GE Capital, Transportation Finance has published a new research report on the refuse and recycling industry; it can be found here <http://www.americas.gecapital.com/GECA_Document/Refuse_Recycling_IRM_Update.pdf> . According to the Bureau of Labor Statistics, total employment in the waste management and remediation services industry increased 2% year-over-year in March to an all-time high of 392,000, while average hourly wages increased 4.4% to a near-high of $24.81. As of early May, GE economists expected U.S. GDP growth to improve from 2.4% in 2014 to 3.0% in 2015 – and that benefits the refuse industry. Refuse industry volumes have seen a gradual improvement since a low point in the second half of 2013. However, the industry is facing some challenges, including stubbornly low recycling commodity prices and the possibility of rising interest rates, which could dampen construction activity as well as associated refuse volumes. The consumer price index (CPI) related to garbage and trash collection, which is used as a benchmark for contract service pricing, has shown a severe deceleration since November 2014 to below the rate of core inflation. This mirrors the decline in recycling commodity prices as well as energy prices and, likewise, fuel surcharges. The revenues of a composite of publicly traded waste management companies experienced typical seasonal weakness during the first quarter of 2015. However, total EBITDA increased 3% during the period, supported by upward core pricing trends coupled with lower fuel costs. Large haulers have also improved their pricing metrics by exhibiting the discipline to forego contracts that don’t meet required returns on invested capital.
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