SECURE ANNOUNCES 2023 FOURTH QUARTER AND YEAR-END RESULTS
-
Achieved record Q4 Adjusted EBITDA1 of
$162 million ($0.56 /basic share1) and$590 million Adjusted EBITDA in 2023 ($1.99 /basic share) -
Delivered
$0.95 /basic share1 in shareholder returns through dividends and share repurchases in 2023 -
Repurchased 3.5% of outstanding shares under the renewed NCIB that commenced in
December 2023 -
Closed
$1.150 billion asset sale to Waste Connections, Inc., onFebruary 1, 2024 , satisfying the requirements of theCompetition Tribunal divestiture order -
Obtained commercial support to double capacity at the newly constructed
Clearwater terminal
"2023 was an exceptional year for SECURE, marked by strong financial performance that underscores the stability and growth potential inherent in our core waste management and energy infrastructure operations," said
"We delivered significant shareholder value in 2023, returning a total of
"We also advanced our strategy as a leader in waste management and energy infrastructure. The accretive multiple achieved from the mandated facilities divestiture to Waste Connections highlights the underlying value of SECURE's business. Post-transaction closure, we maintain our market leadership in western
"The proceeds from the asset sale to Waste Connections has significantly improved our financial position, affording us capacity to enhance returns to shareholders and strategically expand in the industrial and energy waste markets. Our Board of Directors and management team continues to believe a substantial disparity exists between our intrinsic value and the current share price. The transaction valuation underscores our conviction that we should trade higher than the current multiple. Therefore, the Corporation remains committed to aggressive NCIB share repurchases, and we will evaluate various avenues, including the merits of a substantial issuer bid, to further return capital to shareholders."
FOURTH QUARTER HIGHLIGHTS
- Entered into a definitive agreement (the "Divestiture Agreement") with Waste Connections, Inc. (through its wholly owned subsidiary) ("Waste Connections") to sell the 29 facilities formerly owned by Tervita Corporation that were ordered to be divested by the
Competition Tribunal for$1.075 billion in cash, plus$75 million for certain adjustments as provided in the Divestiture Agreement for total cash proceeds of$1.150 billion . OnFebruary 1, 2024 , the Corporation closed the sale transaction with Waste Connections (the "Sale Transaction"), which was completed byR360 Environmental Solutions Canada Inc. , an affiliate of Waste Connections. - Generated revenue (excluding oil purchase and resale) of
$451 million , an increase of 12% from 2022. - Achieved Adjusted EBITDA of
$162 million or$0.56 per basic share, an increase of 17% on a per basic share basis from 2022. - Recorded net income of
$59 million or$0.20 per share, a 100% increase from$0.10 per basic share in 2022. - Increased funds flow from operations to
$128 million , up 52% from 2022. - Sold the Corporation's Projects business unit, focused on mobile yellow iron used for demolition and remediation. This sale completed the Corporation's portfolio rationalization of non-core oilfield service focused business units that did not fit into SECURE's core waste management and infrastructure strategy.
- Paid a quarterly dividend of
$0.10 per common share, which currently represents an attractive yield of 3.7% on our common shares compared to peers. - Renewed the Corporation's normal course issuer bid ("NCIB") effective
December 14, 2023 , which allows the Corporation to repurchase approximately 8.0% of the Corporation's outstanding common shares. The Corporation has repurchased and cancelled 10,076,810 shares since the start of the new NCIB at a weighted average price per share of$9.97 for a total of $100 million. - Maintained a Total Debt to EBITDA covenant ratio of 1.9x.
ANNUAL HIGHLIGHTS
- Generated revenue (excluding oil purchase and resale) of
$1.647 billion , an increase of 7% from 2022. - Achieved Adjusted EBITDA of
$590 million or$1.99 per basic share, an increase of 11% on a per basic share basis from 2022. - Recorded net income of
$195 million or$0.66 per basic share, and increase of 12% on a per basic share basis from 2022. - Increased funds flow from operations to
$474 million , up 18% from 2022. - Maintained an industry leading Adjusted EBITDA margin1 of 36%.
- Completed and commissioned the expansion of our Montney water disposal infrastructure and
Clearwater oil terminalling and gathering infrastructure projects safely, on time and on budget. - Repurchased and cancelled approximately 23 million common shares at a weighted average price per share of
$7.10 for a total of$163 million . - Progressed our short-term target to reduce emissions associated with our operations by 15%. Since 2021, the Corporation has reduced Scope 1 and Scope 2 emissions at our waste processing facilities by 9% through energy conservation programs.
- Recorded zero lost time injuries, and reduced our recordable injury frequency by 36% over 2022.
- Introduced our WiQ application, a transparent e-ticketing system that ensures compliance and standardization for the documentation of waste and recyclables. WiQ provides an innovative solution that will help maximize the efficiency of compliant operations, assist with product logistics and provide the necessary information to support waste and emissions reporting for our customers.
The Corporation's operating and financial highlights for the three and twelve months ended
|
Three months ended |
Twelve months ended |
||||
($ millions except share and per share data) |
2023 |
2022 |
% change |
2023 |
2022 |
% change |
Revenue (excludes oil purchase and resale) |
451 |
401 |
12 |
1,647 |
1,534 |
7 |
Oil purchase and resale |
1,889 |
1,624 |
16 |
6,597 |
6,468 |
2 |
Total revenue |
2,340 |
2,025 |
16 |
8,244 |
8,002 |
3 |
Adjusted EBITDA (1) |
162 |
150 |
8 |
590 |
557 |
6 |
Per share ($), basic (1) |
0.56 |
0.48 |
17 |
1.99 |
1.80 |
11 |
Per share ($), diluted (1) |
0.55 |
0.48 |
15 |
1.97 |
1.78 |
11 |
Net income |
59 |
32 |
84 |
195 |
184 |
6 |
Per share ($), basic |
0.20 |
0.10 |
100 |
0.66 |
0.59 |
12 |
Per share ($), diluted |
0.20 |
0.10 |
100 |
0.65 |
0.59 |
10 |
Funds flow from operations |
128 |
84 |
52 |
474 |
403 |
18 |
Per share ($), basic |
0.44 |
0.27 |
63 |
1.60 |
1.30 |
23 |
Per share ($), diluted |
0.44 |
0.27 |
63 |
1.58 |
1.29 |
22 |
Discretionary free cash flow (1) |
96 |
74 |
30 |
363 |
348 |
4 |
Per share ($), basic(1) |
0.33 |
0.24 |
38 |
1.23 |
1.12 |
10 |
Per share ($), diluted (1) |
0.33 |
0.24 |
38 |
1.21 |
1.11 |
9 |
Capital expenditures (3) |
33 |
34 |
(3) |
203 |
96 |
111 |
Dividends declared per common share |
0.1000 |
0.1000 |
— |
0.4000 |
0.1225 |
227 |
Total assets |
2,844 |
2,840 |
— |
2,844 |
2,840 |
— |
Long-term liabilities |
1,186 |
1,115 |
6 |
1,186 |
1,115 |
6 |
Common shares - end of year |
287,627,549 |
309,381,452 |
(7) |
287,627,549 |
309,381,452 |
(7) |
Weighted average common shares: |
|
|
|
|
|
|
Basic |
288,968,141 |
309,956,766 |
(7) |
295,909,340 |
309,637,322 |
(4) |
Diluted |
293,212,504 |
314,248,785 |
(7) |
299,086,393 |
313,167,037 |
(4) |
|
1 Non-GAAP financial measure/ratio. Refer to the "Non-GAAP and other specified financial measures" section herein. |
2 Calculated in accordance with the Corporation's credit facility agreements. Refer to the Q4 2023 Management's Discussion and Analysis ("MD&A"). |
3 The Corporation classifies capital expenditures as either growth, acquisition or sustaining capital. Refer to "Operational Definitions" in the MD&A for further information. |
OUTLOOK
Following the Sale Transaction, SECURE remains the market share leader in western
2024 Expectations
SECURE expects activity levels to remain robust in both the energy and industrial sectors for 2024. Our Canadian and
Financial Guidance
Consistent with previous guidance, the Corporation expects to generate between
In 2024, the Sale Transaction is anticipated to have a lesser impact on Discretionary Free Cash Flow compared to 2023, despite the expected Adjusted EBITDA change. This difference results from reduced sustaining capital and asset retirement obligations due to fewer facilities post-Sale Transaction. Additionally, lower interest expense is expected as significant Sale Transaction proceeds are allocated towards debt repayment.
The Corporation's infrastructure network maintains significant capacity to support customers, accommodating increased volumes for processing, disposal, recycling, recovery, and terminalling, driving higher same store sales with minimal incremental fixed costs or additional capital. SECURE also continues to realize a sizable organic opportunity set to partner with our customers in areas where infrastructure and additional capacity are required to match production growth.
SECURE continues to have
The Corporation also continues to expect to spend approximately $60 million on sustaining capital including landfill expansions, and approximately $15 million on settling SECURE's abandonment retirement obligations.
Capital Allocation
The Sale Transaction resulted in significant proceeds of
Debt Repayment
SECURE has repaid the entire amount drawn on the
In addition, SECURE intends to redeem the outstanding
Share Repurchases
SECURE received approval from the
As such, SECURE intends to continue to actively repurchase shares under the NCIB, and will evaluate other methods that may be available to reduce this valuation gap and return capital to shareholders, which may include consideration of the merits of a substantial issuer bid, based on, among other things, market conditions, the discretion of the Board of Directors, compliance with debt covenants and financial performance at the applicable time.
Dividend
The Corporation intends to continue paying its quarterly dividend of
Growth
The Corporation plans to execute on growth opportunities, both organically, and through acquisitions that align with the Corporation's investment criteria and complement its core waste management and energy infrastructure business operations. Execution of growth expenditures will depend on signing agreements with customers to backstop the investments, and acquisition opportunities present.
Looking Ahead
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. This strategic approach allows our customers to allocate their capital where it can yield the highest return while emphasizing operational excellence and strong ESG standards.
Proceeds from the Sale Transaction, as well as continued strong free cash flow generation, provides the Corporation with significant capital allocation optionality for 2024 and beyond. SECURE is well positioned to grow the business and deliver incremental shareholder returns, all while maintaining low leverage. The Corporation has a strong team of dedicated employees in place to execute on these objectives, while continuing to provide best-in-class customer service.
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 twelve months ended
In this press release, the Corporation has also reported shareholder returns delivered in 2023, and returns per basic share, which do not have any standardized meaning as prescribed by IFRS. Shareholder returns are calculated as the sum of dividends paid and share repurchases made. Returns per basic share is calculated as shareholder returns divided by basic weighted average common shares.
Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA per 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.
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 twelve months ended
|
Three months ended
|
Twelve months ended
|
||||
|
2023 |
2022 |
% Change |
2023 |
2022 |
% Change |
Net income |
59 |
32 |
84 |
195 |
184 |
6 |
Adjustments: |
|
|
|
|
|
|
Depreciation, depletion and amortization (1) |
52 |
49 |
6 |
203 |
178 |
14 |
Current tax expense |
(4) |
— |
(400) |
2 |
— |
200 |
Deferred tax expense |
23 |
23 |
— |
60 |
68 |
(12) |
Share-based compensation (1) |
7 |
5 |
40 |
26 |
19 |
37 |
Interest, accretion and finance costs |
24 |
24 |
— |
96 |
97 |
(1) |
Unrealized loss (gain) on mark to market transactions (2) |
(12) |
1 |
(1,300) |
(6) |
(1) |
(500) |
Other expense (income) |
10 |
1 |
900 |
— |
(25) |
2,500 |
Transaction and related costs |
3 |
15 |
(80) |
14 |
37 |
(62) |
Adjusted EBITDA |
162 |
150 |
8 |
590 |
557 |
6 |
|
|
|
|
|
|
|
(1) Included in cost of sales and/or G&A expenses on the Consolidated Statements of Comprehensive Income. |
||||||
(2) Includes amounts presented in revenue on the Consolidated Statements of Comprehensive Income. |
Discretionary Free Cash Flow and Discretionary Free Cash Flow per 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 twelve 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.
|
Three months ended
|
Twelve months ended December 31, |
||||
|
2023 |
2022 |
% Change |
2023 |
2022 |
% Change |
Funds flow from operations |
128 |
84 |
52 |
474 |
403 |
18 |
Adjustments: |
|
|
|
|
|
|
Sustaining capital (1) |
(19) |
(21) |
(10) |
(89) |
(69) |
29 |
Lease liability principal payments and other |
(16) |
(4) |
300 |
(36) |
(23) |
57 |
Transaction and related costs |
3 |
15 |
(80) |
14 |
37 |
(62) |
Discretionary free cash flow |
96 |
74 |
30 |
363 |
348 |
4 |
|
|
|
|
|
|
|
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 annual audited consolidated financial statements and notes thereto for the years ended
FOURTH QUARTER AND YEAR-END 2023 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; lower interest expenses; debt repayment; growth opportunities in 2024; construction activities on 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: 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 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