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When Republic releases fourth-quarter results, on average, five analysts polled by Thomson Reuters expect the company to earn $0.44 per share for the quarter. Two analysts have a revenue estimate of $1.81 billion for the quarter. Full year earnings are estimated to be $1.79 per share on revenues of $7.38 billion. Analysts' estimates typically exclude special items.
On October 30, 2008, the company reported higher third-quarter profit, helped by increased operating margins and revenue growth. Quarterly net income increased to $88.7 million or $0.48 per share from $67.0 million or $0.35 per share reported in the corresponding quarter in 2007. Revenue for the quarter increased 2.5% to $834.0 million from $806.2 million in the same period last year, exceeding Wall Street's expectation of $824.08 million.
Among peers in the industry, Waste Management Inc. (WMI | Quote | Chart | News | PowerRating) said on February 12 that its fourth-quarter profit dropped 29% from last year on lower revenue, owing to deterioration of the recycling commodities markets. The company's net income for the quarter was $218 million or $0.44 per share, compared with $309 million or $0.61 per share in the year-ago period. Operating revenue for the quarter declined to $3.11 billion from $3.36 billion in the comparable quarter a year before. The company also announced a reorganization plan to weather the economic storm.
A significant event during Republic's fourth quarter was its $4.5 billion combination with Allied Waste Industries, Inc. The trash hauler in December 2008 said it completed its merger with Allied through a stock deal, creating the second largest waste company in the U.S. Republic said that the merger forms a company with expected pro forma annual revenue of about $9 billion and a total market capitalization of about $8 billion. It is expected to generate more than $150 million in pre-tax annual synergies by 2011. The combined company has more than 35 thousand employees serving more than 13 million customers in 40 states and Puerto Rico.
Following the completion of the transaction, Friedman, Billings, Ramsey in December 2008 upgraded the company's shares to "Outperform" from "Market Perform" with a price target of $35. The brokerage also raised its earnings per share estimate for 2008 on the company to $1.83 from $1.78, and its 2009 estimate to $2.13 from $1.85.
Viewing the transaction as a positive for both the company and the industry, analyst Brian Butler said further consolidation, especially among the landfill assets, should help to support long-term pricing discipline. The analyst believes that the combined company can successfully achieve its $150 million synergy target, as well as benefit from future debt refinancing.
However, Fitch Ratings downgraded the company's Issuer Default rating to BBB- from BBB+ with a Stable outlook, to reflect the consolidated entity's credit profile, which according to the agency, is weaker than Republic's pre-merger credit profile but stronger than that of Allied before merger.
Republic revealed recently that in a follow-up action to the merger, it was selling certain assets to California-based Waste Connections Inc. (WCN | Quote | Chart | News | PowerRating). The assets being sold include six municipal landfills, six collection operations and three transfer stations, with a combined revenue of about $110 million. The sale, expected to occur in the second quarter of 2009, is in line with conditions set by the U.S. Department of Justice to approve the merger.
It was reported last week that Cascade Investments, the investment firm owned by Bill Gates, spent $584.2 million to purchase nearly 21.2 million Republic shares on the open market over the past seven months. The fund has a 13% stake in the company.
RSG closed Thursday's regular trade at $21.84, down $0.87 or 3.83%, on 3.66 million shares. For the past year, the stock traded in the range of $18.25-$36.52.
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