10-QPeriod: Q2 FY2018

REPUBLIC SERVICES, INC. Quarterly Report for Q2 Ended Jun 30, 2018

Filed July 27, 2018For Securities:RSG

Summary

Republic Services, Inc. (RSG) reported its financial results for the second quarter and first half of 2018. For the three months ended June 30, 2018, revenue was $2,517.8 million, a slight decrease of 0.4% compared to the prior year's $2,526.7 million. Net income attributable to the company was $234.9 million, a significant increase from $202.9 million in the same period last year. Diluted earnings per share (EPS) rose to $0.71 from $0.60. For the six months ended June 30, 2018, revenue increased by 0.5% to $4,945.2 million from $4,919.5 million in the prior year. Net income attributable to RSG more than doubled to $472.6 million, compared to $390.7 million in the first half of 2017. Diluted EPS for the six-month period improved to $1.43 from $1.15. The company also announced an increase in its quarterly dividend to $0.375 per share and updated its full-year 2018 adjusted diluted EPS guidance to a range of $3.05 to $3.10.

Financial Highlights

54 data points
Beta

Revenue

$2.52B

37.4% Gross Margin

Net Income

$235.70M

9.4% Net Margin

EPS (Diluted)

$0.71

Total Assets

$21.20B

Cash & Equivalents

$61.30M

Free Cash Flow

$330.80M

Financial Statements
Beta
Revenue$2.52B
Cost of Revenue$1.58B
Gross Profit$940.60M
SG&A Expenses$252.90M
Operating Income$408.20M
Interest Expense$96.50M
Net Income$235.70M
EPS (Basic)$0.72
EPS (Diluted)$0.71
Shares Outstanding (Basic)327.37M
Shares Outstanding (Diluted)328.83M

Key Highlights

  • 1Revenue for the second quarter of 2018 was largely flat year-over-year, but net income and EPS showed substantial improvement.
  • 2Six-month revenue saw modest growth, while net income and EPS experienced significant increases.
  • 3The company adopted new revenue recognition standards (ASU 2014-09) effective January 1, 2018, which impacted revenue and cost of operations reporting.
  • 4Republic Services refinanced its credit facilities in June 2018, increasing its revolving credit facility to $2.25 billion.
  • 5The company repurchased $474.0 million of its stock in the first six months of 2018, a significant increase from $230.7 million in the prior year.
  • 6Quarterly dividend was increased by 9% to $0.375 per share, reflecting confidence in financial performance.
  • 7Full-year 2018 adjusted diluted EPS guidance was updated to $3.05 - $3.10.

Frequently Asked Questions

In the second quarter of 2018, Republic Services reported revenue of $2,517.8 million, a slight decrease of 0.4% from $2,526.7 million in the same period of 2017. However, profitability saw a significant improvement, with net income attributable to the company increasing to $234.9 million from $202.9 million, and diluted earnings per share rising to $0.71 from $0.60.

Republic Services adopted ASU 2014-09, Revenue from Contracts with Customers, effective January 1, 2018. This adoption resulted in a reclassification of certain customer payments and rebates from cost of operations to a reduction of revenue, which lowered reported revenue and cost of operations. For the six months ended June 30, 2018, this adoption decreased revenue by $169.6 million and cost of operations by $166.8 million.

Republic Services updated its financial guidance for the full year 2018. The company anticipates adjusted diluted earnings per share to be in the range of $3.05 to $3.10, reflecting confidence in its ongoing operational performance.

Revenue growth for the first six months of 2018 was driven by increases in average yield (2.1%), volume (1.2%), fuel recovery fees (0.6%), energy services (0.3%), and acquisitions (1.8%). These were partially offset by decreases in recycling processing and commodity sales (-1.3%) and the impact of adopting new revenue recognition standards (-4.2%). Operating income was impacted by increased labor, maintenance, and fuel costs, partially offset by favorable pricing and cost management.