US waste company Republic Services plans $500 mil in acquisitions for 2024

US waste services company Republic Services expects to invest at least $500 million in acquisitions in 2024, significantly lower than the $1.8 billion invested in 2023, executives said during an earnings call late afternoon on Feb. 27.

With the approach of 2025 and 2030 recycled content targets for packaging and end-users looking to secure feedstock supply, the US recycling sector has witnessed dozens of mergers and acquisitions.

Recent examples include LyondellBasell's acquisition of PreZero recycling assets in California and Eastman's partnership with Rumpke Recycling(opens in a new tab) to capture colored polyethylene terephthalate to feed its new US methanolysis plant(opens in a new tab).

CEO Jon Vander Ark said Republic looks at how a potential acquisition fits into existing operations, as well as the ability to absorb the other entity.

He added that Republic would likely avoid constructing more than one big deal in the same part of the country at the same time, to avoid overtaxing team capacity to integrate the acquisitions.

Republic also considers medium-size deals, he said, though those are more difficult to predict as far as timing.

"Not that we're not pursuing it [smaller deals], but you just don't know when they're going to move or when they're going to come," he said. "So that's predicated on a step-down in our expectation this year for what we've done."

"It's not because the pipeline is weaker. Pipeline is strong, but we never know exactly what we're going to close, and we're going to stay disciplined," he said.

Republic is finalizing commissioning of its first polymer center(opens in a new tab) in Las Vegas, Nevada, Vander Ark said, with delivery of plastic flake to offtake partners(opens in a new tab) expected to begin in the coming weeks.

The center opened in late 2023 and processes post-consumer plastics including PET and polyethylene, to create recycled resin.

The second of four planned centers is under construction in Indianapolis, Indiana(opens in a new tab). Vander Ark said the site is on track for its expected completion in late 2024.

Financial returns on the Las Vegas center are expected to be above modeling, he said.

"We feel very good about the demand in the marketplace," he said. "And that's certainly given us confidence ... to go to Indy [Indianapolis], and then we're planning on at least two more across the country."

For full-year 2023, the average selling price for recycled commodities including paper, plastics, metals and glass was $117/mt, lower by 31% from 2022, according to the Republic filing.

For the fourth quarter, the average recycled commodity price was $131/mt, higher by 17% on the quarter and by 49% on the year.

Platts, part of S&P Global Commodity Insights, assessed post-consumer mixed color HDPE bales at 20 cents/lb FOB Chicago at the end of December 2023, 60% higher than at end-2022, when prices were at 12.5 cents/lb.