Q4 2023 Secure Energy Services Inc Earnings Call
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Okay.
Operator: Secure Energy Services Inc. Ladies and gentlemen, thank you for your patience. Please do not disconnect.
[music], ladies and gentlemen.
Operator: Your conference call with Secure will begin momentarily. Thank you for your patience, up up up and the www.secureenergy.com, Secure Energy Services Inc. Music. Good morning, ladies and gentlemen, and welcome to the Secure Q4 2012 conference call. At this time, note that all lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require me to... Please press star zero for the op.
Thank you for your patience. Please do not disconnect Your conference call with secure will begin momentarily. Thank you for your patience.
[music].
Good morning, ladies and gentlemen, and welcome to the Q4 2023 results conference call. At this time note that all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session and if at any time. During this call you require me to the assistance. Please press star zero for the operator.
Operator: Note that this call is being recorded on Monday, February 26, 2012. And I would like to turn the call over to Chad. Please go ahead.
Chad: Thank you and good morning, everyone. Welcome to Secure's conference call for the fourth quarter of 2023. Joining me on the call today are Renny Amiro, our Chief Executive Officer; Alan Grants, our President; and Corey Higham, our Chief Operating Officer. During the call today, we will make forward-looking statements related to future performance, and we will refer to certain financial measures and ratios that do not have any standardized meaning prescribed by GAAP and may not be comparable to similar financial measures or ratios disclosed by other companies. The forward-looking statements reflect the current views of Secure with respect to future events and are based on certain key expectations and assumptions considered reasonable by Secure. However, since forward-looking information addresses future events and conditions, by their very nature, it involves inherent assumptions, risks, and uncertainties, and actual results could differ materially from those anticipated due to numerous factors and risks. Please refer to our continuous disclosure documents available on CDART Plus. They identify risk factors applicable to secure factors, which may cause actual results to differ materially from any forward-looking statement, and identify and define our non-GAAP measures.
Also note that the call is being recorded on Monday February 26, 2024, and I would like to turn the call over to Chad. Please go ahead.
Thank you and good morning, everyone welcome to <unk> conference call for the fourth quarter of 2023.
Joining me on the call today is running apparel, our chief Executive Officer, Alan <unk>, our President and Cory Hi him, our Chief operating officer during the call today.
I'll make forward looking statements related to future performance and we will refer to certain financial measures and ratios that do not have any standardized meaning prescribed by GAAP and may not be comparable to similar financial measures or ratios disclosed by other companies.
Our forward looking statements reflect the current views of secure with respect future events and are based on certain key expectations and assumptions considered reasonable by secure since.
Since forward looking information addresses future events and conditions by their very nature, they involve inherent assumptions risks and uncertainties and actual results could differ materially from those anticipated due to numerous factors and risks.
These refer to our continuous disclosure documents available on SEDAR plus.
They identify risk factors applicable to secure factors, which may cause actual results to differ materially from any forward looking statements.
Identify and define our non-GAAP measures.
Chad: Today, we will review our financial and operational results for the fourth quarter of 2023 and our outlook for 2024. I will now turn the call over to Rennie for his opening remarks. Thank you, Chad. And good morning, everyone.
Today, We will review, our financial and operational results for the fourth quarter of 2023, and our outlook for 2024.
I will now turn the call over to Randy for his opening remarks.
Chad and good morning, everyone.
Renny Amiro: 2023 was another remarkable year for Secure. We achieved record operational and financial performance, exceeding all our short-term objectives. Strong financial performance underscored the stability and growth potential of our waste management and energy infrastructure business. We delivered significant shareholder value in the year, returning a total of $280 million to shareholders, or $0.95 per basic share, through a combination of quarterly dividends and strategic share repurchase. We also strategically advanced our position as a leader in waste management and energy infrastructure. Most significantly...
2023 was another remarkable year for secure we achieved record operational and financial performance exceeding all of our short term objectives, our strong financial performance underscore the stability and growth potential of our waste management and energy infrastructure business, we delivered significant shareholder value.
In the year, returning a total of $280 million to shareholders or 95.
For basic share through a combination of quarterly dividends and strategic share repurchases.
We also strategically advanced our position as a leader in waste management and energy infrastructure most significantly.
Renny Amiro: The $1.15 billion asset sale to an affiliate of Waste Connections, a large North American integrated solid waste services company, begins to highlight the underlying value of our infrastructure-based business that provides stable, reoccurring revenue while generating significant free cash flow. Proceeds from this asset sale have significantly improved our financial position, affording us significant capacity to enhance returns to shareholders and strategically expand the business and strategically expand the industrial and energy waste market. In 2023, we deployed $114 million of growth capital into our core business. Our two major infrastructure projects this year, the expansion of a water disposal facility in the Monty region and an oil pipeline and terminal in the Clearwater region, were safely commissioned on time and on budget.
The $1, one 5 billion asset sales gain affiliated waste connections a large north American integrated solid waste services company begins to highlight the underlying value of our infrastructure based business that provides stable reoccurring revenue, while generating significant free cash flow.
Proceeds from this asset sale has significantly improved our financial position.
Joining us significant capacity to enhance returns to shareholders and strategically expand the business and strategically expand in the industrial and energy waste markets. In 2023, we deployed $114 million of growth capital into our core business. Our two major infrastructure projects. This year the expansion of our water disposal of soybean in the Montney.
Region, and an oil pipeline and terminal in the Clearwater region, where safely commissioned on time and on budget. Both projects are supported by long term contracts, providing critical infrastructure for handling customers volumes and consistent cash flows for secure across all business cycles.
Renny Amiro: Both projects are supported by long-term contracts, providing critical infrastructure for handling customers' volumes and consistent cash flows for security across all businesses. During the year, we also completed our strategic portfolio rationalization by divesting of non-core oilfield service business units that did not align with our core infrastructure strategy. Post-closing of the sale transaction, we maintain our market leadership in Western Canada and North Dakota, leveraging our extensive facility network to expertly manage waste streams for energy and industrial customers. This record-breaking year is a testament to the hard work and dedication of our entire team, including our 250 colleagues who joined Waste Connections on February 1st, upon closing the asset. I sincerely appreciate everyone's effort in helping us to get to where we are today. I believe this is only the beginning.
During the year, we also completed our strategic portfolio rationalization by divesting of noncore oilfield service business units that did not align with our core infrastructure strategy post closing of the sale transaction, we maintain our market leadership in Western Canada, and North Dakota, leveraging leveraging our <unk>.
Tensive facility network to expertly manage waste streams for energy and industrial customers.
This record breaking years, a testament to the hard work and dedication of our entire team, including our 250, <unk> 250 colleagues, who joined waste connections on February one.
Upon closing the asset sale I sincerely appreciate everyone's effort in helping us to get to where we are today.
Believe this is only the beginning for <unk> here, we are well positioned with the right people asset network and financial flexibility to take us on our next phase of growth with that today I am announcing my retirement as Chief Executive Officer as of May one.
Renny Amiro: We are well positioned with the right people, asset network, and financial flexibility to take us on our next phase of growth. With that, today I'm announcing my retirement as Chief Executive Officer as of May 1st. It has been a privilege to work with incredible people over the past 17 years at Secure. It is their commitment to Secure's values and strong execution that has allowed us to grow with great value for all stakeholders. I'm proud of what we've accomplished together and even more excited about our future. I look forward to continuing on as Vice Chair of the Board of Directors. Our Board of Directors has unanimously approved the appointment of Alan Grange as President and CEO effective May 1st.
It has been a privilege to work with incredible people over the past 17 years at superior. It is their commitment to secures values strong execution that has allowed us to grow and create value for all stakeholders.
Part of what we've accomplished.
Gather and even more excited about our future I look forward to continuing on as Vice chair of the board of Directors. Our board of Directors has unanimously approved the appointment of Alan branch as President and CEO effective may one I've worked with Alan since he joined US here in the fall of our inaugural year over that time Alan.
Alan Grange: I've worked with Alan since he joined Secure in the fall of our inaugural year. Over that time, Alan has held executive roles in finance, business development, operations, and, most recently, since 2022, as President. He has acquired extensive industry knowledge and experience that has developed him into a highly competent and respected leader. We have diligently planned for this succession, and I'm confident in Alan's ability to lead the team as we move forward into the next chapter. I'll now pass it over to Alan. Thanks, Renny. Good morning, everyone.
<unk> held executive roles in finance business development operations and most recently since 2020 as President. He has acquired extensive industry knowledge and experience has developed into a highly confident and respected leader we are diligently.
Diligently plan for this recession and I am confident in our ability to lead the team as we move forward into the next chapter I will now pass it over to Alan.
Thanks, Randy Good morning, everyone I first want to offer any congratulations on his retirement from daily management and Express Express my sincere gratitude for the profound impact he has had unsecured success.
Alan Grange: I first want to offer Renny congratulations on his retirement from daily management and express my sincere gratitude for the profound impact he has had on Secure's success. Ready founded Secure in 2007, along with five other employees. The company started as a startup with a single landfill and a small entrepreneurial team.
<unk> founded secure and 22007, along with five other employees. The company started as a startup with a single landfill and a small entrepreneurial team under his visionary leadership over the past 17 years secure has established itself as a trusted industry partner showcasing remarkable growth in op.
Alan Grange: Under his visionary leadership over the past 17 years, Secure has established itself as a trusted industry partner, showcasing remarkable growth and operational excellence. Today, Secure is a market leader in waste processing, recycling, and disposal for energy and industrial markets across Western Canada and North Dakota, with an infrastructure network of over 75 facilities, 1600 employees, and a market capitalization of $3 billion. Renny instilled a culture of passion and excellence in the organization from the outset, driving the team to think differently, be innovative, and challenge what's possible to develop customer-centric solutions. His entrepreneurial spirit, and charisma, and trust in his team inspires us all to perform our best.
Duration all exit excellent.
Today's to care as a market leader in waste processing recycling and disposal for energy and industrial markets across Western Canada, and North Dakota with an infrastructure network of over 75 facilities 600 employees and a market capitalization of $3 billion.
R&D instill the culture of passion and excellence with the organization from the outset driving the teams to think differently.
Innovated and challenged what's possible to develop customer centric solutions, Randy's entrepreneurial spirit, and charisma and trust and his team inspires us all to perform our best.
Alan Grange: He encourages collaboration and partnership, extending the success of the corporation to all stakeholders. His dedication and loyalty, a track record of strong execution and fulfillment of commitments, have earned him the respect of customers, employees, stakeholders, and investors alike. I'd like to personally thank Randy for his mentorship and guidance, and I'm honoured to be taking on the expanded role of CEO beginning May 1st. I look forward to Renny's continued support as Vice Chair of the Board of Directors and working with him and the entire board to help guide Secure into the future.
We encourage this collaboration and partnership extending the success of the corporation to all stakeholders.
Dedication and loyalty our track record of strong execution in fulfillment of commitments has earned him the respect of customers employees and stakeholders and investors alike.
I'd like to personally thank Rodney for his mentorship and guidance and I am honored to be taking on the expanded role as CEO beginning may one.
I look forward to continued support as vice chair of the board of directors and working with him and the entire board to help guide secure into the future.
Alan Grange: Turning now to our year-end results, 2023 was a year marked by successful execution across all businesses; adjusted EBITDA of $590 million increased by 6% over 2022, or 11% on a per share basis. This growth underscores the strong utilization of our infrastructure network and the sustained demand for critical services.
Turning now to our year end results.
123 was a year marked by successful execution across all business units.
Adjusted EBITDA of $590 million increased by 6% over 2022 or 11% on a per share basis.
This growth underscores the strong utilization of our infrastructure network and the sustained demand for our critical services.
Alan Grange: We handle record volumes across our waste network, helping our customers to cost-effectively manage their environmental liabilities. In 2023, our facilities handled on average 156,000 barrels of produced water per day and 63,000 barrels of slurry waste and emulsion. Through our processes, we were able to recover 1.4 million barrels of oil from customer waste. Across our landfill network, we safely disposed of 4.5 million tons of contaminated solid waste.
We handled record volumes over our waste network, helping our customers to cost effectively manage their environmental liability in 2023, our facilities handled on average 156000 barrels of produced water per day, and 63000 barrels a slurry waste and Martin.
Through our processes, we were able to recover $1 4 million barrels of oil from customer waste.
Across our landfill network, we safely disposed of $4 5 million tons of contaminated solid waste.
Alan Grange: Our metal recycling business had a tremendous year of growth in 2023. Operational improvements and enhanced rail capabilities helped drive a 24% increase in Ferris volumes over 2022. And a 200 basis point margin improvement in the business unit. It was also a year of growth for our energy infrastructure segment, which successfully executed on our Clearwater Infrastructure Project, resulting in our third oil pipeline being brought into service at the end of the third quarter. The infrastructure is backed by three commercial agreements for a 10-year term and supports our customers' needs for additional infrastructure to support higher production volumes in the Clearwater region, which has seen oil production grow from zero to approximately 130,000 barrels a day over the last five years. In 2023, we generated discretionary free cash flow of $363 million and an impressive 62% conversion from our adjusted EBITDA, which enabled us to execute on our capital allocation priorities, including delivering During the year, we pay $0.10 per share in quarterly dividends or $0.40 per share on an annualized basis.
Our metals recycling business had a tremendous year of growth in 2023 operationally operational improvements and enhanced rail capabilities helped drive a 24% increase in ferrous volumes over 2022.
At 200 basis point margin improvement in the business unit.
It was also a year of growth for our energy infrastructure segment, we successful successfully executed on our Clearwater infrastructure project, resulting in our third oil pipeline being brought into service at the end of the third quarter the.
The infrastructure is backed by three commercial agreements for our 10 year term and supports our customers' needs for additional infrastructure to support higher production volumes in the Clearwater region, which has seen oil production growth from zero to approximately 130000 barrels a day over the last five years.
In 2023, we generated discretionary free cash flow of $363 million, an impressive 62% conversion from our adjusted EBITDA, which enables us to execute on our capital allocation priorities, excluding including delivering on our commitment and enhance shareholder returns.
During the year, we paid <unk> <unk> per share quarterly dividend or <unk> 40 per share on an annualized basis.
Alan Grange: Our opportunistic share buybacks resulted in a 7% decrease in outstanding shares in 2023, contributing to the 11% improvement in adjusted EBITDA per share over 2022. Notably, we accomplished these milestones while maintaining a total debt-to-EBITDA covenant ratio below two times. And finally, we advanced our commitments to ESG. The team is hard at work on our annual sustainability report, which will provide a comprehensive update on the progress we're making on our ESG journey. A few noteworthy accomplishments include avoiding 168,000 tons of greenhouse gas emissions through our business operations. This was achieved as a result of our pipeline operations, taking trucks off the road, recovering crude oil from waste, and recycling scrap metal. Demonstrating our commitment to an injury-free workplace by working the entire year without a lost time injury, we also reduced our recordable injury frequency by 36% over 2022.
Our opportunistic share buybacks resulted in a 7% decrease in outstanding shares in 2023 contributing to the 11% improvement in adjusted EBITDA per share over 2022.
Notably we accomplished these milestones while maintaining a total debt to EBITDA covenant ratio below two times.
And finally, we advanced our commitment to ESG. The team is hard at work on our annual sustainability report, which we will provide a comprehensive update on the progress we're making in our ESG journey a.
A few noteworthy accomplishments include avoiding a 168000 tons of greenhouse gas emissions through our business operations. This was achieved as a result of our pipeline operations, taking trucks off the road recovery in crude oil from waste and recycling scrap metal.
Constraining our commitment to an injury free workplace by working the entire year without a lost time injury.
We also reduced our recordable injury frequency by 36% over 2020 to.
Chad: Progressing on our short-term target to reduce emissions associated with our operations by 15% over a three-year period by reducing our year-over-year emissions intensity by 5.4%. Chad will now go through financial highlights for the fourth quarter of 2023. Thanks, Alan.
Progressing our short term target to reduce emissions associated with our operations by 15% over a three year period by reducing our year over year emissions intensity by five 4%.
Tad will now go through financial highlights for the fourth quarter of 2023.
Thanks, Tom.
Chad: Continuing our trajectory of success, the business capped off the year with a strong fourth quarter performance, demonstrating financial strength and stability. Net revenue of 451 million in the quarter increased 12% from the prior year, driven by increased activity in the waste management and energy infrastructure segments. Additionally, contributions from capital investment projects completed late in the third quarter of 2023 further fueled our strong fourth quarter results. Adjusted EBITDA of $162 million, or $0.56 per share, 17% higher on a per-share basis driven by higher revenue and a lower share count.
Our trajectory of success of business capped off the year with strong fourth quarter performance, demonstrating financial strength and stability net revenue of $451 million in the quarter increased 12% from the prior year driven by increased activity in the waste management and energy infrastructure segment.
<unk> contributions from capital investment projects completed late in the third quarter of 2023 further fueled our strong fourth quarter results.
Adjusted EBITDA of $162 million or <unk> 56 per share was <unk>, 17% higher on a per share basis, driven by higher revenue and a lower share count.
Chad: We maintained our industry-leading adjusted EBITDA margin of 36% as we continue to diligently manage inflationary costs through price increases and operational efficiency. Our income for the quarter was $59 million, for $0.20 per basic share, up $0.10 per share from the fourth quarter of 2022, primarily due to the same drivers as our increases in revenue. We generated $128 million of funds flow from operations for $0.44 per share, a 63% increase from the prior year. This drove our discretionary free cash flow of $96 million, or $0.33 per share, an increase of 38% from the prior year. With respect to returns of capital, during the 4th quarter, we repurchased 1.5M common shares for $14M and paid our quarterly dividend of $0.10 per common share, amounting to $29M.
We maintained our industry, leading adjusted EBITDA margin of 36% as we continued to diligently manage inflationary costs through price increases and operational efficiencies.
Net income for the quarter was $59 million for $2000 per basic share up <unk> 10 per share from the fourth quarter of 2022, primarily due to the same drivers as our increases in revenue with.
We generated $128 million of funds flow from operations or <unk> 44 per share.
63% increase from the prior year. This drove our discretionary free cash flow of $96 million or <unk> 33 per share and increased 38% from prior year.
With respect to returns of capital during the fourth quarter, we repurchased one 5 million common shares for $14 million and paid our quarterly dividend of <unk> 10 per common share amounting to 29 million.
Chad: At December 31st, our debt consisted of $153 million U.S. of 2025 senior secured notes, $340 million U.S. of 2020 and $340 million U.S. of 2026 unsecured notes and a draw on our revolving credit facility of $419 million. Subsequent to year-end, Secure has repaid the entire amount drawn on the revolving credit facility with proceeds from the sale transaction. Additionally, we have redeemed $153 million of the U.S. outstanding balance of the 11 percent notes secondly at a redemption price of $1055 plus accrued interest.
At December 31, our debt consisted of 153 million U S of 2025 senior secured notes $340 million.
2026, unsecured notes and a draw on our revolving credit facility of $419 million.
Subsequent to year end.
<unk> has repaid the entire amount drawn on the revolving credit facility with proceeds from the sale transaction. Additionally, we redeemed $153 million.
<unk> outstanding balance of the 11% second lien notes at a redemption price of 155 plus accrued interest.
Chad: We currently sit in a net cash position, providing us ample capacity to deliver on our capital allocation priorities in 2024. We renewed our normal course issuer bid effective December 14, 2023, allowing us to repurchase approximately 8% of the corporation's outstanding shares over the 12-month period to December 13, 2024. To date, we have repurchased 10 million shares since the start of the new NCIB at a weighted average price per share of $9.97 for a total of $100 million.
Currently sit in a net cash position, providing us ample capacity to deliver on our capital allocation priorities in 2024.
We renewed our normal course issuer bid effective December 14th 2023, allowing us to repurchase approximately 8% of the corporation's outstanding shares over the 12 month period to December 13th 2024.
To date, we have repurchased 10 million shares since the start of the new NCI B at a weighted average price per share of $9 97.
For a total of a $100 million.
Corey Higham: I'll now welcome Corey Higham, our COO, to provide some operational highlights from the fourth quarter. In Q4, our core business operations delivered continued strength and consistency, fueling our strong financial results. We handled record-produced water volumes across our waste processing facilities, driven by the expansion of the customer-backed Montney Water Disposal Facility, as well as higher same-store sales due to industry trends resulting in increased water volume. On average, we had 170,000 barrels per day of produced water in the fourth quarter, up 23% from the same period in 2020.
We'll now open Corey Haim, our COO to provide some operational highlights from the fourth quarter.
Thanks, Jeff in Q4, our core business operations delivered continued strength and consistency fueling our strong financial results. We handled record produced water volumes across our waste processing facilities driven by the expansion of the customer back Montney, one auto disposal facility.
As well as higher same store sales due to industry trends, resulting in increased water volume on.
On average we have a 170000 barrels per day of produced water in the fourth quarter up 23% from the same period in 2022.
Corey Higham: We saw an uptick, an 80% uptick in landfill volumes from the 4th quarter of 2022 as reclamation and remediation activities picked up following earlier delays experienced in the 2nd and 3rd quarters of the year, resulting from wildfires and weather conditions. Overall, metal recycling volumes increased 33% due to strategic investments made during the year and process improvements, which resulted in improved operating capabilities and efficiency. In our energy infrastructure segment, crude oil and condensate terminaling and pipeline volumes were up to 97,000 barrels per day in the fourth quarter, a 2% increase from the same period in 2022 driven by the newly constructed Clearwater Heavy Oil Terminal, which commenced operations, Turning now to our capital program, we are extremely, we're extremely pleased with the performance of our two major growth projects in 2023, both the Clearwater Terminal and Montney Waters Expansion Projects provide reliable volumes and recurring cash flows through customer partnerships with long-term take or pay contracts.
Uptick and any percent uptick in landfill volumes from the fourth quarter of 2022 as reclamation and remediation activities picked up following earlier delays experienced in the second and third quarters of the year, resulting from wildfires and weather conditions.
Overall metal recycling volumes increased 33% due to strategic investments made during the year and process improvements, which resulted in improved operating capabilities and efficiencies.
In our energy infrastructure segment crude oil and condensate Terminalling and pipeline volumes were up to 97000 barrels per day in the fourth quarter, a 2% increase from the same period in 2022, driven by the newly constructed Clearwater heavy oil terminal, which commenced operations in the quarter.
Turning now to our capital program. We're extremely we're extremely pleased with the performance of our two major growth projects in 2023, both the Clearwater terminal and Montney waters global expansion projects provide reliable volumes and recurring cash flows through customer partnerships with long term take or pay contracts.
Corey Higham: Our $114 million growth capital spend for 2023 included an additional amount beyond our guidance of $100 million as we began to invest in the second phase of the Clearwater Terminal and some additional capital at our metal recycling and waste transfer locations. The expansion is backed by both existing and new customers and will approximately double the terminal capacity to over 60,000 barrels per day.
Our $114 million gross capital spend for 2023 included an additional amount beyond our guidance of $100 million as we began to invest in the second phase of the Clearwater terminal and some additional capital at our metal recycling and waste transfer locations the.
The expansion is backstopped by both existing and new customers and will approximately double the terminal capacity to over 60000 barrels per day construction activities are expected to be completed and the expanded capacity operational in the second quarter of 2024.
Corey Higham: Construction activities are expected to be completed at the expanded capacity in the second quarter of 2024. The sustaining capital of $19 million for the quarter related to landfill cell expansions, well maintenance, and asset integrity programs for processing facilities and asset purchases for our metal recycling and waste management operations. In total, we incurred $89 million for sustaining capital expenditures for 2023, in line with our previous guidance. As for 2024, we continue to expect to spend approximately $60 million on sustaining capital, including landfill expansions, and approximately $50 million on selling Secure's abatement retirement obligations. The decrease from 2023 reflects fewer facilities post-sale transactions.
Sustaining capital of $19 million for the quarter related to landfill cell expansions, well maintenance and asset integrity programs for processing facilities and asset purchases for our metals recycling and waste management operations in total we incurred $89 million for sustaining capital spend for 2023 in line with our previous guidance.
As for 2024, we continue to expect to spend approximately $60 million on sustaining capital, including landfill expansions and approximately $15 million on selling secures abandonment retirement obligations. The decrease from 2023 reflects fewer facilities wholesale transaction.
Renny Amiro: I will now turn it over to Renny to close with our outlook for 2024. Thanks, Corey. The fourth quarter capped off another extremely successful year for Secure. We generated record-adjusted EBITDA and demonstrated our strategy of directing discretionary free cash flow towards shareholder returns, growth, and debt reduction in a balanced manner to maximize shareholder value and ensure future capital allocation flexibility. We took some meaningful steps in 2023 to advance our strategy as a leading waste management and energy infrastructure company. The accretive multiple achieved from this mandated facility divestiture to waste connections highlights the underlying value of Secure's business. Secure remains the market share of the year in Western Canada for processing, recovery, recycling, and disposal of waste streams generated by energy and industrial customers, and we expect to continue to deliver industry-leading margins and a stable cash flow profile underpinned by recurring volume. We expect activity levels to remain strong in the energy industrial sectors, resilient in the face of persistent macroeconomic factors, including the ongoing presence of a global conflict resulting in fluctuations in supply and demand dynamics affecting commodity price volatility.
I'll now turn it over to Randy to close with our outlook for 2024.
Thanks Corey.
The fourth quarter capped off another extremely successful year for secure we generated record adjusted EBITDA and demonstrated our strategy you are directing discretionary free cash flow towards shareholder returns growth and debt reduction in a balanced manner to maximize shareholder value and share future capital allocation flexibility.
<unk>.
We took some meaningful steps in 'twenty three to advance our strategy as a leading waste management and energy infrastructure company. The accretive multiple achieved from this mandated facility divesture to waste connections highlights the underlying value of secures business secure remains the market share in the year in Western Canada, a processing recovery recycling and disposal.
Waste streams generated by energy and industrial customers and we expect to continue to deliver industry, leading margins and the stable cash flow profile underpin by recurring volumes.
We expect activity levels to remain strong in the energy industrial sectors resilient in the face of persistent macroeconomic factors, including the ongoing presence of a global conflict, resulting in fluctuations in supply and demand dynamics affecting commodity price volatility customer.
Renny Amiro: Customers remain financially strong, focused on modest growth and efficiency strategies for disciplined production growth within cash flow. Increased producer access to global markets via pipeline expansions will fuel sustained and growing activity for years to come. Meanwhile, the industrial sector is expected to stay stable, supported by steady volumes and demand for our services and activities linked to long-term and recurring projects.
Customers remain financially strong focused on modest growth and efficiency strategies for a disciplined production growth within cash flow.
Increased producer access to global markets via pipeline expansions will fuel sustained and growing activity for years to come. Meanwhile, the industrial sector is expected to stay stable supported by steady volumes and demand for our services and activity linked to long term and reoccurring projects.
Renny Amiro: Consistent with previous guidance, we expect to deliver between 440 to 465 million of adjusted EBITDA in 2024, excluding corporate costs. Approximately 70% of that adjusted EBITDA is expected to come from our environmental waste management business. We have significant optionality with respect to capital allocation. We have cash on hand, significant leverage capacity, and continue to generate robust discretionary free cash flow. The Corporation intends to continue paying its quarterly dividend of $0.10 per share, which offers an attractive yield relative to our peers.
Assistant with previous guidance, we expect to deliver between $440 million to $465 million of adjusted EBITDA in 2024, excluding corporate costs approximately 70% of that adjusted EBITDA is expected to come from our environmental waste management business segment.
We have significantly optionality with respect to capital allocation, we have cash on hand significant leverage capacity and continue to generate robust discretionary free cash flow.
Corporation intends to continue paying a quarterly dividend of <unk> 10 per share, which offers an attractive yield relative to our peers. Our board and management team believes substantial disparity continues to exist between our intention in terms of value and the current share price the compelling valuation achieved on the sale underscores.
Renny Amiro: Our board and management team believes a substantial disparity continues to exist between our intrinsic value and the current share price. The compelling valuation achieved on the sale underscores our conviction that we should trade higher than the current multiplier. Cure announced today its intention to redeem the outstanding $340 million of aggregate principal amount of $7.25 senior unsecured notes due December 30, 2026 in the coming weeks, which will alleviate restricted covenants associated with shareholder returns.
Our conviction that we should trade higher than the current multiple.
<unk> announced our intention today to redeem the outstanding $340 million of aggregate principal amount of seven and a quarter senior unsecured notes due December 32026 in the coming weeks, which will alleviate restricted covenants associated with shareholder returns.
Renny Amiro: Accordingly, we remain committed to aggressive NCIB share repurchase, and we will evaluate various avenues, including the merits of a substantial issuer bid, to further retain capital for shareholders. Our infrastructure network boasts significant capacity to accommodate increased volumes for processing, disposal, and recycling, all with minimal additional costs or capital.
Accordingly, we remain committed to aggressive and CIB share repurchases and we will evaluate various avenues, including the merits of our substantial issuer bid to further retain capital to shareholders or.
Our infrastructure network, both significant capacity to accommodate increased volumes for processing disposal and recycling all with minimal additions additional costs or capital.
This efficient network positions us to capitalize on brownfield expansion opportunities partnering with customers, who seek to reduce their environmental footprint and allocate their capital where can generate the greatest returns. At this time secured continues to have $50 million allocated for growth opportunities in 2024 that leverage existing infrastructure.
Renny Amiro: This efficient network positions us to capitalize on brownfield expansion opportunities by partnering with customers who seek to reduce their environmental footprint and allocate their capital where we can generate the greatest return. At this time, Secure continues to have $50 million allocated for growth opportunities in 2024 that leverage existing infrastructure through long-term contracts. The corporation intends to update its growth plans and provide further details following the entry of agreements with its customers. Lastly, I'd like to thank Brad Munro, a longtime director of Secures, for his 15 years of service on the board. Brad will not be standing for re-election at the 2024 Annual General Meeting of Shareholders.
Sure through long term contracts the corporation intends to update its growth plans and provide further details following the entry of agreements with its customers.
Lastly, I would like to thank Brad Monroe, a longtime director of secures for his 15 years of service on the board Brad will not be standing for reelection at the 2024 annual general meeting of shareholders.
Renny Amiro: Brad's guidance and thoughtful advice helped shape and define the corporation's growth and best practices on our board. We are extremely grateful for his valuable contributions and wish him all the best. That concludes our prepared remarks. Now I'll be happy to take, Thank you.
<unk> guidance and thoughtful advice helped shape and define corporations growth and best practices on our board. We are extremely grateful for his valuable contributions and wish him all the best.
That concludes our prepared remarks, now I'll be happy to take your questions.
Operator: Ladies and gentlemen, if you would like to ask a question, please press star followed by one on your touch tone. You will then hear a three-tone prompt acknowledging your..., if you would like to witness, simply press star followed by one.
Thank you, Sir ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone you will then hear a sweet home from acknowledging your request.
I would like to withdraw from the question queue simply press star followed by two and if Youre using a speakerphone, we ask that you. Please lift the handset before.
Operator: Secure Energy Services, Inc. We ask that you please lift the hand................ Go ahead and press star 1 now if you have any questions. The first question will be from Cole Pereira at Stifel. Hi, good morning all, and congratulations to Al on the new role and Rennie on the well-deserved retirement. I just wanted to start on the shareholder returns front, so I see the balance sheet is in great shape. You've been active with the NCIB. But how do you think about the incremental shareholder returns, namely in SIB? What do you need to see before moving forward with... Hey, good morning, Cole. It's Chad here.
Before pressing any keys. Please go ahead and press Star one now if you have any questions.
And your first question will be from KOL Pereira at Stifel. Please go ahead.
Hi, Good morning, all and congrats al on the new role and Randy on the well deserved retirement.
Just wanted to start on the shareholder returns front, so obviously the balance sheets in great shape.
Been active with the NCI b, but how do you think about the incremental shareholder returns, namely an S. B, what do you need to see before moving forward with that.
Hey, good morning call. It chat here, we'll see.
Start with the <unk>.
Chad: We'll start with the note redemption that we announced. Not sure everyone's aware, but we have some restrictions on the amount we can dividend out and do share buybacks. And we've been pretty aggressive on our share buybacks over the last year or so. And we are, as we move forward, we see us requiring more capacity there. So the 1st step is to redeem those.
Note redemption that we announced.
Not sure everyone's aware, but we have some restrictions on the amount we can dividend out and.
And do in share buybacks, and we've been pretty aggressive on our share buybacks over the last year or so.
We are as we move forward.
We see us requiring more capacity there. So first step is to redeem those.
Chad: Those bonds We've got lots of cash on hand, obviously, and capacity in our revolver. So we're going to do that. And then when we think longer term. With respect to debt and our capital structure, you know, we'll continue to look at things that just maximize our flexibility with respect to all things we do. But, you know, 1st and foremost, the return of capital to shareholders, so all while focusing on minimizing our interest costs as well. So, that's kind of the 1st step that we'll focus on here over the next month. Oh, great. That's perfect, thanks.
Bonds, we've got lots of cash on hand, obviously.
And capacity in our revolver.
So we're going to do that.
And then when we think longer term with respect.
To debt and our capital structure, we will continue to look at things that just maximize our flexibility.
With respect to all things, we do but.
First and foremost.
Return of capital to shareholders. So.
At all while being on it.
Focusing on minimizing our interest costs as well so that's kind of the first steps that level focus on here over the next month or so.
Oh, great that's perfect. Thanks.
Alan Grange: As you sit here today, how do you think about the growth of the core waste disposal business over the next few years, excluding any further growth projects? How do you think the volume growth and maybe the pricing upside from that business can move here over the next few years? Morning, it's Alan here.
As you sit here today, how do you think about the growth of the core waste disposal business over the next few years, excluding any further growth projects like how do you think that the volume growth and maybe the pricing upside from that business can move here over the next few years.
Barney its Alan hair.
Alan Grange: Yeah, I think we have a lot of opportunities within the business on the organic side, but when I look at the base business and how it's growing today, I mean, you can take a look at our annual results. Our revenue is up by 7%, and a lot of that is just driven by the volume that we're seeing at our facilities. You know, we handle over 156,000 barrels of produced water per day, 63,000 gallons of slurry, and our metal recycling volumes were up 33%. We're going to continue to see growth in the waste market. And when you look at our facilities today, they're in that 60 to 65% utilization rate. So we don't have to put capital into these facilities at these 75 locations that we have.
Yes, I think we have a lot of opportunities within the business.
On the organic side, but when I look at the base business and how it's growing today I mean, you can take a look at our annual results. Our revenue was up by 7% and a lot of that is just driven by the volume that we're seeing at our facilities.
We handle over 156000 barrels of produced water per day 63000 of slurry our metal recycling volumes were up 33%, we're going to continue to see the growth in the waste market and when you look at our facilities today, they're in that 60% to 65% utilization. So we don't have to put.
Capital at these facilities at the 75 locations that we have we have the capacity to absorb what I would consider these same store sales growth in that call it 5% to 6% per year for that for the foreseeable future. So I think the base business has a lot of growth potential of a lot of opportunity just in and what we handle on.
Alan Grange: We have the capacity to absorb what I would consider this same store sales growth at that call 5 to 6% per year for the foreseeable future. So, I think the base business has a lot of growth potential, a lot of opportunity just in what we handle on a daily basis to make sure it's processed and recycled and disposed accordingly. But I think on top of that growth that you saw in Q4, we came out with the launch of our Nipissi Terminal, which came online in Q4 in October as well as our Kapwa water produced water disposal facility. And so we started getting additional contribution to our revenue from those capital programs.
Daily basis to make sure it's process and recycled and disposed accordingly, but I think on top of that growth that you saw in Q4, we came out with.
Launching our <unk> terminal, which came online in Q4 in October as well as our catalog.
Water produced water disposal facility and so we started getting additional contribution to our revenue from those capital programs.
Alan Grange: And so, when we think about the contribution every year going forward, there's opportunities to expand these facilities via some pipelines as volumes grow and we're taking trucks off the road, but also adding new infrastructure in some of these areas, like the clear water that continues to grow. So, not only are we going to get same-store sales growth, but we're going to be able to put new capital and brownfield expansion capital to work to really continue to grow that base business. Okay, perfect. That's all for me, thanks. I'll turn it back.
So when we think about the contribution every year going forward, there's opportunities to expand these facilities.
Some pipelines that volumes grow and we're taking trucks off the road.
But also adding new infrastructure in some of these areas like the Clearwater that continue to grow so not only are we going to get same store sales growth, but we're going to be able to put new capital in brownfield expansion capital to work to really continue to grow that base business.
Okay perfect. That's all for me, Thanks, I'll turn it back.
Thank you thanks Paul.
Operator: Thanks, Cole. The next question will be from John Gibson at BMO Capital Markets. Go ahead.
Next question will be from John Gibson at BMO capital markets. Please go ahead.
Good morning, Thanks for taking my questions I wanted to say congrats.
Operator: Morning, thanks for taking my questions and wanted to say congrats, Rene, on a great career at Secure. You've obviously set the company up for a lot of success moving forward. First, can you maybe speak to the strong EWM segment result this quarter? You mentioned some stronger Ferris metal prices. I guess, which of these factors was more impactful this quarter? Good morning, John.
Congrats on a great career securities, obviously that the company up for a lot of success moving forward.
First can you maybe speak to the strong AWS segment result, this quarter, you mentioned, some stronger ferrous metal pricing and higher production volumes I guess, which of these factors was more impactful this quarter.
Good morning, John.
Operator: Yeah, you know, quarter over quarter and even over the last 12 months, we have invested a lot of money into new equipment and railcars to allow us to more efficiently handle the volumes we see on a daily basis, which allows us to turn our inventory a lot quicker. So when we can turn our inventory a lot quicker, we can get those volumes out to market a lot quicker. You know, those operational improvements have been key to success in that area. You've got it.
Quarter over quarter and even over the last 12 months we spent.
And put a lot of investment into new equipment and railcars to allow us to more efficiently handle the volumes, we see on a daily basis, which allows us to turn our inventory a lot quicker. So when we can turn our inventory a lot quicker we can get those volumes to market a lot quicker.
Those operational improvements.
The key to success in that business.
Got it thanks.
Operator: Thanks. Second one for Mia, as we think further out in terms of potentially getting to your longer-term leverage target, which will most likely include some type of M&A. I guess, which types of businesses and markets do you find most attractive and maybe see fitting into the Secure portfolio longer? Yeah, good question.
The second one for me.
Think further out in terms of potentially getting into your longer term leverage targets.
This will most likely include some type of M&A, I guess, which types of businesses and end markets you find most attractive and maybe see fitting into the <unk> secure portfolio longer term.
Okay.
Yeah. Good question I think.
Operator: I think, first of all, on the organic hopper, I'd say we're opportunity-rich. I think, you know, we've already announced that. For 2024, we're spending $50 million in growth capital, and we noted that part of that growth capital is an expansion at Nipissi to move it from 30,000 barrels a day to 60,000 barrels a day. And so we're going to continue to look at opportunities that are either going to be expansions to our existing infrastructure network or new opportunities where we believe there are opportunities to put new infrastructure that will be utilized. And obviously, that comes with partnerships and creating efficiency. As we think about the next few years, that opportunity is plentiful. And I think we've done a good job of, as those projects progress, we'll come to the market and say, we've got either a partnership agreement or a contract signed, and we'll let the market know what it's going to look like.
First of all on the organic Hopper I'd say, we're opportunity rich I think we've already announced.
For 2024, we're spending $50 million in growth capital and we noted that part of that growth capital is an expansion at net to see to move it from 30000 barrels a day to 60000 barrels a day and so we're going to continue to look at opportunities that are either going to be expansions too.
Our existing infrastructure network or new opportunities, where we believe.
There is opportunities to put new infrastructure that will be utilized and obviously that comes with partnerships and creating efficiencies.
As we think about the next few years that opportunity is.
Planning for and I think we are.
We've done a good job of as those projects progress will come to the market and say, we've got either a partnership agreement or a contract signed and we'll let the market know what it's going to look like and obviously as Chad talked about our balance sheet is in such good shape that it gives us a lot of opportunity to progress that that hopper.
Operator: And obviously, as Chad talked about, our balance sheet is in such good shape that it gives us a lot of opportunity to progress that hopper sooner and quicker. In terms of M&A, I think we are going to look at businesses that are within our core competencies. We did a big strategic review and said, "What are the core competencies of Secure?".
<unk> sooner and quicker in terms of M&A I think we are going to look at businesses that are within our core competencies.
We did a big strategic review and said what are the core competencies of secure and we want to make sure that our strategy is aligned that align with that and Thats really what you are good at.
Operator: And we want to make sure that our strategy is aligned with that. And it's really what you're good at, and really doubling down on bringing your expertise to handling waste. The types of businesses we want to go after have stability in their cash flows. They are recurring in nature.
And really doubling down at bringing your expertise to.
<unk> had one waste in the types of businesses, we want to go after half stability in their cash flows. They are reoccurring in nature. They have partnerships associated they have the infrastructure and so that's aligned with our core competencies and I think what you will see as we progress here through 'twenty four 'twenty five that any sort of.
Operator: They have partnerships associated with them. They have infrastructure, and so that's aligned with our core competencies, and I think what you will see as we progress here through 24 and 25 is that any sort of M&A opportunities that we seek are going to fit that core competency and that strategy going forward. We do believe there are some really good opportunities to do some of what I would consider tucking into our base business today, and so we can slowly chip away at adding some great volumes and leverage some more synergy. Great, I appreciate the response, and congratulations to you all as well on the expanded roll turn effect. Thank you very much.
M&A opportunity that we seek are going to fit that core competency in that strategy going forward, but we do believe there are some really good opportunities to do some what I would consider tuck into our to our base business today and so we can still be chipped away at adding some great volumes.
Some more synergies.
Great I appreciate their sponsor.
Perhaps to help as well in the expanded or I'll turn it back.
Thank you very much thanks John.
Operator: Thanks, John. The next question will be from Keith at RBC. Hi, good morning everyone.
Next question will be from Keith Mckey.
RBC. Please go ahead.
Hi, good morning, everyone.
Renny Amiro: Just maybe wanted to start out. One of the service companies that reported last week talked about some potential water constraints on their operations, potentially through the summer, given some of the dry conditions. So, as part of the whole water infrastructure market, can you just talk a little bit more about what you're seeing there? Are there any particular opportunities? And what are the main sorts of characteristics in the water market these days, whether it's disposal, recycling, et cetera? Thanks, Keith. Yeah, Rennie here.
Just maybe wanted to start out.
One of the service companies that reported last week talked about some potential water constraints on their operations potentially through through the summer given some of the dry conditions. So as part of the whole water infrastructure market can you just talk a little bit more about what youre seeing there are there any particular opportunities and what are the.
The main sort of characteristics.
In the water market these days with disposal recycling et cetera.
Thanks Keith.
Randy here.
Renny Amiro: You know, I'll give you kind of the big picture view and then try to bring it back to, you know, current conditions, you know, whether there's going to be enough snowpack and whatnot. But, you know, the big, big picture here is that I think that us and the, the, the, gas producers want to recycle as much water as possible and And so with that, there are some huge complexities in terms of if you were dealing with a refinery, you would deal with a very fixed amount of water coming at you every day. Well, in our world, especially in the completions world, you have water demand and supply going in opposite directions sometimes and never lining up quite well. So,
I'll give you kind of a big picture view, and then try to bring it back to current conditions, whether theres going to be enough snowpack and whatnot, but.
The Big Big picture here is I think that us and the.
Oil and gas producers water recycle as much water as possible.
And so with that there is some huge complexities in terms of <unk>.
You were dealing with a refinery you would deal with a very fixed amount of water coming at you every day.
In our world, especially in the completions world.
You have water demand and supply going in opposite directions, sometimes it never lining up quite well so you.
Renny Amiro: You don't want to go out there and put a huge amount of capital into those fluctuations. So, you know, we're trying to work with the customers and say, "What are the easy wins here that we can at least recycle some of this water and do it in a cost-effective way without putting out, you know, huge, huge capital investments on either side. And so that's kind of where the industry is at in terms of there being a great desire, and I think there are ways we can do this. Part B of that, and that's why we love the specialty chemical business we have. I think there are a bunch of things that we can do through technology and chemicals to make it more cost-effective, easier, and better for the producer.
You don't want to go out there and put a huge amount of capital.
For those fluctuations so.
We're trying to work with the customers and say, what's what are the easy wins here that we can at least recycle some of this water in.
And do it in a cost effective way without putting out.
Huge huge capital investments on either side and so that's that's kind of where the industry is that in terms of there's a great desire and I think there's ways. We can do this.
Part b of that and Thats why we love the specialty chemical business, we have I think theres a bunch of things that we can do through technology and chemicals to make it more cost effective easier and better for the for the producer and so we're working on some really.
Renny Amiro: And so we're working on some really innovative stuff there, and that's going to help. But then you get back to the realities of coming out of this spring and going into the summer as to, you know, how much freshwater you need to combine with your recycled waters is going to be there. And that's obviously a big unknown, but I think you have everybody at the table, including the government, wanting to, you know, increase the amount of recycled water. But we've got to do it in a cost-effective way and do it in a way that makes sense so that the water's there when you need it. And that's not an easy fix, and I think that's maybe something that we're going to have to evolve over the next five years. So there's just nothing easy and quick that we can bring to the industry right now to make this a solution overnight.
Innovative stuff there and that's going to help and then you get back to the realities of going into.
Coming out of this spring and going into this summer as to how much freshwater.
Two combined with your recycled water is going to be there and thats, obviously, a big unknown, but I think you have everybody at the table, including the government wanting to increase the amount of recycled water. We've got to do it in a cost effective cost effective way and do it in a way that it makes.
So that the waters there when you need it and that's that's not an easy fix and I think thats maybe.
Something that we're going to evolve over the next five years. So there's just there's just nothing easy and quick that we can bring to the industry right now that to make this.
Our solution overnight.
Okay.
Yes.
Helpful. Appreciate the context Rennie now just just to follow up on the on the capital allocation.
Operator: Just to follow up on the capital allocation, can you just maybe run through sort of your liquidity position post-asset sale proceeds and post-repayment of the 2026 notes? I think what a lot are trying to figure out is just what is the potential amount of capital you could allocate to a larger share repurchase program or acquisitions. And so if we think about that in the context of like your liquidity and your leverage targets, because it seems like either of those options are going to have to come out of credit facility liquidity, can you just maybe run through what that amount is and how you think about potentially allocating between those main uses of cash to the extent that you can? Yeah, hey Keith. So, post sale transaction, I think in some of our
Can you just maybe run through sort of your your liquidity position post asset sale proceeds and post repayment of the 2026 notes I think what a lot are trying to figure out is just what is the potential amount of capital you could allocate to a law.
<unk> share repurchase program or acquisitions, and so if we think about that in the context of like your liquidity and your leverage targets because it seems like this.
Either of those options are going to have to come out of out of credit facility liquidity can you just maybe run through what that amount is and how you think about potentially allocating between those those main uses of cash to the extent that you can.
Yeah, Hey, Keith.
So post.
Sales transaction I think in some of our disclosures kind of walk through what we had paid off on the revolver.
Obviously redeeming the 11% notes after that we have approximately $200 million of cash on hand.
We redeem these next <unk> $340 million of the notes, but theres, a small policy to pay but so that would be putting <unk>.
<unk> $150 million on the revolver.
So obviously revolver still $800 million $650 million of capacity there.
Perfect.
We'll see a $650 million of capacity and then and then free cash flow generation throughout the year and then.
And then you will kind of make the decisions on what youre going to do relative to capital allocation as time progresses.
Sure.
Got it fair comment yes.
Okay. Thanks, very much that's it for me.
Thanks Keith.
As a reminder, ladies and gentlemen, if you would like to ask a question. Please press star followed by one on your Touchtone phone.
And your next question will be from Patrick Kenny at National Bank Financial. Please go ahead.
Hey, good morning, and congrats to both of you.
Just to follow up on the the notes redemption.
Conversation.
Removing those restrictions just wanted to confirm if the plan is to be back in the market with a new fixed rate offering at some point, perhaps with.
More flexible conditions.
Where do you see yourselves just staying within your credit facility capacity going forward, even if it means.
Remaining below your two times leverage Mark.
Yes, good morning, Pat.
Yes, I thought processes now we need to address.
<unk>.
$340 million notes right now.
So we are going to redeem those no matter, while we've got various avenues to do that including the cash on hand.
And the revolver as I mentioned earlier.
But longer term, we do expect to have certain amount of debt, including.
Some likely some term debt.
So we will continue to evaluate options.
We're not ruling anything else, we're always evaluate.
Whats best for us at the time and all stakeholders.
Yeah.
And does.
The lower level of interest deductibility for the time being anyway.
From a taxable income perspective does that bring forward any cash taxes or.
Do you still see you or Kevin.
Being a couple of years old.
Yes, I don't think it would have a material impact on that horizon.
Right now we see will be will record current income taxes in 2024, but we won't likely pay any cash tax on that until 2025.
Yes announced yet really changed with me with any changes right.
Got it okay.
Moving over just to the organic side here, so Clearwater terminal being doubled by mid year.
I guess really just based on your comments.
Current activity levels, where they are I guess, we have a constructive outlook here for.
Tighter heavy differential once <unk> comes on I.
I guess, just how are you guys thinking about when you might need to invest even more into your clearwater infrastructure to handle what you see coming down the pipe.
Yes.
And I'll, let Alan chime in a little bit more but.
The.
Every discussion with our customers up there and there is still lots of.
Exploration going on with that so they don't really know how much they have up there. So big picture you've got to believe that that thing could get as high as 200000 barrels a day and so to your point.
Are we going to need.
Some more infrastructure, one way or another but.
Alex but talking to the customers here in the last three or four months and its been pretty positive, yes, it's been very positive and.
I think as that base.
Matures and as production matures you have more water more production waste coming from that from that area and so youre going to need things like treatment.
To be able to handle some water that's commingled with date with it with the production and so exactly right as we see the volumes grow we're going to see that production waste grow as well and so there'll be some add ons from that perspective, and when you think about even the broader western and Canadian market.
We have with <unk> coming online is going to give a lot of our heavy oil producers.
Our capacity to get their volumes so as they increase their volumes are throughput, we're going to see increased production ways from that as well and then we have LNG, Canada and northeast D C coming on and that whole northeast D C area and while we have.
Challenging regulatory market, that's where we bring expertise and we work with our customers to say how can we help you manage these volumes and manage the regulatory aspects of it and so I think looking at those opportunities organically in those two big projects, the <unk> and LNG, Canada coming online are going to stimulate even more.
Capital that we'll need to deploy here in 'twenty four 'twenty five and 2026.
And I guess given.
Those sort of.
Supply push.
Organic growth tailwind across your legacy energy business in Canada.
Alan.
<unk> been very much aligned obviously with the strategy all along but.
Just from an M&A standpoint does that maybe.
Redirect your attention or your focus a little bit more towards perhaps.
Beefing up the industrial waste management side of the business just to help balance out your your business mix going forward.
Yes, no great comment I think.
When we think about the <unk>.
Waste processing facilities in the landfills and given the utilization.
There's enough capacity in the market unless we're talking about these areas where are growing because of development but.
But when I think about the industrial side, our waste transfer stations, we definitely see growth there an opportunity to potentially use smaller type M&A opportunity, where we're going to build that book of business and so what youre going to see is more industrial customers that are going to be.
Part of our overall network when we think about waste management and that side of the segment will grow just because I think ultimately the on the M&A side. There is opportunities to use our network of landfills, our metals recycling locations to increase throughput and get more efficiencies. So.
Youre, 100% right Thats an avenue that we can proceed to increase our industrial customers.
Okay, that's great and congrats again guys.
Thanks Pat.
Thanks, Patrick.
Thank you and at this time, we have no further questions registered please proceed.
Well, thank you for being on our conference call today are Pete broadcast of the call will be available on secures website. We look forward to providing you with updates on secures performance at the end of April after the completion of the first quarter. Thanks again bye now thank you.
You, Sir ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending and at this time, we do ask that you. Please disconnect your lines.
Ooh Ooh.
Hum.
Ooh Ooh.
Okay.