Most publicly traded companies in the solid waste and recycling industry had a quiet start to the year for M&A spending. Total Q1 spending reached an estimated $1.29B, primarily due to one larger deal.

This figure includes spending reported by WM, Republic Services, Waste Connections, GFL Environmental and Casella Waste Systems in the U.S. and Canada.

Here’s a quick recap on first-quarter M&A activity for the five public companies and what executives said about potential future activity during recent quarterly earnings calls.

*Spending totals are net of cash acquired, with some variation in methodology among companies.

**GFL figures converted from Canadian to U.S. dollars for comparison purposes, based on May 6 exchange rate.

Recaps and outlooks

WM

The industry’s largest company had little M&A activity in Q1. When asked during its earnings call about any possible opportunities, executives kept the answer open-ended and reiterated their usual expectations for $100 million to $200 million in potential annual spending. CEO Jim Fish described the possible pipeline as “pretty strong.”

“I do think there's opportunity for us to grow both organically, as we've talked a lot on this call, but also inorganically, and we're just going to make sure it's the right acquisition that we feel like has a good strategic long-term prospect,” said Fish.

Republic Services

Republic purchased an unspecified number of businesses in Q1 and reiterated its outlook to potentially spend $500 million on deals this year. CEO Jon Vander Ark noted that the company completed $5.5 billion in M&A spending during the past three years, but it still sees plenty of opportunities in both its solid waste and environmental solutions businesses.

“The only place, I'd say, we're slightly self-constrained is on the environmental solutions services side of the business, only because we're doing so much IT integration work that we're letting that team get focused there,” he said, referring to recent acquisitions in this area, such as ACTenviro.

“The pipeline is certainly building, and we could close more opportunities right now,” said Vander Ark, referring to environmental solutions. However, he said, “we're pausing until 2025 on that when we [will] have a really solid foundation to integrate companies into, because that's [how] we think we maximize the synergies of those acquisitions.”

Waste Connections

The company closed nine solid waste deals in Q1, plus its larger purchase of Canadian energy waste facilities from Secure Energy Services for $1.1 billion (Canadian).

Out of $375 million in annualized revenue acquired year to date, $150 million of that came from solid waste transactions. Its most notable transaction was the purchase of assets from the Waste-Away Group, operating in Indiana and Michigan, which accounted for about half of the annualized revenue acquired for solid waste. CEO Ron Mittelstaedt said another deal is expected to close in that region during Q2.

Looking ahead, Mittelstaedt said the company has letters of intent signed for deals in all of its operating regions. This could include further deals in the mid-South and East Coast which could be vertically integrated into the rail-served landfill it purchased with Arrowhead Environmental Partners last year.

“We have a busy plate, a lot going on,” said Mittelstaedt.

GFL Environmental

(All figures in Canadian dollars)

GFL completed four deals in the quarter that cost an estimated $111.6 million, and it has since closed two more deals that cost another $439.3 million. The largest was its purchase of Angelo’s Recycled Materials. This included a C&D landfill in central Florida, which CEO Patrick Dovigi described as “one of the fastest-growing markets in the U.S.”

“This asset is highly complementary to our existing network, and we expect that it will act as a driver for significant organic growth for us in this market for years to come,” he said.

GFL says it has acquired an estimated $100 million in annualized revenue to date. Looking ahead, Dovigi reiterated plans to keep a “hard cap” on M&A spending in the range of $600 million to $650 million (Canadian) this year. 

This comes as investors continue to press the company about its higher debt leverage ratio, due in part to years of elevated acquisition activity. Dovigi said he does not expect “an influx of deals” next year, either, and he tried to put the company’s current approach to M&A in perspective.

“...I think the business is just now of a size and scale that M&A is really just a modest contribution, and just a real part of sort of the growth algorithm, but it’s not going to be the part of the growth algorithm that’s front and center,” he said.

Casella Waste Systems

Casella, which is coming off its own period of elevated M&A spending last year, reported no specific Q1 M&A activity. President Ned Coletta said the company still sees a current pipeline of potential deals that could be worth $800 million in annualized revenue, and “we are positioned very well to have another solid acquisitive year in 2024.”

The company expects to keep a targeted focus when it comes to future deals.

“Much of our focus right now is on driving density and adjacencies, [we’re] really not looking at large new platforms in any serious way at this moment in time,” said CEO John Casella. “We're really looking at density, both in the legacy markets and now down into the Mid-Atlantic, with strong tuck-ins, strong adjacent acquisitions.”