Republic bolsters adjusted EBITDA in 2020 based on ‘new level of performance’

Republic Services Inc., Phoenix, has reported net income of $235.5 million, or 74 cents per diluted share, for the fourth quarter of 2020. This is opposed to net income of $289.3 million, or 90 cents per diluted share, for the comparable 2019 period. Excluding certain benefits and expenses, on an adjusted basis, net income for Q4 2020 was $320.4 million, or $1 per diluted share, versus $282.7 million, or 88 cents per diluted share, for the comparable 2019 period.

For the full year 2020, net income was $967.2 million, or $3.02 per diluted share, versus $1.07 billion, or $3.33 per diluted share, for 2019. On an adjusted basis, net income for 2020 was $1.14 billion, or $3.56 per diluted share, versus $1.6 billion, or $3.30 per diluted share, for 2019.

"Last year proved the resiliency of our business model and power of our portfolio. In the face of adversity, the Republic Services team remained focused on our priorities—putting our people first, keeping our facilities running smoothly and taking care of our customers," Republic Services CEO Donald Slager says. "Republic again proved its strength, resolve and ability to persevere through a challenging environment. As a result, we outperformed our adjusted earnings and free cash flow targets and created sustainable value for our shareholders."

Q4 and full-year 2020 highlights include:

• Fourth-quarter 2020 earnings per share (EPS) were 74 cents, and adjusted EPS were $1 per share, an increase of 14 percent over the prior year.
• Full-year EPS were $3.02, and adjusted EPS were$3.56 per share, an increase of 8 percent over the prior year. Adjusted EPS exceeded the company's full-year guidance.
• Full-year cash provided by operating activities was $2.47 billion and adjusted free cash flow, a non-GAAP (generally accepted accounting principles) measure, was $1.24 billion. Adjusted free cash flow exceeded the company's full-year guidance.
• Republic invested $613 million in acquisitions, or $580 million net of divestitures.
• Full-year cash returned to shareholders through dividends and share repurchases was $621 million and total shareholder return was 10 percent.
• Full-year core price increased revenue by 4.8 percent. Core price consisted of 5.6 percent in the open market and 3.4 percent in the restricted portion of the business.
• Full-year revenue growth from average yield was 2.6 percent.
• Full-year adjusted EBITDA (earnings before interest, taxes, depreciation and amortization), a non-GAAP measure, was $2.99 billion and adjusted EBITDA margin was 29.4 percent, an increase of 130 basis points over the prior year. On the company’s earnings call, Republic President Jon Vander Ark attributed this increase to the company finding “a new level of performance” that will allow the company to “further expand [its] margin from here.”
• The company's average recycled commodity price per ton sold during the fourth quarter was $110. This represents an increase of $44 per ton versus the prior year.
• Republic continued to convert Consumer Price Index- (CPI-) based contracts to more favorable pricing mechanisms for the annual price adjustment. The company now has approximately $874 million in annual revenue, or 35 percent of its legacy $2.5 billion CPI-based book of business, tied to the water-sewer-trash index or a fixed-rate increase of 3 percent or greater.

2021 financial guidance*

• Adjusted diluted earnings per share: The company says it expects adjusted diluted earnings per share to be in the range of $3.65 to $3.73.
• Adjusted free cash flow: Republic says it expects adjusted free cash flow to be in the range of $1.3 billion to $1.38 billion.
• Revenue: Republic says it expects an increase in average yield of approximately 2.5 percent and volume growth to be in the range of 1.5 percent to 2 percent.
• Adjusted EBITDA margin: Republic expects adjusted EBITDA margin of approximately 29.5 percent.
• Acquisitions and investments: Republic expects to invest approximately $600 million in acquisitions and $125 million in solar energy investments that qualify for tax credits.

"We expect to achieve the highest levels of adjusted earnings and free cash flow in the company's history in 2021," Slager says. "We feel confident about our ability to deliver these strong results because of the firm foundation in place, the broad capabilities that have been developed and the positive momentum in the business heading into the New year."

*Republic's financial guidance is based on current economic conditions and does not assume any significant changes in the overall economy in 2021.