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Republic Services (RSG) Beats on Q2 Earnings, Raises '21 View

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Republic Services, Inc. RSG reported better-than-expected second-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate.

Adjusted earnings (excluding 6 cents from non-recurring items) per share of $1.09 outpaced the consensus mark by 16% and rallied 34.6% 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 nearly $950 million in annual revenues. The company's average recycled-commodity price per ton sold in the second quarter was $170, up $37 per ton on a sequential basis and $69 year over year.

So far this year, shares of Republic Services have gained 32.3% compared with 28% surge of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research


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Revenues

Quarterly revenues of $2.8 billion surpassed the consensus estimate by 3.5% and increased 14.6% year over year. The company’s top line includes a favorable impact of 12.6% from internal growth and 2% from acquisitions.

Revenues in the Collection segment totaled $2.1 billion, up 14.8% year over year. Transfer segment revenues of $175.6 million increased 17% year over year. Landfill segment revenues of $368.1 million increased 16.6% year over year. Environmental services segment revenues of $29.3 million declined 2.7% year over year. Other segment revenues of $169.2 million increased 31.6% year over year.

Operating Results

Adjusted EBITDA margin of 30.6% improved 110 basis points (bps) from the prior-year quarter’s levels.

Operating income was $517.9 million, up 31% from the year-ago quarter’s levels. Operating margin rose to 18.4% from 16.1% in the year-ago quarter.
Total selling, general and administrative expenses were $315.8 million, up 20.5% from the year-ago quarter’s figures.

Republic Services, Inc. Price, Consensus and EPS Surprise

Republic Services, Inc. Price, Consensus and EPS Surprise
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 second-quarter 2021 with cash and cash equivalents of $34 million compared with $23.2 million at the end of the prior quarter. Long-term debt was $8.83 billion compared with $8.59 billion at the end of the prior quarter.

The company generated $821.8 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $545.2 million.

Dividend Hike

The company’s board of directors declared a dividend hike of 8.2% to 46 cents per share. This is marked as the 17th consecutive year of dividend hike. The hiked dividend will be payable on Oct 15 to stockholders, as of record date Oct 1.

In April 2021, the company paid out $135.6 million of cash dividend to shareholders on record as of Apr 1, 2021. As of Jun 30, 2021, the company’s quarterly payable dividend to shareholders was $135.4 million on record as of Jul 1, 2021. The dividend was paid out on Jul 15, 2021.

Share Repurchase Activity

During the reported quarter, the company repurchased 0.7 million shares for $79.5 million. As of Jun 30, 2021, the company had $1.9 billion available under its October 2020 repurchase program.

Raised 2021 Guidance

Republic raised its full-year adjusted diluted EPS and adjusted free cash flow guidance.

Adjusted EPS is now expected between $4.00 and $4.05 compared with the prior guidance of $3.74 and $3.79. The Zacks Consensus Estimate of $3.85 lies below the updated guidance.

The company now expects to generate $1.45 billion to $1.475 billion of adjusted free cash flow compared with the prior guidance of $1.35 billion to $1.40 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 second-quarter 2021 adjusted earnings of $1.98 per share beat the Zacks Consensus Estimate by 15.8% and increased on a year-over-year basis. Revenues of $1.23 billion outpaced the consensus estimate by 6.4% and rose 26% year over year on a reported basis and 23% on a local-currency basis.

Robert Half’s RHI second-quarter 2021 earnings of $1.33 per share beat the consensus mark by 26.7% and were up more than 100% year over year. Revenues of $1.6 billion surpassed the consensus mark by 6.5% and increased 42.3% year over year on a reported basis and 40% on an adjusted basis.

ManpowerGroup’s MAN second-quarter 2021 adjusted earnings of $2.02 per share beat the consensus mark by 68.2% and increased more than 100%. Revenues of $5.28 billion beat the consensus mark by 2% and rallied 41% year over year on a reported basis and 31.3% on a constant-currency (cc) basis.


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