01—Abstract
Summary
Summary of the 10-Q filed April 25, 2014. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its first quarter 2014 financial results, showing a year-over-year increase in revenue and net income attributable to the company.
Revenue grew by 3.8% to $2,073.7 milliona, driven by a combination of average yield increases, volume growth, and acquisitions. Net income attributable to Republic Services, Inc. rose to $132.5 million ($0.37 per diluted share) from $124.6 million ($0.34 per diluted share) in the prior year's quarter, reflecting improved operational performance and management of costs. The company's balance sheet remained robust, with total assets of $19,842.5 million.
Key liabilities include long-term debt of $7,007.9 millionb. Management highlighted operational efficiency improvements and strategic growth initiatives as key drivers.
Despite some environmental remediation charges, particularly related to the Bridgeton Landfill, the company demonstrated a solid operational performance, generating significant cash flow from operations. Investors should note the ongoing efforts to manage environmental liabilities and the company's continued focus on returning capital to shareholders through dividends and share repurchases.
02—Key points
Key Highlights
- Revenue increased by 3.8% to $2,073.7 million for the three months ended March 31, 2014, compared to $1,998.6 million in the prior year period.
- Net income attributable to Republic Services, Inc. increased to $132.5 million ($0.37 per diluted share) from $124.6 million ($0.34 per diluted share) in the first quarter of 2013.
- Operating income improved to $306.1 million, up from $274.2 million in the prior year's quarter, indicating better operational efficiency.
- The company continued its share repurchase program, buying back 3.9 million shares for $132.2 million in the first quarter of 2014.
- Cash provided by operating activities was $396.4 million, a slight decrease from $419.8 million in the prior year, but still strong.
- The company had significant accrued landfill and environmental costs totaling $1,665.7 million.
- Republic Services maintains substantial liquidity with $1,505.6 million in available credit facilities as of March 31, 2014, with no outstanding borrowings.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2014, Republic Services, Inc. kept $0.06.
- Revenue$2.08B100.0%
- Cost of revenue−$1.32B63.8%
- Gross profit$752.5M36.2%
- Operating costs−$446.4M21.5%
- Operating income$306.1M14.7%
- Interest, other & tax−$173.6M8.4%
- Net income$132.5M6.4%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2014filed April 25, 2014Financial Statements
Q1 FY2014 against Q1 FY2013
| Line item | Q1 FY2014Q1 FY2013 | Change |
|---|---|---|
| Revenue | $2.08B$2.00B | +3.9% |
| Cost of Revenue | $1.32B$1.22B | +8.3% |
| Gross Profit | $752.50M$775.50M | −3.0% |
| SG&A Expenses | $213.80M$206.50M | +3.5% |
| Operating Income | $306.10M$274.20M | +11.6% |
| Interest Expense | $87.00M$89.60M | −2.9% |
| Net Income | $132.50M$124.60M | +6.3% |
| EPS (Basic) | $0.37$0.34 | +8.8% |
| EPS (Diluted) | $0.37$0.34 | +8.8% |
| Shares Outstanding (Basic) | 359.78M362.66M | −0.8% |
| Shares Outstanding (Diluted) | 360.97M364.09M | −0.9% |
05—Questions
Frequently Asked Questions
What were the main drivers of the revenue growth in the first quarter of 2014?
Revenue growth was primarily driven by increases in average yield (1.2%), volume (1.5%), acquisitions (0.6%), and a smaller contribution from fuel recovery fees (0.1%) and recycled commodities (0.4%). Improvements in business activity and new National Accounts contracts contributed to volume increases in commercial and industrial collection, and landfill services.
What are the significant environmental liabilities or charges mentioned in the filing?
The company recorded a charge of $36.1 million during the first quarter of 2014 related to the design and construction of a leachate management facility at its closed Bridgeton Landfill in Missouri. The total accrued environmental remediation liability for Bridgeton Landfill was $109.6 million as of March 31, 2014. Additionally, the company has a remediation liability for Congress Landfill of $83.1 million.
How is Republic Services managing its debt and liquidity?
As of March 31, 2014, Republic Services had total debt of $7,013.3 million. The company maintained significant liquidity with $1,505.6 million of availability under its credit facilities and no outstanding borrowings. Republic Services also continues to return capital to shareholders through dividends ($0.26 per share declared in Feb 2014) and share repurchases.
What is the impact of the Central States Pension Fund withdrawal?
Republic Services fully withdrew from the Central States, Southeast and Southwest Areas Pension Fund in 2013. The company has an estimated withdrawal liability of $165.3 million recorded as of March 31, 2014, which is expected to be paid in installments over 20 years. The company made progress payments of $4.0 million during the first quarter of 2014.
06—Continue