Republic Services Sees YOY Revenue Gain in Q2

Republic Services Sees YOY Revenue Gain in Q2

The Phoenix-based hauler saw strong metrics on core price and continued to progress on its fleet maintenance standardization and customer service initiatives.

Republic Services posted revenues of $2.35 billion in the second quarter, a year-over-year gain of 1.7 percent. Average yield was 2 percent and volumes increased 0.5 percent.

However, the Phoenix-based hauler’s net income was down slightly from $190.3 million in 2015 to $180.8 million this year.

"Our second quarter results continue to demonstrate the stability and predictability of our business, and the strength of our operating model," President and CEO Donald W. Slager said in a statement. "Strong pricing performance, positive volume growth and contributions from our strategic initiatives keep us well positioned to achieve our full year financial guidance."

Other highlights from the firm’s financial and operations results included:

  • Core price increased revenues by 3.1 percent, which consisted of 4.1 percent in the open market and 1.5 percent in the restricted portion of the business.
  • Republic’s board approved a 2-cent increase in the quarterly dividend. The quarterly dividend of $0.32 per share for shareholders of record on Oct. 3, 2016, will be paid on Oct. 14, 2016. "We are pleased to raise our quarterly dividend approximately 7 percent,” Slager said. “We have increased the quarterly dividend seven years in a row, which reflects our confidence in our future cash flows and our commitment to effectively return cash to shareholders."
  • In a research note summarizing takeaways from solid waste earnings to date, Stifel analyst Michael E. Hoffman wrote that the “clear message is the construction cycle buoyed by residential and non-residential construction has not peaked. The broad consensus is structural solid waste volume growth is 1 percent and the construction cycle is pushing volumes higher and should do so until housing peaks at 1.4mm to 1.6mm starts in 2018/19.” Hoffman also noted that reported price from the publicly-traded companies has averaged 2.4 percent—ahead of expectations. “If more companies can narrow the leakage to core price by lowering churn and avoid loosing high margin customers coupled with a focused plan to raise landfill prices 3 percent to 5 percent, reported price should move from 2.0 percent to 2.5 percent to 2.5 percent to 3.0 percent. This trend is achievable over the next 18 to 26 months, in our view.”
  • Cost of operations as a percentage of revenue decreased to 61.3 percent resulting in 20 basis points of gross margin expansion.
  • Adjusted EBITDA margin was consistent with the prior year period at 28.3 percent of revenue.
  • Year-to-date cash provided by operating activities was $844 million and adjusted free cash flow was $337 million.
  • The company said it also continue to focus on creating a better customer experience and further differentiating its service offerings. To that end, more than 1.6 million customers are now enrolled in its MyResource customer portal and mobile app. Customers can also purchase temporary large containers or residential subscription services online.
  • Republic completed the rollout of its standardized maintenance program to all of its maintenance shops. It expects its entire fleet will be certified under the program by the second quarter of 2017. Currently, 85 percent of its fleet is certified, up from 70 percent in the prior year. In addition, 17 percent of its fleet operates on natural gas, up from 15 percent in the prior year and 73 percent of its residential fleet is automated, up from 70 percent in the prior year.
  • In July, Republic opened its second customer resource center, in Phoenix. The company expects to open its final customer resource center in Indianapolis during the third quarter of 2016.
  • Republic’s board approved a 2-cent increase in the quarterly dividend. The quarterly dividend of $0.32 per share for shareholders of record on Oct. 3, 2016, will be paid on Oct. 14, 2016. "We are pleased to raise our quarterly dividend approximately 7 percent,” Slager said. “We have increased the quarterly dividend seven years in a row, which reflects our confidence in our future cash flows and our commitment to effectively return cash to shareholders.
  • In a research note summarizing takeaways from solid waste earnings to date, Stifel analyst Michael E. Hoffman wrote that the “clear message is the construction cycle buoyed by residential and non-residential construction has not peaked. The broad consensus is structural solid waste volume growth is 1 percent and the construction cycle is pushing volumes higher and should do so until housing peaks at 1.4mm to 1.6mm starts in 2018/19.” Hoffman also noted that reported price from the publicly-traded companies has averaged 2.4 percent—ahead of expectations. “If more companies can narrow the leakage to core price by lowering churn and avoid loosing high margin customers coupled with a focused plan to raise landfill prices 3 percent to 5 percent, reported price should move from 2.0 percent to 2.5 percent to 2.5 percent to 3.0 percent. This trend is achievable over the next 18 to 26 months, in our view.”
Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish