GFL advances growth through acquisition

GFL Environmental, Vaughan, Ontario, has acquired Capital Waste Services, a Columbia, South Carolina-based waste services firm.

Capital Waste, a portfolio company of New York-based Kinderhook Industries LLC, provides solid waste hauling services for residential, commercial and industrial waste generators.  

GFL announced the acquisition during its third-quarter earnings call Nov. 2.

The firm noted during the earnings call that it completed 11 acquisitions in the third quarter and four acquisitions after quarter end. Patrick Dovigi, CEO of GFL Environmental, highlighted two acquisitions in particular that pose “highly attractive growth opportunities” for GFL, one of those being Capital Waste.

Dovigi described the firm as a vertically integrated, secondary market-focused solid waste business located in the middle of GFL’s already dense footprint in the Southeast.

“We believe Capital Waste’s four landfills, eight transfer stations and over 200 collection vehicles have meaningful runway and self-help opportunities to drive outsized organic growth and margin expansion in the near term,” he said during the earnings call.

In the past two years, Capital Waste has made significant growth moves through several acquisitions.

In 2022, the company acquired the assets of Pascon LLC, a Lexington, South Carolina-based solid waste hauler providing dumpsters, roll-off containers and hauling services to residential and industrial customers. The assets included six front-end-load waste collection vehicles, along with the routes associated with those vehicles.

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In February, Capital Waste acquired two waste operations in Tennessee—Southern Central Waste Services of McMinnville, Tennessee, and Priority Waste Services Inc. of Soddy Daisy, Tennessee. In March, it acquired the Sandlands C&D Landfill in Gresham, South Carolina, marking the company’s 10th add-on acquisition.

During the Q3 earnings call, Dovigi also mentioned GFL's acquisition of Fielding Environmental, a family-owned environmental services business based in Toronto. The company was established in 1955 and is “in the heart of the largest footprint of [GFL’s] environmental services business,” Dovigi said. 

“Fielding has … highly complementary specialized processing capabilities and a Part B permit that will allow for the realization of material internalization and organic cross-selling growth opportunities within our existing Environmental Services network,” he said.

These deals will result in 10 basis points to 15 basis points of higher leverage in Q4 and will have a short-term impact on free cash flow conversion, according to GFL.

“We are highly confident in our ability to generate accretive returns on invested capital from these investments over the medium term, leading to even better free cash flow conversion in the future,” Dovigi said.