PHOENIX, Oct. 29, 2015 /PRNewswire/ -- Republic
Services, Inc. (NYSE: RSG) today reported net income of
$215.0 million, or $0.61 per diluted share, for the three months
ended Sept. 30, 2015, versus
$185.8 million, or $0.52 per diluted share, for the comparable 2014
period. Excluding certain benefits and expenses, on an adjusted
basis, net income for the three months ended Sept. 30, 2015, was $184.7
million, or $0.53 per diluted
share, versus $186.0 million, or
$0.52 per diluted share, for the
comparable 2014 period.
For the nine months ended Sept. 30,
2015, net income was $577.7
million, or $1.64 per diluted
share, versus $497.3 million, or
$1.39 per diluted share, for the
comparable 2014 period. On an adjusted basis, net income for the
nine months ended Sept. 30, 2015, was
$547.4 million, or $1.55 per diluted share, versus $522.1 million, or $1.46 per diluted share, for the comparable 2014
period.
"Our results continue to demonstrate the progress we have made
with our strategy of profitable growth through differentiation,
while capturing the benefits of a steady improvement in solid waste
trends," said Donald W. Slager,
president and chief executive officer. "Our initiatives are
delivering strong results through a heightened focus on the
customer experience and improving service delivery, while reducing
costs through operational programs and efficiencies."
Mr. Slager added, "We are pleased with our performance and
remain well-positioned to achieve our full-year financial guidance
which we raised in July. Our Board recently approved an additional
$900 million to our share repurchase
authorization, which continues to demonstrate the confidence we
have in our free cash flow generation and our commitment to
increase cash returns to shareholders."
Third Quarter Financial Highlights:
- Adjusted diluted EPS was $0.53
per share and year-to-date adjusted free cash flow was $603 million; both were in-line with our
expectations.
- Revenue growth from average yield was 2.5 percent and volumes
increased 0.6 percent. This reflects our ability to grow price and
volume simultaneously.
- Core price was 3.6 percent, which consisted of 4.7 percent in
the open market and 1.8 percent in the restricted portion of our
business.
- Adjusted EBITDA margin was consistent with the prior year at
28.1 percent of revenue. Margin expansion in our solid waste
business primarily from lower fuel costs was offset by headwinds in
our recycling business and the impact of recent acquisitions.
- Year-to-date adjusted EBITDA margin was 28.4 percent of
revenue, an improvement of 40 basis points from the prior year,
primarily due to the positive impact from higher pricing levels and
lower fuel costs.
- In the third quarter we returned approximately $191 million to our shareholders through share
repurchases and dividends. We have returned approximately
$594 million to shareholders on a
year-to-date basis.
- Our Board approved a $900 million
increase to our existing share repurchase authorization, and
extended the term through Dec. 31,
2017.
Third Quarter Operational Highlights:
- We further advanced our revenue enhancing initiatives that are
focused on creating a better customer experience and further
differentiating our service offering. For example:
- Continued growth with our MyResourceTM customer
portal and mobile app with approximately 1.1 million customers
active and enrolled, significantly enhancing customer interaction
and connectivity;
- 90 percent of our sales force has been trained on Priority
Based Selling; and,
- We have over 400 contracts with approximately $200 million in annual revenue that now use an
alternative index for the annual price adjustment.
- We continue to make progress on our fleet-based initiatives
designed to improve productivity and lower costs. Currently:
- 16 percent of our fleet operates on natural gas;
- 71 percent of our residential fleet is automated; and,
- 74 percent of our fleet is certified under our standardized
maintenance program.
Fiscal Year 2016 Preliminary Outlook
The Company is providing its preliminary outlook for 2016. This
does not represent full detailed guidance, but rather a
point-in-time estimate based on current projections of 2015
performance, early reviews of the 2016 budget process and current
economic conditions. Consistent with prior practice, we will
provide formal guidance in February
2016 once the budget process is complete and full year 2015
results are reported.
2016 Preliminary Outlook:
- Diluted earnings per share is expected to be in a range of
$2.13 to $2.17. This assumes an
effective tax rate of 39.5 percent, which results in a 3-cent tax headwind compared to our expected 2015
results.
- Adjusted free cash flow is expected to be in a range of
$790 million to $810 million.
Adjusted free cash flow consists of cash provided by operating
activities, less property and equipment received, plus proceeds
from the sales of property and equipment and withdrawal payments
related to Central States Pension Fund, net of tax.
Mr. Slager commented, "Our preliminary outlook represents mid-
to high- single digit growth excluding the anticipated increase in
our effective tax rate. This level of growth is strong given the
impact low CPI will have on our indexed-based pricing."
Company Declares Quarterly Dividend
Republic announced today that its Board of Directors declared a
regular quarterly dividend of $0.30
per share for shareholders of record on Jan.
4, 2016. The dividend will be paid on Jan. 15, 2016.
Presentation of Certain Non-GAAP
Measures
Adjusted diluted earnings per share, adjusted net income,
adjusted EBITDA, and adjusted free cash flow are described in the
Reconciliation of Certain Non-GAAP Measures section of this
document. Adjusted diluted earnings per share and adjusted free
cash flow guidance for 2015 is described in the 2015 Financial
Guidance section of this document.
About Republic Services
Republic Services, Inc. (NYSE: RSG) is an industry leader in
U.S. recycling and non-hazardous solid waste. Through its
subsidiaries, Republic's collection companies, recycling centers,
transfer stations and landfills focus on providing effective
solutions to make proper waste disposal effortless for their
commercial, industrial, municipal, residential and oilfield
customers. We'll handle it from
here.TM, the brand's tagline, lets customers
know they can count on Republic to provide a superior experience
while fostering a sustainable Blue PlanetTM for
future generations to enjoy a cleaner, safer and healthier
world.
For more information, visit the Republic Services website at
RepublicServices.com. "Like" Republic on Facebook at
www.facebook.com/RepublicServices and follow on Twitter
@RepublicService.
SUPPLEMENTAL
UNAUDITED FINANCIAL INFORMATION
|
AND OPERATING
DATA
|
|
|
|
|
REPUBLIC SERVICES,
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(in
millions, except per share amounts)
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
2015
|
|
2014
|
|
(Unaudited)
|
|
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
102.5
|
|
|
$
|
75.2
|
|
Accounts receivable,
less allowance for doubtful accounts and other of $50.2 and $38.9,
respectively
|
988.8
|
|
|
930.4
|
|
Prepaid expenses and
other current assets
|
236.8
|
|
|
263.4
|
|
Deferred tax
assets
|
116.2
|
|
|
122.0
|
|
Total current
assets
|
1,444.3
|
|
|
1,391.0
|
|
Restricted cash and
marketable securities
|
107.2
|
|
|
115.6
|
|
Property and
equipment, net
|
7,553.2
|
|
|
7,165.3
|
|
Goodwill
|
11,128.3
|
|
|
10,830.9
|
|
Other intangible
assets, net
|
258.6
|
|
|
298.9
|
|
Other
assets
|
300.2
|
|
|
292.3
|
|
Total
assets
|
$
|
20,791.8
|
|
|
$
|
20,094.0
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
560.8
|
|
|
$
|
527.3
|
|
Notes payable and
current maturities of long-term debt
|
5.4
|
|
|
10.4
|
|
Deferred
revenue
|
316.5
|
|
|
306.3
|
|
Accrued landfill and
environmental costs, current portion
|
179.2
|
|
|
164.3
|
|
Accrued
interest
|
69.4
|
|
|
67.0
|
|
Other accrued
liabilities
|
769.2
|
|
|
750.7
|
|
Total current
liabilities
|
1,900.5
|
|
|
1,826.0
|
|
Long-term debt, net
of current maturities
|
7,555.6
|
|
|
7,050.8
|
|
Accrued landfill and
environmental costs, net of current portion
|
1,676.9
|
|
|
1,677.5
|
|
Deferred income
taxes
|
1,133.4
|
|
|
1,149.0
|
|
Insurance reserves,
net of current portion
|
281.5
|
|
|
298.0
|
|
Other long-term
liabilities
|
441.7
|
|
|
344.9
|
|
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; 416.7 and 414.4
issued including shares held in treasury, respectively
|
4.2
|
|
|
4.1
|
|
Additional paid-in
capital
|
6,952.3
|
|
|
6,876.9
|
|
Retained
earnings
|
3,070.3
|
|
|
2,795.0
|
|
Treasury stock, at
cost (69.0 and 61.7 shares, respectively)
|
(2,200.4)
|
|
|
(1,901.8)
|
|
Accumulated other
comprehensive loss, net of tax
|
(26.6)
|
|
|
(28.9)
|
|
Total Republic
Services, Inc. stockholders' equity
|
7,799.8
|
|
|
7,745.3
|
|
Noncontrolling
interests
|
2.4
|
|
|
2.5
|
|
Total stockholders'
equity
|
7,802.2
|
|
|
7,747.8
|
|
Total liabilities and
stockholders' equity
|
$
|
20,791.8
|
|
|
$
|
20,094.0
|
|
REPUBLIC SERVICES,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
|
(in
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue
|
$
|
2,344.0
|
|
|
$
|
2,267.9
|
|
|
$
|
6,824.8
|
|
|
$
|
6,574.2
|
|
Expenses:
|
|
|
|
|
|
|
|
Cost of
operations
|
1,390.2
|
|
|
1,401.1
|
|
|
4,114.9
|
|
|
4,102.7
|
|
Depreciation,
amortization and depletion
|
247.1
|
|
|
235.6
|
|
|
726.3
|
|
|
679.0
|
|
Accretion
|
19.7
|
|
|
19.5
|
|
|
59.2
|
|
|
58.4
|
|
Selling, general and
administrative
|
244.1
|
|
|
229.0
|
|
|
719.5
|
|
|
663.8
|
|
Negotiation and
withdrawal costs - Central States Pension and Other
Funds
|
—
|
|
|
0.3
|
|
|
—
|
|
|
1.8
|
|
Restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
Operating
income
|
442.9
|
|
|
382.4
|
|
|
1,204.9
|
|
|
1,066.7
|
|
Interest
expense
|
(91.8)
|
|
|
(87.0)
|
|
|
(272.0)
|
|
|
(260.8)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.4)
|
|
Interest
income
|
0.1
|
|
|
0.1
|
|
|
0.6
|
|
|
0.6
|
|
Other (expense)
income, net
|
(0.4)
|
|
|
(0.1)
|
|
|
0.5
|
|
|
1.2
|
|
Income before income
taxes
|
350.8
|
|
|
295.4
|
|
|
934.0
|
|
|
806.3
|
|
Provision for income
taxes
|
135.6
|
|
|
109.6
|
|
|
356.0
|
|
|
308.9
|
|
Net income
|
215.2
|
|
|
185.8
|
|
|
578.0
|
|
|
497.4
|
|
Net income
attributable to noncontrolling interests
|
(0.2)
|
|
|
—
|
|
|
(0.3)
|
|
|
(0.1)
|
|
Net income
attributable to Republic Services, Inc.
|
$
|
215.0
|
|
|
$
|
185.8
|
|
|
$
|
577.7
|
|
|
$
|
497.3
|
|
Basic earnings per
share attributable to Republic Services, Inc.
stockholders:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.62
|
|
|
$
|
0.52
|
|
|
$
|
1.65
|
|
|
$
|
1.39
|
|
Weighted average
common shares outstanding
|
348.9
|
|
|
356.3
|
|
|
351.0
|
|
|
357.4
|
|
Diluted earnings per
share attributable to Republic Services, Inc.
stockholders:
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.61
|
|
|
$
|
0.52
|
|
|
$
|
1.64
|
|
|
$
|
1.39
|
|
Weighted
average common and common equivalent shares outstanding
|
350.3
|
|
|
357.7
|
|
|
352.4
|
|
|
358.8
|
|
Cash dividends per
common share
|
$
|
0.30
|
|
|
$
|
0.28
|
|
|
$
|
0.86
|
|
|
$
|
0.80
|
|
REPUBLIC SERVICES,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
millions)
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
Cash provided by
operating activities:
|
|
|
|
Net income
|
$
|
578.0
|
|
|
$
|
497.4
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Depreciation,
amortization, depletion and accretion
|
785.5
|
|
|
737.4
|
|
Non-cash interest
expense
|
35.2
|
|
|
33.6
|
|
Restructuring related
charges
|
—
|
|
|
1.8
|
|
Stock-based
compensation
|
15.1
|
|
|
14.2
|
|
Deferred tax
benefit
|
(12.3)
|
|
|
(4.7)
|
|
Provision for
doubtful accounts, net of adjustments
|
17.3
|
|
|
16.3
|
|
Loss on
extinguishment of debt
|
—
|
|
|
1.4
|
|
Gain on disposition
of assets, net and asset impairments
|
(1.6)
|
|
|
(4.7)
|
|
Environmental
adjustments
|
(1.3)
|
|
|
36.2
|
|
Excess income tax
benefit from stock-based compensation activity and other non-cash
items
|
(7.0)
|
|
|
(3.3)
|
|
Change in assets and
liabilities, net of effects from business acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(39.8)
|
|
|
(77.8)
|
|
Prepaid expenses and
other assets
|
(64.2)
|
|
|
(28.0)
|
|
Accounts
payable
|
11.7
|
|
|
(2.3)
|
|
Restructuring
expenditures
|
—
|
|
|
(1.0)
|
|
Capping, closure and
post-closure expenditures
|
(50.4)
|
|
|
(36.5)
|
|
Remediation
expenditures
|
(50.1)
|
|
|
(75.0)
|
|
Other
liabilities
|
108.4
|
|
|
(3.4)
|
|
Cash provided by
operating activities
|
1,324.5
|
|
|
1,101.6
|
|
Cash used in
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(732.0)
|
|
|
(683.1)
|
|
Proceeds from sales
of property and equipment
|
17.1
|
|
|
13.9
|
|
Cash used in business
acquisitions, net of cash acquired
|
(535.9)
|
|
|
(73.5)
|
|
Change in restricted
cash and marketable securities
|
8.4
|
|
|
36.2
|
|
Other
|
(0.8)
|
|
|
(4.5)
|
|
Cash used in
investing activities
|
(1,243.2)
|
|
|
(711.0)
|
|
Cash used in
financing activities:
|
|
|
|
Proceeds from notes
payable and long-term debt
|
895.4
|
|
|
939.8
|
|
Proceeds from
issuance of senior notes, net of discount
|
497.9
|
|
|
—
|
|
Payments of notes
payable and long-term debt
|
(908.9)
|
|
|
(951.0)
|
|
Fees paid to issue
senior notes and retire certain hedging relationships
|
(3.2)
|
|
|
(4.0)
|
|
Issuances of common
stock
|
52.3
|
|
|
79.5
|
|
Excess income tax
benefit from stock-based compensation activity
|
6.2
|
|
|
3.6
|
|
Purchases of common
stock for treasury
|
(293.3)
|
|
|
(277.5)
|
|
Cash dividends
paid
|
(295.0)
|
|
|
(279.1)
|
|
Distributions paid to
noncontrolling interests
|
(0.4)
|
|
|
(0.4)
|
|
Other
|
(5.0)
|
|
|
(1.8)
|
|
Cash used in
financing activities
|
(54.0)
|
|
|
(490.9)
|
|
Increase (decrease)
in cash and cash equivalents
|
27.3
|
|
|
(100.3)
|
|
Cash and cash
equivalents at beginning of year
|
75.2
|
|
|
213.3
|
|
Cash and cash
equivalents at end of period
|
$
|
102.5
|
|
|
$
|
113.0
|
|
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, 2014. 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,
2015 and 2014:
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Collection:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
564.9
|
|
|
24.1
|
|
%
|
|
$
|
551.9
|
|
|
24.4
|
|
%
|
|
$
|
1,682.4
|
|
|
24.7
|
|
%
|
|
$
|
1,639.4
|
|
|
25.0
|
|
%
|
Commercial
|
704.2
|
|
|
30.0
|
|
|
|
685.8
|
|
|
30.2
|
|
|
|
2,098.1
|
|
|
30.7
|
|
|
|
2,027.1
|
|
|
30.8
|
|
|
Industrial
|
497.5
|
|
|
21.2
|
|
|
|
471.5
|
|
|
20.8
|
|
|
|
1,413.0
|
|
|
20.7
|
|
|
|
1,329.0
|
|
|
20.2
|
|
|
Other
|
10.7
|
|
|
0.5
|
|
|
|
9.3
|
|
|
0.4
|
|
|
|
29.3
|
|
|
0.4
|
|
|
|
27.7
|
|
|
0.4
|
|
|
Total
collection
|
1,777.3
|
|
|
75.8
|
|
|
|
1,718.5
|
|
|
75.8
|
|
|
|
5,222.8
|
|
|
76.5
|
|
|
|
5,023.2
|
|
|
76.4
|
|
|
Transfer
|
289.2
|
|
|
|
|
|
279.1
|
|
|
|
|
|
831.7
|
|
|
|
|
|
793.0
|
|
|
|
|
Less:
intercompany
|
(174.9)
|
|
|
|
|
|
(169.6)
|
|
|
|
|
|
(510.2)
|
|
|
|
|
|
(486.9)
|
|
|
|
|
Transfer, net
|
114.3
|
|
|
4.9
|
|
|
|
109.5
|
|
|
4.8
|
|
|
|
321.5
|
|
|
4.7
|
|
|
|
306.1
|
|
|
4.7
|
|
|
Landfill
|
536.6
|
|
|
|
|
|
529.4
|
|
|
|
|
|
1,524.5
|
|
|
|
|
|
1,484.7
|
|
|
|
|
Less:
intercompany
|
(246.4)
|
|
|
|
|
|
(243.4)
|
|
|
|
|
|
(714.3)
|
|
|
|
|
|
(698.9)
|
|
|
|
|
Landfill, net
|
290.2
|
|
|
12.4
|
|
|
|
286.0
|
|
|
12.6
|
|
|
|
810.2
|
|
|
11.9
|
|
|
|
785.8
|
|
|
12.0
|
|
|
E&P waste
services
|
22.0
|
|
|
0.9
|
|
|
|
10.4
|
|
|
0.5
|
|
|
|
72.8
|
|
|
1.1
|
|
|
|
29.3
|
|
|
0.4
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of recycled
commodities
|
99.4
|
|
|
4.2
|
|
|
|
101.6
|
|
|
4.5
|
|
|
|
277.7
|
|
|
4.1
|
|
|
|
307.7
|
|
|
4.7
|
|
|
Other
non-core
|
40.8
|
|
|
1.8
|
|
|
|
41.9
|
|
|
1.8
|
|
|
|
119.8
|
|
|
1.7
|
|
|
|
122.1
|
|
|
1.8
|
|
|
Total
other
|
140.2
|
|
|
6.0
|
|
|
|
143.5
|
|
|
6.3
|
|
|
|
397.5
|
|
|
5.8
|
|
|
|
429.8
|
|
|
6.5
|
|
|
Total
revenue
|
$
|
2,344.0
|
|
|
100.0
|
|
%
|
|
$
|
2,267.9
|
|
|
100.0
|
|
%
|
|
$
|
6,824.8
|
|
|
100.0
|
|
%
|
|
$
|
6,574.2
|
|
|
100.0
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reflects changes in components of our
revenue, as a percentage of total revenue, for the three and nine
months ended September 30, 2015 and 2014:
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Average
yield
|
|
2.5
|
%
|
|
1.4
|
%
|
|
2.4
|
%
|
|
1.3
|
%
|
Fuel recovery
fees
|
|
(1.5)
|
|
|
0.2
|
|
|
(1.3)
|
|
|
0.2
|
|
Total
price
|
|
1.0
|
|
|
1.6
|
|
|
1.1
|
|
|
1.5
|
|
Volume
|
|
0.6
|
|
|
2.1
|
|
|
1.2
|
|
|
2.1
|
|
Recycled
commodities
|
|
(0.6)
|
|
|
0.2
|
|
|
(0.8)
|
|
|
0.4
|
|
Total internal
growth
|
|
1.0
|
|
|
3.9
|
|
|
1.5
|
|
|
4.0
|
|
Acquisitions /
divestitures, net
|
|
2.4
|
|
|
0.7
|
|
|
2.3
|
|
|
0.6
|
|
Total
|
|
3.4
|
%
|
|
4.6
|
%
|
|
3.8
|
%
|
|
4.6
|
%
|
|
|
|
|
|
|
|
|
|
Core price
|
|
3.6
|
%
|
|
3.0
|
%
|
|
3.6
|
%
|
|
3.1
|
%
|
|
|
|
|
|
|
|
|
|
Average yield is defined as revenue growth from the change in
average price per unit of service, expressed as a percentage. Core
price is defined as price increases to our customers and fees,
excluding fuel recovery, net of price decreases to retain
customers. We measure changes in average yield and core price as a
percentage of related-business revenue, defined as total revenue
excluding recycled commodities and fuel recovery fees, to determine
the effectiveness of our pricing strategies. Average yield as
a percentage of related-business revenue was 2.8% and 2.6% for the
three and nine months ended September 30, 2015, respectively,
and 1.5% and 1.4% for the same periods in 2014, respectively. Core
price as a percentage of related-business revenue was 4.0% for each
of the three and nine months ended September 30, 2015, and
3.2% and 3.4% for the same periods in 2014.
COST OF OPERATIONS
The following table summarizes the major components of our cost
of operations for the three and nine months ended
September 30, 2015 and 2014:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Labor and related
benefits
|
|
$
|
475.5
|
|
|
20.3
|
|
%
|
|
$
|
437.7
|
|
|
19.3
|
|
%
|
|
$
|
1,379.0
|
|
|
20.2
|
|
%
|
|
$
|
1,280.9
|
|
|
19.5
|
|
%
|
Transfer and disposal
costs
|
|
188.4
|
|
|
8.0
|
|
|
|
179.1
|
|
|
7.9
|
|
|
|
537.6
|
|
|
7.9
|
|
|
|
505.4
|
|
|
7.7
|
|
|
Maintenance and
repairs
|
|
223.7
|
|
|
9.5
|
|
|
|
202.7
|
|
|
8.9
|
|
|
|
636.5
|
|
|
9.3
|
|
|
|
584.0
|
|
|
8.9
|
|
|
Transportation and
subcontract costs
|
|
132.6
|
|
|
5.7
|
|
|
|
129.1
|
|
|
5.7
|
|
|
|
382.0
|
|
|
5.6
|
|
|
|
374.0
|
|
|
5.7
|
|
|
Fuel
|
|
94.9
|
|
|
4.0
|
|
|
|
130.4
|
|
|
5.8
|
|
|
|
288.9
|
|
|
4.2
|
|
|
|
394.1
|
|
|
6.0
|
|
|
Franchise fees and
taxes
|
|
115.1
|
|
|
4.9
|
|
|
|
111.4
|
|
|
4.9
|
|
|
|
332.2
|
|
|
4.9
|
|
|
|
318.5
|
|
|
4.8
|
|
|
Landfill operating
costs
|
|
35.3
|
|
|
1.5
|
|
|
|
36.2
|
|
|
1.6
|
|
|
|
110.2
|
|
|
1.6
|
|
|
|
109.9
|
|
|
1.7
|
|
|
Risk
management
|
|
43.6
|
|
|
1.9
|
|
|
|
55.1
|
|
|
2.4
|
|
|
|
118.9
|
|
|
1.8
|
|
|
|
135.9
|
|
|
2.1
|
|
|
Cost of goods
sold
|
|
43.7
|
|
|
1.9
|
|
|
|
42.9
|
|
|
1.9
|
|
|
|
125.2
|
|
|
1.8
|
|
|
|
130.7
|
|
|
2.0
|
|
|
Other
|
|
87.4
|
|
|
3.7
|
|
|
|
76.5
|
|
|
3.4
|
|
|
|
254.4
|
|
|
3.7
|
|
|
|
233.2
|
|
|
3.5
|
|
|
Subtotal
|
|
1,440.2
|
|
|
61.4
|
|
|
|
1,401.1
|
|
|
61.8
|
|
|
|
4,164.9
|
|
|
61.0
|
|
|
|
4,066.6
|
|
|
61.9
|
|
|
Bridgeton (insurance
recovery) / remediation charge
|
|
(50.0)
|
|
|
(2.1)
|
|
|
|
—
|
|
|
—
|
|
|
|
(50.0)
|
|
|
(0.7)
|
|
|
|
36.1
|
|
|
0.5
|
|
|
Total cost of
operations
|
|
$
|
1,390.2
|
|
|
59.3
|
|
%
|
|
$
|
1,401.1
|
|
|
61.8
|
|
%
|
|
$
|
4,114.9
|
|
|
60.3
|
|
%
|
|
$
|
4,102.7
|
|
|
62.4
|
|
%
|
These cost categories 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
The following table summarizes our selling, general and
administrative expenses for the three and nine months ended
September 30, 2015 and 2014:
|
|
Three Months Ended
September 30,
|
|
|
Nine Months Ended
September 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
|
Salaries
|
|
$
|
158.6
|
|
|
6.8
|
|
%
|
|
$
|
144.3
|
|
|
6.4
|
|
%
|
|
$
|
466.9
|
|
|
6.8
|
|
%
|
|
$
|
425.8
|
|
|
6.5
|
|
%
|
Provision for
doubtful accounts
|
|
6.2
|
|
|
0.2
|
|
|
|
7.9
|
|
|
0.3
|
|
|
|
17.3
|
|
|
0.3
|
|
|
|
16.3
|
|
|
0.2
|
|
|
Other
|
|
79.3
|
|
|
3.4
|
|
|
|
76.8
|
|
|
3.4
|
|
|
|
235.3
|
|
|
3.4
|
|
|
|
221.7
|
|
|
3.4
|
|
|
Total selling,
general and administrative expenses
|
|
$
|
244.1
|
|
|
10.4
|
|
%
|
|
$
|
229.0
|
|
|
10.1
|
|
%
|
|
$
|
719.5
|
|
|
10.5
|
|
%
|
|
$
|
663.8
|
|
|
10.1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
These cost categories 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
those of other companies.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
EBITDA
The following table calculates EBITDA, which is not a measure
determined in accordance with U.S. generally accepted accounting
principles (U.S. GAAP), for the three and nine months ended
September 30, 2015 and 2014:
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net income
attributable to Republic Services, Inc.
|
$
|
215.0
|
|
|
$
|
185.8
|
|
|
$
|
577.7
|
|
|
$
|
497.3
|
|
Net income
attributable to noncontrolling interests
|
0.2
|
|
|
—
|
|
|
0.3
|
|
|
0.1
|
|
Provision for income
taxes
|
135.6
|
|
|
109.6
|
|
|
356.0
|
|
|
308.9
|
|
Other expense
(income), net
|
0.4
|
|
|
0.1
|
|
|
(0.5)
|
|
|
(1.2)
|
|
Interest
income
|
(0.1)
|
|
|
(0.1)
|
|
|
(0.6)
|
|
|
(0.6)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
Interest
expense
|
91.8
|
|
|
87.0
|
|
|
272.0
|
|
|
260.8
|
|
Depreciation,
amortization and depletion
|
247.1
|
|
|
235.6
|
|
|
726.3
|
|
|
679.0
|
|
Accretion
|
19.7
|
|
|
19.5
|
|
|
59.2
|
|
|
58.4
|
|
EBITDA
|
$
|
709.7
|
|
|
$
|
637.5
|
|
|
$
|
1,990.4
|
|
|
$
|
1,804.1
|
|
We believe that presenting EBITDA is useful to investors because
it provides important information concerning our operating
performance exclusive of certain non-cash and other costs. EBITDA
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 credit rating and minimizing debt,
paying cash dividends and repurchasing our common stock, and
maintaining and improving our market position through business
optimization. This measure has limitations. Although depreciation,
depletion, amortization and accretion are considered operating
costs in accordance with U.S. GAAP, they represent the allocation
of non-cash costs generally associated with long-lived assets
acquired or constructed in prior years. Our definition of EBITDA
may not be comparable to similarly titled measures presented by
other companies.
Adjusted Earnings
Reported diluted earnings per share were $0.61 and $1.64 for
the three and nine months ended September 30, 2015,
respectively, as compared to $0.52
and $1.39 for the same periods in
2014. During each of the three and nine months ended
September 30, 2015 and 2014, we recorded a number of charges,
other expenses and benefits that impacted our EBITDA, pre-tax
income, net income attributable to Republic Services, Inc. (net
income – Republic) and diluted earnings per share.
|
|
Three Months Ended
September 30, 2015
|
|
Three Months Ended
September 30, 2014
|
|
|
|
|
|
|
Net
|
|
Diluted
|
|
|
|
|
|
Net
|
|
Diluted
|
|
|
|
|
Pre-tax
|
|
Income -
|
|
Earnings
|
|
|
|
Pre-tax
|
|
Income -
|
|
Earnings
|
|
|
EBITDA
|
|
Income
|
|
Republic
|
|
per Share
|
|
EBITDA
|
|
Income
|
|
Republic
|
|
per Share
|
As
reported
|
|
$
|
709.7
|
|
|
$
|
350.8
|
|
|
$
|
215.0
|
|
|
$
|
0.61
|
|
|
$
|
637.5
|
|
|
$
|
295.4
|
|
|
$
|
185.8
|
|
|
$
|
0.52
|
|
Bridgeton insurance
recovery
|
|
(50.0)
|
|
|
(50.0)
|
|
|
(30.3)
|
|
|
(0.08)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Negotiation and
withdrawal costs - Central States Pension and Other
Funds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
|
0.00
|
Total
adjustments
|
|
(50.0)
|
|
|
(50.0)
|
|
|
(30.3)
|
|
|
(0.08)
|
|
|
0.3
|
|
|
0.3
|
|
|
0.2
|
|
|
0.00
|
As
adjusted
|
|
$
|
659.7
|
|
|
$
|
300.8
|
|
|
$
|
184.7
|
|
|
$
|
0.53
|
|
|
$
|
637.8
|
|
|
$
|
295.7
|
|
|
$
|
186.0
|
|
|
$
|
0.52
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, 2015
|
|
Nine Months Ended
September 30, 2014
|
|
|
|
|
|
|
Net
|
|
Diluted
|
|
|
|
|
|
Net
|
|
Diluted
|
|
|
|
|
Pre-tax
|
|
Income -
|
|
Earnings
|
|
|
|
Pre-tax
|
|
Income -
|
|
Earnings
|
|
|
EBITDA
|
|
Income
|
|
Republic
|
|
per
Share(2)
|
|
EBITDA
|
|
Income
|
|
Republic
|
|
per Share
|
As
reported
|
|
$
|
1,990.4
|
|
|
$
|
934.0
|
|
|
$
|
577.7
|
|
|
$
|
1.64
|
|
|
$
|
1,804.1
|
|
|
$
|
806.3
|
|
|
$
|
497.3
|
|
|
$
|
1.39
|
Bridgeton (insurance
recovery) / remediation charge
|
|
(50.0)
|
|
|
(50.0)
|
|
|
(30.3)
|
|
|
(0.08)
|
|
|
36.1
|
|
|
36.1
|
|
|
21.8
|
|
|
0.06
|
Negotiation and
withdrawal costs - Central States Pension and Other
Funds(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
1.8
|
|
|
1.1
|
|
|
0.00
|
Restructuring
charges(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|
1.8
|
|
|
1.0
|
|
|
0.00
|
Loss on
extinguishment of debt (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.4
|
|
|
0.9
|
|
|
0.00
|
Total
adjustments
|
|
(50.0)
|
|
|
(50.0)
|
|
|
(30.3)
|
|
|
(0.08)
|
|
|
39.7
|
|
|
41.1
|
|
|
24.8
|
|
|
0.07
|
As
adjusted
|
|
$
|
1,940.4
|
|
|
$
|
884.0
|
|
|
$
|
547.4
|
|
|
$
|
1.55
|
|
|
$
|
1,843.8
|
|
|
$
|
847.4
|
|
|
$
|
522.1
|
|
|
$
|
1.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The aggregate impact
of these items noted to adjusted diluted earnings per share totals
to $0.01 for the nine months ended September 30, 2014.
|
(2)
|
Line items in this
column do not total to $1.55 per share due to rounding.
|
We believe that presenting adjusted EBITDA, adjusted pre-tax
income, adjusted net income – Republic, and adjusted diluted
earnings per share, which are not measures determined in accordance
with U.S. GAAP, provides an understanding of operational activities
before the financial impact of certain items. We use these
measures, and believe investors will find them helpful, in
understanding the ongoing performance of our operations separate
from items that have a disproportionate impact on our results for a
particular period. We have incurred comparable charges and costs
and have recorded similar recoveries in prior periods, and similar
types of adjustments can reasonably be expected to be recorded in
future periods. In the case of the Bridgeton remediation charges
and insurance recoveries, we are adjusting such amounts due to
their significant effect on our operating results; however, in the
ordinary course of our business, we often incur remediation charges
and recoveries that we do not adjust from our operating results.
Our definitions of adjusted EBITDA, adjusted pre-tax income,
adjusted net income – Republic, and adjusted diluted earnings per
share may not be comparable to similarly titled measures presented
by other companies.
Adjusted Free Cash Flow
The following table calculates our adjusted free cash flow,
which is not a measure determined in accordance with U.S. GAAP, for
the nine months ended September 30, 2015 and 2014:
|
Nine Months Ended
September 30,
|
|
2015
|
|
2014
|
Cash provided by
operating activities
|
$
|
1,324.5
|
|
|
$
|
1,101.6
|
|
Property and
equipment received
|
(746.7)
|
|
|
(691.6)
|
|
Proceeds from sales
of property and equipment
|
17.1
|
|
|
13.9
|
|
Cash paid related to
negotiation and withdrawal costs - Central States Pension and Other
Funds, net of tax
|
7.4
|
|
|
8.0
|
|
Restructuring
payments, net of tax
|
0.6
|
|
|
0.6
|
|
Adjusted free cash
flow
|
$
|
602.9
|
|
|
$
|
432.5
|
|
We believe that presenting adjusted free cash flow provides
useful information regarding our recurring cash provided by
operating activities after certain payments. It also demonstrates
our ability to execute our financial strategy and is a key metric
we use to determine compensation. The presentation of adjusted free
cash flow has material limitations. Adjusted free cash flow does
not represent our cash flow available for discretionary payments
because it excludes certain payments that are required or to which
we have committed, such as debt service requirements and dividend
payments. Our definition of adjusted free cash flow may not be
comparable to similarly titled measures presented by other
companies.
Purchases of property and equipment as reflected on our
consolidated statements of cash flows and the adjusted free cash
flow presented above represent amounts paid during the period for
such expenditures. A reconciliation of property and equipment
reflected on our consolidated statements of cash flows to property
and equipment received during the period follows for the three and
nine months ended September 30, 2015 and 2014:
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Purchases of property
and equipment per the unaudited consolidated statements of cash
flows
|
|
$
|
232.8
|
|
|
$
|
210.2
|
|
|
$
|
732.0
|
|
|
$
|
683.1
|
|
Adjustments for
property and equipment received during the prior period but paid
for in the following period, net
|
|
9.3
|
|
|
(6.8)
|
|
|
14.7
|
|
|
8.5
|
|
Property and
equipment received during the period
|
|
$
|
242.1
|
|
|
$
|
203.4
|
|
|
$
|
746.7
|
|
|
$
|
691.6
|
|
|
|
|
|
|
|
|
|
|
The adjustments noted above do not affect our net change in cash
and cash equivalents as reflected in our consolidated statements of
cash flows.
ACCOUNTS RECEIVABLE
As of September 30, 2015 and December 31, 2014, accounts receivable were
$988.8 million and $930.4 million, net of allowance for doubtful
accounts and other of $50.2 million
and $38.9 million, respectively,
resulting in days sales outstanding, net of acquisitions, of 38 (or
25 net of deferred revenue).
CASH DIVIDENDS
In July 2015, we paid a cash
dividend of $97.8 million to
shareholders of record as of July 1,
2015. As of September 30, 2015, we recorded a quarterly
dividend payable of $104.3 million to
shareholders of record at the close of business on October 1, 2015, which was paid on October 15, 2015.
STOCK REPURCHASE PROGRAM
During the three months ended September 30, 2015, we
repurchased 2.3 million shares of our stock for $93.8 million at a weighted average cost per
share of $40.89. In addition,
as of September 30, 2015, 0.1 million repurchased shares were
pending settlement and $5.3 million
were unpaid and included within other accrued liabilities.
As of September 30, 2015, we had 347.7 million shares of
common stock issued and outstanding.
2015 FINANCIAL GUIDANCE
Adjusted Diluted Earnings per Share
We are not changing our 2015 adjusted diluted earnings per share
guidance. Our 2015 presentation has been updated to exclude the
favorable impact of an insurance recovery related to our closed
Bridgeton Landfill in Missouri. The following is a summary of
anticipated adjusted diluted earnings per share for the year ending
December 31, 2015, which is not a
measure determined in accordance with U.S. GAAP:
|
(Anticipated)
Year
Ending
December 31,
2015
|
Diluted earnings per
share
|
$2.10 -
$2.13
|
Bridgeton insurance
recovery
|
(0.08)
|
Adjusted diluted
earnings per share
|
$2.02 -
$2.05
|
We believe that presenting adjusted diluted earnings per share,
which excludes Bridgeton insurance recoveries, provides an
understanding of operational activities before the financial impact
of certain 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. We have incurred comparable
benefits in prior periods, and similar types of adjustments can
reasonably be expected to be recorded in future periods. Our
definition of adjusted diluted earnings per share may not be
comparable to similarly titled measures presented by other
companies.
Adjusted Free Cash Flow
We are not changing our 2015 adjusted free cash flow guidance.
Our 2015 presentation has been updated to exclude the favorable
impact of an insurance recovery related to our closed Bridgeton
Landfill in Missouri. Our anticipated adjusted free cash flow
for the year ending December 31,
2015, which is not a measure determined in accordance with
U.S. GAAP, is calculated as follows:
|
(Anticipated)
Year
Ending
December 31,
2015
|
Cash provided by
operating activities
|
$ 1,660 -
1,685
|
Property and
equipment received
|
(940)
|
Proceeds from sales
of property and equipment
|
20
|
Cash paid related to
negotiation and withdrawal costs - Central States Pension and Other
Funds, net of tax
|
10
|
Bridgeton insurance
recovery, net of tax
|
(30)
|
Adjusted free cash
flow
|
$
720
- 745
|
We believe that presenting adjusted free cash flow provides
useful information regarding our recurring cash provided by
operating activities after certain expenditures. It also
demonstrates our ability to execute our financial strategy and is a
key metric we use to determine compensation. The presentation of
adjusted free cash flow has material limitations. Adjusted free
cash flow does not represent our cash flow available for
discretionary expenditures because it excludes certain expenditures
that are required or to which we have committed such as debt
service requirements and dividend payments. Our definition of
adjusted free cash flow may not be comparable to similarly titled
measures presented by other companies.
INFORMATION REGARDING FORWARD-LOOKING
STATEMENTS
This press release contains certain 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," "plan,"
"estimate," "project," "intend," "should," "can," "likely,"
"could," "outlook" and similar expressions are intended to identify
forward-looking statements. These statements include
statements about 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 cannot assure you 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:
- general economic and market conditions, including inflation and
changes in commodity pricing, fuel, interest rates, labor, risk,
health insurance and other variable costs that generally are 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
Waste Industries, Inc.), 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;
- price increases to our customers may not be adequate to offset
the impact of increased costs, including labor, third-party
disposal and fuel, and may cause us to lose volume;
- our ability to manage growth and execute our 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;
- the impact on us of our substantial indebtedness, including on
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;
- our ability to retain our investment grade ratings for our
debt;
- our dependence on key personnel;
- our dependence on large, long-term collection, transfer and
disposal contracts;
- our business is capital intensive and may consume cash in
excess of cash flow from operations;
- any exposure to environmental liabilities or remediation
requirements, to the extent not adequately covered by insurance,
could result in substantial expenses;
- risks associated with undisclosed liabilities of acquired
businesses;
- risks associated with pending and future legal proceedings,
including litigation, audits or investigations brought by or before
any governmental body;
- severe weather conditions, including those brought about by
climate change, 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;
- potential increases in our costs if we are required to provide
additional funding to any multiemployer pension plan to which we
contribute or if a withdrawal event occurs with respect to any
multiemployer pension plan to which we contribute;
- 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;
- changes by the Financial Accounting Standards Board or other
accounting regulatory bodies to generally accepted accounting
principles or policies;
- a cyber-security incident could negatively impact our business
and our relationships with customers; and
- acts of war, riots or terrorism, including 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.
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, 2014 for further
discussion regarding our exposure to risks. You should be
aware that any forward-looking statement made by us in this press
release, speaks only as of the date on which we make it.
Additionally, new risk factors emerge from time to time and it is
not possible for us to predict all such risk factors, or 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 made in this press release. You
should not place undue reliance on these forward-looking
statements. 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 of this press release, or to reflect
the occurrence of unanticipated events.
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SOURCE Republic Services, Inc.