Summary
Republic Services, Inc. (RSG) reported its financial results for the quarter ended June 30, 2012. The company's revenue showed a slight decrease year-over-year for the six-month period, impacted by lower volumes and recycling commodity prices, though partially offset by price increases and fuel surcharges. Net income attributable to Republic Services, Inc. saw a significant increase compared to the prior year, driven by strong operational performance and favorable adjustments related to debt extinguishment and tax matters. Key financial developments include a notable reduction in interest expense due to debt refinancing activities, a substantial gain from the extinguishment of debt, and a favorable tax provision adjustment. The company continued its share repurchase program and increased its quarterly dividend, signaling confidence in its financial position and future outlook. Republic Services maintained its investment-grade credit ratings and reaffirmed its commitment to operational efficiency and strategic growth.
Financial Highlights
54 data pointsBeta
Financial Statements
Beta
| Revenue | $2.06B |
| Cost of Revenue | $1.24B |
| Gross Profit | $822.10M |
| SG&A Expenses | $197.30M |
| Operating Income | $387.00M |
| Interest Expense | $98.80M |
| Net Income | $149.20M |
| EPS (Basic) | $0.41 |
| EPS (Diluted) | $0.40 |
| Shares Outstanding (Basic) | 367.89M |
| Shares Outstanding (Diluted) | 368.87M |
Key Highlights
- 1Revenue for the six months ended June 30, 2012, was $4,043.0 million, a slight decrease of 0.2% from $4,051.5 million in the prior year, primarily due to decreased volume and recycling commodity prices.
- 2Net income attributable to Republic Services, Inc. for the six months increased significantly to $292.1 million, or $0.79 per diluted share, from $204.7 million, or $0.54 per diluted share, in the comparable period of 2011.
- 3The company reported a substantial "Loss on extinguishment of debt" of $110.3 million for the six months ended June 30, 2012, primarily related to debt refinancing, which was significantly higher than the $201.3 million loss in the prior year, indicating active debt management.
- 4Operating income for the six months decreased to $713.9 million from $777.4 million in the prior year, impacted by higher labor costs and maintenance expenses, partially offset by lower transfer and disposal costs.
- 5Cash provided by operating activities for the six months was $695.0 million, a decrease from $795.6 million in the prior year, primarily due to changes in working capital and higher cash paid for environmental remediation.
- 6Republic Services continued its share repurchase program, repurchasing 6.3 million shares for $171.8 million in the six months ended June 30, 2012, and declared a quarterly dividend of $0.235 per share, a 7% increase.
- 7The company amended and restated its revolving credit facility in May 2012, extending the maturity to May 2017, and maintained its investment-grade credit ratings.
Frequently Asked Questions
Revenue for the six months ended June 30, 2012, decreased by 0.2% to $4,043.0 million from $4,051.5 million in the prior year. This was primarily due to a 0.6% decrease in volume and a 0.9% decrease in recycling commodity prices. These decreases were partially offset by a 0.6% increase in core pricing, a 0.2% increase in fuel surcharges, and a 0.5% net increase from acquisitions.
Net income attributable to Republic Services, Inc. increased significantly to $292.1 million for the six months ended June 30, 2012, from $204.7 million in the prior year. Key factors contributing to this increase included substantial gains from debt extinguishment activities ($110.3 million loss in 2012 vs. $201.3 million loss in 2011, representing a favorable year-over-year change), and a favorable tax provision adjustment of approximately $34 million related to the resolution of tax years for Allied. While operating income saw a decrease due to increased costs, these favorable items significantly boosted the net income.
As of June 30, 2012, Republic Services had $69.3 million in cash and cash equivalents and $138.9 million in restricted cash. The company amended its revolving credit facility to extend maturity to May 2017, indicating proactive debt management. The company also issued $850 million of 3.550% senior notes due 2022 to refinance higher-cost debt. The company's debt-to-EBITDA ratio was 2.93, well within its covenant limit of 3.50, and its EBITDA to interest coverage ratio was 5.83, above the minimum covenant requirement of 3.00, suggesting a strong ability to service its debt.
Republic Services faces several contingencies, including significant environmental remediation liabilities at landfills like Countywide ($54.3 million accrued, with a possible range of $51 million to $73 million) and Congress Landfill ($83.9 million accrued, with a possible range of $53 million to $154 million). The company also has potential liabilities related to multiemployer pension plans, specifically the Central States fund, estimated at approximately $109 million in the event of complete withdrawal. Additionally, the company is involved in various legal proceedings, though it believes the outcomes will not have a material adverse impact on its financial position, results of operations, or cash flows, with an aggregate accrual of approximately $58 million for outstanding legal proceedings.