Dive Brief:

• Recycle Track Systems (RTS), a New York-based waste and recycling service provider, recently acquired Ohio-based Elytus, a third-party administrator of waste services. This is the largest deal by RTS since its launch in 2015. Financial terms were not disclosed.
• Elytus will add an estimated 12,000 service locations to the RTS portfolio. This expands the company's presence to all 50 U.S. states, Puerto Rico and Canada and grows its team to around 150 employees.
• "Their expertise and strong network will support our momentum as we continue to scale across the country and build new customer and hauler relationships," said Gregory Lettieri, RTS CEO and co-founder, in a statement. "Our shared values of transparency and sustainability will make us great partners as we strive to redesign the waste management industry."

Dive Insight:

As the environmental, social and governance (ESG) trend gains more traction among customers and investors involved with the waste industry, multiple companies that don't own collection assets are seeking to gain market share by emphasizing their technology and sustainability offerings.

RTS started with this approach in mind, touting its ability to offer more timely service updates, sustainability metrics and disposal alternatives for businesses looking to update their waste programs. Its core model falls into the traditional waste broker category, in which customers (particularly those with multiple locations) work directly with RTS but it arranges smaller third-party haulers to provide the service. Since launching in the New York market, RTS has picked up numerous clients that include stadiums, office buildings, restaurants, hotels and other businesses around the U.S.

Lettieri said he believes the Elytus transaction now makes RTS the U.S. waste industry's second-largest broker (after Rubicon). Elytus launched in 2007 as a software company before expanding into brokerage a few years later, per a recent Waste Today profile. While RTS declined to share revenue figures for either company, a 2016 Columbus Dispatch story reported revenue for Elytus exceeded $25 million at the time. Elytus is known in part for its WINStream customer platform, which Lettieri said will be integrated into his company's own system.

“We’re excited to join RTS on the journey toward a world without waste,” Elytus co-founder and President Matthew Hollis said in a statement. “This partnership will allow us to provide our customers with expanded sustainability services and combined technology solutions with better data to help them better manage their waste streams.”

This marks the fourth acquisition for RTS, including multiple deals that were unique moves in the waste broker category. In 2019 it purchased Recyclebank, which once had hundreds of municipal contracts to help incentivize recycling participation. RTS plans to relaunch Recyclebank this year and is also working to grow its e-commerce platform, ZeroWaste.com.

In 2020, RTS purchased Enevo's U.S. accounts as well as New Jersey-based organics recycler Ambrosia. The latter company creates cleaning products made from organics while also meeting growing demand for organics processing capacity spurred by multiple diversion mandates in the New York and New Jersey region. RTS initially had plans to replicate this system with additional organics recycling facilities in other cities, but Lettieri said no further updates are available yet.

Another differentiation between RTS and other brokers is its growing focus on municipal collection contracts. Lettieri said RTS now has contracts to handle waste for an estimated 60,000 households in parts of Illinois, Indiana and New Jersey. This has come with its share of controversy, prompting at least four lawsuits in New Jersey from competitors that lost out on local bids. 

The president of Gaeta Recycling, one of the plaintiffs, told NorthJersey.com last year his goal was to see RTS and one of its hauling partners "no longer allowed to bid on municipal work in New Jersey," adding "there's a cost to doing business, and neither of them have paid it." That suit and others have been dismissed or resolved.

Lettieri said RTS will continue expanding its municipal business and commercial accounts while competing to serve multiple areas in New York City's upcoming commercial waste zone system. Further acquisitions are also possible, he said, estimating more than 250 waste brokers are currently active in the market.

"We will continue to evaluate additional opportunities over the coming months and years," said Lettieri.

RTS isn't the only one eyeing such deals. Rubicon, the largest company in the market, referenced plans to grow via acquisition in its recent announcement of a $1.7 billion initial public offering and SPAC deal. In other signs of ongoing investment interest in this part of the waste industry, Pennsylvania-based RoadRunner Recycling announced the completion of a $70 million Series D funding round last week and said it could also go public in the future.

RTS completed a $35 million Series C round last year, which brought its valuation to $260 million at the time. Lettieri said the company doesn't currently have any plans to go public.