Republic Services Covers Dividends with Free Cash Flow By a Nice Margin

Image: Republic Services’ stock has had a fantastic run during the past couple years.

By Brian Nelson, CFA

On April 30, Republic Services (RSG) reported mixed first quarter with revenue coming in a bit light on the top line, but the trash taker handily beating expectations on the bottom line. During the first quarter, total revenue growth was 7.8% consisting of 4.1% coming from organic means, while 3.7% coming from growth though acquisitions. The company faced some volume pressure in the period, but core price on total revenue advanced an impressive 7%.

We are off to a strong start to the year and well-positioned to achieve our full-year goals. Continued pricing in excess of cost inflation generated double-digit growth in EBITDA and EPS, and expanded EBITDA margin by more than 100 basis points. Solid execution by our 42,000 team members and investments in our differentiating capabilities — Customer Zeal, Digital and Sustainability — continue to produce positive results, and support our ability to deliver ongoing profitable growth. 

On an adjusted basis, EBITDA came in at ~$1.16 billion, with its adjusted EBITDA margin advancing 120 basis points over the same period a year ago. Adjusted earnings per share came in at $1.45, which was up nicely from the $1.24 mark it posted in last year’s quarter. Republic’s operating cash flow expanded to $811.5 million in the quarter versus $687.7 million in the year-ago period, while free cash flow of $297 million in the quarter comfortably covered cash dividends paid in the period ($168.3 million). We continue to like Republic Services across our newsletter portfolio suite.

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