Five large publicly traded North American haulers recently reported their second-quarter earnings. | LV Olga/Shutterstock
Rising commodity prices were a boon for major recycling operators in the second quarter of the year, and they’re now anticipating better full-year results than they initially expected.
North America’s five largest publicly traded garbage and recycling companies – WM, Republic Services, Casella Waste Systems, GFL Environmental and Waste Connections – all recently disclosed their second-quarter 2024 financial results.
Compared to prior-year Q2, commodity prices are higher and revenues are up, leading to sunny predictions and prompting GFL to consider selling its Environmental Solutions segment.
In an investor call on July 25, WM President and CEO Jim Fish said building off this quarter and the investments that WM is currently making, he anticipates a “blockbuster year” in 2025.
“I don’t care who gets elected in November. Well, I do, but it doesn’t matter who gets elected in November, and it doesn’t matter whether we have geopolitical problems,” he said. “It doesn’t matter whether the economy is up or down. We’re going to have a blockbuster year in 2025.”
The following are details on recycling-related financial results for the top five publicly traded garbage and recycling companies in the second quarter of 2024:
WM
WM reported Q2 recycling revenue of $475 million, up 20.6% year over year. The average commodity price in the second quarter also increased about 57% compared to last year, coming in at $96 per ton.
The recycling segment’s second-quarter operating earnings before interest, taxes, depreciation and amortization, or EBITDA, was up $11 million year over year.
WM had higher capital expenditures in Q2 2024, spending $147 million more year over year, “related to our strategic focus on sustainability growth investments in recycling and renewable energy,” its SEC filing noted.
It opened two upgraded recycling facilities in Q2, a press release stated.
In addition, the company closed more than $750 million worth of acquisitions through July, the press release noted. During the first two quarters of the year, WM completed solid waste and recycling acquisitions in Florida, North Carolina and Arizona of $240 million and paid $16 million of holdbacks related to prior year acquisitions.
On July 15, WM completed the acquisition of Winters Bros. Waste Systems in Long Island, New York, for $550 million. In addition, its acquisition of specialty waste management firm Stericycle is expected to close in the fourth quarter for about $7.2 billion, including about $1.4 billion of Stericycle’s debt.
In the press release, Fish said WM is “excited about our planned acquisition of Stericycle, and we are progressing through the customary regulatory reviews.”
In a July 25 investor call, Fish added that the Stericycle acquisition “adds complementary business platforms to further our leading suite of comprehensive waste and environmental solutions. And these strategic benefits are accompanied by attractive financial benefits.”
The company raised its full-year outlook for adjusted operating EBITDA and free cash flow by $100 million, based on the strong results.
Recycling made up about 7.2% of WM’s total revenue in Q2, about one percentage point higher year over year. Overall, the company reported revenues of $5.4 billion in the second quarter of 2024, up 5.5% year over year, attributed to higher yield in its collection and disposal businesses and the increase in market value for recycled commodities.
By the numbers
The following is a look at key second-quarter 2024 recycling numbers from the five largest publicly traded haulers in North America:
WM
Q2 recycling revenue: $475 million
Q2 revenue change YoY: Up 20.6%
Average Q2 commodity price: $96 per ton
Commodity price change Yoy: Up 57%
Q2 recycling EBITDA YoY: Up by $11 million
Republic Services
Q2 recycling revenue: $107.5 million
Q2 revenue change YoY: Up 35.2%
Average Q2 commodity price (excluding glass and organics): $173 per ton
Commodity price YoY: Up 45.4%
Casella Waste Systems
Q2 Resource Solutions (which includes recycling) revenue: $83 million
Q2 revenue change YoY: Up 15.4%
Q2 Resource Solutions operating income: $4.3 million
Operating income YoY: Up by $3.6 million
GFL Environmental (converted to USD from Canadian dollars on Aug. 2, 2024)
Q2 recycling revenue: $79.5 million
Q2 revenue change YoY: Up 33.4%
Waste Connections
Q2 recycling revenue: $63.3 million
Q2 revenue change YoY: Up 65%
Average Q2 OCC price: $140 per ton
OCC price YoY: Up 86.7%
Republic Services
Republic Services reported that its recycling processing and commodity sales revenue was $107.5 million in the second quarter, up 35.2% from the second quarter of 2023. The average commodity price for the second quarter was $173 per ton, a year-over-year increase of 45.4%.
In a press release, Jon Vander Ark, president and CEO of Republic Services, said “pricing in excess of cost inflation and solid operational execution underpinned strong results across the business.”
Due to the strong quarter, the company is raising its full-year financial guidance, predicting revenue of roughly $16.1 billion.
Vander Ark added in a July 25 investor call that the company is using cameras to identify overfilled containers and contamination in recycling containers that will reduce contamination and create about $60 million in incremental annual revenue. To date, the technology has achieved $45 million of benefit.
In its quarterly report, the company noted it spent $260.2 million in Q2 2024 on capital expenditures in waste and recycling specifically, down slightly from the $261.9 million it spent in the same period last year.
As of June 30, Republic operated 362 collection operations, 246 transfer stations, 75 recycling centers, 208 active landfills, two treatment, recovery and disposal facilities and 23 treatment, storage and disposal facilities.
The quarterly report added that Republic’s acquisition growth strategy focuses “primarily on acquiring privately held recycling and waste companies and environmental solutions businesses that complement our existing business platform,” and it plans to spend up to $500 million in acquisitions in 2024, including on a post-collection business.
Total company revenue in the second quarter 2024 was $4.0 billion, up from the $3.7 billion the company reported in Q2 2023. Recycling made up about 2.7% of the overall company revenue in the second quarter.
Casella
Casella’s Resource Solutions segment, which includes recycling and other businesses, reported $83 million in revenue during the second quarter, up 15.4% from the year before.
The Resource Solutions segment includes the company’s recycling business, its organics processing and disposal business, and services for large industrial, institutional or multi-site retail customers.
The company attributed the increase to strong collection and disposal pricing, acquisitions closed in 2023 and higher recycling commodity pricing of $4.9 million, up 19.1% year over year, and National Accounts business pricing growth of $1.7 million, up 3.7%.
The company also discloses operating income in the Resource Solutions business. For the second quarter, the Resource Solutions segment’s operating income was $4.3 million. During the second quarter of 2023, the operating income in that segment was $688,000.
In an Aug. 2 investor call, CEO John W. Casella said the strong results in the resource solutions segment was led by the performance of the recycling operations.
“While our average commodity revenue per ton was up 50% year-over-year, much of this value is shared with our customers, given our balanced model that focuses on steady returns while reducing commodity price volatility,” he said. “Contributions from the Boston MRF drove most of the success in the quarter.”
In a press release, Casella noted that “since the end of the second quarter, we acquired two high quality companies in the Mid-Atlantic region that expand and densify our operations in this market and offer exciting growth opportunities.”
“As we build scale in this market, we see further value creation opportunity through cost efficiencies and our differentiated service offerings,” he added.
Overall, Casella has acquired five businesses this year through Aug. 1, with over $100 million in aggregate annualized revenues, including LMR Disposal and Whitetail Disposal.
He added that the company raised its 2024 revenue outlook to between $1.520 billion and $1.550 billion. The previous range was $1.480 billion to $1.510 billion.
The company brought in $377.2 million in revenue, up 30.2% year over year, consistent with last quarter’s year-over-year growth. The Resource Solutions segment made up 22.1% of overall revenues in the second quarter of 2024.
GFL Environmental
Canadian company GFL Environmental’s recycling segment brought in 110.3 million Canadian dollars (about $79.5 million; all subsequent values in USD, converted Aug. 2) in revenue in Q2 2024, and as a result it increased its full-year 2024 guidance. The company estimated its 2024 revenue would reach around $5.7 billion overall. Recycling revenue was up about 33.4% year over year.
In a press release, Patrick Dovigi, founder and CEO of GFL, said the company also “accelerated our exit from a portfolio of residential collection contracts in Michigan that no longer met our return thresholds.” That sale was completed at the end of Q2.
He added that “considering our organic growth opportunities over the next two years,” including extended producer responsibility laws and renewable natural gas, “we do not believe that taking GFL private at this time is in the best long-term interest of our shareholders.”
However, he added in an Aug. 1 investor call that “while selling the entire business is not on the table today, there could be merit in selling a portion of our business at valuations that are more in line with what we believe is fair value of the business.” The Environmental Services segment is one area under consideration for sale, Dovigi said. That includes liquid waste disposal services and some soil remediation.
“A sale of high-quality assets, such as our ES segment could easily attract mid-teens multiples,” Dovigi said. “We have had significant inbound interest from both strategic and financial sponsors that support this valuation perspective.”
Such a sale would require a full auction process, he added, and GFL is “absolutely exploring all of our options and have begun to implement the steps necessary to prepare for a potential transaction,” possibly launching in September.
Overall, the company reported revenue of $1.5 billion in the Q2 2024, an increase of 11.1% year over year. Materials recovery makes up 5.4% of GFL’s overall revenue.
Waste Connections
For Waste Connections, recycling revenue in Q2 2024 was $63.3 million, up 65% from the same period of 2023.
In a press release, Ronald Mittelstaedt, president and CEO, attributed the success to “solid operational execution supplemented by incremental acquisitions and increased commodity values.”
“We are extremely pleased by the continued strength of operational execution during the quarter, including sequential improvement in employee retention, as we maintain the strategy that has served to differentiate our results and which positions us for continued outsized growth,” Mittelstaedt said, adding that the company is increasing its 2024 outlook to $8.85 billion in revenue. That’s $100 million higher than its initial outlook.
In addition, Waste Connections is tracking a record year of private company acquisitions, with over $500 million in annualized revenue in year-to-date completed acquisitions and another $150 million under definitive agreement, expected to close later this year.
The company acquired nine non-hazardous solid waste collection, transfer, recycling and disposal businesses in the first quarter of the year and another five in the second quarter. In the first half of the year, it paid $1.4 billion for acquisitions, according to its quarterly filing.
In a July 25 investor’s call, Mittelstaedt said that second quarter acquisitions included “multiple tuck-ins to existing markets as well as the strategic acquisition of state-of-the-art recycling facilities in the Pacific Northwest, furthering our sustainability-related efforts and internalizing our recyclables in that market.”
Having internalized recycling operations in Tacoma, Washington and Portland, Oregon “is very important in these two states who have recently adopted EPR legislation,” Mittelstaedt said.
The average Q2 OCC price was $140 per ton, up from $75 per ton in the same period last year.
Overall, Waste Connections reported a Q2 2024 revenue of $2.3 billion, up 11.2% year over year and above what the company had predicted. Recycling made up about 2.7% of its total revenue, up slightly year-over-year.