01—Abstract
Summary
Summary of the 10-Q filed July 28, 2017. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported solid financial performance for the second quarter and first half of 2017.
Revenue increased by 7.0%a year-over-year for the first six months, driven by improvements in average yield, volume, and commodity prices. Net income attributable to Republic Services, Inc. also saw a significant increase.
The company continues to execute its growth strategy through targeted acquisitions, which contributed to revenue growth. Management also highlighted an increase in their 2017 adjusted diluted earnings per share guidance and an increase in their quarterly dividend, signaling confidence in future performance and commitment to returning value to shareholders.
02—Key points
Key Highlights
- Revenue increased by 7.0% for the first six months of 2017 compared to the same period in 2016, reaching $4.92 billion.
- Net income attributable to Republic Services, Inc. for the six months ended June 30, 2017, was $390.7 million, an increase from $337.4 million in the prior year period.
- Diluted earnings per share for the six months ended June 30, 2017, were $1.15, up from $0.98 in the comparable period of 2016.
- The company increased its full-year 2017 adjusted diluted earnings per share guidance to a range of $2.36 - $2.39.
- The quarterly dividend was increased by 7.8% to $0.345 per share, payable in October 2017.
- Acquisitions contributed 0.3% to revenue growth in the first half of 2017.
- The company maintained compliance with its debt covenants, with an EBITDA to interest ratio of 7.43, well above the required minimum of 3.00.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2017, Republic Services, Inc. kept $0.08.
- Revenue$2.53B100.0%
- Cost of revenue−$1.56B61.6%
- Gross profit$969.3M38.4%
- Operating costs−$543.8M21.5%
- Operating income$425.5M16.8%
- Interest, other & tax−$222.6M8.8%
- Net income$202.9M8.0%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2017filed July 28, 2017Financial Statements
Q2 FY2017 against Q2 FY2016
| Line item | Q2 FY2017Q2 FY2016 | Change |
|---|---|---|
| Revenue | $2.53B$2.35B | +7.5% |
| Cost of Revenue | $1.56B$1.44B | +8.1% |
| Gross Profit | $969.30M$910.00M | +6.5% |
| SG&A Expenses | $262.90M$243.50M | +8.0% |
| Operating Income | $425.50M$382.10M | +11.4% |
| Interest Expense | $89.50M$92.20M | −2.9% |
| Net Income | $202.90M$180.80M | +12.2% |
| EPS (Basic) | $0.60$0.53 | +13.2% |
| EPS (Diluted) | $0.60$0.52 | +15.4% |
| Shares Outstanding (Basic) | 338.06M343.89M | −1.7% |
| Shares Outstanding (Diluted) | 339.97M345.22M | −1.5% |
05—Questions
Frequently Asked Questions
What were the primary drivers of revenue growth in the first half of 2017?
Revenue growth was primarily driven by increases in average yield (2.4%), recycled commodity prices (1.8%), volume (1.5%), and contributions from acquisitions. Fuel recovery fees and energy services also provided a smaller boost.
How did the company manage its debt and liquidity?
Republic Services maintained a strong liquidity position with $36.0 million in cash and cash equivalents and significant availability under its credit facilities ($1,517.6 million as of June 30, 2017). The company also demonstrated compliance with its debt covenants, with key ratios comfortably exceeding requirements. Debt management included refinancing activities and a focus on maintaining investment-grade credit ratings.
What is the company's outlook and commitment to shareholders?
The company raised its full-year 2017 adjusted diluted earnings per share guidance, indicating positive performance expectations. Furthermore, the board approved a 7.8% increase in the quarterly dividend, reflecting confidence in sustainable profitability and a commitment to shareholder returns.
Are there any significant environmental liabilities or legal proceedings that investors should be aware of?
Republic Services has accrued approximately $46 million for outstanding legal proceedings, and while the company does not believe these will materially impact its financial position, specific cases like the Bridgeton Landfill matters and Sunshine Canyon Landfill matter involve ongoing regulatory scrutiny and potential penalties. Environmental remediation liabilities are also a significant consideration, with accrued landfill and environmental costs totaling $1.8 billion.
06—Continue