![]() ![]() With over 17,000 trucks, Republic Services is one of the largest operators of vocational fleets offering residential and commercial recycling and waste solutions. “It’s capital-intensive and it’s not compounding at 20% per year like software, but for the big players it’s become an extraordinarily repeatable and inflation-resistant business.Republic Services, one of the largest waste disposal companies and environmental services leaders, unveiled the first fully integrated electric recycling and waste collection truck Monday, according to the company. “Remember, we’re talking about garbage,” he says. Hoffman figures it’s a good diversifier for Gates. That’s because with hazardous waste volumes growing faster than those of normal trash, and opening new hazardous waste facilities nearly impossible, he will have the power to raise prices and expand margins.ĭespite such investments, Republic pays steady dividends its largest shareholder, Cascade Investments (Microsoft cofounder Bill Gates’ personal holding company), receives more than $200 million a year in dividends from its 34% stake. He didn’t hesitate to pay a 70% premium to the pre-deal stock price for a company with lower operating margins than Republic’s. Ecology, which has a market-leading 36% share in hazardous waste disposal, with five landfills that entomb chemical, medical and low-level nuclear waste. Vander Ark’s approach to growth-and profit-is illustrated by Republic’s just-completed $2.2 billion acquisition of U.S. ![]() You need to have a fleet that rolls,” says Vander Ark, who will even fly mechanics cross-country to keep trucks moving. “You don’t need to fix a truck 165 different ways there ought to be one way to do it. It operated under dozens of names (everything from Duncan Disposal to Trash Taxi) and hadn’t standardized truck maintenance or fleet operations. When Vander Ark arrived on the scene a decade later, Republic still hadn’t moved past its roll-up roots. Republic was spun out of AutoNation in 1999. He left that company in 1984 and repeated his roll-up play with Blockbuster Video and AutoNation. He got his start hanging on the back of a trash truck, then acquired hundreds of competitors before taking Waste Management public in 1971. 1 and 2 in trash) are the spawn of billionaire Wayne Huizenga, who died in 2018. John Dobosz is editor of the Forbes Dividend Investor and Forbes Premium Income Report investment newsletters.īoth Waste Management and Republic (Nos. Priced at 15 times earnings, Dover trades at a 22% discount to its five-year average P/E, and its dividend yield is 1.6%. Revenue this year is expected to grow 8.3% to $8.6 billion, with earnings up 11%. It’s also a big player in pumps, winches, hoists, commercial refrigerators and equipment for automotive repair. If you want a piece of Heil, you’ll have to buy shares of Dover Corp., the Illinois-based mini-conglomerate that bought into the garbage truck business in 1993. Workers at its factory in Fort Payne, Alabama, weld several tons of steel and machinery atop truck chassis and roll out the customized pieces of heavy-duty compacting and carting equipment to trash haulers around the world. Heil Environmental Industries has been one of the world’s largest makers of specialized sanitation vehicles since 1901. Illustration by PATRICK WELSH FOR FORBES HOW TO PLAY ITīy John Dobosz Wagering on society to keep churning out trash seems a safe bet-and unless we revert to tossing our refuse into the streets, garbage trucks have a secure future. It wasn’t until 2019, Hoffman says, that Houston-based archrival Waste Management (2021 sales: $18 billion) caught up with Republic’s aggressive landfill pricing. ![]() Those that could pay were self-identifying as profitable enough to become Republic acquisition targets. Operators that couldn’t afford it would go elsewhere. Vander Ark argued that Republic should dramatically increase its fees. In essence, Republic was selling its future profits too cheaply. The marginal cost of adding another few tons of trash to a landfill appeared deceptively low because it didn’t include the high expenses of opening new landfills. Never maximized routes.”Įarly on, the young consultant convinced then CEO Don Slager that Republic wasn’t charging independent trash haulers high enough “tipping fees” to dump their loads at Republic-owned landfills. Industrial waste has never priced assets as scarce. “But Jon brought something that they wouldn’t have figured out. “I’m a cynic about hiring consultants from McKinsey,” says Michael Hoffman, managing director at Baltimore’s Stifel Investments, who has followed the garbage business since 2008. ![]()
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