WASTE MANAGEMENT, RECYCLING & REMEDIATION QUARTERLY UPDATE Q2 2019
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WASTE MANAGEMENT, RECYCLING & REMEDIATION QUARTERLY UPDATE Q2 2019
INDUSTRY OVERVIEW
WASTE COLLECTION SERVICES IN CANADA
The waste collection services industry in Canada is defined as collecting hazardous and non-hazardous waste and
recyclable materials. Non-hazardous waste includes municipal solid waste and industrial and commercial waste. The
industry includes transfer stations where waste is transferred from local vehicles to long-distance vehicles for transport to
disposal facilities. The industry includes private solid waste management companies that provide curbside collection,
recycling and other waste management solutions to both households and businesses.
• The waste collection services industry in Canada experienced steady INDUSTRY GLANCE
expansion during the five years leading up to 2017, growing at an
2018 Revenue
annualized rate of 2.8% to $5.5 billion.
• Rising consumer spending and consumption levels have resulted in an
increased residential waste output over the most recent five-year
$5.5B
period.
Annual Growth 2013–2018
2.8%
• Conversely, according to Statistics Canada non-residential waste
output experienced a decline between 2012 and 2016, likely a result
of a continued movement towards waste reduction and efficiency.
• Key external drivers: Projected Annual Growth 2018–2023
1. Population
2. Value of non-residential construction 1.6%
3. Demand from manufacturing
Number of Businesses in 2018
1,504
4. Demand from recycling facilities
5. World price of crude oil
• The industry has experienced structural change in recent years,
including: PRODUCTS AND SERVICES
• Shift to privatization – Many local governments have had SEGMENTATION (2018)
difficulty maintaining disposal sites and have sought relief by
contracting waste collection services to private operators.
However, the majority of municipalities in Canada continue to be
served by public waste management agencies. 15%
• Increased regulation – Increased federal and provincial regulation
has driven up industry costs across all segments. New regulations 6%
40%
are aimed at further development in the diversion of recyclable,
electronic or compostable waste from landfills. 11%
• Transfer stations – In an effort to promote operational efficiency,
large operators in the industry have focused on developing
networks of transfer stations and disposal facilitates. These enable 28%
operators to reduce costs.
• Vertical integration – In response to increased regulations and
costs, larger operators have focused on vertically integrating their Non-hazardous residential waste collection
waste management operations. This includes acquisitions to gain
Non-hazardous non-residential collection
additional services, as well as acquisitions to gain additional
landfill facilities. Non-hazardous consolidation storage and preparation
services
Non-hazardous waste transfer facility services
All other services
Source: IBISWorld Report 56211CA Waste Collection Services in Canada. Leach, Nathaniel. July 2018.
Page 2
INDUSTRY OVERVIEW
WASTE TREATMENT & DISPOSAL SERVICES IN
CANADA
The waste treatment and disposal services industry is defined as owners and operators of waste treatment or disposal
facilitates, including waste combustors, waste-to-energy (WTE) plants, solid waste landfills and compost dumps or other
types of disposal facilitates for hazardous or non-hazardous waste.
• Overall waste production has continued to grow and industry revenue INDUSTRY GLANCE
has been increasing despite the trend toward recycling.
2018 Revenue
$5.1B
• Most waste directed to landfills is the product of consumer goods and
as disposable income levels rise there has a been a higher level of
consumption.
• Key external drivers: Annual Growth 2013–2018
1. Consumer spending
2. Population 1.4%
3. Industrial capacity utilization
Projected Annual Growth 2018–2023
2.2%
4. Value of non-residential construction
• The industry has experienced structural change in recent years,
including:
• Waste volume increases – The industry is poised for growth as a Number of Businesses in 2018
742
result of continued growth in the economy and higher consumer
consumption levels with an end result of rising levels of residential
waste production. The industry will also benefit from a growing
manufacturing sector. This will lead to a projected 1% annualized
growth rate in demand from the manufacturing sector. Rising PRODUCTS AND SERVICES
prices and production in domestic oil and gas will stimulate SEGMENTATION (2018)
demand from industry services.
• Waste-to-energy – Industry operators will continue to turn to
waste-to-energy operations and gas recovery landfills in an effort 4%
6%
to combat rising landfill costs and regulations. Operators will 4%
benefit from regulation that supports the use of renewable energy
as there are tax incentives for renewable energy investment. Over
the near term, it is expected that operators will shift their focus to 50%
operating WTE rather than traditional landfill operations.
• Diversion from landfills – Over the most recent five-year period, 42%
many provincial governments have introduced waste reduction
targets to limit waste sent to landfills. Regulations to limit landfill
waste have led to higher landfill levies, provision of paper and
organic municipal recycling collection services and stringent
regulations on waste disposal methods.
Hazardous waste treatment and disposal
Solid waste treatment and disposal
Waste-to-energy
Non-hazardous waste transfer facility services
Other
Source: IBISWorld Report 56211CA Waste Treatment & Disposal Services in Canada, Nathaniel. August 2018.
Page 3
INDUSTRY OVERVIEW
RECYCLING FACILITIES IN CANADA
The recycling facilities industry in Canada is defined as operators of material-recovery facilities that separate and sort
recyclable materials from non-hazardous waste streams. Operators also sort commingled recyclable materials, such as
paper, plastics, used beverage cans and metals.
• The industry includes small-scale operators that rely on labour-intensive INDUSTRY GLANCE
processes to large-scale operators that benefit from the use of
2018 Revenue
$964.0M
technological machinery for sorting.
• The industry has been boosted by efforts by the federal and local
governments to develop programs that manage waste responsibly.
• Provincial regulation requires producers of recyclable materials must Annual Growth 2013–2018
0.9%
contribute to the recycling programs.
• Industry revenue has slowed in the last five years compared to the
decade before. This is a result of declining commodity prices that have
diminished the cost benefit of recycled plastics. Projected Annual Growth 2018 – 2023
• Key external drivers:
1. Demand from recyclable material wholesaling 1.0%
2. Consumer spending
Number of Businesses in 2018
282
3. Population
4. World price of crude oil
• The industry has experienced structural change in recent years.
• Recycling volume growth – The industry has benefited from PRODUCTS AND SERVICES
increased regulations towards recycling programs. As a result, overall SEGMENTATION (2018)
recycling volume has increased, with the largest segment, household
recycling, growing at the fastest rate.
• Government regulation – The Waste Diversion Act (2002) promotes
12%
reducing, reusing and recycling. Subsequently, the Canadian Council
of Ministers of the Environment approved a nation-wide Action Plan 8%
for Extended Producer Responsibility (2009), adding responsibility to
producers to remain responsible for the recycling of their products.
• Demand for recycled materials – The industry has benefited from 14%
demand from downstream markets. The decline in the commodity 66%
markets eroded the financial benefit of purchasing recycled plastic
goods, however as the world price of oil rebounds and stabilizes,
demand is expected to pick up.
• Technological growth – The industry has experienced strong
technological growth in the past five years. Advances in automated
Recyclable material recovery and processing
processing equipment have led to more streamlined sorting
processes. This has led to an increase in capital intensity across the Sale of waste and recyclable materials
industry in order to stay competitive.
Recyclables collection
Other services
Source: IBISWorld Report 56292CA Recycling Facilities in Canada. Leach, Nathaniel. June 2018.
Page 4
INDUSTRY OVERVIEW
CURRENT HIGHLIGHTS
Shipping recycled plastic waste overseas will become a less viable option for the Canadian recycling industry going
forward. China’s decision to cut imports of 24 different types of recyclable products a year ago has led the waste
management industry into a crisis. In addition to China, other Southeast Asian countries, which Canada has relied upon to
import its recycling products, have decided to tighten the regulations around what types of recycled waste they import.
Recently, the Philippines has demanded that Canada take back mislabelled containers that it had sent to the country five
years ago. These containers were supposed to be filled with plastic, however Filipino authorities discovered they
contained mixed waste including household garbage and adult diapers. A waste facility in Burnaby, B.C. will be retrieving
these containers which amount to approximately 1,500 tons of waste. It will cost the federal government approximately
$250 per ton ($375k) to burn this waste in the B.C. facility’s incinerator.
It appears many Southeast Asian countries are no longer going to tolerate Canada’s contaminated recycled waste, as it is
not worthwhile to sort through mixed waste containers to retrieve valuable recyclables. In 2016, Canada exported
approximately 36% of recyclables. Last year, this number dropped to 29% and is expected to continue to decline. Going
forward, Canadian waste companies will have to improvise sorting at waste transfer stations to ensure they are not
contaminating recycle exports, as this will continue to deteriorate the trade relationship. Lastly, governments may need
to take a bottom-up approach to this issue by informing citizens about what is acceptable to recycle and what is not.
Many Canadians may not know that items such as a pizza box with significant grease is not recyclable, or that consumers
must clean and rinse food containers. Overall, education is paramount to improving the recycling supply chain.
With the economics working against recycling, it needs to be supported by policy. The federal government may need to
step in and establish more strict policies with regards to plastic use, collection and disposal. Some industry experts
suggest that an extended producer responsibility model (EPR) is the appropriate next step for Canada to tackle its
problematic recycling system. The EPR model holds large corporations responsible for the packaging they produce, which
accounts for almost a third of the Canadian plastics market.
The right framework in place could position Canada to transition smoothly into a circular economy, where materials are
produced to be consistently reused, and where corporations are responsible for their own recycling fees. In Ontario, a
special adviser on plastic waste and recycling has been named to determine how the province can fully transfer recycling
costs from municipalities to companies. While some analysts predict the cost of recycling and more expensive packaging
will eventually trickle down to consumers grocery bills, companies like Loblaw Companies Ltd. and IKEA Canada have
expressed support for the initiative and say it will not affect their prices. BC adopted the EPR program in 1994 retailers
have been embedding recycling costs into product pricing. Consumers have continued spending more for the brands they
love.
An example of an EPR model currently being piloted is from Loblaws Companies Limited, Canada's food and pharmacy
leader. They recently partnered with Loop, an innovative packaging provider, to offer consumers alternatives to
disposable materials. For Loblaws, this means consumers ordering President's Choice products online in Loop's durable
shopping tote and containers and then having the containers retrieved from their door step at their preferred time. These
sustainable operational models are popping up across the country as the awareness around plastic waste increases.
If the government were to create and manage funding, grants and incentive programs to encourage the adoption of the
EPR model, companies could dedicate capital to the creation of innovative packaging that would support a circular
economy. This would ensure that companies could give their loyal consumers the option to choose their favourite brand,
be environmentally conscious and not sacrifice the extra expense. With many brands wanting to put their best foot
forward when it comes to corporate social responsibility and sustainability, a system where companies produce less
waste seems within arm’s reach.
Sources: S&P Capital IQ, Globe and Mail and Company websites.
Page 5
INDUSTRY OVERVIEW
CURRENT HIGHLIGHTS
How much of a premium would you be willing to pay for environmentally sustainable products?
Plastics which were revolutionary in the mid-1900s, are now becoming a burden to our environment. This is especially
true for plastics that are used for a short period of time before being disposed. Single-use plastics are becoming a popular
discussion point with environmental activists and government policy makers, as Canada continues to struggle to increase
the efficiency of its recycling system. A consumer may use a plastic fork and knife at lunch for approximately 20 minutes,
then dispose these items into the garbage, where they will remain for the next 400 years. The federal government has
set out a mandate to eliminate single-use plastics by 2021 – an ambitious goal considering the alternatives are currently
economically onerous.
The science behind bioplastics, which are essentially compostable plastics, is quite advanced. However, the trouble lies in
the cost it will bear on consumers and businesses to fully replace traditional plastics. Compostable items cost anywhere
from 50 to 200% more than traditional equivalents. In addition to the cost of bioplastics, properly disposing these plant-
based materials is complex and often involves high amounts of heat and water, which many municipal compost facilities
don’t currently have the capabilities for. Therefore, many bioplastics will sit in landfills just like regular plastics. This
drawback is often referred to as “greenwashing”, which means customers are spending more to do what they believe is
beneficial for the environment, however this benefit is not realized, as waste facilities are not currently set up to
breakdown this bioplastic material. Bioplastics were intended to create many solutions, but instead have created many
challenges, as they are often hard to decipher from regular plastics. Ideally, a bioplastic product needs to be created that
does not need additional processing to compost.
56% of Canadians support a total ban on single-use The poll shows that 32% of Canadians said they would
plastics, while 25% somewhat support a ban, according pay 5% more, 22% said they would pay 2% more and
to Nanos Research. 10% of Canadians somewhat 20% said they would be willing to pay 1% more. 26% of
oppose a total ban, while 8% are opposed and 1% are Canadians surveyed said they would not be willing to
unsure. pay more.
Support for Total Ban on Single- Premium for Environmentally
Use Plastics Sustainable Products
9% Total Support 5 percent
10% 26%
Somewhat support 32% 2 percent
Somewhat Oppose 1 percent
56%
25% Opposed 0 percent
20%
Legend 22% Legend
Note: Nanos Research randomly surveyed 1,000 Canadians, 18 years or older; participants were recruited by live agents
by phone, both landline and cell, and a survey was administered online. The margin of error for the random survey is
3.1%, 19 times out of 20. The survey was commissioned by The Globe and Mail.
Sources: S&P Capital IQ, Globe and Mail, Nanos Research and Company websites.
Page 6
INDUSTRY OVERVIEW
M&A TRANSACTIONS & PERFORMANCE
NORTH AMERICAN
WASTE COLLECTION AND DISPOSAL M&A TRANSACTIONS
20
18 19 19
13
Number of Reported Transactions
16
14 15
14 14 14
12 13
10 11
8
8
6
6
4
2
-
Q1 - 2017 Q2 - 2017 Q3 - 2017 Q4 - 2017 Q1 - 2018 Q2 - 2018 Q3 - 2018 Q4 - 2018 Q1 - 2019 Q2 - 2019
Transaction Volume Average
M&A MARKET UPDATE FOR Q2 2019
• The chart above highlights the quarterly merger and acquisition (M&A) market activity within the sanitary services
industry, including waste management, collection, and recycling operators.
• M&A activity within the industry has been robust in recent years as market participants seek consolidation in a
fragmented waste management market.
• Since 2014, there have been several large transactions where two large market participants have combined. Examples
include Waste Connections US, Inc. acquiring Progressive Waste Solutions Ltd. for a reported $2.8 billion which closed
in June 2016, Waste Connections Inc.’s acquisition of Groot Industries Inc. in January 2017 for a reported $375 million
and, most recently, GFL Environmental Inc.’s $3.7 billion acquisition of Waste Industries.
• Q2 2019 had a total of 14 reported transactions – slightly higher than the two-year average of 13 reported transactions.
Based on the highly fragmented nature of the industry, there is possibility of many smaller players and participants
being active in M&A activity, without any public disclosure.
• Transaction volume for the quarter included both select asset acquisitions, including waste and recycling routes, as well
as full buyout transactions. Purchasers included strategic operators, private-equity backed operators, and sponsor to
sponsor transactions.
• The strong transaction levels have been a result of the low cost of borrowing, increased level of specialization and the
desire of industry leaders to gain additional market share.
• Additionally, as a result of improving underlying commodity prices, including oil prices, there has been an increased
level of consolidation among recycling companies as recycled plastics become more economical for downstream
customers.
Source: Capital IQ. Data as of June 30, 2019, based on publicly disclosed information.
All figures are in USD unless otherwise stated.
Page 7
MACROECONOMIC INDICATORS
The key external drivers that affect the waste collection and disposal industries in Canada include: world price of crude
oil, population of Canada, consumer spending and industrial capacity utilization. Growth in the industry is expected to be
fueled by rising consumption levels and increased regulations.
WORLD PRICE POPULATION
OF CRUDE IN CANADA
40,000
120
100
35,000
Price / Barrel (USD)
Population (000s)
80
60 30,000
40
25,000
20
0 20,000
CONSUMER INDUSTRIAL CAPACITY
SPENDING UTILIZATION
1,600 90
Industrial Capacity Utilization (%)
1,400
Consumer Spending ($ billion)
85
1,200
80
1,000
800 75
600
70
400
65
200
0 60
Source: IBISWorld Industry Reports.
Page 8
SELECT RECENT M&A TRANSACTIONS
• Blue Point Capital Partners acquired TAS Environmental
Closed May 2, 2019 Services LP from TEAM Partners, LLC for an undisclosed
amount.
TEV Not disclosed • TAS Environmental Services is a U.S.-based emergency
acquired response cleanup company, with industrial cleaning
TEV/EBITDA Not disclosed services including tank cleaning, environmental
remediation and hazardous waste transportation.
TEV/Revenue Not disclosed • Blue Point Capital Partners, a U.S. private equity firm,
expects to help advance TAS’s performance through
acquisitions and data enhancement.
• Waste Connection Inc acquired Mountain Waste &
Recycling Inc for an undisclosed amount.
Closed Apr 2, 2019
• Mountain Waste & Recycling Inc is a Colorado-based
materials management company, providing waste
TEV Not disclosed
removal services to residential, commercial, industrial,
acquired
and municipal customers.
TEV/EBITDA Not disclosed
• Waste Connections Inc is a leading provider of solid
waste collection, transfer, recycling and disposal
TEV/Revenue Not disclosed
services in mostly exclusive and secondary markets in
both the U.S. and Canada.
• US Ecology Inc. has entered into an agreement to
acquire NRC Group Holdings Corp in an all stock
transaction for approximately $966 million including
Announced Jun 24, 2019 the assumption of NRC’s debt and cash.
• US Ecology will create a holding company and US
TEV $966 million
Ecology will receive one share of holding company for
acquired
each outstanding share and NRC shareholders will
TEV/EBITDA 15.7x
receive 0.196 holding shares for each share of NRC.
TEV/Revenue 2.4x • Upon completion of the transaction, US Ecology
stockholders will own approximately 70% of the
combined company, and NRC stockholders will own
approximately 30% on a fully diluted basis.
• Waste Management Inc. announced its plans to acquire
Advanced Disposal Services Inc. from Canadian Pension
Announced Apr 15, 2019 Plan Investment Board for $4.94 billion.
• Advanced Disposal Services Inc. is the fourth largest
TEV $4.94 billion solid waste company based in the US, providing
acquired collection, transfer, disposal, and recycling operations
TEV/EBITDA 12.7x throughout 16 states.
• Waste Management Inc. is the largest environmental
TEV/Revenue 3.1x
services provider in North America and this transaction
will grow its footprint and customer base even further.
Source: Capital IQ and company press releases.
All figures are in USD unless otherwise noted.
Page 9
INDUSTRY CONSOLIDATORS
The waste collection and services industry is a highly fragmented industry, with a number of regional players serving local
markets. Additionally, there are many different specialized services within waste collection that add to the fragmentation.
The industry is currently undergoing high levels of consolidation as large players, both public and private, and regional
players seek to add specialization, waste routes and market share through both vertical and horizontal integration. Below
we have highlighted the industry consolidators, based on the number of reported transactions since 2013.
HIGHLIGHTED BUYERS
Waste Connections, Inc. is an integrated Waste Management Inc., through its GFL is a diversified environmental services
waste services company that provides subsidiaries, provides waste company. GFL provides services in solid
non-hazardous solid waste collection and management environmental services to waste management, liquid waste
disposal services to commercial, residential, commercial, industrial and management and infrastructure, serving
industrial, municipal and residential municipal customers in North America. the Canadian and U.S. markets.
customers. Waste Connections is
currently the third-largest waste
management company in North America.
Funding:
Funding: Funding: Private equity backed (BC Partners,
Publicly listed (NYSE:ADSW) Publicly listed (NYSE:WM) Teachers Private Capital)
Recent News: Recent News: Recent News:
• Acquisition of Mountain Waste & • Acquisition of Advanced Disposal • Acquisition of Coastal Ladies Carting
Recycling Inc. (Announced Apr 2019) Services Inc. (Announced Apr 2019) Inc. (Announced Mar 2019)
• Acquisition of American Disposal • Acquisition of EnviroSolutions, Inc. • Acquisition of Waste Industries Inc.
Services, Inc. (Closed Dec 2018) (Closed Apr 2018) (Closed Nov 2018)
• Acquisition of Groot Industries • Acquisition of TLC Waste Disposal • Acquisition of Smithrite Disposal Ltd.
(Closed Jan 2017) Services (Announced Apr 2018) (Closed Mar 2018)
• Acquisition of Progressive Waste • Acquisition of Deep Foundations
(Closed Jun 2016) Contractors Inc. (Announced Feb 2018)
• Acquisition of Carney’s Waste Systems
Source: S&P Capital IQ, Company websites. Ltd. (Closed Feb 2018)
Page 10PUBLIC COMPARABLE ANALYSIS
TRADING MULTIPLES & OPERATING STATISTICS
(Figures in USD millions, except percentages and ratios)
LTM Operating Figures NTM Consensus Estimates Valuation (LTM)
MarketEnterprise Revenue Revenue EBITDA EBITDA Revenue EBITDA EV/ EV/ EV/
Company Cap Value Growth Margin Growth Margin EBITDA EBITDA Revenue
Large Capitalization Waste, Recycling, and Remediation
Waste Management, Inc. $48,996 $59,695 $15,099 3.7% $4,247 28.1% 4.7% 28.3% 13.4x 14.1x 4.0x
Republic Services, Inc. $27,862 $36,455 $10,084 0.1% $2,793 27.7% 4.9% 28.5% 12.1x 13.1x 3.6x
Waste Connections, Inc. $25,195 $29,091 $5,027 7.4% $1,578 31.4% 8.9% 32.2% 16.5x 18.4x 5.8x
Median $27,862 $36,455 $10,084 3.7% $2,793 28.1% 4.9% 28.5% 13.4x 14.1x 4.0x
Mean $34,017 $41,747 $10,070 3.7% $2,873 29.1% 6.2% 29.6% 14.0x 15.2x 4.5x
Small Cap & Specialty Services
Stericycle, Inc. $4,347 $7,505 $3,421 -4.5% $678 19.8% -0.3% 20.0% 11.0x 11.1x 2.2x
Clean Harbors, Inc. $3,972 $5,492 $3,331 10.8% $490 14.7% 4.1% 15.1% 10.5x 11.2x 1.6x
Advanced Disposal Services,
$2,836 $4,748 $1,578 3.4% $389 24.6% 3.9% 27.8% 10.4x 12.2x 3.0x
Inc.
Covanta Holding Corporation $2,341 $4,862 $1,863 3.2% $317 17.0% 1.9% 23.7% 10.8x 15.3x 2.6x
US Ecology, Inc. $1,315 $1,657 $577 12.3% $119 20.7% 6.5% 23.8% 11.3x 13.9x 2.9x
Casella Waste Systems, Inc. $1,872 $2,410 $677 10.4% $125 18.5% 7.6% 21.6% 15.3x 19.3x 3.6x
Heritage-Crystal Clean, Inc $608 $658 $423 14.7% $36 8.5% 8.0% 12.8% 11.2x 18.3x 1.6x
Charah Solutions, Inc. $163 $412 $748 44.5% $104 13.9% -15.1% 10.6% 6.1x 4.0x 0.6x
Median $2,107 $3,579 $1,163 10.6% $221 17.7% 4.0% 20.8% 10.9x 13.1x 2.4x
Mean $2,182 $3,468 $1,577 11.8% $282 17.2% 2.1% 19.4% 10.8x 13.2x 2.3x
Source: Capital IQ. Data as of June 30, 2019.
LTM refers to last 12 months. NTM refers to next 12 months.
Page 11PUBLIC COMPARABLE ANALYSIS
TRADING MULTIPLES & OPERATING STATISTICS
(Figures in USD millions, except percentages and ratios)
Growth Rates Profitability (LTM) Credit Statistics
Stock 52-Week % of 52W EBITDA EBITDA 5-Year Gross EBIT EBITDA Tot Debt LTM EBITDA
Company Price High High (CY+1) (CY+2) EPS CAGR Margin / EBITDA / Int Exp
Large Capitalization Waste Collection
Waste Management, Inc. $115 $117 98% 4% 7% 9% 38% 18% 28% 2.5x 10.9x
Republic Services, Inc. $87 $88 99% 5% 5% 9% 38% 17% 28% 3.1x 7.3x
Waste Connections, Inc. $96 $96 99% 10% 9% 12% 41% 17% 31% 2.8x 11.5x
Median $96 $96 99% 5% 7% 9% 38% 17% 28% 2.8x 10.9x
Mean $99 $100 99% 7% 7% 10% 39% 17% 29% 2.8x 9.9x
Small Cap & Specialty Waste Collection
Stericycle, Inc. $48 $71 67% -11% 10% 9% 39% 12% 20% 4.7x 6.1x
Clean Harbors, Inc. $71 $77 92% 6% 5% 11% 30% 6% 15% 3.6x 5.9x
Advanced Disposal Services,
$32 $33 97% 4% 6% 12% 35% 6% 25% 4.9x 3.9x
Inc.
Covanta Holding Corporation $18 $18 97% -1% 5% 12% 30% 5% 17% 8.2x 2.2x
US Ecology, Inc. $60 $77 77% 11% 10% 10% 29% 13% 21% 3.0x 8.9x
Casella Waste Systems, Inc. $40 $42 95% 12% 8% 0% 31% 8% 18% 4.5x 4.7x
Heritage-Crystal Clean, Inc $26 $29 91% 26% 25% 15% 20% 5% 9% 2.6x 22.5x
Charah Solutions, Inc. $6 $12 47% -48% 53% 0% 13% 9% 14% 2.5x 5.0x
Median $36 $37 91% 5% 9% 11% 30% 7% 18% 4.0x 5.4x
Mean $37 $45 83% 0% 15% 9% 28% 8% 17% 4.2x 7.4x
Source: Capital IQ. Data as of June 30, 2019.
LTM refers to last 12 months. NTM refers to next 12 months.
Page 12PUBLIC COMPARABLE ANALYSIS
GROWTH, MARGINS & MULTIPLES
Revenue Growth (LTM) Median Revenue Growth (NTM)
Waste Management, Inc. 4% Waste Management, Inc. 5%
Republic Services, Inc. NA Republic Services, Inc. 5%
Waste Connections, Inc. 7% Waste Connections, Inc. 9%
Stericycle, Inc. NA Stericycle, Inc. NA
Clean Harbors, Inc. 11% Clean Harbors, Inc. 4%
Advanced Disposal Services, Inc. 3% Advanced Disposal Services, Inc. 4%
Covanta Holding Corporation 3% Covanta Holding Corporation 2%
US Ecology, Inc. 12% US Ecology, Inc. 6%
Casella Waste Systems, Inc. 10% Casella Waste Systems, Inc. 8%
Heritage-Crystal Clean, Inc 15% Heritage-Crystal Clean, Inc 8%
Charah Solutions, Inc. 44% Charah Solutions, Inc. NA
0% 10% 20% 30% 40% 50%
0% 2% 4% 6% 8% 10%
Median 8.9% Median 4.7%
EBITDA Margin (LTM) EBITDA Margin (NTM)
Waste Management, Inc. 28% Waste Management, Inc. 28%
Republic Services, Inc. 28% Republic Services, Inc. 28%
Waste Connections, Inc. 31% Waste Connections, Inc. 32%
Stericycle, Inc. 20% Stericycle, Inc. 20%
Clean Harbors, Inc. 15% Clean Harbors, Inc. 15%
Advanced Disposal Services, Inc. 25% Advanced Disposal Services, Inc. 28%
Covanta Holding Corporation 17% Covanta Holding Corporation 24%
US Ecology, Inc. 21% US Ecology, Inc. 24%
Casella Waste Systems, Inc. 18% Casella Waste Systems, Inc. 22%
Heritage-Crystal Clean, Inc 9% Heritage-Crystal Clean, Inc 13%
Charah Solutions, Inc. 14% Charah Solutions, Inc. 11%
0% 10% 20% 30% 40% 0% 20% 40%
Median 19.8% Median 23.7%
EV/EBITDA (LTM) EV/EBITDA (NTM)
Waste Management, Inc. 14.1x Waste Management, Inc. 13.4x
Republic Services, Inc. 13.1x Republic Services, Inc. 12.1x
Waste Connections, Inc. 18.4x Waste Connections, Inc. 16.5x
Stericycle, Inc. 11.1x Stericycle, Inc. 11.0x
Clean Harbors, Inc. 11.2x Clean Harbors, Inc. 10.5x
Advanced Disposal Services, Inc. 12.2x Advanced Disposal Services, Inc. 10.4x
Covanta Holding Corporation 15.3x Covanta Holding Corporation 10.8x
US Ecology, Inc. 13.9x US Ecology, Inc. 11.3x
Casella Waste Systems, Inc. 19.3x Casella Waste Systems, Inc. 15.3x
Heritage-Crystal Clean, Inc 18.3x Heritage-Crystal Clean, Inc 11.2x
Charah Solutions, Inc. 4.0x Charah Solutions, Inc. 6.1x
.0x 10.0x 20.0x 30.0x 0.0x 10.0x 20.0x
Median 13.9x Median 11.2x
Source: Capital IQ. Data as of June 30, 2019.
“LTM” refers to last 12 months. “NTM” refers to next 12 months.
Page 13PUBLIC COMPARABLE ANALYSIS
PERFORMANCE ANALYSIS
RELATIVE PERFORMANCE (Last 10 years)
300%
280%
250%
223%
200% 199%
Price Return (%)
150%
100%
50% 46%
0%
S&P 500 Dow Jones U.S. Waste & Disposal Services Index
Large Cap Waste - Peer Group Small Cap & Specialized Waste - Peer Group
INDUSTRY PEER GROUP PEER GROUP PERFORMANCE
MEDIAN EV/NTM EBITDA
17 • The sector experienced a recovery in public
16 market prices in Q1 2019 and Q2 2019
15 15.0x following a correction at the end of 2018.
14 This price appreciation in public equities has
13 13.0x
outpaced corporate earnings growth, which
EV / NTM EBITDA Multiple
12 has resulted in significant valuation multiple
11
expansion.
10
9 • The median EV/NTM EBITDA multiple for the
8 large cap waste management peer group
7
currently trades at 15.0x, while the small cap
6
5 and specialized waste peer group trades at
4 13.0x.
3
2
• The Large Cap Waste – Peer Group has
1 outperformed the S&P 500 over the most
0 recent 10-year period, ending June 30, 2019.
• The Small Cap & Specialized Waste – Peer
Group has underperformed S&P 500
Large Cap Waste - Peer Group significantly, lagging by 153% over the 10-
Small Cap & Specialized Waste - Peer Group
year period.
Source: Capital IQ. Data as of June 30, 2019.
Page 14PUBLIC COMPARABLE ANALYSIS
PERFORMANCE ANALYSIS
BENCHMARK PERFORMANCE (LTM)
40%
33%
30% 29%
20%
Price Return (%)
10%
7%
4%
0%
-10%
-20%
-30%
S&P 500 Dow Jones U.S. Waste & Disposal Services Index
Large Cap Waste - Peer Group Small Cap & Specialized Waste - Peer Group
LAST 12 MONTHS PERFORMANCE
• Equity markets experienced volatility in 2018 as a result of many factors including Brexit, trade tensions, government
policies and a fear of slowing corporate growth.
• Q4 2018 results in a significant paring back in stock performance from the year.
• The public waste industry participants experienced this volatility and closed the year erasing previous gains achieved
during 2017.
• Alongside the overall equity markets, the Large Cap Waste – Peer Group has rebounded in Q1 2019 and Q2 2019,
outpacing S&P 500 during the quarter, ending June 30, 2019 with a gain of 33% over the last-twelve months.
• The Small Cap & Specialized Waste – Peer Group has seen strong price appreciation in Q1 2019 and the first month of
Q2 2019. However, the index has declined within the following two months of Q2 2019 and overall has realized a
return of 4% throughout the last twelve months.
Source: Capital IQ. Data as of June 30, 2019.
Page 15MNPCF – LEADERSHIP TEAM
TRANSACTION LEADERSHIP
Brett Franklin Erik St-Hilaire Aleem Bandali Dale Antonsen
President Managing Director Managing Director Managing Director
brett.franklin@mnp.ca erik.st-hilaire@mnp.ca aleem.bandali@mnp.ca dale.antonsen@mnp.ca
204.336.6190 204.336.6200 778.374.2140 250.979.2578
Mike Reynolds Mark Regehr Dan Porter Stephen Shaw
Managing Director Managing Director Managing Director Managing Director
mike.reynolds@mnp.ca mark.regehr@mnp.ca dan.porter@mnp.ca stephen.shaw@mnp.ca
587.702.5909 780.969.1404 416.515.3877 416.515.3883
Kevin Tremblay Jason Burgess Patrick Khouzam Craig Maloney
Managing Director Managing Director Managing Director Managing Director
kevin.tremblay@mnp.ca jason.burgess@mnp.ca patrick.khouzam@mnp.ca craig.maloney@mnp.ca
647.943.4051 905.225.1324 514.228.7874 902.493.5430
DUE DILIGENCE LEADERSHIP
John Caggianiello Johnny Earl
Managing Director Managing Director
john.caggianiello@mnp.ca johnny.earl@mnp.ca
416.513.4177 604.637.1514
Page 16MNPCF – RECENTLY CLOSED DEALS
NATIONAL
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