01—Abstract
Summary
Summary of the 10-Q filed July 29, 2011. 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 2011.
For the three months ended June 30, 2011, revenue increased slightly to $2,086.6 milliona from $2,066.4 million in the prior year, while net income attributable to Republic Services, Inc. saw a significant decrease to $46.5 million ($0.12 per diluted share) from $159.7 million ($0.42 per diluted share) in the same period of 2010. This decline was largely attributed to a substantial "Loss on extinguishment of debt" of $199.5 million, alongside asset impairments and other charges. For the six months ended June 30, 2011, revenue grew to $4,051.5 million from $4,024.1 million in 2010, but net income attributable to Republic Services, Inc. decreased to $204.7 million ($0.54 per diluted share) from $224.7 million ($0.59 per diluted share) in the prior year.
Despite the reported net income decline, the company emphasized "adjusted" figures that exclude significant non-operational items like debt extinguishment losses. Adjusted diluted earnings per share for the second quarter of 2011 were $0.49, compared to $0.43b in the prior year, and for the first half of the year, adjusted diluted earnings per share were $0.90, up from $0.84 in 2010.
The company's liquidity remains solid, with significant availability under its credit facilities. Management also highlighted continued revenue growth driven by price increases and acquisitions, alongside efforts to manage costs and optimize operations.
02—Key points
Key Highlights
- Revenue increased slightly year-over-year for both the second quarter ($2,086.6M vs $2,066.4M) and the first half of the year ($4,051.5M vs $4,024.1M).
- Reported net income attributable to Republic Services, Inc. decreased significantly in the second quarter ($46.5M vs $159.7M) and first half ($204.7M vs $224.7M), largely due to a $199.5 million loss on extinguishment of debt in the current quarter.
- Adjusted earnings per diluted share showed an increase, with Q2 at $0.49 (vs $0.43) and H1 at $0.90 (vs $0.84), excluding significant non-operational items.
- The company completed a significant refinancing in the second quarter, issuing new senior notes and using proceeds to redeem older, higher-interest debt, resulting in a substantial "Loss on extinguishment of debt."
- Capital expenditures increased to $481.7 million for the first half of 2011 compared to $385.4 million in the prior year, indicating investment in property and equipment.
- The company repurchased approximately $262.9 million of its common stock under its share repurchase program during the first half of 2011.
- The company amended and restated its revolving credit facility, increasing borrowing capacity to $1.25 billion and extending maturity to April 2016, maintaining strong liquidity with no borrowings outstanding at June 30, 2011.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Republic Services, Inc. kept $0.02.
- Revenue$2.09B100.0%
- Cost of revenue−$1.24B59.3%
- Gross profit$848.8M40.7%
- Operating costs−$447.6M21.5%
- Operating income$401.2M19.2%
- Interest, other & tax−$354.7M17.0%
- Net income$46.5M2.2%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed July 29, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $2.09B$2.07B | +1.0% |
| Cost of Revenue | $1.24B$1.22B | +1.6% |
| Gross Profit | $848.80M$848.10M | +0.1% |
| SG&A Expenses | $200.10M$210.80M | −5.1% |
| Operating Income | $401.20M$400.80M | +0.1% |
| Interest Expense | $111.40M$130.50M | −14.6% |
| Net Income | $46.50M$159.70M | −70.9% |
| EPS (Basic) | $0.12$0.42 | −71.4% |
| EPS (Diluted) | $0.12$0.42 | −71.4% |
| Shares Outstanding (Basic) | 378.20M382.51M | −1.1% |
| Shares Outstanding (Diluted) | 380.17M384.71M | −1.2% |
05—Questions
Frequently Asked Questions
What is the primary driver for the decrease in reported net income for Q2 2011?
The primary driver for the significant decrease in reported net income for the second quarter of 2011 was a substantial 'Loss on extinguishment of debt' of $199.5 million, incurred as a result of refinancing activities. This loss, along with other charges like asset impairments, impacted the reported net income figure.
How is the company's profitability presented if we exclude one-time charges?
Republic Services provides 'adjusted' financial metrics to offer a view of ongoing operational performance. For Q2 2011, the adjusted diluted earnings per share were $0.49, an increase from $0.43 in Q2 2010. For the first six months of 2011, adjusted diluted earnings per share were $0.90, up from $0.84 in the same period of 2010. These adjusted figures exclude items such as losses on debt extinguishment, restructuring charges, and impairment charges.
What is the company's debt situation and liquidity position?
The company has actively managed its debt, engaging in significant refinancing activities. As of June 30, 2011, Republic Services had $6.9 billion in long-term debt, net of current maturities. Despite this, liquidity remains strong. The company amended and restated its revolving credit facility to $1.25 billion and had no borrowings outstanding under this facility as of June 30, 2011, indicating ample availability for its operational and strategic needs.
How did the company's revenue performance fare in this quarter?
Revenue showed modest growth, increasing by approximately 1% to $2,086.6 million in the second quarter of 2011, compared to $2,066.4 million in the same quarter of 2010. This growth was driven by price increases (core price, fuel surcharges, and commodity revenue) and acquisitions, partially offset by volume declines and the expiration of certain contracts.
06—Continue