01—Abstract
Summary
Summary of the 10-Q filed October 30, 2015. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported solid financial results for the nine months ended September 30, 2015.
Revenue increased by 3.8%a year-over-year, driven by a combination of average yield increases, volume growth, and strategic acquisitions. The company demonstrated effective cost management, with operating income increasing by 13.0% for the nine-month period, resulting in improved operating margins. Key financial highlights include robust operating cash flow generation and a significant increase in capital expenditures, largely due to acquisitions.
The company also continued its commitment to returning capital to shareholders through share repurchases and dividend payments. Despite ongoing investments and acquisitions, Republic Services maintained a strong liquidity position, with substantial availability under its credit facilities.
02—Key points
Key Highlights
- Revenue increased by 3.8% to $6.82 billion for the nine months ended September 30, 2015, compared to $6.57 billion in the prior year period.
- Operating income grew by 13.0% to $1.20 billion for the nine months ended September 30, 2015, from $1.07 billion in the same period last year.
- Diluted earnings per share (EPS) increased to $1.64 for the nine months ended September 30, 2015, up from $1.39 in the comparable period of 2014.
- Cash provided by operating activities was $1.32 billion for the nine months ended September 30, 2015, an increase from $1.10 billion in the prior year.
- Capital expenditures for the nine months ended September 30, 2015 totaled $732.0 million, up from $683.1 million in the prior year, driven by acquisitions and investments in property and equipment.
- The company repurchased $293.3 million of its stock during the nine months ended September 30, 2015, and paid $295.0 million in dividends.
- Total assets grew to $20.79 billion as of September 30, 2015, compared to $20.09 billion at the end of 2014, reflecting acquisitions and asset growth.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2015, Republic Services, Inc. kept $0.09.
- Revenue$2.34B100.0%
- Cost of revenue−$1.39B59.3%
- Gross profit$953.8M40.7%
- Operating costs−$510.9M21.8%
- Operating income$442.9M18.9%
- Interest, other & tax−$227.9M9.7%
- Net income$215.0M9.2%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2015filed October 30, 2015Financial Statements
Q3 FY2015 against Q3 FY2014
| Line item | Q3 FY2015Q3 FY2014 | Change |
|---|---|---|
| Revenue | $2.34B$2.27B | +3.4% |
| Cost of Revenue | $1.39B$1.40B | −0.8% |
| Gross Profit | $953.80M$866.80M | +10.0% |
| SG&A Expenses | $244.10M$229.00M | +6.6% |
| Operating Income | $442.90M$382.40M | +15.8% |
| Interest Expense | $91.80M$87.00M | +5.5% |
| Net Income | $215.00M$185.80M | +15.7% |
| EPS (Basic) | $0.62$0.52 | +19.2% |
| EPS (Diluted) | $0.61$0.52 | +17.3% |
| Shares Outstanding (Basic) | 348.94M356.25M | −2.1% |
| Shares Outstanding (Diluted) | 350.28M357.74M | −2.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of Republic Services' revenue growth in the first nine months of 2015?
Revenue growth was primarily driven by increases in average yield (pricing strategies), positive volume growth across various service lines, and contributions from acquisitions, partially offset by decreases in fuel recovery fees and recycled commodity prices.
How did Republic Services manage its costs during this period?
The company demonstrated effective cost management. While certain costs like labor and maintenance increased, these were offset by decreases in fuel costs due to lower market prices and efficiency initiatives. The company also benefited from an insurance recovery related to the Bridgeton Landfill.
What is the company's strategy regarding capital allocation and shareholder returns?
Republic Services is actively investing in its business through capital expenditures, including those related to acquisitions. Concurrently, the company returned capital to shareholders through a significant share repurchase program totaling $293.3 million and dividend payments of $295.0 million during the first nine months of 2015. The company also has a substantial share repurchase authorization in place.
What significant environmental or legal matters are impacting the company?
The company is involved in ongoing remediation efforts at the Bridgeton Landfill, which included a significant insurance recovery in the third quarter of 2015. Additionally, the company has accrued approximately $61.3 million for pending legal proceedings, though it believes the outcome of these matters will not have a material adverse impact on its financial position.
06—Continue