Standard & Poor's Raises Waste Industry Investment Outlook to Positive

Date: July 8, 2006

Source: Standard & Poor’s

Standard & Poor's is bullish on the waste management industry having recently raised its investment outlook to positive from neutral. S&P Senior Analyst Stewart Scharf cited strong year to date growth of 12 percent, increasing solid waste volumes and especially pricing initiatives, particularly with new customer contracts, to drive continued growth. He expects that surcharges and hedging programs will offset higher fuel costs. Waste companies will enhance customer service rather than cut pricing to maintain share while the companies are becoming more sophisticated in controlling vehicle maintenance, medical and insurance costs. They will continue to focus on generating cash for debt reduction, share buybacks, dividends, and "tuck-in" acquisitions and asset swaps. Higher internalization rates (percentage of trash disposed of in company-owned landfills) and improved route density (volume collected along a localized route) should fatten (EBITDA) margins.

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