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Republic Services (RSG) Beats Q3 Earnings, Issues 2018 View

Waste management firm Republic Services, Inc.RSG reported strong third-quarter 2017 results, with healthy year-over-year increase in earnings and revenues. GAAP earnings for the quarter were $223.2 million or 66 cents per share compared with $85.6 million or 25 cents per share in the year-ago period. The year-over-year increase in earnings was primarily driven by higher revenues.

Excluding non-recurring items, adjusted earnings were $225.2 million or 67 cents per share compared with $212.6 million or 62 cents per share in the year-earlier quarter. Adjusted earnings exceeded the Zacks Consensus Estimate by 4 cents.

Republic Services, Inc. Price, Consensus and EPS Surprise

Republic Services, Inc. Price, Consensus and EPS Surprise | Republic Services, Inc. Quote

Top-Line Performance

Quarterly revenues improved 6.3% year over year to $2,562 million and topped the Zacks Consensus Estimate of $2,533 million. The year-over-year increase was driven by a 2.5% rise in average yield and a 1.6% jump in volume. Core price increased revenues by 4.1% during the quarter.

Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter was $708.6 million, resulting in an adjusted EBITDA margin of 28% compared with the respective tallies of $666.4 million and 28.3% in the year-ago period.

Segmental Details

Revenues from Collection increased 3.8% year over year to $1,882.1 million as all the sub-segments fared relatively better in the reported quarter. Revenues from Transfer improved 7.2% to $134.8 million. Energy Services revenues more than doubled to $40 million from $17.3 million in the year-ago quarter. Revenues from Landfill were up 10.3% to $323.4 million while sales from the Other segment increased 14% to $181.7 million.

Balance Sheet & Cash Flow

Cash and cash equivalents at the quarter end were $63.9 million while long-term debt (net of current maturities) was $7,152 million.

Cash from operating activities totaled $1,381.5 million for the first nine months of 2017 compared with $1,359.6 million in the prior-year period. Adjusted free cash flow for the first nine months of 2017 was $605.6 million compared with $575.9 million in the year-ago period.

Share Repurchase

Republic Services has a share repurchase program in place since November 2010. During the third quarter, the company repurchased 1.8 million shares under this program for $119.3 million at an average price of $64.88 per share. The company had $95.1 million worth of shares remaining under the share repurchase authorization at the quarter end. In addition, the board of directors approved another $2 billion share repurchase authorization which extends through Dec 31, 2020.

Preliminary Guidance for 2018

Republic Services offered a preliminary guidance for 2018, per which adjusted earnings are expected to be within $2.53-$2.58 per share. Adjusted free cash flow is expected to be in a range of $925 million to $950 million as the company is likely to generate a healthy cash flow with diligent execution of operational plans and a realigned operational structure. It has strong underlying fundamentals and is set to achieve consistent earnings growth while creating significant shareholder value.

Republic Services currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry are Forrester Research, Inc. FORR , ManTech International Corporation MANT and Syntel, Inc. SYNT , each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Forrester Research has a long-term earnings growth expectation of 12%. It delivered a positive earnings surprise of 30.4% in the trailing four quarters, beating estimates in each.

ManTech has a long-term earnings growth expectation of 8%. It pulled off a positive earnings surprise of 5.5% in the trailing four quarters, beating estimates thrice.

Syntel has a long-term earnings growth expectation of 10%. It delivered a positive earnings surprise of 10.7% in the trailing four quarters, beating estimates in each.

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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 Nasdaq, Inc.


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

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