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The Big Companies Emerge Stronger in Third Quarter

Date: November 9, 2020

Source: News Room

Encouraging news has emerged as the major publicly traded waste companies have released third quarter earnings this past week. In general, waste volumes, while still lower than year ago levels are considerably improved from the double-digit declines experienced in the second quarter.

Even C&D and special waste volumes are recovering, albeit more slowly, with the gradual reopening of the economy. Companies reported that roughly 70 percent of commercial customers that had cut or suspended business due to the pandemic had resumed service. This varied by region where tighter lockdowns in the Northeast for example were slower to recover.

Despite these pressures, the companies managed to preserve or even improve pricing such that most had core price improvements of 3-4 percent in the third quarter. Companies also exercised discipline in controlling costs, focused on technological improvements, limiting overtime and travel (easy), route management, equipment utilization and other efficiencies. This improved EBITDA margins significantly, more than 200 basis points in many cases as the crisis may have accelerated their transition into leaner enterprises.

M&A activity in the year especially for Waste Management and GFL added revenue from newly acquired assets. Another bright spot came from recycling whose volumes and pricing rose in conjunction with the stay at home orders.

Looking forward, most companies increased their guidance for the year but were reserved in their enthusiasm for a full recovery any time soon.