01—Abstract
Summary
Summary of the 10-K filed March 2, 2009. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) filed its 2008 10-K on March 2, 2009, detailing a transformative year primarily driven by its significant merger with Allied Waste Industries, Inc. (Allied) completed on December 5, 2008.
This merger created the second-largest domestic non-hazardous solid waste provider. The company reported a substantial increase in revenue due to the acquisition, but also faced challenges including integration costs, a weakening economy impacting volumes, and significant charges related to environmental matters at specific facilities. Despite a 16% revenue increase driven largely by the Allied merger, net income declined significantly in 2008 compared to 2007, impacted by nearly $200 milliona in asset impairments and restructuring charges, particularly related to the Countywide facility and merger integration.
The company emphasized its strategy of driving cost synergies from the merger, expecting $150 millionb in annual run-rate synergies by the end of 2010, with $100 million targeted for realization in 2009. Management expressed confidence in achieving these synergies despite economic headwinds. The company's financial position was significantly impacted by the increased debt load from the merger, with total debt rising to approximately $7.7 billion.
02—Key points
Key Highlights
- Completed a significant merger with Allied Waste Industries, Inc. on December 5, 2008, becoming the second-largest solid waste company in the U.S.
- Reported a 16.0% increase in revenue to $3.7 billion, largely driven by the acquisition of Allied, which contributed $463.7 million.
- Net income for 2008 decreased to $73.8 million ($0.37 per diluted share) from $290.2 million ($1.51 per diluted share) in 2007, heavily impacted by merger-related charges.
- Incurred significant charges in 2008, including $89.8 million in asset impairments and $82.7 million in restructuring charges, primarily related to the Allied integration and environmental issues at the Countywide facility.
- Total debt increased significantly to $7.7 billion as of December 31, 2008, largely due to the debt acquired in the Allied merger.
- Anticipates achieving approximately $150 million in annual run-rate synergies from the Allied merger by the end of 2010, with $100 million targeted for 2009.
- Experienced a 3.9% decrease in core volumes across all lines of business due to the economic slowdown, partially offset by a 4.0% increase in core pricing.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2008, Republic Services, Inc. kept $0.02.
- Revenue$3.69B100.0%
- Cost of revenue−$2.42B65.6%
- Gross profit$1.27B34.4%
- Operating costs−$985.2M26.7%
- Operating income$283.2M7.7%
- Interest, other & tax−$209.4M5.7%
- Net income$73.8M2.0%
Where FY2008 revenue went
$3.69B- Cost of revenue: $2.42B, 66% of revenue
- Other operating costs: $550.5M, 15% of revenue
- Net income: $73.8M, 2.0% of revenue
- SG&A: $434.7M, 12% of revenue
- Interest, other & tax: $209.4M, 5.7% of revenue
Kept 2.0% as net incomeNet income $73.8M · 2.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2008filed March 2, 2009Financial Statements
FY2008 against FY2007
| Line item | FY2008FY2007 | Change |
|---|---|---|
| Revenue | $3.69B$3.18B | +16.0% |
| Cost of Revenue | $2.42B$2.00B | +20.6% |
| Gross Profit | $1.27B$1.17B | +8.2% |
| SG&A Expenses | $434.70M$313.70M | +38.6% |
| Operating Income | $283.20M$536.00M | −47.2% |
| Interest Expense | $131.90M$94.80M | +39.1% |
| Net Income | $73.80M$290.20M | −74.6% |
| EPS (Basic) | $0.38$1.53 | −75.2% |
| EPS (Diluted) | $0.37$1.51 | −75.5% |
| Shares Outstanding (Basic) | 196.70M190.10M | +3.5% |
| Shares Outstanding (Diluted) | 198.40M192.00M | +3.3% |
05—Questions
Frequently Asked Questions
What was the primary strategic event for Republic Services in 2008?
The most significant strategic event for Republic Services in 2008 was the completion of its merger with Allied Waste Industries, Inc. on December 5, 2008. This transaction significantly expanded the company's scale and market presence, creating the second-largest provider of solid waste services in the United States.
How did the Allied merger impact Republic Services' financial performance in 2008?
The Allied merger significantly boosted Republic Services' revenue, contributing $463.7 million in 2008. However, the company also incurred substantial costs related to the merger, including integration, restructuring, and asset impairments (totaling nearly $200 million pre-tax), which led to a sharp decline in net income compared to 2007. The total debt also increased substantially due to the acquisition.
What are the key risks or challenges facing Republic Services post-merger?
Key challenges include successfully integrating the Allied operations, realizing the projected cost synergies, managing a significantly increased debt load, navigating the ongoing economic downturn which negatively impacted collection volumes, and addressing specific environmental remediation issues at certain facilities, such as the Countywide site. Regulatory requirements and competition also remain ongoing risks.
What is the company's outlook for 2009 based on this filing?
Republic Services anticipated a continued challenging economic environment in 2009, expecting a decrease in volumes across its business lines. However, the company planned to focus on integration and synergy capture from the Allied merger, aiming for $100 million in run-rate synergies in 2009. They also expected to benefit from cost controls and pricing initiatives to mitigate the economic slowdown.
06—Continue