Five publicly traded North American waste haulers decreased expectations for full-year commodity pricing, and gave insights into new and upgraded capacity. | Photo Courtesy of Republic Services
Story Highlights
- Republic Services nods to future Pennsylvania site
- Tariffs take a toll
- Construction sector slowness to continue
- Canadian EPR provides tailwind for GFL
Soft recycled commodity prices cut into quarterly revenues for major waste haulers, and informed lower expectations for full-year average commodity values, amid the counter forces of mostly weak demand and increasing processing capacity.
WM, Republic Services, Waste Connections and Casella Waste Systems all reported second-quarter average commodity values that were lower by around 15% on the year.
WM reported a quarterly blended average price for single-stream recycled commodities of $82 per ton, lower by 14%. For the full year, WM expects the blended average to be about $80 per ton, lower by $5 from the previous expectation.
CFO Devina Rankin said July 29 WM expects about a $15 million drop in earnings before interest, taxes, depreciation and amortization (EBITDA) associated with commodity prices
At Republic Services, current commodity prices are at about $130 per ton, which implies a full-year average of $140 per ton, said CFO Brian DelGhiaccio during a July 29 earnings call. During the second quarter, the average was at $149 per ton, a decrease of 14% on the year, he said.
Casella Waste Systems reported July 31 that the recycled commodity sales price fell by 16% on the year, “with softer markets across the board and most commodities now selling below 5-year averages,” said CFO Brad Helgeson. He added that the net impact of lower commodity prices on Casella’s revenue was 1.6%, or less than $1 million.
Waste Connections CFO Mary Anne Whitney said July 24 that values for recycled commodities were already down on the year coming into the second quarter, then declined another 10% to 15% by the end of June. And CEO Ron Mittelstaedt said the commodity basket was expected to average $85-$90 per ton for the year, significantly lower than the $105-$110 the company stated in February.
GFL Environmental did not discuss specific figures, though CFO Luke Pelosi and CEO Patrick Dovigi cited lower recycled commodity values among several headwinds the Canada-based company faces.
“Consistent with the first quarter, recyclable volumes associated with the EPR-related activities continues to be a tailwind,” Pelosi said Aug. 1, referring to the increasing prevalence of extended producer responsibility (EPR) programs for packaging in Canada.
Looking ahead, Pelosi said that although EPR would add about $130 million to GFL’s EBITDA, most of that growth would be seen by the end of 2026. “So this is really a sort of a near-term growth profile and not so much ongoing source of growth over that sort of multiyear projection.”
Whitney at Waste Connections also noted that Canada was among the “markets that are holding up a little better on a relative basis,” along with the West Coast, where state-level recycled content mandates have been implemented. She added that the Southeast, including Florida, Texas and Louisiana, and the East and Northeast were among the weakest regions for the company.
New and upgraded capacity provides boost
Despite the drop in pricing, Republic Services said its recycling processing and commodity sales increased by $7 million in the quarter, amid higher volumes at its two polymer centers and the reopening of a West Coast recycling facility.
During the July 29 call CEO Jon Vander Ark said that ramping up the Las Vegas center – the first of four co-located polymer centers and Blue Polymers resin plants – provided valuable lessons in reaching exact customer specifications. As a result of those learnings, the newer Indianapolis plant “is hitting its marks.”
He added, “And then we’ll leverage all those learnings, of course, in Pennsylvania for a third center as well.” The company has not yet disclosed the location of its third site but previously said it would make an announcement in the fourth quarter of this year.
Nevertheless, demand for recycled plastics “is through the roof,” Vander Ark said. “The world is short-supplied, and the country is short-supplied on recycled PET. So we feel very confident about the returns profile of this over time.”
Similarly, WM CEO Jim Fish said that even with the drop in commodity prices, the company’s recycling segment operating EBITDA increased by 17%. “We believe in these high-return investments,” he said, referring to the $1.4 billion the company committed to investing in recycling infrastructure in 2022-2026. “And we continue to execute on the remaining projects in our portfolio, having commenced operations on three new projects during the quarter,” including a recycling automation project in Pennsylvania and a new-market recycling facility in Oregon.
Tara Hemmer, chief sustainability officer, added that much of that growth is related to WM’s upgraded facilities coming online. “We’re seeing volume growth related to those automation investments, and that clearly is us differentiating in the marketplace, where we’re able to add more customers in those key geographies.” Even so, in its recently released sustainability report, WM appeared unlikely to attain its 2025 interim goal for materials recovered for recycling.
In the Northeast, Casella reported its Resource Solutions segment adjusted EBITDA was higher by $1.8 million for the quarter, thanks to higher volumes at the recently upgraded Boston and Willimantic recycling facilities. The company also is acquiring Mountain State Waste, to extend its footprint in Pennsylvania and into West Virginia.
Tariffs have an indirect impact
Republic Services is reducing its volume expectations within the recycling and waste business, largely due to weakness in construction, manufacturing and markets, said DelGhiaccio.
CEO Vander Ark said that “this is where trade policy impacts us, which is manufacturers are not making capital decisions.” He noted that the Manufacturing Purchasing Managers Index (PMI) provides evidence that production is slow, and although the company sees a recovery of production activity, its outlook for the rest of 2025 is conservative.
The Manufacturing PMI was at 48% for July, indicating that manufacturing activity had contracted for the fifth consecutive month.
GFL’s Dovigi said that in the uncertain political and trade-related environment, he didn’t think construction volumes would recover “anytime too soon.” He, too, noted that “in the market of today, a 10% tariff, tomorrow, 50% tariff, maybe a 30% tariff, I think that’s just limiting people’s ability to make real capital investments.”
With more clarity on tariffs, “I think the industrial market will pick back up and people will figure out what the new norm is and how they’re going to operate or how they can operate and what environment they will be operating under.” But “we are months to a year away” from the downtrend to reverse, due to the time required to ramp up operations, he added.