there anything sort of on the fringe there that you're seeing as potential opportunity.

that area that maybe won't fit with key utilities that you're seeing that maybe could be a fit for ATCO or is there anything sort of on the fringe there that you're seeing as potential opportunity?

Yeah.

I would say that the majority of what we would be doing within the energy space in general we would keep within clean utilities I mean, that's really the core competency, where we have a lot of the the key people and operating expertise to manage those type of products.

Yeah, I would say that the majority of what we would be doing within the energy space in general, we would keep within Canadian Utilities. I mean, that's really the core competency where we have a lot of the key people and operating expertise to manage those types of products.

<unk> there may be some small.

Call them.

projects, there may be some small venture or very small opportunities that could fit at the ACO level that may not necessarily receive the adequate attention within CU or could be leveraged across different companies besides just CU. That may make sense at ACO, but that'd be very small-scale stuff that I'm speaking about. But for the most part, any...

Venture or very small opportunities that could fit at the agco level that may not necessarily receive.

Adequate attention within Cu or could be leveraged across different companies. Besides just cu that may make sense that October that'd be very small scale stuff that I'm speaking about but for the most part any any energy transition and those large projects, we would have within Cu driven out of that skill set.

any energy transition and those large projects we would have within CU and driven out of that skill set. Okay. Thanks. Thanks, everyone. Once again, if you have a question...

Okay. Thanks.

Thanks, everyone.

Yeah.

Once again, if you have a question. Please press Star then one.

The next question comes from Andrew Cooper with Credit Suisse.

Please go ahead.

Thanks. Good morning, we don't talk a lot about from tuck, but it's been a nice niche business for you for many years and you know obviously from the NASA Tuck now knows I'm talking announcement back in early fab to know a lot has changed.

Thanks. Good morning. We don't talk a lot about Frontek, but it's been a nice niche business for you for many years.

obviously from the Nasdaq announcement back in early Feb to now, a lot of

I guess, maybe if you could give us a little bit of insights to conversations you've had or maybe developments out of the future for you and enhancing that contract and just capital that may be spent as part of nwf's or other initiatives in the far north.

I guess maybe if you could give us a little bit of insights to conversations you've had or maybe developments out of the future for

enhancing that contract and just capital that may be spent as part of NWS or other initiatives.

Yeah, I mean, I think in general we're very proud of our long history of partnering with governments and the military onto the <unk> business and those types of projects.

Yeah, I mean, I think in general, we're very proud of our long history of partnering with governments and the military to the front tech business and those types of projects.

There was a.

A bit of a quiet time, I would say in that and the north warning system probably signals.

There was, you know, a bit of a quiet time, I would say, in that and this north warning system probably signals.

Hopefully a return to see some more of those projects that will be the hope but.

Hopefully a return to seeing some more of those projects, that would be the hope. But they are large projects and they can be a little bit volatile in terms of when we see them.

They are large projects and they can be a little bit volatile in terms of when we see them specifically with the north warning system.

I think.

Specifically with the north warning system, you know, I think we are hopeful that we can drive some earnings even outside of the contract They've had early indication that there's some additional work requests that will probably be needed there and

We are hopeful that we can drive some earnings even outside of the contracts they've had early indication that there's some additional work requests that will probably be needed there.

Could help boost the base earnings profile that we see off of that relatively large contracts. So I think we're excited about that opportunity and to dig in and really understand more about that.

could help boost the base earnings profile that we see off of that relatively large contract. So I think we're excited about that opportunity and to dig in and really understand more about the work we'll need to do there to continue the good work we've done in the past when we operated it.

The work will need to do there to continue the good work we've done in the past when we operated it.

That's helpful. And then maybe just as a point of clarity like seven year contract you have.

But that's helpful. And then maybe just as a point of clarity, like the seven year contract you have.

Does that wind up being exclusive to.

So the operation and maintenance of NWS, and then you could potentially have exclusive rights or for for add ons.

Does that wind up being exclusive to the operation and maintenance of NWS, and then you could potentially have exclusive rights for add-on?

To that or almost winds up being a foregone conclusion that you want to be complacent about it because I know you're not but.

that or it almost winds up being a foregone conclusion. Not that you want to be complacent about it, because I know you're not, but...

But it's really your business to win should more more activity would be done in the fourth quarter.

It's really your business to win should more activity be done.

I think thats, probably probably true and again, we wouldn't want to be complacent. We did we lost a contract once obviously and then we did obviously we earn it.

I think that's probably true. Again, we wouldn't want to be complacent. We lost the contract once, obviously, and then we did, obviously, re-earn it, and I think our intention would be to be there for the long term as we have a strong commitment to the North and continuing

And I think our intention would be to be there for the long term as we have a strong commitment to the north and continuing to build.

That business and many other businesses with our indigenous partners. So.

that business and many other businesses with our Indigenous partners. So, it is a seven-year contract with extensions available and, you know, I think we, as you say, will probably be in a good position.

It is a seven year contract with extensions available and I.

I think we as you say, we'll probably be in a good position.

To capitalize on those extensions when they come.

um to to capitalize on those extensions when they

Oh, that's that's helpful. And then maybe just focusing more on the structures business.

That's helpful. And then maybe just focusing more on the structures business, you know, you've had a few...

You've had a few situations where you've done there.

Prefab construction for low cost housing initiatives that had been led by government. You know how much has that resonated and do you see that business niche expanding you know to a greater degree.

prefab construction for low-cost housing initiatives that have been led by government, how much has that resonated and do you see that business niche expanding to a greater degree?

It's resonated, it's a smaller portion of that business, but it's an <unk>.

It's resonated, it's a smaller portion of our business, but it's an emerging business. So I certainly think into the future it'll become market forces or macro forces are really driving off-site construction or manufacturing, which were very prevalent in most of our markets.

Emerging business, so I, certainly think into the future. It will become market forces or macro forces are really driving off site construction or manufacturing, which were very prevalent in most of our markets as a real future opportunity. So I think the margins are tied to them.

as a real future opportunity. So I think the margins are tighter there, which you may allude to. They're certainly tighter because the construction industry margins are quite tight, but it's emerging business and you can get scale and increased margin through volume and efficiency as you build that into certain projects as you talked about there with like social or welfare housing contracts that have some repetition about them. And then.

Which which you may allude to.

There is certainly tighter because of the construction industry margins are quite tight but its emerging business and you can get scale and increase margin through volume and efficiency as you build out into certain projects. As you you talked about the with <unk>.

Like social welfare housing contracts that have some repetition about them.

And then maybe just a follow up on that.

Do you just characterize that businesses youre validated the concept and there are some jurisdictions that are just further ahead, but it's a very long cycle industry for you to scale it up to a greater degree.

You just characterized that business as you validated the concept, and there's some jurisdictions that are just farther ahead, but it's a very long cycle industry for you to scale it up to a greater.

Yes, I think different markets there are different level of maturity.

Yeah, I think different markets that are a different level of maturity, certainly. And we have in that permanent modular market also a rental portion as well that is quite stable for us and quite high performing around schools and education facilities that are consistently in demand. So that's a portion of that market and we've been very successful in that market, for example, in Australia.

Certainly and we have in that permanent modular market also I rental portion as well that is quite stable for us and quite high performing.

Around schools and education facilities that are consistently in demand. So that's a portion of that market and we've been very successful in that market for example in Australia.

Okay. That's great. Thank you very much.

This concludes our question and answer session.

This concludes the question and answer.

I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

Yeah.

Great. Thank you so much series and thank you all for participating today.

Great. Thank you so much, Charisse. And thank you all for participating today. I'd also like to thank Katie and Adam for joining us. We appreciate your interest in ACCO, and we're looking forward to speaking with you again soon. This concludes today's conference call. You may disconnect your lines. Thank you.

I think Katie and Adam for joining US. We appreciate your interest in Agco and we're looking forward to speaking with you again soon.

This concludes today's conference call you may disconnect your lines.

Thank you for participating and have a pleasant day.

Okay.

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