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_________________________________________________________ 

 _________________________________________________________

(Mark One)

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                     

_________________________________________________________ 

_________________________________________________________ 

Delaware						65-0716904
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
18500 North Allied Way						85054
Phoenix,			Arizona
(Address of principal executive offices)						(Zip Code)

_________________________________________________________ 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class			Trading Symbol(s)			Name of each exchange on which registered
Common Stock, par value $0.01 per share			RSG			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  þ    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

þ

Accelerated filer

¨

Smaller reporting company

☐

Non-accelerated filer

¨

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  þ

As of October 19, 2023, the registrant had outstanding 314,636,503 shares of Common Stock, par value $0.01 per share (excluding treasury shares of 6,081,110).

 

PART I — FINANCIAL INFORMATION
Item 1.			Financial Statements			3
			Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022			3
			Unaudited Consolidated Statement of Income for the Three and Nine Months Ended September 30, 2023 and 2022			4
			Unaudited Consolidated Statement of Comprehensive Income for the Three and Nine Months Ended September 30, 2023 and 2022			5
			Unaudited Consolidated Statement of Stockholders' Equity for the Three and Nine Months Ended September 30, 2023 and 2022			6
			Unaudited Consolidated Statement of Cash Flows for the Nine Months Ended September 30, 2023 and 2022			8
			Notes to Unaudited Consolidated Financial Statements			9
Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations			32
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			49
Item 4.			Controls and Procedures			50
PART II — OTHER INFORMATION
Item 1.			Legal Proceedings			51
Item 1A.			Risk Factors			51
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds, and Issuer Purchases of Equity Securities			52
Item 3.			Defaults upon Senior Securities			52
Item 4.			Mine Safety Disclosures			52
Item 5.			Other Information			52
Item 6.			Exhibits			53
			Signatures			54

 

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Revenue			$	3,825.9					$	3,597.8					$	11,132.9					$	9,981.5
Expenses:
Cost of operations			2,284.3						2,194.2						6,678.0						6,023.6
Depreciation, amortization and depletion			382.3						353.9						1,099.4						1,001.8
Accretion			24.6						22.8						73.2						66.9
Selling, general and administrative			402.1						361.0						1,177.3						1,059.0
Withdrawal costs - multiemployer pension funds			—						—						—						2.2
Gain on business divestitures and impairments, net			(1.5)						(5.2)						(1.5)						(5.3)
Restructuring charges			6.3						6.8						27.3						18.8
Operating income			727.8						664.3						2,079.2						1,814.5
Interest expense			(127.6)						(105.2)						(378.8)						(282.7)
Loss on extinguishment of debt			—						—						(0.2)						—
Income (loss) from unconsolidated equity method investments			2.8						(51.8)						0.2						(69.2)
Interest income			2.0						0.8						5.0						2.0
Other income (expense), net			1.3						(0.3)						3.2						(6.5)
Income before income taxes			606.3						507.8						1,708.6						1,458.1
Provision for income taxes			126.0						90.9						416.9						317.5
Net income			480.3						416.9						1,291.7						1,140.6
Net (loss) income attributable to non-controlling interests in consolidated subsidiary			(0.1)						—						(0.3)						0.2
Net income attributable to Republic Services, Inc.			$	480.2					$	416.9					$	1,291.4					$	1,140.8
Basic earnings per share attributable to Republic Services, Inc. stockholders:
Basic earnings per share			$	1.52					$	1.32					$	4.08					$	3.60
Weighted average common shares outstanding			316.1						316.5						316.5						316.5
Diluted earnings per share attributable to Republic Services, Inc. stockholders:
Diluted earnings per share			$	1.52					$	1.32					$	4.07					$	3.60
Weighted average common and common equivalent shares outstanding			316.6						317.0						317.0						317.1
Cash dividends per common share			$	0.535					$	0.495					$	1.525					$	1.415

 

			Three Months Ended September 30,												Nine Months Ended September 30,
			2023						2022						2023						2022
Net income			$	480.3					$	416.9					$	1,291.7					$	1,140.6
Other comprehensive income (loss), net of tax
Hedging activity:
Realized (income) loss reclassified into earnings			(2.3)						—						(7.1)						2.1
Unrealized gain			4.1						9.1						16.6						8.1
Pension activity:
Change in funded status of pension plan obligations			—						—						0.2						—
Foreign currency activity:
Unrealized gain (loss) on foreign currency translation			2.4						(6.1)						(0.1)						(6.2)
Other comprehensive income, net of tax			4.2						3.0						9.6						4.0
Comprehensive income			484.5						419.9						1,301.3						1,144.6
Comprehensive (income) loss attributable to non-controlling interests			(0.1)						—						(0.3)						0.2
Comprehensive income attributable to Republic Services, Inc.			$	484.4					$	419.9					$	1,301.0					$	1,144.8

Republic Services, Inc., a Delaware corporation, and its consolidated subsidiaries (also referred to collectively as Republic, the Company, we, us, or our), is one of the largest providers of environmental services in the United States, as measured by revenue. Our senior management evaluates, oversees and manages the financial performance of our operations through three field groups, referred to as Group 1, Group 2 and Group 3. Group 1 is our recycling and solid waste business operating primarily in geographic areas located in the western United States. Group 2 is our recycling and solid waste business operating primarily in geographic areas located in the southeastern and mid-western United States, the eastern seaboard of the United States, and Canada. Group 3 is our environmental solutions business operating primarily in geographic areas located across the United States and Canada. These groups represent our reportable segments, which each provide integrated environmental services, including but not limited to collection, transfer, recycling, and disposal. Prior to the third quarter of 2022, our environmental services operating segment, now referred to as our Group 3 reportable segment, was aggregated with Corporate entities and other.

The unaudited consolidated financial statements include the accounts of Republic Services, Inc. and its wholly owned and majority owned subsidiaries in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). We account for investments in entities in which we do not have a controlling financial interest under the equity method of accounting or, for investments that do not meet the criteria to be accounted for under the equity method, we reflect these investments at their fair value when it is readily determinable. If fair value is not readily determinable, we use an alternative measurement approach. All material intercompany accounts and transactions have been eliminated in consolidation.

We have prepared these unaudited consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information related to our organization, significant accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, these financial statements include all adjustments that, unless otherwise disclosed, are of a normal recurring nature and necessary for a fair presentation of the financial position, results of operations and cash flows for the periods presented. Operating results for interim periods are not necessarily indicative of the results you can expect for a full year. You should read these financial statements in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

For comparative purposes, certain prior year amounts have been reclassified to conform to the current year presentation. All dollar amounts in tabular presentations are in millions, except per share amounts and unless otherwise noted.

In preparing our financial statements, we make numerous estimates and assumptions that affect the amounts reported in these financial statements and accompanying notes. We must make these estimates and assumptions because certain information we use is dependent on future events, cannot be calculated with a high degree of precision from data available or simply cannot be readily calculated based on generally accepted methodologies. In preparing our financial statements, the more critical and subjective areas that deal with the greatest amount of uncertainty relate to our accounting for our long-lived assets, including recoverability, landfill development costs, and final capping, closure and post-closure costs; our valuation allowances for accounts receivable and deferred tax assets; our liabilities for potential litigation, claims and assessments; our liabilities for environmental remediation, multiemployer pension funds, employee benefit plans, deferred taxes, uncertain tax positions, and insurance reserves; and our estimates of the fair values of assets acquired and liabilities assumed in acquisitions. Each of these items is discussed in more detail in our description of our significant accounting policies in Note 2, Summary of Significant Accounting Policies, of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. Our actual results may differ significantly from our estimates.

In September 2022, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations. The ASU requires buyers to disclose information about their supplier finance programs. Interim and annual requirements include the disclosure of outstanding amounts under the obligations as of the end of the reporting period, and annual requirements include a rollforward of those obligations for the annual reporting period, as well as a description of payment and other key terms of the programs.

This update is effective for annual periods beginning after December 15, 2022, and interim periods within those fiscal years, except for the requirement to disclose rollforward information, which is effective for fiscal years beginning after December 15, 2023. The adoption of ASU 2022-04 on January 1, 2023 did not have a material impact on our consolidated financial statements.

Through September 30, 2023, certain of our vendors chose to opt into our vendor supply finance agreement. This agreement allows a vendor to choose, on an invoice by invoice basis, to receive an earlier payment instead of a payment based on its original contracted terms (which, depending on the vendor, could extend up to 90 days or longer). As of September 30, 2023 and December 31, 2022, the amounts outstanding under these programs were not material.

In October 2023, the FASB issued ASU 2023-06 to modify the disclosure or presentation requirements of a variety of topics, which will allow users to more easily compare entities subject to the SEC's existing disclosures with those entities that were not previously subject to the SEC's requirements, and to align the requirements in the FASB accounting standard codification with the SEC's regulations. The Company is currently evaluating the provisions of the amendments and the impact on its future consolidated financial statements.

We acquired various environmental services businesses during the nine months ended September 30, 2023 and 2022. The aggregate purchase price paid for these business acquisitions and the allocations of the aggregate purchase price follows:

			2023						2022
Purchase price:
Cash used in acquisitions, net of cash acquired of $15.2 and $66.6, respectively			$	938.0					$	2,583.2
Holdbacks			9.4						12.6
Fair value, future minimum finance lease payments			0.6						15.6
Total			$	948.0					$	2,611.4
Allocated as follows:
Accounts receivable			$	25.5					$	249.2
Prepaid expenses			0.9						15.6
Landfill development costs			0.5						495.7
Property and equipment			223.9						730.6
Operating right-of-use lease assets			3.4						55.4
Interest rate swap			—						29.1
Other assets			0.1						42.3
Inventory			2.1						11.6
Accounts payable			(5.6)						(108.9)
Deferred revenue			(8.2)						(27.7)
Environmental remediation liabilities			(5.6)						(92.9)
Closure and post-closure liabilities			(10.5)						(89.3)
Operating right-of-use lease liabilities			(3.4)						(55.8)
Deferred income tax liabilities			(23.6)						(151.0)
Other liabilities			(0.3)						(54.7)
Fair value of tangible assets acquired and liabilities assumed			199.2						1,049.2
Excess purchase price to be allocated			$	748.8					$	1,562.2
Excess purchase price allocated as follows:
Other intangible assets			$	136.0					$	169.6
Goodwill			612.8						1,392.6
Total allocated			$	748.8					$	1,562.2

Certain of the purchase price allocations are preliminary and based on information existing at the acquisition dates. Accordingly, the purchase price allocations are subject to change. For the acquisitions that closed during the nine months ended September 30, 2023, we expect that a majority of the goodwill and intangible assets recognized as a result of these acquisitions will be deductible for tax purposes.

These acquisitions are not material to the Company's results of operations, individually or in the aggregate. As a result, no pro forma financial information is provided.

On May 2, 2022, we acquired all outstanding equity of US Ecology, Inc. (US Ecology) in a transaction valued at $2.2 billion. US Ecology is a leading provider of environmental solutions offering treatment, recycling and disposal of hazardous, non-hazardous and specialty waste. As of June 30, 2023, we finalized the purchase price allocation. We did not step-up the tax basis of the assets recognized in connection with the US Ecology acquisition, and do not expect that the goodwill and intangible assets recognized will be deductible for tax purposes.

During the nine months ended September 30, 2023 and 2022, we incurred $24.3 million and $65.4 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology. During the three months ended September 30, 2023 and 2022, we incurred $6.2 million and $8.7 million, respectively, of acquisition integration and deal costs in connection with the acquisition of US Ecology. The 2023 costs primarily related to the integration of certain software systems as well as rebranding of the business, and the 2022 costs included certain costs to close the acquisition and integrate the business.

In June 2023, we acquired a vertically-integrated set of operations located primarily in Colorado from GFL Environmental Inc., including recycling, hauling, transfer and landfill operations. The purchase price allocation is preliminary and remains subject to revision as additional information is obtained about the facts and circumstances that existed at the valuation date. The preliminary allocation of purchase price, including the value assigned to tangible and intangible assets acquired as well as certain landfill and environmental liabilities assumed, is based on the best estimates of management and is subject to revision based on the final valuations. We expect our valuations to be substantially complete by the end of 2023.

In 2023 and 2022, we acquired non-controlling equity interests in certain limited liability companies that qualified for investment tax credits under Section 48 of the Internal Revenue Code. In exchange for our non-controlling interests, we made capital contributions of $34.0 million and $121.0 million, which were recorded to other assets in our September 30, 2023 and 2022 consolidated balance sheets, respectively. During the three and nine months ended September 30, 2023, we decreased the carrying value of these investments by $3.7 million and $6.3 million, respectively, and during the three and nine months ended September 30, 2022, we decreased the carrying value of these investments by $49.5 million and $61.8 million, respectively, as a result of cash distributions and our share of income and loss pursuant to the terms of the limited liability company agreements. Additionally, our tax provisions reflect benefits of approximately $8 million for the three and nine months ended September 30, 2023, and benefits of approximately $35 million and $60 million, respectively, for the three and nine months ended September 30, 2022, due to the tax credits related to these investments. For further discussion of the income tax benefits, refer to Note 11, Income Taxes, in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022.

During the three and nine months ended September 30, 2023, we incurred restructuring charges of $6.3 million and $27.3 million, respectively, and during the three and nine months ended September 30, 2022, we incurred restructuring charges of $6.8 million and $18.8 million, respectively. Of the 2023 charges, $9.5 million related to the early termination of certain leases and $17.8 million related to the redesign of our asset management, and customer and order management software systems, and the 2022 charges primarily related to the redesign of our general ledger, budgeting and procurement enterprise resource planning systems which was completed with systems being placed into production in 2022. During the nine months ended September 30, 2023 and 2022, we paid $32.4 million and $17.0 million, respectively, related to these restructuring efforts.

A summary of the activity and balances in goodwill accounts by reporting segment follows:

						Balance as of December 31, 2022						Acquisitions						Divestitures						Adjustments to Acquisitions						Balance as of September 30, 2023
Group 1						$	6,637.9					$	445.5					$	—					$	(0.9)					$	7,082.5
Group 2						6,238.3						167.3						(0.6)						0.9						6,405.9
Group 3						1,575.3						—						—						227.0						1,802.3
Total						$	14,451.5					$	612.8					$	(0.6)					$	227.0					$	15,290.7

Adjustments to acquisitions during the nine months ended September 30, 2023 primarily related to changes in our valuation of assets acquired and liabilities assumed in connection with our acquisition of US Ecology.

Other intangible assets, net, include values assigned to customer relationships, non-compete agreements and trade names, and are amortized over periods ranging from 1 to 15 years. A summary of the activity and balances by intangible asset type follows:

A summary of prepaid expenses and other current assets as of September 30, 2023 and December 31, 2022 follows:

			2023						2022
Prepaid expenses			$	135.0					$	114.3
Inventories			100.0						96.6
Other non-trade receivables			53.9						59.8
Reinsurance receivable			33.4						31.9
Prepaid fees for cloud-based hosting arrangements, current			14.0						14.4
Income taxes receivable			10.8						214.0
Derivative and hedging assets			10.5						—
Other current assets			3.6						5.5
Total			$	361.2					$	536.5