REPUBLIC SERVICES, INC. PHOENIX, Oct. 30, 2014 /PRNewswire/ -- Republic Services, Inc. (NYSE: RSG) today reported net income of $185.8 million, or $0.52 per diluted share, for the three months ended Sept. 30, 2014, versus $171.4 million, or $0.47 per diluted share, for the comparable 2013 period.
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Republic's net income for the three months ended Sept. 30, 2014 and 2013, includes certain expenses and benefits that impacted its results. A detail of these expenses and benefits is contained in the Reconciliation of Certain Non-GAAP Measures section of this document. Excluding these items, net income for the three months ended Sept. 30, 2014 and 2013, would have been $186.0 million, or $0.52 per diluted share, and $198.2 million, or $0.55 per diluted share, respectively.
"We are pleased with our performance in the third quarter, which was in-line with our expectations. Revenue growth of approximately 5 percent reflects our ability to profitably grow the business and maintain average yield performance, even with a step-down in CPI based pricing," said Donald W. Slager, president and chief executive officer. "Recent acquisitions demonstrate our ability and intent to complete larger transactions within our core space, increase free cash flow and improve returns. The entire Republic team remains focused on delivering an exceptional customer experience to drive improved performance and create lasting shareholder value."
Excluding certain expenses and benefits recorded during the three months ended Sept. 30, 2014 and 2013, as described in the Reconciliation of Certain Non-GAAP Measures section of this document, adjusted earnings before interest, taxes, depreciation, depletion, amortization and accretion (adjusted EBITDA) for the three months ended Sept. 30, 2014, was $637.8 million, or 28.2 percent of revenue, compared to $638.2 million, or 29.5 percent of revenue, for the comparable 2013 period.
Revenue for the three months ended Sept. 30, 2014, increased to $2,264.1 million from $2,165.4 million for the comparable 2013 period. This growth in revenue of 4.6 percent was made up of increases in average yield of 1.4 percent, fuel recovery fees of 0.2 percent, volume of 2.1 percent, recycled commodities of 0.2 percent and acquisitions, net of divestitures of 0.7 percent.
Nine Months Ended Sept. 30, 2014
For the nine months ended Sept. 30, 2014, net income was $497.3 million, or $1.39 per diluted share, versus $352.3 million, or $0.97 per diluted share, for the comparable 2013 period. On an adjusted basis, net income for the nine months ended Sept. 30, 2014 and 2013, would have been $522.1 million, or $1.46 per diluted share, and $522.2 million, or $1.44 per diluted share, respectively.
Republic's net income for the nine months ended Sept. 30, 2014 and 2013, includes certain expenses and benefits that impacted its results. A detail of these expenses and benefits is contained in the Reconciliation of Certain Non-GAAP Measures section of this document.
Excluding certain expenses and benefits recorded during the nine months ended Sept. 30, 2014 and 2013, as described in the Reconciliation of Certain Non-GAAP Measures section of this document, adjusted EBITDA for the nine months ended Sept. 30, 2014, was $1,843.8 million, or 28.1 percent of revenue, versus $1,789.4 million, or 28.5 percent of revenue, for the comparable 2013 period.
Revenue for the nine months ended Sept. 30, 2014, increased to $6,563.1 million from $6,275.7 million for the comparable 2013 period. This growth in revenue of 4.6 percent was made up of increases in average yield of 1.3 percent, fuel recovery fees of 0.2 percent, volume of 2.1 percent, recycled commodities of 0.4 percent and acquisitions, net of divestitures of 0.6 percent.
Updated 2014 Financial Guidance
Republic updated its full year adjusted diluted earnings per share guidance to be in a range of $1.93 to $1.94. Republic also updated its 2014 adjusted free cash flow guidance to be in a range of $675 million to $690 million. A number of charges, other expenses and benefits are excluded from adjusted diluted earnings per share and adjusted free cash flows, as described in the 2014 Financial Guidance section of this document.
Fiscal Year 2015 Preliminary Outlook
The Company is providing its preliminary outlook for 2015. This does not represent full detailed guidance, but rather a point-in-time estimate based on current projections of 2014 performance, early reviews of the 2015 budget process and current economic conditions. Consistent with prior practice, Republic will provide formal guidance in February 2015 once the budget process is complete and full year 2014 results are reported.
2015 Preliminary Outlook:
-- Diluted earnings per share is expected to be in a range of $2.02 to
$2.06. This represents mid- to high-single digit growth compared to
Republic's estimate of 2014 performance.
-- Adjusted free cash flow is expected to be in a range of $725 million to
$750 million. This represents mid-single digit to low-double digit
growth compared to Republic's estimate of 2014 performance. Adjusted
free cash flow consists of cash provided by operating activities, less
property and equipment received, plus proceeds from the sales of
property and equipment and withdrawal payments related to Central States
Pension Fund, net of tax.
Company Declares Quarterly Dividend
Republic announced today that its Board of Directors declared a regular quarterly dividend of $0.28 per share for stockholders of record on Jan. 2, 2015. The dividend will be paid on Jan. 15, 2015.
About Republic Services
Republic Services, Inc. is an industry leader in the U.S. recycling and non-hazardous solid waste industry. Through its subsidiaries, Republic's collection companies, transfer stations, recycling centers and landfills focus on providing reliable environmental services and solutions for commercial, industrial, municipal and residential customers. Republic and its employees believe in protecting the planet and applying common sense solutions to customers' waste and recycling challenges.
Republic participates in investor presentations and conferences throughout the year. Interested parties can find a schedule of these conferences at republicservices.com by selecting "Calendar" on the investor relations page. Audio and other presentations from earnings calls and investor conferences are also available on the investor relations page of the website.
SUPPLEMENTAL UNAUDITED FINANCIAL INFORMATION
AND OPERATING DATA
REPUBLIC SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
September 30, December 31,
2014 2013
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $113.0 $213.3
Accounts receivable, less
allowance for doubtful
accounts of $40.5 and
$38.3, respectively 955.2 890.7
Prepaid expenses and other
current assets 180.6 200.3
Deferred tax assets 112.1 117.6
----- -----
Total current assets 1,360.9 1,421.9
Restricted cash and
marketable securities 133.5 169.7
Property and equipment, net 7,149.3 7,036.8
Goodwill 10,760.4 10,724.1
Other intangible assets, net 279.9 315.8
Other assets 303.0 280.9
----- -----
Total assets $19,987.0 $19,949.2
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $517.3 $511.4
Notes payable and current
maturities of long-term
debt 10.5 15.7
Deferred revenue 311.7 301.8
Accrued landfill and
environmental costs,
current portion 164.9 178.7
Accrued interest 68.5 68.2
Other accrued liabilities 652.1 641.3
----- -----
Total current liabilities 1,725.0 1,717.1
Long-term debt, net of
current maturities 7,020.0 7,002.4
Accrued landfill and
environmental costs, net of
current portion 1,495.3 1,464.3
Deferred income taxes and
other long-term tax
liabilities 1,157.8 1,185.4
Self-insurance reserves,
net of current portion 291.8 294.9
Other long-term liabilities 365.8 379.0
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value
$0.01 per share; 50 shares
authorized; none issued - -
Common stock, par value
$0.01 per share; 750 shares
authorized; 414.1 and 411.0
issued including shares
held in treasury,
respectively 4.1 4.1
Additional paid-in capital 6,863.5 6,764.9
Retained earnings 2,843.9 2,632.7
Treasury stock, at cost
(58.6 and 50.6 shares,
respectively) (1,780.3) (1,501.2)
Accumulated other
comprehensive (loss)
income, net of tax (2.2) 3.0
---- ---
Total Republic Services,
Inc. stockholders' equity 7,929.0 7,903.5
Noncontrolling interests 2.3 2.6
--- ---
Total stockholders' equity 7,931.3 7,906.1
------- -------
Total liabilities and
stockholders' equity $19,987.0 $19,949.2
========= =========
REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in millions, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Revenue $2,264.1 $2,165.4 $6,563.1 $6,275.7
Expenses:
Cost of operations 1,397.3 1,317.6 4,091.6 3,950.7
Depreciation, amortization and
depletion 235.6 224.4 679.0 651.0
Accretion 19.5 19.2 58.4 57.6
Selling, general and administrative 229.0 209.6 663.8 644.3
Negotiation and withdrawal costs -
Central States Pension and Other
Funds 0.3 41.6 1.8 157.7
Gain on disposition of assets and
impairments, net - - - (1.9)
Restructuring charges - 0.7 1.8 8.6
--- --- --- ---
Operating income 382.4 352.3 1,066.7 807.7
Interest expense (87.0) (90.0) (260.8) (269.8)
Loss on extinguishment of debt - - (1.4) (2.1)
Interest income 0.1 0.1 0.6 0.5
Other (expense) income, net (0.1) 1.0 1.2 1.5
---- --- --- ---
Income before income taxes 295.4 263.4 806.3 537.8
Provision for income taxes 109.6 92.3 308.9 185.4
----- ---- ----- -----
Net income 185.8 171.1 497.4 352.4
Net loss (income) attributable to
noncontrolling interests - 0.3 (0.1) (0.1)
--- --- ---- ----
Net income attributable to Republic
Services, Inc. $185.8 $171.4 $497.3 $352.3
====== ====== ====== ======
Basic earnings per share attributable to Republic
Services, Inc. stockholders:
Basic earnings per share $0.52 $0.47 $1.39 $0.97
===== ===== ===== =====
Weighted average common shares
outstanding 356.3 361.7 357.4 362.4
===== ===== ===== =====
Diluted earnings per share attributable to Republic
Services, Inc. stockholders:
Diluted earnings per share $0.52 $0.47 $1.39 $0.97
===== ===== ===== =====
Weighted average common and common
equivalent shares outstanding 357.7 363.0 358.8 363.8
===== ===== ===== =====
Cash dividends per common share $0.28 $0.26 $0.80 $0.73
===== ===== ===== =====
REPUBLIC SERVICES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
Nine Months Ended September 30,
-------------------------------
2014 2013
---- ----
Cash provided by operating
activities:
Net income $497.4 $352.4
Adjustments to reconcile
net income to cash
provided by operating
activities:
Depreciation,
amortization,
depletion and
accretion 737.4 708.6
Non-cash
interest
expense 33.6 35.6
Restructuring
related
charges 1.8 8.6
Stock-based
compensation 14.2 15.8
Deferred tax
benefit (4.7) (53.9)
Provision for
doubtful
accounts, net
of
adjustments 16.3 8.1
Loss on
extinguishment
of debt 1.4 2.1
Gain on
disposition
of assets,
net and asset
impairments (4.7) (7.4)
Withdrawal
liability -
Central
States
Pension and
Other Funds - 140.7
Environmental
adjustments 36.2 101.8
Excess income
tax benefit
from stock
option
exercises and
other non-
cash items (3.3) (5.7)
Change in assets and
liabilities, net of
effects from business
acquisitions and
divestitures:
Accounts
receivable (77.8) (70.8)
Prepaid
expenses and
other assets (28.0) (7.8)
Accounts
payable (2.3) 18.4
Restructuring
expenditures (1.0) (14.8)
Capping,
closure and
post-closure
expenditures (36.5) (59.0)
Remediation
expenditures (75.0) (84.3)
Other
liabilities (3.4) 48.8
---- ----
Cash provided
by operating
activities 1,101.6 1,137.2
------- -------
Cash used in investing
activities:
Purchases of
property and
equipment (683.1) (688.7)
Proceeds from
sales of
property and
equipment 13.9 12.0
Cash used in
business
acquisitions
and
development
projects, net
of cash
acquired (73.5) (49.0)
Cash proceeds
from
divestitures,
net of cash
divested - 2.7
Change in
restricted
cash and
marketable
securities 36.2 (11.3)
Other (4.5) (2.3)
---- ----
Cash used in
investing
activities (711.0) (736.6)
------ ------
Cash used in financing
activities:
Proceeds from
notes payable
and long-
term debt 939.8 1,098.2
Payments of
notes payable
and long-
term debt (951.0) (1,140.6)
Fees paid to
issue notes
payable (4.0) (1.6)
Issuances of
common stock 79.5 138.8
Excess income
tax benefit
from stock
option
exercises 3.6 3.3
Purchases of
common stock
for treasury (277.5) (214.1)
Cash dividends
paid (279.1) (254.9)
Distributions
paid to
noncontrolling
interests (0.4) -
Other (1.8) -
---- ---
Cash used in
financing
activities (490.9) (370.9)
------ ------
(Decrease)
increase in
cash and cash
equivalents (100.3) 29.7
Cash and cash
equivalents
at beginning
of year 213.3 67.6
----- ----
Cash and cash
equivalents
at end of
period $113.0 $97.3
====== =====
You should read the following information in conjunction with our audited consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K as of and for the year ended December 31, 2013. All amounts below are in millions and as a percentage of our revenue, except per share data.
REVENUE
The following table reflects our total revenue by line of business for the three and nine months ended September 30, 2014 and 2013 (in millions of dollars and as a percentage of revenue):
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Collection:
Residential $551.9 24.4% $548.5 25.3% $1,639.4 25.0% $1,632.3 26.0%
Commercial 685.8 30.3 659.4 30.5 2,027.1 30.9 1,953.3 31.1
Industrial 471.5 20.8 433.0 20.0 1,329.0 20.2 1,223.0 19.5
Other 9.3 0.4 8.9 0.4 27.7 0.4 26.0 0.4
--- --- --- --- ---- --- ---- ---
Total collection 1,718.5 75.9 1,649.8 76.2 5,023.2 76.5 4,834.6 77.0
Transfer 279.1 268.1 793.0 767.3
Less: intercompany (169.6) (159.7) (486.9) (461.4)
------ ------ ------ ------
Transfer, net 109.5 4.8 108.4 5.0 306.1 4.7 305.9 4.9
Landfill 539.8 512.4 1,514.0 1,437.6
Less: intercompany (243.4) (236.2) (698.9) (677.9)
------ ------ ------ ------
Landfill, net 296.4 13.1 276.2 12.8 815.1 12.4 759.7 12.1
Sale of recycled
commodities 97.8 4.3 93.3 4.3 296.6 4.5 271.6 4.3
Other non-core 41.9 1.9 37.7 1.7 122.1 1.9 103.9 1.7
---- --- ---- --- ----- --- ----- ---
Other 139.7 6.2 131.0 6.0 418.7 6.4 375.5 6.0
----- --- ----- --- ----- --- ----- ---
Total revenue $2,264.1 100.0% $2,165.4 100.0% $6,563.1 100.0% $6,275.7 100.0%
======== ===== ======== ===== ======== ===== ======== =====
The following table reflects changes in our revenue for the three and nine months ended September 30, 2014 and 2013:
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ------------------
2014 2013 2014 2013
---- ---- ---- ----
Average
yield 1.4% 1.3% 1.3% 1.3%
Fuel
recovery
fees 0.2 0.5 0.2 0.3
--- --- --- ---
Total
price 1.6 1.8 1.5 1.6
--- --- --- ---
Workday
impact - 0.5 - -
Volume 2.1 2.2 2.1 0.9
--- --- --- ---
Total
volume 2.1 2.7 2.1 0.9
--- --- --- ---
Recycled
commodities 0.2 0.7 0.4 0.1
--- --- --- ---
Total
internal
growth 3.9 5.2 4.0 2.6
Acquisitions
/
divestitures,
net 0.7 0.6 0.6 0.5
---
Total 4.6% 5.8% 4.6% 3.1%
=== === === ===
Core
price 3.0% 3.4% 3.1% 3.2%
=== === === ===
COST OF OPERATIONS
The following table summarizes the major components of our cost of operations for the three and nine months ended September 30, 2014 and 2013 (in millions of dollars and as a percentage of revenue):
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Labor and related
benefits $437.7 19.3 % $421.9 19.5 % $1,280.9 19.5 % $1,233.3 19.7 %
Transfer and
disposal costs 178.0 7.9 166.9 7.7 502.1 7.6 477.0 7.6
Maintenance and
repairs 202.7 9.0 189.8 8.8 584.0 8.9 549.5 8.7
Transportation and
subcontract costs 129.1 5.7 124.5 5.7 374.0 5.7 345.9 5.5
Fuel 130.4 5.8 132.1 6.1 394.1 6.0 388.7 6.2
Franchise fees and
taxes 111.4 4.9 107.6 5.0 318.5 4.9 308.2 4.9
Landfill operating
costs 36.2 1.6 22.6 1.0 109.9 1.7 100.1 1.6
Risk management 55.1 2.4 42.3 2.0 135.9 2.1 129.3 2.1
Cost of goods sold 40.2 1.8 33.0 1.5 122.9 1.8 91.3 1.4
Other 76.5 3.3 76.9 3.6 233.2 3.6 218.7 3.5
Subtotal 1,397.3 61.7 1,317.6 60.9 4,055.5 61.8 3,842.0 61.2
Bridgeton
remediation - - - - 36.1 0.5 108.7 1.7
Total cost of
operations $1,397.3 61.7 % $1,317.6 60.9 % $4,091.6 62.3 % $3,950.7 62.9 %
======== ==== ======== ==== ======== ==== ======== ====
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our cost of operations by cost component to that of other companies.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
The following table summarizes our selling, general and administrative expenses for the three and nine months ended September 30, 2014 and 2013 (in millions of dollars and as a percentage of revenue):
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Salaries $144.3 6.4 % $131.2 6.1 % $425.8 6.5 % $408.2 6.5 %
Provision for
doubtful accounts 7.9 0.3 0.6 - 16.3 0.2 8.1 0.1
Other 76.8 3.4 77.8 3.6 221.7 3.4 228.0 3.7
Total selling,
general and
administrative
expenses $229.0 10.1 % $209.6 9.7 % $663.8 10.1 % $644.3 10.3 %
====== ==== ====== === ====== ==== ====== ====
These cost categories may change from time to time and may not be comparable to similarly titled categories used by other companies. As such, you should take care when comparing our selling, general and administrative expenses by cost component to those of other companies.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES
Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Accretion
The following table calculates earnings before interest, taxes, depreciation, depletion, amortization and accretion (EBITDA), which is not a measure determined in accordance with U.S. generally accepted accounting principles (U.S. GAAP), for the three and nine months ended September 30, 2014 and 2013:
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Net income attributable
to Republic Services,
Inc. $185.8 $171.4 $497.3 $352.3
Net (loss) income
attributable to
noncontrolling
interests - (0.3) 0.1 0.1
Provision for income
taxes 109.6 92.3 308.9 185.4
Other expense (income),
net 0.1 (1.0) (1.2) (1.5)
Interest income (0.1) (0.1) (0.6) (0.5)
Loss on extinguishment
of debt - - 1.4 2.1
Interest expense 87.0 90.0 260.8 269.8
Depreciation,
amortization and
depletion 235.6 224.4 679.0 651.0
Accretion 19.5 19.2 58.4 57.6
---- ---- ---- ----
EBITDA $637.5 $595.9 $1,804.1 $1,516.3
====== ====== ======== ========
We believe that presenting EBITDA is useful to investors because it provides important information concerning our operating performance exclusive of certain non-cash and other costs. EBITDA demonstrates our ability to execute our financial strategy, which includes reinvesting in existing capital assets to ensure a high level of customer service, investing in capital assets to facilitate growth in our customer base and services provided, maintaining our investment grade credit rating and minimizing debt, paying cash dividends, repurchasing our common stock, and maintaining and improving our market position through business optimization. This measure has limitations. Although depreciation, depletion, amortization and accretion are considered operating costs in accordance with U.S. GAAP, they represent the allocation of non-cash costs generally associated with long-lived assets acquired or constructed in prior years. Our definition of EBITDA may not be comparable to similarly titled measures presented by other companies.
Adjusted Earnings
Reported diluted earnings per share were $0.52 and $1.39 for the three and nine months ended September 30, 2014, respectively, compared to $0.47 and $0.97 for the same periods in 2013. During the three and nine months ended September 30, 2014 and 2013, we recorded a number of charges, other expenses and net gain on disposition of assets that impacted our EBITDA, pre-tax income, net income attributable to Republic Services, Inc. (Net Income - Republic) and diluted earnings per share. These items primarily consist of the following:
Three Months Ended September 30, 2014 Three Months Ended September 30, 2013
------------------------------------- -------------------------------------
Net Diluted Net Diluted
Pre-tax Income - Earnings Pre-tax Income - Earnings
EBITDA Income Republic per Share EBITDA Income Republic per Share
------ ------ -------- --------- ------ ------ -------- ---------
As reported $637.5 $295.4 $185.8 $0.52 $595.9 $263.4 $171.4 $0.47
------ ------ ------ ----- ------ ------ ------ -----
Negotiation and
withdrawal 0.3 0.3 0.2 0.00 41.6 41.6 25.9 0.08
costs - Central States
Pension and Other Funds
Restructuring charges - - - - 0.7 0.7 0.7 -
Loss on extinguishment
of debt - - - - - - 0.1 -
Bridgeton remediation - - - - - - 0.1 -
--- --- --- --- --- --- --- ---
Total adjustments 0.3 0.3 0.2 0.00 42.3 42.3 26.8 0.08
--- --- --- ---- ---- ---- ---- ----
As adjusted $637.8 $295.7 $186.0 $0.52 $638.2 $305.7 $198.2 $0.55
====== ====== ====== ===== ====== ====== ====== =====
Nine Months Ended September 30, 2014 Nine Months Ended September 30, 2013
------------------------------------ ------------------------------------
Net Diluted Net Diluted
Pre-tax Income - Earnings Pre-tax Income - Earnings
EBITDA Income Republic per Share EBITDA Income Republic per Share
As reported $1,804.1 $806.3 $497.3 $1.39 $1,516.3 $537.8 $352.3 $0.97
-------- ------ ------ ----- -------- ------ ------ -----
Negotiation and
withdrawal costs -
Central States 1.8 1.8 1.1 0.00 157.7 157.7 98.3 0.27
Pension and Other
Funds(1)
Restructuring
charges(1) 1.8 1.8 1.0 0.00 8.6 8.6 5.6 0.02
Loss on extinguishment
of debt(1) - 1.4 0.9 0.00 - 2.1 1.3 -
Gain on disposition of
assets - - - - (1.9) (1.9) (0.9) -
and impairments, net
Bridgeton remediation 36.1 36.1 21.8 0.06 108.7 108.7 65.6 0.18
Total adjustments 39.7 41.1 24.8 0.07 273.1 275.2 169.9 0.47
---- ---- ---- ---- ----- ----- ----- ----
As adjusted $1,843.8 $847.4 $522.1 $1.46 $1,789.4 $813.0 $522.2 $1.44
======== ====== ====== ===== ======== ====== ====== =====
(1) The aggregate impact of
these items noted to
adjusted diluted earnings
per share totals to $0.01
for the nine months ended
September 30, 2014.
We believe that presenting adjusted EBITDA, adjusted pre-tax income, adjusted net income attributable to Republic Services, Inc., and adjusted diluted earnings per share, which are not measures determined in accordance with U.S. GAAP, provides an understanding of operational activities before the financial impact of certain items. We use these measures, and believe investors will find them helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges and costs in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. In the case of the Bridgeton remediation charges, we are adjusting such amounts due to their significant effect on our operating results. However, in the ordinary course of our business, we often incur remediation adjustments that we do not adjust from our operating results. Our definitions of adjusted EBITDA, adjusted pre-tax income, adjusted net income attributable to Republic Services Inc., and adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.
Adjusted Free Cash Flow
The following table calculates our adjusted free cash flow, which is not a measure determined in accordance with U.S. GAAP, for the nine months ended September 30, 2014 and 2013:
Nine Months Ended September 30,
-------------------------------
2014 2013
---- ----
Cash provided by
operating
activities $1,101.6 $1,137.2
Property and
equipment
received (691.6) (701.3)
Proceeds from
sales of
property and
equipment 13.9 12.0
Cash paid
related to
negotiation and
withdrawal
costs -Central
States Pension
and Other
Funds, net of
tax 8.0 10.7
Restructuring
payments, net
of tax 0.6 9.3
Merger-related
payments, net
of tax - 1.1
--- ---
Adjusted free
cash flow $432.5 $469.0
====== ======
We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain payments. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary payments because it excludes certain payments that are required or to which we have committed, such as debt service requirements and dividend payments. Our definition of adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.
Purchases of property and equipment as reflected on our consolidated statements of cash flows and the adjusted free cash flow presented above represent amounts paid during the period for such expenditures. A reconciliation of property and equipment reflected on our consolidated statements of cash flows to property and equipment received during the period follows for the three and nine months ended September 30, 2014 and 2013:
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------- -------------------------------
2014 2013 2014 2013
---- ---- ---- ----
Purchases of
property and
equipment per
the unaudited
consolidated
statements of
cash flows $210.2 $226.9 $683.1 $688.7
Adjustments for
property and
equipment
received during
the prior period
but paid for in
the following
period, net (6.8) (0.4) 8.5 12.6
---
Property and
equipment
received during
the period $203.4 $226.5 $691.6 $701.3
====== ====== ====== ======
The adjustments noted above do not affect our net change in cash and cash equivalents as reflected in our consolidated statements of cash flows.
ACCOUNTS RECEIVABLE
As of September 30, 2014 and December 31, 2013, accounts receivable were $955.2 million and $890.7 million, net of allowance for doubtful accounts of $40.5 million and $38.3 million, resulting in days sales outstanding of 38 (or 26 net of deferred revenue) and 38 (or 25 net of deferred revenue), respectively.
CASH DIVIDENDS
In July 2014, we paid a cash dividend of $92.5 million to stockholders of record as of July 1, 2014. As of September 30, 2014, we recorded a quarterly dividend payable of $99.5 million to stockholders of record at the close of business on October 1, 2014, which was paid on October 15, 2014.
STOCK REPURCHASE PROGRAM
Our share repurchase program has been in effect since November 2010. From November 2010 to September 30, 2014, we repurchased 43.5 million shares of our stock for $1,316.5 million at a weighted average cost per share of $30.28. During the three months ended September 30, 2014, we repurchased 0.6 million shares of our stock for $21.4 million at a weighted average cost per share of $38.60.
As of September 30, 2014, we had 355.5 million shares of common stock issued and outstanding.
2014 FINANCIAL GUIDANCE
Adjusted Diluted Earnings per Share
The following is a summary of anticipated adjusted diluted earnings per share for the year ending December 31, 2014, which is not a measure determined in accordance with U.S. GAAP:
(Anticipated)
Year Ending
December 31,
2014
-------------
Diluted earnings per share $1.86 - $1.87
-------------
Negotiation and withdrawal costs -
Central States Pension and Other
Funds(1) 0.00
Restructuring charges(1) 0.00
Loss on extinguishment of debt(1) 0.00
Bridgeton remediation 0.06
Total adjustments 0.07
----
Adjusted diluted earnings per share $1.93 - $1.94
=============
(1) The aggregate impact of
these items noted to
adjusted diluted earnings
per share totals to $0.01.
We believe that presenting adjusted diluted earnings per share, which excludes negotiation and withdrawal costs - Central States Pension and Other Funds, restructuring charges, loss on extinguishment of debt, and Bridgeton remediation charges provides an understanding of operational activities before the financial impact of certain items. We use this measure, and believe investors will find it helpful, in understanding the ongoing performance of our operations separate from items that have a disproportionate impact on our results for a particular period. We have incurred comparable charges and costs in prior periods, and similar types of adjustments can reasonably be expected to be recorded in future periods. Our definition of adjusted diluted earnings per share may not be comparable to similarly titled measures presented by other companies.
Adjusted Free Cash Flow
Our anticipated adjusted free cash flow for the year ending December 31, 2014, which is not a measure determined in accordance with U.S. GAAP, is calculated as follows:
(Anticipated)
Year Ending
December 31, 2014
-----------------
Cash provided by operating
activities $ 1,474 - 1,489
Property and equipment received (835)
Proceeds from sales of property
and equipment 25
Cash paid related to negotiation
and withdrawal costs -Central
States Pension and Other Funds,
net of tax 10
Restructuring payments, net of
tax 1
Adjusted free cash flow $ 675 - 690
===================
We believe that presenting adjusted free cash flow provides useful information regarding our recurring cash provided by operating activities after certain expenditures. It also demonstrates our ability to execute our financial strategy and is a key metric we use to determine compensation. The presentation of adjusted free cash flow has material limitations. Adjusted free cash flow does not represent our cash flow available for discretionary expenditures because it excludes certain expenditures that are required or to which we have committed such as debt service requirements and dividend payments. Our definition of adjusted free cash flow may not be comparable to similarly titled measures presented by other companies.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking information about us that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are statements that are not historical facts. Words such as "guidance," "expect," "will," "may," "anticipate," "plan," "estimate," "project," "intend," "should," "can," "likely," "could," "outlook," and similar expressions are intended to identify forward-looking statements. These statements include statements about our plans, strategies and prospects. Forward-looking statements are not guarantees of performance. These statements are based upon the current beliefs and expectations of our management and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot assure you that the expectations will prove to be correct. Among the factors that could cause actual results to differ materially from the expectations expressed in the forward-looking statements are:
-- general economic and market conditions, including inflation and changes
in commodity pricing, fuel, interest rates, labor, risk, health
insurance and other variable costs that generally are not within our
control, and our exposure to credit and counterparty risk;
-- whether our estimates and assumptions concerning our selected balance
sheet accounts, income tax accounts, the recoverability of long-lived
assets, the depletion and amortization of landfill development costs,
accruals for final capping, closure and post-closure costs, available
airspace, valuation allowances for accounts receivable, self-insurance,
liabilities for potential litigation, claims and assessments, and
liabilities for environmental remediation, employee benefit and pension
plans, and labor, fuel rates and economic and inflationary trends, turn
out to be correct or appropriate;
-- competition and demand for services in the solid waste industry;
-- price increases to our customers may not be adequate to offset the
impact of increased costs, including labor, third-party disposal and
fuel, and may cause us to lose volume;
-- our ability to manage growth and execute our growth strategy;
-- our compliance with, and future changes in, environmental and flow
control regulations and our ability to obtain approvals from regulatory
agencies in connection with operating and expanding our landfills;
-- the impact on us of our substantial indebtedness, including on our
ability to obtain financing on acceptable terms to finance our
operations and growth strategy and to operate within the limitations
imposed by financing arrangements;
-- our ability to retain our investment grade ratings for our debt;
-- our dependence on key personnel;
-- our dependence on large, long-term collection, transfer and disposal
contracts;
-- our business is capital intensive and may consume cash in excess of cash
flow from operations;
-- any exposure to environmental liabilities or remediation requirements,
to the extent not adequately covered by insurance, could result in
substantial expenses;
-- risks associated with undisclosed liabilities of acquired businesses;
-- risks associated with pending and future legal proceedings, including
litigation, audits or investigations brought by or before any
governmental body;
-- severe weather conditions, which could impair our financial results by
causing increased costs, loss of revenue, reduced operational efficiency
or disruptions to our operations;
-- compliance with existing and future legal and regulatory requirements,
including limitations or bans on disposal of certain types of wastes or
on the transportation of waste, which could limit our ability to conduct
or grow our business, increase our costs to operate or require
additional capital expenditures;
-- potential increases in our expenses if we are required to provide
additional funding to any multiemployer pension plan to which we
contribute or if a withdrawal event or events occur with respect to any
multiemployer pension plan to which we contribute;
-- the negative impact on our operations of union organizing campaigns,
work stoppages or labor shortages;
-- the negative effect that trends toward requiring recycling, waste
reduction at the source and prohibiting the disposal of certain types of
wastes could have on volumes of waste going to landfills;
-- changes by the Financial Accounting Standards Board or other accounting
regulatory bodies to generally accepted accounting principles or
policies; and
-- acts of war, riots or terrorism, including the continuing war on
terrorism, as well as actions taken or to be taken by the United States
or other governments as a result of further acts or threats of
terrorism, and the impact of these acts on economic, financial and
social conditions in the United States.
The risks included here are not exhaustive. Refer to "Part I, Item 1A -- Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2013, for further discussion regarding our exposure to risks. Additionally, new risk factors emerge from time to time and it is not possible for us to predict all such risk factors, or to assess the impact such risk factors might have on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. You should not place undue reliance on these forward-looking statements, which speak only as of the date hereof. Except to the extent required by applicable law or regulation, we undertake no obligation to update or publish revised forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
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SOURCE Republic Services, Inc.
