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 tostructurally 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 PFASrevenue 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

 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 2026-7 (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 being brought online as well and expected to be online by 2026

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), e.g. Veolia acquiring Clean Earth, 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.

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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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 avised Corporates and Private Equity firms in the hazardous waste industry for20+ 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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