GDI Integrated Facility Services Inc.

Good morning, ladies and gentlemen, and welcome to the GDI Integrated Facility Services 3rd Quarter 2025 Resilience 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, November 6th, 2025. I would like to turn the conference over to Mr. Charlie Tien-Jarroir, Senior Vice President and Chief Financial Officer. Please go ahead.

Thank you, operator. Good morning, all, and welcome to GDI's conference call to discuss our results for the third quarter of fiscal 2025. My name is Charles-Etienne Giroir. I am Senior Vice President and Chief Financial Officer of GDI. I am with Tom Bigrat, President and CEO of GDI, and David Inchey, 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 our MD&A file that was sent out last night. I will begin the call with an overview of GDI financial results for the third quarter of fiscal 2025, and will then invite Claude to provide his comments on the business. In the third quarter, GDI recorded revenue of $615 million, a decrease of $25 million, or 4% over 2024. This is comprised of an organic decline of 2% and a 2% decrease from business disposal in 2024. GDI recorded adjusted EBITDA of $38 million in the quarter, down $1 million from $39 million in Q3 2024, which represents an adjusted EBITDA margin of 6%, remaining consistent with Q3 last year. On a year-to-date basis, revenue reached $1.84 billion, a decrease of $82 million or 4% over the same period of 2024. Year-over-year revenue decline was permanently due to a 4% organic decline in revenue. I just said a bit that in the first nine months of the year amounted to $105 million, an increase of $5 million or 5% over the corresponding period of 2024. Our Business Service Canada segment recorded revenue of $144 million in the third quarter, while generating $10 million in adjusted EBITDA, down $1 million compared to Q3 last year. Adjusted EBITDA margin was 7% compared to 8% in Q3 2024. Our Business Service USA segment recorded revenues of $198 million in Q3, a decrease of 11% over Q3 2024. The segment experienced an organic decline of 12% in Q3, which reflects the paring down of low margin accounts as well as the loss in Q1 2025 of the remaining 20% of a large client loss during Q1 of fiscal 24. In addition, revenue generated from one new customer in 2024 fluctuated based on the volume of recurring project works, which was lower in the third quarter of 2025 compared to last year. The segment reported adjusted EBITDA of $13 million, representing an adjusted EBITDA margin of 7%, an increase of 1% over Q3 last year. The technical service segment recorded revenues of $270 million compared to $269 million in Q3 last year. The segment generated adjusted EBITDA of $19 million, which is $1 million higher than Q3 last year. representing an adjusted EBITDA margin of 7% in both Q3 of 2025 and 2024. Finally, our corporate and other segments reported revenues of $3 million compared to $4 million last year, and no change in negative adjusted EBITDA of $4 million versus Q3 2024. I would like now to turn the call to Claude, who will provide further comments on GDI performance during the quarter.

Well, thank you, Charles-Etienne. Bonjour à tous. and thanks to everyone participating in GDI's Q3 earning conference call. I'm relatively pleased with GDI's performance in Q3 this year, considering our technical service segment is continuing to fire on all cylinders. We recorded an organic growth rate of 4% and a record high adjusted EBITDA of $19 million for the quarter. We were able to deliver very strong results despite that we continued to see some client delay project starts due to some uncertainty in the economy during the quarter. Project backlogs at Hemsworth remain near record high and as do the margins on the backlog. We feel that our business service segment performed well in the face of the headwinds we are seeing in the commercial real estate in Canada and the United States. In Canada, even though our client charges more than double our historic rate of 4%, we managed to limit our organic decline to 1%, while adjusted EBITDA came at $10 million versus $11 million last year. The business is holding up quite well despite the market pressures. Our business service USA segment recorded an organic decline of 12% during the quarter. We are still lapping the loss of the remaining piece of our largest client of Q1 2025. combined with the paring down of low-margin accounts, as Charles-Etienne was stating. We expect organic growth to stabilize during the first half of next year, despite the revenue loss. Adjusted EBITDA increased to 7% in Q3 versus the same quarter last year, as we focus on margin protection and retention going forward and during the quarter. Our outlook for the remaining of the year is in line with what we announced in Q2. We expect some weakness in our business service segment and to a lesser degree in business service USA segment due to the economic uncertainty. We are expecting business in this segment to recover well in the first half of 2026. Our technical service business is performing well and notwithstanding the global economic uncertainty, our outlook remains very positive. GDI had a solid quarter from a balance sheet perspective. We ended the quarter with a $26 million reduction in our long-term debt, net of cash coming from a combination of free cash flow, an $11 million reduction in net operating working cap, and the sales of our non-core property in the province of Quebec for $8 million. Our leverage ratio sits comfortably in the mid-twos, which give us plenty of ammunition to fund on our growth strategy. GDI outlook for M&A is positive, as we are dedicated to continue to go to acquisitions, and we're satisfied with the market adjustments we see in multiples, so that makes our activities more promising. I would like to thank our shareholder for the patience and support, and all of my team members at GDI are working very hard to deliver results, but are focused on the long term to manage the business. Operator, please feel to open the line to questions for analysts.