Amid market disruption from China’s import restrictions, Republic Services continued to realize recycling revenue gains last year.
The Phoenix-headquartered company brought in $539.2 million in revenue from the sale of recyclables in 2017, up 28 percent over 2016. The increase was primarily due to higher prices for some commodities.
The total weight sold last year was 5 million tons, half of which was processed through Republic facilities and half was collected and delivered straight to third parties, according to Republic’s quarterly filing with the U.S. Securities and Exchange Commission (SEC). The 2.5 million tons flowing through company MRFs was flat year over year.
The majority of what Republic markets is fiber, including OCC, ONP and mixed paper.
Republic CEO Donald Slager told investors on a Feb. 8 conference call that the company is currently moving about 10 percent of its recovered fiber to China, down from a historical average of 30 percent. It has opened new markets in Europe and other parts of Asia, he said.
“I’ll remind you that we’ve always felt and we always do produce a pretty good quality product,” he said, according to a transcript from Seeking Alpha. “And so our recycle bales, et cetera, are pretty easy to move. We’ve never had to inventory material. We’ve never had to landfill material.”
The full-year recycling results don’t reveal the pricing instability that took place during the year, however. For the full year, Republic sold OCC for an average of $159 per ton, compared with $114 the year before. For ONP, the price last year averaged $100 a ton, compared with $99 a ton in 2016.
For the first half of the year, prices were in the $160 a ton range, Charles Serianni, Republic’s chief financial officer, said during the conference call. But later, values dropped. Commodity prices (excluding glass and organics) in the fourth quarter averaged $125 a ton, down 7 percent year over year.
In January, they were about $120 a ton.
Last year, Republic’s total revenue was $10 billion, up 7 percent year over year. Of that 7 percent increase, recycled commodities contributed 0.9 percentage points to the increase.
Sales of recyclables now makes up about 5.4 percent of the company’s operating revenue pie.
Republic is the second largest publicly traded garbage and recycling company in North America. The first and third largest, Waste Management and Waste Connections, will report their 2017 financial results on Feb. 15 and Feb. 14, respectively.
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