Earnings call transcript: K-Bro Linen Inc. Q2 2025 beats earnings expectations

K-Bro Linen Inc. reported its Q2 2025 financial results, surpassing market expectations with an earnings per share (EPS) of $0.70, significantly higher than the forecasted $0.5195. The company’s revenue reached $113 million, exceeding projections and marking a 21% increase from the previous year. According to InvestingPro analysis, the company maintains a "GOOD" overall financial health score of 2.64 out of 5, with particularly strong performance in growth metrics. Following the announcement, K-Bro Linen Inc.’s stock rose by 4.46%, reflecting investor confidence in the company’s performance and strategic direction. Based on InvestingPro’s Fair Value model, the stock currently appears undervalued in the market.

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Key Takeaways

• K-Bro Linen Inc. achieved a 34.74% EPS surprise in Q2 2025.
• Revenue growth was driven by strong performance in healthcare and hospitality segments.
• The acquisition of Stellar Mayan is expected to bolster market presence.
• Stock price increased by 4.46% post-earnings announcement.
• The company anticipates continued growth and stable EBITDA margins.

Company Performance

K-Bro Linen Inc. demonstrated robust performance in Q2 2025, with revenue reaching $113 million, a 21% increase from Q2 2024. The company’s adjusted EBITDA rose by 30% to $23.7 million, indicating improved operational efficiency. The healthcare and hospitality segments each grew by 21%, contributing significantly to the overall revenue increase.

Financial Highlights

• Revenue: $113 million, up 21% year-over-year
• Adjusted EBITDA: $23.7 million, up 30% year-over-year
• EPS: $0.70, exceeding forecasts by 34.74%
• Net earnings: $5.4 million, up 19.5% year-over-year

Earnings vs. Forecast

K-Bro Linen Inc. reported an EPS of $0.70, significantly surpassing the forecast of $0.5195, resulting in a 34.74% positive surprise. Revenue also exceeded expectations, coming in at $113 million compared to the forecasted $111.45 million, reflecting a 1.45% surprise.

Market Reaction

Following the earnings announcement, K-Bro Linen Inc.’s stock experienced a 4.46% increase, closing at $35.62. This positive movement aligns with the company’s strong financial results and strategic growth initiatives, boosting investor confidence. Analyst consensus remains bullish, with a "Buy" recommendation and price targets ranging from $34.84 to $39.20, suggesting potential upside. The stock has demonstrated low volatility with a beta of 0.92 over the past five years.

Outlook & Guidance

The company expects continued growth in its healthcare and hospitality segments, with stable adjusted EBITDA margins. The integration of Stellar Mayan is anticipated to create synergies over the next 18-24 months. K-Bro Linen Inc. is also exploring new opportunities in the UK healthcare market and anticipates significant Canadian healthcare business opportunities in 2026.

Executive Commentary

Linda McCurdy, CEO of K-Bro Linen Inc., stated, "StellarMine represents the start of a new and exciting chapter for CABRO’s next leg of growth." She also expressed excitement about expanding the scale of the UK healthcare business and noted workforce stabilization in Canada and the UK.

Risks and Challenges

• Integration challenges with new acquisitions could impact operational efficiency.
• Heavy reliance on the healthcare segment may pose risks if market conditions shift.
• Macroeconomic factors, including currency fluctuations, could affect future performance.
• Potential supply chain disruptions may impact product availability.
• Competitive pressures in the UK market could affect growth prospects.

Q&A

During the earnings call, analysts inquired about margin expectations following the Stellar Mayan acquisition and the company’s contract renewal pipeline, estimated at $40-45 million. Discussions also highlighted the strength of the hospitality segment, attributed to reduced US travel, and utility cost reductions from the elimination of the carbon tax.

Full transcript - K-Bro Linen Inc. (KBL) Q2 2025:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the Cabrol Linear System, Inc. Second Quarter twenty twenty five 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. This call is being recorded on 08/14/2025.

I would now like to turn the conference over to Kristi Plaquin. Please go ahead.

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Thank you, operator, and good morning, everyone. Thank you for joining us today, and 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.

Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward looking statement. 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?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you, Christy, and good morning to everyone and thank you for joining us today to review our twenty twenty five second quarter results. I will focus on the main highlights of the second quarter and Christy will provide more details on our financial performance as well as our balance sheet. We’re delighted to have reported record results for Q2 with revenue of $113,000,000 and adjusted EBITDA of $23,700,000 for the quarter. Our record second quarter results reflect early contributions of our recent acquisitions and we’re continuing early integration of Stellar Mayan. Both of Cabro’s healthcare and hospitality segments continue to experience steady volume trends.

Overall, consolidated revenue in our second quarter increased by 21% compared to Q2 twenty twenty four with healthcare and hospitality revenue each increasing by 21% respectively. Healthcare represented approximately 51% of consolidated revenue, which was consistent with Q2 twenty twenty four. On June 11, we were delighted to complete the acquisition of Stellar Mayan, the largest in our history, and we welcome the Stellar team to the Cabro family. We initially entered The UK market through the acquisition of Fisher’s in 2017. Our complementary acquisitions of Shortridge in 2024 and Stellar Mayan in 2025 have helped achieve our vision of building a national platform in The UK, enhancing our scale, reach, and diversification.

Together, we’re excited to support our existing and new healthcare and hospitality customers. Strategic acquisitions of high quality operators with leading market positions in key regions continue to be an important contributor to K BRO’s overall growth profile. And as we actively pursue these growth opportunities, we’ll continue to incur certain transaction, transition and financing costs. In this context, we believe adjusted EBITDA before adjusting items will assist investors to assess our performance on a consistent basis, as it’s an indication of our capacity to generate income from operations. As always, we’re focused on delivering industry leading service, and we’re proud of our growing diverse workforce that operates with our customers in mind.

I’ll now turn the call over to Christy to discuss our detailed financial results for the quarter and which I’ll return to talk about, after which I’ll return to talk about our outlook, as well of course the Q and A. Christy, over to you.

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Thanks, Linda. The information we are discussing is also highlighted in our twenty twenty five second quarter earnings press release issued yesterday and detailed supplemental financial information can be found on our Investor Relations website under the heading Financials. As a result of the Stellar Mayan acquisition in June 2025 and the acquisitions of Shortridge and Centimeters during 2024, consolidated hospitality revenue for Q2 twenty twenty five increased by 21.2% over the comparable period of 2024 and the Corporation saw a 20.7% increase in consolidated healthcare revenue for an overall increase in consolidated revenue of 21%. As we discussed in previous quarters, when reporting adjusted EBITDA we’ve revised our adjusting items to reflect certain amounts which are not indicative of ongoing operating performance. This includes transaction costs, structural finance costs, transition and integration costs, restructuring costs, gains and losses on settlements of contingent consideration, and any other non reoccurring transactions as defined within our MD and A.

We believe adjusted EBITDA will assist investors to assess our performance on a consistent basis. Details of the calculations and adjustments can be found in our MD and A under terminology. Consolidated adjusted EBITDA increased in Q2 of twenty five to twenty three point seven million dollars or by 30% compared to $18,200,000 in 2024. Adjusted EBITDA margin increased to 21% in 2025 compared to 19.5% in 2024. Adjusting items in the quarter included transaction costs, structural financing costs and non reoccurring gains.

Consolidated EBITDA increased in Q2 twenty twenty five to 21,400,000.0 or by 29% compared to 16,600,000.0 in 2024. On a consolidated basis, EBITDA margin increased to 18.9% in 2025 compared to 17.7% in 2024. For the Canadian division, the adjusted EBITDA margin in the second quarter increased to 21.1% for 2025 compared to 18.9% in 2024. The increase in adjusted EBITDA margin was largely due to labour efficiencies and the elimination of the Canadian carbon tax in Q2 twenty twenty five. EBITDA margin increased to 20.6% in the 2025 from 17% in 2024.

For The UK division, the adjusted EBITDA margin in the second quarter remained constant at 20.8% in both 2025 and 2024. The EBITDA margin for The UK division decreased to 16.3% in the 2025 compared to 19.4% in 2024. The decrease in EBITDA margin was due to adjusting items in the quarter related to the Stellar an transaction costs. Net earnings increased by $900,000 in the 2025 or 19.5% from $4,500,000 in 2024 to $5,400,000 in 2025. And net earnings as a percentage of revenue remained relatively consistent at 4.8% in 2025 compared to 4.9% in 2024.

Wages and benefits in the second quarter of twenty twenty five increased by $7,100,000 to $42,300,000 compared to $35,200,000 in the comparative period of 2024 and as a percentage of revenue decreased by 0.2 percentage points to 37.4. The decrease as a percentage of revenue is primarily related to labor efficiencies. Linen in the 2025 increased by $2,100,000 to $11,200,000 compared to 9,100,000.0 in the comparative period of 2024. And as a percentage of revenue increased by 0.2 percentage points to 9.9%. Utilities in the 2025 decreased by $500,000 to $6,500,000 compared to $7,000,000 in the comparative period of 2024 and as a percentage of revenue decreased by 1.7 percentage points to 5.8%.

The decrease as a percentage of revenue is primarily related to lower gas costs in The UK market and the elimination of the carbon tax in Canada in Q2 twenty twenty five. Delivery in the 2025 increased by $2,400,000 to $13,300,000 compared to $10,900,000 in the comparative period of 2024, and as a percentage of revenue increased by 0.1 percentage points to 11.7%. Occupancy costs in the 2025 increased by $700,000 to $2,400,000 compared to $1,700,000 in the comparative period of 2024 and as a percentage of revenue increased by 0.4 percentage points to 2.2%. The increase as a percentage of revenue is primarily related to higher facility operating costs. Materials and supplies in the 2025 increased by $200,000 to $4,000,000 compared to $3,800,000 in the comparative period of 2024, and as a percentage of revenue decreased by point four percentage points to 3.6%.

Repairs and maintenance in the 2025 increased by 400,000 to $4,500,000 compared to $4,100,000 in the comparative period of 2024, and as a percentage of revenue decreased by 0.4 percentage points to 4%. Corporate costs in the 2025 increased by $3,800,000 to $9,000,000 compared to $5,200,000 in the comparative period of 2024, and as a percentage of revenue increased by 2.3 percentage points to 7.9%. The increase as a percentage of revenue is related to higher transaction costs including legal professional and consulting fee expenditures related to the acquisition of Stellar Mayan, as well as structural financing costs, offset by non recurring gains. These items are further defined within our MD and A. We had a recovery in the 2025 of $1,500,000 compared to nothing in the comparative period of 2024, resulting in a $1,500,000 gain in the quarter.

This increase is related to the sale of the Granby facility during 2025 and the gain is an adjusting item for the purposes of calculating adjusted EBITDA, adjusted net income and adjusted earnings as is further detailed in our MD and A. Now looking at our capital resources, distributable cash flow for the 2025 was 8,500,000 and our payout ratio was 40.1%. The company paid out 0.3 per share in dividends during the quarter for total consideration of $3,400,000 The Corporation had net working capital of $90,500,000 at 06/30/2025, compared to its working capital position of $54,100,000 at 12/31/2024. The increase in working capital is primarily attributable to the acquisition of Stellar Mayan in June 2025. With regards to credit and liquidity, we have a strong balance sheet and ample undrawn capacity on our syndicated revolving credit facility, which has an operating line of $175,000,000 and an amortizing term loan of 134,300,000.0, as well as a further $50,000,000 accordion for growth purposes.

At June 30, we had an undrawn balance of close to 46,000,000 on our operating line without taking into account the accordion, reinforcing our strong liquidity. This represents a debt to EBITDA ratio on a pro form a basis, excluding leases of about 2.9 times. On June 11, KBRO amended its existing three year committed syndicated credit facility agreement to include the $134,300,000 four year amortizing term loan and extended the term of the facility to 06/10/2029. In addition, CABRO issued 2,300,000.0 common shares to finance the Stellar Mayan acquisition. Debt to total capitalization for the period ended 06/30/2025 was 50.6%.

Total debt net of cash increased in the quarter from $105,000,000 in December 2024 to $228,300,000 due to the amortizing term loan to finance the Stellar Mayan acquisition. I’ll now turn things back over to Linda for additional additional commentary. Linda?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you, Christy. Our acquisition of StellarMine represents the start of a new and exciting chapter for CABRO’s next leg of growth. StellarMine is highly complementary to Fisher’s and Shortridge and creates a top three commercial laundry in The UK with a strategic national presence. Our combined platform serves existing and new health care and hospitality customers from coast to coast. Pardon me.

StellarMine and KBRO have shared values in putting people first, being dependable partners, and environmental stewardship. Our UK managing director, who is an experienced Kbro veteran, is overseeing the combined UK operations, including the Stellar Mayan business integration plan. We anticipate the integration will take twelve to eighteen months, and our transition team is executing on our plan. On a consolidated basis, we’re excited about the future potential of our combined business and see a positive outlook going forward. We’ve been market leaders in Canadian health care for over half a century.

We’re excited to expand the scale of our UK healthcare business, and we believe The UK market shares similarities to the Canadian market. Both of CABRO’s healthcare and hospitality segments continue to experience steady growth trends. In the healthcare segment, we expect activity levels to remain strong from continued focus on reducing wait times and enhancing patient care. In the hospitality segment, we expect solid activity levels from both business and leisure travel, reflecting historical seasonal trends. Going forward, we expect combined adjusted EBITDA margins will remain at similar levels to seasonally adjusted combined historical margins.

We continue to monitor evolving global and Canadian foreign policies, geopolitical events, and economic conditions, which could have a direct or indirect impact on KBRO. We’re not currently expecting meaningful impacts on the business as key customers and suppliers are not US based. We’re committed to a sustainable future, and we’re proud of our seven decades of responsible innovative growth. We collaborate with our stakeholders to appreciate their priorities, solicit and receive feedback, and align around common goals. Our services are essential to the continuity of our customers’ operations, and we’re embodying sustainable practices to support them for the long term.

Now I’ll turn it over to the Q and A with regards to any questions you may have, on the second quarter results of 2025.

Conference Operator: Thank you. Ladies and gentlemen, we now begin the question and answer session. Should you have a question, please press star followed by 1. On your touch tone phone, you will hear prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by 2.

If you’re using a speakerphone, please lift the hands up before pressing any keys. One moment, please, for your first question. Your first question comes from Derek Lessard with TD Cowen. Please go ahead.

Derek Lessard, Analyst, TD Cowen: Yeah. Good morning, Linda and Christy, and belated congrats on the Stellenbine deal and great quarter.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you, Derek, good morning.

Derek Lessard, Analyst, TD Cowen: Maybe I just want to focus a little bit on the margin side to begin, in your prepared remarks and in the MD and A, you did say that you expected the adjusted EBITDA margins to remain at similar levels to the combined adjusted historical margins. I was just wondering if maybe you could add some context around that, particularly as it relates to capturing the Stella mine synergies.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Sure, Derek. So what we’ve said is that they will be consistent with historical margins, and I think there are things that go both ways. So, obviously, as we’ve seen, there is the pickup, from reduced carbon tax and reduced energy prices. Those are offset by, a lower margin profile out of the gate for Stellar. We expect over the next eighteen to twenty four months that synergies will we we’ve certainly guided that there are synergies that we expect to harvest, but those will take some some time.

Christine, do have anything to add? Yeah. Oh, sorry. Sorry, Derek.

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Christie, did you have anything further to add? Sorry. I didn’t. I think you’ve captured it at all. Thanks, Linda.

Derek Lessard, Analyst, TD Cowen: Yeah, all good, that makes sense on the cadence there. Just maybe one last one for me before I re queue, just talk about some of the, talked about the labor efficiencies in your prepared remarks, Just curious, are you seeing on that side of the efficiency?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: We have certainly seen a stabilization of our workforce, both in Canada and The UK. The benefit of some of our capital investments, the optimization of the integration of our Quebec Quebec acquisitions. So I would say it’s a combination of all of those factors, where we’ve been able to, you know, reduce and optimize efficiencies in most of our plants.

Derek Lessard, Analyst, TD Cowen: Okay. Thank you both. I’ll requeue.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: You bet.

Conference Operator: Thank you. Your next question comes from Michael Glenn with Raymond James. Michael, please go ahead.

Michael Glenn, Analyst, Raymond James: Hey, good morning. Maybe just to start, in terms of the business and revenue being acquired, are you happy with what you see for the margin profile or pricing on this work? Is there is there some is this something where you potentially see some opportunity?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you, Michael and good morning. We’re certainly happy with the the acquisition and the fact that it is predominantly health care in The UK. We have acquired very solid plants, good operations. I think as we go forward, there are efficiencies that we will harvest through, different operating practices. And I think as we continue to work with the customers, there are opportunities to expand the, product line, which will mean ultimately margin expansion.

They use in The UK, our observations, and we knew this going in, from a product line perspective, they use more disposables and not just in the o the operating room, but in, just general rooms linen, where we think we can introduce, like we have in Canada, new products that will, you know, increase volumes to existing customers, increase sales, and improve operating leverage over time. That’s not gonna happen overnight. As we know, selling clinical products takes time, but we have met with, I’d say 12 of the NHS trusts, and they’re all very excited about the innovation and the and and the fact that a strategic from out of market has acquired Stellar.

Michael Glenn, Analyst, Raymond James: And in in Canada, I guess, we’re familiar with how the regional health care authorities or hospitals go about their process with RFPs being issued when pieces of business come up for opportunity. Is it a similar process in The UK? Can you describe how that works and maybe describe how that bidding pipeline looks like over in The UK?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Sure. You bet. It’s it’s quite similar when we compare our an RFP in Canada to an RFP in The UK. I would say the questions are similar. The weightings tend to be similar for cost, corporate profile, or sorry, price, corporate profile, innovation, corporate strengths.

That tends to be quite similar. I think the most significant difference is their contracts tend to be three to five years in length, where our health care contracts tend to be longer term in nature. That to me would be the largest differentiator. In terms of pipeline in The UK, we’re quite excited about, growth opportunities. And I’d say over the next eighteen months, we are aware of about £10,000,000 of business that will come up, outside of our existing business.

Our existing business, we don’t have anything material coming up until next summer. And even then, it’s not overly material.

Michael Glenn, Analyst, Raymond James: When you say existing business, you’re talking about the Canadian and The UK business combined, or is that specific to The UK?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: No. That was UK Michael. Sorry. I thought you we were referring to The UK.

Michael Glenn, Analyst, Raymond James: Yeah. Yes, we were. Alright. And and maybe just on Canada Healthcare. Can you update us on two parts?

Number one, your contract renewals overall for the next, say, twelve months or or eighteen months? And then number two, what the bidding pipeline in Canada looks like for health care business?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Sure. I’d say we have locked down over 40% of the contracts that come up this year. And while we are into August and ’40 may seem low, we just have to remember that a lot of it comes due in q three and q four or a December, expiry. We’re feeling confident in our ability to renew those contracts. In terms of Canadian health care, I would say that we expect in ’26, probably, you know, tens of millions of dollars of of business to come to the market in a variety of different geographies.

Our major contract our first major contract that comes due would be in 2027.

Michael Glenn, Analyst, Raymond James: Okay. And that’s is that Western Canada? I guess that’s Western Canada more than likely?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Yeah.

Derek Lessard, Analyst, TD Cowen: Okay.

Conference Operator: Yes.

Michael Glenn, Analyst, Raymond James: Okay. Thank you for taking the questions.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thanks, Mike.

Conference Operator: Thank you. Your next question comes from Justin Keywood with Stifel. Please go ahead.

Justin Keywood, Analyst, Stifel: Good morning. Thanks for taking my call. Nice to see the results.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you, Justin.

Justin Keywood, Analyst, Stifel: So as we enter in Q3, historically it’s been the seasonally strongest quarter for Cabrol, the most EBITDA contribution Q3 of last year, the adjusted EBITDA margin was 22%. Realize there’s several moving parts with this Q3, but should we expect a margin to be in the similar range or how should we be looking at that?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: I think that’s within the ballpark. Consistent with my earlier comment, you know, the the stellar profile, does have a lower margin profile, but overall, I think it should be, in the ballpark, Justin.

Justin Keywood, Analyst, Stifel: Okay, great. And then I just wanted to clarify a few points on the contracts. So for the remaining 60% that is coming up for renewal for the balance of the year, are you able to quantify that as far as the dollar impact?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Christy, can you weigh in here?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Yes. That would be roughly $4,045,000,000, Justin.

Justin Keywood, Analyst, Stifel: Okay, and are these just as far as the composition, is that in the three to four contract range or just to help to illustrate that?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Can you clarify that again? How

Justin Keywood, Analyst, Stifel: many RFPs are within that 40,000,000?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: None of them are really a material contract, Justin. Most of them would be smaller contracts where we would just go through a normal renewal process. There would be a few RFPs potentially, but for the most part they would just be a negotiation.

Justin Keywood, Analyst, Stifel: Okay. That’s very helpful. Very diversified.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Yeah. Very diversified, Justin. And I would what percent of that is The UK, Christie?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: It’s probably about fifty fifty, Linda. K.

Justin Keywood, Analyst, Stifel: Okay. Very helpful. Then just on the opportunity for Canadian RFPs in 2026 and beyond, think I heard there’s tens of millions of dollars. Is that accurate?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Yes, yeah.

Justin Keywood, Analyst, Stifel: And I assume that’s related to one of the main competitors in Ontario and GTA hospitals where the RFPs are coming up for renewal?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: I’d say it’s, you know, across the country, but we would expect, we would expect, business to come up in Ontario. Yes.

Justin Keywood, Analyst, Stifel: And is it and

Derek Lessard, Analyst, TD Cowen: just to get a

Justin Keywood, Analyst, Stifel: bit more precise, is that, like, happening early in 2026, later, or a bit unclear?

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: I think it’s the yeah. The the the back half.

Conference Operator: Okay.

Justin Keywood, Analyst, Stifel: Of

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: ’20 Great. ’20

Justin Keywood, Analyst, Stifel: Thank you for taking my questions.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you.

Conference Operator: Thank you. Michael has a follow-up. Michael, please go ahead.

Michael Glenn, Analyst, Raymond James: Yep. Just working capital. I know there was even there was about a $9,000,000 AR build, it looks like, in the quarter. Christy, would you expect to get that back in the back half of the year?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Yeah. Yeah. It’s fairly seasonal just because Q2 is stronger than Q1, but if we just look historically, there’s usually an investment in Q2 that gets recovered over the balance of the quarters.

Michael Glenn, Analyst, Raymond James: Okay. And then the CapEx was reiterated at 10 to 12,000,000 plus the amount associated with Stellar Mayan. Now, the allocation for the Stellar Mayan portion, would that happen this year or next year?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: Predominantly this year, Michael, we would expect it to be spent relatively evenly over the next two quarters. Some may trickle into 2026 just depending on timing, but it would be early Q1 if it did.

Michael Glenn, Analyst, Raymond James: Okay. And then if we’re looking then at 2026, would you with the with the acquisition, like, you have 10 to 12 on the legacy operation, and now with Stellar Mayan. So would that so would that numbers go to on a on a normal run rate basis, where where would it go to?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: I would say there’ll definitely be an increase with the Stellar acquisition, probably closer to the, you know, 15 to 18 range.

Justin Keywood, Analyst, Stifel: Okay.

Michael Glenn, Analyst, Raymond James: Thank you. Thank you for taking the question.

Conference Operator: Thank you. Your follow-up question comes from Derek. Please go ahead.

Derek Lessard, Analyst, TD Cowen: Yeah, maybe just on the hospitality side, excuse me, just curious what you’re seeing in terms of the activity so far, maybe in Q3, and if you’re seeing any benefits from domestic travel or traveling to Europe in light of the trade uncertainties.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you for the question, Derek. Yes, we are seeing solid performance on the hospitality side of the business. I think, being driven by, fewer trips to The US, by Canadians, as well as, to your point, increased European, travel to Canada. So, we are definitely seeing that. And, if anyone stayed in a hotel room in Canada, it’s evidenced by room rates.

But we’re we’re feeling quite positive about volumes for q three on the hospitality segment.

Derek Lessard, Analyst, TD Cowen: Okay, and then maybe just on the utility costs. Do you have a sense of the, I guess, the rough breakdown between the carbon tax in Canada and sort of the lower gas costs in The UK and then on The UK gas hedges, if I remember correctly, those hedges are rolling off by the 2026. And should we start seeing the benefit in 2027 or are we starting to see that earlier on?

Christy Plaquin, Financial Officer/Investor Relations, Cabrol Linear System, Inc.: I can take that Linda. Just Great, maybe to address The UK first. The original hedge actually rolled off at the ’24. So we are seeing the impact of the new hedge in UK margins. The new hedge is a two year hedge and it does roll off at the 2026.

The impact of the positive gas prices are already reflected in the 2025 margin profile. And then in terms of the breakdown of the carbon tax versus the pricing, I would say that around it’s probably split roughly half and half, but a little bit more highly weighted to the to to the carbon tax impact versus The UK gas hedge impact.

Derek Lessard, Analyst, TD Cowen: Okay. Perfect. Thanks for taking my questions and congrats again.

Conference Operator: Thank you. There are no further questions on the phone line. I will now turn the call back to Linda McCurdy for some closing remarks.

Linda McCurdy, President and Chief Executive Officer, Cabrol Linear System, Inc.: Thank you everyone for joining this morning. If there’s any follow-up questions, please feel free, to reach out. And if not, we will, hear from everyone in q 3. Thank you, and have a great day.

Conference Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.

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