Delaware | 1-14267 | 65-0716904 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
18500 North Allied Way | ||
Phoenix, Arizona | 85054 | |
(Address of principal executive offices) | (Zip Code) |
Exhibit No. | Description | |
99.1 | Press release of Republic Services, Inc. issued April 28, 2016 to announce the financial results for the three months ended March 31, 2016. |
Republic Services, Inc. | |||
Date: April 28, 2016 | By: | /s/ Charles F. Serianni | |
Charles F. Serianni | |||
Executive Vice President and Chief Financial Officer (Principal Financial Officer) | |||
By: | /s/ Brian A. Goebel | ||
Brian A. Goebel | |||
Vice President and Chief Accounting Officer (Principal Accounting Officer) |
● | Company Reports First Quarter Earnings of $0.45 Per Share and $0.48 Per Share As Adjusted | |
● | Revenue Growth of $79 million Includes Average Yield of 2 Percent and Volume Growth of 2.5 Percent | |
● | Returned $191 Million to Shareholders through Dividends and Share Repurchases |
* | Adjusted diluted EPS was $0.48 per share and adjusted free cash flow was $160 million; both were in-line with our expectations. |
* | Revenue growth from average yield was 2 percent and volumes increased 2.5 percent. Volume growth included approximately 50 basis points from one additional workday. |
* | Core price increased revenues by 3.4 percent, which consisted of 4.5 percent in the open market and 1.7 percent in the restricted portion of our business. |
* | Adjusted EBITDA margin was 27.8 percent of revenue. The additional workday during the quarter lowered margin performance by approximately 50 basis points. |
* | We returned $191 million total cash to our shareholders through dividends and share repurchases. |
* | We advanced our revenue enhancing initiatives that are focused on creating a better customer experience and further differentiating our service offerings. For example: |
• | We continue to increase the number of customers that do business with us digitally. We now have over 1.4 million customers active and enrolled in our MyResourceTM customer portal and mobile app. These tools significantly enhance customer interaction and connectivity. |
• | We continue to convert contracts from CPI to a more favorable pricing mechanism. We now have approximately $325 million in annual revenue that is tied to a waste-related index for the annual price adjustment. |
* | We advanced our fleet-based initiatives designed to improve productivity and lower costs. Currently: |
• | 81 percent of our fleet is certified under our standardized maintenance program, up from 64 percent in the prior year |
* | We completed the planning and design of our Charlotte Customer Resource Center, which opened on April 4, 2016. The new state-of-the-art facility and technology promotes better levels of customer service, and will enable us to lower our cost structure once the transition is complete. We expect to open the other two Customer Resource Centers in the second half of 2016. |
* | We realigned our field support functions by eliminating our region offices, and consolidating and reducing the number of area offices. We reinvested a portion of the savings back into our area offices by creating additional operating and functional support roles, which puts resources closer to our business and our customers. |
Media Inquiries | Investor Inquiries |
Darcie Brossart (480) 627-2700 | Brian DelGhiaccio (480) 627-2741 |
media@RepublicServices.com | investor@RepublicServices.com |
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION | |||||||
AND OPERATING DATA | |||||||
REPUBLIC SERVICES, INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(in millions, except per share amounts) | |||||||
March 31, | December 31, | ||||||
2016 | 2015 | ||||||
(Unaudited) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 33.4 | $ | 32.4 | |||
Accounts receivable, less allowance for doubtful accounts and other of $46.3 and $46.7, respectively | 935.0 | 962.9 | |||||
Prepaid expenses and other current assets | 214.9 | 235.0 | |||||
Total current assets | 1,183.3 | 1,230.3 | |||||
Restricted cash and marketable securities | 95.7 | 100.3 | |||||
Property and equipment, net | 7,612.0 | 7,552.8 | |||||
Goodwill | 11,149.1 | 11,145.5 | |||||
Other intangible assets, net | 231.1 | 246.4 | |||||
Other assets | 268.0 | 260.6 | |||||
Total assets | $ | 20,539.2 | $ | 20,535.9 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 542.4 | $ | 577.4 | |||
Notes payable and current maturities of long-term debt | 5.5 | 5.5 | |||||
Deferred revenue | 316.9 | 313.9 | |||||
Accrued landfill and environmental costs, current portion | 156.7 | 149.8 | |||||
Accrued interest | 70.1 | 71.6 | |||||
Other accrued liabilities | 718.7 | 716.6 | |||||
Total current liabilities | 1,810.3 | 1,834.8 | |||||
Long-term debt, net of current maturities | 7,554.9 | 7,527.4 | |||||
Accrued landfill and environmental costs, net of current portion | 1,679.1 | 1,677.9 | |||||
Deferred income taxes and other long-term tax liabilities | 1,128.9 | 1,131.8 | |||||
Insurance reserves, net of current portion | 283.3 | 278.1 | |||||
Other long-term liabilities | 316.8 | 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; 346.8 and 346.0 issued including shares held in treasury, respectively | 3.5 | 3.5 | |||||
Additional paid-in capital | 4,701.6 | 4,677.7 | |||||
Retained earnings | 3,190.9 | 3,138.3 | |||||
Treasury stock, at cost (2.3 and 0.4 shares, respectively) | (101.7 | ) | (14.9 | ) | |||
Accumulated other comprehensive loss, net of tax | (31.1 | ) | (30.5 | ) | |||
Total Republic Services, Inc. stockholders' equity | 7,763.2 | 7,774.1 | |||||
Noncontrolling interests | 2.7 | 2.5 | |||||
Total stockholders' equity | 7,765.9 | 7,776.6 | |||||
Total liabilities and stockholders' equity | $ | 20,539.2 | $ | 20,535.9 |
REPUBLIC SERVICES, INC. | |||||||
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME | |||||||
(in millions, except per share data) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Revenue | $ | 2,248.6 | $ | 2,169.4 | |||
Expenses: | |||||||
Cost of operations | 1,381.4 | 1,304.3 | |||||
Depreciation, amortization and depletion | 243.2 | 233.4 | |||||
Accretion | 19.8 | 19.7 | |||||
Selling, general and administrative | 241.2 | 239.2 | |||||
Withdrawal costs - multiemployer pension funds | 5.6 | — | |||||
Restructuring charges | 11.9 | — | |||||
Operating income | 345.5 | 372.8 | |||||
Interest expense | (92.7 | ) | (88.6 | ) | |||
Interest income | 0.5 | 0.3 | |||||
Other expense, net | (0.7 | ) | — | ||||
Income before income taxes | 252.6 | 284.5 | |||||
Provision for income taxes | 95.7 | 112.0 | |||||
Net income | 156.9 | 172.5 | |||||
Net income attributable to noncontrolling interests | (0.2 | ) | (0.1 | ) | |||
Net income attributable to Republic Services, Inc. | $ | 156.7 | $ | 172.4 | |||
Basic earnings per share attributable to Republic Services, Inc. stockholders: | |||||||
Basic earnings per share | $ | 0.45 | $ | 0.49 | |||
Weighted average common shares outstanding | 345.4 | 353.3 | |||||
Diluted earnings per share attributable to Republic Services, Inc. stockholders: | |||||||
Diluted earnings per share | $ | 0.45 | $ | 0.49 | |||
Weighted average common and common equivalent shares outstanding | 346.7 | 354.8 | |||||
Cash dividends per common share | $ | 0.30 | $ | 0.28 |
REPUBLIC SERVICES, INC. | |||||||
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(in millions) | |||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash provided by operating activities: | |||||||
Net income | $ | 156.9 | $ | 172.5 | |||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||
Depreciation, amortization, depletion and accretion | 263.0 | 253.1 | |||||
Non-cash interest expense | 11.6 | 11.0 | |||||
Restructuring charges | 11.9 | — | |||||
Stock-based compensation | 6.5 | 7.2 | |||||
Deferred tax benefit | (3.3 | ) | (11.4 | ) | |||
Provision for doubtful accounts, net of adjustments | 4.6 | 4.9 | |||||
Gain on disposition of assets, net and asset impairments | (0.9 | ) | (1.4 | ) | |||
Withdrawal liability - multiemployer pension funds | 5.6 | — | |||||
Environmental adjustments | — | (1.3 | ) | ||||
Excess income tax benefit from stock-based compensation activity and other non-cash items | (4.1 | ) | (4.1 | ) | |||
Change in assets and liabilities, net of effects from business acquisitions and divestitures: | |||||||
Accounts receivable | 22.6 | 31.3 | |||||
Prepaid expenses and other assets | (44.1 | ) | 12.3 | ||||
Accounts payable | (39.7 | ) | (34.0 | ) | |||
Restructuring expenditures | (5.3 | ) | — | ||||
Capping, closure and post-closure expenditures | (11.7 | ) | (9.3 | ) | |||
Remediation expenditures | (14.8 | ) | (15.3 | ) | |||
Other liabilities | 72.7 | 80.6 | |||||
Cash provided by operating activities | 431.5 | 496.1 | |||||
Cash used in investing activities: | |||||||
Purchases of property and equipment | (271.5 | ) | (269.6 | ) | |||
Proceeds from sales of property and equipment | 2.9 | 3.2 | |||||
Cash used in business acquisitions, net of cash acquired | (6.0 | ) | (509.4 | ) | |||
Change in restricted cash and marketable securities | 4.6 | 2.9 | |||||
Other | (0.2 | ) | (0.5 | ) | |||
Cash used in investing activities | (270.2 | ) | (773.4 | ) | |||
Cash used in financing activities: | |||||||
Proceeds from notes payable and long-term debt | 812.0 | 658.0 | |||||
Proceeds from issuance of senior notes, net of discount | — | 497.9 | |||||
Payments of notes payable and long-term debt | (798.6 | ) | (660.8 | ) | |||
Fees paid to issue senior notes and retire certain hedging relationships | — | (3.3 | ) | ||||
Issuances of common stock | 12.8 | 26.2 | |||||
Excess income tax benefit from stock-based compensation activity | 3.9 | 3.6 | |||||
Purchases of common stock for treasury | (85.8 | ) | (86.1 | ) | |||
Cash dividends paid | (103.7 | ) | (98.7 | ) | |||
Other | (0.9 | ) | (0.4 | ) | |||
Cash (used in) provided by financing activities | (160.3 | ) | 336.4 | ||||
Increase in cash and cash equivalents | 1.0 | 59.1 | |||||
Cash and cash equivalents at beginning of year | 32.4 | 75.2 | |||||
Cash and cash equivalents at end of period | $ | 33.4 | $ | 134.3 |
Three Months Ended March 31, | |||||||||||||
2016 | 2015 | ||||||||||||
Collection: | |||||||||||||
Residential | $ | 551.1 | 24.5 | % | $ | 551.7 | 25.5 | % | |||||
Small-container commercial | 707.8 | 31.5 | 694.8 | 32.0 | |||||||||
Large-container industrial | 469.5 | 20.9 | 435.0 | 20.1 | |||||||||
Other | 8.9 | 0.4 | 9.0 | 0.4 | |||||||||
Total collection | 1,737.3 | 77.3 | 1,690.5 | 78.0 | |||||||||
Transfer | 268.2 | 251.2 | |||||||||||
Less: intercompany | (164.5 | ) | (157.9 | ) | |||||||||
Transfer, net | 103.7 | 4.6 | 93.3 | 4.3 | |||||||||
Landfill | 489.4 | 456.2 | |||||||||||
Less: intercompany | (227.7 | ) | (217.6 | ) | |||||||||
Landfill, net | 261.7 | 11.6 | 238.6 | 11.0 | |||||||||
Energy services | 18.7 | 0.8 | 24.1 | 1.1 | |||||||||
Other: | |||||||||||||
Sale of recycled commodities | 86.8 | 3.9 | 85.4 | 3.9 | |||||||||
Other non-core | 40.4 | 1.8 | 37.5 | 1.7 | |||||||||
Total other | 127.2 | 5.7 | 122.9 | 5.6 | |||||||||
Total revenue | $ | 2,248.6 | 100.0 | % | $ | 2,169.4 | 100.0 | % | |||||
Three Months Ended March 31, | ||||||
2016 | 2015 | |||||
Average yield | 2.0 | % | 2.1 | % | ||
Fuel recovery fees | (1.4 | ) | (0.7 | ) | ||
Total price | 0.6 | 1.4 | ||||
Volume | 2.5 | 1.9 | ||||
Recycled commodities | (0.1 | ) | (1.0 | ) | ||
Energy services | (0.6 | ) | — | |||
Total internal growth | 2.4 | 2.3 | ||||
Acquisitions / divestitures, net | 1.2 | 2.1 | ||||
Total | 3.6 | % | 4.4 | % | ||
Core price | 3.4 | % | 3.7 | % | ||
Three Months Ended March 31, | ||||||||||||||||
2016 | 2015 | |||||||||||||||
Labor and related benefits | $ | 472.0 | 21.0 | % | $ | 442.9 | 20.4 | % | ||||||||
Transfer and disposal costs | 179.0 | 8.0 | 160.4 | 7.4 | ||||||||||||
Maintenance and repairs | 218.3 | 9.7 | 198.5 | 9.1 | ||||||||||||
Transportation and subcontract costs | 122.2 | 5.4 | 117.3 | 5.4 | ||||||||||||
Fuel | 70.3 | 3.1 | 93.0 | 4.3 | ||||||||||||
Franchise fees and taxes | 108.4 | 4.8 | 102.7 | 4.7 | ||||||||||||
Landfill operating costs | 43.7 | 1.9 | 32.9 | 1.5 | ||||||||||||
Risk management | 45.7 | 2.0 | 36.7 | 1.7 | ||||||||||||
Cost of goods sold | 38.5 | 1.7 | 39.1 | 1.8 | ||||||||||||
Other | 83.3 | 3.8 | 80.8 | 3.8 | ||||||||||||
Total cost of operations | $ | 1,381.4 | 61.4 | % | $ | 1,304.3 | 60.1 | % |
Three Months Ended March 31, | ||||||||||||||||
2016 | 2015 | |||||||||||||||
Salaries | $ | 158.7 | 7.1 | % | $ | 154.2 | 7.1 | % | ||||||||
Provision for doubtful accounts | 4.6 | 0.2 | 4.9 | 0.2 | ||||||||||||
Other | 77.9 | 3.4 | 80.1 | 3.7 | ||||||||||||
Total selling, general and administrative expenses | $ | 241.2 | 10.7 | % | $ | 239.2 | 11.0 | % | ||||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Net income attributable to Republic Services, Inc. | $ | 156.7 | $ | 172.4 | |||
Net income attributable to noncontrolling interests | 0.2 | 0.1 | |||||
Provision for income taxes | 95.7 | 112.0 | |||||
Other expense, net | 0.7 | — | |||||
Interest income | (0.5 | ) | (0.3 | ) | |||
Interest expense | 92.7 | 88.6 | |||||
Depreciation, amortization and depletion | 243.2 | 233.4 | |||||
Accretion | 19.8 | 19.7 | |||||
EBITDA | $ | 608.5 | $ | 625.9 |
Three Months Ended March 31, 2016 | Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||||||
Net | Diluted | Net | Diluted | |||||||||||||||||||||||||||||
Pre-tax | Income - | Earnings | Pre-tax | Income - | Earnings | |||||||||||||||||||||||||||
EBITDA | Income | Republic | per Share | EBITDA | Income | Republic | per Share | |||||||||||||||||||||||||
As reported | $ | 608.5 | $ | 252.6 | $ | 156.7 | $ | 0.45 | $ | 625.9 | $ | 284.5 | $ | 172.4 | $ | 0.49 | ||||||||||||||||
Withdrawal costs - multiemployer pension funds | 5.6 | 5.6 | 3.4 | 0.01 | — | — | — | — | ||||||||||||||||||||||||
Restructuring charges | 11.9 | 11.9 | 7.2 | 0.02 | — | — | — | — | ||||||||||||||||||||||||
Total adjustments | 17.5 | 17.5 | 10.6 | 0.03 | — | — | — | — | ||||||||||||||||||||||||
As adjusted | $ | 626.0 | $ | 270.1 | $ | 167.3 | $ | 0.48 | $ | 625.9 | $ | 284.5 | $ | 172.4 | $ | 0.49 | ||||||||||||||||
Three Months Ended March 31, | |||||||
2016 | 2015 | ||||||
Cash provided by operating activities | $ | 431.5 | $ | 496.1 | |||
Property and equipment received | (277.7 | ) | (261.0 | ) | |||
Proceeds from sales of property and equipment | 2.9 | 3.2 | |||||
Cash paid related to negotiation and withdrawal costs - Central States Pension and Other Funds, net of tax | — | 2.5 | |||||
Restructuring payments, net of tax | 3.2 | — | |||||
Adjusted free cash flow | $ | 159.9 | $ | 240.8 |
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Purchases of property and equipment per the unaudited consolidated statements of cash flows | $ | 271.5 | $ | 269.6 | ||||
Adjustments for property and equipment received during the prior period but paid for in the following period, net | 6.2 | (8.6 | ) | |||||
Property and equipment received during the period | $ | 277.7 | $ | 261.0 | ||||
• | 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. |