© Reuters
TORONTO – Waste Connections, Inc. (TSX/NYSE: NYSE:) has completed the acquisition of Secure Energy Services Inc.’s (TSX: SES) energy waste treatment and disposal facilities in Western Canada, the companies revealed today. The transaction, valued at CAD$1.075 billion (1CAD$= $1.34) includes a diverse portfolio of 30 sites, which was officially closed following the Canadian Competition Bureau’s consent on January 30, 2024.
The acquired facilities, now under the Waste Connections subsidiary R360 Environmental Solutions Canada Inc., consist of 18 treatment, recovery, and disposal facilities; six landfills; four saltwater disposal injection wells; and two disposal caverns. These assets were part of the mandatory divestitures ordered by the Canadian Competition Tribunal after Secure’s 2021 merger with Tervita Corporation.
Strategically located in key Canadian oil and gas basins, the facilities serve a broad customer base primarily focused on production. Waste Connections anticipates that the acquisition will significantly contribute to its margin expansion in 2024, with the facilities’ disposal-oriented operations. The annual revenue from these newly acquired assets is estimated to be around CAD$300 million.
Ronald J. Mittelstaedt, President and CEO of Waste Connections, expressed satisfaction with the expansion of their waste operations into Canada and welcomed the former Secure employees to their team.
Waste Connections is known for providing a range of non-hazardous waste services, including collection, transfer, and disposal, as well as resource recovery through recycling and renewable fuels generation. The company serves millions of customers across the United States and Canada and is also involved in non-hazardous oilfield waste treatment and intermodal services.
InvestingPro Insights
Following the strategic acquisition by Waste Connections, Inc. (TSX/NYSE: WCN), the company’s financial metrics and market performance offer valuable insights for investors. With a robust market capitalization of 40.75 billion USD, Waste Connections is trading at a premium with a P/E ratio of 48.9, reflecting high expectations from the market. Despite a notable revenue growth of 12.76% over the last twelve months as of Q1 2023, the company’s P/E ratio suggests it is trading at a high earnings multiple relative to near-term earnings growth, which could be a point of consideration for value-focused investors.
InvestingPro Tips indicate that Waste Connections has raised its dividend for 8 consecutive years, demonstrating a commitment to returning value to shareholders. Additionally, the company has seen a strong return over the last three months, with a price total return of 19.92%, indicating a positive short-term investor sentiment. While the company operates with a moderate level of debt, it is important to note that short-term obligations exceed liquid assets, which could be a risk factor for liquidity management.
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