- Free cash flow on target PHOENIX, April 30 /PRNewswire-FirstCall/
-- Republic Services, Inc. (NYSE: RSG) today reported net income
for the three months ended March 31, 2009 of $113.0 million, or
$.30 per diluted share, compared to net income of $76.1 million, or
$.41 per diluted share, for the same period in 2008. Our first
quarter 2009 financial results include Allied Waste Industries,
Inc. (Allied) which merged with Republic on December 5, 2008.
Operating income for the three months ended March 31, 2009 was
$353.0 million compared to $142.2 million for the comparable period
in 2008. Operating income before depreciation, amortization,
depletion and accretion for the three months ended March 31, 2009
was $598.1 million, or 29.0% of revenue compared to $220.0 million,
or 28.2% of revenue in 2008. (Logo:
http://www.newscom.com/cgi-bin/prnh/20020531/RSGLOGO) Revenue for
the three months ended March 31, 2009 increased to $2,060.5 million
compared to $779.2 million for the same period in 2008. Core price
for the three months ended March 31, 2009 (assuming the merger with
Allied had occurred on January 1, 2008) increased 3.5%. Internal
growth for the three months ended March 31, 2009 (assuming the
merger with Allied had occurred on January 1, 2008) decreased 8.6%
(consisting of a 3.5% price increase offset by decreases of 8.0% in
core volume, 2.9% in commodity prices and 1.2% in fuel charges).
Commenting on these results, James E. O'Connor, Chairman and Chief
Executive Officer of Republic Services, said, "During the first
quarter, we continued to see positive results regarding the merger
of Republic and Allied. Thus far, we have captured more than $75
million in annual run-rate synergy savings. We are well on our way,
and remain confident in our commitment, to secure a total annual
savings of at least $150 million by the end of 2010." "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 Donald W.
Slager, President and COO of Republic Services, Inc. "Customer
service and effective pricing continue to be the primary focus of
our business in 2009. We remain committed to achieving our previous
pricing guidance of 4% for the full year." In April 2009, we
received approximately $332 million in proceeds from the sale of
certain businesses mandated by the United States Department of
Justice. These proceeds were used to repay amounts borrowed under
our revolving credit facility. Company Declares Quarterly Dividend
Republic also announced that its Board of Directors declared a
regular quarterly dividend of $.19 per share for shareholders of
record on July 1, 2009. The dividend will be paid on July 15, 2009.
About Republic Services, Inc. Republic Services, Inc. is a leading
provider of services in the domestic, non-hazardous solid waste
industry. We provide solid waste collection, transfer, disposal and
recycling services for commercial, industrial, municipal and
residential customers through 400 collection companies in 40 states
and Puerto Rico. We also own or operate 242 transfer stations, 213
solid waste landfills and 78 recycling facilities. Republic serves
millions of residential customers under contracts with more than
3,000 municipalities for waste collection and residential services.
For more information, visit the Republic Services web site at
http://www.republicservices.com/. 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 December 5, 2008. In
accordance with the purchase method of accounting, the purchase
price paid has been allocated to assets and liabilities acquired
based upon their estimated fair values as of the effective date of
the merger, with the excess of the purchase price over the net
assets acquired being recorded as goodwill. We are in the process
of valuing all of the assets and liabilities acquired in the
merger, and, until we have completed our valuation process, there
may be adjustments to our estimates of fair values and the
resulting preliminary purchase price allocation. 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 March 31, 2009 and 2008 is calculated as follows: 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 $1.10 to $1.15 per share. We anticipate reported 2009 earnings
per diluted share before the accounting impact of our merger with
Allied and restructuring charges to be in the range of $1.70 to
$1.75 per share. 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 March 31, 2009 and 2008 is calculated as follows
(in millions): 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 $.4 million and $.3 million of capitalized
interest for the three months ended March 31, 2009 and 2008,
respectively. As of March 31, 2009, accounts receivable was $877.6
million, net of allowance for doubtful accounts of $60.1 million,
resulting in days sales outstanding of approximately 39 (or 23 net
of deferred revenue). CASH DIVIDENDS In January 2009, we paid a
cash dividend of $72.0 million to stockholders of record as of
January 2, 2009. As of March 31, 2009, we recorded a dividend
payable of $72.0 million to stockholders of record at the close of
business on April 1, 2009, which has been paid. In April 2009, our
Board of Directors declared a regular quarterly dividend of $.19
per share payable to stockholders of record as of July 1, 2009,
which will be paid on July 15, 2009. 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 December 31,
2008, for further discussion regarding our exposure to risks.
Additionally, new risk factors emerge from time to time and it is
not possible for us to predict all such risk factors, nor to assess
the impact such risk factors might have on our business or the
extent to which any factor or combination of factors may cause
actual results to differ materially from those contained in any
forward-looking statements. Readers are cautioned not to place
undue reliance on these forward-looking statements which speak only
as of the date hereof. Except to the extent required by applicable
law or regulation, we undertake no obligation to update or publish
revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
http://www.newscom.com/cgi-bin/prnh/20020531/RSGLOGODATASOURCE:
Republic Services, Inc. CONTACT: Media Inquiries: Will Flower,
+1-480-718-6565, Investor Inquiries: Ed Lang, +1-480-627-7128 Web
Site: http://www.republicservices.com/
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