Republic Services, Inc. Reports Fourth Quarter Results And Provides 2013 Guidance For 2012, Republic Reports Adjusted Free Cash Flow of $768 Million and Returns $655 Million in Cash to Stockholders

PHOENIX, Feb. 7, 2013 /PRNewswire/ -- Republic Services, Inc. (NYSE: RSG) today reported net income of $127.0 million, or $0.35 per diluted share, for the three months ended Dec. 31, 2012, versus $191.0 million, or $0.51 per diluted share, for the comparable 2011 period. 

(Logo: http://photos.prnewswire.com/prnh/20100304/RSLOGO)  

Republic's net income for the three months ended Dec. 31, 2012 and 2011, includes a number of charges and other expenses and benefits that impacted its results.  A detail of these charges, other expenses and benefits is contained in the Reconciliation of Certain Non-GAAP Measures section of this document.  Excluding these items, net income for the three months ended Dec. 31, 2012 and 2011, would have been $133.4 million, or $0.37 per diluted share, and $195.3 million, or $0.53 per diluted share, respectively. 

Excluding certain charges, other expenses and benefits recorded during 2012 and 2011, as described in the Reconciliation of Certain Non-GAAP Measures section of this document, adjusted earnings before interest, taxes, depreciation, depletion, amortization and accretion (adjusted EBITDA) for the three months ended Dec. 31, 2012, would have been $535.1 million, or 26.4 percent of revenue, compared to $603.6 million, or 29.8 percent of revenue, for the comparable 2011 period. 

Revenue for the three months ended Dec. 31, 2012, increased to $2,028.3 million from $2,025.2 million for the comparable 2011 period.  This increase in revenue of 0.2 percent was made up of increases in core price of 1.1 percent, fuel recovery fees of 0.2 percent and acquisitions, net of divestitures of 0.5 percent that were partially offset by decreases in volumes of 0.8 percent and recycling commodities of 0.8 percent.

For the year ended Dec. 31, 2012, net income was $571.8 million, or $1.55 per diluted share, versus $589.2 million, or $1.56 per diluted share, for the comparable 2011 period.

Republic's net income for the years ended Dec. 31, 2012 and 2011, includes a number of charges, other expenses and benefits that impacted its results.  A detail of these charges, other expenses and benefits is contained in the Reconciliation of Certain Non-GAAP Measures section of this document.  Excluding these items, net income for the years ended Dec. 31, 2012 and 2011 would have been $663.4 million, or $1.80 per diluted share, and $738.3 million, or $1.96 per diluted share, respectively. 

Excluding certain charges, other expenses and benefits recorded during 2012 and 2011 as described in the Reconciliation of Certain Non-GAAP Measures section of this document, adjusted EBITDA for the year ended Dec. 31, 2012, would have been $2,289.1 million, or 28.2 percent of revenue, compared to $2,502.4 million, or 30.5 percent of revenue, for the comparable 2011 period.

Revenue for the year ended Dec. 31, 2012, decreased to $8,118.3 million from $8,192.9 million for the comparable 2011 period.  This decrease in revenue of 0.9 percent was made up of increases in core price of 0.8 percent, fuel recovery fees of 0.1 percent and acquisitions, net of divestitures of 0.4 percent that were more than offset by decreases in volumes of 1.0 percent and recycling commodities of 1.2 percent.

Commenting on these results, Donald W. Slager, president and chief executive officer, said, "We faced a number of challenges during 2012.  However, we responded by remaining committed to our long-term strategy, which allowed us to achieve adjusted free cash flow in line with our expectation. Our cash flow performance and disciplined approach to cash utilization enabled us to re-invest in the business, complete accretive acquisitions and return approximately $655 million in cash to our stockholders through dividends and share repurchases."

Fiscal Year 2013 Guidance

Republic's guidance is based on current economic conditions and does not assume any significant changes in the overall economy in 2013.  Please refer to the Information Regarding Forward-Looking Statements section of this document.

Specific guidance is as follows:

  • Adjusted Free Cash Flow:  We expect adjusted free cash flow for 2013 to be $675 million to $700 million.  Adjusted free cash flow excludes a number of charges and other expenses and benefits.  Detail relating to the computation of Adjusted Free Cash Flow is contained in the Reconciliation of Certain Non-GAAP Measures section of this document.
  • Adjusted Diluted Earnings per Share:  We expect 2013 adjusted diluted earnings per share to be in the range of $1.86 to $1.91.  This assumes a full year effective tax rate of approximately 38 percent.  Adjusted diluted earnings per share excludes loss on extinguishment of debt, if any, negotiation and withdrawal costs - Central States Pension Fund, restructuring charges and (gain) loss on disposition of assets and impairments, net, if any.  
  • Revenue:  We expect an increase in revenue for 2013 of 2.0 to 2.5 percent comprised of the following:

Increase

(Decrease)

Core price

1.0 to 1.5

Volume

0.0

Fuel recovery fees

0.2

Recycling commodities

(0.2)

Acquisitions / divestitures, net

1.0

Total change

2.0 to 2.5 





Our guidance for fuel and commodities assumes pricing consistent with current levels.

  • Property and Equipment:  In 2013, we anticipate receiving $860 million of property and equipment.  Purchases of property and equipment as reflected on our consolidated statement of cash flows for 2013 are expected to be $880 million and represent amounts to be paid during 2013 for such expenditures. The $20 million difference between property and equipment received and purchases of property and equipment represents property and equipment received during 2012, but paid for in 2013.
  • Margins:  We expect EBITDA margins for 2013 to be approximately 29 percent.
  • Taxes:  We expect our provision for income taxes in 2013 to be 38 percent and to approximate our cash taxes. 

Mr. Slager, commenting on the Company's guidance, stated, "We have seen some encouraging signs in the economy evidenced by two consecutive quarters of positive volume growth in our collection business.  In 2013, we will remain focused on increasing returns through effective pricing programs, growth initiatives, selective acquisitions, and standardized operating practices.  We are committed to maintaining a strong credit profile and investment grade ratings as we continue to invest in the business and efficiently return cash to stockholders through share repurchases and dividends."

Company Declares Quarterly Dividend

Republic also announced that its Board of Directors declared a regular quarterly dividend of $0.235 per share for stockholders of record on April 1, 2013.  The dividend will be paid on April 15, 2013.

About Republic

Republic is an industry leader in the U.S. non-hazardous solid waste industry.  Through its subsidiaries, Republic's collection companies, transfer stations, recycling centers and landfills focus on providing reliable environmental services and solutions for commercial, industrial, municipal and residential customers.  Republic and its employees believe in protecting the planet and applying common sense solutions to customers' waste and recycling challenges. 

Republic participates in investor presentations and conferences throughout the year.  Interested parties can find a schedule of these conferences at republicservices.com by selecting "Calendar" on the investor relations page.  Audio and other presentations from earnings calls and investor conferences are also available on the investor relations page of the website.

 

SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION

AND OPERATING DATA





REPUBLIC SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)






December 31,


December 31,


2012


2011


(Unaudited)



ASSETS

Current assets:




Cash and cash equivalents

$

67.6



$

66.3


Accounts receivable, less allowance for doubtful accounts of $45.3 and $48.1, respectively

836.6



825.8


Prepaid expenses and other current assets

209.3



215.9


Deferred tax assets

117.8



157.7


Total current assets

1,231.3



1,265.7


Restricted cash and marketable securities

164.2



189.6


Property and equipment, net

6,910.3



6,792.3


Goodwill

10,690.0



10,647.0


Other intangible assets, net

358.7



409.6


Other assets

262.4



247.3


Total assets

$

19,616.9



$

19,551.5






LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:




Accounts payable

$

474.5



$

563.6


Notes payable and current maturities of long-term debt

19.4



34.8


Deferred revenue

313.2



290.2


Accrued landfill and environmental costs, current portion

195.5



184.2


Accrued interest

68.8



72.2


Other accrued liabilities

623.6



752.5


Total current liabilities

1,695.0



1,897.5


Long-term debt, net of current maturities

7,051.1



6,887.0


Accrued landfill and environmental costs, net of current portion

1,420.6



1,396.5


Deferred income taxes and other long-term tax liabilities

1,232.7



1,161.1


Self-insurance reserves, net of current portion

290.9



303.9


Other long-term liabilities

220.9



222.1


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; 405.2 and 402.1 issued including shares held in treasury, respectively

4.1



4.0


Additional paid-in capital

6,588.9



6,495.6


Retained earnings

2,403.2



2,164.7


Treasury stock, at cost (44.1 and 32.2 shares, respectively)

(1,287.1)



(961.5)


Accumulated other comprehensive loss, net of tax

(5.8)



(21.5)


Total Republic Services, Inc. stockholders' equity

7,703.3



7,681.3


Noncontrolling interests

2.4



2.1


Total stockholders' equity

7,705.7



7,683.4


Total liabilities and stockholders' equity

$

19,616.9



$

19,551.5


 

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share data)










Three Months Ended December 31,


Years Ended December 31,


2012


2011


2012


2011

Revenue

$

2,028.3



$

2,025.2



$

8,118.3



$

8,192.9


Expenses:








Cost of operations

1,283.5



1,207.7



5,005.7



4,865.1


Depreciation, amortization and depletion

216.4



214.2



848.5



843.6


Accretion

19.3



19.4



78.4



78.0


Selling, general and administrative

207.3



213.9



820.9



825.4


Negotiation and withdrawal costs - Central States Pension Fund

1.2





35.8




Loss (gain) on disposition of assets and impairments, net

0.7



3.3



(2.7)



28.1


Restructuring charges

11.1





11.1




Operating income

288.8



366.7



1,320.6



1,552.7


Interest expense

(92.2)



(104.8)



(388.5)



(440.2)


Loss on extinguishment of debt



(3.5)



(112.6)



(210.8)


Interest income

0.2



0.1



1.0



0.3


Other income, net

2.3



0.5



3.4



4.3


Income before income taxes

199.1



259.0



823.9



906.3


Provision for income taxes

72.1



68.0



251.8



317.4


Net income

127.0



191.0



572.1



588.9


Net (income) loss attributable to noncontrolling interests





(0.3)



0.3


Net income attributable to Republic Services, Inc.

$

127.0



$

191.0



$

571.8



$

589.2


Basic earnings per share attributable to Republic Services, Inc. stockholders:








Basic earnings per share

$

0.35



$

0.52



$

1.56



$

1.57


Weighted average common shares outstanding

363.2



370.3



366.9



376.0


Diluted earnings per share attributable to Republic Services, Inc. stockholders:








Diluted earnings per share

$

0.35



$

0.51



$

1.55



$

1.56


Weighted average common and common equivalent shares outstanding

364.3



371.6



368.0



377.6










Cash dividends per common share

$

0.235



$

0.220



$

0.910



$

0.840


 

REPUBLIC SERVICES, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)


Years Ended December 31,


2012


2011

Cash provided by operating activities:




Net income

$

572.1



$

588.9


Adjustments to reconcile net income to cash provided by operating activities:




Depreciation, amortization, depletion and accretion

926.9



921.6


Non-cash interest expense

58.4



75.4


Restructuring related charges

11.1




Stock-based compensation

21.2



20.6


Deferred tax provision

83.9



334.8


Provision for doubtful accounts, net of adjustments

29.7



21.0


Loss on extinguishment of debt

112.6



210.8


(Gain) loss on disposition of assets, net and asset impairments

(14.1)



6.1


Withdrawal liability - Central States Pension Fund

30.7




Environmental adjustments

62.4



3.6


Excess income tax benefit from stock option exercises and other non-cash items

(4.1)



(9.2)


Change in assets and liabilities, net of effects from business acquisitions and divestitures:




Accounts receivable

(37.2)



(16.0)


Prepaid expenses and other assets

(13.9)



(5.1)


Accounts payable

(49.6)



11.9


Restructuring and synergy related payments

(70.3)



(3.0)


Capping, closure and post-closure payments

(77.6)



(105.7)


Remediation payments

(73.1)



(45.0)


Other liabilities

(55.3)



(244.0)


Cash provided by operating activities

1,513.8



1,766.7






Cash used in investing activities:




Purchases of property and equipment

(903.5)



(936.5)


Proceeds from sales of property and equipment

28.7



34.6


Cash used in business acquisitions and development projects, net of cash acquired

(95.3)



(42.6)


Cash proceeds from divestitures, net of cash divested

9.6



14.2


Change in restricted cash and marketable securities

23.2



(16.8)


Other

(0.3)



(3.1)


Cash used in investing activities

(937.6)



(950.2)






Cash used in financing activities:




Proceeds from notes payable and long-term debt

2,771.4



1,416.4


Proceeds from issuance of senior notes, net of discount

847.6



1,844.9


Payments of notes payable and long-term debt

(3,568.2)



(3,224.5)


Premiums paid on extinguishment of debt

(25.8)



(89.6)


Fees paid to issue and retire senior notes and certain hedging relationships

(17.5)



(58.8)


Issuances of common stock

70.4



40.7


Excess income tax benefit from stock option exercises

1.9



2.5


Purchases of common stock for treasury

(325.6)



(460.7)


Cash dividends paid

(329.1)



(309.4)


Cash used in financing activities

(574.9)



(838.5)






Increase (decrease) in cash and cash equivalents

1.3



(22.0)


Cash and cash equivalents at beginning of period

66.3



88.3


Cash and cash equivalents at end of period

$

67.6



$

66.3


 

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, 2012 (when filed).  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 months and years ended December 31:


Three Months Ended December 31,



Years Ended December 31,



2012



2011



2012



2011


Collection:
















Residential

$

541.7



26.7

%


$

534.1



26.4

%


$

2,155.7



26.6

%


$

2,135.7



26.1

%

Commercial

638.8



31.5



616.0



30.4



2,523.2



31.1



2,487.5



30.4


Industrial

389.5



19.2



373.7



18.5



1,544.2



19.0



1,515.4



18.5


Other

8.5



0.4



8.5



0.4



33.4



0.4



32.9



0.4


Total collection

1,578.5



77.8



1,532.3



75.7



6,256.5



77.1



6,171.5



75.4


















Transfer

241.5





243.3





964.5





994.2




Less: Intercompany

(146.2)





(139.8)





(575.3)





(572.8)




Transfer, net

95.3



4.7



103.5



5.1



389.2



4.8



421.4



5.1


















Landfill

454.6





467.3





1,863.3





1,867.6




Less: Intercompany

(212.5)





(210.7)





(862.5)





(846.9)




Landfill, net

242.1



11.9



256.6



12.7



1,000.8



12.3



1,020.7



12.5


















Sale of recyclable materials

82.5



4.1



97.3



4.8



349.0



4.3



438.6



5.4


Other non-core

29.9



1.5



35.5



1.7



122.8



1.5



140.7



1.6