ATCO (TSE:ACO.X) reported second-quarter adjusted earnings of CAD 114 million, or CAD 1.01 per share, up 13% from a year earlier, as stronger activity at its Structures business and utility operations supported results.
Chief Financial and Investment Officer Katie Patrick said the company is operating in an environment marked by demand for resilient infrastructure and services across housing, energy and defense. She said those areas are benefiting from economic and geopolitical factors, creating opportunities for companies that can support communities, industries and governments.
Structures Delivers Continued Earnings Growth
ATCO Structures delivered CAD 36 million in adjusted earnings during the quarter, marking its 16th consecutive quarter of year-over-year earnings growth, according to President Adam Beattie. Adjusted EBITDA for the business rose 17% year over year to CAD 82 million.
Beattie said results were driven by space-rental activity in the United States, Canada and Australia, as well as contributions from the Stibnite Gold Project and new permanent modular construction contracts. Global average monthly rental rates reached CAD 896, a 10% increase from the prior year.
Newer U.S. branches in Phoenix, San Antonio, Louisiana and Seattle were among the major drivers of growth as they reached higher operating capacity and targeted utilization levels, Beattie said. He added that the company expects demand and fleet performance to remain favorable through the end of 2026.
The company completed manufacturing for phase one of its Stibnite Gold Project during the quarter and expects the first handover milestone in the latter part of the fourth quarter.
ATCO Structures also reported several contract wins during the quarter:
- CAD 89 million of Canadian contracts for space rentals, workforce housing and permanent modular construction, covering more than 365 modular units.
- CAD 23 million of U.S. contracts for space rentals and workforce housing, including 250 modular units.
- A CAD 57 million Australian workforce-housing contract for a mining project in Western Australia, including 160 modular units.
Beattie said the company also secured space-rental work related to data center projects in New South Wales and Victoria. He described the projects as having high fleet requirements and rental terms generally averaging 24 to 36 months. ATCO Structures received a further CAD 80 million in notices of award and limited notices to proceed during the quarter, with those projects expected to begin in 2026.
Manufacturing facilities have strong backlogs through the end of 2026 and into 2027, Beattie said. The company is seeing demand from data center construction, energy and mining customers, and urban affordable-housing projects.
Utility Investment and Cash Flow
ATCO’s investment in Canadian Utilities generated adjusted earnings of CAD 74 million, an increase of CAD 11 million from the second quarter of 2025. Patrick said all three of Canadian Utilities’ key businesses posted growth in the quarter.
Patrick said utility earnings benefited from inflation indexing on rate base and higher rates at ATCO Gas Australia. In response to a question on capital expenditures, she said projects beyond the CAD 2.9 billion Yellowhead project are generally smaller by comparison, though the portfolio includes relatively larger transmission opportunities as well as resiliency and information-technology investments.
Standalone ATCO businesses, excluding Canadian Utilities, generated CAD 122 million in cash flow from operating activities, up nearly 70% from the prior year. Patrick attributed the increase to higher fleet sales at ATCO Structures and the timing of accounts-receivable collections.
Defense and Northern Infrastructure Opportunity
Management highlighted potential long-term opportunities tied to Canadian defense investment and Arctic infrastructure. Patrick pointed to federal funding announcements that include CAD 32 billion for defense infrastructure upgrades over 10 years and CAD 2.7 billion for a network of support sites and hubs. She also cited approximately CAD 80 billion of government defense infrastructure spending connected to modernization of the North American Aerospace Defense Command and the proposed Golden Dome for America project.
Patrick said contracting for the opportunities remains at an early stage. ATCO has operated and supported defense-related projects in Canada’s Arctic since 1987 and has developed Indigenous partnerships in the region, she said.
Earlier in the year, ATCO announced a CAD 10 million investment in West Kitikmeot Resources for development of the Grays Bay Road and Port Project in Nunavut. The development would include a deepwater port with access to the Northwest Passage shipping corridor. Patrick said the project was referred to Canada’s Major Projects Office and was among the first three projects considered under the federal Build Canada Act at the end of June.
Management expects housing requirements associated with northern and defense projects to emerge before major construction begins. Beattie said the company could see more material housing demand over the next six to 18 months, including temporary workforce accommodations, community infrastructure and on-base military housing.
Looking ahead, Patrick said ATCO expects earnings growth across its portfolio in the second half of the year, while noting the company does not provide specific forward guidance. Beattie said ATCO Structures remains focused on organic expansion and evaluates acquisition opportunities, particularly in Australia, Canada and the United States.
About ATCO (TSE:ACO.X)
Atco Ltd is a Canadian holding company that offers gas, electric, and infrastructure solutions. The largest subsidiary of the company is Canadian utilities, which operates natural gas, electricity, and logistical services. Atco’s primary segments include Structures and Logistics; Utilities; Energy Infrastructure; Neltume Ports and Corporate and Other. It generates maximum revenue from the Utilities segment. Geographically, it derives most of its revenue from Canada.
