America’s trash flow isn't signaling a recession, CEO explains
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The U.S. economy has been giving off mixed signals lately, leading some to consider unusual indicators including men's underwear, champagne sales, and even trash.
According to one company that handles American waste, trash trends do not lie.
"I would say, no," Republic Services CEO and President Jon Vander Ark said on Yahoo Finance Live (video above) when asked if trash demand signaled the economy is in a recession.
"We are supply constrained right now — our demand is incredibly strong across all markets," Vander Ark added. "And we see that from the consumer all the way to industrial and large national accounts. The demand is very, very strong."
Despite a challenging economic environment in 2022, the waste disposal industry has continued to see strong growth.
On August 4, Republic Services reported total revenue growth of 21% in the second quarter compared to a year ago as the trash giant expanded through acquisitions and organic growth.
"We've never grown as fast as we have from a volume standpoint, and our outlook for the remainder of the year is very, very positive," Vander Ark said.
Republic stock (RSG) reached an all-time high of $147.94 on August 17 while competitor Waste Management (WM) momentarily ascended to its own high of $175.82 during the same trading session.
Growth of the 'sustainability story'
Recession or not, the waste management industry is finding opportunities beyond trash and pivoting toward cleaner operations.
"We've gone from being a garbage company to, really, an environmental services and a sustainability company," Vander Ark said.
Republic's acquisition of US Ecology (ECOL), which closed on May 2, paved the way for the waste handler to venture into the environmental services sector.
"Our 1,000-plus salespeople are out every day trying to drive a recycling and sustainability story with our customers," Vander Ark explained. "And our take rates have gone up — we've grown that category faster than solid waste for the last decade."
The push to increase recycling capabilities comes as companies across the board set objectives to decrease the scope of their carbon footprints and plastic usage. Many consumer-facing brands like Sprite, Kraft Heinz, and Blueland cleaning products have all started shifting away from traditional packaging.
According to Vander Ark, these initiatives require waste management solutions that can extend the life cycle of materials.
"The more important topic is not all recycling is equal — an aluminum can requires an enormous amount of energy and has an enormous amount of value to be recycled," Vander Ark specified. "So we really think about aluminum, fiber, and cardboard, and plastics is the primary things that have a really big value in the end market that we want to use to drive circularity."
Republic's goal for its plastics recycling facility in Las Vegas is to produce 100 million pounds of recycled plastic per year, starting in 2023.
With recycling rates hovering around 50% in the U.S., Vander Ark highlighted the industry has a lot of runway ahead and noted that consumers and businesses should feel confident that what they recycle isn't diverted to the trash heap.
"I think very little is actually getting landfilled," Vander Ark said. "So you should feel good that if you're putting it into the container, that it's going to end up in the right place."
Republic has also invested heavily in other innovative ventures, such as transmuting waste into energy.
"When you put garbage into a landfill, it produces leachate, which is a gray water, and also methane," Vander Ark said. "And so we've now taken on 75 projects today and we've got another almost 60 in the pipeline to harness that methane and produce either electricity or renewable natural gas."
Luke is a producer for Yahoo Finance. You can follow him on Twitter @theLukeCM.
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