News Releases
Republic Services, Inc.
Republic's income before income taxes for the three months ended September 30, 2009, includes $0.9 million ($0.00 per diluted share) of a net loss on disposition of assets, $12.3 million ($0.02 per diluted share) of restructuring charges, $31.8 million ($0.05 per diluted share) of loss on extinguishment of debt, $8.9 million ($0.01 per diluted share) of costs to achieve synergies and a gain of $8.8 million ($0.01 per diluted share) related to insurance recoveries resulting from remediation activities. Excluding these items, net income for the three months ended September 30, 2009 would have been $149.3 million or $0.39 per diluted share. Income before income taxes for the three months ended September 30, 2008 includes $3.2 million ($.01 per diluted share) of integration costs related to the Allied merger. Excluding these costs, net income for the three months ended September 30, 2008 was $90.7 million or $0.49 per diluted share.
Operating income before depreciation, amortization, depletion and accretion for the three months ended September 30, 2009 was $627.4 million compared to $248.9 million for the comparable period in 2008. Excluding the net loss on disposition of assets, restructuring charges, costs to achieve synergies, and insurance recoveries recorded during 2009 and the integration costs recorded during 2008, operating income before depreciation, amortization, depletion and accretion for the three months ended September 30, 2009 was $640.7 million, or 30.9% as a percentage of revenue, compared to $252.1 million, or 30.2% as a percentage of revenue, for the comparable 2008 period.
Revenue for the three months ended September 30, 2009 increased to $2,073.5 million compared to $834.0 million for the same period in 2008. Core price for the three months ended September 30, 2009 (assuming the merger with Allied had occurred on January 1, 2008) increased 2.8%. Offsetting the core price growth of 2.8% for the three months ended September 30, 2009 were decreases of 10.1% in core volume, 1.9% of commodity pricing and 3.6% in fuel recovery fees.
For the nine months ended September 30, 2009, net income was $459.4 million, or $1.21 per diluted share, compared to $205.5 million, or $1.11 per diluted share, for the comparable period last year. Republic's income before income taxes for the nine months ended September 30, 2009, includes $144.3 million ($0.23 per diluted share) of net gains on disposition of assets, $55.9 million ($0.09 per diluted share) of restructuring charges, $31.8 million ($0.05 per diluted share) of loss on extinguishment of debt, $31.8 million ($0.05 per diluted share) of costs to achieve synergies and a gain of $8.8 million ($0.01 per diluted share) related to insurance recoveries resulting from remediation activities. Excluding these items, net income for the nine months ended September 30, 2009 would have been $438.6 million or $1.16 per diluted share.
Income before income taxes for the nine months ended September 30, 2008 includes a $34.0 million charge ($0.12 per diluted share) related to environmental conditions at our Countywide Recycling and Disposal Facility in Ohio, a $35.0 million charge ($0.12 per diluted share) related to estimated costs to comply with a consent decree and settlement agreement related to the Sunrise Landfill in Nevada and $3.2 million ($0.01 per diluted share) of integration costs related to the merger with Allied. Excluding these charges and costs, net income for the nine months ended September 30, 2008 was $251.3 million or $1.36 per diluted share.
Operating income before depreciation, amortization, depletion and accretion for the nine months ended September 30, 2009 was $1,986.7 million compared to $635.2 million for the comparable period in 2008. Excluding the net gain on disposition of assets, restructuring charges, costs to achieve synergies and insurance recoveries recorded during 2009 and the remediation charges and integration costs recorded during 2008, operating income before depreciation, amortization, depletion and accretion for the nine months ended September 30, 2009 was $1,921.3 million, or 31.0% as a percentage of revenue, compared to $706.4 million, or 28.9% as a percentage of revenue, for the comparable 2008 period.
Revenue for the nine months ended September 30, 2009 increased to $6,200.1 million compared to $2,440.7 million for the same period in 2008. Core price for the nine months ended September 30, 2009 (assuming the merger with Allied had occurred on January 1, 2008) increased 3.2%. Offsetting the core price growth of 3.2% for the nine months ended September 30, 2009 were decreases of 9.6% in core volume, 2.4% of commodity pricing and 2.6% in fuel recovery fees.
During the three months ended September 30, 2009, the Company completed the divestiture of assets and related liabilities required under the settlement reached with the U.S. Department of Justice in connection with the Allied merger. After tax proceeds of $374.6 million related to these divestitures were used to repay amounts borrowed under the Company's credit facilities.
"Based on our continued solid performance, we are increasing our full year earnings guidance for the second time this year," said James E. O'Connor, Chairman and Chief Executive Officer of Republic Services, Inc. "Our new, full-year adjusted earnings guidance is a range of $1.46 to $1.48 per share, which represents a three cent per share increase over our previous guidance. We are also reaffirming our full-year free cash flow guidance of $700 to $725 million. I am especially pleased to see a 110 basis point increase in our adjusted year-over-year margins."
Commenting on merger-related synergies, Don Slager, President and Chief Operating Officer, stated, "We are realizing our synergy savings ahead of schedule. Our field organization continues to execute our merger strategy while remaining focused on revenue and cost control initiatives," said Mr. Slager. "Providing excellent customer service, managing operational costs and increasing customer retention remain key focal points for the organization."
Quarterly Dividend
Separately, Republic announced that its Board of Directors has approved a regular quarterly dividend of $0.19 per share to be paid on January 18, 2010 to shareholders of record on January 4, 2010.
Republic Services, Inc. is a leading provider of services in the domestic, non-hazardous solid waste industry. The Company provides non-hazardous solid waste collection services for commercial, industrial, municipal, and residential customers through 380 collection companies in 40 states. It also owns or operates 236 transfer stations, 199 solid waste landfills and 78 recycling facilities. Republic serves millions of residential customers under contracts with more than 3,000 municipalities for waste collection and residential services. It also serves commercial customers throughout its expansive service area. For more information, visit the Republic Services web site at www.republicservices.com
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
AND OPERATING DATA
(in millions, except per share amounts and percentages)
REPUBLIC SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
September December
30, 31,
2009 2008
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $107.3 $68.7
Accounts receivable, less allowance for
doubtful accounts of $54.2 and $65.7 as
of September 30, 2009 and December 31,
2008, respectively 928.2 945.5
Prepaid expenses and other current assets 189.3 174.7
Deferred tax assets 179.5 136.8
----- -----
Total current assets 1,404.3 1,325.7
Restricted cash and marketable securities 254.9 281.9
Property and equipment, net 6,585.6 6,738.2
Goodwill, net 10,534.0 10,521.5
Other intangible assets, net 517.7 564.1
Other assets 233.6 490.0
----- -----
Total assets $19,530.1 $19,921.4
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $458.8 $564.0
Notes payable and current maturities
of long-term debt 242.5 504.0
Deferred revenue 332.7 359.9
Accrued landfill and environmental costs,
current portion 188.4 233.4
Accrued interest 110.5 107.7
Other accrued liabilities 765.1 796.8
----- -----
Total current liabilities 2,098.0 2,565.8
Long-term debt, net of current maturities 6,813.3 7,198.5
Accrued landfill and environmental costs,
net of current portion 1,251.0 1,197.1
Deferred income taxes and other
long-term liabilities 1,323.2 1,239.9
Self-insurance reserves, net of current
portion 303.7 234.5
Other long-term liabilities 186.4 203.1
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.01 per
share; 50.0 shares authorized; none
issued - -
Common stock, par value $0.01 per share;
750.0 shares authorized; 394.6 and 393.4
issued, including shares held in
treasury, as of September 30, 2009 and
December 31, 2008, respectively 4.0 3.9
Additional paid-in capital 6,289.7 6,260.1
Retained earnings 1,720.1 1,477.2
Treasury stock, at cost (14.9 shares
as of September 30, 2009 and
December 31, 2008) (457.2) (456.7)
Accumulated other comprehensive loss, net
of tax (4.4) (3.1)
---- ----
Total Republic Services, Inc.
stockholders' equity 7,552.2 7,281.4
Noncontrolling interests 2.3 1.1
----- -----
Total stockholders' equity 7,554.5 7,282.5
------- -------
Total liabilities and stockholders'
equity $19,530.1 $19,921.4
========= =========
REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
Revenue $2,073.5 $834.0 $6,200.1 $2,440.7
Expenses:
Cost of operations 1,207.5 499.5 3,643.1 1,553.5
Depreciation, amortization and
depletion 218.3 77.3 658.7 226.9
Accretion 22.2 4.6 67.4 13.5
Selling, general and
administrative 225.4 85.6 658.7 252.0
Loss (gain) on disposition of
assets, net 0.9 - (144.3) -
Restructuring charges 12.3 - 55.9 -
---- ---- ---- ----
Operating income 386.9 167.0 1,260.6 394.8
Interest expense (144.8) (22.6) (448.8) (65.1)
Loss on extinguishment of debt (31.8) - (31.8) -
Interest income 0.5 2.6 1.7 7.9
Other income (expense), net 1.3 (1.6) 2.8 (0.7)
---- ---- ---- ----
Income before income taxes 212.1 145.4 784.5 336.9
Provision for income taxes 91.1 56.7 323.9 131.4
----- ----- ----- -----
Net income 121.0 88.7 460.6 205.5
Less: net income
attributable to
noncontrolling
interests (0.5) - (1.2) -
---- ---- ---- ----
Net income attributable to
Republic
Services, Inc. $120.5 $88.7 $459.4 $205.5
====== ===== ====== ======
Basic earnings per share
attributable to Republic
Services, Inc. stockholders:
Basic earnings per share $0.32 $0.49 $1.21 $1.13
===== ===== ===== =====
Weighted average common
shares outstanding 379.7 182.3 379.3 182.6
===== ===== ===== =====
Diluted earnings per share
attributable to Republic
Services, Inc. stockholders:
Diluted earnings per share $0.32 $0.48 $1.21 $1.11
===== ===== ===== =====
Weighted average common
and common equivalent
shares outstanding 381.1 184.1 380.3 184.4
===== ===== ===== =====
Cash dividends per common share $0.19 $0.19 $0.57 $0.53
===== ===== ===== =====
REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Nine Months Ended
September 30,
-----------------
2009 2008
---- ----
Cash Provided by Operating Activities:
Net income $460.6 $205.5
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization of property and
equipment 389.9 145.7
Landfill depletion and amortization 216.3 76.5
Amortization of intangible and other assets 52.5 4.7
Accretion 67.4 13.5
Non-cash interest expense - debt 76.0 -
Non-cash interest expense - other 33.3 -
Restructuring and synergy related charges 33.2 -
Stock-based compensation 11.6 9.5
Deferred tax provision 5.6 24.1
Provision for doubtful accounts, net of
adjustments 16.8 6.4
Excess income tax benefit from stock option
exercises (1.4) 1.8
Asset impairments 10.4 -
Loss on extinguishment of debt 31.8 -
Gain on disposition of assets, net (156.2) (1.1)
Other non-cash items (0.1) 2.5
Change in assets and liabilities, net of
effects from business acquisitions and
divestitures:
Accounts receivable 1.0 (33.9)
Prepaid expenses and other assets 2.6 (42.6)
Accounts payable and accrued liabilities (94.8) 7.0
Restructuring and synergy related expenditures (53.4) -
Capping, closure and post-closure expenditures (60.2) (9.8)
Remediation expenditures (42.6) (29.1)
Other liabilities 12.1 93.5
---- ----
Cash Provided by Operating Activities 1,012.4 474.2
------- -----
Cash Used in Investing Activities:
Purchases of property and equipment (542.5) (264.1)
Proceeds from sales of property and equipment 22.8 5.8
Cash used in acquisitions, net of cash
acquired (0.1) (13.4)
Cash proceeds from divestitures, net of cash
divested 473.3 -
Change in restricted cash and marketable
securities 27.1 (6.4)
Other - (0.2)
----- -----
Cash Used in Investing Activities (19.4) (278.3)
----- ------
Cash Used in Financing Activities:
Proceeds from notes payable and long-term debt 948.2 693.4
Proceeds from senior notes 645.4 -
Payments of notes payable and long-term debt (2,323.7) (663.2)
Premiums paid on extinguishment of debt (18.0) -
Fees paid to issue and retire senior notes and
certain hedging relationships (9.0) -
Issuances of common stock 17.9 20.2
Excess income tax benefit from stock option
exercises 1.4 3.9
Purchases of common stock for treasury (0.5) (138.4)
Cash dividends paid (216.1) (93.7)
------ -----
Cash Used in Financing Activities (954.4) (177.8)
------ ------
Increase in Cash and Cash Equivalents 38.6 18.1
Cash and Cash Equivalents at Beginning of
Period 68.7 21.8
----- -----
Cash and Cash Equivalents at End of Period $107.3 $39.9
====== =====
The following information should be read in conjunction with our audited consolidated financial statements and notes thereto appearing in our Form 10-K as of and for the year ended December 31, 2008 and our current report on Form 8-K filed June 5, 2009. It should also be read in conjunction with our unaudited consolidated financial statements and notes thereto appearing in our Form 10-Q as of and for the six months ended June 30, 2009.
REVENUE
The following table reflects our total revenue by line of business for the three and nine months ended September 30, 2009 and 2008:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
Collection:
Residential $548.0 $216.2 $1,644.6 $633.4
Commercial 634.4 259.2 1,926.8 762.5
Industrial 396.2 161.3 1,173.4 476.3
Other 6.5 5.9 20.1 16.2
---- ---- ---- ----
Total collection 1,585.1 642.6 4,764.9 1,888.4
Transfer and disposal 789.4 304.7 2,374.9 886.6
Less: Intercompany (392.7) (154.0) (1,191.3) (455.2)
------ ------ -------- ------
Transfer and disposal, net 396.7 150.7 1,183.6 431.4
Other 91.7 40.7 251.6 120.9
----- ----- ----- -----
Total revenue $2,073.5 $834.0 $6,200.1 $2,440.7
======== ====== ======== ========
The following table summarizes our adjusted revenue for the three and nine months ended September 30, 2009 and 2008 which assumes our merger with Allied occurred on January 1, 2008:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
2009 2008 2009 2008
---- ---- ---- ----
Republic Services, Inc. $2,073.5 $834.0 $6,200.1 $2,440.7
Allied Waste Industries, Inc. - 1,606.2 - 4,672.7
-------- ------- -------- -------
2,073.5 2,440.2 6,200.1 7,113.4
Less: Divestitures (3.1) (56.7) (9.0) (104.4)
Less: Intercompany revenue - (7.2) - (22.1)
------- ---- ------- -----
Adjusted revenue $2,070.4 $2,376.3 $6,191.1 $6,986.9
======== ======== ======== ========
Adjusted revenue is used to calculate internal growth for the three and nine months ended September 30, 2009. Intercompany revenue relates to prior year transactions between Republic and Allied that would have been eliminated if the companies had merged on January 1, 2008.
The following table reflects changes in our core adjusted revenue for the three and nine months ended September 30, 2009 and 2008. For comparative purposes, we have presented the components of our revenue changes for the three and nine months ended September 30, 2008 assuming our merger with Allied occurred on January 1, 2008. Our presentation also eliminates revenue associated with divested assets in the quarter the assets were sold and the comparable quarter in the prior year.
Three Months Nine Months
Ended Ended
September 30, September 30,
-------------- --------------
2009 2008 2009 2008
---- ---- ---- ----
Core price 2.8% 4.2% 3.2% 4.3%
Fuel surcharges (3.6) 2.8 (2.6) 1.9
Commodities (1.9) 0.3 (2.4) 0.6
---- --- ---- ---
Total price (2.7) 7.3 (1.8) 6.8
Core volume (10.1) (3.1) (9.6) (2.9)
----- --- ----- ----
Total internal growth (12.8)% 4.2% (11.4)% 3.9%
===== === ===== ===
Certain prior year amounts have been reclassified to conform to the
current year's presentation.
We believe that the presentation of adjusted revenue and changes in adjusted revenue above provides useful information to investors because it allows investors to understand increases or decreases in our revenue that are driven by changes in the operations of the newly combined company, and not merely by the addition of Allied's revenues for periods after the merger. This information has been prepared for illustrative purposes and is not intended to be indicative of the revenue that would have been realized had the merger been consummated at the beginning of the periods presented or the future results of the combined operations.
MERGER WITH ALLIED
We completed our acquisition of Allied effective December 5, 2008. In accordance with the purchase method of accounting, the purchase price paid has been allocated to assets and liabilities acquired based upon their estimated fair values as of the effective date of the merger, with the excess of the purchase price over the net assets acquired being recorded as goodwill. We are in the process of valuing all of the assets and liabilities acquired in the merger, and, until we have completed our valuation process, there may be adjustments to our estimates of fair values and the resulting preliminary purchase price allocation.
As a condition of the merger with Allied in December 2008, the Department of Justice (DOJ) required us to divest of certain assets and related liabilities. As of September 30, 2009 we are complete with our required divestitures.
The following table summarizes our revenue, costs and expenses for the three and nine months ended September 30, 2008 assuming the merger with Allied occurred on January 1, 2008:
Three Months Ended Nine Months Ended
September 30, 2008 September 30, 2008
------------------ ------------------
Allied Republic Total Allied Republic Total
------ -------- ----- ------ -------- -----
Revenue $1,606.2 $834.0 $2,440.2 $4,672.7 $2,440.7 $7,113.4
Cost of operations 973.0 499.5 1,472.5 2,868.8 1,553.5 4,422.3
----- ----- ------- ------- ------- -------
Gross profit 633.2 334.5 967.7 1,803.9 887.2 2,691.1
Depreciation,
amortization,
depletion, and
accretion 148.5 81.9 230.4 454.6 240.4 695.0
Selling, general
and
administrative 154.2 85.6 239.8 442.2 252.0 694.2
Loss on disposition
of assets and
merger related
costs 12.2 - 12.2 45.0 - 45.0
---- ----- ---- ---- ----- ----
Operating income $318.3 $167.0 $485.3 $862.1 $394.8 $1,256.9
====== ====== ====== ====== ====== ========
We believe that the presentation of revenue and expenses above provides useful information to investors because it allows investors to understand increases or decreases in our revenue and expenses that are driven by changes in the operations of the newly combined company, and not merely by the addition of Allied's revenues and expenses for periods after the merger. This information has been prepared for illustrative purposes and is not intended to be indicative of the results of operations that would have actually occurred had the acquisition been consummated at the beginning of the periods presented or the future results of the combined operations.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
Operating Income before Depreciation, Amortization, Depletion and Accretion
Operating income before depreciation, amortization, depletion and accretion (OIDADA), which is not a measure determined in accordance with GAAP, for the three and nine months ended September 30, 2009 and 2008 is calculated as follows:
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Net income attributable to Republic
Services, Inc. $120.5 $88.7 $459.4 $205.5
Noncontrolling interests 0.5 - 1.2 -
Provision for income taxes 91.1 56.7 323.9 131.4
Other (income) expense, net (1.3) 1.6 (2.8) 0.7
Interest income (0.5) (2.6) (1.7) (7.9)
Loss on extinguishment of debt 31.8 - 31.8 -
Interest expense 144.8 22.6 448.8 65.1
Depreciation, amortization and
depletion 218.3 77.3 658.7 226.9
Accretion 22.2 4.6 67.4 13.5
---- ---- ---- ----
OIDADA $627.4 $248.9 $1,986.7 $635.2
====== ====== ======== ======
We believe that the presentation of OIDADA is useful to investors because it provides important information concerning our operating performance exclusive of certain non-cash costs. OIDADA 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 maintaining and improving our market position through business optimization. This measure has limitations. Although depreciation, amortization, depletion and accretion are considered operating costs in accordance with GAAP, they represent the allocation of non-cash costs generally associated with long-lived assets acquired or constructed in prior years. Our definition of OIDADA may not be comparable to similarly titled measures presented by other companies.
Adjusted Earnings
Reported diluted earnings per share were $0.32 and $0.48 for the three months ended September 30, 2009 and 2008, respectively, and $1.21 and $1.11 for the nine months ended September 30, 2009 and 2008, respectively. During the three and nine months ended September 30, 2009 and 2008, we recorded a number of gains, charges (recoveries) and other expenses that impacted our OIDADA, pre-tax income, net income attributable to Republic Services, Inc., ("Net Income - Republic") and diluted earnings per share. These items primarily consist of the following:
Three Months Ended
September 30, 2009
----------------------------------
Net Diluted
Pre-tax Income - Earnings
OIDADA Income Republic per Share
------ ------ -------- ---------
As reported $627.4 $212.1 $120.5 $0.32
Loss on disposition of
assets, net 0.9 0.9 1.4 -
Restructuring charges 12.3 12.3 7.6 0.02
Loss on extinguishment
of debt - 31.8 19.7 0.05
Costs to achieve
synergies 8.9 8.9 5.5 0.01
Remediation recoveries (8.8) (8.8) (5.4) (0.01)
Pre-merger integration
costs - - - -
------ ------ ------ -----
Adjusted $640.7 $257.2 $149.3 $0.39
====== ====== ====== =====
Three Months Ended
September 30, 2008
----------------------------------
Net Diluted
Pre-tax Income - Earnings
OIDADA Income Republic per Share
------ ------ -------- ---------
As reported $248.9 $145.4 $88.7 $0.48
Loss on disposition of
assets, net - - - -
Restructuring charges - - - -
Loss on extinguishment
of debt - - - -
Costs to achieve
synergies - - - -
Remediation recoveries - - - -
Pre-merger integration
costs 3.2 3.2 2.0 0.01
----- ----- ----- -----
Adjusted $252.1 $148.6 $90.7 $0.49
====== ====== ===== =====
Nine Months Ended
September 30, 2009
------------------------------------
Net Diluted
Pre-tax Income - Earnings
OIDADA Income Republic per Share
------ ------ -------- ---------
As reported $1,986.7 $784.5 $459.4 $1.21
Gain on disposition of
assets, net (144.3) (144.3) (88.7) (0.23)
Restructuring charges 55.9 55.9 34.1 0.09
Loss on extinguishment
of debt - 31.8 19.7 0.05
Costs to achieve
synergies 31.8 31.8 19.5 0.05
Remediation charges
(recoveries) (8.8) (8.8) (5.4) (0.01)
Pre-merger integration
costs - - - -
----- ----- ----- -----
Adjusted $1,921.3 $750.9 $438.6 $1.16
======== ====== ====== =====
Nine Months Ended
September 30, 2008
----------------------------------
Net Diluted
Pre-tax Income - Earnings
OIDADA Income Republic per Share
------ ------ -------- ---------
As reported $635.2 $336.9 $205.5 $1.11
Gain on disposition of
assets, net - - - -
Restructuring charges - - - -
Loss on extinguishment
of debt - - - -
Costs to achieve
synergies - - - -
Remediation charges
(recoveries) 68.0 69.0 43.8 0.24
Pre-merger integration
costs 3.2 3.2 2.0 0.01
----- ----- ----- -----
Adjusted $706.4 $409.1 $251.3 $1.36
====== ====== ====== =====
We believe that the presentation of adjusted OIDADA, adjusted pre-tax income, adjusted net income attributable to Republic Services, Inc., and adjusted diluted earnings per share, which excludes gain and loss on disposition of assets, restructuring charges, loss on extinguishment of debt, costs to achieve synergies, remediation charges (recoveries) and pre-merger integration costs which are not measures determined in accordance with GAAP, provide an understanding of operational activities before the financial impact of certain non-operational 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. Comparable charges and costs have been incurred in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definition of adjusted OIDADA, adjusted pre-tax income, adjusted net income attributable to Republic Services, Inc., and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.
Cash Flow
We define free cash flow, which is not a measure determined in accordance with GAAP, as cash provided by operating activities less purchases of property and equipment plus proceeds from sales of property and equipment as presented in our unaudited consolidated statements of cash flows. Our free cash flow for the three and nine months ended September 30, 2009 and 2008 is calculated as follows:
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Cash provided by operating
activities $324.8 $162.7 $1,012.4 $474.2
Purchases of property and equipment (187.4) (98.7) (542.5) (264.1)
Proceeds from sales of property and
equipment 6.1 2.5 22.8 5.8
---- ---- ---- ----
Free cash flow $143.5 $66.5 $492.7 $215.9
====== ===== ====== ======
Purchases of property and equipment as reflected on our unaudited consolidated statements of cash flows and the free cash flow presented above represent amounts paid during the period for such expenditures. A reconciliation of property and equipment reflected on our unaudited consolidated statements of cash flows to property and equipment received during the period is as follows:
Three Months Nine Months
Ended Ended
September 30, September 30,
------------- -------------
2009 2008 2009 2008
---- ---- ---- ----
Purchases of property and equipment
per the unaudited consolidated
statements of cash flows $187.4 $98.7 $542.5 $264.1
Adjustments for property and equipment
received during the prior period but
paid for in the following period, net (7.3) 1.5 (41.5) (26.4)
---- ---- ----- -----
Property and equipment received
during the current period $180.1 $100.2 $501.0 $237.7
====== ====== ====== ======
The adjustments noted above do not affect either our net change in cash and cash equivalents as reflected in our unaudited consolidated statements of cash flows or our free cash flow.
We believe that the presentation of free cash flow provides useful information regarding our recurring cash provided by operating activities after expenditures for property and equipment, net of proceeds from sales of property and equipment. It also demonstrates our ability to execute our financial strategy as previously discussed and is a key metric we use to determine compensation. The presentation of free cash flow has material limitations. Free cash flow does not represent our cash flow available for discretionary expenditures because it excludes certain expenditures that are required or that we have committed such as, debt service requirements and dividend payments. Our definition of free cash flow may not be comparable to similarly titled measures presented by other companies.
As of September 30, 2009, accounts receivable was $928.2 million, net of allowance for doubtful accounts of $54.2 million, resulting in days sales outstanding of approximately 41 (or 26 net of deferred revenue).
CASH DIVIDENDS
In July 2009, we paid a cash dividend of $72.1 million to stockholders of record as of July 1, 2009. As of September 30, 2009, we recorded a dividend payable of $72.2 million to stockholders of record at the close of business on October 1, 2009, which has been paid. In October 2009, our Board of Directors declared a regular quarterly dividend of $0.19 per share payable to stockholders of record as of January 4, 2010, which will be paid on January 18, 2010.
UPDATED FINANCIAL GUIDANCE Adjusted Diluted Earnings per Share
The following is a summary of anticipated adjusted diluted earnings per share for the twelve months ended December 31, 2009 excluding gain on disposition of assets, loss on extinguishment of debt and insurance recoveries:
(Anticipated)
Twelve Months
Ended
December 31,
2009
----
Diluted earnings per share (excluding items previously
described) $ 1.28 - 1.30
Restructuring charges and cost to achieve synergies 0.18
------------
Adjusted diluted earnings per share $ 1.46 - 1.48
============
We believe that the presentation of adjusted diluted earnings per share, which excludes gain on disposition of assets, loss on extinguishment of debt, charges related to the integration of our businesses and insurance recoveries provides an understanding of operational activities before the financial impact of certain gains on disposition of assets, merger related costs and insurance recoveries. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations when the integration process is complete. Comparable charges and costs have been incurred 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 define adjusted free cash flow, which is not a measure determined in accordance with GAAP, as cash provided by operating activities, less purchases of property and equipment net of proceeds from sales of property and equipment, plus merger related costs. Our actual adjusted free cash flow for the nine months ended September 30, 2009 and our anticipated adjusted free cash flow for the twelve months ended December 31, 2009 are calculated as follows:
(Actual) (Anticipated)
Nine Months Twelve Months
Ended Ended
September 30, December 31,
2009 2009
---- ----
Cash provided by operating activities $1,012.4 $1,334 - 1,359
Purchases of property and equipment, net of
proceeds from sales (519.7) (835)
Merger related expenditures, net of tax 62.5 86
Divestiture related tax payments 74.3 115
------ -----
Adjusted free cash flow $629.5 $ 700 - 725
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We believe that the presentation of adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after expenditures for property and equipment, net of proceeds from sales of property and equipment, plus merger related costs and divestiture related tax payments. It also demonstrates our ability to execute our financial strategy. 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 that 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
Certain statements and information included herein constitute 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," "could" and similar expressions are intended to identify forward-looking statements. These statements include statements about the expected benefits of the merger, 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 can give no assurance 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:
-- our ability to successfully integrate Allied's and Republic's
operations and to achieve synergies or create long-term value for
stockholders as expected, including the possibility that we will
experience significant and unexpected transaction- and
integration-related costs;
-- the impact on us of our substantial post-merger 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 and the fact that any
downgrade in our bond ratings could adversely impact us;
-- general economic and market conditions including, but not limited to,
the current global economic and financial market crisis, inflation and
changes in commodity pricing, fuel, labor, risk and health insurance
and other variable costs that are generally 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), 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;
-- the fact that price increases or changes in commodity prices may not
be adequate to offset the impact of increased costs, including but not
limited to 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;
-- 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;
-- the fact that our business is capital intensive and may consume cash
in excess of cash flow from operations;
-- that any exposure to environmental liabilities, 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 any future legal proceedings,
including our matters currently pending with the Department of Justice
and Internal Revenue Service;
-- severe weather conditions, 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;
-- any litigation, audits or investigations brought by or before any
governmental body;
-- workforce factors, including potential increases in our costs if we
are required to provide additional funding to any multi-employer
pension plan to which we contribute and 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;
-- acts of war, riots or terrorism, including the events taking place in
the Middle East and 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; and
-- the timing and occurrence (or non-occurrence) of transactions and
events which may be subject to circumstances beyond our control.
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, 2008, for further discussion regarding our exposure to risks. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, nor 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. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date hereof. 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 hereof or to reflect the occurrence of unanticipated events.
First Call Analyst: Flower, Will
FCMN Contact:
SOURCE: Republic Services, Inc.
CONTACT: Media, Will Flower, +1-480-718-6565, or Investors, Ed Lang,
+1-480-627-7128, both of Republic Services, Inc.
Web Site: http://www.republicservices.com/