CES Energy Solutions Corp.

Hello and welcome to the CES Energy Solutions fourth quarter 2025 results conference 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. And if you would like to ask a question during this time, please press star one on your telephone keypad. I would now like to turn the conference over to Tony Alicino, Executive Vice President and CFO. You may begin.

Good morning, everyone, and thank you for attending today's call. I'd like to note that in our commentary today, there will be forward-looking financial information and that our actual results may differ materially from the expected results due to various risk factors and assumptions. These risk factors and assumptions are summarized in our annual information form, fourth quarter MD&A, and press release dated March 10th, 2026. In addition, certain financial measures that we will refer to today are not recognized under current general accepted accounting policies. And for a description and definition of these, please see our fourth quarter MD&A. At this time, I'd like to turn the call over to Ken Zinger, our president and CEO. Thank you, Tony.

Welcome, everyone, and thank you for joining us for our fourth quarter and full year 2025 earnings call. On today's call, I will provide a brief summary of our financial results released yesterday, followed by an update on capital allocation, and then our outlook for 2026, and finally, our divisional updates for Canada and the US. I will then pass the call over to Tony to provide a detailed financial update. We will take questions, and then we will wrap up the call. As always, I will start my comments today by highlighting some of the major financial accomplishments achieved in Q4 of 2025. These highlights include our highest ever quarterly revenue of $664.5 million, beating our prior record from Q1 of 2025 by almost 5%. Our highest ever quarterly EBITDA of $113.2 million, beating our prior record from last quarter by 9%. Fourth quarter EBITDA margin of 17%. Total debt to trailing 12 months EBITDA was at 1.23 times. at the end of Q4 2025, which was almost dead center with our targeted range of 1 to 1.5 times. Cash conversion cycle days in Q4 was 98 days, well below our targeted range of 110 to 115 days, and our lowest quarterly level ever. The 2025 full-year annual financial highlights include all-time record revenue of $2.5 billion, which was up 6% over the prior record from 2024, all-time record EBITDA of $404.6 million, and 7.5% of our outstanding shares were repurchased during the year at an average price of $8.20. With regard to our capital allocation plans, I am pleased to report the following. Consistent with our prior messaging, we intend to address the dividend once per year while reporting Q4 or Q1 of each year. So on that note, we are happy to report that we are increasing our quarterly dividend by 29%, to 5.5 cents per share beginning for shareholders of record on March 31st, 2026. We will continue to support the business with the necessary investments required to provide acceptable growth and returns. This includes the previously announced CapEx in 2026 of 85 to 90 million. We will continue to research and execute on strategic tuck-in acquisition opportunities which support vertical integration or interrelated business lines or geographies. where we believe we can add value and grow returns. We will continue repurchasing shares while staying within our current debt to trailing 12 months EBITDA range of one to one and a half times as previously communicated. Although there has been negativity surrounding oil prices since April of 2025, due to the forecasted oversupply expected to appear in the market in late 2025 and early 2026, this oversupply still has not materialized. The fear of it appearing has served to keep oil prices lower during the past nine months, but not down to the feared level of $50 or less. This has led to only slightly reduced exploration and production in 2025. As a result of the Middle East situation and spiking oil prices, there is fresh optimism that severely constrained production out of the Middle East may actually serve to offset the impending oversupply concerns, or if it drags on for a few weeks, even outpace the supply. and instead create a shortage. Although this is not currently represented in our outlook, it is possible. Needless to say, prolonged inventory deficits that could result in oil prices at anything north of $65 to $70 could materially affect the industry outlook in both the short and medium terms, leading to increased activity levels and resulting in further upside in our operation and financial performance. Obviously, we have tremendous torque stored in the company performance. I would predict that any activity moved to the upside would translate to outsized participation in activity, revenues and earnings by CES. We'll have to wait and see what the next few weeks brings us in the way of short and medium term supply, demand and dynamics and pricing. Now for a summary of our Q4 performance overall and by division. Today our rig count on North American land stands at 221 rigs out of the 745 listed as currently operating on land in North America representing an industry-leading and an all-time record North American land market share of 29.7%. This market share surpasses our prior record from last quarter of 29.5%. In Q4, 65% of CES revenue was generated in the United States and 35% in Canada. As previously noted, quarterly revenues by countries and by divisions were at all-time highs in Q4. That speaks to the strength of the entire business currently. These results were driven by outperformance across the board, not just by one division or national jurisdiction. As noted during the Q3 call and message throughout the first half of the year, we expected margins to be under pressure during the first half of 2025 as tariff concerns, the negative macro outlook, and our overstaffing in preparation for some large RFPs all took a toll on margins in Q1 and Q2. As shown in our Q3 performance of 16.6% margins, and then emphasized in our Q4 results with the 17% margins, the business has been dialed back in and is now operating at an extremely high efficiency level. We have staffed up even further throughout the second half of 2025 as we continue to gradually take on the full workload from the RFP wins. We expect the full realization of the awarded revenues to show up completely in the financials by the end of Q2. In Canada, the Canadian Drilling Fluids Division continues to lead the WCSB in market share. Today, we are providing service to 81 of the 213 jobs listed as underway in Canada, or a 38% market share. The overall active drilling rig count in Canada throughout Q4 and so far in Q1 has been trending consistently lower than 2024 by approximately 10% year over year. In contrast to that, as previously noted by our record revenues, the service intensity phenomenon continues to more than offset the reduction in the number of rigs. We remain very optimistic about the prospects for 2026 due to the completion and full startup of infrastructure projects and their associated takeaway capacity. We continue to view the WCSB as a basin which is in a great position to not only weather the macro pressure, but also to benefit significantly if and when those pressures subside. Purechem, our Canadian production chemical business, continued its run of record results in Q4. Purechem continued its impressive growth trajectory as all of the business lines continued to perform at record levels. We experienced further revenue and earnings from our continued market penetration and market share growth in Q4. Additionally, we have recently begun achieving access to larger opportunities in the attractive heavy oil thermal market. This is a market we've been focused on penetrating for the past 10 years. Although it is a long and complicated process to break into this market, we have persistently worked to find effective solutions. Over the past year or two, we have finally been able to achieve some wins in treating thermal production for a couple of the smaller operators and plants in the regions. This has now given us the data to demonstrate to the larger operators that not only do we have capability to service the production reliably, but we can also provide superior results in the status quo. This is high-volume, high-revenue, and very sticky business due to its complexity and due to the cost of change. We liken this business to the offshore business in the United States, different chemistry and problems with large rewards if you can penetrate and execute on them. Now for the United States. AES, our U.S. drilling fluids group, is providing chemistry and service to 140 of the 532 rigs listed as active in the U.S. land market today, for a continually widening and AES record-tying number one market share of U.S. land rigs at 26.3%. The number of rigs drilling in the USA is slightly up since we last reported in November, but down by just over 10% year over year. In spite of this, AES is actually up by two rigs year over year, and currently we enjoy a basin leading 87 rigs out of the 241 listed as working in the Permian Basin, or a number one market share of 36%. very close to our highest market share ever in the Permian. I would also like to note that AES Completion Services, formerly Hydrolyte, continues to make significant penetration into the clean-out, drill-out market in the Permian and South Texas regions. In partnership with AES, this business unit is delivering material revenue and EBITDA contributions significantly above the pre-acquisition levels. As well, fossil fluids group that we acquired in Oklahoma during Q2 of 2025 is also running at a much higher revenue and profitability level than prior to our purchase. Their specialization in the increasingly attractive Cherokee shale hybrid oil and gas plate provides us with more exposure to another growing basin with alignment to the strong trends currently being experienced in the North American natural gas market. Our market shares throughout the USA land market continue to grow as natural gas production continues to garner attention. A little over two years ago during our November 2023 earnings call, I noted that we intended to begin putting an emphasis on getting back into the Haynesville play as gas was starting to become relevant again. At that time, we had zero rigs in the Haynesville. Today, I'm very proud to report that we are on 15 of the 53 working in the Haynesville. This represents a market share of over 28%, which is up from 21% when we reported three and a half months ago. Over the past year, we have constructed a blending plant and distribution facility, including a rail siding strategically located within the basin. We've also developed some highly technical products and systems specifically for the high temperature, high pressure challenges within the Haynesville play. We anticipate further growth in this area as activity continues to ramp up in the coming months and years. At the beginning of 2024, there were 33 rigs working in the Haynesville. Today, there are 53, which represents year over year activity growth of close to 30% per year as LNG exports and AI continue to drive demand and growth in both the Hainesville as well as the Northeast USA. Finally, our U.S. production chemical division, JTAM Catalyst, continues its steady trend of growing market share and profitability. The division remains focused on further market penetration in all the areas in which they operate. As noted on the prior quarterly earnings calls in 2025, JCAM Catalyst invested in CapEx and personnel during the first half of 2025 in order to support not only its growing activity levels, but also to support several potential meaningful business opportunities. It is important to note that JCAM's business, like Purechem's, is almost entirely leveraged to production-related spending by the E&Ps, and therefore the revenue and earnings are extremely durable through any cycle. As noted earlier in my comments, J-CAM Catalyst has now been awarded some of the major RFP business and have been actively onboarding this business since late November. In the coming few months, we will complete the transition to servicing this new opportunity. This will be evidenced by the increased revenue EBITDA and CapEx that we have previously discussed and forecasted for 2026. Also, as noted on the Q2 earnings call, J-CAM Catalyst has been optimizing manufacturing, developing products, and hiring some technical specialists in order to become a relevant supplier in the Gulf of America. Our initial targets in this region are the 54 deepwater platforms to be followed by the six ultra deepwater platforms in the Gulf. These types of platforms experience extreme technical conditions and require high volume treatment and superior technical support. These conditions allow for specialized chemical solutions which, although different from land-based chemistries, present opportunities for product development and solution differentiation. Although a long and steep learning curve, we are making progress as evidenced by the fact that we have recently begun treating our fourth platform with all of the chemistries required and have now been awarded a trial on a fifth platform to start testing chemical applications. As with prior platforms, it will take several months to a few quarters before all testing is complete and we are fully treating the platform with the full suite of chemicals. As always, I would like to reiterate the confidence I have in the resilience of our business model in the face of any market conditions possible. Our business is counter-cyclical, requires minimal capex, and demonstrates high free cash flow throughout the cycles. Noteworthy as well is that in spite of the pullback and upstream activity, we have consistently experienced revenue and opportunity growth throughout 2025 and into 2026. Therefore, our strategy remains the same, anchored by a cautious focus on maintaining relationships with existing clients while continuing to develop products and solutions which benefit them, as well as differentiating us from our competitors. We believe our Q4 results are an early indicator of the tremendous work we have building in our business right now. We also believe that US upstream activity will inevitably accelerate at some point in 2026 or 2027. In the meantime, we continue to expect 2026 to be a year of growth and positioning, with 2027 potentially looking even stronger in North America as the oil market seems headed towards a more positive structure and natural gas demand accelerates due to LNG and AI development. With regard to USA tariffs and the suggested Canadian counter tariffs, these continue to have little to no direct effect on our business in our current state. However, we have taken significant steps to restructure our manufacturing and supply chain in order to minimize future exposures as much as possible. I will state again for clarity that as noted quickly on our Q1 2025 earnings call, the impact from tariffs to date continues to be immaterial to our overall business. Finally, I want to extend my appreciation to each and every one of our employees for their commitment to the business culture and success of CES. Due to the growth we are still experiencing as well as anticipating experiencing, we have increased the total number of employees at CES by 7% from 2,530 on January 1st of 2025 to 2,707 at the end of 2025. I will now pass the call over to Tony for the financial update.

2025 represented a pivotal year for CES as we continued and accelerated our unwavering focus on surplus free cash flow generation, return on capital employed, attractive returns, and financial discipline. During the year, these financial attributes were recognized by credit rating agencies through DVRS's upgrade to double B low with a stable outlook and SMP's upgrade to B high with a stable outlook. These upgrades combined with our consistently strong financial results facilitated a $75 million addition to our high yield bond and an attractive implied yield of 5.6%. Our delivery of consistent and strong financial results has also led to acknowledgements by the equity markets, including CS's inclusion into the S&P TSX Dividend Aristocrat Index on January 13th, 2026, and last Friday's announcement by FTSE for inclusion in the FTSE Canadian Small Cap Index, effective March 20th, 2026. CES's credit quality, conservative capital structure, and attractive cost of capital allow us to effectively return capital to shareholders while executing our business plan, including expansion opportunities such as the Haynesville drilling fluids market, and the sizable production chemical markets in the Gulf of America and the Canadian oil sands. CES's financial results for the fourth quarter and full year set record levels of revenue and adjusted EBITDA and demonstrated a continuation of strong free cash flow and high quality earnings, despite muted rig counts in the US and Canada. These results underpin the unique resilience of CS's consumable chemicals business model. Revenue for 2025 of $2.5 billion represented a new all-time high and a 6% increase over 2.4 billion in 2024. Adjusted EBITDA of 404 million reached record levels and compared to 403 million in 2024 and adjusted EBITDA margin for the year of 16.2% compared to 17.1% in 2024. Adjusted EBITDAHC margins continue to come in near the top end of our 15.5% to 16.5% guidance and should remain constructive given the current operating environment. These impressive results were achieved through strong contributions across all parts of the business amid increasing levels of service intensity, vertically integrated supply chains, and leading market share positions. Strong annual free cash flow of $166 million enabled CES to continue its track record of consistent returns to shareholders through $35 million in dividends and $140 million in share repurchases. Focusing on the fourth quarter, CES delivered record quarterly revenue and adjusted EBITDA and demonstrated a continuation of margin expansion, strong funds flow from operations, and high-quality earnings, despite lower rate counts in WPI price-related and market volatility. These results underpin the unique resilience of CS's consumable chemicals business model and sustained profitable growth as our customers continue to adopt chemical-related improved efficiencies and require higher treatment levels for increasingly prolific wells. In Q4, CS generated record revenue of $665 million, representing an annualized run rate of approximately $2.7 billion, and a 10% increase over prior years, $605 million. Revenue generated in the US set a new record at $435 million, representing 65% of total consolidated revenue. These results compared to revenue of $409 million in Q3 2025 and $390 million in Q4 2024. Revenue generated in Canada also set a new quarterly record at $230 million compared to $214 million in Q3 and $250 million in 2024. Revenue levels continued to benefit from recent acquisition contributions and elevated service intensity and production chemical volumes, driven by increasingly complex drilling programs. Customer emphasis on optimizing production through effective chemical treatments benefited both countries and countered declines in industry rig counts, illustrating the resilience and attractiveness of our business model. Adjusted EBITDA in Q4 came in at 113.2 million compared to 103.3 million in Q3 and 103.2 million in Q4 2024. Q4's adjusted EBITDA margin of 17.0% came in above our targeted EBITDA margin range and compared to 16.6% in Q3 and 17% in Q4, 2024. This continued trend of improving margins reflected the onset of growing into a cost structure, supporting higher revenue levels, strong contributions from the creative tuck-in acquisitions, and an attractive product mix. CES generated $108 million in cashflow from operations, setting a new all-time record in the quarter. compared to $52 million in Q3 and $62 million in Q4 2024. The increase in cash flow from operations was driven by strong funds flow from operations combined with a working capital harvest in the quarter. Funds flow from operations, which isolates the effect of working capital fluctuations, was $84 million in Q4 compared to $86 million in Q3 and 69 million in Q4 2024. Free cash flow was 78 million in Q4 compared to 27 million in Q3 and 35 million in Q4 2024. As measured by a free cash flow to adjusted EBITDA conversion rate, this equates to approximately 69% in the current quarter and 41% for 2025. Excluding investments in working capital, CES realized a conversion rate of 49% for the quarter and 51% for 2025. CES maintained a prudent approach to capital spending through the quarter with CapEx spend net of disposals of $18 million, representing 3% of revenue. We will continue to adjust plans as required to support existing business and attractive growth throughout our divisions. And for 2026, we expect cash traffic to be approximately $90 million split evenly between maintenance and expansion capital to support incremental accretive business development opportunities and current record revenue levels. CES maintains the flexibility to alter spending levels commensurate with changes in end markets and required support levels. During the quarter, we continue to be active in our NCIB program purchasing 4.9 million common shares at an average price of $10.28 per share for a total cash outlay of $50.4 million, representing 2.2% of outstanding shares at July 1st, 2025. For the full year 2025, we purchased 16.8 million shares at an average price of $8.20 per share, representing 7.5% of outstanding shares as at December 31st, 2024. Subsequent to the quarter, we purchased 1.3 million shares at an average price of $13.01 per share for a total of $16.7 million. This brings the total purchases under our current NCIB to 50% of the 18.9 million shares available. Since the inception of the NCIB program in 2018, CES has purchased 87 million shares, representing 32% of the outstanding shares at that time, at an average price of $4.49 per share. During the quarter, CES completed a private placement of an additional $75 million in senior notes due May 24, 2029, at a premium of $103.08, representing an implied yield of 5.6%, acknowledging the credit quality of the business model. This issuance in conjunction with the Q2 2025 amendment and extension of our senior facility leaves us with significant financial flexibility and no near-term maturities. We ended the quarter with $497 million in total debt representing a decrease of $14 million from the prior quarter and an increase of 44 million from December 31st, 2024. Total debt was primarily comprised of the $275 million in senior notes, a net draw on the senior facility of 109 million and $99 million in lease obligations. Total debt to adjusted EBITDA of 1.23 times at the end of the quarter compared to 1.29 times at September 30th, demonstrating our continued commitment to maintaining prudent leverage in the one to one and a half times range. This prudent capital structure is further illustrated by our current net draw of approximately $123 million, which has increased by 14 million from the end of the quarter, primarily as a result of our quarterly dividend payment and timing of procurement related spends. We are very comfortable with our current debt level, maturity schedule and leverage in the one to one and a half times range, thereby enabling strong return of capital to shareholders and prioritizing a sustainable dividend and share buybacks in addition to token strategic acquisition opportunities. In accordance with that view, I am pleased to announce that on March 10th, the company's board of directors approved a 29% increase to the quarterly dividend from 4.25 cents per share to 5.5 cents per share. This represents an annualized dividend yield of 1.3% at yesterday's closing price and a conservative annual payout ratio of approximately 19%. The 29% increase to the quarterly dividend will only cost an incremental $11 million annually, underscoring another ancillary benefit of share buybacks by reducing the share count and increasing returns to shareholders. Elevated activity levels combined with our continued focus on working capital optimization has led to improvements in cash conversion cycle, which ended the quarter at a record low of 98 days compared to 110 days in Q3. This translates to an operating working capital as a percentage of annualized quarterly revenue of 26% compared to our historical range of 30 to 35%. Each percentage improvement at these revenue levels represents approximately $27 million on our balance sheet. We continue to remain focused on profitable growth, acceptable margins, working capital optimization, and prudent capital expenditures, which drive our key metric of return on average capital employed. This approach has led to a cultural adoption of these key factors, allowing us to maintain a strong trailing 12-month ROCE of 23%. At current levels of activity, market share and service intensity, CES remains in a position of strength and flexibility, supporting our capital allocation priorities, which are governed by adequate return metrics. We continue to prioritize capital allocation toward supporting existing and new business through investments in working capital as required and CapEx projects that deliver internal rates of return above our internal hurdle rates. We remain very comfortable with our dividend, which represents a yield of approximately 1.3% at our current share price and is supported by a prudent 19% payout ratio and 20%. Through the year, we plan to buy back at least enough shares to offset our modest equity compensation related dilution, be in the market on a consistent basis, and consider opportunistic purchases in the context of surplus free cash flow generation, implied valuation levels, and most importantly, an adherence of our one to one and a half times target leverage range. We will continue to explore prudent acquisitions with a continued focus on accretive tuck-ins, providing complementary products, markets, geographies, and leadership that can benefit from our platform to realize attractive growth. At this time, I'd like to turn the call back to the operator to allow for questions.

Thank you. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Please ensure that your phone is not on mute when called upon. Thank you. Your first question comes from John Gibson of BMO Capital Markets. Your line is open.

Morning, all. Thanks for taking my questions here. Just maybe starting the margins. Obviously, the business is performing very well here and just given the positive outlook and now two quarters of strong margin performance, I guess. What would you need? What would it take to additionally from here to potentially revisit that the guidance maybe later in the year?

Yeah, I think it's something we talk about every quarter, John, and absolutely, we like the trends. And when you look at the setup that Ken laid out from a positioning perspective, we're very optimistic. However, we put up to 17%. It was the first one in four quarters, almost five quarters. And we like the way Q1 is shaping out so far. However, Q1 typically has a couple of one-timers that we should know that do affect the quarter. Number one is breakup in Canada. So breakup has started, and it's a little bit steeper and faster than we were expecting. And it's no surprise to anybody on the call that we and everybody have started seeing cost increases for anything petroleum-related over the last week because of the spike in WTIs. and that's transportation-related costs, diesel, et cetera. These are all things that the guys have structured into agreements that we will be able to pass on, but that's not going to happen immediately. Had it not been for those couple of things, we would have taken a more serious look at increasing that range, but we're going to stay here, obviously, for at least this quarter, and we'll revisit next quarter, depending on where we are and where we're going. Hope that helps.

No, that's very helpful. I appreciate it. Then last one for me, you know, in terms of market share in U.S. production chemicals, you've obviously had some nice wins here. What inning are we in in terms of where this business could go? Or I guess, in other words, what is the magnitude of additional RFPs you're looking at now versus what you've recently won?

Yeah, sure. Good morning, John. If you're going by any, we like to look at the businesses, each of the business divisions as being possible to get 30 to 35% market share before you kind of hit a point where you're getting enough pressure from operators because they want to keep diversification of supply too. So the last year's Kimberlite report had us at 21% of the market in the U.S. land production chemicals. That sort of gives you the number. 21 is where we're at. Up 35 is where we think we can go. And as far as pace goes, yeah, we're on pretty much every RFP that comes out. But we have a real focus on taking care of the customers we already have, first and foremost, and then trying to pick up some of the new business. So it'll continue to be steady growth, we hope. That's what's been the case for the last 10 years. Or in COVID, that's sort of been the pace we're on, and that's what we're hoping to continue. both sides of the border and all business lines.

Thanks a lot. I really appreciate the responses here. I'll turn it back.

Your next question comes from Keith Mackey with RBC. Your line is open.

Hey, thanks, and good morning. Definitely heard the commentary on tuck-in M&A in the prepared remarks. done a couple of tuck-in acquisitions over the last little while. Just curious if you can speak to the opportunity set of potential targets that are out there now. Is there still a very large pool of potential candidates that would meet your hurdle returns, hurdle rates and required returns? Just curious for how you're thinking about going about incremental tuck-in M&A from that standpoint and generally what is out there in the market?

So I'll start Keith. So nothing has changed. So you're right. We have, the team has put up the numbers that have been recognized that have led to a lot of the great financial results that have been recognized by the markets. And yeah, our multiple is higher and our capital structure is, is very prudent, but that's not changing our approach at all. It's really interesting. We're not chasing M&A for growth for sure. As we've always said, we're looking for specific opportunities with specific technologies, maybe geographies and absolutely good people. Those deals that the team did over the last couple of years, those were really originated by the divisions where they saw some really good people and good opportunities. And that's the way they came in. We know everything that's out there that could be out there. But we're not chasing them aggressively. What we would say is obviously we have the ability to do things that would be very easy to do if they came up just given our size and capital structure and obviously valuation. But that doesn't mean we're going to be more aggressively looking for stuff or pay significantly higher than we otherwise would have.

Yeah, we all jump in and just say that we definitely have target, um, markets that we were looking for, uh, opportunities in, and we have some general, um, vertical integration stuff that we're investigating as well, but you know, those things to get quality businesses that you can fit in, you want to bring into your culture is a tough, tough road. So we're, we're looking at stuff in some specific areas, just haven't found the right ones yet.

Yeah. And just to close the loop there, uh, we're always talking about specific opportunities that may come up typically through the guys that run the divisions. But if we found like unicorns that could help us accelerate the things that we've been talking about and targeting, we would obviously act on something like that. Like the fossil fluids and hydrolyte were great examples of that where we saw those markets wanted to expand and those were excellent opportunities to do so.

Got it. No, that all makes perfect sense. I guess maybe just broadening it out in terms of capital allocation, you definitely gave some comments around how you're thinking about buybacks at these levels. Tony, maybe could you just take the opportunity here to kind of flesh out what your buyback strategy is. Is it strictly the keeping debt within the target leverage ratio or Or how much does current valuation of the stock play into how many shares you might buy back? Or is it more just an availability of capital and a leverage question?

It's really a hybrid, right, with an emphasis on the latter. So, again, to reiterate, job number one is maximizing surplus-free cash flow. And the guys have been doing a great job at that, at the divisions. And you can see the consolidated results after that. We have our dividends. that we were able to increase by 29% on a different per share basis, but it's only costing us an extra $11, sorry, $11 million per year. And, uh, and then after that, it's, uh, if we find some tuck-ins great, if not, we're just going to keep buying back shares. However, uh, we will, we're, we're aiming to be in the market every single day. And, uh, and be governed by staying within that one to one and a half times leverage range and that allows us to be opportunistic uh on certain days if we do see some softness we will uh we will accelerate and increase our buying those days and uh and what what that means is that we're not We're not wed to necessarily exhausting any given NCIB program, like the one that runs out on July 22nd. We're through 50% of that program, and we're going to continue to eat away at it. But our plan is to be in the market for almost every day during the year and buy quantities that allow us to maintain that one to one and a half times leverage range. In terms of valuation, you know the attributes of the company and you see the financial results and we're not the experts of picking a multiple, but what we do know is when we spend that money and we compare it versus the returns elsewhere, it's the right place to be putting the money in. Just repeating what we've heard from investors, they're looking at the company differently now. They're looking at the consistent ROCE and the low to mid 20s. They're looking at the significant CAGR and FFO per share since IPO. They're looking at the high free cash flow generation, margin expansion, market share expansion. And they're looking at the company differently than they did before. And that's been acknowledged by some of the indexes that we've been added to.

Got it. Thanks very much for the comments.

Again, if you have a question, it is star one on your telephone keypad. We will pause for a moment. Your next question comes from Jonathan Golden with Scotiabank. Your line is open.

Hey, good morning. Ken, Tony, thanks for taking my questions. Maybe just congratulations to you and all the employees at CES for all the great work over the past several years. It's nice to see you showing up in the results and the share price. I guess my first question is maybe on the working capital. Another quarter of solid improvement there. It keeps trending down. I was just wondering if there's anything that happened in the quarter, maybe one time, that would make those results look better than they were, or how should we think about sustainability of the working capital investment rate from Q4 on?

Yeah, number one was it was a confluence of excellent activity on all three levels, right, DSI, DSO, and DPI. So when we look at the range that we want to be in, we're still at that 110 to 115, which we think is sustainable. That 98 was an excellent accomplishment. But as we've talked about, you should use that range, probably the lower end of that range going forward. And hopefully over the next couple of quarters, just like we're going to revisit the margin range, maybe we'll revisit that range as well.

Okay, that's good color. And then since you brought it up, Tony, on the margin range, you know, you talked about Q1, some of the puts and takes there. But as we move forward, into 26 and 27, you guys are growing. Is it fair to assume we can expect some degree of operating leverage as you just ramp the revenues and you kind of hold the cost base and the employee base stable as you've already invested last year?

Yes.

Okay, fair enough. Thanks for taking my questions.

Thanks, Rob.

There are no further questions at this time. I'll turn the call to Ken Zinger for closing remarks.

Well, thank you, everyone, for joining us for the call today. Appreciate the time. And we look forward to speaking with you all again during the Q1 update call on May 8th, 2026.

This concludes today's conference call. Thank you for joining. You may now disconnect.