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Republic Services Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: November 5, 2010 11:16AM
Republic Services Inc. (RSG) filed Quarterly Report for the period ended 2010-09-30. Republic Services Inc. has a market cap of $11.43 billion; its shares were traded at around $29.95 with a P/E ratio of 19.3 and P/S ratio of 1.4. The dividend yield of Republic Services Inc. stocks is 2.7%. Republic Services Inc. had an annual average earning growth of 10.3% over the past 10 years. GuruFocus rated Republic Services Inc. the business predictability rank of 4.5-star.RSG is in the portfolios of Oak Value of Oak Value Capital Management, Larry Robbins of Glenview Capital, Westport Asset Management, Warren Buffett of Berkshire Hathaway, Bill Gates of Bill & Melinda Gates Foundation Trust, Steven Cohen of SAC Capital Advisors, Mario Gabelli of GAMCO Investors, Columbia Wanger of Columbia Wanger Asset Management, Ron Baron of Baron Funds, Ruane Cunniff of Ruane & Cunniff & Goldfarb Inc, George Soros of Soros Fund Management LLC, Jim Simons of Renaissance Technologies LLC, PRIMECAP Management.
Highlight of Business Operations:
As a result of our 2008 acquisition of Allied, we committed to a restructuring plan related to our corporate overhead and other administrative and operating functions. The plan included closing our corporate office in Florida, consolidating administrative functions to Arizona, the former headquarters of Allied, and reducing staffing levels. The plan also included closing and consolidating certain operating locations and terminating certain leases. During the three months ended September 30, 2010 and 2009, we incurred $2.6 million and $12.3 million, respectively, of restructuring and integration charges related to our integration of Allied. During the nine months ended September 30, 2010 and 2009, we incurred $9.6 million, net of adjustments, and $55.9 million, respectively, of restructuring and integration charges related to our integration of Allied. Substantially all the charges are recorded in our corporate segment. We expect to incur additional charges of $0.9 million to complete our plan. We expect that the majority of these charges will be paid during the remainder of 2010 and into 2011.
Our pre-tax income was $229.7 million and $616.2 million for the three and nine months ended September 30, 2010 versus $212.1 million and $784.5 million for the comparable 2009 periods, respectively. Our net income attributable to Republic Services, Inc. was $134.2 million and $358.9 million for the three and nine months ended September 30, 2010, or $0.35 and $0.93 per diluted share, respectively, versus $120.5 million and $459.4 million, or $0.32 and $1.21 per diluted share for the comparable 2009 periods, respectively.
Additionally, during the first quarter of 2010, we issued $850.0 million of 5.00% senior notes due 2020 and $650.0 million of 6.20% senior notes due 2040. We used the net proceeds from the Notes as follows: (i) $433.7 million to redeem the 6.125% senior notes due 2014 at a premium of 102.042% ($425.0 million principal outstanding); (ii) $621.8 million to redeem the 7.250% senior notes due 2015 at a premium of 103.625% ($600.0 million principal outstanding); and (iii) the remainder to reduce amounts outstanding under our Credit Facilities and for general corporate purposes. We incurred a loss on extinguishment of debt of $132.1 million for premiums paid to repurchase debt, to write-off unamortized debt discounts and for professional fees paid to effectuate the repurchase of the senior notes. Separately, we incurred a loss of $0.2 million in the first quarter of 2010 related to the write-off of unamortized deferred issuance costs associated with the accounts receivable securitization program.
Restructuring charges. During the three and nine months ended September 30, 2010 we incurred $2.6 million and $9.6 million, respectively, of restructuring and integration charges related to our merger with Allied versus $12.3 million and $55.9 million for the comparable 2009 periods, respectively. These charges consist of severance and other employee termination and relocation benefits as well as consulting and professional fees. Substantially all of these charges were recorded in our corporate segment. We expect to incur additional charges of $0.9 million to complete our plan. We expect that the majority of these charges will be paid during the remainder of 2010 and into 2011.
Costs to achieve synergies. During the three and nine months ended September 30, 2010 we incurred $7.4 million and $25.0 million, respectively, of incremental costs to achieve our synergy plan that are recorded in selling, general and administrative expenses versus $8.9 million and $31.8 million for the comparable 2009 periods, respectively. These incremental costs primarily relate to a synergy incentive plan as well as other integration costs. We expect that we will incur an additional $7.5 million in the fourth quarter of 2010 to complete our synergy incentive plan.
Loss (gain) on disposition of assets and impairments, net. During the three and nine months ended September 30, 2010, we recorded a net loss on the disposition of assets and impairments of $25.5 million and $27.1 million, respectively. In August 2010, we divested hauling operations and two transfer stations in New York for aggregate proceeds of approximately $50 million and recognized a loss on disposition of $14.7 million. Additionally, during the nine months ended September 30, 2010, we recorded an impairment loss of $11.5 million related to certain long lived assets that are held and used. Future adjustments, if any, made to the valuation of assets acquired and liabilities assumed will be recorded in the consolidated statement of income in the period in which such adjustments become known.
Stocks Discussed: RSG,