Republic Services Inc., Phoenix, has reported net income of $664.4 million, or $1.98 per diluted share, for 4Q 2017, versus $189.5 million, or $0.55 per diluted share, for the comparable 2016 period. Excluding certain benefits and expenses on an adjusted basis, net income for 4Q 2017 was $203.8 million, or $0.61 per diluted share, versus $193.8 million, or $0.57 per diluted share, for the comparable 2016 period.
For 4Q 2017, net income was $1,278.4 million, or $3.77 per diluted share, versus $612.6 million, or $1.78 per diluted share, for the comparable 2016 period. On an adjusted basis, net income for 4Q 2017, was $822.2 million, or $2.43 per diluted share, versus $763.3 million, or $2.22 per diluted share, for the comparable 2016 period.
"We finished the year strong and delivered full-year results that exceeded the upper end of our guidance range," Donald Slager, president and CEO of Republic, says. "By continuing to focus on attracting and retaining the best employees and delivering products and services that meet our customers' wants and needs, we delivered high single-digit growth in revenue, earnings and free cash flow per share as well as increased our return on invested capital and cash returned to shareholders. Our solid results continue to reflect positive contributions from effectively investing in the business and successfully executing our strategy of profitable growth through differentiation."
4Q and full year financial highlights include:
- 4Q 2017 adjusted diluted earnings per share (EPS) was $0.61 per share. Adjusted diluted EPS was positively impacted by a net 3-cent contribution from lower taxes.
- Full year adjusted diluted EPS was $2.43, which exceeded the high end of the company's upwardly revised guidance by 4 cents.
- Full year cash provided by operating activities was $1.9 billion and adjusted free cash flow was $934 million, which exceeded Republic's full year guidance.
- 4Q 2017 total revenue increased 7.6 percent over the prior year. Revenue growth from average yield was 2.4 percent and volumes increased 2.7 percent, resulting in over 5 percent organic revenue growth.
- Full year total revenue increased 7 percent over the prior year. Revenue growth from average yield was 2.5 percent, the company's highest level of average yield since 2009. Volumes increased 1.8 percent.
- Full year adjusted earnings before interest, tax, depreciation and amortization (EBITDA) was $2.8 billion and adjusted EBITDA margin was 27.7 percent.
- Republic returned $1.1 billion to shareholders in 2017 through share repurchases and dividends, representing a cash yield of 5.1 percent.
Full year operational highlights include:
- The company invested $437 million in acquisitions during 2017.
- Republic continued to convert consumer price index (CPI)-based contracts to more favorable pricing mechanisms for the annual price adjustment. The company now has approximately $530 million in annual revenue tied to either a waste-related index or a fixed-rate increase of 3 percent or greater.
- Republic completed its standardized maintenance initiative and certified its entire fleet under the program.
- The company advanced its fleet-based initiatives designed to improve productivity and lower costs. Currently 19 percent of the fleet operates on natural gas, up from 18 percent in the prior year, and 75 percent of the residential fleet is automated, up from 74 percent in the prior year.
Republic was recognized for its leading performance in several key areas including employee engagement, ethics and sustainability. For example, the company was named to the:
- Forbes 2017 America's Best Large Employers list and was the recipient of the Glassdoor Employees' Choice Award. Republic was the only recycling and waste services company to receive either recognition;
- 2017 World's Most Ethical Companies List by the Ethisphere Institute; and
- 2017 Dow Jones Sustainability World and North America Indices for the second consecutive year. Republic was the only recycling and solid waste service provider in the world to be included in either index this year.
Republic's financial guidance is based on current economic conditions and does not assume any significant changes in the overall economy in 2018. The company's guidance reflects the benefit from tax reform as well as the adoption of the new revenue recognition standard.
Specific guidance is as follows:
- Adjusted free cash flow: Republic expects adjusted free cash flow to be $1,090 million to $1,115 million, an increase of 18 percent over the prior year
- Adjusted diluted earnings per share: The company expects adjusted diluted earnings per share to be in the range of $3.05 to $3.10, an increase of 27 percent over the prior year.
- Revenue: Republic expects an increase in revenue of 4 to 4.5 percent, excluding the impact of adopting the new revenue recognition standard. The change in revenue is comprised of property and equipment, where Republic anticipates receiving $1,050 million of property and equipment, net of proceeds from the sale of property and equipment; margin, where Republic expects adjusted EBITDA margin to expand by approximately 110 to 130 basis points to 28.8 to 29.0 percent; taxes, where the expects an effective tax rate of approximately 27 percent; and cash utilization, where Republic expects to invest over $150 million in tuck-in acquisitions.
Additionally, the company expects to return approximately $1.2 billion total cash to shareholders, through $450 million of dividends and $775 million in share repurchases.
"Aside from the impact of tax reform, our financial guidance is consistent with the preliminary outlook we provided last October demonstrating the visibility we have into our business and the stability of our earnings and cash flows," Slager says. "Republic will benefit substantially from tax reform. As a result, it is our responsibility and intention to invest and deploy the additional cash flow in a manner that will provide benefits to our employees, customers, communities and shareholders that are not only meaningful, but also sustainable."
Republic also announced that its board of directors declared a regular quarterly dividend of $0.345 per share for stockholders of record on April 2, 2018. The dividend will be paid on April 16, 2018.