01—Abstract
Summary
Summary of the 10-Q filed August 7, 2009. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its second-quarter 2009 financial results, highlighting the significant impact of its December 2008 merger with Allied Waste Industries.
Total revenue saw a substantial increase of 157% year-over-year, reaching $4.13 billiona for the six months ended June 30, 2009, primarily due to the consolidation of Allied's operations. Despite the revenue surge, the company is navigating a challenging economic environment, with internal revenue growth (excluding the merger's impact) showing a decline of 10.6% for the first six months of 2009, attributed to decreased volumes and lower commodity prices, partially offset by core price increases. The company generated strong operating income and free cash flow, demonstrating effective cost management and operational efficiencies post-merger.
Management is focused on integrating Allied, realizing synergies, and managing capital expenditures to maintain financial flexibility. The balance sheet reflects increased assets and liabilities following the merger. Total assets stood at $19.45 billionb, with goodwill representing a significant portion due to the acquisition.
Long-term debt remains substantial at $6.77 billionc, though the company maintains compliance with its debt covenants and possesses ample liquidity. The company also reported a substantial net income of $338.9 million for the first six months of 2009, a significant improvement from the prior year's $116.8 million, largely driven by the merger synergies and asset divestitures, partially offset by restructuring charges.
02—Key points
Key Highlights
- Revenue increased by 157% to $4.13 billion for the first six months of 2009, driven by the acquisition of Allied Waste Industries.
- The company reported a net income of $338.9 million for the first six months of 2009, a significant increase from $116.8 million in the prior year.
- Core revenue (excluding merger impact) declined by 10.6% for the first six months of 2009 due to lower volumes and commodity prices, partially offset by pricing initiatives.
- Operating income was $873.6 million for the first six months of 2009, with an operating margin of 21.2%, benefiting from merger synergies and asset divestiture gains.
- Free cash flow for the first six months of 2009 was $342.3 million, demonstrating continued operational cash generation despite economic headwinds.
- Total debt stood at $7.1 billion at June 30, 2009, with the company maintaining compliance with its debt covenants and sufficient liquidity.
- The company incurred $43.6 million in restructuring charges and recognized $145.2 million in gains from asset dispositions related to the Allied merger during the first six months of 2009.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2009, Republic Services, Inc. kept $0.11.
- Revenue$2.07B100.0%
- Cost of revenue−$1.23B59.4%
- Gross profit$839.2M40.6%
- Operating costs−$318.5M15.4%
- Operating income$520.7M25.2%
- Interest, other & tax−$294.8M14.3%
- Net income$225.9M10.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2009filed August 7, 2009Financial Statements
Q2 FY2009 against Q2 FY2008
| Line item | Q2 FY2009Q2 FY2008 | Change |
|---|---|---|
| Revenue | $2.07B$827.50M | +149.7% |
| Cost of Revenue | $1.23B$577.50M | +112.5% |
| Gross Profit | $839.20M$250.00M | +235.7% |
| SG&A Expenses | $215.80M$83.70M | +157.8% |
| Operating Income | $520.70M$85.60M | +508.3% |
| Interest Expense | $150.50M-$21.10M | +813.3% |
| Net Income | $225.90M$40.70M | +455.0% |
| EPS (Basic) | $0.60$0.22 | +172.7% |
| EPS (Diluted) | $0.59$0.22 | +168.2% |
| Shares Outstanding (Basic) | 379.17M182.00M | +108.3% |
| Shares Outstanding (Diluted) | 379.93M183.90M | +106.6% |
05—Questions
Frequently Asked Questions
What is the primary driver for the significant increase in revenue reported in this quarter?
The primary driver for the substantial increase in revenue is the acquisition of Allied Waste Industries, Inc., which was completed on December 5, 2008. This merger significantly expanded the company's scale and operational footprint.
How is the company managing the economic slowdown's impact on its business?
Republic Services is implementing cost control measures and pricing initiatives to mitigate the impact of reduced volumes and lower commodity prices. The company is also focusing on integrating the Allied merger to achieve cost synergies and is managing capital expenditures to maintain financial flexibility.
What is the company's debt situation, and is it managing its obligations effectively?
As of June 30, 2009, Republic Services had approximately $7.1 billion in total debt. The company reported it was in compliance with its debt covenants and had $730.1 million in available liquidity under its credit facilities, indicating it is managing its obligations effectively.
Are there any significant gains or charges impacting the reported financial results?
Yes, the company reported a net gain of $145.2 million from the disposition of assets related to the Allied merger and incurred $43.6 million in restructuring and integration charges during the first six months of 2009. These items significantly impacted the reported net income.
06—Continue