Republic Services Inc (RSG) 2005 Q2 法說會逐字稿

Good morning, and welcome to the Second Quarter Conference Call for Investors in Republic Services. Republic is traded on the New York stock exchange under the symbol RSG. Your host for this afternoon's call is Chairman and CEO, Jim O'Connor. Today's call is being recorded and all participants are in a listen-only mode. There will be a question-and-answer session following Republic's summary of quarterly earnings. I will provide you with specific instructions for questions later in the call. At this time, it's my pleasure to turn the call over Mr. O'Connor. Good afternoon, Mr. O'Connor.

Good afternoon, Barry. Welcome and good afternoon to all of you for joining us and thank you for joining us today. This is Jim O'Connor and I would like to welcome everyone to Republic Services second quarter conference call. This afternoon, Tod Holmes, our Chief Financial Officer, and Ed Lang, our Treasurer are joining me as we discuss our second quarter performance. We're conducting our call from our regional office in Indianapolis, where we have concluded our quarterly Board meeting. Our Board routinely visits our operating locations in order to understand the dynamics of our industry better. I would like to take a moment to remind everyone that some of the information we will discuss with you today contains forward-looking statements, which involves risks and uncertainties and maybe materially different from our actual results.

Our SEC filings discuss factors that could cause actual results to differ materially from expectations. And additionally, the material that we discuss today is time sensitive. If in the future you listen to a rebroadcast or a recording of this conference call, you should be sensitive to the date of the original call, which is July 27, 2005. Please note that this call is the property of Republic Services Incorporated, any redistribution, retransmission, or rebroadcast of this call in any form without the expressed written consent of Republic Services is strictly prohibited.

I'm pleased to report to you today that Republic continues to improve its operating performance as a result of our pricing discipline and strategic initiatives, while we are still facing high fuel costs, which we're mitigating through fuel surcharges and pricing initiatives, we have still experienced improvement in cost of operations and margins. Fuel still remains a volatile component of our cost structure. Before our financial review, I would like to provide an update on the strategic objectives we discussed on our February conference call. Our first strategic objective was to continue to utilize our return on investment pricing model to improve margins. In addition, we will continue to develop our field management team and invest in training to ensure that we're benefiting from our cost initiatives. As a result in the first quarter, Republic earned $0.44 per share versus $0.39 per share in the second quarter of 2004. Operating margins improved 10 basis points to 17.1%. We saw lower insurance cost, improved labor productivity and maintenance expense. Higher fuel expense negatively impacted our operating margins.

Our EBITDA margins improved by 30 basis points to 27.4% and our internal growth was 5.8% with 3.2% from price. Our second strategic objective, we will exit under performing markets or lines of business. Our decision to enter or expand any market is based on return on invested capital objectives. In the last quarter's call, we discussed our transition in Western New York and a successful bid to operate a landfill in Arlington, Texas. We began operating at the Arlington facility May 1. In addition, we have recently signed a letter of intent with allied for the purchase and sale of a number of markets. We will continue to look to improve our competitive position and return on investment through these types of transactions. Our third objective, we will continue to roll out our routing tools in our residential collection business as we had in the prior year on our commercial business. All of our cost initiatives are ongoing efforts.

A 30 basis point improvement in gross operating expenses demonstrates that our initiatives regarding price, labor productivity, maintenance and safety have been successful. Other highlights for the quarter include, during the quarter Republic generated $86 million of free cash flow, continued to return our excess cash to our shareholders. In the second quarter, we repurchased 4.3 million shares for $148 million. Year-to-date, we have repurchased 10.2 million shares. Since we initiated our share repurchase program five years ago, we've repurchased over $1 billion of our stock. Our internalization rate for the quarter has increased to 56% as a result of it a number of acquisitions in the landfill area over the past year and the divestiture of a collection operation in Western New York. Based on our strong business fundamentals and cash flow expectations, our Board of Directors has approved a 17% increase in the dividend from $0.12 to $0.14 per share per quarter. This increase will be effective with the dividend paid in October. And in June, we entered into a new $750 million, 5-year revolving credit facility. This new bank financing will lower our letter of credit costs and extend the maturity of our bank line beyond our next public debt maturity in May of 2009.

After Tod's financial review, I have some comments on our 2005 financial guidance. Tod?

Thank you, Jim. I'll begin by review of the Company's financial results by discussing the second quarter revenue. Second quarter 2005 revenue rose by 5.2% to $718.6 million from $683.2 million in the last year. Internal growth was a very strong 5.8%, of which 5% was from core operations, 2.6 from price and 2.4 from volume. During the quarter, we continued to benefit from our ongoing price increase strategy and pricing remains a key initiative throughout 2005.

Our core volume growth comes from all lines of business, including our residential, commercial, industrial landfill businesses, the remaining $0.08 of 1% of internal growth comes from commodities, non-core business and fuel surcharges. This internal growth was partially offset by $0.06 of 1% reduction in revenue primarily due to the divestiture of assets in Western New York during the first quarter of 2005. Our Company's internalization increased from 55% during the first quarter to 56% during the second quarter of 2005 due to the sale of these assets in Western New York and volumes being internalized into our landfill in Arlington, Texas.

Next, let me discuss changes in our sequential operating margins. Sequentially, our second quarter operating margins decreased by 50 basis points. The key components of this sequential decrease in margins are as follows- fuel, negative 30 basis points, labor disposal and subcontracting costs, negative 60 basis points, DD&A, a negative 80 basis points, SG&A, a positive 120 basis points for a net decrease of 50 basis points.

Now, I'll briefly discuss the components of our sequential margin change. First, fuel. Fuel was approximately 4.9% of revenue during the second quarter of 2005. A sample of our larger collection divisions indicate that our wholesale price per gallon increased about 6% in the quarter from $2.2 in the first quarter to $2.15 in the second quarter.

Second, labor disposal and subcontracting costs. During the second quarter, we experienced higher sequential labor disposal and subcontracting costs due to the normal seasonal increase in volumes, especially from our residential collection business. This is a normal seasonal change that we see in our business.

Third, DD&A. During the first quarter of 2005, the Company completed its annual review of actual and projected costs associated with landfill capping, closure and post closure in accordance with Statement of Financial Accounting Standards 143. As a result of this review, the Company recorded a $5.9 million reduction in landfill amortization during the first quarter. This reduction is due to the reversal of contractor profits we previously discussed and projected inflation that was included in the previous Company's cost estimates as required by the statement. Obviously, we don't see that benefit continuing in the second quarter. This is a one-time item.

Finally, SG&A. Sequentially, SG&A decreased by 120 basis points. During the first quarter, the Company exchanged $275 million of its public debt due in 2009 for new notes due in 2035. The Company incurred approximately $3 million of cost associated with this exchange. Also, SG&A as a percentage of revenue was typically lower in the month, in the summer months due to seasonally higher revenue. We believe that for the year, the Company's SG&A as a percentage of revenue will be in the 10% range. Operating income before depreciation, amortization, depletion, and accretion, sequentially, operating income before DD&A increased by $30 million or 7.1% from 184.1 million during the first quarter of '05 to 197.1 million in the second quarter of '05.

Let's turn our attention to the second quarter year-over-year operating margins. Operating margins increased by 10 basis points from the second quarter of 2004 to the second quarter of 2005. Excluding the impact of higher fuel costs, our margins actually expanded by a 100 basis points indicating continued effective management of controllable cost and the effective execution of our price increase strategy. The key components of this margin increase are as follows; Risk and Health Insurance positive 60 basis points, Fuel negative 90 basis points, Labor disposal and sub contractor cost positive 60 basis points, DD&A negative 20 basis points, and SG&A was unchanged for net improvement margins year-over-year of 10 basis points.

Now briefly comment on these components of the year-over-year margin change. First the risk and health Insurance. During the second quarter of 2005 insurance expense was approximately 5% of revenue. This 50 basis point improvement is primarily the result of the Company's continued focus on safety and claims management. We expect self-insurance to be and remain in this 5.5% range for the balance of 2005.

Second, fuel. Fuel as I mentioned earlier was 4.9% of revenue during the second quarter of 2005. A sample of our larger divisions indicates that the wholesale price per gallon increase, about 34% of $1.60 in the second quarter of 2004 to $2.15 in the second quarter of 2005. Our Republic is recovering about half of our fuel increases, the fuel surcharges plus on like basis we are also recovering fuel increases for the franchise portion of our business as franchises come up for CPI adjustment. Third, the labor disposal and subcontracting cost, improved pricing in our collection lines of business, increased internalization, and the continued focus on productivity improvements resulted in the 60 basis point margin benefit.

Four DD&A, the increase in DD&A is primarily due to depreciation on newly acquired cost (ph) and equipment. And finally, SG&A, SG&A as a percentage of revenue remain constant at 9.8% in the second quarter of '04 to the second quarter of '05. A slight increase in bad debt expense during the second quarter was offset by higher revenue.

Overall, we believe that the Company will continue to experience margin, modest margin expansion during 2005 as a result of that better pricing environment and continued focus on cost control. Thus assumes no major changes in fuel from the current levels.

First quarter operating income before depreciation, amortization, depletion and accretion. Year-over-year operating income before DD&A increased by $12 million or 6.5% from 185.1 million or a 27.1% in the second quarter of '04 to a 197.1 million or 27.4% in the second quarter of '05.

Next I will focus on free cash flow. Again our definition of free cash flow is very simple. It's cash provided by the operating activities less the purchase of property and plant and equipment proceeds from the sale of equipment is presented in the Company's consolidated statement of cash flows. Using this straightforward definition free cash flow for the second quarter of 2005 was $86 million. This is based upon cash flow from operating activities of $167 million less purchases of property and equipment of 87 million, plus proceeds from the sale of equipment of 6 million for a free cash flow of 86. For the six months year-to-date until June 30 free cash flow was 204 million. This consists of cash flow provided by operations of 335 million plus purchases of property and equipment of 137 million plus $6 million proceeds in the sale of equipment for a net of 204 million free cash. Please keep in mind that our free cash flow is historically high during the first half of the fiscal year due to the timing of tax payments and capital expenditures.

We currently expect our full year capital spending will be slightly higher than our $300 million original guidance, maybe then to $15 million higher due to a stronger than expected internal growth which must be funded with capital. However we do believe that we remain on track to achieve our revised free cash flow guidance of 280 million for the year. Items didn't pack in cash balances. During the second quarter of 2005, we paid approximately $16 million in connection with our acquisition of landfill in Arlington, Texas. We also purchased 4.3 million shares of our common stock for approximately $148 million at average price of about 34 to 53. So, as Jim indicated earlier, year-to-date we purchased over 10.2 million shares of our stock which is about 6.8% of our total shares.

At June 30, 2005, we had 437.5 million remaining under our existing share repurchase program, and our actual share count at June 30, 2005 was a 141.9 million shares. Our balance sheet remains very strong. At June 30, our accounts receivable balance was 268 million. Our day sales outstanding was 33 days. Again Republic continues to lead the industry in managing working capital and particularly accounts receivable. Our net debt is 1billion 187 million, that's up from 1 billion 20 million at December 31, '04. Consistent with our cash flow performance in previous guidance, our net debt to total capital at June 30 is 42%, and the public remains committed to maintaining this investment grade rating.

Now I will turn the call back over to Jim.

Thank you Tod. I think it's obvious that we are off to a very good start in 2005. Although we have the challenge of high fuel cost and other inflationary pressures we are raising our EPS guidance to $1.70 to $1.74. This guidance assumes that the current economic conditions do not deteriorate and fuel costs do not increase above the second quarter levels for the remaining of 2005. We remain focused on improving our return on invested capital and free cash flow, and I would like to congratulate all the members of the Republic team for there performance and that's depicted in our second quarter results.

So, with that operator, we will open the call for questions.

[OPERATOR INSTRUCTIONS]. Lorraine Maikis.

Just wanted to talk a little bit about the pricing growth that you saw. Can you give us a little more information on are you working on any landfill initiative. Was that mostly collection and if so were there any areas of your collection business that were stronger than others?

We are receiving price from all lines of business. But predominantly again still from our collection business. Again, where we have fully intergraded operations in some of our smaller markets, we are receiving some price from third parties in those markets, but it is still limited. But, I think we are starting to see that market loosen up a little bit and we would continue to see and we are continuing to forecast, you know, strong price for the balance of the year. Again that was one of our strategic initiatives at the beginning of the year and I think it's holding true. Some of it is due to the market and I think some of the flexibility that we are finding in the market for price as well as again the disciplines and tools that we continue to employ in the field.

Okay and then, what percentage of your business are you currently surcharging for fuel and do you plan on implementing any kind of environmental fee or some of the other charges we have seen your competitors use?

Of the business that we had discretion over, we are probably upwards to 90% of that. We do have a component that has resisted but from the first quarter to the second quarter we have been much more successful at increasing that percentage of participation. The balance of our work is either in contracts that don't allow it to happen or from our franchises where we will recover it through the indexing of the contract price, so that lag, as Tod said in his comments. But, again I think we are seeing it pretty much across all of our lines of business predominantly (indiscernible) collection. But, again I think regionally I think we are getting it across the country.

Amanda Tepper, J.P. Morgan

J.P. Morgan. Good afternoon. On the acquisition side, aside from this one landfill, are you finding good opportunities out there? Is your payback criteria moving up as you are seeing this good organic growth in your existing business or because other companies are talking about maybe a little bit more opportunity there more than what you're seeing?

Well, I mean, again, we haven't done very much here in this quarter. You know, we continue to focus in on the markets that need to be integrated as I think as example when we have accomplished in the Dallas for work marketplace, but I think where our real focus is really in opening up discussions and purchase and sell arrangements with our two or three national competitors. And I think we have announced that we are trying the letter of intent without (indiscernible) currently continue to have discussions with waste management that we hope will culminate in some transactions here. So, I mean that's really our focus right now, is really to improve the returns that we've got in some of the markets and the ones where we don't see it and hopefully we would be exiting. So, our real focus is there because we just don't see a lot of quality acquisitions out there.

And is this somewhat new focus because the idea of making it mutually beneficial has been around for a long time. Are you more open to than in the past or are you finding that some of your major competitors under new management are more open to swapping quality for quality in the past or do you think we will see a lot more a meaningful pickup in slot activity?

Well, I mean I think all, I can't speak for my competitors, I can only speak about how we look at our own markets. Again we are looking to continue to move up to an acceptable return on investor capital in every market that we have, if we are not already there, and the only means to do that is by either acquiring business that's more profitable and getting the synergies out of those businesses or looking to exit those markets via a slot or to strengthen it by purchasing another competitors' work there. So, I mean I think that's what we are looking at right now and I am assuming because of some of the conversations that we have had with our competitors the activity may pick up, but again all those things remain to be seen and we are an active participant there, if in effect given the right sort of circumstances and the right marketplaces.

Jamie Cook, Credit Suisse First Boston.

My first question just to dig a little more into the asset swaps and divestitures. Mostly focused on the divestiture side, when your competitors said last night that they would consider divesting versus just an asset swap and I guess my question to you is given -- did you see yourself restricted to the sunbelt area or given the right opportunity would you be more aggressive in expanding your geographic front?

Given the right sort of circumstances, you know, and again assuming that meet our criteria, our market definitions I mean for growth, the opportunities in the market would afford us in the future, and then our return expectations, yes, sure we are always open to that. I mean that's how we got to Richmond, California, that's how we got up into the San Francisco bay area, those were new -- that was a new market entry for us. As it relates to selling business, again we think our portfolio is in pretty good shape. We would prefer to be actually exchange or to be purchasers of business. So, there may be opportunities out there versus quality traditional swap where we would be a purchaser.

And then my next question relates to in terms of increasing your guidance, I'm just trying to get a feel for the different moving parts here, is the bullishness, I am assuming it's more price -- is it more price and volume, that's what my assumption is, if you could just speak a little bit -- or if your change your forecast for pricing volume for the year?

Well, I think it's volume and you know we are seeing strength in all of our lines of business, but in particular we are seeing it in the industrial collection component of our business and some of our special ways.

And we are seeing it really in the -- across the -- three of our regions here more than the whole country and that will be the western part of the country, the southwest and southern part of the country. Those are certainly a little bit stronger although the other parts are doing still okay also.

Michael Hoffman, Friedman, Billings, Ramsey.

We have seen all of us circling around the same set of questions. Allied last night (indiscernible) other competitors said they are going to get aggressive about landfill pricing and initiate a program that looks a lot like what waste had started at the beginning of the year, do you have any thoughts about what you would do or say differently about your initiatives with regards to landfill pricing?

Well, we are continuing looking -- we continue to look for landfill pricing opportunities and I think when the market better affords us that opportunity, we will try to capitalize on it. I mean -- as I said I think in some of our smaller markets, the markets that we described as having -- being fully integrated and we are a market leader, we've tried to move out price in those particular markets at our landfills. But in some of larger urban areas it has been more difficult as of late better, but still not to a level that would really excite us here at Republic.

Who's the spoiler when it's more difficult?

I don't think it's -- I think it's really just the market conditions that are out there in those markets. Some of it is that there is not in a lot of cases still a lot of special waste. And therefore the discretionary spending out there limits the volume and still continues to hold back the price because the volume is limited. But I don't see anybody as a spoiler. I think the pricing environment in most of our marketplaces is fairly good, Michael.

Corey Greendale, First Analysis.

I guess, I won't circle around the same questions but try a couple of different things. First of all, I was hoping you could just kind of share your current thoughts on capital structure given the up-sizing of the dividend, kind of a specific target you are still aiming at in terms of debt rations?

Well, I think the range that we are in right now is certainly a comfortable range. I think we talked in the past about the share repurchase program and stepping that up to really take the excess cash off the balance sheet. The dividend -- as we did with the share repurchase, we started out modestly with the dividend and then we built it up over time, and this is our third step in that direction. So, it's a nice double-digit type of growth in the dividend and we would expect to move it up. And doesn't really change cash flow utilization characteristics of the business that much. I think that dividend is probably about 9 or $10 million of cash. So looking ahead, we would expect to see more of the same and again as we move ahead we will continue to evaluate the balance of share repurchase and dividend, but I think dividend becomes a stronger component.

Okay. And kind of another longer-term question, was just hoping to get some perspective on -- with the Congressional talks about possibly legislating waste flow from some other countries, whether you are looking at possibly other opportunities in Canada or what your thoughts are about this? The waste has been coming from Toronto, is that a possibility on the table?

Well, again Corey, the bill that is in Congress today we believe is odd. Essentially the bill would delegate federal authority for foreign trade to States, which we believe is clearly contradictory to the constitution of the Untied States, and it's really not the intent of the bill. So, further we are not even sure at this stage from some of the survey work that we have done that the bill is actually going to pass in the Senate. And so, we don't see any significant risk at this stage to our trial volumes, and as far as other opportunities, we continue to invest in other -- investigate other opportunities all the time in the Ontario region.

Tom Ford, Lehman Brothers

You had referenced in your comments about the benefit of the pricing tools and I was just curious if you could talk about how much of the revenue mix you think is benefiting if you will in terms of, you know, where have you rolled out the tools? How much has been rolled out? What do you have left to do?

I mean -- I don't think -- actually the tools, it has been rolled out for several years. But it's like everything else, it's protecting utilization of the tool. And when you start to get into return on invested capital there are lot of moving parts and a lot of dynamics in the marketplace. So once you go through the mathematics just to come up with that correct financial assumptions that go in to the calculation of return on investment capital, now you got to look at what's going on in the real world, the marketplace. And then kind of look at what's, how the marketplace is performing today and how it's -- we think it may perform tomorrow before we draw some conclusions as to whether we stay or leave. And how healthy the market is or how unhealthy it is. But, I think, when you look at all of our lines of business, we've utilized this tool very effectively now like any organization that's decentralized. We've got some of our field organizations utilizing it much better than others. So there is still a lot to be derived here, but I mean we've used it not only on looking at bidding opportunities for commercial and industrial work or specialized work. But we obviously have used it on reviewing all of our existing accounts. And I think it's just a discipline that continues to get better in our company and more than I can get better results from it. Again, I've always said that a lot of our initiatives take years and years to perfect if we ever actually perfect them especially in our organizational structure that being decentralized. But, I mean I think the field is very effective in utilizing this. I'm not so sure there is a whole lot more to be extracted other than the fact that I think on a go forward basis, we're making better pricing decisions going forward today than we probably did two or three years ago on new business or new business opportunities.

And Tod, just a question for you, I don't want to rake you over the (indiscernible) but because the comps are in exactly one-to-one, but if I look at free cash so far this year versus the guidance, it's about 70% and at this point last year relative to what you did and that's about 60% but I know that you had the benefits in there from the landfill tax and what have you, so just wondering if there is anything that you can share or add on that in terms of differences, you know, this year versus last?

I'm not sure if you looked at the capital component, we were looking to get some additional trucks in a little earlier this year, so it could be in the capital spending. Again, I go back to the comments that I made earlier, I think we've been very -- which is don't annualize off in any quarter or semi annual number to come up with a cash flow because both the fax numbers and the capital spending numbers on these businesses could be fairly lumpy within anyone quarter. However, we do feel very comfortable with the increased guidance that we gave for the year. And that's even taking in consideration some modest increase in our capital spend. So, we feel very good about the cash flow generating capability the business has, I think it goes to the pricing and the volumes that Jim spoke to and the overall strength of the economy I would say.

Kevin Monroe, Thomas Weisel Partners.

Just wondering if you guys could quantify the margin impact, I'm assuming it's a benefit from the divestiture you did in the quarter.

Well, there is a number of different things that are going on and it's difficult to totally quantify. I would say that our Rochester Western New York transaction, it's probably between that and the improved mix of revenue internalization in the Arlington, Texas area. It probably ranges 20 to 30 basis points.

Okay, some marginal--

That's probably a little -- what I just said is probably a little bit on the high side because you (indiscernible) revenue mix and we had some pretty strong landfill revenue in the business.

Leone Young, Smith Barney.

Just have a couple of house keeping questions. Do you happen to have available the figures for gross debt, restricted cash and--?

The cash that's restricted for IRBs and financial insurance is a 145 million. We have some other restricted cash and then why don't I put that over to Ed. Ed?

Sure, look at the total debt for the end of the second quarter was 1.362 billion and then if we look at we had two components of cash to come up with a net debt, we had a unrespective cash in the quarter of 30 million and as Todd mentioned was strictly cash related IRB's (ph) of 145. So the net debt was 1.187 billion and if you look at with stockholders equity 1.668 billion (ph), we come up with net debt to total cash of 41.5%.

And your all in average cost adjust these debts?

It's approximately 5.4% but keep in mind that we have a fixed floating mix of 70% fixed and 30% floating. So there is a little bit of what is called interest rate risk in that number in the event there are further increases in short-term rates.

Steve Cole (ph), Metador Capital (ph).

Could you maybe just -- I presume what we are looking at just on the differential on the mid interest expense is just really a function of working down the cash balance and share repurchases on one hand and also seeing some of that negative impact on the short-term tactic financing stuff, am I reading that right or is there something else there?

In the interest expense line, I think that part of -- the other thing that is in the interest expense line is we re-did our bank facility and I think we had probably about $400,000 to $500,00 of unamortized expense associated with our product facilities and we are able to go to market and get a pretty good 5-year commitment. So, we had 2 years, it was unexpired on a previous 5-year commitment.

All right. And I guess one question just on capital structure. I think I heard you correctly that as we go out, you obviously buy back a fair amount of stock in the first half. I wonder if the focus towards dividends become more important as that, have you set a timeframe when we'd look at shifting this mix a little bit?

No. It's not -- I don't think you are going to see a dramatic shift. I think it is like all the other days you've seen from this company over the past 5 or 6 years. We develop a strategy, we identify a couple of different opportunities and then it is a question of balancing those opportunities to maximize the value and at this point, the share repurchase is the stronger of the two in terms of creating value. So, there is a bias towards the share repurchase but the dividend is moving up. So, you are not going to see one big event, I think what you will see is a series of events over a few years with a gradual shift.

Stuart Sharp, Standard & Poor's Equity Group.

Regarding the repurchase plan, I believe you said previously you were looking at a 10% buyback target through '06, correct me if I am wrong and now you are up to 7%, I was wondering if you are planning to reach that goal sooner, like by the end of this year?

No, I think what we were saying was the combination of '05 and '06 represented, I thought it was somewhere around 16% of our shares and so over that 24-month period, we would complete that program, which has been our behavior. We are very consistent in terms of announcing something and then completing in that time period. So, I would fully expect that with the guidelines that we gave last quarter, it still holds and we will finish this year. Obviously, we will be continuing to be in the market in third and fourth quarter of the year, but at the end of the year, we still have substantial authorization available for the share repurchase program that will not be completed until 2006. And again the strategy here is to take the excess cash off the balance sheet, prefer it back in the share repurchase program and try to be approximately cash flow neutral, and we may need bank facility modestly depending on the seasonality of cash flows.

Okay. And also regarding acquisitions, you are still looking in the 4 to 5 times EBITDA range with run rates of 25 to 30 million or I think that's looking a little higher now?

Well, I think it just depends on some of the other transactions that we would see from some of the other larger companies. I guess 4 or 5 times EBITDA would be what we will pay for small tuck-in acquisition. So, from a cash utilization standpoint, we'll see a huge amount of cash going out for acquisitions. I think it's more of a balanced approach where the cash that's going out for acquisitions, a fair portion of it is being funded by cash that we are receiving as we are divesting our assets to fit out business plan longer term.

Thank you very much. Thanks to all of you for joining us and spending time with us today. Replay of this call is available today by calling area code 203-369-0485, and ask for the Republic Services Earnings Conference Call. Additionally, this call will be archived on Republic Services' website at www.republicservices.com. Again, thank you for joining us.

Thank you, that concludes today's conference call. At this time you may disconnect. Thank you.