Republic Services(US:RSG)2021-02-26 23:13Financial Data and Key Metrics Changes - Total company revenue for Q4 2020 was $241.1 million, up 4% year-over-year and up 1% sequentially from Q3 2020 [9][20] - Adjusted EBITDA for Q4 2020 was $42.8 million, down 7% from the same quarter last year [10][24] - For the full year 2020, revenue was $933.9 million, adjusted EBITDA was $170.2 million, and adjusted earnings per diluted share was $0.61, compared to $1.96 in 2019 [11][25] Business Line Data and Key Metrics Changes - Waste solutions segment revenue was $105.7 million in Q4 2020, down 7% compared to Q4 2019, primarily due to a 13% decline in transportation revenue [20] - Field services segment revenue was $130.5 million in Q4 2020, compared to $105.5 million in Q4 2019, with NRC contributing $75.2 million of segment revenue [21] - Legacy US Ecology's revenue was flat year-over-year, while the event business saw a 20% increase, offsetting a 7% decline in base business [11][12] Market Data and Key Metrics Changes - Legacy NRC was significantly impacted by the pandemic, with revenue 50% below initial 2020 plans and down 40% from the prior year [12] - The energy waste segment delivered $1 million in adjusted EBITDA for 2020, down from an original plan of $40 million [12] Company Strategy and Development Direction - The company redefined its reporting segments to include waste solutions, field services, and energy waste to align with its strategy [6][7] - The company is focused on sustainable waste solutions and has launched initiatives to recover oil, solvents, and metals [16] - The company expects to achieve $20 million in net synergies by the end of 2022, with an incremental $5 million to $7 million expected in 2021 [13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2021, expecting growth in revenue, adjusted EBITDA, and adjusted earnings per share across all businesses [29] - The company anticipates a return to growth in 2021, with total revenue expected between $940 million and $990 million [29][30] - Management noted that Q1 2021 is expected to be challenging, with significant growth anticipated in the second half of the year [28][52] Other Important Information - The company reported a solid balance sheet with cash of $73.8 million and over $120 million of available capacity on its revolving line of credit at the end of 2020 [26] - The company has implemented a discretionary increase of $2.7 million to non-executive incentive plans to recognize team efforts during 2020 [18] Q&A Session Summary Question: Can you help us understand the $29 million of decontamination work in your guidance? - Management indicated that while orders are down, they expect to do as much as $10 million in COVID work this year, which may create an EBITDA headwind of $5 million to $6 million, but they are confident in offsetting this with regular business recovery [40][42] Question: Is there an assumption of full reopening in your guidance? - Management stated that they do not know what full reopening looks like but expect challenging conditions in the first half of the year, with easier comparables in the second quarter [43] Question: What is the expected capital spending as a percentage of revenue? - Management indicated that without growth, capital spending would be around 6% to 7%, but with growth investments, it could approach 9% this year [46] Question: What is the target for free cash flow conversion ratio? - Management stated that they aim for a consistent free cash flow conversion ratio in the low 40% range [48] Question: How do you view the contribution profile on the margin side as business picks up? - Management expects EBITDA margins to remain in the high teens to low 20% range as they recover from the pandemic and continue integration efforts [57][60] Question: What is the company's ESG score and how is it perceived in the market? - Management noted that the company is currently ranked at 7 on environmental metrics and is working to improve its data reporting to enhance its ESG score [62][64] Question: What initiatives are being taken regarding recycling? - Management highlighted ongoing efforts in recycling, including the launch of 100% recycling of aerosols and thermal desorption facilities for oil recovery [67]