Houlihan Lokey applauds WM for profitable 2024

The Environmental Services business unit of Los Angeles-based investment bank Houlihan Lokey Inc. has issued a report portraying the waste and recycling sector as one that “continues to be a standout performer” for investors and bankers.

In the 17-page report focusing on the fourth quarter of last year, Houlihan Lokey says 2024 can be considered as continuing a string of “multiple years of above-GDP growth and margin expansion.”

The investment bank writes in part that “while the success was broad-based, perhaps no metric captures the success of the broader industry as concisely and definitively as industry heavyweight WM achieving nearly a 30 percent earnings before interest, taxes, depreciation and amortization (EBITDA) margin for the full year—a remarkable feat.”

Houston-based WM (formerly known as Waste Management) also holds a prominent place in a list of fourth quarter 2024 merger and acquisition (M&A) transactions.

In a list of 15 transactions identified by Houlihan Lokey, only four of them have a deal value mentioned. Of the four, WM’s $7.2 billion purchase of Stericycle carries the biggest price tag.

Other North American transactions listed by the investment bank include the acquisition of Ken’s Trash Service by Arkansas-based Cards Holding; Coastal Waste & Recycling’s acquisition of Southwest Waste in Florida; the acquisition of New York-based Royal Waste Services by Waste Connections Inc.; the Capital Waste Services acquisition of Tennessee Waste Haulers; and a 25 percent stake in waste-to-energy firm Reworld acquired by Singapore-based and government affiliated GIC.

Houlihan Lokey also mentions four transaction in which it was involved as an advisor, including the GIC stake in Reworld. The other three transactions involved regional acquisitions made by Republic Services and Casella Waste Systems and the sale of Tennessee-based specialty waste firm Atomic Transport LLC.

“The largest companies in the environmental services sector have continued investing their cash flow back into their businesses through acquisitions, greenfield projects and upgraded technologies and management teams,” writes Houlihan Lokey.

Looking at the year now underway, the investment bank comments, “While there is some regulatory uncertainty and headline risk with the new U.S. presidency entering 2025, the fundamentals of the industry remain strong and the expectation of accelerated economic growth and decreased regulatory oversight may serve as additional catalysts for activity.”