Weekly News Bulletin: Dec. 5-11, 2012


Goldman Sachs Analyst Sees Recovery in Waste Business

Investment analyst Alex Ovshey of Goldman Sachs is optimistic about the waste business, an industry he now rates as "Attractive." He notes that residential fixed investment, or money spent on residences, is a key driver of municipal solid waste generation. He believes that the expected recovery in residential fixed investment from historic low levels will boost waste volume and pricing, which will benefit all waste firms. Consequently, he has upgraded his earnings outlook for a number of companies, including the industry's top two players Waste Management (Houston, TX) and Republic Services (Phoenix, AZ). Ovshey reiterated his "Buy" rating on Republic Services and added it to his conviction buy list. A conviction buy implies that Goldman's proprietary trading desk is backing that analysis and may be buying that stock for its own account. He has raised his price target for Republic shares to $37 from a previous price target of $30. Similarly, he has upgraded Waste Managementfrom "Neutral" to "Buy" and increased the company's price target by 21 percent from $33 to $42...Read More »



Casella Waste Names New CFO While Reporting Wider 2Q Loss

Casella Waste Systems, Inc. (Rutland, VT) reshuffled its management and reported a second quarter fiscal loss that widened on restructuring costs amid lower revenue that was hurt by lower recycled commodity prices and lower landfill volume. The company promoted its finance chief Ed Johnson to chief operating officer, replacing Paul Larkin, who left the company effective Nov. 30. Ned Coletta, who was until recently vice president of finance, is now CFO.

For the quarter, the company posted a net loss of $21.1 million, or ($0.68) per share, compared with $765,000, or ($0.03) per share, in the year-ago period. Revenue fell 7.3 percent to $120.3 million from $129.9 million last year. The latest quarter included a $9.7 million loss on the extinguishment of debt, $1.8 million in severance and reorganization charges related to its operational realignment unveiled in August, and a $0.1 million expense on the sale of Maine Energy Recovery. Without these charges, the net loss would have been $5.7 million, or ($0.18) per share...Read More »



Apple Doubles Fuel Cell from Waste to Power Data Center

Apple (Cupertino, CA) is doubling the size of its fuel cell project, which runs on landfill gas to power a data center in Maiden, North Carolina. Apple is adding fuel cells to increase output from 4.8 megawatts to 10 megawatts, following testing and initial success of the Maiden project. Powering the fuel cells is biogas from landfills that is cleaned and injected into the local natural gas pipeline (Directed Biogas). Fuel cells offer the advantage of converting biogas or natural gas to power more efficiently than combustion, without significant air emissions and with fewer moving parts. In this case, they will be using a renewable energy source and will not be dependent on the often unreliable and often more expensive energy grid...Read More »



Covanta Buys Delaware Valley Waste-to-Energy Plant for $94 Million

Covanta Holding Corp. (Morristown, NJ) has purchased the big 3,500 ton-per-day Delaware Valley Resource Recovery Facility in Chester, PA, which it already operates, from GE Energy Financial Services for $94 million in cash. The transaction includes the acquisition of about $122 million cash collateral trust and the assumption of $64 million in facility project debt principal and was funded with cash on hand and under the company's revolving credit facility. CEO and President Anthony Orlando said he believes that securing long-term control of the plant will strengthen the company's relationship with the Delaware County Solid Waste Authority, the plant's principal customer, as well as "open new opportunities." He also said it was a smart financial transaction that will be immediately accretive to adjusted EBITDA, free cash flow, and earnings...Read More »



Casella Waste Completes Sale of Incinerator to Biddeford, Maine

Casella Waste Systems, Inc. (Rutland, VT) said it has completed the sale of its Maine Energy Recovery Facility in Biddeford, Maine, to the city for $6.65 million. Under the terms of the agreement, the city will pay Casella over 21 years and has entered into 10-year waste handling and recycling collection agreements with the company. Casella will also continue to operate the facility for up to six months and promises to dismantle all facilities on the property except for the stack that houses cellular transmission equipment. "In September, we began construction of a new transfer station in Westbrook, Maine, to handle the majority of the waste currently disposed of at Maine Energy," said John Casella, chairman and CEO of Casella Waste Systems. "We expect to complete construction at Westbrook in late December, and to begin transferring waste historically directed to Maine Energy to other company landfills." That will likely be the Juniper Ridge Landfill in Old Town, owned by the state of Maine and operated by Casella, provided that the state DEP amends its existing permit to allow the acceptance of municipal solid waste (MSW) directly rather than only as a bypass stream from waste-to-energy facilities...Read More »



Veolia North America Names Former Executive Jeff Adix CEO

Veolia Environmental Services North America has named former executive Jeff Adix as its new president and chief executive officer. Adix replaces Richard Burke, who recently left the company to serve as president of Advanced Disposal Services, which acquired the assets of Veolia ES Solid Waste in a $1.9 billion deal announced last July. Adix returns to the company, having recently served as vice president for staffing company Manpower Group. He worked for Veolia from 2000 to 2009, serving as a member of the company's executive committee and holding various positions including senior vice president of support services and chief financial officer for the company's former solid waste business...Read More »



Fulcrum Withdraws IPO, Raises $175 Million to Build Waste-to-Ethanol Plant

Fulcrum BioEnergy, Inc. (Pleasanton, CA), which plans to build a waste-to-fuel plant near Reno, NV, has withdrawn its proposed initial public offering after having secured another $175 million to finance construction of the 10 million gallon per year facility. The "current IPO market environment remains challenging, especially for development stage companies," said Fulcrum President and Chief Executive Officer E. James Macias. "We intend to pursue an initial public offering in the future when market conditions are more favorable."

The plant is expected to take 18 to 24 months to construct once it begins in the middle of next year. Once operating, it will process 147,000 tons of municipal solid waste (MSW) into about 10 million gallons of ethanol annually...Read More »



Veolia Environnement Offers Cash for Notes Due 2018

Flush with cash from the sale of its US waste business, Veolia Environnement (Paris, France) is offering to buy up to $200 million of its 6% senior notes due 2018, $700 million of which are outstanding. The offer is designed "to optimize the use of the company's cash and cash equivalents, and to reduce its US dollar indebtedness." The price of the notes will be determined based on the yield to maturity of a U.S. Treasury reference security plus a spread determined using a modified "Dutch Auction" method. The offer expires on December 26...Read More »



Advanced Disposal Will Stay in Florida

Advanced Disposal Inc. (Jacksonville, FL) seems likely to keep its headquarters in Florida rather than relocate to Milwaukee, Atlanta, or Charlotte. The company has needed to double its existing office space and relocate since its $1.9 billion acquisition of Veolia's US waste business announced last July. Now, according to the Jacksonville Business Journal, the company is choosing to move to nearby St. Johns County where it is considering two locations. St. Johns County is said to have approved an incentive package within just four days of receiving a request from the company. Similarly, the City of Jacksonville approved an $895,000 incentive package in early October. Milwaukee had initially seemed the logical choice since that is where Veolia already has a large enough space (25,000 square feet) which is home to 59 workers compared to 37 employees in Jacksonville. The new Advanced Disposal headquarters is to have 120 to 135 workers and will include those from Advanced Disposal's sister company Interstate Waste. The cities of Atlanta and Charlotte also made proposals...Read More »



Industry Group Opposes Commercial Franchise Agreements

An industry trade group is fighting an Illinois city's decision to create a waste franchise agreement applied to commercial customers. The Illinois chapter of the National Solid Wastes Management Association (NSWMA) opposes the City of Deerfield's desire to raise money by bidding out the exclusive right to collect all commercial waste in the city. They say that what Deerfield is proposing can lead to higher costs for residents and is inefficient for serving commercial customers. The trade group acknowledges that this is a viable program for residential waste and recycling collection but not for commercial customers because businesses often have very different needs based on the types of waste they generate, as well as other needs related to their type of business. Moreover, the "one-size fits all cookie-cutter approach" under a franchise system tends to limit recycling options that are often required by businesses with particular waste streams...Read More »


Sign up to receive our free Weekly News Bulletin