01—Abstract
Summary
Summary of the 10-Q filed July 30, 2010. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its financial results for the second quarter and first half of 2010.
Revenue remained stable year-over-year for the quarter at $2.07 billiona, but saw a slight decrease of 2.5% to $4.02 billion for the six-month period. This revenue performance was impacted by required divestitures following the Allied Waste Industries merger, which reduced revenue by 1.6%. Core revenue, excluding divested assets, showed a modest decline, driven by volume decreases offset by price and commodity price increases.
Net income attributable to Republic Services, Inc. for the quarter was $159.7 millionb ($0.42 diluted EPS), down from $225.9 million ($0.59 diluted EPS) in the prior year quarter. For the six months, net income was $224.7 million ($0.59 diluted EPS), down from $338.9 million ($0.89 diluted EPS) in 2009.
These decreases were significantly influenced by a substantial loss on extinguishment of debt in the first quarter of 2010, related to the refinancing of higher-interest debt. Excluding special items, adjusted earnings per share showed a more stable performance, indicating operational resilience amidst economic challenges.
02—Key points
Key Highlights
- Total revenue for the six months ended June 30, 2010 was $4.02 billion, a 2.5% decrease compared to $4.13 billion in the prior year period, largely due to asset divestitures.
- Net income attributable to Republic Services, Inc. decreased to $159.7 million for the second quarter of 2010 and $224.7 million for the six-month period, compared to $225.9 million and $338.9 million respectively in 2009.
- Diluted earnings per share for the quarter were $0.42, down from $0.59 in the prior year, and $0.59 for the six-month period, down from $0.89 in 2009.
- A significant $132.3 million loss on extinguishment of debt was recorded in the first half of 2010 due to debt refinancing activities.
- Operating income for the quarter was $400.8 million, down from $520.7 million in the prior year quarter, reflecting the impact of lower volumes and divestitures.
- The company's core revenue, excluding divested revenues, decreased by 0.9% for the six months, with volume declines of 5.2% offset by price increases.
- Cash provided by operating activities was $594.8 million for the six months ended June 30, 2010, down from $687.6 million in the prior year period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2010, Republic Services, Inc. kept $0.08.
- Revenue$2.07B100.0%
- Cost of revenue−$1.22B59.0%
- Gross profit$848.1M41.0%
- Operating costs−$447.3M21.6%
- Operating income$400.8M19.4%
- Interest, other & tax−$241.1M11.7%
- Net income$159.7M7.7%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2010filed July 30, 2010Financial Statements
Q2 FY2010 against Q2 FY2009
| Line item | Q2 FY2010Q2 FY2009 | Change |
|---|---|---|
| Revenue | $2.07B$2.07B | 0.0% |
| Cost of Revenue | $1.22B$1.23B | −0.7% |
| Gross Profit | $848.10M$839.20M | +1.1% |
| SG&A Expenses | $210.80M$215.80M | −2.3% |
| Operating Income | $400.80M$520.70M | −23.0% |
| Interest Expense | $130.50M$150.50M | −13.3% |
| Net Income | $159.70M$225.90M | −29.3% |
| EPS (Basic) | $0.42$0.60 | −30.0% |
| EPS (Diluted) | $0.42$0.59 | −28.8% |
| Shares Outstanding (Basic) | 382.51M379.17M | +0.9% |
| Shares Outstanding (Diluted) | 384.71M379.93M | +1.3% |
05—Questions
Frequently Asked Questions
What is the overall financial performance of Republic Services for the reported period?
For the second quarter and first half of 2010, Republic Services experienced a decline in net income and earnings per share compared to 2009. While revenue remained relatively stable for the quarter, it decreased slightly for the six-month period, largely due to asset divestitures required post-merger. A significant loss on debt extinguishment in the first half of the year also impacted profitability. However, adjusted earnings per share, excluding special items, show a more resilient operational performance.
What factors influenced the company's revenue performance?
Revenue was impacted by required asset divestitures totaling 1.6% of revenue for the six months ended June 30, 2010. Core revenue, excluding these divestitures, saw a slight decline of 0.9%. This was driven by a 5.2% decrease in core volume, reflecting challenging economic conditions, which was partially offset by a 1.9% increase in core price and a 1.7% increase in commodity prices.
How has the company's debt management strategy affected its financial results?
Republic Services undertook significant debt refinancing activities in early 2010, issuing new senior notes and using the proceeds to redeem higher-interest debt. While this strategy is expected to yield long-term interest savings, it resulted in a substantial $132.3 million loss on extinguishment of debt in the first half of 2010, which significantly impacted net income and EPS for the period.
What is the outlook for the company's cash flow and liquidity?
Cash provided by operating activities was $594.8 million for the first six months of 2010, a decrease from the prior year, partly due to a significant tax settlement payment. Despite this, the company's liquidity appears adequate. It has substantial availability under its revolving credit facilities ($934.2 million as of June 30, 2010) and maintains investment-grade credit ratings, indicating continued access to capital markets.
06—Continue