10-QPeriod: Q1 FY2023

REPUBLIC SERVICES, INC. Quarterly Report for Q1 Ended Mar 31, 2023

Filed April 28, 2023For Securities:RSG

Summary

Republic Services, Inc. reported solid financial results for the first quarter of 2023, demonstrating continued growth and operational strength. Revenue increased by 20.6% year-over-year to $3.58 billion, driven by a combination of acquisitions, increased average yield (pricing), and stable volume growth. Profitability also saw a healthy increase, with Net Income attributable to Republic Services, Inc. growing to $383.9 million ($1.21 per diluted share) from $352.0 million ($1.11 per diluted share) in the prior year's first quarter. The company effectively managed its cost of operations, with a slight increase in the cost of operations as a percentage of revenue, but maintained strong Adjusted EBITDA margins of 29.0%. Strategic acquisitions, including the integration of US Ecology, continue to be a key driver of revenue growth, while disciplined capital allocation and debt management remain priorities for the company.

Financial Highlights

52 data points
Beta

Revenue

$3.58B

39.4% Gross Margin

Net Income

$383.90M

10.7% Net Margin

EPS (Diluted)

$1.21

Total Assets

$29.08B

Cash & Equivalents

$132.20M

Free Cash Flow

$309.10M

Financial Statements
Beta
Revenue$3.58B
Cost of Revenue$2.17B
Gross Profit$1.41B
SG&A Expenses$379.20M
Operating Income$644.10M
Interest Expense$126.70M
Net Income$383.90M
EPS (Basic)$1.21
EPS (Diluted)$1.21
Shares Outstanding (Basic)316.71M
Shares Outstanding (Diluted)317.14M

Key Highlights

  • 1Revenue increased by 20.6% to $3.58 billion for the three months ended March 31, 2023, compared to $2.97 billion in the same period of 2022.
  • 2Net income attributable to Republic Services, Inc. rose to $383.9 million ($1.21 per diluted share) from $352.0 million ($1.11 per diluted share) year-over-year.
  • 3Acquisitions, net of divestitures, contributed 11.0% to revenue growth.
  • 4Average yield (price increases) contributed 6.5% to revenue growth, indicating effective pricing strategies.
  • 5Operating income increased to $644.1 million from $560.6 million in the prior year's quarter.
  • 6The company maintained a strong Adjusted EBITDA margin of 29.0%.
  • 7Despite increased debt levels related to acquisitions, the company's total debt to EBITDA ratio of 3.05 was well within its covenant limit of 4.25.

Frequently Asked Questions

Revenue growth was primarily driven by a 20.6% increase year-over-year. Key contributors included revenue from acquisitions (11.0%), increased average yield or pricing (6.5%), and stable volume growth (1.6%). Fuel recovery fees also contributed positively.

While the cost of operations increased in absolute terms, it remained relatively stable as a percentage of revenue (60.6% in Q1 2023 vs. 59.4% in Q1 2022). The company managed to increase its operating income and net income, maintaining strong Adjusted EBITDA margins of 29.0%, indicating effective cost management and pricing strategies.

Acquisitions are a key part of Republic Services' growth strategy, contributing 11.0% to revenue growth in the quarter. The integration of US Ecology, acquired in May 2022, is ongoing and positively impacting revenue and the Environmental Solutions segment's Adjusted EBITDA margin. The company expects to invest at least $500 million in additional acquisitions in 2023.

Republic Services has a diversified debt structure. While debt levels increased due to acquisitions, the company maintains a strong credit rating and ample liquidity. As of March 31, 2023, its total debt to EBITDA ratio was 3.05, well within the covenant limit of 4.25. The company also recently issued new senior notes and has a substantial revolving credit facility available.