Republic Services, Inc. Reports Third Quarter 2023 Results

Published
  • Reported Earnings Per Share of $1.52 and Adjusted Earnings Per Share of $1.54
  • Expanded Net Income Margin 100 Basis Points and Adjusted EBITDA Margin 70 Basis Points
  • Generated Cash Flow from Operations of $2,719 Million and Adjusted Free Cash Flow of $1,827 Million
  • Invested More Than $900 Million in Value-Creating Acquisitions
  • Board Authorized $3 Billion For Share Repurchases
  • Certified as a Great Place to Work® for the Seventh Consecutive Year

PHOENIX, Oct. 26, 2023 /PRNewswire/ -- Republic Services, Inc. (NYSE: RSG) today reported net income of $480.2 million, or $1.52 per diluted share, for the three months ended September 30, 2023, versus $416.9 million, or $1.32 per diluted share, for the comparable 2022 period. Excluding certain expenses and other items, on an adjusted basis, net income for the three months ended September 30, 2023, was $488.3 million, or $1.54 per diluted share, versus $425.4 million, or $1.34 per diluted share, for the comparable 2022 period.

"During the third quarter, we delivered strong results as we continue to execute on our strategy designed to profitably grow the business," said Jon Vander Ark, president and chief executive officer. "Our revenue growth was broad-based, including healthy pricing, positive organic volume growth and above-average contribution from acquisitions, which resulted in adjusted EBITDA growth of nine percent and 70 basis points of margin expansion. The investments we are making in sustainability growth initiatives remain on track, with expected financial contribution beginning in 2024."

Third-Quarter and Year-to-Date 2023 Highlights:

  • Third quarter total revenue growth of 6.3 percent includes 4.6 percent organic growth and 1.7 percent growth from acquisitions.
  • Third quarter core price on total revenue increased revenue by 7.0 percent. Core price on related business revenue increased revenue by 8.6 percent, which consisted of 10.4 percent in the open market and 5.7 percent in the restricted portion of the business.
  • Third quarter revenue growth from average yield on total revenue was 5.8 percent, and volume increased revenue by 0.1 percent. Revenue growth from average yield on related business revenue was 7.2 percent, and volume increased related business revenue by 0.1 percent.
  • Third quarter net income was $480.2 million, or a margin of 12.6 percent.
  • Third quarter EPS was $1.52 per share, an increase of 15.2 percent over the prior year.
  • Third quarter adjusted EPS, a non-GAAP measure, was $1.54 per share, an increase of 14.9 percent over the prior year.
  • Third quarter adjusted EBITDA, a non-GAAP measure, was $1,145.7 million and adjusted EBITDA margin, a non-GAAP measure, was 29.9 percent of revenue.
  • Year-to-date cash invested in acquisitions was $947.4 million, all in the recycling and solid waste business.
  • Year-to-date cash returned to shareholders was $670.6 million, which included $201.1 million of share repurchases and $469.5 million of dividends paid.
  • The Company's average recycled commodity price per ton sold during the third quarter was $112. This represents a decrease of $7 per ton from the second quarter of 2023 and a decrease of $50 per ton over the prior year.

Raised Full-Year 2023 Adjusted EPS Guidance

The Company now expects full-year 2023 diluted earnings per share to be in the range of $5.30 to $5.33 and adjusted diluted earnings per share to be in the range of $5.46 to $5.49. The increase is primarily due to a lower than expected tax rate. The Company reiterates the full-year 2023 guidance ranges for adjusted EBITDA and adjusted free cash flow provided in July. Please refer to the Reconciliation of 2023 Financial Guidance section of this document for detail relating to the computation of non-GAAP measures as well as the Information Regarding Forward-Looking Statements section of this document.

Board Authorized $3 Billion For Share Repurchases

Republic announced today that its Board of Directors approved a $3 billion share repurchase authorization effective starting January 1, 2024, and extending through December 31, 2026. As of September 30, 2023, the remaining purchase capacity under the prior authorization was $1.4 billion, which continues through December 31, 2023.

Company Declared Quarterly Dividend

Republic announced that its Board of Directors declared a regular quarterly dividend of $0.535 per share for shareholders of record on January 2, 2024. The dividend will be paid on January 16, 2024.

Presentation of Certain Performance Metrics and Non-GAAP Measures

Adjusted diluted earnings per share, adjusted net income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA by business type, adjusted EBITDA margin by business type and adjusted free cash flow are described in the Performance Metrics and Reconciliations of Certain Non-GAAP Measures section of this document.

About Republic Services

Republic Services, Inc. is a leader in the environmental services industry. Through its subsidiaries, the Company provides customers with the most complete set of products and services, including recycling, solid waste, special waste, hazardous waste, container rental and field services. Republic's industry-leading commitments to advance circularity, reduce emissions and decarbonize operations are helping deliver on its vision to partner with customers to create a more sustainable world. For more information, please visit RepublicServices.com

For more information, contact:

Media Inquiries                                                                              

Investor Inquiries

Roman Blahoski (480) 718-0328                                         

Aaron Evans (480) 718-0309

media@RepublicServices.com

investor@RepublicServices.com

 

SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION

AND OPERATING DATA

REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

 (in millions, except per share amounts)

September 30,

December 31,

2023

2022

(Unaudited)

ASSETS

Current assets:

Cash and cash equivalents

$               157.5

$               143.4

Accounts receivable, less allowance for doubtful accounts and other of $83.5 and $51.9, respectively

1,829.7

1,677.2

Prepaid expenses and other current assets

361.2

536.5

Total current assets

2,348.4

2,357.1

Restricted cash and marketable securities

153.3

127.6

Property and equipment, net

10,701.4

10,744.0

Goodwill

15,290.7

14,451.5

Other intangible assets, net

447.2

347.2

Other assets

1,101.8

1,025.5

Total assets

$          30,042.8

$          29,052.9

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$            1,198.2

$            1,221.8

Notes payable and current maturities of long-term debt

932.3

456.0

Deferred revenue

484.8

443.0

Accrued landfill and environmental costs, current portion

144.1

132.6

Accrued interest

87.8

79.0

Other accrued liabilities

1,221.6

1,058.3

Total current liabilities

4,068.8

3,390.7

Long-term debt, net of current maturities

10,992.8

11,329.5

Accrued landfill and environmental costs, net of current portion

2,225.6

2,141.3

Deferred income taxes and other long-term tax liabilities, net

1,474.9

1,528.8

Insurance reserves, net of current portion

352.6

315.1

Other long-term liabilities

595.7

660.7

Commitments and contingencies

Stockholders' equity:

Preferred stock, par value $0.01 per share; 50 shares authorized; none issued

Common stock, par value $0.01 per share; 750 shares authorized; 320.7 and 320.3 issued including shares held in treasury, respectively

3.2

3.2

Additional paid-in capital

2,887.6

2,843.2

Retained earnings

8,163.5

7,356.3

Treasury stock, at cost; 5.6 and 4.2 shares, respectively

(720.5)

(504.6)

Accumulated other comprehensive loss, net of tax

(2.5)

(12.1)

Total Republic Services, Inc. stockholders' equity

10,331.3

9,686.0

Non-controlling interests in consolidated subsidiary

1.1

0.8

Total stockholders' equity

10,332.4

9,686.8

Total liabilities and stockholders' equity

$          30,042.8

$          29,052.9

 

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

 (in millions, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Revenue

$              3,825.9

$                3,597.8

$           11,132.9

$              9,981.5

Expenses:

Cost of operations

2,284.3

2,194.2

6,678.0

6,023.6

Depreciation, amortization and depletion

382.3

353.9

1,099.4

1,001.8

Accretion

24.6

22.8

73.2

66.9

Selling, general and administrative

402.1

361.0

1,177.3

1,059.0

Adjustment to withdrawal liability for a multiemployer pension fund

2.2

Gain (loss) on business divestitures and impairments, net

(1.5)

(5.2)

(1.5)

(5.3)

Restructuring charges

6.3

6.8

27.3

18.8

Operating income

727.8

664.3

2,079.2

1,814.5

Interest expense

(127.6)

(105.2)

(378.8)

(282.7)

Loss on extinguishment of debt

(0.2)

Gain (loss) from unconsolidated equity method investments

2.8

(51.8)

0.2

(69.2)

Interest income

2.0

0.8

5.0

2.0

Other income (expense), net

1.3

(0.3)

3.2

(6.5)

Income before income taxes

606.3

507.8

1,708.6

1,458.1

Provision for income taxes

126.0

90.9

416.9

317.5

Net income

480.3

416.9

$              1,291.7

1,140.6

Net income attributable to non-controlling interests in consolidated subsidiary

(0.1)

(0.3)

0.2

Net income attributable to Republic Services, Inc.

$                 480.2

$                   416.9

$              1,291.4

$              1,140.8

Basic earnings per share attributable to Republic Services, Inc. stockholders:

Basic earnings per share

$                   1.52

$                     1.32

$                   4.08

$                   3.60

Weighted average common shares outstanding

316.1

316.5

316.5

316.5

Diluted earnings per share attributable to Republic Services, Inc. stockholders:

Diluted earnings per share

$                   1.52

$                     1.32

$                   4.07

$                   3.60

Weighted average common and common equivalent shares outstanding

316.6

317.0

317.0

317.1

Cash dividends per common share

$                 0.535

$                   0.495

$                 1.525

$                 1.415

 

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (in millions)

Nine Months Ended September 30,

2023

2022

Cash provided by operating activities:

Net income

$              1,291.7

$                1,140.6

Adjustments to reconcile net income to cash provided by operating activities:

Depreciation, amortization, depletion and accretion

1,172.6

1,068.7

Non-cash interest expense

65.5

55.3

Stock-based compensation

31.7

30.8

Deferred tax provision

52.2

100.2

Provision for doubtful accounts, net of adjustments

38.6

27.8

Loss on extinguishment of debt

0.2

Gain on disposition of assets and asset impairments, net

(3.7)

(8.0)

Environmental adjustments

(0.1)

(Gain) loss from unconsolidated equity method investments

(0.2)

69.2

Other non-cash items

(0.6)

8.0

Change in assets and liabilities, net of effects from business acquisitions and divestitures:

Accounts receivable

(161.0)

(206.1)

Prepaid expenses and other assets

121.4

28.0

Accounts payable

93.5

97.7

Capping, closure and post-closure expenditures

(40.5)

(35.6)

Remediation expenditures

(31.4)

(37.3)

Other liabilities

86.9

40.8

Proceeds for retirement of certain hedging relationships

2.4

Cash provided by operating activities

2,719.3

2,380.0

Cash (used in) provided by investing activities:

Purchases of property and equipment

(1,083.2)

(924.8)

Proceeds from sales of property and equipment

25.0

24.0

Cash used in acquisitions and investments, net of cash and restricted cash acquired

(1,051.1)

(2,847.6)

Cash paid for business divestitures

1.7

50.1

Purchases of restricted marketable securities

(13.8)

(15.7)

Sales of restricted marketable securities

13.1

15.4

Other

7.5

(2.3)

Cash used in investing activities

(2,100.8)

(3,700.9)

Cash provided by (used in) financing activities:

Proceeds from credit facilities and notes payable, net of fees

27,940.2

10,496.5

Proceeds from issuance of senior notes, net of discount and fees

1,183.6

Payments of credit facilities and notes payable

(29,024.7)

(8,472.1)

Issuances of common stock, net

(4.3)

(12.9)

Purchases of common stock for treasury

(190.4)

(203.5)

Cash dividends paid

(469.5)

(436.5)

Distributions paid to non-controlling interests in consolidated subsidiary

(0.8)

Contingent consideration payments

(14.1)

(4.5)

Cash (used in) provided by financing activities

(579.2)

1,366.2

Effect of foreign exchange rate changes on cash

0.2

(3.1)

Increase in cash, cash equivalents, restricted cash and restricted cash equivalents

39.5

42.2

Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period

214.3

105.6

Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period

$                253.8

$                  147.8

 

You should read the following information in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K as of and for the year ended December 31, 2022. All amounts below are in millions and as a percentage of our revenue, except per share data.

REVENUE

The following table reflects our total revenue by line of business for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Collection:

Residential

$   718.2

18.8 %

$   680.9

18.9 %

$  2,103.4

18.9 %

$  1,963.0

19.7 %

Small-container

1,126.3

29.4

1,021.8

28.4

3,270.2

29.4

2,912.9

29.2

Large-container

753.0

19.7

709.6

19.7

2,192.4

19.7

2,018.0

20.2

Other

19.0

0.5

14.6

0.4

51.9

0.5

40.3

0.4

Total collection

2,616.5

68.4

2,426.9

67.4

7,617.9

68.5

6,934.2

69.5

Transfer

444.3

412.8

1,280.5

1,183.5

Less: intercompany

(238.1)

(223.5)

(703.3)

(637.5)

Transfer, net

206.2

5.4

189.3

5.3

577.2

5.2

546.0

5.5

Landfill

743.2

703.6

2,172.4

2,019.7

Less: intercompany

(306.9)

(291.4)

(912.6)

(851.9)

Landfill, net

436.3

11.4

412.2

11.5

1,259.8

11.3

1,167.8

11.7

Environmental solutions

424.0

411.0

1,274.0

827.8

Less: intercompany

(19.2)

(13.8)

(62.5)

(37.1)

Environmental solutions, net

404.8

10.6

397.2

11.0

1,211.5

10.9

790.7

7.9

Other:

Recycling processing and commodity sales

76.3

2.0

86.9

2.4

226.6

2.0

300.4

3.0

Other non-core

85.8

2.2

85.3

2.4

239.9

2.1

242.4

2.4

Total other

162.1

4.2

172.2

4.8

466.5

4.1

542.8

5.4

Total revenue

$ 3,825.9

100.0 %

$ 3,597.8

100.0 %

$  11,132.9

100.0 %

$  9,981.5

100.0 %

 

The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Average yield

5.8 %

5.6 %

6.1 %

5.0 %

Fuel recovery fees

(1.1)

3.1

(0.2)

2.7

Total price

4.7

8.7

5.9

7.7

Volume

0.1

2.2

0.7

2.7

Change in workdays

(0.4)

Recycling processing and commodity sales

(0.2)

(1.3)

(0.8)

(0.2)

Environmental solutions

0.4

0.6

0.4

0.5

Total internal growth

4.6

10.2

6.2

10.7

Acquisitions / divestitures, net

1.7

12.4

5.3

9.0

Total

6.3 %

22.6 %

11.5 %

19.7 %

Core price

7.0 %

6.9 %

7.5 %

6.4 %

 

Average yield is defined as revenue growth from the change in average price per unit of service, expressed as a percentage. Core price is defined as price increases to our customers and fees, excluding fuel recovery fees, net of price decreases to retain customers. We also measure changes in core price, average yield and volume as a percentage of related-business revenue, defined as total revenue excluding recycled commodities, fuel recovery fees and environmental solutions revenue, to determine the effectiveness of our pricing and organic growth strategies. The following table reflects core price, average yield and volume as a percentage of related-business revenue for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

As a % of Related Business

As a % of Related Business

Core price

8.6 %

7.7 %

8.9 %

7.0 %

Average yield

7.2 %

6.3 %

7.2 %

5.4 %

Volume

0.1 %

2.4 %

0.8 %

2.9 %

 

The following table reflects changes in average yield and volume, as a percentage of related business revenue by line of business, for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Yield

Volume

Yield

Volume

Yield

Volume

Yield

Volume

Collection:

Residential

6.6 %

(1.5) %

4.3 %

0.2 %

5.4 %

0.2 %

4.2 %

(0.3) %

Small-container

9.4 %

0.5 %

8.3 %

2.4 %

9.7 %

1.2 %

6.7 %

3.2 %

Large-container

8.4 %

(1.7) %

8.9 %

1.8 %

9.0 %

(0.8) %

8.3 %

2.8 %

Landfill:

Municipal solid waste

5.9 %

0.6 %

4.3 %

1.9 %

5.9 %

0.8 %

3.3 %

1.6 %

Construction and demolition waste

8.2 %

(6.2) %

1.5 %

8.4 %

6.4 %

(2.9) %

2.1 %

6.7 %

Special waste

— %

8.2 %

— %

13.2 %

— %

12.3 %

— %

10.9 %

 

COST OF OPERATIONS

The following table summarizes the major components of our cost of operations for the three and nine months ended September 30, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30

Nine Months Ended September 30

2023

2022

2023

2022

Labor and related benefits

$     744.1

19.4 %

$       724.3

20.1 %

$    2,233.0

20.1 %

$    2,003.6

20.1 %

Transfer and disposal costs

268.7

7.0

267.4

7.4

788.6

7.1

733.7

7.4

Maintenance and repairs

357.6

9.3

330.7

9.2

1,036.1

9.3

902.5

9.0

Transportation and subcontract costs

304.9

8.0

298.8

8.3

881.5

7.9

785.1

7.9

Fuel

136.7

3.6

161.3

4.7

406.3

3.6

474.1

4.7

Disposal fees and taxes

89.3

2.3

89.2

2.5

262.1

2.4

257.8

2.6

Landfill operating costs

82.6

2.2

75.3

2.1

248.4

2.2

201.8

2.0

Risk management

99.4

2.6

84.5

2.3

287.1

2.6

231.5

2.3

Other

201.0

5.4

163.3

4.4

534.9

4.8

433.2

4.3

Subtotal

2,284.3

59.8

2,194.8

61.0

6,678.0

60.0

6,023.3

60.3

US Ecology acquisition integration and deal costs

(0.6)

0.3

Total cost of operations

$  2,284.3

59.8 %

$    2,194.2

61.0 %

$    6,678.0

60.0 %

$    6,023.6

60.3 %

 

These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our cost of operations by cost component to that of other companies and of ours for prior periods.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The following table summarizes our selling, general and administrative expenses for the three and nine months ended September 30, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Salaries

$       254.2

6.6 %

$       239.2

6.6 %

$   770.6

6.9 %

$   684.1

6.9 %

Provision for doubtful accounts

18.9

0.5

10.6

0.3

38.6

0.3

27.8

0.3

Other

122.8

3.2

101.9

2.9

343.8

3.1

282.0

2.8

Subtotal

395.9

10.3

351.7

9.8

1,153.0

10.3

993.9

10.0

US Ecology acquisition integration and deal costs

6.2

0.2

9.3

0.2

24.3

0.2

65.1

0.6

Total selling, general and administrative expenses

$       402.1

10.5 %

$       361.0

10.0 %

$ 1,177.3

10.5 %

$ 1,059.0

10.6 %

 

These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies and of ours for prior periods.

PERFORMANCE METRICS AND RECONCILIATIONS OF CERTAIN NON-GAAP MEASURES

The following tables calculate EBITDA, EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, adjusted pre-tax income, adjusted tax impact, adjusted net income - Republic, adjusted diluted earnings per share, and adjusted free cash flow, which are not measures determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP), for the three and nine months ended September 30, 2023 and 2022. Our definitions of the foregoing non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

Also presented below is adjusted EBITDA and adjusted EBITDA margin by business type for the three and nine months ended September 30, 2023 and 2022.

Adjusted EBITDA and Adjusted EBITDA Margin

The following table calculates adjusted EBITDA and adjusted EBITDA margin for the three and nine months ended September 30, 2023 and 2022 (in millions of dollars and as a percentage of revenue):

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Net income attributable to Republic Services, Inc. and net income margin

$     480.2

12.6 %

$     416.9

11.6 %

1,291.4

11.6 %

$  1,140.8

11.4 %

Net income attributable to noncontrolling interests

0.1

0.3

(0.2)

Provision for income taxes

126.0

90.9

416.9

317.5

Other (income) expense, net

(1.3)

0.3

(3.2)

6.5

Interest income

(2.0)

(0.8)

(5.0)

(2.0)

Interest expense

127.6

105.2

378.8

282.7

Depreciation, amortization and depletion

382.3

353.9

1,099.4

1,001.8

Accretion

24.6

22.8

73.2

66.9

EBITDA and EBITDA margin

$  1,137.5

29.7 %

$     989.2

27.5 %

$  3,251.8

29.2 %

$  2,814.0

28.2 %

(Gain) loss from unconsolidated equity method investment

(2.8)

51.8

(0.2)

69.2

Loss on extinguishment of debt and other related costs

0.2

Adjustment to withdrawal liability for a multiemployer pension fund

2.2

Restructuring charges

6.3

6.8

27.3

18.8

(Gain) loss on business divestitures and impairments, net

(1.5)

(5.2)

(1.5)

(5.3)

US Ecology acquisition integration and deal costs

6.2

8.7

24.3

65.4

Total adjustments

$         8.2

$       62.1

$       50.1

$     150.3

Adjusted EBITDA and adjusted EBITDA margin

$  1,145.7

29.9 %

$ 1,051.3

29.2 %

$  3,301.9

29.7 %

$  2,964.3

29.7 %

 

Adjusted EBITDA and Adjusted EBITDA Margin by Business Type

The following table summarizes revenue, adjusted EBITDA and adjusted EBITDA margin by business type for the three and nine months ended September 30, 2023 (in millions of dollars and adjusted EBITDA margin as a percentage of revenue):

Three Months Ended September 30, 2023

Recycling & Solid Waste

Environmental Solutions

Total

Revenue

$       3,421.1

$          404.8

$ 3,825.9

Adjusted EBITDA(a)

$       1,054.0

$            91.7

$ 1,145.7

Adjusted EBITDA Margin

30.8 %

22.7 %

29.9 %

 

Nine Months Ended September 30, 2023

Recycling & Solid Waste

Environmental Solutions

Total

Revenue

$       9,921.5

$       1,211.4

$  11,132.9

Adjusted EBITDA(a)

$       3,034.9

$          267.0

$ 3,301.9

Adjusted EBITDA Margin

30.6 %

22.0 %

29.7 %

(a) Certain corporate expenses, including selling, general and administrative expenses, and National Accounts revenue are allocated to two business types

 

The amounts shown for Recycling & Solid Waste represent the sum of our Group 1 and Group 2 reportable segments, and Environmental Solutions represents our Group 3 reportable segment.

Adjusted Earnings Per Share

The following table calculates adjusted pre-tax income, adjusted tax impact, adjusted net income - Republic, and adjusted diluted earnings per share for the three and nine months ended September 30, 2023 and 2022:

Three Months Ended September 30, 2023

Three Months Ended September 30, 2022

Diluted

Diluted

Net

Earnings

Net

Earnings

Pre-tax

Tax

Income -

per

Pre-tax

Tax

Income -

per

Income

Impact(1)

Republic

Share

Income

Impact(1)

Republic

Share

As reported

$  606.3

126.1

$   480.2

$     1.52

$  507.8

90.9

$   416.9

$     1.32

Restructuring charges

6.3

1.7

4.6

0.01

6.8

1.8

5.0

0.01

(Gain) loss on business divestitures and impairments,

net (2)

(1.5)

(0.4)

(1.1)

(5.2)

(2.2)

(3.0)

(0.01)

US Ecology acquisition integration and deal costs

6.2

1.6

4.6

0.01

8.7

2.2

6.5

0.02

Total adjustments

11.0

2.9

8.1

0.02

10.3

1.8

8.5

0.02

As adjusted

$  617.3

$     129.0

$   488.3

$     1.54

$  518.1

$      92.7

$   425.4

$     1.34

(1) The income tax effect related to our adjustments includes both the current and deferred income tax impact and is individually calculated based on the statutory rates applicable to each adjustment.

(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended September 30, 2023.

 

Nine Months Ended September 30, 2023

Nine Months Ended September 30, 2022

Diluted

Diluted

Net

Earnings

Net

Earnings

Pre-tax

Tax

Income -

per

Pre-tax

Tax

Income -

per

Income

Impact(1)

Republic

Share

Income

Impact(1)

Republic

Share

As reported

$  1,708.6

$     417.2

$ 1,291.4

$     4.07

$  1,458.1

$     317.3

$ 1,140.8

$     3.60

Loss on extinguishment of debt and other related costs (2)

0.2

0.2

Restructuring charges

27.3

7.2

20.1

0.06

18.8

4.9

13.9

0.04

(Gain) loss on business divestitures and impairments, net(2)

(1.5)

(0.4)

(1.1)

(5.3)

(2.2)

(3.1)

(0.01)

Adjustment to withdrawal liability for a multiemployer pension fund

2.2

0.6

1.6

0.01

US Ecology acquisition integration and deal costs

24.3

6.2

18.1

0.06

65.4

14.1

51.3

0.16

Total adjustments

50.3

13.0

37.3

0.12

81.1

17.4

63.7

0.20

As adjusted

$  1,758.9

$     430.2

$ 1,328.7

$     4.19

$  1,539.2

$     334.7

$ 1,204.5

$     3.80

(1) The income tax effect related to our adjustments includes both the current and deferred income tax impact and is individually calculated based on the statutory rates applicable to each adjustment.

(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the nine months ended September 30, 2023.

 

We believe that presenting EBITDA and EBITDA margin is useful to investors because they provide important information concerning our operating performance exclusive of certain non-cash and other costs. EBITDA and EBITDA margin demonstrate our ability to execute our financial strategy, which includes reinvesting in existing capital assets to ensure a high level of customer service, investing in capital assets to facilitate growth in our customer base and services provided, maintaining our investment grade credit ratings and minimizing debt, paying cash dividends, repurchasing our common stock, and maintaining and improving our market position through business optimization. Although depreciation, depletion, amortization and accretion are considered operating costs in accordance with U.S. GAAP, they represent the allocation of non-cash costs generally associated with long-lived assets acquired or constructed in prior years. 

We believe that presenting adjusted EBITDA and adjusted EBITDA margin, adjusted pre-tax income, adjusted tax impact, adjusted net income - Republic, and adjusted diluted earnings per share provide an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges, costs and recoveries in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods.

Restructuring charges. During the three and nine months ended September 30, 2023 we incurred $6.3 million and $27.3 million, respectively, of restructuring charges primarily related to the redesign of our asset management, and customer and order management software systems as well as costs associated with the early termination of certain leases. During the three and nine months ended September 30, 2022, we incurred $6.8 million and $18.8 million, respectively, of restructuring charges primarily related to the redesign of our general ledger, budgeting, and procurement enterprise resource planning systems, which was completed with the systems being placed into production in the fourth quarter of 2022.

Gain on business divestitures and impairments, net. During the three months ended September 30, 2023, we recorded a net gain on business divestitures and impairments of $1.5 million.

Adjustment to withdrawal liability for multiemployer pension funds. During the nine months ended September 30, 2022, we recorded $2.2 million of withdrawal costs from a multiemployer pension plan.

US Ecology acquisition integration and deal costs. During the three and nine months ended September 30, 2023, we incurred $6.2 million and $24.3 million, respectively, and during the three and nine months ended September 30, 2022, we incurred acquisition integration and deal costs of $8.7 million and $65.4 million, respectively, in connection with the acquisition of US Ecology. The acquisition closed on May 2, 2022. The 2023 costs primarily related to the integration of certain software systems as well as rebranding the business, and the 2022 costs included certain costs to close the acquisition and integrate the US Ecology business.

Loss on extinguishment of debt and other related costs. During the nine months ended September 30, 2023, we incurred a loss on the early extinguishment of debt of $0.2 million related to the early repayment of a portion of our term loan facility. We incurred non-cash charges related to the proportional share of unamortized deferred issuance costs.

Adjusted Free Cash Flow

The following table calculates our adjusted free cash flow, which is not a measure determined in accordance with U.S. GAAP, for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

2023

2022

Cash provided by operating activities

$          2,719.3

$          2,380.0

Property and equipment received

(960.1)

(832.5)

Proceeds from sales of property and equipment

25.0

24.0

Cash paid related to adjustments to withdrawal liabilities for a multiemployer pension fund, net of tax

0.3

2.2

Restructuring payments, net of tax

24.0

12.5

Cash tax benefit for debt extinguishment and other related costs

0.1

Divestiture related tax payments

0.3

2.2

US Ecology acquisition integration and deal costs, net of tax

18.5

73.4

Adjusted free cash flow

$          1,827.4

$          1,661.7

 

We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain expenditures or recoveries. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed, such as debt service requirements and dividend payments.

Purchases of property and equipment as reflected on our consolidated statements of cash flows represent amounts paid during the period for such expenditures. A reconciliation of property and equipment expenditures reflected on our consolidated statements of cash flows to property and equipment received during the period follows for the nine months ended September 30, 2023 and 2022:

Nine Months Ended September 30,

2023

2022

Purchases of property and equipment per the unaudited consolidated statements of cash flows

$          1,083.2

$            924.8

Adjustments for property and equipment received during the prior period but paid for in the following period, net

(123.1)

(92.3)

Property and equipment received during the period

$              960.1

$            832.5

 

The adjustments noted above do not affect our net change in cash, cash equivalents, restricted cash and restricted cash equivalents as reflected in our consolidated statements of cash flows.

ACCOUNTS RECEIVABLE

As of September 30, 2023 and December 31, 2022, accounts receivable were $1,829.7 million and $1,677.2 million, net of allowance for doubtful accounts of $83.5 million and $51.9 million, respectively, resulting in days sales outstanding of 43.5, or 32.0 days net of deferred revenue, compared to 43.3, or 31.8 days net of deferred revenue, respectively.

CASH DIVIDENDS

In July 2023, we paid a cash dividend of $156.6 million to shareholders of record as of July 3, 2023. As of September 30, 2023, we recorded a quarterly dividend payable of $168.5 million to shareholders of record at the close of business on October 2, 2023, which was paid on October 13, 2023.

SHARE REPURCHASE PROGRAM

During the three months ended September 30, 2023, we repurchased 1.4 million shares of our stock for $201.1 million at a weighted average cost per share of $146.69. As of September 30, 2023, the remaining authorized purchase capacity under our October 2020 repurchase program was $1.4 billion.

RECONCILIATION OF 2023 FINANCIAL GUIDANCE

The Company reiterates the full-year 2023 guidance ranges for adjusted EBITDA and adjusted free cash flow provided in July. The Company now expects full-year 2023 diluted earnings per share to be in the range of $5.30 to $5.33 and adjusted diluted earnings per share to be in the range of $5.46 to $5.49.

Adjusted EBITDA

The following is a summary of our anticipated adjusted EBITDA for the year ending December 31, 2023, which is not a measure determined in accordance with U.S. GAAP:

(Anticipated)

Year Ending December 31, 2023

Net income attributable to Republic Services, Inc.

$       1,672 to 1,682

Provision for income taxes

360 to 370

Other (income) expense, net

(5)

Interest expense, net

500

Depreciation, amortization, depletion and accretion

1,575

Loss from unconsolidated equity method investments

170

Restructuring charges

35

Gain on business divestitures and impairments, net

(2)

US Ecology acquisition integration and deal costs

35

Adjusted EBITDA

$        4,340 to 4,360

 

We believe that presenting adjusted EBITDA provides an understanding of operational activities before the financial impact of certain items. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges, costs and recoveries in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods.

Adjusted Diluted Earnings per Share

The following is a summary of anticipated adjusted diluted earnings per share for the year ending December 31, 2023, which is not a measure determined in accordance with U.S. GAAP:

(Anticipated) Year Ending December 31, 2023

Diluted earnings per share

$        5.30 to 5.33

Restructuring charges

0.08

US Ecology, Inc. acquisition integration and deal costs

0.08

Adjusted diluted earnings per share

$        5.46 to 5.49

 

We believe that presenting adjusted diluted earnings per share provides an understanding of operational activities before the financial impact of certain items. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges, costs and recoveries in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definition of adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.

Adjusted Free Cash Flow

Our anticipated adjusted free cash flow for the year ending December 31, 2023, which is not a measure determined in accordance with U.S. GAAP, is calculated as follows:

(Anticipated) Year Ending December 31, 2023

Cash provided by operating activities

$        3,495 to 3,540

Property and equipment received

(1,675 to 1,695)

Proceeds from sales of property and equipment

25

Restructuring payments, net of tax

30

US Ecology, Inc. acquisition integration and deal costs, net of tax

25

Adjusted free cash flow

$        1,900 to 1,925

 

We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain expenditures or recoveries. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed, such as debt service requirements and dividend payments. Our definition of adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.

Our financial guidance is based on current economic conditions.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This press release contains certain forward-looking information about us that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as "guidance," "expect," "will," "may," "anticipate," "plan," "estimate," "project," "intend," "should," "can," "likely," "could," "outlook" and similar expressions are intended to identify forward-looking statements. These statements include information about our plans, strategies and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to risk and uncertainties that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that the expectations will prove to be correct. Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are the impacts of the overall global economy and increasing interest rates, our ability to effectively integrate and manage companies we acquire, including US Ecology, and to realize the anticipated benefits of any such acquisitions, the amount of the financial contribution of our sustainability initiatives, acts of war, riots or terrorism, and the impact of these acts on economic, financial and social conditions in the United States, as well as our dependence on large, long-term collection, transfer and disposal contracts. More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2022, particularly under Part I, Item 1A – Risk Factors. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business. We undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.

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