Good morning, ladies and gentlemen, and welcome to the K-Bro Linen Systems Incorporated second quarter 2026 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 Wednesday, August 5th, 2026. I would now like to turn the conference over to Kristie Plaquin. Please go ahead. Thank you, operator. Good morning, everyone. Thank you for joining us today. Welcome to our second quarter results conference call. On the line with me today is Linda McCurdy, President and Chief Executive Officer. Before we begin, I'd like to remind everyone that statements made during our prepared remarks of the conference call with reference to management's expectations or our predictions of the future are forward-looking statements. All statements made today, which are not statements of historical fact, are considered to be forward-looking statements. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Investors are also cautioned not to place undue reliance on these statements. Actual results could differ materially from those anticipated. Risk factors that could affect the results are detailed in the corporation's public filings. I'll now turn the call over to our CEO, Linda McCurdy, who will provide her insights and remarks on the quarter. Linda? Thank you very much, Kristie. Good morning to everyone. Thanks for joining us today to review our 2026 second quarter results. I'll touch on some of the highlights of our second quarter. Kristie will provide some details on our financial performance and our balance sheet. We are pleased with our strong second quarter results, which are consistent with our expectations. Revenue for the quarter was CAD 150 million. Adjusted EBITDA was CAD 29.8 million. We've seen steady trends in both our healthcare and hospitality segments. Our Q2 results highlight the benefit of our strategic national platforms in both Canada and the U.K. We have just passed our first anniversary of owning Stellar Mayan, which was on July 11th, and we are pleased with the progress of our ongoing integration efforts. We continue to anticipate run rate cost synergies will be realized over the contemplated 24-month time horizon. Through the end of Q2, we estimate we've achieved roughly 40% of the anticipated synergies. Consolidated total revenue for the quarter increased by 33% compared to 2025, with healthcare revenue having increased by 50% and hospitality revenue by 15%. Healthcare revenues represented approximately 58% of our consolidated revenue, which is higher compared to approximately 51% in 2025 due to the acquisition of Stellar. Amid a more volatile global backdrop, we are pleased with our Q2 results, underscoring our resilient growth model and business performance. As always, our experienced team is focused on disciplined operations. I will now turn the call over to Kristie to discuss our detailed financial results for the quarter. After which I will return and talk to you about the outlook. Thanks so much. Kristie, over to you. Thanks, Linda. The information we are discussing today is also highlighted in our 2026 second quarter earnings press release issued yesterday, and detailed supplemental financial information can be found on our investor relations website under the heading Financials. K-Bro's consolidated revenue for Q2 2026 increased year-over-year by 33% to CAD 150.4 million. In Canadian dollars, quarterly revenue from both the Canadian and U.K. divisions were roughly equal, with Canada at 47.7% and the U.K. at 52.2%. The increase in consolidated revenue is primarily due to the acquisition of Stellar Mayan in June 2025, as well as the impact of price increases implemented. Consolidated adjusted EBITDA for Q2 2026 increased year-over-year by 25.6% to CAD 29.8 million. Consolidated adjusted EBITDA margin decreased 1.2% year-over-year to 19.8%, largely due to the combination of the Stellar Mayan margin profile and higher fuel costs. For the Canadian division, adjusted EBITDA margin in the second quarter remained relatively constant at 21.1%. For the U.K. division, the adjusted EBITDA margin in the second quarter decreased by 2.1% to 18.6% in 2026. The decrease is primarily related to the combination of the Stellar Mayan margin profile and higher fuel costs. Adjusted net earnings increased in the second quarter of 2026 to CAD 10.1 million from CAD 7.8 million in 2025, including adjusting items of CAD 2.5 million. The adjusted items in the quarter include lower transaction costs and structural financing costs related to the acquisition of Stellar Mayan, transition costs, fair value adjustment on interest rate derivatives, which I will discuss in more detail shortly, non-recurring gains, and intangible asset amortization. K-Bro has a strong cash flow generation profile and a disciplined approach to capital allocation which allows us to both invest in growing the business and return capital to shareholders. Distributable cash flow for Q2 2026 was CAD 14.7 million, and our payout ratio was 26.6%. Our trailing 12-month payout ratio was 27.3%. The company paid out CAD 0.3 per share in dividends during the quarter for a total consideration of CAD 3.9 million. In the second quarter, K-Bro repurchased and canceled 58,000 common shares for CAD 2.5 million under the normal course issuer bid. Post-acquisition, debt and leverage levels have been consistent with our expectations. We have a strong balance sheet with ample undrawn capacity on our syndicated revolving credit facility, with an operating line of CAD 175 million, an amortizing term loan of CAD 134.3 million, and a further CAD 50 million accordion for growth purposes. At the end of the second quarter of 2026, we had an undrawn balance of close to CAD 69.6 million on our operating line without taking into account the accordion, which reinforces our strong liquidity. This represents a pro forma funded debt to EBITDA ratio, excluding leases, of just under 2.5 times on a pro forma basis. Debt to total capitalization for the period ending June 30th, 2026 was 47.5%, and total debt net of cash was CAD 213.5 million. K-Bro is exposed to floating interest rates, and changes in interest rates may impact future cash flows. To manage the exposure to fluctuations in interest rates, in June, K-Bro entered into an interest rate swap in connection with the term loan portion of its syndicated credit facility. Under the terms of the swap, K-Bro economically converts the floating interest rate exposure on the term loan to a fixed rate. The interest rate swap is measured at fair value and recorded as interest rate derivatives on the consolidated statement of financial position, with changes in fair value recognized in fair value adjustment on interest rate derivatives within operating costs in the consolidated statement of income. Realized gains and losses on the interest rate swap are recognized in finance expense, consistent with the presentation of interest on the underlying term loan. Fair value adjustment on the interest rate derivatives is included as an adjusted item, as detailed in the tables within the terminology section of our MD&A. I'll now turn things back over to Linda for additional commentary. Linda? Thank you, Kristie. We're pleased with our start to 2026, and we see a positive outlook in the context of an evolving macro landscape. Following our acquisition of Stellar in 2025, K-Bro is the largest healthcare and hospitality laundry and linen processor in Canada and one of the largest in the U.K., with coast-to-coast national geographic footprints in each country. We're able to deliver industry-leading service to healthcare and hospitality customers from a network of strategically located facilities. Our services are essential to the continuity of our customers' operations. We have a highly experienced team, and we're focused on disciplined operational performance. Last week, we announced the addition of John Lynch to the board. John spent 10 years as a managing director at J.P. Morgan Asset Management, growing and managing the infrastructure investments and team in Europe. John brings a range of capital markets experience to the board, including more than three decades of experience in international finance and investing, all of which will further strengthen K-Bro's board of directors. We're very excited about the addition of John. We've made good progress on our U.K. integration efforts. As we have highlighted before, over the past year, we've implemented various improvements at Stellar, including insourcing the maintenance function, workflow optimizations, realigning compensation structures, changing certain managers, and leveraging K-Bro's deep strength of talent. Our national U.K. platform is a top three player, and we're well-positioned for long-term growth in healthcare and hospitality. On a consolidated basis, we continue to monitor the evolving global economic and political forces. From where we stand today, both K-Bro's healthcare and hospitality segments continue to experience steady growth. Going forward, we expect combined adjusted EBITDA margins will remain at similar levels to seasonally adjusted combined historical margins. In line with our expectations, due to the lower EBITDA margin profile of Stellar, the consolidated U.K. divisional adjusted EBITDA margins will be lower than seasonally adjusted historical margins. We continue to monitor the volatile energy pricing environment and the impact on diesel prices and our margins. In the U.K., 50% of our diesel usage is hedged and 50% is floating. In Canada, our diesel usage is floating. Management estimates that Q2 2026 adjusted EBITDA margins were impacted negatively by half a percentage point due to diesel rates. Should diesel rates stay consistent, management anticipates that the adjusted EBITDA margin for the remaining quarters in 2026 will continue to be impacted by this same magnitude. As we celebrate Stellar's first anniversary, we are focused on completing the integration, pursuing organic growth opportunities, and potential M&A opportunities. Strategic acquisitions of high-quality operators continue to be an important contributor to our overall growth profile and strategy. We are pleased with the early contribution of our recent acquisitions and believe they will further enhance our growth profile. We elevate potential strategic acquisitions that may complement our platform, and will look to leverage our strong liquidity position, balance sheet, and access to the capital markets to execute on these opportunities as they arise. Putting people first, being dependable partners, and embracing environmental stewardship have always been part of our culture, and we are committed to a sustainable future. I will now open it up to any questions which you may have as it relates to the quarter. Operator? Thank you. Ladies and gentlemen, we will now begin our question and answer session. Should you have a question, please press the 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 the star followed by the two. If you are using a speakerphone, please lift the handset first before pressing any keys. We have our first question from Cheryl Zhang with TD Cowen. Hey, good morning, Linda and Kristie. Good morning, Cheryl. Thanks for taking our question. Good morning. I first wanted to ask about the synergy capture. I am curious if you could comment on the incremental Stellar Mayan synergy that was captured in Q2, and what remains to be achieved. Thanks, Cheryl. We're quite pleased with the progress we've made. I identified a number of the areas that has been our focus to date. We estimate that about 40% of the targeted synergies have been achieved, with the remaining to be achieved over the next 12 months. The largest piece yet to conquer is to convert to seven-day working in our healthcare plants. We have converted one plant, which went well. The more complicated transition will be in our healthcare plants. Planning is well underway, and we expect that to happen over the next six months. It is a significant change in people's work routines and obviously their schedules. Well, all had weekends off, we have to be very careful and mindful in how this is rolled out. To date, as I mentioned, some of the key accomplishments is bringing the entire engineering function and maintenance function back in-house, which has gone exceedingly well. We've made management changes. We've worked with our customers to pursue additional volumes. We're very pleased with our progress, certainly more to come, Cheryl. Understood. That's very helpful color. Thank you, Linda. My next question is around hospitality. I think Canadian hospitality growth slowed to 0.9% this quarter. I'm curious if you could provide some color around that, and are you seeing any slowdown in travel activities? Maybe I can ask the same question for U.K. hospitality as well. Just curious how the organic growth involving has trended. Yes. Great question. I will say that from a hospitality growth perspective, Q2 relative to prior years was definitely behind what we have seen year-over-year. One key note would've been FIFA, which could have impacted both Toronto and Vancouver, where quite frankly, where occupancies didn't meet what was expected. I think that a large number of rooms were blocked off by FIFA. They were not secured or not occupied, open to the public, but rates were exceedingly high. Hotel room rates were exceedingly high, people made choices not to come. That impacted both the Toronto and Vancouver market. In the U.K., I would say, they experienced extreme heat, and volumes and occupancies also were a little weaker than historical norms. A little unclear as to what that means for Q3. We're still seeing growth, perhaps just not as high as we've seen historically. In Canada, it was very clearly aligned to the impact of under-selling for FIFA. It is a little unclear, however, what that means going forward. Okay. That's helpful color. Thank you. I'll get back in queue. Thanks, Cheryl. Thank you. Thank you. We have our next question from Hanzo Sars with ATB Cormark. Hey, I'm on for Kyle McPhee. We're hoping to get an update on the hedge book specifically for diesel and natural gas. My main question is, have you entered any new hedges since the last quarterly update that would alter your margin exposure risk in 2027? I know that regardless of how things play out, you can claw back potential margin drag over time with your kind of pricing power, but we just want to understand that transient risk in 2027 if diesel and gas prices don't alleviate. Thank you. Yes, thank you for your question. Kristie, I'm going to let you respond to that. Yeah, absolutely. We haven't entered any additional hedges since our Q1 call. Really our guidance would still remain relatively consistent. As Linda mentioned, about 50% of our natural gas usage in the U.K. is hedged and 50% is floating, all floating in Canada. Should the diesel rates prevail, we see exposure of about 0.5% to the margin. From a natural gas perspective, for the most part, our hedges in the Canadian market roll off over several years. We're not seeing huge volatility in natural gas pricing on the Canadian side as of now, especially given we don't have material hedges that roll off in 2027. On the U.K. front, natural gas costs presently are slightly higher than where our current hedge would sit. To the extent we had to lock in pricing today, there would be a negative margin impact of about 0.5% as well. Okay. Got it. Then just regarding margins in Q2, your margin landed better than we thought. Was that pricing action that allowed you to offset the diesel inflation exposure, or should we attribute the margin performance to something else that was really working in your favor? I think there were Go ahead, Kristie. (No, go ahead. It's okay). Yeah. I think there were a number of contributing factors. We have optimized some distribution routes. We have seen some price increases in certain areas. Labor has been contained nicely, partially as the result of installation of new equipment. Kristie, is there anything I'm missing in the list of contributing factors? No, I think you've hit the highlights. Yeah. You've hit the highlights. That's great color. Thank you. Thank you. We have our next question from Ahmed Abdullah with National Bank of Canada. Yeah. Thank you. Good morning, all. Touching a little bit more on the margins, your Canadian margin was steady versus last year, despite obviously the wage and diesel pressure. I'll ask the question a little bit differently. How much of that resilience came from pricing and route optimization and other initiatives, perhaps volume as well? How much of those benefits should we expect to persist into the second half? I'd say it's a combination of both, about 50/50, Ahmed. I think we're feeling that it's reasonable to expect that to continue into the balance of the year. Yeah, we were pleased with our results on containing costs and being able to cover the increased diesel costs through efficiencies in other areas. Okay. Despite the lack of a hedge on the diesel costs, you're still able to manage around it to try to soften the impact as much as possible. Is that the read I'm supposed to get here? Yeah. Okay. Yeah. Cost containment in other areas. Route consolidation was a contributor for sure, labor, then as I mentioned, price increase in other areas. We feel that in Q3, that will continue to be achievable. Okay. Just a question on something we've noticed since your reporting of Q4. You've had a linen purchase obligation on your books that's quite sizable. Is this supporting a new contract win, or are you replacing some aged inventory that you have? Any color around that we should be thinking about? Kristie, I'll pass that to you. I was going to say I can take that, Linda. No, not supporting a new contract win. I think it's really just a timing issue in terms of when we've issued purchase orders for standard linen orders. We've likely just done that sooner this year than we've done in previous years. Really more standard fare linen purchases. Okay. That's helpful color. Just one last one from me. Any updates, Linda, on the RFP processes on the eastern side of Canada? Nothing formal to report. I would say that we're still optimistic and that it's a conversation point as well as they are expiring, so we feel good about it. Okay. That's helpful. I'll pass the line. Thank you very much. Thank you. Our next question comes from Michael Glen with Raymond James. Michael, perhaps you're muted? Your line is open. I'm not receiving a response. I will go to the next question. Our next question is from Justin Keywood with Stifel. Good morning. Thanks for taking my call. Good morning, Justin. Hey. On the RFP opportunity, are we able to have an update on the situation in Ontario and the GTA hospitals? Are there expected RFPs to come to the market this year? What could that opportunity be going into next year as well? I think it'll be on a hospital-by-hospital basis, and I do expect that there'll be further activity into Q3 and into Q4 as well as into 2027. I think it's hard to know exactly the potential dollar value, but anywhere from CAD 10 million plus is kind of what we think is out there in the short to medium term. Thank you. That's the aggregate value of RFPs. I assume that includes several hospitals. Yes, absolutely. Yeah. Again, in the short term, I think there will be certain hospitals that may have extended short term. When I say short term, whether it's one year or two years, but over the next two to three years, I think that it'll be well in excess of CAD 10 million. I would say over the next 6 to 12 months would be the timelines in which the CAD 10 million would relate to. Understood. That's very helpful. Then the Vancouver contract that's set to renew next year, I believe. Are we able to have an update on how that process is going, or if it's a bit too early? It's a competitive process, I won't comment too extensively on that other than we have a very large, efficient state-of-the-art plant, have serviced that market since 2000. We feel very good about our position, recognizing that it is a competitive process. Great. On acquisitions, very interesting board addition. Is that a signal that there's additional opportunities in Europe? I realize this may be difficult, but if we could contextualize what that opportunity could be. Also, is there a target percentage of sales as far as hospitality versus healthcare? With Stellar Mayan, the healthcare proportion has edged up a bit. It was 57% in the quarter. Just wondering if there's a medium or long-term target overall. Thank you. Justin, not really a target. Really, it comes down to where are the interesting opportunities. Good acquisition targets, including contracts, good management, and geographically, where are they located? What is the quality of the assets? We're a bit agnostic between healthcare and hospitality. Both are profitable and meaningful parts of our growth strategy. In terms of board addition, the reality is over 50% of our top line is now coming from the U.K. We thought it was very important to add someone who has a U.K. lens, familiar with the English market, and the business environment there. I would say it was in the works for a while. We're very pleased with the addition. In terms of future acquisition size number, we remain optimistic that there are interesting and attractive opportunities out there. I think I have commented that the quantum and size and number of them is likely higher in the U.K. There's still more fragmentation in the U.K. market, in terms of size. We obviously did the largest acquisition of Stellar Mayan. The size of those is reduced substantially with that asset being acquired by us. There are a number that are more of the Shortridge size in the U.K. market. There are acquisitions in Canada, but it has been more consolidated than in the U.K. Thank you. That's very helpful. Look forward to the developments ahead. Thank you very much, Justin. We have our next question from Michael Glen with Raymond James. Sorry about before. Linda, could you just, or Kristie, the AR bills in the quarter, the account receivable bill, is that something that you would expect to reverse in Q3? Yes. It's really seasonality, given Q2 is a much stronger quarter than Q4, the comparative. It's really timing of payments from our customers between the two quarters due to the increased volumes. Okay. Just on the share repurchase program Linda, would you expect the share repurchase program to continue at similar levels? Just trying to gauge the philosophy on the NCIB from here. Yeah. I would say this is something that we monitor on a very regular basis. As we explained, there was over CAD 2 million of repurchases. We'll continue to monitor it, keeping in mind leverage and growth opportunities going forward. We have been active in it, and we continue to be active, balancing leverage and opportunities. Okay. Just on the U.K., you talked about realizing 40% of anticipated synergies. There was also another comment that you made about actions you've taken to change the comp structure and some of the management change over there. On those items, like those comp structure changes and the management items, how far along do you think you are in that bucket? Relatively new on that. I would say with the one-year anniversary, changing the comp structure to be focused on performance and results would be a relatively new introduction, I'd say, within the last quarter. It won't really impact until going forward from here. Okay. Just on the NHS, anything notable in the quarter in terms of some of the progress you may have had with regard to dialogue or with regard to conversations surrounding conversion of disposable to reusable? I see that as an opportunity that is a very good opportunity going forward. I would say there's been good discussions. I can't say there's been 90% of our healthcare have converted. We are extremely pleased with the discussions that we've had with a number of the NHS trusts and our customers, including renewing a number of contracts, including their satisfaction with service quality and service. All the right things are happening. The next phase of that is for sure continuing to work with them to increase product lines and conversion to reusable. Okay. Thank you for taking the questions. Thanks, Mike. We have our next question. It's a follow-up question from Cheryl Zhang with TD Cowen. Thanks, Linda, Kristie. Just a few housekeeping items. First one, you noted that you had an interest rate swap that basically converts your floating rate to a fixed rate. I'm curious, how should we be thinking about your interest rate going forward? I would say, Cheryl, there shouldn't be any significant changes to what you're seeing in the quarter, realistically. Okay. Understood. Then lastly, on CapEx, how much of a Stellar Mayan project CapEx is remaining, and what would be your expected cadence for the CapEx spend for the rest of the year? Big picture, I think the remaining spend will probably be spent more or less probably evenly between Q3 and Q4. Big picture, there's roughly 10, 11 million CAD left from our guided CapEx in totality. A couple million CAD of that is probably the Stellar Mayan remaining cash payments. Okay. That's very helpful. Thank you. Thank you. There are no further questions at this time. I will now turn the call over to Linda McCurdy for closing remarks. Thanks everyone for joining today. If there are any follow-up questions, please feel free to reach out to Kristie and myself. Just wishing everyone a good rest of summer. Thanks so much. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.