Release Date: May 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Secure Waste Infrastructure Corp (SECYF, Financial) reported a solid start to 2025 with a 33% EBITDA margin and stable cash flow despite recessionary concerns and lower commodity prices.
- The company increased its adjusted EBITDA per share by 24% year over year, driven by an 18% reduction in weighted average shares outstanding and strong infrastructure utilization.
- Secure Waste Infrastructure Corp (SECYF) repurchased 5.3 million common shares, reflecting strong conviction in the intrinsic value of the business and commitment to returning capital to shareholders.
- The company announced an increase in its 2025 organic growth capital program to $125 million, supported by a 10-year commercial agreement with a senior Montney producer.
- Secure Waste Infrastructure Corp (SECYF) completed the acquisition of an Edmonton-based metal recycling business, strengthening processing capabilities and improving logistics through investment in railcars.
Negative Points
- Extreme cold weather in February temporarily softened some activity levels, impacting processing volumes.
- The company decided not to proceed with a previously announced $18 million acquisition in the metal recycling business due to final due diligence outcomes.
- Secure Waste Infrastructure Corp (SECYF) maintained its 2025 full-year adjusted EBITDA guidance range, reflecting a cautious stance due to macroeconomic volatility, including uncertainties surrounding tariffs and recessionary concerns.
- The divestiture of 29 facilities on February 1, 2024, partially offset revenue gains from acquisitions and higher pricing.
- The company faces ongoing macroeconomic challenges, including potential impacts from tariffs and a recent decline in commodity prices, which could affect customer activity levels.
Q & A Highlights
Q: Allen, you're sounding cautious on macro and commodity prices, yet the guidance is still the same. Are there areas in your business where things are stronger than expected, offsetting market weakness?
A: Morning, Konark. Our guidance range has room based on current observations. Despite uncertainties like tariffs and recession concerns, activity remains robust. Customers are cautious but not significantly reducing activity, especially since we're more skewed to production, which is stable.
Q: On the new 10-year contract, what return on capital do you expect, and is there room to expand beyond the anchor customer?
A: We target a 20% after-tax IRR. The project is 75% guaranteed by the customer, with additional IRR from area dedications and third-party volumes. The Montney region's high water volumes and our expertise in water management provide expansion opportunities.
Q: Are you pursuing other commercial opportunities that might push the growth budget higher, or will you pause on adding more projects?
A: We're at $125 million, above typical levels, but our team can execute these projects. Our focus is on 2026 and 2027 opportunities. We don't foresee increasing the 2025 capital program further but are planning for future growth.
Q: Regarding the decision not to proceed with the BC metals recycling acquisition, how does this affect your due diligence process for future opportunities?
A: We conduct thorough due diligence on volumes, processing, and environmental liabilities. If expectations aren't met, we're willing to walk away. We have over $100 million in other metal recycling opportunities and will continue to vet them carefully.
Q: Are tariffs impacting demand or prices in your metals recycling business?
A: Currently, tariffs aren't impacting our revenue line items significantly. Most of our downstream markets are in Canada, and we're not seeing major impacts yet, but we'll continue to monitor the situation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
