2025-06-12-Jefferies-2025年废物处理行业的量仍然疲软_12页_701kb

Waste Sector Volume Summary Report

Overview

The waste management sector's volumes are expected to remain range-bound between -1% and +1% long-term, primarily due to intentional shedding by companies pursuing margin improvements and higher pricing. This represents a shift from a volume-driven to a pricing-focused narrative, with population growth acting as a steady demand tailwind, offset by macro-sensitive and shedding-related declines.

Economic Correlations

Volumes show strong correlation with Real Personal Consumption Expenditures (PCE) YoY growth at an average correlation coefficient of 0.76 across the industry, driven by rising consumer demand. Strongest link is seen with GFL at 0.84, while CWST has the weakest at 0.47. New housing starts on a 1-year lag correlate moderately at 0.59, with RSG displaying the highest correlation of 0.63, attributed to its geographical focus on fast-growing Southeast regions and diverse service offerings.

Volume Trends

• Short-term (2025): Industry averages project a 30bps volume decrease due to pronounced shedding across companies like WCN (led by Chiquita impact) and WM, while WM supports positive volume through special waste pipelines. Specific company guides include WCN down 180bps, GFL down 24bps.
• Long-term: Volatile factors like C&D and Specialty waste volumes, more sensitive to economic activity, combined with intentional shedding, keep the range contained.
• Outlook to 2026: Volumes may rebound as macro conditions stabilize, allowing for reduced shedding and growth in collision/demolition and specialty waste streams.

Intentional Shedding and Margin Improvement

Intentional volume reduction is a key strategy following consolidation, where entities like public waste companies acquire higher-margin businesses. Contracts are renegotiated to higher prices, shedding low-margin clients to boost consolidated margins (e.g., residential waste, which averages ~20% margin). Residential business, representing ~30% of collections for public companies, is a major focus for such actions.

Valuation and Investment Risks

Valuation relies primarily on P/FCF multiples, considering historical and peer group contexts. Key risks include competitive pressures, declining CPI and recycling prices, regulatory constraints, and potential cost inflation. Investment opinions vary:

• GFL (BUY): Attractive valuation driven by pricing capabilities.
• RSG (BUY): Strong PFCF, benefited from broad service offerings and regional growth.
• WCN and WM (BUY/hold): Volume declines anticipated, but solid FCF generation offset risk.
• CWST (HOLD): Lower correlation with PCE and higher regional exposure risks.

Key Takeaways

• Volumes are less volatile now due to top-down pricing and margin focus.
• Economic indicators (e.g., PCE growth, new housing) are significant drivers.
• Resilient over 90% of waste volume due to human activity, moderated by shedding.
• Investment should prioritize pricing power and FCF over volume forecasts.