Republic Services(US:RSG)2021-02-23 02:53Market Position and Strategy - The company aims to maintain a number one or number two market position in each market served, with a strategy to divest underperforming assets if necessary [20]. - The company expects to invest approximately $200 million annually in tuck-in acquisitions to enhance its existing business platform [24]. Fleet and Operations - Approximately 77% of residential routes have been converted to automated single-driver trucks, improving efficiency and safety [35]. - As of December 31, 2020, 21% of the fleet operates on compressed natural gas (CNG), with 38 CNG fueling stations in operation [36]. - The average age of the fleet is 7.6 years, with a focus on standardized maintenance to improve reliability and reduce environmental impact [38]. - The company has achieved a safety performance that is 39% better than the industry average over the past 10 years [31]. Environmental Initiatives - The company plans to expand its recycling capabilities, with approximately 32% of municipal solid waste currently recycled and expectations for growth [28]. - The company is actively pursuing electric technology innovation for its fleet to reduce emissions and improve total cost of ownership [37]. - The company aims to reduce absolute Scope 1 and 2 greenhouse gas emissions by 35% by 2030, aligned with the Science Based Targets initiative [62]. - The company is committed to harnessing landfill gas for energy, operating 75 landfill gas and renewable energy projects as of December 31, 2020 [97]. Employee Engagement and Diversity - The company is committed to human capital management, focusing on diversity, engagement, and talent development among its 35,000 employees [39]. - The company has launched several initiatives to enhance inclusion and diversity, including business resource groups for various demographics [43]. - Employee engagement score was approximately 85% in 2020, with a goal to achieve and maintain scores at or above 88% by 2030 [46]. - 92% of employees participated in the engagement survey in 2020, an all-time high compared to 84% in 2019 [46]. Financial Performance - Revenue for the year ended December 31, 2020, was $10,153.6 million, a decrease of 1.4% compared to $10,299.4 million in 2019 [404]. - Net income attributable to Republic Services, Inc. was $967.2 million for 2020, down from $1,073.3 million in 2019, representing a decline of approximately 9.9% [404]. - Basic earnings per share decreased to $3.03 in 2020 from $3.34 in 2019, a decline of about 9.3% [404]. - Total assets increased to $23,434.0 million in 2020 from $22,683.8 million in 2019, reflecting a growth of approximately 3.3% [403]. Shareholder Returns - The quarterly dividend was increased to $0.425 per share in July 2020, representing a 5% increase over the prior year, with a compounded annual growth rate of 7.2% over the last five years [70]. - A $2.0 billion share repurchase authorization was approved in October 2020, effective from January 1, 2021, through December 31, 2023 [71]. Waste Management and Recycling - Approximately 75% of total revenue in 2020 was derived from the collection business, with residential services accounting for 23%, small-container services for 31%, and large-container services for 22% [87]. - The company processed and sold 2.1 million tons of recyclable materials from its recycling processing centers in 2020, with an additional 2.2 million tons collected and delivered to third parties [99]. - The company operates 76 recycling processing centers, which generated approximately 3% of total revenue during 2020 [99]. Regulatory and Compliance Risks - Compliance with Subtitle D regulations has resulted in increased costs, which may require substantial additional expenditures in the future [118]. - The Clean Air Act requires large landfills to install gas monitoring and control systems, which may lead to increased capital or operating costs [119]. - The company is subject to state and local regulations that may require solid waste reduction and recycling programs, impacting operational costs [120]. Debt and Financial Liabilities - The company has $1,297.2 million of floating rate debt and $300.0 million of floating interest rate swap contracts as of December 31, 2020 [369]. - A 100 basis point change in interest rates on variable rate debt would result in an annualized interest expense change of approximately $16 million [369]. - The company’s recorded reserves may not be adequate to cover future claims, which could lead to material adjustments in financial statements [56]. COVID-19 Impact - The company incurred incremental costs related to COVID-19, including $20 million committed to support frontline employees and small business customers [426]. - The company experienced a decline in landfill volumes disposed during the COVID-19 pandemic, which peaked in early April 2020 [422].