More CIBC GFL: Touring The Toronto Multi Materials Recovery Facility
We had the opportunity to visit GFL’s Toronto MMRF (Multi Materials Recovery Facility) in
Toronto. Joining us from the company were Patrick Dovigi, Founder and CEO; Hamzah
Mazari, EVP, Chief Strategy Officer and Head of Investor Relations; and Stephen Miranda,
VP Recycling.
• The Toronto MMRF: GFL's Multi Material Recycling Campus is in Toronto and sits on a
27-acre site that houses two single stream MRFs. The site runs 24 hours, five days a
week and was part of the Canada Fibre acquisition completed in 2019. It began
operations in 2010 and was expanded in 2013 in preparation for a contract to process
materials for the City of Toronto. MRFs use technologies such as ballistic screens, optical
sorters, robotics and more to sort and prepare recyclable material for resale and reuse.
Reusable resources include wood, paper, cardboard, and plastics. The Toronto facility
we toured utilizes 19 optical sorters along with elliptical fibre separation, fully automated
high-speed sorting robots and other mechanical separation processes. These facilities
aim to reduce contamination and achieve high levels of purity of the end-product
commodities. This facility provides municipal residential recycling services to a population
of over 4MM individuals, as well as industrial, commercial and institutional recycling
services, and processes approximately 365,000 tonnes of recyclables per year.
• Recycling Is A Focus: The MRF highlights that recycling is a key focus for the company.
The 2013 expansion of the Toronto facility was purpose-built for the City of Toronto single
stream process contract; however, it was built with capacity for future opportunities as the
company had plans to expand its recycling footprint. The facility has a dedicated material
composition analysis centre that facilitates the sorting and analysis of inbound and
outbound material. In total, GFL has more than 30 MRFs across North America.
Recycling contributed to 5% of total revenue in 2023. According to GFL’s 2022 Investor
Day presentation, recycling's revenue mix is ~47% commodity sales and 53% processing
fees.
• EPR A Growing Opportunity: EPR (Extended Producer Responsibility) is an approach
to recycling that requires producers, such as manufactures, distributors, and retailers, to
take responsibility for the life cycle of the products they sell, including collection, such as
curbside collection or collections depots, and to recycle the packaging and products they
collect. Ontario transitioned to a producer responsibility model on July 1, 2020. After that,
waste electrical equipment transitioned on January 1, 2021. The latest program to
transition is the blue box program, which is recycled printed paper and packaging
(plastics, paper, glass, aluminum, steel). The first group of municipalities or First Nations
transferred responsibility on July 1, 2023, with expectations that producers will be fully
responsible for providing Blue Box services provincewide by December 31, 2025.
• GFL Well Positioned To Take Advantage Of EPR Opportunity: We are of the opinion
that GFL is well positioned to take advantage of the rollout of EPR legislation. Back in
2021, GFL announced the formation of the Resource Recovery Alliance to better position
it for EPR work. Firstly, the company has invested capital in its best-in-class MRFs and
continues to upgrade them. GFL's Winnipeg MRF was awarded National Waste &
Recycling Association Recycling Facility of the Year in 2020 and its Toronto facility was
awarded the same in 2022. The company invested $150MM - $200MM of capex into its
MRFs in 2023, largely in response to EPR legislations and strategic positions. GFL EPR
initiatives are targeted to contribute run-rate adj. EBITDA of $80MM - $100MM by 2026.
Secondly, the company is familiar with the rollout of EPR legislations as it has operations
in B.C. (the province that was an early adopter of the EPR approach). Third, GFL has
noted that there are advantage in working with producers. GFL works with the PRO
(Producer Responsibility Organization), which represents consumer packaged good
companies on the curbside pickup, recycling, and recovery of materials in the City of Toronto. The approach harmonizes the process of collection and improves the pricing of
recovered commodities at the end. Net-net, with EPR legislations rolling through, we
believe GFL well positioned to capture these opportunities. It also highlights that the
company is a key player as stakeholders look to create a circular economy.