Secure Waste Infrastructure Corp.

Good morning, ladies and gentlemen, and welcome to the secure Q3 2024 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Wednesday, October 30th, 2024. I would now like to turn the conference over to Alison Prokof. Please go ahead.

Thank you, and good morning to everyone who is listening to the call. Welcome to Securus Conference Call for the third quarter of 2024. Joining me on the call today is Alan Granch, our President and Chief Executive Officer, Chad Magus, our Chief Financial Officer, and Corey Haim, our Chief Operating Officer. During the call today, 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 described 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 may differ materially from those anticipated due to numerous factors and risks. Please refer to our continuous disclosure documents available on CEDAR Plus as they identify risk factors applicable to secure, factors which may cause actual results to differ materially from any forward-looking statement, and identify and define our non-GAAP measures. Today, we will review our financial and operational results for the third quarter of 2024. I will now turn the call over to Alan.

Thank you, Allison, and good morning, everyone. Yesterday, our shareholders voted in favor of our name change to Secure Waste Infrastructure Corp., a name that better aligns with our core business activities, which are centered on processing, recovery, recycle, and disposal of diverse waste streams and the efficient operation of our critical infrastructure network. The new name reflects our strategic transformation over the last five years from a full-service energy service company to a specialized waste management and energy infrastructure provider. We are pleased to retain the trade name Secure, a brand synonymous with safety, reliability, and entrepreneurship. The formal adoption of the new name is expected on January 1, 2025, coinciding with certain year-end activities planned by the corporation. Our shares will continue to trade on the Toronto Stock Exchange under the ticker symbol SES. This morning, we reported another strong quarter, achieving adjusted EBITDA of $127 million, or $0.53 per basic share, on the high end of our expected range for the third quarter as a robust industry fundamentals drove strong customer demand. Sequentially from the second quarter, net revenue and adjusted EBITDA increased 11%, maintaining our strong 34% EBITDA margin. As we head into the final quarter of the year, we are reaffirming our guidance at the top end of this range, providing for full-year adjusted EBITDA of $470 to $490 million. This quarter, we generated $106 million in funds from operations, enabling us to fund fully self-fund share repurchases, dividend payouts, and growth initiatives. In total, we returned $77 million to shareholders through repurchases under normal course issuer bid and our quarterly dividend of $0.10 per share. We also advanced our organic growth capital program, spending $19 million primarily to add two water pipelines to an existing facility to integrate incremental volumes from existing customers. We also continue to enhance our capacity at the Clearwater heavy oil terminal to meet growing demand in the region and pursue various optimization projects to reduce costs across our waste network. At September 30, 2024, our total debt to adjusted EBITDA ratio was 1.1 times, a full turn below our target leverage ratio of 2 to 2.5 times, providing us with significant financial flexibility. Along with strong discretionary free cash flow, we're well positioned to continue to grow the business while delivering enhanced shareholder returns. Looking ahead, we have a robust pipeline of organic growth opportunities, and we will also consider strategic acquisitions that align with our disciplined approach to enhancing efficiency, expanding network density, and diversifying the waste streams we manage. While we've seen positive momentum in our stock recently, we still trade at a substantial discount to our waste and energy infrastructure peers. Consequently, shared buybacks remain key priority of our near-term capital allocation. We have 2.1 million shares remaining under our current normal course issuer bid, and we intend to renew this program in mid-December, allowing us to repurchase up to 10% of the public float over the subsequent 12-month period. I'll now pass it over to Chad to provide some further financial highlights for the quarter.

Thanks, Alan, and good morning, everyone. The divestiture of 29 facilities to waste connections in February of this year, along with the sale of a non-core oilfield service business unit in late 2023, naturally impacted our financial metrics on an absolute basis compared to the third quarter of 2023. This impact was partially mitigated by strong customer demand, increased pricing, and contributions from capital investments made since the third quarter of 2023. Additionally, as a result of strategic share buybacks over the past year, our weighted average shares outstanding in the third quarter decreased by 18% over the same period last year. This reduction enhanced many of our financial metrics on a per share basis, reflecting the benefits of our capital return strategy. Net revenue for the quarter was $374 million, a 12% decrease year over year, primarily due to the divestitures. However, this was largely offset by several positive factors. higher volumes at our remaining facilities, pricing increases on volume-based processing and disposal, growing demand for specialty chemicals, and contributions from the Clearwater Heavy Oil Terminal, which began operations in late 2023 and has continued to increase throughout 2024. We reported net income of $94 million, or $0.39 per basic share, an increase of $47 million, or 100%, compared to Q3 2023. While the sale of the facilities impacted operating profit, income before tax was $2 million higher, driven by significant reductions in interest, accretion, and financing costs, as proceeds from divesters were used to repay $543 million of higher interest debt, replacing it with a new $300 million issuance of 6.75% senior unsecured notes in the first quarter of 2024. We recorded a one-time $30 million tax recovery this quarter. driven by revisions in the underlying assumptions with respect to the tax treatment of the divestitures. As a result, we now anticipate approximately $30 million of current taxes in 2024, increasing to approximately $60 to $70 million in 2025. Our adjusted EBITDA for the quarter was $127 million, a 20% decrease from Q3 2023, due to the same factors impacting revenue. However, on a per share basis, adjusted EBITDA was only down one cent demonstrating the positive effect of our share buybacks. The adjusted EBITDA margin for the quarter was 34%, down from 37% in the same period last year due to the divested facilities. 34% remains a strong industry-leading margin, reflecting our disciplined focus on efficiency and profitability as consistent with our most recent second quarter margin. We generated $106 million in funds from operations, a decline of 18% year over year, influenced by the same factors previously noted, along with the timing of fixed debt payments. We recorded discretionary free cash flow of $90 million, a 13% decrease from the third quarter of 2023 as a result of factors above, partially offset by reduced spending on sustained capital due to fewer facilities following investors, where the share buybacks drove an increase of 6% on a per share basis. We directed discretionary free cash flow in the quarter to shareholder returns and business growth as we continue to allocate capital where we can generate the highest return for our shareholders. We incurred $53 million to repurchase another 2% of our shares in the quarter at a weighted average price of $11.83 per share, a level we believe remains significantly below the intrinsic value of the corporation. At September 30th, 2024, in addition to the $300 million of fixed debt held, we had drawn $93 million on our $800 million revolving credit facility, leaving us with significant capacity and ample liquidity. This positions us well to fund future growth initiatives, continue returning value to shareholders, and maintain maximum financial flexibility for capital allocation over the coming years. I'll now turn it over to Corey to provide some operational highlights from the third quarter.

Thanks, Chad. During the quarter, our facilities handle on average 93,000 barrels of produced water per day and 43,000 barrels of slurry waste and emulsion. Through our processes, we were able to recover over 296,000 barrels of oil from waste. Across our landfill network, we safely disposed a record 1.2 million tons of contaminated solid waste in the quarter as higher volumes were driven by increased remediation and reclamation project work. Ferris Metal Volumes Recycled increased 15% over the third quarter of 2023 due to the acquisition made in the second quarter, expanding our operations into Saskatchewan, along with the continued strong demand for recycled metal driving higher throughput at our remaining facilities. In our energy infrastructure segment, crude oil and condensate terminaling and pipeline volumes averaged 130,000 barrels per day in the third quarter, a 24% increase from the same period in 2023, driven by the addition of the Clearwater Heavy Oil Terminal, which commenced operations and approximately doubled capacity in the second quarter of 2024. In the year to date, we have spent $41 million of our $75 million growth capital plan for 2024, which primarily related to the expansion of our Clearwater Heavy Oil Terminal to increase capacity and two water pipelines to safely transport and facilitate the disposal of incremental production volumes for our customers. Major growth projects are backed up by new commercial agreements providing reliable volumes and recurring cash flows over the life of the contract, We also purchased 50 rail cars, increasing the efficiency of our metal recycling logistics and distribution operations, and completed several optimization projects across our waste network. The remaining $34 million of growth capital expected for 2024 will be primarily spent on further expanding our Phase 3 of the Clearwater Heavy Oil Terminal and gathering infrastructure for incremental clean heavy oil delivery and adding treated capabilities for trucked and emulsion volumes. reopening a suspended industrial waste processing facility located north of Edmonton to support demand in the area. Capital expenditures required include replacing and upgrading critical infrastructure and restarting the facility operations, and pre-spending on various long-lead equipment, critical equipment associated with 2025 capital plans. We continue to expect to spend approximately $60 million on sustaining capital in 2024, which includes expansions of landfills that are nearing capacity. We are currently working through our capital plans for 2025 and expect to provide preliminary guidance for 2025 in December of this year. Secure's strategic purpose is transforming waste into value. We are committed to being a trusted partner for our customers and other stakeholders, providing solutions that safely manage environmental liabilities, minimize costs and environmental impacts, and create new opportunities for resource development, recovery, and reuse. These commitments around safety and environmental stewardship extend to our own operations as well. We have made good progress this year across the ESG objectives established in our 2023 sustainability report published in May of this year. Notably, we are advancing many safety initiatives that are improving an already strong safety culture across our business unit. Our operations personnel continue to implement the grassroots ideas for the reduction of freshwater consumption in our day-to-day operations, and as a result, our 2024 first half freshwater consumption is down 6% from the same period in 2023. We are also pleased to complete the Partnership Accreditation in Indigenous Relations Certification, receiving bronze by the Canadian Council for Indigenous Business. Finally, we are on track to spend approximately $15 million on Settling Secure's abandonment retirement obligations this year, exceeding minimum spend targets. Included in this figure are two-stage landfill caps and investment to reduce leachate generation and proactively respond to climate change modeling. I'll now turn it over to Alan for some concluding remarks before we open it up to questions.

Thanks, Corey. Our strong results year to date, along with positive market dynamics expected for the remainder of the year and beyond, reinforce the strength of our business. Our critical infrastructure network continues to generate stable and reoccurring cash flows and is well positioned to benefit from multiple growth drivers. Increasing industrial and production activity is leading to higher volumes that require processing, recycling, and disposal across our facility network. Our waste processing facilities are operating at 60% to 65% utilization, providing us with ample capacity to accommodate growing customer demand with minimal additional costs. We also have a robust pipeline of opportunities to deploy growth capital, including both brownfield expansion and greenfield projects to support our customers in regions where production growth is outpacing the available processing and disposal capacity. We plan to secure these investments with commercial agreements that offer contracted volumes and reoccurring cash flows, ensuring a minimum rate of return on our investments. We will also continue to look at smaller-scale acquisitions, such as the metal business acquired in the second quarter of this year, that align with our core business segments and competencies, further enhancing our ability to grow our network and cash flows. With a strong balance sheet, ample capacity on our revolving credit facility, and significant financial flexibility with our September 30th total debt to trailing 12-month pro forma EBITDA at 1.1 times, we are well-positioned to capitalize on these growth opportunities, solidifying our leadership in waste management and energy infrastructure while continuing to deliver enhanced shareholder returns. Since initiating our share buyback program in late 2022, We have reduced our outstanding shares by 24%, underscoring our commitment to creating value for shareholders and our belief in the significant undervaluation of the business. We continue to see a large gap between our market valuation and the value of our underlying business, driven by our critical infrastructure network, providing stable reoccurring cash flows, strong growth opportunities across both our waste management and energy infrastructure segments, a robust balance sheet and flexible capital allocation strategy, and a large valuation gap between Secure and our waste and energy infrastructure peers, despite the strong parallels between our businesses. We are actively working to address this valuation disparity, and we are starting to see positive momentum. In addition to shared buybacks, our upcoming name change to Secure Waste Infrastructure Corp., management presentations at key waste and industrial conferences, New research covers and changes to industry classification are all contributing positively to our share price. However, Secure continues to trade at a significant discount to our peers, and as a result, share repurchases will remain a key component of our capital allocation strategy moving forward. With that in mind, the Board of Directors has decided to maintain our dividend at $0.40 per share on an annualized basis which represents an aggregate payout of $95 million based on our current shares outstanding. In closing, I'd like to thank you for your continued support. We are excited about the road ahead as we continue to remain focused on executing our strategy and driving long-term success. That concludes our prepared remarks. We are now happy to take your questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touchtone phone. You'll hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift a handset before pressing any keys. One moment, please, for your first question. Your first question is from Connor Clipta from Scotiabank. Please go ahead.

Thanks. Good morning, and congrats on a good quarter. I just wanted to ask you on the volume side first, maybe. It's difficult to kind of see the underlying volume trend given the transactions you have had in the last two years. So if you can help us understand how these underlying volumes trended in the waste management segment, especially for water, waste, and all recovery.

Thanks, Conor, and good morning. Yeah, I think when we look at our produced water volumes, our emulsion volumes within our waste processing facilities, I would say it correlated very closely to production growth, call it in that 2% to 3% on a pro forma basis. We saw significant increase in our volumes from our landfills. I think Corey had mentioned 1.2 million tons were put into our landfills in the corridor. And I think part of that volume increase was driven by the fact that there was a lot of wildfires in 2023. So a lot of that cleanup work that is now mandated both in Alberta and in Saskatchewan to force a lot of our customers to clean up some of their asset retirement obligation. I think that's starting to take fruition. So we saw significant volumes in our landfills and you can see that, you know, even with the divestment of five landfills, we were still up on a quarter by quarter basis, which really speaks to the strength and tons on the waste processing assets and that critical infrastructure. I think moving into the terminaling side, you saw a significant increase. That would have been primarily as a result of the Clearwater terminal up in Nipissi. We're upwards of 60,000 barrels a day on that pipeline, and as we complete our phase three here at the end of, call it end of Q4, early Q1, we'll move up into that 70,000 barrels per day just for that Clearwater system alone. I think, you know, on a pro forma basis, you know, it'll become a lot clearer as we get post Q1 next year. But, yeah, I would say very strong performance on our volumes, which is reflective of, you know, the strength in the EBITDA in Q3 and why the performance was so strong.

That's helpful. Thanks. And then on the pricing side, I think there was a note in the MD&A about 5% pricing growth you implemented in Q4 of last year. Any indications on where pricing is trending in the current context? What do you expect for the upcoming cycle?

Yeah, on pricing, I mean, we're all cognizant of cost structures increasing across the network. I think we've seen inflationary charges on, you know, electricity, chemicals, you know, salary and wages. And so last Q4 of 2023, we raised prices by 5%. We've done that again here in Q4 starting. It will be fully implemented by the end of the year. We started having discussions with our customers in Q3 And obviously they're cognizant of their own cost structure going up very similar to ours. And so we have raised prices. I think as we think about 2025 and just the overall environment, we're still seeing a lot of pressure on inflationary costs. So I would expect we'll continue to take a look at pricing and make sure that our services and our infrastructure and what we do is priced accordingly. If you look at our margins, Part of our ability to manage price and cost is indicative in our margins. And on a pro forma basis, you look at Q3 last year, they were 34% once adjusted for the sale of those assets. And we're now 34% again here and in the third quarter. So I think we're doing a good job on managing prices. And I think our customers are understanding of where cost structure is going and what needs to occur within Western Canada.

Great. And last one for me before I turn over on the capital allocation side, maybe it's more of a strategic question. And like, if I look at your balance sheet, let's say you want to go to like two and a half tons of EBITDA, that gives you about $700 million of, you know, access capital that you can deploy today without increasing your EBITDA, obviously. You know, like that's a lot for buybacks, clearly. And I know you're doing buybacks in the short term. But, you know, what's the best sort of, you know, pin to allocating that $700 million of cash available for M&A, for buybacks, or something else?

So, yeah, we talked about capital allocation every quarter with the board. I think we did that substantial buyback in the second quarter, and I think year-to-date we've bought back 18%. So a significant amount of share buybacks. We think that is the best return to our shareholders from a capital return standpoint, which is why we've been so aggressive this year. I mean, when we think about our growth capital, we're at about $75 million. A lot of these projects on these brownfield opportunities are helping our customers more efficiently get their water and waste into our facilities. We will come out in December and announce our 2025 project. allocation program as we think about it. You know, we came out and said we're going to maintain the dividend. I think at our current yield, we're all quite comfortable where the dividend's at. But I think, you know, and then on the M&A side, I think, you know, we've had the strategy of tuck-ins in our core competencies, in our core business segments, and you saw us do that with the BN acquisition there in the second quarter. So I think every quarter we're going to continue to look. I mean, we're going to reinstate our NCID here in December, which will allow us another 10% of buybacks through 2025. You know, we've continually stated we're undervalued. And, you know, that is a good return of capital to our shareholders. So I think it's a quarter by quarter discussion on whether or not, you know, as we get into 2025, do we want to do another meaningful SIP? I think, you know, you're pointing out something that's quite obvious. Our balance sheet is very clean. It gives us a lot of flexibility to pull these levers when we believe it's the right time to do so. So I think that's on buying back our stock, our organic opportunities, and that M&A as well. So, yeah, I would say that NCID would be the area we're probably going to focus on first, but it is an ongoing discussion as we think about the undervaluation of the business currently.

Okay, that's great. I appreciate the time.

The next question is from Keith Mackey. Please go ahead.

Hi, good morning. So heard the increase in volumes loud and clear. Certainly Western Canada has been seeing more oil, water, waste volumes, all of the above the last little while. Just curious if you can talk a little bit more about the customer trends, whether they're more willing now to outsource volumes for things versus the insource volumes for things as the as the overall waste and water volumes grow? Just what trends are you seeing on that front?

Well, morning, Keith. Thanks for the question. Yeah, you know, I think, you know, our customers... look at capital allocation the way we do, what's the best return to their shareholders. I think you've seen a lot of our customers buying back their stock and special dividends, etc. I think when they think about waste and managing water, I think they look at our footprint and how close we are to their existing production. And I stated that that producer, that ability to send that volume to us. But I would say, you know, the overall trend here and specifically on water and water management, I think we're getting less access to fresh water. A lot of our customers are using produced water to complete their wells as they bring them on production. And as they're doing that, you know, the production water is just, it has a lot more chemistry involved with it as they complete the wells and open up some of to deal with, that's our expertise. You know, they look at us and say, you understand how to filter, how to process mechanically, put it in a position where you're filtering it to get it into that late disposal aspect of it. And so I think the trend we'll see is they'll use more produced water in some of their operations, but we're going to see a lot more of it come into our facilities as we think about how hard it is to manage and process it. And I don't know, Corey, is there any points I've missed on that?

No, it's really status quo from how they look at it. I think the other piece to add, because of the complexity in this water, it's a tailwind for our specialty chemicals business because we utilize a lot of the chemicals that we produce in our own business as well, help our customers to streamline their production and the waste that they manage on a daily basis.

Got it. No, that's helpful. And I know you're planning on giving the 2025 guidance in December, but certainly try to at least help frame it up as best as we can now while we're here. But essentially, the way we've thought about 2025 from a growth perspective is roughly similar to maybe how this year is between that $100,000 you know, $50 to $100 million growth CapEx number within your large opportunity set. Can you maybe just talk a little bit more about the opportunity set and what you're thinking as far as growth, whether things might differ from how they were this year?

So I think, you know, when I think about, you know, activity levels and the activity specific to 2024, I do see a very similar 2025. I think a lot of our customers are going through their own budgeting processes right now. But I would say, I would agree with you that I think activity levels will be similar. I do think we, you know, we benefit from our same store sales growth. I think, you know, we've seen volume growth just because that's production water, you specifically. So I do see our volumes continuing to grow into 2025. In terms of a capital spend, we're not going to announce capital projects until we do have signed contracts. And a lot of the pipeline of opportunities, I would characterize it as brownfield expansion, where we're adding pipeline volume to some of our existing network. We do have on the waste processing side. And speaking to your point about outsourcing, I think customers recognize that's our expertise. They want to outsource. We will put in green greenfield infrastructure. So we do have some of those opportunities as well, but we will announce those as we get those contracts completed. And so that will happen throughout the year. We'll provide initial capital spend guidance in December to allow you to kind of put that into your numbers. A lot of the times as we start developing the infrastructure and get put it online, it'll be more of a back half of 2025 EBITDA contribution, if not 2026 EBITDA. both the infrastructure and our infrastructure network.

Okay, that's helpful. Thanks very much.

The next question is from Jamie Songerville. Please go ahead.

Good morning. Thanks. So growth capex, I think it was always going to be heavily weighted to the end of the year, but you've still got 45% of your full-year guidance for $75 million to complete in the fourth quarter to match that guidance. Is there a risk of some of that being carried over into Q1? And have there been any delays to these projects? Was phase three on the Clearwater Terminal always planned to go into 2025? Yeah, maybe we can start with that.

Morning, Jamie. Yeah, I think we've always talked about our NIPC project and phase three coming online late Q4 to early Q1. There really hasn't been any delay on spending or timing. Similar to our spend on our connecting of our two water pipelines within our waste processing infrastructure, that will come online as well. We do typically spend a lot of our capital, call it in the fall, and as we get to the end of the year, our projections are and still remain that we will actually spend the 75 as we get to the end of the year. But I would say all our projects are on time, on budget, and There will be, there might be some even advanced spending as we think about 2025 on some long lead opportunities and some greenfield opportunities if we get them signed. That could provide more color around that in December, so I'll have more clarity. But yeah, no, it's just really a function of timing. It's just happening in the fall here as we approach the end of the year.

Thank you. Makes sense. Related, so Yeah, the throughput volumes for the energy infrastructure side look good. But in terms of quarter of a quarter revenue and gross operating profits for the energy infrastructure business, it's up from the prior quarter down from Q1. I can't remember if there's anything you divested or reclassified. But despite the crude volumes transported showing a very positive trend, the vast majority of the EBITDA and cash flow growth this quarter seems to have come from the waste side. So I guess my question is, was there something holding back revenue or margins for the infrastructure business in the quarter?

Yeah. Hi, Jamie. Good morning. It's Chad here. Just thinking back, we did – there was a portion – of energy infrastructure that was divested. So those numbers did go down as we sold the 29 facilities. However, we had a really strong Q2, Q3 as we had some storage profits there. We held some inventory at Hardesty and I'd say had irregular profits there that didn't continue into Q3. And that would probably be the main reason for the delta.

Perfect. Thank you.

The next question comes from John Gibson. Please go ahead.

Thanks, and congrats on the great quarter here. I just had one more on the landfill volumes uplift. Obviously, it was higher in Q3. It appears to be both drilling and cleanup related. Wondering what the margins look like on your landfill volumes versus those that are more production-oriented, and ending this growth in landfill volumes continues. Can we see your margin shift higher into 2025?

Yeah, the margins are the same regardless of the waste type, whether it be drilling related or remediation volume related. I think what we're seeing from a volume growth perspective in Q3, and I think Alan mentioned it, is really around the tailwinds around the liability management programs. So typically Q3 and Q4 are the stronger months for the remediation project work, just because the weather is a little easier to and more amenable to some of these excavation projects that they work on. So no difference in margin between those types of ways.

You got it. I guess I should add this as well on here. You know, you obviously maintain the dividend and you're happy to do that. And I agree with it with the valuation, but I guess, you know, pending your stock continues to perform as it has over the past little while, when could you start to think about potentially increasing that dividend a little bit?

Yeah, I think, Hey John, it's Chad here. Just going back to what Al said, we do look at all of our capital allocation items quarter by quarter. I can't tell you a price at which that changes, other than we've given the guidance for now of how we felt just given where our evaluation's been. as our valuation changes.

Fair enough. I had to ask, but I really appreciate the responses. I'll turn it over. Thanks, John.

Your next question comes from Jamie Somerville. Please go ahead.

Thanks. Just a follow-up here. You've given high-level guidance that 20% of EBITDA or cash flow is coming from cyclical drilling and completions capex, but kind of listening to some of the comments, I'm suspicious that you might be trending below that. Can you provide any color or thoughts as to how that number might change on a quarter by quarter basis?

Yeah, I'm trying to understand your question. I mean, I think, you know, we've broken down our volumes and we have this in our investor press 20%. So if you do see a decline in any sort of drilling or completion activity, there would be some minimal impact to it. But I'm not quite sure of your question.

Maybe if you could provide a bit more color. Yeah, I guess I'm asking, you're saying that your business is at around that 20% level. And I'm just wondering whether you're seeing that decline quarter over quarter. Is there a chance that a year from now you're actually at 15%?

Oh, yeah, I mean, yeah, I mean, we're constantly monitoring the volumes and where the volumes are coming from. I mean, I don't see a decline in it. I mean, I think it's been pretty consistent if we think about, you know, 23 and 24. And as I mentioned, 25, we think is going to be very similar. But, you know, I think I think, you know, As production gets brought on, our production volumes continue to grow, our utilization will grow. We could get into a scenario where that does get reduced. I mean, even by adding some of the metal recycling businesses that we did buy there in Q2, you know, you're getting more industrial residential markets as well that provide more stability and kind of that reoccurring nature. So over time, as we grow, I believe that percentage will come down, but, you know, I'm not

year over year okay thank you thank you ladies and gentlemen as a reminder should you have any questions please press the star key followed by the number one our next question is from william deforest please go ahead thank guys uh just just a quick one from me i'm just thinking post u.s election um are there any

headwinds that are expected for the waste industry? And I know it's outside of your core operating area, but just thinking M&A, whether it be Republicans or Democrats getting in?

Yeah, I mean, I think when you look at the majority of our operations were Western Canada, we do have some operations in North Dakota and the Balkans. I think a lot of the things we've talked about in the last year, and when I think about M&A opportunities, I've talked about in our core business segments and geographically remaining in Canada. I'm not sure that will have any impact on what we see here in Western Canada, but I think whether it's positive or negative for the overall sector in North America, I think that's yet to be determined. But I think for ourselves, I think we're primarily focused in Western Canada.

Perfect.

Thanks, guys. Ladies and gentlemen, as a reminder, should you have any questions, please press the star key followed by the number one. There are no further questions at this time. Please proceed with closing remarks.

Well, thanks, everyone, for being on the conference call today. A tape broadcast of the call will be available on Secure's website. We look forward to providing you with updates on Secure's performance at the end of October after the completion. Sorry. At the end of February. At the end of February, sorry. Thanks, everyone. Thank you.

Thank you for participating. This concludes today's conference. You may now disconnect.