Atco achieves $103 million in adjusted earnings, up 13%, highlighting growth in structures and logistics segments and a positive outlook for future projects.

OPERATOR - (00:02:01)

Thank you for standing by. This is the conference operator. Welcome to the third quarter 2025 results, conference call and webcast 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 queue, you may press Star then one on your telephone keypad. Should you need assistance during the conference call, you may reach 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.

Colin Jackson - Senior Vice President Financial Operations - (00:02:43)

Thank you. Good morning everyone. We are pleased you could join us for Atco's third quarter 2025 conference call. On the line today we have Katie Patrick, Chief Financial and Investment Officer and Adam Beatty, 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 which is located in the Treaty 7 region. This is the ancestral territory of the Blackfoot Confederacy comprised of the Sisika, the Kainai and Pagani nations, the Sutina Nation and the Stoney Nakota nations which include the Chinniki, Bears Paw and Good Stoney First Nations. I also want to recognize that the city of Calgary is home to the Metis Nation of Alberta Districts 5 and 6. During the quarter, employees across Canada recognized the National Day for Truth and Reconciliation by by walking together to honour Indigenous communities and their experiences. May we continue to reflect, learn and respect the diverse history, languages, ceremonies and culture of Indigenous Peoples as we move towards understanding, healing and reconciliation. 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 which include 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 that presented by other entities. And now I'll turn the call over to Katie Patrick for her opening remarks.

Katie Patrick - Chief Financial and Investment Officer - (00:04:55)

Thanks Colin and a very good morning to everyone. Thank you all for joining us today. I want to start today by saying what a quarter $103 million in earnings, up 13% from last year. I will come back more to this, but want to first spend a moment re emphasizing the strategy behind our overall portfolio of assets that has brought us great results in the past and will continue to drive our growth going forward. As a reminder, ATCO is a Canadian company with a market capitalization of approximately $6 billion, over $27 billion in assets and approximately 21,000 employees worldwide. Atco's globally diversified portfolio provides integrated, sustainable solutions in the essential services space to tackle the world's most urgent challenges. When considering essential services, we look primarily at housing, defense and the energy space along with investments that will drive long term growth. We have extensive experience and a long history of operating across these areas. Many people know us for a strong base of utility assets, but what many do not know is our long history serving the north capabilities to enable a stronger Canadian defence sector. Looking at the ATCO portfolio strategy, you can think of the portfolio as three primary areas which balance yield and long term growth. This is critical to continue to maintain our exceptional dividend history. At the base of our portfolio, we look for a stream of stable and reliable base earnings and recurring cash flows for atco, which supports new investments and provides surety to our dividends. In line with our core financial tenants, many of our Canadian utilities businesses have these characteristics. Moving up in the Pyramid in our middle category, we expect these investments to provide a balance between yield and growth. They will have some cyclicality but generally have the ability to drive better returns. Our Neltume Ports business is a good example of this profile of investments. We used to say structures fits in this category as well, but candidly, with momentum behind them right now, there's a strong case for them to be in our growth category. At the top of the pyramid, our growth category, we look for contributions to the portfolio that are more growth focused. New growth is guided by our focus on essentials service. As of late, our portfolio has become very dominated by our foundational assets which has tempered the growth we are accustomed to. Within the entire portfolio, we have been strategically transitioning to a greater proportion of more growth oriented assets to return the balance and drive long term growth. During the quarter we were able to achieve several operational milestones that I want to highlight on the Canadian Utilities earnings call. This morning we highlighted several growth milestones across the business, most notably the project developments within ATCO Energy Systems and our Yellowhead Pipeline project which remains on track. Earlier this week we were pleased to file the project's facility application with the Alberta Utilities Commission. Another successful milestone in progressing this project. ATCO Structures announced our largest dollar value contract in the US to date, a $179 million contract with Perpetua Resources. Adam will speak to this and other developments during his remarks. AccoFrontech secured a position as a US Prime Contractor on the US Navy's Worldwide Expeditionary Multiple Award contract, one of only two Canadian companies to make this list. This allows the team to bid on and win task orders under this $20 billion program recognizing ATCO Frontac as a trusted and large scale service provider to the United States. And finally, ATTCO Australia saw significant earnings growth under the new access arrangement AA6 with total adjusted earnings growing 80% year over year. A remarkable result and a huge congratulations to the team in Australia. Moving to our consolidated financials, as I mentioned, ATCO achieved adjusted earnings of $103 million or $0.92 per share in the third quarter, up $12 million and 13% compared to the same period in 2024. An impressive result this quarter is that all of our segments saw year over year growth. ATCO Structures and Logistic Logistics adjusted earnings increased $6 million year over year. Within Structures and Logistics, Atco Structures delivered another quarter of growth with adjusted earnings of $30 million. Higher adjusted earnings this quarter were driven by increased space rental activity in Canada and the U.S. along with increased permanent modular construction activity in Canada. Within Structures and Logistics we are seeing stabilization of the Atco Frontec business with year over year adjusted earnings up $5 million compared to the same period in 2024. This growth was driven by improved project level earnings and realized operating efficiencies across the business. Looking at our cash flows, Our ATCO standalone businesses, which excludes Canadian utilities, reported cash flow from operating activities of $84 million in the quarter up almost 100% year over year. This cash generated from our businesses supports our normal course operations including funding our capital plan and future growth within the Atco. Stand alone businesses when considering future growth, our foundational investments which I previously mentioned generate stable cash flows allowing us to pursue diversified opportunity in a prudent and disciplined way. The maintenance of strong credit ratings and access to capital is critical as we continue to grow and we remain focused on maintaining our investment grade credit ratings at the Atco level. This is a key strategic consideration when we evaluate new opportunities. We maintain low debt at the Holdco level along with strong access to credit liquidity and the capital markets, positioning us to fund future growth while sustaining our long history of annual dividend growth. Across Atco, our teams remain focused on operational excellence, consistent earnings growth and ultimately creating value for our share owners and with that I will now pass it over to Adam to further discuss our atcostructures business and the growth they are delivering for the ADCO portfolio.

Adam Beatty - President of ACCO Structures - (00:11:52)

Thank you Katie and Good morning everyone. I am pleased to share that Atco Structures delivered another strong quarter representing the 13th straight quarter in a row of year over year adjusted earnings growth. Akco Structures continues to deliver on its performance and strategic objectives. Our 26,000 unit rental fleet, strategically located in Canada, Australia, the USA, Mexico and Chile, continues to provide reliable growth, cash flow and and earnings as the foundation of our business. As we grow this asset base, we continue to achieve our target of 75% utilization and average rental rates greater than $800 per month. Our space rentals business is sustainably growing contributing to the 6% in earnings growth year over year. On average. We are investing $50 million per quarter in our assets and fleet as we move through the fourth quarter. We expect to invest significant capital to optimize our workforce housing fleet as we see an increase in demand for these assets moving into 2026 with a number of project leads in the energy resources and infrastructure sectors, particularly in Canada, the U.S. and Chile. Securing the recently announced Stibnight Gold project in Idaho is evidence of our competitive value in being selected to deliver large scale turnkey workforce accommodation projects in our key regions. We also delivered solutions for the residential sector during the quarter. The image on the slide are an example of AKTCO using modern modular manufacturing from one of our 13 global facilities to deliver affordable housing solutions. This is 605 Studio West, a six story building with 84 one bedroom apartments manufactured in under 70 days and set on site in 12 days. This demonstrates just how fast and efficient modular construction can be to solve housing needs. Our speed to market expertise and capacity to supply the residential sector positions us as a proven solution to meet Canada's need for 3.5 million new homes across the country within the next five years. Here in Calgary we have successfully partnered with Attainable Homes Calgary to build 605 Studio west, the six storey 84 suite affordable housing project. From design to manufacture to installation, the project with Attainable Homes Calgary will be completed three times faster than a comparable site build project. Unsurprisingly, this project has garnered national media attention due to the quality and speed of the build. With our focus on growing this segment, I'm pleased to announce that we've started pre approval design for an additional project with Attainable Homes Calgary to develop now a six storey complex with 189 suites in Calgary's Sunnyside community. As part of our strategy we continue to position ourselves for the growing pipeline of opportunities for modular manufactured housing which is becoming increasingly demanded and recognised as a high quality, fast and affordable option for single and multifamily housing. Our recent successes are also evident from our acquisition of NRB modular solutions in Q3 2024 where we have since developed a stronger foothold in key central Canadian markets, opened two new retail branches, successfully executed multifamily housing projects including the City of Toronto's Cummer Avenue project, and are now modernizing and expanding production capacity of of our Grimsby, Ontario manufacturing facility. ATCO Structures is the only modular company at scale that has the mix of rental fleet assets, advanced modular manufacturing infrastructure, full service, project management and site construction capabilities. Controlling the entire value chain provides us a distinct competitive advantage. Our global footprint positions us for growth from North America to South America to Australia. We have a strong operating foothold in these markets and see opportunity for future development within these regions. Our operating locations are near regions of economic activity and natural resources, positioning ourselves as a solution for large scale infrastructure, resource and energy project developments. ACCO Structures is well positioned through our capacity and resources to secure market growth beyond our high performing rental fleet base. We have evolved our operations through organic and inorganic initiatives to become a market leader in permanent modular construction which includes both commercial and and residential modular manufactured products and overall project delivery. Following key strategic acquisitions in the residential modular sector, we are leveraging our market leadership, our market leadership, organic expansion and product diversification to accelerate growth across the business as modular products gain wider acceptance. As a solution to the housing supply shortage, we we expect to generate a larger portion of our earnings growth from our permanent modular construction offerings alongside what we are seeing in the housing market. Atcostruxures sees significant growth opportunities across multiple sectors underpinned by strong market demand and unprecedented funding commitments. We expect to see increased investment and revenue across the industrial, commercial and residential markets we serve year to date. This includes $314 million of secured project work in our industrial sector composed of workforce housing and space rentals and $67 million of secured projects in commercial opportunities, for example commercial offices, healthcare and educational products. On the residential front, we remain focused on fulfilling volume purchases for single family homes while executing multifamily turnkey residential projects previously secured. Our strategic acquisitions of NRB Solutions and Triple M Housing combined with the exciting market position of the existing market position of ACCO structures provide us with the capacity, skills and and expertise that has already delivered over 6,000 modular homes across the housing continuum in Canada since 2022. Within our industrial pillar this quarter we were awarded a $179 million contract to supply and install a 1,000 person camp and site offices in support of The Stibnite Gold Project located near Yellow Pine, Idaho. Manufacturing of the 363 modules will begin this December with final completion anticipated in early 2027. This builds on Atco Structures history of being a proven supplier of workforce accommodation to the natural resource sectors on large scale infrastructure projects of national importance to providing certainty to our customers. LNG Canada, BC Hydro Site C Dam and Woodside's Pluto LNG are just a few recent examples showcasing our project experience providing project owners like Perpetual Resources the confidence to leverage our expertise in workforce accommodation so they can focus on their core activities. As we look ahead, we plan to prioritize the sectors and geographies we operate in that have initiatives to accelerate economic activity focused on energy, critical minerals, major infrastructure, defence and housing. We have already secured a reliable pipeline of contracts across our business and we'll continue to build on this as we move into 2026. In addition to the $179 million Stibnite Gold Project, we announced several other contract awards during the quarter in the US which will contribute $34 million to future revenue growth and exemplifies our ability to competitively position ourselves in the US market where we continue to see long term growth opportunities for our CO structures. In Canada, we were awarded several sale and leasing contracts in the quarter totaling $32 million. These contracts will support critical mining operations and exploration through Western and Central Canada. The market momentum in Canada provides continued opportunities for us moving into 2026. In Australia, accostructures was awarded contracts during the quarter to provide space rentals, workforce housing solutions and permanent modular classrooms in Queensland and Victoria totaling $14 million. Additionally, we are seeing positive momentum in Chile's resource sector that we feel will present a growing pipeline for modular space rentals and workforce housing products in the years ahead. Overall, we have a lot of momentum at Atco Structures. While Q3 earnings were primarily driven by increased activity in our Canadian operations, I expect additional opportunities in the us, Australia and Chile to drive continued stability and growth as we enter 2026. With that, I'll now pass the call back over to Katie.

Katie Patrick - Chief Financial and Investment Officer - (00:22:39)

Thank you Adam and congrats to the entire Structures team. As seen in our results this quarter and year thus far, our diversified portfolio of investments continues to deliver a growing earnings profile. We continue to believe that Atco Structures is undervalued in the market. When you assess our Atco sum of the parts trading value, for example accostructures 2024 adjusted EBITDA was $241 million using a 10 times multiple which is comparable to our peers. Our enterprise value for this portion alone would be $2.4 billion. Across our portfolio of investments, we see significant opportunities ahead for structures and the businesses that make up ATCO investments. We remain focused on executing the strategy in front of us and driving results to deliver long term shareowner value. That concludes our prepared remarks and I will now turn the call back to Colin.

Colin Jackson - Senior Vice President Financial Operations - (00:23:37)

Thank you, Katie and Adam. In the interest of time, we ask you to limit yourself to one question. If you have additional questions, you are welcome to rejoin the queue. Welcome to rejoin the queue. I'll now pass it over to our conference coordinator Gaylene for questions.

Gaylene - Moderator - (00:23:52)

Thank you. We'll now begin the question and answer session. To join the question queue, you May press star, then 1. On your telephone keypad you'll hear a tone acknowledging your request. If you're using a speakerphone, please press Pick up your handset before pressing any keys. To withdraw your question, please press Star, then choose. The first question is from Mark Jarvie with CIBC Capital Markets. Please go ahead.

Mark Jarvie - Equity Analyst - (00:24:19)

Yeah, thanks. Good morning, everyone. Thanks, Adam, for all that disclosure. I'm wondering if you could share today something like a book to Bill or anything you can share in terms of visibility of the backlog at structures in terms of where revenue contract through 26 and beyond.

Adam Beatty - President of ACCO Structures - (00:24:36)

Sorry, can you restate that, Mark?

Mark Jarvie - Equity Analyst - (00:24:39)

Yeah, like maybe like a book to Bill. So just given what you've recognized on an LTM basis for revenue versus what you have in hand for the next 12 months ahead, like would you have enough visibility now to kind of give an indication of where revenue at least top line growth could be for the next sort of 12 months?

Adam Beatty - President of ACCO Structures - (00:24:57)

Yeah, definitely. Look, I think probably as we look at moving into next year, we feel we, we have a stronger backlog that we had going into 2024 and some of the momentum in the bidding activity that we're seeing in the market, particularly in the workforce housing sector and also just the inquiry level around the housing sector shows that we believe there's a strong opportunity in both what we've secured and what we're currently bidding to show some good improvement on a revenue basis going into next year.

Mark Jarvie - Equity Analyst - (00:25:33)

Where would the risk be that you don't deliver on that? Like what sort of is one or two things you point to that the team really has to focus on to make sure that doesn't happen?

Adam Beatty - President of ACCO Structures - (00:25:45)

Yeah, I think the focus is on ensuring that. It does happen.

Mark Jarvie - Equity Analyst - (00:25:50)

Yeah, sorry, exactly.

Adam Beatty - President of ACCO Structures - (00:25:51)

Yeah, yeah. Look, I think execution is always the key when you secure a healthy backlog of work Prioritising to make sure that you execute to meet the expectations of those projects is very important. So we maintain our margins. So certainly executing the backlog that we have will be a priority. We've done a very effective job in terms of positioning our resources and our capacity to increase our manufacturing availability to to serve the revenue base that we will be bidding going forward and also the secured revenue that we have. And as you know, you're probably aware of with modular manufacturing, the better the backlog that you take in, the more efficiency you can gain in that volumes of consistent production. So I think if those are key areas, we have clear focus on our space rental business, maintaining our utilization and rental rate expectations and continuing to grow our asset base in that place and then really on executing the projects and that's focused on pre planning and also extracting value from our manufacturing efficiencies from having increased scale in the production backlog.

Mark Jarvie - Equity Analyst - (00:27:10)

Sounds great, thanks.

John Mold - Equity Analyst - (00:27:15)

The next question is from John Mold with TD Collins. Please go ahead. Hi, good morning. Maybe going back to the Stibnite gold project and its scale relative to your US business. Just wondering how many projects of that scale would you be able to take on and maybe willing to take on at once and what's the gating aspect for your ability to take on more projects like that, if there is one?

Adam Beatty - President of ACCO Structures - (00:27:46)

Okay, good question, John, thank you. Certainly there's scale to take on more of those projects. As alluded to in the slides, we have 13 manufacturing locations around the globe. So our ability to service projects, not all of those projects happen in one location. Typically they'll happen in Canada, the us, Australia, Chile. So each of our manufacturing locations and our increased capacity allows us to take on multiple of those projects within a year or at any time continuously. So that's really. And then our site execution capability, again, it's diversified and we have quite a good spread of project management capabilities to deliver site construction and execution capabilities. So we think certainly you couldn't deliver 100 of those projects at once, but there's certainly a lot more capacity to do more projects of those scale simultaneously.

John Mold - Equity Analyst - (00:28:50)

Great, thank you very much for that. And then maybe just, you know, frontec had some positive earnings this quarter. Just wondering how we should think about, you know, that piece of the structures business on a go forward basis in terms of its ability to contribute to the bottom line. You know, appreciating that it had some headwinds in the back half of last year that seemed to be behind that business. Any color there would be great.

Katie Patrick - Chief Financial and Investment Officer - (00:29:20)

Yeah, it's Katie here. I Think the big thing with Frontec is they had a few honestly challenged contracts that they were successfully able to renegotiate some positive terms that should help on a go forward basis. You know where they are right now in terms of their earnings. You can sort of their run rate earnings. But I would say that they do have some potential for some big things to be happening in the north and can't really put our finger quite yet on what that will be or give you indications of kind of the magnitude of that. But as we all know, there is a big focus on development in the north and Frontec is very well positioned with a number of different potential contracts that will obviously keep you informed about as they come out. But I think you can kind of look to this quarter's earnings as a bit of a run rate going forward.

John Mold - Equity Analyst - (00:30:13)

Okay, that's great. Thanks very much for that context. I'll leave it there.

Maurice Choi - Equity Analyst - (00:30:20)

The next question is from Maurice Choi with rbc. Please go ahead. Thank you and good morning everyone. Just wanted to ask a question about slide 16 where you make the separation between industrial modular as well as permanent modular. I like how you've given us the amount of contracts at 314 million bucks in industrial and 67 for commercial permanent modular. But rather than looking backwards, can you just comment about as you look forward to the coming years, what's the mix between these three in terms of contract values that you anticipate? And alongside that, you know, seeming the build timelines are generally aligned with the 11 1/2 year delivery times on slide 13. Can you share the difference between all three of these segments of margins when you have a contract?

Adam Beatty - President of ACCO Structures - (00:31:23)

Thank you, Maurice. I'll try and do the best I can. There Look, a big portion of the industrial sector has the components of our rental fleet. So that's a significant portion of the forward going revenues as long as the major project activities. So I think that will always be substantially larger than the other two tiers. But going forward we see a huge amount of positive activity coming through the residential sector and the project. And the pace of growth that we're seeing in that sector coming off a smaller base we think is going to accelerate relatively quickly and probably faster than the industrial sector. So the pace of growth there should be higher, it's less capitally intensive. And so the margins typically in the industrial sector are a higher margin that we realize than we do in the residential and commercial sector to give some indication with our actual numbers. Understood. Maybe.

Maurice Choi - Equity Analyst - (00:32:30)

Go ahead.

Adam Beatty - President of ACCO Structures - (00:32:32)

I said the cash flow that we generate from those two sectors we use that as a cycle of reinvestment into our industrial sector fleet and growth. So we continue to build that stable base on getting to the critical scale that we want to continue to improve on and our fleet investments in space rentals and workforce housing.

Maurice Choi - Equity Analyst - (00:32:56)

I understand maybe as a quick follow up, I guess when you think about your last few years where you've rebuilt your base business and I think that part of that has to do with this rental fleet that you've managed to rebuild, recontract and reposition. When you think about the next three years, what do you think would constitute a successful three years in terms of growth in earnings? And you can choose about three or five years. But just trying to figure out what. Is the growth profile of this business.

Adam Beatty - President of ACCO Structures - (00:33:35)

Yeah, we don't provide forward guidance at this point in time, but certainly what we see is that the pace of growth that we've experienced in the past is not inconceivable in terms of what we see going forward. Perfect.

Maurice Choi - Equity Analyst - (00:33:54)

Thank you.

OPERATOR - (00:33:57)

Once again. If you have a question, Please press star, then 1. The next question is from Rob Hope with Scotiabank. Please go ahead.

Rob Hope - Equity Analyst - (00:34:08)

Yeah, I did want to circle back on the residential side there. I do appreciate the commentary that you could see some higher growth there as well as the improved margins there. When we think about geographies, which do. You think is going to be kind of the most impactful for you, that we should be watching for the residential build out and you know, and kind of what are the other kind of key policy factors we should be looking for? Yeah.

Adam Beatty - President of ACCO Structures - (00:34:35)

Good morning, Rob. Hi. Certainly I think the key growth geographical region for housing for us over the coming periods will be Canada. And realistically the key there is that's where we've made our strategic inorganic acquisitions. We've really expanded our physical footprint and manufacturing capability to service that market. And we see policy changes and investment decisions really looking to accelerate the cycle of funding put into that sector and the cost competitiveness of modular manufacturing. And the solution in terms of the pace, three times faster we just proved out in that project that I referenced in our presentation really show that that is where we see the market, the greatest market opportunities and concentration of where the growth will occur in the residential sector.

Rob Hope - Equity Analyst - (00:35:36)

All right, appreciate that. That's it for me.

Adam Beatty - President of ACCO Structures - (00:35:37)

Thank you.

OPERATOR - (00:35:41)

This brings to a close the question and answer session. I'd now like to turn the conference back over to Colin Jackson for any closing remarks.

Colin Jackson - Senior Vice President Financial Operations - (00:35:52)

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

OPERATOR - (00:36:04)

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