Republic Services has strong year-end finish

Republic Services Inc., Phoenix, has reported net income of $189.5 million, or 55 cents per diluted share, for the three-months ended Dec. 31, 2016, versus $172.3 million, or 49 cents per diluted share, for the comparable 2015 period. Excluding certain benefits and expenses, on an adjusted basis, net income for the three-months ended Dec. 31, 2016, was $193.8 million, or 57 cents per diluted share, versus $175 million, or 50 cents per diluted share, for the comparable 2015 period.

For the year ended Dec. 31, 2016, net income was $612.6 million, or $1.78 per diluted share, versus $749.9 million, or $2.13 per diluted share, for the comparable 2015 period. On an adjusted basis, net income for the year ended Dec. 31, 2016, was $763.3 million, or $2.22 per diluted share, versus $722.3 million, or $2.06 per diluted share, for the comparable 2015 period.

"We finished the year strong and delivered fourth-quarter and full-year results that exceeded the upper-end of our guidance," says Donald W. Slager, president and chief executive officer. "Our positive momentum continued throughout 2016 which resulted in full-year margin expansion, high-single digit earnings and free cash flow growth, and improved return on invested capital. Our solid results continue to reflect positive contributions from reinvesting back into the business and successfully executing our strategy of profitable growth through differentiation."

Fourth-quarter and full-year financial highlights include:

• Fourth-quarter adjusted diluted EPS was 57 cents per share.
• Full-year adjusted diluted EPS was $2.22, which exceeded the company's full-year guidance.
• Full-year cash provided by operating activities was approximately $1.8 billion and adjusted free cash flow was $885 million. Adjusted free cash flow was positively impacted by lower than anticipated cash taxes.
• Fourth-quarter revenue growth from average yield was 2.2 percent and volumes increased 0.5 percent. This continues to reflect Republic's ability to grow price and volume simultaneously.
• Full-year revenue growth from average yield was 2.1 percent, and volumes increased 1 percent. Both metrics were in line with the company's expectations.
• Fourth-quarter adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin was 27.9 percent, an improvement of 70 basis points from the comparable 2015 period.
• Full-year adjusted EBITDA margin was 28.3 percent, an improvement of 20 basis points from the prior year.
• Delivered total shareholder return of 32.8 percent during 2016, which exceeded the S&P 500 average by approximately 275 percent.
• Returned approximately $820 million to shareholders through share repurchases and dividends during 2016.

Fourth-quarter and full-year operational highlights, according to the company, included:

• Republic advanced its revenue-enhancing and customer-facing initiatives to improve customer experience, further differentiate its product and service offerings, and build customer loyalty. For example, the company:
  • increased the number of customers that do business with Republic digitally to approximately 1.8 million customers, up 50 percent from a year ago; 
  • expanded e-commerce capabilities to allow customers to purchase residential, small-container and temporary large-container services online; 
  • opened three new fully operational state-of-the art Customer Resource Centers; and
  • increased its Net Promoter Score on a year-over-year basis for the fifth straight year.
• The company advanced its fleet-based initiatives designed to improve productivity and lower costs. Currently:
• 18 percent of the fleet operates on natural gas, up from 16 percent in the prior year.
  • 74 percent of the residential fleet is automated, up from 72 percent in the prior year; and
  • 92 percent of the fleet is certified under Republic's standardized maintenance program, up from 78 percent in the prior year, and the company says it expects its entire fleet to be certified under the program by the second quarter of 2017.
• Republic advanced its sustainability platform and was recognized for its industry leading efforts. For example, the company:
  • was named to the 2016 Dow Jones Sustainability World Index and North America Index. Republic was the only company in the solid waste industry to be named to both indices and also was awarded the "Industry Mover" award by the Dow Jones Sustainability Index; and
  • was identified as a global leader for its actions and strategies in response to climate change and named to the Climate A List by the Carbon Disclosure Project and also was awarded a position on the Supplier Climate A List.

Republic's financial guidance is based on current economic conditions and does not assume any significant changes in the overall economy in 2017.

Specific guidance is as follows:

• Republic says it expects adjusted free cash flow to be $875 million to $900 million. Detail relating to the computation of adjusted free cash flow is contained in the Reconciliation of 2017 Financial Guidance section of this document.
• The company says it expects adjusted diluted earnings per share to be in the range of $2.32 to $2.36. Detail relating to the computation of adjusted diluted earnings per share is contained in the Reconciliation of 2017 Financial Guidance section of this document.
• Republic says it expects an increase in revenue of 4.5 to 5 percent comprised of receiving $975 million in net of proceeds from sales of property and equipment.
• Republic says expects adjusted EBITDA margin to expand by 20 to 40 basis points to a range of 28.5 to 28.7 percent.
• The company says it expects an effective tax rate of 39.5 percent.
• Republic says it expects to invest approximately $100 million in tuck-in acquisitions. Additionally, the company expects to return approximately $900 million total cash to shareholders, through $450 million of dividends and $450 million in share repurchases.

Slager says, "Our financial guidance is consistent with the preliminary outlook we provided last October demonstrating the visibility we have into our business and stability of our earnings and cash flows. During 2017, we will continue to advance our strategic initiatives, profitably grow our business, create value for our stakeholders and increase cash returns to our owners."

The full release is available here.