Table of Contents
Investment Summary 4
Our Price Volume Assumptions Appear Conservative 4
So why is Pricing going to be 2% and not zero with volume declines? 5
60-65% of Landfill Capacity is Owned By the Two Largest Waste Companies 5
The Small and Mid Sized Private Waste Companies are Hurting from the Downturn 6
Management Compensation Plans Tied to Getting Pricing 7
Local Governments Have Incentive To Also Raise Disposal Pricing 7
Waste Stocks Are Still Defensive With Strong Cash Flows 7
Market Expectations Are Low 8
When to own waste companies? 8
Long term investors can buy waste now 9
Company Investment Case Summaries 10
The Economics of Waste and Key Drivers 15
Volumes 15
Pricing 17
Proprietary Economic Model Estimating Waste Sales Growth 19
Industry Overview 24
Revenue by Line of Business 27
Collection Services 27
Residential 27
Commercial/Industrial 27
Disposal Services 29
Alternative Methods of Waste Disposal 30
Recycling 30
Waste to Energy 33
Hazardous Waste 35
Regulation 37
The Impact of Subtitle D 37
Key Accounting and Tax Issues 39
Landfill Accounting 39
Accounting Charges Related to Purchase Accounting 39
Republic Tax Matters 39
Multiemployer Pension Plans 40
Risks 41
Valuation Methodology 43
Normalized Earnings 43
Republic Services- A “Show Me” Story 44
Investment Summary 45
Business Overview 49
Collection 50
Transfer and Disposal 51
Other Revenue—Recycling 52
Management and the Board 53
Valuation 54
Return on Capital 57
Balance Sheet 57
Risks 57
Waste Management- The Market Leader 60
Investment Summary 61
Business Overview 64
Collection: 65
Landfills 66
Transfer 67
Recycling (WMRA Group) and Other 68
Waste to Energy (Wheelabrator) 69
Management and the Board 69
Valuation and Financials 70
Return on Capital 73
Balance Sheet 74
Risks 74
Waste Connections-The Growth Play in Waste 76
Investment Summary 77
Business Overview 82
Collection 82
Disposal and Transfer Services 84
Recycling and Other 86
Management and the Board 87
Valuation and Financials 88
Return on Capital 91
Balance sheet 92
Risks 92
Clean Harbors- The Hazardous Waste Leader 95
Investment Summary 96
Business Overview 99
Technical Services 100
Site Services 102
Management and the Board 103
Valuation and Financials 104
Return on Capital 107
Balance Sheet 108
Risks 108
Covanta- The Purest Play for Waste to Energy 111
Investment Summary 112
Business Overview 115
Domestic Operations 116
International Operations 119
Management and the Board 121
Valuation and Financials 122
Balance Sheet 126
Risks 126