eResearch | Early this week, for a third attempt, GFL Environmental Holdings Inc., North America’s fourth largest waste-management company serving more than 4 million households, announced expectations to list on the New York Stock Exchange (“NYSE”) and the Toronto Stock Exchange (“TSX”) using the ticker symbol GFL with two classes of shares. The stock is scheduled to start trading at the beginning of March with shares expected to be priced between US$20 to US$21, which would make GFL’s market capitalization at approximately US$7 billion
Last year, GFL had expectations to raise US$1.5 billion in an IPO but was forced to pull back after receiving backlash from investors who criticized its massive debt load and its ability to grow sustainably.
The year before, GFL terminated plans to list publicly with goals to raise US$1 billion after receiving private funding from two Canadian investment funds, BC Partners and the Ontario Teachers’ Pension Plan.
GFL IPO
GFL’s waste management business is mainly (74%) in solid waste but it is diversifying into infrastructure and soil remediation. In the past 13 years, GFL has grown to be a leader in the industry through aggressively acquiring more than 100 companies, the largest being a US$2.8 billion acquisition for a waste management company in the U.S. called Waste Management Industries USA Inc.
Unfortunately, the acquisitions have been supported by growing levels of debt, with its most recent being US$775 million of debt issued at the end of last year, and GFL has been unable to generate enough profits to sustainably pay back its loans.
GFL plans to fix its debt problem with the US$1.5 billion it expects to raise in its IPO, which is the largest public offering since Manulife Financial Corp. (TSX: MFC) listed publicly and raised US$1.7 billion twenty years ago. GFL’s IPO will be underwritten by major North American banks including BMO Capital Markets, Goldman Sachs, J.P. Morgan, RBC Capital Markets, and Scotiabank.
In 2019, GFL generated revenues of US$2.5 billion, an 84% increase year-over-year, but reported bottom line losses of C$338 million with US$5.8 billion in debt still hanging on the balance sheet.
Waste Management Industry
The waste management industry is a sticky service, which is only growing as populations increase, communities become more urbanized, and more residential infrastructure is built. Waste generation is also on the rise as trends increase towards higher consumer spending on a greater volume of goods while demand grows for products with low to moderate life cycles such as technology.
According to research by Allied Market Research, the global waste management market was valued at US$330.6 billion in 2016 and is expected to reach US$530 billion by 2025, growing at a CAGR of 6%.
Public Waste Management Companies
Clean Harbors, Inc. (NYSE:CLH)
- Clean Harbor provides environmental, energy, and industrial services for large corporations, governments, and small waste generators, with 400 service locations across the U.S. and Canada.
- In 2019, Clean Harbor reported revenues of US$3.4 billion, a 3% increase year-over-year, with a net income of US$97.7 million, a 49% increase year-over-year.
Republic Services, Inc. (NYSE:RSG)
- Republic Services is the second largest waste management company in the U.S with 204 transfer stations, 195 active landfills, 90 recycling centers, 7 treatment and disposal facilities, and 11 salt water disposal wells.
- In 2019, Republic Services reported revenues of US$10.3 billion, a 2.6% increase year-over-year, with a net income of US$1 billion, a 3.4% increase year-over-year.
Stericycle, Inc. (NASDAQ:SRCL)
- Stericycle is a waste management company focused on medical and pharmaceutical waste, with 640 service locations worldwide.
- In 2019, Stericycle reported revenues of US$3.3 billion, a 5.1% decrease year-over-year, with a net loss of US$346 million, a 41.7% increase year-over-year.
Waste Connections, Inc. (NYSE:WCN)
- Waste Connections is a waste management company with 249 landfills and 302 transfer stations across the U.S. and Canada.
- In 2019, Waste Connections reported revenues of US$15.5 billion, a 3.6% decrease year-over-year, with a net loss of US$346 million, a 41.7% increase year-over-year.
Waste Management, Inc. (NYSE:WM)
- Waste Management is a waste management company with 346 transfer stations, 293 landfills, 146 recycling plants, 111 beneficial-use landfill gas projects, and six independent power production plants.
- In 2019, Waste Management reported revenues of US$3.3 billion, a .1% decrease year-over-year, with a net income of US$1.7 billion, a 13% decrease year-over-year.
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