Environmental and Safety Solutions Industry Update │ September 2013 Harris Williams & Co. Environmental and Safety Solutions │September 2013 MONTHLY SPOTLIGHT CONTENTS MONTHLY SPOTLIGHT Trends in Single-Stream Recycling and Mixed-Waste Processing WHAT WE’RE READING Waste management has entailed recycling for some 40 years, with recycling technology RELEVANT HW&CO. TRANSACTIONS PUBLIC MARKETS inching along over this period toward an increasingly holistic view of the waste stream. PUBLIC COMPARABLES Today’s technologies offer the potential for successful implementation of single-stream NOTABLE M&A ACTIVITY recycling (all recyclable materials collected together), as well as truly “all-in-one” M&A TRANSACTION DETAIL mixed-waste processing that manages all waste through one collection. The popularity of single-stream recycling has expanded considerably in recent years (see charts below), OUR PRACTICE and the advent of more sophisticated mixed-waste processing facilities is just beginning. The theoretical advantages of moving to mixed-waste processing through a “single-bin” Harris Williams & Co. is a leading advisor solution have tremendous potential. A single truck collection route can substantially to the environmental and safety solutions reduce the energy use and pollution associated with waste collection, while customers M&A market. Our Environmental and effectively lose the ability to opt-out of recycling programs, instantly boosting Safety Solutions (E&S) Practice includes experience across a broad range of sectors, participation rates to 100%. Despite lingering concerns regarding the purity of including products and services that meet recovered recycling content from these “all-in-one” collection programs and facilities, environmental and safety demands for a advanced material processing technology today offers compelling opportunities to variety of end markets. significantly increase the volume of recycling, waste-to-energy production, and landfill diversion. E&S Sectors Building Products Multiple cities in the U.S. offer examples of the increasing emphasis on single-stream Consumer Products and Services recycling and mixed waste processing: Energy Efficiency and Renewable Energy 1.1 April 2011, Philadelphia, PA: Philadelphia opened Waste Management’s new Engineering, Construction, and single-stream recycling facility, following the lead of other major cities like Boston, Consulting (ECC) Chicago, and Phoenix, which also recently adopted single-stream recycling systems. Remediation, Cleaning, and Abatement 2.2 August 2012, Milpitas, CA (near San Jose): Republic Services opened what it says Safety Equipment is the largest recycling operation in the world, a 110-ton per hour, multiple waste Security and Alarms stream facility. The material recovery facility (“MRF”) processes residential and Test, Measurement, and Control commercial single-stream material for recycling, as well as dry and wet commercial Traffic, Automotive, and Emergency recyclables, comprising all the commercial waste from businesses in San Jose. The Waste Management and Recycling MRF will process more than 400,000 tons per year and is expected to divert at least Water and Wastewater 80% of the material collected. CONTACTS Number of Single-Stream Recycling Percent of U.S. Communities Using Patrick Hanraty | Managing Director Facilities in the U.S. (1995 – 2009) Single-Stream Recycling (2005 – 2010) [email protected] +1 (267) 675-5915 250 75% Bob Baltimore | Managing Director 200 64% [email protected] 200 +1 (804) 915-0129 50% 150 Brian Lucas | Managing Director [email protected] 100 85 +1 (804) 932-1323 20% 25% David Allebach | Vice President 50 [email protected] 10 +1 (267) 675-5920 0 0% Marshall Croft | Vice President 1995 2000 2009 2005 2010 [email protected] Sources: The Huffington Post, Public Works Management Policy, Waste Management. +1 (804) 915-0161 Page | 1 Harris Williams & Co. Environmental and Safety Solutions │September 2013 MONTHLY SPOTLIGHT (CONT.) To be updated 1.3 November 2012, Minneapolis, MN: The first phase of a single-stream recycling program was implemented by consolidating four separate collection routes servicing 33,000 residents. In just the first six weeks of the program, recycling volume among these residents increased by 63%. 2.4 February 2013, Houston, TX: Bloomberg Philanthropies awarded Houston a $1 million innovation prize to pursue its “One Bin for All” program. The program intends to raise participation in recycling to 100% and the recovery rate to 75%. A private partner is being sought to build and operate a $100 million mixed-waste processing plant (targeted to begin operation in early 2015) and take the city's 2.1 million residents to a one-bin collection program. 3.5 July 2013, Montgomery, AL: Earlier this year, Infinitus Energy initiated construction of a mixed-waste processing facility aimed at eliminating up to 85% of waste going to the city’s landfill. The facility will be able to process up to 225,000 tons of waste per year when it is expected to open in June 2014. The facility will cost approximately $35 million. 4.6 September 2013, Detroit, MI: In its current efforts to privatize waste collection services, Detroit is looking to establish a five- year agreement to expand single-stream recycling collection across the city (currently only a portion of the city has single- stream recycling). These are only a few examples of the increasing commitment of local governments to single-stream recycling and mixed-waste processing programs. Continued innovation and proprietary solutions that maximize both the volume and quality of recovered waste streams for various applications offer significant opportunities to companies and investors focused on the waste management and recycling, and engineering, construction, and consulting sectors. Providers that can offer and demonstrate the greater cost-saving potential of advanced products and services to better capture and utilize waste and recyclables will find ample demand from budget-constrained cities, municipalities, and local governments. Please feel free to contact us to discuss the impact of single-stream recycling and mixed-waste processing on your business or our perspectives regarding broader M&A activity in the waste management and recycling, and engineering, construction, and consulting sectors. WHAT WE’RE READING Conflict in the Air: The Near Future of Federalism and U.S. Air Emissions Regulation. “MIT concluded in a recent study that air pollution causes about 200,000 early deaths each year in the United States. The leading causes of fatal air pollution are road transportation and electrical power generation units. Governments have responded to such unsettling statistics in part through increased regulation. And with increasing regulatory activity inevitably comes conflict. In the United States, this conflict often occurs between the federal government and the states.” Read more here. Administration Presses Ahead With Limits on Emissions From Power Plants. “EPA proposes to limit new gas-fired power plants to 1,000 pounds of carbon dioxide emissions per megawatt hour and new coal plants to 1,100 pounds of carbon dioxide. The average advanced coal plant currently emits about 1,800 pounds of carbon dioxide per hour.” Read more here. Harvard, NRDC: Expire Dates Key to Stopping Food Waste. “The expiration dates on your packaged foods might be exaggerated – and a change in how those “best by” and “sell by” labels are regulated might save billions in wasted food. The date labels unnecessarily contributing to $160 billion in food waste in the U.S. each year.” Read more here. Companies that Focus on Health and Safety Are Better Investments, Study Suggests. “In a new study, firms with strong health, wellness and safety programs bested the S&P 500 average rate of return in investment simulations. Researchers tracked the stock-market performance of companies that have received ACOEM's Corporate Health Achievement Award, which annually recognizes the healthiest and safest companies in North America.” Read more here. Page | 2 Harris Williams & Co. Environmental and Safety Solutions │September 2013 WHAT WE’RE READING (CONT.) Colorado’s “Biblical” Flood in Line with Climate Trends. “Extreme rainfall events have become more frequent across the U.S. during the past several decades in part due to manmade global warming. Increasing air and ocean temperatures mean that the air is generally carrying more water vapor than it used to, and this moisture can be tapped by storm systems to yield rain or snow extremes.” Read more here. House Adds Water Infrastructure Bill to Pile of Unfinished Business. “The House of Representatives introduced a bill to move forward work on an array of water projects across the country. The Water Resources Reform and Development Act, the first such bill in six years, would authorize repair and improvements to dams and levees, the deepening of harbors and navigation channels, and flood control and coastal protection projects.” Read more here. EIA Urged to Re-Evaluate its Renewable Energy Forecasts. “In a letter sent to the EIA, nearly 100 organizations and businesses urged the EIA to reconsider the methodology used in developing its renewable energy forecasts. The letter expressed concern that ‘EIA’s estimates in past issues of the ‘Annual Energy Outlook’ for future electrical generation from renewable energy sources in the near- and mid-term have been low and have not been borne out by actual experience.’”