SWANA cancels Wastecon event in favor of virtual conference

Due to the ongoing COVID-19 pandemic and concern for the health and safety of participants, the Solid Waste Association of North America (SWANA) announced on Aug. 26 that it has canceled its Wastecon event that would have taken place Dec. 7-10 in Dallas.

SWANA’s executive leadership summit for the solid waste and recycling industries will be transformed into a virtual conference in late January 2021 that will bring together public and private sector waste industry leaders and professionals.

According to the association, “Virtual Wastecon will combine executive education with innovative program design and leave participants better prepared to lead, inspire and achieve in these challenging times.”

“Our thoughts and prayers are with those affected by the COVID-19 pandemic. SWANA’s top priority must be the health and safety of our members and the Wastecon community,” SWANA Executive Director and CEO David Biderman says. “Particularly after the past five months, we were looking forward to gathering in person in Dallas. Now, SWANA looks forward to bringing the industry together at virtual Wastecon in January 2021 and at other virtual events later in 2020 and early 2021.”

New York associations cancel October event

The Federation of New York Solid Waste Associations has decided to cancel the rescheduled Oct. 4-7 conference and trade show at The Sagamore in Bolton Landing, New York.

The event is typically held each year in May and was at first postponed to October for 2020.

“Based upon input from attendees and discussions with The Sagamore, the Federation of New York Solid Waste Associations has made this difficult decision based on COVID-19 uncertainty, logistics and priority for the safety of participants,” the federation announced.

“Details about the May 16-19, 2021, event will be posted on our website as they become available,” adds the federation.

Electric vehicle technology dates back to the 19th century, but until the last few years, most iterations of these vehicles have been hamstrung by low power, short drive range, lack of charging infrastructure, and inflated cost—all factors that have hindered adoption for waste industry applications.

And while a handful of waste companies and municipalities have purchased, or announced their intent to purchase, electric waste vehicles in the last couple of years, these have mostly been one-off investments.

This all changed when Republic Services Inc., Phoenix, Arizona, announced a binding agreement with Phoenix-based Nikola Corp. on Aug. 10 to purchase 2,500 electric waste and recycling collection trucks with estimated delivery dates starting in 2023.

According to Republic, this represents “the industry’s first large-scale commitment to fleet electrification.”

During an Aug. 10 conference call, Nikola Corp. founder and executive chairman Trevor Milton and Republic Services President Jon Vander Ark discussed how the deal came to life, the truck specs and what the implications are for Republic and the waste industry at large.

About the trucks

Nikola’s waste trucks will be built on its battery electric Nikola TRE platform, which is a heavy duty chassis that was unveiled last year. The TRE has been undergoing continuous testing in anticipation of delivery to European customers in 2021. Milton says the company will be partnering with waste truck manufacturers, who will be supplying the body directly to Nikola. These truck bodies will be licensed to Nikola, allowing the company to service and warranty the entire truck in-house.

According to Milton, these trucks will have 720 kilowatt hours of energy storage and a range up to 150 miles, allowing operators to collect 1,200 trash cans a day in residential settings or around 140 small containers for commercial customers. The vehicles can be charged overnight for operation the next day.

Dispelling the myth of low power, Milton says, “[This] is the first time an electric trash truck has been able to achieve a full route that you would see with a diesel or natural gas [truck]. The actual powertrain is incredibly powerful. It was made to pull 80,000 pounds. So, we’re going to have to software limit that down. Theoretically, that powertrain is capable of up to almost 2,000 horsepower. … The regular trucks in the industry right now run about 350 to 500 horsepower, and it will supersede those. It will also have a smart algorithm in it that notices when a truck needs more horsepower and it will let it have access to that horsepower instantaneously.”

Milton says beyond added power, these vehicles will have zero emissions and be noticeably more quiet than diesel or natural gas alternatives. These vehicles will also be able to help drivers navigate their assignments through preprogrammed routes accessible from the cab’s infotainment system.

Milton noted that the company will be working directly with Republic to help incorporate some of this fleet management functionality into the trucks during development.

“By partnering with Republic Services, we’re able to develop and design this vehicle specifically for the trash industry to solve as many problems as we possibly can,” Milton says. “That’s going to be an exciting thing. The improvements that we make will be available to the rest of the industry, as well. There will be some specific stuff that Republic will own, like the data to their customers and things like that. But most importantly, they’re going to help us solve problems for the entire industry.”

Republic is also working with Nikola to help improve cab design to ensure these vehicles are as driver-friendly as possible.

The parties didn’t share the total cost of the investment, but Milton noted that the expense per truck would be less than then average cost of today’s electric waste trucks, which normally run upwards of $500,000 a unit. Milton ballparked Republic’s total investment between $1 billion to $2 billion.

Vander Ark notes that the company has “done [its] homework” looking at the end-to-end economics to factor in the cost of the units, the increased maintenance benefits over time, lower energy costs and the potential for the vehicles to help the company win new contracts and give it purchasing power.

Vander Ark issued the caveat that the cost of the trucks wasn’t the bottom line when it came to deciding to invest in the trucks because the company has a longer term vision and isn’t getting “caught up in the details of all the economics [because] that’s how innovation fails.”

What the deal means for Republic

Vander Ark says that Republic has been looking at investing in electric vehicles for several years and had compared all vendors in the space before selecting Nikola roughly a year ago. Since then, Vander Ark says the two companies have been working together to lay the groundwork for the deal.

“We took our time, we didn’t race,” Vander Ark says about the vetting process. “We weren’t trying to meet any other deadline other than to get it right for both sides, which we feel like we’ve done. I spent a lot of my life in the automotive industry, and [I’ve seen] a lot of tension between customer and supplier. And I think we’ve flipped the problem on its head and said, ‘How do we create something truly new and great end to end across the ecosystem?’ All the way from the design of the truck, to the manufacturing, to the servicing, to the grid and putting power back into the grid, all the elements of this thing we’ve worked together on.”

Republic noted that the anticipated benefits of these vehicles are instant torque, no idling, regenerative braking, up to 90 percent lower emissions on a per-mile basis, quieter operation in neighborhoods, as well as significantly lower maintenance costs.

In terms of maintenance and upkeep, Milton says, “Everyone is pointing fingers in the industry right now and no one wants to solve the problems of these trucks breaking down. And it’s a big problem, actually. Probably the most contentious part of owning a big refuse company is getting the service you need and getting the money to fix these parts. The nice thing about having [the whole truck] come from one OEM and one factory is that the entire truck is our responsibility at Nikola, the whole thing. … We have a warranty from [the body suppliers], as well. So, what this allows us to do is provide [service and support] directly to the customer.”

The Nikola powertrains are comprised of a pack of nine batteries. These batteries are estimated to last between five and 10 years, depending on the application and how many cycles a truck is performing in a day. Should damage occur to any one of these individual batteries, only the damaged one needs to be swapped out, the company says. Additionally, Milton says the single-speed eAxles on the truck don’t require the use of gears, which further simplifies maintenance since these can also be swapped out when needed.

Vander Ark says that Republic’s network of technicians should be able to handle the lion’s share of service work when these trucks eventually hit the street, and that the trucks’ design should lend itself to more streamlined repairs. He also acknowledged that the company hasn’t mapped out its expectations in stone for the life cycle of these vehicles.

“About 90 percent of our maintenance today is done in-house. We’re not reliant on a third-party dealer network in this case. Right now, we’ve got some capability builds to do among our more than 1,000 technicians, but we’ve got the ability to control [our service needs] within our system, and working together, we’re going to figure out the life cycle aspects of [these trucks],” he says. “There are just so many fewer moving pieces that we think we can get a maintenance advantage over time.”

Going where the road leads

Although the deal with Nikola is a significant commitment, Vander Ark says the company is still going forward with an electric vehicle pilot program with Mack that was announced last year.

On the company’s agnostic approach to electric fleet technology, he says, “I think if you look at us and you look at any player in the space, they’ll have multiple OEM partners going forward. We are pro electrification and we want everybody to get there, … even providers that we don’t buy from, because I think that creates a cleaner future for everybody.”

As for the company’s potential investments in CNG vehicles down the line, Vander Ark says natural gas has served its purpose as a bridge technology, but the future is in electrification.

Milton says he plans for Nikola to be able to deliver trucks for testing to Republic over the next 12 to 24 months to help work out any bugs in vehicle performance.

According to Vander Ark, the company will initially roll these trucks out into environments that are the most favorable. He singled out California and Arizona as having the right geography, climate, regulatory environment and customer appetite to deploy these trucks upon receipt.

While the initial purchase agreement is for 2,500 vehicles, the deal is expandable to 5,000 vehicles over the life of the agreement. For other waste companies interested in investing in Nikola’s vehicles, Milton says the company should be able to supply trucks to interested parties at the end of 2022 or beginning of 2023.

Summarizing the impact of the deal for Republic, Vander Ark says its investment in Nikola trucks will benefit its customers, employees, neighboring communities and future generations.

“This will be the first zero-emissions vehicle at scale in the industry and our customers in all capacity—small businesses, municipalities, residents—everybody is asking for this, and we’re going to be able to provide it at scale. So, that’s exciting for them,” he says. “It’s exciting for our employees. They get to ride in a state-of-the-art vehicle that is quiet, efficient, clean and gets to serve their customers in their neighborhoods. I’m excited for our shareholders because we’re going to jointly create value in this project together. And probably most importantly, I’m excited for my kids and my grandkids, and hopefully, my great grandkids, because I think we’re going to together deliver a cleaner future.”

The author is the editor of Waste Today and can be reached at aredling@gie.net.

Harsco’s roots date back to 1853 when a group of entrepreneurs formed the Harrisburg Car Manufacturing Company to help produce rail cars for the burgeoning railroad industry. Over the next 167 years, Harsco’s business mix would consistently evolve with a focus on industrial products and services in industries such as steel, construction, energy and rail.

It was this diverse business mix that Nick Grasberger identified as part of the company’s problem when he was hired in 2013 as its CFO. According to Grasberger, who became president and CEO a year later, Harsco needed to sharpen its operational focus, and environmental services was where the opportunities were. So, despite Harsco’s Metals & Minerals business being the only division providing environmental services at the time he joined the company, Grasberger made the strategic decision in 2018 to go all in to transform the company into a “single-thesis company focused on providing environmental solutions on a global basis.”

Today, the company’s Metals & Minerals business (recently rebranded as Harsco Environmental), is now a more than $1 billion global market processor and recycler of industrial, retail and health care waste streams.

Out with the old

Unifying Harsco’s corporate vision wasn’t a seamless task. According to Grasberger, before the company could streamline operations, there was a lot of internal division that needed to be sorted out.

“Prior to my arrival, there had been four CEOs in five years,” he says. “They were caretakers who never committed to the company. Without leadership, it is really hard to establish a culture. Additionally, each leader in each division had established a zone of influence, so to speak, and this further eroded the corporate culture. I have worked hard to establish a strong corporate culture built on what we call our ‘Harsco Values.’ These values include Employee Care, Passion for Winning, Satisfy the Customer, Inclusion, Integrity and Respect.”

Grasberger says that after he took over, the company required those who wanted to stay to buy in to the company’s new culture by drawing a line in the sand, making embracing these new values nonnegotiable.

“It became very clear, very quickly, to those who had been with the company for several years that we were moving to another culture and they had to figure out whether they were cut out for our new culture,” he says. “This was a top-down approach, no doubt, and our employees came to understand what my nature was, what my expectations were and that I was going to work really hard to reinforce these values of what was acceptable and what was not.”

Along with instituting a new set of values across the company, Grasberger says that he simultaneously began rebuilding the company’s executive leadership team. He says rather than focus on executives who had specific expertise in areas such as finance, legal, HR or communications, he wanted broad-minded individuals who could focus on various areas of the business and cross the aisle to help when needed.

Grasberger says that since becoming CEO, his nine direct reports are all new, and their fresh perspectives have helped jumpstart the company and drive its growth and transformation.

While the challenges of overhauling the company were daunting, Grasberger notes that the opportunity to reenvision Harsco was one that he embraced.

“I was attracted to Harsco by the challenge of fixing an industrial company with an impressive history, but one that had lost its way,” he says. “The management team, culture, strategy and business system each needed to be addressed. Earlier in my career, I was hired as the CFO of Kennametal Inc., which was in a similar situation, and I came to realize that I was well-suited for turnarounds. Up to the time I joined Harsco, that was the most rewarding role in my career—to get a company back on a path to success. When I became CEO at Harsco, my initial priorities were to build a management team and culture based on a new set of values. I also realized we needed to fix or sell the existing businesses before we could further transform the portfolio.”

Grasberger says Harsco made the decision to shed its energy businesses through divestiture two years ago to allow the company to prioritize making inroads in the environmental services market.

With the company aligned philosophically, Grasberger set his sights on pushing Harsco to take the next step in its evolution

Getting in the game

In May 2018, Harsco announced a $60 million acquisition of ALTEK Group, a UK-based manufacturer of products that enable aluminum producers and recyclers to manage and extract value from waste streams and reduce waste generation. Then, in June 2019, the company announced the acquisition of Clean Earth for $625 million. Clean Earth is one of the largest specialty waste processing companies in the U.S., providing processing and beneficial reuse solutions for hazardous and non-hazardous wastes, contaminated materials and dredged volumes. In April, the company completed its trio of acquisitions when it announced it had acquired the Environmental Solutions business (ESOL) from Stericycle Inc. for $462.5 million. ESOL specializes in environmental and regulated waste management and provides a range of hazardous waste solutions to customers across the industrial, retail and health care industries.

While the ALTEK deal signaled the company’s intention to invest in its environmental services offerings, the Clean Earth and ESOL deals removed all doubt as to the degree of the company’s commitment.

“Early in 2019, we felt our foundation was sufficiently strong enough to take the next big step in our transformation. … Our analysis concluded that Clean Earth would be the perfect first step due to its financial profile and the ability to scale the business quickly both organically and through additional acquisitions. We had also identified the Stericycle Environmental Solutions business as one that would fit well with Clean Earth and would likely become available within a year,” Grasberger explains.

Grasberger says the network of assets, as well as the 3,300 new employees, derived from the Clean Earth and ESOL acquisitions helped catapult the company to become a global leader in the environmental services sector within the span of 10 months.

“Clean Earth is a leader in the hazardous waste market and is the largest operator in the contaminated materials and dredged material management market, operating 27 permitted facilities in the U.S.,” he says. “The company currently maintains a portfolio of more than 200 scarce and difficult-to-replicate permits with a 100 percent permit renewal success rate to date. With the addition of Clean Earth, Harsco gained entry into adjacent, high-margin environmental services markets with significant regulatory barriers to entry. In addition, Clean Earth expanded Harsco’s portfolio with an innovative and diverse range of customized environmental services and solutions. Relying on its global operating platform, Harsco also intends to grow within the industrial waste sector outside of the U.S. over time.

“The ESOL business … operates a valuable network of 13 federally permitted treatment, storage and disposal facilities (TSDFs) and 48 10-day transfer facilities. With a fleet of more than 700 vehicles, the business serves more than 90,000 customer locations with 450,000 service stops annually, collecting, receiving and processing more than 500,000 tons of waste a year.”

Additionally, Grasberger says combining ESOL with Clean Earth expands the company’s geographic portfolio across the U.S. to create a national hazardous waste processing platform; broadens the company’s customer relationships across industries; expands the company’s exposure through a large logistics fleet; provides opportunities for operational improvements, cost synergies and revenue growth; and creates an attractive value proposition for the company’s employees and shareholders.

Grasberger noted following the ESOL deal that Clean Earth and ESOL were in the process of being integrated into a single business operating under the Clean Earth name, and that the revenue from this Clean Earth segment will likely exceed that of Harsco Environmental within a few years.

This integration, he notes, makes sense in the long term for the company from both a financial and ESG perspective.

“This is not just about needing a single thesis as a business,” he says. “It is about doing the right thing for our people and planet. By focusing on the urgent societal needs of providing environmental solutions for industrial and specialty waste streams, we are determined to make a tangible difference for our customers and employees while making our earth cleaner.”

Grasberger says that in the year since Clean Earth was acquired, more than 80 percent of the company’s revenue now comes from environmental solutions business, compared to just 60 percent less than three years ago. He notes that the company’s goal is to ultimately derive over 90 percent of Harsco’s annual revenue from environmental products and services.

A unified front

After a whirlwind couple of years, Grasberger says Harsco is “hitting the pause button” before jumping back into the M&A market as the company works to integrate its Clean Earth and ESOL business, but he does not think “Clean Earth will be a complete business without some tack-on M&A at some point in the future.”

With Harsco aligned both strategically and philosophically, Grasberger says that the company is ready to focus on meshing its offerings to offer the best possible service to its growing network of customers.

“With a national network of locations, Clean Earth is uniquely positioned to solve our customers’ highly regulated business challenges under one roof. We will be able to simplify waste management for our customers by serving as a one-stop shop to ensure the safe and compliant disposal of all their hazardous and non-hazardous waste,” he says. “It is really challenging for our customers to recycle, reuse or safely dispose of tough-to-treat, and often hazardous, materials. By solving this problem for them, our customers can focus on their own businesses. If we make it simple enough, our business will grow, and importantly, more waste will find its way to sustainable outlets.”

The author is the editor of Waste Today magazine and can be reached at aredling@gie.net.

2020 has been unpredictable, to put it mildly. As with any major economic shift to the status quo, the impact of the COVID-19 pandemic can be felt across all industries. And, with major countrywide shutdowns keeping people home and offices abandoned since late in the first quarter, the waste industry has not been exempt from this shift. The good news is that it’s not all bad. In fact, according to Raymond James, businesses are still experiencing growth and transactions are still occurring in the waste and environmental services sector.

Raymond James, the full-service middle-market investment bank based in St. Petersburg, Florida, has a dedicated practice focused on the waste and environmental services sector.

“We have unique perspective on the trends that are driving the waste and environmental services business through COVID-19 and are advising on transactions despite the pandemic,” Andy Schwartz, managing director and co-head of the waste and environmental services practice of Raymond James, says.

Before the shakeups that the COVID-19 pandemic brought on, Schwartz says the year started off strong, continuing years’ long momentum.

“From an M&A standpoint, the year was active, and it remains active. We started off with a slew of very notable acquisitions, and that has continued despite COVID-19,” he says.

Making early moves

You can’t discuss M&A activity in 2020 without first mentioning GFL Environmental. GFL started the year by continuing its 13-plus year history of acquisitive growth with two sizable acquisitions, paying approximately $480 million for County Waste and $380 million for American Waste. The company continued making headlines when it priced its initial public offering (IPO) of $2.2 billion in equity and convertible securities, just as the broader market began its COVID-19-related sell-off.

Following up its active first quarter, GFL announced in June that it had entered into a definitive agreement to purchase substantially all of the Department of Justice-mandated divestitures expected to result from the previously announced acquisition of Ponte Vedra, Florida-based Advanced Disposal Services Inc. by Houston-based Waste Management Inc. The acquisition includes vertically integrated solid waste collection, transfer, recycling and disposal assets for an aggregate purchase price of $835 million. The assets to be acquired by GFL include 32 collection operations, 36 transfer stations and 18 landfills supported by 380 collection vehicles across 10 U.S. states. The acquired assets are expected to generate an annualized revenue of approximately $345 million, according to the company.

If that wasn’t enough activity for one year, GFL followed this up with an August announcement that it had agreed to acquire Houston-based WCA and its subsidiaries for an aggregate purchase price of $1.2 billion.

At the time of this writing, the Waste Management acquisition of ADS, which has been over a year in the making, is projected to close in the near-term.

Additionally, Schwartz notes that Republic Services is also in the process of completing its previously announced acquisition of Cleveland, Tennessee-based Santek Waste Services. Other large solid waste and recycling companies such as Waste Connections, Waste Management, Casella Waste Systems and Meridian Waste Services remain acquisitive, as do many specialty waste, industrial services and environmental services providers.

“While many of us remain focused on the sizable, headline-worthy deals happening in the industry, there have been numerous smaller, under-the-radar transactions,” Schwartz says. “Large consolidators are consistently spending hundreds of millions of dollars on M&A annually, both pre-COVID and through the COVID pandemic. A lot of transactions are taking place, and multiples remain at historically elevated levels.”

COVID-19 impacts

While activity remains high throughout the waste sector, value remains in the eye of the beholder.

“When it comes to valuing a business, it’s not a one-size-fits-all approach,” Schwartz says. “Valuations are at an all-time high, but there has been some uncertainty in how companies are performing in this environment. Some companies are outperforming and some are more challenged.”

Early on in the pandemic, the industry was faced with new safety challenges, an influx of residential waste and a shortage of waste volume from the commercial sector. The traffic seen in offices shifted as companies adjusted to remote work and children were sent home from schools. Some municipalities were faced with the suspension of certain services, including curbside recycling and yard waste pickup.

“Those with a greater mix towards residential experienced increased volumes,” Schwartz says. “Those more focused on C&D waste streams or commercial waste streams, in general, saw lower volumes at least at the onset of COVID-19.”

"Those more focused on C&D waste streams or commercial waste streams, in general, saw lower volumes at least at the onset of COVID-19,” –Andy Schwartz, managing director and co-head of the waste and environmental services practice of Raymond James

Since then, however, Schwartz says there have been slow improvements.

“Some smaller haulers that don’t have access to their own landfill or aren’t vertically integrated may have seen some margin pressure in April as much more waste was being disposed of through residential volumes,” he says.

Now is the time

Despite the struggles some operations saw during the onset of COVID-19, Schwartz says the most important thing for businesses to understand is that now is still an opportune time to consider selling a business.

Putting aside the short-term dislocation the industry felt, the focus for those looking to make acquisitions remains on how a company will perform under new ownership and in a post-COVID environment, not as much on how COVID-19 impacted operations.

“Many of the operators [in the market today] have reached an age or stage in their career where it makes sense to explore liquidity and exit alternatives,” Schwartz says. “We’ve seen a continued environment where players in the space have a real desire to put their capital to work in M&A.

“Overall, deals are still getting done, acquirers are still active and looking to invest in M&A and valuations remain high,” Schwartz says. “Each company is different, which is why we welcome the opportunity to chat with business owners about their companies and options for funding growth, securing a new capital partner and liquidity to see if now is the right time to consider a deal.”

The author is the conference producer of the Recycling Today Media Group and can be reached at lrathmell@gie.net. Andy Schwartz can be reached at WasteServicesIB@RaymondJames.com.