Republic Services Beats on Q3 Adjusted Earnings - Analyst Blog

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Leading waste management company Republic Services, Inc. 's ( RSG ) third-quarter 2013 adjusted earnings increased to $198.2 million or 55 cents per share from $193.1 million or 53 cents in the year-earlier quarter. The year-over-year increase in earnings was primarily attributable to an improvement in solid waste trends including higher levels of landfill special waste. The adjusted earnings beat the Zacks Consensus Estimate by 5 cents.

GAAP net income for the reported quarter was $171.4 million or 47 cents per share compared with $152.7 million or 42 cents per share in the year-earlier quarter. The healthy rise in net income for the reported quarter was largely driven by a decent top-line growth.

Revenues improved 5.8% to $2,165.4 million in the reported quarter from $2,046.9 million in the prior-year period. The year-over-year increase was driven by 1.3% rise in average yield, higher fuel recovery fees of 0.5%, higher volume of 2.2%, 0.6% accretive effect for acquisitions, higher prices of recycling commodities to the tune of 0.7% and a positive effect of 0.5% for an additional workday.

The reported revenues exceeded the Zacks Consensus Estimate of $2,118 million. Adjusted EBITDA for third quarter 2013 was $638.2 million versus $609.6 million in the year-ago quarter.

Segment Performance

Revenues from the Collection segment increased 4.5% year over year to $1,649.8 million as all the sub-segments, namely Residential, Commercial, and Industrial fared relatively better. The Transfer segment revenues gained 7.0% year over year to $108.4 million. Revenues from the Landfill segment were up 6.4% to $276.2 million, while sale from Other segment climbed 22.0% year over year to $125.4 million.

Financial Update

Cash and cash equivalents at quarter-end aggregated $97.3 million, while long-term debt (excluding current maturities) totaled $7,023.6 million. Cash from operating activities totaled $1,137.2 million for the first nine months of 2013 compared with $1,056.7 million in the prior-year period. Adjusted free cash flow for the first nine months of 2013 was $469.0 million versus $479.7 million in the prior-year period.

Share Repurchase

Republic Services has a share repurchase program in place since Nov 2010. By quarter-end, the company has repurchased 35.5 million shares under this program for $1,039.2 million at an average price of $29.30 each, including 2.3 million shares bought back for $78.5 million at $33.51 per share during the third quarter.

During the reported quarter, Republic Shares increased its existing share repurchase authorization by about $650 million. With approximately $110.6 million worth of share repurchases remaining under the erstwhile program, the total share repurchase authorization currently stands at $760.6 million through Dec 31, 2015.

Outlook

With sequential improvements in core pricing and EBITDA margin, Republic Services remains focused to further drive its North American solid waste and recycling businesses. Management also remained confident of achieving its earlier guidance for the year. The company also maintained its adjusted free cash flow guidance of $675 million to $700 million for the ongoing year.

Moving Forward

Republic Services expects to remain committed to its long-term strategy with a healthy cash flow and disciplined approach to cash utilization. Republic Services presently has a Zacks Rank #1 (Strong Buy). Other players in the industry worth reckoning include Clean Harbors, Inc. ( CLH ), EnerSys ( ENS ) and Rexnord Corporation ( RXN ), each carrying a Zacks Rank #2 (Buy).




CLEAN HARBORS (CLH): Free Stock Analysis Report

ENERSYS INC (ENS): Free Stock Analysis Report

REPUBLIC SVCS (RSG): Free Stock Analysis Report

REXNORD CORP (RXN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.




This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: CLH , ENS , RSG , RXN

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