Dive Brief:

• Republic Services reported a 3.9% growth in revenue for the fourth of quarter of 2016, as compared to the previous year. The company also saw a 2.2% increase in revenue from average yield at the same time as a 0.5% volume increase, an overall trend that has now occurred four years in a row. Excluding glass and organics, average commodity prices were up by 24%. 
• Large container volume increased, due in part to growing C&D volumes. Small containers and residential business both saw a decrease in volumes, due to a shift away from brokers and the decision not to renew certain contracts that didn't meet return criteria. When asked why this process couldn't happen faster, CEO Don Slager said, "...Even if we are in a situation we don't like, we do our best to negotiate our way through it. We never just walk away from a customer when we've got a contractual obligation."
• Net capital expenditures for 2017 are expected to be around $975 million — some of this for the new Los Angeles franchise contract — with $100 million dedicated to tuck-in acquisitions. That $100 million could also be used for one large company if it was the right fit.

Dive Insight:

Republic reported an increase in adjusted net income for 2016 and projected good returns in 2017 as multiple internal programs come to fruition. This includes the company's customer service center consolidation, expanded e-commerce options, and increased enrollment in its MyResource customer portal and mobile app. Slager classified the company's technology investments as being in "early innings" with much more to come.

Republic is also seeing results from its OneFleet standardized maintenance program. About 92% of the company's fleet is now certified with the rest to follow this year. The process has reportedly led to reduced maintenance and repair costs, reduced capital costs, better customer service and the lowest driver turnover rate in four years. Slager estimated that this had helped save $100 million so far, with future savings expected.

Overall, Republic's position seems similar to other large companies in the industry at the moment — restructuring to have less exposure to commodity swings amid a period of measured growth. The results of ongoing negotiations in Las Vegas, which Slager declined to comment on, and other situations could affect their course as the year continues.

The company didn't spend as much on acquisitions as expected last year due to unacceptable details at some companies, but more activity was projected this year with the potential for a boost from federal tax reform. Multiple deals are reportedly in "advanced stages" at the moment, though Slager said the company would be taking a patient approach.

"We're not going to do bad deals just to hit an acquisition target goal...we're going to buy good companies and good recurring cash flow," he said.