Secure Waste Infrastructure Corp.

Good morning, ladies and gentlemen, and welcome to the Secure Energy Q2 2024 Results Conference Call. 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 require immediate assistance, please press star 0 for the operator. This call is being recorded on Tuesday, July 30, 2024. I would now like to turn the conference over to Chad. Please go ahead.

Thank you, and good morning to everyone who is listening to the call. Welcome to Secure's conference call for the second quarter of 2024. Joining me on the call today is Alan Granch, our President and Chief Executive Officer, and Corey Haim, our Chief Operating Officer. During the call, we will make 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. 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. 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. Please refer to our continuous disclosure documents available on CDAR Plus that identify risk factors applicable to secure, factors which may cause actual results to differ materially from any forward-looking statements, and identify and define our non-GAAP measures. Today, we will review our financial and operational results for the second quarter of 2024 and our outlook for the remainder of the year. I will now turn the call over to Alan to provide second quarter highlights.

Thank you, and good morning, everyone. We were pleased to report another strong quarter this morning, achieving adjusted EBITDA of 114 million, or 43 cents per basic share, ahead of our expectations as robust industry fundamentals and favorable weather conditions drove higher customer demand. We have increased our full year adjusted guidance to 470 to 490 million to reflect strong results from the first half of 2024, and ongoing market dynamics driving a constructive remainder of 2024. During the quarter, we successfully executed on our share buyback plans, repurchasing nearly 14% of our outstanding shares through a substantial issuer bid for $250 million, a direct acquisition from our largest shareholder, and continued repurchases under our normal course issuer bid. We completed these buybacks at a weighted average price of $11.41 which we believe provides an excellent return for the corporation. We will continue to view a significant disparity between our market valuation and the underlying business based on the following factors. Our critical infrastructure network provides reoccurring cash flows that have proven year over year. Our growth opportunities, the strength of our balance sheet and capital allocation flexibility, and the large trading valuation gap to our waste and energy infrastructure peers. Because of this valuation disparity, we continue, we expect to continue to repurchase our shares under the normal course issuer bid over the course of the back half of the year. In total, we can repurchase up to 6.3 million common shares on the open market prior to the renewal of the bid period in December of 2024. Since we started buying back shares at the end of 2022, we have reduced our shares outstanding by 22%. As a result of the buybacks over the course of the past year, our weighted average shares outstanding in the second quarter decreased by 11% over the prior year comparative period, improving every single one of our financial metrics on a per share basis despite the divestiture of 29 facilities which was completed in February. We also announced today that we closed a strategic tuck-in acquisition during the quarter of a privately owned group of metal recycling yards based in Saskatchewan for cash consideration of $31 million. This acquisition expands our network into new operating regions, diversifies our supply base, and bolsters our processing capabilities and logistics strategies. Key highlights of the acquisition include market expansion into saskatchewan with residential commercial and industrial feedstock in an area we believe is poised for growth infrastructure enhancement including a 2500 horsepower shredder which broadens our operational scope and enhances our ability to offer comprehensive recycling solutions and rail access at the saskatoon yard provides logistics optimization to complement our red deer central hub expanding our distribution strategy Overall, we will continue to look at these smaller-scale acquisitions that fit within our core business segments and our core competencies. In addition to the acquisition noted, we incurred $11 million of growth capital in the quarter, which included an expansion at the Clearwater heavy oil terminal. Phase 2 was brought into service in June and has doubled the capacity of crude oil that we handle at that facility. The Clearwater project is a great example of critical infrastructure to help our customers, backed off by commercial agreements with multiple customers, providing contracted values and reoccurring cash flows over the life of the contract. The facility was designed for expansion and we will see multiple phases of growth to support our customers in the region in the future. We continue to have a solid pipeline of organic growth opportunities, and we will consider strategic acquisitions that meet our investment criteria and enhance our core operations and waste management and energy infrastructure. Our investment approach will remain disciplined, focusing on growth that enhances operational efficiencies, expands our network density, fosters long-term customer partnerships, and diversifies the types of waste we manage. We've maintained our quarterly dividend of $0.10 per common share, which represents an attractive yield of 3.5% on our common shares of yesterday's closing price. The Board of Directors and Management continue to evaluate the merits of increasing the dividend. We expect increases will be modest over time and in alignment with increasing cash flows and other capital allocation priorities. Our balance sheet remains incredibly strong, and we have significant capacity on our credit facility to facilitate all secure strategic priorities for 2024 and beyond. We will achieve this while successfully maintaining low leverage, positioning us well for the future.