Q3 2024 Secure Energy Services Inc Earnings Call
Speaker Change: Good morning ladies and gentlemen and welcome to the secure Q3-2020 for Results Conference Call. At this time, all lines are in the Sonal of the Mode.
Speaker Change: Following the presentation, we'll conduct a question and answer session. And for any time during this call, you require immediate assistance, please press star 0 for the operator. This call is being rewarded at 1.8 October 30th 2024.
Speaker Change: I would now like to turn the car off and over to Alison Prokop. Please go ahead.
Alison Prokop: Thank you and good morning to everyone who is listening to the call. Welcome to Securities Conference Call for the third quarter of 2024. Joining me on the call today is Alan Gransch, our president and chief executive officer, Chad Magus, our chief financial officer, and Corey Higham, our chief operating officer.
Alison Prokop: During the call today, we will make four bookings statements related to future performance and we will refer to certain financial measures and ratios that do not have any standardized meaning prescribed by Gap. And may not be comparable to similar financial measures or ratios.
Speaker Change: Good for you guys by other company.
Speaker Change: The forward-looking statements reflect the current use of secure and respect at the future events, and are based on certainty as expectations and assumptions considered reasonable by secure.
Speaker Change: Since Ford looking information addresses future events and conditions, but every day for the involved inherent assumptions, risks and uncertainties, and actual results may differ materially from those anticipated due to numerous factors in risk.
Speaker Change: Please refer to our continued disclosure documents available on Cedar Plus if they identify risk factors of plus-pult-suffices, factors which may cause actual results to get from materialy from any
Speaker Change: Today we will review our financial and operational results for the third quarter of 2024. I will now turn the call over to Allen.
Allen: Thank you, Alison, and as a good morning, everyone.
Allen: Yesterday our shareholders voted in favor of our name change to secure, waste and for structure core.
Allen: and named the Better Alliance with our core business activities, which are centered on processing, recovery, recycle and disposal of diverse waste drains and the efficient operation of our critical infrastructure network.
Allen: The new name reflects our strategic transformation over the last five years from a full service energy service company to a specialized waste management and energy infrastructure provider.
Allen: We are pleased to retain the trade name secure, a brand synonymous with safety, reliability, and entrepreneurship.
Allen: The formal adoption of the new names is expected on January 1, 2025, coinciding with certain year-end activities planned by the corporation.
Allen: Our shares will continue to trade on the Toronto Stock Exchange under the ticker symbol F-E-F.
Allen: This morning.
Allen: We reported another strong quarter achieving a Jeff to even $127 million or 53-step per basic share. On the high end of our expected range for the third quarter as a robust industry fundamentals drove strong customer demand.
Allen: sequentially from the second quarter, net revenue and adjusted EBITDAWF increased 11% maintaining our strong 34% EBITDAWM margin.
Allen: As we head into the final quarter of the year, we are reaffirming our guidance at the top end of this range providing for full year adjusted to EBITDA, a 470, 490 million.
Allen: This quarter we generated 106 million funds from operations, enabling us to fund fully self-bond shared purchases given and payouts and gross initiatives.
Allen: and total returned 77 million to shareholders through repurchases under normal course, issue a bit and are quarterly dividend of 10th F. Per share.
Allen: We also advanced our organic group capital programs, that the 19 million primarily to add two water pipelines to an existing facility to integrate incremental volumes from existing customers.
Allen: We also continue to enhance our capacity at the Clearwater Heavy Oil Terminal to meet growing demand in the region and pursue various optimization projects to reduce costs across our waste network.
Allen: At September 30, 2020, our total debt to adjusted the but dawn ratio was 1.1 times a full-term below our target leverage ratio of 2 to 2.5 times. Providing us was significant financial flexibility.
Allen: A long, strong, discretionary, free cash flow were well positioned to continue to grow with the fence while delivering and hats shareholder returns.
Allen: Look at ahead, we have a robust pipeline of organic growth opportunities and we will also consider strategic acquisition that align with our discipline approach to enhancing efficiency, expanding network density and diversifying the waste dreams we manage.
Allen: While we've seen positive momentum in our stock recently, we still train at a substantial discount to our waste and energy infrastructure peers, consequently shared by-backed remaining huge priority of our near-term capital allocation.
Allen: We have 2.1 million shares remaining under our current normal course issue, we're a bit and we intend to renew this program in mid-December, allowing us to repurchase up to 10% of the public flow over the subsequent 12 months period.
Speaker Change: I'll now pass an over to Chad to provide some further financial highlights for the quarter.
Chad Magus: Thanks Allen and good morning everyone. The Devasture of 29 facilities, Tways, connections, and fibres this year along with the sale of a non-corporable field service business unit in late 2023. Naturally impacted our financial metrics on an absolute basis compared to the third quarter of 2023.
Chad Magus: This impact was partially mitigated by strong customer demand, increased pricing and contributions from capital investments made since the third quarter of 2023.
Chad Magus: Additionally, as a result of a strategic share by Voxa with Passea, our awaited average shares on standing in the third quarter, decreased by 18% over the same period last year.
Chad Magus: This reduction enhanced many of our financial metrics on a per share basis, reflecting the benefits of our capital return strategy.
Chad Magus: Network revenue for the quarter was 374 million, the 12% decrease year over year, primarily due to the investors. Wherever this is largely offset by several positive factors.
Chad Magus: Higher volumes that are remaining facilities, pricing increases on volume-based processing and disposal, growing demand for specialty chemicals and contributions from the Clearwater Heavy Old Terminal, which began operations in Lake 2023 and has continued to increase throughout 2024.
Chad Magus: We reported net income of 94 million for 39 cents per basic share, an increase of 47 million or 100 percent compared to Q3, 2033.
Chad Magus: While the sale of facilities impacted operating profit, income before taxes 2 million higher, driven by significant reductions in interest accretion and financing costs, as proceeds from investors reuse 3.543 million of higher interest debt, replacing it with a new 300 million dollar issuance.
Chad Magus: of 6.75% senior unscared notes in the first quarter of 2024.
Chad Magus: We recorded a one-time $30 million tax recovery this quarter. Driven by the revisions in the underlying assumptions with respect to the tax treatment of that
Chad Magus: As a result, we now anticipate approximately 30 million of current taxes in 2024, increasing to approximately 60 to 70 million in 2025.
Chad Magus: Our adjusted the budget for the quarter was 127 million, a 20% decrease from Q3, 203, through the same factors impact in grip and use.
Chad Magus: Whoever on a per share basis adjusted to E.B.I was only down one cent. Demonstrating the positive effect of our share by box.
Chad Magus: The adjusted EBITDA margin for the quarter or 34 percent down from 37 percent in the same period last year, due to the like-abasted facilities.
Chad Magus: 34% remains a strong, industry-leading margin, reflecting our discipline focus on efficiency, profitability, as consistent with our most recent second quarter margin.
Chad Magus: We generated 106 million funds from operations, a decline of 18% year-old year, influenced by the same factors previously noted, along with the timing of fixed-toff payments.
Chad Magus: We reported discretionary free cash flow of 90 million, a 13% decrease from the third quarter of 2020 as a result of factors above.
Chad Magus: Partly offset by reducing spending on sustained capital due to fewer facilities following the investors. For the share by box, drill an increase of 6% on a per share basis.
Chad Magus: We directed discretionary for your class, blowing the quarter to share the returns and business growth. As we continue to allocate capital where we can generate a highest return.
Chad Magus: and Rene Amirault.
Chad Magus: We incurred 53 million to repurchase another 2% of our shares in the quarter. At a weighted average price of 1183 per share, a level we believe remain significantly below in terms of value of the corporation.
Chad Magus: As of 10th or 30th, 2024, in addition to the 300 million of fixed debt help, we had drawn 93 million on our $800 million revolving credit facility, leaving us with significant capacity and ample liquidity.
Chad Magus: This position is as well to fund future growth initiatives, continue returning valuable shareholders and maintain maximum financial flexibility for capital, and the case for the coming years.
Speaker Change: I'll now turn over to Corey provides some operational highlights from the third quarter.
Corey Higham: Thanks, Chad. Dray in the corner of the sillies handle an average of 93,000 barrels of produced water per day and 43,000 barrels of slurry waste in a motion. Through our processes, we were able to recover over 296,000 barrels of oil from waste.
Corey Higham: Cross our landfill network, we safely disposed to record 1.2 million tons of contaminated solid waste in the quarters. Higher volumes, returned by increased remediation and reclamation project work.
Corey Higham: Ferris Mettable Williams recycled increased 15% over the third quarter of 2023, due to the acquisition made in the second quarter, expanding our operations into Statue, along with the continued strong demand for recycled metal driving higher throughput at our main facilities.
Corey Higham: Interenergy Infrastructure segment, crude oil and condensate terminaling and pipeline volumes average 130,000 barrels per day in the third quarter, at 24% increase from the same period in 2023, driven by the addition of the Clearwater Heavy All Terminal which commenced operations in the fourth quarter of 2023.
Corey Higham: and approximately double capacity in the second quarter of 2024.
Corey Higham: In the year today, we have spent 41 million of our 75 million-dollar growth capital plant for 2024, which primarily related to the expansion of our clear water heavy oil terminal to increase capacity and two water pipelines to safely transport and facilitate the disposal of incremental production volumes for our customers.
Corey Higham: The injured growth projects are backed up by new commercial agreements providing reliable volumes and recurring castles over the life of the contract. We also purchased 50 rail cars, increasing efficiency and remettled recycling logistics and distribution operations, and completed several optimization projects across our waste network.
Corey Higham: The remaining $34 billion of growth capital expected for 2024 will be primarily spent on. Further expanding our phase 3 of the Clearwater Heavy Oil Terminal in gathering infrastructure for incremental clean heavy oil delivery and adding treated capabilities for truckton and motion volumes.
Corey Higham: We're opening a suspended industrial waste processing facility located north of Edmonton to support demand in the area. Capital expenditures requiring include replacing and upgrading critical infrastructure and restarting the facility operations.
Corey Higham: and pre-spending on various long-lead-foot-vis critical equipment associated with 2025 Cabo Plansch.
Corey Higham: We continue to expect to spend approximately $60 million on sustaining capital in 2024, which includes expansions of landtills that are nearing capacity.
Corey Higham: We're currently working to our capital plans for 2025, an expected provide preliminary guidance for 2025 in December of this year.
Speaker Change: Secures strategic purposes transforming waste into value. We are committed to being a trusted partner for our customers and other stakeholders, providing solutions that safely manage environmental liabilities, minimized costs, and environmental impacts, and create new opportunities for resource development recovery to be used.
Speaker Change: These commitments around safety and environmental stewardship extend to our own operations as well. We have made good progress this year across the ESG objectives established in our 2023 Sustainability Report published in May of this year.
Speaker Change: Notably, we're advancing many safety initiatives that are proving and all-reestrolng safety culture across our business units.
Speaker Change: Our operations personnel continue to implement the grassroots ideas for the reduction of freshwater consumption in our day to day operations. And as a result, our first at 2024 First Tap freshwater consumption is down 6% from the same period in 2023.
Speaker Change: We are also pleased to complete the partnership accreditation and Indigenous Relations Certification, receiving bronze by the Canadian Council for Indigenous Business.
Speaker Change: Finally, we are on track to spend approximately $50 million on $15 million on settling secure's of management retirement obligations this year, exceeding minimum.
Speaker Change: Spent Harvets, including this figure, are two stage-alandial caps and investments to reduce each-change generation and are practically responding to climate change modeling. On the alternative to Allen for some concluding remarks before we open it up to questions.
Allen: Thanks, Corey!
Allen: Our strong result, year to date, along with positive market dynamics expected for the remainder of the year and beyond reinforced the strength of our business. Our critical infrastructure network continues to generate stable and reoccurring cas flows, and is well positioned to benefit from multiple growth drivers.
Allen: Increasing industrial and production activity is leading to higher volumes that require processing, recycling, and disposal across our facility network.
Allen: Our waste processing facilities are operating at 60 to 65% utilization, providing us with ample capacity to accommodate growing customer debt demand with minimal additional costs.
Allen: We also have a robust pipeline of opportunities to deploy growth capital, including both Brownfield expansion and greenfield projects. The support of our customers and regions where production growth is outpacing the available processing and disposal capacity.
Allen: We plan to secure these investments with commercial agreements that offer contracted volumes and reoccurring cash flows, ensuring a minimum rate of return on our investments.
Allen: We will also continue to look at smaller scale acquisitions such as the metal business acquired in the second quarter of this year that align with our core business segments and competencies, competencies, further in acting our ability to grow our network in cash flows.
Allen: With a strong balance sheet, Apple capacity on a revolving credit facility and significant financial flexibility with our September 30th total debt to 3,12 month performance even though at 1.1 times.
Allen: We are well positioned to capitalize on these growth opportunities, so let it buy our leadership in waste management and energy infrastructure while continuing to deliver enhanced shareholder returns.
Allen: Since initiating our Share Buy Back Program in late 2022, we have reduced our outstanding shares by 24%. Under scoring our commitment to creating value for shareholders and our belief in the significant undervaluation of the business.
Allen: We continue to see a large gap between our market valuation and the value of our underlying business driven by our critical infrastructure network providing stable reoccurring cash flows.
Allen: Strong Rope Opportunities across both our waste management and energy infrastructure statements, a robust balance sheet and flexible capital allocation strategy and a large valuation gap between secure and our waste and energy infrastructure peers, despite the strong parallels between our businesses.
Allen: We are actively working to address this valuation disparity and we are starting to see positive momentum.
Allen: In addition to shared by-backs, our upcoming aim change to secure ways to infrastructure core management presentations that key ways to an industrial conferences.
Allen: New Research covers and changes to industry classification.
Allen: are all contributing positively to our share price.
Allen: However, secure continues to trade at a significant discount to our peers and as a result, share repurchases will remain a key component of our Capital Allocation Strategy moving forward.
Allen: With that in mind, the Board of Directors has decided to maintain our dividend at 40 cents per share on an annualized basis, which represents an aggregate payout of 95 billion based on our current share's outstanding.
Allen: In closing, I'd like to thank you for your continued support. We are excited about the road ahead as we continue to remain focused on executing our strategy and driving long-term success.
Allen: That concludes our prepared remarks. We are now happy to take your questions.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question and answer session.
Speaker Change: If you have a question, please press the star, followed by the number one on your touch shown phone.
Speaker Change: You'll hear a prompt that your hand has been raised.
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Speaker Change: One moment please for your first question.
Speaker Change: Your first question is from Cardiac Dept. from Skosha Bank. Please go ahead.
Speaker Change: Thanks for your good morning and welcome to our good quarter
Speaker Change: and just wanted to ask you on the morning site so as maybe it's difficult to get up to see the underlying
Speaker Change: Wallimtrend given the transactions you have had in the last two years. So if you can help us understand how these underlying volumes stranded in the waste management segment, especially for water waste and all recovery.
Speaker Change: Thanks Connor, good morning. Yeah, I think when we look at our produced water volumes, our emulsion volumes within our waste processing facilities.
Speaker Change: I would say it correlated very closely to production growth, call it in that 2 to 3% on a proform of basis.
Speaker Change: We saw significant increase in our volumes from our landfills. I think Corey has mentioned 1.2 million tons were put into our landfills in the quarter and I think part of that volume increase.
Speaker Change: was driven by the fact that there was a lot of wildfires.
Speaker Change: in 2023. So a lot of that cleanup work that is now mandated both in Alberta and in Saskatchewan to force a lot of our customers to clean up some of their asset retirement obligations. I think that's starting to take fruition. So we saw significant volumes in our landfills and you can see that even with the divestment of five landfills we were still up on a quarter by quarter basis, which really speaks to the strength and tons on the way's processing assets. And that critical infrastructure.
Speaker Change: I think moving into the term alongside the South Significant Increase that would have been primarily as a result of the Clearwater Terminal Opinipacy. You know, we're upwards of 60,000 barrels a day on that pipeline and as we complete our phase three here at the end of the unit end of Q4, early Q1, we'll move up into that 70,000 barrels per day just for that Clearwater System alone. So I think on a Proforma basis, it'll become a lot clearer as we get post Q1 next year, but yeah, I would say very strong performance on our volumes, which is reflective of this strength and even dog in Q3 and why the performance was so strong.
Speaker Change: That's helpful, thanks. And then on the pricing side, I think there was a note in the MBN about 5% pricing growth, you implemented in Q4 of last year. Any indications on where pricing is trending in the current context? What do you expect for the upcoming cycle?
Speaker Change: Yeah, on pricing, I mean, we're all cognizant of cost structures increasing across the network. I think we've seen inflationary charges on, you know, electricity, chemicals, you know,
Speaker Change: salary and wages. And so last Q4 of 2023, we raised prices by 5%. We have done that again here in
Speaker Change: Q4 starting. It will be fully implemented by the end of the year. We start having discussions with our customers.
Speaker Change: in in Q3 and obviously they're cognizant of their own cost structure going up very similar to ours and so uh we have raised prices I think as we think about 2025 and just the overall environment we're still seeing a lot of pressure on inflationary costs so I would expect
Speaker Change: you know, we'll continue to take a look at pricing and make sure that our services and our infrastructure and what we do is priced accordingly. If you'll look at our margins...
Speaker Change: Part of our ability to manage price and cost is indicative in our margins, and on a pro forma basis, if you look at Q3 last year, they were 34%.
Speaker Change: once adjusted for the sale of those assets and we're now 34% again here and in the third quarter. So I think we're doing a good job on managing prices and I think our customers are understanding of you know where cost structure is going and what needs to occur within Western Canada.
Speaker Change: Great, and last one from me before I turn over, on the capital allocation side, maybe it's more of a strategic question.
Speaker Change: And like if I look at a balance sheet and let's say you want to go to like two and a half tens of EBITDA.
Speaker Change: That gives you about $700 million of access capital that you can deploy today without increasing your EBITDA, obviously. That's a lot for buybacks, clearly, and I know you're doing buybacks in the short-term, but what's the best sort of...
Speaker Change: And I'll pin to, you know, allocating that $700 million of cash available for M&A, for buybacks, or something else.
Speaker Change: So, yeah, I mean, we talked about capital allocation.
Speaker Change: Every quarter with the board, I think, you know, we did that substantial buyback in the second quarter, and I think year-to-date, we've bought back 18%.
Speaker Change: So, significant amount of share buybacks. We think that is...
Speaker Change: the best return to our shareholders from a capital return standpoint, which is why we've been so aggressive this year. I mean, when we think about our growth capital, we're at about $75 million. A lot of these projects on these brownfield opportunities are helping our customers more efficiently get their water and waste into our facilities.
Speaker Change: We will come out in December and announce our 2025 guidance along with our capital spend, and that will be...
Speaker Change: part of our capital allocation program as we think about it.
Speaker Change: You know, we came out and said we're going to maintain the dividend, I think at our current yield, we're all quite comfortable with the dividends at. But I think, you know, and then on the M&A side, I think, you know, we've had the strategy of tuck-ins in our core competencies, in our core business segments, and you saw us do that.
Speaker Change: with the BN acquisition there in the second quarter.
Speaker Change: So, I think every quarter we're going to continue to look, I mean, we're going to reinstate our NCIB here in December, which will allow us another 10% of buybacks through.
Speaker Change: through 2025.
Speaker Change: We've continually stated we're undervalued, and that is a good return of capital to our shareholders. So I think it's a quarter-by-quarter discussion on whether or not, as we get into 2025, do we want to do another meaningful SIP. I think you're pointing out something that's quite obvious. Our balance sheet is very clean.
Speaker Change: it gives us a lot of flexibility to pull these levers when we believe it's the right time to do so. So I think that flexibility gives us that optionality on buying back our stock, our organic opportunities, and that M&A as well. So yeah, I would say that NCIB would be the area we're probably going to focus on first, but it is an ongoing discussion as we think about the undervaluation of the business currently.
Speaker Change: That's great. I appreciate the time.
Speaker Change: and many more. Thank you for watching. I'm Rene Amirault.
Speaker Change: The next question is from Keith Mackey.
Keith Mackey: Hi, good morning.
Keith Mackey: more willing now to outsource volumes for things versus insource volumes for things as the overall waste and water volumes grow. Just what trends are you seeing on that front?
Speaker Change: Well, morning, Keith. Thanks for the question. Yeah, you know, I think, you know, our customers
Speaker Change: Look at capital allocation the way we do, what's the best return to their shareholders. I think you've seen a lot of our customers buying back their stock and special dividends, etc. I think when they think about waste and managing water, I think they look at our footprint.
Speaker Change: and how close we are to their existing production. And I stated that, you know, we're 60 to 65% utilization. That.
Speaker Change: you know, that infrastructure should be utilized.
Speaker Change: perks that that obviously gives.
Speaker Change: that producer, that ability to send that volume to us.
Speaker Change: But I would say, you know, the overall trend here, and specifically on water and water management, I think we're getting less access to fresh water. A lot of our customers are using produced water to complete their wells if they bring them on production.
Speaker Change: And as they're doing that, you know, the production water is just...
Speaker Change: it has a lot more chemistry involved with it as they complete the wells and open up some of the reservoirs. And as the water complexity gets harder to deal with, that's our expertise. They look at us and say, you understand how to filter, how to process mechanically, put it in a position where you're filtering it to get it into that light, the disposal aspect of it. And so I think the trend we'll see is they'll use more produced water in some of their operations, but we're going to see a lot more of it come into our facilities as we think about how hard it is to manage and process it.
Speaker Change: Daniel, Corey, is there any points I've missed on that? No, it's really status quo from how they look at it. I think the other piece to add, because of the complexity in this water, it's a tailwind for our
Speaker Change: our specialty chemicals business because we utilize utilize a lot of the chemicals uh that that we produce in our own business as well help our help our customers to streamline their production and the waste that they manage on a daily basis.
Speaker Change: $50 to $100 million growth CapEx number within your large opportunity set. Can you maybe just talk a little bit more about the opportunity set and what you're thinking as far as growth, whether things might differ from how they were this year?
Speaker Change: So, I think, you know, when I think about, you know, activity levels and the activities specific to 2024, I do see a very similar 2025. I think a lot of our customers are going through their own budgeting processes right now, but I would say, I would agree with you. I think activity levels will be similar. I do think we, you know, we benefit from our same store sales growth. I think, you know, we've seen volume growth just because that production water, you know, as wells continue to produce, our production water continues to rise in that, call it four to five percent on water specifically. So, I do see our volumes continuing to, you know, to grow into 2025.
Speaker Change: In terms of a capital spend, you know, we're not going to announce capital projects until we do have signed contracts.
Speaker Change: And a lot of the pipeline of opportunities, I would, you know, I would characterize it as brownfield expansion, where we're adding pipeline volume to some of our existing network. We do have some greenfield opportunities on the waste processing side, and speaking to your point about outsourcing, I think.
Speaker Change: you know, customers recognize, you know, that's our expertise they want to outsource. We will put in green field infrastructure, so we do have some of those opportunities as well, but we will announce those as we get those contracts completed, and so that will happen throughout the year. We'll provide initial capital spend guidance.
Speaker Change: in December to allow you to kind of put that into your numbers. A lot of the times, as we start developing the infrastructure and put it online, it'll be more of a back half of 2025 EBITDA contribution, if not 2026 EBITDA contribution as we think about it. But the pipeline of opportunities is definitely quite robust right now when we think about the infrastructure and our infrastructure network.
Speaker Change: Okay, that's helpful. Thanks very much.
Speaker Change: and many more. Thank you. Thank you. Thank you. Thank you.
Speaker Change: The next question is from Jamie Songville. Please go ahead.
Jamie Songville: Is there a risk of some of that being carried over into Q1 and have there been any delays to these projects? Was Phase 3 on the Clearwater Terminal always planned to go into 2025?
Speaker Change: Yeah, maybe we can start with that.
Speaker Change: and Rene Amirault. Thank you. Thank you.
Speaker Change: Morning, Jamie. Yeah, I think.
Speaker Change: We've always talked about our NIPITI project and phase.
Rene Amirault: Phase 3 coming online late Q4 to early Q1. There really hasn't been any delay on spending or timing. Similar to our spend on our connecting of our two water pipelines within our waste processing infrastructure, that will come online as well. We do typically spend a lot of our capital, call it in the fall, and as we get to the end of the year, our projections are and still remain that we will actually spend the $75,000 as we get to the end of the year. But I would say all our projects are on time, on budget.
Rene Amirault: and some greenfield opportunities if we get them signed. I can provide more color around that in December, so I'll have more clarity. But yeah, no, it's just really a function of timing. It's just happening in the fall here as we approach the end of the year.
Thank you, makes sense. Related, so yeah, the throughput volumes on...
for the energy infrastructure side look good.
But in terms of quarter-of-a-quarter revenue and gross operating profit
Speaker Change: for the energy infrastructure business.
It's up from the prior quarter, down from Q1. I can't remember if there's anything you divested or reclassified.
But despite the crude volumes transported, showing a very positive trend, the vast majority of the EBITDA and cash flow growth this quarter seems to have come from the waste side.
So, I guess my question is, was there something holding back revenue or margins for the infrastructure business in the quarter?
Speaker Change: and Rene Amirault. Thank you. Thank you.
Chad Magus: Hi, Jamie. Good morning. It's Chad here.
Chad Magus: Just thinking back, we did, there was a portion,
Chad Magus: Bye.
of energy infrastructure that was divested, so those numbers did go down.
as we sold the 29 facilities. However, we had a really strong Q2, Q3 as we had some storage profits there. We held some inventory at Hardesty and I'd say had irregular profits there that didn't continue into Q3. And that would probably be the main reason for the Delta.
Perfect. Thank you.
and many more. Thank you. Thank you.
The next question comes from John Gibson, please go ahead.
Thanks and congrats on a great quarter here.
John Gibson: I just had one more on the land with volumes uplift. Obviously it was higher in Q3. It appears to be both drilling and cleanup related. Wondering...
What do the margins look like on your landfill volumes versus those that are more production-oriented? And in this growth in landfill volumes continues, can we see your margins shift higher into 2025?
Thank you for watching. See you next time.
and many more. Thank you. Thank you.
Yeah, the margins are the same regardless of the waste type, whether it be drilling-related or remediation volume-related. I think what we're seeing from a volume growth perspective in Q3, and I think Alan mentioned it, is really around the tailwinds around the liability management programs. So typically Q3 and Q4 are the stronger months for the remediation project work, just because the weather is a little easier to do.
Chad Magus: to and more amenable to some of these excavation projects that they work on. So no difference in margin between those types of ways.
Speaker Change: Thank you very much.
You got it. I guess I should add this as well on here, you know, you obviously maintain the dividend and you're happy to do that and I agree with it with the valuation, but I guess, you know, pending your stock continues to perform as it has over the past little while, when could you start to think about potentially increasing that dividend a little bit?
Speaker Change: Yeah, I think.
So, you know, we haven't really
You know, I can't tell you a price at which that changes, other than, you know, we've given the guidance for now of how we felt, just given where our evaluation's been, and we'll continue to update, you know, hopefully as our evaluation changes.
Speaker Change: Fair enough, I had to ask, but I really appreciate the responses.
Speaker Change: Your next question comes from Jamie Somerville. Please go ahead.
Jamie Somerville: Thanks. Just a follow-up here. You've given high-level guidance that 20% of EBITDA, or cash flow, is coming from
cyclical drilling and completions CAPEX, but
kind of listening to some of the comments, I'm suspicious that you might be trending below that. Can you provide any color or thoughts as to how that number might change on a quarter by quarter basis?
Yeah, I'm trying to understand your question. I mean, I think, you know, we've broken down our volumes.
And we have this in our investor presentation.
Effectively, you know, when we think about drilling and completion volumes and volumes that I would, even on the industrial side, that were somewhat cyclical, it represents about 20%.
So, if we do, you know, if you do see a decline in any sort of drilling or completion activity, you know, there would be some minimal impact to it. But.
I'm not quite sure, I'm not quite sure of your question, like what will...
Speaker Change: Maybe if you could provide a bit more color on it.
Yeah, I guess I'm asking, you know, you're saying that your business is at around that 20% level.
Speaker Change: and many more. Thank you. Thank you.
Speaker Change: Oh, yeah, I mean, yeah, I mean, we're constantly monitoring the volumes and where the volumes are coming from. I mean, I don't see a decline in it. I mean, I think it's been pretty consistent if we think about, you know, 23 and 24. And as I mentioned, 25, we think is going to be very similar. But, you know, I think, I think, you know,
Speaker Change: As production gets brought on, our production volumes continue to grow, our utilization will grow. We could get into a scenario where that does get reduced.
Speaker Change: I mean, even by adding some of the metal recycling businesses that we did buy there in Q2, you know, you're getting more industrial residential markets as well that provide more stability and kind of that reoccurring nature. So, over time, as we grow, I believe that percentage will come down. But, you know, I'm not saying that's going to be significant enough to mention kind of year over year.
Speaker Change: Okay, thank you.
Speaker Change: Thank you.
Speaker Change: Thank you. Thank you.
Ladies and gentlemen, as a reminder, should you have any questions, please press the star key followed by the number one.
Speaker Change: Subs by www.zeoranger.co.uk
Our next question is from Willem D. Forrest. Please go ahead.
Speaker Change: I think that's just a quick one from me. I'm just thinking post-U.S. election, are there any?
and many more. Thank you. Thank you.
Yeah, I mean, I think when you look at the majority of our operations were Western Canada, we do have some operations in North Dakota and the Bakken. I think, you know, a lot of the things we've talked about in the last year, and when I think about M&A opportunities, I've talked about in our core business segments and geographically remaining in Canada.
I don't, I'm not sure, you know, that will have any impact on what we see here in Western Canada, but I think, you know,
you know, whether it's positive or negative for the overall sector in North America. I think that's yet to be determined, but I think for ourselves, I think, you know, we're primarily focused in Western Canada.
Speaker Change: Okay, perfect. Thanks, guys.
Ladies and gentlemen, as a reminder, should you have any questions, please press the star key followed by the number one.
Speaker Change: There are no further questions at this time. Please proceed with closing remarks.
Speaker Change: Well, thanks everyone for being on the conference call today. A taped broadcast of the call will be available on SECURE's website. We look forward to providing you with updates on SECURE's performance at the conference.
Speaker Change: at the end of October after the completion.
Sorry, at the end of February, sorry.