Republic Services(RSG) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a revenue growth of 9%, with over 4% attributed to acquisitions, and adjusted EBITDA growth of 10.5% [54] - Adjusted EBITDA margin expanded by 40 basis points to 30% during the quarter [61] - Adjusted earnings per share were reported at $1.41, and adjusted free cash flow increased by 10$1.26 billion [54][86] Business Line Data and Key Metrics Changes - The Environmental Solutions business saw revenue increase by $104 million year-over-year, primarily due to the acquisition of U.S. Ecology, with an adjusted EBITDA margin of 22.5$119 per ton, down from $218 per ton in the prior year, with expectations for average recycled commodity prices to remain between$110 and $115 per ton for the full year [60] - The company experienced a 3.7$1 billion in value-creating acquisitions for the year, with a strong pipeline for both recycling and solid waste and Environmental Solutions businesses [45] - The company is focusing on sustainability investments, including the Blue Polymers joint venture, which aims to enhance plastic circularity [48] - The company aims to maintain disciplined pricing strategies while expanding its Environmental Solutions business and leveraging cross-selling opportunities [79] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving double-digit topline growth in the medium term, driven by pricing discipline and organic growth in the solid waste and recycling business [12][13] - The company anticipates a relatively flat volume environment in the second half of the year, reflecting caution due to construction market conditions [124] - Management noted that inflation in cost categories is expected to moderate in the second half of the year, allowing for a favorable price-cost spread [101] Other Important Information - The company achieved over $40 million in annualized cost synergies, contributing to improved margins [55] - Total debt was reported at$12.2 billion, with total liquidity of 2.1 billion and a leverage ratio of approximately 3x [62] Q&A Session Summary Question: Can you expand on the visibility for double-digit topline growth? - Management indicated that growth will be driven by pricing, organic growth, and M&A contributions, with a disciplined approach to pricing [12][13] Question: What is the expected EBITDA impact from the Polymer Center in 2024? - The expected contribution from the Polymer Center is 15 million in 2024, with incremental growth expected in subsequent years [33] Question: Are there signs of price competition from smaller players? - Management noted that while there is always some competition, they have not seen a significant negative trend in pricing or volume [35][97] Question: How does the company view the impact of PFAS remediation? - Management sees PFAS remediation as a net positive opportunity, with ongoing discussions about solutions and customer needs [129] Question: What is the expected contribution from M&A in the new revenue guidance? - Management indicated that M&A is expected to contribute closer to 3.5% to 4% to revenue growth, with a strong pipeline for future acquisitions [106]