Republic Services, Inc. Reports Second Quarter 2020 Results
PHOENIX, Aug. 6, 2020 /PRNewswire/ -- Republic Services, Inc. (NYSE: RSG) today reported net income of $225.5 million, or $0.71 per diluted share, for the three months ended June 30, 2020, versus $251.5 million, or $0.78 per diluted share, for the comparable 2019 period. Excluding certain gains and expenses, on an adjusted basis, net income for the three months ended June 30, 2020 was $258.2 million, or $0.81 per diluted share, versus $254.1 million, or $0.79 per diluted share, for the comparable 2019 period.
"Our second quarter results clearly demonstrate the resiliency of our business and the strength of our cash flow. During the quarter, we expanded adjusted EBITDA margin 170 basis points, increased adjusted earnings and delivered double-digit growth in adjusted free cash flow," said Donald W. Slager, chief executive officer. "I am extremely proud of the team's perseverance during these challenging times. Thanks to their hard work and laser focus we provided uninterrupted service to our customers, rapidly adjusted the business as volumes changed and effectively managed our cost structure. We continue to invest in the safety and well-being of our people and achieved our best-ever safety performance in the company's history."
Slager added, "We remain confident in the team's ability to execute in this dynamic environment and are well-positioned as volumes return. As a result, we are reinstating annual cash flow guidance and now expect to generate $1.1 billion to $1.175 billion of adjusted free cash flow in 2020."
Second-Quarter and First Half 2020 Highlights:
-- Second quarter EPS was $0.71 per share. Adjusted EPS, a non-GAAP
measure, was $0.81 per share, an increase of approximately 3 percent
over the prior year.
-- Year-to-date cash provided by operating activities was $1,334 million,
an increase of 17.4 percent versus the prior year. Adjusted free cash
flow, a non-GAAP measure, for the same period was $743 million, an
increase of 19.7 percent versus the prior year. The increase in adjusted
free cash flow was primarily due to improvements in working capital.
-- Year-to-date cash flow invested in acquisitions was $124 million, or $95
million net of divestitures. The Company expects to invest $600 to $650
million in acquisitions for the full year.
-- Second quarter core price increased revenue by 4.7 percent, which
consisted of 5.5 percent in the open market and 3.4 percent in the
restricted portion of the business.
-- Second quarter average yield was 2.5 percent.
-- Second quarter adjusted EBITDA, a non-GAAP measure, was $726 million and
essentially flat versus the prior year.
-- Second quarter adjusted EBITDA margin was 29.6 percent of revenue and
increased 170 basis points over the prior year. This included a 110
basis point benefit from higher recycled commodity prices and lower fuel
costs and a 130 basis point headwind from $31 million of COVID-related
costs.
-- The Company continued to convert CPI-based contracts to more favorable
pricing mechanisms for the annual price adjustment. The Company now has
approximately $850 million in annual revenue, or 34 percent of its
approximately $2.5 billion CPI-based book of business, tied to a
waste-related index or a fixed-rate increase of 3 percent or greater.
-- The Company's average recycled commodity price per ton sold in the
second quarter was $101. This represents a sequential increase from the
first quarter of $25 per ton as well as an increase versus the prior
year of $23 per ton.
-- The Company was named to 3BL Media's annual 100 Best Corporate Citizens
list, which is based on a ranking of the 1,000 largest U.S. public
companies for transparency and performance of 141 environmental, social
and governance factors.
2020 Financial Guidance
Republic reinstated its full-year 2020 adjusted free cash flow guidance. It expects to generate $1.1 billion to $1.175 billion of adjusted free cash flow for the full year. This guidance assumes continued gradual improvement in economic activity through the remainder of the year.
Company Declares Quarterly Dividend
Republic continues to increase cash returns to shareholders and previously announced that its Board of Directors approved a 2-cent increase in the quarterly dividend. The quarterly dividend of $0.425 per share for shareholders of record on October 1, 2020 will be paid on October 15, 2020.
"We are raising the dividend by 5 percent to reflect our confidence in delivering consistent free cash flow growth," Slager said. "The annual dividend per share has increased 16 consecutive years, which demonstrates our commitment to efficiently return cash to our shareholders."
Presentation of Certain Non-GAAP Measures
Adjusted diluted earnings per share, adjusted net income, adjusted EBITDA, adjusted EBITDA margin and adjusted free cash flow are described in the Reconciliation of Certain Non-GAAP Measures section of this document.
About Republic Services
Republic Services, Inc. is an industry leader in U.S. recycling and non-hazardous solid waste disposal. Through its subsidiaries, Republic's collection companies, transfer stations, recycling centers, landfills and environmental services provide effective solutions to make responsible recycling and waste disposal effortless for its customers across the country. Its 36,000 employees are committed to providing a superior experience while fostering a sustainable Blue Planet(®) for future generations to enjoy a cleaner, safer and healthier world. For more information, visit RepublicServices.com, or follow us at Facebook.com/RepublicServices, @RepublicService on Twitter and @republic_services on Instagram.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
AND OPERATING DATA
REPUBLIC SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
June 30, December 31,
2020 2019
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $
269.7 $
47.1
Accounts receivable, less
allowance for doubtful
accounts and other of
$34.3 and $34.0,
respectively 1,066.5 1,125.9
Prepaid expenses and other
current assets 232.6 433.0
Total current assets 1,568.8 1,606.0
Restricted cash and
marketable securities 142.6 179.4
Property and equipment,
net 8,499.1 8,383.5
Goodwill 11,673.5 11,633.4
Other intangible assets,
net 126.7 133.9
Other assets 815.6 747.6
Total assets $
22,826.3 $
22,683.8
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $
657.4 $
777.9
Notes payable and current
maturities of long-term
debt 60.0 929.9
Deferred revenue 334.6 336.0
Accrued landfill and
environmental costs,
current portion 128.1 132.6
Accrued interest 68.4 74.0
Other accrued liabilities 817.6 814.2
Total current liabilities 2,066.1 3,064.6
Long-term debt, net of
current maturities 8,598.0 7,758.6
Accrued landfill and
environmental costs, net
of current portion 1,724.1 1,703.2
Deferred income taxes and
other long-term tax
liabilities, net 1,186.8 1,180.6
Insurance reserves, net of
current portion 274.5 276.5
Other long-term
liabilities 745.9 579.4
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value
$0.01 per share; 50
shares authorized; none
issued -
Common stock, par value
$0.01 per share; 750
shares authorized; 354.1
and 353.3 issued
including shares held in
treasury, respectively 3.5 3.5
Additional paid-in
capital 5,026.6 4,994.8
Retained earnings 5,529.2 5,317.3
Treasury stock, at cost;
35.9 and 34.5 shares,
respectively (2,315.7) (2,199.6)
Accumulated other
comprehensive income
(loss), net of tax (16.5) 2.2
Total Republic Services,
Inc. stockholders' equity 8,227.1 8,118.2
Non-controlling interests
in consolidated
subsidiary 3.8 2.7
Total stockholders' equity 8,230.9 8,120.9
Total liabilities and
stockholders' equity $
22,826.3 $
22,683.8
REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2020 2019 2020 2019
Revenue $
2,454.4 $
2,605.3 $
5,008.3 $
5,075.9
Expenses:
Cost of operations 1,468.1 1,617.0 3,018.2 3,123.1
Depreciation,
amortization and
depletion 269.1 264.2 537.7 515.8
Accretion 20.8 20.5 41.7 40.9
Selling, general and
administrative 262.1 264.5 539.2 530.9
Withdrawal costs -
multiemployer pension
funds 31.6 35.9
Loss on business
divestitures and
impairments, net 5.3 0.2 1.4 0.5
Restructuring charges 2.2 1.5 6.0 4.5
Operating income 395.2 437.4 828.2 860.2
Interest expense (91.6) (98.5) (188.2) (198.9)
Loss from
unconsolidated equity
method investments (9.4) (11.5) (22.6) (23.1)
Interest income 3.3 1.4 3.6 3.3
Other income (loss),
net 2.6 (0.2) 1.7 (0.1)
Income before income
taxes 300.1 328.6 622.7 641.4
Provision for income
taxes 73.8 77.7 149.6 155.6
Net income 226.3 250.9 473.1 485.8
Net (income) loss
attributable to non-
controlling interests
in consolidated
subsidiary (0.8) 0.6 (1.3) (0.1)
Net income attributable
to Republic Services,
Inc. $
225.5 $
251.5 $
471.8 $
485.7
Basic earnings per share attributable to
Republic Services, Inc. stockholders:
Basic earnings per
share $
0.71 $
0.78 $
1.48 $
1.51
Weighted average common
shares outstanding 319.0 321.7 319.3 322.0
Diluted earnings per share attributable
to Republic Services, Inc.
stockholders:
Diluted earnings per
share $
0.71 $
0.78 $
1.47 $
1.50
Weighted average common
and common equivalent
shares outstanding 319.6 322.8 319.9 323.1
Cash dividends per
common share $
0.405 $
0.375 $
0.810 $
0.750
REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Six Months Ended June 30,
2020 2019
Cash provided by operating activities:
Net income $
473.1 $
485.8
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation, amortization,
depletion and accretion 579.4 556.7
Non-cash interest expense 30.9 23.3
Stock-based compensation 19.4 20.1
Deferred tax provision 11.4 40.3
Provision for doubtful
accounts, net of adjustments 15.9 15.9
Gain on disposition of assets
and asset impairments, net (1.3) (0.2)
Withdrawal costs -
multiemployer pension funds 35.9
Environmental adjustments (0.4) (10.3)
Loss from unconsolidated
equity method investments 22.6 23.1
Other non-cash items (2.6) (0.8)
Change in assets and liabilities, net of
effects from business acquisitions and
divestitures:
Accounts receivable 45.5 (53.0)
Prepaid expenses and other
assets 192.1 101.3
Accounts payable (60.8) 12.8
Capping, closure and post-
closure expenditures (23.2) (23.8)
Remediation expenditures (28.3) (17.8)
Other liabilities 23.9 (37.8)
Cash provided by operating
activities 1,333.5 1,135.6
Cash used in investing activities:
Purchases of property and
equipment (654.7) (588.7)
Proceeds from sales of
property and equipment 12.3 7.9
Cash used in acquisitions and
investments, net of cash and
restricted cash acquired (95.1) (178.9)
Cash received from business
divestitures 26.8 (0.2)
Purchases of restricted
marketable securities (16.2) (8.2)
Sales of restricted
marketable securities 5.6 7.8
Other (0.5) (2.3)
Cash used in investing
activities (721.8) (762.6)
Cash used in financing activities:
Proceeds from notes payable
and long-term debt, net of
fees 2,441.0 2,284.2
Proceeds from issuance of
senior notes, net of
discount and fees 985.5
Payments of notes payable and
long-term debt and senior
notes (3,493.9) (2,194.2)
Issuances of common stock,
net (6.7) (3.1)
Purchases of common stock for
treasury (98.8) (202.5)
Cash dividends paid (257.9) (241.7)
Distributions paid to non-
controlling interests in
consolidated subsidiary (0.2) (0.2)
Contingent consideration
payments (7.4) (5.1)
Cash used in financing
activities (438.4) (362.6)
Increase in cash, cash
equivalents, restricted cash
and restricted cash
equivalents 173.3 10.4
Cash, cash equivalents,
restricted cash and
restricted cash equivalents
at beginning of year 177.4 133.3
Cash, cash equivalents,
restricted cash and
restricted cash equivalents
at end of period $
350.7 $
143.7
You should read the following information in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K as of and for the year ended December 31, 2019 as well as our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, expected to be filed with the Securities and Exchange Commission on or about August 6, 2020. All amounts below are in millions and as a percentage of our revenue, except per share data.
REVENUE
The following table reflects our total revenue by line of business for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
Six Months Ended June 30,
2020 2019 2020 2019
Collection:
Residential $
573.6 23.4 $
570.1 21.9 $
1,142.1 22.8 $
1,127.5 22.2
% % % %
Small-container 742.4 30.3 792.0 30.4 1,548.1 30.9 1,570.0 30.9
%
Large-container 501.3 20.4 573.9 22.0 1,053.7 21.0 1,104.5 21.8
%
Other 12.6 0.5 11.7 0.4 24.9 0.5 22.5 0.4
%
Total collection 1,829.9 74.6 1,947.7 74.7 3,768.8 75.2 3,824.5 75.3
Transfer 330.5 344.7 652.4 639.6
Less: intercompany (180.4) (193.5) (366.0) (365.5)
Transfer, net 150.1 6.1 151.2 5.8 286.4 5.7 274.1 5.4
Landfill 564.0 607.5 1,122.3 1,142.8
Less: intercompany (248.3) (270.1) (500.6) (508.6)
Landfill, net 315.7 12.9 337.4 13.0 621.7 12.4 634.2 12.5
Environmental services 30.1 1.2 40.8 1.6 76.9 1.6 85.9 1.7
Other:
Recycling processing and
commodity sales 73.5 3.0 71.9 2.7 141.3 2.8 144.6 2.9
Other non-core 55.1 2.2 56.3 2.2 113.2 2.3 112.6 2.2
Total other 128.6 5.2 128.2 4.9 254.5 5.1 257.2 5.1
Total revenue $
2,454.4 100.0 $
2,605.3 100.0 $
5,008.3 100.0 $
5,075.9 100.0
% % % %
The following table reflects changes in components of our revenue, as a percentage of total revenue, for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June Six Months Ended June
30, 30,
2020 2019 2020 2019
Average yield 2.5 2.8 2.7 2.9
% % % %
Fuel recovery fees (0.8) 0.1 (0.5) 0.1
Total price 1.7 2.9 2.2 3.0
Volume (1) (7.4) 0.1 (3.7) (0.7)
Recycling processing
and commodity sales 0.1 0.2
Environmental
services (0.9) (0.4) (0.7) (0.2)
Total internal
growth (6.5) 2.8 (2.2) 2.1
Acquisitions /
divestitures, net 0.7 0.7 0.9 0.5
Total (5.8) 3.5 (1.3) 2.6
% % % %
Core price 4.7 4.6 5.0 4.7
% % % %
(1) The decrease in volume
of (3.7)% during the six
months ended June 30, 2020
includes an offsetting
increase of 0.2% due to
one additional workday as
compared to the same
respective period in 2019.
The decrease in volume of
(0.7)% during the six
months ended June 30, 2019
includes a decrease of
(0.3)% due to one less
work day as compared to
the same respective period
in 2018.
Average yield is defined as revenue growth from the change in average price per unit of service, expressed as a percentage. Core price is defined as price increases to our customers and fees, excluding fuel recovery fees, net of price decreases to retain customers. We also measure changes in average yield and core price as a percentage of related-business revenue, defined as total revenue excluding recycled commodities and fuel recovery fees, to determine the effectiveness of our pricing strategies. Average yield as a percentage of related-business revenue was 2.6% and 2.8% for the three and six months ended June 30, 2020, respectively, and 3.0% for the same periods in 2019. Core price as a percentage of related-business revenue was 4.9% and 5.2% for the three and six months ended June 30, 2020, respectively, and 4.9% and 5.0% for the same periods in 2019.
The following table reflects changes in average yield and volume, as a percentage of total revenue by line of business, for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
Six Months Ended June 30,
2020 2019 2020 2019
Yield Volume Yield Volume Yield Volume Yield Volume
Collection:
Residential 2.2 % (1.6) % 2.7 % (1.9) % 2.3 % (1.4) % 2.8 % (2.0) %
Small-container 4.1 % (8.8) % 3.7 % (1.0) % 4.0 % (4.5) % 3.6 % (0.8) %
Large-container 1.6 % (12.4) % 3.3 % (0.6) % 2.5 % (6.6) % 3.6 % (0.2) %
Landfill:
Municipal solid waste 2.9 % (3.5) % 3.2 % 4.5 % 3.0 % (2.1) % 3.3 % 5.4 %
Construction and
demolition waste 7.6 % 0.2 % 2.2 % 3.3 % 5.8 % 9.2 % 2.1 % 4.6 %
Special waste % (17.2) % % 9.8 % % (10.6) % % (4.4) %
COST OF OPERATIONS
The following table summarizes the major components of our cost of operations for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
Six Months Ended June 30,
2020 2019 2020 2019
Labor and related $
514.2 21.0 $
551.7 21.2 $
1,071.1 21.4 $
1,088.9 21.5
benefits
% % % %
Transfer and disposal
costs 189.2 7.7 221.1 8.5 387.8 7.7 418.4 8.2
Maintenance and
repairs 232.2 9.5 251.0 9.6 479.5 9.6 492.8 9.7
Transportation and
subcontract costs 160.7 6.5 171.8 6.6 328.0 6.5 325.6 6.4
Fuel 58.7 2.4 96.8 3.7 138.3 2.8 188.9 3.7
Disposal fees and
taxes 77.2 3.1 85.0 3.3 154.6 3.1 158.2 3.1
Landfill operating
costs 65.7 2.7 67.2 2.6 130.5 2.6 120.9 2.4
Risk management 51.6 2.1 63.6 2.4 113.5 2.3 116.1 2.3
Other 118.6 4.8 108.8 4.2 225.7 4.5 213.3 4.2
Subtotal 1,468.1 59.8 1,617.0 62.1 3,029.0 60.5 3,123.1 61.5
Bridgeton insurance
recovery (10.8) (0.2)
Total cost of $
1,468.1 59.8 $
1,617.0 62.1 $
3,018.2 60.3 $
3,123.1 61.5
operations
% % % %
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our cost of operations by cost component to that of other companies and of ours for prior periods.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The following table summarizes our selling, general and administrative expenses for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
Six Months Ended June 30,
2020 2019 2020 2019
Salaries and related $
181.0 7.4 $
182.5 7.0 $
372.4 7.5 $
366.7 7.2
benefits
% % % %
Provision for
doubtful accounts 11.0 0.4 8.4 0.3 15.9 0.3 15.9 0.3
Other 68.3 2.8 71.7 2.7 145.3 2.9 145.8 2.9
Subtotal 260.3 10.6 262.6 10.0 533.6 10.7 528.4 10.4
Acquisition
integration and
deal costs 1.8 0.1 1.9 0.1 5.6 0.1 2.5
Total selling,
general and
administrative % % % %
expenses $
262.1 10.7 $
264.5 10.1 $
539.2 10.8 $
530.9 10.4
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies and of ours for prior periods.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
EBITDA
The following table calculates EBITDA, which is not a measure determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP), for the three and six months ended June 30, 2020 and 2019:
Three Months Ended June 30,
Six Months Ended June 30,
2020 2019 2020 2019
Net income
attributable to
Republic
Services, Inc. $
225.5 $
251.5 $
471.8 $
485.7
Net income
attributable to
non-controlling
interests 0.8 (0.6) 1.3 0.1
Provision for
income taxes 73.8 77.7 149.6 155.6
Other loss
(income), net (2.6) 0.2 (1.7) 0.1
Interest income (3.3) (1.4) (3.6) (3.3)
Interest expense 91.6 98.5 188.2 198.9
Depreciation,
amortization and
depletion 269.1 264.2 537.7 515.8
Accretion 20.8 20.5 41.7 40.9
EBITDA $
675.7 $
710.6 $
1,385.0 $
1,393.8
We believe that presenting EBITDA is useful to investors because it provides important information concerning our operating performance exclusive of certain non-cash and other costs. EBITDA demonstrates our ability to execute our financial strategy, which includes reinvesting in existing capital assets to ensure a high level of customer service, investing in capital assets to facilitate growth in our customer base and services provided, maintaining our investment grade credit ratings and minimizing debt, paying cash dividends, repurchasing our common stock, and maintaining and improving our market position through business optimization. This measure has limitations. Although depreciation, depletion, amortization and accretion are considered operating costs in accordance with U.S. GAAP, they represent the allocation of non-cash costs generally associated with long-lived assets acquired or constructed in prior years. Our definition of EBITDA may not be comparable to similarly titled measures presented by other companies.
Adjusted Earnings
Reported diluted earnings per share was $0.71 and $1.47 for the three and six months ended June 30, 2020 as compared to $0.78 and $1.50 for the same periods in 2019. During the three and six months ended June 30, 2020 and 2019, we recorded a number of charges and other expenses and gains that impacted our EBITDA, pre-tax income, net income attributable to Republic Services, Inc. (Net Income - Republic) and diluted earnings per share. The tables below set forth such measures on an adjusted basis to exclude such charges, other expenses and gains:
Three Months Ended June 30, 2020
Three Months Ended June 30, 2019
Net Diluted Net Diluted
Pre-tax Income - Earnings Pre-tax Income - Earnings
EBITDA Income Republic per Share EBITDA Income Republic per Share
As reported $
675.7 $
300.1 $
225.5 $
0.71 $
710.6 $
328.6 $
251.5 $
0.78
Loss from unconsolidated
equity method investment 9.4 11.5
Restructuring charges (1) 2.2 2.2 1.6 0.01 1.5 1.5 1.1
Loss on business
divestitures and
impairments, net (1) 5.3 5.3 6.4 0.02 0.2 0.2 0.2
Acquisition integration
and deal costs (2) 1.8 1.8 1.3 1.9 1.9 1.3 0.01
Withdrawal costs -
multiemployer pension
funds 31.6 31.6 23.4 0.07
Total adjustments 50.3 40.9 32.7 0.10 15.1 3.6 2.6 0.01
As adjusted $
726.0 $
341.0 $
258.2 $
0.81 $
725.7 $
332.2 $
254.1 $
0.79
(1) The aggregate impact to
adjusted diluted earnings
per share totals to less
than $0.01 for the three
months ended June 30,
2019.
(2) The aggregate impact to
adjusted diluted earnings
per share totals to less
than $0.01 for the three
months ended June 30,
2020.
Six Months Ended June 30, 2020
Six Months Ended June 30, 2019
Net Diluted
Net Diluted
Pre-tax Income - Earnings Pre-tax Income - Earnings
EBITDA Income Republic per Share EBITDA Income Republic per Share
As reported $
1,385.0 $
622.7 $
471.8 $
1.47 $
1,393.8 $
641.4 $
485.7 $
1.50
Loss from unconsolidated
equity method investment 22.6 23.1
Restructuring charges 6.0 6.0 4.5 0.02 4.5 4.5 3.3 0.01
Loss on business
divestitures and
impairments, net(1) 1.4 1.4 3.5 0.01 0.5 0.5 0.4
Acquisition integration
and deal costs 5.6 5.6 4.1 0.02 2.5 2.5 1.8 0.01
Withdrawal costs -
multiemployer pension
funds 35.9 35.9 26.5 0.08
Bridgeton insurance
recovery (10.8) (10.8) (8.2) (0.03)
Incremental contract
startup costs -large
municipal contract(1) 0.7 0.7 0.5
Total adjustments 60.7 38.1 30.4 0.10 31.3 8.2 6.0 0.02
As adjusted $
1,445.7 $
660.8 $
502.2 $
1.57 $
1,425.1 $
649.6 $
491.7 $
1.52
(1) The aggregate impact to
adjusted diluted earnings
per share totals to less
than $0.01 for the six
months ended June 30,
2019.
We believe that presenting adjusted EBITDA, adjusted pre-tax income, adjusted net income - Republic, and adjusted diluted earnings per share, which are not measures determined in accordance with U.S. GAAP, provide an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges, costs and recoveries in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definitions of adjusted EBITDA, adjusted pre-tax income, adjusted net income - Republic, and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies. Further information on each of these adjustments is included below.
Restructuring charges. In 2019, we incurred costs related to the redesign of certain back-office software systems, which continued into 2020.
Loss on business divestitures and impairments, net. During the three and six months ended June 30, 2020 and 2019, we recorded a net loss on business divestitures and impairments.
Acquisition integration and deal costs. Although our business regularly incurs costs related to acquisitions, we specifically identify in the tables above integration and deal costs incurred during the three and six months ended June 30, 2020 and 2019. We do this because of the magnitude of the costs associated with the particular acquisition and integration activity during these time periods.
Withdrawal costs - multiemployer pension funds. During the three and six months ended June 30, 2020, we recorded charges to earnings for withdrawal events at multiemployer pension funds to which we contribute. As we obtain updated information regarding multiemployer pension funds, the factors used in deriving our estimated withdrawal liabilities will be subject to change, which may adversely impact our reserves for withdrawal costs.
Bridgeton insurance recovery. During the six months ended June 30, 2020, we recognized an insurance recovery related to our closed Bridgeton Landfill in Missouri as a reduction of remediation expenses in our cost of operations.
Incremental contract startup costs - large municipal contract. Although our business regularly incurs startup costs under municipal contracts, we specifically identify in the tables above the startup costs with respect to an individual municipal contract (and do not adjust for other startup costs under other contracts). We do this because of the magnitude of the costs involved with this particular municipal contract and the unusual nature for the time periods in which they were incurred.
Adjusted Free Cash Flow
The following table calculates our adjusted free cash flow, which is not a measure determined in accordance with U.S. GAAP, for the six months ended June 30, 2020 and 2019:
Six Months Ended June 30,
2020 2019
Cash
provided
by
operating
activities $
1,333.5 $
1,135.6
Property
and
equipment
received (583.1) (527.4)
Proceeds
from
sales of
property
and
equipment 12.3 7.9
Restructuring
payments,
net of
tax 4.6 4.8
Divestiture
related
tax
payments 2.1 (0.1)
Bridgeton
remediation,
net of
tax (26.4)
Adjusted
free
cash
flow $
743.0 $
620.8
We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain expenditures or recoveries. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed, such as debt service requirements and dividend payments. Our definition of adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.
Purchases of property and equipment as reflected on our consolidated statements of cash flows represent amounts paid during the periods for such expenditures. A reconciliation of property and equipment expenditures reflected on our consolidated statements of cash flows to property and equipment received during the periods follows for the six months ended June 30, 2020 and 2019:
Six Months Ended June 30,
2020 2019
Purchases of
property and
equipment per
the unaudited
consolidated
statements of
cash flows $
654.7 $
588.7
Adjustments to
exclude the
purchase of
property and
equipment
associated
with
acquisitions (9.1) (3.6)
Adjustments
for property
and equipment
received
during the
prior period
but paid for
in the
following
period, net (62.5) (57.7)
Property and
equipment
received
during the
period $
583.1 $
527.4
The adjustments noted above do not affect our net change in cash and cash equivalents as reflected in our consolidated statements of cash flows.
ACCOUNTS RECEIVABLE
As of June 30, 2020 and December 31, 2019, accounts receivable were $1,066.5 million and $1,125.9 million, net of allowance for doubtful accounts of $34.3 million and $34.0 million, respectively, resulting in days sales outstanding of 39.5, or 27.1 days net of deferred revenue, compared to 39.8, or 27.9 days net of deferred revenue, respectively.
CASH DIVIDENDS
In April 2020, we paid a cash dividend of $128.9 million to shareholders of record as of April 1, 2020. As of June 30, 2020, we recorded a quarterly dividend payable of $129.0 million to shareholders of record at the close of business on July 1, 2020, which was paid on July 15, 2020.
STOCK REPURCHASE PROGRAM
During the three months ended June 30, 2020, there were no shares repurchased. As of June 30, 2020, the remaining authorized purchase capacity under our October 2017 repurchase program was $605.8 million.
2020 FINANCIAL GUIDANCE
Our anticipated adjusted free cash flow for the year ended December 31, 2020, which is not a measure determined in accordance with U.S. GAAP, is calculated as follows:
(Anticipated)
Year Ending
December 31,
2020
Cash provided by
operating
activities
$2,145 to $2,295
Property and (1,075 to
equipment 1,150)
received
Proceeds from
the sale of
property and
equipment 15
Restructuring
payments, net
of tax 14
Payments for
withdrawal
costs -
multiemployer
pension funds,
net of tax 25
Divestiture
related tax
payments 2
Bridgeton
insurance
recovery, net
of tax (26)
Adjusted free
cash flow
$1,100 to $1,175
Purchases of property and equipment as reflected
on our consolidated statements of cash flows
represent amounts paid during the period for
such expenditures. A reconciliation of property
and equipment reflected on our consolidated
statements of cash flows to property and
equipment received during the period is as
follows:
(Anticipated)
Year Ending
December 31,
2020
Purchases of
property and
equipment per
the unaudited
consolidated
statements of
cash flows
$1,105 to $1,180
Adjustments to
exclude the
purchase of
property and
equipment
associated with
acquisitions (30)
Adjustments for
property and
equipment
received during
the prior
period but paid
for in the
following
period, net -
Property and
equipment
received during
the period
$1,075 to $1,150
We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain expenditures or recoveries. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed, such as debt service requirements and dividend payments. Our definition of adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information about us that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as "guidance," "expect," "will," "may," "anticipate," "plan," "estimate," "project," "intend," "should," "can," "likely," "could," "outlook" and similar expressions are intended to identify forward-looking statements. These statements include information about our plans, strategies and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to risk and uncertainties that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that the expectations will prove to be correct. Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are the effects of the COVID-19 pandemic and actions taken in response thereto, acts of war, riots or terrorism, and the impact of these acts on economic, financial and social conditions in the United States as well as our dependence on large, long-term collection, transfer and disposal contracts. More information on factors that could cause actual results or events to differ materially from those anticipated is included from time to time in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2019, particularly under Part I, Item 1A - Risk Factors, and our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, which we expect to file with the Securities and Exchange Commission on or about August 6, 2020. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business. We undertake no obligation to update publicly any forward-looking statements whether as a result of new information, future events or otherwise, except as required by law.
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SOURCE Republic Services, Inc.
