Waste Management Inc. (Houston, TX) is buying Oakleaf Global Holdings (Windsor, CT) for $425 million. Oakleaf, with $580 million in revenue last year, does not own hauling vehicles or dumps, rather it operates a network of 2,500 haulers and others to provide its clients with seamless one-stop shopping for their waste collection and recycling needs, particularly across multiple geographic markets. Oakleaf also audits clients' actual usage along with market conditions to make sure they are getting the best value for their services. It manages the waste collection and recycling needs of large national clients such as Walmart, Target, Sears/Kmart, General Electric and United Technologies Corp.
Waste Management said the acquisition would not increase earnings for three to six months, while it absorbs costs to combine Oakleaf with its own operations. After that transition period, Waste Management said the deal would produce at least $80 million a year in earnings before interest, taxes, depreciation and amortization. The deal is subject to price adjustments for working capital.
Oakleaf was founded by Jim Barnes in 1995 who sold most of his company to Charterhouse Capital in 2003. Charterhouse in 2007 sold to the current majority owner, New Mountain Capital for $655 million, quadrupling its investment. Oakleaf is currently the largest private (non-publicly traded) company and the twelfth largest waste firm in North America overall.
Waste Business Journal View:
The merger makes a lot of sense for Waste Management which has, like its competitors, been increasingly focusing on customer service to boost retention in a rising price environment. The Oakleaf business model further develops this customer-centric strategy and gives the company access to more service providers. The merger expands Waste Management's "service footprint to new geographies" allowing them to better sell its customers a super-regional waste contract. Equally important, it will allow Waste Management to internalize some of the volumes collected by Oakleaf's vendor haulers into Waste Management landfills. This builds on Waste Management's larger strategy of vertical integration and control of the entire waste stream from collection to processing and disposal in order to achieve the greatest efficiencies possible and to maximize the utilization of equipment and landfill.
While Waste Management may win back some business lost to Oakleaf, it will also likely lose some large Oakleaf clients that may balk at the idea that WM/Oakleaf can continue to promise them a "good deal" on their waste collection.
Since Oakleaf does not own waste processing and disposal assets, other waste firms are not likely to oppose the merger. In fact, some of them may believe that they can capture some of those aforementioned disgruntled clients...Read More »
Waste Management, Inc. (Houston, TX) reported lower second quarter profit, despite a 6 percent rise in revenue on higher volumes and higher prices paid for the recycled commodities it collects. Consequently, the company cut its full-year adjusted earnings outlook saying it expects weaker volumes in the second half than originally anticipated. It now expects adjusted earnings of $2.14-$2.18 a share, down from its prior view of $2.24-$2.30 a share. Separately, the company said it acquired smaller rival Oakleaf Global Holdings for $425 million to strengthen its domestic customer base and expand its footprint to new geographies (see related story). For the second quarter, the company earned $237 million, or $0.50 per share, compared with $246 million, or $0.51 per share a year ago. The latest quarter included $0.04 per share in charges for repair and maintenance costs, litigation impacts and other items. Revenue for the second quarter rose to $3.35 billion...Read More »
Republic Services Inc. (Phoenix, AZ) reported second quarter profit that, excluding special items, was $184.9 million, or 49 cents a share, compared with $166.4 million or 43 cents a share, a year earlier. However, including several one-time charges such as losses from selling assets and extinguishing debt, among others, profits fell sharply from a year earlier, to $46.5 million, or 12 cents a share, compared with $159 million, or 42 cents a share, a year earlier. Revenue increased 1% to $2.09 billion. Core volume fell 1%. Commodity prices and fuel surcharges rose 1.1% and 1.3%, respectively. "The business continues to track to our expectations; the company's performance is a direct result of continued focus on pricing, productivity improvements and customer service," said Donald W. Slager, president and CEO of Republic Services, in a statement. "This is the fifth quarter in a row we have seen improvement in our collection volumes. We are confident in reaffirming our guidance. We remain committed to a consistent cash utilization strategy that includes both dividend growth and share repurchase." Republic said it still expects to earn between $1.86 and $1.89 per share for the year. The company also increased its quarterly dividend 2 cents per share to 22 cents for shareholders of record on Oct. 3. The dividend will be paid on Oct. 17...Read More »
Progressive Waste Solutions Ltd., formerly IESI-BFC (Toronto, ON), announced the retirement of its CEO Keith A. Carrigan, who has headed the company since its founding 11 years ago. He will leave at the end of the year, but remain as a consultant to senior management until June 30, 2012. President and Chief Operating Officer Joseph D. Quarin, who also has been with the company in various roles since its creation, will become the new CEO. Quarin joins the company's board immediately. William P. "Bill" Hulligan, currently head of the company's U.S. operations, will become president and COO of the entire company. "We appreciate the significant contributions Keith has made in delivering the company's exponential growth and financial results during his tenure. As a result of his work, we now have a solid foundation to support a seamless management succession," said James J. Forese, non-executive chairman of the board...Read More »
Waste Connections (Folsom, CA) moved a step closer in its deal to operate an Albany, NY area landfill as the Town of Colonie voted 6-1 to approve the contract. In a deal worth up to $100 million, Waste Connections will run the Colonie Landfill over a 25-year period. The town would receive an immediate $23 million signing payment, another $2.3 million annually for the first five years, and $1.1 million annually for the remaining 20 years. The move has strategic importance to Waste Connections which recently purchased County Waste and Recycling, one of the largest independent haulers in the region. The landfill would allow the company to internalize those volumes and give it a potentially significant amount of capacity in an area of the country that lacks landfill space and sees an increasing volume of its waste shipped elsewhere. As part of the deal and further tying there fortunes together, the town will also receive a "permit modification payment" of between $2 million and $10.8 million depending upon how much the Department of Environmental Conservation (DEC) allows the landfill to expand, (possibly up to 9.8 million cubic yards). The town also gets a $6 per ton premium for waste collected in excess of 170,500 tons annually...Read More »
Kohlberg Kravis Roberts & Co. has invested $113.8 million in a convertible bond issued by United Envirotech Ltd. (UEL), a water-treatment and recycling-solution provider in China. UEL services municipal and industrial waste-water-treatment projects and operates a portfolio of treatment plants across China. KKR's investment will support UEL's expansion in China's fast-growing water industry, the companies said in a statement. "KKR's investment will allow us to achieve further growth at a crucial time in the development of the China waste-water treatment industry," said Lin Yucheng, chairman and chief executive of UEL. According to the latest World Bank statistics, per capita water resources in China are less than a third of the world's average. The companies expect to close the deal before the end of the year, subject to approval from UEL's shareholders...Read More »
Alternative energy company InEnTec Inc. (Bend, OR) said it raised $20 million in the first round of a $69 million private placement, though it did not disclose the investors. The innovative plasma gasification to energy company said it would use the capital to fund new commercial projects.
InEnTec employs a proprietary system it calls the Plasma Enhanced Melter to produce a synthesis gas (syngas) from municipal and industrial wastes. Syngas can be converted into ethanol, methanol, clean diesel and other transportation fuels. InEnTec was formed in 1995 by scientists and engineers from MIT and Battelle. In March 2010, the company formed a joint venture with Waste Management, Inc. called S4 Energy Solutions to build and operate plasma gasification facilities using InEnTec's technology, including a renewable fuel project at the Columbia Ridge Landfill in Arlington, OR.
The company also converted its company structure from a limited liability corporation, or LLC, to a corporation and filed incorporation papers in Delaware...Read More »
Stericycle Inc. (Lake Forest, IL) reported second quarter revenue that rose by 18 percent to $410.4 million. Net income increased more modestly by 4.5 percent to $55.5 million or $0.63 per diluted share compared with $53.1 million or $0.61 per diluted share for the second quarter of 2010. "We continue to see strong worldwide growth driven by new account acquisition," said Richard Kogler, chief operating officer of Stericycle, during a conference call to discuss earnings. The company completed 11 acquisitions in the second quarter, including seven domestic and four international companies, said CEO Mark Miller, during the conference call. Those acquisitions include Healthcare Waste Solutions, which was finalized in the quarter, he said. As no good deed goes unpunished, the stock has slid about 5 percent since the earnings announcement, not for failing to meet expectations, but rather for failing to beat expectations...Read More »
Waste Management's (Houston, TX) subsidiary WM Recycle America announced that it has acquired an e-waste recycling company Access Computer Products Inc. and its partner Mordell LLC, both based in Loveland, CO. Access Computer acquires and markets used electronics. Mordell refurbishes and sells used computer equipment obtained through Access and other third party suppliers. Rapidly changing technology and consumer demand for new gadgets makes e-waste one of the fastest growing waste streams. Because used equipment contains some hazardous materials, twenty-six states have mandated e-waste recycling programs to help keep them out of landfills. It is estimated that e-waste recovery constitutes a $5- billion-a-year industry, which employs more than 30,000 full-time workers in the U.S. and which collected and processed over 3.5 million tons of used and end-of-life electronics equipment in 2010, up from 1.8 million tons in 2009.
The acquisition dovetails with Waste Management's overall strategy to offer its customers a broad array of waste solutions that also helps them achieve their sustainability goals. Waste Management has its own sustainability goal of tripling the amount of material it recycles to 20 million tons by 2020...Read More »
Regional waste management company Advanced Disposal Services, Inc. (Jacksonville, FL) has bought Eatonton, GA-based Curly's Waste Disposal LLC. The deal includes a transfer station, 150 commercial customers, contracts and containers, and four roll-off trucks. The company views it as a strategic (tuck-in) acquisition since it overlaps existing operations that can utilize the transfer station and where the waste volumes can be taken to its Rogers Lake Road Landfill in nearby Lithonia, GA. "Curly Waste Disposal presented a great opportunity to strengthen the density and efficiencies of our roll-off collection operations in Putnam County while providing additional volume to our landfills," said Advanced Disposal's Regional Vice President Charlie Gray...Read More »
US Ecology, Inc. (Boise, ID) reported that second quarter net income rose 102 percent to $4.7 million helped by improved demand, especially for site cleanups. Revenue for the second quarter of 2011 was $39.5 million, up 99% from $19.8 million a year ago. The company's acquisition of Stablex Canada Inc. in October 2010 contributed $9.8 million of that revenue. Excluding Stablex, revenue increased by 50% over the same quarter last year. The company attributes the stunning growth to improved economic conditions. Volumes disposed at its Idaho, Nevada, Texas and Quebec waste facilities (including thermal recycling) was up 79 percent (up by 40 percent in the US alone) over last year's. Similarly, pricing was up by 7 percent, primarily due to the addition of Stablex. "Improved demand for our services, especially for private-sector cleanups, pushed revenue higher," said Jeff Feeler, vice president and CFO...Read More »
Synagro Technologies (Houston, TX) won a 10-year, $28 million contract to operate Camden County Municipal Utilities Authority's (CCMUA) green energy sludge drying facility set to begin soon following the contract 's approval by the Department of Community Affairs. At the facility, Synagro will convert sewage sludge into a renewable fuel, transforming waste into a valuable alternative energy resource. Synagro's contract with CCMUA is for facility operation and fuel product marketing and distribution. "Synagro's focus on green energy solutions makes us a perfect fit for cities like Camden looking to improve sustainability and manage costs," explained Bill Massa, president and CEO of Synagro. "We transform organic waste materials into valuable resources and renewable fuels to meet civic goals while balancing the needs of communities."...Read More »
Chrin Brothers Inc. (Easton, PA) unveiled a new $8 million landfill gas-to-energy plant at its Glendon Green Energy Park across from its landfill in Easton, PA. Methane gas from the Chrin Landfill in Williams Township south of Interstate 78 is piped under the highway through a 400-foot tunnel into a plant containing two Caterpillar engines, which together will produce 3.2 megawatts of electricity or enough to power 2,200 homes. A division of PPL Renewable Energy called Millennium Design Builders designed, built and is now operating the plant. The project received $1 million in federal stimulus funding through a grant provided by the Pennsylvania Economic Development Authority...Read More »
The Solid Waste Association of North America (SWANA) has approved a policy for guiding the responsible disposal of unused or expired household pharmaceuticals. According to the policy, companies selling or dispensing pharmaceuticals should be encouraged to participate in the development and implementation of safe and secure take-back programs, especially since these programs are not yet widely available. SWANA encourages solid waste agencies to instruct consumers to follow federal guidelines for ensuring that unwanted pharmaceuticals will not be used by those for whom the materials were not prescribed. Where the take-back program is available, it should be promoted as an alternative to the flushing recommendation on certain existing drug labels. Moreover, consumers in communities served by a waste-to-energy or Subtitle D municipal waste landfills can confidently dispose of their unused medications in household trash because the waste will be safely and effectively disposed, according to the policy, developed by Marc Rogoff, project director for SCS Engineers. "Safe disposal of unused or expired pharmaceuticals is an important facet of a community's integrated solid waste management plan," Rogoff said in a statement...Read More »
Heritage-Crystal Clean, Inc. (Elgin, IL), a provider of parts cleaning and special waste services, announced second quarter revenues that were up by 26.5%, to $32.0 million, compared to $25.3 million a year ago as both their oil business and their environmental services units showed strength. Net income rose accordingly to $14.3 million from $10.9 million last year. Revenue from their oil business segment, which includes used oil collection and sales, rose by $3.1 million or 259% on expanded activity and higher oil prices. Revenue from the environmental services segment -- that includes parts cleaning, containerized waste, and vacuum services -- rose by $3.5 million, or 14.5%. Mr. Joseph Chalhoub, President and Chief Executive Officer of Heritage-Crystal Clean, Inc. commented, "We are pleased with our second quarter, as we delivered results better than our plans. . . We continue to ramp up our used oil collection services, leveraging our 67 branch locations and tens of thousands of customers. Construction of the re-refinery remains on schedule for production of lube oil near the end of the year."...Read More »