Atco (TSX:ACO) reported first-quarter financial results on Wednesday. The transcript from the company’s first-quarter earnings call has been provided below.
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View the webcast at https://event.choruscall.com/mediaframe/webcast.html?webcastid=XPb2K8fW
Summary
Atco reported adjusted earnings of $165 million for Q1 2026, a 3% increase year-over-year, driven by growth in utility investments and increased activity in Atco Structures.
The company highlighted a strategic focus on defense opportunities in Canada’s North with a potential $35 billion investment in infrastructure upgrades, emphasizing their expertise in Arctic and defense operations.
Atco Structures achieved its fifth consecutive quarter of earnings growth, supported by strong space rentals and modular construction sales, with an investment in expanding manufacturing capabilities.
Significant future growth is anticipated from defense sector opportunities and ongoing projects such as the Stibnite Gold project, with a strong backlog of $113 million in new contracts secured in Q1.
Management emphasized the strength of Atco’s diversified portfolio in delivering stable earnings and dividends while continuing to explore opportunities for long-term investments in strategic sectors.
Full Transcript
Colin Jackson (Senior Vice President, Financial Operations)
Thank you and good morning everyone. We are pleased you could join us for ATCO’s first quarter 2026 conference call. On the conference line with me 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 in Calgary which is located in the Treaty 7 region. This is the ancestral territory of the Blackfoot Confederacy comprised of the Sisika, the Kainai, the Pagani and the Sutina Nation and the Stoney Dakota nations which include the Chiniki Bears, Par 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. We honor and respect the diverse history, languages, cities, ceremonies and culture of the Indigenous peoples who call these areas home. 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 today’s presentation we may refer to certain non GAAP and other financial measures including adjusted earnings and adjusted ebitda. These measures do not have any standardized meaning under IFRS and as a result they may not be comparable to similar measures presented by other entities. And now I’ll turn the call over to Katie for her opening remarks.
Katie Patrick (Chief Financial and Investment Officer)
Thanks Colin and good morning everyone. Thank you for joining us today. Despite the ever changing geopolitical landscape across the world, we continue to execute and deliver on our strategy across the ATCO portfolio. Some of you may have seen our refreshed brand launch which rolled out last week. Energy, Housing, Defense. It’s hard to think of three more relevant trends in the world today and ATCO has a long history and is extremely well positioned in each. Our long term investment focused and diversified nature of our assets positions our business businesses to drive growth for the total portfolio, generating stable earnings and dividends for shareowners. We often talk about our strategy related to housing through ADCO Structures and energy through Canadian Utilities, but today I thought we would begin by talking a bit more about the defence opportunity ahead of us and how ATCO is positioned in particular. As you can see outlined on the slide, there is a landscape of growing opportunities in Canada’s North. The Federal Government has shared its commitment to invest in Canada’s defence sector with a significant focus on the Arctic. This includes $35 billion of funding towards defense infrastructure upgrades, new Northern Operational Support hubs, modernizing and upgrading Arctic airports, civilian infrastructure and key economic hub developments. Aligned with our expertise, we see Canada’s north as a critical development opportunity. ATCO has a demonstrated history of success in what we feel are the four critical elements to success. First, Arctic experience Second, Defense experience Third, Construction experience Fourth and most importantly, Indigenous participation and partnerships. For close to 40 years ATCO Frontec has operated in the most remote parts of North America’s Arctic. We are a trusted defence partner who operates and maintains critical defence infrastructure like the North Warning System, a joint Canadian and United States radar network monitoring Arctic airspace and the Alaska Radar System. ATCO Frontec provides comprehensive operational support, site services, facility maintenance and logistics. We also have trusted Indigenous partnerships built over the course of many years operating in the North. To be specific, across ATCO we currently have 73 partnerships, MOUs and arrangements with Indigenous groups. This is something we are incredibly, incredibly proud of and aligns with our history and ongoing commitment of collaborating with Indigenous communities. As a demonstration of the types of investments we are talking about, in March we announced a $10 million investment in West Kitikmeot Resources, or WKR, who will develop the Grays Bay Road and Port Project in Nunavut. This critical project is highlighted in the Federal Government’s Nation Building Projects list. While it is very early days today, this partnership should be thought of as a growth investment. We believe WKR will one day develop into a strong foundational investment for atco. The Grays Bay Road and Port project strongly aligns with ATCO’s existing expertise and strategy in the north while building on our growth oriented assets across the housing, energy and defense sectors. Now moving to the quarter’s results, ATCO achieved adjusted earnings of $165 million or $1.47 per share in the first quarter of this year. This is up 3% year over year and in line with our expectations for the quarter. Results were driven by growth in the utilities as well as increased sale and leasing activity in Canada at aktostructures. The quarterly results reiterate the benefits of our diversified portfolio of investments. Looking at the specific businesses, ATCO’s investment in Canadian Utilities Ltd. Delivered adjusted earnings of $127 million for the quarter, up $5 million year over year. Higher adjusted earnings were primarily driven by growth in rate base at ATCO Energy Systems as well as higher rates and favorable CPI adjustments at Aquagas Australia. As mentioned on this morning’s CU call, there is significant momentum across our utility assets in Alberta and we expect earnings growth on a full year basis. ATCO Structures and Logistics delivered adjusted earnings of $28 million up 4% year over year. Adjusted earnings at ATCO Structures were driven by the space rentals portion of the business along with earnings from our stibnight project, which Adam will speak to in his remarks. Looking at the full year 2026, we expect to see strong organic earnings growth across the portfolio of investments. With that, I will now pass the call over to Adam to discuss our atcostructures and logistics business.
Adam Beatty (President of ATCO Structures)
Thank you Katie and good morning everyone. I’ll focus my comments on ATCO Structures and how our first quarter performance reflects the operating metrics you see in today’s material ATCO Structures. Delivered $27 million of adjusted earnings in the first quarter, making our fifth consecutive quarter of year over year earnings growth. This performance reflects the durability of our diversified model across space rentals, workforce housing and permanent modular construction and is a credit to the teams across our operations. Earnings in the quarter were supported by strong space rentals activity, permanent modular construction sales and contributions from our progress on the Stibnight Gold project. Importantly, our results continue to be underpinned by disciplined execution and a focus on deploying the right mix of rental fleet and manufacturing capacity to meet our customers needs. During the quarter we increased our global space rentals fleet by 5% while maintaining our desired utilisation target. The average rental rate increased by 7.7percent year over year to $863 per month on average, reflecting price discipline across ACCU geographies. The improvement in fleet performance contributed to the $65 million of adjusted EBITDA generated in the quarter which grew 5% over the prior year. The modular industry continues to benefit from demand for fast delivery, high certainty on schedule and quality versus traditional construction, particularly in affordable housing, education, community infrastructure and resource development. ATCostructures serves these areas well because of our scale, our ability to offer end to end solutions and our established branch and manufacturing network that keeps us close and responsive to our customers. Additionally, this quarter ATCO Structures invested in the launch of a national advertising campaign throughout Canada showcasing our expertise across multiple modular residential, commercial and industrial construction applications. This campaign garnered considerable positive feedback and generated an increase in inbound leads for our Canadian operations. I’ll pause on the scale of our platform because it is a meaningful differentiator in the modular industry. Globally we operate 44 branches and 13 manufacturing locations across five countries. Over the last several years we have expanded our operations and manufacturing footprint through organic growth, targeted acquisitions and investment in lean manufacturing process optimisation. Leveraging this scale and efficiencies, we have increased our ability to serve customers globally better than ever. The integration of NRB Modular solutions is another good example of how we can add capacity and capability efficiently and strengthen our reach and serviceability for existing and new customers. We are also advancing the expansion of our Grimsby, Ontario manufacturing facility. This factory expansion has been designed to increase our throughput and create operating synergies across our vertically integrated business segments with a more efficient production flow and an expanded product mix and nearly double the production capacity. Our integrated model, which includes design, manufacturing, delivery, installation and in many cases ongoing operations …
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