01—Abstract
Summary
Summary of the 10-Q filed April 28, 2017. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. reported solid financial results for the first quarter of 2017, demonstrating revenue growth and improved profitability.
Total revenue increased by 6.4% year-over-year, driven by increases in average yield, recycled commodity prices, and volume. Net income attributable to the company rose to $187.8 milliona, or $0.55 per diluted share, up from $156.7 million, or $0.45 per diluted share, in the prior year's first quarter. The company's operational efficiency appears to be improving, with cost of operations as a percentage of revenue slightly increasing but managed effectively.
Significant initiatives, such as restructuring efforts aimed at consolidating back-office functions and customer service locations, are expected to continue through 2017, contributing to future cost savings. Republic Services also maintained a strong liquidity position, with substantial availability under its credit facilities, supporting its ongoing capital expenditure and acquisition strategies.
02—Key points
Key Highlights
- Revenue increased by 6.4% to $2.39 billion in Q1 2017 compared to $2.25 billion in Q1 2016.
- Net income attributable to Republic Services, Inc. grew to $187.8 million, a significant increase from $156.7 million in the prior year.
- Diluted earnings per share improved to $0.55 from $0.45 year-over-year.
- The company generated $444.3 million in cash flow from operating activities, indicating strong operational cash generation.
- Investments in property and equipment were $223.9 million, supporting ongoing business needs and growth.
- The company continued its share repurchase program, buying back 1.7 million shares for $98.9 million during the quarter.
- Republic Services highlighted the positive impact of higher recycled commodity prices on revenue, noting a substantial increase in average prices for old corrugated containers and old newsprint.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2017, Republic Services, Inc. kept $0.08.
- Revenue$2.39B100.0%
- Cost of revenue−$1.48B62.0%
- Gross profit$908.7M38.0%
- Operating costs−$520.6M21.8%
- Operating income$388.1M16.2%
- Interest, other & tax−$200.3M8.4%
- Net income$187.8M7.8%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2017filed April 28, 2017Financial Statements
Q1 FY2017 against Q1 FY2016
| Line item | Q1 FY2017Q1 FY2016 | Change |
|---|---|---|
| Revenue | $2.39B$2.25B | +6.4% |
| Cost of Revenue | $1.48B$1.38B | +7.4% |
| Gross Profit | $908.70M$867.20M | +4.8% |
| SG&A Expenses | $253.50M$241.20M | +5.1% |
| Operating Income | $388.10M$345.50M | +12.3% |
| Interest Expense | $89.40M$92.70M | −3.6% |
| Net Income | $187.80M$156.70M | +19.8% |
| EPS (Basic) | $0.55$0.45 | +22.2% |
| EPS (Diluted) | $0.55$0.45 | +22.2% |
| Shares Outstanding (Basic) | 339.87M345.40M | −1.6% |
| Shares Outstanding (Diluted) | 341.88M346.73M | −1.4% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue increase in the first quarter of 2017?
The primary drivers of the revenue increase were higher average yield (pricing), increased recycled commodity prices, and a modest increase in volume. Specifically, average yield contributed 2.3%, recycled commodities contributed 2.1%, and volume contributed 1.0% to the revenue growth.
How did the company manage its costs of operations relative to revenue growth?
While the cost of operations as a percentage of revenue slightly increased from 61.4% to 62.0%, the company managed this increase effectively given the revenue growth. Key cost increases were related to labor, fuel, and landfill operating costs, partially offset by favorable adjustments in risk management expenses and cost of goods sold related to recycling rebates.
What is the company's financial outlook based on this quarter's results and ongoing initiatives?
The results indicate a positive trend with growing revenue and net income. Ongoing restructuring efforts are expected to yield further efficiencies. The company's strong operating cash flow and access to credit facilities provide ample liquidity to fund capital expenditures, acquisitions, dividends, and share repurchases, suggesting a stable and growth-oriented outlook.
Are there any significant environmental liabilities that investors should be aware of?
Yes, the company has significant accrued landfill and environmental costs, totaling $1.81 billion. A notable item is the Bridgeton Landfill, with a recorded remediation liability of $192.9 million, and potential for significantly higher costs. Investors should monitor developments related to these environmental matters and the company's accruals for them.
06—Continue