Mr. Allen Gransch reports

SECURE ANNOUNCES 2024 FIRST QUARTER RESULTS

Secure Energy Services Inc. has released its operational and financial results for the three months ended March 31, 2024.

"We're pleased to report a solid start to 2024, with first-quarter results meeting our expectations, allowing us to narrow our adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] guidance to $450-million to $465-million for the year," said Allen Gransch, president and incoming chief executive officer. "Strong execution across all business units continues to underscore the stability of our cash-flow-generation capabilities. In addition, we've optimized our capital structure through debt repayment and refinancing, positioning us with substantial liquidity for strategic initiatives. Our critical infrastructure network, expertise and financial position set us up to drive operational excellence, growth and long-term sustainability as a leading waste management and energy infrastructure company.

"Over the last quarter, the corporation successfully refinanced its long-term debt, and continued to deliver shareholder returns through dividends and share buybacks, while maintaining significant financial flexibility. Given our positive operational results in the first quarter, the board of directors and management continue to believe that a significant gap exists between Secure's current market valuation and that of peers in the waste management and energy infrastructure sector. In light of these factors, alongside ongoing initiatives, we intend to initiate a substantial issuer bid next week as a key element of Secure's capital allocation strategy."

First-quarter highlights:

• Closed the sale of 29 facilities to Waste Connections Inc. (through its wholly owned subsidiary) for $1.15-billion on Feb. 1, 2024. The 29 facilities were formerly owned by Tervita Corp. and were ordered to be divested by the competition tribunal.
• Repaid the entire amount drawn on the $800-million senior secured revolving credit facility, excluding letters of credit.
• Redeemed the outstanding $153-million (U.S.) aggregate principal amount of 11 per cent senior secured notes due 2025.
• Closed the offering of $300-million aggregate principal amount of 6.75 per cent senior unsecured notes due 2029. Net proceeds from the offering, along with cash on hand, were used to redeem the outstanding $340-million aggregate principal amount of 7.25 per cent senior unsecured notes due 2026.
• Repurchased and cancelled 12,055,510 shares under the normal course issuer bid (NCIB) at a weighted average price per share of $10.47 for a total of $126-million, reducing Secure's shares outstanding by 4 per cent in the first quarter. The corporation repurchased an additional 2,812,700 shares subsequent to quarter-end.
• Paid a quarterly dividend of 10 cents per common share, which currently represents an attractive yield of 3.5 per cent on the company's common shares compared with peers.
• Generated revenue (excluding oil purchase and resale) of $360-million, a decrease of 13 per cent from the first quarter of 2023, primarily related to the impact of the sale transaction, and the divestiture of two non-core oil field service business units in 2023, partially offset by higher volumes and improved margins across the corporation's remaining infrastructure network.
• Recorded net income of $422-million, or $1.50 per basic share, an increase of $367-million, or $1.32 per basic share, compared with the first quarter of 2023. The increase was primarily driven by the gain of $520-million recognized on the sale transaction, net of the current and deferred tax expenses resulting from the gain.
• Achieved adjusted EBITDA of $132-million (47 cents per basic share), a decrease of 13 per cent to the first quarter of 2023 (4 per cent on a per-basic-share basis) due to the same factors impacting revenue. However, the decrease in adjusted EBITDA per basic share was partially offset by a reduction in the number of common shares outstanding resulting from continuing share repurchases over the past year, which resulted in a decrease of 8 per cent to the weighted-average basic shares outstanding in the first quarter of 2024 from the 2023 comparative period.
• Generated funds flow from operations of $108-million (38 cents per basic share), a decrease of 21 per cent to the first quarter of 2023 (14 per cent on a per-basic-share basis), as a result of lower operating profit resulting from the sale transaction.
• Generated discretionary free cash flow of $93-million (33 cents per basic share), a decrease of 24 per cent to the first quarter of 2023 (18 per cent on a per-basic-share basis), as lower adjusted EBITDA was partially offset by reduced spending on sustaining capital due to reduced facility count following the sale transaction.

The corporation's operating and financial highlights for the three months ended March 31, 2024, and 2023, can be summarized as shown in the associated table.

Outlook

Secure is extremely well positioned for success with a strong industry backdrop, growth opportunities and the financial capacity to execute on the company's strategic initiatives and deliver enhanced shareholder returns. With the Trans Mountain pipeline expansion scheduled to begin operations in the second quarter, Secure's customers can gain take-away capacity and stronger pricing, with access to global markets paving the way for sustained and expanded activity levels in the years ahead. Secure expects industry fundamentals will drive increased volumes and overall demand for Secure's infrastructure. With the company's waste processing facilities currently operating at approximately 60-per-cent utilization, Secure has ample capacity to accommodate growing customer needs for processing, disposal, recycling, recovery and terminalling, all with minimal incremental fixed costs or additional capital investment.

Proceeds from the sale transaction, as well as continued strong free cash flow generation, provides the corporation with significant capital allocation optionality for 2024 and beyond, facilitating the company's ability to execute on all Secure's strategic priorities. With a solid foundation and clear direction, it is confident in its ability to protect the base business and seize new opportunities to create value for the company's shareholders. Secure also remains committed to enhanced shareholder returns through share repurchases and the company's 40 cents per share annualized dividend, all while maintaining low leverage.

Two thousand twenty-four expectations:

• Adjusted EBITDA of $450-million to $465-million, the high end of the range previously provided of $440-million to $465-million. Excluding corporate costs, Secure anticipates approximately 70 per cent of adjusted EBITDA will be attributable to the waste management reporting segment in 2024, with the remaining approximately 30 per cent of adjusted EBITDA generated from the energy infrastructure segment;
• Continued robust adjusted EBITDA margins as Secure focuses on optimizing the business, targeting additional operating efficiencies and continually improving operating cash flow;
• High discretionary free cash flow conversion with low sustaining capital and debt service requirements;
• Growth capital expenditures will increase by $25-million to approximately $75-million for 2024. The increase relates to customer agreements for a produced water pipeline to a waste processing facility, as well as processing equipment for phase 3 at the Clearwater heavy oil terminal. With a solid pipeline of organic growth opportunities, the corporation continues to pursue growth strategies to expand its infrastructure network with new project announcements following the finalization of customer agreements. Additionally, the corporation will consider acquisitions that meet its investment criteria and enhance its core operations in waste management and energy infrastructure;
• Sustaining capital expenditures of approximately $60-million, including landfill expansions;
• Asset retirement obligation expenditures of approximately $15-million;
• Continued share repurchases, including by means of a substantial issuer bid in the second quarter of 2024, based on, among other things, market conditions and the discretion of the board of directors;
• Annualized base dividend of 40 cents per share, which equates to a total of approximately $110-million per year based on current issued and outstanding shares;
• Mr. Gransch, president, to succeed Rene Amirault as chief executive officer, effective May 1, 2024. Mr. Amirault will remain on the board of directors as vice-chair;
• Election of Mr. Gransch to the board of directors at the corporation's annual general meeting of shareholders on April 26, 2024. The board of directors will remain at eight directors, with Brad Munro not seeking re-election;
• Release of Secure's 2023 sustainability report and second Task Force on Climate-Related Financial Disclosures (TCFD) report in May, 2024, demonstrating its continuing commitment to transparent reporting.

"I'd like to congratulate Brad Munro and Rene Amirault on their respective retirements," said Mick Dilger, chairman of the board of directors. "Brad was elected as a director of the corporation in 2009, and has provided exceptional leadership, guidance and thoughtful advice for over 15 years. With over 30 years as a director in the waste management industry, Brad brought valuable experience and mentorship to many of his fellow directors. Brad served as lead director from April, 2020, to July, 2021, and interim chairman of the board of directors from June, 2022, to January, 2023, where he was instrumental in guiding the organization during the merger negotiations and successful integration. On behalf of the entire board, we thank Brad for his valuable contributions.

"As previously announced, Rene will retire as CEO on May 1, 2024. While he steps down from his executive role, we are pleased that Rene will remain on the board of directors as vice-chair. As one of the founders of the corporation, we welcome Rene's leadership, which will continue to help guide the organization and Secure's strategic direction. After 17 years of great successes, we wish Rene all the best in his well-deserved retirement from management."

Mr. Amirault commented: "The corporation has a strong team of dedicated employees in place to execute on its strategic objectives, while continuing to provide best-in-class customer service. The leadership transition with Allen Gransch assuming the role of president and CEO marks the beginning of an exciting new chapter for the corporation. Allen's proven leadership capabilities, extensive experience and diverse skill set will allow for a seamless succession, and guide Secure as it moves forward."

"I'm very privileged to be taking over as CEO at this time," said Mr. Gransch. "Thanks to Rene's visionary leadership, Secure has established itself as a trusted industry partner, showcasing remarkable accomplishments in growth and operational excellence. The corporation is extremely well positioned to advance our strategy as a leader in waste management and energy infrastructure, prioritizing value creation for our customers through reliable, safe and environmentally responsible infrastructure. I'm excited for this opportunity for continued growth and innovation."

Financial statements and management's discussion and analysis (MD&A)

The corporation's consolidated financial statements and notes thereto, and management's discussion and analysis, for the three months ended March 31, 2024, and 2023, are available on Secure's website and on SEDAR+.

First quarter 2024 conference call

Secure will host a conference call Thursday, April 25, 2024, at 1 p.m. Mountain Time to discuss the first-quarter results. To participate in the conference call, dial 416-764-8650 or toll-free 1-888-664-6383. To access the simultaneous webcast, please visit the company's website. For those unable to listen to the live call, a taped broadcast will be available at the company's website and, until midnight MT on Thursday, May 2, 2024, by dialling 1-888-390-0541 and using the pass code 204398 followed by the pound key.

About Secure Energy Services Inc.

Secure is a leading waste management and energy infrastructure business headquartered in Calgary, Alta. Secure's extensive infrastructure network located throughout Western Canada and North Dakota includes waste processing and transfer facilities, industrial landfills, metal recycling facilities, crude oil and water gathering pipelines, crude oil terminals, and storage facilities. Through this infrastructure network, Secure carries out its principal business operations, including the processing, recovery, recycling and disposal of waste streams generated by its energy and industrial customers and gathering, optimization, terminalling, and storage of crude oil and natural gas liquids. The solutions Secure provides are designed not only to help reduce costs, but also lower emissions, increase safety, manage water, recycle byproducts and protect the environment.

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