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Republic Services (RSG) Beats on Q1 Earnings & Revenues

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Waste management firm Republic Services, Inc. (RSG - Free Report) started 2017 on a positive note with strong first-quarter results, with healthy year-over-year increase in earnings and revenues. GAAP earnings for the reported quarter were $187.8 million or 55 cents per share compared with $156.7 million or 45 cents per share in the year-ago quarter. The year-over-year increase in earnings was primarily attributable to higher revenues.

Excluding non-recurring items, adjusted earnings for the first quarter were $187.3 million or 55 cents per share compared with $167.3 million or 48 cents per share in the year-earlier quarter. Adjusted earnings for the reported quarter exceeded the Zacks Consensus Estimate by 2 cents.

Top-Line Performance

Quarterly revenues improved 6.4% year over year to $2,392.8 million and exceeded the Zacks Consensus Estimate of $2,357 million. The year-over-year increase in revenues was driven by a 2.3% rise in average yield and a 1.0% increase in volume. Core price increased revenues by 4.1% during the quarter.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter was $655.2 million, resulting in an adjusted EBITDA margin of 27.4% compared with the respective tallies of $626.0 million and 27.8% in the year-ago period.

Segmental Details

Revenues from Collection increased 3.8% year over year to $1,802.9 million as all the sub-segments fared relatively better in the reported quarter. Revenues from Transfer improved 6.6% year over year to $110.6 million. Energy Services revenues increased 44.9% to $27.1 million. Revenues from Landfill were up 4.1% to $279.6 million while sales from the Other segment increased 41.4% year over year to $164.5 million.

By the end of the reported quarter, about 18% of the total fleet was operating on natural gas. Approximately 75% of the residential fleet was automated and 96% was certified under the standardized maintenance program.

Republic Services, Inc. Price, Consensus and EPS Surprise

 

Republic Services, Inc. Price, Consensus and EPS Surprise | Republic Services, Inc. Quote

Balance Sheet & Cash Flow

Cash and cash equivalents at the quarter end were $33.2 million while long-term debt (net of current maturities) was $7,663.9 million.

Cash from operating activities totaled $444.3 million for the reported quarter compared with $431.5 million in the prior-year period. Adjusted free cash flow for the quarter was $240.2 million, significantly up from $159.9 million in the year-ago period.

Share Repurchase

Republic Services has a share repurchase program in place since Nov 2010. During the first quarter, the company repurchased 1.8 million shares under this program for $109.8 million at an average price of $60.66 per share.

Moving Forward

Republic Services is likely to generate a healthy cash flow in the future with diligent execution of operational plans and a realigned operational structure. The company has strong underlying fundamentals and is set to achieve consistent earnings growth while creating significant shareholder value.

Republic Services currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Stericycle, Inc. (SRCL - Free Report) , Waste Connections, Inc. (WCN - Free Report) and US Ecology, Inc. , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stericycle has a long-term earnings growth expectation of 9.7%. It reported a positive earnings surprise of 2.28% in the trailing four quarters.

Waste Connections has a long-term earnings growth expectation of 15.8%. It posted a positive earnings surprise of 8.2% in the trailing four quarters.

US Ecology has a long-term earnings growth expectation of 5.0%.  

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