SECURE Waste Infrastructure (SES) Q2 2024 earnings summary

Executive summary

• Achieved Adjusted EBITDA of CAD 114 million (CAD 0.43 per share) in Q2 2024, exceeding expectations due to strong industry fundamentals, favorable weather, and operational execution, resulting in double-digit same-store sales growth.

• Increased full-year adjusted EBITDA guidance to CAD 470–490 million, reflecting strong H1 results, positive market dynamics, and robust recurring revenues from waste management and energy infrastructure.

• Completed a substantial share buyback, repurchasing nearly 14% of outstanding shares for CAD 250 million in Q2, and continued repurchases under the Normal Course Issuer Bid, reducing shares outstanding by 22% since 2022.

• Closed a strategic tuck-in acquisition of metal recycling yards in Saskatchewan in Q2 2024, expanding network and diversifying the supply base.

• Business transformation over the past decade has shifted cash flows to 80% recurring, with a strong infrastructure focus and diversified customer base.

Financial highlights

• Adjusted EBITDA for Q2 2024 was CAD 114 million, down 4% year-over-year, but up 8% per share due to share buybacks; full-year 2023 Adjusted EBITDA reached CAD 470–490 million, with a 28% CAGR from 2021–2023.

• Revenue for the quarter was CAD 337 million (excluding oil purchase/resale), a 5% decline year-over-year due to divestitures, but up on a same-store basis.

• Net income was CAD 32 million (CAD 0.12 per share), down CAD 2 million year-over-year, but net income per share increased by 9% due to reduced share count.

• Adjusted EBITDA margin held steady at 34–35.8%, leading industry peers.

• Funds Flow from Operations increased 14% to CAD 91 million; Discretionary Free Cash Flow rose 26% to CAD 53 million, with a 43% increase per share.

Outlook and guidance

• Full-year 2024 Adjusted EBITDA guidance raised to CAD 470–490 million, up from previous CAD 440–465 million, with 80% tied to highly stable, production-related waste streams.

• Strong industry backdrop and major infrastructure projects (Trans Mountain Pipeline, LNG Canada) expected to drive higher volumes and demand.

• Waste processing facilities operating at 60–65% utilization, providing room for growth without significant new capital.

• Growth capital expenditures for 2024 set at CAD 75 million, focused on terminal expansions and pipeline tie-ins; sustaining capital at CAD 60 million.

• Discretionary free cash flow for 2024 projected to remain strong, supporting capital allocation priorities.