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Republic Services (RSG) Q4 Earnings & Revenues Top Estimates

Republic Services, Inc.RSG reported solid fourth-quarter 2020 results wherein earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.00 outpaced the consensus mark by 25% and improved year over year.

Republic Services continued to convert CPI-based contracts to more favorable pricing mechanisms for annual price adjustment. It now has roughly $874 million in annual revenues, or 35% of nearly $2.5 billion CPI-based book of business. The company's average recycled-commodity price per ton sold in the fourth quarter was $110, reflecting a year-over-year increase of $44 per ton.

Over the past year, shares of Republic Services have declined 10.1% against 20.3% decline of the industry it belongs to. The Zacks S&P 500 composite has risen 23.3% in said time frame.

Revenues

Quarterly revenues of $2.57 billion lagged the consensus estimate by 0.9% and decreased 0.1% year over year. The company’s top line includes an unfavorable impact of 0.2% internal growth and favorable impact of 0.1% acquisitions.

Revenues in the Collection segment totaled $1.93 billion, down 0.9% year over year. Transfer segment revenues of $155.7 million increased 9.9% year over year. Landfill segment revenues of $323.9 million decreased 0.6% year over year. Environmental services segment revenues of $26.7 million declined 44.6% year over year. Other segment revenues of $140.6 million grew 20.7% year over year.

Operating Results

Adjusted EBITDA margin of 29.9% improved 150 basis points (bps) from the prior-year quarter.

Operating income was $432.7 million, down 5.8% from the year-ago quarter. Operating margin declined to 16.8% from 17.8% in the year-ago quarter.

Total selling, general and administrative expenses were $257.7 million, declining 10.9% from the year-ago quarter.

Republic Services, Inc. Price, Consensus and EPS Surprise

Republic Services, Inc. price-consensus-eps-surprise-chart | Republic Services, Inc. Quote

Balance Sheet and Cash Flow

Republic Services exited fourth-quarter 2020 with cash and cash equivalents of $38.2 million compared with $406.4 million at the end of the prior quarter. Long-term debt was $8.77 billion compared with $8.59 billion at the end of the prior quarter.

The company generated $562.6 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $126.8 million.

Dividend Payout

In October 2020, the company paid out $135.4 million of cash dividend to shareholders on record as of Oct 1, 2020. As of Dec 31, 2020, the company’s quarterly payable dividend was $135.5 million to shareholders on record as of Jan 4, 2021. The dividend was paid out on Jan 15, 2021.

The company’s board of directors declared a regular quarterly dividend of 42.5 cents per share for shareholders on record as of Apr 1, 2021. The dividend will be paid out on Apr 15, 2021.

Share Repurchase Activity

During the reported quarter, the company did not repurchase any share. In October 2020, the company’s board of directors approved $2 billion for share repurchases, effective from Jan 1, 2021 till Dec 31, 2023.

2021 Guidance

Republic Services unveiled its full-year 2021 adjusted EPS guidance. Adjusted EPS is expected to be in the range of $3.65-$3.73. The Zacks Consensus Estimate of $3.74 lies above the guidance.

The company now expects to generate $1.30 billion to $1.375 billion of adjusted free cash flow for the full year. Adjusted EBITDA margin is expected around 29.5%. It also plans to invest $600 million in acquisitions and $125 million in solar energy for the full year.

Currently, Republic Services carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

RollinsROL fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the consensus estimate as well as the year-ago figure by 18.2%. Revenues of $536.3 million beat the consensus mark by 1.7% and improved 6% year over year.

IHS Markit’s INFO fourth-quarter fiscal 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter on a reported basis.

Automatic Data Processing’s ADP second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and improved 0.7% year over year.

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Automatic Data Processing, Inc. (ADP): Free Stock Analysis Report
 
Republic Services, Inc. (RSG): Free Stock Analysis Report
 
Rollins, Inc. (ROL): Free Stock Analysis Report
 
IHS Markit Ltd. (INFO): Free Stock Analysis Report
 
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