Basics of Progressive Waste
Progressive Waste (BIN) is in the non-hazardous waste management industry. The industry involves collecting, transporting, disposing, and recycling of commercial, industrial, and residential household waste. Progressive Waste is structured as a holding company. Its US and Canadian operating subsidiaries are held separately from the parent company.
Progressive Waste is one of the largest vertically integrated non-hazardous waste management companies in North America. It consists of 66 transfer stations, 30 landfills, and 40 MRFs (material recovery facilities). It benefits from longstanding relationships with many of its commercial, industrial, and residential customers. This provides a high degree of stability to its business. Most of Progressive Waste’s revenue from commercial and industrial customers is generated from contracts with typical durations of three to five years. As a result, Progressive Waste is one of the ultimate defensive stocks. It’s largely immune to economic cycles and recessions.
In early 2015, Progressive bid for a waste management contract in New York City and Toronto. This would be through its transfer stations. This is becoming the preferred way of handling waste. Transfer stations accept waste and then send it to either a third-party operated landfill or one of Progressive’s 30 landfills.
Progressive Waste is being bought by Waste Connections (WCN) through a reverse merger. It has very high EBITDA (earnings before interest, tax, depreciation, and amortization) margins of around 26% on revenue of about $2 billion. The company is expected to report 2015 EPS (earnings per share) of $1.19.
Merger arbitrage resources
Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL). For a primer on risk arbitrage investing, read Merger arbitrage must-knows: A key guide for investors.
Investors who are interested in trading in the consumer services sector should look at the iShares US Consumer Services ETF (IYC).