Republic Services(US:RSG)2022-10-28 02:32Financial Data and Key Metrics Changes - Revenue growth of 23% in Q3 2022, with over 12% attributed to acquisitions [9] - Adjusted earnings per share increased by 20% to $1.34 compared to the prior year [9] - Adjusted free cash flow for the year-to-date reached over $1.6 billion, a 23% increase year-over-year [9][23] - Total debt stood at $11.8 billion with total liquidity of $1.9 billion [25] Business Line Data and Key Metrics Changes - Environmental Solutions revenue increased by $343 million year-over-year, primarily due to the acquisition of US Ecology [21] - Adjusted EBITDA margin for Environmental Solutions was 18.7%, a sequential increase of 160 basis points [21] - Total company adjusted EBITDA margin for Q3 was 29.2%, down from 30.5% in the prior year [22] Market Data and Key Metrics Changes - Organic volume growth of 2.2% during Q3, with increases across various segments [12][18] - Commodity prices for recycling were $162 per ton in Q3, down from $230 per ton in the prior year, with a forecast of $90 per ton for Q4 [19][20] - Customer retention rate remained strong at over 94% [18] Company Strategy and Development Direction - The company is focused on value-creating acquisitions, having invested $2.6 billion year-to-date, including US Ecology [10] - Continued emphasis on digital capabilities and sustainability initiatives, including renewable gas projects and polymer centers [13][14] - Plans to provide detailed 2023 guidance in the fourth quarter earnings call in February [29] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the ability to price ahead of cost inflation despite headwinds from rising interest rates and commodity prices [28][29] - The fundamentals of the business are strong, with expectations for above-average growth in revenue, EBITDA, and free cash flow [29] - Management acknowledges potential economic pullbacks but maintains a positive outlook on volume growth [41] Other Important Information - The company returned $640 million to shareholders through dividends and share repurchases year-to-date [11] - The integration of US Ecology is progressing as planned, with expected cost synergies of at least $40 million [10] Q&A Session Summary Question: Progress on US Ecology integration and pricing actions - Integration is going well, with positive market reception to pricing actions on disposal and field services [32] Question: Sustainability of strong volume growth - Volume remains strong, with expectations for some moderation in growth rates due to economic conditions [41] Question: Impact of commodity prices on revenue and profitability - A decrease in commodity prices could lead to a significant revenue and EBITDA impact, but the company has strategies to mitigate this [44][48] Question: Interest expense and free cash flow conversion outlook - Anticipated increases in interest expense due to rising rates, but strong growth in revenue and EBITDA is expected to offset this [52][89] Question: Cross-selling opportunities and timeline - The company is on track to achieve cross-selling targets by 2024, with optimism about progress [77] Question: Pricing pushback from customers - No significant pushback observed; pricing remains at elevated levels [104]