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Republic Services Releases 4th Quarter 2013 Financial Results; Declares Dividend

February 12, 2014

Republic Services, Inc. reported net income of $236.6 million, or $0.65 per diluted share, for the three months ended Dec. 31, 2013, versus $127.0 million, or $0.35 per diluted share, for the comparable 2012 period.

In a release on Feb. 6, Republic said its net income for the three months ended Dec. 31, 2013 and 2012, includes certain expenses and benefits that impacted its results. Excluding these items, net income for the three months ended Dec. 31, 2013 and 2012, would have been $193.1 million, or $0.53 per diluted share, and $155.7 million, or $0.43 per diluted share, respectively.

Excluding certain expenses and benefits recorded during 2013 and 2012, adjusted earnings before interest, taxes, depreciation, depletion, amortization and accretion (adjusted EBITDA) for the three months ended Dec. 31, 2013, would have been $648.1 million, or 30.3 percent of revenue, compared to $572.1 million, or 28.2 percent of revenue, for the comparable 2012 period.

Revenue for the three months ended Dec. 31, 2013, increased to $2,141.5 million from $2,028.3 million for the comparable 2012 period. This increase in revenue of 5.6 percent was made up of increases in average yield of 1.3 percent, fuel recovery fees of 0.2 percent, volume of 2.5 percent, recycled commodities of 1.0 percent and acquisitions, net of divestitures of 0.6 percent.

Full Year 2013 Results

For the year ended Dec. 31, 2013, net income was $588.9 million, or $1.62 per diluted share, versus $571.8 million, or $1.55 per diluted share for 2012.

Republic's net income for the years ended Dec. 31, 2013 and 2012, includes certain expenses and benefits that impacted its results. Excluding these items, net income for the years ended Dec. 31, 2013 and 2012, would have been $715.3 million, or $1.97 per diluted share, and $708.1 million, or $1.92 per diluted share, respectively.

Excluding certain expenses and benefits recorded during 2013 and 2012, adjusted EBITDA for the year ended Dec. 31, 2013, would have been $2,437.4 million, or 29.0 percent of revenue, compared to $2,363.2 million, or 29.1 percent of revenue for 2012.

Revenue for the year ended Dec. 31, 2013, increased to $8,417.2 million from $8,118.3 million for the year ended Dec. 31, 2012. This increase in revenue of 3.7 percent was made up of increases in average yield of 1.3 percent, fuel recovery fees of 0.3 percent, volume of 1.3 percent, recycled commodities of 0.3 percent and acquisitions, net of divestitures of 0.5 percent.

"In 2013, we executed our strategy and delivered results that exceeded our EPS and free cash flow guidance," said Donald W. Slager, president and chief executive officer. "Our volumes increased 2.5 percent in the fourth quarter, and we reported the first full year of positive volume performance since 2006. Our performance demonstrates our ability to profitably grow the business and create long-term shareholder value."

Fiscal Year 2014 Guidance

Republic's guidance is based on current economic conditions and does not assume any significant changes in the overall economy in 2014.

Specific guidance includes:

-Adjusted Free Cash Flow: Republic expects adjusted free cash flow for 2014 to be $675 million to $725 million.

-Diluted Earnings per Share: The Company expects 2014 diluted earnings per share to be in the range of $1.93 to $1.98.

-Revenue: Republic expects an increase in revenue for 2014 of 3.5 to 4.5 percent.

Increase

-Property and Equipment: In 2014, the Company anticipates receiving $820 million of property and equipment, net of proceeds from sales of property and equipment.

-Margins: Republic expects EBITDA margins for 2014 to be in a range of 28.5 to 29 percent.

-Taxes: The Company expects our provision for income taxes in 2014 to be approximately 39.5 percent, of which cash taxes as a percentage of the overall tax provision are expected to be in a range of 105 to 110 percent.

Slager said, "We are encouraged by the positive momentum of our business entering 2014. We are focused on managing the controllable aspects of our business by enhancing the quality of our revenue, investing in profitable growth opportunities, and reducing costs. We remain committed to increasing returns and efficiently returning cash to shareholders through share repurchases and dividends."

Republic Declares Quarterly Dividend

Republic also announced that its Board of Directors declared a regular quarterly dividend of $0.26 per share for stockholders of record on April 1. The dividend will be paid on April 15.

ACCOUNTS RECEIVABLE

As of December 31, 2013 and 2012, accounts receivable were $890.7 million and $836.6 million, net of allowance for doubtful accounts of $38.3 million and $45.3 million, resulting in days sales outstanding of 38 (or 25 net of deferred revenue) and 38 (or 24 net of deferred revenue), respectively.

CASH DIVIDENDS

In October 2013, we paid a cash dividend of $93.6 million to stockholders of record as of October 1, 2013. As of December 31, 2013, we recorded a dividend payable of $93.7 million to stockholders of record as of January 2, which was paid on January 15. In February 2014, our board of directors declared a regular quarterly dividend of $0.26 per share to be paid on April 15, to stockholders of record as of April 1.

STOCK REPURCHASE PROGRAM

We have had a share repurchase program since November 2010. From November 2010 to December 31, 2013, we repurchased 35.5 million shares of our stock for $1,039.2 million at a weighted average cost per share of $29.30. During 2013, we repurchased 6.5 million shares of our stock for $213.6 million at a weighted average cost per share of $32.92.

As of December 31, 2013, we had 360.4 million shares of common stock issued and outstanding.

Republic is a company focusing on the U.S. non-hazardous solid waste and recycling industry. Through its subsidiaries, Republic's collection companies, transfer stations, recycling centers and landfills focus on providing environmental services and solutions for commercial, industrial, municipal and residential customers.

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Source: Manufacturing Close - Up


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