AQ2 2025 TCO Ltd Earnings Call

Speaker 4: Thank you for standing by. This is the conference operator. Welcome to the second quarter 2025 results conference call and webcast for ATCO LTD. 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, then zero. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Go ahead, Mr. Jackson.

Thank you for standing by. This is the conference operator. Welcome to the second quarter, 2025 results conference calls and webcasts for Atco Limited.

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 here. You may press star then 1 on your telephone keypad. Should you need assistance during the conference call you may signal an operator by pressing star then zero?

I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations.

Colin Jackson: Thank you, and good morning, everyone. We are pleased you could join us for ATCO's second quarter 2025 conference call. On the line today, we have Katie Patrick, Chief Financial and Investment Officer, and Adam Beattie, President of ATCO Structures. Before we move into today's remarks, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today, I am speaking to you from our ATCO Park Head Office in Calgary, which is located in the Treaty 7 region. This is the ancestral territory of the Blackfoot Confederacy, comprised of the Sisika, the Kainai, and the Pekani Nations, the Tsuut'ina Nation, and the Stonee Nakoda Nations, which include the Chenike, Ferrispaw, and Goodstonee First Nations. I also want to recognize that the city of Calgary is home to the Métis Nation of Alberta, Districts 5 and 6.

Go ahead, Mr. Jackson.

Thank you, and good morning, everyone.

We are pleased. You could join us for ako's, second quarter, 2025 conference call.

On the line today, we have Katherine-Jane Patrick, Chief Financial and Investment Officer, and Adam Bey, President of ACO Structures.

Before we move into today's remarks, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our Global facilities are located.

Today, I am speaking to you from our Aqua Park head office in Calgary, which is located in the Treaty 7 region.

This is the ancestral territory of the Blackfoot Confederacy, comprised of the Sika, the Kainai, and the Piikani Nations, the Tsuu T'ina Nation, and the Stoney Nakoda Nations, which include the Chiniki, Bearspaw, and Goodstoney First Nations.

Colin Jackson: During our second quarter, we proudly celebrated National Indigenous History Month in Canada, a time to honor the stories, achievements, and resiliency of Indigenous peoples. May we continue to respect and celebrate the diverse history, languages, and culture of Indigenous peoples beyond the month of June. Today, we'll hear from Katie, who will deliver opening comments on our financial results and recent company developments, followed by an update from Adam on ATCO Structures. Following today's remarks, the team will take questions from the investment community. Please note a replay of the conference call, a copy of the presentation, and today's transcript will be available on our website at atco.com following the call. The materials can be found in the Investor section under Events and Presentation. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties.

I also want to recognize that the City of Calgary is home to the Métis Nation of Alberta, districts 5 and 6.

During our second quarter, we proudly celebrated National Indigenous History Month in Canada.

The time to honor the stories, achievements, and resiliency of Indigenous Peoples.

May we continue to respect and celebrate the diverse history, languages and culture of indigenous peoples beyond the month of June.

Today we'll hear from Katie who will deliver opening comments on our financial results and recent company developments followed by an update from Adam on a cost structures.

Following today's remarks, the team will take questions from the investment community. Please note a replay of the conference call, a copy of the presentation, and today's transcript will be available on our website at atco.com following the call.

The materials can be found in the investor section under events and presentations.

Colin Jackson: For more information on these risks and uncertainties, please refer to our filings with the Canadian Securities Regulators. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings and adjusted EBITDA; these measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities. And now, I'd like to turn the call over to Katie for her opening remarks.

Today's remarks will include forward-looking statements that are subject to important risks and uncertainties.

For more information on these risks and uncertainties, please refer to our filings with the Canadian Securities regulators.

In today’s presentation, we may refer to certain non-GAAP and other financial measures.

including adjusted earnings and adjusted EBITDA.

These measures do not have any standardized meaning under IFRS.

And as a result, they may not be comparable to similar measures presented by other entities.

Katie Patrick: Thanks, Colin, and good morning, everyone. Thank you all for joining us today. ATCO achieved adjusted earnings of $101 million or 90 cents per share in the second quarter, up $5 million compared to the same period in 2024. Steady growth in our Canadian utilities investment was driven primarily by growth in our rate base across our regulated utilities at Energy Systems, combined with higher rates and ROE at ATCO Gas Australia as they moved into their new five-year access arrangement. This growth more than offset the reset in the allowable ROE at our Alberta utilities and the conclusion of the efficiency carryover mechanism, which ended in 2024 for our Alberta distribution utilities. I want to highlight and congratulate the teams on our ability to find efficiencies and overcome these headwinds to still achieve growth.

And now I'd like to turn the call over to Katie for her opening remarks.

Thanks, Colin, and good morning, everyone. Thank you all for joining us today.

At Ko achieved adjusted earnings of 101 million or 90 cents per share in the second quarter up 5 million compared to the same period in 2024.

Steady growth in our Canadian utilities investment was driven primarily by growth in our rate base.

Across regulated utilities at Energy Systems, combined with higher rates and return on equity (ROE) and actual gas prices in Australia, as they moved into their new 5-year access arrangement.

This growth more than offset the reset and the allowable ROE at our Alberta utilities, as well as the conclusion of the efficiency carryover mechanism, which ended in 2024 for our Alberta distribution utilities.

Katie Patrick: We also saw strong seasonal spreads in natural gas storage services at ATCO Empower over the quarter. ATCO Structures had another strong quarter, delivering adjusted earnings of $32 million, up $2 million compared to the same period in 2024. Higher adjusted earnings this quarter were driven by increased permanent modular construction activity in Canada and increased workforce housing sale activity in Australia and Chile. Structures delivered adjusted EBITDA of $70 million in the second quarter, and we are on track to exceed last year's annual EBITDA of $241 million. In our view, Structures continues to be undervalued in the market when you assess ATCO's some of the parts trading value. Its implied value is a significant discount compared to our peers, which trade at eight to ten times EBITDA. We continue to successfully execute our strategy at ATCO Structures, resulting in very strong and reliable growth for the business.

I went to highlight a congratulate, the teams on our ability to find efficiencies and overcome these headwinds to still achieve growth.

We also saw strong seasonal spreads in natural gas storage services at Aqua Empower over the quarter.

At Cost structures, had another strong quarter, delivering adjusted earning of adjusted earnings of 32 million up 2 million dollars compared to the same period in 2024.

Higher adjusted earnings this quarter were driven by increased permanent modular construction activity in Canada and increased workforce housing sales activity in Australia and Chile.

Structures delivered adjusted ibida of 70 million dollars in the second quarter and we are on track to exceed last year's annual ibida of 241 million.

In our view, structures continues to be undervalued in the market. When you assess our active, some of the parts trading value,

It's implied value is a significant discount compared to our peers, which trade at 8 to 10 times EBITDA.

Katie Patrick: A focus on fleet rental and sales, geographic diversity, and a reduced dependence on large projects continues to drive this growth. Adam will discuss the Structures business further in his update. Moving to ATCO Frontech, year-over-year adjusted earnings are up compared to the same period in 2024. This was primarily driven by operating efficiencies that have been implemented throughout the business. Within ATCO Investments, our Neltuné Ports investment delivered adjusted earnings growth of $1 million compared to Q2 2024. In May, Neltuné broke ground on the Vancouver Bulk Terminal, a joint venture between Neltuné Ports and Nautilus International Holding Corporation. This facility will have the capacity to export 3 million tons of soda ash annually and is expected to be operational by late 2026. As a reminder, our Neltuné investment benefits from its diversification with 17 multipurpose bulk cargo and container port facilities and five port operation services.

We continue to successfully execute our strategy at AA structures. Resulting in very strong and reliable growth for the business.

A focus on fleet rental and sales, Geographic diversity, and a reduced. Dependence on large projects continues to drive this growth.

Atom will discuss.

structures business further in his update,

Moving to adjusted earnings year-over-year, adjusted earnings are up compared to the same period in 2024.

This was primarily driven by operating efficiencies that have been implemented throughout the business.

With ATCO Investments, are you aware of the too many ports investment delivered? Adjusted earnings growth of $1 million compared to Q2 2024.

In May, on May 2, we broke ground on the Vancouver Bulk Terminal, a joint venture between ATCO Ltd. and Nautilus International Holding Corporation.

This facility will help increase the capacity to export 3 million tons of soda ash annually and is expected to be operational by late 2026.

Katie Patrick: Since our investment in 2018, we have already seen a series of significant geopolitical events, including COVID and trade uncertainty. Our results in this business have remained very resilient, and this investment is a strong proxy for the types of other investments we would look to make within this new investment segment. Looking at our cash flows, our standalone ATCO businesses, which excludes Canadian utilities, reported cash flow from operating activities of $192 million year to date, up over 30% compared to the previous year. This growth allows us to increase our capital spend and investment in the business, setting us up for success now and into the future. Year to date, the ATCO standalone businesses reported capital expenditures of $117 million, up $43 million year over year. Higher expenditures were primarily due to increased capital spending on rental fleet additions in ATCO Structures, largely in the United States.

As a reminder, I'll highlight two main investment benefits from its diversification with 17 multi-bulk cargo and container port facilities, and 5 port operation services.

Since our investment in 2018, we have already seen a series of significant geopolitical events, including COVID and trade uncertainty.

Our results in this business have remained very resilient, and this investment is a strong proxy for the types of other investments we would look to make within this new investment segment.

Looking at our cash flows, our Standalone, actual businesses, which excludes Canadian utilities reported cash flow from operating activities of 192 million year to date up over 30% compared to the previous year.

This growth allows us to increase our Capital spend and investment in the business setting us up for Success now, and into the future.

Year to date, the Aqua standalone businesses reported capital expenditures of $117 million, up $43 million year-over-year.

Katie Patrick: With that, I will now pass it over to Adam to further discuss our ATCO Structures business, including our performance across the key geographies we operate in.

We're primarily due to increase capital spending on rental, with fleet additions in actual structures, largely in the United States.

Adam Beattie: Thank you, Katie, and good morning, everyone. ATCO Structures delivered another strong quarter with adjusted earnings of $32 million, representing the 12th straight quarter in a row of delivering year-over-year adjusted earnings growth. Our global space rentals business continues to be a strong proxy of overall Structures' performance. Over the last five years, this business has seen an increase in our total fleet size by 54% to over 25,700 units that are well-diversified geographically across the five countries that we operate. Strong growth has also been achieved in our average rental rate, all while maintaining an average utilization rate of 75%. In our first half of the year, growth within ATCO Structures was driven by strong performance in Canada and Australia. In Q2 2025, we continued growing our market presence through organic strategic initiatives and investment in our base business.

With that, I will now pass it over to Adam to further discuss our ATCO Structures business, including our performance across the key geographies we operated in.

And good morning, everyone.

At Ko structures delivered, another strong quarter with adjusted earnings of 32 million representing the 12th straight quarter in a row of delivering year-over-year just at earnings growth.

Our global space rentals business continues to be a strong proxy of overall structures performance.

Over the last 5 years, this business has seen an increase in our total Fleet size by 54% to over 25,000 units that are well Diversified Geo geographically across the 5 countries that we operate.

Strong growth has also been achieved in our average rental rate.

All while maintaining an average utilization rate of 75%.

In our first half of the year, growth within Aiko structures was driven by strong performance in Canada and Australia.

Adam Beattie: This included the expansion and optimization of our global rental fleet and the addition of a new manufacturing facility in Australia. This new location in Brisbane will alleviate capacity constraints, enable our planned fleet expansion, and provide capacity to meet demand for new infrastructure projects in the region. This further illustrates the resiliency and diversity of our business, the industries we serve, and the geographies we operate in. As we look towards the second half of 2025, we see ourselves well-positioned, stimulated from our recent strategic acquisition of NRB, which expanded our modular manufacturing and housing delivery capabilities across Canada. Combined with our market entry in multiple key locations within the US, we expect to see a number of project opportunities awarded before the end of the year. Expected market tailwinds combined with our increased market share and a continued prioritization of our base business growth is encouraging.

In Q2 2025, we continued growing our market presence through organic strategic initiatives and investment in our base business. This included the expansion and optimization of our global rental fleet and the addition of a new manufacturing facility in Australia.

This new location in Brisbane will alleviate capacity constraints, enable our planned fleet expansion, and provide capacity to meet demand for new infrastructure projects in the region.

This further illustrates the resiliency and diversity of our business, the industries we serve, and the geographies we operate in.

As we look towards the second half of 2025, we see ourselves. Well positioned

Stimulated from our recent strategic acquisition of nrb which expanded our modular manufacturing and housing, delivery capabilities across Canada combined with our Market entry in multiple key locations. Within the us, we expect to see a number of project opportunities awarded before the end of the year.

Adam Beattie: Beyond 2025, we continue to execute on securing a robust pipeline of new opportunities across our key product lines. Our long-term growth strategy is focused on housing expansion, base business growth via our rental fleet growth, new branch locations, and advanced manufacturing, which focuses on incorporating process technology advancement and new product lines in our operating geographies. We are confident in our market position and our ability to deliver our business growth objectives. I'll now pass the call back over to Katie.

Expected market tailwinds, combined with our increased market share and a continued prioritization of our base business growth, is encouraging.

Beyond 2025, we continue to execute on securing a robust pipeline of new opportunities across our key product lines.

Our long-term growth strategy is focused on housing expansion and business growth via our rental fleet growth.

New branch locations and advanced manufacturing, which focuses on incorporating process, technology advancement and new product lines in our operating geography.

We are confident in our market position and our ability to deliver on our business growth objectives.

Katie Patrick: Thank you, Adam. Overall, we had a strong first half of the year driven by growth across our portfolio of investments. As we look to the second half of 2025, we will continue to focus on executing the strategy we set out for ourselves while capitalizing on opportunities when available as we drive continued share on our value. That concludes our prepared remarks. I will now turn the call back to Colin.

I'll now pass the call back over to Katie.

Thank you, Adam.

Overall, we had a strong first half of the year, driven by growth across our portfolio of investments. As we look to the second half of 2025, we will continue to focus on executing the strategy we set out for ourselves, while capitalizing on opportunities when available, as we drive continued share on our value.

Colin Jackson: Thank you, Katie. We encourage you to join our Q&A queue. In the effort of time, we ask that you limit yourself to two questions and rejoin the queue should you have another question.

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

Thank you, Katie.

We encourage you to join our Q&A queue in.

The effort of time. We ask that you limit yourself to 2 questions and rejoin the queue. Should you have another question?

Speaker 7: 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're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star, then two. Once again, anyone on the conference call wishes to ask a question may press star, then one at this time. The first question comes from Ben Pham with BMO. Please go ahead.

To join the question queue, you may press star, then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys to draw your question. Please press star, then 2.

Once again, anyone on the conference call who wishes to ask a question may press star, then 1 at this time.

Ben Pham: Hi, thanks. You referenced the ATCO Structures business in terms of implied multiple versus what you're seeing out there from peers. Can you comment, is this the widest discount you've seen Structures relative to some of the comps you're looking at? And maybe you can level set the conversation around, like, what are the key differences between your business and others?

The first question comes from Ben Fam with BML. Please go ahead.

Hi. Thanks. Uh, the aqua structure is a business. Uh, in terms of implied, multiple verses that what you're seeing out there from from peers, can you, uh,

Can you comment is that?

Is this the widest discount you you've seen?

Katie Patrick: Yeah, I can comment on the market activity. I would say no, I don't think this is the widest discount that we've seen. I think we have been working hard to narrow that discount, and the business itself and the performance it's seen has really helped to make it clear to the market about the value that is in Structures. But that being said, it is still, in our minds, trading at a discount. It's obvious, as I was saying, it's not, you can't just see exactly what Structures is trading at, but you can do the implied some of the parts to realize the value there. So from a, you know, maybe I'll let Adam talk to some of the differential between the peers, but I would say we view ourselves as the global market leader in this sector, and Adam can maybe address that a bit.

Structures relative to 2. So on a competitive, you're looking at, and maybe you can leverage level sets. The conversation around, like, what are the key differences between your business and others?

Adam Beattie: Hi, Ben. Good morning. Look, I think key differences compared to other listed companies is the diversity and scale of our modular fleet of where it's located, but also the added value that we have within our organization of having 12 manufacturing locations globally that allow us not only to execute rental contracts but also a significant amount of sale trade contracts, which is manufacturing new products and delivering turnkey solutions to customers, which most of our peers that are listed do not have that capability. So I think that's a significant advantage in terms of your ability to unlock next phases of growth.

Has really helped to, to make it clear to the market about the, the values that is in structures. Um, but that being said, it is still in our minds trading at a discount level. It's obvious. As I was saying it's not, you can't just see exactly what structures is trading at, but you can do the implied, some of the parts to to realize the value there. So um from a, you know, maybe I'll let Adam talked to some of the the differential between the peers but I would say, we view ourselves as as the global market leader, in the sector and and Adam can maybe address that a bit.

Hi, good morning. Um, look, I think key differences compared to other listed companies is the diversity and scale of our modular fleet, where it's located, but also the added value that we have within our organization of having 12 manufacturing locations globally. That allows us not only to execute rental contracts, but also a significant amount of sale trade contracts, which is manufacturing new products and delivering turnkey solutions to customers, which most of our peers that are listed do not have that capability. So, I think that's a significant advantage in terms of our ability to unlock the next phases of growth.

Ben Pham: Okay. And may I follow up, too, you highlighted a couple of projects on your press release for the Structures level. Are you able to comment, because I know in the past you've given some dates associated with some of these Structures projects, but this list here doesn't reference that at all. Are you able to share in terms of timeframe you're expecting revenue benefit?

Okay.

May I highlight a couple of projects mentioned in your press release regarding the structures.

Level you.

You able to comment can also in the past. You given some dates associated with with some of these uh, these structures project that he's this. This list here doesn't reference that at all. Are you able to share in terms of time frame or expecting Revenue benefit?

Katie Patrick: Yeah, most of that I can quickly answer. I think most of the projects that we listed were projects that we were awarded during the quarter, and it's a non-exhaustive but indicative list of the types of projects that we are going after. So the majority of those are some smaller projects, but I think you would see the benefit of those within the year. But they are, for the most part, sort of run rate, just a good demonstration of the diversity of our project list.

Adam Beattie: And most of our, Ben, most of our projects, as soon as they're awarded, they move pretty instantaneously into execution phase.

Ben Pham: Okay, understood. Thank you.

Yeah, most of the I can quickly answer. I think most of the projects that we listed were were projects that we were awarded during the quarter and it it's a non-exhaustive but indicative list of the types of projects that we are, we are um, going after. So the majority of those are some smaller projects that I think you would see the benefit of those within the year. Um, but they are for the most part, sort of run rate, just a good demonstration of the diversity of our our project list and most of that been most of our projects. They they as soon as they're rewarded they move pretty instantaneously into execution phase.

okay, understood

Thank you.

Speaker 7: Our next question comes from Maurice Choi with RBC Capital Markets. Please go ahead.

Ben Pham: Good morning, everyone. Just wanted to chat about Frontech. Obviously, over since we last chatted in the Q1 call, Canada has committed to increasing its defense investments to be 5% of GDP by 2035. In the press release that you put out this morning, the contract wins that you have largely relate to Structures and less so on Frontech. So assuming this increased defense spending is optimistic for Frontech, when do you anticipate seeing new contracts for this segment and any color you could give in terms of timing, pace, quantum, and nature of contracts? Thank you.

The next question comes from Morice Choy, with RBC Capital Markets. Please go ahead.

Good morning, everyone. Um, just wanted to chat about, uh, fontech.

Katie Patrick: Yeah, thanks, Maurice. You know, I think, like many parts of the new federal government, we're very optimistic about some of the things that are being said around nation-building projects, I think, in utilities and around defense spending in particular and housing for ATCO Structures. So there's three areas that we really think that we are very poised to benefit from as the federal government rolls out their political agenda. I think, like most Canadians, we are waiting to see the actions come from the words, and you know we're ready to act when it starts happening. So, you know, in particular, as it relates to defense spending and in the North, I think we are one of the best-positioned Canadian companies that there is to benefit from that.

Obviously over the since we last chatted in q1 call uh Canada has committed to increasing its Defence Investments to be 5% of GDP by 2035. Um in the press release that you put out this morning, the contract wins that you have largely related to structures and less so on context. So assuming this, you know, increased defense spending this, op optimistic for FAQ. When do you anticipate uh, seeing new contracts for this segment and um, any color you could give in terms of um, timing Pace Quantum and nature of contract. Thank you.

Yeah, thanks, Maurice. Um, you know, I think, um, like many parts of the new federal government, we're very optimistic about some of the things that are being said, uh, around nation-building projects, within Canadian utilities and around defense spending in particular, um, and housing for active structure. So there are three areas that we really think we are very poised to, um, to benefit from as the federal government rolls out their political agenda. Um, I think like most Canadians...

Katie Patrick: Frontech has a long history of operating in the North, as does many of our other businesses, Structures and Canadian utilities as well. So we are waiting for some of the contracts to start coming out. You know, I think it's difficult to give a specific timeline because it is in the hands of the federal government, a lot of these. But you did see that we did have a win already for the Polar Over the Horizon radar in the North, a small win, but indicative of people acknowledging the strength of our business there. So I think, you know, we'll expect over the course of the rest of this year to start seeing some of those contracts where we could participate come out.

Experience, we are waiting to see the actions come from the words. Uh, and you know, we're we're ready to act when they when it starts happening. So, you know, in particular, as it relates to defense spending and in the north um I think we are 1 of the best position Canadian companies. Uh, that there is to benefit from that. Um, frantic has a long history of operating the north as does, uh, many of our other businesses structures and Canadian utilities as well. So, um, we are we are waiting for some of the contracts to start coming out. Um, you know, I think it's it's difficult to, to give a specific timeline because it is in the hands of the federal government. A lot of these. But you did see that we did have a win already for the polar, Over the Horizon radar in the north, a small win but indicative of people acknowledging the strengths of our business there. So um, I think you know, we'll expect over the course of the rest of this year to start seeing some of those contracts where we could participate come out.

Ben Pham: Understood. And if I could just finish off with a Structures question. You've called out the multiple award schedule contract by the US GSA that was awarded to you, which enables you to sell directly through the GSA. Just trying to understand what this means tangibly for your earnings. Does it open you up to a larger pipeline, or is it about improving margins as you're cutting out like a middle person?

Question.

Adam Beattie: Yeah, it's early days in the accreditation. So, and like any of these government contracts, there's no specific specification of award volume at this point, but it's an access point to supply directly to the government. So it can be grown over a period of time. So the key is the relationship and the ability to supply direct to government. So I would say it's not focused on margin; it's focused on volume growth of activity, dealing directly with the government, with the US, and that's where we saw the accretion on us.

Um, you've called out the multiple award schedule contract by the usgsa that was awarded to you which enables you to sell uh, directly through the GSA. Um, just trying to understand what this um, means tangibly for for your earnings. Does it open you up to a larger pipeline or is it about improving margins? As you're cutting out like a middle person?

Ben Pham: And just so I understand, what kind of products and services are we speaking about? You said that you're selling directly to the government.

Yeah, it it's it's early days in the accreditation so and um, like any of these, um, uh, government contracts. There's no specific specification of award volume at this point, but it's an access point to supply directly to the government. So, so it can be grown over a period of time. So, the key is the relationship and the ability to supply direct to government. So, um, I would say it's not, uh, focused on margin. It's focused on, uh, volume growth of activity, uh, dealing directly with the government with the US and, um, that's where we saw the aggression on.

Adam Beattie: It's modular building supply.

Ben Pham: Perfect. Thank you very much.

What kind of products and services to. So we speak it's it's modular Building Supply.

Perfect, thank you very much.

Speaker 7: The next question comes from Mark Harvey with CIBC Capital Markets. Please go ahead.

Speaker 9: Thanks. Back in May, you issued some debt at the ATCO Limited level. Just curious in terms of the quantum that came was raised, just where it all kind of went, and then just future capital needs, I guess, to keep growing Structures and logistics, or where else you might be needing capital at the ATCO Limited level going forward.

Next question comes from Mark Harvey with CIBC Capital Markets. Please go ahead.

Thanks. Um.

Back in May you issued some debt at the echo. Limited level just curious in terms of uh the quantum that came was raised just where it all kind of went and then just future Capital needs. I guess to keep growing structures and Logistics or where else you might be.

Katie Patrick: Yeah, no, I mean, that was a, we issued $250 million of notes at the ATCO Limited level. We saw very, very strong demand for that offering. So we do know that there's appetite for continued capital to help fund our business. That was a bit of a cleanup of some of our credit facilities, including, you know, we had made the acquisition of ATCO Energy from Canadian Utilities, a few other items where we were cleaning up the corporate level credit facilities. We also do have a facility in place at the Structures level where they have lots of room to continue to grow off that. And we would access continued, you know, external public funding, mostly in connection with, you know, larger investments that we might make or larger investments that Structures may make requiring equity.

I'm needing capital at the echo limited level going forward.

Yeah. No. I mean that was a um we did we issued 250 million of of notes at The aao Limited level. Uh we saw we saw very very strong demand for that offering. So we do know that there's appetite for

Speaker 9: But on an organic basis, don't see a need to top up anything at this point in the foreseeable future.

um continued Capital to help fund our business. Um that was a bit of a clean up some of our our credit facilities um including you know we had made the acquisition of Aqua energy from Canadian, utilities a few other items where we were cleaning up the corporate level credit facilities. Um we also do have a a facility in place at the structures level where they have uh lots of room to continue to grow off that. Uh and we would assess continued, you know, external Public Funding, mostly in connection with um, you know, larger Investments that we might make or larger Investments That structures may make, uh, requiring equity.

Katie Patrick: Yeah, on an organic basis, we don't, and Structures will continue to draw on its facility to fund its organic growth.

On an organic basis, I don't see a need to top up anything at this point in the foreseeable future.

Speaker 9: Okay. And then just in terms of the federal policies, when you think about affordable housing, community housing, the northern and sort of defense spending, do you have a sense of what would be more of a needle mover overall for your company in the next sort of three to five years?

On an organic basis, we don't and and structures will continue to draw on its facility to fund, its organic growth.

Katie Patrick: Yeah, like I can, I think, to be honest, the one that has the most momentum at the moment, there certainly is something to be said for the defense spending, but I think the one that has the most momentum at the moment, and we're actually seeing tangible progress, is on the housing front. And, you know, we had, we were in the front page of the Calgary Herald yesterday. So I think I'll let Adam kind of talk to where we see some of that potential demand.

Okay. And then, just in terms of the federal policies and you think about affordable housing community housing? The northern and sort of defense spending, do you have a sense of what would be more of a needle mover overall for your company at um, in the next sort of 3 to 5 years?

Adam Beattie: Yes, certainly. I think the key there, or the opportunity of the committed government spending around affordable housing presents and the specific recognition of prefabricated and modular, our physical manufacturing capacities and locations spread across Canada, I think is a viable opportunity for the government to rapidly expand the housing supply in that affordable, attainable housing space. And using the experience we have in delivering modular housing, over 3,000 in the past seven years, we've delivered of modular housings, low-cost, affordable modular housing. So I think that's a significant opportunity, and it's a capability that we have that aligns with the government's defined objectives there.

Uh yeah. Like I can I think to be honest, the 1 that has the most momentum at the moment. Uh I there's certainly is something to be said for the defense spending but I think the 1 that has the most momentum at the moment and we're actually seeing tangible. Um, progress is on the housing front. And you know, we had uh we were in the front page of the Calgary Herald yesterday. So I think I'll let Adam kind of talk to where we see some of that potential um demand.

Yes. Um, certainly, I think the, the key there or the opportunity of the commit committed government spending, uh, around affordable housing, uh, presents and the specific recognition of pre-fabricated and modular, uh, our physical manufacturing capacities and locations spread across Canada. I think is a viable opportunity for the government, to rapidly. Expand the housing Supply in that affordable, attainable housing space, and using the experience we have in delivering, uh,

Speaker 9: Is there any potential to provide more operating and disclosures around that subsegment and sort of make it more standalone from the rest of the structure and logistics, or at least more obvious if you view that it becomes a high growth in an area that investors might reward you for? Is there an opportunity to highlight that better?

Modular housing over 3,000 in the past 7 years, we've delivered of modular, housings low, cost affordable, modular housing. So I think that's a significant opportunity. And it's a capability that we have that aligns with the government's uh, defined objectives there.

Is there any potential to provide more operating and disclosures around that sub segments and sort of make it more Standalone from the rest of?

Katie Patrick: Yeah, absolutely. We'll take that one away and see how we progress in the coming quarter and take that away as a potential improvement to our disclosure.

Of the structure and logistics, or at least more obvious, if you view that it becomes a high growth area that investors might reward you for, is there an opportunity to highlight that better?

Speaker 9: Okay. Thanks, everyone.

Yeah, absolutely. We'll, we'll take that 1 away and and see how we progress in the in the coming quarter, um, and um, take that away as a potential Improvement to our disclosure.

Okay. Thanks everyone.

Speaker 7: Once again, if you have a question, please press star, then one. The next question comes from John Moult with TD Cohen. Please go ahead.

Speaker 9: Hi, morning, everyone. Maybe just picking up on that last question on the modular housing side. If that opportunity does pan out in Canada as you're hoping, or maybe to the upside of maybe the mid-range, you know, scenario you're contemplating, have you got the scale you need on the manufacturing side to fully capture that opportunity? Have you got a straightforward path to adding capacity if needed? You know, how should investors understand your positioning there?

Once again, if you have a question, please press star, then 1. The next question comes from John Moe with TD Cohen. Please go ahead.

Adam Beattie: Yeah, so number one, I think the easiest way to put this is there's significant existing capacity on a single shift to supply to that opportunity immediately at scale. And then with manufacturing or modular manufacturing production capacities, then you can move to double shift production that it rapidly increases your production output. And that's a very easy and accessible escalation of capacity before you even have to start moving on to new facility locations.

Um, hi morning everyone. Uh, maybe just picking up on that last, uh, question on the modular housing side. Um, if that opportunity does pan out in in Canada, as you're hoping or or maybe, um, to the the, the upside of maybe the mid-range, you know, scenario or contemplating, have you got the scale you need on the manufacturing side to fully capture that opportunity? Have you got a straightforward path to adding capacity if needed? You know, how should investors understand your positioning? Their

Yeah, so, number one, I think the easiest way to put this is there’s significant.

Existing capacity on a single shift.

Speaker 9: Okay, and that's great. Thanks for that.

To supply to that opportunity at scale. And then with the manufacturing or modular manufacturing production capacities, then you can move to double shift production that it rapidly increases your production output. And that's a very um, easy and accessible um, escalation of capacity. Um, before you even have to start moving on to new facility locations,

Adam Beattie: To put it in the context, that's about 5,000 additional modules per annum, just on a single shift we have capacity for.

Okay, and that's great. Thanks for that to put it in the context. That's about 5,000 additional modules per Anam. Just on a, on a single shift, we have capacity for

Speaker 9: Okay, got it. Thank you. And then just more broadly on organic investment, you commented, you know, on that focus on organic strategic initiatives and flagged that new manufacturing facility in Australia. You know, where else are the key focus points for you at this stage, you know, to make further investments along that line? You know, should we think of the US as a key focus, just given that market's relevant fragmentation and, you know, maybe an update on the level of competition you're seeing in the US right now on the structure side more broadly?

Okay, got it. Thank you. And then, just more broadly on organic investment, you commented on that focus on organic strategic initiatives and flagged that new...

Adam Beattie: Definitely. Look, I think at three primary markets of the US, Canada, and Australia, still we feel have significant growth opportunities for us organically and inorganically. And certainly, our footprint in the US, I think I've specified that before, is quite small in comparison to the market. I think the very encouraging thing for us in the US, we have a very good performing business model, we feel. There's been a lot of consolidation in that at the top end of that market, and it's rife for new competitors. And you're looking at some of the smaller regional competitors that are probably limited in their capacity to grow within those markets. So strategically, obviously, fleet growth, the housing market in the US, and additional manufacturing capacity in the US will be areas that we look at sort of progress over our long-term strategic pathways.

Manufacturing facility in Australia, you know where else are the keys Focus points for you at this stage? Um, you know, to make further Investments along that line you should be thinking of the us as a key Focus just giving that markets relevant fragmentation and and you know, maybe an update on the level of competition, you're seeing in the US right now on the structure side. More, broadly.

I definitely look I I I think our our 3 primary markets of uh, the US Canada and Australia still, we feel have significant growth opportunities for us, uh, organically and inorganically. And certainly our footprint in the US, I think I've specified that before is quite small in comparison to the market. I think the very encouraging thing for us in the US, we have

Speaker 9: Okay, thank you.

A very good performing business model. We feel, uh, there's been a lot of consolidation in that at the top end of that market and it's right for new competitors. And you're looking at some of the smaller Regional competitors that, uh, probably Limited in that their capacity to grow within those markets. So, so strategically obviously free Fleet growth, the housing market in the US and Manufacturing uh, additional manufacturing capacity in the US will be areas that we look at sort of progress over a long term strategic pathways.

Okay, thank you.

Speaker 7: This concludes the question and answer session. I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Please go ahead.

This concludes the question and answer session. I would like to turn the conference back over to Mr. Collins Jackson for any closing remarks, please go ahead.

Colin Jackson: Thank you. And thank you all for participating today. We appreciate your interest in ATCO, and we look forward to speaking with you again soon.

Thank you, and thank you all for participating. Today, we appreciate your interest in ATCO, and we look forward to speaking with you again soon.

Speaker 7: This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.