Dive Brief:

• Recycle Track Systems (RTS) has acquired the majority of Enevo Group's commercial accounts in the United States for undisclosed terms. The transaction will grow its footprint in California, Colorado, Maine, New Hampshire, Ohio, Texas and other areas.
• Enevo will continue to provide IoT sensor technology and related capabilities to these customers, while RTS will assume responsibility for servicing their waste and recycling needs via third-party hauling partners. RTS declined to say how many customers are included in the deal, though noted it involves multiple regional franchises for companies such as Wendy's and IHOP.
• This marks the second acquisition for RTS and comes as the company says demand for sustainability services is still growing amid economic turbulence. “Especially during this time it shows that we’re aggressively expanding, organically and through acquisition, and opening new markets," RTS CEO Gregory Lettieri told Waste Dive. 

Dive Insight:

Since its 2015 launch in New York, RTS has seen substantial growth in recent years. Initially branching out into markets such as Boston, Washington, D.C. and Philadelphia, it now has a presence in numerous states around the United States. This new transaction marks a greater expansion into Western areas, including Colorado.

Following a second funding round, RTS made its first acquisition last fall with the purchase of Recyclebank. Once a well-funded and high-profile company, Recyclebank focused on gamification and messaging to increase municipal recycling participation. The company saw business decline in recent years, as some municipalities sought to cut costs due to commodity market declines, and Lettieri pledged to overhaul "the entire strategy and execution of the company." Asked about the integration process, he recently told Waste Dive it had "gone very well" and related announcements could be expected in the coming months.

That particular deal was viewed as complementary to the company's recent expansion into municipal contracts, an area less commonly pursued by similar technology companies providing service via hauling partners. This latest transaction with Enevo fits into the core RTS model of servicing commercial accounts, with clear overlap around the two companies' focus on tracking and data.

This transaction is the latest sign that M&A activity will continue in the waste and recycling sector for deals of clear strategic value, even as business has been disrupted. Like others, RTS reported a decline in commercial activity among many customers – particularly in New York – due to pandemic-related shutdowns. More recently, Lettieri reported that trend had begun to stabilize and said RTS has been signing up new customers interested in boosting their sustainability efforts. Enevo has reported similar volume declines among its own customers, including an unnamed "chain of prominent convenience stores" in the Northeast. 

In a release about the deal, RTS pointed out the increasing value of sensor technology like Enevo's as more customers experience fluctuating waste volumes due to the economic effects of the pandemic. Enevo will still play a role for legacy customers through a service partnership and Lettieri said the two will "continue to explore new opportunities together." Enevo similarly expressed interest in the potential for additional growth on the technology side. 

“We’re truly delighted to begin a deeper relationship with RTS in adopting our technology and providing them with tools that allows them to achieve better waste and recycling services for their customers," said Enevo Group CEO Fredrik Kekalainen in a statement.

Finland-based Enevo made a push into the U.S. market in 2016 with the hiring of a waste industry veteran to lead its efforts. In 2017, the company announced a $12 million funding round and a formal "expansion into waste and recycling services." At the time, Kekalainen said Enevo was "uniquely positioned to handle all waste operations for our customers" and described this as a natural expansion beyond its initial sensor technology.

More recently, the company has sold off some other U.S. accounts and this transaction with RTS essentially marks an exit from that part of the business. Enevo's ongoing work with U.S. municipalities was not part of the transaction. The broader Enevo Group currently touts more than 40,000 active sensors, along with a range of other technology offerings, with offices in the United States, U.K. and Finland.