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Republic Services Records Highest Level of Core Pricing in the Last Decade

Republic Services republic-cng.jpg

As Republic Services heads into the new year, the Phoenix-based company announced it outperformed expectations despite a 2020 filled with economic uncertainty.

Republic recorded core pricing at 4.8% in 2020, its highest level in the last ten years. Adjusted free cash flow of $1.24 billion also exceeded the original full-year guidance.

CEO Don Slager commented, saying “profitable growth remains our number one strategic imperative. And we continue to believe that investing in acquisitions with attractive returns is the best use of free cash flow to increase long term shareholder value.”

With a strong focus on acquisitions, the company further plans to bolster its market position with expansion into new markets with “attractive growth profiles,” Slager said.

More than $600 million in acquisitions were solidified in 2020, and Slager said he expects the 2021 year to be “equally robust.” Republic continues to moving forward with the purchase of Tennessee-based Santek Waste Services, which was first announced in March 2020 and is now expected to close by the end of Q1 2021.

President Jon Vander Ark provided details about Q4. All lines of business continued to improve from Q3, with volume decreasing 1.8% for the quarter, compared to 3.4% in Q3.

Small container volume also decreased by 3.5%, up 130 basis points from Q3. Large container volume decreased 3.4%

“Volume performance was relatively consistent between the permanent and temporary portions of this business,” Vander Ark said. “Total landfill volume decreased 2.4% versus the prior year. This included an increase of 1.7% in MSW and a 1% increase in C and D, which is offset by 9.8% decrease in special waste. Our pipeline for special waste volume remains strong.”

He continued, “looking forward, we expect the gradual improvement in the economy that we saw during the second half of last year to continue, leading to volume growth of 1.5% to 2% in 2021.”

Q4 Highlights:

  • Net Income: $235.5 million, or $0.74 per diluted share ($289.3 million, or $0.90 per diluted share in 2019)
  • Adjusted Net Income: $320.4 million, or $1.00 per diluted share ($282.7 million, or $0.88 per diluted share in 2019)
  • Average recycled commodity price:  $110, up $44 per ton from 2019, or 67%
  • Earnings Per Share: $0.74 per share
  • Adjusted EPS: $1.00 per share, up 14% YOY.

2020 Highlights:

  • Net Income: $967.2 million, or $3.02 per diluted share ($1.07 billion, or $3.33 per diluted share in 2019)
  • Adjusted Net Income: $1.137 billion, or $3.56 per diluted share ($1.06 billion, or $3.30 per diluted share in 2019)
  • Core Price: 5.6% in the open market. 3.4% in restricted portion of the business. Increased revenue by 4.8%
  • Earnings Per Share: $3.02 per share
  • Adjusted EPS: $3.56 per share, up 8% from 2019. Exceeded the Company's full-year guidance.
  • Adjusted EBITDA: $2.99 billion
  • Adjusted EBITDA Margin: 29.4%, up 130 basis points YOY.
     

2021 Outlook

  • Adjusted Diluted Earnings per Share: $3.65 to $3.73
  • Adjusted Free Cash Flow: $1.3 billion $1.375 billion
  • Revenue: An increase in average yield of approximately 2.5% and volume growth to be in the range of 1.5% to 2.0%.
  • Adjusted EBITDA Margin: Approximately 29.5%.
  • Acquisitions & Investments:  $600 million in acquisitions and $125 million in solar energy investments that qualify for tax credits.
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