Republic Services, Inc. Reports Third Quarter Earnings of $0.52 Per Share - Positive quarterly volume growth

- Repurchased more than 4% of Company stock during the past twelve months

- Reaffirms EPS and free cash flow guidance

PHOENIX, Oct. 27, 2011 /PRNewswire/ -- Republic Services, Inc. (NYSE: RSG) today reported net income of $193.5 million, or $0.52 per share, for the three months ended September 30, 2011, versus $134.2 million, or $0.35 per share, for the comparable period last year.  

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

Republic's net income for the three months ended September 30, 2011 and 2010 includes a number of charges and other expenses that impacted its results.  A detail of these charges and other expenses is contained in the Reconciliation of Certain Non-GAAP Measures section of this document.  Excluding these items, net income for the three months ended September 30, 2011 and 2010 would have been $198.5 million, or $0.53 per diluted share, and $172.8 million, or $0.45 per diluted share, respectively.  

Excluding certain charges and other expenses recorded during 2011 and 2010 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 September 30, 2011 would have been $648.7 million, or 30.7% as a percentage of revenue, compared to $634.8 million, or 30.8% as a percentage of revenue, for the comparable 2010 period.

Revenue for the three months ended September 30, 2011 increased to $2,116.2 million compared to $2,061.7 million for the same period in 2010.  Core price for the three months ended September 30, 2011 increased 0.7%, fuel surcharges increased 1.2%, commodities pricing increased 1.7%, volume increased 0.3% and acquisitions / divestitures, net increased 0.1%.  Partially offsetting this revenue growth of 4.0% was a decrease of 1.4% due to the end of our San Mateo County collection contract and our disposal and transportation contract with the City of Toronto effective December 31, 2010.

For the nine months ended September 30, 2011, net income was $398.2 million, or $1.05 per diluted share, versus $358.9 million, or $0.93 per diluted share, for the comparable period last year.

Republic's net income for the nine months ended September 30, 2011 and 2010 includes a number of charges and other expenses that impacted its results.  A detail of these charges and other expenses is contained in the Reconciliation of Certain Non-GAAP Measures section of this document.  Excluding these items, net income for the nine months ended September 30, 2011 and 2010 would have been $543.1 million, or $1.43 per diluted share, and $496.8 million, or $1.29 per diluted share, respectively.  

Excluding certain charges and other expenses recorded during 2011 and 2010 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 nine months ended September 30, 2011 would have been $1,898.7 million, or 30.8% as a percentage of revenue, compared to $1,900.3 million, or 31.2% as a percentage of revenue, for the comparable 2010 period.  

Revenue for the nine months ended September 30, 2011 increased to $6,167.7 million compared to $6,085.8 million for the same period in 2010.  Core price for the nine months ended September 30, 2011 increased 0.9%, fuel surcharges increased 1.0% and commodities pricing increased 1.4%.  Partially offsetting this revenue growth of 3.3% were decreases of 1.4% due to the end of our San Mateo County collection contract and our disposal and transportation contract with the City of Toronto effective December 31, 2010, 0.5% from core volume and 0.1% from divestitures.

"Republic reported volume growth in the quarter," said Don Slager, President and Chief Executive Officer of Republic Services, Inc.  "We remain confident that our earnings per share and free cash flow for 2011 will be in line with our guidance.  In August 2011, our board of directors authorized the repurchase of $750 million of our stock.  During the past twelve months, we have continued to return cash to our stockholders by using $470 million to repurchase more than 4% of our stock and by paying $300 million in dividends."

Company Declares Quarterly Dividend

Republic also announced that its Board of Directors declared a regular quarterly dividend of $0.22 per share for stockholders of record on January 3, 2012.  The dividend will be paid on January 17, 2012.

About Republic

Republic Services, Inc. provides recycling and solid waste collection, transfer and disposal services in the United States.  The Company's various operating units, including collection companies, transfer stations, recycling centers and landfills, are focused on providing reliable environmental services and solutions for commercial, industrial, municipal and residential customers.  For more information, visit the Republic Services website at www.republicservices.com.  The Company participates in investor presentations and conferences throughout the year.  Interested parties can find a schedule of these conferences at www.republicservices.com by selecting "Calendar" under the Investor Relations tab.  Live audio presentations from earnings calls and investor conferences are webcast on the Republic website.


SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION


AND OPERATING DATA




REPUBLIC SERVICES, INC.


CONSOLIDATED BALANCE SHEETS


(in millions, except per share amounts)








September 30,


December 31,



2011


2010



(Unaudited)




ASSETS


Current assets:





Cash and cash equivalents

$             72.6


$            88.3


Accounts receivable, less allowance for doubtful accounts of $46.1 and $50.9, respectively

901.3


828.9


Prepaid expenses and other current assets

175.9


207.4


Deferred tax assets

104.6


121.5


Total current assets

1,254.4


1,246.1


Restricted cash and marketable securities

160.5


172.8


Property and equipment, net

6,708.9


6,698.5


Goodwill

10,646.7


10,655.3


Other intangible assets, net

427.6


451.3


Other assets

258.1


237.9


Total assets

$      19,456.2


$     19,461.9







LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:





Accounts payable

515.2


606.5


Notes payable and current maturities of long-term debt

9.7


878.5


Deferred revenue

306.8


295.1


Accrued landfill and environmental costs, current portion

190.2


182.0


Accrued interest

82.8


93.1


Other accrued liabilities

752.8


621.3


Total current liabilities

1,857.5


2,676.5


Long-term debt, net of current maturities

7,021.6


5,865.1


Accrued landfill and environmental costs, net of current portion

1,413.5


1,416.6


Deferred income taxes and other long-term tax liabilities

1,069.7


1,044.8


Self-insurance reserves, net of current portion

301.1


304.5


Other long-term liabilities

178.3


305.5


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; 401.9 and 400.2 issued including shares held in treasury, respectively

4.0


4.0


Additional paid-in capital

6,486.0


6,431.1


Retained earnings

2,055.3


1,890.3


Treasury stock, at cost (31.1 and 16.5 shares, respectively)

(930.7)


(500.8)


Accumulated other comprehensive (loss) income, net of tax

(2.2)


21.9


Total Republic Services, Inc. stockholders' equity

7,612.4


7,846.5


Noncontrolling interests

2.1


2.4


Total stockholders' equity

7,614.5


7,848.9


Total liabilities and stockholders' equity

$      19,456.2


$     19,461.9




REPUBLIC SERVICES, INC.


UNAUDITED CONSOLIDATED STATEMENTS OF INCOME


(in millions, except per share data)














Three Months Ended September 30,


Nine Months Ended September 30,




2011


2010


2011


2010


Revenue


$ 2,116.2


$ 2,061.7


$ 6,167.7


$ 6,085.8


Expenses:










Cost of operations


1,260.0


1,224.9


3,657.5


3,580.0


Depreciation, amortization and depletion


215.0


211.6


629.4


628.4


Accretion


19.4


20.1


58.6


60.5


Selling, general and administrative


207.5


209.4


611.5


630.5


Loss on disposition of assets and impairments, net


5.8


25.5


24.8


27.1


Restructuring charges


-


2.6


-


9.6


Operating income


408.5


367.6


1,185.9


1,149.7


Interest expense


(108.3)


(122.0)


(335.4)


(387.0)


Loss on extinguishment of debt


(6.0)


(19.4)


(207.3)


(151.7)


Interest income


-


0.4


0.3


0.5


Other income, net


1.8


3.1


3.8


4.7


Income before income taxes


296.0


229.7


647.3


616.2


Provision for income taxes


102.4


95.2


249.4


256.6


Net income


193.6


134.5


397.9


359.6


Net loss (income) attributable to noncontrolling interests


(0.1)


(0.3)


0.3


(0.7)


Net income attributable to Republic Services, Inc.


$    193.5


$    134.2


$    398.2


$    358.9


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










Basic earnings per share


$      0.52


$      0.35


$      1.05


$      0.94


Weighted average common shares outstanding


373.2


384.0


377.9


382.6


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










Diluted earnings per share


$      0.52


$      0.35


$      1.05


$      0.93


Weighted average common and common equivalent shares outstanding


374.7


386.1


379.6


384.7












Cash dividends per common share


$      0.22


$      0.20


$      0.62


$      0.58




REPUBLIC SERVICES, INC.


UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


(in millions)










Nine Months Ended September 30,




2011


2010


Cash provided by operating activities:






Net income


$   397.9


$   359.6


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






Depreciation and amortization of property and equipment


384.3


384.0


Landfill depletion and amortization


188.0


191.5


Amortization of intangible and other assets


57.1


52.9


Accretion


58.6


60.5


Non-cash interest expense - debt


20.9


40.9


Non-cash interest expense - other


37.2


36.2


Stock-based compensation


16.4


18.3


Deferred tax benefit


(18.9)


(1.7)


Provision for doubtful accounts, net of adjustments


10.9


14.4


Excess income tax benefit from stock option exercises


(2.4)


(2.9)


Asset impairments


45.9


11.5


Loss on extinguishment of debt


207.3


151.7


(Loss) gain on disposition of assets, net


(34.8)


5.8


Other non-cash items


(6.7)


0.9


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






Accounts receivable


(80.7)


(48.6)


Prepaid expenses and other assets


24.5


(36.9)


Accounts payable


6.3


(81.1)


Restructuring and synergy related expenditures


(2.9)


(15.8)


Capping, closure and post-closure expenditures


(73.3)


(62.2)


Remediation expenditures


(26.7)


(32.2)


Other liabilities


77.9


(83.1)


Cash provided by operating activities


1,286.8


963.7








Cash used in investing activities:






Purchases of property and equipment


(696.1)


(571.4)


Proceeds from sales of property and equipment


23.4


17.4


Cash used in acquisitions, net of cash acquired


(40.8)


(21.4)


Cash proceeds from divestitures, net of cash divested


14.2


50.6


Change in restricted cash and marketable securities


12.3


33.0


Other


(2.2)


(0.6)


Cash used in investing activities


(689.2)


(492.4)








Cash used in financing activities:






Proceeds from notes payable and long-term debt


1,137.5


1,069.5


Proceeds from issuance of senior notes, net of discount


1,844.9


1,499.4


Payments of notes payable and long-term debt


(2,827.6)


(2,763.3)


Premiums paid on extinguishment of debt


(89.6)


(30.4)


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


(58.8)


(23.7)


Issuances of common stock


35.6


67.1


Excess income tax benefit from stock option exercises


2.4


2.9


Purchases of common stock for treasury


(429.9)


(1.4)


Cash dividends paid


(227.8)


(217.7)


Distributions paid to noncontrolling interests


-


(1.2)


Cash used in financing activities


(613.3)


(398.8)








Increase in cash and cash equivalents


(15.7)


72.5


Cash and cash equivalents at beginning of period


88.3


48.0


Cash and cash equivalents at end of period


$     72.6


$   120.5



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, 2010.  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 and nine months ended September 30:




Three Months Ended September 30,



Nine Months Ended September 30,





2011



2010



2011



2010



Collection:






















Residential


$    538.3


25.4

%


$    548.4


26.6

%


$ 1,601.6


26.0

%


$ 1,629.2


26.8

%


Commercial


625.9


29.6



624.6


30.3



1,871.5


30.3



1,868.8


30.7



Industrial


397.5


18.8



387.4


18.8



1,141.7


18.5



1,118.8


18.4



Other


8.5


0.4



7.3


0.4



24.4


0.4



21.1


0.3



Total collection


1,570.2


74.2



1,567.7


76.1



4,639.2


75.2



4,637.9


76.2

























Transfer and disposal


778.5





778.2





2,219.0





2,262.0





Less: Intercompany


(380.8)





(394.5)





(1,112.8)





(1,152.4)





Transfer and disposal, net


397.7


18.8



383.7


18.6



1,106.2


17.9



1,109.6


18.2

























Sale of recycling materials


111.4


5.3



72.2


3.5



317.0


5.2



221.0


3.6



Other non-core


36.9


1.7



38.1


1.8



105.3


1.7



117.3


2.0



Other


148.3


7.0



110.3


5.3



422.3


6.9



338.3


5.6

























Total revenue


$ 2,116.2


100.0

%


$ 2,061.7


100.0

%


$ 6,167.7


100.0

%


$ 6,085.8


100.0

%



The following table reflects changes in our core revenue for the three and nine months ended September 30:




Three Months Ended September 30,


Nine Months Ended September 30,




2011


2010



2011


2010



Core price


0.7

%

1.5

%


0.9

%

1.7

%


Fuel surcharges


1.2


0.5



1.0


0.7



Recycling commodities


1.7


0.6



1.4


1.4



Total price


3.6


2.6



3.3


3.8















Volume


0.3


(2.5)



(0.5)


(4.3)















San Mateo and Toronto contract losses


(1.4)


-



(1.4)


-















Total internal growth


2.5


0.1



1.4


(0.5)















Acquisitions / divestitures, net


0.1


(0.7)



(0.1)


(1.3)



Total


2.6

%

(0.6)

%


1.3

%

(1.8)

%



COST OF OPERATIONS

Cost of operations includes labor and related benefits, which consists of salaries and wages, health and welfare benefits, incentive compensation and payroll taxes. It also includes transfer and disposal costs representing tipping fees paid to third party disposal facilities and transfer stations; maintenance and repairs relating to our vehicles, equipment and containers, including related labor and benefit costs; transportation and subcontractor costs, which include costs for independent haulers who transport our waste to disposal facilities and costs for local operators who provide waste handling services associated with our national accounts in markets outside our standard operating areas; fuel, which includes the direct cost of fuel used by our vehicles, net of fuel credits; disposal franchise fees and taxes consisting of landfill taxes, municipal franchise fees, host community fees and royalties; landfill operating costs, which includes landfill accretion, financial assurance, leachate disposal and other landfill maintenance costs; risk management, which includes casualty insurance premiums and claims; cost of goods sold, which includes material costs paid to suppliers associated with recycling commodities; and other, which includes expenses such as facility operating costs, equipment rent and gains or losses on sale of assets used in our operations.

The following table summarizes the major components of our cost of operations for the three and nine months ended September 30:




Three Months Ended September 30,



Nine Months Ended September 30,





2011



2010



2011



2010



Labor and related benefits


$    387.7


18.3

%


$    392.9


19.1

%


$ 1,148.4


18.6

%


$ 1,152.3


18.9

%


Transfer and disposal costs


166.9


7.9



173.8


8.4



483.2


7.8



503.7


8.3



Maintenance and repairs


166.0


7.8



158.4


7.7



471.4


7.6



459.8


7.6



Transportation and subcontract costs


118.2


5.6



118.6


5.8



330.2


5.4



354.1


5.8



Fuel


133.3


6.3



101.8


4.9



388.2


6.3



299.8


4.9



Franchise fees and taxes


103.7


4.9



101.2


4.9



296.2


4.8



296.5


4.9



Landfill operating costs


34.0


1.6



31.2


1.5



92.9


1.5



95.9


1.6



Risk management


39.9


1.9



52.5


2.5



129.9


2.1



135.6


2.2



Cost of goods sold


41.8


2.0



24.7


1.2



113.8


1.9



75.6


1.2



Other


68.5


3.2



69.8


3.4



203.3


3.3



206.7


3.4



Total cost of operations


$ 1,260.0


59.5

%


$ 1,224.9


59.4

%


$ 3,657.5


59.3

%


$ 3,580.0


58.8

%



The cost categories shown above may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our cost of operations by cost component to that of other companies.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses include salaries, health and welfare benefits and incentive compensation for corporate and field general management, field support functions, sales force, accounting and finance, legal, management information systems, and clerical and administrative departments. Other expenses include rent and office costs, fees for professional services provided by third parties, marketing, investor and community relations, directors' and officers' insurance, general employee relocation, travel, entertainment and bank charges, but exclude any such amounts recorded as restructuring charges.

The following table provides the components of our selling, general and administrative costs for the three and nine months ended September 30:




Three Months Ended September 30,



Nine Months Ended September 30,




2011



2010



2011



2010



Salaries


$ 133.7


6.3

%


$ 134.0


6.5

%


$ 399.5


6.5

%


$ 402.2


6.6

%


Provision for doubtful accounts


4.8


0.2



4.1


0.2



10.9


0.2



14.4


0.2



Costs to achieve synergies


-


-



7.4


0.4



-


-



25.0


0.4



Other


69.0


3.3



63.9


3.1



201.1


3.2



188.9


3.2



Total selling, general and administrative expenses


$ 207.5


9.8

%


$ 209.4


10.2

%


$ 611.5


9.9

%


$ 630.5


10.4

%



The cost categories shown above may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to that of other companies.

RECONCILIATION OF CERTAIN NON-GAAP MEASURES

Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Accretion