01—Abstract
Summary
Summary of the 10-K filed February 24, 2010. Cited figures are marked; the original filing is the authoritative source.
Republic Services, Inc. (RSG) reported its 2009 full-year results in its February 2010 10-K filing.
The company, a leading provider of waste management services, was significantly impacted by its acquisition of Allied Waste Industries, Inc. in December 2008. This merger led to a substantial increase in revenue, reaching $8.2 billiona in 2009, up from $3.7 billion in 2008, primarily due to the combined entity's operations. Despite the revenue growth driven by the acquisition, the "core" business experienced a revenue decrease of 10.7% in 2009, reflecting the challenging economic environment.
This decline was attributed to a 9.5%b drop in core volume, partially offset by a 3.0% increase in core pricing. The company's financial strategy emphasizes generating free cash flow and maintaining investment-grade credit ratings.
Management is focused on completing the integration of Allied, realizing synergies, and managing costs effectively in the prevailing economic climate. The company also highlighted its ongoing commitment to safety, service delivery, and enhancing return on invested capital.
02—Key points
Key Highlights
- The acquisition of Allied Waste Industries, Inc. in December 2008 significantly boosted revenue to $8.2 billion in 2009, a 122.5% increase year-over-year.
- Despite the headline revenue growth, core operations faced challenges, with a 10.7% revenue decrease in 2009 driven by a 9.5% decline in volume, though price increases (3.0%) provided some offset.
- Republic Services is actively pursuing integration synergies from the Allied merger, having already achieved $150 million in run-rate synergies and aiming for $165-$175 million by the end of 2010.
- The company's financial strategy prioritizes generating free cash flow and maintaining investment-grade credit ratings, with efforts focused on debt reduction and efficient capital allocation.
- Despite economic headwinds impacting volumes, the company's focus on pricing initiatives and cost control helped to moderate margin declines.
- Landfill operations remained a significant part of the business, with 192 active landfills and substantial available disposal capacity.
- The company operated 74 landfill gas and renewable energy projects, highlighting a commitment to sustainability and diversified energy generation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Republic Services, Inc. kept $0.06.
- Revenue$8.20B100.0%
- Cost of revenue−$4.84B59.1%
- Gross profit$3.35B40.9%
- Operating costs−$1.77B21.5%
- Operating income$1.59B19.4%
- Interest, other & tax−$1.09B13.4%
- Net income$495.0M6.0%
Where FY2009 revenue went
$8.20B- Cost of revenue: $4.84B, 59% of revenue
- Interest, other & tax: $1.09B, 13% of revenue
- Net income: $495.0M, 6.0% of revenue
- SG&A: $880.4M, 11% of revenue
- Other operating costs: $884.7M, 11% of revenue
Kept 6.0% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 24, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $8.20B$3.69B | +122.5% |
| Cost of Revenue | $4.84B$2.42B | +100.4% |
| Gross Profit | $3.35B$1.27B | +164.5% |
| SG&A Expenses | $880.40M$434.70M | +102.5% |
| Operating Income | $1.59B$283.20M | +461.4% |
| Interest Expense | $595.90M$131.90M | +351.8% |
| Net Income | $495.00M$73.80M | +570.7% |
| EPS (Basic) | $1.30$0.38 | +242.1% |
| EPS (Diluted) | $1.30$0.37 | +251.4% |
| Shares Outstanding (Basic) | 379.70M196.70M | +93.0% |
| Shares Outstanding (Diluted) | 381.00M198.40M | +92.0% |
05—Questions
Frequently Asked Questions
What was the impact of the Allied acquisition on Republic Services' financial performance in 2009?
The acquisition of Allied Waste Industries, Inc. in December 2008 significantly impacted Republic Services' 2009 financial performance. It led to a substantial increase in reported revenue from $3.7 billion in 2008 to $8.2 billion in 2009, a 122.5% increase. However, this growth was primarily driven by the combination of the two companies, as core operations experienced a revenue decline of 10.7% due to lower volumes, reflecting the challenging economic environment of 2009.
How is Republic Services managing its debt following the Allied acquisition?
Republic Services took on significant debt as part of the Allied acquisition, with total debt standing at approximately $7.4 billion at the end of 2009. The company's financial strategy includes managing this debt by issuing new debt to repay existing debt, extending maturities, and reducing average coupon rates. During 2009, the company repaid approximately $1.6 billion of senior notes and amounts outstanding under its credit facilities, funded by new debt issuances and operational cash flow. Maintaining investment-grade credit ratings is a key priority.
What are the company's key operational strategies and priorities for 2010?
For 2010, Republic Services' key initiatives include completing the integration of Allied operations, focusing on achieving synergy targets (aiming for $165-$175 million in run-rate synergies by year-end), prioritizing safety and service delivery, and enhancing return on invested capital. Management expects the challenging economic conditions to persist into 2010, leading to continued volume declines, but plans to mitigate this through cost control and pricing strategies.
06—Continue