) will initiate modernization of its recycling facilities at the
St. Louis area by spending $19 million. The renovation activities
would be carried on both at North County and South County of St.
The renovation activity follows Republic Services' decision to
enhance its capabilities in recycling centers, for which the
company started investing significantly since last year. It
invested nearly $46 million in 2011 to develop and upgrade these
The company intends to invest an additional $60 million in 2012.
These measures are expected to increase the recycling volume by
nearly 12% over the next 18 months.
The Annual Green City Index issued by
) in 2011 revealed that the facility at the St. Louis region
recycled only 3% of its waste as compared with 27-city index
average of 26%. Republic Services expects that the renovation
activities at St. Louis centers will increase the volume of waste
The company intends to introduce a new state-of-the-art
technology which is expected to increase its recycling
capacity three-fold. This technology is also new to the
Missouri area. Once the reconstruction process is completed, the
company expects to employ 20 additional employees.
Republic Services arranges and sorts out the recyclables before
sending them to different producers who utilize them for
manufacturing new products, particularly consumer goods like toilet
paper. Thus, this initiative helps in reducing the prices of
Moreover, if recycling happens then less waste will be deposited
in the landfill spaces and this will lead to conservation of
landfill spaces. The process of frequent and regular recycling will
ultimately lead to conservation of more landfill spaces as this
will diminish the volume of waste material deposited in the spaces.
Recycling activities have socio economic impact and, should
be encouraged for a sustainable future.
Recycling activities in the St. Louis area started way back in
2008 when local people began using single-stream recycling bins.
The recycling rate in St. Louis County increased 900%, cutting down
nearly 49% of wastes from going to landfills.
The single-stream recycling service makes recycling easy for
Republic Services. The company collects wastes including steel,
aluminum, plastic, glass containers, cardboard, paper and other
wastes from one bin used by people and recycles them.
The company's first-quarter 2012 adjusted earnings were 38 cents
per share, missing the Zacks Consensus Estimate of 42 cents and
falling behind the year-ago adjusted earnings of 42 cents. Total
revenue increased only 0.9% year ove year to $1.98 billion, lagging
behind the Zacks Consensus Estimate of $1.99 billion.
Increasing fuel costs remains a concern for the company. Margins
affected the results as fuel expenses increased 60 basis-points
year over year as diesel price inflated 9% during the quarter. If
fuel prices remain at this level, Republic Services may face margin
headwinds for the balance of the year.
Republic Services faces competition from companies like
). Currently, the stock holds a short-term Zacks #4 Rank (Sell). We
have a long-term neutral recommendation on Republic Services.
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