DOW JONES NEWSWIRES
Republic Services Inc.'s (RSG) second-quarter earnings soared as
the company recorded a big gain from the disposal of Allied Waste
assets.
The company, saying its cost-cutting efforts are ahead of
schedule, also raised its earnings guidance for the year, though it
said revenue would fall more than expected.
Garbage companies are fighting against lower volume, with
recycling commodities markets deteriorating in the recession. But
Republic, now the second-largest player in the industry, is saving
money as it integrates Allied Waste and is trying to keep prices
strong in the face of dropping demand.
On Wednesday, the company expects to realize $125 million of
run-rate savings by year-end, up 25% from its previous target.
Republic also raised next year's target to $165 million from $150
million.
Republic posted earnings of $225.9 million, or 59 cents a share,
compared with $40.7 million, or 22 cents a share, a year earlier.
The latest quarter included a net 20 cents in gains. Revenue more
than doubled to $2.07 billion, including the acquisition of
Allied.
Analysts polled by Thomson Reuters expected per-share earnings
of 36 cents on $2.11 billion in revenue.
Standard & Poor's Rating Services upgraded Republic earlier
this month, citing the company's acquisition cost savings and
pricing. The ratings agency also said it expects Republic to use
some of its proceeds from divestitures to repay debt. The company
had $6.77 billion in long-term debt outstanding at the end of the
quarter, down $430 million from the start of the year.
For the year, Republic raised its forecast, saying it expects
adjusted per-share earnings of $1.43 to $1.45. However, the company
said weaker-than-expected economic conditions led to expect a
decline of 11% to 11.8% in pro-forma revenue. Wall Street expects
earnings of $1.44 a share.
Republic's stock closed down 0.8% at $26.38 and was inactive
after hours.
-By Melissa Korn and Jay Miller, Dow Jones Newswires;
212-416-2355; jay.miller@dowjones.com