01—Abstract
Summary
Summary of the 10-K filed February 23, 2021. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its 2020 full-year results, demonstrating resilience despite the economic impacts of the COVID-19 pandemic.
The company maintained its position as a leading provider of environmental services in the U.S., operating a vast network of facilities across 41 states. Financially, RSG generated revenue of $10.15 billiona, a slight decrease of 1.4% year-over-year, primarily attributed to reduced volumes stemming from the pandemic. However, the company managed its costs effectively, with operating income remaining strong at $1.71 billion.
RSG continued its commitment to shareholder returns through dividends and share repurchases, reflecting a stable financial strategy supported by its investment-grade credit ratings. The company also highlighted its strategic focus on operational efficiency, sustainability, and technological advancement as key drivers for future profitable growth.
02—Key points
Key Highlights
- Republic Services reported $10.15 billion in revenue for 2020, a 1.4% decrease year-over-year, largely due to pandemic-related volume declines.
- The company maintained a robust operating income of $1.71 billion, demonstrating effective cost management.
- RSG is committed to shareholder returns, with a quarterly dividend of $0.425 per share and an ongoing $2.0 billion share repurchase authorization.
- The company's operational strategy is underpinned by three foundational elements: market position, operating model ('The Republic Way'), and human capital management.
- Republic Services continues to invest in fleet modernization, with 77% of residential routes automated and ongoing pilots for electric trucks.
- The company is focused on sustainability, with ambitious 2030 goals including reducing Scope 1 and 2 greenhouse gas emissions by 35% and increasing the recovery of key materials by 40%.
- Despite a challenging environment, RSG managed its debt effectively, maintaining investment-grade credit ratings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Republic Services, Inc. kept $0.10.
- Revenue$10.15B100.0%
- Cost of revenue−$6.10B60.1%
- Gross profit$4.05B39.9%
- Operating costs−$2.34B23.1%
- Operating income$1.71B16.8%
- Interest, other & tax−$739.5M7.3%
- Net income$969.6M9.5%
Where FY2020 revenue went
$10.15B- Cost of revenue: $6.10B, 60% of revenue
- Other operating costs: $1.29B, 13% of revenue
- Net income: $969.6M, 9.5% of revenue
- SG&A: $1.05B, 10% of revenue
- Interest, other & tax: $739.5M, 7.3% of revenue
Kept 9.5% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 23, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $10.15B$10.30B | −1.4% |
| Cost of Revenue | $6.10B$6.30B | −3.1% |
| Gross Profit | $4.05B$4.00B | +1.3% |
| SG&A Expenses | $1.05B$1.09B | −3.6% |
| Operating Income | $1.71B$1.79B | −4.4% |
| Interest Expense | $355.60M$392.00M | −9.3% |
| Net Income | $969.60M$1.07B | −9.7% |
| EPS (Basic) | $3.03$3.34 | −9.3% |
| EPS (Diluted) | $3.02$3.33 | −9.3% |
| Shares Outstanding (Basic) | 319.28M321.06M | −0.6% |
| Shares Outstanding (Diluted) | 319.84M321.99M | −0.7% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic impact Republic Services' financial performance in 2020?
The COVID-19 pandemic led to a decrease in revenue by 1.4% to $10.15 billion, primarily due to reduced collection volumes from small- and large-container customers and a decline in landfill/transfer station volumes. The company incurred approximately $68.4 million in incremental costs directly related to the pandemic, such as safety equipment and cleaning, but also experienced cost savings in variable operating expenses.
What is Republic Services' strategy for profitable growth?
RSG's strategy focuses on profitable growth through three foundational elements: developing a leading market position (aiming for #1 or #2 in each market), executing a standardized operating model ('The Republic Way') for efficiency, and investing in human capital. Growth is driven by internal factors like volume and price increases, and external factors such as acquisitions and public-private partnerships. The company also prioritizes sustainability and digital capabilities to differentiate itself.
How is Republic Services managing its debt and returning capital to shareholders?
As of December 31, 2020, RSG had approximately $9 billion in debt and maintained investment-grade credit ratings. The company's cash utilization strategy involves investing in acquisitions and returning free cash flow to shareholders through dividends and share repurchases. The Board approved a $2.0 billion share repurchase authorization for 2021-2023, and quarterly dividends have been increased, demonstrating a commitment to shareholder value.
What are the key risks facing Republic Services?
Key risks include intense competition in the environmental services industry, fluctuations in fuel and recycled commodity prices, the potential for increased operating costs not fully offset by price increases, the capital-intensive nature of the business, and the impact of environmental and flow control regulations. The company also faces risks related to cybersecurity, climate change, and potential disruptions from labor actions or severe weather.
06—Continue