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Republic Services, Inc. - Waste Management
- Category Directory
110 S.E. 6th Street, 28th Floor
Fort Lauderdale, Florida
(954) 769-2400
www.republicservices.com
Sales
$2.5
billion
Business Description
W We
are a leading provider of services in the domestic non-hazardous solid waste
industry. We provide non-hazardous solid waste collection services for
commercial, industrial, municipal and residential customers through 142
collection companies in 22 states. We also own or operate 93 transfer
stations, 58 solid waste landfills and 35 recycling facilities.
As of December 31, 2003, our operations were organized into five regions
whose boundaries may change from time to time: Eastern, Central, Southern,
Southwestern and Western. Each region is organized into several operating
areas and each area contains a group of operating locations. Each of our
regions and substantially all our areas provide collection, transfer,
recycling and disposal services. We believe that this organizational
structure facilitates the integration of our operations within each region,
which is a critical component of our operating strategy. See Note 10 of the
Notes to Consolidated Financial Statements for further discussion of
operating segments.
We had revenue of $2,517.8 million and $2,365.1 million and operating income
of $412.7 million and $459.5 million for the years ended December 31, 2003
and 2002, respectively. The $152.7 million, or 6.5%, increase in revenue
from 2002 to 2003 is primarily attributable to the successful execution of
our operating and growth strategies described below. The $46.8 million, or
10.2%, decrease in operating income from 2002 to 2003 is primarily
attributable to additional self-insurance expense.
Our presence in high growth markets throughout the Sunbelt, including
California, Florida, Georgia, Nevada, North Carolina, South Carolina and
Texas, and in other domestic markets that have experienced higher than
average population growth during the past several years, supports our
internal growth strategy. We believe that our presence in these markets
positions our company to experience growth at rates that are generally
higher than the industry’s overall growth rate.
While we believe that we are well positioned to continue to increase our
revenue and operating income in the longer term, the economic slowdown has
had a negative impact on certain aspects of our business. However, the
aspects of our business that we believe are “recession resilient” have
continued to perform well. These include our residential and commercial
collection operations which are flat-rate businesses and are not subject to
the volatility we experience in our industrial collection and disposal
businesses. We continue to focus on enhancing stockholder value by
implementing our financial, operating and growth strategies as described
below.
Operations
Our operations primarily consist of the collection and disposal of
non-hazardous solid waste.
Collection Services. We provide solid waste collection services to
commercial, industrial, municipal and residential customers in 22 states
through 142 collection companies. In 2003, 75% of our revenue was derived
from collection services consisting of approximately 32% from services
provided to municipal and residential customers, 38% from services provided
to commercial customers and 30% from services provided to industrial and
other customers.
Our residential collection operations involve the curbside collection of
refuse from small containers into collection vehicles for transport to
transfer stations or directly to landfills. Residential solid waste
collection services are typically performed under contracts with
municipalities, which we generally secure by competitive bid and which give
our company exclusive rights to service all or a portion of the homes in
their respective jurisdictions. These contracts or franchises usually range
in duration from one to five years, although some of our exclusive
franchises are for significantly longer periods. Residential solid waste
collection services may also be performed on a subscription basis, in which
individual households contract directly with our company. The fees received
for subscription residential collection are based primarily on market
factors, frequency and type of service, the distance to the disposal
facility and cost of disposal. In general, subscription residential
collection fees are paid quarterly in advance by the residential customers
receiving the service.
In our commercial and industrial collection operations, we supply our
customers with waste containers of varying sizes. We also rent compactors to
large waste generators. Commercial collection services are generally
performed under one- to three-year service agreements, and fees are
determined by such considerations as:
• market factors,
• collection frequency,
• type of equipment furnished,
• the type and volume or weight of the waste collected,
• the distance to the disposal facility and
• the cost of disposal.
We rent waste containers to construction sites and also provide waste
collection services to industrial and construction facilities on a
contractual basis with terms generally ranging from a single pickup to one
year or longer. We collect the containers or compacted waste and transport
the waste either to a landfill or a transfer station for disposal.
We own or operate 93 transfer stations. We deposit waste at these stations,
as do other private haulers and municipal haulers, for compaction and
transfer to trailers for transport to disposal sites or recycling
facilities.
Also, we currently provide recycling services in certain markets primarily
to comply with local laws or obligations under our franchise agreements.
These services include the curbside collection of residential recyclable
waste and the provision of a variety of recycling services to commercial and
industrial customers.
Disposal Services. As of December 31, 2003, we owned or operated 58
landfills, which had approximately 8,607 permitted acres and total available
permitted and probable expansion disposal capacity of approximately 1.8
billion in-place cubic yards. The in-place capacity of our landfills is
subject to change based on engineering factors, requirements of regulatory
authorities and the ability to expand our sites successfully. Some of our
landfills accept non-hazardous special waste, including utility ash,
asbestos and contaminated soils. See “— Properties.”
Most of our existing landfill sites have the potential for expanded disposal
capacity beyond the currently permitted acreage. We monitor the availability
of permitted disposal capacity at each of our landfills and evaluate whether
to pursue expansion at a given landfill based on estimated future waste
volumes and prices, market needs, remaining capacity and likelihood of
obtaining an expansion. To satisfy future disposal demand, we are currently
seeking to expand permitted capacity at certain of our landfills, although
no assurances can be made that all future expansions will be permitted as
designed.
Other Services. We have 35 materials recovery facilities and other recycling
operations, which are generally required to fulfill our obligations under
long-term municipal contracts for residential collection services. These
facilities primarily sort recyclable paper, aluminum, glass and other
materials. Most of these recyclable materials are internally collected by
our residential collection operations. In some areas, we receive commercial
and industrial solid waste that is sorted at our facilities into recyclable
materials and non-recyclable waste. The recyclable materials are salvaged,
repackaged and sold to third parties and the non-recyclable waste is
disposed of at landfills or incinerators. Wherever possible, our strategy is
to reduce our exposure to fluctuations in recyclable commodity prices by
utilizing third party facilities, thereby minimizing our recycling
investment.
We provide remediation and other heavy construction services primarily
through our subsidiary located in Missouri. During 2002, our subsidiary was
awarded a contract to assist on the Riverside Levy Project in Missouri.
Revenue from this project, which is scheduled to be completed in 2004, is
expected to be approximately $50.0 million of which approximately $41.0
million has already been recorded.
We also have a Texas-based compost, mulch and soil business at which yard,
mill and other waste is processed, packaged and sold as various products.
Waste Management Industry Overview
Based on analysts’ reports and industry trade publications, we believe that
the United States non-hazardous solid waste services industry generates
annual revenue of approximately $43.0 billion, of which approximately 59% is
generated by publicly-owned waste companies, 28% is generated by
privately-held waste companies, and 13% is generated by municipal and other
local governmental authorities. Three companies generate the substantial
majority of the publicly-owned companies’ total revenue. However, according
to industry data, the domestic non-hazardous waste industry remains highly
fragmented as privately-held companies and municipal and other local
governmental authorities generate approximately 41% of total industry
revenue. In general, growth in the solid waste industry is linked to growth
in the overall economy, including the level of new household and business
formation. The solid waste industry has experienced a period of rapid
consolidation. During this time we were able to grow significantly through
acquisitions.
Waste Management
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