Q2 2026 ATCO Ltd Earnings Call

July 29, 2026

Speaker #1: Thank you for standing by. This is the conference operator. Welcome to the second quarter 2026 results conference call and webcast for ATCO Ltd. As a reminder, all participants are in a listen-only mode, and the conference is being recorded.

Operator: Thank you for standing by. This is the conference operator. Welcome to the Q2 2026 Results Conference Call and Webcast for ATCO Ltd. As a reminder, all participants are in a 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. Please go ahead, Mr. Jackson.

Speaker #1: After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press *1 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing * then 0.

Speaker #1: I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

Speaker #2: Thank you, and good morning, everyone. We are pleased you could join us for ATCO's second quarter 2026 conference call. On the line today, we have Katie Patrick, Chief Financial and Investment Officer, and Adam Beattie, the President of ATCO Structures.

Colin Jackson: Thank you. Good morning, everyone. We are pleased you could join us for ATCO's Q2 2026 conference call. On the line today, we have Katie Patrick, Chief Financial and Investment Officer, and Adam Beattie, the 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 Siksika, the Kainai, and the Piikani nations, the Tsuut'ina Nation, and the Stoney Nakoda Nations, which include the Chiniki First Nation, the Bearspaw First Nation, and the Goodstoney First Nation. I also want to recognize the City of Calgary is home to the Métis Nation of Alberta, Districts 5 and 6.

Speaker #2: 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.

Colin Jackson: 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 Siksika, the Kainai, and the Piikani nations, the Tsuut'ina Nation, and the Stoney Nakoda Nations, which include the Chiniki First Nation, the Bearspaw First Nation, and the Goodstoney First Nation. I also want to recognize the City of Calgary is home to the Métis Nation of Alberta, Districts 5 and 6.

Speaker #2: 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 Sixka, the Kainai, and the Pagani Nations, the Tsutina Nation, and the Stony Dakota Nations, which include the Chiniki, Bearspaw, and Good Stony First Nations.

Speaker #2: 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.

Colin Jackson: During our Q2, 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'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 security 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, as a result, they may not be comparable to similar measures presented by other entities. Now I'll turn the call over to Katie for her opening remarks.

Speaker #2: A time to honor the stories, achievements, and resiliency of Indigenous peoples. May we continue to respect and celebrate the diverse history, languages, and cultures of Indigenous peoples beyond the month of June.

Speaker #2: 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 Security Regulators.

Speaker #2: 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, may not be comparable to similar measures presented by other entities.

Speaker #2: And now, I'll turn the call over to Katie for her opening remarks.

Speaker #3: Thanks, Colin, and good morning, everyone. Thank you for joining us today. I'll start with some perspective on our current operating environment and the strong tailwinds for our businesses.

Katie Patrick: Thanks, Colin, good morning, everyone. Thank you for joining us today. I'll start today with some perspective on our current operating environment and the strong tailwinds for our businesses. Then Adam and I will provide some detailed quarterly performance updates. We're operating in a significant period of opportunity for ATCO. One shaped by shifting geopolitics, growing demand for secure and resilient infrastructure, and a renewed focus on the essential services that support communities and economies. In many ways, this moment dates to the company's early days, when ATCO's ability to move quickly, build boldly, and solve complex challenges was foundational to creating the business we are today. The critical concerns that face the communities and the countries we operate in include housing, energy, and defense.

Speaker #3: And then Adam and I will provide some detailed quarterly performance updates. We're operating in a significant period of opportunity for ATCO, one shaped by shifting geopolitics, growing demand for secure and resilient infrastructure, and renewed focus on the essential services that support communities and economies.

Speaker #3: In many ways, this moment dates to the company's early days, when ATCO's ability to move quickly, build boldly, and solve complex challenges was foundational to creating the business we are today.

Speaker #3: The critical concerns that faced the communities and the countries we operate in include housing, energy, and defense. These sectors are being shaped by economic demand and geopolitical factors, and will result in significant opportunities, creating a growing need for resilient infrastructure and services for industries, partners, and governments.

Katie Patrick: These sectors are being shaped by economic demand and geopolitical factors and will result in significant opportunities, creating a growing need for resilient infrastructure and services for industries, partners, and governments. With decades of experience operating across each of these sectors in diverse locations, including Canada's challenging northern environment, ATCO is well-positioned to benefit from these tailwinds as investment in these areas continues to accelerate. Our experience and key partnerships across housing, energy, and defense over the past 80 years aligns to what the world needs. Our purpose-built strategy supports sustainable growth in these key areas and will drive stable earnings and dividends to shareowners in the years to come. Focusing on Canada's North, we remain optimistic about the significant growth opportunities in this region, specifically those tied to the defense sector.

Speaker #3: With decades of experience operating across each of these sectors, in diverse location, including Canada's challenging northern environment, ATCO is well-positioned to benefit from these tailwinds as an investment in these areas continues to accelerate.

Speaker #3: Our experience and key partnerships across housing, energy, and defense over the past 80 years aligns to what the world needs. Our purpose-built strategy supports sustainable growth in these key areas, and will drive stable earnings and dividends to shareholders in the years to come.

Speaker #3: Focusing on Canada's North, we remain optimistic about the significant growth opportunities in this region, specifically those tied to the defense sector. In recent months, the federal government has publicly committed a sizable investment in Canada's defense sector, with a focus on Arctic sovereignty.

Katie Patrick: In recent months, the federal government has publicly committed a sizable investment in Canada's defense sector with a focus on Arctic sovereignty. The funding announced to date is specifically earmarked for developing, modernizing, and building out key infrastructure projects, including CAD 32 billion for defense infrastructure upgrades over the next 10 years, and CAD 2.7 billion to build out a network of support sites and hubs. In addition to this, there's approximately CAD 80 billion in government defense infrastructure spending between the modernization of the North American Aerospace Defense Command and the United States proposed Golden Dome for America project. While we view these projects as critical developments, contracting for these opportunities is still very much in its early stages. As these projects materialize, we believe ATCO is well-positioned to capitalize on current and future opportunities in the north for several reasons.

Speaker #3: The funding announced to date is specifically earmarked for developing, modernizing, and building up key infrastructure projects including $32 billion for defense infrastructure upgrades over the next 10 years, and $2.7 billion to build on a network of support sites and hubs.

Speaker #3: In addition to this, there's approximately $80 billion in government defense infrastructure spending between the modernization of the North American Aerospace Defense Command and the United States' proposed Golden Dome for the America Project.

Speaker #3: While we view these projects as critical developments, contracting for these opportunities is still very much in its early stages. As these projects materialize, we believe ATCO is well-positioned to capitalize on current and future opportunities in the North for several reasons.

Speaker #3: We have executed and supported operations, including defense-specific projects, in Canada's Arctic since 1987. That is almost 40 years of operational expertise, demonstrating our long history and success in the North.

Katie Patrick: We have executed and supported operations, including defense specific projects in Canada's Arctic since 1987. That is almost 40 years of operational expertise, demonstrating our long history and success in the north. Importantly, over that period of time, we have developed Indigenous partnerships, which has led to meaningful participation. This is a fundamental part of our history, our culture, and our ongoing commitments to partner and collaborate with Indigenous communities. Lastly, we have the construction knowledge needed to successfully build in Canada's north. As you see on the slide, we have unique Arctic expertise from coast to coast in the north. We are a trusted defense partner who maintains and operates mission critical infrastructure. Earlier this year, we announced a CAD 10 million investment in West Kitikmeot Resources, who will develop the Grays Bay Road and Port project in Nunavut.

Speaker #3: Importantly, over that period of time, we have developed Indigenous partnerships which have led to meaningful participation. This is a fundamental part of our history, our culture, and our ongoing commitments to partner and collaborate with Indigenous communities.

Speaker #3: And lastly, we have the construction knowledge needed to successfully build in Canada's North. As you see on the slide, we have unique Arctic expertise from coast to coast in the North.

Speaker #3: We're a trusted defense partner who maintains and operates mission-critical infrastructure. Earlier this year, we announced the $10 million investment in West Katipune Resources, who will develop the Grays Bay Road and Port Project in Nunavut.

Speaker #3: The Grays Bay Road and Port Project is a critical piece of infrastructure in the north and will include a deepwater port with access to the northwest passage shipping corridor.

Katie Patrick: The Grays Bay Road and Port project is a critical piece of infrastructure in the north and will include a deepwater port with access to the Northwest Passage shipping corridor. We are optimistic this development will grow into a strong foundational investment for the ATCO portfolio longer term. The project has been referred to Canada's Major Projects Office, at the end of June, was named as one of the first of three projects to be considered under the federal government's Building Canada Act. As I said, we are very excited for the opportunities ahead, with ATCO positioned to play a central role in some of these nation building initiatives. With that, I will now turn it over to Adam.

Speaker #3: We are optimistic this development will grow into a strong foundational investment for the ATCO portfolio longer term. The project has been referred to Canada's major projects office, and at the end of June, was named as one of the first of three projects to be considered under the federal government's Build Canada Act.

Speaker #3: As I said, we are very excited for the opportunities ahead. With ATCO positioned to play a central role in some of these nation-building initiatives.

Speaker #3: With that, I will now turn it over to Adam.

Speaker #2: Thank you, Katie, and good morning, everyone. ATCO Structures delivered $36 million of adjusted earnings in Q2, marking the 16th consecutive quarter of year-over-year earnings growth.

Adam Beattie: Thank you, Katie, and good morning, everyone. ATCO Structures delivered CAD 36 million of adjusted earnings in Q2, marking the 16th consecutive quarter of year-over-year earnings growth. Earnings this quarter were driven by space rentals activity in the United States, Canada, and Australia. Our Stibnite Gold Project and new contracts tied to permanent modular construction as well. While it was an impressive quarter across all our geographies, our rentals and sales business lines in the United States were a key driver and saw significant earnings growth year-over-year. The earnings uptick was driven by four of our newer branches, including Phoenix, San Antonio, Louisiana, and Seattle, which are now operating at a significantly increased capacity, attaining optimal targeted utilizations. Our continued success across the business is led by the execution of our industry leading teams.

Speaker #2: Earnings this quarter were driven by space rentals activity in the United States, Canada, and Australia, our Steve Knight Gold Project, and new contracts tied to permanent modular construction as well.

Speaker #2: While it was an impressive quarter across all our geographies, our rentals and sales business lines in the United States were a key driver and saw significant earnings growth year over year.

Speaker #2: The earnings uptick was driven by four of our newer branches, including Phoenix, San Antonio, Louisiana, and Seattle, which are now operating at a significantly increased capacity, attaining optimal targeted utilizations.

Speaker #2: Our continued success across the business is led by the execution of our industry-leading teams. We are improving fleet performance and have considerable demand favorably positioning us through to the end of 2026.

Adam Beattie: We are improving fleet performance and have considerable demand favorably positioning us through to the end of 2026. As you can see on the slide, adjusted EBITDA for the quarter was CAD 82 million, up 17% year-over-year. Along with the average rental rates for our global space rental business, which averaged CAD 896 per month, a 10% increase year-over-year. We continue to progress our Stibnite Gold Project, a key contract for our US business, and during the quarter we completed manufacturing for phase I of the project and continue to expect the first handover milestone to occur in the later part of Q4 of this year.

Speaker #2: As you can see on the slide, adjusted EBITDA for the quarter was $82 million, up 17% year over year. Along with that, the average rental rates for our global space rental business averaged $896 per month, a 10% increase year over year.

Speaker #2: We continue to progress our Steve Knight Gold Project, a key contract for our U.S. business, and during the quarter, we completed manufacturing for phase one of the project. We continue to expect the first handover milestone to occur in the later part of the fourth quarter of this year.

Speaker #2: By demonstrating our ability to execute and deliver complex remote project sites, we put ATCO Structures on the map for other major developments across the United States.

Adam Beattie: By demonstrating our ability to execute and deliver complex remote project sites, we put ATCO Structures on the map for other major developments across the United States, which helps to grow our market share and gain a stronger foothold in the US. Last quarter, we were pleased to highlight some additional projects in our queue. I'm happy to share more about them today. In Canada, we successfully secured a handful of contracts during the quarter totaling CAD 89 million. These contracts include space rentals, workforce housing, and permanent modular construction solutions encompassing over 365 modular units. In the United States, we secured CAD 23 million in contracts for space rentals and workforce housing solutions, which includes 250 modular units. In Australia, we successfully secured a CAD 57 million contract to provide workforce housing solutions for a mining project in Western Australia. This contract will include 160 modular units.

Speaker #2: Which helped to grow our market share and gain a stronger foothold in the US. Last quarter, we were pleased to highlight some additional projects in our queue.

Speaker #2: I am happy to share more about them today. In Canada, we successfully secured a handful of contracts during the quarter totaling $89 million. These contracts include space rentals, workforce housing, and permanent modular construction solutions, encompassing over 365 modular units.

Speaker #2: In the United States, we secured $23 million in contracts for space rentals and workforce housing solutions, which includes 250 modular units. And in Australia, we successfully secured a $57 million contract to provide workforce housing solutions for a mining project in Western Australia.

Speaker #2: This contract will include 160 modular units. In addition to these, we have been highly successful in securing space rental contracts for a number of data center projects in New South Wales and Victoria, where we see continued opportunities going forward.

Adam Beattie: In addition to these, we have been highly successful in securing space rental contracts for a number of data center projects in New South Wales and Victoria, where we see continued opportunities going forward. These projects have strong economics with high fleet numbers required per project and long rental durations averaging 24 to 36-month terms. We are seeing positive growth across the geographies we operate in. Last quarter, I spoke about the CAD 100 million in limited notices to proceed or LNTPs and contracts we received, several of which have now materialized into secured projects that I just highlighted. I'm pleased to share that this momentum is continuing. In this quarter, we have received another CAD 80 million in new notices of award and LNTPs, which we expect to commence in 2026. As Katie mentioned at the onset, ATCO is focused on housing, energy, and defense.

Speaker #2: These projects have strong economics, with high fleet numbers required per project and long rental durations averaging 24- to 36-month terms. We are seeing positive growth across the geographies we operate in.

Speaker #2: Last quarter, I spoke about the $100 million in limited notices to proceed, or LNTPs, and contracts we received—several of which have now materialized into secured projects that I just highlighted.

Speaker #2: I'm pleased to share that this momentum is continuing, and this quarter we have received another $80 million in new notices of award and LNTPs, which we expect to commence in 2026.

Speaker #2: As Katie mentioned at the outset, ATCO is focused on housing, energy, and defense. ATCO Structures is a key pillar of this strategy. We see strong demand for our products in our commercial, industrial, and residential sectors.

Adam Beattie: ATCO Structures is a key pillar of this strategy. We see strong demand for our products in our commercial, industrial, and residential sectors. When I look ahead to the back half of this year, many of our manufacturing facilities have strong backlogs through to the end of 2026 and into 2027. Overall, we are experiencing strong demand across our major geographies and sectors, including the emergence of new customer groups, particularly in data center construction and, as I mentioned earlier, increases in energy and mining sector performance and continued success in urban affordable housing. With that, I'll now pass the call back over to Katie.

Speaker #2: When I look ahead to the back half of this year, many of our manufacturing facilities have strong backlogs through to the end of 2026 and into 2027.

Speaker #2: Overall, we are experiencing strong demand across our major geographies and sectors, including the emergence of new customer groups—particularly in data center construction—and, as I mentioned earlier, increases in energy and mining sector performance, as well as continued success in urban affordable housing.

Speaker #2: With that, I'll now pass the call back over to Katie.

Speaker #3: Thank you, Adam. Looking at this quarter's results, I'm pleased to share that ATCO achieved adjusted earnings of $114 million, or $1.01 per share, in the second quarter of this year.

Katie Patrick: Thank you, Adam. Looking at this quarter's results, I'm pleased to share that ATCO achieved adjusted earnings of CAD 114 million, or CAD 1.01 per share in the Q2 of this year. This is up 13% year over year. Higher adjusted earnings in the Q2 were driven by ATCO Structures increased space rental activity and earnings from the Stimson project. As I mentioned on this morning's CU call, inflation indexing on rate base and increased rates at ATCO Gas Australia also supported earnings for our utility business. We see positive momentum across the ATCO portfolio as we execute on our strategic roadmap heading into the back half of the year. Looking at our specific businesses, ATCO's investment in Canadian Utilities delivered adjusted earnings of CAD 74 million for the quarter, up CAD 11 million year over year.

Speaker #3: This is up 13% year over year. Higher adjusted earnings in the second quarter were driven by ATCO Structures' increased space rental activity and earnings from the Steve Knight project.

Speaker #3: As I mentioned on this morning's CU call, inflation indexing on rate base and increased rates at ATCO Gas Australia also supported earnings for our utility business.

Speaker #3: We see positive momentum across the ATCO portfolio as we execute on our strategic roadmap heading into the back half of the year. Looking at our specific businesses, ATCO's investment in Canadian utilities delivered adjusted earnings of $74 million for the quarter, up $11 million year over year.

Speaker #3: This is an impressive result and, importantly, all three of our key businesses within CU delivered strong growth in the quarter. ATCO structures and logistics delivered adjusted earnings of $35 million.

Katie Patrick: This is an impressive result, importantly, all three of our key businesses within CU delivered strong growth in the quarter. ATCO Structures & Logistics delivered adjusted earnings of CAD 35 million, up CAD 3 million compared to the same period in 2025. Looking at our cash flows, our standalone ATCO businesses, which excludes Canadian Utilities, reported cash flow from operating activities of CAD 122 million in Q2, up almost 70% compared to the prior year. This increase is reflective of higher fleet sales in ATCO Structures and the timing of accounts receivable collection. This growth in cash flow gives us the flexibility we need for future growth within the ATCO businesses. Quarter after quarter, we've demonstrated the value of ATCO Structures by continuously driving earnings growth. We are pleased with the progress we've made so far this year and the strong foundation we've built across the business.

Speaker #3: Up $3 million compared to the same period in 2025. Looking at our cash flows, our standalone ATCO businesses, which excludes Canadian Utilities, reported cash flow from operating activities of $122 million in Q2, up almost 70% compared to the prior year.

Speaker #3: This increase is reflective of higher fleet sales in ATCO Structures and the timing of accounts receivable collection. This growth in cash flow gives us the flexibility we need for future growth within the ATCO businesses.

Speaker #3: Quarter after quarter, we've demonstrated the value of ATCO Structures by continuously driving earnings growth. We are pleased with the progress we've made so far this year and the strong foundation we've built across the business.

Speaker #3: While there is still a lot of work ahead, our priorities are clear. Our teams are focused, and we remain confident in our ability to execute.

Katie Patrick: While there is still a lot of work ahead, our priorities are clear, our teams are focused, and we remain confident in our ability to execute. As we look ahead, we see consistent earnings growth for the entire ATCO portfolio in the back half of the year. That concludes our prepared remarks, I will now turn the call back to Colin.

Speaker #3: As we look ahead, we see consistent earnings growth for the entire ATCO portfolio in the back half of the year. That concludes our prepared remarks, and I will now turn the call back to Colin.

Speaker #2: Thank you, Katie and Adam. In the interest of time, we ask you to limit yourself to two questions. If you have additional questions, you're welcome to rejoin the queue.

Colin Jackson: Thank you, Katie and Adam. In the interest of time, we ask yourself to limit yourself to two questions. If you have additional questions, you're welcome to rejoin the queue. I'll now turn it over to our conference coordinator, Cole, for questions.

Speaker #2: I'll now turn it over to our conference coordinator, Cole, for questions.

Speaker #4: Thank you, sir. We will now begin the question and answer session. To join the question queue, you may press *1 on your telephone keypad.

Operator: Thank you, sir. We will now begin the question and answer session. 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 the keys. To withdraw your question, please press star then two. Once again, anyone that wishes to ask a question may press star then one at this time. Our first question today will come from Ben Pham with BMO. Please go ahead.

Speaker #4: You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press *2.

Speaker #4: And once again, anyone that wishes to ask a question may press *1 at this time. Our first question today will come from Ben Pham with BMO.

Speaker #4: Please go ahead.

Speaker #5: Hi, thanks, everybody. I wanted to maybe touch on the regulated capex. I know that's more at the C-level, but I wanted to flesh that out a bit.

Ben Pham: Hi. Thanks for everybody. I wanted to maybe touch on the regulated CapEx. I know that's more the C level, but I wanted to flesh that out a bit. You have the Yellowhead project in there. That's roughly a quarter of the backlog. CETO is now complete. When you think about the remaining CapEx, is it mainly mostly a bunch of smaller projects that are paying that, or is there a couple more CETO projects in there that drive that?

Speaker #5: You have the Yellowhead project in there. That's roughly a quarter of the backlog. CTO is now complete. When you think about the remaining capex, is it mainly just a bunch of smaller projects that are paying that, or are there a couple more CTO projects in there?

Speaker #5: That drive that?

Katie Patrick: Yeah. Hi, Ben. Thanks for the question. I think you're correct that it does become smaller projects when you compare it to the CAD 2.9 billion Yellowhead project, which is obviously very large. Yes, they're smaller in magnitude, the rest of the projects that are in there. We did provide a detailed breakdown of sort of the categories of spending in the appendices to our IR materials. You can kind of see the types of spending that there is, including resiliency and IT investments, et cetera. In short, yes, it is smaller projects, but only when you compare it to a CAD 2.9 billion project. There are still some, on a relative basis, larger projects included in that, including some transmission opportunities, et cetera, that would be on the larger side, but they don't compare to the large Yellowhead project.

Speaker #6: Yeah, hi Ben. Thanks for the question. I think you're correct that it does become smaller projects when you compare it to the $2.9 billion Yellowhead project, which is obviously very large.

Speaker #6: So yes, they're smaller in magnitude. The rest of the projects that are in there—there's—we did provide a detailed breakdown of sort of the categories of spending in the appendices to our IR materials.

Speaker #6: So you can kind of see the types of spending that there are, including resiliency and IT investments, et cetera. So, in short, yes, it is smaller projects, but only when you compare it to a $2.9 billion project.

Speaker #6: There are still some, on a relative basis, larger projects included in that, including some transmission opportunities, et cetera, that would be on the larger side. But they don't compare to the large Yellowhead project.

Speaker #5: Okay, I got it. I was thinking more of the CTO comparison, but I totally appreciate that. Maybe just on the structures side, if you think of the last couple of years, earnings have had a nice uptick—$80 million to $90 million to $100 million and moving higher.

Ben Pham: Okay. I got it. I was thinking more of the CETO comparison, but I totally appreciate that. Maybe just on the structures side, say, you think of the last couple of years, earnings has had a nice uptick, around CAD 80 million to CAD 90 to CAD 100 and moving higher. When you think about even the past, though, and correct me if I'm wrong, I think structures peaked out at something like CAD 200 million in the past cycle. Is there still ability when you think about your backlog, your manufacturing capacity, the current Policy backdrop, market backdrop? Is there a blue sky scenario that you can theoretically get back to CAD 200 million over time?

Speaker #5: When you think about even the past, though, and correct me if I'm wrong, I think structures peaked out at something like $200 million. In the past cycle, is there still ability when you think about your backlog, your manufacturing capacity, the current policy backdrop, market backdrop, is there a blue sky scenario that you can theoretically get back to $200 million over time?

Speaker #7: Thanks, Ben. Our peak wasn't $200 million, but it was probably closer to $150 million at the Structures level. Maybe a little bit less than that, but I'd have to confirm.

Adam Beattie: Thanks, Ben. Our peak wasn't CAD 200 million, but it was probably closer to the CAD 150 million at the structures level. Maybe a little bit less than that, but I'd have to confirm that. Certainly, I think that's future opportunity, very achievable. We've expanded capacity, certainly within the business and our fleet sizing. If you look back to 2017, our fleet size was about 13,000 units, and it's now up to 27,000 units. If you look at the mix of earnings is different. Those peak years were very driven by large, one-off workforce housing camp project opportunities, particularly within the oil sand. That mix of where our revenue or income has come from has highly shifted to our fleet business.

Speaker #7: Certainly, I think that's a future opportunity that is very achievable. We've expanded capacity, certainly within the business, and our fleet sizing. So, if you look back to 2017, our fleet size was about 13,000 units, and it's now up to 27,000 units.

Speaker #7: So, if you look at the mix of earnings, it is different. Those peak years were very driven by large, one-off workforce housing camp project opportunities, particularly within the oil sands.

Speaker #7: That mix of where our revenue or income has come from has highly shifted to our fleet business. So if you both look at the foundational business of our fleet, that is overdoubled, and then you add on the project opportunities that are ahead of us with those kind of resource sector cycles, I think you can look at some pretty good indications of where the market could potentially go for us with additional increased capacities in both our manufacturing facilities and our human capital and resources to execute these large-scale projects as well as that supporting foundational piece.

Adam Beattie: If you both look at the foundational business of our fleet, that is over doubled, you add on the project opportunities that are ahead of us with those kind of resource sector cycles, I think you can look at some pretty good indications of where the market could potentially go for us. With additional increased capacities in both our manufacturing facilities and our human capital, our resources to execute these large-scale projects, as well as that supporting foundational business. Plus the housing and residential sector that we weren't operating within in that previous times.

Speaker #7: Business. Plus, the housing and residential sector that we weren't operating within in that previous times.

Speaker #5: Okay, got it. Thanks for the call.

Ben Pham: Okay, got it. Thanks for the color.

Speaker #4: And our next question will come from Rob Hope with Scotiabank. Please go ahead.

Operator: Our next question will come from Rob Hope with Scotiabank. Please go ahead.

Speaker #7: Yeah, morning everyone. Maybe just sticking with structures—so, you mentioned increased space, rental activity, and rates. When you take a look across your large fleet, where are you seeing the most incremental demand, as well as the most incremental kind of price movement upwards?

Rob Hope: Yeah. Morning, everyone. Maybe just sticking with Structures. You mentioned increased space rental activity and rates. When you take a look across your large fleet, where are you seeing the most incremental demand as well as the most incremental price movement upwards?

Speaker #7: Yeah, thanks, Rob. Good morning. Look, I think we're probably seeing it in all of our sectors. So, if you look at it across all of our geographies, having improved space rentals performance, the ones that are driving significant improvements, I would say, are the U.S.—we've got high utilization there.

Adam Beattie: Thanks, Rob. Good morning. Look, I think we're probably seeing it in all of our sectors. If you look at it across all of our geographies have improved space rentals performance. The ones that are driving significant improvements, I would say the US. We've got high utilization there. We have high utilization in Australia that's performing very well, and there's some very good tailwinds that we're seeing there, particularly with some of these new market sectors like the data centers that I mentioned. Also Canada is very strong. Not to be under placed is our Chilean and Mexican businesses are also performing extremely well in the space rental sector.

Speaker #7: We have high utilization in Australia. That's performing very well, and there are some very good tailwinds that we're seeing there, particularly with some of these new market sectors like the data centers that I mentioned.

Speaker #7: And also, Canada is very strong. But not to be underappreciated is that our Chilean and Mexican businesses are also performing extremely well in the space rental sector.

Speaker #5: Sorry, appreciate that. And then also, in the MD&A, permanent modular construction sales in both the U.S. and Canada were kind of called out as being a tailwind.

Rob Hope: All right. Appreciate that. Also in the MD&A permanent modular construction sales in both the US and Canada were called out as being a tailwind. Can you provide us an update on the permanent sale, what the strategy is there as well as ballpark? What percentage of the business is that now?

Speaker #5: Can you provide us an update on the permanent sale? What the strategy is there, as well as, ballpark, what percentage of the business that is now?

Speaker #7: Yeah, so as we said, it's more of an emerging business, but we've certainly seen increased activity in those sectors. And if you give some indication there, that probably sits I think I've given some previous indication that that's probably about 10 to 12 percent of our revenue stream in a consolidated as a percentage of a consolidation.

Adam Beattie: Like as we said, it's more of an emerging business, but certainly we've seen increased activity in those sectors. If you give some indication there, that probably sits, I think I've given some previous indication that that's probably about 10% to 12% of our revenue stream as a percentage of our consolidation.

Speaker #5: Thank you.

Rob Hope: Thank you.

Speaker #7: And the opportunities there are, really, we have the affordable multifamily, and then we have our Triple M business arm that is very focused on single-family housing as well.

Adam Beattie: The opportunities there are really we have the affordable multifamily, then we have our Triple M Housing that is very focused on single family housing as well. Then we do a lot of other products, education and some community buildings, O&M buildings, some other sort of permanent office establishments, healthcare facilities, other sectors like that. They're on the smaller scale to the residential penetration that we're having in the market.

Speaker #7: And then we do a lot of other products, education, and some community buildings, O&M buildings, some other sort of permanent office establishments, healthcare facilities, and other sectors like that.

Speaker #7: But they're on a smaller scale compared to the residential penetration that we're having in the market.

Speaker #5: Thank you.

Rob Hope: Thank you.

Speaker #4: And our next question will come from Maurice Choi with RBC. Please go ahead.

Operator: Our next question will come from Maurice Choy with RBC. Please go ahead.

Speaker #5: Thank you, and good morning, everyone. Over the past few years, SNL has been able to successfully diversify its customer base. But I suppose if you look historically, SNL has fairly focused its business on the resource sector.

Maurice Choy: Thank you. Good morning, everyone. Over the past few years, SNL has been able to successfully diversify its customer base. I suppose if you look historically, SNL has fairly focused its business on the resource sector. If you think about the potential growth in the WCSB, I wonder if you could share your outlook on securing space rental, workforce housing, or even permanent modular construction solutions as the energy sector does take off in the coming years.

Speaker #5: If you think about the potential growth in the WCSB, I wonder if you could share your outlook on securing space rental, workforce housing, or even permanent modular construction solutions as the energy sector does take off in the coming years.

Speaker #7: Yeah, certainly, strategically, if you look at those business lines, they don't cross over to distort resource capacity to service each of those sectors independently.

Adam Beattie: Yeah. Certainly strategically, if you look at those business lines, they don't cross over to distort resource capacity to service each of those sectors independently. We're very confident in our model where we've built those channels to be resourced and have capacity to service each of those sectors effectively for the future growth that certainly we see in each of those markets.

Speaker #7: So we're very confident in our model, where we've built those channels to be resourced and have capacity to service each of those sectors effectively, for future growth.

Speaker #7: That certainly we see in each of those markets.

Speaker #5: Maybe this is a quick follow-up. I suppose historically, if you've been able to secure fairly large deals whenever a new pipeline, for example, is built, I assume those sales, those connections, those relationships are still in place. So, if we do see quite a bit of pipeline growth, for example, SNL should be positioned to secure some contract wins?

Maurice Choy: Maybe this is a quick follow-up. I suppose historically you've been able to secure fairly large deals whenever a new pipeline, for example, is built. I assume those sales, those connections, those relationships are still in place such that if we do see quite a bit of pipeline growth, for example, SNL should be positioned to secure some contract wins.

Speaker #7: Definitely. So we've got very strong relationships within those customer sectors in each of our geographies. And they're only increasing. And I think certainly our ability to execute like it's not lost on any of you that we've gone from basically one manufacturing facility in Canada to five and so our ability to even service a broader geographic footprint in Canada and in the US and in Australia 13 manufacturing facilities globally actually increases our ability to service that customer base in a more timely fashion.

Adam Beattie: Definitely. We've got very strong relationships within those customer sectors in each of our geographies, and they're only increasing. I think certainly our ability to execute, it's not lost on any of you that we've gone from basically 1 manufacturing facility in Canada to 5. Our ability to even service a broader geographic footprint in Canada and in the US and in Australia, 13 manufacturing facilities globally, actually increases our ability to service that customer base in a more timely fashion. We have more capacity available, so we can actually execute multiple projects simultaneously.

Speaker #7: So, we have more capacity available, so we can actually execute multiple projects simultaneously.

Speaker #3: And I think Adam touched on it, but I'll just add I think as we've diversified our customer base, it doesn't mean we've left any customer behind from our past.

Katie Patrick: I think Adam touched on it, but I'll just add, I think as we've diversified our customer base, it doesn't mean we've left any customer behind from our past.

Speaker #3: So I think it's only additive.

Adam Beattie: Correct

Katie Patrick: It's only additive.

Speaker #4: That makes sense. If I could shift from energy customers to more defense and housing type of spending,

Maurice Choy: That makes sense. If we could shift from energy customers to more defense and housing type of spending. I think you've mentioned earlier that there are a number of federal initiatives to support spending here. I wonder if you could help share your thoughts on the timing or roadmap ahead before we start seeing some of these initiatives meaningfully lead to earnings or contract wins at SNL.

Speaker #5: I think you've mentioned earlier that there are a number of federal initiatives to support spending here. And I wonder if you could help share your thoughts on the timing or roadmap ahead before we start seeing some of these initiatives meaningfully lead to earnings or contract wins at SNL?

Speaker #3: Yeah, I might just—I can talk generally about, sort of, the overall spending profile and maybe Adam can chime in more specifically around the modular opportunity with the defense spending.

Katie Patrick: Yeah, I can talk generally about the overall spending profile. Maybe Adam can chime in more specifically around the modular opportunity with the defense spending. We referenced that there's been CAD 35 billion of announcements around defense spending, particularly in the North. Those are targeted on a few specific opportunities to upgrade some of our existing defense locations in the North. Those are 10-year type of numbers, just to be clear. The CAD 35 billion is over 10 years. This is a long-term opportunity. The government of Canada came out quite aggressively with their timing on trying to get some of those awards. There have been some delays in fully getting out the RFPs for those contracts. They still are trying to move quickly to get some of those contracts and the upgrades around those five main facilities that they're looking to upgrade.

Speaker #3: So, we referenced that there's been $35 billion of announcements around defense spending, particularly in the North. And those are targeted on a few specific opportunities to upgrade some of our existing defense locations in the North.

Speaker #3: The government of Canada has been very—those are 10-year type of numbers, just to be clear. So, the $35 billion is over 10 years.

Speaker #3: So, this is a long-term opportunity. The Government of Canada came out quite aggressively with their timing on trying to get some of those awards.

Speaker #3: There have been some delays in fully getting out the RFPs for those contracts, but they still are trying to move quickly to get some of those contracts and the upgrades around the five main facilities that they're looking to upgrade.

Speaker #3: And they have said publicly, I think, that those will be coming in the next year, trying to get all five of those out. So that gives an idea where I think everyone is somewhat waiting on the government to get these out there, but I do think that the first phases of this will come pretty quickly.

Katie Patrick: They have said publicly, I think, that those will be coming in the next year, trying to get all five of those out. That gives an idea where I think everyone is somewhat waiting on the government to get these out there. I do think that the first phases of this will come pretty quickly, but it is over that 10-year period. I'll let Adam comment on the modular side of the opportunity there.

Speaker #3: But it is over that 10-year period. And I'll let Adam comment on the modular side of the opportunity there.

Speaker #7: Yeah, just expanding on that, Maurice, I think when you look at certainly defense or some of the northern projects and where they're being located and you link that back into housing, we feel housing comes before major—or we believe, whether that's temporary workforce housing or permanent infrastructure to support communities that are expanding, or even defense space, on-base housing for military personnel.

Adam Beattie: Just expanding on that, Maurice. I think when you look at certainly defense or some of the northern projects and where they're being located and you link that back into housing. We feel housing comes before major, or we believe, whether that's temporary workforce housing or permanent infrastructure to support communities that are expanding or even defense base, on-base housing for military personnel. Those are going to come a little earlier, we believe, as these contracts start materializing. Your solution for personnel needs to come prior to projects. I think over the next six to 18 months, you'll see a lot more materiality in terms of housing requirements for some of these project opportunities or funding allocations that have been put into defense, particularly in regional areas on base and even in the north.

Speaker #7: Those are going to come a little earlier. We believe as these contracts start materializing, so your solution for personnel needs to come prior to projects.

Speaker #7: So I think over the next six to 18 months, you'll see a lot more materiality in terms of housing requirements for some of these project opportunities or funding allocations that have been put into defense, particularly in regional areas on base and even in the north.

Speaker #7: That needs to start being thought about prior to the projects kicking off.

Adam Beattie: That needs to be started to be thought about prior to the projects kicking off.

Maurice Choy: Makes sense. Thank you very much.

Speaker #5: Thank you very much.

Speaker #4: And our next question will come from John Mould with TD Cowan. Please go ahead.

Operator: Our next question will come from John Mould with TD Cowen. Please go ahead.

Speaker #5: Hi, just one from me, maybe on the structure side. Just wondering what you're seeing in terms of M&A markets there—specifically, I think the US. You've called out before that things there were looking pretty frothy.

John Mould: Hi. Just one from me, maybe on the ATCO Structures side. Just wondering what you're seeing in terms of M&A markets there. Specifically, I think, the US, you've called out before that things there were looking pretty frothy. I'm just wondering how active you've been in considering any potential opportunities on the M&A side within your ATCO Structures business. Not just in the US, but I would say more broadly. Any insight there appreciated.

Speaker #5: I'm just wondering how active you've been in considering any potential opportunities on the M&A side within your Structures business. Not just in the US, but I would say more broadly—any insight there is appreciated.

Speaker #7: Yeah, certainly, John. We're actively looking at opportunities—both what comes to us and what we seek out more strategically. So that's a key part of our strategy.

Adam Beattie: Yeah. Certainly, John. We're actively looking at opportunities, both what comes to us and what we seek out more strategically. That's a key part of our strategy. The US still has a pretty high expectation in terms of multiples in this sector. Our organic growth plan there has certainly been very successful, and we certainly want to keep prioritization on that. If you look at M&A, we're certainly active in that market in terms of looking at what opportunities will present themselves over the next couple of years. Our targets, if you look at regionally, I think our main areas would be Australia, Canada, and the US.

Speaker #7: The US still has a pretty high expectation in terms of multiples in this sector. And our organic growth plan there has certainly been very successful.

Speaker #7: And we certainly want to keep prioritization on that. But if you look at M&A, we're certainly active in that market in terms of looking at what opportunities will present themselves over the next couple of years.

Speaker #7: And our targets, if you look at regionally, I think our main areas would be Australia, Canada, and the U.S.

Speaker #5: Okay. I was also trying to tease out if there are any other markets you might be looking at entering, but it sounds like that's not the case at this point.

John Mould: Okay. I was also trying to tease out if there's any other markets you might be looking at entering. Sounds like that's not the case at this point. Is that fair?

Speaker #5: Is that fair?

Speaker #7: We're always looking; we are a global company. We look at global projects, so we do keep our finger on the pulse in other markets. But certainly, the synergy value from our existing operations is advantageous, particularly in the M&A sector.

Adam Beattie: We're always looking. We are a global company. We look at global projects. We do keep our finger to the pulse in other markets, but certainly the synergy value from our existing operations is advantageous, particularly in the M&A sector.

Speaker #5: That's fair. Okay, all my other questions are answered. Thank you very much.

John Mould: That's fair. Okay. All my other questions are answered. Thank you very much.

Speaker #4: And once again, if you would like to ask a question, please press star then one. Our next question will come from Mark Jarvi with CIBC Capital Markets.

Operator: Once again, if you would like to ask a question, please press star then one. Our next question will come from Mark Jarvi with CIBC Capital Markets. Please go ahead.

Speaker #4: Please go ahead.

Speaker #1: Thanks. Hey, everyone. Katie, you mentioned that you think you can see—I believe your term was "consistent earnings growth." How would you frame 'consistent'?

Mark Jarvi: Thanks. Hey, everyone. Katie, you mentioned that you think you can see, I believe your term was consistent earnings growth. How would you frame consistent? Is that what you've seen in the last 12 months? What's happened the H1 of the year? Like how should we interpret those comments?

Speaker #1: Is that what you've seen in our last 12 months? What's happened in the first half of the year? How should we interpret those comments?

Speaker #3: Yeah, I think "consistent." Consistent would be consistently up for sure. I think—we don’t provide forward-specific guidance, but our track record that we’ve had with structures over the past couple of years—I think we can expect that to continue in the near to medium term.

Katie Patrick: Yeah, I think consistent would be consistently up for sure. I think we don't provide forward specific guidance, but our track record that we've had with structures over the past couple of years, I think we can expect that to continue in the near to medium term. From the CU side, I think we've laid out a pretty clear roadmap to the type of capital growth and deployment that we can expect from CU.

Speaker #3: And from the CU side, I know—I think we've laid out a pretty clear roadmap to the type of capital growth and deployment that we can expect from CU.

Speaker #1: Yeah, certainly on the utility side, I think it's pretty transparent and obvious. I guess it's more on the structure side. Given the LNTP stuff that you guys flagged last quarter, this quarter, good end market demand.

Mark Jarvi: Yeah. Certainly on the utility side, I think it's pretty transparent, obvious. I guess it's more on the structure side, given the LNTP stuff that you guys flagged last quarter, this quarter, good end market demand. I'm just curious if you'd be disappointed if you only had the same growth that you had last year or is the expectation that growth can maybe tick up from this level right now?

Speaker #1: I'm just curious if you'd be disappointed if you only had the same growth that you had last year, or if the expectation is that growth can maybe tick up from this level right now.

Speaker #3: I don't think anyone's going to be disappointed when we continue to have the double-digit growth that we've had. I think that's very solid—that's where we've kind of been.

Katie Patrick: I don't think anyone's gonna be disappointed when we continue to have double-digit growth that we've had. I think that's where we've kind of been, and I think certainly wouldn't be a disappointment if we were able to continue to deliver that.

Speaker #3: And I think it certainly wouldn't be a disappointment if we were able to continue to deliver that.

Speaker #1: Got it. And then, Adam, how would you frame the competitive landscape overall, in terms of your peers' ability to deliver on the business?

Mark Jarvi: Got it. Adam, how would you frame the competitive landscape just overall in terms of your peers' ability to deliver on the business? It seems like all the end markets are seeing strong demand. You've talked about your manufacturing footprint, your human capital being in a good position. Do you feel like the demand is starting to exhaust some of your peers' capacity, and does that allow you to take maybe market share? Just curious on how you're seeing the competitive landscape right now.

Speaker #1: It seems like all the end markets are seeing strong demand. You've talked about your manufacturing footprint and your human capital, and about being in a good position.

Speaker #1: Do you feel like the demand is starting to exhaust some of your peers' capacity? And is that allowing you to maybe take some market share?

Speaker #1: Just curious how you're seeing the competitive landscape right now.

Speaker #7: Yeah. Look, certainly we're seeing that we're taking a portion of market share. And we think some of our advantages, certainly into the near future, around our capacity to manufacture, are highly advantageous.

Adam Beattie: Yeah. Look, certainly we're seeing that we're certainly taking a portion of market share, and we think some of our advantage is certainly into the near future, around our capacity to manufacture is highly advantageous. Like, it drives a lot of fleet demand or growth. There's different strategies for how companies grow, we think we have a multi-pronged strategy. We have a strong fleet growth strategy. We have manufacturing capability and capacity. We're well-funded and we're generating good cash flow that we're reinvesting in growth in the business. We feel that we're very well-positioned compared to our competitors. Now, that doesn't mean that they're not competitive or not highly competitive, we've got a lot of respect for them as well. We feel like we're in a strong position to execute on the strategies that we have ahead of us.

Speaker #7: It drives a lot of fleet demand or growth. There are different strategies for how companies grow, and we think we have a multi-pronged strategy. We have a strong fleet growth strategy.

Speaker #7: We have manufacturing capability and capacity. We're well funded and we're generating good cash flow that we're reinvesting in growth in the business. So we feel that we're very well positioned compared to our competitors.

Speaker #7: Now, that doesn't mean that they're not competitive, or not highly competitive. So we've got a lot of respect for them as well. But we feel like we're in a strong position to execute on the strategies that we have ahead of us.

Speaker #1: And then, just in terms of the rental rate trends we've seen, could you kind of parse apart what you think is driving that?

Mark Jarvi: Just in terms of the rental rate trends we've seen, could you kinda parse apart what do you think is driving that?

Adam Beattie: Certainly the advantage that you get from the rental fleet business is new capital goes in, plus you have existing fleet assets that are all capital costs that have built quite a period ago. That certainly supports the growth in average rental rate plus demand. Once you get demand in new sectors coming in, like data centers and those kind of projects, obviously it puts an increased demand on the amount of accessible fleet in the market, and that supports the ability to have slight increases on your rental rates.

Speaker #7: Certainly, some of the advantage that you get from the rental fleet business is new capital goes in, plus you have existing fleet assets that are old capital costs that have been built quite a period ago.

Speaker #7: That certainly supports the growth in average rental rate plus demand. Once you get demand in new sectors coming in, like data centers and those kinds of projects, obviously, it puts increased demand on the amount of accessible fleet in the market.

Speaker #7: And that supports the ability to have slight increases in your rental rates.

Speaker #1: Great. Thanks, everyone.

Mark Jarvi: Great. Thanks, everyone.

Speaker #4: And this will conclude our question-and-answer session. I'd like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

Operator: This will conclude our question and answer session. I'd like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

Speaker #7: Thank you, Cole. And thank you all for participating today. We appreciate your interest in ATCO, and we're looking forward to speaking with you again soon.

Colin Jackson: Thank you, Cole, and thank you all for participating today. We appreciate your interest in ATCO. We're looking forward to speaking with you again soon.

Speaker #4: And this brings today's conference call to a close. You may now disconnect your lines at this time. And thank you for participating and have a pleasant day.

Operator: This brings today's conference call to a close. You may now disconnect your lines at this time, and thank you for participating, and have a pleasant day.

Q2 2026 ATCO Ltd Earnings Call

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