SECURE ANNOUNCES 2024 THIRD QUARTER RESULTS
-
Adjusted EBITDA1 of
$127 million ($0.53 per basic share1) -
Reaffirming 2024 full year Adjusted EBITDA guidance at top end of previous range provided of
$470 -$490 million -
Discretionary Free Cash Flow1 of
$90 million used to self-fund growth, share buybacks and dividends in the quarter -
September 30, 2024 Total Debt to EBITDA ratio2 of 1.1x (0.9x excluding leases) providing significant flexibility to execute strategic priorities -
Shareholder approval received for the corporate name change to
SECURE Waste Infrastructure Corp. , expected to take effectJanuary 1, 2025
"Positive industry trends and strong operational execution drove financial results on the high end of our expected range in the third quarter," said
"We are reaffirming our 2024 Adjusted EBITDA guidance at the top end of the
SECURE continues to deliver on its capital allocation priorities. In the year to date, the Corporation has repurchased
At
THIRD QUARTER HIGHLIGHTS
- Generated revenue (excluding oil purchase and resale) of
$374 million , a decrease of 12% from the third quarter of 2023, primarily due to the impact of 29 facilities divested onFebruary 1, 2024 (the "Sale Transaction"), and the divestiture of a non-core oilfield service business unit inDecember 2023 . On a pro forma basis, revenue increased over the third quarter of 2023, driven by strong customer demand, higher pricing, and contributions from capital investments made since the third quarter of 2023, including theClearwater heavy oil terminal, which began operations in Q4 2023. - Recorded net income of
$94 million or$0.39 per basic share, an increase of$47 million in net income (100% increase) compared to the third quarter of 2023, as lower interest expense following the repayment of debt with proceeds from the Sale Transaction, and a one-time tax recovery in the quarter more than offset the impact of lower Adjusted EBITDA. Net income per share increased by$0.23 per basic share (144% increase) over the same period due to the share buybacks over the past year reducing the weighted average shares outstanding in the quarter by 18%. - Achieved Adjusted EBITDA1 of
$127 million ($0.53 per basic share1), a decrease of 20% compared to the third quarter of 2023 (2% decrease on a per share basis) as a result of the same factors described above. - Recorded an Adjusted EBITDA margin1 of 34%, down from 37% in the third quarter of 2023, primarily due to the Sale Transaction.
- Generated funds flow from operations of
$106 million ($0.44 per basic share1), a decrease of 18% compared to the third quarter of 2023 (2% decrease on a per share basis). The decrease resulted from lower Adjusted EBITDA and the timing of fixed debt payments, partially offset by lower interest payments due to reduced debt. - Generated discretionary free cash flow1 of
$90 million ($0.38 per basic share1), a decrease of 13% compared to the third quarter of 2023 (6% increase on a per share basis) as a result of the factors above, along with reduced spending on sustaining capital due to reduced facility count following the Sale Transaction. - Incurred growth capital expenditures of
$19 million , primarily directed towards ongoing investments in theClearwater heavy oil terminalling and gathering infrastructure to enhance capacity, as well as a two water pipeline projects to integrate incremental volumes from existing customers. - Repurchased and cancelled 4,480,700 shares, reducing our shares outstanding by 2% in the quarter. The Corporation incurred a total cost of
$53 million to complete the repurchases, representing a weighted average price per share of$11.83 . - Paid a quarterly dividend of
$0.10 per common share, which currently represents a yield of 2.9% on our common shares. - Ended the quarter with a Total Debt1 to Adjusted EBITDA ratio of 1.1x2 (0.9x excluding leases).
- On
October 29, 2024 , shareholders approved the corporate name change toSECURE Waste Infrastructure Corp. , better reflecting SECURE's core business in waste processing, recovery, recycling, and disposal, as well as the efficient operation of our critical infrastructure network. SECURE expects to formally adopt the new name on or aboutJanuary 1, 2025 , following the receipt of all regulatory approvals.
The Corporation's operating and financial highlights for the three and nine months ended
|
Three months ended
|
Nine months ended
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($ millions except share and per share data) |
2024 |
2023 |
% change |
2024 |
2023 |
% change |
Revenue (excludes oil purchase and resale) |
374 |
427 |
(12) |
1,071 |
1,196 |
(10) |
Oil purchase and resale |
2,240 |
1,788 |
25 |
7,039 |
4,708 |
50 |
Total revenue |
2,614 |
2,215 |
18 |
8,110 |
5,904 |
37 |
Adjusted EBITDA (1) |
127 |
158 |
(20) |
373 |
428 |
(13) |
Per share ($), basic (1) |
0.53 |
0.54 |
(2) |
1.43 |
1.44 |
(1) |
Per share ($), diluted (1) |
0.52 |
0.54 |
(4) |
1.41 |
1.42 |
(1) |
Net income |
94 |
47 |
100 |
548 |
136 |
303 |
Per share ($), basic |
0.39 |
0.16 |
144 |
2.10 |
0.46 |
357 |
Per share ($), diluted |
0.39 |
0.16 |
144 |
2.07 |
0.45 |
360 |
Funds flow from operations |
106 |
130 |
(18) |
305 |
346 |
(12) |
Per share ($), basic (1) |
0.44 |
0.45 |
(2) |
1.17 |
1.16 |
1 |
Per share ($), diluted (1) |
0.44 |
0.44 |
— |
1.15 |
1.15 |
— |
Discretionary free cash flow (1) |
90 |
104 |
(13) |
236 |
267 |
(12) |
Per share ($), basic (1) |
0.38 |
0.36 |
6 |
0.90 |
0.90 |
— |
Per share ($), diluted (1) |
0.37 |
0.35 |
6 |
0.89 |
0.89 |
— |
Capital expenditures (3) |
29 |
56 |
(48) |
91 |
170 |
(46) |
Dividends declared per common share |
0.10 |
0.10 |
— |
0.30 |
0.30 |
— |
Total assets |
2,186 |
2,870 |
(24) |
2,186 |
2,870 |
(24) |
Long-term liabilities |
616 |
1,156 |
(47) |
616 |
1,156 |
(47) |
Common shares - end of period |
236,850,412 |
289,073,492 |
(18) |
236,850,412 |
289,073,492 |
(18) |
Weighted average common shares: |
|
|
|
|
|
|
Basic |
239,290,458 |
292,043,344 |
(18) |
261,026,100 |
298,248,498 |
(12) |
Diluted |
243,055,638 |
294,929,189 |
(18) |
265,068,915 |
301,065,871 |
(12) |
1 Non-GAAP financial measure, non-GAAP ratio, capital management measure or supplementary financial measure (as applicable). Refer to the "Non-GAAP and other specified financial measures" section in this press release for further information. |
2 Calculated in accordance with the Corporation's credit facility agreements. Refer to the "Liquidity and Capital Resources" section in the MD&A for additional information. |
3 The Corporation classifies capital expenditures as either growth, acquisition or sustaining capital. Refer to "Operational Definitions" in the MD&A for further information. |
Following the receipt of proceeds from asset divestitures earlier this year and continued strong free cash flow generation, SECURE maintains low leverage, providing significant financial capacity to execute on its strategic priorities. With a constructive industry backdrop from new developments in
SECURE expects to disclose guidance for 2025 in December of this year.
NON-GAAP AND OTHER SPECIFIED FINANCIAL MEASURES
The Corporation uses accounting principles that are generally accepted in
However, these measures should not be used as an alternative to IFRS measures because they are not standardized financial measures under IFRS and therefore might not be comparable to similar financial measures disclosed by other companies. See the "Non-GAAP and other specified financial measures" section of the Corporation's MD&A for the three and nine months ended
Adjusted EBITDA, Adjusted EBITDA margin and Adjusted EBITDA per basic and diluted share
Adjusted EBITDA is calculated as noted in the table below and reflects items that the Corporation considers appropriate to adjust given the irregular nature and relevance to comparable operations. Adjusted EBITDA margin is defined as Adjusted EBITDA divided by revenue (excluding oil purchase and resale). Adjusted EBITDA per basic and diluted share is defined as Adjusted EBITDA divided by basic and diluted weighted average common shares. For the three and nine months ended
The following table reconciles the Corporation's net income, being the most directly comparable financial measure disclosed in the Corporation's financial statements, to Adjusted EBITDA for the three and nine months ended
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Three months ended
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Nine months ended
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|
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
Net income |
94 |
47 |
100 |
548 |
136 |
303 |
Adjustments: |
|
|
|
|
|
|
Depreciation, depletion and amortization (1) |
45 |
50 |
(10) |
131 |
151 |
(13) |
Interest, accretion and finance costs |
12 |
25 |
(52) |
43 |
72 |
(40) |
Current tax (recovery) expense |
(15) |
2 |
(850) |
27 |
6 |
350 |
Deferred tax (recovery) expense |
(15) |
13 |
(215) |
92 |
37 |
149 |
Share-based compensation (2) |
5 |
5 |
— |
25 |
19 |
32 |
Gain on asset divestitures |
— |
— |
— |
(520) |
— |
100 |
Other expense (income) |
— |
6 |
(100) |
15 |
(10) |
(250) |
Unrealized loss on mark to market transactions (3) |
1 |
6 |
(83) |
10 |
6 |
67 |
Transaction and related costs |
— |
4 |
(100) |
2 |
11 |
(82) |
Adjusted EBITDA |
127 |
158 |
(20) |
373 |
428 |
(13) |
1 Included in cost of sales and/or G&A expenses on the Consolidated Statements of Comprehensive Income. |
2 Included in G&A expenses on the Consolidated Statements of Comprehensive Income. |
3 Includes amounts reported in revenue on the Consolidated Statements of Comprehensive Income. |
Discretionary Free Cash Flow and Discretionary Free Cash Flow per basic and diluted share
Discretionary free cash flow is defined as funds flow from operations adjusted for sustaining capital expenditures, and lease payments. The Corporation may deduct or include additional items in its calculation of discretionary free cash flow that are unusual, non-recurring, or non-operating in nature. Discretionary free cash flow per basic and diluted share is defined as Discretionary Free Cash Flow divided by basic and diluted weighted average common shares. For the three and nine months ended
The following table reconciles the Corporation's funds flow from operations, being the most directly comparable financial measure disclosed in the Corporation's financial statements, to discretionary free cash flow.
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Three months ended
|
Nine months ended September 30, |
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|
2024 |
2023 |
% Change |
2024 |
2023 |
% Change |
|||
Funds flow from operations |
106 |
130 |
(18) |
305 |
346 |
(12) |
|||
Adjustments: |
|
|
|
|
|
|
|||
Sustaining capital (1) |
(10) |
(23) |
(57) |
(50) |
(70) |
(29) |
|||
Lease liability principal payments and other |
(6) |
(7) |
(14) |
(21) |
(20) |
5 |
|||
Transaction and related costs |
— |
4 |
(100) |
2 |
11 |
(82) |
|||
Discretionary free cash flow |
90 |
104 |
(13) |
236 |
267 |
(12) |
1 The Corporation classifies capital expenditures as either growth, acquisition or sustaining capital. Refer to "Operational Definitions" in the MD&A for further information. |
FINANCIAL STATEMENTS AND MD&A
The Corporation's consolidated financial statements and notes thereto and Management's Discussion and Analysis for the three and nine months ended
THIRD QUARTER 2024 CONFERENCE CALL
SECURE will host a conference call
FORWARD-LOOKING STATEMENTS
Certain statements contained or incorporated by reference in this press release constitute "forward-looking statements and/or "forward-looking information" within the meaning of applicable securities laws (collectively referred to as "forward-looking statements"). When used in this press release, the words "achieve", "advance", "anticipate", "believe", "can be", "capacity", "commit", "continue", "could", "deliver", "drive", "enhance", "ensure", "estimate", "execute", "expect", "focus", "forecast", "forward", "future", "goal", "grow", "integrate", "intend", "may", "maintain", "objective", "ongoing", "opportunity", "outlook", "plan", "position", "potential", "prioritize", "realize", "remain", "result", "seek", "should", "strategy", "target" "will", "would" and similar expressions, as they relate to SECURE, its management are intended to identify forward-looking statements. Such statements reflect the current views of SECURE and speak only as of the date of this press release.
In particular, this press release contains or implies forward-looking statements pertaining but not limited to: SECURE's expectations and priorities for 2024 and beyond and its ability and position to achieve such priorities; expansion plans to handle production growth in the
Forward-looking statements are based on certain assumptions that SECURE has made in respect thereof as at the date of this press release regarding, among other things: SECURE's 2024 expectations; economic and operating conditions, including commodity prices, crude oil and natural gas storage levels, interest rates, exchange rates, and inflation; ability to enter into signing agreements with customers to backstop the investments and acquisition opportunities present; continued demand for the Corporation's infrastructure services and activity linked to long-term and recurring projects; the changes in market activity and growth will be consistent with industry activity in
Forward-looking statements involve significant known and unknown risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether such results will be achieved. Readers are cautioned not to place undue reliance on these statements as a number of factors could cause actual results to differ materially from the results discussed in these forward-looking statements, including but not limited to: general global financial conditions, including general economic conditions in
The guidance in respect of the Corporation's expectations of Adjusted EBITDA, capital expenditures and discretionary free cash flow in 2024 in this press release may be considered to be a financial outlook for the purposes of applicable Canadian securities laws. Such information is based on assumptions about future events, including economic conditions and proposed courses of action, based on management's assessment of the relevant information currently available, and which may become available in the future. These projections constitute forward-looking statements and are based on several material factors and assumptions set out above. Actual results may differ significantly from such projections. See above for a discussion of certain risks that could cause actual results to vary. The financial outlook contained in this press release has been approved by management as of the date of this press release. Readers are cautioned that any such financial outlook contained herein should not be used for purposes other than those for which it is disclosed herein. SECURE and its management believe that the financial outlook contained in this press release has been prepared based on assumptions that are reasonable in the circumstances, reflecting management's best estimates and judgments, and represents, to the best of management's knowledge and opinion, expected and targeted financial results. However, because this information is highly subjective, it should not be relied on as necessarily indicative of future results.
Although forward-looking statements contained in this press release are based upon what the Corporation believes are reasonable assumptions, the Corporation cannot assure investors that actual results will be consistent with these forward-looking statements. The forward-looking statements in this press release are made as of the date hereof and are expressly qualified by this cautionary statement. Unless otherwise required by applicable securities laws, SECURE does not intend, or assume any obligation, to update these forward-looking statements.
ABOUT SECURE
SECURE is a leading waste management and energy infrastructure business headquartered in
SECURE's shares trade under the symbol SES and are listed on the
TSX Symbol: SES
SOURCE