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Republic Services' CEO Discusses Q4 2011 Results - Earnings Call Transcript

Our field organization continues to target profitable growth and effectively manage our cost structure. In the fourth quarter, we saw a 20 basis point sequential improvement in our total Collection volumes. Our industrial Collection volumes were positive on a year-over-year basis for the quarter and for the full year. Our cost of operations as a percentage of revenue was flat on a year-over-year basis after adjusting for the impact of higher fuel expense. SG&A expense was 10.6% in the quarter and 10.1% for the full year. Our safety performance continues to improve with a 4.5% favorable reduction in our frequency rate.

Some of our operational achievements during 2011 include: we increased the automated portion of our residential fleet by 8%. 59% of our residential fleet is now automated, which exceeded our year-end goal. We continue to invest in our CNG fleet and natural gas infrastructure, with 6% of our fleet now operating on natural gas. In 2012, we expect about 65% of the trucks we purchase to be fueled by CNG.

We increased recycling capacity by investing $46 million in developing and upgrading our recycling centers in 2011 and are planning on spending an additional $60 million in 2012. These investments will add approximately 12% of incremental recycling volume over the next 18 months. These are new tons to the company that were not previously delivered to a Republic recycling facility or disposal site.

I would like to thank our field operations for their continued support in executing our strategy of achieving profitable growth and maintaining a safe working environment. Tod and Ed will now update our financial performance.

Tod C. Holmes

Thanks, Don. Fourth quarter 2011 revenue, as Don said, was approximately $2 billion. This reflects the following components of internal growth: core price growth, up positive 0.6%; commercial and industrial price was on average up 1%, with residential remaining more competitive due to the municipal and franchise contract pricing environment and also the lagging impact of prior year's CPI. Since our price on index-based contracts tends to lag, we are impacted by the lower CPI environment of 2010, which has not fully anniversaried. Given the current CPI environment, we expect index-based pricing to modestly improve in the second half of 2012.

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