The multiyear trend of solid waste and recycling acquisitions is on track to continue into 2023, with the industry’s top publicly traded companies spending in Q1 an estimated $563 million on transactions in the U.S. and Canada.

This figure includes spending reported by WM, Republic Services, Waste Connections, GFL Environmental and Casella Waste Systems. Catch up on the details for each company as well as what executives said about further 2023 activity during recent quarterly earnings calls.

*Spending totals are net of cash acquired.

**GFL figures converted from Canadian to U.S. dollars for comparison purposes, based on May 1 exchange rate.

Current outlooks

WM

WM is maintaining a targeted approach to acquisitions, such as the recent purchase of a large Minnesota composting company, but has the balance sheet to be opportunistic. CEO Jim Fish said the company’s ability to invest in technology is creating a further advantage over smaller competitors. This, in turn, could create potential acquisition opportunities when such companies may be acquired through consolidating customer service functions or rethinking collection systems.

“Some of the companies that we've acquired are showing double the turnover that we're showing. It's why we think there's an opportunity for us to take share,” he said. “When you are able to hold a lot of your drivers, it makes a big difference in that customer lifetime value proposition.”

Republic Services

All of Republic’s Q1 acquisitions were in the solid waste and recycling space, with no further details shared on the transactions. CEO Jon Vander Ark said he foresees the potential to spend “well over $500 million” on deals this year. “The pipeline remains strong. I think both for '23 and all the way into '24 at this point. We feel really good about the pipeline,” he said.

Looking over the next three to five years, Vander Ark said he expects the company’s deal pipeline to be around 80% solid waste/recycling and 20% environmental services opportunities.

Waste Connections

The company purchased four unspecified solid waste and recycling businesses in the quarter, with plans to continue its long-running pace and see another “above average” level of activity this year. CEO Ron Mittelstaedt said the company is well-positioned to continue on this front as Rick Wojahn, longtime business development lead, retires. Wojahn’s replacement has M&A experience, and the staff on that team grew last year. Plus, Wojahn will remain involved by “assisting with those larger deals where he has relationships.”

“M&A ebbs and flows. As you know, [it was an] incredible year in 2022, incredibly strong year in the second half of 2021 coming off the pandemic,” said Mittelstaedt. “We’re very confident in M&A and nothing has changed in that arena.”

GFL Environmental

The Canada-based company completed the acquisition of 12 businesses during Q1, 10 of which were focused on solid waste. This includes the larger purchase of Vertex Energy’s Heartland used motor oil business, but the business is otherwise more focused on smaller tuck-in transactions. CFO Luke Pelosi anticipates the company could reach around $600 million (Canadian) in acquisition spending this year, including the Heartland deal. Recent tuck-in examples include deals in Colorado, Oklahoma and Wisconsin.

“So that's looking at markets where we have a lot of post-collection operations, that maybe we acquired through other businesses or we got through the [2020 WM-Advanced Disposal Services] divestiture package, where they're running at sort of 60%, 70% utilization and we want to push those to a 100% utilization,” said CEO Patrick Dovigi. “That's where the lion’s share of those dollars are going to be deployed this year.”

Once the company completes a pending divestiture package of its own, and uses the proceeds to reduce its debt leverage, Dovigi said GFL may also seek to grow through deals in tertiary markets next year.

Casella Waste Systems

The Vermont-based company reported $263,000 worth of acquisition spending for Q1, related to holdback provisions on prior deals, but no new transactions in the quarter. On April 3, it purchased a “solid waste collection and transfer station company” worth an estimated $12 million in annualized revenue. Looking ahead, CEO John Casella said the company’s pipeline has at least $500 million worth of possible deals, but the company’s upcoming Mid-Atlantic expansion via the purchase of GFL assets could nearly double that.

“...Our pipeline has developed well over the last year-plus, but this platform acquisition is a great opportunity for us to have a platform across the region and then looking to densify through great sales efforts and also tuck-in acquisitions,” said President and CFO Ned Coletta.