Hoffman Outlines What to Expect at the Waste Expo 2014 Investor SummitHoffman Outlines What to Expect at the Waste Expo 2014 Investor Summit
April 26, 2014
The first day of WasteExpo once again features the day-long Investor Summit. The second annual summit is put together by WasteExpo and Wunderlich Securites Inc. It features conversational discussions with a pantheon of waste industry CEOs, CFOs and other top officials. Asking the questions and directing the program is long-time industry securities analyst Michael Hoffman with Wunderlich Securities.
Hoffman outlined his vision for the summit and provided some thoughts on the industry in an interview with Waste360.
Waste360: Do you expect the tone to different at this year's Investor Summit, and if so, how?
Hoffman: We would expect the solid waste companies to be more optimistic about the direction and scope of price and volume without being exuberant. Energy waste will be very bullish, particularly the U.S.-focused companies. And the hazardous/industrial companies are entering the fourth year of stable, repeatable mid-single digit growth and would expect to remain positive about another good year in fiscal 2014.
Waste360: The year's summit features panels on automation and productivity, private equity investing and the state of energy waste. What were your thoughts in selecting these topics?
Hoffman: Automation/productivity is a key focus of the solid waste operators (public or private). Our discussion with the suppliers to the industry will focus on what is being asked of them by operators and what are they doing proactively to anticipate the need to be more productive and spend/stretch capital smarter. Regarding energy waste: This is a hot new area of growth with the prospect of low double to low 20 percent annual sales growth, as compared to solid waste, which is at best 3 to 5 percent. This panel will focus on this dynamic opportunity and how each company is positioned to benefit.
This year we are focused on small- to mid-sized private equity investments in solid waste, landfill gas and environmental consulting. The objective is to understand what private equity is looking for in a waste/environmental related company, what the operating companies want in a private equity investor and the outlook for more growth as a result of these investments.
Waste360: What points struck you the most regarding what was said at last year's Summit?
Hoffman: The summit gave an early insight into the better than expected volumes that surfaced in 2013 second quarter and the second half in solid waste. The private equity panel was a who’s who of solid waste, and investors were intrigued to learn more about what these companies were doing.
Waste360: What's the industry's overall mood these days on mergers & acquisitions?
Hoffman: In solid waste, sanguine valuation can be a sticking point in a low inflation/low interest environment. There are lots of tuck-ins and probably fewer new market entrees. In hazardous/industrial waste, there is a diet to do deals, and deals are being fairly to fully priced.
In energy waste, public markets are probably a better valuation point. Deals are hard to do as lots of assets have too much environmental baggage to justify valuations sought by sellers.
Waste360: How is the financial community generally viewing the waste/recycling industry?
Hoffman: On solid waste there is a bit of fatigue. It looks like the sustainable topline growth is going to be relatively muted for a while. Therefore, the companies have to drive more margin expansion to support good free cash flow growth despite the muted sales growth.
Energy waste seems too good to be true, and the market wants to have conviction but is unsure. With hazardous/industrial: will the industry leaders finally get their hands around cost controls?
Waste360: What else can attendees expect to take away from this year's Summit?
Hoffman: This an even more diverse group of companies representing solid, hazardous/industrial and energy waste this year, with 21 presenting in either a one-on-one interview or as a panelist.