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Operator: Good morning, ladies and gentlemen, and welcome to the SECURE Waste Infrastructure Corp. 2025 Q4 and Annual Conference Call. [Operator Instructions] This call is being recorded on Friday, February 20, 2026. And I would now like to turn the conference over to Mr. Chad Magus. Thank you. Please go ahead.
Chad Magus: 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 Fourth Quarter and Full Year 2025 Results. I'm Chad Magus, Chief Financial Officer. And joining me on the call today are Allen Gransch, our President and Chief Executive Officer; and Corey Higham, 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 press release, management's discussion and analysis and annual financial statements for the year ended December 31, 2025, all available on SEDAR+ for a discussion of these risks and for definitions and reconciliations of non-GAAP measures. Today, we'll review our financial and operational results for the 3 and 12 months ended December 31, 2025, and provide our outlook for 2026. I will now turn the call over to Allen.
Allen Gransch: Thanks, Chad. Good morning, and thank you for joining today's call. 2025 was a year that clearly demonstrated the resilience, durability and quality of SECURE Waste Management and energy infrastructure business. Despite lower commodity prices, reduced industry activity and significant volatility across several end markets, we delivered full year adjusted EBITDA of $501 million, representing 5% growth year-over-year on a pro forma basis. Just as importantly, we generated strong discretionary free cash flow and continue to execute on our disciplined capital allocation strategy. At a high level, our performance in 2025 reflects 3 core strengths of our business model. First, the majority of our earnings are driven by reoccurring infrastructure-backed volumes. Approximately 80% of our adjusted EBITDA is tied to ongoing production and industrial activity with only about 20% linked to drilling and completion activity. That mix provides stability across cycles and limits our exposure to short-term swings in upstream activity. Second, we operate long-life permitted assets, permitted assets with high barriers to entry. Our facilities are difficult to replicate, capital intensive and require unique operating capabilities. Additionally, many of our assets are embedded in our customers' operations. Overall, these factors provide us with strong competitive advantage and support consistent utilization and pricing over time. Third, we remain highly disciplined in how we allocate capital. We invest where customers need capacity, where returns are attractive and where projects are supported by long-term contracts or clear demand and market signals. Turning to the fourth quarter specifically. We delivered adjusted EBITDA of $135 million, up 15% year-over-year and up 24% on a per share basis. This performance reflects contributions from assets placed in service during the year, disciplined pricing across key service lines and continued optimization across our network and the benefit of share repurchases. For the full year, we returned $373 million to shareholders through dividends and share buybacks. In total, we repurchased nearly 19 million shares at an average price below $15, representing approximately 8% of our outstanding shares. From a growth and investment standpoint, 2025 was an important year. We deployed $138 million of organic growth capital above our original plan of $75 million as customer demand accelerated and project scopes expanded. These investments were primarily directed toward produced water infrastructure in the Montney as well as an industrial waste processing and continued optimization of our metal recycling business. A key milestone during the year was the commissioning of our first 2 fully contracted produced water disposal facilities in the Montney region with the second facility expected to come online in March. These are long-cycle infrastructure assets supported by strong counterparties and long-term agreements, and they will contribute meaningful to earnings going forward. In metal recycling, 2025 was a difficult year due to the implementation of a 50% tariff by the U.S. on finished steel, which significantly reduced domestic demand in Canada. In response, we repositioned over 90% of our scrap volumes into the U.S. markets. This required building new customer relationships, expanding rail capacity and working through inventory and transportation constraints. While this transition created near-term headwinds, the strategy is now largely in place and positions the business well for improved performance in 2026 as logistic improvements take effect and inventory levels normalize throughout the first half of the year. Before turning the call over to Chad, I want to emphasize that our outlook for 2026 is grounded in what we see and control. While macro conditions remain volatile, our guidance is supported by contracted projects, infrastructure-backed cash flows and assets that are already built or nearing completion. With that, I'll turn it back over to Chad to walk through the financial results and an important accounting update.
Chad Magus: Thanks, Allen. I'll start with a brief review of our financial performance for the fourth quarter and full year. For the fourth quarter, revenue was $372 million, up 10% year-over-year. Adjusted EBITDA was $135 million, with margins remaining strong and consistent with our infrastructure-driven model. Funds flow from operations was $118 million and discretionary free cash flow was $84 million, supporting continued investment, dividends and share repurchases. For the full year, adjusted EBITDA was $501 million, funds flow from operations was $378 million and discretionary free cash flow was $273 million. While discretionary free cash flow declined modestly year-over-year, this was primarily due to higher interest expense and cash taxes, and we continue to deliver industry-leading conversion of over 50%. Our balance sheet remains very strong. We ended the year with total debt to adjusted EBITDA of 2.1x or 1.8x, excluding leases. During the fourth quarter, we also refinanced a portion of our debt with the issuance of $300 million of senior unsecured notes due in 2032, further extending our maturity profile and enhancing financial flexibility. Turning now to the voluntary accounting policy change we implemented in the fourth quarter related to the presentation of our oil purchase and resale activities and certain commodity-related derivative instruments. Under the updated policy, we now present realized and unrealized gains and losses from physically settled commodity contracts and related derivatives on a net basis within revenue rather than presenting gross proceeds and offsetting costs. We believe this change better reflects the economic substance of these activities. It also provides financial statement users with a clearer view of SECURE's underlying infrastructure-driven earnings and improve the transparency and comparability of our reported results relative to our peers. Importantly, there is no impact to net income, adjusted EBITDA, cash flow or the statement of financial position for any period. The change affects only the presentation of revenue and cost of sales and prior periods have been restated for comparability. Finally, in relation to this restatement and as part of our improving transparency and alignment with our business model, we intend to pursue changes to our industry classification with S&P and MSCI to better reflect our positioning as a waste infrastructure business. With that, I'll turn it over to Corey to review our operational performance.
Corey Higham: Thanks, Chad. Operationally, our teams delivered consistent and reliable performance across our 80 location infrastructure network in the fourth quarter and throughout 2025 despite a challenging operating environment. Safety and environmental stewardship remain foundational to how we operate. In 2025, we continue to advance our safety performance metrics, invest in environmental controls across our facilities and strengthen engagement within the communities in which we operate. Sustainability remains embedded in our daily operations and long-term strategic planning. Across the waste management network in 2025, we disposed approximately 95,000 barrels per day of produced water, processed approximately 38,000 barrels per day of liquid waste, recovered roughly 1 million barrels of oil from waste streams and safely disposed of approximately 3.2 million tons of solid waste. In our Energy Infrastructure segment, we handle over 133,000 barrels per day of crude oil across 13 terminals and 3 gathering pipelines. These figures reinforce the scale and critical nature of our platform and the repeatable infrastructure-backed cash flows that underpin our results. Across our waste management network, produced water volumes remained stable, reflecting ongoing production activity. Waste processing, oil recovery and landfill volumes did see some year-over-year declines, primarily due to reduced exploration activities and lower discretionary spending by our customers. As Allen mentioned, approximately 20% of our business is tied to energy exploration. When WTI oil prices move into the high 50s and low 60s range, we typically see producers become more cautious, slowing discretionary work and pacing activity. That dynamic was evident in 2025 and contributed to volume declines in certain service lines. Importantly, these declines are partially offset by pricing actions, operational efficiencies and contributions from the new capacity brought online during the year. In Energy Infrastructure, pipeline and terminalling volumes increased modestly, supported by the Clearwater terminal expansion and the introduction of emulsion treating capabilities. These assets continue to operate under long-term agreements and provide stable fee-based cash flows. From a capital standpoint, we ended the year with a strong portfolio of projects either commissioned or nearing completion. As we think about volumes across the network, it's helpful to consider the broader production backdrop. Western Canadian energy production is expected to grow approximately 2% annually through 2030 and will be enabled by significant investments into LNG projects, petrochemical industry expansions, AI data center build-outs and baseline energy demand growth. Given the commodity price environment that existed in 2025 and is forecasted into 2026, we believe this is baseline activity and volume for our operating areas due to production profiles and declines in the basin. This gives us a great deal of confidence in the stability of our business, but also emphasizes the future volume growth within our infrastructure as a result of the significant energy investments being made in Western Canada. This growth underscores the importance of network density, pricing discipline and safe operations. We will continue to optimize performance facility by facility, align capacity with customer demand and support growth activity -- support growth where activity is strongest, while maintaining cost discipline and operational consistency across the system. Our capital deployment continues to be selective and customer-driven, where demand exceeds current capacity, we will continue to invest and ensure reliability and long-term efficiency. These projects are all are aligned with customer activity and in many cases, supported by commercial agreements that provide visibility into future volumes. With that, I'll turn the call back to Allen for closing remarks.
Allen Gransch: Thanks, Corey. To wrap up, 2025 reinforced why SECURE is different. We are a waste infrastructure business built around long-life assets, reoccurring volumes and disciplined execution. Even in a volatile macro environment, we delivered stable earnings, strong cash flow and meaningful shareholder returns. Looking ahead to 2026, we are entering a year with solid momentum supported by structural production growth and the densification of our infrastructure network. Canadian crude oil supply is anticipated to increase on average approximately 2.5% per year to 2030 and regulatory-driven reclamation and abandonment programs continue to support reoccurring industrial and landfill volumes regardless of short-term commodity volatility. Additionally, managing significant produced water volumes is a material operational and cost consideration for producers. As water handling remains complex, regulated and capital intensive, we continue to see a structural shift towards outsourcing, supporting long-term demand for third-party disposal infrastructure. Within the macro backdrop, our strategy remains disciplined, deploy capital where production is growing, where we can continue to support our customers and where returns exceed our hurdle rates. Several growth projects advanced in 2025, we will continue to contribute to 2026 results. Metal recycling performance is expected to improve as the logistics normalize, and our core waste network continues to benefit from stable production and industrial activity. For 2026, we are providing adjusted EBITDA guidance of $520 million to $550 million. While macro conditions remain uncertain, our guidance is supported by contracted infrastructure, reoccurring production back volumes and assets already built or nearing completion. From a quarterly cadence perspective, we expect the first quarter to be broadly consistent with the fourth quarter of 2025, reflecting similar macro conditions and activity levels. As the year progresses, we anticipate incremental improvement relative to prior year quarters, driven by contributions from projects commissioned in late 2025 and early '26 as well as improving performance in metal recycling as logistics continue to normalize. Our capital allocation priorities for 2026 include investing in high-return infrastructure-backed growth projects. We anticipate spending $75 million in organic growth projects, and we believe we can continue to build on that amount during 2026, including completion of our previously announced projects, incremental water disposal capacity at 2 existing facilities in the Montney region and optimization projects and equipment at various facilities, including the investment of a pre-shredding infrastructure for the Edmonton metal recycling facility to enhance throughput and reduce downtime on the mega shredder. We will also continue to evaluate tuck-in acquisition opportunities that complement our existing business. All of our investing activities, whether organic growth or M&A, will continue to strengthen our core business and create long-term value. Growing our dividend by 5% to $0.42 per share annualized beginning with the second quarter of 2026 in April. This increase reflects our confidence in the durability of our cash flows and the strength of our balance sheet while preserving significant financial flexibility to execute on our capital allocation priorities and continuing to grow the dividend over time. Preserving financial flexibility to pursue high-return organic projects and strategic acquisitions in a disciplined and selective manner, focusing on high-quality assets that are strategically aligned, accretive to cash flow and offering clear integration and synergy potential while continuing to opportunistically buy back shares where we see a meaningful dislocation in our share price. Since renewing our NCIB in December, we have repurchased 1.1 million shares at a weighted average price of $17.10. With the portfolio simplification largely complete and our positioning as a waste infrastructure company firmly established, 2026 will be about execution, consistency and incremental growth. I want to thank our employees for their hard work and commitment throughout a demanding year and our shareholders for their continued support. That concludes our prepared remarks. Operator, we're now happy to take questions.
Operator: [Operator Instructions] Your first question comes from the line of Konark Gupta from Scotiabank.
Konark Gupta: Maybe the first one on the commodity price. I think there's a clear evidence of commodity price volatility not having a similar impact on your fundamentals. But the volumes, we saw some impact on the waste processing side, as you mentioned. Would you say the impact from those commodity prices be relatively similar on EBITDA as well compared to the volumes or would be less?
Allen Gransch: Yes. So when we think about the volumes in 2025, we -- when you have a lower commodity price, specifically with WTI being off 14% throughout the year, you generally see our customers slow down in their activity. And that's not a surprise to us. I mean we do have a portion that is centered around the exploration activity. And so when they slow down, they're going to have less discretionary spending, they're going to do less exploration, and they're going to be focused solely on optimizing their infrastructure. And so we saw that on a pro forma basis, we saw that on our landfill volumes specifically tied to that, and we also saw that in our waste processing volumes. But it's really consistent to what we expected would happen with that -- what I would consider the trough of the cycle. When you look at breakevens for not only the Canadian basin, but in the U.S., I mean, you're in the 50s, mid-50s. And so when you get a high $50 WTI price, low $60, you can imagine that they're optimizing what they currently are producing. And so when I think about EBITDA and where EBITDA kind of changed year-over-year, I mean, it's reflective of the pricing increases we did in Q4 of 2024, and we saw that contribute in 2025. And then we came out with some price increases in Q4 this year as well, which will contribute to EBITDA growth in 2025 -- 2026. So yes, so I think generally, and I'll maybe pass it over to Corey to give you a little bit more intel on the volumes, but that's generally what we saw in '25 and kind of what we're seeing here as we start 2026.
Corey Higham: Yes, Konark, volumes in '25 reflected everything Allen just mentioned around lower exploration activities, a decrease in discretionary spend, but that production-based volumes, which is really the backbone of our network remains pretty stable. Specific to produced water volumes at about 95,000 barrels per day in the quarter, it truly reflects the resilient of the production-based volumes in our network. And when you do get into that mid-50s, you're starting to lose some of those services. But that's exactly what we would expect in that 20% of the EBITDA that is tied to exploration-linked services. So these volumes that had -- that we saw in the $50 WTI environment, we see these as close to baseline volumes. So it just gives us a lot of confidence in the stability of the business as we look forward.
Konark Gupta: And on the metal recycling side, I mean, it sounds like, I mean, your additional railcars helped you reach or broaden the reach to the U.S. market. I think I heard 90% of the volumes are now going to the U.S. In 2026, as things probably stabilize from an inventory perspective, do you see some sort of balance into the Canadian market? Or you're still kind of waiting for clarity given the tariff situation here?
Corey Higham: Yes, Konark, it's Corey again. I would characterize the back half of 2025 as performing through some volatility. As you mentioned, we shipped 90% of our volume to Canadian-based mills up until middle of 2024. We had to pivot pretty quickly to find new markets. And through Q3 into Q4, we shipped all of that volume or 90% of the volume into U.S. markets and the investments that we made in the railcars through 2025, and we took on an additional 50 railcars in Q4 has helped to normalize our logistics and help us work through the inventory that had built in the back half. So we see that inventory that was built sort of get back to normal levels by the end of the second half -- beginning of the -- end of the first half of 2026. And this improvement is a combination of both just normalized throughput and better operating efficiencies. But we don't really have any sort of clear expectations when Canadian mills are going to get it back up and running. It really depends on Canadian steel manufacturing and Federal Government projects. So we're pretty comfortable with the railcar movements from logistics into the U.S. mills, and we're obviously keeping our finger on the pulse of all the developments in that market.
Konark Gupta: That's great. And last one for me before I turn over. On the CapEx side, I think you guys pulled forward some CapEx in December on the 2 produced water facilities you're building. Any sense as to what led you to do that? I mean, was it more required based on demand? Or was just the timing of the activity levels, et cetera? And then are you waiting for any incremental growth CapEx subject to green lighting by any of your customers?
Allen Gransch: It's Allen here. Yes. So let's start with 2025. And I think we came out last year when we put out our guidance, we announced that our capital program was $75 million, and it would grow. I would say that similar situation exists for 2026. As you progress through the year, you're talking with your customers, you're working through your engineering and your scoping. And so it does take time for that to come to fruition. But we have a lot of projects in the hopper that we continue to work through this quarter and through the rest of the year. So you'll see updates every quarter as these projects get closer to what we call sanctioned and get Board approval on, we will announce. When I think about what we wanted to spend, obviously, we raised our $75 million in 2025 to $125 mimillion and that was primarily consisted of these 2 new water disposal facilities, one -- both of them in the Montney. One of them came online in Q4. The other one is going to come online here very shortly. There's very little capital we've spent on that project here in 2026. We also have Redwater Phase 1 and Phase 2, and we decided to do it all as one tranche. But I would characterize it as the Phase 1 is now completed now and part of our capital program here in 2026 is completing that Phase 2 for that has industrial facility, which will come online in Q2. And then we bought some railcars and equipment. And so the pre-investment, this $13 million that we invested in December, it was primarily access to equipment. Things are tied up long term. And if you can get access to equipment to be able to access and drill these disposal wells. So we drilled 2 disposal wells in December, got access. We were planning on doing it in Q1. So it helps advance getting those wells drilled already. And so there will be a pipeline and basically some other infrastructure and equipment required to tie all that in, and we'll provide more clarity throughout 2026 as we get there. But essentially, I think we very successful $125 million capital deployment, very contract-backed. And then as we think about the program here for 2026, we got 2 expansions. And then we've invested in some pre-shred equipment. So this would go in front of the mega shredder in Edmonton. And the purpose of that is just to run through some of the scrap material in advance of it hitting in the mega shredder. And we want to make sure whatever goes into the shredder has already been processed to a certain point where it doesn't require the shredder to have any sort of downtime or maintenance because of a large piece or because of certain components that might make their way in. So we're pretty excited about the growth opportunities. I said the hopper is quite large here for us as we think about 2026 and more to come on that as we progress through the year.
Operator: And your next question comes from the line of Steven Hansen from Raymond James.
Steven Hansen: I know it's not disclosed specifically, but can you give us like really rough magnitudes in terms of how big of a hit the metals business took in '25 on an EBITDA basis? Like was it down 10%, 20%? Just want to get a rough flavor of magnitude as we think about the recovery.
Allen Gransch: Yes. So on the metals business, I think there's a couple of things that we work through. We were obviously repositioning some of our, what we call hub and spoke. So we were moving some of our metal -- scrap metal from some of our yards directly into Edmonton to utilize the mega shredder. So we had some synergies that we were working on in integration. At the same time, we had to balance that with some railcars that we needed to move that product into the U.S. And so I would say roughly 10% to 15% would have been impacted by not only what we saw in Q3 and partly into Q2 as well. But really, we were building inventory and then you've got this transition time that takes you from your cycle time of what you can get your inventory processed and through into the U.S. just over 30 days. And as we've said in the past, we don't like taking commodity risk. We want to process our inventory and ship it out on a 30-day basis. And so that's what Corey and his team are going to work on here through 2026. We're in a slower period for metals in the winter months as spring hits and you start to see more scrap metal roll into the yards. We want to make sure we've got our logistics balance and at the same time, monitor the Canadian market to see whether or not these mills are going to get operational again, and there will be some opportunities for us there. But I would say that would be my rough estimate of the magnitude. So we'll get some of that back here into 2026, which is great.
Steven Hansen: That's great color. I appreciate that. As it happens, copper and some of these other metals have rallied quite nicely in the meantime. So perhaps there's some benefit there. Just wanted to circle back to Konark's earlier question around the volume side. And it's more just that recognizing you've already given some pretty good color so far. But how have you seen the pattern shift, if at all, as we started into '26 here, crude is not at 50 anymore. So I'm just trying to get a sense if you're starting to see that recovery in activity take place? Or is it probably more of maybe a second or third quarter type benefit?
Corey Higham: Yes. I think if we could see sustained mid-$60 WTI, we'll see some slow improvement. But right now, we're a month into 2026. There hasn't been a whole lot of change from the activity levels that we saw in Q4.
Operator: And your next question comes from the line of Arthur Nagorny from RBC Capital Markets.
Arthur Nagorny: Maybe just starting with the 2026 adjusted EBITDA guide. Can you maybe give us some perspective on what your assumptions might look like between the high and the low end of the range?
Chad Magus: Arthur, it's Chad here. Yes, it's a similar range size to last year. And when we take a look at the macro and all of our different service lines of what can change, obviously, what we've seen in the past and that we are still, I'd say, have a little uncertainty around it is just metals operations and what happens there with tariffs and how we've been able to acquire more railcars and the logistics around that. And even if we could acquire more railcars, that can help improve that number. Obviously, field activity is the biggest impact especially with new drilling and completion activities that can have an impact. Obviously, we saw that decline in 2025. So that obviously can swing the ultimate range of what we come in at.
Allen Gransch: Yes. I mean, so right now, we're at the midpoint. And I think all signs are pointing to very similar first half 2026 to the back half of 2025. So you're going to have that kind of being consistent. I do think a lot of our customers, they came out with their budgets in December and a lot of them are calling for 3% to 5% growth. And a lot of them have planned out what they wanted to do in Q1 and Q2. So even though you've seen the uptick in the commodity doesn't really change what they planned on doing. I think that's more of a back half story. So I think depending on where we see that going, they can make changes and shifts in what they want to do in Q3 and Q4. That's primarily you get out of spring breakup and they can start to get access to some of these locations, and we'll see activity pick up. And that's our expectation. And so you'll see us go above that midpoint when that activity level starts to percolate. And so we'll have more clarity on that as we get through Q1 and get into how does the spring-like conditions look like. But that would be your upside scenario just on activity levels in the back half of 2026.
Arthur Nagorny: All right. That's helpful. And then I believe you mentioned you took some price in the back half of last year. Have you completed your pricing discussions already for 2026? And if so, can you give us an idea of kind of what that looks like across the business lines?
Allen Gransch: Yes. We have had multiple discussions with our customers. I mean when you look at inflation in Canada, it was up over 3%. A lot of our price increases [ on Q1 ], you want to cover your inflationary costs, but also we want to make sure that we're cognizant of where our customers are at. And so it was a bit of a balanced approach, I would say, in Q4, and we were selective on certain service lines where we felt like we needed to increase prices more significantly. And it was a lot of detailed conversations with our customers, but we did manage to get that done in Q4. We don't plan on doing anything in the near term here. I think all those discussions have been settled. For us, right now, our primary focus is on operations, getting this facility commissioned here in the next couple of weeks in the Montney and then obviously turning our attention to some other growth projects and some tuck-in M&A. I think I've talked about M&A in the past just on -- there's a few more metal recycling locations we're looking at. And so that might come to fruition here in 2026 if we can get to the appropriate valuations. We also have some other complementary businesses that I think would fit well into SECURE's network. And so we're looking at those as well. And so you'll see a balance of our focus on some of the growth capital, but also on some of this tuck-in M&A that we think could be very complementary to 2026 and 2027.
Arthur Nagorny: Got it. And then maybe on the metals recycling business, you mentioned the kind of inventory that you're working through given the disruption from last year. And just wondering kind of, I guess, where you're at with that? And maybe as a follow-up, I think near the end of the year, the Canadian government announced some measures to support the Canadian market. So just wondering if you're seeing any improvements in the [ Nomesta ] market yet and maybe how you're thinking about your go-forward positioning given some of these changes?
Corey Higham: Yes. A couple of questions there. The first one would be really around how do we -- how we're working through our inventory. As I mentioned previously, I think we'll get through back to normal inventory levels and inventory turns by the midpoint of this year. So everything is going to plan. With respect to what are we seeing in the Canadian markets, we haven't seen much demand pull into the Canadian mills as of yet. There has been small orders here and there. But I think what we've done in our business with the railcar infrastructure, when and if there are buy signals from Canadian mills, we are well positioned to ship to Canadian mills as well as the U.S. mills. So now we have a lot of outlets for our scrap. So we feel very comfortable where we're at today, Arthur.
Arthur Nagorny: All right. And then last question for me. Just curious how the Specialty Chemicals business did in Q4, if you can give some perspective on maybe volume or pricing or revenue, sorry.
Allen Gransch: Yes. I mean on the specialty chem side, we're continually seeing more of our production chemistry being really a useful tool, specifically on the paraffins on the wax side of things. And so we've got quite a few programs now where we're assisting some of our customers with taking some of that wax out of their production streams. And so we saw a continuation of that in Q4. That's a pattern that we do have that we're quite happy to promote with our customers. Activity levels, I would say, Q3 over Q4 were relatively similar on the fluids and the equipment side. There wasn't really much of a change. I think it was really just as expected of what our customers wanted to do in the last quarter. But I would say we got the benefit on the production chemistry side and that side continues to perform very, very well as we roll out some of the new initiatives we have on not only the paraffin side, but there's also some on emulsion breakers and scale, and that seems to be going very, very well. I don't know, Chad, do you want to add?
Chad Magus: Yes. Just looking at kind of year-over-year, again, I think similar to what Allen said, just probably up a couple of percent Q4 versus Q4 of the prior year.
Allen Gransch: I think you would have also noticed as well, we had disclosed this lawsuit that we have with CES. And really, we're at the point now where it's gone through the federal courts and the Supreme Court recently concluded that we own this patent. And we put into our disclosure the potential claim of $100 million, and that's really based off of -- this goes back to 2018 and really the sale that relates directly -- the sale of fluids that relate directly to this patent as well as did you get the work because of that patent. And so the $100 million claim, I think that's something we're going to pursue here over the next couple of years. And it's really going to go back to how -- what will the courts do in terms of the timing of when that patent was concluded at SECURE's as well as are we including just the sale of the patent or also other fluid sales that are included in that. So that $100 million will be determined by the courts in some future manner, but that's also ongoing.
Operator: And your next question comes from the line of John Gibson from BMO Capital Markets.
John Gibson: Just in terms of the growth CapEx for '26, how much of it will be focused on your energy end markets versus more of the metals recycling or conventional waste businesses? And is this mix materially different than last year?
Allen Gransch: No. The mix will be relatively similar. I think it's primarily weighted to our waste management business. On the metal side, we're calling it around the $10 million level. We've got the pre-shred and some equipment and then we've been leasing some railcars. But primarily, it's related to waste expansion at our facilities. When you look at certain areas like the Montney, it's busier. We haven't spent a lot on expansion capital here over the last few years. A lot of the capital we've directed more in closer to production within a specific customer. And so this is now looking at some of our facilities where we're getting to the point where it's almost a bottleneck and we need to expand to allow more volumes to come in. And so you see a little bit more of expansion capital in 2026 just because we're at that point in certain facilities that will need that required capital.
John Gibson: Got it. Just in regards to your move to ship steel products to the U.S., what is the incremental cost on doing so? And I guess you mentioned the business was impacted by roughly 15%. Just wondering how much of this you can recapture with these improved logistics if volumes are similar?
Chad Magus: John, there is obviously an incremental cost. It's just moving it further by rail. However, we've been able to recoup some of that by getting a better price by just having a bigger market to ship it to. So I think when you net those 2, there's maybe been a percent margin erosion, but we're continuing to work with markets to try to improve that. What was the second part of the question?
John Gibson: No, that's great. That answers it. I appreciate it, and I'll turn it back.
Operator: And your next question comes from the line of Maxim Sytchev from National Bank Capital.
Maxim Sytchev: I had one quick follow-up on metals recycling, if I can. There was some speculation that perhaps some of the tariffs will be rolled back and administration sort of walked that down. But in case of the were to happen, can you maybe walk through how much of a tailwind that could be for the overall business right now that you have fully built out the capacity in the U.S. and Canada, obviously, on the metal side of things?
Allen Gransch: Yes, I think we've been monitoring what's been happening in the U.S., and we've got a lot of relationships with a lot of the mills and we figured out the turnaround times and logistics for our railcars. And so if the Canadian market remains challenged, that's really giving us a competitive advantage over our competitors here in Western Canada. A lot of them don't have railcars, which we do. And so the fact that we're already 90% gives us that competitive edge. And from our standpoint, when we factor in the additional transportation cost to obviously get the scrap further down into the U.S. market, we have to reduce the price that we're willing to pay across the scale because we want to maintain our margin spread. And so from our perspective, at some point, that will turn where you're going to see that inventory that we may have paid a lower value for being realized in the Canadian market. And so all of a sudden, that shipping cost is going to go down, and you're going to realize some of that. And I think that's kind of what you're driving at. Difficult to predict. I mean it's just been -- we haven't seemed to make any ground on where we're going to go with the tariffs here in the U.S. And so our focus is really about getting the scrap in, getting it processed efficiently and turning it around into the U.S. I mean this whole electric arc furnace change has been substantial. The demand for scrap, we've seen it pick up. And I think Steve made the comment just on the commodities on copper on the nonferrous side is very strong. And I think even on the ferrous side, we're just seeing more and more demand for it from our perspective. And so I think the market is getting very, very robust, which is really, really good. And I think there will be a moment in time here as things play out where I think some of the things will be on the benefit of our side as we think about inventory levels and how activity is going to progress throughout 2026.
Operator: And your last question comes from the line of Konark Gupta from Scotiabank.
Konark Gupta: Just a few follow-ups. On the tuck-ins, I just wanted to clarify, the EBITDA guidance, the range does not embed any of the tuck-ins that you might do this year, right?
Allen Gransch: That's correct. Yes. No, it does not embed any tuck-ins at this point. And that's something that -- because you never really know if you can get to a definitive agreement and get everything tied up to the way you want. So as that progresses and as we get potential opportunities coming across our desk, that's when we'll start thinking about, okay, what is this going to contribute to '26. So we -- I guess, long story short, we'll provide guidance when the acquisitions happen and what that means for 2026.
Konark Gupta: Okay. Great. And on the cash flow side, I don't think I heard too much today. So just like in terms of any outlook for ranges, et cetera. I mean your EBITDA at the midpoint is up $35 million, I think, and CapEx -- total CapEx is down about $65 million. So that's $100 million together. I mean, should we simply add that $100 million to the cash flow? Or should we consider any other factors this year, like taxes, et cetera?
Chad Magus: Yes. I mean there's not -- I would say the remaining items will be relatively in line with what we saw in 2025. I think, obviously, cash interest will change a little bit depending on our leverage ratio. And then cash taxes, we're still kind of in a transition year in 2025. So it will be slightly higher as a percent, if you look at it, I guess, on adjusted EBITDA, slightly higher next -- in 2026. But still probably not above that $60 million mark for the full year. And then when we just look at the conversion ratio, we're still going to come out higher than 50% discretionary free cash flow conversion from adjusted EBITDA.
Konark Gupta: That's helpful. And last one, on the GICS, I heard you guys talked about the S&P and MSCI discussions. I mean with the accounting change, I mean, that reduces a substantial portion of your sort of commodity revenue, right? And what would be some of the GICS options that might be available to you? I mean I know you cannot choose, but what you might qualify for D&O at this point?
Chad Magus: Yes. Thanks, Konark. Yes, good question in the past, we can make certain recommendations, but obviously, they ultimately decide. But definitely, it should result in a change. Next steps will be all of our information will be updated. I definitely think they will change it. I don't know how long it will take to change it. But I mean, more of an industrial type [ GICS ] code, there is when you look at all the different waste peers, there is a number of different ones. They're not all exactly the same. But we think any of those would be more relevant than where we are today.
Allen Gransch: I think, too, I mean, this accounting change will be very helpful for investors and shareholders. I think when you go on Bloomberg and you're looking at our financials, you're now looking at all of the margins are where they need to be, and we've got the highest margins out of all of our waste peers. We've got the highest discretionary free cash flow per share, return on capital. We've increased the dividend as well. Just showing that you come out of a trough year like 2025, and we've got the conviction to not only push up the dividend, we've been buying back stock, just showing that the value of the business is -- there's more to go. And when we compare to some of our waste peers and you look at some of these key metrics, we stack up very, very well. So we're pretty excited. We're happy that we came off of 2025 and here we go in 2026. So that's a lot.
Operator: That ends our question-and-answer session. I will now hand the call back to Allen Gransch for any closing remarks.
Allen Gransch: Well, thank you for your time today and your continued support of SECURE. We look forward to talking with you again at the end of April with our Q1 results.
Operator: This concludes today's call. Thank you for participating. You may all disconnect.