We Work for Earth.TM
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18500 N. Allied Way Phoenix, Arizona 85054 480-627-2700 TM RepublicServices.com 2018 Summary Annual Report We work for Earth. 7 | Republic Services, Inc. 2018 Summary Annual Report 1 | Republic Services, Inc. 2018 Summary Annual Report Table of Contents We Work for Earth 1 A Message to Our Shareholders 2 Awards & Recognition 4 Company Overview 5 Board of Directors Executive Leadership Team Corporate Information 6 This Summary Annual Report reflects Year-End 2018 numbers, except where noted. 2 We believe in the preservation of our Blue Planet®, a cleaner, safer and healthier world where people thrive – not just for today, but for generations to come. That’s why we work for Earth. We are 36,000 guardians of the Earth, and we have a responsibility to protect our environment from the materials we’re entrusted to handle every day by encouraging increased recycling, generating renewable energy and helping our customers be more resourceful. Republic Services, Inc. 2018 Summary Annual Report | 1 A Message to Our Shareholders The Republic Services team delivered another successful year of growth and strong financial performance in 2018. Our solid results reflect the positive contributions from effectively investing in the business and executing our strategy of Profitable Growth through Differentiation. We are very proud of the efforts of our employees who continue to put our customers first and enable the extraordinary work we do in communities across the country. STRONG FINANCIAL PERFORMANCE We made significant progress on multi-year initiatives designed 2018 achievements include double-digit growth in earnings and to improve the customer experience and deliver superior service. ® free cash flow per share, an over $200 million investment in Our MyResource customer portal and mobile app, as well as value-enhancing acquisitions and an increased return on invested our e-commerce sales channel, increased customer satisfaction, capital. We achieved our EPS guidance and exceeded our free interaction and connectivity — all while lowering our costs. As a cash flow guidance, demonstrating the underlying strength of the result, we achieved our highest pricing level in nearly a decade and solid waste business. We continued to invest in our business and an all-time low customer defection rate of sub-seven percent in capitalized on trends to drive both price and volume growth while the fourth quarter of the year. strengthening our market position. Financial highlights included Safety remains our number one priority. In fact, our safety $2.2 billion of cash flow from operations in 2018 and $1.2 billion incentives and industry-leading training programs continue to of adjusted free cash flow, which was a 26 percent increase facilitate safety performance that has been 40 percent better over the prior year. Positive momentum throughout the year than the industry average for 10 years running (based on OSHA resulted in adjusted EBITDA of $2.8 billion and adjusted EBITDA recordable rates). Our efforts in automation have facilitated margin of 28.0 percent. safer work environments, in addition to reduced labor costs and improved productivity. RETURNED TO SHAREHOLDERS We continue to evaluate innovative approaches and technologies to improve performance in all areas of our business. By 1.2B developing standardized processes with rigorous controls and ADJUSTED tracking, we have been able to leverage our scale and deliver consistent operational excellence. EPS 27% Our team seized an opportunity in 2018’s challenging recycling market to transform recycling into a more durable and ADJUSTED FREE economically sustainable business for the Company. We continue CASH FLOW to tightly manage operating costs and increase recycling collection and processing fees while transitioning many of our municipal 26% customers to a fee-based pricing model with shared risk. I’m proud of our Recycling Simplified campaign, which launched in We also continued our practice of returning excess cash to our 2018, and continues to educate consumers on what and how to shareholders while maintaining our investment-grade credit recycle in order to decrease contamination rates and protect our ratings. We returned $1.2 billion to shareholders through share Blue Planet. repurchases and dividends, representing a cash yield of 5.1 percent. Total shareholder return at the close of the year was approximately 9 percent, compared to the S&P 500’s negative WE WORK FOR EARTH return of 4 percent. It’s our 36,000 employees who continue to be the most critical part of successfully executing our strategy. Every day, they turn waste into possibility. We Work for Earth™ represents the collective DRIVING EXCELLENCE AND commitment to, and passion for, environmental responsibility, CONSISTENCY which helps us build a more relevant, durable and profitable As always, our efforts to serve our customers, our communities business. Leading by example, we are committed to being and our employees throughout the year were guided by what we responsible at every stage of our operations and we aim to set the refer to as The Republic Way: One Way. Everywhere. Every Day. highest standards in our 235 markets across the country. ENDNOTE: Adjusted free cash flow, adjusted EBITDA and adjusted EPS are defined in Republic’s Current Report on Form 8-K, dated February 7,2019. 2 | Republic Services, Inc. 2018 Summary Annual Report In 2018, we marked the achievement of the time-bound goals In 2018, the Republic Services Charitable Foundation affirmed our we set four years ago with the creation of our multifaceted, commitment to community engagement, philanthropic support enterprise-wide sustainability platform. Through investments in and neighborhood revitalization in the areas where our employees technology and our Profitable Growth through Differentiation and our customers live and work. The Foundation’s National strategy, we added an additional 150,000 tons per year of Neighborhood Promise™ charitable giving program enables us recycling capacity. We also reduced absolute fleet emissions by to grant funds to local nonprofit organizations to support three percent during this time through the use of Compressed projects including critical home repairs, community cleanups and Natural Gas (CNG) and Renewable Natural Gas (RNG). New landfill neighborhood revitalization efforts. gas-to-energy projects came online, increasing the production of energy used to power homes, businesses and, in some cases, our own vehicles. THE ROAD AHEAD Our strong finish to the year positions us well for 2019. As Today, approximately 20 percent of our overall fleet operates we look to the future, we expect to continue delivering on natural gas — including the vast majority of our vehicles in strong operational and financial performance, providing our California. Most notably, more than 90 percent of these California customers with outstanding service and creating long-term vehicles utilize RNG, which has the lowest carbon intensity of all value for shareholders. commercially available fuels. I state this with confidence because we’re passionate about our role as responsible stewards of our nation’s waste. We also We are committed to being take pride when these efforts are recognized by reputable third parties, which you’ll see highlighted on the following page. I want responsible at every stage of our to thank all of our employees for their relentless efforts to make operations and we aim to set the Republic Services America’s preferred recycling and waste services partner. It’s their dedication and hard work that resulted in these highest standards in our 235 distinguished awards and rankings throughout the year. markets across the country. I also would like to express my deep appreciation to our Board of Directors for its continued guidance and support. Finally, I It is no surprise that Republic is continually recognized for being sincerely thank you, our owners, for believing in The Republic Way. an employer of choice, because we offer more than just jobs. On behalf of the entire management team, I look forward Our growth results in even more opportunities for passionate to building on our success. individuals to build meaningful, ethical careers with the Company. In all our locations, we cultivate a culture in which our entire team feels welcomed and valued. This includes access to experiential onboarding and leadership training, as well as fair and competitive wages and benefits. We developed new strategies and activities in 2018 to continue DONALD W. SLAGER creating a more diverse workforce and inclusive workplace. This President and Chief Executive Officer includes an approach to recruiting that focuses on attracting a diverse pool of candidates. Our annual employee engagement survey confirms that our workforce continues to outperform industry and competitor benchmarks. Republic Services, Inc. 2018 Summary Annual Report | 3 Awards & Recognition 2018 marked the launch of our Recycling Simplified consumer education campaign. Visit RecyclingSimplified.com to learn more. 4 | Republic Services, Inc. 2018 Summary Annual Report COMPANY OVERVIEW 36K 14M $10B EMPLOYEES CUSTOMERS IN REVENUE $200M+ 4.9M IN ACQUISITIONS PICK-UPS PER DAY 41 40% states & BETTER SAFETY 20% Puerto Rico PERFORMANCE THAN THE OF FLEET POWERED INDUSTRY AVERAGE BY NATURAL GAS Based on OSHA recordable rates largest vocational TH fleet in the nation 75 with 16K trucks LANDFILL GAS 7 & RENEWABLE ENERGY PROJECTS 349 190 207 HAULING ACTIVE, MODERN-DAY TRANSFER FACILITIES LANDFILLS STATIONS 91