01—Abstract
Summary
Summary of the 10-K filed February 11, 2022. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported robust performance for the fiscal year ending December 31, 2021.
The company demonstrated significant revenue growth, driven by a combination of volume increases across key service lines and strategic acquisitions. Operational efficiency improved, reflected in a higher operating margin compared to the previous year. RSG's commitment to its "Republic Way" operating model, focusing on safety, talent development, and customer service, appears to be yielding positive results.
The company also continues to invest in fleet modernization, including CNG and electric vehicles, and digital solutions to enhance customer experience and operational efficiency. Shareholder returns were supported by dividend payments and a substantial share repurchase program, indicating a balanced approach to capital allocation. Looking ahead, RSG has outlined its 2022 financial guidance, projecting continued revenue and earnings growth, with a notable upcoming acquisition in the environmental solutions sector that is expected to further bolster its market position.
The company's financial health remains strong, supported by consistent cash flow generation and a commitment to maintaining investment-grade credit ratings. RSG's strategic focus on vertical integration within its markets, coupled with its market planning process, positions it well for both internal growth and external expansion through acquisitions.
The company's emphasis on sustainability and environmental responsibility is integrated into its core business strategy, aligning with increasing market demand for such services. While the company faces various risks inherent to the industry, including competition and regulatory changes, its diversified service offerings and national footprint provide a degree of resilience.
02—Key points
Key Highlights
- Revenue increased by 11.2% to $11.3 billion in 2021 compared to $10.15 billion in 2020, driven by volume growth, pricing increases, and acquisitions.
- Operating income grew to $2.08 billion, resulting in an operating margin of 18.4%, an improvement from 16.8% in 2020.
- Diluted earnings per share (EPS) for 2021 were $4.04, an increase from $3.02 in 2020. Adjusted diluted EPS was $4.17.
- Republic Services returned $563 million to shareholders through dividends and $252.2 million through share repurchases in 2021.
- The company continued to invest in fleet modernization, with 77% of residential routes automated and 21% of its fleet operating on Compressed Natural Gas (CNG).
- Republic Services announced a definitive agreement to acquire US Ecology, Inc. for approximately $2.2 billion, expanding its environmental solutions capabilities.
- The company projects revenue growth of 3.4% in average yield and 1.5%-2.0% in volume for 2022, with adjusted diluted EPS anticipated between $4.58 to $4.65.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Republic Services, Inc. kept $0.11.
- Revenue$11.29B100.0%
- Cost of revenue−$6.74B59.7%
- Gross profit$4.56B40.3%
- Operating costs−$2.48B22.0%
- Operating income$2.08B18.4%
- Interest, other & tax−$783.9M6.9%
- Net income$1.29B11.4%
Where FY2021 revenue went
$11.29B- Cost of revenue: $6.74B, 60% of revenue
- Net income: $1.29B, 11% of revenue
- SG&A: $1.20B, 11% of revenue
- Other operating costs: $1.29B, 11% of revenue
- Interest, other & tax: $783.9M, 6.9% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 11, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $11.29B$10.15B | +11.2% |
| Cost of Revenue | $6.74B$6.10B | +10.4% |
| Gross Profit | $4.56B$4.05B | +12.4% |
| SG&A Expenses | $1.20B$1.05B | +13.6% |
| Operating Income | $2.08B$1.71B | +21.5% |
| Interest Expense | $314.60M$355.60M | −11.5% |
| Net Income | $1.29B$969.60M | +33.3% |
| EPS (Basic) | $4.05$3.03 | +33.7% |
| EPS (Diluted) | $4.04$3.02 | +33.8% |
| Shares Outstanding (Basic) | 318.81M319.28M | −0.1% |
| Shares Outstanding (Diluted) | 319.43M319.84M | −0.1% |
05—Questions
Frequently Asked Questions
What was Republic Services' revenue and profit performance in 2021?
In 2021, Republic Services reported a significant increase in revenue to $11.3 billion, an 11.2% rise from 2020. This growth was driven by higher volumes, increased pricing (average yield), acquisitions, and improved recycling commodity prices. Operating income also saw a healthy increase to $2.08 billion, with an operating margin of 18.4%, up from 16.8% in 2020. Diluted earnings per share were $4.04, up from $3.02 in the prior year.
How is Republic Services managing its capital and returning value to shareholders?
Republic Services is actively managing its capital through a balanced approach. In 2021, the company returned capital to shareholders via $563 million in dividends and $252.2 million in share repurchases. The company has a $2.0 billion share repurchase authorization in place through 2023. Additionally, they plan to invest significantly in capital expenditures and acquisitions, including the notable pending acquisition of US Ecology.
What are Republic Services' key strategic priorities and outlook for 2022?
The company's strategy is focused on profitable growth, disciplined acquisitions, fostering an inclusive culture, delivering superior customer experiences, and advancing technology for operational excellence. For 2022, Republic Services guides for revenue growth driven by increases in average yield and volume. They also anticipate adjusted diluted earnings per share to be in the range of $4.58 to $4.65, reflecting confidence in continued performance improvement.
What is the significance of the US Ecology acquisition for Republic Services?
The pending acquisition of US Ecology, valued at approximately $2.2 billion, is a strategic move to enhance Republic Services' environmental solutions segment. US Ecology is a leading provider of hazardous, non-hazardous, and specialty waste treatment, recycling, and disposal services. This acquisition is expected to strengthen Republic Services' position in the broader environmental services market and is anticipated to be financed through a combination of existing and new debt.
06—Continue