Secure Energy Services: Resilience Amidst Challenges

Secure Energy Services ((TSE:SES)) has held its Q2 earnings call. Read on for the main highlights of the call.

Secure Energy Services: Resilience Amidst Challenges

SECURE Waste Infrastructure Corporation demonstrated resilience and strategic progress during its latest earnings call, despite facing significant challenges in its metals recycling segment and environmental disruptions. The company expressed a cautiously optimistic outlook, supported by strong shareholder returns, infrastructure investments, and sustainability achievements.

Adjusted EBITDA Growth

SECURE reported an adjusted EBITDA of $110 million, or $0.49 per share, marking a 14% year-over-year increase on a per-share basis. This growth was achieved despite market volatility, showcasing the company’s ability to navigate challenging conditions effectively.

Shareholder Returns

The company returned $286 million to shareholders through dividends and share repurchases. This included $137 million from a substantial issuer bid and $104 million from a normal course issuer bid, highlighting SECURE’s commitment to delivering value to its shareholders.

Infrastructure Expansion Projects

SECURE completed Phase 3 expansion at the Clearwater heavy oil terminal and is advancing construction on two new water disposal facilities under 10-year contracts. These projects are expected to bolster the company’s infrastructure and support future growth.

Sustainability Achievements

The company exceeded its 3-year greenhouse gas emission reduction target with an 18% reduction since 2021. Additionally, significant reductions in water use were achieved, underscoring SECURE’s commitment to sustainability.

Strong Balance Sheet and Liquidity

SECURE extended its revolving credit facility to 2028 and increased its size to $900 million. The company maintains a strong balance sheet with a total debt-to-EBITDA ratio of 2x, providing financial flexibility for future initiatives.

Metals Recycling Segment Challenges

The metals recycling segment faced near-term volatility due to U.S. steel tariffs, soft global demand, and trade policy uncertainty. These factors have impacted the business, but SECURE remains focused on long-term opportunities in the sector.

Seasonal and Environmental Disruptions

Operational disruptions from the spring breakup, active forest fires, and gas plant turnaround affected volumes. These seasonal and environmental challenges were acknowledged as impacting the company’s performance.

Reduced EBITDA on Absolute Basis

Adjusted EBITDA decreased by 4% on an absolute basis from the second quarter of 2024, reflecting seasonality and market challenges. Despite this, the company remains focused on strategic growth initiatives.

Forward-Looking Guidance

During the earnings call, SECURE maintained its 2025 guidance despite macroeconomic challenges such as U.S. steel tariffs and forest fires. The company expects adjusted EBITDA between $510 million and $540 million for the full year, with discretionary free cash flow of $270 to $300 million. SECURE is optimistic about long-term fundamentals and anticipates stronger performance in the fourth quarter, driven by organic growth projects and expected recovery in the metals market.

In conclusion, SECURE Waste Infrastructure Corporation’s earnings call highlighted the company’s resilience and strategic progress amidst challenges. With strong shareholder returns, infrastructure investments, and sustainability achievements, SECURE is positioned for cautious optimism moving forward.