01—Abstract
Summary
Summary of the 10-Q filed July 27, 2018. Cited figures are marked; the original filing is the authoritative source.
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 milliona, 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 millionb 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 $1.43c 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.
02—Key points
Key Highlights
- Revenue for the second quarter of 2018 was largely flat year-over-year, but net income and EPS showed substantial improvement.
- Six-month revenue saw modest growth, while net income and EPS experienced significant increases.
- The company adopted new revenue recognition standards (ASU 2014-09) effective January 1, 2018, which impacted revenue and cost of operations reporting.
- Republic Services refinanced its credit facilities in June 2018, increasing its revolving credit facility to $2.25 billion.
- The 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.
- Quarterly dividend was increased by 9% to $0.375 per share, reflecting confidence in financial performance.
- Full-year 2018 adjusted diluted EPS guidance was updated to $3.05 - $3.10.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2018, Republic Services, Inc. kept $0.09.
- Revenue$2.52B100.0%
- Cost of revenue−$1.58B62.6%
- Gross profit$940.6M37.4%
- Operating costs−$532.4M21.1%
- Operating income$408.2M16.2%
- Interest, other & tax−$172.5M6.9%
- Net income$235.7M9.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2018filed July 27, 2018Financial Statements
Q2 FY2018 against Q2 FY2017
| Line item | Q2 FY2018Q2 FY2017 | Change |
|---|---|---|
| Revenue | $2.52B$2.53B | −0.4% |
| Cost of Revenue | $1.58B$1.56B | +1.3% |
| Gross Profit | $940.60M$969.30M | −3.0% |
| SG&A Expenses | $252.90M$262.90M | −3.8% |
| Operating Income | $408.20M$425.50M | −4.1% |
| Interest Expense | $96.50M$89.50M | +7.8% |
| Net Income | $235.70M$202.90M | +16.2% |
| EPS (Basic) | $0.72$0.60 | +20.0% |
| EPS (Diluted) | $0.71$0.60 | +18.3% |
| Shares Outstanding (Basic) | 327.37M338.06M | −3.2% |
| Shares Outstanding (Diluted) | 328.83M339.97M | −3.3% |
05—Questions
Frequently Asked Questions
How did Republic Services' revenue and profitability perform in the second quarter of 2018 compared to the prior year?
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.
What impact did the adoption of new accounting standards have on the financial statements?
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.
What is the company's outlook for the full year 2018 based on this report?
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.
What are the key drivers for the changes in revenue and operating income observed in the report?
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.
06—Continue