01—Abstract
Summary
Summary of the 10-Q filed July 26, 2019. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its second quarter 2019 financial results, demonstrating continued revenue growth and operational execution.
For the six months ended June 30, 2019, revenue increased by 2.6% to $5.1 billiona compared to the same period in 2018. This growth was driven by a 2.9% increase in average yield, reflecting effective pricing strategies across its service lines, and was further supported by acquisitions contributing 0.5% to revenue. Operating income also saw an increase, rising to $860.2 million for the six-month period, indicating strong operational leverage.
Key financial strengths include a solid operating cash flow of $1.14 billionb for the first six months of 2019, providing ample resources for capital expenditures, acquisitions, and shareholder returns. The company maintained a healthy debt-to-EBITDA ratio of 2.96, well within its credit facility covenants, highlighting its robust financial position. Management also announced an 8% increase in its quarterly dividend to $0.405 per share, signaling confidence in future performance and a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Revenue for the six months ended June 30, 2019, increased by 2.6% to $5.1 billion, driven by average yield increases and acquisitions.
- Operating income for the six months ended June 30, 2019, increased to $860.2 million, up from $812.4 million in the prior year period.
- The company generated $1.14 billion in cash flow from operations for the first six months of 2019, demonstrating strong cash generation.
- Total debt as a percentage of EBITDA was 2.96 as of June 30, 2019, indicating a healthy leverage position and compliance with debt covenants.
- Republic Services announced an 8% increase in its quarterly dividend to $0.405 per share, payable in October 2019.
- The company's effective tax rate for the period was 24.3%, a slight decrease from the prior year's comparable period.
- Acquisition activity contributed positively to revenue growth, with acquisitions (net of divestitures) increasing revenue by 0.5% for the six-month period.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2019, Republic Services, Inc. kept $0.10.
- Revenue$2.61B100.0%
- Cost of revenue−$1.62B62.1%
- Gross profit$988.3M37.9%
- Operating costs−$550.9M21.1%
- Operating income$437.4M16.8%
- Interest, other & tax−$186.5M7.2%
- Net income$250.9M9.6%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2019filed July 26, 2019Financial Statements
Q2 FY2019 against Q2 FY2018
| Line item | Q2 FY2019Q2 FY2018 | Change |
|---|---|---|
| Revenue | $2.61B$2.52B | +3.5% |
| Cost of Revenue | $1.62B$1.58B | +2.5% |
| Gross Profit | $988.30M$940.60M | +5.1% |
| SG&A Expenses | $264.50M$252.90M | +4.6% |
| Operating Income | $437.40M$408.20M | +7.2% |
| Interest Expense | $98.50M$96.50M | +2.1% |
| Net Income | $250.90M$235.70M | +6.4% |
| EPS (Basic) | $0.78$0.72 | +8.3% |
| EPS (Diluted) | $0.78$0.71 | +9.9% |
| Shares Outstanding (Basic) | 321.72M327.37M | −1.7% |
| Shares Outstanding (Diluted) | 322.76M328.83M | −1.8% |
05—Questions
Frequently Asked Questions
How did Republic Services' revenue perform in the first half of 2019 compared to the previous year?
For the six months ended June 30, 2019, Republic Services' revenue increased by 2.6% to $5,075.9 million, up from $4,945.2 million in the same period of 2018. This growth was primarily driven by an increase in average yield (pricing) and contributions from acquisitions.
What is the company's financial health regarding debt?
Republic Services maintains a solid financial position. As of June 30, 2019, the company's total debt to EBITDA ratio was 2.96, which is well within the covenants of its credit facilities (maximum allowed 3.50). The company was also in compliance with its EBITDA to interest ratio covenant (7.43, minimum required 3.00).
Has Republic Services returned value to shareholders recently?
Yes, Republic Services announced a significant commitment to shareholders by increasing its quarterly dividend by 8% to $0.405 per share. This dividend was scheduled to be paid on October 15, 2019.
What were the key drivers of the increase in operating income?
Operating income for the first six months of 2019 increased to $860.2 million from $812.4 million in the prior year. This improvement was supported by revenue growth from higher average yields and acquisitions, along with effective management of operating expenses. Cost of operations as a percentage of revenue decreased slightly.
06—Continue