Republic Services, Inc. RSG posted impressive results for the first quarter of 2022, with earnings and revenue exceeding the Zacks consensus estimate.

Adjusted earnings (excluding 3 cents of one-time items) per share of $1.14 exceeded the consensus mark of 8.6% and increased 16.3% year-over-year.

Republic Services’ average recycled raw materials price per ton sold in the first quarter was $201, down $17 sequentially but up $68 year-over-year.

So far this year, shares of Republic Services have gained 17.6% against a 21.6% drop in the industry to which it belongs.

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Revenue

Quarterly revenue of $2.97 billion beat the consensus estimate of 2.4% and was up 14.3% year over year. RSG revenue includes a favorable impact of 10.5% from organic growth and 3.9% from acquisitions/disposals.

Collection segment revenue totaled $2.17 billion, up 11.6% year-over-year. Transfer segment revenue (net) was $164.9 million, up 12.8% year-over-year. Landfill segment revenue (net) totaled $348.2 million, up 10.3% year-over-year. Environmental Solutions revenue (net) of $99.3 million jumped more than 100% year over year. Other segment revenue of $179.4 million increased 20.4% year-over-year.

Operating results

Adjusted EBITDA margin of 30.4% decreased 30 basis points (bps) from prior year quarter levels.

Operating profit was $560.6 million, up 14% from year-ago quarter levels. The operating margin decreased slightly to 18.8% compared to the prior year quarter.

Republic Services, Inc. Price, Consensus, and EPS Surprise

Republic Services, Inc. Price, Consensus, and EPS Surprise

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

Total selling, general and administrative expenses were $307.8 million, up 16% from the prior year quarter.

Balance sheet and cash flow

Republic Services ended the first quarter of 2022 with cash and cash equivalents of $39 million, compared to $29 million at the end of the prior quarter.

Long-term debt (net of current maturities) was $9.61 billion, down from $9.55 billion at the end of the prior quarter.

RSG generated $705.6 million in cash from operating activities in the current quarter. Adjusted free cash flow was $530.9 million.

During the March 2022 quarter, RSG returned $349.4 million in total cash to its shareholders (including $203.5 million in share buybacks and $145.9 million in dividends paid).

RSG announced a quarterly cash dividend of 46 cents per share, which will be paid on July 15 to its shareholders of record on July 1.

During the current quarter, RSG repurchased 1.6 million shares for $203.5 million at a weighted average cost per share of $124.02. As of March 31, 2022, the remaining authorized purchase capacity under RSG’s October 2020 buyback program was $1.5 billion.

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

Revenue Insights

Within the broader business services sector, ManpowerGroup Inc. MAN, Omnicom Group Inc. OMC and Equifax Inc. EFX recently released its first quarter 2022 results.

ManpowerGroup posted impressive results for the first quarter of 2022, with earnings and revenue exceeding the Zacks consensus estimate. Quarterly adjusted earnings of $1.88 per share beat the consensus mark of 20.5% and improved 69.4% year-over-year. Revenue of $5.14 billion topped the consensus mark by 0.7% and edged up 4.5% year-over-year on a reported basis and 9.8% on an to-date basis. constant exchange rates (cc).

Omnicom released impressive results for the first quarter of 2022, in which earnings and revenue exceeded the Zacks consensus estimate. Earnings of $1.39 per share topped the consensus mark of 8.6% and rose 4.5% year-over-year, driven by strong margin performance. Total revenue of $3.4 billion beat the consensus estimate of 5.4%, but was down slightly year over year.

Equifax announced better than expected first quarter 2022 results. Adjusted earnings of $2.22 per share beat Zacks’ consensus estimate by 3.3% and improved 13% year-over-year. Revenue of $1.36 billion beat the consensus estimate by 2.4% and improved 12.4% year-over-year on a reported basis and 13% on a currency basis local.

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