Nine Highlights from Waste Connections Latest Quarterly Results

Waste Connections Inc. posted slight increases in net earnings and revenue for its third quarter in preliminary results, and it announced several acquisitions made during the period.

Here are nine highlights on the latest financial results from The Woodlands, Texas-based waste and recycling firm for the period ended Sept. 30.

  1. Waste Connections’ net profits rose 2 percent to $61.3 million, or 50 cents per diluted share, compared with $60.1 million, or 48 cents per diluted share, in the 2014 period.
  2. Revenue for the company climbed 0.2 percent in the third quarter to $547.9 million from $546.6 million a year earlier, according to a news release.
  3. The preliminary results do not include an anticipated non-cash charge to earnings for impairment of a significant portion of the goodwill and indefinite-lived intangible assets associated with its exploration and production (E&P) segment. The company said that the significant and sustained decline in crude oil prices in recent months and the slow recovery make such a charge likely.
  4. The company bought Shamrock Disposal, a solid and industrial waste collection and disposal firm in Duluth, Minn., as well as tuck-in acquisitions of collection operations in California, Oregon and Texas. The purchases add about $15 million in annualized revenue. Ron Mittelstaedt, Waste Connections chairman and CEO said those buys, along with other acquisitions that may close before the end of the year, could provide 5 percent additional revenue growth in 2016.
  5. For the nine-month period, net income slipped 0.8 percent to $170.5 million, or $1.37 per diluted share, compared with $171.8 million, or $1.38 per share, a year earlier.
  6. Revenue for the year-to-date period advanced 2.6 percent to $1.59 billion from $1.55 billion.
  7. The take on the performance from Mittelstaedt, Waste Connections chairman and CEO: "Continuing momentum and strong margin expansion in solid waste drove better than expected performance in the period. Notable increases in collection activity and double-digit growth in special waste and C&D (construction and demolition) landfill tonnage resulted in over 2.5 percent organic volume growth.”  He also said E&P waste activity “was in line with our expectations." 
  8. Waste Connections’ net earnings in the second quarter dropped 8.5 percent while revenue increased slightly. Mittelstaedt said then that the company had improved solid waste collection activity, disposal volumes and recycled commodity values, while E&P waste activity played out as expected.
  9. Industry analyst Leone Young, in her Business Insights review of industry performance for the second quarter, noted that Waste Connections reported solid strength in both price and volume. She singled out the company’s West Coast operations as having as a strong performance.

15 More American Zero Waste Programs

In a previous gallery, we looked at 10 Major U.S. Cities with Zero Waste Goals.

But there are many other zero waste initiatives across the United States. In this gallery, we’re including programs being implemented in smaller cities, counties and, in a few cases, at the state level.

If you know of initiatives that we didn't include in either gallery, please send me a note at david.bodamer@penton.com.

Could Packaging Change Put an End to Disposable Coffee Pods Heading to Landfill?

It’s morning. Time to get moving. What do most of us reach for after the snooze button, but a nice, strong, hot cup of coffee? And if stagnant sales of traditional coffee makers are any indication, your cup of joe is increasingly coming from a single-serve counter-top coffee brewer that uses plastic pods.

In fact, the disposable cups are so popular, industry leading Keurig Green Mountain Inc. alone sold 9 billion of them last year, and posted approximately $1.4 billion in sales. The impact could be more that caffeine-addicted drivers on the loose. The non-recyclable plastic pods are tossed into the trash—enough, some say—if laid end to end to wrap around the planet more than 10 times. Enough, that even John Sylvan, who invented the tiny vessels, told The Atlantic in an interview, that he “feels bad sometimes” that he ever created them.

But Keurig is aware of environmental impact of its products and has said its goal is to make 100 percent of K-Cup packs recyclable by 2020. To meet that target, the company is evaluating product development solutions and working with the recycling community and partners to ensure the new K-Cup pack can effectively be recycled in the majority of community programs – a big step for the industry if the goal is met.

Yet Keurig is not the only fish in the ever-growing sea of reusable coffee pods. In fact, Canadian coffee roaster Club Coffee believes it has the answer to the growing waste concerns for the single-serve pods now. The company recently received the Biodegradable Products Institute (BPI) certification for its PrPod100, making it the first certified completely compostable single-serve pod for Keurig-style brewers. The certification was earned partly because of the pod's design, which uses plant-based resins and the coffee “chaff,” or the coffee bean skin left over from the roasting process.

According to Rhodes Yepsen, executive director of BPI, Club Coffee is the first manufacturer to earn BPI certification for single-serve pods. Diverting products associated with food residuals away from disposal is complicated, he said. BPI certification is a critical piece of the process, ensuring that items will break down in a timely manner in the appropriate composting environment, and not have a negative impact on the quality of the finished compost.

According to the Club Coffee, customers also share concerns about the waste they associate with traditional disposable pods. Through certification, the company feels it can dispel consumer concerns of producing more waste heading to landfill.

The BPI certification also confirms that the PῧrPod100 is industrially compostable, which means it fully breaks down in large-scale commercial composting processes. "Third-party certification is important because it validates that the PῧrPod100 breaks down in large-scale composting," said John Pigott, Club Coffee CEO in a press release. "Equally important, this external certification tells consumers that they can buy the right solution to the mounting problem of waste and its impact on the environment associated with single-serve formats. It also offers a solution for municipal governments who see a growing number of single-serve pods flooding their landfills."

Club Coffee continues to work with U.S. municipalities, composting manufacturers, well-known retailers and recognized food/coffee brands to provide consumers with access to both products using the PῧrPod100 technology as well as to composting channels. “We believe that compostable pods are the right choice for consumers to enjoy the quality and convenience of single-serve coffee and, at the same time, help protect our environment,” said Brian Kubicki, vice president of marketing, Massimo Zanetti Beverage USA. “Americans will have access to the first certified 100 percent compostable pods through our Hills Bros, Chock full o'Nuts and Kauai Coffee brands in the coming months.”

“Certification of 100 percent compostable pods cuts through confusing single-serve coffee product claims,” said Club Coffee's Pigott.  “In today's market, some pods claim to be partially biodegradable, while others tout some recyclability – but none of those claims are backed by independent third-party validation.” In contrast, BPI certification of PῧrPod100 provides consumers with clear evidence that the only convenient and proven solution is certified 100 percent compostable pods filled with the high-quality coffee, tea and hot beverages that they expect from single-serve.”

Need to Know

Dell Cuts E-Waste with Recycled Carbon Fiber

In the electronics industry, rapid technology innovation and ever-shortening product lifespans are contributing to staggering flows of e-waste.

In 2014, global e-waste amounted to nearly 42 million tons, according to a report by the United Nations University. That’s enough discarded televisions, computers, cellphones and other gadgets to equal the weight of 115 Empire State Buildings.

And the total amount of global e-waste could hit 50 million tons by 2017, the report warned.

All of this has profound negative environmental and human health impacts. Toxic chemicals accumulate in soil, water and food, and harmful fumes pollute the air.

Continue reading at GreenBiz

Need to Know

Gloomy Glass Recycling Trade Is Half Empty in Hong Kong

In Hong Kong, glass recycling is way down at the bottom rung of the recycling hierarchy.

According to statistics from the government’s Environmental Protection Department, Hong Kong’s population generated 9,547 tonnes of municipal solid waste everyday in 2013. Of this, only 37 percent was recycled.

The recycling rates for paper, plastic and metals were fairly high at 50-80 percent, with much of the recycling carried out in the mainland and in other countries. Collectively, these brought Hong Kong an export earning of HK$5 billion. However, Hong Kong’s overall glass recycling rate only came to a miserable 9.7 percent.

Continue reading at HKFP

Need to Know

Dart Expands on Its EPS Recycling Offer for NYC

Dart Container Corp., embroiled with New York City’s administration over the idea of banning certain expanded polystyrene products, is trying a different tact to jump start discussions with the mayor.

But the mayor’s office doesn’t think much of the idea.

The Mason, Mich.-based company is out with a nearly 3-minute video aimed directly at Mayor Bill de Blasio to make a case for expanded polystyrene recycling in the city.

Release of the video comes just about a month after a Manhattan Supreme Court judge overturned the city’s EPS ban of single-serve foodservice items.

Continue reading at Plastics News

Need to Know

Kansas’ Coal Ash Management Plan Receives EPA Approval

The US EPA Region 7 gave conditional approval to the State of Kansas’ plan to implement rules for the safe disposal of coal ash from coal-fired power plants on 19 October.

The coal ash disposal rule has set out regulations that safeguard communities from coal ash impoundment failures and prevents groundwater contamination and air emissions from coal ash disposal.

It is intended that the rule will best attain its protections where state partners adopt regulations, as necessary, which are at least as stringent as the federal requirements and submit new or revised solid waste management plans to the EPA for approval.

Continue reading at World Coal

Need to Know

Profile Acquires Erosion Control and Landfill Cover Businesses

Profile Products LLC is continuing its growth. The company has announced the acquisition of Central Fiber LLC’s erosion control and landfill cover businesses. The deal includes Central Fiber’s Canton, Ohio production and distribution facility, as well as the affiliated employees and sales team at that location.

Key pieces of the transaction are the Second Nature® and Enviro Fiber® hydraulic mulches, which will now be sold alongside Profile’s hydroseeding solutions, which include Flexterra HP®, ProMatrix® and Base mulch in the erosion control field.

Profile has also been active in landfill daily cover applications. With the Central Fiber deal, Profile will add Topcoat® and Waste-Coat® landfill cover products to its landfill cover portfolio. Both of these new additions are non-toxic and biodegradable, which meets the high-bar for daily cover requirements.

Continue reading at Geosynthetica.net

Seven Takeaways from Stericycle’s Latest Financial Results

Medical waste firm Stericycle Inc. reported a drop in net earnings but higher revenue for its third quarter–a similar result to its previous fiscal period.

Here are seven takeaways from the Lake Forest, Ill.-based company’s latest results, for the quarter ended Sept. 30.

  1. Net income declined 49.2 percent to $42.2 million, or 47 cents per diluted share, compared with $83 million, or 96 cents per diluted share, in the 2014 period.
  2. Revenue climbed 7.6 percent to $718.6 million from $667.9 million a year earlier, the company said in a news release. Acquisitions added about $33.3 million in revenues to the current period’s growth.
  3. For the nine-month period, net profits for Stericycle fell 27.1 percent to $178.9 million, or $2.04 per diluted share, compared with $245.5 million, or $2.83 per diluted share, in the year-ago period.
  4. For the same year-to-date period, revenue rose 11.7 percent to $2.1 billion from $1.88 billion in the 2014 period.
  5. Zacks Equity Research characterized earnings per share results as “woefully short” of its consensus estimate by 10 cents. It said the significant decline occurred despite a healthy top-line improvement and was the result primarily of high operating, acquisition and integration expenses.
  6. Earlier in October Stericycle settled a long-standing lawsuit regarding charges that it had been systematically overcharging government entities for its services. The settlement totaled $26.8 million.
  7. In July Stericycle made a huge acquisition, buying information destruction firm Shred-it International for $2.3 billion.

Why James Pappas is Battling Casella Waste for Board Seats

The battle for seats on the Casella Waste Systems Inc. board of directors is heating up as it gets closer to the Nov. 6 meeting and vote on the proxy dispute. The Rutland, Vt.-based Casella Waste wants its shareholders to re-elect its slate of existing directors. Investor JCP Investment Management LLC wants its two director candidates elected.

In late September Casella made its case in a letter to shareholders. And just on Oct. 19 it named Jim O’Connor, a current Casella director and the long-time CEO of Republic Services Inc., as lead independent director, succeeding Gregory Peters, who continues as a member of the Casella board. The company’s slate is the White Proxy Card group.

Waste360 interviewed the man leading the rival Gold Proxy Card slate trying to change things up with the management of the waste and recycling firm: James Pappas, managing member of Houston-based JCP. He hopes to be elected to the board, along with waste industry veteran Brett Frazier. He’s looking for his team to replace John Casella and William Hulligan on the board.

Casella is chairman and CEO of Casella Waste. Hulligan was appointed to the board in September and is the former chairman and CEO of Progressive Waste Solutions Ltd., Vaughan, Ontario.

Pappas says the management of Casella Waste has significantly increased capital spending but hasn’t increased earnings power and hurt shareholder return. Pappas, who characterizes himself as a top 5 shareholder in the firm, says his goal if the Gold Card slate is elected is to make management more accountable.

Waste360: Why are you trying to gain seats on the Casella Waste board?

James Pappas: We first purchased shares in Casella in 2010. We’ve been around the company for about five years. We’ve been talking to [Casella CFO Ned Coletta] directly for about a year and a half; just continually getting updated about what’s going on. Total stockholder return, which is a really, really important metric for us, especially the longer term total stockholder return, because we view ourselves as long-term stockholders. And obviously having purchased shares (since) 2010, if you look at the five- and 10-year run, the total stockholder return, the stock is down nearly 50 percent.

And then if you say, what has capital allocation been like over that time period? Over the last 10 years they’ve generated more than $600 million in cash flow from operations, spent nearly $770 million in capex. And at the same time, they haven’t improved their earnings power.

I think that’s a big piece of the story, which is, they’ve spent so much money and yet they haven’t increased earnings power of the company.

They’ve taken on a pretty decent amount of leverage, in buying companies since they went public. You look at how much they've taken on relative to their girth, what I would consider to be companies that are similar operations, Republic, Waste Management, Progressive, Waste Connections …  they’ve levered the company quite a bit.

One of the other pieces that’s also noticeable is you have this Class A/Class B structure. The Class B shares, Doug (Casella) and John have approximately a million Class B shares. The rest of the shareholders have Class A shares.

So the shares that are public and the shares that I own are the Class A shares. Today there’s about 400 million Class A shares. And Doug and John own about a million Class B shares.

For each Class B share that they own, they get 10 votes on any vote of the company per share. The Class A shares, you only get one vote per share. Now, when the company initially went public, they had a million Class B shares, and about 10 and a half million Class A shares. The Class A shares have gone from 10 and a half million shares, to nearly 40 million today.

So what they’ve done is diluted the Class A shares significantly. Yet still, there’s been no true increase in earnings power after all that time period.

You really need to see increases in earnings power as you do these things. And unfortunately, we just haven’t had them on an operational basis.

Next, revenues have remained flat despite significant capital expenditures. EBITDA (earnings before interest, taxes, depreciation and amortization) has decreased from $112 million in 2005 to $95 million this last year. And over that same time period their margins have declined.

So when you’ve got so much capital going out, you’ve got stock dilution, you’ve got leverage, you should see increases of earnings power, just like you’ve seen in some of the companies with similar operations. Unfortunately, you just haven’t seen that here.

Lastly, you have what are related party transactions. An executive of a company might have outside company that they own also. In this case, John and Doug own an outside company called Casella Construction. Over the last 10 years, Casella Construction has received in and around $80 million of business from Casella Waste.

You don’t see related party transactions of this size with public companies as much any more. So when I saw this, and I said to myself, well, that’s a significant amount of money that John and Doug’s company is being paid to do business with a public company. At the same time, performance has been really poor. So I wonder what’s going on there; that’s not a good thing to have.

Waste360: What do you hope to achieve with this effort to gain board seats?

James Pappas:  We obviously feel we have a great slate, between myself and Brett Frazier. We feel like the Class A shareholders are really frustrated, over the last 15-plus years.

The stock was $18 when (Casella) went public. Today it’s $6.60, with no dividends in between.

I think given all that, I feel like the two seats that we have today, the folks that we put up, we feel like we’d do a fantastic job, a way better job, and really take a look at some of the things they have going on today and whether or not they are allocating capital correctly. Whether or not they’re considering all the alternatives. Should they be increasing Class A continuously? Should they continue to increase leverage at this point? At this point they say no, we’re going to bring down leverage and we’re going to do all these things, but unfortunately, they just have not hit their targets …. So what we’re going to do is just keep them accountable.

Waste360: Do you want to keep existing management in place?

James Pappas: It will depend once we get in there. One thing I don’t like to do is, go in and say this is exactly what the plan should be. Because one thing that’s certain is that a public company, you only get to see what’s going on from the outside.

I’ve been on four public company boards. Once you get in on the inside, you get to see everything. That’s really a moment where you get to make true decisions. You sort of need that background of having been on public boards, having been an investment banker, having run my own investment company, I sort of know what to look for. Once we’re inside we feel like we’ll do a great job of really assessing what the situation is.

If you look back in January of 1999, they were predicting that the company would have $560 million in revenue and EBITDA of $145 (million). If you look forward to today, they have $525 million in revenue, and EBITDA of $103 (million) to $107 (million).

How after spending nearly $600 million plus, have you gone down in earnings power? When the rest of the companies that are operating in your business have gotten bigger? You don’t see this type of shareholder destruction that often.

Waste360: Does it have to be the slate elected, or what about electing the directors individually? 

James Pappas: We feel that Brett brings a phenomenal background in the waste industry. He worked for Waste Management for many, many years. He has just a fantastic feel for landfills, collection operations, down to just the levels that you would just love to have a guy on the board that knows everything. And he operated in the Northeast. So he’s phenomenal in that area.

Then I bring the public company board experience, and kind of the investment experience. So I think the two of those together are just hugely powerful.

Waste360: Casella Waste has taken measures in the last couple of years to address its problems. How do you evaluate what they’ve tried to do to fix things?

James Pappas: I look at the performance in the last couple of years, and really I only see very minimal changes just in last quarter of two, because we showed up. They keep talking about all these changes that have been in the last couple of years, and … leverage has gone up. Dilution has continued on the Class A stock. And these related party transactions are significant. I’m just not seeing what they’re seeing, and it’s not playing out in the numbers.

Waste360: What do you think are the main variables in the vote? What will the shareholders be considering?

James Pappas: I think people will consider how the company’s done over the past 10 to 15 years. I think people will look at the operating performance and say, ok, how has John managed the company? Like any management team, they’re going to look at how have things gone. Then they’re going to look at, what are some of the corporate governance issues that I think are really important, and one of the things I’d like to see changed. And then they’re going to say, is James behind this? Is Brett behind this? I think that’s going to be a big portion of this, it’s going to be operating performance, it’s going to be corporate governance.

I think a big part of it is, do you want to stay with the status quo that has produced this outcome over the last 10-15 years? Or do you want to go with somebody that has a track record of creating value–myself–and a guy that has a great track record within the industry to have a new set of fresh eyes and can come in and make a difference? And frankly, I’m a Top 5 shareholder. I’ve got a lot of money on the line. And it’s a lot of my money. There is a huge amount of alignment here.

Waste360: What will you do if you win?

James Pappas: We’re going to be putting that information out at some point before the vote, but we’re not doing that right now. But I will tell you this: Looking at a company from the outside is much different than looking at it from the inside. John and Ned have perfect information, I do not. There’s a big difference. So once you get in on the inside, if you’ve been on public company boards like I have before, there’s a lot to do. Especially when you have performance like this.

Waste360: And what will you do if you lose?

James Pappas: We have big stock holdings. We typically don’t say what will happen (if) we lose, but I tell you, we think there’s a lot of value here, and we’re long-term stockholders.