TSX:SES - Post Discussion
Post by
retiredcf on Mar 02, 2023 10:02am
RBC
March 2, 2023
Secure Energy 4Q22 - In-line EBITDA
TSX: SES | CAD 8.61 | Outperform | Price Target CAD 11.00
Sentiment: Neutral
Our view: We have a neutral first impression of Secure's 4Q22 results. Adj. EBITDA of $150MM was 3/1% ahead of Street/RBC expectations, 2023 growth capital spending of $50MM was maintained, and SES generated $74MM of headline discretionary free cash flow, or 49% of its adj. EBITDA.
• Adj. EBITDA in-line; EPS lower. Revenue was 4/2% ($15/8MM) below Street/RBC estimates, while adj. EBITDA was 3/1% ($4/2MM) above Street/RBC estimates. Results were driven by slightly higher adj. EBITDA margins of 37.4% (Street 35.2%, RBC 36.1%), from high processing, recovery, terminalling and pipeline volumes. EPS of $0.10 was $0.08 below our estimate primarily due to higher depreciation and taxes. SES also repaid $58M of principal on its 2025 11% secured notes in the quarter.
* 2023 capital allocation priorities maintained. Capex guidance remains $135MM ($50MM growth, $60MM maintenance, $25MM landfill expansion). The company also called-out $25MM ARO spend this year. On the shareholder returns front, SES has maintained its $0.10/share quarterly dividend and will continue to use buybacks opportunistically. Finally, SES reiterated its plan to reduce absolute debt levels to $850-950MM.
• Conference call today at 11:00 AM ET
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