Articles from 2019 In October

Despite Macro Headwinds, Republic Reports Strong Growth for Q3 2019

Republic Services Reports Strong Growth for Q3 2019

Republic Services, Inc. (RSG) reported net income of $298.3 million, or $0.93 per diluted share, for the third quarter of 2019, versus $263.4 million, or $0.81 per diluted share, for the comparable 2018 period. Excluding certain gains and expenses, on an adjusted basis, net income for the three months ended September 30, 2019, was $291.7 million, or $0.91 per diluted share, versus $269 million, or $0.82 per diluted share, for the comparable 2018 period.

"We are pleased with our third quarter results. The team's continued ability to tightly manage costs and capitalize on favorable solid waste trends enabled us to price in excess of cost inflation and expand underlying EBITDA margin by 60 basis points. During the quarter, we invested $275 million in acquisitions, further strengthening our leading market position and increasing the scale of our operations," said Republic Services CEO Donald W. Slager in a statement. "We now expect to outperform our original 2019 full-year adjusted EPS [earnings per share] guidance and achieve the upper end of our adjusted free cash flow guidance range. The momentum in our business and stable economic backdrop position us well for continued growth in 2020."

During an October 30 call with investors, Slager noted that in Q3, the company continued to see additional weakness in global recycling commodity markets and further declines in U.S. rate counts and drilling activity.

“Despite these macro headwinds, the business is performing ahead of plan. As a result, we are raising our full-year adjusted EPS guidance from $3.28 to $3.30, and we expect to achieve the upper end of our free cash flow guidance range,” he said. “In the third quarter, we generated $372 million of free cash flow and approximately $1 billion of cash flow year-to-date. We believe investing our free cash flow in acquisitions is the best way to increase long-term shareholder value.”

In the third quarter, Republic invested approximately $275 million in acquisitions, bringing its year-to-date acquisitions investment to $490 million.

“Our acquisition pipeline remains robust. For the full year, we are on track to invest approximately $550 million and believe 2020 could be another strong year of acquisitions,” added Slager.

In addition, Republic Services was recently certified as a Great Place to Work for the third consecutive year. During the October 30 call with investors, Slager congratulated the team for this acheivement.

“We believe an engaged and diverse workforce is the greatest indicator of our success. This is yet another recognition of the inclusive culture we are building at Republic, one where the best people come to work,” he said.

During the Q&A portion of the October 30 call, one investor asked Republic about the sanitation workers currently on strike at Republic Services in Marshfield, Mass., who extended their picket line to Seattle earlier this month. The striking workers, members of Teamsters Local 25 in Boston, began their strike on August 29 after claiming Republic refused to agree to a contract “with a livable wage and affordable healthcare.”

In response, Slager explained that this strike has been “incredibly narrow.” “This is one business unit in the Northeast, and we are bargaining in good faith; our team is doing a great job. We hope to get back to work soon. There have been a couple of one-day strikes in a handful of markets, but the good news is customers are not disrupted. We are getting the recycling and garbage off the ground, given those minor disturbances. From a cost standpoint, it has been nominal for the quarter.”

Additional Q3 2019 highlights include:

  • EPS was $0.93 per share. Adjusted EPS was $0.91 per share, an increase of 11 percent over the prior year.
  • Cash provided by operating activities was $651 million, and adjusted free cash flow was $372 million. Year-to-date cash provided by operating activities was $1.8 billion, and adjusted free cash flow was $1 billion.
  • Cash flow invested in acquisitions was $275 million, or $228 million net of divestitures. This brings the company's year-to-date acquisition investment to $490 million, or $441 million net of divestitures. The annual revenue acquired, net of divestitures, in the third quarter was approximately $55 million. Year-to-date annual revenue acquired, net of divestitures, was approximately $161 million.
  • Total cash returned to shareholders through dividends and share repurchases was $271 million.
  • Core price increased revenue by 4.7 percent. Core price consisted of 5.7 percent in the open market and 3.1 percent in the restricted portion of the business. This is the highest level of core price Republic has achieved in more than a decade.
  • Adjusted EBITDA was $742 million, and adjusted EBITDA margin was 28 percent of revenue, a decrease of 40 basis points versus the prior year. Underlying margin expanded 60 basis points during the quarter but was more than offset by a 50-basis point headwind from lower recycled commodity prices and a 50-basis point headwind from an additional workday in the quarter relative to the prior year.
  • The company continued to convert Consumer Price Index (CPI)-based contracts to more favorable pricing mechanisms for the annual price adjustment. RSG said it now has approximately $775 million in annual revenue, or 31 percent of its approximately $2.5 billion CPI-based book of business, tied to either a waste-related index or a fixed-rate increase of 3 percent or greater.
  • Republic raised its full-year adjusted diluted EPS guidance to $3.28 from $3.30 and reaffirmed its full-year adjusted free cash flow guidance of $1.125 million to $1.175 million. Republic now expects to achieve the upper end of its adjusted free cash flow guidance range.
  • Republic expects to invest approximately $550 million in acquisitions and $150 million in solar energy investments that qualify for tax credits. Additionally, the company expects to return approximately $900 million total cash to shareholders, through approximately $500 million of dividends and $400 million in share repurchases.
  • Recycled commodity prices continued to decline, said Jon Vander Ark, Republic’s chief operating officer, during the call. Prices have continued to decline in October, and the company estimated its price per ton to be $68 for the month. “Next year, we expect our sensitivity to commodity prices to decrease,” he explained.
  • Vander Ark also noted that the company rolled out a new platform for dispatch operations for the large containers business. "The platform leverages the operational foundation we have been building over the last several years, with additional mobile and in-cab technology with more real-time routing information and data and visualization tools," he said. "Ultimately, this platform enables us to digitally connect our customers, drivers, dispatchers, supervisors and trucks."
  • Next year, in partnership with Mack Trucks, Republic also will begin piloting its first electric vehicle on a residential collection route.

During the call with investors, Slager said, “Given the predictability and consistency of our business, we are providing a preliminary outlook as we have in prior years.” Here is Republic’s preliminary financial outlook for 2020:

  • Expect adjusted diluted earnings per share to be in a range of $3.46 to $3.51. This outlook assumes an effective tax rate of 21 percent and a non-cash charge of approximately $110 million related to solar energy investments that qualify for tax credits.
  • Expect adjusted free cash flow to be in a range of $1.150 million to $1.200 million. In 2020, Republic said it expects to reinvest approximately $100 million of its tax-reform savings into its fleet and frontline employee facilities, which represents a $25 million increase from the $75 million investment in 2019.

"We expect current business and economic conditions to continue into 2020, positioning us well for another year of strong pricing, positive volume growth and continued EBITDA margin expansion,” said Slager in a statement. “Additionally, our acquisition pipeline remains robust, and we believe 2020 could be another strong year of investment, similar to 2019."

Updated: New York City Council Passes Controversial Waste Zone Bill

New York City Council Passes Controversial Waste Zone Bill

After six years in the making, the New York City Council passed the Commercial Waste Zones bill (Intro 1574) on October 30. The legislation divides the city into at least 20 commercial waste zones, each served by up to three private haulers.

Under the legislation, which was sponsored by City Council Member Antonio Reynoso, private carters will need to meet baseline standards to be eligible for a zone and their proposals will be judged based on their plans to improve safety, recycling, pollution and job quality. The bill caps the number of private carters in any zone at three.

The legislation also creates incentives to switch to more sustainable vehicles and haul trash to more reputable waste transfer stations. There are also provisions to increase public safety training requirements for sanitation workers and authorize the City of New York Department of Sanitation (DSNY) to set a minimum rate waste haulers can charge customers.

"We are making private sanitation a good job again," said Sean T. Campbell, president of Teamsters Local 813, in a statement. "For years, private sanitation workers have testified at City Council hearings and protested in the streets for legislation to hold their employers accountable. That legislation is finally being voted on today. Commercial waste zones will overhaul private sanitation to reward the good companies and force the bad companies to shape up. We thank Council Member Reynoso and Speaker [Corey] Johnson for their leadership."

The National Waste & Recycling Association (NWRA), which was opposed to the commercial waste zone system, released the following statement to Waste360 on October 31:  

"As we move from the legislative process to implementation and administration of the new commercial waste zone collection system that was opposed by NWRA, many unresolved issues remain," said Steve Changaris, NWRA's vice president of the Northeast Region. "We will continue to engage with the city as it moves from the existing private competitive commercial waste collection system toward its new governmentally controlled zone collection system for commercial waste."  

David Biderman, executive director and CEO for the Solid Waste Association of North America (SWANA) explained that SWANA has been in close contact with DSNY over the past few months regarding outreach to the industry—both in New York and at the national level—prior to a request for proposal that will be issued in spring 2020.

“We look forward to working with DSNY, licensed carters and others interested in potentially bidding on one or more zones in New York City,” he says.

Before the legislation was passed on Wednesday afternoon, a coalition of New Yorkers in favor of the bill rallied alongside City Council members to support passage of the bill to create a citywide commercial waste zone system. The City Hall Park rally included sanitation workers and advocates from the environmental justice, safe streets and small business communities.

“This legislation marks the most significant reform to the problem-plagued commercial waste disposal system since the city’s effort to rid the industry of organized crime influence in the 1990s,” said Eric A. Goldstein, NYC environment director at the Natural Resources Defense Council, in a statement. “The City Council has turned a triple play—commercial waste zones will yield less truck traffic and air pollution, safer and quieter streets and better treatment for private sanitation workers. Bravo to Councilmember Antonio Reynoso, Speaker Corey Johnson and their colleagues and staffs.”

Ahead of the bill’s passage, critics continued to vocalize their concerns and opposition to the legislation, referring to the bill as a “recipe for corruption” and a measure that could drive family-run carters out of business.

Before the bill was passed on October 30, Kendall Christiansen, executive director of New Yorkers for Responsible Waste Management, released the following statement:

“Today’s City Council vote (on Intro 1574-A)—without a single public hearing—insures that ‘private carter’ will be replaced by ‘DSNY Franchisee’ as the city takes over full responsibility for the commercial waste system, which handles 12,000 tons of waste, recyclables and organics every night. We are more than disappointed that this misguided law will destroy dozens of local companies, many with 50 years or more of service, and displace hundreds of workers (mostly people of color, and many second-chance, making good money for hard and thankless work). Just like when Los Angeles eliminated competition as the basis for this essential service, no choice, price increases and declining service will become very real to New York’s businesses and industries, with questionable environmental benefits.”

The Bronx Chamber of Commerce, Brooklyn Chamber of Commerce, Manhattan Chamber of Commerce, Queens Chamber of Commerce and Staten Island Chamber of Commerce released the following joint statement regarding the adoption of Intro 1574-A:

"We are extremely disappointed that the City Council has decided to ignore the concerns of small business owners by hastily passing a commercial waste zone plan that limits competition, restricts consumer choice, and will only serve to harm the small businesses that drive New York City's economy. This policy has failed when implemented elsewhere, and it is especially disheartening and shortsighted to see it implemented here in New York City when more reasonable alternatives are available. The Council should work with experts, community stakeholders, and businesses alike to strike a reasonable balance and achieve a smart, workable solution, not rush through a poorly-thought-out policy like this. Our Chambers will continue to work with local businesses to mitigate the damage that this policy could wreak on our economy."

Need to Know

Canadian Village Postpones Waste Incinerator Decision

Canadian Village Postpones Waste Incinerator Decision

The village of Beiseker in Alberta, Canada, has tabled a decision regarding the proposed site of a controversial biomedical waste incinerator.

G-M Pearson has proposed to build a thermal treatment plant in the village’s southeast corner along Highway 9. According to an Airdrie Today report, the proposal has drawn opposition from residents in Beiseker, Irricana and the surrounding area.

If constructed, the facility is expected to dispose of roughly 8,000 tonnes of biomedical and other non-hazardous waste per year.  

Airdrie Today has more:

Village of Beiseker council postponed a decision on a controversial biomedical waste incinerator that drew opposition from residents of Beiseker, Irricana and the surrounding area.

According to Mayor Warren Wise, council voted unanimously at a public hearing Oct. 15 to table the application by G-M Pearson until its Nov. 12 meeting in order to gather additional information from Alberta Health Services (AHS) and Alberta Environment and Parks.

“On receiving some of that information…we should be able to come up with a decision,” Wise said.

Read the full article here.

Need to Know

Hawaii Gets C on Clean Energy Report Card

Blue Planet Foundation Twitter Hawaii Gets C on Clean Energy Report Card

Hawaii has earned a C on Blue Planet Foundation’s Clean Energy Report Card, reports Pacific Business News. The grade is a result of the state’s progress toward 100 percent renewable energy standards.

Hawaii’s progress is judged in five key areas including transportation, efficiency, renewables, smart grid and economics. While the 2019 grade is slightly better than the C– grade Hawaii received when the first energy report card was published in 2013, it's slightly worse than Hawaii's 2017 B- score, according to the report.

Pacific Business News points out that the main contributing factor to Hawaii’s grade was the transportation sector, which received a D. It also breaks down what the state has done well and where improvement is needed.

Pacific Business News has more information:

The Aloha State earned a C for its progress toward 100% renewable standards in Blue Planet Foundation's update to its energy report card last week, which showed a few areas where Hawaii is missing the mark.

"The energy report card is a comprehensive, big-picture assessment of our progress to 100% clean energy," Melissa Miyashiro, managing director of strategy and policy at Blue Planet Foundation said. "It is also a point-in-time snapshot and doesn't include projects in the pipeline and potential policies that could turn the tide."

Read the full article here.

BP’s New Technology to Enable Circularity for PET Plastic Waste

Neste, Ravago to Develop Chemical Recycling of Plastic Waste

BP has developed an enhanced recycling technology, BP Infinia, that enables currently unrecyclable polyethylene terephthalate (PET) plastic waste to be diverted from landfill or incineration and instead transformed back into new, virgin-quality feedstocks.

BP plans to construct a $25 million pilot plant in the U.S. to prove the technology, before progressing to full-scale commercialization.

“We see our Infinia technology as a game changer for the recycling of PET plastics. It is an important stepping stone in enabling a stronger circular economy in the polyester industry and helping to reduce unmanaged plastic waste,” said Tufan Erginbilgic, BP's downstream chief executive, in a statement.

PET is the most commonly used plastic for beverage and rigid food packaging. Around 27 million tonnes of PET a year are used in these applications globally, with the majority—around 23 million tonnes—used in bottles.

Although PET is one of the most widely recycled types of plastic, less than 60 percent of the PET used for bottles is collected for recycling and only 6 percent of the total makes it back into new bottles. The rest is either downcycled, where products are recycled and reused once before turning into waste, or destined for landfill and incineration.

BP Infinia technology is designed to turn difficult-to-recycle PET plastic waste—such as black food trays and colored bottles—into recycled feedstocks that are interchangeable with those made from traditional hydrocarbon sources.

“BP is committed to fully developing and commercializing this technology,” said Charles Damianides, BP’s vice president of petrochemicals technology, licensing and business development, in a statement. “We have long experience and a proven track record of scaling technology, and we firmly believe that this innovation can ultimately contribute to making all types of polyester waste infinitely recyclable.”

BP’s new pilot plant is planned to be located at its research and development hub in Naperville, Ill. It is expected to be operational in late 2020 to prove the technology on a continuous basis.

BP said it sees the potential to develop multiple full-scale commercial plants using this technology around the world. If deployed at scale in a number of facilities, BP estimates that the technology has the potential to prevent billions of PET bottles and trays from ending up in landfill or incineration every year.

Need to Know

New Bill Would Require Washington, D.C., Businesses to Compost Food Waste

New Bill Would Require D.C. Businesses to Compost Food Waste

Last week, the Washington, D.C., Council announced a new bill that would require businesses to compost their food waste. The bill, “Zero Waste Omnibus Amendment Act of 2019,” is part of a larger plan to reduce waste in the city.

The bill requires a plan for comprehensive organics site management and recycling infrastructure. Additionally, it requires a uniform recycling labeling scheme, waste collectors to address contamination in recyclables and compostables and the mayor to impose a surcharge on recycling disposed of at district transfer stations when they exceed a contamination threshold.

It also establishes additional standards regarding the use of compostable disposable foodservice ware such as requiring the use of reusable foodservice ware when providing food for consumption. It also establishes a reuse and donation program to reduce waste in landfills and incinerators.

The DC Post has more details:

A bill introduced last week in the D.C. Council would call for businesses to compost their food waste, as part of a larger plan to minimize waste in the city.

Behind the 34-page bill titled “Zero Waste Omnibus Amendment Act of 2019” is D.C. Council member Mary Cheh, who also previously introduced the bill that aimed to ensure that the District would meet its “zero waste” goal by 2032 by modernizing the city’s Waste Management Program.

Other council members who signed the bill are Vincent Gray, Brandon Todd, Jack Evans, David Grosso, Brianne Nadeau, Charles Allen and Chairman Phil Mendelson.

Read the full article here.

Need to Know

New Series Takes on Travel Industry’s Addiction to Plastics

New Series Takes on Travel Industry’s Addiction to Plastics

In a new series called “Travel Beyond Plastics,” Skift takes on the “travel industry’s addiction to plastics” and what happens when companies and travelers try to kick this habit.

In a recent article, Skift focuses on Amtrak, which the publication says is late to the game compared with other global rail services when it comes to eliminating single-use plastics in meal service. Additionally, the article claims Amtrak “doesn’t always do some of the things it is able to do when it comes to recycling.”

Skift has more:

In mid-October, 20 design students and design professionals boarded an Amtrak train at 30th Street Station in Philadelphia. Their mission on the way to their destination: find ways for Amtrak to reduce its use of single-use plastics.

During the 65-minute workshop, the designers showed off ideas for serving passengers at their seats and in sleeper cars, using sustainable materials.

They included bento boxes for meal service, similar to Japan Rail, wrapping menu items in waxed plastic, aluminum serving pieces that could be sterilized and re-used, and bamboo cutlery, the kind many eco-minded travelers already pack in their carryon bags.

Read the full article here.

Need to Know

MES Signs Agreement with Bioenergy DevCo

Bioenergy DevCo Twitter MES Signs Agreement with Bioenergy DevCo

Maryland Environmental Service (MES) announced it has entered into an agreement with Bioenergy DevCo (BDC). MES, a state-owned nonprofit, will provide extensive operational expertise to BDC as it designs, sites, constructs, permits and subsequently operates two anaerobic digestion (AD) facilities planned for the Baltimore area.

BDC, headquartered in Howard County since 2016, is a global provider in the finance, design, construction, engineering and operation of AD facilities. The company recently announced plans to develop facilities in the United States, including Maryland. AD technology naturally breaks down organic waste, typically headed for incineration or landfills, and converts the waste into renewable natural gas and an organic soil amendment. Used extensively internationally, the technology is an environmentally sound means of creating renewable energy while processing organic waste and reducing air, water and soil pollution in local communities.

“This agreement is an important step toward achieving greater environmental sustainability in Maryland,” said Roy McGrath, CEO of MES, in a statement. “We're establishing innovative ways to achieve Governor Hogan’s goal of 100 percent clean energy by 2040. Technology, like through this new anaerobic digestion agreement, will help localities preserve landfill space while disposing of organic waste in an economical and sustainable way. The 50 years of experience MES' team brings to the table will now help facilitate this progressive technology in Maryland and beyond.”

“With their long history and track record throughout Maryland and the Delmarva, we believe MES is the right partner to accelerate the development of AD projects that help municipalities meet their zero waste and renewable energy goals,” said Shawn Kreloff, CEO of Bioenergy DevCo, in a statement.

Under the agreement, MES said it will:

  • Support site, design, permit and other necessary operational and commissioning and management of the facilities.
  • Perform engineering services including quality assurance and control.
  • Create construction documents, materials and equipment and procurement specifications.
  • Provide environmental documentation and permitting and technical services.

The initial AD facilities are in development for Jessup and planned for Northeast Maryland. Anaerobic digestion will:

  • Reduce the amount of waste traditionally held in landfills by up to 40 percent.
  • Reduce greenhouse gas emissions.
  • Create renewable energy by converting the waste into natural gas.
  • Turn waste management challenges into profitable economic development solutions.

USDA, EPA and FDA Team with Food Waste Reduction Alliance

Food Marketing Institute Twitter USDA, EPA and FDA Team with Food Waste Reduction Alliance

The U.S. Department of Agriculture (USDA), the U.S. Environmental Protection Agency (EPA) and the U.S. Food and Drug Administration (FDA) announced a new partnership with the Food Waste Reduction Alliance (FWRA), the latest effort in the Winning on Reducing Food Waste Initiative launched by the three federal agencies in 2018. 

Through this Memo of Understanding, USDA, EPA and FDA will formalize industry education and outreach efforts with The Grocery Manufacturers Association, the Food Marketing Institute and the National Restaurant Association, the three founding partners of the FWRA. The FWRA represents three major sectors of the supply chain: food manufacturing, retail and restaurant and foodservice. It also pursues three goals: reducing the amount of food waste generated; increasing the amount of safe, nutritious food donated to those in need; and diverting food waste from landfills.

“USDA shares many common goals with the Food Waste Reduction Alliance, including our belief in the power of teamwork,” said U.S. Secretary of Agriculture Sonny Perdue in a statement. “We are proud to join this public-private partnership to prompt action throughout the food system.”

“EPA is proud to build upon the Winning on Reducing Food Waste Initiative through this partnership with leaders of the Food Waste Reduction Alliance,” said EPA Administrator Andrew Wheeler in a statement. “Reducing food loss and waste has many environmental and social benefits. By collaborating with these major segments of the food supply chain, we are making progress toward the national goal to reduce food loss and waste by 50 percent by 2030.”  

“The FDA strongly supports our shared goal of reducing the amount of food that Americans waste through important efforts like today’s agreement,” said Acting FDA Commissioner Ned Sharpless in a statement. “The issues of food waste and food safety go hand-in-hand, and we will continue to work with our federal partners and other stakeholders on enhancing our efforts to reduce food waste and do it safely. We are committed to doing all that we can to support safe and sound food policy decisions that are good for our families, good for our communities and good for our planet.”

Federal officials shared the news at the 2019 Food Waste Summit, hosted by Rethink Food Waste Through Economics and Data (ReFED), a nonprofit that uses a data-driven approach to combat food loss and waste. At the event, federal officials also recognized the growing cadre of U.S. Food Loss and Waste 2030 Champions, a group of corporations and organizations that have made a public commitment to reduce food loss and waste in their U.S. operations by 50 percent by 2030. EPA, FDA and USDA also released a public service announcement video discussing the importance of reducing food loss and waste.

In the U.S., more than one-third of all available food goes uneaten through loss or waste. Food is the single largest type of waste in the nation's daily trash. In recent years, great strides have been made to highlight and mitigate food loss and waste, but the work has just begun. When food is tossed aside, so too are opportunities for economic growth, healthier communities and environmental protection—but that can change through partnership, leadership and action.

The Winning on Reducing Food Waste Initiative is a collaborative effort among USDA, EPA and FDA to reduce food loss and waste through combined and agency-specific action. Individually and collectively, these agencies contribute to the initiative, encourage long-term reductions and work toward the goal of reducing food loss and waste in the United States. These actions include research, community investments, education and outreach, voluntary programs, public-private partnerships, tool development, technical assistance, event participation and policy discussion.