Secure Energy Services Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Konark Gupta - Scotia Bank - Analyst : Thanks. Good morning and congrats on a good quarter. I just wanted to ask you on the volume side first, maybe. You know, it's difficult to kind of see the underlying volume trend given the transactions you have had in the last two years or so. So if you can help us understand, you know how these underlying volumes stranded in the waste management segment, especially for water waste and all recovery.

Question: Konark Gupta - Scotia Bank - Analyst : 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?

Question: Konark Gupta - Scotia Bank - Analyst : 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 and let's say you want to go to like 2.5 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, 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, I know pin to, you know, allocating that $700 million of cash available for M&A for buybacks or something else.

Question: Konark Gupta - Scotia Bank - Analyst : Okay. That's great. I appreciate the time.

Question: Keith Mackey - RBC Dominion Securities Inc. - Analyst : 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, more willing now to REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 3:00PM, SES.TO - Q3 2024 Secure Energy Services Inc Earnings Call outsource volumes for things versus insource volumes for things as the overall waste and water volumes grow. Just what trends are you seeing on that front?

Question: Keith Mackey - RBC Dominion Securities Inc. - Analyst : Got it. No, that's helpful. And I know you're planning on giving the, the 2025 guidance in December, but certainly try to at least help frame it up as best as we can now as while we're here. But essentially, you know, the way we thought about 2025 from a growth, growth perspective is, you know, roughly similar to maybe how this year is between that 100 you know, $50 million 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.

Question: Keith Mackey - RBC Dominion Securities Inc. - Analyst : Okay, that's helpful. Thanks very much.

Question: Jamie Somerville - Eight Capital - Analyst : Good morning. Thanks. So growth CapEx, I think it was always going to be heavily weighted to the end of the year, but you 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 plans to go into 2025. Yeah, maybe we can start with that.

Question: Jamie Somerville - Eight Capital - Analyst : Yeah, thank you. Makes sense. Related, you're the throughput volumes on the for the energy infrastructure side look good. But in terms of quarter-on-quarter revenue and gross operating profit 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. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 3:00PM, SES.TO - Q3 2024 Secure Energy Services Inc Earnings Call So I guess my question is, was there something holding back revenue and margins for the infrastructure business in the quarter?

Question: Jamie Somerville - Eight Capital - Analyst : Perfect. Thank you.

Question: John Gibson - BMO Capital Markets - Analyst : Thanks, and congrats on the great quarter. I just had one more on the lab of volumes uplift. Obviously, it was higher in Q3. It appears to be both drilling and cleanup related. Wondering 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 margins shift higher into 2025?

Question: John Gibson - BMO Capital Markets - Analyst : 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?

Question: John Gibson - BMO Capital Markets - Analyst : Fair enough, I had to ask, but we appreciate the responses. I'll turn it back.

Question: Jamie Somerville - Eight Capital - Analyst : Thanks. Just to follow up here. You've given high level guidance that 20% of EBITDA or cash flow is coming from cyclical drilling and completion 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?

Question: Jamie Somerville - Eight Capital - Analyst : Yeah, I guess I'm asking, you know, you're saying that your, your business is at around that 20% level. And I'm just wondering whether you're seeing

Question: Jamie Somerville - Eight Capital - Analyst : Okay. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2024 / 3:00PM, SES.TO - Q3 2024 Secure Energy Services Inc Earnings Call

Question: Wilmd Forest - - Analyst : I think that's just. Just a quick one for me. I'm just thinking post US election. Are there any headwinds that are expected for the waste industry. And I know it's outside of your core operating area. But just, just thinking M&A whether it be Republicans or Democrats getting in.

Question: Wilmd Forest - - Analyst : Okay, perfect. Thanks guys.