Q4 2024 SECURE Waste Infrastructure Corp Earnings Call
In addition, we will conduct a question and answer session. If at any time. During this call you need assistance. Please press star zero for the operator. This call is being recorded on Friday February 21, 2025, I would now like to turn the conference over to Alison Procarp. Please go ahead.
Thank you and good morning to everyone Who's listening to the call welcome to secured conference call for the fourth quarter of 2020 for joining me on the call today is Alan Graf, our President and Chief Executive Officer, Chad <unk>, Our Chief Financial Officer, and Corey Hi him, our Chief operating officer during the call today, we will be making forward looking statements related to.
Speaker Change: Good morning, ladies and gentlemen, and welcome to the Secure Waste Infrastructure Corp Q4 2024 Results Conference Call.
Speaker Change: At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you need assistance, please press star zero for the operator. This call is being recorded on Friday, February 21, 2025. I would now like to turn the conference over to Alison Prokop. Please go ahead.
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 ratio 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 for sure.
Speaker Change: Thank you and good morning to everyone who is listening to the call. Welcome to Secure's conference call for the fourth quarter of 2024. Joining me on the call today is Allen Gransch, our President and Chief Executive Officer, Chad Magus, our Chief Financial Officer, and Corey Higham, our Chief Operating Officer.
This forward looking information that drop with 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. Please refer to our continuous disclosure documents available on SEDAR plus they identify risk factors applicable to secure factors that may cause actual results could differ.
Speaker Change: During the call today, we will be making 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.
Really from any forward looking statements and identify and define our non-GAAP measures today.
Speaker Change: 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.
Today, We will review our financial and operational results for the three and 12 months ended December 31, 2024, I will now turn the call over to Alan.
Speaker Change: 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.
Alan Graf: Thanks, Alison good morning, and thank you for joining today's call 2024 was an outstanding year for secure we executed on our strategic priorities investing in our business and delivering significant returns for our shareholders, while providing reliable cost effective solutions for our customers' waste and energy.
Speaker Change: Please refer to our Continuous Disclosure documents available on CDERplus as they identify risk factors applicable to secure factors that may cause actual results to differ materially from any forward-looking statements and identify and define our non-GAP measures.
You need.
Alan Graf: This year, we solidified our position as a leading waste management and energy infrastructure company, culminating in our name change to secure waste infrastructure Corp. On Jan One 2025. This change reflects our central role in processing recovery recycling and disposal across our diverse waste streams along.
Speaker Change: Today we will review our financial and operational results for the 3 and 12 months ended December 31, 2024. I will now turn the call over to Allen.
Allen Gransch: Thanks, Alison. Good morning and thank you for joining today's call.
Speaker Change: 2024 was an outstanding year for Secure. We executed on our strategic priorities, invested in our business, and delivered significant returns for our shareholders while providing reliable, cost-effective, and safe solutions for our customers' waste and energy needs.
Alan Graf: Side, the efficient operation of our infrastructure network.
Alan Graf: Alright density is now fully aligned with our long term strategy and critical services we provide.
Alan Graf: We began the year with the transformative transaction generating $1 $1 $5 billion in cash proceeds from the mandated sale of 29 facilities, formerly owned by <unk> Corporation.
Speaker Change: This year, we solidified our position as a leading waste management and energy infrastructure company, culminating in our name change to Secure Waste Infrastructure Corp. on Jan 1, 2025.
Alan Graf: This strengthened our balance sheet reduce leverage and funded a substantial share buyback program in 2024, we repurchased $57 3 million common shares at an average price of $11 47 per share, reducing our total shares outstanding by 19%.
Speaker Change: This change reflects our essential role in processing, recovery, recycling, and disposal across our diverse waste streams alongside the efficient operation of our infrastructure network.
Speaker Change: Our identity is now fully aligned with our long-term strategy and critical services we provide.
Alan Graf: This strategic allocation of capital improved per share performance and enhance long term value for shareholders.
Speaker Change: We began the year with a transformative transaction, generating $1.15 billion in cash proceeds from the mandated sale of 29 facilities formerly owned by Torita Corporation.
Alan Graf: Additionally, we returned $104 million to shareholders through dividends, reflecting a quarterly dividend of <unk> 10 per share.
Speaker Change: This strengthened our balance sheet, reduced leverage, and funded a substantial share buyback program.
Alan Graf: <unk> provides an attractive yield of two 7% based on our current share price.
Speaker Change: In 2024, we repurchased 57.3 million common shares at an average price of $11.47 per share, reducing our total shares outstanding by 19%.
Alan Graf: We also delivered strong financial results in 2024, with adjusted EBITDA, reaching $490 million the top end of our guidance after increasing in the second quarter of 2024.
Speaker Change: This strategic allocation of capital improved per-share performance and enhanced long-term value for shareholders.
Alan Graf: Despite divesting approximately 27% of our business adjusted EBITDA declined only 17% year over year, demonstrating strong demand solid execution and the resilience of our business model, our adjusted EBITDA margin averaged 35% of revenue, excluding Wil purchased and resold in the.
Speaker Change: Additionally, we returned $104 million to shareholders through dividends, reflecting a quarterly dividend of $0.10 per share, which provides an attractive yield of 2.7% based on our current share price.
Alan Graf: Year, reflecting the efficiency of our long life assets high utilization strong pricing and disciplined cost management.
Speaker Change: We also delivered strong financial results in 2024, with adjusted EBITDA reaching $490 million, the top end of our guidance after increasing it in the second quarter of 2024.
Alan Graf: We maintained industry, leading adjusted EBITDA to discretionary free cash flow conversion conversion supported by low sustaining capital debt service and a favorable tax position. This resulted in $316 million of discretionary free cash flow and impressive 64% conversion rate, which we.
Speaker Change: Despite divesting approximately 27% of our business, adjusted EBITDA declined only 17% year-over-year, demonstrating strong demand, solid execution, and the resilience of our business model.
Speaker Change: Our adjusted EBITDA margin averaged 35% of revenue, excluding oil purchased and resold in the year, reflecting the efficiency of our long-life assets, high utilization, strong pricing, and disciplined cost management.
Alan Graf: We invested in high value growth projects share buybacks and dividends, all while maintaining a strong balance sheet.
Alan Graf: Alongside these strong financial results, we invested $100 million in growth initiatives focused on critical infrastructure projects that support the safe and efficient handling of production related waste and energy volumes. These investments enhance our network's capacity, while ensuring reoccurring long term cash flows backed by commercial.
Speaker Change: This resulted in $316 million of discretionary free cash flow at a press of 64% conversion rate, which we reinvested in high-value growth projects, share buybacks, and dividends, all while maintaining a strong balance sheet.
Alan Graf: <unk>.
Alan Graf: Key highlights include.
Alan Graf: Completion of the initial expansion of our Clearwater heavy oil terminal, which more than doubled the capacity at the terminal enhancing our ability to serve customers in the region phase III is now underway to further increase our capacity and processing capabilities. Our operations are expected to begin here in March.
Speaker Change: Alongside these strong financial results, we invested $100 million in growth initiatives focused on critical infrastructure projects that support the safe and efficient handling of production-related waste and energy volumes.
Alan Graf: Growth of our Montney water pipeline system, adding to pipeline connections to existing infrastructure and commencing construction of a new facility to support increasing volumes in the region.
Speaker Change: These investments enhance our network's capacity while ensuring reoccurring long-term cash flows backed by commercial agreements. Key highlights include
Alan Graf: Strategic tuck in acquisition in our metal recycling business in the second quarter, expanding our network into the Saskatchewan area and diversity diversifying our supply base strengthening our ability to capture value across evolving waste market and finally, an investment in 50, new railcars, enhancing our middle enhancing our metal recycling and.
Speaker Change: Completion of the initial expansion of our Clearwater Heavy Oil Terminal, which more than doubled the capacity at the terminal, enhancing our ability to serve customers in the region. Phase 3 is now underway to further increase our capacity and processing capabilities. Our operations are expected to begin here in March.
Alan Graf: <unk> capabilities.
Alan Graf: On January 31, 2025, we closed the acquisition of Edmonton based metal recycling business. This acquisition expands our scale and processing capabilities, while creating significant synergies with our existing operations.
Speaker Change: Growth of our Montmey water pipeline system, adding two pipeline connections to existing infrastructure, and commencing construction of a new facility to support increasing volumes in the region.
Speaker Change: A strategic tuck-in acquisition at our metal recycling business in the second quarter, expanding our network into the Saskatchewan area and diversifying our supply base, strengthening our ability to capture value across evolving waste markets.
Alan Graf: <unk> seen a new hub in Edmonton strengthens our metal recycling network through the vertical integration of our Mega Shredder and greater diversification of scrap supply increasing exposure to residential and industrial waste streams. In total we expect our recycling business, our metals recycling business to contribute approximately 10% of our overall.
Speaker Change: And finally, an investment in 50 new railcars, enhancing our metal recycling logistics capabilities.
Speaker Change: On January 31st, 2025, we closed the acquisition of the Edmonton-based metal recycling business. This acquisition expands our scale and processing capabilities while creating significant synergies with our existing operations.
Alan Graf: <unk> 2025, adjusted EBITDA before corporate costs.
Alan Graf: We continue.
Alan Graf: Due diligence on our second previously announced acquisition of approximately $18 million and while clothing was initially expected in Q1, we now anticipate it may take a little longer to finalize and we will provide an update with the release of our first quarter results at the beginning of May.
Speaker Change: Establishing a new hub in Edmonton strengthens our metal recycling network through the vertical integration of a mega shredder and greater diversification of scrap supply, increasing exposure to residential and industrial waste streams.
Alan Graf: Looking ahead to 2025, we expect to generate $510 million to $540 million and adjusted EBITDA, representing a 10% increase at the midpoint from 2020 for pro forma results. The increase is expected to be driven by contributions from our recent metal recycling acquisition assets placed into service in.
Speaker Change: In total, we expect our metals recycling business to contribute approximately 10% of our overall 2025 adjusted EBITDA before corporate costs. We continue...
Alan Graf: 2024, and planned organic growth projects for 2025, and higher volumes driven by production growth and pricing across our existing infrastructure.
Alan Graf: Following the metal acquisition, our total debt to EBITDA ratio, excluding leases stands at approximately one one times well below of our targeted range of two to two five times, giving us significant financial flexibility.
Alan Graf: Bind with expected 2025 discretionary free cash flow of $270 million to $300 million, we are well positioned to pursue further growth opportunities, while maintaining strong shareholder returns.
Chad: Before I turn the call over to Chad I want to thank our entire secured team. It's the dedication and commitment of our incredible employees that drive our success.
Speaker Change: Following the acquisition, our total debt to EBITDA ratio, excluding leases stands at approximately one one times well below our targeted range of two to two five times, giving us significant financial flexibility combined with expected 2025 discretionary free cash flow of 270.
Chad: As we move forward. We are excited about the opportunities ahead and remain committed to delivering long term value for all of our stakeholders.
Chad: Now I'll turn it over to Chad.
Chad: Thanks, Alan and good morning, everyone.
Chad: Our fourth quarter financial results continue to highlight the strength and stability inherent in our infrastructure based business model and the benefits of our disciplined capital allocation strategy.
Speaker Change: At $300 million, we are well positioned to pursue further growth opportunities, while maintaining strong shareholder returns.
Chad: The divestiture of <unk> 29 facilities waste connections in early 2024, and the sale of non core oilfield service business late 2023 naturally impacted our year over year financial metrics.
Speaker Change: Before I turn the call over to Chad I want to thank our entire secured team. It's the dedication and commitment of our incredible employees that drive our success.
Speaker Change: As we move forward. We are excited about the opportunities ahead and remain committed to delivering long term value for all of our stakeholders.
Chad: However, strong customer demand pricing increases and contributions from our 2023 of 2024 capital investments helped to mitigate these effects.
Chad Magus: I'll now turn it over to Chad.
Chad Magus: Thanks, Alan and good morning, everyone.
Chad: Strategic share buybacks over the past year reduced our weighted average shares outstanding by 18% in the fourth quarter enhancing financial metrics on a per share basis, and reinforcing the value of our capital return strategy.
Chad Magus: Our fourth quarter financial results continue to highlight the strength and stability inherent in our infrastructure based business model and the benefits of our disciplined capital allocation strategy.
Chad Magus: The divestiture of <unk> 29 facilities waste connections in early 2024, and the sale of non core oilfield service business late 2023 naturally impacted our year over year financial metrics, However, strong customer demand pricing increases and contributions from our 2023 of 2024 capital investments helped to mitigate these effects.
Chad: Net revenue for Q4 was $332 million down 26% year over year, primarily due to divestitures <unk>.
Chad: Excluding the divestments revenue was relatively flat year over year supported by the ramp up of the Clearwater heavy oil terminal and higher pricing on retained facilities. However.
Chad: However, these positive impacts were partially offset by earlier than normal activity slowdowns before the holidays.
Chad Magus: <unk>.
Chad Magus: Strategic share buybacks over the past year reduced our weighted average shares outstanding by 18% in the fourth quarter.
Chad: On an annual pro forma basis revenue increased approximately 11% to the addition of the Clearwater heavy oil terminal and increased volumes and pricing and the waste management segment.
Chad Magus: <unk> financial metrics on a per share basis, and reinforcing the value of our capital return strategy.
Chad Magus: Net revenue for Q4 was 332 billion down 26% year over year, primarily due to divestitures. Excluding the divestments revenue was relatively flat year over year supported by the ramp up of the Clearwater.
Chad: Adjusted EBITDA for Q4 was $117 million, reflecting a 35% margin.
Chad: System with our average for all of 2024.
Chad: Absolutely.
Chad Magus: Water heavy oil terminal and higher pricing on retained facilities.
Chad: Adjusted EBITDA declined 28% due to asset sales on a per share basis. It was down just 11% demonstrating the benefits of our buyback program.
Chad Magus: However, these positive impacts were partially offset by earlier than normal activity slowdowns before the holidays.
Chad: Net income for Q4 was up $34 million was down 42% from last year, primarily due to lower operating profit, resulting from the divestitures.
Chad Magus: On an annual pro forma basis revenue increased approximately 11% due to the addition of the Clearwater heavy oil terminal and increased volumes and pricing and the waste management segment.
The decrease was partially offset by lower interest accretion and financing costs after using proceeds from asset sales to reduce debt.
Chad Magus: Adjusted EBITDA for Q4 was $117 million, reflecting a 35% margin.
Chad: Funds flow from operations of $106 million decreased 17% compared to the fourth quarter of 2023 due to lower adjusted EBITDA, partially offset by reduced interest costs, resulting from lower debt levels and the timing of fixed payments.
Chad Magus: Assistant with our average for all of 2024.
Chad Magus: Absolute.
Chad Magus: Adjusted EBITDA declined 28% due to asset sales on a per share basis. It was down just 11% demonstrating the benefits of our buyback program.
However, thanks to share buybacks funds flow from operations per basic share increased 2% 45.
Chad Magus: Net income for Q4 was up $34 million was down 42% from last year, primarily due to lower operating profit, resulting from the divestitures.
Chad: Discretionary free cash flow was $80 million.
Chad Magus: The decrease was partially offset by lower interest accretion and financing costs after using proceeds from asset sales to reduce debt.
Chad: <unk> ongoing investments and capital returns despite a 17% decrease from prior year on a per share basis discretionary free cash flow was up 3% to 34.
Chad Magus: Funds flow from operations of $106 million decreased 17% compared to the fourth quarter of 2023 due to lower adjusted EBITDA, partially offset by reduced interest costs, resulting from lower debt levels and the timing of fixed debt payments.
Chad: At December 31, 2024 in addition to our $300 million and fixed that we had drawn $46 million on our $800 million revolving credit facility, leaving us with significant capacity and ample liquidity.
Chad Magus: However, thanks to share buybacks funds flow from operations per basic share increased 2% 45.
Chad: Following the metals recycling acquisition, which recently closed on January 31, our total debt to EBITDA ratio increased from one times to one three times or one one times excluding leases.
Chad Magus: Discretionary free cash flow was $80 million.
Chad Magus: Supporting ongoing investments and capital returns despite a 17% decrease from prior year on a per share basis discretionary free cash flow was up 3% to 34.
Chad: Secure remains well positioned to fund future growth initiatives continue returning value to shareholders and maintain maximum financial flexibility for capital allocation in the years ahead.
Chad Magus: At December 31, 224 in addition to our $300 million and fixed that we had drawn $46 million on our $800 million revolving credit facility, leaving us with significant capacity and ample liquidity.
Chad: With that I'll pass over to Corey to discuss our operational highlights.
Corey Hi: Thanks, Chad our team delivered consistent performance across our facility network in the fourth quarter and sharing the same processing recycling and disposal of waste and efficient transportation of oil.
Chad Magus: Following the metals recycling acquisitions recently closed on January 31, our total debt to EBITDA ratio increased from one times to one three times or one one times excluding leases.
Corey Hi: Waste processing facilities, we processed 97000 barrels per day of produced water and 41000 barrels per day of slurry and emulsions. We also recovered 264000 barrels of oil from waste streams reinforcing the value we create.
Chad Magus: Secured remains well positioned to fund future growth initiatives.
Chad Magus: Returning value to shareholders and maintain maximum financial flexibility for capital allocation in the years ahead.
Corey Hi: Overall volumes at our waste processing facilities.
Corey Hi: Approximately 3%.
Chad Magus: With that I'll pass over to Corey to discuss our operational highlights.
Corey Hi: Overall volumes increase at our waste processing facilities approximately 3% in 2024 over 2023 pro forma in line with our expectations for production growth in our operating regions landfill disposal volumes remained strong with 835000 tonnes safely contained across our 12 locations in the fourth quarter on an annual basis landfill volumes were up approximately 20%.
Corey Higham: Thanks, Chad our team delivered consistent performance across our facility network in the fourth quarter and sharing the same processing recycling and disposal of waste and efficient transportation of oil.
Corey Higham: Waste processing facilities, we processed 97000 barrels per day of produced water and 41000 barrels per day of slurry and emulsions. We also recovered 264000 barrels of oil from waste streams reinforcing the value we create.
Corey Hi: In 2024 over 2023 pro forma pro forma as we saw a significant uptake reclamation and remediation project volumes.
Overall volumes at our waste processing facilities.
Corey Hi: The energy infrastructure segment fourth quarter, Terminalling and pipeline volumes averaged 130000 barrels per day for the year Terminalling and pipeline volumes were up 30% in 2024 over 2023 pro forma due to the Clearwater asset which came into service in October 2023.
Corey Higham: Approximately 3%.
Corey Higham: Overall volumes increased at our waste processing facilities approximately 3% in 2024 over 2023 pro forma in line with our expectations for production growth in our operating regions landfill disposal volumes remained strong with 835000 tonnes safely contained across our 12 locations in the fourth quarter on an annual basis landfill volumes were up approximately 20%.
Corey Hi: Turning now to our capital program, we incurred $72 million of sustaining capital for the year above our guidance of $60 million as we expanded our asset integrity program related to well and facility improvements at waste processing facilities and upgraded equipment at our metals recycling and waste service operations.
Corey Higham: In 2024, or 2023 pro forma pro forma as we saw a significant uptake reclamation and remediation project volumes.
Corey Higham: The energy infrastructure segment fourth quarter, Terminalling and pipeline volumes averaged 130000 barrels per day for the year Terminalling and pipeline volumes were up 30% in 2024 over 2023 pro forma due to the Clearwater asset which came into service in October 2023.
Corey Hi: 2025, we continue to expect to spend $85 million of sustaining capital with the increase over 2024 largely related to the construction of additional landfill cells to support higher activity levels in.
Corey Hi: In 2024, we spent $62 million of our $75 million growth capital program. The variance of $13 million is due to timing differences and is expected to be carried forward into 2025, bringing our total 2025 drove capital program up to approximately $85 million, which will focus on expanding the processing processing and disposal capacity.
Corey Higham: Turning now to our capital program, we incurred $72 million of sustaining capital for the year above our guidance of $60 million as we expanded our asset integrity program related to well and facility improvements at waste processing facilities and upgrading equipment in our metals recycling and waste service operations in.
Corey Higham: In 2025, we continue to expect to spend $85 million of sustaining capital with the increase over 2024 largely related to the construction of additional landfill cells to support higher activity levels in.
Corey Hi: Water infrastructure network in the Alberta, Montney region to accommodate growing producer volumes with a new pipeline connected water disposal facilities and expansions of the existing network network with the addition of new pipelines in a disposal well the new facility is expected to be operational in the fourth quarter of 2025 with existing facility expansions service target.
Corey Higham: In 2024, we spent $62 million of our $75 million growth capital program. The variance of $13 million is due to timing differences and is expected to be carried forward into 2025, bringing our total 2025 for our capital program up to approximately $85 million.
Corey Hi: <unk> targeted for early 2026.
Corey Hi: Completing the phase III expansion of the Clearwater heavy oil terminal and gathering infrastructure for incremental clean heavy oil delivery and adding treating capabilities for trucked into motion volumes. Following the expansion of the terminal will have a total capacity of 75000 barrels per day.
Corey Higham: Which will focus on expanding the processing processing and disposal capacity of our water infrastructure network in the Alberta, Montney region to accommodate growing producer volumes within new pipeline connected water disposal facility and expansions of the existing network network with the addition of new pipelines disposal well the new facility is expected to be operational in the fourth quarter.
Corey Hi: Reopening of suspended industrial waste processing facility located in Alberta, industrial Heartland to meet local demand capital expenditure or capital expenditures are underway and include replacing and upgrading critical infrastructure to increase capacity and will offer broader industrial waste acceptance and treatment, which is expected to occur in the second quarter of 2025.
Corey Higham: <unk> 2025 with existing facility expansions service target.
Corey Higham: <unk> targeted for early 2026.
Corey Higham: Completing the phase III expansion of the Clearwater heavy oil terminal and gathering infrastructure for incremental clean heavy oil delivery, adding trading capabilities for truck denim auction volumes. Following the expansion of the terminal will have a total capacity of 75000 barrels per day.
Corey Hi: Purchasing incremental railcars, bringing securities fleet to approximately 200 railcars and increasing the efficiency of our metals recycling logistics and distribution operations and lastly, optimizing our waste infrastructure network to Debottleneck increased throughput achieved cost savings and drive higher adjusted EBITDA from same store sales.
Speaker Change: Reopening of suspended industrial waste processing facility located in Alberta, industrial Heartland to meet local demand capital expenditure or capital expenditures are underway and include replacing and upgrading critical infrastructure to increase capacity and will offer broader industrial waste acceptance and treatment, which is expected to occur in the second quarter of 2025.
Corey Hi: All major growth projects are backed by commercial agreements ensuring reliable volumes of recurring cash flows. We also have a robust pipeline of brownfield expansions do Greenfield development regions, where production growth is outpacing available processing and disposal capacity.
Speaker Change: Purchasing incremental railcars, bringing securities fleet to approximately 200 railcars and increasing the efficiency of our metals recycling logistics and distribution operations and lastly, optimizing our waste infrastructure network to Debottleneck increased throughput achieved cost savings and drive higher adjusted EBITDA from same store sales.
Corey Hi: Our investments will be secured by long term contracts that deliver stable cash flows and strong return.
Corey Hi: Our commitment to environmental stewardship, and operational excellence aligns with their strategic purpose transforming waste into value. We continue to provide solutions that help our customers manage environmental liabilities reduce costs and create opportunities for resource recovery and reuse.
Speaker Change: All major growth projects are backed by commercial agreements assuring reliable volumes of recurring cash flows. We also have a robust pipeline of brownfield expansions do greenfield developments regions, where production growth is outpacing available processing and disposal capacity future.
Corey Hi: We made strong progress across our ESG objectives in 2024 with our organize our organizational values to do the right thing for employees customers communities and the environment guiding our decisions.
Speaker Change: Future investments will be secured by long term contracts that deliver stable cash flows and strong returns.
Safety remains our top priority and we successfully advanced many safety initiatives that are improving our already strong safety culture across our business units, we have exceeded our objectives established in 2021 of reducing greenhouse gas emission intensity by 15% over a three year period with significant progress in reducing scope, one and two emissions since 2021 through energy concert.
Speaker Change: Our commitment to environmental stewardship, and operational excellence aligns with their strategic purpose transforming waste into value. We continue to provide solutions that help our customers manage environmental liabilities reduce costs and create opportunities for resource recovery and reuse.
Speaker Change: We made strong progress across our ESG objectives in 2024 with our organize that organizational value to do the right thing for our employees customers communities and the environment guiding our decisions.
Corey Hi: <unk> programs.
Corey Hi: We achieved a 6% reduction in water use over the prior year and we have also established a renewed key indigenous partnerships building on our pillars of community engagement employee and capacity building in economic inclusion.
Speaker Change: Safety remains our top priority and we successfully advanced many safety initiatives that are improving our already strong safety culture across our business units, we have exceeded our objectives established in 2021 of reducing greenhouse gas emission intensity by 50% over a three year period with significant progress in reducing scope, one and two emissions since 2021 through energy conservation.
Corey Hi: Look forward to providing you with a comprehensive update on our progress of our ESG objectives in our 2020 for sustainability report in the second quarter of this year.
Corey Hi: I'll pass it back to Alan for closing remarks.
Thanks Corey.
Alan Graf: Secure continues to make meaningful progress in delivering our strategy as a leader in specialized waste management and energy infrastructure solutions. In 2024, we delivered strong financial results enhance shareholder value and made strategic investments that position us for long term growth looking ahead, we see multiple opportunities to build.
Programs.
Speaker Change: We achieved a 6% reduction in water use over the prior year and we have also established a renewed key indigenous partnerships building our pillars of community engagement employee and capacity building in economic inclusion.
Speaker Change: Look forward to providing you with a comprehensive update on our progress of our ESG objectives in our 2020 for sustainability report in the second quarter of this year.
Corey Hi: On this momentum.
Corey Hi: In 2025, we remain focused on executing our strategy leveraging our infrastructure network to support growing demand from our customers, while maintaining a disciplined approach to capital allocation.
Speaker Change: I'll pass it back to Alan for closing remarks.
Alan: Thanks Corey.
Alan: <unk> continues to make meaningful progress in delivering our strategy as a leader in specialized waste management and energy infrastructure solutions. In 2024, we delivered strong financial results enhance shareholder value and made strategic investments that position us for long term growth looking ahead, we see multiple opportunities to build.
Corey Hi: The dialogue with the implementation of U S tariffs, including tariffs on imported steel and aluminum and aluminum and upcoming tariffs on oil and gas regarding the impact to secure it is important to note that recycled scrap steel is exempt from these tariffs and as Hal is upheld could actually benefit.
On this momentum.
Alan: In 2025, we remain focused on executing our strategy leveraging our infrastructure network to support growing demand from our customers, while maintaining a disciplined approach to capital allocation.
Metal recycling business.
Corey Hi: Historically similar trade measures have led to increased demand for scrap metal, we anticipate a similar market response, potentially driving up scrap metal pricing and creating a favorable environment for our metals recycling business.
Alan: The dialogue with the implementation of U S tariffs, including tariffs on imported steel and aluminum and aluminum and upcoming tariffs on oil and gas regarding the impact to secure it is important to note that recycled scrap steel is exempt from these tariffs and as Hal is upheld could actually benefit.
Corey Hi: Our oil and gas customers will be impacted by the tariffs. However, we expect the impact on secure waste and oil volumes to be insignificant. We believe the current market fundamentals strong producer balance sheets are favorable commodity price environment and a weaker Canadian dollar offsetting some tariff related costs will sustain activity level.
Alan: Metal recycling business.
Alan: Historically similar trade measures have led to increased demand for scrap metal, we anticipate a similar market response, potentially driving up scrap metal pricing and creating a favorable environment for our metals recycling business.
Corey Hi: And production growth, however, broader shift in upstream activity could influence waste and energy volumes over time, depending on further increases to tariffs if they are implemented.
Corey Hi: As a as U S refiners are heavily dependent on Canadian crude, particularly in pad two where there are no viable alternatives alternatives to heavy crude feedstock. The long term feasibility of these tariffs remain uncertain.
Alan: Our oil and gas customers will be impacted by the tariffs. However, we expect the impact on secure waste and oil volumes to be insignificant. We believe the current market fundamentals strong producer balance sheets are favorable commodity price environment and a weaker Canadian dollar offsetting some tariff related costs will sustain activity level.
Corey Hi: Political and economic factors May drive policy adjustments, including redemptions or reality retaliatory measures from Canada.
Alan: And production growth, however, broader shift in upstream activity could influence waste and energy volumes over time, depending on further increases to tariffs if they are implemented.
Corey Hi: Despite the volatility and trade policy discussions secure is well positioned to navigate these shifts and at this time. It does not result in any changes to our 2025 guidance, where we provided a range of EBITDA $510 million to $540 million.
As a as U S refiners are heavily dependent on Canadian crude, particularly in pad two where there are no viable alternatives alternatives to heavy crude feedstock. The long term feasibility of these tariffs remain uncertain.
Corey Hi: Our energy infrastructure supported by take or pay contracts and we continue to see reoccurring waste volumes in demand or a waste management solutions, we remain confident in our ability to adapt to changing market conditions, while continuing to deliver to our customers and our shareholders.
Alan: Political and economic factors May drive policy adjustments, including an exemption is awarded reality retaliatory measures from Canada.
Alan: Despite the volatility and trade policy discussions secure is well positioned to navigate these shifts and at this time. It does not result in any changes to our 2025 guidance, where we provided a range of EBITDA 510 million to $540 million.
Corey Hi: In 2025, we expect to maintain industry, leading margins and a stable cash flow profile underpinned by the reoccurring waste volumes across the industrials metals and energy markets with a strong balance sheet ample liquidity and leverage of approximately one one times to adjusted EBITDA, we are well positioned to capitalize on.
Alan: Our energy infrastructure supported by take or pay contracts and we continue to see reoccurring waste volumes in demand or a waste management solutions, we remain confident in our ability to adapt to changing market conditions, while continuing to deliver to our customers and our shareholders.
Corey Hi: Growth opportunities, while continuing to deliver an enhanced shareholder returns our capital allocation priorities for 2025 include executing on our $85 million organic growth capital program and $85 million and our sustaining broke our sustaining capital program Max.
Alan: In 2025, we expect to maintain industry, leading margins and a stable cash flow profile underpinned by the reoccurring waste volumes across the industrials metals and energy markets with a strong balance sheet ample liquidity and leverage of approximately one one times to adjusted EBITDA, we are well positioned to capitalize on.
Corey Hi: Maximizing shareholder returns through opportunistic share repurchases.
Corey Hi: And our industry, leading dividend in December 2024, we renewed our NCI be allowing us to purchase up to 19 million common shares approximately 8% of our outstanding shares in 2025 and.
Alan: Growth opportunities, while continuing to deliver an enhanced shareholder returns our capital allocation priorities for 2025 include executing on our $85 million organic growth capital program and $85 million and our sustaining broken our sustaining capital program Max.
Corey Hi: At our current share price this represents approximately $290 million in potential buybacks during the year.
Corey Hi: To date, we have already repurchased four 2 million shares for a total of $65 million as management and the board continue to maintain the shares the company are undervalued and these repurchases support that conviction.
Alan: Maximizing shareholder returns through opportunistic share repurchases.
Alan: And our industry, leading dividend in December 2024, we renewed our NCI be allowing us to purchase up to 19 million common shares approximately 8% of our outstanding shares in 2025 and.
Corey Hi: Pain, or <unk> 10 per share quarterly dividend equal to approximately $94 million in 2025 based on our share count as at December 31.
Corey Hi: 2024, and maintaining financial flexibility to pursue additional high return opportunities, while staying below our target leverage range, we have a robust pipeline of organic growth opportunities and we will evaluate additional strategic acquisitions that enhance that efficiency network density and waste stream diversification.
Alan: At our current share price this represents approximately $290 million in potential buybacks during the year.
Alan: To date, we have already repurchased $4 2 million shares for a total of $65 million as management and the board continue to maintain the shares the company are undervalued and these repurchases support that conviction.
Yeah.
Corey Hi: <unk> remains committed to being the leader in waste management and energy infrastructure prioritizing value creation for our customers through reliable safe and environmentally responsible infrastructure.
Alan: Pain, or <unk> 10 per share quarterly dividend equal to approximately $94 million in 2025 based on our share count as at December 31.
Alan: <unk> 24, and maintaining financial flexibility to pursue additional high return opportunities, while staying below our target leverage range.
Corey Hi: With a clear strategy a strong balance sheet and are committed commitment to disciplined growth secure is well positioned to drive long term value. We appreciate your continued support and look forward to delivering on our commitments in 2025 and beyond.
Alan: We have a robust pipeline of organic growth opportunities and we will evaluate additional strategic acquisitions that enhance that efficiency network density and waste stream diversification.
Corey Hi: That concludes our prepared remarks, operator, we're now happy to take questions.
Alan: Secure remains committed to being the leader in waste management and energy infrastructure prioritizing value creation for our customers through reliable safe and environmentally responsible infrastructure.
Corey Hi: Yes.
Corey Hi: Ladies and gentlemen, we will now begin the question and answer session.
Corey Hi: So do you have a question. Please press the star followed by the one on your Touchtone phone.
Corey Hi: We'll hear prompted that you've had has been raised.
Alan: With a clear strategy a strong balance sheet and are committed commitment to disciplined growth secure is well positioned to drive long term value. We appreciate your continued support and look forward to delivering on our commitments through 2025 and beyond.
Corey Hi: If you are using a speaker phone please lift the handset before pressing any case.
Speaker Change: Our first question comes from <unk> Gupta of Scotiabank. Please go ahead.
Gupta: Thanks, and good morning, everyone. Thanks for taking my question.
That concludes our prepared remarks, operator, we're now happy to take questions.
Speaker Change: I wanted to dig into the metals recycling business here.
Alan: Thank you.
Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.
Gupta: Can help us understand.
The Edmonton.
Speaker Change: So do you have a question. Please press the star followed by the one on your Touchtone phone.
Gupta: You purchased obviously vertically integrated too.
Speaker Change: But in terms of synergies and integration whats your expectation there like how should be process unfold.
Speaker Change: Will you have time to that you've had has been raised.
Speaker Change: If you are using a speaker phone please lift the handset before pressing any case.
Speaker Change: <unk> six months timeline or it's more like a one year process and what kind of synergies that you're expecting.
Speaker Change: The first question comes from <unk> Gupta with Scotiabank. Please go ahead.
Speaker Change: Thanks, and good morning, everyone. Thanks for taking my question.
Ken: Good morning, Conor Ken Thanks for the questions.
Speaker Change: I wanted to dig into the metals recycling business here.
Ken: So we're very excited that we closed the acquisition in Edmonton is pretty key.
Speaker Change: Can help us understand.
Speaker Change: The Edmonton.
Ken: Two our strategy when you think about it think of it as Edmonton being the hub and with the Mega Shredder. The ultimate goal here is to increase the volume and throughput of that shredder, because you get synergies with operating margins by processing it through a piece of equipment versus trying to process it with different.
Speaker Change: You purchased obviously vertically integrates U.
Speaker Change: But in terms of synergies and integration, what's your expectation there like how should be process unfold.
Speaker Change: Take a six months timeline or it's more like a one year process and what kind of synergies are you expecting.
Ken: Types of equipment or manual labor and so having that central hub. Our plan here is to integrate our other locations. So we have 10 other metals recycling locations throughout Western Canada, and some of those locations will feed into Atlanta, where we can process it more efficiently get more volume through.
Ken: Good morning, Ken Thanks for the questions.
Speaker Change: So we're very excited that we closed the acquisition of Edmonton is pretty key.
Speaker Change: Two our strategy when you think about it think of it as Edmonton being the hub and with the Mega Shredder. The ultimate goal here is to increase the volume and throughput of that Shredder, because you get synergies with operating margins by processing that through a piece of equipment versus trying to process it with different.
Ken: This shredder, so there'll be synergies associated with that we've also been buying number of railcars. These new railcars are 30% more efficient when you think about transportation.
Ken: The older cars didn't hold as much. These are a lot higher than we are paying the same pain paying the same fees. So we are going to get transportation savings.
Speaker Change: Types of equipment or manual labor.
Speaker Change: So having that central hub our plan here is to integrate our other locations. So we have 10 other metal recycling locations throughout Western Canada, and some of those locations will feed into Atlanta, where we can process. It more efficiently get more volume through this shredder, so there'll be synergies associated with that.
Ken: As well we're looking at.
Ken: Getting opportunities to consult.
Basically consolidate different types of grades where if we can put all grade one aluminum F. One car, we're going to get all grade one pricing, so theres going to be synergies in and the value that we're getting because it be commingled grades you typically get the lower grade we're very pleased.
Speaker Change: We have also been buying number of railcars. These new railcars are 30% more efficient when you think about transportation.
Ken: To hear that scrap metal won't be subject to tariffs that's huge for our business. We've been talking for a long time that these electric arc furnaces that only take scrap material is a growing market and we see growing demand and so as we have the foundation year four more locations to feed into <unk>.
Speaker Change: The older cars didn't hold as much. These are a lot higher than we are paying the same pain paying the same fees. So we are going to get transportation savings.
Speaker Change: As well we're looking at.
Getting opportunities to consult.
Speaker Change: <unk>.
Speaker Change: Basically consolidate different types of grades where if we can put all grade one aluminum F. One car, we're going to get all grademark pricing, so theres going to be synergies and the value that we're getting because we commingle grades you typically get the lower grade we're very pleased.
Ken: Going to be a huge value proposition associated with it so quite excited that was a key component of our metal recycling strategy. I think we were in a unique spot to be able to consolidate some of these locations that we thought were key.
Speaker Change: To hear that scrap metal won't be subject to tariffs that's huge for our business. We've been talking for a long time that these electric arc furnaces that only take scrap material is a growing market and we see growing demand and so as we have the foundation here for more locations to feed into avnet than you think.
Ken: And so as I think about it through through 2025.
Ken: We want to integrate we've got to get what I would consider a run rate synergies typically they take 12 months plus to get your full synergy utilization. So when we announced in early December that we were looking to close this in Q1, we already factored that.
Speaker Change: Going to be a huge value proposition associated with it so quite excited that was a key component of our metal recycling strategy. I think we were in a unique spot to be able to consolidate some of these locations that we thought were key.
Ken: Got into our guidance for 2025, but we're also going to get some benefit of this into 2026 and so when we put out 2026 guidance youll see what that full run rate looks like but we've already factored it into the guidance.
Speaker Change: And so as I think about it through through 2025.
Ken: That's good that's great color. Thanks, so much Alan.
Speaker Change: We want to integrate we've got to get what I would consider a run rate synergies typically they take 12 months plus to get your full synergy utilization. So when we announced in early December that we were looking to close this in Q1, we've already factored that.
Ken: <unk>.
Ken: On the test side.
So if you can.
Ken: Up to speed on how things evolve historically as you said the scrap metal prices can go up.
Ken: In terms of your business today after this latest acquisition.
Speaker Change: Got into our guidance for 2025, but we're also going to get some benefit of this into 2026 and so when we put out 2026 guidance youll see what that full run rate looks like but we have already factored into the guidance.
Ken: If you look at the sensitivity to price changes how should we think about that and are you are you more sort of like a mix of U S dollar and Canadian dollar on the <unk> side or it's all going to adults.
Speaker Change: That's great that's great color. Thanks, so much Alan.
Speaker Change: <unk>.
Speaker Change: On the tennis side, so if you can.
Ken: Yes, so first of all on commodity price. So typically what happens when scrap metal comes into our locations.
Speaker Change: Make us up to up to speed on how things evolve historically as you said the scrap metal prices can go up.
Ken: Paid a spot price based on the volume in the current price.
Speaker Change: In terms of your business today after this latest acquisition.
Ken: In the market at that point in time, our goal here is not to take commodity risk we want to turn our inventory at least a minimum of 12 times a year. So basically you are turning inventory every month and really why you wanted to do that is because typically when it comes across the scale you pay the price you know how long it takes you to process.
Speaker Change: If you look at the sensitivity to price changes how should we think about it and are you are you more sort of like a mix of U S dollar and Canadian dollar on the <unk> side or it's all coming at all.
Speaker Change: Yeah. So first of all on commodity price. So typically what happens when scrap metal comes into our locations. They are paid a spot price based on the volume in the current price.
Ken: And the cost to process and then you want to sell it within that month not to take any commodity price risk. So.
You can get some some fluctuations in a bit of supply and demand as the price moves, but we're not trying to take any of that commodity risk when it comes to FX.
Speaker Change: In the market at that point in time, our goal here is not to take commodity risk we were.
Ken: We do have oil that trades in <unk> in the U S function, we look to offset that through foreign currency.
Speaker Change: Want to turn our inventory at least a minimum of 12 times a year. So basically you are turning inventory every month and really why you wanted to do that is because typically when it comes across the scale you pay the price you know how long it takes you to process and the cost to process and then you want to sell it within that market not to take any commodity price risk. So.
Ken: Hedging to make sure that we don't have exposure on the FX side. So I think we're protected on both fronts I think from our perspective.
Ken: Getting the volumes into <unk> to get this process more efficiently. It's really about just making sure we could turn that inventory very very quickly because we just want to get that that processing charge, that's what we like.
Speaker Change: You can get some some fluctuations in a bit of supply and demand as the price moves, but we're not trying to take any of that commodity risk. When it comes to FX. I mean, we do have oil that trades at <unk> in the U S function, we look to offset that through foreign currency.
Speaker Change: Understood. Thanks for that and last one before I turn over.
Speaker Change: You talked about more potential M&A opportunity.
Speaker Change: Do expect that these opportunities.
Speaker Change: Currently only complaint to the metal recycling or could there be other avenues youre exploring within the risk spectrum.
Speaker Change: Hedging to make sure that we don't have exposure on the FX side. So I think we're protected on both fronts I think from our perspective.
Speaker Change: Getting the volumes into <unk> to get this process more efficiently. It's really about just making sure we could turn that inventory very very quickly because we just want to get that that processing charge, that's what we like.
Speaker Change: Yes. There is there is a few other.
Speaker Change: Metal opportunity that we want to look at I think we obviously want to make sure that it's the right value for us when we integrated into our network. So there is some additional ones that we continue to look at I think when you look at our leverage and when we talk about one one times right now and our goal being two to two five times there are other ways to opportune.
Speaker Change: Understood. Thanks for that and last one before I turn over.
Speaker Change: You talked about more potential M&A opportunity is it fair to expect that these opportunities.
Speaker Change: The only complaint to the metal recycling or could there be other avenues youre exploring within the base spectrum.
Speaker Change: <unk> outside of the metals that are available and are coming to market that we're taking a look at and I think anytime you look at M&A and you get more knowledgeable about how that business works, how it could integrate into your own business, what kind of synergies you can get and so we are continuing to work at waste opportunities that come into the marketplace.
Speaker Change: Yes. There is there is a few other.
Speaker Change: Metal opportunities that we want to look at I think we obviously want to make sure that it's the right value for us when we integrated into our network. So there is some additional ones that we continue to look at I think when you look at our leverage and we talk about one one times right now and our goal of being two to two five times there are other ways to opportune.
Speaker Change: Meet our economic hurdle thresholds, if they if we feel like it's part of our core competencies and we can add value add synergies to it yes of course, we're going to look at it.
Speaker Change: Think we've been very clear on our metal recycling strategy and we.
Speaker Change: <unk> outside of the battles that are available and are coming to market that we're taking a look at and I think anytime you look at M&A and you get more knowledgeable about how that business works, how it get integrate into your own business, what kind of synergies you can get and so we are continuing to work at waste opportunities that come into the marketplace.
Speaker Change: We will continue to pursue that we want to make sure to we just we just absorbed a very big one. This is a 170 employees, we want to make sure that into growth creation with very very smooth and make sure Thats Ryan the way we want before we continue to add more to it but I would say in general there are M&A opportunities that are coming at us every week desktop.
Speaker Change: Meet our economic hurdle thresholds, if they if we feel like it's part of our core competencies and we can add value add synergies to it yes of course, we're going to look at it.
Speaker Change: That we will look at nothing of substantial size here I think I would call everything we see is more tuck ins and that's what we like right now I think that's that's.
Speaker Change: We've been very clear on our metal recycling strategy and.
The value for us.
Speaker Change: Great. Thanks, so much for the time.
Speaker Change: We will continue to pursue that but we want to make sure to we just we just absorbed a very big one. This is a 170 employees, we want to make sure that into grocery creation was very smooth and make sure Thats Ryan the way we walk before we continue to add more to it but I would say in general there are M&A opportunities that are coming at us every week desktop.
Speaker Change: Thank you. The next question comes from Patrick Kenny at National Bank Financial. Please go ahead.
Patrick Kenny: Thank you good morning, sorry.
Patrick Kenny: Just back on the <unk> acquisition and apologies if I missed it but now that you've closed that any clarity on the.
Speaker Change: That will look at nothing of substantial size here I think I would call everything we see is more tuck ins and that's what we like right now I think that that's good value for us.
Patrick Kenny: EBITDA or free cash flow multiple.
Patrick Kenny: Paid for the business and then I guess pro forma the realized synergies to come.
Patrick Kenny: How that transaction multiple might look on a run rate basis as well.
Speaker Change: Great. Thanks, so much for the time.
Speaker Change: Okay.
Patrick Kenny: Yes. Good morning, Good morning, Patrick I think we've been pretty clear through as we've been looking at this market and kind of a roll up strategy in terms of some opportunities to increase some of these feeder yards into a kind of a central location that whenever we were going to acquire.
Speaker Change: Thank you. The next question comes from Patrick Kenny at National Bank Financial. Please go ahead.
Patrick Kenny: Thank you good morning.
Patrick Kenny: Just back on the <unk> acquisition and apologies if I missed it but now that you've closed at any clarity on the EBIT.
Patrick Kenny: EBITDA or free cash flow multiple.
Patrick Kenny: <unk> was going to be accretive. So you you can you can take because it.
Patrick Kenny: Paid for the business and then I guess.
Patrick Kenny: Pro forma the realized synergies to come.
Patrick Kenny: It isn't material and obviously I've talked about wanting to do more but I would say, it's accretive to where we are trading today I think when you think about rural opportunities.
Patrick Kenny: How that transaction multiple might look on a run rate basis as well.
Patrick Kenny: Yeah. Good morning morning, Patrick I think we've been pretty clear throughout as we've been looking at this market and kind of a roll up strategy in terms of some opportunities to increase some of these feeder yards into a kind of a central location that whatever we were going to.
Patrick Kenny: In smaller markets being typically would have.
Patrick Kenny: Slightly lower multiple than you would get in a large municipal area like Edmonton in the industrial Heartland.
Patrick Kenny: It has a lot more activity a lot more consistent residential industrial markets that are feeding into that network you pay a higher value for us. So what I can tell you is accretive.
Patrick Kenny: Wire was going to be accretive. So you can you can take that.
Patrick Kenny: Accretive to where we are trading currently.
Patrick Kenny: Because it isn't material and obviously I've talked about wanting to do more but I would say, it's accretive to where we are trading today I think when you think about rural opportunities.
Patrick Kenny: Very happy very pleased to get it down I think it's going to be a fantastic opportunity for us to leverage all of these yards integrating that very efficient metal recycling business. So I'll leave it there I think we put we put this as I said in our guidance here for 2025, and as we get through synergies and run rate into 2026.
Patrick Kenny: In smaller markets. They typically would have.
Patrick Kenny: A slightly lower multiple than you would get in a large municipal area like AMETEK in the industrial Heartland, where it has a lot more activity a lot more consistent residential industrial markets that are feeding into that network you pay a higher value for us. So what I can tell you is accretive.
Speaker Change: You have more clarity.
Patrick Kenny: As time progresses here.
Speaker Change: Got it.
Speaker Change: And then maybe just on the margin front for the base business, so still quite healthy.
Accretive to where we are trading currently.
Patrick Kenny: Very happy very pleased to get it done I think it's going to be a fantastic opportunity for us to leverage all of these yards into creating a very efficient metal recycling business. So I'll leave it Darrin I think we put we put this as I said in our guidance here for 2025, and as we get through synergies and run rate into 2026 will give.
Speaker Change: 5% EBITDA margins in the quarter.
Speaker Change: But they have been higher in the past so I'm just curious.
Speaker Change: If you could point us towards any.
Speaker Change: Specific initiatives that might be underway, either on the cost structure side or perhaps the commercial side.
Speaker Change: Might generate another few points of margin say by this time next year.
Patrick Kenny: You more clarity.
Patrick Kenny: As time progresses here.
Speaker Change: Yes, I think when we look at some of our capital projects when when we're doing capital projects such as pipeline there are more capital intensive and because they are a high capital intensive in.
Patrick Kenny: Got it.
Patrick Kenny: And then maybe just on the margin front for the base business, so still quite healthy at.
Patrick Kenny: 35% EBITDA margins in the quarter.
Patrick Kenny: But they have been higher in the past so I'm just curious if.
Speaker Change: Restructure you typically get higher operating margins saw a bit of it is mix related. So if we're doing more sort of pipeline investments when you add in the waste processing facility. Those are those are great margins as well, but I think.
Patrick Kenny: If you could point us towards any.
Patrick Kenny: Specific initiatives that might be underway, either on the cost structure side or perhaps the commercial side.
Patrick Kenny: Might generate a another few points of margin say by this time next year.
Speaker Change: In general, we see 2020 or 2025 being very consistent at 34%.
Patrick Kenny: Yes, I think when we look at some of our capital projects when when we're doing capital projects such as pipelines there are more capital intensive and because they are a high capital intensive.
Speaker Change: 35% on averaging we have those assets for a period of time in Q1 of last year. So we've broadened up to 35% on average but.
Patrick Kenny: Restructure you typically get higher operating margin so a bit of it is mix related. So if we're doing more sort of pipeline investments when you add in the waste processing facility. Those are those are great margins as well, but I think.
Speaker Change: What I will state is that you'll look at our margins compared to our peers that were compared against and when you look at our you look at it from an EBITDA margin. We're number one on adjusted EBITDA margin of 34%, 35%. So.
Speaker Change: We're more associated with infrastructure with volumes coming to our facilities that are critical in these locations.
Patrick Kenny: In general, we see 2020 or 2025 being very consistent at 34%.
Speaker Change: When you look at our are very pleased with our revenue our revenue was up 11% on a pro forma basis, which is a combination of our same store sales growth that we've talked about in the past we've got organic.
Patrick Kenny: 35% on averaging we have those assets for a period of time in Q1 of last year. So we brought it up to a 35% on average, but what I will state is that looking at our margins compared to our peers that were compared against and when you look at you look at it from an EBITDA margin we're number one on adjusted.
Speaker Change: New organic capital that we spent that's driving more volumes and then obviously the M&A. So very pleased with the revenue growth that would put us up on the high end of rates, our free cash flow conversion for the basket of our peers.
Patrick Kenny: EBITDA margin of 34%, 35% so.
Patrick Kenny: We are more associated with infrastructure with volumes coming to our facilities that are critical in these locations.
Speaker Change: At over 60%.
Speaker Change: And when we look at what we've been doing recently, which is we've been buying back our stock aggressively I mean, if you go back a year from now a year ago. We sold those 29 locations to waste connections at a trailing seven five times and here. We are today trading below that marker and that's a third party.
Patrick Kenny: When you look at our very pleased with our revenue our revenue was up 11% on a pro forma basis, which is a combination of our same store sales growth that we've talked about in the past we've got organic.
Patrick Kenny: New organic capital that we spend thats driving more volumes and then obviously the M&A. So very pleased with the revenue growth that would put us up on the high end of their age or free cash flow conversion for the basket of our peers.
Speaker Change: Participant pain that valuation in a distress sale through a regulatory competition Bureau of divestment and so we have a high conviction here to continue to buyback our stock from a capital allocation.
Patrick Kenny: Over 60%.
Patrick Kenny: And when we look at what we've been doing recently, which is we've been buying back our stock aggressively I mean, if you go back a year from now a year ago.
Speaker Change: Perspective, and so youre going to see us kind of focus on Where's the best return for our shareholders as we walk through our capital allocation priorities on buybacks on our stock on an organic growth in that on the M&A that we've talked about.
Patrick Kenny: So those 29 locations to waste connections that are trailing seven five times and here. We are today trading below that marker and that's a third party.
Speaker Change: Okay. That's great. Thanks, Alan and then just lastly for me.
Patrick Kenny: Paying that valuation in a distress sale through a regulatory competition Bureau, divestment and so we have a high conviction here to continue to buyback our stock from a capital allocation.
Speaker Change: Back on your comments surrounding tariffs so.
Speaker Change: So far I mean, the strong rig count remains pretty well unaffected.
And there's also been some additional consolidation within the E&P space over the past few months.
Patrick Kenny: Active and so youre going to see us kind of a focus on where's the best return for our shareholders as we work through our.
Speaker Change: So I'm just curious.
Speaker Change: How some of these acquisitions by your customers.
Patrick Kenny: Capital allocation priorities on buybacks on our stock on an organic growth in that on the M&A that we talk about.
Speaker Change: Assuming a 10% tariff has a de minimis impact on activity itself.
Speaker Change: How this consolidation activity might.
Patrick Kenny: Okay. That's great. Thanks, Alan and then just lastly for me.
Speaker Change: Bias your outlook.
Speaker Change: For other business development opportunities.
Patrick Kenny: Back on your comments surrounding tariffs so.
Speaker Change: Or just throughput itself.
Speaker Change: So far I mean, the strong rig count remains pretty well unaffected and Theres also been some additional consolidation within the E&P space over the past few months.
Speaker Change: Yes, I think when you look at the tariffs and the impact on our oil and gas customers I think there's been lots of analysis, whether it was going to be at 25%, whether it's going to be a 10% impact I think and I've heard varying degrees.
Patrick Kenny: So I'm just curious how some of these acquisitions by your customers.
Patrick Kenny: Assuming a 10% tariff has a de minimis impact on activity itself.
Speaker Change: Some of that tariff increase going to be borne by the producer maybe 30%.
Patrick Kenny: How this consolidation activity might.
Speaker Change: Some by the refiner in the U S. And then ultimately the consumer so a third a third a third 50 50, but I think when you start you start looking at it from a producer perspective, the heavy differential widened out by 2% or $3 theyre getting less from the perspective of the widening differential however, what we saw early February.
Patrick Kenny: Bias your outlook.
Patrick Kenny: For other business development opportunities.
Patrick Kenny: Or just throughput itself.
Yeah.
Patrick Kenny: Yeah, I think when you look at the tariffs and the impact on our oil and gas customers I think there's been lots of analysis, whether it was going to be a 25%, whether it's going to be a 10% impact I think and I've heard varying degrees out some of that.
Speaker Change: He was a weaker Canadian dollar on the back of that tariffs and so because you are selling in <unk> in U S dollars.
Patrick Kenny: <unk> increased points be borne by the producer maybe 30%.
Speaker Change: They're getting the benefit of <unk>.
Speaker Change: Higher higher cash flow from a weaker Canadian dollar so it's a bit of an offset so some of the range as I've seen from an impact on cash flow from our customers is in that 3% to 5% and I think they'll make their own capital allocation decisions, whether it's buybacks, whether it's dividends on their balance sheets are great I think we have it.
Some by the refiner in the U S. And then ultimately the consumer so a third a third a third 50 50, but I think when you start you start looking at it from a producer perspective, the heavy differential widens out by two or $3. They are getting less from the perspective of the widening differential however, what we saw early fab.
Speaker Change: <unk> on any of our customers that are pulling back on what they want to do from a from a drilling and completion standpoint. They are getting very good at setting their setting their budgets and ratably doing it every month throughout the year. So I don't think where we're seeing the tariffs today is going to change course, and that which is why we have strong conviction in in.
Patrick Kenny: He was a weaker Canadian dollar on the back of that tariffs and so because you're selling <unk> in U S dollars and Youre getting the.
Patrick Kenny: Benefit of <unk>.
Patrick Kenny: Higher higher cash flow from a weaker Canadian dollar so it's a bit of an offset so some of the ranges ive seen from an impact on cash flow from our customers is in that 3% to 5% and I think they'll make their own capital allocation decisions, whether it's buybacks, whether it's dividends on their balance sheets are great I think we have it.
Speaker Change: And the volumes that are going to come to the facility in terms of consolidation we've seen that over the past few years and I think it makes these producers market share and I think anytime we're talking about outsourcing all of partnering up with our customers.
Patrick Kenny: <unk> on any of our customers that are pulling back on what they want to do from a from a drilling and completion standpoint. They are getting very good at setting their setting their budgets and ratably doing it every month throughout the year. So I don't think where we're seeing the tariffs today is going to change course, and that which is why we have strong conviction.
Speaker Change: From our perspective, we try to get that utilization of any infrastructure right to the Max level of day, one because thats going to be the best way Youre going to get your IRR is right out of the gate and so I think each consolidation in each producer has to look at their own internal infrastructure and say Where's my utilization as it makes sense for me to deploy that capital.
Patrick Kenny: And the volumes that are going to come to the facility in terms of consolidation we've seen that over the past few years and I think it makes these producers market I think anytime we're talking about outsourcing all of partnering up with our customers.
Speaker Change: Outsource it to a company like secure where we can partner up with multiple customers to make it efficient for everybody and I think that's been the mindset from a lot of our customers is hey, let's partner up I think this is an efficient way to use capital and we can sign agreements. Accordingly, so so I think on both those fronts.
Patrick Kenny: From our perspective, we try to get that utilization of any infrastructure right to the Max level of day, one because thats going to be the best way Youre going to get your IRR is right out of the gate and so I think each consolidation in each producer has to look at their own internal infrastructure and say Where's my utilization as it makes sense for me to deploy that capital or do.
Speaker Change: I think it's going to be a positive outcome for us in the business in 2025.
Speaker Change: Okay, that's great color and I appreciate the comments I'll jump back in the queue.
Speaker Change: Okay.
Patrick Kenny: Outsource it to a company like secure where we can partner up with multiple customers to make it efficient for everybody and I think that's been the mindset from a lot of our customers is hey, let's partner up I think this is an efficient way to use capital and that we can sign agreements. Accordingly, so so I think on both those fronts.
Speaker Change: Thank you, ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Speaker Change: The next question comes from Arthur <unk> at RBC. Please go ahead.
Arthur: Hey, good morning.
Arthur: Just on the topic of tariffs I appreciate the color you gave but circling back I guess to the metals.
Patrick Kenny: It's going to be a positive outcome for us in the business in 2025.
Arthur: Cycling business can you share what percent of sales go to the U S and assuming scrap steel does get impacted by tariffs.
Speaker Change: Okay. That's great color I appreciate the comments I'll jump back in the queue.
Arthur: What is your ability to pivot this volume to Canadian customers.
Okay.
Thank you, ladies and gentlemen, as a reminder, should you have any questions. Please press star one.
Alan Graf: Good morning, Arthur Yeah. So if you think about scrap.
Speaker Change: The next question comes from Arthur Mcguinty and RBC. Please go ahead.
Arthur: We sell a pre.
Arthur: Significant portion of our scrap actually in Canada. There are there are a couple of markets that we direct sell too. We also have the opportunity to sell scrap to international markets. We do that through a couple of ports and we have that lever to pull if we thought that scrap metal is going to be impacted but when you look at the <unk>.
Arthur Mcguinty: Hey, good morning.
Arthur Mcguinty: Just on the topic of tariffs I appreciate the color you gave but circling back I guess to the metals.
Arthur Mcguinty: <unk> business can you share what percent of sales go to the U S and assuming scrap steel does get impacted by tariffs.
Arthur Mcguinty: What is your ability to pivot this volume to Canadian customers.
Arthur: Need for scrap metal in the U S market is not dissimilar to oil where there.
Speaker Change: Good morning Arthur.
Arthur: Operations are outfitted to accept scrap material, they're going to want to get it from the closest location, which is our neighboring top order here. So we think that demand will be there I think thats why they exempted.
Speaker Change: So if you think about scrap.
Speaker Change: We saw a pretty significant portion of our scrap actually in Canada. There are there are a couple of markets that we direct sell too. We also have the opportunity to sell scrap to international markets. We do that through a couple of ports and we have that lever to pull if we thought that scrap metal is going to be impacted but we.
Arthur: <unk> metal specifically because they know that these these mills need that material to run their businesses and be competitive in the U S marketplace.
Speaker Change: When you look at the need for scrap metal in the U S market is not dissimilar to oil where there.
Arthur: So we do have that benefit and of course that can change depending on what happens long term here, but I'd say, we have leavers to direct more to Canada to go to international markets as well.
Speaker Change: Operations are outfitted to accept scrap material, they're going to want to get it from the closest location, which is our neighboring order here and so we think that demand will be there I think thats why they exempted scrap metal specifically because they know that these these mills need that material.
Arthur: But right now we're seeing pretty strong demand from from the U S market.
Arthur: Got it.
Arthur: And then on the <unk> acquisition can you share what percent of the scrap supply mix comes from residential and industrial markets.
Speaker Change: To run their businesses and be competitive in the U S marketplace.
Arthur: Now how does this change.
Arthur: The overall mix.
Speaker Change: So we do have that benefit and of course that can change depending on what happens long term here, but I'd say, we have leavers to direct more of that Canada to go to international markets as well.
Arthur: The entire metals recycling business.
Arthur: Yes, it's great.
With respect to the sort of supply mix into Edmonton It would be.
Speaker Change: But right now we're seeing pretty strong demand from from the U S market.
Arthur: Probably 75 industrial 25 residential.
Speaker Change: Got it.
Speaker Change: Then on the <unk> acquisition can you share what percent of the scrap supply mix comes from residential and industrial markets.
Arthur: Got it.
Speaker Change: And then I appreciate youre still doing due diligence on the other metals recycling acquisition, but assuming that when it does go through.
Speaker Change: How does this change.
Speaker Change: Would you say is the dollar opportunity Thats left I guess with M&A in the metals recycling space going forward I think you previously outlined $2 million to $300 million in <unk>.
Speaker Change: The overall mix of.
Speaker Change: The entire metals recycling business.
Speaker Change: Yes, it's great.
Speaker Change: With respect to the sort of supply mix into Edmonton It would be.
Speaker Change: You mentioned youre, focusing on tuck ins going forward, but just wondering if you can outline the dollar opportunity there.
Speaker Change: Probably 75 industrial 25 residential.
Speaker Change: Yes, I mean this was a very large one and a very critical one to get complete here in Edmonton and I would say the hoppers, probably 100 million plus remaining that I think we're going to take our time with we just want to make sure you've got the kind of a hub and spoke and the operations and the integration writing very smooth.
Speaker Change: Got it.
Speaker Change: And then I appreciate youre still doing due diligence on the other metals recycling acquisition, but assuming that one does go through.
Speaker Change: Would you say is the dollar opportunity Thats left I guess with M&A in the metals recycling space going forward I think you've previously outlined $2 million to $300 million and you've kind of mentioned you're focusing on tuck ins going forward, but just wondering if you can outline some of the dollar opportunity there.
Speaker Change: As we roll up a couple more locations so.
Speaker Change: I'll give you that as probably are our targets specific to this sector.
Speaker Change: Alright, and then last one for me.
Speaker Change: Yes, I mean, this was a very large one and a very critical one.
Speaker Change: I guess just on the growth Capex guide.
Speaker Change: Get complete here in Edmonton, and I would say the hoppers, probably a 100 million plus remaining that I think we're going to take our time with we just want to make sure you've got the kind of a hub and spoke and the operations and the integration right very smooth as we as we roll up a couple more locations. So.
Speaker Change: Can you share the expected timing of the earnings contribution from those investments.
Speaker Change: Just over the course of the year.
Speaker Change: Yes, so I think when we look at.
Speaker Change: Clearwater, We've got our final phase going through here, we knew was going to be kind of into January.
Speaker Change: I'll give you that as probably are our target specific to this sector.
Speaker Change: February where kind of maxed out with our.
Speaker Change: That pipeline capacity from the efficacy and so we're going to get to 75000 is going to come online here.
Speaker Change: Alright, and then last one for me.
Speaker Change: So that that $10 million will be in complete and the operational. So it's included in our guidance from April one to the end of the year. So we've already factored that in when you look at the <unk>.
Speaker Change: I guess just on the growth Capex guide.
Speaker Change: Can you share the expected timing of the earnings contribution from those investments I guess just over the course of the year.
Speaker Change: Yeah, So I think when we look at.
Speaker Change: The 75 that we want to spend this year most of it is going to contribute into 2026 could time, we get the disposal wells drill get the infrastructure in place and get everything operation operational commissioning, it's going to be kind of that late 2025 early 2025.
Speaker Change: Clearwater, We've got our final phase going through here, we knew was going to be kind of into January and February were kind of macs dealt with.
Speaker Change: Our.
That pipeline capacity from the efficacy and so we're going to get to 75000 is going to come online here.
Speaker Change: And so that that $10 million will be in complete and the operational. So it's included in our guidance from April one to the end of the year. So we've already factored that in when you look at the <unk>.
Speaker Change: Water.
Speaker Change: We're looking at that coming online here in May June kind of call. It. The end of Q2. So it will have some contribution as well, but we've factored that into the guidance just to make it easier.
Speaker Change: The 75 that we want to spend this year most of it is going to contribute into 2026, because time, we get the disposal wells drill get the infrastructure in place and get everything operation operational commissioning, but it's going to be kind of that late 2025 early 2026.
Speaker Change: For everyone as they think about where our numbers could come in for the year.
Speaker Change: Okay, and then actually if I can just squeezing one last one here just.
Just on the adjusted EBITDA Guide, obviously, a couple of moving pieces in there, but can you share your expectations for.
Speaker Change: Same store sales growth.
Speaker Change: Water.
Speaker Change: We're looking at that coming online here in May June kind of call. It. The end of Q2. So it will have some contribution as well, but we've factored that into the guidance just to make it easier.
Speaker Change: Were there any sort of more one off items that happened in 2020 for like maybe <unk>.
Speaker Change: You are not factoring in for 2025.
Speaker Change: For everyone as they think about where the numbers could come in for the year.
Speaker Change: With respect to one time items earlier.
Speaker Change: Earlier in the year, we had some storage opportunities that we've highlighted that.
Speaker Change: Okay, and then actually if I can just squeezing one last one here.
Speaker Change: We got the benefit of in Q1 and Q2.
Speaker Change: Just on the adjusted EBITDA Guide, obviously, a couple of moving pieces in there, but can you share your expectations for <unk>.
Speaker Change: Then obviously, we had one month of contribution from the 29 facilities. So that happened in Q1. So obviously when we speak to the 490 <unk> it had the benefit of that.
Speaker Change: Same store sales growth.
Speaker Change: And.
Speaker Change: Are there any sort of more one off items that happened in 2020 for like maybe <unk>.
Speaker Change: And so if you if you deduct for those items, you're starting point is a little bit lower than the 400 ideas you've built into the $5 10 to $5 40.
Speaker Change: Youre not factoring in for 2025.
Speaker Change: With respect to one time items earlier.
Speaker Change: Earlier in the year, we had some storage opportunities that we highlighted that.
Speaker Change: With respect to same store sales.
Speaker Change: We're assuming.
We got the benefit of in Q1 and Q2.
Speaker Change: 3% volume growth.
Speaker Change: We've talked about pricing increases in the past now there is certain service lines, where we are able to increase prices that's not across the board but.
Speaker Change: Obviously, we had one month of contribution from the 29 facilities. So that happened in Q1, so obviously when we speak to the $4 nine it had the benefit of that.
Speaker Change: As the majority of our service lines within waste management.
Speaker Change: And so if you if you if you deduct for those items, you're starting point is a little bit lower than the 400 ideas you've built into the $5 10 to $5 40.
Okay perfect. That's all for me. Thank you very much.
Speaker Change: Thanks Robert.
Alan Graf: Thank you there are no further questions I will turn the call back over to Alan <unk> for closing comments.
Speaker Change: With respect to same store sales.
Speaker Change: We're assuming 3% volume growth.
Alan Graf: Well, thanks, everyone for being on the conference call today are taped broadcast of this call will be available unsecured website, and we look forward to providing you with updates on secures first quarter results on May one. Thank you.
Speaker Change: We've talked about pricing increases in the past now there is certain service lines, where we're able to increase prices that's not across the board but.
Speaker Change: It's the majority of our service lines within the waste management.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.
Speaker Change: Okay perfect. That's all for me. Thank you very much.
Speaker Change: Thanks Robert.
Speaker Change: Thank you there are no further questions I will turn the call back over to Alan Graf for closing comments.
Alan Graf: Well, thanks, everyone for being on the conference call today take broadcast of this call will be available unsecured website, and we look forward to providing you with updates on secures first quarter results on May one.
Speaker Change: Ya Li.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today, we thank you for participating and we ask that you. Please disconnect your lines.
Speaker Change: Okay.
Speaker Change: Okay.