Financial report: Republic Services spent $2.7 billion in acquisitions in 2022

Republic Services, Inc. has released its latest financial results for the full year and the fourth quarter of 2022. Republic Services has reported a net income of $346.8 million, or $1.09 per diluted share, for the three months ended December 31, 2022, versus $313.1 million, or $0.98 per diluted share, for the comparable 2021 period. Excluding certain benefits and expenses, on an adjusted basis, net income for the three months ended December 31, 2022, was $358.1 million, or $1.13 per diluted share, versus $325.5 million, or $1.02 per diluted share, for the comparable 2021 period.

For the year ended December 31, 2022, net income was $1,487.6 million, or $4.69 per diluted share, versus $1,290.4 million, or $4.04 per diluted share, for the comparable 2021 period. Excluding certain benefits and expenses, on an adjusted basis, net income for the year ended December 31, 2022 was $1,562.8 million, or $4.93 per diluted share, versus $1,330.6 million, or $4.17 per diluted share, for the comparable 2021 period.

"We finished the year strong by executing our strategy designed to profitably grow the business," says Jon Vander Ark, president and chief executive officer of Republic Services. "During 2022, we delivered double-digit growth in revenue, EBITDA, earnings, and free cash flow that exceeded our full-year expectations. Our initiatives that support our differentiated capabilities are driving tangible results, and we continue to successfully integrate the acquisition of US Ecology. I am proud of what the Republic Services team accomplished during the year, which keeps us well-positioned to produce outsized growth in 2023."

Republic Services' fourth-quarter 2022 highlights

• Total revenue growth of 19.5 percent includes 8.3 percent of organic growth and 11.2 percent of growth from acquisitions.
• Core price on total revenue increased revenue by 7.4 percent. Core price on related business revenue increased revenue by 8.4 percent, which consisted of 10.4 percent in the open market and 5.1 percent in the restricted portion of the business.
• Revenue growth from average yield on total revenue was 5.9 percent, and volume increased revenue by 1.5 percent. Revenue growth from the average yield on related business revenue was 6.7 percent.
• Net income was $346.8 million, or 9.8 percent of revenue.
• EPS was $1.09 per share, an increase of 11.2 percent over the prior year.
• Adjusted EPS, a non-GAAP measure, was $1.13 per share, an increase of 10.8 percent over the prior year.
• Adjusted EBITDA, a non-GAAP measure, was $965.0 million and adjusted EBITDA margin, a non-GAAP measure, was 27.3 percent of revenue.
• The company's average recycled commodity price per ton sold during the fourth quarter was $88. This represents a decrease from the third quarter of 2022 of $74 per ton and a decrease of $130 per ton over the prior year.
• Republic was named to the Dow Jones Sustainability Index for the seventh consecutive year and maintained an "A" in MSCI's ESG ratings.

Republic Services' full-year 2022 highlights

• Total revenue growth of 19.6 percent includes 10.0 percent of organic growth and 9.6 percent of growth from acquisitions.
• Core price on total revenue increased revenue by 6.7 percent. Core price on related business revenue increased revenue by 7.3 percent, which consisted of 9.2 percent in the open market and 4.3 percent in the restricted portion of the business.
• Revenue growth from average yield on total revenue was 5.2 percent, and volume increased revenue by 2.4 percent. Revenue growth from average yield on related business revenue was 5.7 percent.
• Net income was $1.5 billion, or 11.0 percent of revenue.
• EPS was $4.69 per share, an increase of 16.1 percent over the prior year.
• Adjusted EPS was $4.93 per share, an increase of 18.2 percent over the prior year. Adjusted EPS exceeded the company's upwardly revised guidance.
• Adjusted EBITDA was $3.9 billion and adjusted EBITDA margin was 29.1 percent of revenue.
• Cash provided by operating activities was $3,190.0 million, an increase of 14.5 percent over the prior year.
• Adjusted free cash flow, a non-GAAP measure, was $1,742.4 million, an increase of 15.0 percent versus the prior year. Adjusted free cash flow exceeded the company's upwardly revised guidance.
• Cash invested in acquisitions was $2.7 billion, $2.2 billion of which is related to the acquisition of US Ecology.
• Cash returned to shareholders was $796.4 million, which included $203.5 million of share repurchases and $592.9 million of dividends paid.
• The company's average recycled commodity price per ton sold during the year was $170. This represents a decrease from the prior year of $17 per ton.

Republic Services' 2023 financial guidance

Revenue: Republic expects revenue to be in the range of $14.650 billion to $14.800 billion. The company expects growth from the average yield on total revenue of approximately 5.5 percent and volume growth to be in the range of 0.5 percent to 1.0 percent. The average yield on related business revenue is expected to be 6.5 percent.

Adjusted EBITDA: Republic expects adjusted EBITDA to be in the range of $4.275 billion to $4.325 billion.

Adjusted diluted earnings per share: The company expects adjusted diluted earnings per share to be in the range of $5.15 to $5.23.

Adjusted free cash flow: Republic expects adjusted free cash flow to be in the range of $1.86 billion to $1.90 billion. The company expects to receive between $1.65 billion to $1.67 billion of property and equipment, net of proceeds from the sale of property and equipment.

Acquisitions: Republic expects to invest at least $500 million in acquisitions in 2023. The 2023 financial guidance only includes the expected contribution from acquisitions that closed through December 31, 2022.

"We expect to deliver high single-digit growth in revenue, EBITDA, and free cash flow in 2023, even with the headwinds from lower recycled commodity prices and higher interest rates," says Mr. Vander Ark. "Our strong financial guidance is underpinned by pricing in excess of cost inflation, leveraging digital tools to drive productivity improvements and increase customer retention, and continuing to invest in sustainability initiatives to produce value-creating growth."