Republic Services, Inc. Reports First Quarter 2018 Results
"We are pleased with our strong start to the year. Through the execution of our strategy we delivered solid growth in both price and volume, expanded EBITDA margins and produced double-digit growth in earnings and free cash flow per share independent of the benefit from tax reform," said
First-Quarter Highlights:
- EPS was
$0.72 per share. Adjusted EPS, a non-GAAP measure, was$0.74 per share, an increase of 35 percent over the prior year. - Cash provided by operating activities was
$581.4 million and adjusted free cash flow, a non-GAAP measure, was$355.7 million , an increase of approximately 48 percent over the prior year. Adjusted free cash flow per share increased 52 percent over the prior year. - Total cash returned to shareholders through dividends and share repurchases was
$350 million . - Total revenue increased 5.6 percent over the prior year, excluding the impact of the new revenue standard.
- Revenue growth from average yield was 2.2 percent and volume increased 2.0 percent.
- Core price increased revenues by 3.8 percent, which consisted of 4.6 percent in the open market and 2.5 percent in the restricted portion of the business.
- Adjusted EBITDA was
$699.4 million , an increase of approximately 7 percent over the prior year. Adjusted EBITDA margin was 28.8 percent of revenue, an increase of 140 basis points over the prior year. Excluding the impact of the new revenue standard, adjusted EBITDA margin increased 30 basis points over the prior year. - SG&A expenses as a percentage of revenue decreased by 20 basis points over the prior year, excluding the impact of the new revenue standard.
- The Company invested
$26 million in tuck-in acquisitions during the quarter ended March 31, 2018. Republic continued to convert CPI-based contracts to more favorable pricing mechanisms for the annual price adjustment. The Company now has approximately$570 million in annual revenue tied to either a waste-related index or a fixed-rate increase of 3 percent or greater.Republic was named to the elite 2018 World's Most Ethical Companies List by theEthisphere Institute , a global leader in defining and advancing the standards of ethical business practices.- The Company was recognized on the first annual Barron's 100 Most Sustainable Companies list.
Company Declares Quarterly Dividend
Presentation of Certain Non-GAAP Measures
Adjusted diluted earnings per share, adjusted net income, adjusted EBITDA, adjusted EBITDA margin, and adjusted free cash flow are described in the Reconciliation of Certain Non-GAAP Measures section of this document.
Unaudited Supplemental Schedules
Included in Exhibit 99.2 is a proforma presentation of our 2017 financial results had we adopted the new revenue recognition standard as of
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SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION |
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AND OPERATING DATA |
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REPUBLIC SERVICES, INC. |
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CONSOLIDATED BALANCE SHEETS |
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(in millions, except per share amounts) |
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March 31, |
December 31, |
||||||
2018 |
2017 |
||||||
(Unaudited) |
|||||||
ASSETS |
|||||||
Current assets: |
|||||||
Cash and cash equivalents |
$ |
62.6 |
$ |
83.3 |
|||
Accounts receivable, less allowance for doubtful accounts and other of $32.7 and $38.9, respectively |
1,052.2 |
1,105.9 |
|||||
Prepaid expenses and other current assets |
239.2 |
247.6 |
|||||
Total current assets |
1,354.0 |
1,436.8 |
|||||
Restricted cash and marketable securities |
116.3 |
141.1 |
|||||
Property and equipment, net |
7,783.1 |
7,777.4 |
|||||
Goodwill |
11,329.1 |
11,315.4 |
|||||
Other intangible assets, net |
121.3 |
141.1 |
|||||
Other assets |
404.9 |
335.2 |
|||||
Total assets |
$ |
21,108.7 |
$ |
21,147.0 |
|||
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||||||
Current liabilities: |
|||||||
Accounts payable |
$ |
572.4 |
$ |
598.1 |
|||
Notes payable and current maturities of long-term debt |
707.0 |
706.7 |
|||||
Deferred revenue |
341.5 |
312.1 |
|||||
Accrued landfill and environmental costs, current portion |
140.4 |
135.2 |
|||||
Accrued interest |
76.2 |
74.5 |
|||||
Other accrued liabilities |
722.7 |
808.2 |
|||||
Total current liabilities |
2,560.2 |
2,634.8 |
|||||
Long-term debt, net of current maturities |
7,499.7 |
7,480.7 |
|||||
Accrued landfill and environmental costs, net of current portion |
1,700.4 |
1,686.5 |
|||||
Deferred income taxes and other long-term tax liabilities, net |
836.5 |
796.4 |
|||||
Insurance reserves, net of current portion |
274.1 |
275.4 |
|||||
Other long-term liabilities |
323.5 |
312.1 |
|||||
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; 351.1 and 350.1 issued including shares held in treasury, respectively |
3.5 |
3.5 |
|||||
Additional paid-in capital |
4,871.6 |
4,839.6 |
|||||
Retained earnings |
4,309.3 |
4,152.5 |
|||||
Treasury stock, at cost; 22.5 and 18.4 shares, respectively |
(1,314.3) |
(1,059.4) |
|||||
Accumulated other comprehensive income, net of tax |
41.7 |
22.6 |
|||||
Total Republic Services, Inc. stockholders' equity |
7,911.8 |
7,958.8 |
|||||
Noncontrolling interests in consolidated subsidiary |
2.5 |
2.3 |
|||||
Total stockholders' equity |
7,914.3 |
7,961.1 |
|||||
Total liabilities and stockholders' equity |
$ |
21,108.7 |
$ |
21,147.0 |
REPUBLIC SERVICES, INC. |
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UNAUDITED CONSOLIDATED STATEMENTS OF INCOME |
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(in millions, except per share data) |
|||||||
Three Months Ended March 31, |
|||||||
2018 |
2017 |
||||||
Revenue |
$ |
2,427.5 |
$ |
2,392.8 |
|||
Expenses: |
|||||||
Cost of operations |
1,469.8 |
1,484.1 |
|||||
Depreciation, amortization and depletion |
263.1 |
249.9 |
|||||
Accretion |
20.4 |
20.0 |
|||||
Selling, general and administrative |
261.2 |
253.5 |
|||||
Withdrawal costs - multiemployer pension funds |
— |
1.1 |
|||||
Gain on disposition of assets and asset impairments, net |
(0.7) |
(8.3) |
|||||
Restructuring charges |
9.5 |
4.4 |
|||||
Operating income |
404.2 |
388.1 |
|||||
Interest expense |
(94.8) |
(89.4) |
|||||
Loss from unconsolidated equity method investment |
— |
(2.9) |
|||||
Interest income |
0.2 |
0.3 |
|||||
Other income, net |
1.0 |
0.1 |
|||||
Income before income taxes |
310.6 |
296.2 |
|||||
Provision for income taxes |
72.7 |
108.4 |
|||||
Net income |
237.9 |
187.8 |
|||||
Net income attributable to noncontrolling interests in consolidated subsidiary |
(0.2) |
— |
|||||
Net income attributable to Republic Services, Inc. |
$ |
237.7 |
$ |
187.8 |
|||
Basic earnings per share attributable to Republic Services, Inc. stockholders: |
|||||||
Basic earnings per share |
$ |
0.72 |
$ |
0.55 |
|||
Weighted average common shares outstanding |
330.7 |
339.9 |
|||||
Diluted earnings per share attributable to Republic Services, Inc. stockholders: |
|||||||
Diluted earnings per share |
$ |
0.72 |
$ |
0.55 |
|||
Weighted average common and common equivalent shares outstanding |
332.2 |
341.9 |
|||||
Cash dividends per common share |
$ |
0.345 |
$ |
0.320 |
REPUBLIC SERVICES, INC. |
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UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(in millions) |
|||||||
Three Months Ended March 31, |
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2018 |
2017 |
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Cash provided by operating activities: |
|||||||
Net income |
$ |
237.9 |
$ |
187.8 |
|||
Adjustments to reconcile net income to cash provided by operating activities: |
|||||||
Depreciation, amortization, depletion and accretion |
283.5 |
269.9 |
|||||
Non-cash interest expense |
10.9 |
10.9 |
|||||
Restructuring related charges |
9.5 |
4.4 |
|||||
Stock-based compensation |
11.1 |
9.6 |
|||||
Deferred tax provision |
25.3 |
8.7 |
|||||
Provision for doubtful accounts, net of adjustments |
6.8 |
5.4 |
|||||
Gain on disposition of assets and asset impairments, net |
(0.8) |
(9.0) |
|||||
Withdrawal costs - multiemployer pension funds |
— |
1.1 |
|||||
Environmental adjustments |
1.4 |
— |
|||||
Loss from unconsolidated equity method investment |
— |
2.9 |
|||||
Other non-cash items |
0.5 |
1.3 |
|||||
Change in assets and liabilities, net of effects from business acquisitions and divestitures: |
|||||||
Accounts receivable |
47.5 |
(26.1) |
|||||
Prepaid expenses and other assets |
4.4 |
33.1 |
|||||
Accounts payable |
(3.2) |
(18.2) |
|||||
Restructuring expenditures |
(8.4) |
(5.5) |
|||||
Capping, closure and post-closure expenditures |
(7.3) |
(9.7) |
|||||
Remediation expenditures |
(11.2) |
(11.3) |
|||||
Other liabilities |
(26.5) |
(10.9) |
|||||
Cash provided by operating activities |
581.4 |
444.4 |
|||||
Cash used in investing activities: |
|||||||
Purchases of property and equipment |
(263.3) |
(223.9) |
|||||
Proceeds from sales of property and equipment |
3.6 |
1.3 |
|||||
Cash used in business acquisitions and investments, net of cash acquired |
(19.1) |
(54.7) |
|||||
Cash received from (used in) business divestitures |
1.1 |
(14.5) |
|||||
Purchases of restricted marketable securities |
(30.2) |
(2.9) |
|||||
Sales of restricted marketable securities |
30.4 |
2.8 |
|||||
Other |
0.8 |
0.6 |
|||||
Cash used in investing activities |
(276.7) |
(291.3) |
|||||
Cash used in financing activities: |
|||||||
Proceeds from notes payable and long-term debt |
1,093.9 |
1,085.3 |
|||||
Payments of notes payable and long-term debt |
(1,073.4) |
(1,076.2) |
|||||
Issuances of common stock |
1.3 |
13.5 |
|||||
Purchases of common stock for treasury |
(254.5) |
(98.9) |
|||||
Cash dividends paid |
(114.4) |
(108.6) |
|||||
Other |
(2.5) |
(2.1) |
|||||
Cash used in financing activities |
(349.6) |
(187.0) |
|||||
(Decrease) increase in cash, cash equivalents, restricted cash and restricted cash equivalents |
(44.9) |
(33.9) |
|||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of year |
179.1 |
113.0 |
|||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period |
$ |
134.2 |
$ |
79.1 |
|||
You should read the following information in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K as of and for the year ended December 31, 2017. All amounts below are in millions and as a percentage of our revenue, except per share data.
The results presented below for the three months ended March 31, 2017 reflect our historical presentation prior to the adoption of the new revenue recognition standard. A pro forma presentation of our financial results for the three months ended March 31, 2017 had we adopted the new revenue recognition standard as of
REVENUE
The following table reflects our total revenue by line of business for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
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2018 |
2017 |
||||||||||||||
Collection: |
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Residential |
$ |
548.5 |
22.6 |
% |
$ |
564.3 |
23.6 |
% |
|||||||
Small-container |
748.6 |
30.9 |
733.6 |
30.7 |
|||||||||||
Large-container |
515.4 |
21.2 |
495.3 |
20.7 |
|||||||||||
Other |
10.5 |
0.4 |
9.7 |
0.4 |
|||||||||||
Total collection (1) |
1,823.0 |
75.1 |
1,802.9 |
75.4 |
|||||||||||
Transfer |
288.3 |
282.2 |
|||||||||||||
Less: intercompany |
(168.6) |
(171.6) |
|||||||||||||
Transfer, net |
119.7 |
4.9 |
110.6 |
4.6 |
|||||||||||
Landfill |
549.7 |
504.7 |
|||||||||||||
Less: intercompany |
(243.2) |
(232.4) |
|||||||||||||
Landfill, net |
306.5 |
12.6 |
272.3 |
11.4 |
|||||||||||
Energy services |
47.8 |
2.0 |
27.1 |
1.1 |
|||||||||||
Other: |
|||||||||||||||
Sale of recycled commodities (2) |
76.0 |
3.1 |
133.9 |
5.6 |
|||||||||||
Other non-core |
54.5 |
2.3 |
46.0 |
1.9 |
|||||||||||
Total other |
130.5 |
5.4 |
179.9 |
7.5 |
|||||||||||
Total revenue |
$ |
2,427.5 |
100.0 |
% |
$ |
2,392.8 |
100.0 |
% |
|||||||
(1) In accordance with our adoption of the new revenue recognition standard, municipal franchise fees were presented as a reduction to revenue for the three months ended March 31, 2018. Similar fees were presented as a cost of operations for the three months ended March 31, 2017. |
(2) In accordance with our adoption of the new revenue recognition standard, costs paid to suppliers associated with recycled commodities were presented as a reduction to revenue for the three months ended March 31, 2018. Similar costs were presented as a cost of operations for the three months ended March 31, 2017. |
The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||
2018 |
2017 |
||||
Average yield |
2.2 |
% |
2.3 |
% |
|
Fuel recovery fees |
0.5 |
0.4 |
|||
Total price |
2.7 |
2.7 |
|||
Volume |
2.0 |
1.0 |
|||
Recycled commodities |
(1.3) |
2.1 |
|||
Energy services |
0.4 |
0.4 |
|||
Total internal growth |
3.8 |
6.2 |
|||
Acquisitions / divestitures, net |
1.8 |
0.2 |
|||
Subtotal |
5.6 |
% |
6.4 |
% |
|
Adoption of the new revenue recognition standard |
(4.2) |
% |
— |
% |
|
Total |
1.4 |
% |
6.4 |
% |
|
Core price |
3.8 |
% |
4.1 |
% |
|
Average yield is defined as revenue growth from the change in average price per unit of service, expressed as a percentage. Core price is defined as price increases to our customers and fees, excluding fuel recovery fees, net of price decreases to retain customers. We also measure changes in average yield and core price as a percentage of related-business revenue, defined as total revenue excluding recycled commodities and fuel recovery fees, to determine the effectiveness of our pricing strategies. Average yield as a percentage of related-business revenue was 2.3% and 2.5% for the three months ended March 31, 2018, and 2017, respectively. Core price as a percentage of related-business revenue was 4.1% and 4.3% for the three months ended March 31, 2018 and 2017, respectively.
COST OF OPERATIONS
The following table summarizes the major components of our cost of operations for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
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2018 |
2017 |
||||||||||||||
Labor and related benefits |
$ |
529.1 |
21.8 |
% |
$ |
496.7 |
20.8 |
% |
|||||||
Transfer and disposal costs |
188.3 |
7.8 |
187.3 |
7.8 |
|||||||||||
Maintenance and repairs |
240.2 |
9.9 |
226.7 |
9.5 |
|||||||||||
Transportation and subcontract costs |
149.3 |
6.2 |
134.0 |
5.6 |
|||||||||||
Fuel |
81.5 |
3.4 |
84.5 |
3.5 |
|||||||||||
Disposal fees and taxes (1) |
74.3 |
3.1 |
109.1 |
4.6 |
|||||||||||
Landfill operating costs |
50.5 |
2.0 |
53.1 |
2.2 |
|||||||||||
Risk management |
52.0 |
2.1 |
47.5 |
2.0 |
|||||||||||
Cost of goods sold (2) |
— |
— |
55.4 |
2.2 |
|||||||||||
Other |
104.6 |
4.2 |
89.8 |
3.8 |
|||||||||||
Total cost of operations |
$ |
1,469.8 |
60.5 |
% |
$ |
1,484.1 |
62.0 |
% |
(1) Disposal fees and taxes included municipal franchise fees of $37.7 million for the three months ended March 31, 2017. In accordance with our adoption of the new revenue recognition standard, these fees were presented as a reduction to revenue for the three months ended March 31, 2018. |
(2) Cost of goods sold included material costs paid to suppliers associated with recycled commodities for the three months ended March 31, 2017. In accordance with our adoption of the new revenue recognition standard, these costs were presented as a reduction to revenue for the three months ended March 31, 2018. |
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our cost of operations by cost component to that of other companies.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The following table summarizes our selling, general and administrative expenses for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||||||||||
2018 |
2017 |
||||||||||||||
Salaries |
$ |
176.5 |
7.3 |
% |
$ |
176.7 |
7.4 |
% |
|||||||
Provision for doubtful accounts |
6.8 |
0.3 |
5.4 |
0.2 |
|||||||||||
Other |
77.9 |
3.2 |
71.4 |
3.0 |
|||||||||||
Total selling, general and administrative expenses |
$ |
261.2 |
10.8 |
% |
$ |
253.5 |
10.6 |
% |
|||||||
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
EBITDA
The following table calculates EBITDA, which is not a measure determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP), for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||
2018 |
2017 |
||||||
Net income attributable to Republic Services, Inc. |
$ |
237.7 |
$ |
187.8 |
|||
Net income attributable to noncontrolling interests |
0.2 |
— |
|||||
Provision for income taxes |
72.7 |
108.4 |
|||||
Other income, net |
(1.0) |
(0.1) |
|||||
Interest income |
(0.2) |
(0.3) |
|||||
Interest expense |
94.8 |
89.4 |
|||||
Depreciation, amortization and depletion |
263.1 |
249.9 |
|||||
Accretion |
20.4 |
20.0 |
|||||
EBITDA |
$ |
687.7 |
$ |
655.1 |
We believe that presenting EBITDA is useful to investors because it provides important information concerning our operating performance exclusive of certain non-cash and other costs. EBITDA demonstrates our ability to execute our financial strategy, which includes reinvesting in existing capital assets to ensure a high level of customer service, investing in capital assets to facilitate growth in our customer base and services provided, maintaining our investment grade credit ratings and minimizing debt, paying cash dividends, repurchasing our common stock, and maintaining and improving our market position through business optimization. This measure has limitations. Although depreciation, depletion, amortization and accretion are considered operating costs in accordance with U.S. GAAP, they represent the allocation of non-cash costs generally associated with long-lived assets acquired or constructed in prior years. Our definition of EBITDA may not be comparable to similarly titled measures presented by other companies.
Adjusted Earnings
Reported diluted earnings per share was
Three Months Ended March 31, 2018 |
Three Months Ended March 31, 2017 |
||||||||||||||||||||||||||||||
Net |
Diluted |
Net |
Diluted |
||||||||||||||||||||||||||||
Pre-tax |
Income - |
Earnings |
Pre-tax |
Income - |
Earnings |
||||||||||||||||||||||||||
EBITDA |
Income |
Republic |
per Share |
EBITDA |
Income |
Republic |
per Share |
||||||||||||||||||||||||
As reported |
$ |
687.7 |
$ |
310.6 |
$ |
237.7 |
$ |
0.72 |
$ |
655.1 |
$ |
296.2 |
$ |
187.8 |
$ |
0.55 |
|||||||||||||||
Gain on disposition of assets and asset impairments, net (1) |
(0.7) |
(0.7) |
(0.5) |
— |
(8.3) |
(8.3) |
(3.8) |
(0.01) |
|||||||||||||||||||||||
Restructuring charges |
9.5 |
9.5 |
7.0 |
0.02 |
4.4 |
4.4 |
2.6 |
0.01 |
|||||||||||||||||||||||
Incremental contract startup costs - large municipal contract (1) |
2.9 |
2.9 |
2.1 |
— |
— |
— |
— |
— |
|||||||||||||||||||||||
Withdrawal costs - multiemployer pension funds (2) |
— |
— |
— |
— |
1.1 |
1.1 |
0.7 |
— |
|||||||||||||||||||||||
Loss from unconsolidated equity method investment |
— |
— |
— |
— |
2.9 |
— |
— |
— |
|||||||||||||||||||||||
Total adjustments |
11.7 |
11.7 |
8.6 |
0.02 |
0.1 |
(2.8) |
(0.5) |
— |
|||||||||||||||||||||||
As adjusted |
$ |
699.4 |
$ |
322.3 |
$ |
246.3 |
$ |
0.74 |
$ |
655.2 |
$ |
293.4 |
$ |
187.3 |
$ |
0.55 |
(1) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended March 31, 2018. |
(2) The aggregate impact to adjusted diluted earnings per share totals to less than $0.01 for the three months ended March 31, 2017. |
We believe that presenting adjusted EBITDA, adjusted pre-tax income, adjusted net income –
Adjusted Free Cash Flow
The following table calculates our adjusted free cash flow, which is not a measure determined in accordance with U.S. GAAP, for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||
2018 |
2017 |
||||||
Cash provided by operating activities |
$ |
581.4 |
$ |
444.4 |
|||
Property and equipment received |
(235.4) |
(208.8) |
|||||
Proceeds from sales of property and equipment |
3.6 |
1.3 |
|||||
Restructuring payments, net of tax |
6.1 |
3.4 |
|||||
Adjusted free cash flow |
$ |
355.7 |
$ |
240.3 |
We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain payments. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed, such as debt service requirements and dividend payments. Our definition of adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.
Purchases of property and equipment as reflected on our consolidated statements of cash flows represent amounts paid during the period for such expenditures. A reconciliation of property and equipment expenditures reflected on our consolidated statements of cash flows to property and equipment received during the period follows for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||
2018 |
2017 |
||||||
Purchases of property and equipment per the unaudited consolidated statements of cash flows |
$ |
263.3 |
$ |
223.9 |
|||
Adjustments to exclude the purchase of property and equipment associated with acquisitions |
(5.3) |
— |
|||||
Adjustments for property and equipment received during the prior period but paid for in the following period, net |
(22.6) |
(15.1) |
|||||
Property and equipment received during the period |
$ |
235.4 |
$ |
208.8 |
|||
The adjustments noted above do not affect our net change in cash and cash equivalents as reflected in our consolidated statements of cash flows.
ACCOUNTS RECEIVABLE
As of March 31, 2018 and
CASH DIVIDENDS
In
STOCK REPURCHASE PROGRAM
During the three months ended March 31, 2018, we repurchased 3.5 million shares of our stock for
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information about us that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as "guidance," "expect," "will," "may," "anticipate," "plan," "estimate," "project," "intend," "should," "can," "likely," "could," "outlook" and similar expressions are intended to identify forward-looking statements. These statements include information about our plans, strategies and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to risk and uncertainties that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that the expectations will prove to be correct. Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are acts of war, riots or terrorism, and the impact of these acts on economic, financial and social conditions in
Exhibit 99.2
The following is a pro forma presentation of our 2017 financial results had we adopted the new revenue recognition standard as of
REVENUE
The following table reflects our total revenue by line of business for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||||||||||||||||||
2018 |
2017 |
Change |
|||||||||||||||||||||
Proforma |
|||||||||||||||||||||||
Collection: |
|||||||||||||||||||||||
Residential |
$ |
548.5 |
22.6 |
% |
$ |
552.2 |
24.0 |
% |
$ |
(3.7) |
(1.4) |
% |
|||||||||||
Small-container |
748.6 |
30.9 |
718.2 |
31.2 |
30.4 |
(0.3) |
|||||||||||||||||
Large-container |
515.4 |
21.2 |
489.4 |
21.3 |
26.0 |
(0.1) |
|||||||||||||||||
Other |
10.5 |
0.4 |
9.7 |
0.4 |
0.8 |
— |
|||||||||||||||||
Total collection |
1,823.0 |
75.1 |
1,769.5 |
76.9 |
53.5 |
(1.8) |
|||||||||||||||||
Transfer |
288.3 |
274.9 |
13.4 |
||||||||||||||||||||
Less: intercompany |
(168.6) |
(165.6) |
(3.0) |
||||||||||||||||||||
Transfer, net |
119.7 |
4.9 |
109.3 |
4.8 |
10.4 |
0.1 |
|||||||||||||||||
Landfill |
549.7 |
500.6 |
49.1 |
||||||||||||||||||||
Less: intercompany |
(243.2) |
(232.3) |
(10.9) |
||||||||||||||||||||
Landfill, net |
306.5 |
12.6 |
268.3 |
11.7 |
38.2 |
0.9 |
|||||||||||||||||
Energy services |
47.8 |
2.0 |
26.9 |
1.2 |
20.9 |
0.8 |
|||||||||||||||||
Other: |
|||||||||||||||||||||||
Sale of recycled commodities |
76.0 |
3.1 |
78.7 |
3.4 |
(2.7) |
(0.3) |
|||||||||||||||||
Other non-core |
54.5 |
2.3 |
45.9 |
2.0 |
8.6 |
0.3 |
|||||||||||||||||
Total other |
130.5 |
5.4 |
124.6 |
5.4 |
5.9 |
— |
|||||||||||||||||
Total revenue |
$ |
2,427.5 |
100.0 |
% |
$ |
2,298.6 |
100.0 |
% |
$ |
128.9 |
— |
% |
COST OF OPERATIONS
The following table summarizes the major components of our cost of operations for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||||||||||||||||||
2018 |
2017 |
Change |
|||||||||||||||||||||
Proforma |
|||||||||||||||||||||||
Labor and related benefits |
$ |
529.1 |
21.8 |
% |
$ |
496.7 |
21.6 |
% |
$ |
32.4 |
0.2 |
% |
|||||||||||
Transfer and disposal costs |
188.3 |
7.8 |
187.3 |
8.1 |
1.0 |
(0.3) |
|||||||||||||||||
Maintenance and repairs |
240.2 |
9.9 |
226.7 |
9.9 |
13.5 |
— |
|||||||||||||||||
Transportation and subcontract costs |
149.3 |
6.2 |
134.0 |
5.8 |
15.3 |
0.4 |
|||||||||||||||||
Fuel |
81.5 |
3.4 |
84.5 |
3.7 |
(3.0) |
(0.3) |
|||||||||||||||||
Disposal fees and taxes |
74.3 |
3.1 |
71.3 |
3.1 |
3.0 |
— |
|||||||||||||||||
Landfill operating costs |
50.5 |
2.0 |
53.1 |
2.3 |
(2.6) |
(0.3) |
|||||||||||||||||
Risk management |
52.0 |
2.1 |
47.5 |
2.1 |
4.5 |
— |
|||||||||||||||||
Other |
104.6 |
4.2 |
90.0 |
3.9 |
14.6 |
0.3 |
|||||||||||||||||
Total cost of operations |
$ |
1,469.8 |
60.5 |
% |
$ |
1,391.1 |
60.5 |
% |
$ |
78.7 |
— |
% |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The following table summarizes our selling, general and administrative expenses for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||||||||||||||||||
2018 |
2017 |
Change |
|||||||||||||||||||||
Proforma |
|||||||||||||||||||||||
Salaries |
$ |
176.5 |
7.3 |
% |
$ |
176.7 |
7.7 |
% |
$ |
(0.2) |
(0.4) |
% |
|||||||||||
Provision for doubtful accounts |
6.8 |
0.3 |
5.4 |
0.2 |
1.4 |
0.1 |
|||||||||||||||||
Other |
77.9 |
3.2 |
71.4 |
3.1 |
6.5 |
0.1 |
|||||||||||||||||
Total selling, general and administrative expenses |
$ |
261.2 |
10.8 |
% |
$ |
253.5 |
11.0 |
% |
$ |
7.7 |
(0.2) |
% |
ADJUSTED EBITDA
The following table summarizes Adjusted EBITDA, which is not a measure determined in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), for the three months ended March 31, 2018 and 2017:
Three Months Ended March 31, |
|||||||||||||||||||||||
2018 |
2017 |
Change |
|||||||||||||||||||||
Proforma |
|||||||||||||||||||||||
Adjusted EBITDA |
$ |
699.4 |
28.8 |
% |
$ |
654.0 |
28.5 |
% |
$ |
45.4 |
0.3 |
% |
|||||||||||
REVENUE
The following table reflects our total revenue by line of business for 2017:
Proforma |
|||||||||||||||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
2017 |
|||||||||||||||||||||||||||||||||||
Collection: |
|||||||||||||||||||||||||||||||||||||||
Residential |
$ |
552.2 |
24.0 |
% |
$ |
564.4 |
23.3 |
% |
$ |
564.3 |
22.9 |
% |
$ |
556.2 |
22.6 |
% |
$ |
2,237.2 |
23.2 |
% |
|||||||||||||||||||
Small-container |
718.2 |
31.2 |
731.7 |
30.2 |
736.5 |
29.9 |
743.6 |
30.2 |
2,930.0 |
30.4 |
|||||||||||||||||||||||||||||
Large-container |
489.4 |
21.3 |
522.5 |
21.6 |
535.2 |
21.7 |
516.1 |
20.9 |
2,063.2 |
21.4 |
|||||||||||||||||||||||||||||
Other |
9.7 |
0.4 |
10.7 |
0.4 |
11.6 |
0.5 |
12.0 |
0.5 |
44.0 |
0.5 |
|||||||||||||||||||||||||||||
Total collection |
1,769.5 |
76.9 |
1,829.3 |
75.5 |
1,847.6 |
75.0 |
1,827.9 |
74.2 |
7,274.4 |
75.5 |
|||||||||||||||||||||||||||||
Transfer |
274.9 |
305.1 |
306.6 |
296.5 |
1,183.1 |
||||||||||||||||||||||||||||||||||
Less: intercompany |
(165.6) |
(176.2) |
(173.1) |
(167.8) |
(682.8) |
||||||||||||||||||||||||||||||||||
Transfer, net |
109.3 |
4.8 |
128.9 |
5.3 |
133.5 |
5.4 |
128.7 |
5.2 |
500.3 |
5.2 |
|||||||||||||||||||||||||||||
Landfill |
500.6 |
565.3 |
571.7 |
569.2 |
2,206.9 |
||||||||||||||||||||||||||||||||||
Less: intercompany |
(232.3) |
(255.4) |
(252.6) |
(244.7) |
(985.0) |
||||||||||||||||||||||||||||||||||
Landfill, net |
268.3 |
11.7 |
309.9 |
12.8 |
319.1 |
13.0 |
324.5 |
13.2 |
1,221.9 |
12.7 |
|||||||||||||||||||||||||||||
Energy services |
26.9 |
1.2 |
35.8 |
1.5 |
39.5 |
1.6 |
45.1 |
1.8 |
147.3 |
1.5 |
|||||||||||||||||||||||||||||
Other: |
|||||||||||||||||||||||||||||||||||||||
Sale of recycled commodities |
78.7 |
3.4 |
73.3 |
3.0 |
73.1 |
3.0 |
87.7 |
3.6 |
312.8 |
3.2 |
|||||||||||||||||||||||||||||
Other non-core |
45.9 |
2.0 |
47.1 |
1.9 |
51.1 |
2.0 |
51.3 |
2.0 |
195.3 |
1.9 |
|||||||||||||||||||||||||||||
Total other |
124.6 |
5.4 |
120.4 |
4.9 |
124.2 |
5.0 |
139.0 |
5.6 |
508.1 |
5.1 |
|||||||||||||||||||||||||||||
Total revenue |
$ |
2,298.6 |
100.0 |
% |
$ |
2,424.3 |
100.0 |
% |
$ |
2,463.9 |
100.0 |
% |
$ |
2,465.2 |
100.0 |
% |
$ |
9,652.0 |
100.0 |
% |
COST OF OPERATIONS
The following table summarizes the major components of our cost of operations for 2017:
Proforma |
|||||||||||||||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
2017 |
|||||||||||||||||||||||||||||||||||
Labor and related benefits |
$ |
496.7 |
21.6 |
% |
$ |
498.6 |
20.6 |
% |
$ |
507.6 |
20.6 |
% |
$ |
524.4 |
21.3 |
% |
$ |
2,027.2 |
21.0 |
% |
|||||||||||||||||||
Transfer and disposal costs |
187.3 |
8.1 |
207.3 |
8.6 |
204.0 |
8.3 |
197.3 |
8.0 |
795.9 |
8.3 |
|||||||||||||||||||||||||||||
Maintenance and repairs |
226.7 |
9.9 |
236.1 |
9.7 |
240.0 |
9.7 |
237.4 |
9.6 |
940.2 |
9.7 |
|||||||||||||||||||||||||||||
Transportation and subcontract costs |
134.0 |
5.8 |
144.9 |
6.0 |
153.1 |
6.2 |
153.7 |
6.2 |
585.8 |
6.1 |
|||||||||||||||||||||||||||||
Fuel |
84.5 |
3.7 |
83.2 |
3.4 |
87.2 |
3.5 |
94.8 |
3.8 |
349.8 |
3.6 |
|||||||||||||||||||||||||||||
Disposal fees and taxes |
71.3 |
3.1 |
80.6 |
3.3 |
81.0 |
3.3 |
78.7 |
3.2 |
311.6 |
3.2 |
|||||||||||||||||||||||||||||
Landfill operating costs |
53.1 |
2.3 |
57.1 |
2.4 |
53.6 |
2.2 |
56.6 |
2.3 |
220.3 |
2.3 |
|||||||||||||||||||||||||||||
Risk management |
47.5 |
2.1 |
56.0 |
2.3 |
58.6 |
2.4 |
50.5 |
2.1 |
212.6 |
2.2 |
|||||||||||||||||||||||||||||
Other |
90.0 |
3.9 |
92.4 |
3.8 |
98.1 |
4.0 |
106.1 |
4.3 |
386.6 |
4.0 |
|||||||||||||||||||||||||||||
Total cost of operations |
$ |
1,391.1 |
60.5 |
% |
$ |
1,456.2 |
60.1 |
% |
$ |
1,483.2 |
60.2 |
% |
$ |
1,499.5 |
60.8 |
% |
$ |
5,830.0 |
60.4 |
% |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The following table summarizes our selling, general and administrative expenses for 2017:
Proforma |
|||||||||||||||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
2017 |
|||||||||||||||||||||||||||||||||||
Salaries |
$ |
176.7 |
7.7 |
% |
$ |
173.5 |
7.1 |
% |
$ |
176.8 |
7.2 |
% |
$ |
179.3 |
7.3 |
% |
$ |
706.3 |
7.3 |
% |
|||||||||||||||||||
Provision for doubtful accounts |
5.4 |
0.2 |
9.4 |
0.4 |
8.0 |
0.3 |
7.8 |
0.3 |
30.6 |
0.3 |
|||||||||||||||||||||||||||||
Other |
71.4 |
3.1 |
80.0 |
3.3 |
81.9 |
3.3 |
87.1 |
3.5 |
320.5 |
3.4 |
|||||||||||||||||||||||||||||
Total selling, general and administrative expenses |
$ |
253.5 |
11.0 |
% |
$ |
262.9 |
10.8 |
% |
$ |
266.7 |
10.8 |
% |
$ |
274.2 |
11.1 |
% |
$ |
1,057.4 |
11.0 |
% |
ADJUSTED EBITDA
The following table summarizes Adjusted EBITDA, which is not a measure determined in accordance with U.S. GAAP, for 2017:
Proforma |
|||||||||||||||||||||||||||||||||||||||
Three Months Ended |
|||||||||||||||||||||||||||||||||||||||
March 31, 2017 |
June 30, 2017 |
September 30, 2017 |
December 31, 2017 |
2017 |
|||||||||||||||||||||||||||||||||||
Adjusted EBITDA |
$ |
654.0 |
28.5 |
% |
$ |
707.4 |
29.2 |
% |
$ |
716.8 |
29.1 |
% |
$ |
694.8 |
28.2 |
% |
$ |
2,772.9 |
28.7 |
% |
|||||||||||||||||||
View original content with multimedia:http://www.prnewswire.com/news-releases/republic-services-inc-reports-first-quarter-2018-results-300641204.html
SOURCE
Media, Darcie Brossart (480) 627-2700, media@RepublicServices.com; or Investor, Nicole Giandinoto (480) 627-7098, investor@RepublicServices.com