10-QPeriod: Q1 FY2020

REPUBLIC SERVICES, INC. Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 6, 2020For Securities:RSG

Summary

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 billion, 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 million. 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.

Financial Highlights

55 data points
Beta

Revenue

$2.55B

39.3% Gross Margin

Net Income

$246.80M

9.7% Net Margin

EPS (Diluted)

$0.77

Total Assets

$22.91B

Cash & Equivalents

$281.60M

Free Cash Flow

$222.70M

Financial Statements
Beta
Revenue$2.55B
Cost of Revenue$1.55B
Gross Profit$1.00B
SG&A Expenses$277.10M
Operating Income$433.10M
Interest Expense$96.70M
Net Income$246.80M
EPS (Basic)$0.77
EPS (Diluted)$0.77
Shares Outstanding (Basic)319.58M
Shares Outstanding (Diluted)320.23M

Key Highlights

  • 1Revenue 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.
  • 2Net 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.
  • 3Cash 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.
  • 4The company reported $3.1 million in 'business resumption costs' related to COVID-19, including expenses for safety equipment and cleaning.
  • 5Republic Services suspended its full-year 2020 financial guidance due to the uncertain economic impact of the COVID-19 pandemic.
  • 6The company's available liquidity remained strong, with $1.53 billion available under its credit facility as of March 31, 2020.
  • 7Investments in acquisitions contributed 1.0% to revenue growth, reflecting the company's ongoing acquisition strategy.

Frequently Asked Questions

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.

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%.

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.

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.