Phoenix-based Republic Services, Inc. announced its earnings for the first quarter of 2020. The company reported net income of $246.3 million, or $0.77 per diluted share, for the three months ended March 31, 2020, versus $234.2 million, or $0.72 per diluted share, for the comparable 2019 period – a 5 percent increase in adjusted earnings over the prior year.
According to Republic Services, Inc., the Company has made several key investments over the years, including developing standardized processes and procedures, implementing innovative technology to enhance employee safety and efficiency, consolidating its customer service operations and building world-class procurement and business continuity functions.
These investments are yielding strong returns and enabling the Company to quickly adapt and adjust its business to align with today's dynamic market conditions.
"We had a strong start to the year. Despite the impact of the pandemic in March, we delivered solid first quarter results. We increased both revenue and adjusted EBITDA by 3.4 percent and expanded underlying adjusted EBITDA margin by 30 basis points," said Donald W. Slager, chief executive officer, Republic Services, Inc. "While the future remains uncertain, we are beginning to see signs of increasing economic activity. We remain confident in our ability to quickly adjust our costs and capital expenditures to align with changes in demand. Assuming the economy continues to recover, and GDP sequentially improves in the third and fourth quarter as currently predicted by economists, we expect to generate over $1 billion of adjusted free cash flow in 2020."
Other first quarter highlights include:
- Earnings per share (EPS) was $0.77 per share. Adjusted EPS, a non-GAAP measure, was $0.77 per share, an increase of 5 percent over the prior year.
- Cash provided by operating activities was $570 million, an increase of 3 percent versus the prior year. Adjusted free cash flow, a non-GAAP measure, was $267 million, which decreased versus the prior year primarily due to the timing of capital expenditures and cash taxes.
- Cash flow invested in acquisitions was $63 million. The annual revenue acquired was approximately $30 million.
- Total cash returned to shareholders through dividends and share repurchases was $228 million.
- As of March 31, 2020, Republic had $1.9 billion of available liquidity, including $1.6 billion of available borrowing capacity under its credit facilities and $282 million of cash.
- Core price increased revenue by 5.2 percent, and average yield was 2.9 percent.
- Adjusted EBITDA, a non-GAAP measure, was $723 million and adjusted EBITDA margin was 28.3 percent of revenue, consistent with the prior year. Adjusted EBITDA margin was impacted by the following: a 20 basis point headwind from lower recycled commodity prices, a 50 basis point headwind from an additional workday in the quarter relative to the prior year, and a 40 basis point benefit from lower fuel prices and CNG tax credits. Normalizing for these items, adjusted EBITDA margin increased 30 basis points.
- The Company continued to convert CPI-based contracts to more favorable pricing mechanisms for the annual price adjustment. The Company now has approximately $815 million in annual revenue, or 33 percent of its approximately $2.5 billion CPI-based book of business, tied to either a waste-related index or a fixed-rate increase of 3 percent or greater.
- The Company’s average recycled commodity price per ton sold in the first quarter was $76. This represents a sequential increase from the fourth quarter of $10 per ton and a decrease versus the prior year of $17 per ton.
- Republic was named to the elite 2020 World's Most Ethical Companies List® by Ethisphere, a global leader in defining and advancing the standards of ethical business practices.
In addition to its earnings, Republic Services, Inc. is honoring and celebrating its frontline workers, customers and local communities.
"The safety and well-being of our people is our top priority and at the forefront of every decision we make. We have taken several steps to keep our employees safe, including providing masks, implementing enhanced cleaning procedures and expanding employee benefits," said Jon Vander Ark, president, Republic Services, Inc.
The Company launched a $20 million 'Committed to Serve' initiative to recognize the company’s frontline employees who are serving customers every day, while also helping to support small-business customers across the nation. The goal with the program is to support the economy at the local level, benefiting our small-business customers and communities as well as their employees.