1

Solid Waste

As Massachusetts landfills close, a growing portion of the state's solid waste is being hauled out-of-state. In 2015, a quarter

of the state's waste, ~1.4 million tons, was exported to facilities in New Hampshire, Ohio, Maine, New York, Connecticut,

Vermont and Rhode Island, a 16% jump from 2014. Massachusetts imported 500,000 tons of waste in 2015, leaving net

exports at 880,000 tons, or ~16% of the state's total stream

Oregon State University engaged engineering consultants to assist with the development of the Deschutes County

demolition landfill that could eliminate 29,600 truck trips and minimize the impact of campus development on the

community

Kent County, Michigan, officials announced plans to double the methane collection system at its old Kentwood Landfill after

gas seeped outside the landfill’s borders. The Kent County Department of Public Works plans to add nine more gas wells

and a second flare to collect and burn off the migrating methane gas from the 45-acre site

Nestlé Purina announced that it has achieved zero waste to landfill status at its Oklahoma City facility, which produces

brands such as Purina Beyond, Friskies, Purina Pro Plan and Beneful. This is the company’s seventh location to achieve

this status as part of its global commitment to be landfill free by 2020. The company’s efforts to reduce waste to landfill

focus on three key areas - employee engagement, improving processes to minimize generation of waste and partnerships

with credible vendors for composting, recycling, energy recovery and other forms of beneficial use

As of March 31, 2017, the Solid Waste subsector is trading at a median forward 2017E P/E of 28.5x and EV/2017E

EBITDA of 10.3x, vs. 27.1x and 9.8x, respectively, at December 31, 2016

Hazardous / Environmental Remediation

In 2016, a new commercial hazardous waste incinerator was built for $120 million in the U.S. The incinerator is operated by

Clean Harbors in El Dorado, Arkansas, and can handle industrial and laboratory chemicals, manufacture by-products,

medical waste and other solid and liquid materials

President Trump’s 2018 budget provides $120 million to restart licensing activities for the Yucca Mountain nuclear waste

repository, as well as to initiate a robust interim storage program, to safely store nuclear waste for 10,000 years. Nevada’s

Yucca Mountain nuclear waste storage site has languished for three decades because of opposition from

environmentalists. In 2010, the Obama administration cut funding and in 2011, the Nuclear Regulatory Commission

allowed the shutdown of the project citing budgetary limitations from Congress

According to U.S. Army Corps of Engineers, radioactive waste from Ohio will be dumped at the landfills in Wayne, Michigan

and Northwood, Ohio. The shipments to the U.S. Ecology Landfill in Wayne and the Waste Management Evergreen Landfill

in Ohio are part of a clean up of contaminated material from the former Brush Beryllium site near Luckey, Ohio. The site

was used to process beryllium in the early 1950s and the U.S. Atomic Energy Commission sent about 1,000 tons of

radioactive scrap metal there for processing magnesium

As of March 31, 2017, the Hazardous / Environmental Remediation subsector is trading at a median forward 2017E P/E of

23.6x and EV/2017E EBITDA of 9.0x, vs. 23.6x and 9.7x, respectively, at December 31, 2016

Sources: Capital IQ; Waste Management World; Waste360; Company Websites

Disclosure: KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital

Markets Inc., Member NYSE/FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital

Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. This report was

not issued by our research department. The information contained in this report has been obtained from sources deemed to be reliable but is not represented to be complete, and it

should not be relied upon as such. This report does not purport to be a complete analysis of any security, issuer, or industry and is not an offer or a solicitation of an offer to buy or

sell any securities. This report is prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of

any individual person or entity 1

Waste & Environmental Services Industry Review

2

Medical Waste

The U.S. medical waste management market is expected to reach $7,994.6 million by 2023. Non-infectious waste will be

the largest segment in the market with revenue reaching $4,922.1 by 2023. Infectious and pathological waste is expected to

emerge as the fastest growing medical waste type in the United States, owing to the rising demand for proper disposal

As of March 31, 2017, the Medical Waste subsector is trading at a median 2017E P/E of 34.4x and EV/2017E EBITDA of

15.9x, vs. 33.1x and 13.0x, respectively, at December 31, 2016

Waste to Energy

The City of Grand Rapids is gearing up to build a $21 million biodigestor at its Waste Resource Recovery Facility, which will

help manage the food waste generated by Founders Brewing Company, Coca-Cola, Amway and SET Environmental

The Southern Idaho Solid Waste District has announced plans to build a $7.8 million gas-to-energy project at the Milner

Butte Landfill in the city of Burley. The site receives 800 to 900 tons of waste per day from surrounding municipalities. Two

1.3 megawatt generators will be installed, followed by a third within the next five years to potentially generate enough

electricity for up to 5,000 homes. The system is expected to generate $31 million in revenue over the course of its 20-year

energy purchase contract

As of March 31, 2017, the Waste to Energy subsector is trading at a median forward 2017E P/E of 22.9x and EV/2017E

EBITDA of 10.5x, vs. 23.4x and 11.0x, respectively, at December 31, 2016

Recycling

In an effort to increase can and bottle recycling, the State of Oregon will begin doubling the payout for returned cans and

glass bottles, bringing the payout to 10 cents per can and bottle. In 2014 and 2015, the rates at which residents cashed in

bottles and cans dropped from 90% to less than 70% of all bottle sales

As part of the New Plastics Economy initiative, Coca-Cola has pledged to increase its recycling rate of plastic packaging

from 14% to 70% by 2025. The company currently sells products in a 30% bioPET bottle called Plant Bottle, which is fully

recyclable and made partially from plants

Dell announced that it will recycle HDPE plastics to make a new packaging system for its XPS 13 2-in1 laptop. Dell hopes

to increase the amount to 20,000 pounds next year and continue to look at how the plastics can be used for both packaging

and possibly products in the future

As of March 31, 2017, the Recycling subsector is trading at a median forward 2017E P/E of 16.5x and EV/2017E EBITDA

of 7.1x, vs. 18.6x and 7.7x, respectively, at December 31, 2016

Industry Highlight – Waste to Energy (WTE) Market is expected to reach $35.5 billion by 2024

According to Global Market Insights, Waste to Energy (WTE) market is expected to reach $35.5 billion by 2024

Europe, led by UK, Germany, Italy and France biological WTE market should increase more than 5.5% growth to exceed

$2.5 billion by 2024

Incineration waste to energy market may see significant growth, the technology was already valued at over $12.1 billion in

2015

Sources: American Petroleum Institute; Capital IQ; Waste Management World; Waste360; Company Websites

Waste & Environmental Services Industry Review (continued)

3

Sources: Company Websites; SEC Filings; Waste360

Appliance Recycling Centers of America, Inc.

1/10: Announced the opening of a new business unit, Customer Connexx, that supports scheduling and customer service

for its current utility programs and other standalone ventures. The contact center, located in Las Vegas, NV, has a seating

capacity for 90 agents. Customer Connexx provides a full suite of services, including inbound and outbound customer

calls, chat, email, IVR solutions and many other state-of-the-art call center capabilities

Casella Waste Systems

1/26: Announced that it has priced $25.0 million of Series 2005R-3 Bonds. The 2005R-3 Bonds were previously

designated as $3.6 million of FAME Solid Waste Disposal Revenue Bonds Series 2005R-1 and $21.4 million of FAME

Solid Waste Disposal Revenue Bonds Series 2005R-2. The 2005R-3 Bonds are expected to be remarketed on February 1,

2017 and will bear interest at 5.25% until maturity

Commercial Metals Company

2/2: Announced that the company will construct a highly automated steel fence post manufacturing facility on the site of its

new micro mill in Durant, Oklahoma. This location will enhance the Company's position as the leading supplier of fence

post products in the U.S. market and expand the company's national footprint of post manufacturing. It will continue to

operate its existing post manufacturing facilities in Cayce, South Carolina, San Marcos, Texas and Brigham City, Utah.

The Company's steel fence post business, which operates as CMC Southern Post, supplies the agriculture, ranching and

construction fencing markets. The highly automated production facility will produce a full range of steel posts and

shipments are expected to begin in the summer of 2018

1/9: Announced that the company will soon become the first and only producer of hot-rolled, spooled rebar in the United

States. The Company plans to begin production at its new micro mill in Durant, Oklahoma in the fall of 2017 and expects to

begin shipping spooled rebar in the spring of 2018. Traditional coiled rebar's cooling process inherently causes twisting in

the bar while spooled rebar has a no-twist design which alleviates the challenges associated with fabricating loose-wound

coiled rebar

Covanta Holding Corporation

2/22: Announced that it has entered into a new agreement with the Southeastern Connecticut Regional Resource

Recovery Authority (SCRRRA) for sustainable waste disposal at the Southeastern Connecticut Resource Recovery Facility

(SECONN) located in Preston, Connecticut. The new four year agreement will extend the decades-long partnership

between Covanta and SCRRRA until December 2020. SCRRRA was created to implement solutions for solid waste,

recyclables, household hazardous waste and additional waste materials for 12 municipalities in Southeastern Connecticut.

The facility has recovered more than 88,000 tons of metals for recycling, equivalent to the steel used to build two Gold Star

Memorial Bridges and generated 3,800,000 megawatt-hours of electricity, the equivalent of powering over 330,000 homes

for one year

Ormat Technologies

3/21: Announced that the first unit of the Sarulla geothermal power plant, one of the world's largest power plants, located in

Indonesia's North Sumatra, has commenced commercial operation. The 110-megawatt power plant, which combines flash

and binary technologies and 100% reinjection of the exploited geothermal fluid, is operated by Sarulla Operations Ltd.

(SOL). Toshiba and Ormat will continue to collaborate strategically on global promotion of highly-efficient geothermal

combined cycle flash and binary systems

Key Company News (Q1 2017)

4

Sources: Company Websites; SEC Filings; Waste360

Perma-Fix Environmental Services

1/20: Announced the appointment of S. Robert Cochran to the Company’s Board of Directors. Mr. Cochran is President

and CEO of CTG, LLC a consultancy practice that provides management, development, acquisition, and technological

services to nuclear, military and energy operations. Previously, Mr. Cochran served as President of CB&I Federal

Services, where he led the post-acquisition integration of Shaw Corporation's environment and federal businesses. At

CB&I, he was responsible for executing the largest single design-build civil works project awarded by the U.S. Army Corps

of Engineers and leading technical solutions to the Japanese government in the wake of the Fukushima Daiichi nuclear

disaster. Mr. Cochran also served as Senior Vice President for Tyco Infrastructure, where he led the company into new

water, energy, transportation markets valued at more than $1 billion. During his professional career, Mr. Cochran has

authored numerous technical publications related to the remediation of hazardous waste facilities and received an

executive/mini M.B.A. from the University of Richmond's Robins School of Business and a B.S. from James Madison

University

Waste Connections

3/9: Announced that it will rebrand its operations in Canada from Progressive Waste Solutions to Waste Connections of

Canada. The rebranding follows the June 1, 2016 all-stock business combination of the Company (formerly named

Progressive Waste Solutions Ltd.) and Waste Connections U.S., Inc. (formerly named Waste Connections, Inc.). The roll

out of the new brand identity and logo will begin immediately, with the full transition expected to take place over the next 12

to 16 months

Waste Management

2/28: Announced the appointment of Bradbury H. Anderson, to the position of board chairman, effective February 27,

2017. Anderson, who is former vice chairman and chief executive officer of Best Buy Co. Inc., was first elected to Waste

Management’s board of directors in 2011. Over the past five years, Anderson has served on the Nominating and

Governance Committee and the Management Development and Compensation Committee of the board. As board chair,

Anderson will join the Audit Committee, serving on all three committees of the board. Anderson has over 20 years of

experience as a member of public company boards of directors and currently also serves as a director of General Mills,

Inc., Mayo Clinic and Carlson Companies

2/28: Announced the appointment of Devina A. Rankin to the position of Senior Vice President, CFO and treasurer. In her

role, Rankin, is responsible for all finance functions for the Company. She also has executive responsibility for the internal

audit, investor relations and supply chain functions. Rankin joined the Company in 2002 and has held a number of

corporate finance positions of increasing responsibility during her tenure. She began her career at Arthur Andersen, a

public accounting firm, in 1999. Rankin earned a Bachelor of Business Administration and a Master of Science degree in

accounting from Texas A&M University and is a certified public accountant licensed in Texas

Key Company News (Q1 2017) (continued)

Close Date Company Type Use of Proceeds Amount (MM) Maturity Rate / Spread

3/31/2017 Newalta Corporation Revolving Credit Facility General Corporate Purposes $112.6 7/12/2019 NA

3/29/2017 Sharps Compliance Corp. Revolving Credit Facility Acquisition Financing $14.0 3/29/2019 L + 250-300

2/13/2017 Waste Connections, Inc. Senior Unsecured Notes Debt Refinancing $250.0 4/20/2027 3.490%

2/13/2017 Waste Connections, Inc. Senior Unsecured Notes Debt Refinancing $150.0 4/20/2024 3.240%

2/10/2017 Heritage-Crystal Clean, Inc. Revolving Credit Facility General Corporate Purposes $65.0 2/21/2022 L + 250

2/10/2017 Heritage-Crystal Clean, Inc. Term Loan General Corporate Purposes $30.0 2/21/2022 L + 250

1/24/2017 Meridian Waste Solutions, Inc. Follow-on Offering General Corporate Purposes $12.4 NA NA

Select Recent Capital Markets Activity (Q1 2017)

Closed Date Acquirer (Parent) Target (Seller) Highlights

3/24/2017 Clean Earth, Inc. AERC Recycling Solutions Clean Earth, Inc. acquired AERC Recycling Solutions for an undisclosed

consideration

AERC Recycling Solutions provides electronics and waste recycling services to

corporate clients in the United States

3/8/2017 Heritage

Environmental

Services, LLC

Rineco Chemical Industries,

Inc.

Heritage Environmental Services, LLC acquired Rineco Chemical Industries, Inc. for

an undisclosed consideration

Rineco Chemical Industries, Inc. provides environmental and waste management

services for fuel and non-fuel streams

2/28/2017 Shanks Group plc Van Gansewinkel Groep B.V.

(Intermediate Capital Group

plc, KKR & Co., Oranje-

Nassau Groep B.V. )

Shanks Group plc acquired Van Gansewinkel Groep B.V. from Intermediate Capital

Group plc, KKR & Co., Oranje-Nassau Groep B.V. and others for $570 million

Van Gansewinkel Groep B.V. collects waste, transports the streams of waste to

specific treatment and processing locations and manages material streams

1/10/2017 Owen Steel Company

of South Carolina

(Commercial Metals

Company)

Certain assets from

OmniSource Corporation

(Steel Dynamics, Inc.)

Owen Steel Company of South Carolina acquired certain assets of OmniSource

Corporation from Steel Dynamics, Inc. for an undisclosed consideration

Certain assets of OmniSource consists of seven recycling facilities that purchase,

process and sell ferrous and non-ferrous scrap metal and other related products

throughout the southeastern United States

1/9/2017 National Response

Corporation

Water Truck Services, Inc. National Response Corporation acquired Water Truck Services, Inc. for an

undisclosed consideration

Water Truck Services, Inc. provides waste management and environmental services

in the Pacific Northwest

1/4/2017 Lakeshore Recycling

Systems LLC

K. Hoving Recycling &

Disposal, Inc.

Lakeshore Recycling Systems LLC acquired K. Hoving Recycling & Disposal, Inc.

for an undisclosed consideration

K. Hoving Recycling & Disposal, Inc. provides recycling and waste removal services

1/3/2017 Waste Connections,

Inc.

Groot Industries Inc. Waste Connections, Inc. acquired Groot Industries, Inc. for an undisclosed

consideration

Groot Industries Inc. provides solid waste management services to municipalities

and businesses in Illinois

5

Sources: Thomson Reuters; Capital IQ; SEC Filings

[1] Date referenced is the announced date of the proposed transaction

For additional information about KeyBanc Capital Markets, contact:

Waste & Environmental Services Team

Rod MacDonald

Managing Director

Cleveland

216.689.4445

rmacdonald@key.com

Jeff Lakarosky

Vice President

Cleveland

216.689.5139

jlakarosky@key.com

Ali Zahrieh

Analyst

Cleveland

216.689.5165

ali.zahrieh@key.com

Select Recent Merger and Acquisition Activity (Q1 2017)

6

Sources: Capital IQ; Thomson Reuters

Note: LTM represent financials for the period ending 12/31/2016 or the latest available quarter; Forward EPS shown are 2017E per consensus equity research estimates

[1] Outlier EV/EBITDA and EPS multiples excluded from average and median calculations

Boldface denotes KeyBanc Capital Markets Equity Research coverage

Waste & Environmental Services Public Operating & Trading Statistics

$ in millions, except per share data Price

as of Market Enterprise Stock Performance (% Change) EV / LTM Consensus EPS Price to EPS Consensus EBITDA

Company 3/31/2017 Cap Value 1 week 1 month 3 month 1 year EBITDA 2017E 2018E 2017E 2018E

Advanced Disposal Services, Inc. ADSW $22.60 $1,991 $3,913 (0.6%) 0.4% 1.7% 0.0% 9.8x $0.36 $0.54 NM 41.5x

Casella Waste Systems Inc. CWST $14.11 $589 $1,095 2.5% 16.5% 13.7% 110.6% 10.1x $0.47 $0.58 30.3x 24.3x

Republic Services, Inc. RSG 62.81 21,312 28,906 1.0% 1.5% 10.7% 34.9% 10.9x 2.35 2.60 26.7x 24.2x

Waste Connections Inc. WCN 88.22 15,503 18,991 2.6% 0.4% 12.5% NA 17.9x 2.67 3.07 33.0x 28.8x

Waste Management, Inc. WM 72.92 32,216 41,517 0.8% (0.0%) 3.4% 26.7% 11.3x 3.16 3.43 23.1x 21.3x

Average 1.3% 3.8% 8.4% 43.0% 12.0x 28.3x 28.0x

Median 1.0% 0.4% 10.7% 30.8% 10.9x 28.5x 24.3x

Avalon Holdings Corporation [1] AWX $2.38 $9 $22 0.5% (16.4%) (19.3%) 26.7% 7.5x NA NA NM NM

Clean Harbors, Inc. [1] CLH 55.62 3,186 4,512 2.3% (4.6%) (0.1%) 12.7% 11.3x 0.49 1.11 NM 50.1x

Heritage-Crystal Clean, Inc. HCCI 13.70 315 343 1.9% (13.0%) (12.7%) 37.8% 10.7x 0.65 0.73 21.1x 18.8x

Newalta Corporation [1] TSX:NAL 1.72 151 393 6.5% (0.4%) (1.3%) 18.0% 34.8x (0.41) (0.23) NM NM

Perma-Fix Environmental Services Inc. [1] PESI 3.15 37 46 0.0% 5.0% (19.2%) (14.9%) NM NA NA NM NM

Secure Energy Services Inc. [1] TSX:SES 7.35 1,193 1,353 3.8% (8.1%) (15.8%) 21.9% 25.8x 0.01 0.24 NM 31.3x

US Ecology, Inc. ECOL 46.85 1,021 1,297 0.0% (9.3%) (4.3%) 7.8% 11.8x 1.79 2.06 26.2x 22.8x

Average 2.1% (6.7%) (10.4%) 15.7% 17.0x 23.6x 30.7x

Median 1.9% (8.1%) (12.7%) 18.0% 11.5x 23.6x 27.0x

Sharps Compliance Corporation [1] SMED $4.76 $76 $72 (0.8%) 0.4% 24.3% (13.5%) NM $0.11 NA 43.3x NM

Stericycle, Inc. SRCL 82.89 7,066 9,983 1.0% 0.3% 7.6% (34.3%) 9.6x 3.25 3.71 25.5x 22.4x

Average 0.1% 0.4% 15.9% (23.9%) 9.6x 34.4x 22.4x

Median 0.1% 0.4% 15.9% (23.9%) 9.6x 34.4x 22.4x

Covanta Holding Corporation [1] CVA $15.70 $2,060 $4,611 5.0% (0.2%) 2.3% (0.7%) 13.9x $0.04 $0.26 NM NM

Ormat Technologies Inc. ORA 57.08 2,836 3,641 0.8% (3.3%) 6.8% 39.5% 11.2x 2.26 2.53 25.3x 22.6x

Renewi plc LSE:RWI 1.20 956 1,369 0.0% (1.5%) 3.8% 37.8% 14.6x 0.06 0.07 20.5x 17.4x

Average 1.9% (1.7%) 4.3% 25.5% 13.2x 22.9x 20.0x

Median 0.8% (1.5%) 3.8% 37.8% 13.9x 22.9x 20.0x

Appliance Recycling Centers of America Inc. [1] ARCI $1.06 $7 $22 2.7% (10.2%) (5.3%) (10.2%) 29.4x NA NA NM NM

Commercial Metals Company CMC 19.13 2,215 2,884 5.7% (11.7%) (11.7%) 15.8% 9.6x 1.16 1.71 16.5x 11.2x

Industrial Services of America, Inc. [1] IDSA 1.67 13 19 (0.9%) (21.4%) (7.0%) (32.3%) NM NA NA NM NM

Schnitzer Steel Industries, Inc. SCHN 20.65 542 726 4.6% (16.4%) (19.0%) 16.1% 9.4x 1.03 1.37 20.0x 15.1x

Sims Metal Management Limited ASX: SGM 9.44 1,866 1,619 (0.7%) (0.6%) (2.1%) 47.2% 10.7x 0.70 0.77 13.5x 12.2x

Average 2.3% (12.1%) (9.0%) 7.3% 14.8x 16.7x 12.8x

Median 2.7% (11.7%) (7.0%) 15.8% 10.1x 16.5x 12.2x

Overall Average 1.8% (4.2%) (1.4%) 16.6% 14.2x 25.0x 24.3x

Overall Median 1.0% (1.1%) (0.7%) 16.1% 11.2x 25.3x 22.6x

Recycli

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$ in millions

Total Net LTM Total Debt / Net Debt / Total Debt / LTM EBITDA / LT S&P

Company Ticker Debt Debt EBITDA LTM EBITDA LTM EBITDA Capital Interest Rating

Advanced Disposal Services, Inc. ADSW $1,945 $1,943 $399 4.9x 4.9x 70.1% 3.4x B+

Casella Waste Systems Inc. CWST $508 $506 $113 4.5x 4.5x 104.8% 3.2x B

Republic Services, Inc. RSG 7,670 7,637 2,680 2.9x 2.9x 49.9% 7.2x BBB+

Waste Connections Inc. WCN 3,993 3,723 1,223 3.3x 3.0x 41.4% 11.6x BBB+

Waste Management, Inc. WM 11,292 11,262 3,709 3.0x 3.0x 62.0% 9.7x A-

Average 3.7x 3.7x 65.7% 7.0x

Median 3.3x 3.0x 62.0% 7.2x

Avalon Holdings Corporation AWX $13 $12 $0 NM NM 24.2% 0.4x -

Clean Harbors, Inc. CLH 1,634 1,337 410 4.0x 3.3x 60.6% 4.7x BB+

Heritage-Crystal Clean, Inc HCCI 29 18 37 0.8x 0.5x 12.2% 18.0x -

Newalta Corporation TSX:NAL 240 240 36 6.7x 6.7x 59.9% 1.9x -

Perma-Fix Environmental Services Inc. PESI 0 (0) (2) NM NM 0.0% NM -

Secure Energy Services Inc. TSX:SES 147 143 65 2.3x 2.2x 17.4% 9.6x -

US Ecology, Inc. ECOL 275 265 107 2.6x 2.5x 49.3% 6.3x BB

Average 3.3x 3.0x 31.9% 6.8x

Median 2.6x 2.5x 24.2% 5.5x

Sharps Compliance Corporation SMED $3 ($3) $0 5.5x (6.0x) NM 5.4x -

Stericycle, Inc. SRCL 6,218 6,171 1,022 6.1x 6.0x 49.7% 10.5x A

Average 5.8x 0.0x 49.7% 8.0x

Median 5.8x 0.0x 49.7% 8.0x

Covanta Holding Corporation CVA $3,100 $2,656 $306 10.1x 8.7x 88.6% 2.2x BB-

Ormat Technologies Inc. ORA 956 782 334 2.9x 2.3x 44.3% 5.0x -

Renewi plc LSE:RWI 474 433 94 5.0x 4.6x 68.7% 3.3x -

Average 6.0x 5.2x 67.2% 3.5x

Median 5.0x 4.6x 68.7% 3.3x

Appliance Recycling Centers of America Inc. ARCI $15 $14 $1 NM NM 57.6% 0.5x -

Commercial Metals Company CMC 1,064 669 302 3.5x 2.2x 43.9% 5.7x BB+

Industrial Services of America, Inc. IDSA 7 6 1 12.6x NM 36.0% 0.8x -

Schnitzer Steel Industries, Inc. SCHN 209 200 94 2.2x 2.1x 29.4% 10.6x -

Sims Metal Management Limited ASX: SGM 5 (234) 151 0.0x (1.5x) 0.4% 48.7x -

Average 4.6x 0.9x 33.5% 13.3x

Median 2.9x 2.1x 36.0% 5.7x

Overall Average 4.4x 2.9x 46.2% 8.0x

Overall Median 3.5x 2.9x 49.3% 5.4x

So

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Waste

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Waste

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7

Sources: Capital IQ; Thomson Reuters

Boldface denotes KeyBanc Capital Markets Equity Research coverage

Waste & Environmental Services Public Credit Statistics

Value of Construction – Annualized and Seasonally Adjusted (through February 2017)

U.S. Crude Oil and Petroleum Products Exports and Imports (through March 2017)

Sources: U.S. Census Bureau; Energy Institute of America

According to the U.S.

Census Bureau, February

2017 construction spending

totaled $1,192.8 billion, up

3.0% vs. February 2016

spending levels of $1,157.7

billion

Overall construction

increased 0.8% MoM

propelled by increase in

residential and non-

residential construction

activity

U.S. crude oil and petroleum

gross product imports and

exports were 10,223 and

5,863 million bpd,

respectively, for the month of

March

Gross imports were down

2.2% while gross exports

were up 3.3% MoM,

respectively

Net imports in March were

down 8.6% MoM and down

17.2% YoY

8

Industry Fundamentals

491.0

701.8

$30

$130

$230

$330

$430

$530

$630

$730

$830

Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 Feb-16 Feb-17

Bill

ion

s o

f Do

llars

Residential Non-Residential

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17

Th

ou

san

d B

arr

els

pe

r D

ay

(Mo

nth

ly A

ve

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Imports Exports Net Imports

57.2

40

45

50

55

60

Mar-14 Mar-15 Mar-16 Mar-17

ISM

Pu

rch

as

ing

Ma

nag

ers

Ind

ex (P

MI)

243.6

225

230

235

240

245

Feb-14 Feb-15 Feb-16 Feb-17

Co

ns

um

er

Pri

ce

Ind

ex

(CP

I)

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

0

300

600

900

1,200

1,500

1,800

2,100

2,400

Apr-10 Apr-11 Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17

% H

orizo

nta

l or D

irec

tion

alN

um

be

r o

f Ac

tiv

e U

.S.

Rig

s

Vertical Horizontal or Directional % Horizontal or Directional

9

CPI Indicator (through February 2017) and PMI (through March 2017)

Oil & Gas Activity (through April 2017)

The number of oil & gas rigs

increased 82.7% YoY

The number of horizontal or

directional drilling rigs

increased 91.1% YoY

CPI:

The February 2017

consumer price index came

in at 243.6, an increase of

approximately 31 basis

points from the January 2017

level of 242.8, driven by

increase in food, shelter and

recreation

PMI:

The manufacturing PMI

came in at 57.2 in March,

below the February level of

57.7, indicating decline in the

manufacturing sector

Sources: Department of Labor; Baker Hughes

Industry Fundamentals (continued)

10

Recycled Paper Pricing (through March 2017) and Diesel Prices (through March 2017)

Recycled Paper Pricing:

Monthly Recycled Paper

Prices rose to $162 during

March 2017, representing an

increase of 29.1% from

March 2016 price of $125

Diesel Prices:

According to the Energy

Information Administration,

March 2017 diesel prices

averaged $2.53 per gallon,

representing a YoY increase

of 19.4%`

Sources: Bloomberg; American Metal Market

The cost of heavy metal and

shredded auto scraps have

increased 57.4% and 52.4%,

respectively from April 2016.

The cost of aluminum,

copper and nickel scrap

have increased 22.5%,

17.9% and 67.8%,

respectively from April 2016

Ferrous & Nonferrous Scrap Prices (through April 2017)

Industry Fundamentals (continued)

$0.73

$2.09

$4.11

$0

$2

$4

$6

$8

$10

Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17

U.S

. $

/ lb

Aluminum Scrap Copper Scrap Nickel Scrap

$284

$316

$90

$190

$290

$390

$490

Apr-12 Apr-13 Apr-14 Apr-15 Apr-16 Apr-17

U.S

. $

/ to

n

Heavy Melt #1 Shredded Auto

$2.53$2.59

$2.46

$2.82

$1.8

$2.2

$2.6

$3.0

$3.4

$3.8

$4.2

$4.6

$5.0

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

U.S

. $

/ G

allo

n

US East Coast Midwest West Coast

$162

$100

$110

$120

$130

$140

$150

$160

$170

Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

U.S

. $ /

Ton

Financial Conditions Ease After March Rate Hike Current Rate Snapshot (as of April 3, 2017)

11

Source: Bloomberg, Federal Reserve

Fed Speak & Economic News

The Trump Administration’s proposal of tax, deregulation and fiscal policies have been one of the main catalysts driving

the selloff in U.S. Treasuries since November – the other being the Federal Reserve; however, after the failure to push

healthcare reform through Congress, investors have turned slightly weary, with belief that the recent mishap is a

symptom of the political dysfunction that lies ahead. House Speaker Paul Ryan admitted as much when he said, “this

does make tax reform more difficult.” The ideological chasm between the Trump Administration and conservative

establishment emerged when Senate House Majority Leader Mitch McConnell said he hopes “we avoid a trillion-dollar

stimulus” with regards to the infrastructure bill, and when President Trump threatened a “fight” with another faction of the

party, the Freedom Caucus. The political division and fading hopes of reform have led the U.S. Treasury market to rally

in recent weeks

The market has pared its expectations for rate hikes this year and in 2018 in response to the political discourse despite

Fedspeak that maintained its hawkish bias last week. Dallas Fed President Kaplan said three hikes was a good base

case; Boston Fed President Rosengren called for four hikes this year; and San Francisco Fed President Williams

suggested three or four hikes this year while adding that a big fiscal stimulus program was not yet part of the Fed’s

calculus. With overall financial conditions easier than they were since the Fed started the most recent rate hike cycle

and global economic data remaining positive, only a significant decline in growth prospects would derail the Fed’s

intentions

Nearly nine months after the passing of the referendum to leave the European Union, the United Kingdom finally

triggered Article 50 last week. The clock is set at two years to complete the divorce, a task that will surely not be done

easily as the EU seeks to discourage additional departures. Perhaps the only thing assured is the political uncertainty

citizens and businesses in the UK will endure. Though the news had little effect on rates, the market will continue to

react to the situation going forward as the fine details are worked out

In a shocking turn of events the American Healthcare Act was pulled from the floor of House of Representatives. As one

of the primary pillars utilized in campaigning by President Trump and the majority of the Republican party, a failure to

make a change on the healthcare front is viewed as a political setback. While the market continues to digest this

decision it is likely the administration will turn to assessing corporate tax rates and industry deregulation next - both

impactful, market-moving topics

The Bloomberg Financial Conditions Index, which tracks the overall level of

financial stress in the United States money, bond, and equity markets, has risen in

recent months, signaling a further easing of financial conditions. The Fed has been

seen as acting opportunistically: more favorable financial conditions allow the Fed

to hike more easily. But rate hikes should lead to a tightening of financial

conditions, not an easing of them. Additionally, recent rumblings from Fed officials;

such as Rosengren, who said he has some “worry about asset prices”, and

Williams, calling market valuations a “little frothy”; suggest the central bank could

pull the levers even faster to reign in any perceived over-exuberance.

Source: Bloomberg

Capital markets update

Short Term Rates March 31, 2017 Prior Week Change

1-Month LIBOR 0.98% 0.98% 0.00%

3-Month LIBOR 1.15% 1.15% 0.00%

Fed Funds 1.00% 1.00% 0.00%

Fed Discount 0.75% 0.75% 0.00%

Prime 4.00% 4.00% 0.00%

U.S. Treasury Yields

2-Year Treasury 1.26% 1.27% (0.01%)

5-Year Treasury 1.92% 1.93% (0.01%)

10-Year Treasury 2.39% 2.38% 0.01%

Swaps vs. 3M LIBOR

2-Year 1.67% 1.66% 0.01%

5-Year 2.10% 2.09% 0.01%

10-Year 2.43% 2.41% 0.02%

92.5%

(21.0%)

(10.8%)

36.8%

(19.9%)

25.3%

(60%)

(40%)

(20%)

0%

20%

40%

60%

80%

100%

120%

140%

Mar-14 Nov-14 Jun-15 Jan-16 Aug-16 Mar-17

Solid Waste Haz. / Environ. Remediation Medical Waste Waste to Energy Recycling S&P 500

12

Investment Grade and High Yield Bond Spreads (through March 31, 2017)

Sources: Capital IQ, Bloomberg

Solid Waste = CWST, TSX:BIN, RSG, WCN, WM

Hazardous / Environmental Remediation = AWX, CLH, ES, HCCI, TSX:NAL, PESI, TSX:SES, ECOL

Medical Waste = SMED, SRCL

Waste to Energy = CVA, ORA, LSE:SKS

Recycling = ARCI, CMC, IDSA, SCHN, SGM

A and BBB rated bond spreads

were stable throughout March,

while BB and B rated bond

spreads were relatively volatile

Three of the five W&ES

subsectors posted positive

returns for the three month

period ending March 31st. The

Medical Waste subsector

posted a gain of 15.9%, while

the Solid Waste, Waste to

Energy, Recycling and Haz. /

Env. Remediation subsectors

posted returns of 8.4%, 4.3%,

(9.0%) and (10.4%),

respectively

Over the last twelve months, the

Solid Waste subsector has led

the broader W&ES peer group,

posting a gain of 43.0%. The

W&ES subsector average return

was 13.6% compared to the

S&P 500 index return of 14.7%

Capital markets update (continued)

Index Performance (through March 31, 2017)

So lid

Waste

H az. / Env.

R emediat io n

M edical

Waste

Waste to

Energy R ecycling A verage

Last 12 M onths 43.0% 15.7% (23.9%) 25.5% 7.3% 13.6%

Last 3 M onths 8.4% (10.4%) 15.9% 4.3% (9.0%) 1.8%

Last 1 M onth 3.8% (6.7%) 0.4% (1.7%) (12.1%) (3.3%)#DIV/0!

117 bps

170 bps

279 bps

440 bps

0

100

200

300

400

500

600

700

800

900

1,000

Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17

Sp

read

to

Mat

uri

ty

A Index BBB Index BB Index B Index

13

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