SECURE ANNOUNCES 2024 THIRD QUARTER RESULTS
Adjusted EBITDA1 of $127 million ($0.53 per basic share1)
Reaffirming 2024 full year Adjusted EBITDA guidance at top end of previous range provided of $470 - $490 million
Discretionary Free Cash Flow1 of $90 million used to self-fund growth, share buybacks and dividends in the quarter
September 30, 2024 Total Debt to EBITDA ratio2 of 1.1x (0.9x excluding leases) providing significant flexibility to execute strategic priorities
Shareholder approval received for the corporate name change to SECURE Waste Infrastructure Corp., expected to take effect January 1, 2025
CALGARY, AB, Oct. 30, 2024 /CNW/ - SECURE Energy Services Inc. ("SECURE" or the "Corporation") (TSX:SES), a leading waste management and energy infrastructure company, reported today its operational and financial results for the three and nine months ended September 30, 2024.
"Positive industry trends and strong operational execution drove financial results on the high end of our expected range in the third quarter," said Allen Gransch, President & CEO. "We delivered 11% sequential growth in Adjusted EBITDA, resulting in $0.53 per basic share for the quarter. We continued to see improved same store sales across our infrastructure network, driven by higher pricing and strong volumes, particularly within our landfill business which disposed a record 1.2 million tonnes of contaminated solids in the quarter. We are also pleased with the performance of our growth projects in the year. Throughput at the Clearwater heavy oil terminal increased to 55 thousand barrels per day in the third quarter, with further expansion plans underway to handle the production growth in the region."
"We are reaffirming our 2024 Adjusted EBITDA guidance at the top end of the $470 to $490 million range. We maintain a favourable outlook for the business as increased industrial and production activity is leading to incremental volumes requiring processing, recycling and disposal across SECURE's facility network," added Gransch. "In addition to the $75 million organic growth capital planned for this year, we continue to have a robust pipeline of growth opportunities to add recurring volumes and stable cash flows aligned with our core waste management and infrastructure competencies. We expect to provide an update on growth capital anticipated for next year and 2025 Adjusted EBITDA guidance in December of this year."
SECURE continues to deliver on its capital allocation priorities. In the year to date, the Corporation has repurchased $612 million, or 19%, of outstanding shares at a weighted average price of $11.23, a price management and the Board continue to view as substantially discounted to the intrinsic value of the Corporation. The Corporation has also invested $79 million into strategic organic and acquisition growth initiatives, including the expansion of the Clearwater heavy oil terminal and the construction of a produced water pipeline to an existing disposal facility in the Montney region, both supported by long-term customer contracts. Additionally, in the second quarter, the Corporation completed a tuck-in acquisition to expand our geographic presence in metals recycling and purchased additional rail cars to enhance logistics and drive operational efficiencies.
At September 30, 2024, SECURE's leverage remains one full turn below its target of 2.0 to 2.5x Total Debt to EBITDA, providing significant financial flexibility. Along with strong discretionary free cash flow, SECURE can continue to grow the business and deliver enhanced returns to shareholders.
THIRD QUARTER HIGHLIGHTS
Generated revenue (excluding oil purchase and resale) of $374 million, a decrease of 12% from the third quarter of 2023, primarily due to the impact of 29 facilities divested on February 1, 2024 (the "Sale Transaction"), and the divestiture of a non-core oilfield service business unit in December 2023. On a pro forma basis, revenue increased over the third quarter of 2023, driven by strong customer demand, higher pricing, and contributions from capital investments made since the third quarter of 2023, including the Clearwater heavy oil terminal, which began operations in Q4 2023.
Recorded net income of $94 million or $0.39 per basic share, an increase of $47 million in net income (100% increase) compared to the third quarter of 2023, as lower interest expense following the repayment of debt with proceeds from the Sale Transaction, and a one-time tax recovery in the quarter more than offset the impact of lower Adjusted EBITDA. Net income per share increased by $0.23 per basic share (144% increase) over the same period due to the share buybacks over the past year reducing the weighted average shares outstanding in the quarter by 18%.
Achieved Adjusted EBITDA1 of $127 million ($0.53 per basic share1), a decrease of 20% compared to the third quarter of 2023 (2% decrease on a per share basis) as a result of the same factors described above.
Recorded an Adjusted EBITDA margin1 of 34%, down from 37% in the third quarter of 2023, primarily due to the Sale Transaction.
Generated funds flow from operations of $106 million ($0.44 per basic share1), a decrease of 18% compared to the third quarter of 2023 (2% decrease on a per share basis). The decrease resulted from lower Adjusted EBITDA and the timing of fixed debt payments, partially offset by lower interest payments due to reduced debt.
Generated discretionary free cash flow1 of $90 million ($0.38 per basic share1), a decrease of 13% compared to the third quarter of 2023 (6% increase on a per share basis) as a result of the factors above, along with reduced spending on sustaining capital due to reduced facility count following the Sale Transaction.
Incurred growth capital expenditures of $19 million, primarily directed towards ongoing investments in the Clearwater heavy oil terminalling and gathering infrastructure to enhance capacity, as well as a two water pipeline projects to integrate incremental volumes from existing customers.
Repurchased and cancelled 4,480,700 shares, reducing our shares outstanding by 2% in the quarter. The Corporation incurred a total cost of $53 million to complete the repurchases, representing a weighted average price per share of $11.83.
Paid a quarterly dividend of $0.10 per common share, which currently represents a yield of 2.9% on our common shares.
Ended the quarter with a Total Debt1 to Adjusted EBITDA ratio of 1.1x2 (0.9x excluding leases).
On October 29, 2024, shareholders approved the corporate name change to SECURE Waste Infrastructure Corp., better reflecting SECURE's core business in waste processing, recovery, recycling, and disposal, as well as the efficient operation of our critical infrastructure network. SECURE expects to formally adopt the new name on or about January 1, 2025, following the receipt of all regulatory approvals.
The Corporation's operating and financial highlights for the three and nine months ended September 30, 2024 and 2023 can be summarized as follows:
Three months ended September 30,
Nine months ended September 30,
($ millions except share and per share data)
2024
2023
% change
2024
2023
% change
Revenue (excludes oil purchase and resale)
374
427
(12)
1,071
1,196
(10)
Oil purchase and resale
2,240
1,788
25
7,039
4,708
50
Total revenue
2,614
2,215
18
8,110
5,904
37
Adjusted EBITDA (1)
127
158
(20)
373
428
(13)
Per share ($), basic (1)
0.53
0.54
(2)
1.43
1.44
(1)
Per share ($), diluted (1)
0.52
0.54
(4)
1.41
1.42
(1)
Net income
94
47
100
548
136
303
Per share ($), basic
0.39
0.16
144
2.10
0.46
357
Per share ($), diluted
0.39
0.16
144
2.07
0.45
360
Funds flow from operations
106
130
(18)
305
346
(12)
Per share ($), basic (1)
0.44
0.45
(2)
1.17
1.16
1
Per share ($), diluted (1)
0.44
0.44
—
1.15
1.15
—
Discretionary free cash flow (1)
90
104
(13)
