Heading into the final quarter of the year, Republic Services (NYSE: RSG) released its third quarter results, noting its highest level of investment in acquisitions in more than a decade.
This coincides with the waste industry’s appetite for merger and acquisition activity as volumes increase and reopening activity continues. Republic Services has added $ 922 million in acquisitions so far in 2021, or $ 876 million net of divestitures.
Jon Vander Ark, President and CEO, told investors that the company’s acquisition pipeline “remains strong, with many opportunities in the recycling and solid waste industry and in our environmental solutions business.”
Republic Services plans to invest more than $ 1 billion in acquisitions by the end of 2021. Vander Ark mentioned the acquisition by New Jersey-based ACV company Enviro, which was completed in August 2021, as a measure that âexpands our capabilities and our offerings in the environmental services industry. It also provides us with a platform to pursue further growth.
The company’s base price remained at a high of 5.2 percent. Income growth over average yield increased 3.2 percent. Volumes were also up 4.3 year-over-year (YOY). The acquisitions added 350 basis points to total revenue growth.
Investments in technology have contributed to Republic’s drive to exceed customer expectations.
During the third quarter, Republic Services moved to the next phase of its RISE platform. Almost 70% of the company’s large and small container fleets now use tablets, and the equipment is expected to be deployed to all fleets by the end of the year. . Vander Ark said the company plans to roll out more technology upgrades to its residential fleet in 2022.
Landfill gas-to-energy partnership opportunities continue to increase for Republic Services. The company has 17 ongoing projects with hints of more activity going forward.
âIn addition to royalty income, these plans will generate a majority of equity investment opportunities to further participate in the project economy,â said Vander Ark.
On the solar side, the Republic solar project located on a closed landfill in Bellevue, in the Ill, includes 30,000 solar panels that will power 2,200 homes per year.
As part of the company’s 2030 sustainability goals, Republic opened its first solar-powered composting facility in the San Diego area to improve the organic processing capabilities of residents and businesses.
Republic raised its full-year adjusted diluted EPS forecast from $ 4.10 to $ 4.13 and its full-year adjusted free cash flow forecast from $ 1.475 billion to $ 1.5 billion.
âWe expect the positive momentum in our business to continue to deliver profitable growth in 2022,â Vander Ark said on the earnings call. âAt this point, we expect to produce above-average revenue growth, which will result in high single-digit adjusted free cash flow growth relative to our year 2021 performance.â
Highlights of the third quarter of 2021:
Income: $ 2.9 billion, compared to $ 2.57 billion in the third quarter of 2020.
Net revenue: $ 350 million compared to $ 260 million in the third quarter of 2020.
Adjusted EBITDA margin: 30.4% of sales, an increase of 10 basis points compared to 2020. Increase of 90 basis points for the prices of recycled raw materials.
Adjusted earnings per share: $ 1.11 vs. $ 1, or 11%, in Q3 2020
Adjusted Free Cash Flow: $ 1.4 billion versus $ 1.1 billion, or 22%, in the third quarter of 2020
Cash provided by operating activities: $ 2.1 billion, up from $ 1.909 billion, an increase of 12% from the previous year.
Average price of recycled products per tonne: $ 230, up $ 131 from the previous year.