Republic Services Inc. (RSG) filed Quarterly Report for the period ended 2009-09-30.
Republic Services Inc. is a leading provider of services in the domestic non-hazardous solid waste industry. They provide non-hazardous solid waste collection services for commercial industrial municipal and residential customers through their collection companies. They also own or operate transfer stations and solid waste landfills. Republic Services Inc. has a market cap of $9.89 billion; its shares were traded at around $26.07 with a P/E ratio of 15.8 and P/S ratio of 2.7. The dividend yield of Republic Services Inc. stocks is 2.9%. Republic Services Inc. had an annual average earning growth of 11.6% over the past 10 years. GuruFocus rated Republic Services Inc. the business predictability rank of 5-star.
Highlight of Business Operations:
Despite the challenging economic environment, our business performed well during the first nine months of 2009 due in large part to the indispensable nature of our services and the scalability of our business. Revenue during the nine months ended September 30, 2009 increased by 154% to $6.2 billion compared to $2.4 billion during the comparable period in 2008. This increase in revenue is attributable to our merger with Allied. Assuming the merger with Allied occurred on January 1, 2008, and the revenue associated with the related divestitures is eliminated in the period the assets were sold along with the comparable prior year period, core revenue for the nine months ended September 30, 2009 would have been a decrease of 11.4% consisting of a 3.2% increase in core price offset by decreases of 9.6% in core volume, 2.6% in fuel charges and 2.4% in commodity price. See “Consolidated Results of Operations — Revenue” for additional information regarding our revenue. The increase in core price partially offset volume declines, lower commodity prices and lower fuel charges. This increase in price, together with cost control steps taken by our operations management to scale the business down for lower volumes, also served to moderate profit margin declines associated with rising costs and declining revenue resulting from decreases in service volumes.
On December 5, 2008, we acquired all the issued and outstanding shares of Allied in a stock-for-stock transaction for an aggregate purchase price of $11.5 billion which includes approximately $5.4 billion of debt, at fair value. The allocation of purchase price to the fair value of the assets and liabilities acquired in the acquisition of Allied is preliminary and subject to revision. Due to the volume and complexity of the information required to value these assets and liabilities, our valuation of certain significant balances, including landfill development costs, property and equipment, intangible assets, accrued landfill and environmental costs (which includes landfill asset retirement obligations and environmental remediation liabilities), deferred taxes and other long-term tax liabilities, and, included in other long-term liabilities, liabilities for litigation, claims and assessments, and self-insurance, is not completed. Our
As a result of our 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 and nine months ended September 30, 2009, we incurred $12.3 million and $55.9 million of restructuring and integration charges related to our integration of Allied of which, $33.2 million for the nine months ended September 30, 2009 consists of charges for severance and other employee termination and relocation benefits. The remainder of the charges primarily related to consulting and professional fees. Substantially, all the charges are recorded in our “Corporate” segment. We expect to be substantially complete with our plan by the fourth quarter of 2009. We expect to incur additional charges approximating $12.8 million to complete our plan. We expect that the majority of these charges will be paid during the remainder of 2009 and 2010.
By the end of 2009, we anticipate realizing $145 million of annual run rate synergies as a result of the merger of Republic Services and Allied. Our previous guidance for 2009 annual run rate synergies was $125 million. We expect to achieve $165 million to $175 million of annual run rate synergies by the end of 2010.
RSG is in the portfolios of Richard Aster Jr of Meridian Fund, Bill Gates of Bill & Melinda Gates Foundation Trust, Ron Baron of Baron Funds, George Soros of Soros Fund Management LLC.
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