A. Hazwaste in the US has been a historically very attractive market for both Corporates and PEs…

Volume has not been a historical driver of growth: for the last 10-15 years, commercial volumes of hazwaste treated in the US have been flat at ~7 Mt. While volumes generated should be roughly correlated to industrial activity/GDP, two drivers have cancelled that growth:

•    Improving existing processes to reduce hazwaste generated during manufacturing

•    Starting from the design phase, engineering waste out of the entire product life cycle

But economics have vastly compensated for that, driven by:

•    Regulatory obligations (non-discretionary spend), ensuring consistency of demand

•    Permit requirements, ensuring high barriers to entry, especially in treatment and disposal, and therefore pricing power for service providers, in particular in incineration and landfilling

•    Customer requirements for traceability and accountability, ensuring sticky customer relationships

•    Backlog build-ups in Covid years which have enabled price increases multiple times a year, and pushed margins up even further.

Depending on participation in the value chain, margins have been very healthy (up to 50%+), across leading industry players:

•    From very high…

     ◦ Incineration: 35-50%+

     ◦ Landfill: 35-45%+

•    … to medium…

     ◦ Blending and neutralization in TSDFs: 18-25%

     ◦ Resource recovery: 8-20%

•    … to commodity-like

     ◦ Collection and transport: 8-14%

Waste types have also been a key differentiator of margins: e.g. (listed in increasing price per ton) used oil, solvents,industrial liquids, containerized hazardous waste (drums, lab packs), PCBs/organics, radioactive.

B. … and there are more tailwinds ahead

Industrial reshoring represents a $200-400B investment in expanding US industrial capacity, likely to structurally increase the generation of hazardous waste streams over decades

Accelerating growth in certain verticals: semi-conductors, battery manufacturing, pharma

Circular economy impetus: waste-to-energy, recycling (e.g. used oil, solvent recovery, etc.)

Some select opportunities, e.g. PFAS (but real volume and margin opportunities may be inflated — e.g.Clean Harbors projects the PFAS pipeline to grow 20% in 2026 but expects PFAS revenue to remain modest at 1-2% of total revenue).

C. … but the best days may be over…

The Covid backlog has largely been absorbed, and outsized price increases are no longer being taken

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Treatment capacity has increased, e.g. in incineration, keeping price increases to a reasonable amount, compared to the exuberant jumps of the past:

•    Clean Harbors’ Kimball incinerator coming online and being filled up over 2026-27 (70 kt capacity online since 2025, with a 12-18-month ramp-up, full utilization expected by mid-to-late 2026)

•    Veolia’s Gum Springs expected to be online by 2026

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Larger targets are few

•    Incineration: only one incinerator is still ‘independent’, the Ross incinerator in Ohio

•    Large players have already consolidated to a significant degree, and are a formidable competitive force for large volume market opportunities (Clean Harbors and Safety Kleen; Veolia and Clean Earth)

Medium-sized no-asset brokers (“logistics arrangers”) are now the prime target for acquisitions by large players (with assets such as truck fleets and TSDFs and full-time on-site chemists), as their value proposition is increasingly being questioned.

D. … and for Corporates and PEs alike, the hard work begins

Define a clear strategic positioning

•    This positioning needs to be relevant and differentiated to serve selected target market segments

•    Choice can be between being a Generalist at scale, or Specialist, for instance:

       ◦ As a specialized treatment provider (e.g. incineration à la Ross, landfill à la Waste Control Specialists)

       ◦ As a specialized waste stream service provider (e.g. PCBs, explosives, sodium-containing chemicals, lab packs, etc.)

       ◦ As a client industry-specific specialist: universities, hospitals, industrial research centers, semiconductors, pharma, etc.

       ◦ As a broker serving only small quantity generators for whom compliance is a far more important purchasing criterion than price, and for whom switching providers is seen as too risky.

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Grow smart, organically and through M&A

•    From an organic growth perspective: ensure service providers capture all the volume that their cost basis, geographical position and customer relationships allow — focusing on building capabilities and capacities in high-margin waste types and treatment technologies

•    From an M&A perspective: identify middle-market players with good synergies to (1) grow a specialist business to scale or (2) build a platform of hazwaste capabilities.

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Closely monitor critical financial yardsticks

•     Optimize EBITDA levels by maximizing capacity utilization: in a flat volume environment, ensure the availability of the right volume levels and mix of waste intake vs. capabilities while maintaining a low operational cost base

•     Continuously assess the right level of cash conversion of current operations and acquired assets: pilot capex levels to fit operational goals, growth ambitions and returns on capital employed.

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The US hazardous waste market still offers meaningful opportunities for investors and operators with a long-term horizon, but the winners of the next cycle will be those who combine strategic clarity, operational discipline and a sharp eye for niche leadership.

Emerton partners have advised Corporates and Private Equity firms in the hazardous waste industry for 20+ years through numerous projects including market analysis, due diligence, competitive benchmarking, capex business cases, M&A target scans, voice-of-customer studies and post-merger synergy evaluation

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[1] Another 65-70 Mt are treated at the site of generation, also flat over the last decade

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