10-KPeriod: FY2007

REPUBLIC SERVICES, INC. Annual Report, Year Ended Dec 31, 2007

Filed February 21, 2008For Securities:RSG

Summary

Republic Services, Inc. reported solid financial performance for the fiscal year 2007, with revenue increasing by 3.4% to $3.18 billion and operating income rising by 3.2% to $536.0 million. This growth was primarily driven by successful pricing strategies across all business lines, which helped offset rising operational costs, including fuel. The company highlighted its focus on enhancing shareholder value through its financial and operating strategies, including reinvestment in its fleet and facilities, internal growth initiatives, strategic acquisitions, share repurchases, and dividend payments. Management expressed confidence in its ability to manage growth and operational efficiencies through its decentralized structure and experienced team.

Financial Highlights

33 data points
Beta

Revenue

$3.18B

36.9% Gross Margin

Net Income

$290.20M

9.1% Net Margin

EPS (Diluted)

$1.51

Cash & Equivalents

$21.80M

Free Cash Flow

$368.80M

Financial Statements
Beta
Revenue$3.18B
Cost of Revenue$2.00B
Gross Profit$1.17B
SG&A Expenses$313.70M
Operating Income$536.00M
Interest Expense$94.80M
Net Income$290.20M
EPS (Basic)$1.53
EPS (Diluted)$1.51
Shares Outstanding (Basic)190.10M
Shares Outstanding (Diluted)192.00M

Key Highlights

  • 1Revenue grew 3.4% to $3.18 billion in 2007, with operating income increasing 3.2% to $536.0 million.
  • 2The company attributes growth to successful pricing strategies and operational efficiencies.
  • 3Republic Services continues to focus on shareholder value through share repurchases and dividends.
  • 4Expansion into high-growth Sunbelt markets is a key part of the internal growth strategy.
  • 5The company experienced significant environmental charges related to its Countywide facility in Ohio, impacting operating margins in the Eastern Region.
  • 6Diluted Earnings Per Share (EPS) for 2007 was $1.51, with management providing 2008 guidance of $1.78 to $1.82 per share.
  • 7Free Cash Flow generation exceeded expectations, reaching $374.9 million in 2007.

Frequently Asked Questions

Republic Services reported a revenue of $3,176.2 million, an increase of 3.4% from 2006. Operating income rose to $536.0 million, a 3.2% increase. Net income was $290.2 million, or $1.51 per diluted share.

The company's growth is driven by its financial, operating, and growth strategies. Key drivers include implementing price increases across all lines of business to offset rising costs, focusing on internal growth in high-growth markets, pursuing strategic acquisitions, managing operating costs through economies of scale and asset utilization, and maintaining high levels of customer satisfaction.

Republic Services recorded significant pre-tax charges totaling $45.3 million in 2007 related to environmental conditions at its Countywide facility in Ohio. The company is undertaking remedial actions as agreed with the Ohio Environmental Protection Agency and is pursuing financial contributions from third parties. Despite these charges, the company believes it is meeting regulatory requirements and is contesting a recommendation to suspend the facility's operating license.

For 2008, Republic Services anticipates generating free cash flow of $340-$350 million, diluted earnings per share of $1.78-$1.82, and operating margins of approximately 19.0%. The company expects internal core revenue growth of 2.0%-3.5%, driven by price increases, while anticipating a slight decline in volume.