Republic Services(US:RSG)2023-02-16 03:57Financial Data and Key Metrics Changes - In 2022, the company achieved a revenue growth of 20%, with 10% attributed to acquisitions [1] - Adjusted EBITDA grew by 16%, and adjusted earnings per share increased by 18% to $4.93 [1] - Adjusted free cash flow reached $1.74 billion, marking a 15% increase from the previous year [1][40] - Total debt at the end of the year was $11.9 billion, with total liquidity of $1.7 billion [16] Business Line Data and Key Metrics Changes - The Environmental Solutions business saw a revenue increase of approximately $320 million, primarily due to the acquisition of US Ecology [38] - The adjusted EBITDA margin for the Recycling and Solid Waste business was 28.7%, a slight increase from 28.6% in the prior year [14] - The company expects organic volume growth in 2023 to be in the range of 50 basis points to 1% [12] Market Data and Key Metrics Changes - Core price on related revenue increased to 8.4%, with average yield on related revenue rising to 6.7% [6][36] - Current commodity prices are approximately $95 per ton, with expectations for recovery in the second half of the year [37] - The company anticipates a decrease in full-year 2023 revenue and EBITDA of $45 million due to expected commodity price changes [13] Company Strategy and Development Direction - The company is focused on sustainability as a core strategy, leveraging it for profitable growth [33] - Investments in polymer centers and renewable natural gas projects are progressing well, with the first center in Las Vegas expected to come online in late 2023 [135] - The company plans to invest at least $500 million in value-creating acquisitions in 2023 [160] Management's Comments on Operating Environment and Future Outlook - Management expects high single-digit growth in revenue, EBITDA, and free cash flow for 2023 despite headwinds from lower recycled commodity prices and higher interest rates [35] - The company is mindful of potential recession talks but sees strength in the industrial market and consumer engagement [54] - Management indicated that the majority of EPS growth in 2023 is expected to be back-end loaded due to challenging comparisons in the first half [17] Other Important Information - The company returned nearly $800 million to shareholders through dividends and share repurchases [4] - The customer retention rate remained strong at 94%, with the highest NPS scores recorded at the end of 2022 [5] - Full-year SG&A expenses were 10.2% of revenue, reflecting continued cost management [39] Q&A Session Summary Question: What is the expected pricing trend for 2023? - Management expects restricted pricing to increase by 50 to 100 basis points in 2023, with total pricing remaining above 5% in all quarters [20][21] Question: Can you provide details on the US Ecology acquisition performance? - The revenue contribution from US Ecology outperformed expectations by nearly $50 million, primarily due to quicker integration activities [2][26] Question: What are the expectations for commodity prices in 2023? - The company anticipates average recycled commodity prices of $125 per ton in 2023, starting at $95 per ton in the first quarter [162] Question: How does the company view the current market environment? - Management acknowledges ongoing inflation and supply chain challenges but remains optimistic about pricing power and customer willingness to pay [230][201] Question: What is the outlook for residential volumes in 2023? - Management expects residential volumes to remain positive throughout 2023, despite some softness in the construction market [100][211]