“During 2012, we continued to produce strong cash flows from operating activities and return cash to our shareholders. We met our goal of $800 million to $850 million of free cash flow, generating $829 million of free cash. We expect to grow free cash flow by 33% to 45% in 2013. We returned $658 million to our shareholders in 2013 through our dividend, which our Board has indicated will increase in 2013 to $1.46 per share annually.”
KEY HIGHLIGHTS FOR THE FOURTH QUARTER 2012 AND THE FULL YEAR 2012
- Revenue in the fourth quarter increased by 0.8%, or $28 million. For the full year, revenue increased by 2.0%, or $271 million.
- Internal revenue growth from yield for collection and disposal operations was 0.9% for the fourth quarter and 0.8% for the full year. Adjusting for contract changes related to the Company’s South Florida waste-to-energy plants, internal revenue growth from yield for collection and disposal operations was 1.1% in the fourth quarter and 1.0% for the full year.
- Core price increases, which consist of price increases and fees (excluding fuel surcharges), net of rollbacks, were 2.5% for the fourth quarter and 2.8% for the full year.
- Internal revenue growth from volume was 0.4% for the fourth quarter and 0.5% for the full year.
- Recycling and electricity commodities pricing had a negative impact of $0.04 per diluted share in the fourth quarter when compared to the fourth quarter of 2011. For the full year, commodities pricing had a negative impact of $0.25 per diluted share when compared to the full year of 2011.
- Operating expenses increased by $79 million in the fourth quarter and $338 million for the full year. Adjusting for the items excluded in calculating the Company’s as-adjusted earnings, operating expenses increased by $71 million in the fourth quarter and $326 million for the full year. (b) In the fourth quarter, the majority of the increases were for costs associated with operating recently acquired businesses, labor, and repair and maintenance.
- SG&A expenses in the fourth quarter improved to 10.4% of revenue from 11.9% in the prior year period, and for the full year improved to 10.8% of revenue from 11.6% in the prior year.
- In the fourth quarter, net cash provided by operating activities was $577 million; capital expenditures were $378 million; and free cash flow was $215 million. (b) For the full year 2012, net cash provided by operating activities was $2.3 billion; capital expenditures were $1.51 billion; and free cash flow was $829 million. (b)
- The Company returned $165 million to shareholders in the fourth quarter in dividends. For the full year, the Company returned $658 million to shareholders in dividends.
- The effective tax rate was approximately 32.4% in the fourth quarter and approximately 34.0% for the full year.
The Company announced the following with regard to its financial outlook for 2013:
- 2013 adjusted earnings per diluted share are expected to be between $2.15 and $2.20. (b)
- Internal revenue growth from yield on the collection and disposal business is expected to be between 1.0% and 1.5%. Internal revenue growth from volume is expected to be between 0.5% and 1.0%.
- Recycling commodity sales prices are expected to have a negative $0.02 impact on earnings per diluted share in 2013, compared with the prior year.
- Results from the Company’s waste-to-energy operations are expected to have a negative $0.02 impact on earnings per diluted share, compared with the prior year.
- The tax rate is expected to be approximately 35.0%.
- Capital expenditures are expected to be approximately $1.3 to $1.4 billion.
- Free cash flow is projected to be approximately $1.1 to $1.2 billion without the benefit of any divestitures. (b) Any divestitures would increase free cash flow.
- The Board of Directors has announced its intention to increase the dividend to $1.46 per share on an annual basis, at an approximate annual cost of $680 million. The Board must separately declare each dividend. The Board has authorized up to $500 million in share repurchases. The amount of share repurchases will depend on a number of factors, including changes from expected levels of capital expenditures, business acquisitions, investments and debt repayments.