Good morning, and welcome to the first quarter 2009 conference call for Investors and Republic Services. Republic Services is traded on the New York Stock Exchange under the symbol, RSG. Your host this morning is Republic's Chairman and CEO, Mr. 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. (Operator Instructions). At this time, it is my pleasure to turn the call over to Mr. O'Connor.

This is Jim O'Connor and I would like to welcome everyone to Republic Services first quarter conference call. Don Slager, our President and Chief Operating Officer; and Tod Holmes, our Chief Financial Officer, Ed Lang, our Treasurer are joining me as we discuss our first quarter performance. I would like to take a moment to remind everyone that some of the information, that we discuss on today's call, contains forward-looking statements, involve risks and uncertainties and maybe materially different from actual results. Our SEC filings discuss factors that could cause actual results to differ materially from expectations. 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 May 1, 2009. 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 express written consent of Republic Services is strictly prohibited. Although we experienced a very weak economic environment in the first quarter, Republic was successful in executing its pricing strategy, maintaining labor productivity and expanding EBITDA margins. Financial highlights for the first quarter are as follows. Revenue of $2.1 billion, net income of $113 million, or $0.30 of earnings per share, adjusted EPS for integration costs and divestiture charges was $0.37. As reported EBITDA margins of 29%, if results are adjusted for divestiture-related and restructuring charges, EBITDA margins were 30.8%. Republic is the industry leader for not only pricing, but for margin delivery. Average price increased in the quarter was 3.5%. Most importantly, our disposal pricing in the quarter increased to 4.1%. Based on our continued focus on pricing, we expect our full year performance for price,…

Thanks, Jim and good morning everyone. During the first quarter Republic's field management team successfully maintained productivity and our effective pricing program. We have efficiently reduced our cost structure to adjust to the volume changes in our business, while delivering quality service to our customers and improving safety performance. We achieved significant improvement in EBITDA margins of 320 basis points, excluding restructuring charges. This high level of financial performance is being achieved amidst the additional workload of integrating our businesses and realizing synergies ahead of schedule. We continue to review our capital spending plans to ensure, we are effectively employing our balance sheet and realizing an appropriate return on capital for shareholders. I would like to thank all of our employees for their dedication and focus. Their commitment and team work has made us, as Jim said, the price and margin leader in the sector. Now, I'll turn the call over to Tod.

Thanks, Don. As Jim indicated, the first quarter of 2009 revenues recorded rose 164% to $2.1 billion, from $779 million last year. Obviously this increase of $1.2 billion relates to the merger with Allied. Since we are measuring performance of the operations on a combined company basis, the remainder of my comments assumes the companies merged on January 1, 2008. The prior year combined company financial data referenced in my comments can also be found our website. We have also included on our website, additional detail on costs as a percentage of revenue that mirrors the historical detailed presentation from Allied. On a combined company basis, there is a decline in total internal growth of about 8.6%, consisting of positive revenue growth, core revenue growth of 3.5%. We continue to see core price improvements in all lines of business. Pricing is led by the disposal line of business at 4.1%, and also the combined commercial and residential collection business, that annuity revenue had a price increase of about 3.9%. Special waste and roll-off pricing was positive. This is our event type of sale, but it was less than other lines of business in the 2.5% to 3% range, due to a couple large event driven jobs and the temporary construction activity. Commodity revenue decreased 2.9%. This is both price and volume. Commodity prices decreased approximately 56% to an average of $62 a ton, from $141 a ton in the prior year. The average price per ton in March was slightly higher than the first quarter average, at $67 per ton. So, we are seeing a slightly stronger commodity market today. Additionally, commodity volumes sold at our (inaudible) decreased by approximately 17% to 440,000 tons in the quarter. Our fuel recovery fee decreased 1.2%. The reduction in fuel recovery fees relates…

Thanks, Tod. As is our standard policy, we will provide a detailed update on financial guidance on our second quarter call in July. However, we are very comfortable with our previous guidance of full-year reported earnings per share of $1.10 to $1.15. Merger related costs associated with the merger $0.20 per share, adjusted EPS of $1.70 to $1.75, free cash flow of $550 million after merger-related costs and 2008 related tax payment and as Don mentioned, we are reviewing currently our capital spending plans for further reductions. Our Board is committed to the current dividend payout, which is approximately 50% of free cash flow from operations and I would like to thank the 33,000 employees of Republic Services for their dedication to customer service and their financial discipline. We are in a great position to provide strong returns to our shareholders, due to the hard work of our employees. Operator now, we'll take questions.

(Operator Instruction). The first question is from David Feinberg from Goldman Sachs.

First question is with regard to pricing. You posted 3.5% base price increase in the quarter, but you reiterated guidance of 4%, seems to imply that there is going to be an acceleration of pricing throughout the year. Am I reading that right or now that I refer to comments? Does that have something to do with the special waste that was weighing on the pricing in the quarter?

Obviously, special waste did have some effect on the quarter, but again I think the pricing discipline within Republic Services, the tools that we developed and our discussions, Don had with the field organization, we feel very confident that we'll, at year end, be at that 4% guidance. So, we've got some opportunities, and we're continuing to look at disposal pricing, as we move through the year.

Just one point of clarification, perhaps I misunderstood. You intend to be at 4% by the fourth quarter or 4% for the full year?

Full year guidance will be achieved at 4%.

Great and then my follow-up question relates to volumes. Perhaps you can give us some insight in terms of how the monthly trend shaped up by line of business?

Obviously we've seen overall for the business, an 8% decline and we also reported that as guidance, as we went into the first quarter, in our fourth quarter call. We continue to see weakness in the industrial collection business, and the related associated volumes with that at our disposal and transfer facilities. Our commercial small container business has started to see some weakness. We've seen service decreases entering into the marketplace, and we've reacted accordingly in adjusting the productivity and the operations of the business. So, all lines of business are seeing some negativity, but again the lion share of it still resides in our temporary construction businesses, both residential, which we're thinking is bottoming out and we'll see that maybe in the fourth quarter performance, as it relates to volume, but we're still seeing a weakening of the commercial real estate construction market, and in essence, that's starting to have some bleed over into what we would have historically related as our annuity streams in our commercial and residential business. So, while the declines are relatively small in those two lines of business, we are seeing some weakness there.

But no indication sequentially month-over-month the things were getting better throughout the quarter?

Well, I think sequentially we're seeing about flat. We're not seeing really much change in the environment, as it relates to any of our lines of business.

Great, I'll get back in the queue. Thank you.

The next question is from Hamzah Mazari from Credit Suisse.

Would you comment a little on the volumes that you're pulling out of the divested assets, and how much of that is going to landfills that you have in those existing markets, and how much is committed to stay at those divested site and what your outlook is for your internalization rate?

First of all, the internalization rate is about 69%, and maybe up ever so slightly, but fairly constant. We don't have specific details, and we wouldn't give out specific details on individual assets, or even the group of divested assets, but normally if you look at those assets across the industry, about half the volumes going into disposal site, come in on the company's own vehicles. So, obviously landfills or transfer stations, where we actually are collecting the volumes, that portion would then be diverted to one of our own sites.

Got you and my follow-up question relates to the cost side. Looks like you guys are doing a pretty good job on the cost side versus expectations. Could you give us a little more color or perspective on how much of the benefit that we're seeing on your cost side is coming from synergies versus you flexing down on costs and I know you got $75 million of synergies as at the end of the quarter, but where are we most likely to see that? Are we most likely to see that in which line item, SG&A, operating expenses? How should we be thinking about that?

It's in both. Obviously we have the closure of the Fort Lauderdale our corporate office, so there is a synergy benefit coming out of SG&A there, and I’d say that leads the synergy, and then in the field organization. There is some SG&A synergies, but the operating synergies are to some extent dependent upon system conversions. When we look at the actual benefit in the quarter, the dollars that we benefited from within the quarter, it was about $15 million of synergy. So, the impact for synergies in the first quarter is not huge. It's something that's ramping up.

Let me ask Don to give you guys on the call a little bit of color about how well the operations of the business have adjusted to the economic impact to volume. So, Don, you want to give a little color there?

Sure, thanks, Jim. So, keep in mind, as we said, we maintain productivity during the quarter. In fact, in a couple of lines of business we actually improved productivity. So, we measure units per hour, as an example in our front loader or commercial line of business. We've flexed our costs almost exactly against the change in revenues. We've parked hundreds of trucks, as a result of the volume loss. We've unfortunately had to send people home, as a result of that, but our team has been very efficient and very real time in adjusting to those changes. So, in the past, we've actually done a good job, I think, over the last year as the volume is decreased, flexing the commercial or the roll-off side of business, and that's continued. Now we're seeing the lag effect in our commercial line of business. We've flexed that as well and up until now, we've told you that we've had a difficult time changing our cost structure in the disposal line of business, because there is so much fixed cost, but we've seen enough volume dropped in the landfills in the post collection side, that we've actually been able to make some changes there as well. So again, we measure productivity against the tons we take in on an hourly basis, and accordingly, we adjust the number of pieces of equipment we run at the landfill. We reduce personnel staffing levels. We've actually gone to the next level of adjusting hours of operation, where we're opening the gate later, we're closing the gate earlier. In some markets, we are actually closing our landfills on Saturday. So, we have three or four landfills in the marketplace, Detroit would be an example, where we're actually only going to remain one landfill open on the weekend. So again, we're flexing those costs down, as the volume changes, and frankly, as the volume comes back, some of those changes maybe permanent. Those hours of operation changes may become permanent. So, we've become pretty good cost managers process, and if volume comes back, we think we'll get the benefit of that as well as obviously the benefit of the volume coming back at that higher prices, because we've been able to maintain the prices. So again, we've parked hundred of trucks. We've made the staffing level adjustments. Our field is reacted very well to this and again, it shows up the margin. So, we are very proud of productivity volumes.

I mean, the operations of the business have adjusted very well and I think, the strength of this organization, while there will be some job loss due to the volume. The philosophy that the organization has adopted that every one is contributing and looking for operational efficiencies, so that we can save jobs. So, this is really about saving jobs, not eliminating jobs.

The next question is from Jonathan Ellis from Merrill Lynch.

Wanted to talk a little bit about capital structure, you talked about your debt pay down plans for this year. Wondering, I know in the past you’ve talked about not really considering a share repurchase opportunities until, I think, net debt to EBITDA got below two times or at least approached two times. Can you update us on your thinking? Have you perhaps revisited the potential for share repurchase programs a little bit in advance of that two times threshold?

Jonathan, I'm going to turn that over and let Ed Lang, our Vice President and Treasurer, respond. Ed?

Sure. Obviously, the debt reduction plans of the company are really geared on our conversations with the rating agencies and having further improvement in our credit status. Obviously, Republic, premerger had debt to EBITDA coverage of less than two, and what we've stated is, we want to move gradually over time back to the two to one level. I think as we start to approach those type of levels, our Board of Directors will discuss cash flow utilization over time, and obviously I think we would consider reintroducing the share repurchase program. The fact is today our debt to EBITDA is approximately three to one. So, really for the next 12 or 18 months we still have to be focused on that commitment to debt reduction to get the debt to EBITDA back into the low to mid two’s before we could initiate those type of conversations. It is something that, Jim does bring the Board through on a regular basis as far as our cash flow utilization strategies and share repurchase is part of that discussion.

Thanks and just on pricing, can you talk a little bit about any opportunities that you may have recently or plan to over the next few quarters to implement a higher environmental fee and if so, if you can help us maybe quantify what the potential impact of that might be for your core pricing?

We're going to continue to evaluate all the opportunities we have available, and we're continuing to evaluate our environmental fee. Whether or not we yet have a commitment to move forward on an increased environmental fee, I mean those are things we're still analyzing, but again I think in general, we're still on track to achieve our full year guidance of 4% price.

The next question is from Bill Fisher from Raymond James. Bill Fisher - Raymond James Just on the divestitures, I think you originally targeted about 1.5% of revenue, which I think works out to like 140 million. Just if you think about it, since obviously it starts in Q2, should we just think about it is like 35 to 40 a quarter, or how does that flow out of there?

A lot of it actually flows out here in early Q2.

A lot of the closings were done in early April.

Yes, the first week of April. I mean, I think you can look at some of the press releases from other public companies to see that. So, there will be some that should close throughout the second quarter, and if there is a permit that needs to be transferred a bit, it might go into the beginning of the third quarter, but I’d say the lion's share of it is behind us, maybe about two-thirds. Bill Fisher - Raymond James Okay and I guess my point was that $140 million revenue, if that works out to say, 35, 40 a quarter, you will to see that each quarter for the balance of the year?

Right, that’s correct. Bill Fisher - Raymond James Okay, and just to follow-up on the free cash flow, Tod, the 550 to 600, you noted earlier, I think it's $70 million or so, the '08 tax payments in '09. So, just to be clear, was that paid in Q1, or is that going to be more of a Q2 event or something?

That was paid in Q1. The taxes that $75 million that I spoke to is, we would have expected to have a tax payment in the first quarter of $80 million, but obviously the estimated tax payments that a corporation make, don't necessarily all have to occur in the quarter in which you earn the money. So, we have a slight lag effect for federal taxes associated strictly with 2009 business activity, and that's $75 million from the first quarter that would flow into probably the third quarter. I think its August or July.

The next question is from Michael Hoffman from WSI.

Hey guys, how are you? Congratulations, terrific numbers.

Thanks.

I guess the focus I’d like to, on two sides, free cash flow and then pricing and productivity. One of the messages, I'm clearly hearing through the whole earnings season, and you all seem to repeat it is that, the higher you can drive productivity in good times or bad times, the greater probability you can sustain pricing regardless, and that core focus on productivity is seems to also being embraced by the private sector as well, because you're hearing lots of anecdotes of equipment being parked, maintain high productivity and you'll be more profitable and by the way you can get price. Is that philosophically, what we're hearing from you all as well and you're actually producing results from it and you’re also seeing evidence that the market participants are doing the same?

I’d say, Michael that the productivity is directly linked to the margins. So, as a result of strong productivity, we're able to maintain good operating margins in our collection business and offset some of the decline from commodities. From a pricing standpoint, I think, it's a slightly different issue. It really goes to the discipline within the company to focus on getting better returns on assets. Now obviously, they're both linked, productivity and price are necessary to get the good margins and the good returns on assets.

Michael, I think what we see, like most businesses, when the going gets tough, the tough get going, and our field organization has been able to focus on productivity and because of the volume declines, has really stepped up and really started to uncover every opportunity on the expense side for savings other than jobs. I think, what we learn about our business in these times, and I think most businesses do, that we can always do better. So I mean, we're coming out strong, as Don said, the productivity of the field is delivering on now with the volume reductions and flexing the business back. They're doing extremely well and I think, we're learning that we've got a lot more opportunity out there.

Okay and then on the free cash flow, the guidance unadjusted for the acquisition stuff and February it was 550. Tod, you've alluded to a 550 to 600 without changing the guidance. Tod mentioned that 845 is still a capital spending, but I can't remember whether it was Jim or Don suggested CapEx might come down. So, the $50 million is because of the successes of the cost savings and productivity and synergies, and there could be more if you take capital spending down?

That's correct.

We’re currently reviewing on capital spending. I guess what we can say is, that it will be less than the 845. We're just right now still trying to finalize our plans there, and we'll give clearer guidance in the second quarter.

The change in that is across all things or mostly disposal because of volumes, less sell development?

No, I think it’s across all areas of our business. Again as the volumes decline in all lines of business, we're adjusting capital and reviewing capital spends in all those areas.

Again, as Republic practice in the past, we will take a look at all aspects of our guidance, midyear with the Board, and then come back and update that guidance, but right now, it appears as if we're trending at or slightly above our range that we gave.

Cash flow guidance.

Right.

The next question is from Scott Levine from JPMorgan.

On your pricing, I believe the franchise market resets are calculated based on calendar '08 CPIs. Could you remind us what percentage of your business that would be roughly and what the Delta would be on this year's reset that kicks in toward the middle of the year most markets versus last year's? Is that driving some of your expectation or the thought process that pricing could accelerate throughout the year?

Well, let's start with the component of our revenue base that is index price is about 27%. The CPI currently at the end of March, is going to annualize out in 2009 at about 2%, at least it looks like that today, but when you look at what the impact is during the 2009 term, it's really based on the index that was pegged either in July of 2008 or October of 2008. So, we're going to be looking at price increases from our municipal work, our index price work, in the area of 3% to 4%. So, we don't see much change there and as we go into 2010, again, it's going to peg off of 2% assuming that holds, but while that pricing will put some pressure on delivering price in the area of 3.5% to 4%, we believe there is enough flex in the discretionary revenue to achieve the balance and makeup that balance. So, that should tell you that margin expansion will be much greater in 2010, if costs are declining and prices are still holding in that range of 3.5% to 4%.

Okay. In addition, turning to synergies, you mentioned before several times that you have a parking lot of opportunities you’d look at pursuing, once you make sufficient headway through your formal or more formal synergy targets. Do you have any additional thoughts? You moved up timetable a little bit on the last call for the $150 million by the end of 2010. Any thoughts on how far along you need to go with regard to this process before dipping into that bucket and update us on some ideas on cost saves or synergy opportunities within that parking lot.

On some of these we're executing today in the national accounts arena, as we relocate from Houston to Phoenix. We're seeing additional savings there that we had identified early on that. We didn't think we could get to, in light of the commitment for IT to integrate the overall business, but we are finding some additional times to work on sophisticating the national account process. So, that should help us a little bit, but I think probably as we get into the first quarter of 2010, we'll start to move into the parking lot, because we're ahead of schedule, and on almost all fronts, that we've identified for synergies, and so I'd say the parking lot and start moving cars out of the parking lot, Scott, in the first quarter of 2010.

The next question is from Corey Greendale from First Analysis.

First question, I know you touched on the free cash flow guidance. I know you said, you will update the guidance next quarter, but I’ll ask anyway. Historically, just seasonally, Q1 is less than 25% of your full year earnings, and if you just annualize the numbers you've recorded this quarter, it looks like you're running fairly nicely ahead of the guidance for the full year. So, what would have to happen for the rest of the year it would be within the guidance range rather than above?

Well, again I think we'd rather wait until the next quarter. First quarter there is always a lot of noise. Typically on the capital spend side, you see the landfill spend being very low in the first quarter, just due to the construction cycle. We've got obviously a benefit from working capital on the receivable side due to the step down in the volumes. Now, that won't reoccur. I think another aspect is just divestitures and that impact on it. The taxes, I mentioned earlier. There is so much noise in the first quarter. While we don't see any downside, I'm reluctant to say, we want to get out of ahead of where we are right now on the current guidance.

Sorry, I meant more of the EPS, but would the same answer apply?

Yeah. Our divestitures are a factor on the EPS side. In the first quarter, again the headline number was $0. 30, but if you exclude the cost to achieve synergies, and we had a little bit of one line item on costs associated with divestitures of around $4 million. If you exclude all of that, our earnings for the quarter were $0.37, which is run rate earnings, but again there is about $0.03 in that $0.37, which is associated with hurricane Ike and also the divested business.

Okay. Second question is on the volumes. Would you attribute 100% of the volume decline to the economy, or do you think there is any share loss either, because you are leading on price or because of local issues around integration or anything like that?

The majority of the loss is uncontrollable losses, okay. They're not controllable losses. So, they're related to the economy and so we continue to look at defection rates and retention rates, and they appear to be consistent what we've seen in past years. We see the market to be relatively stable from a competitive perspective. I guess, what I’d say as a follow-up to Tod's points, while we don't give any guidance. We feel really good about this quarter. The fields organization is really outperformed my expectations and Don's expectations. So, we're looking forward to a great year. So, operator with that, I'd like to thank everyone on the call, and in summary, as my last comments, as I just said, I'm very pleased with our first quarter results. We continue to be focused on achieving appropriate returns on capital through improved pricing, maintaining labor productivity through route and disposal optimization, continue to meet and exceed expectations for realized merger synergies, generating higher levels of free cash flow performance and reinvest in our people and our business platform to ensure high quality customer service and safe work environment. So, I’d like to remind everyone, that the recording of this call is available through May 5th, by calling 203-369-0653. A recording of this call will be available on Republic's website at republicservices.com. In addition, all of our SEC filings and discussion of business activities are available on the website and again, I would like to thank all of you for spending time with us today. Have a great day.

Ladies and gentlemen, this concludes the Republic Services conference call for today. Thank you for participating. You may now disconnect.