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Hauling Giants See Stronger Prices for Marketed Material

Wednesday, August 10, 2016   (0 Comments)
Posted by: Anne Piacentino
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Source: Resource Recycling
Lacey Evans and Jared Paben, August 9, 2016

North America's two largest garbage and recycling companies say recovered materials values increased during the second quarter, giving them revenue boosts. 

Waste Management and Republic Services each reported slight bumps in commodities sales revenues. Waste Connections, on the other hand, experienced a decrease, attributing the drop to low recovered plastics prices.

"This is the first revenue increase resulting from commodity price increases since the fourth quarter of 2013," Waste Management reported.

The following is a breakdown of revenues for the three largest publicly traded companies involved in residential recycling in North America. The data was reported in quarterly filings with the U.S. Securities and Exchange Commission (SEC):

Waste Management

During the second quarter, Waste Management (WM) saw a slight bump in commodity sales revenues. Specifically, it said a 2 percent increase in commodities prices generated an additional $3 million in revenue.

But the Houston-headquartered garbage and recycling giant reported that commodities prices during the first half of the year were still down 3 percent, resulting in an $18 million revenue reduction year-over-year.

And, overall, WM's recycling business brought in $290 million during the second quarter, down 3.0 percent year-over-year. During the first half of 2016, recycling revenue totaled $558 million, down 4.0 percent from the first half of 2015.

Recycling currently makes up about 8.5 percent of WM's operating revenue pie.

In its filing, WM noted that in January it acquired Davie, Fla.-based Southern Waste Systems/Sun Recycling's business in southern Florida for $525 million.

WM said it continues to see revenue declines in its residential business because of its "focus on renegotiating existing contracts and winning new contracts with reasonable returns."

WM's total revenue was $3.43 billion for the quarter, up 3.3 percent from the year before.

Republic Services

Republic Services saw an increase in the amount of money made from selling recycled commodities, according to its SEC filing. It made $101.4 million in the second quarter, up more than 9 percent from the second quarter of 2015. Its recycling business brought in 4.3 percent of its operating income during the second quarter.

For the first half of the year, Republic's recycling revenue totaled $188.2 million, a 5.6 percent increase over the first half of 2015.

Republic, which operates 66 recycling centers across the country, also noted a recent increase in commodities values. Specifically, it said recovered OCC averaged $104 per ton during the second quarter, up from $98 a year ago. For ONP, the price averaged $88 per ton, compared with $83 a year prior.

The company reported $2.35 billion in total revenue during the second quarter, up 1.7 percent from the same quarter the year before.

Waste Connections

Waste Connections finalized the acquisition of Progressive Waste Solutions on June 1, moving its headquarters to Ontario, Canada.

In the second quarter, Waste Connections made $18.1 million from its recycling program. That is up from $12.3 million in the same quarter last year, before the Progressive acquisition.

A decrease in recovered plastics prices put a $600,000 dent in commodities sales revenues during the second quarter, compared with 2015's second quarter.

"To reduce our exposure to commodity price risk with respect to recycled materials, we have adopted a pricing strategy of charging collection and processing fees for recycling volume collected from third parties," according to the company's filing.

Recycling now makes up about 2.2 percent of revenue for Waste Connections, which operates 71 recycling centers in North America.

For total revenue, Waste Connections reported $727.6 million during the second quarter of 2016, which included $174 million from the merger with Progressive Waste Solutions. During the same time period last year, without Progressive, Waste Connections reported $531.13 million in revenue.

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