Teachers reduces its position in Republic Services
Teachers pension fund: Main position trades in 4Q14 (Part 11 of 11)
Teachers and Republic Services
The Ontario Teachers’ Pension Plan, also known ad “Teachers,” lowered its position in Republic Services (RSG) during the quarter that ended in December. The fund currently owns 1,638,036 shares, down from 4,578,881 shares in the third quarter. The position represents 0.50% of the fund’s total fourth-quarter portfolio.
Republic Services makes up 0.52% of the Industrial Select Sector SPDR Fund (XLI).
Overview of Republic Services
Republic Services operates in the US recycling and non-hazardous solid waste industry. Through its subsidiary collection companies, transfer stations, recycling centers, and landfills, Republic provides environmental services and solutions for commercial, industrial, municipal, and residential customers.
Republic Services (RSG) manages and evaluates its operations through three regions that are also its reportable segments—East, Central, and West. These segments provide integrated waste management services consisting of collection, transfer, recycling, and disposal of domestic non-hazardous solid waste.
Acquisition strategy
Republic notes in its annual filing that it “acquires businesses in the waste industry, including non-hazardous waste collection, transfer, recycling and disposal operations, as part of [our] growth strategy.” It expects to “maintain a steady pace of tuck-in acquisition investment of approximately $100 million annually.”
RSG recently acquired Tervita, LLC, a subsidiary of Tervita Corporation. Tervita is a “pure-play environmental waste solutions provider serving oil and natural gas producers in the United States . Tervita’s geographic footprint spans across some of the most attractive domestic basins, including the Permian, Eagle Ford and Bakken.”
RSG peer Clean Harbors (CLH) recently announced the spin-off of its Oil and Gas Field Services business as “overall conditions for the Oil and Gas Field Services segment were not favorable near-term as seismic business continues to underperform and energy markets remain under commodity pressure.”
Another peer, Waste Connections (WCN), also said recently that “Exploration and production waste activity will undoubtedly be impacted by the recent precipitous drop in crude oil prices.” These conditions could also impact other exploration and production waste treatment solutions providers including Waste Management (WM) and Progressive Waste Solutions (BIN).
Net income impacted by charges
While 4Q14 results met expectations, net income fell to $50.3 million compared to $236.6 million in the same period a year ago. Revenue was $2.22 billion, compared to $2.14 billion in the same period a year ago. The company said its net income was impacted by “certain expenses and benefits.” It added that it saw “a $0.32 charge for future remediation and other related costs at its [closed] Bridgeton Landfill. The $0.32 charge primarily reflects future expected costs to operate and manage the Bridgeton Landfill over the next 35 years, but was recorded as an up-front charge in 2014.”
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