10-QPeriod: Q3 FY2011

REPUBLIC SERVICES, INC. Quarterly Report for Q3 Ended Sep 30, 2011

Filed October 28, 2011For Securities:RSG

Summary

Republic Services, Inc. (RSG) reported its financial results for the nine months ended September 30, 2011. The company generated $6.17 billion in revenue, a slight increase from $6.09 billion in the same period last year, driven by core price increases and fuel surcharges. Net income attributable to Republic Services, Inc. was $398.2 million, or $1.05 per diluted share, an increase from $358.9 million, or $0.93 per diluted share, in the prior year period. The company experienced increased operating income due to a reduction in losses from debt extinguishment and lower restructuring charges compared to the previous year. Cash flow from operations was robust, providing $1.29 billion, enabling significant investments in capital expenditures totaling $696.1 million and strategic acquisitions of $40.8 million. The company also returned capital to shareholders through $429.9 million in share repurchases and $232.7 million in dividends. RSG ended the period with $72.6 million in cash and cash equivalents and a strong credit rating, maintaining compliance with its debt covenants. Significant attention is given to managing environmental liabilities and ongoing legal proceedings, which are being actively defended.

Financial Highlights

54 data points
Beta

Revenue

$2.12B

40.5% Gross Margin

Net Income

$193.50M

9.1% Net Margin

EPS (Diluted)

$0.52

Total Assets

$19.46B

Cash & Equivalents

$72.60M

Free Cash Flow

$276.80M

Financial Statements
Beta
Revenue$2.12B
Cost of Revenue$1.26B
Gross Profit$856.20M
SG&A Expenses$207.50M
Operating Income$408.50M
Interest Expense$108.30M
Net Income$193.50M
EPS (Basic)$0.52
EPS (Diluted)$0.52
Shares Outstanding (Basic)373.18M
Shares Outstanding (Diluted)374.69M

Key Highlights

  • 1Revenue increased by 1.3% year-over-year to $6.17 billion for the nine months ended September 30, 2011, primarily driven by core price increases (0.9%) and fuel surcharges (1.0%).
  • 2Net income attributable to Republic Services, Inc. rose to $398.2 million ($1.05 per diluted share) for the nine months ended September 30, 2011, up from $358.9 million ($0.93 per diluted share) in the prior year period.
  • 3Operating income increased to $1.19 billion for the nine months ended September 30, 2011, compared to $1.15 billion in the same period last year, benefiting from lower losses on debt extinguishment and reduced restructuring charges.
  • 4Cash provided by operating activities was strong at $1.29 billion for the nine months ended September 30, 2011.
  • 5Capital expenditures increased to $696.1 million for the nine months ended September 30, 2011, from $571.4 million in the prior year period, indicating continued investment in the business.
  • 6The company repurchased $429.9 million of its common stock and paid $232.7 million in dividends during the nine months ended September 30, 2011.
  • 7Long-term debt increased to $7.02 billion from $5.87 billion, largely due to strategic debt issuances and refinancing activities, while the company maintained compliance with its debt covenants.

Frequently Asked Questions

Republic Services reported a year-over-year increase in revenue to $6.17 billion and a rise in net income to $398.2 million ($1.05 per diluted share). This growth was supported by strong operating cash flow and strategic investments in capital expenditures and acquisitions. The company also actively managed its debt and returned capital to shareholders through dividends and share repurchases.

The company actively managed its debt through refinancing and strategic issuances. Long-term debt increased to $7.02 billion, primarily due to new senior note issuances totaling $1.84 billion in proceeds, which were used to redeem existing debt and repay credit facilities. Republic Services maintained compliance with its debt covenants, indicating a stable financial position.

Revenue growth was driven by core price increases and fuel surcharges. On the cost side, the company saw some relief from lower restructuring charges and losses on debt extinguishment compared to the prior year. However, increased fuel costs and higher costs for recycled commodities did put some pressure on operating margins, though this was partially offset by improved labor productivity and lower risk management costs.

Investors should note the significant environmental liabilities related to landfills, including accrued costs for capping, closure, and post-closure, as well as remediation liabilities. The company is also involved in several ongoing legal proceedings, including a significant lawsuit related to retaliation, which, despite appeals, still carries potential for substantial damages. Furthermore, the company is subject to market risks related to fuel and commodity prices, which can impact operating expenses and revenue.