Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services Inc Second Quarter 2025 Results Conference Call. At this time, all lines are in 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 Thursday, August 7th, 2025. I would now like to turn the conference over to Charles-Etienne Girouard, Senior Vice President and Chief Financial Officer. Please go ahead. Thank you, operator. [Foreign language], good morning all, and welcome to GDI 's Conference Call to discuss our results for the second quarter of fiscal 2025. My name is Charles-Etienne Girouard. I am Senior Vice President and Chief Financial Officer of 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 SEDAR last night. I will begin the call with an overview of GDI Integrated Facility Services Inc.'s financial results for the second quarter of fiscal 2025, and will then invite Claude to provide his comments on the business. In the second quarter, GDI Integrated Facility Services Inc. recorded revenue of CND 610 million, a decrease of 29.5% over 2024. This is mostly due to an organic decline of 4%. GDI recorded adjusted EBITDA of $34 million in the quarter, in line with Q2 2024, which represents an adjusted EBITDA margin of 6%, increasing 1% over Q2 of last year. On a year-to-date basis, revenue reached CND 1.23 billion, a decrease of CND 57 million, or 4% over the same period of 2024. Year-over-year decline was partly due to an organic decline of 5%. Adjusted EBITDA in the first half of the year amounted to CND 67 million, an increase of CND 6 million, or 10% over the corresponding period of 2024. Our Business Services Canada segment recorded revenue of CND 147 million in the second quarter, up 1% over Q2 2024, while generating CND 10 million in adjusted EBITDA, down CND 1 million compared to Q2 last year. Adjusted EBITDA margin was 7% compared to 8% in Q2 2024. Our Business Services USA segment recorded revenue of CND 204 million in Q2, a decrease of 8% over Q2 2024. The segment experienced an expected organic decline of 11% in Q2, which reflects the paring down of low-margin accounts from our Atalian acquisition, which was carried out through the course of fiscal 2024, as well as the loss in Q1 2025 of the remaining 40% of the large client loss during Q1 of fiscal 2024. In addition, revenue generated by one customer fluctuated based on the volume of recurring project work, which was lower in the second quarter of 2025 compared to last year. This segment reported adjusted EBITDA of CND 14 million, representing an adjusted EBITDA margin of 7%, an increase of 1% over Q2 last year. The Technical Services segment recorded revenue of CND 262 million compared to CND 264 million in Q2 last year. The segment generated an adjusted EBITDA of CND 14 million, which is CND 2 million higher than Q2 2024, representing an adjusted EBITDA margin of 6% compared to 5% in Q2 2024, the increase being mainly attributable to higher margin and project revenue. Finally, our Corporate and Other segments reported revenue of CND 7 million compared to last year, and negative adjusted EBITDA of CND 4 million compared to CND 2 million in Q2 2024. I would like to turn the call to Claude Bigras, who will provide further comments on GDI 's performance during the call. Thank you, Charles-Etienne. Merci, and thanks to everyone participating in our GDI Q2 2025 planning call. I'm relatively pleased with GDI's overall performance in Q2 this year. Our Business Services Canada segment delivered results that were in line with historic performance. However, we began to experience some softness in the business during the quarter. We have a higher than normal degree of churn in our client base, which we believe is due to a higher than historic vacancy rate coupled with economic uncertainty from the set threat of tariffs. This has caused some of our clients to either bring contracts to market or otherwise pressure margins, and in response to this, we have taken strategic action to reduce our cost structure across the business. We also have invested in new sales resources in both Canada and the U.S. to enhance both clients' retention and stimulate organic growth. We expect to see huge softness in the business over the next few quarters as the initiatives we have implemented take hold, and we will continue to focus on winning business with a margin profile that is sustainable for the long term and the good health of the business. Our Business Services USA segment had a good quarter. As we have previously managed, organic growth was hampered by the paring down of low-margin contracts and some from the Italian acquisitions, and that was carried out through 2024. Additionally, as expected in Q1 2025, we have terminated the remaining 20% of the business from the large clients that existed in Q1 2024. Despite this decline in revenue, the business delivered the same level of adjusted EBITDA on a quarter-over-quarter basis, with an increase of EBITDA margin from 6% - 7%, which is the important part of the equation. Our business service support segment has secured a number of new contract wins that we are expecting to start up in Q3, and we'll continue to expect a return to historic organic growth level towards the end of 2025. In mid-2024, we have implemented and adjusted our sales strategy with a greater focus on higher growth and higher margin in markets and invested in resources in both sales and operations to target these markets. The strategy to grow our business service segment is fixed in these particular markets where cleaning is more technical and gives us the ability to develop long-term partnerships with our clients. To date, these initiatives have been successful, and we have been realizing new contractors. GDI's technical segment had a very strong quarter, generating $14 million in adjusted EBITDA and a margin of 6%. In what is typically the segment's second weakest quarter, notably, we delivered these results in a quarter where revenue was under pressure. A slow start to summer caused a lower than anticipated HVAC service revenue, and due to the economic uncertainty, certain clients delayed the startup of project work. The outlook for this business remained quite positive, and we are seeing very high temperature across Canada and the U.S. Northwest, which is helping our HVAC service business. Additionally, our project backlog is close to record high, and backlog margin is 100 - 200 basis points higher than historic. We are experiencing firing on all cylinders. During Q2, our operation and finance team continued to focus on GDI balance sheet. Working capital was stable in Q2 compared to Q1 2025, and we generated a slight decrease in long-term debt. The structural initiatives that we put in place at the end of 2023 and early 2024 are bearing fruit, and our team is remaining focused on cash efficiency. Our balance sheet so far, our leverage ratio sits comfortably under 3x EBITDA, and we're well positioned to execute on our growth strategy. That concludes our formal portion of the earnings call. Operator, please open the lines to analyst 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 receive a call from the polling process, please press star followed by the two. If you are using a speakerphone, please lift your handset before pressing any keys. Your first question comes from Cheryl Zhang with TD Cowen. Your line is now open. Good morning, everyone. This is Cheryl calling in for Claude Bigras. Good morning. Good morning. Thank you for taking our question. My first question is with regard to Business Services Canada. In the press release, you commented on the softness of that business with a higher level of client churn and margin pressure. I'm curious if you can provide more color around what you're seeing in demand and where you're hearing from our customers. Thank you, Cheryl. What we're looking at in the market is there is a... What we're seeing with our customer base is there is definitely a cost, I would say, an aggressive cost management approach to business. We are navigating through that. Our focus remains on customer retention. I've been saying it for years, our focus is always on keeping the margin and having sustainable margin. Yes, it's a little bit costly on the churn, but we are investing instead of cutting margins to a point where it's not sustainable to do business. We are focusing on sales growth and investing in that. Yes, there is a general sense in the business of savings, and we don't want to get entangled into a downward spiral of profitability. Got it. That's very helpful. I need one more to follow with you. On Business Services USA, you noted that you have secured several new contract wins to offset the loss of that remaining business of a major client. Just curious, what is the nature of these new contracts? Like, what type of industry or what type of work? First, I would like to say that, as you know, about a year and a half ago, two years ago, we started with building a strong sales team. I should not maybe say that, but I'm very happy that we started that some time ago because we would be in a difficult... It would be more difficult or more challenging for us. The team is really delivering, especially in the U.S., and now we're implementing the sales strategy in Canada. This has been delivering good results. We operate mainly in our traditional sector, industrial, but like I was saying, the good news is we have invested in operating and business development talent and some very, I would say, higher margin and, you know, more technical sector of cleaning. It's a big undertaking, but we have seen very good wins this year so far. We continue to focus on that. The idea is you have to sell to cope for what we have lost, keep the margin, and attack and get more business in higher-end markets where the margins are more sustainable. It's a very simple strategy, but it would be proven to be efficient in times where we're doing it. Got it. That's very helpful. Thanks so much, I appreciate it. Thank you. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Frederick Tremblay with Desjardins. Your line is now open. Good morning. Good morning, Frederic. Just coming back to Canada. You know, in the U.S., we've seen the eye walk away from some low-margin contracts at Italy, for example. Just trying to gauge, I guess, your view on Canada as it relates to the margin pressure. Are you willing to also walk away from some agreements and sacrifice a bit of the growth on your term to make sure that you sustain those margins that we've seen in past quarters there? Frédéric, you know what? I would say it like this. This discipline approach sometimes is costly on ego, but again, this is exactly what we do. We are really, really working hard with customers, but there is a point where we cannot just reduce it to a point where it will attack either our quality and reputation or the margin. Yes, it's a costly decision to do on the supply. On the bottom line, if you look, the loss of margin is not comparable to the decline in organic growth because we are keeping the discipline approach to pricing. That's the only thing that's long term. Short term, you know what? Yeah, I get beaten up a little bit, but long term, I think it's the right thing to do. Yeah, no, it's really helpful comments. Thanks for that. Maybe switching to Business Services USA. I think last quarter you sort of mentioned that you expected the organic growth there to come back to more normalized levels around the late 2025. You know, we're seeing - 11% in an organic decline in Q2. Is your expectation still to be more at normalized levels towards the end of this year, or has that changed? The answer, Frederick, is twofold. There is a mathematical answer. We lost this huge client last year. You know what? We hear that they will be coming back to the market sooner than later. That's not a bad thing. We lost this huge client. Mathematically, as the quarter passes and we keep this number as an organic growth, you know what? It will do enough swings. Secondly, our very strong sales approach will also pop up these numbers. This is why we say by the end of 2025, it will all adjust and back into a normal organic growth. A little bit of it is mathematical through the client movements, for sure. Yeah, understood. Okay. Lastly for me on potential NNA, I wanted maybe to get a few comments on what you're seeing in terms of the flow and, I guess, the number of opportunities. Has that changed lately one way or the other? Similarly, like multiples that sellers are expecting, are you seeing a good pipeline of transactions that you could potentially complete at similar multiples than what we've seen you do in the past? Okay. Okay. So, Frederick, let me do a comment. I hear the agent will look at me as I'm being right, but listen, lately what we have been seeing is, we've been looking at some businesses that were very aggressive over the last three, four years on acquisitions. If you remember, I was saying that we have to keep discipline. I can tell you that I'm very happy we kept discipline. You cannot buy everything at any price and be happy and have no debt and generate things fast. I'm very happy we kept our discipline approach to that. Secondly, yes, there is a pipeline. We're working hard on it. Again, discipline approach is the key element. The margin, you know what? The multiple that we were seeing during COVID, a little bit pre-COVID, where there was a lot of, I would not say private equity back, I do not say it, businesses that were actually, I would say, driving the multiple up. I think that it's more quiet on that front. I think we're reverting back to a more reasonable multiple. Hopefully, our work will bear fruit sooner than later. Okay, that's helpful. Thank you. Okay. Good. Your next question comes from Zachary Evershed with National Bank Financial. Your line is now open. Good morning, Zachary. Good morning. Could you go into more detail on the specific types of contracts that are experiencing the highest churn? Any particular customer type or region? I would say that I don't have my latest report on business segments, but I would say it's more in the traditional or Business Services Canada businesses, more or less, that this is where we experience the largest client churn, commercial real estate. This is where we have to, and these, I would say that these sectors are compressible, I'm sure, this short term. I think that these clients, as soon as the market, I think, will get in a better place and they realize that there is a cost of reducing their services, will come back to the market. This is what we have seen. Every time, I've been in this for 40 years almost, I've seen it all the time. There is a big contraction in merchant packer customers. They do manage differently and they come back to a more normal sector and we're happy campers. BNI has been primarily the sector. Gotcha. Thanks. Has that affected your outlook for the sector in the context of hybrid work and downtown office occupancy trends? You know what? We see that there is a reoccupancy that is gradually getting in place. I cannot tell you exactly, I don't have a forecast of occupancy in the next one, two, three quarters, but I do feel like over the next two, three, four quarters, we'll see occupancy gradually also increase. This is what is to be expected at some point. Gotcha. Thanks. Just one last one from me. Could you give us a refresher on the types of strategic initiatives you're implementing to address that margin pressure and contract churn? Okay. I would say that we are working, Zachary, the only, as I would look, the only right strategy in those times is to keep focused and focused on sales and business development. You know what? We are focusing on higher margin sectors where we feel it's more sticky, because it is an investment. We invested a couple of million dollars in resources and technical and expertise and systems, but it's the right thing to do. Secondly, we continue to invest and grow our sales force across both markets because, again, the remedy to churn is not to cut margins. It's to be more aggressive in developing customers. This is the two main things we're doing on our strategy. Thirdly, for sure, we have to adjust, and we adjust our operating expenses, but without sacrificing, you know, the sustainability of the company. We are coping with the market volatility. You know what? Swinging your way to greatness is not the best approach all the time, but we're adjusting to market volatility. This is mainly the strategy we're doing to cope with the churn and the market pressure. Thanks very much. I'll turn it over. There are no further questions at this time. I will now turn the call. One moment, please. There's another question from Cheryl Zhang with TD Cowen. Your line is now open. Hi. Thank you. Just a couple of follow-ups. Is there any update on the timing of the SANY Solutions building sale? Okay. Oh, yeah. You know what? The SANY Solutions building, we expect to close probably by the end of September. The building is, as you know, still under contract. Most of the conditions are raised. We're just expecting to close at the end of, between now and the end of September. Got it. Thank you. Are there any changes to your expectations for working capital and CapEx for the year? Okay. You know what? Let's go back to the first question. You asked me the SANY Solutions building. For me, it was the Quebec building. This is the one you were referring to? Yes. Thank you. Okay. Can Can you repeat the question, the second question, please? Yes, I was just curious what your expectations are for working capital and CapEx for the rest of the year. For Quebec, we're very savvy on CapEx, for sure, in those market conditions. It's a cash is king. We're very savvy. We spend money where we have new projects, new contracts, and where we need to replace some equipment. We're not overspending. We're keeping our IT transformation program because it's very important. On cash management, we continue to be very adamant on managing cash. People, it's all hands on bricks on managing the cash, managing our customers, DSOs. This is a first priority all the time. As you see, you know what? We're not depleting cash. We're paying the debt a little bit. We expect between now and the end of the year, it's going to continue to improve, improve. Yeah. All right. Got it. That's great to hear. Just one final one from me. How is your project volume coming in technical services, and what is your backlog in that business? Okay. For sure, it's normal. We always focus on the chart that shows a little bit of volatility. On the technical side, I think a lot of things have happened over the last year. As you see, even though we had a slower start of the season, even though our revenues were a little bit down, you saw the margin increase, and we're very optimistic between now and the end of the year. The work we have done there is really bearing fruit. The backlog is still very high, almost like our record high. The set margin is about 150 - 200 bps higher. It's all very good signs. Yes, the technical business, we're optimistic on it. If we are on the business side, the business service side, we have a little bit of bumpies because of the market volatility. On the technical side, we are doing good. I think we'll take everything we can take. Okay. That is awesome. Sorry, just one final one from me. In the Business Services USA, you highlighted one of the e-customer contractors' volume kind of at the both between quarters and have low volume sessions from Q4 through Q2. I'm curious, where do you see volume trending in the second half of 2025? You know. Again, I think everybody knows what's happening lately in the global geopolitics and everything. This, I have no control over. I can tell you this is with what we're doing in the U.S., the effort on the sales teams, the wins that we have, the startup we have in Q3. Withstanding that, you know what? The clients are still very adamant on savings. I think that by the end of the year, we're going to be back to a normal cruising speed on the Business Services USA. The top line, but the bottom line, I think it's still pretty, pretty acceptable. This is always the focus I'm saying to the team is, you know what? We need to make sure that the business is profitable. This is always the key element. Got it. Thanks so much for answering all my questions. All right. No problem. My pleasure. There are no further questions at this time. I will now turn the call over to Claude for closing remarks. Thank you very much, operator. Thank you, everyone, for participating in our call. As we said, we're spending time working on and improving the business service segment, working on new sales growth. As we are navigating in some volatility, I do believe that we're doing the right things. People are focused on the business. Our strategy is based on business for and in business growth. It's on adjusting the business, keeping the margin, and optimizing our technical business. This is a simple strategy, but that's a strategy that people understand. It's a strategy that will make us go through those times and win. This is our focus. Thank you again. I want to thank the team for all the effort we're doing. We look forward to continuity in the next quarters and to improve. Thank you very much. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.