01—Abstract
Summary
Summary of the 10-Q filed October 31, 2019. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported strong financial results for the nine months ended September 30, 2019.
Revenue increased by 2.8% to $7.72 billiona, driven by a 2.8% increase in average yield and contributions from acquisitions. Net income attributable to Republic Services, Inc. rose by 6.5% to $784.0 million, leading to diluted earnings per share of $2.43, up from $2.23 in the prior year period. The company demonstrated effective cost management, with operating income growing by 6.0% to $1.33 billion.
Key operational highlights include a continued focus on integrating acquisitions and managing operational efficiencies. Republic Services maintained a healthy balance sheet, with total assets growing to $22.33 billionb and a solid credit rating, indicating financial stability and capacity for future growth initiatives. The company also provided a preliminary financial outlook for 2020, projecting adjusted diluted earnings per share in the range of $3.46 to $3.51.
02—Key points
Key Highlights
- Revenue for the nine months ended September 30, 2019, increased 2.8% year-over-year to $7.72 billion.
- Net income attributable to Republic Services, Inc. increased by 6.5% to $784.0 million for the first nine months of 2019.
- Diluted earnings per share for the nine months ended September 30, 2019, were $2.43, an increase from $2.23 in the prior year.
- Operating income grew by 6.0% to $1.33 billion for the nine months ended September 30, 2019.
- The company's preliminary financial outlook for 2020 projects adjusted diluted earnings per share between $3.46 and $3.51.
- Total assets grew to $22.33 billion as of September 30, 2019, up from $21.62 billion at the end of 2018.
- Republic Services continued its acquisition strategy, contributing 0.7% to revenue growth in the first nine months of 2019.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2019, Republic Services, Inc. kept $0.11.
- Revenue$2.65B100.0%
- Cost of revenue−$1.63B61.6%
- Gross profit$1.02B38.4%
- Operating costs−$547.7M20.7%
- Operating income$467.8M17.7%
- Interest, other & tax−$169.8M6.4%
- Net income$298.0M11.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2019filed October 31, 2019Financial Statements
Q3 FY2019 against Q3 FY2018
| Line item | Q3 FY2019Q3 FY2018 | Change |
|---|---|---|
| Revenue | $2.65B$2.57B | +3.2% |
| Cost of Revenue | $1.63B$1.58B | +3.4% |
| Gross Profit | $1.02B$988.30M | +2.8% |
| SG&A Expenses | $275.40M$260.90M | +5.6% |
| Operating Income | $467.80M$440.30M | +6.2% |
| Interest Expense | $98.00M$96.00M | +2.1% |
| Net Income | $298.00M$262.90M | +13.4% |
| EPS (Basic) | $0.93$0.81 | +14.8% |
| EPS (Diluted) | $0.93$0.81 | +14.8% |
| Shares Outstanding (Basic) | 320.63M325.48M | −1.5% |
| Shares Outstanding (Diluted) | 321.71M326.94M | −1.6% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in the first nine months of 2019?
Revenue growth was primarily driven by an increase in average yield of 2.8%, a fuel recovery fee contribution of 0.1%, and acquisitions which contributed 0.7%. These were partially offset by a decrease in volumes and environmental services revenue.
How did the company manage its expenses?
Republic Services demonstrated effective cost management. While cost of operations increased in aggregate dollars due to factors like labor and maintenance, it remained stable as a percentage of revenue (61.6%). Selling, general, and administrative expenses also remained relatively stable at 10.4% of revenue. The company also benefited from a gain on disposition of assets.
What is the company's outlook for 2020?
Republic Services provided a preliminary financial outlook for 2020, projecting adjusted diluted earnings per share in the range of $3.46 to $3.51. This outlook is based on current projections and early budget indicators.
Are there any significant environmental or legal matters that investors should be aware of?
The company is involved in ongoing legal proceedings and environmental remediation matters. Notably, the Bridgeton Landfill and West Lake Landfill Superfund site in Missouri are significant environmental matters. While the company believes it is adequately reserved, future adjustments to liabilities could occur. Additionally, a recent fire-related event in October 2019 is being assessed for its financial impact.
06—Continue