Dexterra Group TSE: DXT reported higher second-quarter revenue, adjusted EBITDA and free cash flow, supported by workforce accommodations occupancy, new contract activity and contributions from the Right Choice acquisition.
Revenue for the second quarter of 2026 rose 8% year over year to C$269 million, while adjusted EBITDA increased 9% to C$33 million. Adjusted EBITDA margin was 12%, which Chief Executive Officer Mark Becker said reflected a greater contribution from higher-margin workforce accommodations rental revenue, operational efficiencies and measures to manage inflation.
The company generated C$22 million in free cash flow during the quarter and reduced net debt to C$206 million from C$225 million at March 31. Its net-debt-to-adjusted-EBITDA ratio ended the quarter at 1.5 times. Becker said the company’s financial position provides flexibility to invest in the business, pursue high-return investments and consider accretive acquisitions.
Support Services Growth Led by Accommodations Occupancy
Support Services revenue increased 10% from a year earlier to C$226 million. Chief Financial Officer Denise Achonu said the increase was driven by strong workforce accommodations occupancy, including the Right Choice acquisition completed in the third quarter of 2025, partly offset by lower-than-normal wildfire support activity.
Excluding Right Choice, Support Services revenue grew 5% year over year. Achonu said that result was in line with the company’s expectations and included positive momentum in the U.S. business.
Support Services adjusted EBITDA rose 12% to C$23 million, with margins holding at 10%. PVC, the U.S. facilities-management business in which Dexterra holds a 40% stake, contributed C$1.4 million of adjusted EBITDA. PVC’s revenue is not included in Dexterra’s reported revenue because it is accounted for under the equity method.
Excluding PVC, the Support Services EBITDA margin was 9.5%, reflecting continued investments in U.S. sales and business-development resources. Achonu said Dexterra expects PVC to remain cash-flow neutral in the near term while it invests in its software and expands its team to support growth.
During the quarter, PVC secured three new facilities-management contracts with combined annual revenue of about C$30 million, according to Becker. He described the customers as operating in commercial and light-industrial segments and said the contracts carry margins within Dexterra’s stated 8% to 10% target range for facilities-management and integrated-facilities-management work.
Asset-Based Services Margin Improves
Asset Based Services revenue was C$43 million in the second quarter. Higher-margin rental revenue increased 13%, aided by higher equipment utilization and Right Choice’s contribution, though lower wildfire activity partially offset those gains. Excluding Right Choice, rental revenue increased 2% year over year.
Installation and demobilization revenue declined by C$5 million from the prior-year quarter, reflecting lower project activity. Achonu said that revenue is lower margin and dependent on project timing, but remains important to Dexterra’s turnkey workforce accommodations offering and long-term customer relationships.
Adjusted EBITDA in the segment rose 4% to C$17 million, while its adjusted EBITDA margin expanded to 40% from 38%. The improvement reflected a higher mix of rental activity relative to installation and demobilization work. Dexterra expects rental activity to remain stronger through the second half of 2026 and expects segment margins to remain at the upper end of its 30% to 40% target range.
The company’s workforce accommodations fleet was more than 85% utilized at the end of the quarter, with approximately 2,000 beds of available capacity. Becker said Dexterra expects to deploy that capacity over the medium term as it captures growth opportunities. Any incremental fleet investment would be evaluated against a high-return threshold, with Becker citing returns within two to four years and preferably closer to two years.
Data Centers and Nation-Building Opportunities
Becker said large-scale data-center development is creating workforce accommodations opportunities in the U.S. Dexterra has partnered with an established U.S.-based turnkey provider of workforce housing and support services to pursue work in that market.
The company is already active on two U.S. data-center projects. One project, involving roughly 500 beds, was mobilized last year and is already reflected in Dexterra’s results. Becker said the broader opportunity is still developing, with the company bidding on additional work. He said the most significant contribution from the partnership is expected to come from Support Services, although the company may also provide accommodations assets.
For larger U.S. projects, Dexterra expects client-owned or third-party-owned assets to play a significant role under its capital-light model. In Canada, Becker said project structures could vary depending on a project’s scale and duration.
Dexterra is also tracking Canadian “nation-building” opportunities across energy, mining, infrastructure, government and defense. Becker said the company’s coast-to-coast presence and more than 80 Indigenous partnerships position it to compete for those projects. He characterized the wider opportunity set as extending from 2027 onward, although some other projects could arise sooner.
Cash Flow, Capital Allocation and Outlook
Achonu said second-quarter free cash flow benefited from profitability as well as collections from certain U.S. government accounts and Canadian government-funded operations. Dexterra continues to expect more than 50% conversion of adjusted EBITDA to free cash flow for the full year, with the majority of free cash flow expected in the second half.
Capital expenditures totaled C$3.6 million, including C$2 million related to a first-quarter fire that Dexterra expects to recover through insurance. The company continues to expect sustaining capital expenditures of approximately 1% to 1.5% of annualized revenue.
The board renewed Dexterra’s normal course issuer bid through May 24, 2027, authorizing repurchases of up to 3 million shares. The company conducted limited buybacks in the second quarter and declared a C$0.10-per-share dividend payable in October 2026.
Becker said Dexterra remains relatively insulated from direct tariff impacts because it employs workers locally and sources most materials domestically in Canada and the U.S. While geopolitical developments could create broader inflation pressure, he said contract pass-through provisions, pricing discipline, supply-chain actions and operating-efficiency initiatives should help protect margins. Based on current conditions, Dexterra does not expect inflation to have a material effect on its business.
About Dexterra Group (TSE:DXT)
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.
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