By the numbers
Q1 net income: $453.8M
Up 18.18% versus prior year, with a margin of 11.8%
- Results: Republic Services once again reported revenue growth in the first quarter of 2024, which CEO Jon Vander Ark attributed in part to a core price in related revenue of 8.5% on the company’s earnings call Tuesday. That occurred despite a 1.1% decline in volumes, driven in part by a particularly rough winter. “We are off to a strong start to the year and well-positioned to achieve our full-year goals,” Vander Ark said in the company’s earnings release. An improved recycling outlook helped buoy revenues, offsetting what DelGhiaccio described as a “zero-growth environment for waste and recycling” due to overall softness in sectors like construction and manufacturing.
- Volume: Overall volume on total revenue was down 90 basis points, driven by a 4.4% decline in large container volumes due to inclement weather and the weak construction market. Residential volumes were also down 2.6%, but landfill MSW volumes were up 1.6% year over year, DelGhiaccio said.
- Pricing: Core pricing in the fourth quarter was 7%, down from 8.2% in the first quarter of 2023. Vander Ark predicted a “sequential step down in the level of pricing” on the company’s previous earnings call due to fluctuations in the consumer price index. Nevertheless, the company’s pricing outpaced its internal cost of inflation for the quarter.
- Recycling: Rising commodity sales boosted Republic’s first-quarter revenue from recycling, increasing 8.4% year over year. The company recorded commodity prices of $153 per ton in Q1 of 2024 compared to $105 per ton for the same period in 2023, said CFO Brian DelGhiaccio. He said pricing exceeded the company’s expectations. The company is also using AI-assisted cameras for collections, and executives said they expected increasing revenue from their enhanced ability to detect customers’ overfilled bins, to whom they can sell increased service.
- Polymer centers: Republic’s Las Vegas Polymer Center began delivering recycled flake to offtake partners in March, Vander Ark said. He said core operations at the facility are exceeding expectations, and Republic’s partners think it’s producing “some of the, if not the, cleanest rPET flake in the world.” Construction continues at Republic’s Indianapolis plant, and executives said they planned to reveal the location for a third plant on the East Coast in the near future.
- Environmental solutions: Revenue from environmental solutions was $423.3 million in Q1, up from $408.3 million the prior year. Republic continues to integrate ACTEnviro into its environmental solutions business following the transaction’s close in November 2023. Republic is onboarding the company’s employees onto its IT platform to maximize cross-selling opportunities with other services.
- M&A: As a result, Vander Ark said Republic would likely pause acquisitions of more environmental services or field services businesses until “we have a really solid foundation to integrate companies,” likely until 2025. Executives are still predicting roughly $500 million of investments in acquisitions this year, predominantly in the waste and recycling business.
- Sustainability projects: Executives predicted Republic will spend about $231 million through the full year on joint ventures in sustainability-related projects, with costs tapering somewhat as the year goes on. Lightning Renewables, the company’s renewable natural gas joint venture with BP’s Archaea Energy, began construction on a $70 million landfill-gas-to-RNG project at the Middle Point Landfill in March. Blue Polymers, the company’s joint venture with Ravago, also announced its second location in Buckeye, Arizona, on Wednesday, a day after the earnings call.
