Solid Waste ManagementKelli Alcantar, Jackie Cremer, Cordy SmithBradley Hall, Joey Lafleur, & Yannick Ohle

History1910: 80% of cities had organized collection1910: garbage trucks appearedMid 50’s: prohibit feeing pigs garbage (trichinosis)1920: landfilling wetlands with garbage

History

History1970: clean air act closures of incineratorsRecent decades: recycling to new materials2007: 34% of city waste is recycled or composted2010: capture greenhouse gas for energy

History

OrganizationsCompaniesCompaniesWaste ManagementRepublic servicesCovanta Stericylcle inc. Waste connectionsClean Harbors

Share of Market2004-2009

Company Market Share % 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008Public 27,589 29,351 30,753 31,909 33,139 58.6% 58.9% 59.0% 58.0% 59.5%

Waste Management 12,516 13,074 13,363 13,310 13,390 26.6% 26.2% 25.6% 24.2% 24.0%Allied Waste Industries 5,660 5,735 6,029 6,110 12.0% 11.5% 11.6% 11.1% 0.0%Republic Services Inc 2,710 2,864 3,071 3,176 9,440 5.8% 5.7% 5.9% 5.8% 16.9%Covanta Energy 700 979 1,269 1,433 1,664 1.5% 2.0% 2.4% 2.6% 3.0%Veolia Environmental Services 737 1,000 1,045 1,140 1,214 1.6% 2.0% 2.0% 2.1% 2.2%BFI Canada 484 577 762 906 1,117 1.0% 1.2% 1.5% 1.6% 2.0%Stericycle Inc 516 610 790 933 1,084 1.1% 1.2% 1.5% 1.7% 1.9%Waste Connections 629 722 824 959 1,050 1.3% 1.4% 1.6% 1.7% 1.9%Clean Harbors 643 711 830 947 1,031 1.4% 1.4% 1.6% 1.7% 1.9%All other public companies 2,993 3,079 2,772 2,995 3,150 6.4% 6.2% 5.3% 5.4% 5.7%

Private Companies 6,368 7,438 8,478 9,171 9,780 13.5% 14.9% 16.3% 16.7% 17.6%Municipalities 13,100 13,000 12,900 12,900 12,800 27.8% 26.1% 24.7% 23.5% 23.0%Total 47,057 49,834 52,131 54,980 100.0% 99.9% 100.0% 98.2% 100.0%

Share of Market

SOM

2004

26.6%

12.0%

5.8%

1.5%1.6%1.0%1.1%1.3%1.4%

6.4%

13.5%

27.8%

Municipalities

Private

WM

Allied

RSG

VeoliaCVA

2005

26.2%

11.5%

5.7%

2.0%2.0%1.2%1.2%1.4%1.4%

6.2%

14.9%

26.1%

Municipalities

Private

WM

Allied

RSG

VeoliaCVA

2006

25.6%

11.6%

5.9%

2.4%2.0%1.5%1.5%1.6%1.6%

5.3%

16.3%

24.7%

Municipalities

Private

WM

Allied

RSG

CVA

Veolia

2007

24.2%

11.1%

5.8%

2.6%2.1%1.6%1.7%1.7%1.7%

5.4%

16.7%

23.5%

Municipalities

Private

WM

Allied

RSG

CVAVeolia

2008

24%

17%

3%2%2%2%2%2%

6%

18%

23%

Municipalities

Private

WM

RSG AlliedVeolia

CVA

Key MetricsGDPHousing StartsU.S. Population GrowthDaily MSW (municipal solid waste generated per capita)Landfill and incinerator capacity

Key Metrics

Key Metrics

Key Metrics: GDP2010: 2.7% Economic growth has been soft but recovery will strengthen in 2011

GDP

Key Metrics

Key Metrics: GDPPrivate homes: 10% below April estimate but, 7.8% above may 2009Single Family: 17.2% below April estimate

Housing Starts

Key Metrics

Key Metrics: GDPDaily MSW (municipal solid waste generated per capita)409,029,000 tonsIncrease of 26,435,000 tons from year before32% is recycled0.979 tons/person

Daily MSW

Key Metrics

Key Metrics: GDPLandfill and incinerator capacityMost incinerators are at capacityLandfill capacity has remained constant, new landfills are much larger than the past.As of 2000, many states had less than 10 years till landfill capacity

Landfill Capacity

Key Metrics

Key Metrics: GDPNet Profit Margin of 9.08

Financials

$$$

industry WM RSG CLH WCM SRCL CVAQuick Ratio 0.06 0.98 0.55 2.7 0.82 1.11 1.65Current Ratio 0.08 1.02 0.56 2.89 0.82 1.11 1.65interest coverage 4.3 4.54 2.35 4.18 4.99 9.34 2.18ROE, 5yr average 15.09 18.48 8.53 16.9 10.42 19.21 12

Key Metrics: GDPInsert table???

Revenue

Performance

Key Metrics: GDPInsert table???

Stock

Performance

Key Metrics: GDP

Middle of the Mature stage

Product Life Cycle

Performance

Key Metrics: GDPSCP

Structure

Market Leader has 24% of the market The next biggest Company has 16%The industry is otherwise fragmented among small players Growth is coming from two sides

The general industry and From the decrease in Municipality activity

Further consolidation of the industry is expected.

This is specifically shown in the recent acquisitions

Key Metrics: GDPSCP

Conduct

Due to the Logistical Nature of the companies, competition is in terms of Geography

This means that companies expand in a regionDue to the heavy investment required to enter markets - more companies are choosing to purchase existing companies

Cross Selling among diversified customer base Growth through related and selected acquisitions Diversified Customer Base (Government and Private Entities)

High Switching Cost for many providers Long tenure of Management Team Aim for

Product differentiation and Cost effectiveness High Barriers to entry in Industry

Strategic GroupsStategic Groups

Map

Key Metrics: GDPInsert table???

Macro

Forces

Key Metrics: GDPInsert table???

Macro

Forces

Key Metrics: GDPGoing green/sustainability worrying about landfillsAcquisitionsOther services to expandRevenues

Prognosis

OrganizationsCompaniesCompaniesWaste ManagementRepublic servicesCovanta Stericylcle inc. Waste connectionsClean Harbors

OrganizationsCompaniesWaste Management

Waste Management

Kelli

OrganizationsCompaniesRepublic Services

Republic Services

Joey

OrganizationsCompaniesRepublic Services

Republic Services

2009 Revenue: $8,199.1 million2nd largest provider in solid waste industry as measured by revenue

OrganizationsCompanies???

Republic Services

2009 Revenue: $8,199.1 million2nd largest provider in solid waste industry as measured by revenue

OrganizationsCompaniesStrategy

Republic Services

Operating strategy for revenue: increase operating margins and enhance shareholder valueGrowth strategy: internal growth and acquisitions

OrganizationsCompaniesRepublic Services

Republic Services

Joey

2009

2007

2005

$0.00 $1,000.00 $2,000.00 $3,000.00 $4,000.00 $5,000.00 $6,000.00 $7,000.00 $8,000.00 $9,000.00

RevenueStock-holder's Equity

Republic: SOMMost dramatic way to increase market share is a mergerAllied Services merger in 2008

RSG

Revenues for Solid Waste Management

IndustryRepublic Services, Inc.

Republic: SCPOperations are national in scope, but physical collection is a local serviceCombine local management with standardized business practicesThis creates greater operating efficienciesThe basis of competition is around their pricing and location

RSG

OrganizationsJackie

OrganizationsJackie

OrganizationsJackie

OrganizationsJackie

OrganizationsCordy

1986 Dr. James Sharp developed waste disposal idea Enter David Lane 1988 Company brought to life in 1991 50.1 million raised through venture partners in 19921993-1996 with extra cash acquisitioned other companies to expand1996 became public

1996-2010 has expanded through acquisitions such as waste management and Allied waste industries medical waste disposal businesses

History

SWOTStrengths

SWOT AnalysisStrengths

strongest firm in medical waste incinerationSteri-safe BBP training Strong diversification Ability to integrate acquisitions with ease and speed WeaknessesProfile diversification all in medical field. Limited customer population

SWOT AnalysisOpportunities

Steri-safe worldwide Medical waste collecting promises steady sales growth Expansion into hazardous and pharma waste across country

Sweats

BradRepublic Services

Republic Services

YannickClean Harbors

Clean Harbors

Founded by now CEO Alan McKimFounded 30 years agoFour Person tank cleaning business

History

Clean Harbors

Started in the area of Field servicesMoved into Waste Management through the acquisition of Braintree and Natick in the early 80’sAdded Industrial Services around 1998In 2009 acquired Canadian based company Eveready Inc.

History

Clean Harbors

Geographic Service Line ExtensionsMarket PenetrationAcquisitions

Growth Reasons

Clean Harbors

  Organizational Definition

GoalAs with any business – to create satisfactory value for the owners of the business

 MissionDiversified Customer Base of related businesses in the fields ofEnvironmental, Energy and Industrial ServicesTechnical Services – hazardous and non-hazardous waste removal

Field Services – Environmental Cleanup ServicesIndustrial Services – Industry tailored solutions, including cleaning of chemicalsExplorations Services – Oil and Gas Exploration Technical Services – 49% of RevenuesField Services – 15% of RevenuesIndustrial Services – 32% RevenuesExplorations Services – 4% of Revenues 

“Lodging” issue“Oil and Gas Exploration” issue

Left over from acquisition in 2009Company has recently chosen to spin off

Vision“We strive to be recognized as the premier supplier of a broad range of value-added services based upon quality, responsiveness, customer service, information technologies, breadth of service offerings and cost effectiveness.” Values

to maintain the highest professional standardsto exceed the operating requirements imposed by regulationEntrepreneurial SpiritHealth and Safety culture

ObjectivesHigh Growth – continued track record of 15-20% Revenue and EBITA growth

 

Organizational Definition

Clean Harbors

Sales and Share of MarketSee slides Profit HistorySee Excel Spreadsheet

Consistently underperforms both the Industry and the MarketHowever – the company also shows strong gains in terms of Revenue and EBITA growthThe growth strategy the company is pursuing might undermine much of the Profit performanceAlso – different markets of operation – skew of figures? ROA?

Focus on Cost, Pricing and Productivity Initiatives We provide multi-faceted and low cost services to a broad mix of customers    Appendix Stuff  Technical Services—provide a broad range of hazardous material management services includingthe packaging, collection, transportation, treatment and disposal of hazardous andnon-hazardous waste at Company-owned incineration, landfill, wastewater, and other treatmentfacilities.1• Field Services—provide a wide variety of environmental cleanup services on customer sites orother locations on a scheduled or emergency response basis including tank cleaning,decontamination, remediation, and spill cleanup.• Industrial Services—provide industrial and specialty services, such as high-pressure and chemicalcleaning, catalyst handling, decoking, material processing and industrial lodging services torefineries, chemical plants, pulp and paper mills, and other industrial facilities.• Exploration Services—provide exploration and directional boring services to the energy sectorserving oil and gas exploration and production, and power generation.

Sales?

Clean Harbors

Stock Performance vs other companiesSee Slides .

Stocks

Clean Harbors

Stock Performance vs other companiesSee Slides StrengthsLeading Provider of Environmental, Energy and Industrial Services

Large size, able to support multiple locationsLarge and Diversified Customer Base

Limited credit ExposureStable and Recurring Revenue Base

Long term agreements with customersComprehensive Service Capabilities

Full service provider with ability to cross sellIntegrated Network of Assets

Vertically integratedRegulatory Compliance

Capital Intensive and tediousEffective Cost Management

Efficiency through scaleProven and Experienced Management Team

16 Executives with long standing experience in the IndustryWeaknesses   Opportunities   Threats 

Swot

Clean Harbors

   Corporate Level StrategiesExpand Service Offerings and Geographic Coverage

Further expansion of Business will allow for growth target to be achievedFocus more heavily on Field Services Segment by Geographic ExpansionIndustrial and Exploration Services by Geographic Expansion

 Business Level StrategiesCross-Sell across Segments

Focus on “full packages” in terms of Environment and IndustryCapture Large-Scale Projects

To increase utilization of existing assetsExpand Throughput Capacity of Existing Waste Facilities

By change of terms able to capture more market sharePursue Selective Acquisitions

Enhance or Expand existing BusinessFocus on Cost, Pricing and Productivity Initiatives We provide multi-faceted and low cost services to a broad mix of customers    Appendix Stuff  Technical Services—provide a broad range of hazardous material management services includingthe packaging, collection, transportation, treatment and disposal of hazardous andnon-hazardous waste at Company-owned incineration, landfill, wastewater, and other treatmentfacilities.1• Field Services—provide a wide variety of environmental cleanup services on customer sites orother locations on a scheduled or emergency response basis including tank cleaning,decontamination, remediation, and spill cleanup.• Industrial Services—provide industrial and specialty services, such as high-pressure and chemicalcleaning, catalyst handling, decoking, material processing and industrial lodging services torefineries, chemical plants, pulp and paper mills, and other industrial facilities.• Exploration Services—provide exploration and directional boring services to the energy sectorserving oil and gas exploration and production, and power generation.

Strategy

Clean Harbors

  Appendix Stuff  Technical Services—provide a broad range of hazardous material management services includingthe packaging, collection, transportation, treatment and disposal of hazardous andnon-hazardous waste at Company-owned incineration, landfill, wastewater, and other treatmentfacilities.1• Field Services—provide a wide variety of environmental cleanup services on customer sites orother locations on a scheduled or emergency response basis including tank cleaning,decontamination, remediation, and spill cleanup.• Industrial Services—provide industrial and specialty services, such as high-pressure and chemicalcleaning, catalyst handling, decoking, material processing and industrial lodging services torefineries, chemical plants, pulp and paper mills, and other industrial facilities.• Exploration Services—provide exploration and directional boring services to the energy sectorserving oil and gas exploration and production, and power generation.

Rest?

Clean Harbors

"Natonal Economic Accounts." Bureau of Economic Analysis. U.S Department of Commerce, 25/06/2010. Web. 26 Jun 2010. <http://bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm>. Cheeseman, Jennifer. "National Population Projections." Population Profile of the United States. U.S Census Bureau, n.d. Web. 26 Jun 2010. <http://www.census.gov/population/www/pop-profile/natproj.html>. "U.S Department of Housing." U.S Census Bureau News. U.S Department of Commerce, n.d. Web. 26 Jun 2010. <http://www.census.gov/const/newresconst.pdf>.  "Waste Statisitics." Research Bulletin. Environmental List Every Day, n.d. Web. 26 Jun 2010. <http://environmentalistseveryday.org/docs/research-bulletin/Research-Bulletin-MSW-Recycling-10-05.pdf>. 

Sources

Clean Harbors

Solid Waste ManagementKelli Alcanter, Jackie Cremer, Cordy SmithBradley Hall, Joey Lafleur, & Yannick Ohle