The non-discretionary defensive characteristics of the waste management industry continue to exhibit impressive pricing leverage and steady free cash flow despite a decelerating macro environment. Given that CPI-linked pricing and fuel surcharges lag in both directions, and with internal inflation pressures potentially past peak, the stickiness of recent price increases should provide a tailwind for operating leverage through at least the end of the year. Still, rising interest rates and shifting consumer spending away from goods will pressure large volume-generating sectors such as construction, retail, and manufacturing. Against that volume backdrop, the industry maintains a proven cash flow preservation playbook, including reduced overtime and discretionary expenses, equipment optimization, and postponing significant capital outlays.
Industry Update: Refuse and Recycling Summer 2022
