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Operator: Thank you for standing by. This is the conference operator. Welcome to the Second Quarter 2025 Results Conference Call and Webcast for ATCO Limited. [Operator Instructions]. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Go ahead, Mr. Jackson.
Colin R. Jackson: Thank you, and good morning, everyone. We are pleased you could join us for ATCO's Second Quarter 2025 Conference Call. On the line today, we have Katie Patrick, Chief Financial and Investment Officer; and Adam Beattie, President of ATCO Structures. Before we move into today's remarks, I would like to take a moment to acknowledge the numerous traditional territories and Home lands 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 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, Bearspaw and Goodstoney First Nations. I also want to recognize the City of Calgary is home to the Metis Nation of Alberta Districts 5 and 6. During our second quarter, we proudly celebrated National Indigenous history month in Canada. The time to honor the stories, achievements and resiliency of indigenous peoples. We continue to respect and celebrate the diverse history, languages and culture of indigenous peoples beyond the month of June. Today, we'll hear from Katie, who will deliver opening comments on our financial results and recent company developments, followed by an update from Adam on ATCO Structures. Following today's remarks, the team will take questions from the investment community. Please note a replay of the conference call, a copy of the presentation and today's transcript will be available on our website at atco.com following the call. The materials can be found in the Investors section under Events and Presentation. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please refer to our filings with the Canadian securities regulators. During Dave's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings and adjusted EBITDA. These measures do not have any standardized meaning under IFRS and as a result, they may not be comparable to similar measures presented by other entities. And now I'd like to turn the call over to Katie for her opening remarks.
Katherine-Jane Patrick: Thanks, Colin, and good morning, everyone. Thank you all for joining us today. ATCO achieved adjusted earnings of $101 million or $0.90 per share in the second quarter, up $5 million compared to the same period in 2024. Steady growth in our Canadian Utilities investment was driven primarily by growth in our rate base, across our regulated utilities at Energy Systems, combined with higher rates and ROE and ATCO Gas Australia as they moved into their new 5-year access arrangement. This growth more than offset the reset in the allowable ROE at our Alberta utilities and the conclusion of the efficiency carryover mechanism which ended in 2024 for our Alberta distribution utilities. I want to highlight and congratulate the teams on our ability to find efficiencies and overcome these headwinds to still achieve growth. We also saw strong seasonal spreads in natural gas storage services at ATCO EnPower over the quarter. ATCO Structures had another strong quarter, delivering adjusted earnings of $32 million, up $2 million compared to the same period in 2024. Higher adjusted earnings this quarter were driven by increased permanent modular construction activity in Canada and increased workforce housing sale activity in Australia and Chile. Structures delivered adjusted EBITDA of $70 million in the second quarter, and we are on track to exceed last year's annual EBITDA of $241 million. In our view, structures continues to be undervalued in the market when you assess our ATCO's sum of the parts trading value. Its implied value is a significant discount compared to our peers, which trade at 8 to 10x EBITDA. We continue to successfully execute our strategy at ATCO Structures resulting in very strong and reliable growth for the business, a focus on rental and sales, geographic diversity and the reduced dependence on large projects continues to drive this growth. Adam will discuss the Structures business further in his update. Moving to ATCO Frontec, year-over-year adjusted earnings are up compared to the same period in 2024. This was primarily driven by operating efficiencies that have been implemented throughout the business. Within ATCO Investments, our Neltume Ports investment delivered adjusted earnings growth of $1 million compared to Q2 2024. In May, Neltume broke ground on the Vancouver Bulk Terminal, a joint venture between Neltume Ports and Nautilus International Holding Corporation. This facility will have the capacity to export 3 million tons of soda ash annually and is expected to be operational by late 2026. As a reminder, a Naltume investment benefits from its diversification with 17 multipurpose both cargo and container port facilities and 5 port operation services. Since our investment in 2018, we have already seen a series of significant geopolitical events, including COVID and trade uncertainty. Our results in this business have remained very resilient, and this investment is a strong proxy for the types of other investments we would look to make within this new investment segment. Looking at our cash flows. Our stand-alone ATCO businesses, which excludes Canadian Utilities, reported cash flow from operating activities of $192 million year-to-date, up over 30% compared to the previous year. This growth allows us to increase capital spend and investment in the business, setting us up for success now and into the future. Year-to-date, the ATCO stand-alone businesses reported capital expenditures of $117 million, up $43 million year-over-year. Higher expenditures were primarily due to increased capital spending on rental fleet additions in ATCO Structures, largely in the United States. With that, I will now pass it over to Adam to further discuss our ATCO Structures business, including our performance across the key geographies we operate in.
Adam M. Beattie: Thank you, Katie, and good morning, everyone. ATCO Structures delivered another strong quarter with adjusted earnings of $32 million, representing the 12th straight quarter in a row of delivering year-over-year adjusted earnings growth. Our global space rentals business continues to be a strong proxy of overall structures performance. Over the last 5 years, this business has seen an increase in our total fleet size by 54% to over 25,700 units that are well diversified geographically across the 5 countries that we operate. Strong growth has also been achieved in our average rental rate, all while maintaining an average utilization rate of 75%. In our first half of the year, growth within ATCO Structures was driven by strong performance in Canada and Australia. In Q2 2025, we continued growing our market presence through organic strategic initiatives and investment in our base business. This included the expansion and optimization of our global rental fleet and the addition of a new manufacturing facility in Australia. This new location in Brisbane will alleviate capacity constraints, enable our planned fleet expansion and provide capacity to meet demand for new infrastructure projects in the region. This further illustrates the resiliency and diversity of our business, the industries we serve and the geographies we operate in. As we look towards the second half of 2025, we see ourselves well positioned. Stimulated from our recent strategic acquisition of NRB, which expanded our modular manufacturing and housing delivery capabilities across Canada combined with our market entry in multiple key locations within the U.S., we expect to see a number of project opportunities awarded before the end of the year. Expected market tailwinds, combined with our increased market share and a continued prioritization of our base business growth is encouraging. Beyond 2025, we continue to execute on securing a robust pipeline of new opportunities across our key product lines. Our long-term growth strategy is focused on housing expansion, base business growth via our rental fleet growth, new branch locations and advanced manufacturing, which focuses on incorporating process technology advancement and new product lines in our operating geographies. We are confident in our market position and our ability to deliver our business growth objectives. I'll now pass the call back over to Katie.
Katherine-Jane Patrick: Thank you, Adam. Overall, we had a strong first half of the year, driven by growth across our portfolio of investments. As we look to the second half of 2025, we will continue to focus on executing the strategy we set out for ourselves while capitalizing on opportunities when available as we drive continued share owner value. That concludes our prepared remarks. I will now turn the call back to Colin.
Colin R. Jackson: Thank you, Katie. We encourage you to join our Q&A queue in the effort of time, we ask that you limit yourself to 2 questions and rejoin the queue should you have another question.
Operator: [Operator Instructions]. The first question comes from Ben Pham with BMO.
Benjamin Pham: You referenced the ATCO Structures business in terms of implied multiple versus what you're seeing out there from peers. Can you comment, is this the widest discount you've seen structures relative to kind of the comps that you're looking at? And maybe you maybe level set the conversation around like what are the key differences between your business and others?
Katherine-Jane Patrick: Yes. I can comment on the market activity. I would say no, I don't think this is the widest discount that we've seen. I think we have been working hard to narrow that discount and the business itself and the performance we've seen has really helped to make it clear to the market about the value that is in structures. But that being said, it is still, in our minds, trading at a discount level. It's obvious, as I was saying, it's not -- you can't just see exactly what structures is trading at, but you can do the implied some of the parts to realize the value there. So from a -- maybe I'll let Adam talk to some of the differential between the peers. But I would say we view ourselves as the global market leader in this sector, and Adam can maybe address that a bit.
Adam M. Beattie: Ben, look, I think key differences compared to other listed companies as the diversity and scale of our modular fleet of where it's located, but also the added value that we have within our organization of having 12 manufacturing locations globally that allow us not only to execute rental contracts but also a significant amount of sale trade contracts, which is manufacturing new products and delivering turnkey solutions to customers, which most of our peers that are listed do not have that capability. So I think that's a significant advantage in terms of your ability to unlock next phases of growth.
Benjamin Pham: And may I follow up to that. You highlighted a couple of projects on your press release, the structures leveling. Are you able to comment to that as you've given some dates associated with both some of these structures project. This list here doesn't reference that at all? Are you able to share in terms of time frame or revenue benefit?
Katherine-Jane Patrick: Yes. Most of it, I can quickly answer. I think most of the projects that we listed were projects that we were awarded during the quarter, and it's a nonexhaustive but an indicative list the types of projects that we are going after. So the majority of those are some smaller projects that I think you would see the benefit of those within the year. But they, for the most part, sort of run rate, just a good demonstration of the diversity of our project list.
Adam M. Beattie: And most of that, Ben, most of our projects, as soon as they're awarded, they move pretty instantaneously into execution phase.
Operator: The next question comes from Maurice Choy with RBC Capital Markets.
Maurice Choy: Just wanted to chat about Frontec. Obviously, over the -- since you last had on the Q1 call, Canada has committed to increasing its defense investments to be 5% of GDP by 2025. In the press release that you put out this morning, the contract wins that you have largely relates to structures and less so on Frontec. So assuming this increased defense spending is optimistic for Frontec. When do you anticipate seeing new contracts for this segment? And any color you could give in terms of timing, pace and nature of contracts?
Katherine-Jane Patrick: Yes. Thanks, Maurice. I think like many parts of the new federal government, we're very optimistic about some of the things that are being said around nation-building projects, within utilities and around defense spending in particular and housing for ATCO Structure. So there's 3 areas that we really think that we are very poised to benefit from as the federal government rolls out their political agenda. I think like most Canadians, we are waiting to see the actions come from the word, and we're ready to act when it starts happening. So in particular, as it relates to defense spending and in the north, I think we are one of the best positioned Canadian companies that there is to benefit from that. Frontec has a long history of operating in the north, as does many of our other businesses, structures and Canadian utilities as well. So we are waiting for some of the contracts to start coming out. I think it's difficult to give a specific time line because it is in the hands of the federal government, a lot of these. But you did see that we did have a win already for the polar over the horizon radar in the North , a small win, but indicative of people acknowledging the strength of our business there. So I think we expect, over the course of the rest of this year to start seeing some of those contracts where we could participate come out.
Maurice Choy: Understood. And if I could just finish off with the structures question. You've called out the multiple award schedule contract by the U.S. GSA that was awarded to you, which enables you to sell directly through GSA just trying to understand what this means tangibly for your earnings, does it open you up to a larger pipeline? Or is it about improving margins as you are cutting out like a middle person?
Adam M. Beattie: Yes. It's early days in the accreditation. And like any of these government contracts, there's no specific specification of award volume at this point. But it's an access point to supply directly to the government. So it can grow over a period of time. So the key is the relationship and the ability to supply direct to government. So I would say it's not focused on margin. It's focused on volume growth of activity dealing directly with the government, with the U.S., and that's where we saw the accretion on.
Maurice Choy: And just trying to understand what kind of products and services are we speaking about your side that you sell directly to the...
Colin R. Jackson: It's modular building supply.
Operator: Next question comes from Mark Jarvi with CIBC Capital Markets.
Mark Thomas Jarvi: Back in May, you issued some debt at the ATCO Limited level. Just curious in terms of the quantum that came was raised, just where it all kind of went. And then just future capital needs, I guess, to keep growing structures and logistics or where else you might be needing capital at the acumen level going forward?
Katherine-Jane Patrick: Yes. No. I mean that was -- we issued $250 million of limited level. We saw very, very strong demand for that offering. So we do know that there's appetite for continued capital to help fund our business. That was a bit of a cleanup some of our credit facilities, including we had made the acquisition of energy from Canadian Utilities, a few other items where we were cleaning up the corporate level credit. We also do have a facility in place at the structures level, where they have lots of room to continue to grow off that. And we would access continued external public funding, mostly in connection with larger investments that we might make or larger investments that structures may make requiring equity.
Mark Thomas Jarvi: But on an organic basis, I don't see a need to top up anything at this point in the foreseeable future?
Katherine-Jane Patrick: Yes. On an organic basis, we don't and structures will continue to draw on its facility to fund its organic growth.
Mark Thomas Jarvi: Okay. And then just in terms of the federal policies and you think about affordable housing, community housing, the Northern and sort of defense spending. Do you have a sense of what would be more of a needle mover overall for your company in the next sort of 3 to 5 years?
Katherine-Jane Patrick: Yes. Like I can -- I think, to be honest, the one that has the most momentum at the moment, there certainly is something to be said for the defense spending. But I think the one that has the most momentum at the moment, and we're actually seeing tangible progress is on the housing front. And we had -- we were in the front page of the Calgary Herald yesterday. So I think I'll let Adam kind of talk to where we see some of that potential demand.
Adam M. Beattie: Yes. Certainly, I think the key there or the opportunity of the committed government spending around affordable housing presents and the specific recognition of prefabricated and modular. Our physical manufacturing capacities and locations spread across Canada, I think it's a viable opportunity for the government to rapidly expand the housing supply in that affordable attainable housing space and using the experience we have in delivering modular housing over 3,000 in the past 7 years. We've delivered of modular housing low-cost affordable modular housing. So I think that's a significant opportunity, and it's a capability that we have that aligns with the government's defined objectives there.
Mark Thomas Jarvi: Is there any potential to provide more operating and disclosures around that subsegment and sort of make it more stand-alone from the rest of the structure and logistics? Or are these more obvious if you view that it becomes a high growth in an area that investors might reward you for? Is there an opportunity to highlight that better?
Katherine-Jane Patrick: Yes, absolutely. We'll take that one away and see how we progress in the coming quarter and take that away as a potential improvement to our disclosure.
Operator: [Operator Instructions]. The next question comes from John Mould with TD Cowen.
John Mould: Maybe just picking up on that last question on the modular housing side. If that opportunity does pan out in Canada, as you're hoping or maybe the upside of maybe the mid-range scenario you're contemplating. Have you got the scale you need on the manufacturing side to fully capture that opportunity? Have you got a straightforward path to adding capacity if needed. How should investors understand your positioning there?
Adam M. Beattie: Yes. So number one, I think the easiest way to put this is there's significant existing capacity on a single shift to supply to that opportunity immediately at scale. And then with manufacturing or modular manufacturing production capacities, then you can move to double shift production that it rapidly increases your production output, and that's a very easy and accessible escalation of capacity before you even have to start moving on to new facility locations. To put it in the context, that's about 5,000 additional modules per annum just on a single shift we have capacity for.
John Mould: Got it. And then just more broadly on organic investment, you commented on that focused on organic strategic initiatives and flag that new manufacturing facility in Australia. Where else are the key focus points for you at this stage to make further investments along that line? Should we think of the U.S. as a key focus just given that market's relevant fragmentation and maybe an update on the level of competition you're seeing in the U.S. right now on the structure side more broadly?
Adam M. Beattie: Definitely. Look, I think our 3 primary markets of the U.S., Canada and Australia. Still, we feel have significant growth opportunities for us organically and inorganically. And certainly, our footprint in the U.S., I think I've specified that before, is quite small in comparison to the market. I think the very encouraging thing for us in this, we have a very good performing business model, we feel there's been a lot of consolidation in that -- at the top end of that market, and it's right for new competitors. And you're looking at some of the smaller regional competitors that probably limited in their capacity to grow within those markets. So strategically, obviously, fleet growth, the housing market in the U.S. and manufacturing additional manufacturing capacity in the U.S. will be areas that got sort of progress over our long-term strategic pathways.
Operator: This concludes question-and-answer session. I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Please go ahead.
Colin R. Jackson: Thank you. And thank you all for participating today. We appreciate your interest in ATCO, and we look forward to speaking with you again soon.
Operator: This brings to a close of today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.