Republic Services, Inc. Reports Second Quarter 2022 Results

·9 min read
Republic Services, Inc. Sets Date for Third Quarter 2022 Earnings Release and Conference Call
Republic Services logo (PRNewsfoto/Republic Services, Inc.)
  • Second Quarter Total Revenue Growth of 21 Percent

  • Reported Earnings Per Share of $1.17

  • Increased Adjusted Earnings Per Share 21 Percent Over the Prior Year to $1.32

  • Generated Cash Flow from Operations of $1,563 million and Adjusted Free Cash Flow of $1,152 million for the Six Months Ended June 30, 2022

  • Raised 2022 Full-Year Financial Guidance

  • Increased Quarterly Dividend by Approximately 8 Percent

PHOENIX, Aug. 4, 2022 /PRNewswire/ -- Republic Services, Inc. (NYSE: RSG) today reported net income of $371.9 million, or $1.17 per diluted share, for the three months ended June 30, 2022, versus $331.1 million, or $1.03 per diluted share, for the comparable 2021 period. Excluding certain benefits and expenses, on an adjusted basis, net income for the three months ended June 30, 2022 was $418.4 million, or $1.32 per diluted share, versus $349.9 million, or $1.09 per diluted share, for the comparable 2021 period.

"We are very pleased with our second quarter results, which demonstrate our ability to dynamically adjust price to offset higher levels of cost inflation and drive margin expansion in the underlying business," said Jon Vander Ark, president and chief executive officer. "As a result of our strong performance and outlook for the balance of the year, we are raising our full-year financial guidance."

Second-Quarter 2022 Highlights:

  • Total revenue growth of 21.4 percent includes 11.1 percent of organic growth and 10.3 percent of growth from acquisitions. Revenue growth from acquisitions includes US Ecology, which closed on May 2, 2022.

  • Second quarter revenue growth from average yield was 5.0 percent and volume increased revenue by 2.4 percent.

  • Second quarter core price increased revenue by 6.2 percent. Core price consisted of 7.8 percent in the open market and 3.5 percent in the restricted portion of the business.

  • Second quarter EPS was $1.17 per share, and adjusted EPS, a non-GAAP measure, was $1.32 per share. Adjusted EPS increased 21.1 percent over the prior year.

  • Year-to-date cash provided by operating activities was $1,563.5 million. Adjusted free cash flow, a non-GAAP measure, was $1,152.0 million, an increase of 14.1 percent versus the prior year.

  • Republic's second quarter net income was $371.9 million, or 10.9 percent of revenue.

  • Second quarter adjusted EBITDA, a non-GAAP measure, was $1.0 billion and adjusted EBITDA margin was 29.6 percent of revenue.

  • Year-to-date cash invested in acquisitions was $2.5 billion, $2.2 billion of which related to the acquisition of US Ecology.

  • Year-to-date cash returned to shareholders was $494.7 million, which included $203.5 million of share repurchases and $291.2 million of dividends paid.

  • The Company's average recycled commodity price per ton sold during the second quarter was $218. This represents an increase from the first quarter of 2022 of $17 per ton and an increase of $48 per ton over the prior year.

  • The Company was named to 3BL Media's 100 Best Corporate Citizens list for the third consecutive year. The ranking recognizes Republic's ESG leadership in climate change, environment and governance.

Raised Full-Year 2022 Financial Guidance

Republic raised its full-year adjusted diluted EPS guidance to $4.77 to $4.80 and its full-year adjusted free cash flow guidance to $1,700 million to $1,725 million.

Please refer to the Information Regarding Forward-Looking Statements section of this document.

Company Increases Quarterly Dividend

Republic continues to increase cash returns to shareholders and previously announced that its Board of Directors approved a 3.5-cent increase in the quarterly dividend. The quarterly dividend of $0.495 per share for shareholders of record on October 3, 2022 will be paid on October 14, 2022.

Presentation of Certain Non-GAAP Measures

Adjusted diluted earnings per share, adjusted net income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA by business type, adjusted EBITDA margin by business type and adjusted free cash flow are described in the Reconciliation of Certain Non-GAAP Measures section of this document.

About Republic Services

Republic Services, Inc. is a leader in the environmental services industry. Through its subsidiaries, the Company provides customers with the most complete set of products and services, including recycling, solid waste, special waste, hazardous waste, container rental and field services. Republic's industry-leading commitments to advance circularity, reduce emissions and decarbonize operations are helping deliver on its vision to partner with customers to create a more sustainable world. For more information, please visit RepublicServices.com.

For more information, contact:


Media Inquiries

Investor Inquiries

Donna Egan (480) 757-9770

Aaron Evans (480) 718-0309

media@RepublicServices.com

investor@RepublicServices.com

SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION

AND OPERATING DATA





REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)






June 30,


December 31,


2022


2021


(Unaudited)



ASSETS

Current assets:




Cash and cash equivalents

$ 119.4


$ 29.0

Accounts receivable, less allowance for doubtful accounts and other of $50.6 and $38.5, respectively

1,654.7


1,271.4

Prepaid expenses and other current assets

366.5


410.4

Total current assets

2,140.6


1,710.8

Restricted cash and marketable securities

121.5


139.0

Property and equipment, net

10,395.8


9,232.1

Goodwill

14,166.3


12,826.0

Other intangible assets, net

398.7


259.5

Other assets

990.0


787.6

Total assets

$ 28,212.9


$ 24,955.0

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Accounts payable

$ 1,044.6


$ 910.0

Notes payable and current maturities of long-term debt

313.8


8.2

Deferred revenue

419.6


381.3

Accrued landfill and environmental costs, current portion

121.3


124.5

Accrued interest

74.0


62.1

Other accrued liabilities

961.3


929.5

Total current liabilities

2,934.6


2,415.6

Long-term debt, net of current maturities

11,589.5


9,546.2

Accrued landfill and environmental costs, net of current portion

2,072.8


1,837.7

Deferred income taxes and other long-term tax liabilities, net

1,432.4


1,229.5

Insurance reserves, net of current portion

302.4


303.9

Other long-term liabilities

665.2


642.4

Commitments and contingencies




Stockholders' equity:




Preferred stock, par value $0.01 per share; 50 shares authorized; none issued


Common stock, par value $0.01 per share; 750 shares authorized; 320.1 and 319.6 issued including shares held in treasury, respectively

3.2


3.2

Additional paid-in capital

2,818.9


2,789.5

Retained earnings

6,907.1


6,475.6

Treasury stock, at cost; 4.1 and 2.4 shares, respectively

(500.4)


(274.8)

Accumulated other comprehensive loss, net of tax

(13.4)


(14.6)

Total Republic Services, Inc. stockholders' equity

9,215.4


8,978.9

Non-controlling interests in consolidated subsidiary

0.6


0.8

Total stockholders' equity

9,216.0


8,979.7

Total liabilities and stockholders' equity

$ 28,212.9


$ 24,955.0

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)










Three Months Ended June 30,


Six Months Ended June 30,


2022


2021


2022


2021

Revenue

$ 3,413.6


$ 2,812.3


$ 6,383.7


$ 5,408.2

Expenses:








Cost of operations

2,064.4


1,650.2


3,828.1


3,184.0

Depreciation, amortization and depletion

337.6


303.0


647.9


585.2

Accretion

22.4


20.7


44.1


41.1

Selling, general and administrative

391.5


315.8


699.3


581.2

Withdrawal costs - multiemployer pension funds

2.2



2.2


Loss (gain) on business divestitures and impairments, net


0.9



(0.2)

Restructuring charges

5.9


3.8


11.9


6.6

Operating income

589.6


517.9


1,150.2


1,010.3

Interest expense

(94.0)


(78.4)


(177.5)


(156.7)

Loss from unconsolidated equity method investments

(13.6)


(12.4)


(17.4)


(28.9)

Interest income

0.7


0.6


1.2


1.4

Other (expense) income, net

(4.6)


(0.3)


(6.2)


1.4

Income before income taxes

478.1


427.4


950.3


827.5

Provision for income taxes

106.3


95.4


226.6


199.1

Net income

371.8


332.0


723.7


628.4

Net loss (income) attributable to non-controlling interests in consolidated subsidiary

0.1


(0.9)


0.2


(1.4)

Net income attributable to Republic Services, Inc.

$ 371.9


$ 331.1


$ 723.9


$ 627.0

Basic earnings per share attributable to Republic Services, Inc. stockholders:








Basic earnings per share

$ 1.18


$ 1.04


$ 2.29


$ 1.96

Weighted average common shares outstanding

316.5


319.5


316.5


319.5

Diluted earnings per share attributable to Republic Services, Inc. stockholders:








Diluted earnings per share

$ 1.17


$ 1.03


$ 2.28


$ 1.96

Weighted average common and common equivalent shares outstanding

317.0


320.0


317.1


319.9

Cash dividends per common share

$ 0.460


$ 0.425


$ 0.920


$ 0.850

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


Six Months Ended June 30,


2022


2021

Cash provided by operating activities:




Net income

$ 723.7


$ 628.4

Adjustments to reconcile net income to cash provided by operating activities:




Depreciation, amortization, depletion and accretion

692.0


626.3

Non-cash interest expense

38.1


34.2

Stock-based compensation

21.2


38.6

Deferred tax provision

52.8


42.5

Provision for doubtful accounts, net of adjustments

17.2


11.4

(Gain) loss on disposition of assets and asset impairments, net

(3.2)


0.2

Environmental adjustments


4.8

Loss from unconsolidated equity method investments

17.4


28.9

Other non-cash items

6.3


(1.7)

Change in assets and liabilities, net of effects from business acquisitions and divestitures:




Accounts receivable

(150.4)


(68.1)

Prepaid expenses and other assets

72.6


88.8

Accounts payable

167.1


54.4

Capping, closure and post-closure expenditures

(18.0)


(26.8)

Remediation expenditures

(21.1)


(21.7)

Other liabilities

(52.2)


42.6

Cash provided by operating activities

1,563.5


1,482.8

Cash (used in) provided by investing activities:




Purchases of property and equipment

(647.3)


(608.6)

Proceeds from sales of property and equipment

20.0


8.2

Cash used in acquisitions and investments, net of cash and restricted cash acquired

(2,655.0)


(576.6)

Cash received from business divestitures


45.9

Purchases of restricted marketable securities

(9.1)


(16.6)

Sales of restricted marketable securities

8.5


14.9

Other

(1.0)


(0.3)

Cash used in investing activities

(3,283.9)


(1,133.1)

Cash provided by (used in) financing activities:




Proceeds from credit facilities and notes payable, net of fees

5,338.9


2,737.9

Payments of credit facilities and notes payable

(3,027.1)


(2,756.1)

Issuances of common stock, net

(15.5)


(9.5)

Purchases of common stock for treasury

(203.5)


(40.1)

Cash dividends paid

(291.2)


(271.1)

Distributions paid to non-controlling interests in consolidated subsidiary


(1.2)

Contingent consideration payments

(2.9)


(11.8)

Cash provided by (used in) financing activities

1,798.7


(351.9)

Effect of foreign exchange rate changes on cash

(0.1)


Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents

78.2