Republic Services Posts Strong Earnings Growth

Total internal growth reached 6.2 percent. Revenue growth from average yield was 2.3 percent and volumes increased 1.0 percent. Average yield was 2.0 percent in 2016 while volume was up 2.5 percent a year ago. Recycled commodities were up 2.1 percent compared to a 0.1 percent decrease in the first quarter of 2016. Fuel recovery fees and energy services each contributed 0.4 percent.

Average yield in the collection business was 2.9 percent, which included 3.8 percent yield in the small container business, 2.8 percent yield in the large container business and 1.8 percent yield in residential.

Volumes increased 1.8 percent in Republic’s large container business. Volumes decreased 70 basis points in the small container business, which included a 130-basis-point impact from intentionally shedding certain work performed on behalf of brokers.

“On the small container business specifically, that's just a strategic decision that we've made to not continue to do business with brokers and that broker volume to us that loss is non-regrettable,” Republic Senior Vice President and Chief Accounting Officer Charles Serianni said during the call with investors. “Our perspective is that brokers don't add any real value to customers. Customers should be doing business with us directly.”

Residential collection contributed $564.3 million in revenue, 23.6 percent of the company’s total. That was up from $551.2 million in 2016. Small-container revenue increased from $707.8 million in 2016 to $733.6 million in 2017. And large-container revenue increased from $469.2 million in 2016 to $495.3 million in 2017.

Transfer revenue increased from $268.2 million to $282.2 million year over year. With intercompany activity removed, the numbers were $103.7 million in 2016 and $110.6 million in 2017.

Landfill revenues increased from $489.4 million to $504.7 million. Less intercompany activity, landfill revenues stood at $272.3 million in 2017 vs. $261.7 million a year ago.

Landfill volumes increased 2.8 percent. That included C&D of 17.1 percent and special waste of 1.1 percent. MSW volumes were flat.

Revenues from sales of recycled commodities rose considerably from $86.8 million in the first quarter of 2016 to $133.9 million in the first quarter of 2017. Excluding glass and organics, average commodity prices for Republic increased 61 percent to $162 per ton in the first quarter from $101 per ton in the prior year. The current average commodity price is approximately $155 per ton.

Core price increased revenues by 4.1 percent, which consisted of 5.5 percent in the open market and 1.9 percent in the restricted portion of its business. That was up from 3.4 percent in the first quarter of 2016. The core price number was the firm’s highest level in more than five years.