Republic Services, Inc. (RSG), a leading waste management company, reported a net income of $124.6 million or 34 cents per share in first quarter 2013 versus $142.9 million or 38 cents per share in the year-earlier quarter. The year-over-year decrease in earnings was primarily attributable to several non-recurring items such as pension and restructuring expenses.
Excluding one-time items, adjusted earnings for the reported quarter were $167.4 million or 46 cents per share compared to $140.9 million or 38 cents in the year-ago quarter. The adjusted earnings for the quarter surpassed the Zacks Consensus Estimate by 6 cents.
Total revenue increased marginally to $1,998.6 million in the reported quarter from $1,982.4 million in the prior-year period. The 0.8% year-over-year increase was driven by 1.2% rise in core price, 0.3% hike in fuel recovery fees and 0.5% inorganic growth, partially offset by 1.0% decrease in volume and 0.2% dip in recycling commodities.
The reported revenues, however, missed the Zacks Consensus Estimate of 2,008 million. Adjusted EBITDA for first quarter 2013 were $569.3 million versus $556.8 million in the year-ago quarter.
Segment Performance
Revenues from the Collection segment increased 2.4% year over year to $1,563.6 million as all the sub-segments, namely Residential, Commercial, and Industrial fared relatively better. The Transfer segment revenues inched up 1.0% year over year to $91.5 million. Revenues from the Landfill segment declined 6.5% year over year in the reported quarter to $224.4 million, while sale from Other segment plummeted 4.0% year over year to $119.1 million.
Financial Update
Cash and cash equivalents were $130.1 million at quarter-end, while long-term debt (excluding current maturities) totaled $7,007.8 million. Cash from operating activities aggregated $419.8 million in the reported quarter compared to $334.2 million in the previous year. Adjusted free cash flow was $212.8 million for first quarter 2013 versus $175.3 million in the prior-year period.
Share Repurchase
Republic Services has a share repurchase program in place since Nov 2010. By quarter-end, the company repurchased 31.1 million shares under this program for $892.5 million at an average price of $28.69 each, including 2.1 million shares for $67.0 million at $31.40 per share during the first quarter.
Outlook
With sequential improvements in core pricing and EBITDA margin, Republic Services remains focused to further drive its North American solid waste and recycling businesses. Management also remained confident of achieving its earlier guidance for the year.
Republic Services reiterated its adjusted earnings outlook in the range of $1.86-$1.91 per share for full year 2013. The company also maintained its adjusted free cash flow guidance of $675 million to $700 million for the ongoing year, with total revenue increasing 2.0% to 2.5% year over year.
Moving Forward
Republic Services expects to remain committed to its long-term strategy with a healthy cash flow and disciplined approach to cash utilization. At the same time, the company expects to face severe competitive pressure from industry bigwigs such as Clean Harbors, Inc. (CLH), Waste Management, Inc. (WM), and Stericycle Inc. (SRCL). Republic Services currently has a Zacks Rank #3 (Hold).
CLEAN HARBORS (CLH): Free Stock Analysis Report
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WASTE MGMT-NEW (WM): Free Stock Analysis Report
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