The largest provider of comprehensive waste management services in North America, Waste Management Inc. (WM) is strengthening its foothold in the growing food waste recycling business by investing in Peninsula Compost Company, LLC (“PCC”), which is engaged in organics processing.
Peninsula Compost diverts organic waste from landfills and produces natural, nutrient-rich, environmentally friendly organic compost and soil products for the retail, professional and agribusiness markets. The organic processing company owns and operates the Wilmington Organic Recycling Center (WORC), the only fully operational and permitted in-vessel organics processing center in Delaware, Maryland and Virginia.
The WORC facility is the largest composting facility in the eastern United States, with an estimated capacity to accept 600 tons per day (tpd) of food waste and organic material. The current average production at WORC is at 250 tpd to 300 tpd of organic waste.
Waste Management has steadily been boosting its organic recycling business. With the acquisition of a majority stake in Garick LLC, the company gained access to the distribution of organic lawn and garden products that will expand its organic recycling services.
This acquisition will benefit the company’s residential, commercial and industrial customers seeking to convert their organic wastes into products such as compost, mulch and organic soil amendment.
Earlier, in August 2009, the company invested in Terrabon LLC to generate renewable transportation fuels from organic waste via a unique MixAlco technology. In 2010, the company invested in Enerkem and Harvest Power to expand its organics processing facilities across North America and to develop innovative anaerobic digestion technology to accelerate the decomposition of organic materials that may produce renewable energy.
WORC's operations could add over 200,000 tons to Waste Management’s current annual organics processing capacity of over 1.7 million tons and accelerate the expansion of the company's organics recycling services and development of value-added organic products in the Mid-Atlantic States.
These investments are in line with three of Waste Management's sustainability goals – doubling its renewable energy production, tripling the amount of recyclables processed by 2020 and investing in new technologies for managing waste.
These acquisitions will also help tap the growing demands in the composite services market, which is growing at a 20% annual clip. The market for composting services is on the rise as consumers are increasingly demanding alternatives to conventional fertilizers for lawn and garden care, and as municipalities and companies are seeking to increase the recycling of organic materials for beneficial use.
North America generates over 80 million tons of organic waste each year. In the United States, approximately a third of municipal solid waste is organic, including food, yard and wood waste. Approximately 65% of yard waste and 2.5% of food waste collected in the United States is currently diverted from disposal.
Waste Management has incurred substantial start-up costs for growth initiatives in its medical waste business. Competitors have been active on the acquisition front in this space, restricting the company’s efforts to gain market share. Therefore, we expect margins to be affected in the near term. We currently have a Zacks #3 Rank (short-term Hold recommendation) on Waste Management.
Houston, Texas-based Waste Management provides collection, transfer, recycling and resource recovery, and disposal services to nearly 20 million residential, commercial, industrial and municipal customers.
The company is also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the U.S. Waste Management competes in niches with Casella Waste Systems Inc. (CWST), Republic Services Inc. (RSG) and privately held Safety-Kleen Inc.
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