ATCO Ltd.

Thank you and good morning, everyone. We are pleased you could join us for ATCO’s fourth quarter 2024 conference call.

On the line today, we have Katie Patrick, Executive Vice President, Chief Financial and Investment Officer and Adam Beattie, President of ATCO Structures. Before we move into today’s remarks, I would like to take a moment to acknowledge the numerous traditional territories and homelands of 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, Bearspaw and Goodstony 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, ceremonies and culture of the indigenous peoples who call these areas home.

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 ATCO team will take questions from the investment community.

Please note that 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 Presentations.

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, adjusted EBITDA and capital investment. 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.

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

Reflecting on the past year our strong performance in 2024 highlights our continued focus on our strategic growth objectives. I am pleased to report that ATCO achieved adjusted earnings of $481 million.

This is $49 million and over 11% higher than the previous year. This $49 million of growth demonstrates the strength of our strategy to invest in resilient assets within the essential services space with all of our segments delivering year-over-year growth in adjusted earnings compared to 2023.

At Canadian Utilities, growth in 2024 was driven by a few factors, including rate base growth across our utilities, the increase in allowable ROE from 8.5% in 2023 to 9.28% in 2024 and the benefit of the efficiency carryover mechanism. As discussed on this morning’s CU call, we will have a reset to our Alberta utilities allowable ROE from 9.28% to 8.97% for 2025.

Additionally, the efficiency carryover mechanism we were awarded in 2023 and 2024 for achieving efficiencies during PBR2 comes to an end. With these two factors – while these two factors will contribute to more moderated growth in 2025, we anticipate continued rate base growth and cost savings to partially offset this.

Over the long-term, we continue to be bullish on the outlook of our energy businesses. As population and industrial needs continue to grow, we expect to see very strong fundamentals in our core Alberta markets and opportunities to deliver even higher rate base growth.

Moving to Structures & Logistics. Adjusted earnings in 2024 were $14 million higher compared to the prior year.

ATCO Structures delivered growth throughout 2024, which was tied to their strong base business performance, driven by increased global space rental activity, in addition to improved workforce housing trade sale performance, across Australia, Canada and the U.S. Neltume Ports continued to deliver consistent results as adjusted earnings were $2 million higher compared to the prior year.

Neltume remains focused on growth and the deployment of capital, all while being a stable source of dividends for ATCO. Moving to the very important cash generation, when looking at our standalone ATCO businesses, which exclude Canadian Utilities, cash flow from operating activities was $280 million in 2024, up over 50% from the prior year.

This growth was driven by our strong focus on finding efficiencies within our business, along with actual energy being reported under our ATCO Corporate segment in 2024. This growth supported our operations, capital program and normal course financial commitments.

Looking ahead, we continue to have significant growth aspirations across our existing investments at ATCO and share owners can expect that new investments we make will be tied to our proven strategy of investing within the essential services space. Further, our capital investment plan over the medium term at the ATCO level is expected to be primarily funded by our internally generated cash flow.

Before I turn the call over to Adam to discuss ATCO Structures in more detail, I want to speak to our ATCO investment portfolio briefly. To maintain our exceptional dividend resiliency, our portfolio has been constructed to provide a balance between yield and long-term growth.

This balance ensures we have stable and reliable earnings and cash flows to support not only our dividends, but also the investments we expect to make within our existing businesses to drive long-term growth. As a final point, we will continue to focus on demonstrating the value of ATCO Structures as we believe the market is currently undervaluing this investment.

Despite ATCO Structures now delivering an annual adjusted EBITDA of over $240 million, along with 10 quarters in a row of year-over-year adjusted earnings growth, it continues to be valued at a significant discount compared to our North American peers, which trade at 8x to 10x EBITDA. We look forward to continuing our investor marketing efforts throughout 2025 and beyond to talk more about this.

And with that, I will now pass it over to Adam to further discuss our ATCO Structures business.

Thank you, Katie and good morning everyone. As Katie alluded to, ATCO Structures delivered another strong year with adjusted earnings of $108 million, representing our tenth quarter in a row of delivering year-over-year adjusted earnings growth.

In 2024, we realized growth across all the markets we operate in. We expanded our global footprint by establishing new markets and service capabilities through both organic and planned strategic initiatives.

During the year, we established 5 new operating locations across Canada and the U.S. alone.

Increased demand combined with continuous supply optimizations allowed us to continue to sustain growth in our rental fleet and other business lines. Our strategically positioned international operations combined with our expertise in global modular product manufacturing remains a key competitive differentiator to our modular peers.

Our recent pace of growth across our footprint strengthens our position as a market leader in modular shelter solutions. Our growth continues to be underpinned by the expansion of our base business, primarily in the U.S., Canada and Australia and the optimization of our global fleet performance and distribution of single and multifamily modular housing products.

Over the last 5 years, our global space rentals business has seen an increase in our total fleet size by 53% to over 25,000 units that are well diversified geographically across the 5 countries we operate and growth in our average rental rate of over 38%. This while maintaining an average utilization around our target of 75%, demonstrating the continuous execution of our strategy which is to increase our customer base and market share by effectively moving new fleet on to contracted rental terms while still providing sufficient stock of available assets to quickly service our customers across multiple project sites.

Going forward, strategic investment will be organic and – organically and inorganically made to continue to grow our fleet and other sustaining base business initiatives aligning with our long-term growth strategies. In 2024, we were pleased to announce the acquisition of NRB Modular Solutions.

NRB was a leader in manufactured modular multifamily residential, industrial, education and commercial buildings. Upon close, the business was fully integrated into our Canadian modular operations.

The acquisition allowed us to more competitively and quickly support products, supply products to our existing operations and customers in Ontario and British Columbia, where we previously did not have manufacturing capabilities. NRB is playing a key role in our growth strategy, expanding our fleet and increasing our expertise and capacity to provide world class modular products and services to more customers across Canada.

With this acquisition, ATCO Structures is now the only national modular company that provides multiple forms of advanced new modular products, fleet, diverse manufacturing capability and world class site construction and project management capabilities across all of Canada. As we move into 2025, we remain focused on delivering sustainable earnings growth at Structures, driven by continued growth of our base business and the continued advancement of our skills and capabilities as an innovative world leader in modular solutions.

Beyond the success we’ve delivered within our space rentals business, our other business lines continue to provide a robust and balanced business model. Our residential housing segment, Triple M Housing continues to deliver strong results and has proved to be a valuable strategic addition to our business capability and portfolio.

We expect the current backlog of opportunities in front of us to continue throughout 2025 as an imbalance between housing demand and supply persists. I am pleased to see that modular housing is becoming a recognizable and popular solution to this national and international issue and ATCO has an array of products and skills to solution and support this need.

Overall, we remain confident that there continues to be a solid pipeline of project opportunities across Australia, Canada and the United States. And with improving business conditions in Latin America, we believe ATCO Structures is well positioned and equipped to secure and execute new opportunities in 2025.

I look forward to sharing these future updates as we progress throughout the year. I’ll now pass the call back to Katie.

Thank you, Adam. Since acquiring our 40% interest in Neltume Ports in 2018, our ports investment has been a stable contributor to earnings and dividends for ATCO.

As we look to the future, Neltume Ports will continue to focus on growth and the deployment of capital, both in the form of increased ownership in our existing ports and through the pursuit of new investments for a diversified portfolio. Part of this next phase of growth is tied to our Vancouver Bulk Terminal joint venture with Nautilus.

This opportunity will see us develop the soda ash export bulk facility at Terminal 2 within the Port of Vancouver, Washington. As we move into 2025 and beyond, we expect our Neltume Ports investment to generate earnings and growth through improved operational efficiencies at existing ports as well as deployment of capital into greenfield, brownfield and M&A opportunities.

Overall, ATCO had a great 2024 as demonstrated by the performance of each of our business units. Across our portfolio of investments, we continue to focus on executing on our growth plans.

More than that, we continue to believe that the unique combination of investments in our portfolio and the work we have done to expand the earnings from these investments creates the foundation to support our growth aspirations going forward. That concludes our prepared remarks.

I will now turn the call back to Colin.

Thank you, Katie. In the interest of time, we ask that you limit yourself to two questions.

If you have additional questions, you are welcome to rejoin the queue. I will now turn it over to the conference coordinator for questions.

Good afternoon or good morning everyone. Maybe to start off on the residential housing opportunity, can you maybe dive a little bit deeper here?

Like how much of structures is that right now and where you think it could be in a couple of years? It does seem like this is an effort to increase the size of the business, and we did see Veeva housing being launched.

Thanks Robert and good morning or good afternoon to you. Look, the residential market and our position is simply Alberta, I will start with Triple M.

Triple M is the largest or the largest modular single-family housing provider in Western Canada. So, from a market share base, I think from that perspective, they are a significant supplier into Western Canada and some parts of the U.S.

with a small portion of their supply. That opportunity expands with NRB when we get into different forms of housing requirements or residential requirements.

And they have quite a track record of delivering a number of multifamily projects throughout Eastern Canada or Central Canada and the West as well. So, in terms of volume, it’s reasonable, it’s not the majority portion of our business, but it’s a significant portion in terms of our sale trade activity that we produce in our company.

And then the market opportunities for it, obviously to build it out further in Canada, and then we also see the potential of further opportunities into the future in other countries in where we may operate. So – but that product is probably more minimal in terms of this point in time and Canada is the majority of where that activity occurs.

I appreciate that. And then maybe just moving over to ATCO Frontec, negative earnings for the year, you have had more negative orders here than positive over the last couple of years.

Is there an ability here to improve the profitability of that business? And I guess how much of that is actually tied to the structures part of the business versus – and business development versus, we will call it, some underperforming business lines?

Yes. Thanks Robert.

No, it’s been a difficult few quarters here for Frontec in terms of the overall results. And there has been a few headwinds that have been facing it.

Inflation certainly was one of the items that was causing some issues. This is a tight margin business.

So, in any way that cost can escalate quickly, it will erode margins pretty quickly. That said, there is a very strong link between our ATCO Structures business and Frontec on the camps side of the business, and the camps which is one portion of Frontec’s business.

So, I think Adam can talk about it. And I think that’s been historically a very good add-on and a very complementary service offering.

So, I might let Adam just talk about how that can play out in the future.

Yes. Thank you again, Robert.

Look, I certainly think there is a strategic value to our customer base in offering a turnkey solution and when ATCO Structures and Frontec unify and deliver these packages to our customers. It’s always positively received in the market.

So, I think that will be continually be a positive attribute of our business model or delivery model.

Thank you.

Thanks. Good afternoon.

Pretty positive comments around the outlook for structures, I am just curious if anything around the uncertainty of tariffs is impacting on the sales funnel and dynamics around securing new contracts, particularly I think maybe Mexico or any other markets where you are seeing sort of a bit of sort of decision-making being put on pause.

Yes, and look, there is a lot of – there is still not a lot of clarity around tariffs in terms of how that being in pause [ph]. What we do and I think it’s a very good position that we are in.

Yes, we have independent operations niche in those geographies and across North America. So, there is no lot of cross-border trade that makes up that commercial model in delivering to our customers.

So, that gives some positive growth but resilience around how that looks in terms of our business model.

What about on the sort of end demand in terms of customer needs and their decision-making in terms of moving forward on contracts?

I will just jump in before Adam kind of alluded to sort of the uncertainty that we all face in the environment right now, I would just say, overall, ATCO, because I think this is an important point. We don’t have a lot of course, cross-border trade, either within structures or any of our other businesses.

So, obviously, as everybody, no one in Canada wants these tariffs to move forward and the detriment to the inflationary environment and costs, we think is obviously going to be a headwind for everybody. But specifically in terms of first order magnitude impact to ATCO’s businesses overall, it’s relatively muted.

The second order impacts, obviously, are going to be affecting everyone in terms of taking a look at what this means going forward for the economy.

Understood. And then, Katie, on the Canadian Utilities call and in the press release this morning, you highlighted the inflection in the rate base growth, particularly 2027, what’s the views in terms of how ATCO feels about supporting the capital needs at Canadian Utilities that you do on the path of common equity raises, would you participate pro rata, any sort of updated view just in terms of how you see these – the two entities interacting going forward on capital needs?

Yes. CU is and always will be an important investment for ATCO.

And I think as we go forward and CU contemplates its need for capital, ATCO will weigh that in relation to the other investment opportunities and other opportunities to deploy capital that ATCO has on a risk-return basis. So, we will see when CU makes that decision, how ATCO chooses to participate.

At this point, though, it doesn’t seem like there is obvious needs for material capital investments either at the Neltume or structured business, maybe I am wrong on that, or maybe I don’t see anything else that you guys are hinting towards in terms of newer business verticals add to. So, as it stands today, would the preference be to continue to maintain your ownership level?

I think as it stands right now, the best returning part of our portfolio has been structures. And I think they have – in terms of our overall capital, there is the need for continued investment there.

And I think we would – as I have said, as it stands today, and I think we would consider what that looks like on a go-forward basis and before we made an investment decision.

Okay. Thanks for the time today.

Thanks and good morning everyone. Katie, in your prepared remarks, you mentioned that you believe the market is undervaluing ATCO Structures.

And you mentioned that the peers are trading about 8x to 10x, how would you compare this 8x to 10x range to what you are seeing in the M&A market for similar assets or platforms?

I couldn’t quite sure the end of that, Maurice. What was the – how would it compare to what?

To the M&A market for similar assets [ph] or similar platforms?

Yes. In general, the M&A market in this space has been pretty frothy, to be honest with you.

And the multiples that we are seeing in the trade there have been even higher than that 8x to 10x. So, if you look at both the trading costs and the precedent transactions around it, I think they are both supportive of higher valuation for structures than what we believe that we are getting from the market.

So, I guess with that, fully recognizing the legacy of this business within ATCO, are there any tangible actions that you are considering to service value?

That was headed towards whether we are considering any type of sale, quick answer is, no. We really like that business.

And I think the way that we are going to surface value for that business is continuing to, as we have demonstrated the growth and continuing to show the fundamentals of that business and how that can be sustainable over the long-term.

Maybe alongside that, on my calculations, the structures business is probably about 1x debt to EBITDA. And it seems to me that there is probably quite a bit of room there in terms of balance sheet capacity.

How do you think about utilizing that, because I think in one of your slides, you mentioned that strategic investments is important to your long-term growth structures?

Yes. We do have capacity for additional leverage on structures.

It obviously isn’t like our utility businesses in terms of the ability to bear a significant amount of leverage. But we operate well below our peers, and we still believe that there is capacity for us to be able to service additional debt there.

So, that definitely can contribute to additional growth infrastructures as well as some of the capital that we continue to accrue at the ATCO level in terms of excess cash flows that we have overall.

Thanks. And just to finish up, you mentioned 10 consecutive quarters of year-over-year growth for this particular segment.

As you look at 2025, do you believe you have sufficient contracts in place with the right returns to keep you going on beyond 10 quarters?

I will jump in there, Maurice. And I think probably what I can say is we are starting 2025 in a better position than we started 2024.

Thanks.

Maurice, thank you.

Hi. Thanks.

I am just going to a CU call again. There was commentary and enthusiasm around the data center opportunity in Alberta.

Is there anything around related to that, that only ATCO would look at instead as a separate business unit?

I think we put up the value turn of the numerous ways that ATCO can contribute. I mean I think you could put data center in a box.

I mean that’s theoretically something we could do restructured. But I don’t foresee that there is – but there would be a need for ATCO to specifically set up something different to participate in that data center.

I think the majority of that opportunity lies within Canadian Utilities.

Got it. So, nothing like being a real estate developer and getting out of permits and power and everything to set up maybe intercompany and whatnot?

To become like our own data center provider, I don’t think – I think if someone – we have a few parcels of land and if someone had an interest in developing a data center, we would certainly consider that. But I don’t think that, that’s a business line that we will be looking to start right now.

Okay. Got it.

And a lot of questions on structures, I appreciate that. On your slide on the global rental units, you have been investing couple of million dollars each year for extended period of time and bulking that up.

Are you almost at the path of finishing that investment cycle now, or are you expecting more in the years ahead?

I can start and pass it over to Adam. I think in terms of whether we are going to continue to invest in some of the space rentals fleet, I think in particular, they are not at all near saturation point in the U.S.

market. So, maybe Adam, can you talk a little bit about how we probably will continue to grow in that market.

Yes. I think that’s certainly – we certainly see growth opportunities in all the markets we operate, particularly the three primary ones Canada, Australia and the U.S.

But to give you some context that may help, we are 1% of the U.S. market in terms of our structures business.

So, there is a lot of runway in terms of potential for what we feel we can execute within that market. And certainly, we have seen a lot of positive response of our strategic execution over the last 4 years in that market, to our entry and our products and our position there.

So, that’s a good opportunity for us.

Okay. Thank you very much.

Thank you. Thank you all for participating today.

We appreciate your interest in ATCO and we look forward to speaking with you again soon.