10-QPeriod: Q3 FY2022

REPUBLIC SERVICES, INC. Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 28, 2022For Securities:RSG

Summary

Republic Services, Inc. (RSG) reported solid results for the nine months ended September 30, 2022, demonstrating robust revenue growth and improved profitability. Total revenue increased by 19.7% year-over-year to $9.98 billion, driven by a combination of increased volume, average yield (pricing), and strategic acquisitions, most notably the significant acquisition of US Ecology. Net income attributable to Republic Services, Inc. rose by 16.7% to $1.14 billion, translating to diluted earnings per share of $3.60, a 17.6% increase from the prior year. The company's strong operational performance was supported by effective cost management, despite rising fuel costs, and strategic pricing initiatives. The acquisition of US Ecology significantly expanded the company's environmental solutions capabilities and is expected to contribute to future growth. RSG also continued to return value to shareholders through consistent dividend payments and share repurchases, reinforcing its commitment to shareholder returns.

Financial Highlights

52 data points
Beta

Revenue

$3.60B

39.0% Gross Margin

Net Income

$416.90M

11.6% Net Margin

EPS (Diluted)

$1.32

Total Assets

$28.40B

Cash & Equivalents

$81.40M

Free Cash Flow

$539.30M

Financial Statements
Beta
Revenue$3.60B
Cost of Revenue$2.19B
Gross Profit$1.40B
SG&A Expenses$361.00M
Operating Income$664.30M
Interest Expense$105.20M
Net Income$416.90M
EPS (Basic)$1.32
EPS (Diluted)$1.32
Shares Outstanding (Basic)316.51M
Shares Outstanding (Diluted)317.05M

Key Highlights

  • 1Revenue for the nine months ended September 30, 2022, increased by 19.7% to $9.98 billion, compared to $8.34 billion in the prior year period, driven by volume, pricing, and acquisitions.
  • 2Net income attributable to Republic Services, Inc. increased by 16.7% to $1.14 billion for the nine months ended September 30, 2022.
  • 3Diluted earnings per share rose by 17.6% to $3.60 for the nine months ended September 30, 2022.
  • 4The company completed the significant acquisition of US Ecology for $2.2 billion on May 2, 2022, expanding its environmental solutions offerings.
  • 5Operating income for the nine months ended September 30, 2022, increased to $1.81 billion from $1.57 billion in the prior year.
  • 6As of September 30, 2022, Republic Services had $1.0 billion in commercial paper outstanding, supported by its $3.0 billion revolving credit facility.
  • 7The company generated $2.38 billion in cash from operating activities for the nine months ended September 30, 2022, an increase from $2.14 billion in the prior year period.

Frequently Asked Questions

The primary drivers of the revenue increase were a combination of increased volume (2.7%), average yield (pricing) of 5.0%, strategic acquisitions contributing 9.0% (most notably the acquisition of US Ecology), increased fuel recovery fees (2.7%), and higher environmental solutions revenue (0.5%). This was partially offset by a decrease in recycling processing and commodity sales (0.2%).

The acquisition of US Ecology, valued at $2.2 billion and completed on May 2, 2022, significantly expanded Republic Services' environmental solutions segment (Group 3). Its financial results are included in the consolidated statements from May 2, 2022 onwards, contributing to overall revenue growth and the expansion of the company's service offerings nationwide.

Republic Services continues to focus on its acquisition growth strategy, primarily targeting privately held recycling, solid waste, and environmental solutions businesses. The company stated that it expects to invest at least $500 million in additional acquisitions in 2022. Beyond acquisitions, the company returned value to shareholders through dividend payments and share repurchases, and expects its existing cash, cash equivalents, and operational cash flows to be sufficient for its foreseeable needs, including capital expenditures, debt service, and dividends.

Republic Services' fuel recovery fee program is designed to mitigate the impact of increased fuel prices. The filing notes that for the nine months ended September 30, 2022, fuel costs increased significantly due to higher diesel prices, but a corresponding increase in fuel recovery fees helped offset these higher costs. The company estimates that a $0.20 per gallon change in diesel fuel price would impact fuel costs by approximately $26 million annually, with a similar offsetting impact from the fuel recovery fees.