Republic reports first quarter growth

Republic Services Inc. reports 8 percent total revenue growth, including 4.1 percent organic growth and 3.7 percent growth from acquisitions, during the first quarter of 2024.

In its earnings report, the Phoenix-based environmental services company reported net income of $453.8 million, or $1.44 per diluted share, versus $383.9 million, or $1.21 per diluted share, for the prior year, an increase of 19 percent.

Along with generated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) growth of 12 percent, the company’s adjusted EBITDA margin expanded 120 basis points. Republic reported adjusted earnings per share of $1.45, $812 million in generated cash flow from operations and $535 million in adjusted free cash flow.

Strong organic revenue growth during the first quarter was underpinned by core price on related revenue of 8.5 percent and average yield on related revenue of 7.3 percent, Republic President and CEO Jon Vander Ark said, a level of pricing that exceeded internal cost inflation.

“We are off to a strong start to the year and well-positioned to achieve our full-year goals,” Vander Ark said on a Q1 earnings call. “Continued pricing in excess of cost inflation generated double-digit growth in EBITDA and EPS and expanded EBITDA margin by more than 100 basis points. Solid execution by our 42,000 team members and investments in our differentiating capabilities—Customer Zeal, Digital and Sustainability—continue to produce positive results, and support our ability to deliver ongoing profitable growth.”

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Republic invested $41 million in acquisitions in the recycling and sold waste space during the first quarter.

“Our acquisition pipeline remains supportive of continued activity in both the recycling and waste and environmental solutions businesses,” Vander Ark said. “We continue to see opportunity for $500 million of investment in value-creating acquisitions in 2024.”

Republic continues to benefit from advanced technology on recycling and waste collection routes, Vander Ark said, including a platform using cameras to identify overfilled containers and contamination in recycling containers. This reduction in contamination in recycling centers has achieved $30 million in incremental annual revenue and is expected to generate about $60 million incremental annual revenue.

The company is developing a new asset management system to increase maintenance technician productivity. Vander Ark expects to begin deploying the new system later this year, saying it will result in an estimated $20 million in annual cost savings by 2026.

Republic completed and commenced operations on one renewable natural gas project in the first quarter of 2024, with 7 additional projects expected to be completed in 2024.

“We continue to advance our efforts to support decarbonization, including our industry-leading commitment to fleet electrification,” Vander Ark said, adding Republic currently has 15 electric vehicle (EV) collection vehicles in operations, with more than 50 additional EVs expected to be added to the fleet in 2024.

Republic was named to Barron’s 2024 100 Most Sustainable Companies List, and Vander Ark pointed to investments in sustainability innovation in plastic circularity and renewable natural gas as a platform for profitable growth. He said development of the company’s polymer centers remains on track. A polymer center in Las Vegas is operational, and delivery of plastic flake began in March. Construction is progressing on a joint venture facility with Blue Polymers.

First-quarter volume on total revenue decreased 90 basis points, including a 4.4 percent decrease in large container and disposal volumes, reported Republic Chief Financial Officer Brian DelGhiaccio, which were negatively impacted by severe weather across the country and continued softness in construction activity. Landfill municipal solid waste volume increased by 1.6 percent while small-container volume increased 30 basis points.  

The company’s average recycled commodity price per ton sold at recycling centers was $153, an increase of $48 per ton over the prior year and exceeding initial expectations, DelGhiaccio said.