Republic Services, Inc.RSG reported mixed first-quarter 2021 results wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.
Adjusted earnings per share of 93 cents outpaced the consensus mark by 8.1% and improved year over year.
Republic Services continued to convert CPI-based contracts to more favorable pricing mechanisms for annual price adjustment during the quarter. It now has roughly $931 million in annual revenues, or 37% of nearly $2.5-billion CPI-based book of business. The company's average recycled-commodity price per ton sold in the first quarter was $133, reflecting a sequential increase of $23 per ton and year-over-year increase of $57 per ton.
So far this year, shares of Republic Services have gained 13.6% compared with 15.7% surge of the industry it belongs to and 11.6% rally of the Zacks S&P 500 composite.
Quarterly revenues of $2.59 billion lagged the consensus estimate by 0.6% but increased 1.7% year over year. The company’s top line includes a favorable impact of 0.7% from internal growth and 1% from acquisitions.
Revenues in the Collection segment totaled $1.96 billion, up 0.9% year over year. Transfer segment revenues of $146.2 million increased 7.3% year over year. Landfill segment revenues of $313.3 million increased 2.4% year over year. Environmental services segment revenues of $30 million declined 35.9% year over year. Other segment revenues of $149 million grew 18.3% year over year.
Adjusted EBITDA margin of 30.7% improved 270 basis points (bps) from the prior-year quarter.
Operating income was $492.4 million, up 13.7% from the year-ago quarter. Operating margin rose to 18.9% from 16.9% in the year-ago quarter.
Total selling, general and administrative expenses were $265.4 million, declining 4.2% from the year-ago quarter.
Republic Services, Inc. Price, Consensus and EPS Surprise
Republic Services, Inc. price-consensus-eps-surprise-chart | Republic Services, Inc. Quote
Balance Sheet and Cash Flow
Republic Services exited first-quarter 2021 with cash and cash equivalents of $23.2 million compared with $38.2 million at the end of the prior quarter. Long-term debt was $8.59 billion, flat sequentially.
The company generated $661 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $464.2 million.
In January 2021, the company paid out $135.5 million of cash dividend to shareholders on record as of Jan 4, 2021. As of Mar 31, 2021, the company’s quarterly payable dividend to shareholders was $135.6 million on record as of Apr 1, 2021. The dividend was paid out on Apr 15, 2021.
The company’s board of directors declared a regular quarterly dividend of 42.5 cents per share for shareholders on record as of Jul 1, 2021. The dividend will be paid out on Jul 15, 2021.
Share Repurchase Activity
During the reported quarter, the company repurchased 0.1 million shares for $12.7 million. As of Mar 31, 2021, the company had $2 billion available under its October 2020 repurchase program.
Republic raised its full-year adjusted diluted EPS and adjusted free cash flow guidance.
Adjusted EPS is now expected between $3.74 and $3.79, compared with the prior-guided range of $3.65-$3.73. The Zacks Consensus Estimate of $3.72 lies below the updated guidance.
The company now expects to generate $1.35 billion to $1.40 billion of adjusted free cash flow compared with the prior guidance of $1.30 billion to $1.375 billion.
Currently, Republic Services carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
Equifax’s EFX first-quarter 2021 adjusted earnings of $1.97 per share beat the Zacks Consensus Estimate by 29.6% and improved on a year-over-year basis. Revenues of $1.21 billion outpaced the consensus estimate by 7.9% and improved 26.6% year over year on a reported basis as well as on a local-currency basis.
Robert Half’s RHI first-quarter 2021 earnings of 98 cents per share beat the consensus mark by 22.5% and were up 24.1% year over year. Revenues of $1.4 billion surpassed the consensus mark by 3.3% but declined 7.2% year over year on a reported basis and 7.6% on an adjusted basis.
Omnicom’s OMC first-quarter 2021 adjusted earnings of $1.33 per share beat the consensus mark by 16.7% and increased 11.8% year over year. Total revenues of $3.4 billion surpassed the consensus estimate by 3.6% and marginally increased year over year.
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