Republic Services, Inc. RSG reported mixed second-quarter 2018 results, with earnings in line with the Zacks Consensus Estimate and revenues missing the same.
Adjusted earnings per share (EPS) of 73 cents came in line with the Zacks Consensus Estimate and improved 19.7% year over year. The bottom line was positively impacted by a 12 cents benefit from the tax reform.
During the quarter, Republic Services invested more than $120 million in value-enhancing acquisitions. The company invested $56 million and an additional $42 million in July for tuck-in-acquisitions.
The company's shares have gained 10.6% over the past year compared with the industry 's rise of 10.8%.
Quarterly revenues of $2.5 billion missed the consensus mark by $9 million and declined marginally year over year on non-adjusted and proforma basis.
Collection segment revenues delivered year-on-year rise of 1.5% on non-adjusted basis and 3.3% on proforma basis to $1.8 billion. It accounted for 75.1% of total revenues.
Transfer segment revenues registered year-over-year increase of 6.7% on non-adjusted basis and 7.8% on proforma basis to $139 million. It contributed 5.5% of total revenues.
Landfill segment revenues increased slightly on non-adjusted basis and 1.7% on proforma basis to $315.3 million. It accounted for 12.5% of total revenues.
Energy services segment revenues delivered year-over-year increase of 39.1 on non-adjusted basis and 40.2% on proforma basis to $50.2 million. It contributed 2% of total revenues.
Other segment revenues declined 32.9% on non-adjusted basis and improved 2.1% year over year to $122.9 million. It accounted for 4.9% of total revenues.
Republic Services, Inc. Price, Consensus and EPS Surprise
Republic Services, Inc. Price, Consensus and EPS Surprise | Republic Services, Inc. Quote
Adjusted EBITDA was $690 million compared with $708.6 million in the year-ago quarter. Adjusted EBITDA margin was 27.4% of total revenues compared with 28% in the prior-year quarter. Operating income for second-quarter 2018 was $408.2 million compared with $425.5 million in the year-ago quarter. Operating margin was 16.2% compared with 16.8% in the year-ago quarter.
Total selling, general and administrative expenses were $252.9 million compared with $262.9 million in the year-ago quarter.
Balance Sheet and Cash Flow
Republic Services exited second-quarter 2018 with cash and cash equivalents of $61.3 million compared with $36 million in the year-ago quarter. As of Jun 30, 2018, long-term debt (net of current maturities) was $8.2 billion compared with $7.1 billion in the year-ago period.
The company generated $1191 million during the first half of the year compared with $879.2 million as of Jun 30, 2017. Adjusted free cash flow was $323.1 million in the reported quarter compared with $118.4 million in the year-ago quarter.
Share Repurchase and Dividend Payout
In the quarter, Republic Services returned $328 million to shareholders through dividends and share repurchases. The company repurchased almost 3.2 million shares at an aggregate cost of $214.9 million and an average price of $67.62 per share. As of Jun 30, the company had $1.4 billion available under its share repurchase authorization.
Additionally, on the same day of earnings release, the company's board of directors announced a quarterly cash dividend of 37.5 cents per share payable on Oct 15, 2018, to shareholders of record as of Oct 1, 2018.
As of Jun 30, 2018, the company's quarterly dividend payable was $112.3 million to shareholders of record as of Jul 2. The dividend was paid on Jul 16. In April, the company paid a cash dividend of $113.3 million to shareholders of record as of Apr 2, 2018.
Adjusted EPS guidance of $3.05-$3.10 billion and free cash flow guidance of $1.09-$1.11 billion have been reaffirmed. The company expects to invest $200 million for tuck-in-acquisitions. Adjusted tax rate for the full year is estimated to be around 24%.
Zacks Rank & Upcoming Releases
Republic Services currently has a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Investors interested in the broader Business Services Sector are keenly awaiting second-quarter earnings reports from key players, namely Clean Harbors, Inc. CLH , Black Knight Financial Services, Inc. BKI and Fidelity National Information Services, Inc. FIS . While Clean Harbors will release second-quarter results on Aug 1, Black Knight and Fidelity National will announce the same on Jul 30 and Jul 31, respectively.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Fidelity National Information Services, Inc. (FIS): Free Stock Analysis Report Republic Services, Inc. (RSG): Free Stock Analysis Report Clean Harbors, Inc. (CLH): Free Stock Analysis Report Black Knight Financial Services, Inc. (BKI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research