Raymond James, a St. Petersburg, Florida-based investment banking company, has released a new report detailing its perspectives on the current state of the environmental and waste services industry.

As shared in the report, the company’s investment banking team says the sector continues to perform well despite the effects of COVID-19 as investors flock to resilient industries with strong growth prospects.

Although the effects of the pandemic have driven employees out of the office and into their homes, waste haulers and landfill owners have seen decreasing commercial volumes and vastly greater year-over-year residential volumes. As residential hauling services are generally not priced by the volume of trash collected, some businesses have seen margin pressure over the second quarter, which has eased as states have re-opened and employees have started going back to the office.

The public integrated waste businesses continue to push their disposal pricing up, helping to offset any declines in overall volume. Additionally, some businesses are deciding to reduce their 2020 capital expenditure budgets in order to shore up free cash flow and keep balance sheets healthy. 

The highest-profile merger and acquisition (M&A) activity of the quarter was relating to Houston-based Waste Management’s (WM) acquisition of Advanced Disposal Services (ADS), Ponte Vedra, Florida. WM re-cut the terms of the acquisition by reducing the equity value paid to ADS’ shareholders by approximately 9 percent. The DOJ is requiring the divestiture of around $340 million in revenue, which Canada-based GFL Environmental is picking up for an EBITDA multiple of approximately 9.0 times, or 8.0 times after synergies. 

In the specialty waste sector, Harsco Corporation, Camp Hill, Pennsylvania, closed on its approximately $460 million acquisition of Detroit-based Stericycle’s Environmental Services' business in April, which it will merge into its Clean Earth business segment, acquired from Compass Diversified Holdings in May 2019 for over $600 million. Harsco sees this division as a national leader in hazardous waste solutions and is likely to look to continue to grow through M&A as the parent company transitions to a less cyclical, more asset-light business model.

According to the report, private equity interest in both the solid waste and specialty waste segments continues to be robust, with many groups looking to back seasoned executives to roll-up assets in regional markets and with specialized service capabilities. Private equity is attracted to the waste space due to its proven resilience through economic cycles, the opportunity to consolidate a fragmented market and the attractive financial profile of many sub-segments.

The environmental services market is also in favor currently. These businesses are slightly more effected by COVID-19, but have strong long-term tailwinds driven by regulatory compliance; adoption of environmental, social and governance (ESG) standards; and the will to limit future environmental litigation risk. Investor appetite towards the sector can be seen in the recent IPO performance of Irvine, California-based Montrose Environmental Group, a growth-oriented environmental consulting business, which has surged over 40 percent in its public debut. Raymond James anticipates continued interest in the sector, with soil and water treatment, consulting and air quality testing businesses likely to remain interesting for both private equity and strategic acquirers.

For a full copy of the report, interested parties are encouraged to reach out directly to the Raymond James Waste Services team at WasteServicesIB@RaymondJames.com.

Orlando, Florida-based Sustainable Green Team Ltd. (SGTM), a provider of tree and storm debris recycling services, has announced the installation of a dual line mulch bagger and electric grinding and screening operation at the Apopka, Florida, landfill location of Waste Management Inc.(WM).

SGTM says it is now able to increase its mulch production by 4 million bags per year by operating one shift per day at the Apopka facility. SGTM says Apopka, about 20 miles from Orlando, “is strategically located in Central Florida for optimal reach.”

The installation of the equipment “will allow full vertical integration at WM’s landfill by utilizing unused debris that would normally be buried there,” according to SGTM. It says the formerly unused debris will now be recycled and branded into a mulch product using the automated equipment installed at the landfill site.

“This is a pivotal advancement,” says Tony Raynor, SGTM’s CEO and director. “With our strong relationship with Waste Management, we are progressing toward achieving true green sustainability.”

In addition to the Apopka Installation, SGTM in July has achieved a playground association certification for its mulch to be used as a surfacing material, which it says will help it tap into a $4 billion market.

SGTM says it provides tree services, debris hauling and removal, biomass recycling, and mulch manufacturing, packaging and sales.

OilQuickUSA, Superior, Wisconsin, the U.S. distributor of OilQuick automatic quick coupler systems, has announced that it has partnered with Volvo Construction Equipment and Services (VCES) to provide the automatic quick coupler systems on an exclusive basis to the California market. VCES, with locations throughout California, is a leading international distributor of Volvo construction equipment and Sennebogen material handlers.

“We are honored that VCES has chosen to partner with OilQuickUSA, and we look forward to a long and successful venture,” says Kevin Boreen, CEO of OilQuickUSA. “VCES provides quality equipment and exceptional service to the market they serve, precisely what we look for in dealers we do business with.”

OilQuick launched its hydraulic quick coupler system in 1993, enabling heavy equipment operators to change hydraulic attachments directly from the driver’s cabs in seconds, according to OilQuickUSA. 

“VCES prides itself on providing our customers with the most advanced equipment solutions, focusing on safety, productivity and uptime,” VCES’ Dan McCausland says. “To that end, we have made a significant investment with OilQuickUSA. We know the time is now for automatic coupler systems, and OilQuickUSA is the clear leader in this space, both in terms of the product and their support infrastructure.”

VCEs will be a full-line dealer for the OilQuick coupler system, including the OQE for excavators, the OQTR for tilt-rotators, the OQC for cranes/material handlers, the OQL for wheel loaders and the OQT for forklifts. The company will offer factory-direct sales, service and parts support from its dealer network in California, and rental machines will be equipped with multiple attachment options, according to a news release from OilQuickUSA.

Jason Johnson, OilQuickUSA director of sales, states, “We are very excited about the partnership with VCES—their sales, service and support is a great fit! Combined with our excellent engineering and manufacturing capabilities, OilQuick will be the best-supported attachment in the [California] market.” 

OilQuickUSA is a branch of Exodus Machines LLC, also based in Superior.

The use of recycled asphalt shingles (RAS) in asphalt pavement has become increasingly popular among paving contractors seeking a cost-efficient alternative to virgin materials. Consisting of asphalt cement, aggregate and fiber, the composition of RAS can make it an ideal substitute for the virgin asphalt and fine aggregate routinely used in hot mix asphalt (HMA) formulations.

According to the National Asphalt Pavement Association (NAPA), asphalt mixture producers used more than 1 million tons of RAS in asphalt pavement mixtures during the 2018 construction season, and in the process, diverted about 10 percent of the total available supply of waste shingles from landfills.

While this was a 12.5 percent increase from the 980,000 tons used in 2017, it is only a fraction of the approximately 11 million tons of asphalt shingles disposed of each year.

In an effort to further the sustainable practice of utilizing RAS in asphalt mixtures, NAPA released an updated report in 2019 on the use of reclaimed shingles in asphalt pavements. The report, which was an updated version of the association’s “Guidelines for the Use of Reclaimed Asphalt Shingles in Asphalt Pavements,” laid out a number of best practices associated with RAS usage.

“I think the big thing that we just have to encourage is if you’re going to use this material, then you’ve got to do your homework,” Richard Willis, vice president for engineering, research and technology at NAPA, says. Willis was also a co-author of the report. “You have to know your material properties, such as your typical aggregate and binder, as they become even more important [when using RAS in mixtures].”

COMPOSITION

Although the composition of asphalt roofing shingles can vary depending on the manufacturer, shingle age, product line and roofing application, most contain a basic mix of asphalt binder, filler, fine aggregate or granules, and fiberglass or organic felt.

“[Practically] every asphalt mixture that we make has two of those same ingredients in it. You’ve got the asphalt binder and you’ve got some kind of fine aggregate that’s involved in the fines system,” Willis says. “When you’re looking at using the shingles in an asphalt mixture, we use them in very small dosages because your typical shingle is going to be somewhere between 20-30 percent asphalt binder depending on how old it is and what type of fiber was used with it.”

The aggregate or mineral granules on the surface of the shingles are often very durable and angular, which can be desirable for incorporation in asphalt mixtures. In addition, the surface aggregate in shingles can create added voids in mineral aggregate (VMA) in the asphalt mixture.

According to NAPA, achieving proper VMA in asphalt mixtures is a key part of meeting the volumetric properties needed to ensure a strong aggregate skeleton, the ideal amount of asphalt binder and proper air void space to provide optimal performance against cracking, permanent deformation and aging.

“When using shingles, it all comes down to ensuring these mixtures are engineered well,” says Willis.

SOURCES

Waste shingles used for the production of RAS are usually sourced from two major categories—post-consumer asphalt shingles (PCAS) and manufacturing waste asphalt shingles (MWAS).

MWAS, which is typically generated from manufacturers scrap, is often preferred by processors because it is free of many contaminants such as nails, wood and asbestos that might compromise PCAS composition. However, with sources of MWAS limited by geographic availability, many producers are left with only PCAS as an option.

According to NAPA, processors of RAS end up using PCAS volumes 10 times greater than that of MWAS thanks to its availability, which is usually derived from reroofing activities.

While NAPA recommends shingle recycling operations consider local, state and federal requirements when addressing contamination, the association has identified two basic modes for acceptance of PCAS.

Source separating requires the roofing contractor to deliver only clean PCAS to the recycling facility. According to the report, the shingles should be free of wood, plastics, large scrap metal, dirt, rocks, adhesives, solvents, petroleum contamination, other trash, and other substances deleterious to the shingle recycling processes.

“Most of the specifications when you look at them do have a requirement for what we would call ‘deleterious materials,’ and that’s basically our way of assessing contamination,” says Willis. “We have pretty tight specifications and requirements that states set out to ensure that these materials are clean, but it is a continual process as we figure out how to make them cleaner.”

Mixed roofing waste loads, on the other hand, require sorting the PCAS from the waste at the recycling facility. These can vary from simple “dump and pick” operations to more elaborate systems with screens, conveyor systems, and elevated picking stations to remove non-shingle materials.

PROCESSING

To produce RAS, sorted shingles are fed into a grinder or shredder to be processed. The ground or shredded shingles then pass through a screening process where material of a specified size is stockpiled for use in asphalt pavement mixtures.

NAPA states there can be some variance with what grinders or shredders may be used to process shingles, with each manufacturer utilizing a unique combination of material-handling and size-reduction designs.

In general, the grinder will include a loading hopper, a feeding drum to move the shingles into the grinding chamber, a grinding chamber with cutting teeth, a sizing screen and an exit conveyor.

To combat the excessive heat generated during the shredding or grinding of shingles, Willis recommends adding water to the shingle material as it is fed into the grinding chamber.

“Because you’ve got very stiff material that you are grinding at very rapid speeds, one of the challenges that you see is you have a lot of heat that’s developed,” he says. “With asphalt binder, as it’s exposed to heat, it gets softer. So, to really prevent it from gumming up the system, they use the water to process and keep it cooler to help the system stay active and running smoothly.”

MIXTURE

RAS contains stiffer asphalt binder, fibers and filler, as well as hard, durable and angular aggregates. With this is mind, several studies have illustrated the importance of accounting for recycled binder properties when incorporating RAS into an asphalt mixture design.

According to the American Association of State Highway and Transportation Officials (AASHTO) Standard Specifications and Standard Practices for using RAS in asphalt mixtures, there are three areas to address when utilizing recycled shingles: shingle aggregate gradation and specific gravity, binder quantity requirements for effective asphalt, and binder quality requirements for binder embrittlement.

Of these guidelines, some research has found that increasing the VMA requirements will increase the total and effective asphalt binder in the asphalt mixture. This is because the asphalt binder in RAS does not fully liquefy during asphalt production, leaving a portion of RAS asphalt binder that does not become effective during production.

In addition, the AASHTO MP 23-15 specification requires RAS be processed so that 100 percent passes the 3/8-inch sieve to optimize blending. Variations in processed RAS gradations have resulted in a range of RAS asphalt binder effectiveness when mixing with new asphalt binders. Generally, finer RAS gradations lead to higher effective asphalt contents.

“States and areas are starting to look at not just developing a recipe for these mixtures, but also starting to incorporate some tests that will allow people to have higher confidence that these mixtures are going to perform,” Willis says. “That may allow people to open up their specifications of their standards a little bit.”

This article originally appeared in the July/August issue of Construction & Demolition Recycling. The author is the assistant editor for Construction & Demolition Recycling magazine and can be reached at hrischar@gie.net.