Ten years ago, the waste hauling landscape looked far different than it does today.

In the past few years, merger and acquisition (M&A) activity has transformed the sphere, absorbing companies that were once large players and bloating those at the top with healthy revenue growth.

Waste Today’s inaugural Top Hauler List is an attempt to quantify those changes and track the companies still on top based on their revenues. Along with national players, our list features some of the top regional haulers across North America.

While change has occurred, the industry is still in a state of flux. Both waste management companies and private investment firms are buying up hauling businesses regularly thanks to their profitability, a robust economy and ideal selling conditions (read more in “Money moves” on page 48).

This activity has sopped up both smaller and larger waste management companies, some of which would have been on the list had they not been acquired. Advanced Disposal in Ponte Vedra, Florida, for example, was omitted in light of Waste Management's recent acquisition of the company, despite the deal being set to officially close in early 2020. Had it been included, the company would have been No. 8 on our list, with $1.56 billion in revenue in 2018. (For more on our methodology, please see "More about the Top Hauler List" on page 46.)

With M&A activity here to stay, the Top Hauler List could present even more change in just a few years’ time as waste hauling businesses continue to grow, expand on and invest in their fleets, and weigh the risks on the best time to buy and sell.

Money moves

In 2016, M&A activity began picking up in a way that hasn’t slowed down since.

While this has included high-profile transactions, such as Waste Management’s recent acquisition of Advanced Disposal, much of it is composed of the mom-and-pop haulers who found the timing right to sell.

It’s a market that’s nearly doubled in pace since 2017 thanks an ideal combination of factors, says Michael Hoffman, the managing director and group head of diversified industrials at Stifel Financial Corp. in Baltimore.

The U.S. economy typically moves in five-year cycles, peaking in the fifth year and then contracting back to a period of slowdown. Five years after the recession of 2009, though, the economy was still expanding with no indication of a slowdown in sight. The housing market had recovered, landfill volumes were improving and inflation had started to pick up. But savvy business owners knew a recession was somewhere on the horizon.

Then, national tax reform passed in 2017, driving up capital and equipment costs for companies. At the same time, the ongoing labor shortage operators face today was just coming into clear view as a long-term issue.

For those who were thinking of selling their companies already, it created the perfect conditions to let go while making a profit.

Hoffman says there are five D’s owners consider in business succession planning: descendance, death, divorce, disability and disease.

“If you had a descendant issue, and you’re looking out and thinking about the recession and coming out of that … the timing would be perfect,” Hoffman says.

Waste hauling companies and private investment firms alike have taken advantage of the long economic cycle. This year alone:

• GFL Environmental of Ontario, Canada, announced two acquisitions within a week in July: The Soil Safe group of companies of Columbia, Maryland, and Canada Fibers Ltd. of Toronto, Canada.
• Waste Management was approved to acquire Advanced Disposal of Ponte Vedra, Florida, in June.
• In June, US Ecology of Boise, Idaho, merged with NRC Group Holdings Corp., a Houston-based provider of compliance and waste management services to the marine and rail transportation, general industrial and energy industries.
• GFL acquired Bestway Disposal of Colorado Springs, Colorado, in March.
• Waste Industries of Raleigh, North Carolina, acquired Coastal Ladies Carting Inc. in March.
• Macquarie Infrastructure and Real Assets of New York announced its acquisition of Tunnel Hill Partners of Stamford, Connecticut, in February.

These acquisitions come on the heels of a strong year for M&A activity, which included GFL’s merger with Waste Industries in November 2018.

It’s activity that has changed the hauling landscape significantly in the past five years, eliminating numerous smaller companies and taking haulers out of the equation that would otherwise be major players. And Hoffman doesn’t anticipate that pace slowing anytime soon.

“I think this could be a much longer cycle than everyone thinks it could be,” Hoffman says.

Waste companies are experiencing a high point in stock values, with Houston-based Waste Management Inc.’s stock rising in value more than threefold since the end of 2011 and Phoenix-based Republic Service’s stock value rising by two-and-a-half times in the same time period, according to Bloomberg. It’s created the right conditions for GFL to file for an initial public offering (IPO) that would be the largest in Canada in five years.

With ongoing economic expansion, waste haulers are continuing to focus on M&A activity for the remainder of the year.

“In the second quarter [of 2019], we invested $129 million in acquisitions to further enhance our leading market position and drive growth in free cash flow. Our currency pipeline continues to be strong,” said Don Slager, CEO of Republic Services, during an investor call July 25. “As a result, we now expect to invest approximately $550 million in acquisitions this year.”

Hoffman is predicting a mild recession within the next couple years, but he doesn’t anticipate it being one that will slow M&A activity significantly.

“I don’t see anything that would disrupt it,” Hoffman says.

The author is the assistant editor for Waste Today and can be contacted at tcottom@gie.net.

Photo by Julia Drozdowsky | Angle Media Group

GFL Environmental announces two acquisitions within a week

GFL Environmental Inc., Ontario, Canada, announced in July that it will acquire the Soil Safe group of companies, based in Columbia, Maryland, in its second acquisition announcement within a week. The transaction closed July 5, and financial details were not disclosed.

Patrick Dovigi, GFL’s founder and CEO, told Waste Today that the acquisition added new markets in California. Dovigi says the acquisition is in line with the company’s goal of replicating all its existing services across the continent.

Since its inception in 1989, Soil Safe has recycled more than 30 million tons of non-hazardous petroleum-contaminated soil for beneficial reuse outside of landfills.

"Soil Safe and its management team, led by Mark Smith, are recognized as industry leaders in contaminated soil recycling and the development of inert soil products for beneficial use in sustainable construction and green building applications. GFL is one of the largest processors of contaminated soils in Canada, and our acquisition of Soil Safe is in keeping with our strategy of replicating all of our service offerings in the U.S.," Dovigi says. "Soil Safe's in-house expertise and recycled products complement and extend our existing capabilities as we build our infrastructure business to service our customers' needs across North America. We are excited to welcome Soil Safe and its employees to the GFL team."

The acquisition comes at the heels of GFL’s acquisition of Toronto-based Canada Fibers Ltd., which the company announced July 5. That transaction is expected to close in the third quarter of 2019.

Dovigi says that acquisition “will create new opportunities to provide integrated collection, sorting, processing and marketing of recyclable materials."

Dovigi says the close timing of the acquisitions was coincidental. The purchase of Canada Fibers depended mostly on the commodity market, which has hit record lows since China implemented its National Sword policy.

"We were fortunate to watch what happened with commodities over the past year. It's tougher to buy recycling businesses when commodity values are extremely high," Dovigi says. "On the commodity sales side, we believe it's very close to the bottom."

GFL made waves last year when it merged with Raleigh, North Carolina-based Waste Industries. The merger, which more than doubled GFL's footprint of operations in North America, was expected to take place over the course of a year. Dovigi says integration is almost complete and has "been a very smooth process with very like-minded teams."

Acquisition activity is likely to continue in the second half of the year as GFL pushes forward with a swath of new companies under its belt.

"I think we look at anything that makes sense in any of our existing offerings. It's a complete coincidence that these happened at the same time, but GFL being what it is, we're always looking at ways to be greener," Dovigi says.

"I think we'll continue to look at opportunities to be a little bit different and a little bit greener."

© Saklakova | stock.adobe.com

US Ecology to merge with NRC Group Holdings Corp.

US Ecology Inc., Boise, Idaho, announced June 24 that it has entered into a definitive merger agreement with NRC Group Holdings Corp. (NRCG), a Houston-based provider of compliance and waste management services to the marine and rail transportation, general industrial and energy industries. The agreement was comprised of an all-stock transaction with an enterprise value of $966 million. The transaction is expected to close in the fourth quarter of 2019, subject to clearance approvals.

“The addition of NRCG’s substantial service network strengthens and expands US Ecology’s suite of environmental services,” says Jeffrey Feeler, president, CEO and chairman of US Ecology. “This transaction will establish US Ecology as a leader in standby and emergency response services and adds a new waste vertical in oil and gas exploration and production landfill disposal to further drive waste volumes throughout the Gulf region.”

NRCG is one of two leading national Oil Spill Removal Organizations (OSRO) that provide mandated standby emergency response for the transportation of oil products. With more than 50 service centers, NRCG has a national service network providing emergency and spill response, light industrial services, hazardous and industrial waste management and transportation services. From a growing base of disposal assets in the two key oil basins in the Gulf region, the Permian and the Eagle Ford, NRCG provides landfill disposal of waste from oil and gas drilling, treatment and handling of residual waste streams and rental and transportation services to support its disposal operations.

“NRCG will bring highly complementary services and customers to US Ecology and will position the combined company as a leading player in industrial waste management while strengthening its position in the overall environmental services market,” says Christian Swinbank, president and CEO of NRCG. “We believe the combination will provide compelling upside for stockholders of both companies.”

The transaction has been approved by both companies’ boards of directors. Upon completion of the transaction, US Ecology stockholders will own approximately 70 percent of the combined company, and NRCG stockholders will own approximately 30 percent on a fully diluted basis. The combined company will use the US Ecology name, and its shares will continue to be listed on the Nasdaq Global Select Market under the ticker ECOL. Feeler will continue to serve as president, CEO and chairman of the board of directors. The company will maintain its headquarters in Boise, Idaho, with regional support centers in Boise, Detroit, New York and Houston.

US citizens are world's top waste producers, report shows

Two new indices that measure the waste generation and recycling tendencies of 194 countries show that the U.S. is the world’s top waste producer.

The report, produced by United Kingdom-based consulting firm Verisk Maplecroft, notes that 2.1 billion metric tons of municipal solid waste (MSW) are generated throughout the globe annually. Only 16 percent of this waste is recycled.

As part of the company’s Waste Generation Index (WGI) that captures per capita rates of waste production, U.S. citizens were found to produce 1,704 pounds of MSW per person. In total, this accounts for 12 percent of global MSW production while representing only 4 percent of the world’s population.

By contrast, the WGI found that China and India combined account for 36 percent of the world’s population, yet the population of the countries generate only 27 percent of its waste. In relation, U.S. citizens end up producing three times the waste of Chinese individuals and seven times more waste than people living in Ethiopia, the country ranked as the “lowest risk” in the index in terms of waste production.

The countries that are considered the highest risk after the U.S. in terms of waste produced include the Netherlands, Canada, Austria, Switzerland, Germany, France and Australia.

In the Recycling Index produced by Verisk Maplecroft, the U.S. was found to recycle 35 percent of its MSW. Germany, the most efficient recycling nation according to the index, was shown to recycle 68 percent of MSW.

According to the Verisk Maplecroft report, the U.S. “is the only developed nation whose waste generation outstrips its ability to recycle, underscoring a shortage of political will and investment in infrastructure.”

The consultancy concludes that the U.S., along with other nations, could be poised to introduce new legislation to combat plastic waste as the ramifications of China’s National Sword import ban continue to reverberate both domestically and abroad.

“Beyond the potential financial impacts, the reputational risks for business are high if they ignore intensifying interest in the issue from consumers and investors,” a summary of the report concludes. “Using data from our suite of waste indices, we identify the Netherlands, the U.S. and the U.K. as the most likely countries to pass new regulations on plastic materials that could hit companies in the pocket. But, France, Canada, Australia and Belgium are also flagged as jurisdictions to watch.

“It’s going to be vital for companies to get ahead of these issues. Investing in circular economy measures can not only mitigate risk but can open up new markets and improve brand reputation.”

EPA completes $20M cleanup of contaminated Nevada sites

The U.S. Environmental Protection Agency (EPA) announced it has completed its seven-year, $20 million cleanup of residential and commercial properties in Eureka, Nevada.

Eureka’s lead smelting industry in the late 1800s led to widespread soil contamination, and since 2012, EPA says it has removed more than 56,000 cubic yards of arsenic- and lead-contaminated soil.

“On behalf of EPA staff and contractors, I’d like to extend my gratitude to the community for their collaboration and patience as we worked together on this enormous task,” says EPA Pacific Southwest Regional Administrator Mike Stoker. “Removing soil contaminated with heavy metals protects the health of local Eureka residents.”

After EPA and the Nevada Division of Environmental Protection (NDEP) detected high levels of lead and arsenic in surface soils in 2012, EPA began a comprehensive assessment throughout Eureka, sampling 287 parcels in town. Over the course of six construction seasons, EPA cleaned up 183 properties, placed rock covers over four historic smelter locations, replaced landscaping and installed fencing.

“NDEP appreciates the collaborative relationship formed between the EPA, NDEP and Eureka County to make this project a success,” says Greg Lovato, an NDEP administrator. “The cleanup activities conducted by the EPA and the future long-term management of the remedy by NDEP and Eureka County will reduce future exposure to lead and arsenic in this community for generations.”

The work at the Eureka smelter sites included excavation and disposal of contaminated soils at an on-site repository. In addition, EPA installed drainage controls and fencing around one of the large slag piles, while NDEP and Eureka County installed drainage controls and fencing around a second large slag pile.

EPA worked with NDEP, Eureka County and the Nevada State Historic Preservation Office (NSHPO) on the cleanup.during the seven-year effort. Eureka County and NDEP provided logistical and technical support, while NSHPO ensured compliance with historic preservation requirements.

Institutional controls will be managed by both Eureka County and NDEP. The Institutional Control Plan, which provides guidelines to help ensure properties are not re-contaminated, was approved by the Board of Eureka County Commissioners and NDEP.