Republic Services, Inc. (RSG) Cash Flow Statement

The OCF/NI ratio consistently above 1.8, peaking at 4.20 in 2026Q2, suggests that reported earnings are heavily backed by cash generation, likely due to significant non-cash D&A and favorable working capital dynamics. However, the 2026Q2 spike may reflect timing of collections or payables, warranting monitoring for sustainability. The gap between net income and operating cash flow is a positive signal, but investors should verify that it is not driven by one-off items.

The FCF trajectory shows a clear upward trend from 2024Q1 to 2026Q2, with margins averaging around 15-18% in recent quarters, excluding the outlier 2026Q2. This suggests improving operational efficiency and disciplined capital allocation, though the 34.1% margin in 2026Q2 may be inflated by lower CapEx relative to revenue. Compared to peers, RSG's FCF margin is competitive with WCN's 18.5%, indicating strong cash generation capability.

The elevated CapEx/Rev in 2026Q2 (19.6%) suggests a potential increase in landfill cell development or fleet replacement, which may be growth-oriented given the company's expansion in Environmental Solutions. However, the variability across quarters (10-14% typical) implies that maintenance capex is a substantial component, and investors should monitor if rising capital intensity without corresponding EBITDA growth signals diminishing returns. The 2026Q2 spike may also reflect timing of large projects.

The negative working capital changes in 2025Q4 and 2024Q4 suggest seasonal payables or receivables timing, while positive changes in other quarters indicate efficient collections. The overall pattern appears consistent with a stable business model, but the 2026Q2 positive change of $17M is minimal, suggesting no major inventory build-up or receivable issues. Investors should monitor if working capital becomes a persistent drag on cash flow, which could indicate deteriorating collection efficiency.

The company returned significant capital to shareholders, with dividends growing steadily from $168M in 2024Q1 to $385M in 2026Q2, and buybacks fluctuating but reaching $659M in 2026Q2. Acquisitions, particularly the US Ecology integration, have been a major cash use, with net acquisition spending peaking at $865M in 2026Q2. This suggests management is prioritizing both organic growth and shareholder returns, but the high acquisition spend may strain liquidity if not offset by operating cash flow.

The cumulative gap of $6.1B between operating cash flow and net income highlights the significant non-cash charges, primarily D&A, which is typical for capital-intensive waste companies. This divergence suggests that earnings quality is high, as cash generation is not dependent on aggressive accruals. However, investors should note that the gap may narrow if D&A declines or working capital turns negative, so monitoring the trend is essential.