Republic Services Remains a Cash Cow

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By Brian Nelson, CFA

Garbage hauler Republic Services (RSG) recently reported second quarter results that were mixed. The firm beat non-GAAP earnings per share estimates but missed when it came to revenue growth. Total revenue growth of 4.6% included 3.1% organic growth and the balance coming from growth from acquisitions. Net income was $550 million in the quarter, reflecting a margin of 13%, while adjusted earnings per share came in at $1.77, an increase of 9.9% over the prior year. Adjusted EBITDA was $1.36 billion, as its adjusted EBITDA margin expanded 100 basis points, to 32.1%.

Management had the following to say about the results:

We are pleased with our second quarter results which demonstrate the resilience of our business model and the benefit of the investments in our differentiated capabilities. We produced double-digit growth in EBITDA and 100 basis points of adjusted EBITDA margin expansion by continuing to price ahead of cost inflation and consistently executing our operational plan.

Year-to-date, Republic Services’ cash flow from operations was $2.13 billion while year-to-date adjusted free cash flow was $1.42 billion. Year-to-date, Republic has invested $888 million in acquisitions. Year-to-date cash returned to shareholders was $407 million, consisting of $45 million of buybacks and $362 million of dividends paid. For full year 2025, Republic now expects revenue in the range of $16.675-$16.75 billion and adjusted EBITDA in the range of $5.275-$5.325 billion. Adjusted diluted earnings per share is reiterated in the range of $6.82-$6.90 for the year, while adjusted free cash flow is now targeted in the range of $2.375-$2.415 billion. We continue to like Republic Services in the newsletter portfolios. 

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