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Article Excerpt
OPERATOR: Welcome to the Allied Waste Industries third quarter 2008 earnings conference call. At this time, all participants are in a listen-only mode. After the prepared remarks by the company, we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded Wednesday, October 29th, 2008. I will now turn the call over to Jim Zeumer, Senior Vice President Communications. Please go ahead, sir.
JIM ZEUMER, SVP, COMMUNICATIONS, ALLIED WASTE INDUSTRIES, INC.: Thank you. Good afternoon. I would like to welcome everybody to Allied Waste's conference call to discuss operating and financial results for our third quarter ended September 30th, 2008. Our earnings release issued earlier today provides information on Allied's third quarter financial results. On the call to discuss our results are John Zillmer, Chairman and Chief Executive Officer, Don Slager, President and Chief Operating Officer, and Pete Hathaway, Executive Vice President and Chief Financial Officer. Also in the room is Mike Burnett, Senior Vice President and Treasurer.
Before we start, let me remind everyone that certain matters discussed during this conference call are forward-looking statements, intended to qualify for the safe harbor from liability established by the Private Securities and Litigation Reform Act of 1995. These statements will generally be identified as such because the context of the statements include words such as the company believes, anticipates, expects, or words of similar impart. The forward-looking statements are subject to certain risks, uncertainties and other factors which could cause actual results to differ materially from those currently anticipated. The description of such risks, uncertainties and other factors can be found in our periodic reports filed with the Securities and Exchange Commission. Shareholders, potential investors and other participants are encouraged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such statements. Forward-looking statements made during today's conference call are made only as of the date of this call and the company undertakes no obligation to publicly update these statements to reflect subsequent events or circumstances.
Our presentation also includes certain financial measures, including gross profit, free cash flow and EBITDA, or operating income before depreciation and amortization that are considered non-GAAP financial measures. You can access information required by the SEC about these non-GAAP financial measures, including reconciliation to the most directly comparable GAAP financial measure in our quarterly press release, which is located on our website at alliedwaste.com. Let me now turn the call over to John Zillmer.
JOHN ZILLMER, CHAIRMAN & CEO, ALLIED WASTE INDUSTRIES, INC.: Thanks, Jim. Excuse me, on previous conference calls and investor meetings I have talked about important initiatives that Allied Waste Industries was pursuing that were focused on driving long-term business metrics including strategic pricing, operating efficiency and cash flow. Successfully implementing these business initiatives has been a key component to the operating improvements and financial gains Allied Waste has experienced over the past three years. Our third quarter and nine months results show the positive impacts these actions continue to have and the overall progress made throughout our operations. While it would have been easy for the organization to have lost focus because of challenging economic conditions or our proposed merger, I am very pleased to say that the strength of our Q3 results clearly demonstrate that that did not happen. In the quarter, pricing gained 7.6%, which when combined with good cost controls helped to expand gross margins by 60 basis points and EBITDA margins by 100 basis points, excluding the impact of merger related expenses. As detailed in our press release, for the quarter Allied Waste reported adjusted earnings of $0.28 per share compared with $0.24 per share in Q3 2007. This earnings per share increase of almost 17% reinforces the point that Allied Waste made significant gains in key areas throughout our operations and that the organization remains focused on delivering consistent long-term operating and financial improvement.
Before turning the call over to Don and Pete for a more detailed review of the quarterly financials, let me take just a few minutes to provide an update on a proposed merger with Republic Services. A lot has happened since our last quarterly call, but through it all, the merger and related integration processes remained on track. Currently, only approvals by the shareholders of each company and the Department of Justice remain for this merger to be completed. A joint proxy statement was filed by Allied Waste and Republic on October 10th in support of a special meeting with shareholders on November 14th. We have spoken with most of our major shareholders over the intervening weeks of the merger process and we fully expect our shareholders to approve this transaction at the November 14th meeting. We are also on track with expected DOJ approval of the transaction. We certified compliance with the Department of Justice's second request for information and we are currently in the process of completing final negotiations with the agency. At this time, this process is proceeding well and is on track to allow us to complete this merger on schedule by mid December. Republic already has in place the needed financing, so we are certainly in position to complete this merger by early to mid December, which is consistent with the schedule outlined when the deal was first announced in June.
Operating on a parallel track with shareholder and DOJ approvals, our integration teams have done tremendous work planning for the post-merger integration of Allied Waste and Republic. Teams, comprised of representatives from each company, have mapped out all the critical business functions ranging from truck routing and purchasing to information systems and benefits. The teams have built detailed day one readiness programs that will enable these two companies to effectively come together, while continuing to provide industry leading service to our customers. Over the course of my career I have been involved with a number of mergers, so I can truly appreciate the work that has...
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