Republic Services collected less volume last quarter than it did a year earlier. Revenue rose 4.6% anyway. That gap is the business Bill Gates has been buying since 2008.
You read this morning that Cascade Investment put $119 million into Republic Services on September 1 and 2. Tonight, let’s take the business itself apart.
Three questions I’ll answer
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What does a company that picks up trash actually sell? |
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How does revenue rise while the volume falls? |
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And why does Cascade now own more than a third of the company? |
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The Toll Booth at the End of the Route
Republic Services is the second-largest solid waste company in the United States: collection routes, transfer stations, recycling centers, and more than 200 landfills across North America. The trucks are the part you see. The landfills are the part that earns the money. Every ton collected has to end up somewhere, and in most of the country a new landfill can no longer be built — Republic’s own annual report says permitting one takes years with no assurance of success. Each permit the company already holds is an asset a competitor cannot copy at any price, and whoever controls disposal sets the toll for everything upstream.
Price Over Volume
In the June quarter, Republic’s organic volumes fell — they reduced revenue by 1.6%, with residential volumes down 4.3%. Revenue still rose 4.6% to $4.43 billion, because core price — the rate increase the company pushes through on existing customers, separate from fuel or recycling swings — rose 5.3%. That is pricing power in one line: nobody changes hauler over a few dollars a month on the invoice, and municipal contracts reset on a formula rather than a negotiation.
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Core price, Q2 2026
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+5.3%
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Volume contribution, Q2 2026
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−1.6%
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Adjusted EBITDA margin
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32.1%
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Adjusted EBITDA margin held at 32.1% — roughly 32 cents of operating cash profit on every revenue dollar, before interest, taxes and the trucks wearing out. Software companies earn margins like that; garbage companies are not supposed to. Management raised full-year free cash flow guidance to $2.54 billion to $2.575 billion.
What Cascade Owns
This is not a new idea for Bill Gates. Cascade Investment, his private holding company, has owned Republic Services since 2008. Its most recent Schedule 13D amendment — the filing required of an owner above 5% who is more than a passive investor — reported 112.4 million shares, or 36.7% of the 306.2 million outstanding as of July 30, with 1.6 million of them bought on the open market in the 60 days ended August 19. Form 4s since have carried the position above 113.9 million shares, before the September purchases this morning’s issue covered.
NATE’S TAKE
What I keep coming back to is that Cascade is not buying a forecast here. The price increases are contractual, the disposal capacity cannot be replicated, and the cash flow arrives whether the last jobs report was hot or cold. Eighteen years and more than a third of a company is a different act from a trade — it is a decision about what kind of asset you want to own when the rate path is the thing everyone else is arguing about. Whether the low $220s Cascade has been paying is the right price for that today is a separate question, and not one I’m answering for you.
— Nate Fowler
After the Bell · Evening Special Edition
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