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REPUBLIC SERVICES, INC. (RSG)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue grew 5.6% YoY to $4,046M with GAAP EPS of $1.63 and adjusted EPS of $1.58; adjusted EBITDA margin expanded 110 bps YoY to 31.0% on pricing ahead of costs and modest tailwinds from fuel and commodities .
  • Organic pricing remained robust (core price +6.1% on total revenue; average yield +4.4%), while volumes declined 1.2% driven by residential pruning and continued construction softness; net income margin expanded 120 bps YoY to 12.7% .
  • 2025 guidance introduced: revenue $16.85–$16.95B, adjusted EBITDA $5.275–$5.325B, adjusted EPS $6.82–$6.90, adjusted FCF $2.32–$2.36B; management expects pricing > cost inflation, acquisition contribution, and digital/productivity gains to support growth .
  • Incremental 2025 contribution from sustainability investments (RNG, polymer centers): +$70M revenue and +$35M EBITDA; baseline recycled commodity assumption ~$145/ton and no CNG tax credits included (a ~$20M headwind), framing margin cadence and potential upside if commodities improve .

What Went Well and What Went Wrong

  • What Went Well

    • Continued margin expansion: Q4 adjusted EBITDA margin 31.0% (+110 bps YoY) on pricing above cost inflation and productivity; “we delivered adjusted EBITDA, EPS and free cash flow that exceeded our full year guidance” (CEO) .
    • Environmental Solutions (ES) strength: Q4 ES adjusted EBITDA margin 24.7% (+500+ bps YoY) with management seeing further runway post-ERP integration; “onward and upward with the business” (CEO) .
    • Digital execution: RISE fees created ~$60M incremental revenue in first year; Empower roll-out targeted for completion by end of 2025 with ~$20M annual savings at run-rate .

  • What Went Wrong

    • Volume headwinds: Q4 total volume -1.2% (large container pressured by construction softness; residential reduced by contract pruning), weighing on organic growth mix .
    • Commodities normalization QoQ: recycled commodity price per ton stepped down to ~$153 in Q4 (from $177 in Q3), modestly easing the tailwind sequentially .
    • 2025 headwinds embedded: no CNG tax credit (~$20M hit) and commodities held flat at ~$145/ton in the guide, tempering headline margin expansion despite stronger underlying expansion .

Financial Results

Headline results (YoY and QoQ comparison)

MetricQ4 2023Q3 2024Q4 2024
Revenue ($USD Millions)$3,832 $4,076.2 $4,046
Diluted EPS (GAAP) ($)$1.39 $1.80 $1.63
Adjusted EPS ($)$1.41 $1.81 $1.58
Net Income Margin (%)11.5% 13.9% 12.7%
Adjusted EBITDA ($USD Millions)$1,145 $1,303.3 $1,253
Adjusted EBITDA Margin (%)29.9% 32.0% 31.0%

Segment performance

SegmentQ3 2024 Revenue ($M)Q3 2024 Adj. EBITDA ($M)Q3 2024 Adj. EBITDA Margin (%)Q4 2024 Revenue ($M)Q4 2024 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA Margin (%)
Recycling & Waste$3,611.5 $1,185.0 32.8% $3,564 $1,134 31.8%
Environmental Solutions$464.7 $118.3 25.5% $482 $119 24.7%
Total$4,076.2 $1,303.3 32.0% $4,046 $1,253 31.0%

Operating KPIs

KPIQ4 2023Q3 2024Q4 2024
Core Price (Total Revenue) (%)7.2% 6.2% 6.1%
Average Yield (Total Revenue) (%)6.3% 4.6% 4.4%
Volume (Total Revenue) (%)0.3% (1.2%) (1.2%)
Avg Recycled Commodity Price ($/ton)$131 $177 $153

Additional items

  • Q4 net income: $512M; full-year CFO: $3.94B; adjusted FCF: $2.18B .
  • Dividend: $0.58/share declared for payment on April 15, 2025 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2025N/A$16.850B–$16.950B Introduced
Adjusted EBITDAFY 2025N/A$5.275B–$5.325B Introduced
Adjusted Diluted EPSFY 2025N/A$6.82–$6.90 Introduced
Adjusted Free Cash FlowFY 2025N/A$2.320B–$2.360B Introduced
Property & Equipment ReceivedFY 2025N/A$1.870B–$1.910B (in adj. FCF calc) Introduced
AcquisitionsFY 2025N/A~ $1B expected Introduced
DividendQ2 2025—$0.58/share payable Apr 15, 2025 Maintained cadence

Notes: 2025 guidance holds recycled commodities flat at $145/ton and excludes CNG tax credits ($20M headwind), and assumes net interest expense of ~$565M .

Earnings Call Themes & Trends

TopicQ2 2024 (Prior-2)Q3 2024 (Prior-1)Q4 2024 (Current)Trend
Pricing vs. cost inflationPricing > costs; margins +110 bps; core price 6.8% Pricing > costs; margins +210 bps; core price 6.2% Pricing > costs; margins +110 bps; core price 6.1% Stable positive spread
Volumes/cyclicalsConstruction softness; residential pruning Continued construction softness; residential pruning Volume -1.2%; construction soft; residential pruning Persistent headwind
Environmental SolutionsOrganic + acquisitions; margin +130 bps Margin +290 bps to 25.5% Q4 margin 24.7%; more M&A/organic to come Improving, moderating
Digital (RISE/Empower)RISE ~$60M, Empower $20M run-rate by 2026 Ongoing roll-out; $100M digital opportunity framework reiterated Empower phased through 2025; RISE still contributing Execution progressing
RNG/Polymer centersFort Wayne JV first-up; more projects 2H’24 2 RNG online in Q3; LV polymer ramp; Indy commissioning 2 RNG online in Q4; +1 in Jan; 7 total in 2025 Building contribution
Commodity pricesAssumed ~$170/ton in FY24 guide $177/ton in Q3; noted decline to ~$106 current at Q3 timing $153/ton in Q4; FY25 baseline ~$145/ton Normalizing
EV fleet & supply chain>50 EVs by YE’24; charging sites expanding EV orders and infra plans; supply chain catching up 52 EVs YE’24; >150 EVs by YE’25; 22 charging sites; supply chain resolved Scaling
Taxes/Credits~25.5% equivalent tax impact Q3 equivalent tax impact 21.6% (timing), FY ~25.5% FY equivalent tax 23.9%; 2025 ~25% (no CNG credit) Slight headwind in 2025
M&A cadence$300M+ advanced in Q2 ~$300M expected FY’24; 2025 pipeline building 2025 spend ~ $1B; 4 deals already included in guide Accelerating

Management Commentary

  • “We delivered adjusted EBITDA, EPS and free cash flow that exceeded our full year guidance.” — Jon Vander Ark, CEO .
  • “Margin performance… included margin expansion in the underlying business of 110 bps… partially offset by ~20 bps from acquisitions.” — Brian DelGhiaccio, CFO (Q4) .
  • “Empower… is anticipated to be completed by the end of 2025… will deliver $20 million of annual cost savings once fully implemented.” — CEO .
  • “Across our sustainability investments… incremental revenue of around $70 million and incremental EBITDA of $35 million [in 2025].” — CFO .
  • “We expect to deploy at least $1 billion of investment in value-creating acquisitions in 2025… guidance includes the contribution from acquisitions closed to date.” — CEO .

Q&A Highlights

  • Margin bridge: Underlying 50+ bps expansion in 2025 offset by ~10 bps commodities and 10 bps deal/integration costs; no CNG credit assumed ($20M/~10 bps), implying 60–70 bps underlying strength vs ~30 bps headline .
  • M&A pipeline: Expect ~$1B 2025 spend with a strong start; revenue rollover from deals closed to-date is ~1 pt of growth; 4 deals closed included in guidance .
  • Commodities sensitivity: ~$10/ton move in recycled commodities ≈ ~$10M annual EBITDA; FY25 baseline ~$145/ton .
  • Seasonality: Q1 is seasonally the lowest margin quarter; expect margin expansion in all quarters in 2025, more balanced cadence .
  • ES trajectory: Post-ERP integration, more cross-sell and mix/pricing discipline; continued (but moderating) margin expansion ahead .
  • EV/supply chain: 52 EVs in operation YE’24; supply chain “caught up”; automation ~77% of fleet .

Estimates Context

  • We attempted to pull Wall Street consensus estimates from S&P Global (Capital IQ) for Q4 2024, but access was unavailable due to a request limit. As a result, we cannot present vs-consensus comparisons for revenue or EPS this quarter (values could not be retrieved from S&P Global) [GetEstimates error].

Key Takeaways for Investors

  • Pricing power intact with core price +6.1% and average yield +4.4%, driving sustained margin expansion despite volume softness; Q4 adjusted EBITDA margin rose to 31.0% (+110 bps YoY) .
  • 2025 guide embeds conservative assumptions (commodities flat at ~$145/ton, no CNG credit) yet still targets growth in revenue, EBITDA, EPS, and FCF; underlying margin expansion likely stronger than headline .
  • Environmental Solutions is a structurally improving earnings stream (Q4 margin 24.7%) with further integration, mix, and pricing levers; management sees more M&A and organic growth in 2025 .
  • Sustainability investments add tangible earnings: 2025 incremental +$70M revenue and +$35M EBITDA across RNG and polymer centers, with additional medium-term runway as projects ramp .
  • Digital initiatives (RISE, Empower) are durable productivity drivers—RISE delivered ~$60M of fees in year one, Empower roll-out through 2025 targets ~$20M annual savings .
  • M&A is set to re-accelerate (~$1B targeted 2025), with a strong start already incorporated into guidance—supports top-line and footprint expansion .
  • Watch list: volume recovery tied to construction activity, recycled commodity pricing, and potential reinstatement of CNG credits; sensitivity: ~$10/ton commodities ≈ ~$10M EBITDA .