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Solid Waste
Waste Connections Inc. and Progressive Waste Solutions Ltd. remain committed to a tie-up that will place the combined
companies’ corporate address in Canada despite the Treasury Department’s proposed tax regulations on inversion deals.
The new regulations are expected to have an impact of less than 3% to combined adjusted free cash flow
The city of Louisville, Kentucky Department of Public Works has reached out to a group of consultants in order to create a
10-year solid waste plan. The move is an effort to help the city and Jefferson County reach its 90% diversion goal by 2042.
Three phases will be involved in the $350,000 project: a waste characterization study, an examination of current collection
systems and the actual development of the 10-year plan
Antero Midstream Partners LP announced plans to construct a landfill near its proposed 60,000 barrel/day wastewater
treatment complex in Doddridge County, West Virginia. The facility would process the wastewater from Antero Resources
Corp.'s shale wells in Ohio and West Virginia, and produce salt and sludge byproducts in the process. The landfill would be
used to dispose of salt not sold to third parties. On average, the landfill would reduce water truck travel by over ten million
miles annually
Officials for Ontario County, NY announced that that the third and final permit to expand Ontario County Landfill was
granted. This allows Casella Waste Systems to create a new 43.5-acre deposit area at the existing landfill. The Finger
Lakes Zero Waste Coalition is opposing the expansion arguing that the landfill and the waste-to-energy plant on the same
site should be treated as a single source of emissions
As of March 31, 2016, the Solid Waste subsector is trading at a median forward 2016E P/E of 23.8x and EV/2016E
EBITDA of 9.8x, vs. 19.4x and 8.5x, respectively, at December 31, 2015
Hazardous / Environmental Remediation
A newly introduced bill seeks to expand a long-standing general ban against hauling radioactive waste into Kentucky for
disposal. This is in response to the dumping of radioactive oil and gas drilling waste from West Virginia. It would specify
that such wastes are banned whether they are naturally occurring or are the result of processing
A new ocean conservancy report, Stemming the Tide, indicates that 60% of the plastic trash in the world’s oceans come
from five countries: China, Vietnam, Philippines, Indonesia and Thailand. Economic growth in these areas outpaces trash
collection infrastructure and waste management regulations. The report follows an announcement from the fall where The
Ocean Cleanup, an environmental pilot project, detailed plans for a 62-mile barrier in the Pacific Ocean
An oilfield landfill south of Williston is the first facility in North Dakota to propose accepting radioactive waste under new
state rules. The type of waste the facility proposes to accept – known as technologically enhanced naturally occurring
radioactive material, or TENORM – would include tank bottoms, sludge and filter socks that fall under the state’s limit of 50
picocuries per gram of radioactive material
The Environmental Protection Agency assisted contractors in Missouri with the removal of trash resulting from heavy rains
and flooding in December. Roughly 3,000 tons of residential debris and hazardous material was collected from Franklin,
Jefferson, St. Charles and St. Louis counties. The waste included drums, propane tanks, compressed gas tanks, major
appliances and batteries
As of March 31, 2016, the Hazardous / Environmental Remediation subsector is trading at a median forward 2016E P/E of
31.1x and EV/2016E EBITDA of 9.7x, vs. 17.4x and 6.5x, respectively, at December 31, 2015
Sources: Capital IQ; Waste Management World; Waste360; WasteDive; Company Websites
Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital
Markets Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital
Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was
not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it
should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or
sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of
any individual person or entity 1
Waste & Environmental Services Industry Review
Hazardous Germantown, TN approved a $3.9 million, five-year
trash collections contract with Waste Pro. The
contract shows a double-digit increase in price over
the current service provider. The city is discontinuing
business with the current provider after a series of
upsets to citizens’ services and associated fines and
fees the city incurred to resolve them.
Germantown, TN approved a $3.9 million, five-year
trash collection contract with Waste Pro. The
contract includes a 34% increase in price over the
current service provider. The city is discontinuing
business with the current provider after continued
poor service and associated fines and fees the city
incurred to resolve complaints
2
Medical Waste
A coalition of environmental and health organizations, agencies, activists and state legislators, called for the Food and Drug
Administration (FDA) to work more closely with the Environmental Protection Agency (EPA), the Drug Enforcement
Agency, and the White House Office of National Drug Control Policy to develop clear and consistent guidance for
consumers regarding the safe disposal of leftover household medications. The coalition claims that the flushing of
medications contributes to pharmaceutical pollution in the environment. Estimates are that 30 - 40% of prescribed
medications in American homes go unused
Stericycle has proposed relocating incineration operations to a new facility in Tooele County, UT. The new location would
allow the Company to burn 18,000 tons of hospital, medical and infectious (HMI) waste per year, more than double the
current capacity at the North Salt Lake City facility
As of March 31, 2016, the Medical Waste subsector is trading at a median 2016E P/E of 23.3x and EV/2016E EBITDA of
13.3x, vs. 23.4x and 10.1x, respectively, at December 31, 2015
Waste to Energy
The Bowerman Landfill, located in Irvine, CA, just launched a $60 million waste-to-energy facility that was built by
Bowerman Power. The facility has capacity to generate 160,000 megawatt-hours/year from methane gases. The total
amount of electricity produced annually by Orange County landfills is now 380,000 megawatt-hours
Smiths Creek Landfill, in St. Clair County, MI, has seen favorable results from the municipal solid waste “bioreactor landfill”
initiative implemented in 2000. The county introduced human bio-waste from residential septic tanks to significantly speed
up decomposition of waste. The landfill generates up to 3.2 megawatts (MW) through the increased production of methane
Biomass-to-liquid specialist, Velocys, has entered into an agreement with Ventech Engineers to install process modules for
ENVIA’s Oklahoma City landfill gas-to-liquid (GTL) plant. The project will produce Syngas through steam methane
reforming while also converting syngas to “paraffinic hydrocarbon.” The by-products can be blended with naturally occurring
crude oil to produce ultra-clean diesel, kerosene, naptha, lubricants and waxes, among other “green” products
As of March 31, 2016, the Waste to Energy subsector is trading at a median forward 2016E P/E of 23.9x and EV/2016E
EBITDA of 11.2x, vs. 21.7x and 10.1x, respectively, at December 31, 2015
Recycling
Lakeshore Recycling Systems has started a new $8.5 million system that will increase recycling output by 40 times current
production. The Chicago-based material recovery facility (MRF) that will employ roughly 65 workers monitoring a mostly
automated system that will harvest / produce up to 200 tonnes of recycled material per day with the use of optical and
ferrous / non-ferrous sorters
The Solid Waste Authority of Central Ohio (SWACO) has canceled a $100 million project that would have brought a new
recycling facility and waste-to-energy facility to Franklin County. Team Gemini, the contractor, reportedly defaulted on rent
and was the subject of concerns regarding feasibility of technology given the proposed size and scale of the planned project
As of March 31, 2016, the Recycling subsector is trading at a median forward 2016E P/E of 14.2x and EV/2016E EBITDA
of 6.4x, vs. 11.5x and 5.9x, respectively, at December 31, 2015
Industry Highlight – Global Plastic Waste Management Market worth $26.6 billion by 2020
The global plastic waste management market is projected to be valued at around $26.6 billion by 2020, growing at a CAGR
of 3.1% from 2015 to 2020
The significant growth is due to the growing concern of the environmental impact of accumulating plastics
The main industry drivers are increasing urban population, stringent laws & regulations and increasing consumer
awareness
The end-use sector for recycled plastics includes packaging, furniture, construction, automotive and textile & clothing
The current leading players in the market include Veolia Environnement S.A., SUEZ Environnement Company, Waste
Management, Inc., Republic Services, Inc. and Stericycle Inc.
Sources: American Petroleum Institute; Bloomberg; Capital IQ; Waste Management World; Waste360; WasteDive; Company Websites
Waste & Environmental Services Industry Review (continued)
Waste to Energy xx
Recycling xx
3
Sources: Company Websites; SEC Filings; Waste360
Appliance Recycling Centers of America
04/05: Announced that it launched seven turnkey appliance recycling programs with multiple utilities. A majority of these
programs relate to contracts in five states: Delaware, Georgia, New Mexico, Maryland and Virginia. Management stated
that the increase in business is due to the Company’s scalable solution and the fact that utilities are embracing the benefits
of energy-efficiency programs for ratepayers and the environment
03/39: Announced that the Climate Action Reserve approved the issuance of carbon offset credits for two greenhouse gas
(GHG) destruction projects undertaken in September and November of 2015. The carbon offset credits will be issued into
the California cap-and-trade compliance program, a plan that encourages the destruction of GHGs, resulting in $1 million
in revenue for ARCA and $700,000 in revenue for ARCA’s joint venture, ARCA Advanced Processing, LLC
Casella Waste Systems
02/03: Announced that the New York State Department of Environmental Conservation has issued a permit to expand the
Ontario County landfill disposal area by 43.5 acres, which will create approximately 13 years of additional airspace at the
current run-rate. The landfill located in Seneca, New York is currently permitted to accept up to 917,694 tons per year of
municipal solid waste
Clean Harbors
03/21: Announced the opening of new offices along the western end of the transcontinental freeway in Washington state.
The new locations will allow field services crews to serve the whole of Washington, Eastern Oregon, North Idaho and
Western Montana. The new service centers will provide tank cleaning, decontamination and dismantling, excavation, pond
cleaning, marine booming and emergency response services
01/28: Announced the first phase of an extensive expansion of its Lambton, Ontario facility. The project will nearly double
the Lambton Landfill capacity from 1.9 million cubic meters to 3.7 million cubic meters. The Lambton site is geographically
advantageous due to its proximity to its Sarnia incinerator, the impervious clay soil that allowed the Company to forgo a
landfill liner, and relative isolation in Southern Ontario farmland
Commercial Metals Company
02/09: Announced the closure of its fence post operations in Magnolia, Arkansas. Production will be relocated to the San
Marcos, Texas production facility, as operations in Magnolia wind down and cease in their entirety by the end of the
company's third fiscal quarter. The decision to consolidate production in Texas is in response to, what the Company
believes to be, unfair trade practices relating to several products
Covanta Holding Corporation
04/05: Acquired a material processing facility in Augusta, Georgia from US Ecology. The facility provides non-hazardous
waste solidification, shredding, water treatment and transportation services to commercial and industrial customers. The
acquisition expands the Company’s existing Southeast network, complementing current waste to energy facilities in
Florida and Alabama, as well as the Company’s material processing facilities in North Carolina
02/11: Announced the execution of a long-term waste supply contract for the Dublin Waste-to-Energy facility with Panda,
one of the leading waste and recycling collection companies in Ireland. The project is a Public Private Partnership (PPP)
between Covanta and Dublin City Council that will provide the Dublin region with a long-term sustainable and
environmentally superior waste management solution
Newalta Corporation
03/31: Announced that it entered into an agreement with a syndicate of underwriters to raise gross proceeds of $26.6
million. Separately, Newalta agreed to raise another $23.4 million from certain institutional investors on a private
placement basis. The net proceeds of the offerings will be used to reduce the Company’s bank indebtedness as well as
general corporate purposes
02/16: Restructured the business to withstand the lower oil price environment by suspending the dividend, reducing the
total capital spending budget and rationalizing incremental costs. The initiatives are designed to protect the Company’s
balance sheet through better debt management with improved cash flow
Key Company News (Q1 2016)
CLH Clean Harbor Environmental Services has been
awarded a three-year contract to continue its
involvement in Washington County’s household
hazardous waste (HHW) program. The Company
provides services to receive and package HHW,
electronics and recyclables. It also provides site
management at the Environmental Center while
ensuring that the facility meets regulatory
compliance and safety standards
4
Sources: Company Websites; SEC Filings; Waste360
Ormat Technologies
03/30: Announced its subsidiary has signed an agreement with Alevo Group SA to jointly build, own and operate the
Rabbit Hill Energy Storage Project, located in Georgetown, Texas. Ormat will own and fund the majority of the Rabbit Hill
energy storage project and, under the terms of the agreement, will provide engineering, construction services and the
balance of plant equipment. The strategic move aligns with the Company’s stated objective of entering the energy storage
market in order to diversify revenues while transitioning from a geothermal company to a recognized leader in the
renewable energy industry
03/14: Signed an Investment Agreement and Shareholders Agreement with Sageos holding, a fully owned subsidiary of
Bureau de Recherches Géologiques et Miniéres. Ormat Technologies believes that its technology and expertise will
increase efficiency within existing facilities in order to reach design capacity
Perma-Fix Environmental Services
02/18: Announced that it was awarded a six month contract extension by KEMRON Environmental Services Inc. to
continue to provide radiological support services to KEMRON at the 10-acre Safety Light Corporation site located in South
Centre Township near Bloomsburg, Pennsylvania.
01/20: Announced that is was selected by the U.S. Navy for a $240 million, 5-year Comprehensive Long-Term
Environmental Action Navy (CLEAN) contract for environmental remediation services at various installations, primarily in
the Mid-Atlantic, Washington, Northeast, Southwest and EURAFSWA AORs / Puerto Rico regions
Progressive Waste Solutions
01/25: Appointed Dan Pio as Chief Executive Officer, effective January 29, 2016. Joseph Quarin is stepping down from the
role of President and Chief Executive Officer as well as the Company’s Board of Directors. Progressive had previously
announced that Mr. Quarin planned to step down during the integration period of the Company’s proposed combination
with Waste Connections Inc.
Republic Services, Inc.
01/15: Announced changes to its organizational structure and customer engagement model that are designed to better
serve its 14 million customers. The Company has realigned its field support functions by combining two organizational
layers into one. This includes the elimination of its three regions, the consolidation of its 20 areas into 10 and the
streamlining of select roles at its Phoenix Headquarters. The Company also plans to invest approximately $20 million in
2016 to design and implement Customer Resource Centers and other customer-focused initiatives. These initiatives are
expected to contribute approximately $10 million of annual cost savings beginning in 2018
Shanks Group plc
01/05: Announced that it was awarded a food waste contract from the Buckinghamshire County Council. The contract will
run for the next two years with the potential for three additional one year extensions. Under the contract, Shanks will
manage the treatment of approximately 7,000 tonnes of food waste in the northern part of Buckinghamshire, UK. The
waste will be treated at Shanks’ Westcott Park anaerobic digestion facility near Aylesbury. Westcott Park has capacity to
process 48,000 tonnes of food waste each year and export three megawatts of green electricity back to the National Grid
Waste Connections, Inc.
Announced the early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976 in connection with the previously announced agreement to merge in an all-stock transaction with Progressive
Waste Solutions. The transaction is expected to close in the second quarter of 2016, and remains subject to other
customary closing conditions, including the approval of both companies’ shareholders
Key Company News (Q1 2016) (continued)
Closed Date Acquirer (Parent) Target (Seller) Highlights
4/11/2016 WS Atkins plc EnergySolutions, Inc,
Projects, Products and
Technology Business
(EnergySolutions, Inc.)
WS Atkins acquired Energy Solutions’ Projects, Products and Technology
business for $318 million
The Projects, Products and Technology business comprises nuclear waste
remediation projects, products and technology solutions
3/10/2016 Lakeshore Recycling
Sys LLC C&D Recycling Lakeshore Recycling Systems acquired C&D Recycling for an undisclosed
consideration
C&D Recycling provides recycling services for construction and demolition debris
2/24/2016 New Jersey-
American Water
Company, Inc.
(American Water
Works Company)
Roxiticus Water Co Inc. New Jersey-American Water Company acquired Roxiticus Water Company for an
undisclosed consideration
Roxiticus Water Co provides water and wastewater utility services in New Jersey
2/11/2016 [1] GFL Environmental
Inc. Enviro-Viridis Development
Corporation
(Novacap)
GFL Environmental agreed to acquire Enviro-Viridis Development Corporation
from Novacap for an undisclosed consideration
Enviro-Viridis Development Corporation recycles and processes domestic,
commercial and industrial waste materials
2/3/2016 Safety-Kleen
Systems, Inc.
(Clean Harbors Inc.)
Bango Oil, LLC
(Vertex Energy, Inc.)
Safety-Kleen Systems acquired Bango Oil from Vertex Energy for $35 million
Bango Oil offers re-refined oils and lubricants from used oil
2/3/2016 [1] Veolia
Environnement S.A. Kurion Inc.
(Lux Capital Management,
Firelake Capital Management,
LLC and Acadia Woods
Partners, LLC)
Veolia Environnement agreed to acquire Kurion from Lux Capital Management,
Firelake Capital Management and Acadia Woods Partners for $350 million
Kurion develops technological solutions to minimize and stabilize nuclear and
hazardous waste for safe, secure and permanent disposal
1/19/2016 [1] Waste Connections
Inc. Progressive Waste Solutions
Ltd.
(Blue Harbour Group, L.P. and
Sentry Investments Inc.)
Waste Connections agreed to acquire Progressive Waste Solutions through a
reverse merger valued at ~$2.670 billion and a 4.4% premium of TSX:BIN’s prior
closing price
Progressive Waste Solutions Ltd provides non-hazardous solid waste collection
and landfill disposal services to commercial, industrial, municipal and residential
customers in ten states and five Canadian provinces
1/8/2016 Waste Management,
Inc Southern Waste Systems LLC Waste Management, Inc acquired Southern Waste Systems LLC for an
undisclosed consideration
Southern Waste Systems collects, processes and recycles waste for commercial,
industrial, municipal and residential clients
5
Sources: Bloomberg; Thomson Reuters; Capital IQ; SEC Filings
[1] Date referenced is the announced date of the proposed transaction
[2] Amount in USD; Initial amount reduced from $175 CAD to $160 CAD on 3/1/2016
[3] Blended rate for 2015 was 2.59%
Close Date Company Type Use of Proceeds Amount (MM) Maturity Rate / Spread
4/30/2016 Newalta Corporation Revolving Credit Facility General Corporate Purposes $145 [2] 7/12/2018 NA [3]
3/14/2016 Clean Harbors Inc. Secured Bonds Acquisition – Services Matrec $250 6/1/2021 5.125%
2/24/2016 Aqua America Inc. Revolving Credit Facility General Corporate Purposes $250 2/23/2021 L + 725
1/26/2016 GFL Environmental Senior Notes Refinance Existing Bank Debt $300 2/1/2021 9.875%
For additional information about KeyBanc Capital Markets, contact:
Waste & Environmental Services Team
Rod MacDonald
Managing Director
Cleveland
216-689-4445
Jeff Lakarosky
Vice President
Cleveland
216-689-5139
Bobby Grebenc
Analyst
Cleveland
216.689.5665
Select Recent Merger and Acquisition Activity (Q1 2016)
Select recent capital markets (equity / debt) activity (Q1 2016)
Newalta 4/30/2016
$145M Revolver
General Corporate Purposes
7/12/2018
2.59%
$ in millions, except per share data Price
as of Market Enterprise Stock Performance (% Change) EV / LTM Consensus EPS Price to EPS Consensus EBITDA
Company 3/31/2016 Cap Value 1 week 1 month 3 month 1 year EBITDA 2016E 2017E 2016E 2017E
Casella Waste Systems Inc. CWST $6.70 $275 $796 (1.9%) 6.0% 12.0% 19.4% 8.3x ($0.08) $0.09 NM NM
Progressive Waste Solutions Ltd. TSX:BIN 31.14 3,388 5,032 (0.7%) (0.8%) 24.4% 11.0% 10.3x 1.22 1.41 25.5x 22.1x
Republic Services, Inc. RSG 47.65 16,428 23,972 (0.4%) 2.9% 9.0% 22.3% 9.4x 2.15 2.31 22.2x 20.6x
Waste Connections Inc. WCN 64.59 7,906 10,073 (0.2%) 2.0% 15.0% 35.2% 14.2x 1.96 2.24 33.0x 28.8x
Waste Management, Inc. WM 59.00 26,234 35,198 (0.2%) 4.2% 11.3% 13.3% 10.3x 2.78 2.94 21.3x 20.1x
Average (0.7%) 2.9% 14.3% 20.3% 10.5x 25.5x 22.9x
Median (0.4%) 2.9% 12.0% 19.4% 10.3x 23.8x 21.4x
Avalon Holdings Corporation AWX $1.88 $7 $17 (1.6%) 4.4% (0.5%) (31.7%) 10.8x NA NA NM NM
Clean Harbors, Inc. CLH 49.34 2,842 4,040 3.0% 12.9% 18.5% (13.6%) 8.4x 1.03 1.50 47.9x 32.9x
Heritage-Crystal Clean, Inc. HCCI 9.94 222 270 8.0% 24.1% (6.2%) (19.4%) NM 0.32 0.52 31.1x 19.1x
Newalta Corporation TSX:NAL 1.50 84 337 2.1% (33.1%) (44.4%) (86.0%) 9.3x (0.89) (0.47) NM NM
Perma-Fix Environmental Services Inc. PESI 3.70 43 52 (0.3%) (2.4%) (0.5%) (3.9%) 10.8x NA NA NM NM
Secure Energy Services Inc. TSX:SES 6.36 1,003 1,213 (0.5%) 10.9% (0.5%) (46.7%) 16.6x (0.18) 0.03 NM NM
US Ecology, Inc. ECOL 44.16 961 1,254 7.0% 12.8% 21.9% (10.3%) 10.2x 1.85 2.10 23.9x 21.1x
Average 2.5% 4.2% (1.7%) (30.2%) 11.0x 34.3x 24.4x
Median 2.1% 10.9% (0.5%) (19.4%) 10.5x 31.1x 21.1x
Sharps Compliance Corporation SMED $5.50 $85 $71 5.4% 7.8% (36.8%) (13.5%) NM $0.28 NA 19.6x NM
Stericycle, Inc. SRCL 126.19 10,682 13,858 1.7% 7.0% 4.6% (9.1%) 13.2x 4.68 5.45 27.0x 23.2x
Average 3.5% 7.4% (16.1%) (11.3%) 13.2x 23.3x 23.2x
Median 3.5% 7.4% (16.1%) (11.3%) 13.2x 23.3x 23.2x
Covanta Holding Corporation CVA $16.86 $2,190 $4,584 2.9% 21.0% 10.5% (19.8%) 12.9x $0.03 $0.17 NM NM
Ormat Technologies Inc. ORA 41.24 2,033 2,862 2.0% 7.4% 14.0% 8.1% 14.0x 1.77 1.88 23.2x 21.9x
Shanks Group plc LSE:SKS 1.20 476 1,022 1.8% 3.8% (14.0%) (19.4%) 14.7x 0.03 0.05 35.4x 21.8x
Average 2.2% 10.7% 3.5% (10.4%) 13.9x 29.3x 21.9x
Median 2.0% 7.4% 10.5% (19.4%) 14.0x 29.3x 21.9x
Appliance Recycling Centers of America Inc. ARCI $1.18 $7 $23 11.3% 49.4% 12.4% (39.8%) NM NA NA NM NM
Commercial Metals Company CMC 16.97 1,944 2,661 1.4% 10.8% 25.1% 8.6% 5.9x 1.19 1.10 14.2x 15.4x
Industrial Services of America, Inc. IDSA 2.46 20 19 (12.8%) 44.7% 87.9% (47.0%) NM NA NA NM NM
Schnitzer Steel Industries, Inc. SCHN 18.44 493 681 (1.8%) 23.3% 30.1% 21.8% 10.4x (0.06) (0.49) NM NM
Sims Metal Management Limited ASX: SGM 6.64 1,329 1,033 (1.3%) 28.0% 20.8% (25.2%) 14.6x (0.31) (0.33) NM NM
Average (0.6%) 31.3% 35.3% (16.3%) 10.3x 14.2x 15.4x
Median (1.3%) 28.0% 25.1% (25.2%) 10.4x 14.2x 15.4x
Overall Average 1.1% 11.2% 9.7% (11.2%) 11.3x 27.0x 22.5x
Overall Median 0.6% 7.6% 11.7% (11.9%) 10.6x 24.7x 21.8x
Recycli
ng
Ticker
Hazard
ou
s /
En
vir
on
men
tal
Rem
ed
iati
on
So
lid
Waste
Med
ical
W
aste
Waste
to
En
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y
6
Sources: Capital IQ; Thomson Reuters
Note: LTM represent financials for the period ending 12/31/2015 or the latest available quarter; Forward EPS shown are 2016E per consensus equity research estimates
[1] Outlier EV/EBITDA and EPS multiples excluded from average and median calculations
Boldface denotes KeyBanc Capital Markets Equity Research coverage
Waste & Environmental Services Public Operating & Trading Statistics
7
Sources: Capital IQ; Thomson Reuters
Boldface denotes KeyBanc Capital Markets Equity Research coverage
Waste & Environmental Services Public Credit Statistics
$ in millions
Total Net LTM Total Debt / Net Debt / Total Debt / LTM EBITDA / LT S&P
Company Ticker Debt Debt EBITDA LTM EBITDA LTM EBITDA Capital Interest Rating
Casella Waste Systems Inc. CWST $524 $521 $92 5.7x 5.7x 104.3% 2.3x B
Progressive Waste Solutions Ltd. TSX:BIN 1,572 1,537 481 3.3x 3.2x 58.2% 7.6x BBB-
Republic Services, Inc. RSG 7,574 7,542 2,558 3.0x 2.9x 49.3% 7.1x BBB+
Waste Connections Inc. WCN 2,171 2,160 709 3.1x 3.0x 52.2% 11.0x BBB+
Waste Management, Inc. WM 11,231 11,192 3,347 3.4x 3.3x 62.6% 8.6x A-
Average 3.7x 3.6x 65.3% 7.3x
Median 3.3x 3.2x 58.2% 7.6x
Avalon Holdings Corporation AWX $8 $6 $2 5.4x 4.2x 16.6% 10.5x -
Clean Harbors, Inc. CLH 1,383 1,198 493 2.8x 2.4x 55.8% 6.4x BB+
Heritage-Crystal Clean, Inc HCCI 71 47 26 2.8x 1.9x 27.2% 13.6x -
Newalta Corporation TSX:NAL 237 236 36 6.5x 6.5x 49.1% 2.4x -
Perma-Fix Environmental Services Inc. PESI 10 9 5 2.1x 1.8x 17.9% 6.7x -
Secure Energy Services Inc. TSX:SES 199 196 76 2.6x 2.6x 25.1% 10.1x -
US Ecology, Inc. ECOL 298 292 123 2.4x 2.4x 53.8% 5.3x BB
Average 3.5x 3.1x 35.1% 7.9x
Median 2.8x 2.4x 27.2% 6.7x
Sharps Compliance Corporation SMED $0 ($14) $2 NM (6.0x) NM NM -
Stericycle, Inc. SRCL 6,569 6,513 1,017 6.5x 6.4x 53.9% 13.1x A
Average 6.5x 0.2x 53.9% 13.1x
Median 6.5x 0.2x 53.9% 13.1x
Covanta Holding Corporation CVA $2,486 $2,392 $362 6.9x 6.6x 79.5% 2.7x BB-
Ormat Technologies Inc. ORA 920 735 296 3.1x 2.5x 45.9% 4.1x -
Shanks Group plc LSE:SKS 666 575 69 9.6x 8.3x 71.1% 1.7x -
Average 6.5x 5.8x 65.5% 2.8x
Median 6.9x 6.6x 71.1% 2.7x
Appliance Recycling Centers of America Inc. ARCI $18 $17 ($4) NM NM 60.6% NM -
Commercial Metals Company CMC 1,098 717 454 2.4x 1.6x 44.9% 6.1x BB+
Industrial Services of America, Inc. IDSA 0 (1) (6) NM NM 0.1% NM -
Schnitzer Steel Industries, Inc. SCHN 204 185 65 3.1x 2.9x 28.0% 7.5x -
Sims Metal Management Limited ASX: SGM 6 (281) 70 0.1x (4.0x) 0.4% 8.6x -
Average 1.9x 0.2x 26.8% 7.4x
Median 2.4x 1.6x 28.0% 7.5x
Overall Average 3.9x 2.9x 45.6% 7.1x
Overall Median 3.1x 2.9x 49.3% 7.1x
So
lid
Waste
Med
ical
Waste
Waste
to
En
erg
yH
azard
ou
s /
En
vir
on
men
tal
Rem
ed
iati
on
Recycli
ng
Value of Construction – Annualized and Seasonally Adjusted (through February 2016)
U.S. Crude Oil and Petroleum Products Exports and Imports (through March 2016)
Sources: U.S. Census Bureau; Energy Institute of America
According to the U.S.
Census Bureau, February
2016 construction spending
totaled $1,144 billion, up
10.3% YoY
Overall construction
decreased 0.5% MoM
propelled by gain in
residential construction and
loss in non-residential real
estate
U.S. crude oil and petroleum
gross product imports and
exports were 9,959 and
4,696 million bpd,
respectively, for the month of
March
Gross imports and exports
were up 1% and 7% MoM,
respectively
Net imports in December
were down 3.8% MoM and
up 10.1% YoY
8
Industry Fundamentals
453.7
690.3
$30
$130
$230
$330
$430
$530
$630
$730
$830
Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16
Bill
ion
s o
f Do
llars
Residential Non-Residential
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16
Th
ou
san
d B
arre
ls p
er D
ay (
Mo
nth
ly A
vera
ge)
Imports Exports Net Imports
9
CPI Indicator (through February 2016) and PMI (through March 2016)
Oil & Gas Activity (through April 2016)
The number of oil & gas rigs
decreased 56.1% YoY
The number of horizontal or
directional drilling rigs
decreased 55.7% YoY
CPI:
The February 2016
consumer price index came
in at 237.1, an increase of
approximately 8 basis points
from the January 2016 level
of 236.9, driven by rising
natural gas prices
PMI:
The manufacturing PMI
came in at 51.8 in March,
above the February level of
49.5, indicating growth in the
manufacturing sector
Sources: Department of Labor; Baker Hughes
Industry Fundamentals (continued)
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0
300
600
900
1,200
1,500
1,800
2,100
2,400
Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16
% H
orizo
nta
l or D
irec
tion
alN
um
be
r o
f Ac
tiv
e U
.S.
Rig
s
Vertical Horizontal or Directional % Horizontal or Directional
237.1
220
225
230
235
240
Feb-13 Feb-14 Feb-15 Feb-16
Co
ns
um
er
Pri
ce
Ind
ex
(CP
I)
51.8
40
45
50
55
60
Mar-13 Mar-14 Mar-15 Mar-16
ISM
Pu
rch
as
ing
Ma
nag
ers
Ind
ex (P
MI)
$83
$70
$90
$110
$130
$150
$170
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
Mo
nth
ly R
ec
yc
led
Pa
pe
r P
ric
es
-O
CC
10
Recycled Paper Pricing (through December 2015) and Diesel Prices (through March 2016)
Sources: Bloomberg; American Metal Market
The cost of heavy melt and
shredded auto scrap have
decreased nearly 20.1% and
12.4% respectively from
March 2015. The cost of
copper scrap has fallen
19.4%, while aluminum
scrap and nickel scrap have
decreased 20.3% and
42.4%, respectively from
March 2015
Ferrous & Nonferrous Scrap Prices (through March 2016)
Industry Fundamentals (continued)
$2.09$2.18
$2.08
$2.32
$1.8
$2.2
$2.6
$3.0
$3.4
$3.8
$4.2
$4.6
$5.0
Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
U.S
. $
/ G
allo
n
US East Coast Midwest West Coast
$180
$207
$90
$190
$290
$390
$490
Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
U.S
. $
/ to
n
Heavy Melt #1 Shredded Auto
$0.60
$1.77
$2.45
$0
$2
$4
$6
$8
$10
Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
U.S
. $
/ lb
Aluminum Scrap Copper Scrap Nickel Scrap
Recycled Paper Pricing:
Monthly Recycled Paper
Prices declined to $83 during
March 2016, representing a
decrease of 2.4% compared
to the prior year period
Diesel Prices:
According to the Energy
Information Administration,
March 2016 diesel prices
averaged $2.11 per gallon,
representing a YoY decrease
of 24.9%
Source: Bloomberg
Short Term Rates Friday Last Week Change
1-Month LIBOR 0.44% 0.44% 0.00%
3-Month LIBOR 0.64% 0.64% 0.00%
Fed Funds 0.50% 0.50% 0.00%
Fed Discount 0.75% 0.75% 0.00%
Prime 3.50% 3.50% 0.00%
U.S. Treasury Yields
2-Year Treasury 0.78% 0.82% (0.04%)
5-Year Treasury 1.30% 1.36% (0.06%)
10-Year Treasury 1.83% 1.89% (0.06%)
Swaps vs. 3M LIBOR
2-Year 0.97% 1.00% (0.03%)
5-Year 1.32% 1.36% (0.04%)
10-Year 1.78% 1.80% (0.02%)
Equities and Commodities Turn Positive Current Rate Snapshot (as of May 2, 2016)
11
Source: Bloomberg, Federal Reserve
Fed Speak & Economic News
Central banks once again gripped the attention of market participants. The Federal Reserve and Bank of Japan echoed
the tone set by the European Central Bank last week, as of May 2, by remaining in wait-and-see mode
In the United States, the Federal Reserve acted largely in line with market expectations, with a few caveats. As
predicted, the federal funds rate was left unchanged; however, certain pieces of the statement were interpreted to have
a dovish lean. The outlook on the domestic economy was downgraded slightly, citing some softness in business
investments and exports, though it was noted that the housing sector and labor market do continue to show strength.
The initial release of GDP for the first quarter left more to be desired as it printed a dismal 0.5 percent quarter-over-
quarter. The global economy did, however, turn more positive in the eyes of the Fed as the line “global economic and
financial developments continue to pose risks”, was changed to “closely monitored” as fears of a significant global
slowdown and hard landing from the Chinese economy have abated. Kansas City Fed President Esther George was the
lone dissenter in the vote, arguing for a rate hike. Nonetheless, the door remains open for a hike in June, and important
economic releases this week, as of May 2, will be closely monitored by investors for any clues on the June FOMC
meeting
The Bank of Japan made a large splash in international markets due to its recent inaction. Markets were anticipating
further easing or even additional cuts to the benchmark rate, but instead received nothing as policy makers await
additional feedback from previously announced easing measures. The news sent markets sharply lower and the Nikkei
plummeted nearly 4 percent in the trading session, putting its year-to-date drop at almost 12 percent. Conversely, the
yen continued its march higher, reaching a 17-month high versus the dollar, another worrying sign to Japan’s policy
makers who fear further appreciation
Following a visit by President Obama, and repeated warnings on the perils of a ‘Brexit’ from the likes of the IMF, the
Bank of England, and Her Majesty’s Treasury, fears about the outcome of the June 23rd referendum have ebbed and
odds that Britain leaves the European Union appear to have dissipated. Nonetheless, the BoE has developed
contingency plans should sentiment change, preparing for major currency outflows
For the first time since the start of the year, the Dow Jones, S&P 500 and
crude oil are all higher Year-To-Date. The rise of global currencies against
the dollar, despite their countries’ best efforts to stem those gains, helped
push commodities higher and could improve the prospects of U.S. exports. A
weaker dollar also helps alleviate fears of a hard landing in China. When the
dollar rises, China imports tighter financial conditions at a time when it can
hardly afford to do so
Capital Markets Update
74.2%
(12.3%)
61.3%
40.9%
(11.0%)
31.9%
(40%)
0%
40%
80%
120%
160%
200%
240%
Apr-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16
Solid Waste Haz. / Environ. Remediation Medical Waste Waste to Energy Recycling S&P 500
12
Index Performance (through March 31, 2016)
Investment Grade and High Yield Bond Spreads (through April 4, 2015)
Sources: Capital IQ, Bloomberg
Solid Waste = CWST, TSX:BIN, RSG, WCN, WM
Hazardous / Environmental Remediation = AWX, CLH, ES, HCCI, TSX:NAL, PESI, TSX:SES, ECOL
Medical Waste = SMED, SRCL
Waste to Energy = CVA, ORA, LSE:SKS
Recycling = ARCI, CMC, IDSA, SCHN, SGM
Bond spreads have spiked
recently in response to recent oil
price volatility
Three of the five W&ES
subsectors posted positive
return for the three month period
ending March 31st. The Solid
Waste, Waste to Energy and
Recycling subsector posted a
gain of 14.3%, 3.5% and 35.3%,
respectively, while the
Hazardous / Environmental
Remediation and Medical Waste
subsectors posted returns of
(16.1%) and (1.7%),
respectively
Over the last twelve months, the
Solid Waste subsector has led
the broader W&ES peer group,
posting a gain of 20.3%
Over the last twelve months, the
W&ES subsector average return
was (9.6%) compared to the
S&P 500 index return of 0.0%
Capital Markets Update (continued)
146 bps234 bps
447 bps
662 bps
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
Apr-09 Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16
Sp
rea
d to
Ma
turi
ty
A Index BBB Index BB Index B Index
So lid
Waste
H az. / Env.
R emediat io n
M edical
Waste
Waste to
Energy R ecycling A verage
S&P
500
Last 12 M onths 20.3% (30.2%) (11.3%) (10.4%) (16.3%) (9.6%) 0.0%
Last 3 M onths 14.3% (1.7%) (16.1%) 3.5% 35.3% 7.1% (0.2%)
Last 1 M onth 2.9% 4.2% 7.4% 10.7% 31.3% 11.3% 4.1%#DIV/0!
13
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