Republic Services (RSG), a non-hazardous solid waste management and recycling company, has reported a 3.18 times jump in profit for the quarter ended Jun. 30, 2014, helped by sharp improvement in operating margins.
The company earned $179 million or $0.50 a share in the second-quarter compared with $56.30 million or $0.15 a share a year ago. Adjusted earnings per share came in at $0.51, when analysts expected $0.49.
Revenue during the second-quarter grew 5.38 percent to $2225.30 million from $2111.70 million in the last year period.
Gross margin expanded by 507 basis points over the last year period to 38.30 percent. Total expenses as a percentage of revenues decreased to 83 percent from 91.42 percent in the same period last year. That has resulted in improvement of 842 basis points in operating margins to 17 percent.
The company posted operating income of $378.30 million compared with $181.20 million in the previous year period.
''We are pleased with our performance in the second quarter, which was in line with our expectations. Our results continue to demonstrate our ability to execute our growth and productivity initiatives,'' said Donald W. Slager, president and chief executive officer.
Republic reaffirmed its full year adjusted diluted earnings per share guidance of $1.93 to $1.98. It also maintained its 2014 adjusted free cash flow guidance of $675 million to $725 million.
Cash Flow
Republic Services has generated cash of $722.30 million from operating activities during the first half, down 5.15 percent or $39.20 million when compared with the last year period. The company has generated 16.80 cents of operating cash flow in every sales dollar for the first half, down from 18.53 cents in the same period last year.
The company has spent $522.60 million cash to meet investing activities during the first half, as against cash outgo of $501.90 million in the last year period. It has made net capital expenditure of $466.20 million during the first half, which was higher by 2.60 percent or $11.80 million, from a year ago.
The company's free cash flow accounted for 35.46 percent of operating cash flow for the first half, compared with 40.33 percent in the last year period.
The company has spent $363.50 million cash to meet financing activities during the first half, as against cash outgo of $230.50 million in the last year period. It has borrowed net of $17.60 million through debt during the first half. It has spent net of $190.70 million on repurchase of common stocks.
The company's cash dividend payment increased 9.89 percent or $16.80 million to $186.60 million. Dividend payment accounted for 25.83 percent of operating cash flow for the first half, compared with 22.30 percent in the same period previous year.
As on Jun. 30, 2014, the company's cash balance stood at $49.50 million, down 48.81 percent or $47.20 million from Jun. 30, 2013.
Working Capital
Republic Services' working capital remained negative at $480.40 million on Jun. 30, 2014, compared with negative $482 million on Jun. 30, 2013. It registered a decrease in current ratio to 0.72 as at Jun. 30, 2014 from 0.72 on Jun. 30, 2013.
Debt Position
Republic Services has witnessed an increase in the total debt over the last one year. As on Jun. 30, 2014, total debt stood at $7052.20 million, up 0.34 percent or $23.60 million, from Jun. 30, 2013.
The company's total debt was 35.48 percent of total assets as on Jun. 30, 2014, compared with 35.54 percent on Jun. 30, 2013. It has witnessed a decline in debt to equity ratio to 0.90 on Jun. 30, 2014 compared with 0.91 on Jun. 30, 2013.
Interest coverage ratio, which determines how easily a company can pay interest expenses on outstanding debt, has improved to 4.35 from 2 in the same period last year.
Shares of Republic Services gained $0.32 or 0.86 percent to settle at $37.37 on Friday.
