On Jun 23, Zacks Investment Research initiated the research report on waste management services provider Waste Connections Inc. WCN.
Headquartered in The Woodlands, TX, Waste Connections is an integrated solid waste services firm that provides waste collection, transfer, disposal and recycling services across the U.S. and Canada. The company also offers non-hazardous oilfield waste treatment, recovery and disposal services in various active natural resource producing areas in the country through its R360 Environmental Solutions subsidiary.
The Upside
With prime location of disposal sites within competitive markets, Waste Connections has optimal asset positioning to generate higher profitability. Given the importance of and costs associated with the transportation of waste to treatment and disposal sites, having the disposal capacity proximate to the waste stream offers a competitive advantage and serve as a barrier to entry. An experienced management team, decentralized operating strategy and financial strength remain additional tailwinds.
Waste Connections merged with rival Progressive Waste Solutions Ltd early this month to create an industry leader with enhanced scale and a stronger financial profile. With complementary footprints, the combined company will benefit from a diverse revenue base and will have strategic assets uniquely positioned for continued growth. In addition, the merger is expected to generate approximately $50 million in annualized SG&A cost savings within the first 12 months after closing. Besides, the operational & safety-related improvements and market rationalization are expected to contribute an additional upside over the long-term.
In addition, Waste Connections generally focuses on providing vertically integrated services, from collection through disposal of solid waste in landfills that it owns or operates. The operations are managed on a decentralized basis to place decision-making authority close to the customer, enabling it to identify and address customers鈥� needs on a real-time basis in a cost-effective manner. This low-overhead, highly-efficient operational structure allows it to expand into geographically contiguous markets and operate in relatively small communities that other competitors may not find attractive.
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