Core Viewpoint - UBS upgraded Waste Management from Neutral to Buy and raised the price target to $260 from $225, anticipating a positive impact from the resumption of share repurchases [1] Group 1: Shareholder Returns - The resumption of share repurchases, which had been suspended since Q1 2024, is expected to drive a 2.5-times increase in capital returned to shareholders [1] - UBS noted that following previous investment cycles, Waste Management's relative valuation had expanded by as much as 20% [2] Group 2: Financial Performance - Waste Management successfully integrated Stericycle into its WM Healthcare Solutions business and reduced leverage from 3.6x to 3.0x in Q4 2024 [2] - These actions are projected to set the stage for over 30% year-over-year growth in free cash flow in 2026 [2] Group 3: Market Trends - UBS expects a shift in investor preference towards companies that emphasize capital returns rather than continued investment in municipal solid waste, which may support a re-rating of the stock [3]

Group 1 - The class action lawsuit related to WM's acquisition of Advanced Disposal Services (ADS) is nearing completion, with a judge granting final approval of a $30 million settlement [3][8] - The lawsuit alleges that WM misled investors regarding the timeline and financial risks associated with the ADS acquisition, leading to losses on senior notes issued for the deal [8] - WM completed the acquisition of ADS in October 2020, having initially announced the deal in April 2019 for $4.9 billion, and issued $4 billion in senior notes to finance the acquisition [4][3] Group 2 - The U.S. Department of Justice viewed the merger as a significant consolidation in the waste industry, requiring WM to divest up to $200 million in assets to address antitrust concerns [6] - WM later recognized the need to divest more than $200 million in assets to meet regulatory requirements, which contributed to delays in closing the merger by the initial deadline of July 14, 2020 [7][5] - WM has denied any wrongdoing in the lawsuit and stated that the settlement will not affect its financial or operational capabilities, as it will be covered by insurance [8]

Group 1 - Brett Ashcroft Green is a CERTIFIED FINANCIAL PLANNER™ with extensive experience in private credit and commercial real estate mezzanine financing [1] - He has worked with high-net-worth and ultra-high-net-worth individuals globally, indicating a strong focus on affluent clientele [1] - His professional background includes collaboration with leading commercial real estate developers such as The Witkoff Group and Fortress Investment Group [1] Group 2 - The article does not provide any specific financial data or performance metrics related to companies or industries [2][3][4]

Company Overview - Clean Harbors, Inc. (CLH) is the leading provider of hazardous and environmentally sensitive waste disposal in North America, operating the continent's largest network of incinerators and offering extensive emergency response, industrial services, and logistics capabilities [2] - The company has a vertically integrated model supported by 5,000 drivers and over 20,000 vehicles, enabling it to manage complex waste streams from various sectors including semiconductor fabs and hospitals [2] Business Segments - CLH dominates used-oil recycling through its Safety-Kleen Sustainability Solutions (SKSS) segment, which collects, re-refines, and resells oil, although this segment is more sensitive to global oil prices and has lower margins compared to the core environmental services segment [3] - The company's competitive advantage is bolstered by a national network of incinerators, landfills, and TSDF facilities, which face significant permitting barriers, along with deep regulatory expertise in PFAS destruction, a growing multibillion-dollar remediation market contributing $100–125 million in revenue and growing at 20% annually [3] Competitive Landscape - CLH competes with major players such as Veolia, Waste Management, and Republic Services, but remains the most comprehensive one-stop shop for industrial customers [4] - While organic growth has historically been low to mid-single digits, increased demand for PFAS remediation and reshoring trends could provide additional growth opportunities [4] Financial Metrics - As of November 28th, CLH's share price was $227.56, with trailing and forward P/E ratios of 31.61 and 28.82 respectively [1] - The company has a run-rate free cash flow near $400 million against an enterprise value of approximately $13.5 billion, indicating modest returns without assuming continued acquisition-driven expansion or higher oil prices [4] Market Outlook - The stock appears fundamentally strong but is priced for optimism, suggesting that it may be prudent to wait for more attractive valuations before considering an investment [5] - The bullish thesis on CLH emphasizes its industrial and regulatory-driven growth profile, similar to the perspective on Waste Management, Inc. [6]

Core Viewpoint - Casella Waste Systems (CWST) has been under observation, with shares declining approximately 9% since the last analysis in December 2024, which maintained a 'hold' rating on the stock [1] Company Analysis - The company is recognized for its high-quality stock and strong business fundamentals, particularly in capital allocation and return on capital [1] Investment Philosophy - The investment approach emphasizes acquiring stocks from businesses that demonstrate disciplined capital allocation, exceptional returns on capital, and the ability to compound invested capital over extended periods [1]

Core Viewpoint - The waste management industry, while not glamorous, offers impressive long-term returns and stability compared to more volatile sectors like technology [1][2]. Company Overview - Waste Management, founded in 1968, is North America's largest provider of public sanitation services, managing household, commercial, and industrial waste, with over 250 active landfills and advanced recycling facilities [4]. - The company has a market capitalization of $82 billion and a current stock price of $203.94, with a gross margin of 28.92% and a dividend yield of 1.63% [3][14]. Financial Performance - In the third quarter, Waste Management's revenue increased by 15% year-over-year to $6.4 billion, although operating income fell by 12% to $989 million due to noncash outflows and asset impairment [5][6]. - The company has a price-to-earnings (P/E) ratio of 32, which is higher than the S&P 500 average of 26, indicating that shares are somewhat expensive for a mature industrial company [13]. Market Potential - The total addressable market for Waste Management is vast, as nearly every business and household in North America generates waste, with a growing number of potential clients [8]. - The company is exploring growth opportunities in green energy, particularly through landfill gas-to-energy initiatives, which convert methane from landfills into renewable natural gas [9][10]. Strategic Growth Initiatives - Waste Management is expanding through acquisitions, such as the $7.2 billion purchase of Stericycle, a medical waste service provider, which enhances its footprint in the healthcare waste market [11]. - The company's focus on synergistic opportunities, including medical waste and green energy production, positions it well for future growth [12].

Group 1: Microsoft Azure and AI Growth - Azure has reached a valuation of $75 billion, with revenue growth accelerating due to increased AI-capable cloud capacity to meet demand [1] - Microsoft has established itself as a leader in generative AI, integrating AI services into Azure and Microsoft 365, which has significantly contributed to business growth [2] - The enterprise software segment is experiencing strong double-digit revenue growth, driven by new AI features that enhance user retention and pricing power [7] Group 2: Bill Gates and the Gates Foundation - Bill Gates plans to donate at least 99% of his wealth through his foundation by 2045, having already contributed billions in Microsoft shares since its inception [5][6] - The Gates Foundation's trust fund is heavily concentrated, with three stocks accounting for over two-thirds of its marketable equity portfolio [4] Group 3: Berkshire Hathaway Investments - The Gates Foundation holds a significant position in Berkshire Hathaway, with 24.1 million Class B shares valued at $11.8 billion [9] - Berkshire Hathaway has shown solid results despite challenges in its insurance business, with operating earnings exceeding expectations [10] - The company has a substantial cash position of approximately $340 billion, allowing for strategic acquisitions like OxyChem for $9.7 billion [12] Group 4: Waste Management Holdings - Waste Management is a long-term holding of the Gates Foundation, with a competitive advantage due to its scale and landfill ownership [14][15] - The company reported strong adjusted EBITDA margins of 38.4%, despite some challenges in its recycling business [16] - Management has provided revenue guidance of $28.5 billion to $29.25 billion for 2027, indicating solid growth prospects [17]

Core Insights - The company reported Q3 2025 revenue of $6.44 billion, a 14.9% increase year over year, but net income decreased by 20.7% to $603 million [1] - Operating EBITDA was $1.72 billion, reflecting a 2.5% year-over-year growth with an adjusted margin of 30.6% [1] Financial Performance - CEO Jim Fish highlighted expanded margins and reduced operating costs due to technology and fleet automation [1] - Core price increased by 6%, and landfill volumes rose by 5.2%, driven by MSW, special waste, and construction categories [1] - The collection and disposal business contributed significantly to the year-over-year increase in operating earnings, achieving a 32% EBITDA margin in the legacy business [1] Sector Challenges - Healthcare Solutions revenue was $628 million, slightly below expectations, as the company integrates Stericycle and its ERP system [1] - The segment faced customer frustrations with billing and reporting, leading to credits or deferred price increases [1] Operational Adjustments - The closure of the Natura PCR facility in Texas resulted in a $152 million impairment charge due to unfavorable market conditions [1] - Recycled commodity prices fell nearly 35% year over year, yet the recycling segment's operating EBITDA grew by 18% due to MRF automation investments [1] Renewable Natural Gas (RNG) Developments - The company doubled its RNG production in the first nine months of the year and pre-sold about 45% of its 2026 offtake [2] - RIN prices for 2026 are projected to be in the $220 to $230 range [2] M&A Activity - The company has completed approximately $450 million in deals this year, with expectations to reach $500 million by year-end [2] - Future transactions may close in Q4 or roll into next year, with a return to a normal range of $100 million to $200 million expected in 2026 [2] Revised Guidance - The company maintains its full-year growth expectations for operating EBITDA and free cash flow, with revenue projected at the low end of the previous guidance range of $25.275 billion to $25.475 billion [2] - Margin expectations have increased to between 29.6% and 30.2% [2]

Financial Data and Key Metrics Changes - Revenue for Q3 2025 was $2.458 billion, an increase of $120 million or 5.1% year over year, exceeding expectations [15][20] - Adjusted EBITDA for Q3 was $830.3 million, up 5.4% year over year, with an adjusted EBITDA margin of 33.8%, reflecting a 10 basis point increase year over year [19][20] - Core pricing increased by 6.3% in Q3, leading to an expected full-year core pricing of approximately 6.5% [15][20] Business Line Data and Key Metrics Changes - Roll-off pulls were down 1% year over year, while rates per pull increased by 2% [17] - Landfill tons increased by almost 3%, with municipal solid waste (MSW) tons up 2% and special waste tons up 10% [17] - E&P waste revenues increased by 7% year over year, driven by the production-oriented R360 Canada business [18] Market Data and Key Metrics Changes - Volumes were down 2.7%, reflecting a purposeful shedding of low-margin contracts and sluggishness in cyclically exposed activities [15][20] - The southern region continued to experience mid-single-digit declines, while markets like Florida and Texas showed less negative trends compared to previous quarters [17] Company Strategy and Development Direction - The company is focused on acquisition activity, with approximately $300 million in annualized revenues either closed or under definitive agreement year to date [10] - An 11.1% increase in the regular quarterly cash dividend was authorized, marking the 15th consecutive annual double-digit increase since 2010 [10] - Long-term investments in technology and infrastructure are being made to enhance productivity and efficiency, with a focus on data analytics and customer experience [14][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering the full-year 2025 outlook, assuming no further headwinds [4][20] - For 2026, the company anticipates mid-single-digit revenue growth driven by price-led organic growth in solid waste, with adjusted EBITDA margin expansion expected [21][22] - The company is optimistic about the benefits of higher employee retention and engagement, which have positively impacted financial results [12][13] Other Important Information - The company has achieved significant progress in sustainability targets, including a 19% reduction in emissions and improved safety metrics [11][12] - The Chiquita Canyon landfill closure is being managed effectively, with ongoing remediation efforts showing positive results [46][48] Q&A Session Summary Question: Can you discuss the performance of the E&P business in Q3 and its outlook? - Management noted strong performance in the production-oriented segment, with a sequential increase in the Canadian business due to a remediation job, suggesting a run rate adjustment of $10 million for future projections [27] Question: What is the expected impact of RNG investments on EBITDA? - Management indicated that there would be no material incremental RNG revenue or EBITDA in 2025, with benefits expected to materialize more significantly in 2027 [28] Question: How do you view the pricing strategy for 2026? - The company expects to need less price increase in 2026 compared to 2025, with a target price-cost spread of 150 to 200 basis points [40][42] Question: What are the expectations for free cash flow in 2026? - Management highlighted that the timing of capital expenditures and green CapEx will inform free cash flow expectations, with a potential $50 million benefit from lower green CapEx [43] Question: Can you provide an update on the Chiquita Canyon remediation obligations? - Progress is being made in the remediation efforts, with a reduction in leachate handling and a significant decrease in odor complaints, although outlays are running ahead of expectations [46][48] Question: What is the outlook for volumes heading into next year? - Management indicated that while volumes have been flattish, there are signs of improvement, and the company is not expecting significant contract expirations that would impact volumes negatively [51][76]

Group 1: Government Shutdown Overview - The likelihood of a government shutdown is high, with estimates between 80% to 90% [19] - A shutdown occurs when Congress fails to pass a budget or short-term funding, leading to temporary furloughs of federal workers [39][40] - Essential services continue during a shutdown, but many federal operations are paused, affecting data releases like the employment report [40][41] Group 2: Market Reactions and Economic Impact - Despite the looming shutdown, stock markets have shown resilience, with a strong quarter reported [6][8] - Historical data indicates that markets tend to recover after initial drops during shutdowns, with positive returns observed one month post-shutdown [44][48] - Long-term Treasury yields typically decline following a shutdown, with a median drop of 19 basis points observed in nine out of eleven instances [47] Group 3: Investor Sentiment and Strategies - Investors are advised to focus on defensive plays that are less affected by government shutdowns, such as companies in essential services [27] - The current political climate suggests a lack of cooperation between parties, which may complicate negotiations and prolong the shutdown [35][36] - The upcoming earnings season is expected to reflect strong corporate performance, with projected earnings growth of 7% to 10% [14][16]