01—Abstract
Summary
Summary of the 10-Q filed May 6, 2020. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its first-quarter 2020 financial results, demonstrating resilience amidst the initial impacts of the COVID-19 pandemic.
Total revenue grew by 3.4% year-over-year to $2.55 billiona, driven by increases in average yield and acquisition activity. Net income attributable to Republic Services, Inc. rose to $246.3 million, or $0.77 per diluted share, up from $234.2 million, or $0.72 per diluted share, in the prior year's first quarter. The company highlighted increased operating costs related to business resumption efforts due to COVID-19, such as for additional safety equipment and cleaning.
Despite these increased costs and economic uncertainties, Republic Services maintained strong operational performance and positive cash flow from operations, which increased to $569.5 millionb. The company also provided an update on its financial flexibility, noting sufficient liquidity from its credit facilities and cash on hand to meet its obligations, while also suspending its full-year 2020 financial guidance due to the unpredictable nature of the pandemic's economic impact.
02—Key points
Key Highlights
- Revenue increased by 3.4% to $2.55 billion for the three months ended March 31, 2020, compared to $2.47 billion in the prior year period.
- Net income attributable to Republic Services, Inc. increased to $246.3 million, or $0.77 per diluted share, from $234.2 million, or $0.72 per diluted share, in Q1 2019.
- Cash provided by operating activities was $569.5 million for the first quarter of 2020, an increase from $553.7 million in the same period of 2019.
- The company reported $3.1 million in 'business resumption costs' related to COVID-19, including expenses for safety equipment and cleaning.
- Republic Services suspended its full-year 2020 financial guidance due to the uncertain economic impact of the COVID-19 pandemic.
- The company's available liquidity remained strong, with $1.53 billion available under its credit facility as of March 31, 2020.
- Investments in acquisitions contributed 1.0% to revenue growth, reflecting the company's ongoing acquisition strategy.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2020, Republic Services, Inc. kept $0.10.
- Revenue$2.55B100.0%
- Cost of revenue−$1.55B60.7%
- Gross profit$1.00B39.3%
- Operating costs−$570.8M22.4%
- Operating income$433.1M17.0%
- Interest, other & tax−$186.3M7.3%
- Net income$246.8M9.7%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2020filed May 6, 2020Financial Statements
Q1 FY2020 against Q1 FY2019
| Line item | Q1 FY2020Q1 FY2019 | Change |
|---|---|---|
| Revenue | $2.55B$2.47B | +3.4% |
| Cost of Revenue | $1.55B$1.51B | +2.9% |
| Gross Profit | $1.00B$964.50M | +4.1% |
| SG&A Expenses | $277.10M$266.40M | +4.0% |
| Operating Income | $433.10M$422.80M | +2.4% |
| Interest Expense | $96.70M$100.40M | −3.7% |
| Net Income | $246.80M$234.90M | +5.1% |
| EPS (Basic) | $0.77$0.73 | +5.5% |
| EPS (Diluted) | $0.77$0.72 | +6.9% |
| Shares Outstanding (Basic) | 319.58M322.28M | −0.8% |
| Shares Outstanding (Diluted) | 320.23M323.45M | −1.0% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic impact Republic Services' first-quarter 2020 results?
The COVID-19 pandemic led to an increase in 'business resumption costs,' totaling $3.1 million, for items like additional safety equipment and cleaning. While the broader economic impact was still unfolding, the company experienced some volume declines in collection lines of business due to reduced service levels. However, revenue growth and strong operational execution largely offset these initial negative impacts for the quarter. Republic Services suspended its full-year guidance due to continued uncertainty.
What was the revenue performance for Republic Services in Q1 2020?
Republic Services reported a 3.4% increase in revenue for the first quarter of 2020, reaching $2.55 billion, up from $2.47 billion in the same period of 2019. This growth was primarily driven by a 2.9% increase in average yield (pricing) and a 1.0% contribution from net acquisitions. Volume increased by 0.4%.
How is the company managing its debt and liquidity in the current environment?
Republic Services maintained a strong liquidity position, with $1.53 billion available under its $2.25 billion revolving credit facility as of March 31, 2020. The company reported strong operating cash flow of $569.5 million. They also proactively managed their debt, issuing new senior notes and using proceeds to repay maturing debt. The company affirmed its compliance with debt covenants and stated its belief that its financial resources are sufficient to meet its obligations.
What are the key components of Republic Services' cost structure, and how did they change?
The primary cost of operations include labor, transfer and disposal costs, and maintenance. For Q1 2020, labor costs increased due to annual wage adjustments and an extra workday. Fuel costs decreased due to lower prices and tax credits. 'Business resumption costs' related to COVID-19 were an added expense. The company also noted a favorable insurance recovery of $10.8 million related to its Bridgeton Landfill, which reduced remediation expenses.
06—Continue