01—Abstract
Summary
Summary of the 10-Q filed November 6, 2020. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. reported its third-quarter results for the period ending September 29, 2020.
The company experienced a year-over-year decrease in revenue for both the three months and nine months ended September 30, 2020, largely attributed to reduced service levels and waste volumes stemming from the COVID-19 pandemic. Despite these revenue challenges, the company demonstrated resilience, with operating income remaining relatively stable for the three-month period and seeing a slight decrease for the nine-month period on a reported basis. Net income attributable to Republic Services, Inc. also saw a decline compared to the prior year, with diluted earnings per share reflecting this trend.
The company's financial performance was impacted by various one-time charges and gains, including a significant loss on the extinguishment of debt during the third quarter. Management highlighted efforts to manage costs and maintain operational efficiency amidst the economic disruptions caused by the pandemic. The company provided updated financial guidance for the full year 2020, indicating anticipated adjusted diluted earnings per share.
02—Key points
Key Highlights
- Revenue for the nine months ended September 30, 2020, decreased by 1.8% to $7,580.4 million compared to $7,722.7 million in the same period of 2019, primarily due to COVID-19 related volume declines.
- Net income attributable to Republic Services, Inc. for the nine months ended September 30, 2020, was $731.8 million, a decrease from $784.0 million in the prior year.
- Diluted earnings per share for the nine months ended September 30, 2020, were $2.29, down from $2.43 in the prior year.
- The company incurred a $34.5 million loss on the extinguishment of debt during the third quarter of 2020 related to the redemption of senior notes.
- Operating income for the nine months ended September 30, 2020, was $1,276.4 million, a decrease from $1,328.0 million in the prior year.
- The company maintained a strong balance sheet with total assets of $23,110.1 million as of September 30, 2020.
- Republic Services reported updated 2020 financial guidance, anticipating adjusted diluted earnings per share between $3.37 and $3.40.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2020, Republic Services, Inc. kept $0.10.
- Revenue$2.57B100.0%
- Cost of revenue−$1.54B59.7%
- Gross profit$1.04B40.3%
- Operating costs−$588.8M22.9%
- Operating income$447.9M17.4%
- Interest, other & tax−$187.7M7.3%
- Net income$260.2M10.1%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2020filed November 6, 2020Financial Statements
Q3 FY2020 against Q3 FY2019
| Line item | Q3 FY2020Q3 FY2019 | Change |
|---|---|---|
| Revenue | $2.57B$2.65B | −2.8% |
| Cost of Revenue | $1.54B$1.63B | −5.9% |
| Gross Profit | $1.04B$1.02B | +2.1% |
| SG&A Expenses | $256.10M$275.40M | −7.0% |
| Operating Income | $447.90M$467.80M | −4.3% |
| Interest Expense | $88.90M$98.00M | −9.3% |
| Net Income | $260.20M$298.00M | −12.7% |
| EPS (Basic) | $0.81$0.93 | −12.9% |
| EPS (Diluted) | $0.81$0.93 | −12.9% |
| Shares Outstanding (Basic) | 319.20M320.63M | −0.4% |
| Shares Outstanding (Diluted) | 319.73M321.71M | −0.6% |
05—Questions
Frequently Asked Questions
How did the COVID-19 pandemic impact Republic Services' financial performance in this quarter?
The COVID-19 pandemic significantly impacted Republic Services' performance, primarily through reduced service levels and waste volumes, leading to a decrease in revenue. The company also incurred incremental costs related to business resumption, such as for safety equipment and cleaning, and guaranteed minimum work weeks for some employees. However, cost-saving measures in other areas helped mitigate some of these impacts.
What was the impact of debt extinguishment on the company's results?
Republic Services incurred a significant loss on the extinguishment of debt during the third quarter of 2020, amounting to $34.5 million. This loss was primarily due to a cash premium paid for the redemption of senior notes and the related unamortized deferred issuance costs. This impacted reported net income and earnings per share for the period.
How has the company managed its debt and liquidity during this period?
Republic Services managed its debt by issuing new, lower-interest senior notes and using the proceeds to redeem older, higher-interest notes. As of September 30, 2020, the company had no borrowings outstanding under its significant credit facilities, indicating a strong liquidity position. The company also maintained its dividend payments and continued its share repurchase authorization, albeit at a slower pace than the previous year.
What is the outlook for Republic Services given the ongoing economic uncertainties?
The company provided updated full-year 2020 guidance, suggesting confidence in its ability to navigate the challenging economic environment. Management highlighted ongoing efforts to drive operational efficiencies and cost management. The company's essential service nature provides a degree of stability, but continued economic disruption from the pandemic remains a key risk factor.
06—Continue