Republic Services’ environmental services business line generated $544 million in revenue in the third quarter, a $95 million improvement over the same period a year ago, the company announced in its earnings release Thursday. That growth, fueled in part by one-time emergency response jobs but also by underlying improvement, is a marked departure from the segment’s performance over the last year.
The company’s environmental services business was turbocharged in 2022 by its $2.2 billion acquisition of US Ecology, a sizable environmental services business. The following year, the company eyed $50 million in cost synergies through its integration of US Ecology and planned to boost its environmental services segment’s margin from 20% to 30%.
That goal led the company to begin pushing up the prices it bid for jobs handled by the segment. But last year, executives acknowledged that the company had taken too aggressive of an approach to pricing that was leading it to win fewer jobs than it would like.
By the company’s first quarter earnings call in May, CFO Brian DelGhiaccio said the company had corrected its strategy, telling analysts “we think we got market pricing very dialed in here.” For the environmental services segment in Q1, revenue was down 10% year over year, and in Q2, revenue was down 1%.
A portion of those declines could be attributed to difficult comparisons with the prior year due to one-time jobs. But in Q3 this year, revenue would have grown 9% year over year excluding such jobs.
CEO Jon Vander Ark said the company does thousands of smaller emergency response jobs every year, but the large jobs can make an outsized impact on the segment’s economics. He noted there was a dearth of larger jobs over the last 18 to 24 months that caused headwinds for the segment, but also said the team was doing a better job of leveraging its full capabilities.
“I think we're getting better and smarter every day,” Vander Ark said.
He also noted signs of growth in the business, and said he expected revenue growth through the rest of the year and into 2027. That’s driven by a broad-based increase in activity in the industrial economy, driven in part by reshoring activities. DelGhiaccio said Republic’s hazardous waste landfills, E&P facilities, TSDFs and field and industrial services all saw increased activity in Q3.
“I think we're seeing a reignition of growth in the sector, and we're certainly getting our fair share, and we feel probably more than our fair share right now,” Vander Ark said.
The company also continued to report positive results through the rest of the business. Republic logged a 7.2% increase in revenue from collection activities and a 14% increase in revenue from recycling processing and commodity sales.
The company revised up its full-year revenue guidance to a range of $17.425 billion to $17.475 billion and its adjusted earnings before income, taxes, depreciation and amortization guidance to a range of $5.55 billion to $5.575 billion.
