S&P Optimistic about the Waste Industry

Date: May 31, 2013

Source: Standard & Poor's

Ratings agency Standard & Poor's is optimistic about the waste industry having raised its 12-month outlook from neutral to positive. They believe that the recovering economy will allow higher pricing that will drive top-line organic growth even though commercial and residential collection volumes are expected to remain somewhat soft. However, industrial volume, in which they include construction and demolition (C&D) wastes, will rise in accordance with the recovering housing market. Recycling prices have stabilized and are expected to improve later in the year and into 2014.

The haulers will likely continue to divest underperforming assets in favor of accretive acquisitions. The pace of acquisitions could pick up as smaller operators tire of operating in a soft environment and as private equity firms revive their interest in the industry. The haulers will likely deploy cash flow not used for acquisitions to reduce debt and repurchase stock. They will also continue to enhance customer service to maintain a high retention rate amid rising prices.

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