Date: May 1, 2009
Source: Republic Services Inc.
Free cash flow on target
EBITDA margins improve to 29.0%
Republic Services, Inc. (NYSE: RSG) today reported net income for the three months ended
Revenue for the three months ended
Commenting on these results,
"The field organization has done an excellent job managing costs through
improved efficiency and productivity during the economic downturn which has
resulted in significant margin expansion," said
In
Company Declares Quarterly Dividend
Republic also announced that its Board of Directors declared a regular
quarterly dividend of
About
REPUBLIC SERVICES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
March 31, December 31,
2009 2008 (1)
------ --------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $193.5 $68.7
Accounts receivable, less allowance for
doubtful accounts of $60.1 and $65.7 ,
respectively 877.6 945.5
Other current assets 292.8 311.5
----- -----
Total Current Assets 1,363.9 1,325.7
RESTRICTED CASH AND MARKETABLE SECURITIES 262.7 281.9
PROPERTY AND EQUIPMENT, NET 6,677.8 6,738.2
GOODWILL AND OTHER INTANGIBLE ASSETS, NET 10,965.5 11,085.6
OTHER ASSETS 592.7 490.0
----- -----
$19,862.6 $19,921.4
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, deferred revenue and
other current liabilities $2,018.5 $2,061.8
Notes payable and current maturities of
long-term debt 457.9 504.0
----- -----
Total Current Liabilities 2,476.4 2,565.8
LONG-TERM DEBT, NET OF CURRENT MATURITIES 7,118.7 7,198.5
ACCRUED LANDFILL AND ENVIRONMENTAL COSTS 1,244.9 1,197.1
OTHER LIABILITIES 1,693.9 1,677.5
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.01 per share; 50.0
shares authorized; none issued - -
Common stock, par value $.01 per share; 750.0
shares authorized; 393.7 and 393.4 issued,
including shares held in treasury, respectively 3.9 3.9
Additional paid-in capital 6,267.6 6,260.1
Retained earnings 1,518.2 1,477.2
Treasury stock, at cost (14.9 and 14.9 shares,
respectively) (457.0) (456.7)
Accumulated other comprehensive income,
net of tax (5.5) (3.1)
---- ----
Total Republic Services, Inc.
Stockholders' Equity 7,327.2 7,281.4
Noncontrolling Interests 1.5 1.1
--- ---
Total Stockholders' Equity 7,328.7 7,282.5
------- -------
$19,862.6 $19,921.4
========= =========
(1) Derived from the December 31, 2008 consolidated balance sheet.
REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Three Months
Ended March 31,
----------------
2009 2008
---- ----
REVENUE
$2,060.5 $779.2
EXPENSES:
Cost of operations 1,208.7 476.5
Depreciation, amortization and depletion 221.8 73.4
Accretion 23.3 4.4
Selling, general and administrative 217.5 82.7
Asset impairments and losses on sales of
businesses 4.9 -
Restructuring charges 31.3 -
---- ----
OPERATING INCOME 353.0 142.2
INTEREST EXPENSE (153.5) (21.4)
INTEREST INCOME .7 2.8
OTHER INCOME (EXPENSE), NET .2 .2
--- ---
INCOME BEFORE INCOME TAXES 200.4 123.8
Provision for income taxes 87.0 47.7
---- ----
NET INCOME $113.4 $76.1
Less: Net income attributable to the
noncontrolling interest (.4) -
---- -----
NET INCOME ATTRIBUTABLE TO REPUBLIC SERVICES,
INC. $113.0 $76.1
====== =====
BASIC EARNINGS PER SHARE ATTRIBUTABLE
TO REPUBLIC SERVICES, INC. :
Basic earnings per share attributable to
Republic Services, Inc. $.30 $.41
===== =====
Weighted average common shares
outstanding 378.9 183.4
===== =====
DILUTED EARNINGS PER SHARE ATTRIBUTABLE
TO REPUBLIC SERVICES, INC. :
Diluted earnings per share attributable to
Republic Services, Inc. $.30 $.41
===== =====
Weighted average common and common
equivalent shares outstanding 379.9 185.1
===== =====
CASH DIVIDENDS PER COMMON SHARE $.19 $.17
===== =====
REPUBLIC SERVICES, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Three Months
Ended March 31,
------------
2009 2008
---- ----
CASH PROVIDED BY OPERATING ACTIVITIES:
Net income $113.4 $76.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Net income attributable to noncontrolling
interest (.4) -
Depreciation, amortization, and depletion 221.8 73.4
Accretion 23.3 4.4
Other non-cash items 82.6 15.8
Change in operating assets and liabilities, net of
effects from business acquisitions and
dispositions 71.7 (21.7)
---- -----
512.4 148.0
----- -----
CASH USED IN INVESTING ACTIVITIES:
Purchases of property and equipment (193.4) (81.6)
Proceeds from sales of property and equipment 4.9 1.0
Cash used in business acquisitions, net of cash
acquired (.1) (11.7)
Cash proceeds from business dispositions, net of
cash disposed .3 -
Change in restricted cash 19.2 (25.0)
---- -----
(169.1) (117.3)
------ ------
CASH USED IN FINANCING ACTIVITIES:
Proceeds from notes payable and long-term debt 230.9 122.0
Payments of notes payable and long-term debt (381.1) (1.2)
Issuances of common stock 3.7 5.3
Excess income tax benefit from stock option
exercises .3 1.2
Purchases of common stock for treasury (.3) (97.8)
Cash dividends paid (72.0) (31.6)
----- -----
(218.5) (2.1)
------ ----
INCREASE IN CASH AND CASH EQUIVALENTS 124.8 28.6
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 68.7 21.8
---- ----
CASH AND CASH EQUIVALENTS AT END OF PERIOD $193.5 $50.4
====== =====
REPUBLIC SERVICES, INC.
UNAUDITED SUMMARY DATA SHEET - STATEMENT OF OPERATIONS
DATA
(in millions, except percentages)
The following information should be read in conjunction
with our audited consolidated financial statements and
notes thereto appearing in our Form 10-K as of and for the year ended
December 31, 2008 .
REVENUE
The following table reflects our total revenue by revenue
source for the three months ended March 31, 2009 and
2008:
Three Months
Ended March 31,
----------------
2009 2008
---- ----
Collection:
Residential $546.1 $204.9
Commercial 658.6 248.5
Industrial 382.9 152.9
Other 7.2 4.9
--- ---
Total collection 1,594.8 611.2
Transfer and disposal 775.8 274.9
Less: Intercompany (389.3) (144.5)
------ ------
Transfer and disposal, net 386.5 130.4
Other 79.2 37.6
---- ----
Total revenue $2,060.5 $779.2
======== ======
The following table reflects our revenue growth for the
three months ended March 31, 2009 and 2008.
For comparative purposes, we have presented the
components of our revenue growth for the three
months ended March 31, 2009 on a pro forma basis as if
the acquisition of Allied had been effective
January 1, 2008 .
Three Months
Ended March 31,
----------------
2009 2008(1)
---- -------
Core price 3.5% 4.3%
Fuel surcharges (1.2) 1.1
Commodities (2.9) .8
---- ---
Total price (.6) 6.2
Core volume (8.0) (2.5)
---- ---
Total internal growth (8.6) 3.7
Acquisitions, net of divestitures - (1.9)
- ----
Total revenue growth (8.6)% 1.8%
==== ===
(1) Certain prior year amounts have been reclassified to
conform to the current year's presentation.
REPUBLIC SERVICES, INC.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
MERGER WITH ALLIED
We completed our acquisition of Allied effective
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
Operating Income before Depreciation, Amortization, Depletion and Accretion
Operating income before depreciation, amortization, depletion and
accretion, which is not a measure determined in accordance with GAAP, for the
three months ended
Three Months Ended
March 31,
2009 2008
Net income attributable to Republic
Services, Inc. $113.0 $76.1
Noncontrolling interests .4 -
Provision for income taxes 87.0 47.7
Other (income) expense, net (.2) (.2)
Interest income (.7) (2.8)
Interest expense 153.5 21.4
Depreciation, amortization and depletion 221.8 73.4
Accretion 23.3 4.4
Operating income before depreciation,
amortization, depletion and accretion $598.1 $220.0
We believe that the presentation of operating income before depreciation, amortization, depletion and accretion is useful to investors because it provides important information concerning our operating performance exclusive of certain non-cash costs. Operating income before depreciation, amortization, depletion and accretion 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 rating and minimizing debt, paying cash dividends, and maintaining and improving our market position through business optimization. This measure has limitations. Although depreciation, amortization, depletion and accretion are considered operating costs in accordance with GAAP, they represent the allocation of non-cash costs generally associated with long-lived assets acquired or constructed in prior years.
Diluted Earnings per Share
Reported earnings per diluted share for 2009 are expected to be in the
range of
The following is a summary of adjusted diluted earnings per share for the
anticipated twelve months ended December 31, 2009 and the actual three months
ended March 31, 2009 :
(Anticipated) (Actual)
Twelve Months Three Months Ended
Ended December March 31, 2009
31, 2009
Diluted earnings per share $1.10 - 1.15 $.30
Integration costs .20 .07
Depreciation, depletion and
amortization, non- cash interest
expense and conforming accounting
policies .40 .10
Adjusted diluted earnings per
share $1.70 - 1.75 $.47
We believe that the presentation of adjusted diluted earnings per share, which excludes charges related to the integration of our businesses, higher depreciation, depletion and amortization, non-cash interest expense for amortizing the discount to fair value on Allied's debt and other acquired liabilities, and conforming our accounting policies provides an understanding of operational activities before the financial impact of certain non-operational items. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. Comparable charges and costs have been incurred in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods.
Cash Flow
We define free cash flow, which is not a measure determined in accordance
with GAAP, as cash provided by operating activities less purchases of property
and equipment plus proceeds from sales of property and equipment as presented
in our unaudited condensed consolidated statements of cash flows. Our free
cash flow for the three months ended
Three Months Ended
March 31,
2009 2008
Cash provided by operating activities $512.4 $148.0
Purchases of property and equipment (193.4) (81.6)
Proceeds from sales of property and equipment 4.9 1.0
Free cash flow $323.9 $67.4
Purchases of property and equipment as reflected on our unaudited condensed consolidated statements of cash flows and the free cash flow presented above represent amounts paid during the period for such expenditures. A reconciliation of property and equipment reflected on the unaudited condensed consolidated statements of cash flows to property and equipment received during the period is as follows (in millions):
Three Months Ended
March 31,
2009 2008
Purchases of property and equipment per the
unaudited condensed consolidated statements of
cash flows $193.4 $81.6
Adjustments for property and equipment
received during the prior period but paid for
in the following period, net (45.0) (33.8)
Property and equipment received during the
current period $148.4 $47.8
The adjustments noted above do not affect either our net change in cash and cash equivalents as reflected in our unaudited condensed consolidated statements of cash flows or our free cash flow.
We believe that the presentation of free cash flow provides useful information regarding our recurring cash provided by operating activities after expenditures for property and equipment, net of proceeds from sales of property and equipment. It also demonstrates our ability to execute our financial strategy as previously discussed and is a key metric we use to determine compensation. The presentation of free cash flow has material limitations. Free cash flow does not represent our cash flow available for discretionary expenditures because it excludes certain expenditures that are required or that we have committed to such as debt service requirements and dividend payments. Our definition of free cash flow may not be comparable to similarly titled measures presented by other companies.
Capital expenditures include
As of
CASH DIVIDENDS
In
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements and information included herein constitute 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," "intend," "can," "could" and similar expressions are intended to identify forward-looking statements. These statements include statements about the expected benefits of the merger, 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 can give no assurance 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:
-- our ability to successfully integrate Allied's and Republic's
operations and to achieve synergies or create long-term value for
stockholders as expected, including the possibility that we will
experience significant and unexpected transaction- and
integration-related costs or that the timing of and proceeds received
from the mandatory divestiture of certain assets may result in
additional expenditures of money and resources or reduce the benefits
of the merger;
-- the impact on us of our substantial post-merger indebtedness,
including our ability to obtain financing on acceptable terms to
finance our operations and growth strategy and to operate within the
limitations imposed by financing arrangements and that any downgrade
in our bond ratings could adversely impact us;
-- general economic and market conditions including, but not limited to,
the current global economic and financial market crisis, inflation and
changes in commodity pricing, fuel, labor, risk and health insurance
and other variable costs that are generally not within our control and
our exposure to credit and counterparty risk;
-- whether our estimates and assumptions concerning our selected balance
sheet accounts, income tax accounts, final capping, closure, post-
closure and remediation costs, available airspace, and projected costs
and expenses related to our landfills and property and equipment
(including our estimates of the fair values of the assets and
liabilities acquired in our acquisition of Allied), and labor, fuel
rates, and economic and inflationary trends, turn out to be correct or
appropriate;
-- competition and demand for services in the solid waste industry;
-- the fact that price increases may not be adequate to offset the impact
of increased costs and may cause us to lose volume;
-- our ability to manage growth and execute our acquisition growth
strategy;
-- our compliance with, and future changes in, environmental and flow
control regulations and our ability to obtain approvals from
regulatory agencies in connection with operating and expanding our
landfills;
-- our dependence on key personnel;
-- our dependence on large, long-term collection, transfer and disposal
contracts;
-- our dependence on acquisitions for growth;
-- risks associated with undisclosed liabilities of acquired businesses;
-- risks associated with pending and any future legal proceedings,
including our matters currently pending with the DOJ and IRS;
-- severe weather conditions, which could impair our financial results by
causing increased costs, loss of revenue, reduced operational
efficiency or disruptions to our operations;
-- compliance with existing and future legal and regulatory requirements,
including limitations or bans on disposal of certain types of wastes
or on the transportation of waste, which could limit our ability to
conduct or grow our business, increase our costs to operate or require
additional capital expenditures;
-- any litigation, audits or investigations brought by or before any
governmental body;
-- workforce factors, including potential increases in our costs if we
are required to provide additional funding to any multi-employer
pension plan to which we contribute and the negative impact on our
operations of union organizing campaigns, work stoppages or labor
shortages;
-- the negative effect that trends toward requiring recycling, waste
reduction at the source and prohibiting the disposal of certain types
of wastes could have on volumes of waste going to landfills and waste-
to-energy facilities;
-- changes by the Financial Accounting Standards Board or other
accounting regulatory bodies to generally accepted accounting
principles or policies;
-- acts of war, riots or terrorism, including the events taking place in
the Middle East , the current military action in Iraq and the
continuing war on terrorism, as well as actions taken or to be taken
by the United States or other governments as a result of further acts
or threats of terrorism, and the impact of these acts on economic,
financial and social conditions in the United States ; and
-- the timing and occurrence (or non-occurrence) of transactions and
events which may be subject to circumstances beyond our control.
The risks included here are not exhaustive. Refer to "Part I, Item 1A --
Risk Factors" in our Annual Report on Form 10-K for the year ended
For more information, contact:
Media Inquiries:
Investor Inquiries:
Web Site: http://www.republicservices.com
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