CA - Secure Energy Services: Available At A 10% Free Cash Flow Yield

2024-07-05 10:30:00 ET

Summary

• Secure Energy Services completed a C$1.15B sale of waste management facilities, wiping out net debt and initiating share buybacks.
• The company's financial results show strong cash flows, with an anticipated underlying free cash flow of approximately C$93M and sustaining free cash flow of around C$1.20 per share.
• The balance sheet shows a healthy net cash position after the sale, with shareholders benefiting from share buybacks and potential for future growth.

Introduction

Earlier this year, Secure Energy Services Inc. ( SES:CA ) ( SECYF ) completed the sale of waste management facilities to a subsidiary of Waste Connections for total cash proceeds of C$1.15B. This wiped out the net debt position overnight and the company decided to spend about C$560M on share buybacks (so far; I anticipate SES to buy back more shares later this year) and will now likely run its balance sheet with a debt ratio of around 0.6-0.75 times EBITDA. I first covered the company in December 2020 when it was trading at C$2.55 per share. The stock is now trading at in excess of C$12 and has returned C$0.78 per share in dividends for a total return of just over 400%....

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