Summary
Republic Services, Inc. (RSG) reported its third-quarter 2008 financial results, showing a revenue increase of 3.4% to $834.0 million for the quarter and 2.5% to $2,440.7 million for the nine months ended September 30, 2008. Net income for the quarter rose to $88.7 million ($0.48 per diluted share) from $67.0 million ($0.35 per diluted share) in the prior year quarter, though net income for the nine-month period slightly decreased to $205.5 million ($1.11 per diluted share) from $208.1 million ($1.08 per diluted share) in the comparable 2007 period. The company is significantly impacted by substantial environmental charges related to the Countywide and Sunrise landfills, which affected profitability, particularly in the first nine months of the year. A major development is the pending merger with Allied Waste Industries, Inc., expected to close in the fourth quarter of 2008, which has led to the suspension of the company's share repurchase program and significant capitalized transaction costs. Financially, the company maintained a solid balance sheet with total assets of $4,606.5 million. While long-term debt decreased to $1,497.2 million from $1,565.5 million, accrued landfill and environmental costs increased significantly to $377.1 million, largely due to remediation efforts. The company also secured a new $1.75 billion revolving credit facility, enhancing its liquidity. Investors should monitor the successful integration of the Allied Waste merger, the resolution of significant environmental liabilities, and the company's ability to maintain pricing power and manage operational costs, especially fuel, in the prevailing economic climate.
Financial Highlights
31 data points| Revenue | $834.00M |
| Cost of Revenue | $499.50M |
| Gross Profit | $334.50M |
| SG&A Expenses | $85.60M |
| Operating Income | $167.00M |
| Interest Expense | $22.60M |
| Net Income | $88.70M |
| EPS (Basic) | $0.49 |
| EPS (Diluted) | $0.48 |
| Shares Outstanding (Basic) | 182.30M |
| Shares Outstanding (Diluted) | 184.10M |
Key Highlights
- 1Revenue increased by 3.4% year-over-year for the quarter to $834.0 million, driven by price increases and fuel surcharges, partially offset by volume declines.
- 2Net income for the three months ended September 30, 2008, increased to $88.7 million ($0.48 per diluted share) from $67.0 million ($0.35 per diluted share) in the prior year period.
- 3The company incurred significant pre-tax charges totaling $34.0 million related to environmental remediation at the Sunrise Landfill and $34.0 million for the Countywide facility, impacting profitability.
- 4A significant event is the proposed merger with Allied Waste Industries, Inc., expected to close in Q4 2008, with $33.3 million in capitalized transaction costs recorded.
- 5The company secured a new $1.75 billion revolving credit facility in September 2008, enhancing its liquidity, and had $308.2 million in availability under its existing credit lines.
- 6Accrued landfill and environmental costs rose substantially to $377.1 million from $279.2 million, reflecting ongoing remediation efforts and new orders.
- 7The company's share repurchase program remained suspended due to the planned merger with Allied.