Republic reaches highest level of growth in eight years during Q2

Republic Services, Phoenix, has released their Q2 financial report. The company reports a net income of $202.9 million, or $0.60 per diluted share, for the three months ended June 30, 2017, versus $180.8 million, or $0.52 per diluted share, for the comparable 2016 period. Excluding certain gains and expenses, on an adjusted basis, net income for the three months ended June 30, 2017, was $205.9 million, or $0.61 per diluted share, versus $189.5 million, or $0.55 per diluted share, for the comparable 2016 period.

"Our second-quarter performance underscores our ability to grow both price and volume, increase earnings and free cash flow and consistently improve cash returns to shareholders," says Donald W. Slager, president and CEO. "Given the strength of our business and the ongoing successful execution of our strategy, we are raising our guidance to reflect our expected out-performance for the year."

Q2 financial highlights include:

Adjusted diluted earnings per share (EPS) was $0.61 per share, an increase of 11 percent over the prior year.

Year-to-date cash provided by operating activities was $879 million and adjusted free cash flow was $358 million, an increase of approximately 6 percent over the prior year.

Total revenue increased 7.5 percent over the prior year, the company's highest level of growth in more than 8 years.

Revenue growth from average yield was 2.5 percent and volumes increased 1.9 percent.

Core price increased revenues by 4.1 percent, which consisted of 5.3 percent in the open market and 2.2 percent in the restricted portion of the business.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased $42 million, or 6 percent, over the prior year. Adjusted EBITDA margin was 28 percent of revenue.

Total cash returned to shareholders through dividends and share repurchases was $247 million. Year-to-date cash returned to shareholders was $454 million.

Q2 operational highlights include:

The company continued to convert contracts from consumer pricing index (CPI) to a more favorable pricing mechanism for the annual price adjustment. The company now has approximately $440 million in annual revenue tied to a waste-related index or a fixed-rate increase of 3 percent or greater.

Republic completed its standardized maintenance initiative and the entire fleet is now certified under the program.

The company, which operates the seventh largest vocational fleet in the U.S., advanced its fleet-based initiatives designed to improve productivity and lower costs. Currently, 19 percent of the fleet operates on compressed natural gas, up from 17 percent in the prior year; and 75 percent of the residential fleet is automated, up from 73 percent in the prior year.

Republic invested $36 million in tuck-in acquisitions during the second quarter and $91 million year to date.

The company was recently named to the Forbes 2017 America's Best Large Employers list, an employer ranking based on the results of an independent survey conducted among 30,000 U.S. workers at companies and institutions across the country, as well as a recipient of the Glassdoor Employees' Choice Award which is based on employee reviews about Republic Services on Glassdoor.com.

Republic raised its full-year adjusted diluted EPS guidance to be in a range of $2.36 to $2.39, from the original guidance of $2.32 to $2.36.

Republic continues to increase cash returns to shareholders, and announced that its board of directors approved a 2.5 cent increase in the quarterly dividend. The quarterly dividend of $0.345 per share for shareholders of record on Oct. 2, 2017, will be paid on Oct. 16, 2017.

"The increase in our quarterly dividend of 8 percent demonstrates our commitment to increase cash returned to shareholders,” Slager says. “This is the eighth year in a row we've increased our quarterly dividend which speaks to the stability and predictability of our cash flows."