PHOENIX, July 28, 2016 /PRNewswire/ -- Republic
Services, Inc. (NYSE: RSG) today reported net income of
$180.8 million, or $0.52 per diluted share, for the three months
ended June 30, 2016, versus
$190.3 million, or $0.54 per diluted share, for the comparable 2015
period. Excluding certain expenses, on an adjusted basis, net
income for the three months ended June 30,
2016, was $189.5 million, or
$0.55 per diluted share.
For the six months ended June 30,
2016, net income was $337.4
million, or $0.98 per diluted
share, versus $362.7 million, or
$1.03 per diluted share, for the
comparable 2015 period. On an adjusted basis, net income for the
six months ended June 30, 2016, was
$356.7 million, or $1.03 per diluted share.
"Our second quarter results continue to demonstrate the
stability and predictability of our business, and the strength of
our operating model," said Donald W.
Slager, president and chief executive officer. "Strong
pricing performance, positive volume growth and contributions from
our strategic initiatives keep us well positioned to achieve our
full year financial guidance."
Second Quarter Financial Highlights:
- Second quarter revenue growth from average yield was 2 percent
and volumes increased 0.5 percent.
- Core price increased revenues by 3.1 percent, which consisted
of 4.1 percent in the open market and 1.5 percent in the restricted
portion of the business.
- Second quarter adjusted diluted EPS was $0.55 per share and was in-line with the
Company's expectations.
- Cost of operations as a percentage of revenue decreased to 61.3
percent resulting in 20 basis points of gross margin
expansion.
- Adjusted EBITDA margin was consistent with the prior year
period at 28.3 percent of revenue.
- Year-to-date cash provided by operating activities was
$844 million and adjusted free cash
flow was $337 million, both in-line
with the Company's expectations.
- The Company returned $211 million
total cash to its shareholders through dividends and share
repurchases.
Second Quarter Operational Highlights:
- Republic advanced its revenue enhancing initiatives that
focused on creating a better customer experience and further
differentiating its service offerings. For example, the Company:
- continued to increase the number of customers that do business
with it digitally. Over 1.6 million customers are now
enrolled in the MyResourceTM customer portal and mobile
app. These tools significantly enhance customer interaction and
connectivity.
- now has the capability for customers to purchase temporary
large containers or residential subscription services online.
Republic's eCommerce platform addresses the evolving needs of
customer buying preferences and provides a lower-cost sales
channel.
- The Company completed the rollout of its standardized
maintenance program to all of its maintenance shops. The Company
expects its entire fleet will be certified under the program by the
second quarter of 2017. Currently, 85 percent of its fleet is
certified, up from 70 percent in the prior year.
- The Company advanced other fleet-based initiatives designed to
improve productivity and lower costs. Currently:
- 17 percent of its fleet operates on natural gas, up from 15
percent in the prior year.
- 73 percent of its residential fleet is automated, up from 70
percent in the prior year.
- In July, Republic opened its second state-of-the-art Customer
Resource Center, in Phoenix. The
Customer Resource Centers enhance the customer experience and will
lower the Company's cost structure once the transition is
completed. The Company expects to open its final Customer Resource
Center in Indianapolis during the
third quarter of 2016.
Full Year 2016 Guidance
Republic reaffirmed its full year adjusted diluted earnings per
share and adjusted free cash flow guidance.
Dividend and Refinancing Activity
Republic continues
to increase cash returns to shareholders, and announced today that
its Board of Directors approved a 2-cent increase in the quarterly dividend. The
quarterly dividend of $0.32 per share
for shareholders of record on Oct. 3,
2016, will be paid on Oct. 14,
2016.
In May 2016, the Company entered
into a $1 billion unsecured revolving
credit facility (the "Replacement Credit Facility"), which replaced
the $1 billion credit facility
maturing in May 2017. The Replacement
Credit Facility will mature in May
2021. Republic also entered into Amendment No. 1 to the
Company's existing $1.25 billion
unsecured credit facility maturing in 2019 to conform certain terms
with those of the Replacement Credit Facility.
During the second quarter the Company priced cash tender offers
to purchase $575.4 million of
outstanding notes and debentures with coupons ranging from 5.7
percent to 7.4 percent (the "Existing Notes"). Additionally, it
priced an offering of $500 million of
2.9 percent senior notes due 2026 (the "2.9 percent Notes") that
was used to purchase the Existing Notes. The tender of the Existing
Notes and sale of the 2.9 percent Notes closed on July 5, 2016.
"We are pleased to raise our quarterly dividend approximately 7
percent. We have increased the quarterly dividend seven years in a
row, which reflects our confidence in our future cash flows and our
commitment to effectively return cash to shareholders," added
Slager. "Additionally, we opportunistically refinanced a credit
facility and initiated two capital market transactions enabling us
to lower interest costs in future periods."
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. The adjusted
diluted earnings per share and adjusted free cash flow related to
the full year guidance are described in the 2016 Financial Guidance
section of this document.
About Republic Services
Republic Services, Inc. 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 its 14 million customers. We'll handle it from
here.TM, the brand's promise, 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)
|
|
|
|
|
|
June 30,
|
|
December
31,
|
|
2016
|
|
2015
|
|
(Unaudited)
|
|
|
|
ASSETS
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
42.0
|
|
|
$
|
32.4
|
|
Accounts receivable,
less allowance for doubtful accounts and other of $49.4 and $46.7,
respectively
|
990.6
|
|
|
962.9
|
|
Prepaid expenses and
other current assets
|
226.8
|
|
|
235.0
|
|
Total current
assets
|
1,259.4
|
|
|
1,230.3
|
|
Restricted cash and
marketable securities
|
96.8
|
|
|
100.3
|
|
Property and
equipment, net
|
7,634.3
|
|
|
7,552.8
|
|
Goodwill
|
11,154.2
|
|
|
11,145.5
|
|
Other intangible
assets, net
|
214.6
|
|
|
246.4
|
|
Other
assets
|
286.1
|
|
|
260.6
|
|
Total
assets
|
$
|
20,645.4
|
|
|
$
|
20,535.9
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
558.0
|
|
|
$
|
577.4
|
|
Notes payable and
current maturities of long-term debt
|
5.6
|
|
|
5.5
|
|
Deferred
revenue
|
320.3
|
|
|
313.9
|
|
Accrued landfill and
environmental costs, current portion
|
168.2
|
|
|
149.8
|
|
Accrued
interest
|
72.0
|
|
|
71.6
|
|
Other accrued
liabilities
|
723.6
|
|
|
716.6
|
|
Total current
liabilities
|
1,847.7
|
|
|
1,834.8
|
|
Long-term debt, net
of current maturities
|
7,608.4
|
|
|
7,527.4
|
|
Accrued landfill and
environmental costs, net of current portion
|
1,662.2
|
|
|
1,677.9
|
|
Deferred income taxes
and other long-term tax liabilities
|
1,139.9
|
|
|
1,131.8
|
|
Insurance reserves,
net of current portion
|
279.5
|
|
|
278.1
|
|
Other long-term
liabilities
|
349.7
|
|
|
309.3
|
|
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; 347.4 and 346.0
issued
including shares held in treasury,
respectively
|
3.5
|
|
|
3.5
|
|
Additional paid-in
capital
|
4,724.3
|
|
|
4,677.7
|
|
Retained
earnings
|
3,268.0
|
|
|
3,138.3
|
|
Treasury stock, at
cost (4.7 and 0.4 shares, respectively)
|
(209.2)
|
|
|
(14.9)
|
|
Accumulated other
comprehensive loss, net of tax
|
(30.9)
|
|
|
(30.5)
|
|
Total Republic
Services, Inc. stockholders' equity
|
7,755.7
|
|
|
7,774.1
|
|
Noncontrolling
interests
|
2.3
|
|
|
2.5
|
|
Total stockholders'
equity
|
7,758.0
|
|
|
7,776.6
|
|
Total liabilities and
stockholders' equity
|
$
|
20,645.4
|
|
|
$
|
20,535.9
|
|
REPUBLIC SERVICES,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF INCOME
|
(in
millions, except per share data)
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
$
|
2,350.7
|
|
|
$
|
2,311.4
|
|
|
$
|
4,599.2
|
|
|
$
|
4,480.8
|
|
Expenses:
|
|
|
|
|
|
|
|
Cost of
operations
|
1,440.7
|
|
|
1,420.4
|
|
|
2,822.0
|
|
|
2,724.7
|
|
Depreciation,
amortization and depletion
|
250.1
|
|
|
245.9
|
|
|
493.3
|
|
|
479.3
|
|
Accretion
|
19.8
|
|
|
19.7
|
|
|
39.6
|
|
|
39.4
|
|
Selling, general and
administrative
|
243.5
|
|
|
236.2
|
|
|
484.7
|
|
|
475.4
|
|
Withdrawal costs -
multiemployer pension funds
|
—
|
|
|
—
|
|
|
5.6
|
|
|
—
|
|
Restructuring
charges
|
14.5
|
|
|
—
|
|
|
26.4
|
|
|
—
|
|
Operating
income
|
382.1
|
|
|
389.2
|
|
|
727.6
|
|
|
762.0
|
|
Interest
expense
|
(92.2)
|
|
|
(91.5)
|
|
|
(185.0)
|
|
|
(180.2)
|
|
Interest
income
|
0.2
|
|
|
0.1
|
|
|
0.8
|
|
|
0.5
|
|
Other income,
net
|
1.6
|
|
|
0.9
|
|
|
0.9
|
|
|
0.9
|
|
Income before income
taxes
|
291.7
|
|
|
298.7
|
|
|
544.3
|
|
|
583.2
|
|
Provision for income
taxes
|
110.7
|
|
|
108.4
|
|
|
206.4
|
|
|
220.3
|
|
Net income
|
181.0
|
|
|
190.3
|
|
|
337.9
|
|
|
362.9
|
|
Net income
attributable to noncontrolling interests
|
(0.2)
|
|
|
—
|
|
|
(0.5)
|
|
|
(0.2)
|
|
Net income
attributable to Republic Services, Inc.
|
$
|
180.8
|
|
|
$
|
190.3
|
|
|
$
|
337.4
|
|
|
$
|
362.7
|
|
Basic earnings per
share attributable to Republic Services, Inc.
stockholders:
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.53
|
|
|
$
|
0.54
|
|
|
$
|
0.98
|
|
|
$
|
1.03
|
|
Weighted average
common shares outstanding
|
343.9
|
|
|
350.7
|
|
|
344.6
|
|
|
352.0
|
|
Diluted earnings per
share attributable to Republic Services, Inc.
stockholders:
|
|
|
|
|
|
|
|
Diluted earnings per
share
|
$
|
0.52
|
|
|
$
|
0.54
|
|
|
$
|
0.98
|
|
|
$
|
1.03
|
|
Weighted
average common and common equivalent shares outstanding
|
345.2
|
|
|
352.0
|
|
|
346.0
|
|
|
353.4
|
|
Cash dividends per
common share
|
$
|
0.30
|
|
|
$
|
0.28
|
|
|
$
|
0.60
|
|
|
$
|
0.56
|
|
REPUBLIC SERVICES,
INC.
|
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(in
millions)
|
|
Six Months Ended June
30,
|
|
2016
|
|
2015
|
Cash provided by
operating activities:
|
|
|
|
Net income
|
$
|
337.9
|
|
|
$
|
362.9
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Depreciation,
amortization, depletion and accretion
|
532.9
|
|
|
518.7
|
|
Non-cash interest
expense
|
23.1
|
|
|
23.1
|
|
Restructuring
charges
|
26.4
|
|
|
—
|
|
Stock-based
compensation
|
12.1
|
|
|
11.6
|
|
Deferred tax
benefit
|
9.0
|
|
|
(12.7)
|
|
Provision for
doubtful accounts, net of adjustments
|
11.6
|
|
|
11.1
|
|
Gain on disposition
of assets, net and asset impairments
|
(2.3)
|
|
|
(3.0)
|
|
Withdrawal liability
- multiemployer pension funds
|
5.6
|
|
|
—
|
|
Environmental
adjustments
|
0.3
|
|
|
(1.3)
|
|
Excess income tax
benefit from stock-based compensation activity and other non-cash
items
|
(8.0)
|
|
|
(5.1)
|
|
Change in assets and
liabilities, net of effects from business acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(39.2)
|
|
|
(14.4)
|
|
Prepaid expenses and
other assets
|
(67.1)
|
|
|
11.0
|
|
Accounts
payable
|
(27.4)
|
|
|
4.3
|
|
Restructuring
expenditures
|
(14.5)
|
|
|
—
|
|
Capping, closure and
post-closure expenditures
|
(35.3)
|
|
|
(26.2)
|
|
Remediation
expenditures
|
(32.8)
|
|
|
(31.1)
|
|
Other
liabilities
|
112.0
|
|
|
52.3
|
|
Cash provided by
operating activities
|
844.3
|
|
|
901.2
|
|
Cash used in
investing activities:
|
|
|
|
Purchases of property
and equipment
|
(512.0)
|
|
|
(499.2)
|
|
Proceeds from sales
of property and equipment
|
5.5
|
|
|
8.1
|
|
Cash used in business
acquisitions, net of cash acquired
|
(13.9)
|
|
|
(512.6)
|
|
Change in restricted
cash and marketable securities
|
3.6
|
|
|
6.2
|
|
Other
|
(0.4)
|
|
|
(0.7)
|
|
Cash used in
investing activities
|
(517.2)
|
|
|
(998.2)
|
|
Cash used in
financing activities:
|
|
|
|
Proceeds from notes
payable and long-term debt
|
1,789.6
|
|
|
793.2
|
|
Proceeds from
issuance of senior notes, net of discount
|
—
|
|
|
497.9
|
|
Payments of notes
payable and long-term debt
|
(1,729.8)
|
|
|
(803.5)
|
|
Fees paid to issue
senior notes and retire certain hedging relationships
|
(3.5)
|
|
|
(3.3)
|
|
Issuances of common
stock
|
26.7
|
|
|
33.0
|
|
Excess income tax
benefit from stock-based compensation activity
|
6.3
|
|
|
4.8
|
|
Purchases of common
stock for treasury
|
(196.1)
|
|
|
(199.5)
|
|
Cash dividends
paid
|
(207.1)
|
|
|
(197.2)
|
|
Distributions paid to
noncontrolling interests
|
(0.7)
|
|
|
(0.5)
|
|
Other
|
(2.9)
|
|
|
(3.2)
|
|
Cash (used in)
provided by financing activities
|
(317.5)
|
|
|
121.7
|
|
Increase in cash and
cash equivalents
|
9.6
|
|
|
24.7
|
|
Cash and cash
equivalents at beginning of year
|
32.4
|
|
|
75.2
|
|
Cash and cash
equivalents at end of period
|
$
|
42.0
|
|
|
$
|
99.9
|
|
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, 2015, and Form 8-K filed on June 3, 2016. 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 six months ended June 30, 2016 and
2015:
|
Three Months Ended
June 30,
|
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Collection:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
$
|
559.8
|
|
|
23.8
|
|
%
|
|
$
|
565.8
|
|
|
24.5
|
|
%
|
|
$
|
1,110.8
|
|
|
24.2
|
|
%
|
|
$
|
1,117.5
|
|
|
24.9
|
|
%
|
Small-container commercial
|
714.9
|
|
|
30.4
|
|
|
|
699.1
|
|
|
30.2
|
|
|
|
1,422.7
|
|
|
30.9
|
|
|
|
1,393.9
|
|
|
31.1
|
|
|
Large-container industrial
|
499.7
|
|
|
21.3
|
|
|
|
480.2
|
|
|
20.8
|
|
|
|
968.9
|
|
|
21.1
|
|
|
|
914.9
|
|
|
20.4
|
|
|
Other
|
9.7
|
|
|
0.4
|
|
|
|
9.9
|
|
|
0.4
|
|
|
|
19.0
|
|
|
0.4
|
|
|
|
19.2
|
|
|
0.4
|
|
|
Total
collection
|
1,784.1
|
|
|
75.9
|
|
|
|
1,755.0
|
|
|
75.9
|
|
|
|
3,521.4
|
|
|
76.6
|
|
|
|
3,445.5
|
|
|
76.8
|
|
|
Transfer
|
296.8
|
|
|
|
|
|
291.3
|
|
|
|
|
|
565.0
|
|
|
|
|
|
542.5
|
|
|
|
|
Less:
intercompany
|
(178.2)
|
|
|
|
|
|
(177.5)
|
|
|
|
|
|
(342.7)
|
|
|
|
|
|
(335.3)
|
|
|
|
|
Transfer, net
|
118.6
|
|
|
5.0
|
|
|
|
113.8
|
|
|
4.9
|
|
|
|
222.3
|
|
|
4.8
|
|
|
|
207.2
|
|
|
4.6
|
|
|
Landfill
|
536.2
|
|
|
|
|
|
531.3
|
|
|
|
|
|
1,025.6
|
|
|
|
|
|
987.4
|
|
|
|
|
Less:
intercompany
|
(249.6)
|
|
|
|
|
|
(250.3)
|
|
|
|
|
|
(477.3)
|
|
|
|
|
|
(467.8)
|
|
|
|
|
Landfill, net
|
286.6
|
|
|
12.2
|
|
|
|
281.0
|
|
|
12.2
|
|
|
|
548.3
|
|
|
11.9
|
|
|
|
519.6
|
|
|
11.6
|
|
|
Energy
services
|
17.2
|
|
|
0.7
|
|
|
|
27.1
|
|
|
1.2
|
|
|
|
35.8
|
|
|
0.8
|
|
|
|
51.2
|
|
|
1.2
|
|
|
Other:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of recycled
commodities
|
101.4
|
|
|
4.3
|
|
|
|
92.9
|
|
|
4.0
|
|
|
|
188.2
|
|
|
4.1
|
|
|
|
178.3
|
|
|
4.0
|
|
|
Other
non-core
|
42.8
|
|
|
1.9
|
|
|
|
41.6
|
|
|
1.8
|
|
|
|
83.2
|
|
|
1.8
|
|
|
|
79.0
|
|
|
1.8
|
|
|
Total
other
|
144.2
|
|
|
6.2
|
|
|
|
134.5
|
|
|
5.8
|
|
|
|
271.4
|
|
|
5.9
|
|
|
|
257.3
|
|
|
5.8
|
|
|
Total
revenue
|
$
|
2,350.7
|
|
|
100.0
|
|
%
|
|
$
|
2,311.4
|
|
|
100.0
|
|
%
|
|
$
|
4,599.2
|
|
|
100.0
|
|
%
|
|
$
|
4,480.8
|
|
|
100.0
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table reflects changes in components of our
revenue, as a percentage of total revenue, for the three and six
months ended June 30, 2016 and 2015:
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Average
yield
|
|
2.0
|
%
|
|
2.4
|
%
|
|
2.0
|
%
|
|
2.3
|
%
|
Fuel recovery
fees
|
|
(1.0)
|
|
|
(1.5)
|
|
|
(1.2)
|
|
|
(1.1)
|
|
Total
price
|
|
1.0
|
|
|
0.9
|
|
|
0.8
|
|
|
1.2
|
|
Volume
|
|
0.5
|
|
|
1.1
|
|
|
1.5
|
|
|
1.4
|
|
Recycled
commodities
|
|
0.3
|
|
|
(1.0)
|
|
|
0.1
|
|
|
(1.0)
|
|
Energy
services
|
|
(0.5)
|
|
|
—
|
|
|
(0.6)
|
|
|
—
|
|
Total internal
growth
|
|
1.3
|
|
|
1.0
|
|
|
1.8
|
|
|
1.6
|
|
Acquisitions /
divestitures, net
|
|
0.4
|
|
|
2.7
|
|
|
0.8
|
|
|
2.5
|
|
Total
|
|
1.7
|
%
|
|
3.7
|
%
|
|
2.6
|
%
|
|
4.1
|
%
|
|
|
|
|
|
|
|
|
|
Core price
|
|
3.1
|
%
|
|
3.8
|
%
|
|
3.1
|
%
|
|
3.7
|
%
|
|
|
|
|
|
|
|
|
|
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 fees, net of price decreases to retain
customers. We also 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 2.2% for each
of the three and six months ended June 30, 2016, respectively,
and 2.7% and 2.5% for the same periods in 2015, respectively. Core
price as a percentage of related-business revenue was 3.4% and 3.5%
for the three and six months ended June 30, 2016,
respectively, and 4.1% for each of the same periods in 2015.
COST OF OPERATIONS
The following table summarizes the major components of our cost
of operations for the three and six months ended June 30, 2016
and 2015:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended June
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Labor and related
benefits
|
|
$
|
475.8
|
|
|
20.2
|
|
%
|
|
$
|
460.5
|
|
|
19.9
|
|
%
|
|
$
|
947.9
|
|
|
20.6
|
|
%
|
|
$
|
903.4
|
|
|
20.2
|
|
%
|
Transfer and disposal
costs
|
|
195.2
|
|
|
8.3
|
|
|
|
188.7
|
|
|
8.2
|
|
|
|
374.1
|
|
|
8.1
|
|
|
|
349.1
|
|
|
7.8
|
|
|
Maintenance and
repairs
|
|
223.7
|
|
|
9.5
|
|
|
|
214.3
|
|
|
9.3
|
|
|
|
442.0
|
|
|
9.6
|
|
|
|
412.8
|
|
|
9.2
|
|
|
Transportation and
subcontract costs
|
|
133.4
|
|
|
5.7
|
|
|
|
132.0
|
|
|
5.7
|
|
|
|
255.6
|
|
|
5.6
|
|
|
|
249.4
|
|
|
5.6
|
|
|
Fuel
|
|
80.3
|
|
|
3.4
|
|
|
|
101.1
|
|
|
4.4
|
|
|
|
150.6
|
|
|
3.3
|
|
|
|
194.1
|
|
|
4.3
|
|
|
Franchise fees and
taxes
|
|
114.7
|
|
|
4.9
|
|
|
|
114.3
|
|
|
4.9
|
|
|
|
223.1
|
|
|
4.9
|
|
|
|
217.0
|
|
|
4.8
|
|
|
Landfill operating
costs
|
|
44.2
|
|
|
1.9
|
|
|
|
42.0
|
|
|
1.8
|
|
|
|
88.0
|
|
|
1.9
|
|
|
|
74.9
|
|
|
1.7
|
|
|
Risk
management
|
|
46.7
|
|
|
2.0
|
|
|
|
38.6
|
|
|
1.7
|
|
|
|
92.4
|
|
|
2.0
|
|
|
|
75.3
|
|
|
1.7
|
|
|
Cost of goods
sold
|
|
43.6
|
|
|
1.9
|
|
|
|
42.6
|
|
|
1.8
|
|
|
|
82.1
|
|
|
1.8
|
|
|
|
81.6
|
|
|
1.8
|
|
|
Other
|
|
83.1
|
|
|
3.5
|
|
|
|
86.3
|
|
|
3.8
|
|
|
|
166.2
|
|
|
3.6
|
|
|
|
167.1
|
|
|
3.7
|
|
|
Total cost of
operations
|
|
$
|
1,440.7
|
|
|
61.3
|
|
%
|
|
$
|
1,420.4
|
|
|
61.5
|
|
%
|
|
$
|
2,822.0
|
|
|
61.4
|
|
%
|
|
$
|
2,724.7
|
|
|
60.8
|
|
%
|
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 six months ended
June 30, 2016 and 2015:
|
|
Three Months Ended
June 30,
|
|
|
Six Months Ended June
30,
|
|
|
|
2016
|
|
|
2015
|
|
|
2016
|
|
|
2015
|
|
Salaries
|
|
$
|
154.4
|
|
|
6.6
|
|
%
|
|
$
|
154.0
|
|
|
6.7
|
|
%
|
|
$
|
313.2
|
|
|
6.8
|
|
%
|
|
$
|
308.3
|
|
|
6.9
|
|
%
|
Provision for
doubtful accounts
|
|
7.0
|
|
|
0.3
|
|
|
|
6.2
|
|
|
0.3
|
|
|
|
11.6
|
|
|
0.3
|
|
|
|
11.1
|
|
|
0.2
|
|
|
Other
|
|
82.1
|
|
|
3.5
|
|
|
|
76.0
|
|
|
3.2
|
|
|
|
159.9
|
|
|
3.4
|
|
|
|
156.0
|
|
|
3.5
|
|
|
Total selling,
general and administrative expenses
|
|
$
|
243.5
|
|
|
10.4
|
|
%
|
|
$
|
236.2
|
|
|
10.2
|
|
%
|
|
$
|
484.7
|
|
|
10.5
|
|
%
|
|
$
|
475.4
|
|
|
10.6
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 six months ended
June 30, 2016 and 2015:
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net income
attributable to Republic Services, Inc.
|
$
|
180.8
|
|
|
$
|
190.3
|
|
|
$
|
337.4
|
|
|
$
|
362.7
|
|
Net income
attributable to noncontrolling interests
|
0.2
|
|
|
—
|
|
|
0.5
|
|
|
0.2
|
|
Provision for income
taxes
|
110.7
|
|
|
108.4
|
|
|
206.4
|
|
|
220.3
|
|
Other income,
net
|
(1.6)
|
|
|
(0.9)
|
|
|
(0.9)
|
|
|
(0.9)
|
|
Interest
income
|
(0.2)
|
|
|
(0.1)
|
|
|
(0.8)
|
|
|
(0.5)
|
|
Interest
expense
|
92.2
|
|
|
91.5
|
|
|
185.0
|
|
|
180.2
|
|
Depreciation,
amortization and depletion
|
250.1
|
|
|
245.9
|
|
|
493.3
|
|
|
479.3
|
|
Accretion
|
19.8
|
|
|
19.7
|
|
|
39.6
|
|
|
39.4
|
|
EBITDA(1)
|
$
|
651.9
|
|
|
$
|
654.8
|
|
|
$
|
1,260.5
|
|
|
$
|
1,280.7
|
|
|
|
(1) EBITDA for the
three months ended June 30, 2016, may not sum due to
rounding.
|
|
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 ratings and minimizing
debt, paying cash dividends, 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 $0.52 and $0.98 for
the three and six months ended June 30, 2016, respectively, as
compared to $0.54 and $1.03 for the same periods in 2015. During each
of the three and six months ended June 30, 2016, we recorded a
number of charges and other expenses that impacted our EBITDA,
pre-tax income, net income attributable to Republic Services, Inc.
(net income – Republic) and diluted earnings per share. During each
of the three and six months ended June 30,
2015, we did not report adjusted EBITDA, adjusted pre-tax
income, adjusted net income - Republic or adjusted diluted earnings
per share because we had no adjustments. The 2016 items primarily
consist of the following:
|
|
Three Months Ended
June 30, 2016
|
|
Six Months Ended June
30, 2016
|
|
|
|
|
|
|
Net
|
|
Diluted
|
|
|
|
|
|
Net
|
|
Diluted
|
|
|
|
|
Pre-tax
|
|
Income -
|
|
Earnings
|
|
|
|
Pre-tax
|
|
Income -
|
|
Earnings
|
|
|
EBITDA
|
|
Income
|
|
Republic
|
|
per Share
|
|
EBITDA
|
|
Income
|
|
Republic
|
|
per Share
|
As
reported
|
|
$
|
651.9
|
|
|
$
|
291.7
|
|
|
$
|
180.8
|
|
|
$
|
0.52
|
|
|
$
|
1,260.5
|
|
|
$
|
544.3
|
|
|
$
|
337.4
|
|
|
$
|
0.98
|
|
Withdrawal costs -
multiemployer pension funds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.6
|
|
|
5.6
|
|
|
3.4
|
|
|
0.01
|
|
Restructuring
charges
|
|
14.5
|
|
|
14.5
|
|
|
8.7
|
|
|
0.03
|
|
|
26.4
|
|
|
26.4
|
|
|
15.9
|
|
|
0.04
|
|
Total
adjustments
|
|
14.5
|
|
|
14.5
|
|
|
8.7
|
|
|
0.03
|
|
|
32.0
|
|
|
32.0
|
|
|
19.3
|
|
|
0.05
|
|
As
adjusted
|
|
$
|
666.4
|
|
|
$
|
306.2
|
|
|
$
|
189.5
|
|
|
$
|
0.55
|
|
|
$
|
1,292.5
|
|
|
$
|
576.3
|
|
|
$
|
356.7
|
|
|
$
|
1.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 in
prior periods, and similar types of adjustments can reasonably be
expected to be recorded in future periods. Our definition 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 three and six months ended June 30, 2016 and
2015:
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Cash provided by
operating activities
|
$
|
412.8
|
|
|
$
|
405.1
|
|
|
$
|
844.3
|
|
|
$
|
901.2
|
|
Property and
equipment received
|
(243.7)
|
|
|
(243.6)
|
|
|
(521.4)
|
|
|
(504.6)
|
|
Proceeds from sales
of property and equipment
|
2.6
|
|
|
4.9
|
|
|
5.5
|
|
|
8.1
|
|
Cash paid related to
negotiation and withdrawal costs - Central States Pension and Other
Funds, net of tax
|
—
|
|
|
2.4
|
|
|
—
|
|
|
4.9
|
|
Restructuring
payments, net of tax
|
5.6
|
|
|
—
|
|
|
8.8
|
|
|
—
|
|
Adjusted free cash
flow
|
$
|
177.3
|
|
|
$
|
168.8
|
|
|
$
|
337.2
|
|
|
$
|
409.6
|
|
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
six months ended June 30, 2016 and 2015:
|
|
Three Months Ended
June 30,
|
|
Six Months Ended June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Purchases of property
and equipment per the unaudited consolidated statements of cash
flows
|
|
$
|
240.5
|
|
|
$
|
229.6
|
|
|
$
|
512.0
|
|
|
$
|
499.2
|
|
Adjustments for
property and equipment received during the prior period but paid
for in the following period, net
|
|
3.2
|
|
|
14.0
|
|
|
9.4
|
|
|
5.4
|
|
Property and
equipment received during the period
|
|
$
|
243.7
|
|
|
$
|
243.6
|
|
|
$
|
521.4
|
|
|
$
|
504.6
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2016 and December 31,
2015, accounts receivable were $990.6
million and $962.9 million,
net of allowance for doubtful accounts of $49.4 million and $46.7
million, respectively, resulting in days sales outstanding
of 38, or 26 days net of deferred revenue, compared to 38, or 26
days net of deferred revenue, respectively.
CASH DIVIDENDS
In April 2016, we paid a cash
dividend of $103.4 million to
shareholders of record as of April 1,
2016. As of June 30, 2016, we recorded a quarterly
dividend payable of $102.8 million to
shareholders of record at the close of business on July 1, 2016, which was paid on July 15, 2016.
STOCK REPURCHASE PROGRAM
During the three months ended June 30, 2016, we repurchased
2.3 million shares of our stock for $107.6
million at a weighted average cost per share of $47.70.
As of June 30, 2016, we had 342.7 million shares of common
stock issued and outstanding.
2016 FINANCIAL GUIDANCE
Adjusted Diluted Earnings per Share
The following is a summary of adjusted diluted earnings per
share guidance for the year ending December
31, 2016, which is not a measure determined in accordance
with U.S. GAAP:
|
Year
Ending
December 31,
2016
|
Diluted earnings per
share
|
$1.70 -
$1.74
|
Withdrawal costs -
multiemployer pension funds
|
0.01
|
Restructuring
charges
|
0.07
|
Loss on
extinguishment of debt and other related costs
|
0.35
|
Adjusted diluted
earnings per share
|
$2.13 -
$2.17
|
We believe that the presentation of adjusted diluted earnings
per share guidance, which excludes withdrawal costs - multiemployer
pension funds, restructuring charges, loss on extinguishment of
debt, and gain/(loss) on disposition of assets and impairments,
net, 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 charges and costs 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 guidance may not be comparable to similarly
titled measures presented by other companies.
Adjusted Free Cash Flow
Our adjusted free cash flow guidance for the year ending
December 31, 2016, which is not a
measure determined in accordance with U.S. GAAP, is calculated as
follows:
|
Year
Ending
December 31,
2016
|
Cash provided by
operating activities
|
$ 1,778 -
1,798
|
Property and
equipment received
|
(915)
|
Proceeds from sales
of property and equipment
|
15
|
Cash paid related to
withdrawal costs - multiemployer pension funds
|
—
|
Restructuring
payments, net of tax
|
22
|
Cash tax benefit for
debt extinguishment and other related costs
|
(80)
|
Adjusted free cash
flow
|
$
820 - 840
|
We believe that presenting adjusted free cash flow guidance
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 guidance 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,
projected costs and expenses related to our landfills, fair values
of acquired assets and liabilities assumed in our acquisitions, 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 and
recycling 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 credit 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;
- 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 such
plan;
- 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, 2015 for further
discussion regarding our exposure to risks. You should be aware
that any forward-looking statement 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 statement
made in this press release. You should not place undue reliance on
any forward-looking statement. 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.