Secure Waste Infr (TSX:SES) reported first-quarter financial results on Thursday. The transcript from the company’s first-quarter earnings call has been provided below.
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The full earnings call is available at https://app.webinar.net/Z2prKwqGmen
Summary
SES AI Corp reported a strong financial performance with an adjusted EBITDA of $137 million, reflecting a 13% year-over-year increase, and a revenue of $383 million, resulting in a 36% margin.
The company announced a strategic transaction with GFL Environmental, emphasizing immediate value to shareholders and potential future upside through equity ownership in the combined company.
SES AI Corp raised its 2026 adjusted EBITDA guidance and increased growth capital expenditure to $100 million to support high-return infrastructure projects.
Operational highlights included the commissioning of produce water infrastructure in the Montney and progressing the reopening of a waste processing facility in Alberta.
Management emphasized the stability of cash flows driven by long-cycle drivers and steady volumes, with a focus on disciplined pricing and cost control.
Full Transcript
OPERATOR
Good morning ladies and gentlemen and welcome to the SecureWaste Infrastructure Corp. Q1 2026 results conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during the call you require immediate assistance, please press star zero for the operator. This call is being recorded on Thursday, April 30, 2026. I would now like to turn the conference over to Chad Mangus. Please go ahead.
Chad Mangus (Chief Financial Officer)
Thank you and good morning to everyone who is listening to the call. Welcome to Secure Waste Infrastructure Corp’s conference call to discuss our first quarter 2026 results. I’m Chad Mangus, Chief Financial Officer and joining me on the call today are Alan Granch, our President and Chief Executive Officer, and Corey Hyam, our Chief Operating Officer. During the call we will make forward looking statements related to future performance and refer to certain non GAAP financial measures that do not have standardized meanings under IFRS and may not be comparable to similar measures disclosed by other companies. Forward looking statements reflect management’s current expectations and are based on assumptions that we believe are reasonable. However, actual results may differ materially due to a number of risks and uncertainties. Please refer to our disclosure documents available on SEDAR for further details of these risks and for definitions and reconciliations of non GAAP measures. Today we will focus on three areas the GFL transaction and shareholder meeting, an overview of Q1 performance and key financial highlights, and an outlook for the remainder of 2026 and beyond. I will now turn the call over to Alan.
Alan Granch (President and Chief Executive Officer)
Thanks, Chad. Good morning and thank you for joining the call today. I’d like to start with our recently announced transaction with GFL Environmental and the materials filed this week in connection with the upcoming shareholder meeting. This transaction delivers immediate and certain value to shareholders at an attractive valuation, including a meaningful premium to our recent trading levels, while also providing continued participation in future upside through equity ownership in the combined company. The Board unanimously recommends that shareholders vote in favor of the transaction following a comprehensive review of strategic alternatives. In making this recommendation, the Board considered the opportunity to crystallize the value created at Secure, the ability to participate in future value creation through GFL equity, alignment with a proven entrepreneurial management team as well as limited number of alternative transactions available and the relative risk adjusted value of continuing as a standalone business. The Board also considered that GFL shares are currently trading below historical levels and in its view do not fully reflect the underlying value of the business, providing a potential for future re-rating over time. Over the past several years, Secure has built a high quality infrastructure backed waste platform with strong fundamentals and a clear path to continue growth. However, realizing that value on a standalone basis requires ongoing execution and capital deployment. This transaction enables shareholders to crystallize that value today and reduces execution risk and preserves meaningful upside through the combined platform. None of this would be possible without our people. Over 2000 employees have built secure into what it is today, grounded in a culture of safety, operational excellence and doing the right thing. These values are strongly aligned with GFL and our team will play a critical role in the combined company going forward. We encourage all shareholders to review the materials and vote in favor of the transaction on May 27. Turning briefly to the quarter, we delivered a strong start to 2026, generating $137 million of adjusted EBITDA, up 13% year over year and 21% per share. This performance reflects continued strength across volumes, pricing, capital projects and acquisitions despite lower oil prices for the majority of the quarter prior to the recent strengthening in commodity prices. Operationally, we continue to advance our growth projects including commissioning our produced water infrastructure in the Montney and progressing the reopening of suspended industrial waste processing facility in Alberta’s industrial heartland, which remains on track for completion by the end of the second quarter. Overall, the quarter reinforces what we consistently see in our business stable volumes, disciplined pricing and incremental growth from capital deployment. We now expect results to trend toward the high end of our 2026 adjusted EBITDA guidance range and we are increasing our growth capital to approximately 100 million from 75 million to support the acceleration of high return infrastructure projects. I’ll now turn the call over to Chad.
Chad Mangus (Chief Financial Officer)
Thanks Alan. In the first quarter we generated 137 million of adjusted EBITDA on 383 million of revenue, resulting in a margin of 36%. While revenue growth was modest, EBITDA growth was stronger reflecting a continued shift toward higher margin waste streams, disciplined pricing and cost control. This is consistent with our strategy of prioritizing quality of earnings over top line growth. We also generated 101 million of funds flow from operations in the quarter, supporting both our capital program and returns to shareholders on the balance sheet. Let me walk through a few more items in more detail than usual. We reported restricted cash of 31 million reflecting margin posted on hedging positions. This was driven by the sharp move in oil prices during March which created temporary margin requirements. These positions were fully offset by physical positions that have either been or are expected to be realized at a higher price. We also reported a higher than normal cash balance of 59 million reflecting the large payment received on the last day of the quarter. As of today, a revolver balance has been paid down by 76 million since end of Q1 to approximately 350 million. From a capital allocation perspective, we continue to execute on our priorities. During the quarter, we increased the dividend by 5% to 10 and a half cents per share paid quarterly, we repurchased nearly 1 million shares at a weighted average price of just over $17. And we continue to invest in high return projects, spending 22 million to advance previously announced plans. Our priorities remain unchanged. Invest in the business, maintain a strong balance sheet and return capital to shareholders. I’ll turn the call over to Corey now to discuss the business outlook for the remainder of 2026 and beyond.
Corey Hyam (Chief Operating Officer)
Thanks, Chad. To start, I want to provide an overview of the underlying cash flow profile of the business. One of Secure’s key strengths is that our cash flow is generally not tied to short term commodity prices. Our business is driven by ongoing production, industrial demand and mandated environmental spending. These are long cycle drivers resulting in stable volumes and predictable cash flow across cycles. What we typically see is limited near term upside when prices rise and moderated downside when prices fall. That stability under pins our performance now, tying that to our outlook. The move toward the high end of our guidance range primarily reflects oil prices that are approximately 20% stronger than our original assumptions. That said, given our limited direct exposure to commodity prices, the impact to our business remains modest and confined within a relatively narrow range. Importantly, this is not what is driving the underlying growth of the business. The year over year increase relative to 2025 is being driven by the same factors that have consistently underpinned our first, the strength and resilience of our base business supported by steady volumes and disciplined pricing. Second, the full contribution from infrastructure projects and acquisitions commissioned through 2025 and early 2026, which are now contributing incremental EBITDA and third, improved performance of metals recycling supported by higher volumes, better pricing and the logistics improvements we made last year. So when you step back, the move within the guidance range reflects macro tailwinds with the growth of the business itself or while the growth of the business itself continues to be driven by execution, capital deployment and the strength of our underlying platform. Looking longer term, the fundamentals remain strong. Western Canadian production is expected to grow approximately 3% annually through 2030, supported by improved market access through TMX and LNG developments, resilient producer economics and a continued focus on efficient long life resource development. Additionally, increasing reclamation and remediation requirements are driving non discretionary demand for our infrastructure. Produced water volumes are also increasingly increasing with higher intensity development and as water handling becomes more complex and capital intensive, we continue to see a structural shift towards outsourcing. When you combine these factors, it creates a long duration, highly visible demand profile for our business. I’ll now turn it over to Alan to conclude our prepared remarks.
Alan Granch (President and Chief Executive Officer)
Thanks Corey. To close Secure continues to deliver stable recurring earnings, strong free cash flow and visible long term growth core attributes that underpin the intrinsic value of our business. The transaction with GFL captures that value today, reduces the risks associated with realizing it independently, and positions shareholders to participate in the next phase of growth through a larger, more scaled platform. The transaction has the full support of our board, including a special committee of independent directors.
Alan Granch (President and Chief Executive Officer)
Additionally, certain of our largest shareholders, together with our directors and executive officers, have entered into voting support agreements representing approximately 21% of our outstanding shares. We encourage all shareholders to review the materials and vote in favor of the upcoming meeting. I also want to recognize our employees for their continued commitment, their focus on safety and execution as what built this business and we continue to drive success going forward.
Alan Granch (President and Chief Executive Officer)
With that, we’ll open the line for questions.
OPERATOR
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 one. On your touchtone phone you will 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 two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. Your first question comes from Konark Gupta with Scotiabank. Please go ahead.
Konark Gupta (Equity Analyst)
Thanks. Good morning team. I think maybe the first one on the volume side, it seems like you guys have changed the disclosures around volumes. So just trying to understand, you know, the volumes seem to be up on the liquid side on the waste segment and maybe down a little bit on the solid waste side, which I think includes now the scrap metal. If you can help us parse out the key underlying drivers in these volumes. I mean I think seems like produced water seems still more positive than other commodities.
Konark Gupta (Equity Analyst)
But what were the sort of puts and takes in the quarter on different commodities? Thanks.
Corey Hyam (Chief Operating Officer)
Good morning Konark, It’s Corey. Yeah, I think, I think you kind of nailed it there in terms of the macro pieces. You know, it’s kind of the same themes as we exited Q3 and Q4 where, you know, activity was a little softer in the field. But you know, I think Q1 showed stability in Our liquids volumes, which it was driven by the produced water volumes. As you mentioned, when you look at the solids processing side, we had outperformance in our metals group which offset some of the softness in the landfill volumes.
Corey Hyam (Chief Operating Officer)
So you know, when I look at this, it just, it really just emphasizes the performance and the stability in those two solids and liquids processing pieces of our business.
Alan Granch (President and Chief Executive Officer)
I think to add here, Konark. I think too as we think about the activity levels here in 2026 and obviously we just raised our guidance to the upper end of that range. You …
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