Republic Services Caps Off 2022 with Double-Digit Revenue Growth

Phoenix-based Republic Services (NYSE:RSG) achieved double-digit revenue growth for the full-year 2022 driven by its robust acquisition strategy.

The waste services provider reported a 20 percent revenue increase in 2022 and provided insight into 2023 plans during an investor earnings call.

"We finished the year strong by executing our strategy designed to profitably grow the business," said Jon Vander Ark, president and chief executive officer, in a media statement. "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."

Republic completed $2.7 billion in acquisitions in 2022, most notably the $2.2 billion purchase of Boise, Id.-based US Ecology, which the company continues to integrate.  Vander Ark noted that cost synergies "tracking ahead of plan" as the revenue contribution from US Ecology contributed nearly $50 million for the year.

"Our acquisition pipeline continues to support outsized levels of activity in both Recycling and Solid Waste and Environmental Solutions," Vander Ark said. 

He added that the company plans to expand with an additional $500 million in value-added acquisitions in 2023.

EVP and CFO Brian DelGhiaccio spoke about the impact of commodity prices on full-year and Q4 results. 

Commodity prices were $88 per ton for Q4 2022, a sharp decrease from $218 per ton in 2021. Recycling processing and commodity sales dropped 180 basis points for the quarter. 

Full-year 2022 prices averaged $170 per ton, down from $187 per ton in the previous year.

"Current commodity prices are approximately $95 per ton," DelGhiaccio said. "We believe that current commodity prices are temporarily depressed due to a global supply/demand imbalance and that prices will recover in the second half of the year."

As a result, Republic is expecting average recycled commodity prices to be $125 ton in 2023, with an estimated $95 per ton in Q1 2023.

"At $125 per ton, this would result in a decrease in full year 2023 revenue and EBITDA of $45 million when compared to the prior year and a 30 basis point headwind to EBITDA margin," he commented. "In the first quarter of 2023, this would result in a year-on-year decrease of nearly $30 million in revenue and EBITDA and a 70 basis point headwind to EBITDA margin."

Q4 Highlights:
Revenue: $3.5 billion, up from $2.95 billion in 2021
Net Income: $346 million, up from $313 million in 2021
Adjusted EBITDA: $965 million

Full-Year 2022 Highlights:
Revenue: $13.5 billion
Net Income: $1.5 billion
Adjusted Free Cash Flow: $1.74 billion
Adjusted EBITDA: $3.9 billion