Dexterra Group Q2 2026 Earnings Report

Dexterra Group EPS Results

• Actual EPS: C$0.20
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Dexterra Group Revenue Results

• Actual Revenue: $269.21 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Dexterra Group Announcement Details

• Quarter: Q2 2026
• Date: 8/4/2026
• Time: After Market Closes
• Conference Call Date: Wednesday, August 5, 2026
• Conference Call Time: 8:30AM ET

Dexterra employs more than 9,000 people, delivering a range of support services for the creation, management, and operation of infrastructure across Canada and the U.S. Powered by people, Dexterra brings best-in-class regional expertise to every challenge and delivers innovative solutions, giving clients confidence in their day-to-day operations. Activities include a comprehensive range of integrated facilities management services, industry-leading workforce accommodation solutions, and other support services for diverse clients in the public and private sectors.

Dexterra Group Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q2 results exceeded the prior-year period, with revenue up 8% to CAD 269 million, Adjusted EBITDA up 9% to CAD 33 million, and Free Cash Flow of CAD 22 million. The company attributed the performance to higher Workforce Accommodations occupancy, new contract wins, operational efficiencies, and the Right Choice acquisition.
• Positive Sentiment: Workforce Accommodations utilization reached approximately 85%, with roughly 2,000 beds of available capacity expected to be deployed over the medium term. Management expects rental activity to remain strong through the second half of 2026, supporting Asset Based Services margins at the upper end of the 30%-40% target range.
• Positive Sentiment: Dexterra highlighted a strong growth pipeline in U.S. facilities management, Canadian nation-building projects, and U.S. data centers. It is already active on two U.S. data-center projects, while three new PVC contracts represent approximately CAD 30 million in combined annual revenue with potential for scope expansion.
• Neutral Sentiment: Lower-than-normal wildfire support activity reduced Q2 revenue, although activity subsequently moved toward more normalized levels and management expects an average wildfire season for the year. The company noted that wildfire contributions have historically been approximately CAD 20 million-CAD 25 million annually, split between Q2 and Q3.
• Positive Sentiment: Strong cash generation reduced net debt to CAD 206 million and leverage to 1.5 times Adjusted EBITDA, giving Dexterra flexibility for high-return investments and acquisitions. The board renewed its share-repurchase program for up to 3 million shares and declared a CAD 0.10-per-share dividend.

Presentation

[Operator]

Thank you for standing by. My name is Jordan, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Dexterra Group Inc. Second Quarter 2026 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, followed by the number one on your telephone keypad. If you'd like to withdraw your question, press star one again. Thank you. I would now like to turn the call over to Denise Achonu, Chief Financial Officer. Please go ahead.

[Denise Achonu, CFO at Dexterra Group Inc]

Thank you, Jordan. Good morning. Thank you to everyone for joining the call. My name is Denise Achonu, Chief Financial Officer of Dexterra Group Inc. With me on the call today are Mark Becker, our CEO, and our Board Chair, Bill McFarland, who will provide some brief introductory comments. After a brief presentation, we will take questions on the call, with the call ending by 9:15 A.M. Eastern Time. We will be commenting on our Q2 2026 results with the assumption that you have read the Q2 2026 earnings press release, MD&A, and financial statements. The slide presentation which supports today's comments is posted on our website. We encourage participants to access the slides and follow along with our presentation. Before we begin, I would like to make some comments about forward-looking information.

[Denise Achonu, CFO at Dexterra Group Inc]

In yesterday's news release and on slide two of the presentation that we have posted to our website, you will find cautionary notes in that regard. I will not cover the content of the cautionary notes in any detail. However, we do claim their protection for any forward-looking information that we might disclose on this conference call today. I will now turn it over to Bill McFarland for his introductory comments.

[Bill McFarland, Board Chair at Dexterra Group Inc]

Good morning. Thank you for joining our call today. Dexterra had another strong quarter in Q2, reflecting continued progress in meeting our business plan goals as outlined at our recent AGM, by delivering profitable growth and strong free cash flow while maintaining a strong balance sheet which provides flexibility as we pursue new opportunities. We have a very resilient business model with limited direct impacts from tariffs and other geopolitical events, a key differentiator from many other businesses. This has allowed us to continue to make strong progress in achieving our business plan goals and is supported by disciplined execution by our management team.

[Bill McFarland, Board Chair at Dexterra Group Inc]

The board is optimistic about the company's outlook, including a growing pipeline of opportunities across North America, and is encouraged to see the market recognizing our strong financial performance and future prospects, which when taken together have delivered excellent shareholder returns and a positive backdrop for all stakeholders. We are also very pleased with the performance and progress made by the management team as they build a strong company for the future. I'll now pass it over to Mark for his business overview.

[Mark Becker, CEO at Dexterra Group Inc]

Thanks very much, Bill, and good morning to everyone. Starting off on slide five, as Bill talked about, we continued the positive momentum from Q1 with another quarter of strong operational and financial performance. We generated revenue of CAD 269 million, an increase of 8%, while Adjusted EBITDA increased by 9% to CAD 33 million over Q2 of last year. This demonstrates we're adding scale to the business while improving our bottom-line profitability, including strong Free Cash Flow generation, which allows us to reinvest in the business, pay dividends, and create long-term value for shareholders. Our performance in the quarter was driven primarily by strong Workforce Accommodations occupancy, organic growth from new contract wins coming on stream, as well as positive impact from the Right Choice acquisition. These results were delivered despite lower than normal activity in wildfire support.

[Mark Becker, CEO at Dexterra Group Inc]

Adjusted margins were strong at 12% in the quarter, reflecting a greater contribution from our high-margin Workforce Accommodations rental revenue stream. Operational efficiency gains while maintaining strong customer retention, loyalty and satisfaction ratings. 3, managing inflation pressures through supply chain initiatives, contract inflation terms, and price adjustments. We also generated CAD 22 million in Free Cash Flow in the quarter and exited the quarter with a net debt at 1.5 times Adjusted EBITDA. This financial flexibility will allow us to continue investing in the business and pursue high return investments and acquisitions where they make sense and are accretive to shareholders. One of our key near-term priorities is to realize the full value of our acquisitions, and I'm pleased to report that we're making good progress.

[Mark Becker, CEO at Dexterra Group Inc]

The Right Choice acquisition has enhanced our competitive position in the Montney region and contributed to our available Workforce Accommodations equipment capacity of approximately 2,000 beds, which is important to support new growth, including Canadian Nation building and other opportunities. Our fleet is over 85% utilized today, which is a market-leading rate, and we expect our utilization to increase as we secure new growth contracts. Also with a focus on building some excess capacity as needed for new business. Our partnership with PVC is also progressing very well. We are focused on growing our joint business by leveraging the combined platform and expanding relationships with both new and existing customers, and we have been very impressed by the PVC team's talent and engagement. PVC has secured a number of new logo facility management contract wins in the quarter, supporting our ambitious growth objectives in the U.S.

[Mark Becker, CEO at Dexterra Group Inc]

These new contracts will come on stream over the coming quarters and demonstrates the power of our combined brands. Our trailing 12-month Return on Equity as of the end of Q2 was 15.4%, achieving our target of 15% and demonstrating our continued commitment to delivering strong shareholder value. With that overview, I'll turn things over to Denise to provide more detail on our segmented results and financial position.

[Denise Achonu, CFO at Dexterra Group Inc]

Thank you, Mark. I'll begin with a detailed look at our business segments, starting with Support Services on slide seven. Revenue in Support Services for the second quarter was CAD 226 million, up 10% compared to Q2 2025. This increase was driven by strong workforce accommodation occupancy, including the contribution from the Right Choice acquisition, which was completed in Q3 2025, partially offset by lower than normal wildfire support activity in the quarter. Wildfire support activity is part of both Support Services and Asset Based Services. Subsequent to Q2, our wildfire support for the affected communities is trending towards more normalized levels. Excluding the contribution from the Right Choice acquisition, Support Services revenue increased by 5% year-over-year, which is in line with our expectations, including positive growth momentum in the U.S.

[Denise Achonu, CFO at Dexterra Group Inc]

Adjusted EBITDA in Support Services was CAD 23 million, an increase of 12% compared to the same period last year. While Adjusted EBITDA margins were 10%, consistent with the prior year period. PVC contributed CAD 1.4 million to Adjusted EBITDA in the quarter. Excluding PVC, Adjusted EBITDA margins were 9.5%, reflecting continued investments in sales and business development resources in our U.S. facilities management platform to support growth. These costs are being closely managed to align with our projected growth profile. As a reminder, PVC is accounted for using the Equity Method, as we currently own 40% of the business with an option to acquire the remaining 60% in 2027. As a result, PVC's revenue is not included in Dexterra's reported revenue.

[Denise Achonu, CFO at Dexterra Group Inc]

We continue to expect PVC to be cashflow neutral in the near term as it invests in modernizing its proprietary software, PVC Connect, and expands its team to support the long-term growth of its distributed model across North America. Looking ahead, we remain focused on delivering profitable organic growth with a focus on North American facilities management service, driving operational efficiencies, and managing inflationary pressures, including higher energy costs through a disciplined contract management and supply chain initiatives. We continue to expect Support Services Adjusted EBITDA margins to exceed 9% over the long term, particularly as we expand our facilities management services business through both self-perform and distributed models, a key competitive advantage for Dexterra. Moving on to Asset Based Services on slide eight. Revenue was CAD 43 million in the second quarter.

[Denise Achonu, CFO at Dexterra Group Inc]

Higher margin rental revenue increased by 13%, supported by higher equipment utilization and the contribution from Right Choice, partially offset by lower wildfire activity. Excluding Right Choice, revenue increased 2% compared to the prior year. Installation and demobilization revenue was lower by CAD 5 million year-over-year, reflecting less activity in the quarter. This revenue stream is lower margin and varies based on project timing. However, it is a critical enabler to our market-leading competitive position as a turnkey provider of Workforce Accommodations, securing key market opportunities and incenting long-term client relationships. Beginning in Q1 2026, we expanded our disclosure on the composition of Asset Based Services revenue to provide investors with greater visibility into the key drivers of this business. Supplemental 2025 quarterly comparative information by revenue component is available on our website on the investor's page under documents and filings.

[Denise Achonu, CFO at Dexterra Group Inc]

Adjusted EBITDA was CAD 17 million, up 4% compared to Q2 2025. Adjusted EBITDA margin improved to 40% compared to 38% in the prior year period, primarily reflecting a higher mix of Workforce Accommodations rental activity, which carries stronger margins than installation and demobilization activity. Looking ahead, current market indicators continue to support higher Workforce Accommodations rental activity through the second half of 2026. While Access Matting utilization is expected to remain similar to 2025 levels. For 2026, we continue to expect a greater proportion of revenue to come from higher margin rental activity versus installation and demobilization activity. Adjusted EBITDA margins should continue to be at the upper end of our 30%-40% target range. Moving to slide nine.

[Denise Achonu, CFO at Dexterra Group Inc]

Free Cash Flow was CAD 22 million in the second quarter, supported by strong profitability and collections from certain U.S. government accounts impacted by the shutdown and the collection of certain accounts receivable balances related to operations funded by the Canadian government. We expect the majority of our Free Cash Flow conversion to occur in the back half of 2026, similar to prior years. On a full year basis, we continue to expect Adjusted EBITDA conversion to Free Cash Flow to exceed 50%. In the second quarter, corporate expenses represented 2.7% of revenue compared to 2.8% in Q2 2025. Revenue growth more than offset the increase in corporate costs, which included investments in our technology platform related to labor management and artificial intelligence applications, which over time are expected to drive further operational efficiency.

[Denise Achonu, CFO at Dexterra Group Inc]

Looking ahead, in 2026, we continue to expect corporate costs to approximate 2.5% of revenue, inclusive of planned investments in technology and our U.S. business platform as the business continues to scale. Capital expenditures were CAD 3.6 million, including CAD 2 million incurred as a result of the fire in Q1, which we expect to recover through insurance. We continue to expect sustaining capital expenditures to approximate 1%-1.5% of revenue on an annualized basis. We remain committed to a capital-light approach, including assessing potential high-return projects using the lens of increased shareholder value. Net debt declined to CAD 206 million at quarter end, compared to CAD 225 million at March 31st, 2026, reflecting strong Free Cash Flow generated in the quarter. Net debt to Adjusted EBITDA was 1.5 times, which remains well within our comfort level, and our balance sheet provides flexibility as we pursue our capital allocation priorities.

[Denise Achonu, CFO at Dexterra Group Inc]

As we continue to focus on operational efficiency and Free Cash Flow conversion, we expect net debt to decline over the balance of 2026, absent significant investments or acquisition activity. Our CAD 425 million term loan matures in 2029 and has significant available capacity to support growth. We also remain committed to delivering strong returns to shareholders. In May, the board approved the renewal of Dexterra's Normal Course Issuer Bid through May 24, 2027, allowing for the repurchase of up to 3 million shares and providing flexibility for opportunistic share repurchases. In Q2, we had limited share buybacks. We declared a dividend yesterday of CAD 0.10 per share, payable in October 2026. I will now pass it back to Mark for concluding remarks.

[Mark Becker, CEO at Dexterra Group Inc]

Great. Thanks very much, Denise, Before we open things up for questions, I'll provide a few comments on our outlook and priorities, which is highlighted on slide 10. As we look to the remainder of 2026, our focus continues on strong execution of our business plan and delivering profitable, predictable results, pursuing profitable organic growth opportunities, and realizing the full value of our acquisitions. Our sales pipeline remains strong across both Canada and the U.S. in support of our growth objectives. We expect strong organic growth across the Dexterra FM North American portfolio, including government services and integrated facilities management. In our U.S. facilities management business, we continue to focus on scaling our FM platform and expanding our facilities management opportunities through our investment in PVC and our expanded U.S. organization and sales force.

[Mark Becker, CEO at Dexterra Group Inc]

As mentioned previously, we're seeing positive new sales and contract wins with PVC under the distributed FM model, supporting our growth expectations set out at the time of the PVC acquisition investment. The development of large-scale data centers is providing significant opportunity for Workforce Accommodations, particularly in the U.S. Dexterra is partnering with an established U.S.-based turnkey provider of workforce housing and Support Services to jointly pursue opportunities for data center development and other projects. Our objective is to grow our exposure to the data center space under our capital-light model, and we will continue to provide further updates as these opportunities unfold. In Canada, our established FM/IFM platform, together with our market leadership position in Workforce Accommodations, positions us very well to pursue opportunities related to nation-building projects. We are tracking a number of opportunities identified under the nation-building umbrella, including a mix of near-term and longer-dated projects.

[Mark Becker, CEO at Dexterra Group Inc]

With Dexterra's market-leading coast-to-coast presence across the energy, mining, infrastructure, government, and defense segments, as well as our over 80 Indigenous partnerships across Canada, we are well-positioned to take advantage of these opportunities, which we expect will provide a meaningful upside opportunity for both FM and the Workforce Accommodations business. Given the strong pipeline of opportunities in the Workforce Accommodations business, including nation-building, we expect to deploy our 2,000 beds available capacity in the medium term. Accordingly, we are and we will continue to actively look at high-return, accretive opportunities to augment our asset fleet while staying true to our capital-light business model. For example, our asset refurbishment expertise and facility at our Grande Prairie operations provides us with a competitively unique capability to acquire and deploy quality market assets in a very cost-effective manner. We also continue to closely monitor the macroeconomic environment and inflationary trends.

[Mark Becker, CEO at Dexterra Group Inc]

Our business remains well insulated from the direct impact of tariffs as we employ our workforce locally and source the majority of our materials and supplies domestically in both Canada and the U.S. While ongoing geopolitical tensions and the conflict in the Middle East may create broad inflationary pressures, we have a number of levers to manage these impacts. These include contractual inflation pass-through mechanisms, disciplined pricing and contract management, supply chain initiatives, and our ongoing operational efficiency projects, all of which have been very effective in supporting our margins. Based on what we see today, we don't expect inflation to have a material impact on our business, although we continue to monitor the situation closely. Finally, we remain committed to our disciplined approach to capital allocation. Our current priorities continue to be supporting the dividend. Number 2, sustaining in high return capital investments.

[Mark Becker, CEO at Dexterra Group Inc]

3, maintaining a strong balance sheet, paying down the debt, and 4, accretive acquisitions. We're also making strategic investments in technology, both client facing and enterprise technology that support innovation, operational efficiency, and differentiation across our platform. In closing, we are very confident in our strategy and our ability to grow and win in the developing marketplace, and are well-positioned to continue delivering profitable growth and long-term shareholder value. This concludes our prepared remarks. I'll turn things back over to Jordan to chair our Q&A portion of the call.

[Operator]

As a reminder, if you'd like to ask a question during today's call, simply press star followed by the number 1 on your telephone keypad. Your first question comes from the line of Kyle McPhee from ATB Cormark. Your line is live.

[Kyle McPhee, Analyst at ATB Cormark]

Hi, everyone. Your comments point to the workforce accommodation opportunities linked to U.S. data centers, and it was described as a near-term opportunity in your filings, suggesting maybe it's already de-risked and we'll see the benefits soon. Can you tell us anything more about timing and size of this demand linked to U.S. data centers and whether or not anything's actually been contracted at this point?

[Mark Becker, CEO at Dexterra Group Inc]

Morning, Kyle. Yeah, we were already contracted and active on one project in the U.S. Actually two projects in the U.S. Lots of activity around those projects. These are large-scale projects and that continues to develop. I think what we see is a fairly aggressive approach to projects, but they are large, complex projects and will kind of develop over time. Probably the best thing I could say, Kyle, is it's continuing to develop for us and I think we'll kind of keep you posted. Again, these are large projects that will take time, but we do expect to continue to develop our contracting on that front.

[Kyle McPhee, Analyst at ATB Cormark]

Got it. Okay. Is this mainly services you'll be providing to third-party owned workforce camps, or is this rental contracts linked to your own fleet or both?

[Mark Becker, CEO at Dexterra Group Inc]

A little bit of both, but I would say broadly, our initial contract was some of our Workforce Accommodations that we have active down in one of the projects. More broadly on these opportunities that we're pursuing, it is client owned or third-party owned assets. Along with our business partner down there, we are doing Workforce Accommodation set up, turnkey provision of the accommodations, maintenance of the assets, and then as well, the full servicing of the assets as part of the contracts.

[Kyle McPhee, Analyst at ATB Cormark]

Got it. Okay.

[Operator]

Your next question comes from the line of Frederic Bastien from Raymond James. Your line is live.

[Frederic Bastien, Analyst at Raymond James]

Thank you.

[Mark Becker, CEO at Dexterra Group Inc]

Morning, Fred.

[Frederic Bastien, Analyst at Raymond James]

How are you? I think Kyle got cut off, but I'll just build on that comment around the U.S. partnership. Is it fair to assume, though, that the bulk of your contribution to this partnership would be coming from the Support Services side?

[Mark Becker, CEO at Dexterra Group Inc]

Yes. That'll be the most significant part of it.

[Frederic Bastien, Analyst at Raymond James]

Okay, cool. Question on the wildfire season. Obviously started quieter than normal in Q2, but it sure seems to have picked up since. Does that change your outlook for that part of the business into the back half?

[Mark Becker, CEO at Dexterra Group Inc]

I think our outlook would be a more normal level of what we would if there's such a thing as a normal year. If you averaged out the last 10 years, I would say kind of a more normal year for wildfires. One thing I can say is wildfires aren't all created equally. The fires in Northern Ontario we're actually supporting and supporting the communities there. It's been raining like crazy in Alberta, but there's activity in BC. It just kind of depends where they are and the nature of the fires in terms of what we can support. Generally I would say kind of smaller impact is what we're seeing this year, but kind of an average amount.

[Frederic Bastien, Analyst at Raymond James]

Thanks. Thanks, guys. That's all I have. Solid execution. I'll pass it over.

[Operator]

Returning back to Kyle McPhee for a second question. Your line is live.

[Kyle McPhee, Analyst at ATB Cormark]

Hello again. It was nice to see the 5% organic growth from your Support Services segment in Q2. That would be net of some of the year-over-year drag from wildfire services that didn't repeat. Can you quantify that year-over-year drag from wildfire services so we can get a better idea of the true organic growth from the rest of the segment?

[Denise Achonu, CFO at Dexterra Group Inc]

Yeah, sure. Hi, Kyle, this is Denise. Typically in a normal year wildfire activity has contributed around, let's say CAD 20 million, CAD 25 million, equally split between Q2 and Q3. In Q2 we did see, I would say less than half of what we've seen in the past. Does that help?

[Operator]

Your next question comes from the line of Mark Neville from Canaccord Genuity. Your line is live.

[Mark Neville, Analyst at Canaccord Genuity]

Hey, good morning. Just to follow up on the data center conversation. It seems like it's quite a large opportunity. I'm just curious how you sort of plan to manage the growth, the markets that you might target, and any comments around staffing and such. Thanks.

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. Good question, Mark, and good morning. They are shaping up. They are larger projects, as I said, they're large complex projects. We've actually got folks from our Workforce Accommodations business. We've got a leader down there that's virtually working full-time on this. A few more people that we've seconded into the opportunity, and we're also hiring on folks in the U.S. I think we're well-positioned to support the work that we're gaining and we're bidding into on those projects. It's all part of being part of the ecosystem down there on the various regions and various projects that are ongoing. We're certainly well-positioned for it, and I think we're well-positioned also to provide resources, as I mentioned, on a capital light basis.

[Mark Neville, Analyst at Canaccord Genuity]

Got it. This may be just a second question. At least to me, it sort of sounds like, or feels like you're talking up M&A a bit more or the opportunity or the potential to do M&A, or sort of high margin or accretive opportunities. Can you just maybe expand on that sort of topic and whether we're reading into it properly? Thanks.

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. As we've talked about, I think so far this year, we're really focused on making sure we kind of deliver full value from the recent acquisitions, which is the Right Choice acquisition and the PVC investment. I would say when we talk about high return kind of investments, they would be smaller capital investments, not necessarily M&A, but other capital investments, like some of the things I talked about in my remarks, that they'll kind of support the business. That's been typical for us, but not specifically focused towards M&A at this point. Never say never. Those would be kind of our priority focuses that we're focused on this year.

[Operator]

Your next question comes from the line of Zachary Evershed from National Bank Capital Markets. Your line is now live.

[Zachary Evershed, Analyst at National Bank Capital Markets]

Good morning, everybody. Congrats on the quarter.

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. Thanks, Zach. Appreciate that.

[Zachary Evershed, Analyst at National Bank Capital Markets]

Maybe building on the last question there, what kind of hurdle rate would you guys be looking for when you're investing in new or refurbished beds?

[Mark Becker, CEO at Dexterra Group Inc]

High, quick return is what I would say. Our two to four years max, and probably closer to two realistically. We're on a refurbishment basis that can be done pretty cost effectively, as I mentioned. With a lot of the projects that we're seeing in our pipeline, there's real opportunity to put those to good use. I think our focus is really going to be about well matching any of those incremental investments to the pipeline and the opportunities that we see in front of us, not get too far ahead of our skis in terms of how we do that and make sure any investments are indeed that high return investment that we're really going to recapture that from the contracts that we're going to deploy that equipment on.

[Zachary Evershed, Analyst at National Bank Capital Markets]

Got you. Thanks. Sticking on maybe the Nation building theme, can you compare and contrast your indigenous relationships versus other peers who you see as main contenders and whether that's been a major factor in the pipeline?

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. It is a big factor and I think if you look at our last five years in the remote business, we've gone from kind of a Western-focused business to west to east to the Arctic, coast to coast to coast, as I like to say, including energy mining infrastructure. We've kind of got quite a breadth and we've got quite a breadth of indigenous relationships, over 80 relationships, as I talked about. I think if you look across the competitive environment, you're not going to see anyone that really has that kind of scope and scale in terms of both geographic coverage as well as community relationships. Without exception, Nation building, more broadly broad opportunities in Canada, in the remote space, indigenous relationships are really important. We're very happy to have that position.

[Mark Becker, CEO at Dexterra Group Inc]

We're very happy to be able to work with communities on that basis because it's a key part of how we're going to earn and land this work in front of us.

[Operator]

Your next question comes from the line of Trevor Reynolds from Acumen Capital. Your line is live.

[Trevor Reynolds, Analyst at Acumen Capital]

Morning, guys. I was just wondering if you could touch on the magnitude of the new contracts that you highlighted in the U.S.

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. Good morning, Trevor. Generally, I would say right around that CAD 30 million per annum, with some upside growth potential on scope expansion. There are new logos to the distributed model, which is positive and indicative of our work with PVC and I think also supports what we're seeing in the U.S. in terms of a larger, more fragmented market, where there is larger opportunities and ability for larger growth rates.

[Trevor Reynolds, Analyst at Acumen Capital]

Great. You mentioned that you expect the 2,000 beds of current capacity to be deployed near term here. Maybe just which sort of projects those are going to? Then maybe just on your ability to procure more assets, it seems like the market's getting very tight. How do you think you're going to be able to do that?

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. I'd probably say, always got to watch characterization of near term. I would say probably midterm is probably a good way to say that. For us, and Zach was asking about our coverage in Canada, it's not just about specific Nation building projects. There's a much broader pipeline of opportunities that even some very near-term things that'll come into play. I think we're kind of seeing Nation building projects that are identified as the Nation building projects, perhaps. They're all under discussion, they're all under contracting activity, but maybe coming to fruition and hitting the P&L the back half of next year. There's other opportunities that are near term and other opportunities that are long term.

[Mark Becker, CEO at Dexterra Group Inc]

I guess one thing we're sure seeing is, I think the overall opportunity set is probably a 2027+, and 2027-2035, if you look at all the Nation building projects and the proposed schedule. To answer your question around equipment, I mentioned in my remarks, we do maintain our equipment very well. I've always talked about that with our business. We have a facility that can maintain equipment, and we would use that to build incremental assets by purchasing market assets. There is assets out there. Obviously, we want to achieve our level of quality, and with limited investment, you can actually bring those to good market shape to be able to bring those two to the contracts that we're seeing. We've talked about the data centers being more client or third party capitalized under the capitalized model.

[Mark Becker, CEO at Dexterra Group Inc]

That's another opportunity both in Canada and the U.S., I would say. Obviously, ultimately new equipment, but that can be a very expensive way to go and a very slow way to go where we would see the refurbishment model to be something that can be brought to bear fairly quickly and very cost effectively.

[Operator]

Your next question comes from the line of Jonathan Goldman from Scotiabank. Your line is live.

[Jonathan Goldman, Analyst at Scotiabank]

Hey, good morning, team, and thanks for taking my questions. Just some housekeeping ones from me. What was the organic growth in the Asset Based Services business?

[Denise Achonu, CFO at Dexterra Group Inc]

It was 2%.

[Jonathan Goldman, Analyst at Scotiabank]

On a consolidated basis for the entire segment?

[Denise Achonu, CFO at Dexterra Group Inc]

The retip, again, there's two components to the Asset Based Services business. There's rental. The organic growth is on that rental piece because the installation and demobilization, that does not have anything related to Right Choice in it. Right? Again, because we mentioned that is project-based, so it can be very variable.

[Jonathan Goldman, Analyst at Scotiabank]

Yeah, I understand. Is it possible to quantify the consolidated organic growth, though, for the segment?

[Denise Achonu, CFO at Dexterra Group Inc]

Well, you can see from a revenue basis, it was flat, right? For Q2 2025 compared to Q2 2026.

[Jonathan Goldman, Analyst at Scotiabank]

Okay, maybe we can take that offline. Back to the wildfires, are you able to quantify how much of a drag on margins the lower activity was in each segment?

[Mark Becker, CEO at Dexterra Group Inc]

Sorry, say that again, Jonathan. I didn't hear your question.

[Jonathan Goldman, Analyst at Scotiabank]

Yeah, the lower wildfire activity. I was under the assumption it's margin accretive, so it looks like margins are pretty good this quarter. Are you able to quantify how much of a drag it was on the margins in each segment?

[Mark Becker, CEO at Dexterra Group Inc]

One thing I'd say probably, you'd find the kind of support that we provide, it's Workforce Accommodations, it's other types of support that we provide, kind of fits sort of in the center of the margin profile, I would say, between what we have on Support Services segment as well as the ABS segment. I think it fits really well. I wouldn't say it would necessarily be a drag in terms of the % margin that we would've seen there.

[Jonathan Goldman, Analyst at Scotiabank]

Okay, that's helpful. Your comments around the data centers. Maybe I misheard, but you're already on two projects. Would that already be reflected in your numbers? If we think a little more out, how material could this opportunity be for you guys?

[Mark Becker, CEO at Dexterra Group Inc]

I think it's just getting going. We do have assets on the first project that we mobilized actually last year, was about 500 beds in the U.S., and that's been part of our numbers. Some of the newer projects that we're seeing are really just getting going, but they are getting contracted as well. Honestly, Jonathan, really, I think the best way to leave this with the market is we do see these as significant opportunities, but we're bidding on a lot of work related to these and we'll kind of keep the market well informed as we land work there. We do see the opportunity as potentially significant.

[Operator]

Your next question comes from the line of Kyle McPhee. Your line is live.

[Kyle McPhee, Analyst at ATB Cormark]

Hello again. Just to finish the discussion on my last question because the operator's having fun cutting me off here. The organic growth for your Support Services segment was 5%, adjusted for wildfire is probably more like 8% high single digit. How would you characterize that organic growth in terms of how it landed for Facilities Management versus remote services? Or were kind of both growing in around that rate or was one much better than the other?

[Mark Becker, CEO at Dexterra Group Inc]

Yeah, I think very similar. I think we're doing well on both fronts is what I would say. The things around PVC, that's a really good number. Knowing what we announced in terms of the overall PVC revenue, that's a really positive amount of growth on that front. I would say blended across the both business segments, both remote as well as Facilities Management, we are seeing positive organic growth rates.

[Kyle McPhee, Analyst at ATB Cormark]

Got it. Okay.

[Denise Achonu, CFO at Dexterra Group Inc]

And-

[Kyle McPhee, Analyst at ATB Cormark]

And then-

[Denise Achonu, CFO at Dexterra Group Inc]

Just-

[Kyle McPhee, Analyst at ATB Cormark]

Yeah, go ahead.

[Denise Achonu, CFO at Dexterra Group Inc]

Sorry. Clarity. PVC isn't right now in our revenue numbers.

[Kyle McPhee, Analyst at ATB Cormark]

Yep, understood.

[Denise Achonu, CFO at Dexterra Group Inc]

as Mark, equally Facilities Management and our Workforce Accommodation business.

[Kyle McPhee, Analyst at ATB Cormark]

Yep, understood. Okay. Then on the PVC contract win, can you tell us what type of client business that they're winning? That helps us get a feel on margin and how many of these CAD 30 million a year type contracts they won.

[Mark Becker, CEO at Dexterra Group Inc]

Yeah. Kind of in the center of, I guess, the target that some of the segments that we look at, things like commercial light industrial is what I would kind of characterize it as, which has been the center of the target for PVC and it continues to be part of our pipeline. We're always targeting, as we've always articulated on a segment level that FM, IFM work is in that 8%-10% margin range and these things are in that range in terms of the delivered margin.

[Kyle McPhee, Analyst at ATB Cormark]

Okay, thank you. That is it for me.

[Operator]

Your next question comes from the line of Mark Neville from Canaccord Genuity. Your line is live.

[Mark Neville, Analyst at Canaccord Genuity]

Hey. Thanks for letting me back in. Maybe just two points of clarification or two follow-ups. Just on Kyle's last question, how many new contracts were there in the quarter?

[Mark Becker, CEO at Dexterra Group Inc]

Well, the ones we're specifically talking about is actually three.

[Mark Neville, Analyst at Canaccord Genuity]

Three? Okay.

[Mark Becker, CEO at Dexterra Group Inc]

Yeah.

[Mark Neville, Analyst at Canaccord Genuity]

And is that-

[Mark Becker, CEO at Dexterra Group Inc]

But-

[Mark Neville, Analyst at Canaccord Genuity]

Go ahead.

[Mark Becker, CEO at Dexterra Group Inc]

Why I would say Mark is we're more referencing PVC because it's noteworthy. There's contracts we win all the time.

[Mark Neville, Analyst at Canaccord Genuity]

Yep

[Mark Becker, CEO at Dexterra Group Inc]

400 clients kind of North America wide. We're always winning work. I certainly wouldn't look at that as we won three contracts across the entire business, even in just FM in the quarter, there's certainly a lot more than that.

[Mark Neville, Analyst at Canaccord Genuity]

Yeah. No, for sure, understood. The CAD 30 million, that was combined or that was per contract?

[Mark Becker, CEO at Dexterra Group Inc]

That'd be combined on a per annum basis.

[Mark Neville, Analyst at Canaccord Genuity]

Okay. Maybe just a final question on the data centers. Would you be pursuing these opportunities in Canada as well, and would you anticipate those being sort of also client or third party owned assets or would that be different? Would your expectation that's a different sort of model in Canada? Thanks.

[Mark Becker, CEO at Dexterra Group Inc]

Yes, we are. I think it could be either is what I would say. I think some of it gets down to scale, Mark. Some of these things in the U.S. are very large projects and it kind of gets down to how big the project is, how long the project is. It may make more sense for either the client or third party to be kind of capitalizing the assets versus us taking on the kind of capital commitment. I think it can kind of vary. I would say though, We'll see how things develop with this, which is why you hear me be pretty cagey because we want to see how things develop. It certainly is very active down in the U.S. and very large projects, as I've mentioned.

[Mark Becker, CEO at Dexterra Group Inc]

I would say in Canada, we see less number on very large projects and smaller projects as well, which to be honest, we like all of those, even small projects where we mobilize our equipment, it can make a lot of sense for us.

[Mark Neville, Analyst at Canaccord Genuity]

Got it. Thanks again.

[Operator]

Your next question comes from the line of Trevor Reynolds from Acumen Capital. Your line is live.

[Trevor Reynolds, Analyst at Acumen Capital]

Hey guys, just one follow-up. In terms of what you're seeing in the rates as you're bidding on these new contracts for Asset Based Services. There used to be discussion that rates need to triple to entice new construction. Is that still the case, kind of what you're seeing? Or just maybe what you're seeing on the rates front as you're bidding on new contracts?

[Mark Becker, CEO at Dexterra Group Inc]

I would say in general, it sort of depends, but we are seeing pricing in certain areas kind of going up around turnkey Workforce Accommodations and that size of thing. Obviously, providing new build equipment, not only the timeframe and, to be honest, the cost of them in Canada from what we see, would be a very expensive way to go and would require. To be honest, Trevor, we have clients right now that are asking for new equipment, meaning, because of the nature of their project, like for example, one of them is a mining project that is going to be mobilizing kind of assets are going to be there for a very long time. They want new equipment. They're willing to pay that bill for it, we're happy to offer that.

[Mark Becker, CEO at Dexterra Group Inc]

I would say though, just because of the cost and timeframe, that's probably tranche 3 out of the options around providing turnkey solutions to clients. It is something we do, and it is something that's going to be the highest tranche of cost to the client, just depending what their objectives are.

[Trevor Reynolds, Analyst at Acumen Capital]

Okay, great. Thanks.

[Operator]

Your next question comes from the line of Jonathan Goldman from Scotiabank. Your line is now live.

[Jonathan Goldman, Analyst at Scotiabank]

Thanks for taking my follow-up. Denise, how should we think about the level of cash taxes for the balance of the year?

[Denise Achonu, CFO at Dexterra Group Inc]

It should be approximately, I think this is something we've talked about in the past. It's in at around CAD 15 million, CAD 12 million-CAD 15 million in terms of cash taxes.

[Jonathan Goldman, Analyst at Scotiabank]

That's for the balance of the second half or for the year total?

[Denise Achonu, CFO at Dexterra Group Inc]

This is the year. That's for the installment that we'll be looking for 2026. You'll recall at the beginning of the year, we would've made our about CAD 12 million cash tax payment for 2025. Combined would be in and around, I don't know, CAD 27.7 million.

[Jonathan Goldman, Analyst at Scotiabank]

Okay, perfect. Thanks.

[Operator]

That concludes our question and answer session. Thank you for joining today's call. You may now disconnect.

Participants

Executives

• Denise Achonu, CFO
• Bill McFarland, Board Chair
• Mark Becker, CEO

Analysts

• Kyle McPhee, Analyst at ATB Cormark
• Frederic Bastien, Analyst at Raymond James
• Mark Neville, Analyst at Canaccord Genuity
• Zachary Evershed, Analyst at National Bank Capital Markets
• Trevor Reynolds, Analyst at Acumen Capital
• Jonathan Goldman, Analyst at Scotiabank