Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services First Quarter 2025 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, May 9, 2025. I would now like to turn the conference over to Charles-Étienne Girouard, Executive Vice President of Finance. Please go ahead. Thank you, Operator. Bon matin à tous. Good morning, all. Hello and welcome to GDI's conference call to discuss our results in the first quarter of fiscal 2025. My name is Charles-Étienne Girouard. I am Executive Vice President of Finance at GDI. I am with Claude Bigras, President and CEO of GDI, and David Hinchey, Executive Vice President of Corporate Development. Before we begin, I would like to make you aware that this call contains forward-looking information, and we ask listeners to refer to the full description of the forward-looking safe harbor provision that is fully described at the beginning of the MD&A filed on Saturday last night. I will begin the call with an overview of GDI's financial results for the first quarter of fiscal 25, and will then invite Claude to provide his comments on the business. In the first quarter, GDI recorded revenue of CAD 616 million, a decrease of CAD 28 million, or 4% over Q1 2024. This is mostly due to an organic decline of 7%, partially offset by an increase from the foreign currency translation of 3%. GDI recorded adjusted EBITDA of CAD 34 million in the quarter, representing an adjusted EBITDA margin of 6%, an increase of CAD 6 million and 2%, respectively, over Q1 of last year. In the first quarter, GDI reported a net operating working capital reduction of CAD 9 million. GDI has also reduced its long-term debt, net of cash, by CAD 14 million over Q4 2024. Before moving to our business segment results, I would like to discuss some housekeeping changes that we made in the first quarter. First, we allocate certain IT costs from our corporate and other segments into our operating segments based on usage. The exercise moved costs of about CAD 1 million per quarter into our Business Service Canada segment and about CAD 2 million per quarter in our Technical Service segment. We feel this more accurately depicts profitability in operating segments. Secondly, we have moved reporting for our ISS business unit from corporate and other to Technical Services as we feel that this is a more appropriate home for this business. The reclass represents about CAD 25 million in revenue and CAD 1 million in adjusted EBITDA annually. Now, the only operating segment business that resides in corporate and other is our chemical manufacturing business. Q1 fiscal 2024 results have been restated to reflect these changes as will future financial reports. Our Business Service Canada segment recorded revenue of CAD 147 million in the first quarter, while generating CAD 11 million in adjusted EBITDA, up CAD 1 million compared to Q1 2024. The adjusted EBITDA margin of 7% was in line with Q1 of last year following the adjustment of the IT cost allocation. Our Business Service USA segment recorded revenue of CAD 217 million in Q1, a decrease of 4% over Q1 2024. The segment experienced an unexpected organic decline in Q1 2025 due to the loss of the segment's largest client at the end of Q1 2024 and a reduction of low-margin contracts obtained in the Italian acquisition. The organic decline was partially compensated by an increase from foreign currency translation of 6% and by growth from acquisition of 5%. This segment reported adjusted EBITDA of CAD 15 million, representing an adjusted EBITDA margin of 7%, an increase of CAD 1 million and 1%, respectively, over Q1 of last year. The Technical Service segment recorded revenue of CAD 246 million compared to CAD 260 million in Q1 last year, mainly due to organic decline of 5% attributable to lower service call levels and to the timing of project revenues. The segment generated adjusted EBITDA of CAD 12 million, which is CAD 6 million higher than Q1 last year, as last year was negatively affected by cost overrun on three projects and its U.S. operations. The adjusted EBITDA margin of 5% this quarter increased by 3% over Q1 2024. Finally, our corporate and other segments reported revenues of CAD 6 million compared to CAD 14 million last year, mainly due to the sale of our Superior distribution and retail business at the beginning of Q2 2024. I would like to turn the call to Claude, who will provide further comments on GDI performance during the quarter. Thank you, Charles-Etienne. Good morning, and thank you for participating in our conference call to discuss GDI's results for the first quarter of 2025. I was very pleased with the results of GDI this quarter. Each business segment delivered an increase in adjusted EBITDA over the prior year. On a consolidated basis, GDI delivered a 21% increase in adjusted EBITDA and a 6% adjusted EBITDA margin during Q1, which is typically our slowest quarter due to some seasonal factors. Our Business Service Canada segment recorded its fifth quarter in a row with a 7% adjusted EBITDA margin after adjusting its historic results for the IT cost reallocation. This business has been very stable. In 2025, we have been seeing a higher amount of clients going to market, which has increased our churns to less likely. However, we have also been successful in winning new clients. That being said, we are expecting to deliver our historic GDI level, organic growth in this segment, depending on the timing of replacing losses with new wins. Our Business Service Canada U.S. segment had a solid quarter, returning to its historic adjusted EBITDA margin range as the work to improve profitability of the Italian contracts has now been completed. As previously announced, organic growth in Q1 was impacted by the loss of GDI's largest client in Q1 2024 at the end of 2023. We have replaced most of the lost business and expect organic growth to progressively return to our historic level by Q4 of this year. Apart from the large client loss and the Italian restructuring, our core business is very healthy and has been growing quite well. Our Technical Services segment had an outstanding quarter with CAD 246 million in revenue and a 5% EBITDA margin. Q1 is traditionally Ainsworth's seasonally weakest quarter. To put this in perspective, adjusted EBITDA in Q1 has ranged between 2%-4% adjusted for the IT recharge since we acquired Ainsworth at the end of 2015. Much of the strong performance has resulted in our initiative to increase margin in Ainsworth's project that will begin in Q3 2023. The outlook for Ainsworth for the remainder of 2025 remains positive. I'm also pleased to report that GDI has continued to successfully execute on its balance sheet improvement initiative during Q1. We reduced net operating working capital by CAD 9 million, which brings the total reduction to CAD 53 million since we launched our initiative in Q3 of 2023. Additionally, the working capital reduction along solid cash flow from operation enabled us to reduce GDI long-term debt by CAD 14 million over Q4 of 2024. This debt reduction, coupled with the strong growth in adjusted EBITDA during Q1, has brought GDI's leverage ratio in the mid-2s, which is well below our comfort zone of 2%-3.5% at times. In summary, all of GDI's business segments performed well during the quarter, and our outlook for each is positive for the remainder of 2025. We have been actively evaluating a number of M&A opportunities, and the pipeline is healthy. Our balance sheet is strong, our leverage ratio is low, and we are in a good position to continue to execute on our growth strategy. I would also like to share that effective today, Charles-Etienne is now officially our new SVP and Chief Financial Officer. I would like to congratulate him, and I'm very, very, very excited to see him working and going forward. Thank you, sir. I would like to thank you for participating in our conference call for Q1 2025 and would now ask the Operator to open the line for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please set the handset up before pressing any keys. Your first question comes from Derek Lessard with TD Cowen. Your line is now open. Yeah, good morning, everybody, and congrats, Charles-Etienne, on the promotion. Good morning, Daniel. Good morning, Derek. I guess I just maybe only a few questions for me. I just wanted to hit on the organic growth and technical services. I guess, is it fair to say that the guardrails that you put in place to protect profitability are holding back a little bit on the revenue growth temporarily? And if so, when can we, I guess, expect that organic growth to return? Listen, Derek, I would maybe take it the other side. You know what? The organic growth compared, if you remember, we had a lot of growth the year before in revenue with some of and some of it has caused us to have some road bumps last year. I am seeing it as very positive. Now we are very good. We are, as you know, I do not want to repeat myself from other calls, but we have reorganized our structure. We have reorganized our validating team. We have also refocused on margin improvements of the backlog. All of the above, but coupled with also the organic growth that we had the year before was not the healthier, if you allow me to say this. Yeah, that's fair, Stéphane. I guess maybe just as a follow-up to that, could you just maybe comment on your backlog? Okay. Listen, it's Claude, by the way. I'm so sorry. I don't get it all, but no, no, no, I'm joking. I'm sorry, Claude. You're our seventh in two days of reporting. I understand. I see you guys publishing, so it's very nice. On the backlog, you know what? It's very healthy. Margin has improved in the area of 10%, not 10% on the revenue, 10% increment in the percentage. I'm telling you that we cannot deliver results if the backlog and margin hasn't been improved in the sense that I'm very, very happy. In the U.S., we are still working a little bit on some areas where we have a little bit of weakness. It should be behind us very soon. I'm very, very comfortable with our backlog. Awesome. Thanks for that, Claude. Maybe one final one, Charles-Etienne. I'm getting your name right, I think, but good progress on the working cap initiatives. Is there any more? Do you see any more work to be done in this area? I guess you did say leverage did come down below your three to three and a half times comfort level. Just curious where you actually fell in the quarter. The quarter, we did a big portion of the working cap decrease came from changing our other financial assets, where we changed the investment strategy that we have in some place with an intercompany loan that we put in place. We feel that there is maybe more room now we are present with the current economics. We know that Q2 we have the bonus that we're going to pay out, but we'll do our best to still maximize our balance sheet. Okay. On leverage? It is still at a below our comfort level. We're still actively looking for potential M&As. We are looking at various strategies on that front. Okay. Thanks, gentlemen. Your next question comes from Frederic Tremblay with Desjardins. Your line is now open. Thank you. Good morning. Good morning, Fede. I wanted to start with technical services as well. I noticed that one of the points you mentioned was lower service calls. Is that just a matter of timing, or is there anything in the market structurally with the economic environment that's slowing down a little bit there? No, it's because it's the winter. Q1 is usually our weakest, and break fix and maintenance is our weakest quarter during the winter. Now, you know what? I don't expect any changes. Actually, if I'm looking at the last quarters, we have been seeing an increase in break fix and service calls. I don't want to say it's a novelty because it's not that critical, but for sure, Q1 is always our weakest in that particular area of the business. Okay, great. That's helpful. Thanks for that. Maybe just switching to the M&A pipeline or your appetite for M&A. I'm just curious if you're still thinking about the same types of activities in general and technical services, or if you're also looking at options in something else that would be adjacent to what you're currently offering. Okay. First of all, as we're always very active in our M&A approach to things, allow me to comment this way. What we're seeing in the market is there was a lot of activities in M&A in COVID and early after COVID. Unfortunately, but fortunately for us, to start with, is we see those activities with other companies that were doing M&A in our sector. They're experiencing very heavy bumps as maybe the price they paid too much for it for the businesses. We still remained very prudent, and we still remain very disciplined in our approach. That's one thing to start with. Secondly, we have plenty of opportunity in our two main segments, which is business service and technical. At this time, and with the economic, I would say not uncertainty, but with the general condition, I would be prudent in order to explore something new to learn. I think we focused on what was strong, and we will still develop our density. There is still a lot to do in the U.S.. No, I do not think we will do anything sexy going forward. I think we focus on what we do well. Yeah, sounds good. Last question for me. Nice margin stability in business services, Canada. Can you talk about the margin outlook or margin opportunities in the other segments, business services, USA, and technical services? Do you see? Is Is there opportunities in one more than the other to improve margins going forward, in your opinion, or are they both kind of trending in the right direction? Listen, actually, Frederic, I had a discussion with my colleagues earlier on. For sure, now we have targets, but the targets are not the end by itself. Those targets is alignments. For sure, my midterm outlook for technical, I think we can still achieve, we can achieve more. I do not know how to say that in English, but I am working to surpass our targets. On the business service segments, you agree with me that it has been a roller coaster since 20. I think to be stable, I think it is already a good thing. Yes, again, as we grow, I do not know if I can say that, but I will say it. We have been focusing heavily on acquiring market sector segments such as data centers and life science and food processing, which are traditionally delivering stronger results. This is where we are focusing, is increasing the EBITDA through an improvement of the margin. I think my way to greatness, I'm not a big strong believer. There's always improvements to do on our overhead. I think that pursuing activity sectors and developing our sales strength, I think, is the way to go in business service. Great. Thanks a lot. Merci too. Have a good day, Frederic. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Zachary Evershed with National Bank Financial. Your line is now open. Good morning, everyone. Congrats on the quarter, and congrats, Charles-Etienne. Good morning, Zachary. Thank you. Looking at Ainsworth organic decline, it did mention project timing. Do you expect any catch-up in the quarters ahead? What do you think a good pace of organic growth to expect from Ainsworth in 25 is? Listen, you know what? Everything tends for us to go back to our normal growth trend by the end of the year. I'm giving you the conclusion of our analysis, but towards the end of the year, we should resume to our normal growth. After the 2023, 24 bump in revenue and technical, the loss of the client in 2024, I think with the sales now, our sales structure being there and our backlog, I think that you can expect the next couple of quarters to resume back to our normal organic growth globally and in both our segments. That's helpful. Thanks. Looking at the reorganization, broadly speaking, what drove it in general? Do you see any specific synergies between Ainsworth and the integrated facility services? Okay. Actually, this is one of the reasons we made this change, is you know what? I'm happy to report that we acquired another very large North American client in ISS. That is a very good win in Q1. We realized that there are two parts. The first part is we came to realize or we came to a conclusion that the most appealing service in our ISS segment is the technical service segment. We also have defined that engineering, energy, it's all services that are actually a good trend in our IFS. We moved it into our technical segment because that's the right place for IFS to be. Secondly, and it goes along also with our IT, is I want to have the most clear, clear, clear corporate overhead lined up. You know what? I do not want to use pure, but in the sense that I want to have pure corporate overhead in this part. It is easier to trend. I do not want, I am trying to avoid any noise that could mislead. It is the same thing for IT. You know what? Those guys are not in the business unit, so they need to revolve into their original number, including that expense. This will also increase our profitability. Those changes are done to optimize our operations and clarify our numbers. That's great. Thanks. Then the last one for me. Does the reorganization affect your plans for ERP unification in any way? You know what, Zachary? I missed the first couple of words. What did you say? Does the reorganization affect your plans for ERP unification? No. Actually, it simplifies it. No, no, no. Absolutely not. You know what? No. The ERP program is advancing well. We're doing whatever we have to do. There is already a segment that has been put in place in corporate, and simpler is better. Thank you very much. I'll turn it over. Your next question comes from Jonathan Goldman with Scotiabank. Your line is now open. Hi. Good morning, Fema. Thanks for taking my questions. No problem. Hello, Jonathan. Good morning. Thank you. Just maybe a couple of housekeeping ones to start. What would segment margins have been under the old disclosures for each segment? What? Okay. Tell me that again. Okay. Just repeat the last part. If we were to go to the old disclosures before the reclassification, what would the margins be in each segment in this quarter? Oh, okay. So I think, We have restated for your information 2024 Q1. The impact to adjusted would be about CAD 1 million per quarter in business service Canada and about CAD 2 million in technical service per quarter. Okay. The revenue was affected too, right, for each of those? Yeah. The revenue was affected between corporate and other and technical services. Annually, the IFS business that was transferred between the two segments, it's about CAD 25 million annually in revenue and about CAD 1 million annually in EBITDA. Okay. Perfect. How much did the one fewer working day contribute to Canada and USA margins improvement year on year? Fewer working days? It's about CAD 3 million per working day. Sales or EBITDA? EBITDA. Okay. Claude, could you just clarify the comment you made earlier, the 10% increment improvement in backlog? Was that the technical backlog? You were talking about, I guess, Quarter-on-Quarter margin improvement. I just was not clear on what you were referring to. Okay. What I'm saying is when we initiate the initiative, we were at what we call the set margin. This margin has improved by 10% up to today. Let's say, for example, we had a set margin of 19.5%. Now we're around 22% margin. We have increased our margin, it's the set margin, by about 10%. The good news is all our empirical analytics, excluding the FEMA CAPS, is very close to set our result. End result is really in line with our set margin and the backlog. For us, it's very encouraging. We have improved our margin by 10% overall in our backlog. In consequency, we are improving our margin of operation and the execution. What's the base to refer to this 10%? Is it Q1? Is it 2024? Is it LTM? You know what? I would say Q1 2024, more or less. It took us two, three quarters to really because do not forget, backlog and executions are maybe two quarters in advance. We start improving margin. I would say Q2, Q3, Q4, we saw the improvement as the backlog gets executed and new business comes in. I would say it is about a year. Perfect. Got it. Perfect. Got it. It was a plan that we had a year ago. We said that we would improve our margin. Nope. Definitely. Maybe one more from me. Do you have an update on the timing of the real estate disaster? I can tell you is that we have some properties in the market. One is well underway. Can I put it this way? I never know exactly what to say to not be legal, but yes, one of the properties is well underway. The other property is on the market. We have some actions, but we do not have anything firm up with the second one. I expect that within the next couple of quarters, done. Okay. Perfect. Thanks for the color. There are no further questions at this time. I will now turn the call over to Claude Bigras, President and CEO of GDI, for closing remarks. Thank you very much, operators. In conclusion, and I think that we discussed heavily on the effort that the team is doing. We're talking about it, but there's a lot of work behind the scenes with the teams. I would like to take this time to say kudos because people are all focused to deliver the strongest result, to keep the business in the best possible shape as possible. Again, it's a marathon. What I can tell you is all these efforts are done, but also in conjunction with making sure the business is on top of its game, that we're efficient, that we're well-staffed to execute. There's no, I would say, no game shows. We are improving. You know what? It's a work in progress, but we don't do it at the discipline of making the business not as strong or as efficient as it's been. I would like, again, to congratulate the teams on being very, very focused and prudent. Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating in FA. Please disconnect your lines.