01—Abstract
Summary
Summary of the 10-Q filed October 28, 2022. Cited figures are marked; the original filing is the authoritative source.
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 billiona, 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.
02—Key points
Key Highlights
- Revenue 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.
- Net income attributable to Republic Services, Inc. increased by 16.7% to $1.14 billion for the nine months ended September 30, 2022.
- Diluted earnings per share rose by 17.6% to $3.60 for the nine months ended September 30, 2022.
- The company completed the significant acquisition of US Ecology for $2.2 billion on May 2, 2022, expanding its environmental solutions offerings.
- Operating income for the nine months ended September 30, 2022, increased to $1.81 billion from $1.57 billion in the prior year.
- As of September 30, 2022, Republic Services had $1.0 billion in commercial paper outstanding, supported by its $3.0 billion revolving credit facility.
- The 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.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Republic Services, Inc. kept $0.12.
- Revenue$3.60B100.0%
- Cost of revenue−$2.19B61.0%
- Gross profit$1.40B39.0%
- Operating costs−$739.3M20.5%
- Operating income$664.3M18.5%
- Interest, other & tax−$247.4M6.9%
- Net income$416.9M11.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed October 28, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $3.60B$2.93B | +22.6% |
| Cost of Revenue | $2.19B$1.74B | +25.8% |
| Gross Profit | $1.40B$1.19B | +18.0% |
| SG&A Expenses | $361.00M$299.00M | +20.7% |
| Operating Income | $664.30M$564.20M | +17.7% |
| Interest Expense | $105.20M$78.10M | +34.7% |
| Net Income | $416.90M$350.80M | +18.8% |
| EPS (Basic) | $1.32$1.10 | +20.0% |
| EPS (Diluted) | $1.32$1.10 | +20.0% |
| Shares Outstanding (Basic) | 316.51M318.64M | −0.7% |
| Shares Outstanding (Diluted) | 317.05M319.37M | −0.7% |
05—Questions
Frequently Asked Questions
What was the primary driver of the revenue increase in the nine months ended September 30, 2022?
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%).
How did the acquisition of US Ecology impact the company's financial performance?
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.
What is the company's outlook regarding future acquisitions and capital allocation?
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.
How is the company managing rising fuel costs?
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.
06—Continue