10-QPeriod: Q2 FY2010

REPUBLIC SERVICES, INC. Quarterly Report for Q2 Ended Jun 30, 2010

Filed July 30, 2010For Securities:RSG

Summary

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 billion, 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 million ($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.

Financial Highlights

54 data points
Beta

Revenue

$2.07B

41.0% Gross Margin

Net Income

$159.70M

7.7% Net Margin

EPS (Diluted)

$0.42

Total Assets

$19.57B

Cash & Equivalents

$56.00M

Free Cash Flow

$118.70M

Financial Statements
Beta
Revenue$2.07B
Cost of Revenue$1.22B
Gross Profit$848.10M
SG&A Expenses$210.80M
Operating Income$400.80M
Interest Expense$130.50M
Net Income$159.70M
EPS (Basic)$0.42
EPS (Diluted)$0.42
Shares Outstanding (Basic)382.51M
Shares Outstanding (Diluted)384.71M

Key Highlights

  • 1Total 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.
  • 2Net 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.
  • 3Diluted 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.
  • 4A significant $132.3 million loss on extinguishment of debt was recorded in the first half of 2010 due to debt refinancing activities.
  • 5Operating 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.
  • 6The 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.
  • 7Cash 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.

Frequently Asked Questions

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.

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.

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.

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.