Weekly News Bulletin: Dec. 12-18, 2012


Republic Services Could See Outsized Returns Says Barron's

Republic Services could generate a total return of 30 percent over the next 12 months, according to a recent article in Barron's Magazine that highlights recent research from Goldman Sachs. That is based on a price target of $37 per share, which is less than 16 times projected 2014 earnings, and in line with the stock's historical average price-to-earnings ratio. The company is already seeing a recovery in waste collection volume which is expected to increase over the next year as the economy improves and housing and construction recover. Another analyst, Tony Bancroft of Gabelli & Co., says the company "has been a good steward of capital" and points to future growth with the housing recovery. Others agree. Last month Bill Gates' private investment firm Cascade boosted its investment in the company by 14 percent to 89 million shares, which represents a 25 percent stake...Read More »



Waste Management Boosts Dividend; Confident in Future Cash Flow

Waste Management, Inc. (Houston, TX) said that on the strength of its strong cash flows, it is increasing its quarterly dividend by 2.8 percent from $0.355 to $0.365 per share, and from $1.42 to $1.46 per share on an annual basis. CEO David Steiner said he expects "operating free cash flow to grow by double digits" next year which will again exceed $1 billion despite headwinds from taxes due to the expiration of bonus depreciation. This marks the 10th consecutive year that the company has raised its dividend.

Despite the decline in free cash flow last year, the company has voiced confidence in improvement over the next year. In part, because 60 percent of last year's decline was owing to falling recycled commodity prices and tax increases, neither of which is expected to continue this year...Read More »



Casella Buys BBI Waste for $23 Million

Casella Waste Systems, Inc. (Rutland, VT) announced that it will expand in northern New England through the acquisition of Blow Brothers Inc. for $20 million in cash and 625,000 shares of Casella common stock (roughly $2.65 million at current prices). Blow Brothers, which does business as Bestway Disposal Services and BBI Waste Industries, generates about $20 million in annual revenue. "BBI's operations overlay well with our footprint in New Hampshire and Maine, and we expect the acquisition to drive incremental value from our existing operations and provide a growth platform in several new market areas," said John Casella, CEO of Casella Waste. "BBI collects and transfers roughly 105,000 tons of solid waste and recyclables and we expect to internalize close to 80% of this material at our facilities," he added...Read More »



Activists and Industry Urge Court to Reject EPA Timeline for Coal Ash Rule

Environmental groups and coal ash recyclers are suing the EPA and urging a federal court to reject the agency's request for additional time to finish its long-delayed ash disposal rule. The groups include Appalachian Voices, Chesapeake Climate Action Network, Environmental Integrity Project, and others, along with recyclers Headwaters Resources Inc. and Boral Materials Technologies Inc. are suing EPA in the consolidated case Appalachian Voices, et al. v. Lisa Jackson in the US District Court for the District of Columbia to force a hard deadline to determine how the agency plans to regulate coal combustion residuals (CCR), otherwise known as coal ash.

The environmentalists argue that further delay is causing increased environmental contamination, while the recyclers say that regulatory uncertainty hinders beneficial reuse of the material, especially out of concern that EPA might label it a hazardous material...Read More »



House and Senate Members Push for Tax Changes to Help Renewables

A group of 9 US senators and 19 US House members are asking the Obama administration to adjust the tax code to give renewable energy projects access to lower cost capital. Their concern is that renewable energy projects are at a disadvantage to fossil-fuel projects which can raise capital through partnerships that allow income to be taxed at the shareholder level, rather than at both the corporate and shareholder levels. The lead authors of the letter, Sen. Chris Coons (D-DE) and Rep. Ted Poe (R-TX), introduced companion legislation, S. 3275 and HR 6437, respectively, which would allow renewable energy projects to form master limited partnerships (MLPs) often employed by oil, gas, and coal infrastructure projects and similar to real estate investment trusts (REITs) employed by energy transmission projects...Read More »


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