Good afternoon, and welcome to the First Quarter 2012 Call for Investors in Republic Services. Republic Services is traded on the New York Stock Exchange under the symbol RSG. Your host for today's call are Don Slager, President and CEO; Tod Holmes, CFO; and Ed Lang, Republic's Senior Vice President and Treasurer. Today's call is being recorded. [Operator Instructions] It is now my pleasure to turn the call over to Mr. Lang. Good afternoon, Mr. Lang.

Thank you, Gabby. Welcome, good afternoon, and thank you for joining us. This is Ed Lang and I would like to welcome everyone to Republic Services' first quarter 2012 conference call. Don Slager, our CEO; and Tod Holmes, our CFO, are joining me as we discuss our first quarter performance. Before we get started, 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, which involve risks and uncertainties and may be 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 recording of this conference call, you should be sensitive to the date of the original call, which is April 26, 2012. Please note that this call is the property of Republic Services, Inc. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Republic Services is strictly prohibited. With that, I would like to turn the call over to Don.

Thanks, Ed. Good afternoon, everyone, and thank you for joining us as we discuss Republic Services' first quarter performance. Before we get started, I want to acknowledge Tod Holmes' announcement regarding his plan to retire next year. First, I want to say that everyone at Republic has great respect for Tod and we also respect his decision. Fortunately, he has given us a full year to work a smooth transition. Secondly, Tod has built an incredibly capable and talented financial team here at Republic, inclusive of solid financial processes, sound controls, and of course, a strong balance sheet. Tod has been one of the primary architects of the company's success, fostering and establishing a lasting culture that is firmly committed to creating cash value for our owners, with steadfast management, focusing on return on investment with a balanced approach to cash utilization. Additionally, besides his 15 years of service to Republic and the countless contributions he has made along the way, he has certainly been an invaluable adviser to me in the past 1.5 years. We will save all of our goodbyes and our thank yous for next year as Tod will be with us for a while, and we have plenty of work to do together before we host his retirement party. I'll ask Tod to share his thoughts with you.

Thanks, Don. As Don said, I've announced my retirement. It's effective May 1, 2013. But it's a pretty simple story here. I turn 65 years old in 2013, and have always planned on retiring then. As part of my contract, I'm required to give the company a 1-year notice prior to my actual retirement. Therefore, I informed Don and the board of my decision at this week's board meeting. I do want to stress to everyone that I'm fully committed to my job here at Republic. We've got a great team, as Don indicated here, and I'm committed to serving Republic over the next 12 months. Don and I, along with, obviously, the board's input, will be working together to ensure a smooth and seamless transition. So with that, we'll go ahead and start the call. I'll turn it back to Don.

Thanks, Tod. I will now review our first quarter financial performance before discussing our revised guidance for 2012. Revenue of approximately $2 billion. Core price growth in the quarter was 0.6%, with positive price in both collection and disposal businesses. Disposal includes MSW landfill price of 2.6%. Volumes increased by 0.2%. Our first quarter earnings per share was $0.38. Our adjusted free cash flow was $175 million. We repurchased 1 million shares in the first quarter for $31 million. We have approximately $620 million remaining under our authorization to return to our shareholders through 2013. We remain committed to an efficient cash utilization strategy, which includes increasing cash returns to our shareholders through share repurchase and dividends. Total cash returned to the shareholders was approximately $112 million during the first quarter. Some of our operational achievements during the first quarter include: Our safety performance continues to improve with a 4% favorable reduction in our frequency rate. We have closed on $65 million of acquisitions through April that represents $40 million of annual run rate revenue. These are highly accretive transactions and we expect to achieve the upper end of our acquisition range of $100 million. We have maintained our return on investment focus when reviewing the acquisition market. We continue to invest in fleet automation and converting the fleet to CNG. During the first quarter, we converted 67 routes to automated vehicles and placed 140 CNG vehicles in service. Our 2012 truck order includes 550 CNG vehicles, which is 65% of our total fleet order. We opened our renovated single stream recycling facility in Anaheim, California, which increases our recycling capacity in that market by 50,000 tons per year. I would like to thank our field operations for their continued support in executing our strategy of achieving profitable growth and maintaining a safe work environment. Tod and Ed will now update our financial performance.

Thanks, Don. First quarter 2012 revenue, as Don indicated, was approximately $2 billion and reflects the following components of internal growth. First, core price growth of 0.6%. This level of core price was in line with our expectations that we spoke to in February for our first quarter. Core price is positive in both collection and disposal businesses, with slightly higher prices in the disposal business due to landfill MSW price increases of 2.6%. Within that component of our business, our third-party open market landfill customers were increasing the price in the range of 4% to 5%. We expected the first half of the year to be below 1% with prices rising modestly in the second half of the year as the impact from higher CPI base pricing takes hold on a restricted customer base. We still expect to see this increase in CPI-based pricing in the second half of the year, but we do see pressure on price levels from new business in the open market, and also, retention efforts in the open market and municipal segments. As a result, as Don will describe in more detail later, we now expect our full year 2012 price to be approximately 1%. Our fuel recovery fee was positive 0.5%. The increase in the fuel recovery fee relates to an increase in fuel costs. The average price per gallon of diesel increased to $3.97 in the first quarter of 2012 from $3.63 in the prior year. This is an increase of 9%. Our commodity revenue decrease was 0.8%. Commodity prices decreased 18% to an average price of $122 a ton in the first quarter of this year from $149 per ton in the prior year. Q1 recycling facility commodity volume of 508,000 tons was up 6.3% from the prior year and up…

Thanks, Tod. First quarter 2012 interest expense was $104 million, which included $17 million of noncash amortization. As we previously stated, in the second quarter of 2012 we expect to call the notes due in June 2017. The interest benefit of this refinancing is included in our full year guidance. Our first quarter effective tax rate is favorably impacted by closing out state audits and changes in estimates on certain tax matters. We now expect our full year 2012 tax rate to be approximately 37%, but this will fluctuate by quarter. I will now discuss free cash flow. First quarter 2012 adjusted free cash flow was $175 million, which consisted of cash provided by operating activities of $334 million, less property and equipment received of $207 million, plus proceeds from the sale of property of $5 million, plus merger-related expenditures net of tax of $41 million, plus divestiture-related payments of $2 million. Therefore, adjusted free cash flow equals $175 million. Free cash flow timing tends to vary by quarter, in particular due to capital expenditures and changes in working capital. We expect to achieve the lower end of our full year guidance range of $775 million to $800 million. Now I'll talk about the balance sheet. At March 31, our accounts receivable balance was $808 million, and our days sales outstanding was 37 days or 23 days net of deferred revenue. Reported debt was approximately $6.9 billion at March 31, and excess credit available under our bank facility was approximately $1.6 billion. I will now turn the call back to Don.

Thanks, Ed. Now I'll update our 2012 guidance. We expect adjusted free cash flow at the lower end of our original guidance of $775 million to $800 million. Adjusted earnings per share of $1.86 to $1.90, which is down from our original guidance of $1.98 to $2.02. Our EPS guidance is primarily impacted by lower-than-expected internal growth, higher fuel expense, implementation cost associated with our maintenance initiative and certain onetime costs. Our revised guidance assumes a normal seasonal earnings pattern of 47% to 48% in the first half of the year and the balance in the second half. We expect price to be approximately 1%. We expect full year volume performance to be flat, down from our original guidance of 0.5%. Our volume expectations are being negatively impacted primarily by 3 distinct MSW disposal locations and a large national account contract loss. EBITDA margins for the full year of 29.5% compared to our original guidance of 30.5%. We expect our full year tax rate to be approximately 37%. We will remain focused on executing our strategy, while improving return on capital through continued disciplined pricing; utilizing our ROI-based tools; growing the business through sales, acquisitions and investments in recycling and processing technology, protecting our profitable business that generates appropriate returns; managing our cost structure through programs designed to gain operational efficiencies, including fleet automation, CNG conversion and standardized managed practices; investing in our people through training and development and maintaining a safe and positive work environment, allowing us to continue to attract and retain top talent; also, enhancing our customer's experience with Republic by continuously improving service delivery and providing solutions to meet their changing demands and buying habits. At this time, operator, we'll open the call for questions.

[Operator Instructions] And that first question comes from Scott Levine with JPMorgan.

I guess my first question really would be, it's only been 2 months since you set guidance, so what's changed? I'm a little surprised to see things change this quickly, general speaking. So maybe I'll just -- without focusing in on price or cost or any particular item, just wondering how things could have changed or your view of the world could've changed this much this quickly.

Well, I guess we need to talk about price and volume because that's a part of it. They're 2 of the major components there. When we built our business plan, as we do every year, we kind of consider how we see the world kind of exit speed Q4 and then what are we seeing at the time. We were finalizing the budget in January and setting guidance in February. At that time, we felt a little better about the economy than we do today. We thought we'd see a little more economic lift than we're seeing right now. We thought the pricing environment in the open market would improve a little bit. It really hasn't. We've maintained our -- the cadence of our pricing programs, so we're out in the general market. Pricing is frequently and is consistently as it were last year. Our price to customer was about 2.7% in the quarter. So that's continued. We've seen a continued pressure from the municipal segment in the sort of rollbacks in renewing business. That's pretty consistent with what we thought. And then this fleet initiative has cost us a little more than we figured. So that -- we talked about that quite a bit last year, Scott. In 2010, we decided we needed to focus more on fleet. We're about, I think, the 8th largest vocational fleet in the nation. And to take the customer service assurance and the productivity to the next level, we need to run our fleet consistently across the nation. We saw some disparity on how our fleets were operating. And so we designed this One Fleet program. We piloted last year. We began to roll it out late last year, and we've gone now and broadened that initiative here in the early part of '12. And what we're seeing is as we're -- the real main focus there of the fleet initiative is to move more to scheduled maintenance and less reactive maintenance to get to that level of productivity and customer service we're trying to achieve. And in order to do that, we've got to spend additional money, that's sort of a temporary adjustment, a little bit of a bow wave, if you will, to move to the level of a kind of world-class maintenance we want to run our fleet at. So rather than back off of it, we've decided to move forward with it even though it's going to cost us more this year. We're coming to you and letting you know that it's critical enough for us that we're going to adjust our guidance. We're going to move through the initiative over the next 3 years and become a world-class fleet.

Yes. Scott, where we look at it, obviously, as Don said, we saw this volume situation here late in the quarter and then this quarter, early in the fourth quarter and here in April. And again, when you look at the cost, as Don indicated, we think that we were seeing about 90 basis points of cost increases kind of on a year-over-year basis. And so that's probably around $0.12. And there's really, as Don said, 3 big items. We got the maintenance, which is the truck. It's also the container maintenance, which is probably worth about 5 to 10 basis points, which we'll work through this year. So while the maintenance might be with us for a couple of years, the container is probably just this year. We've got the fuel, which everyone is aware of, which is about $0.03 of earnings in an addition to a $0.04 in maintenance. And then we have landfill. We got higher leachate because of the warm weather in the Northeast, and we also had some other close site costs at one particular landfill, which we think are kind of a either current quarter or current year situation that should mitigate -- be mitigated next year.

We've also seen 4 distinct volume impacts since we set our guidance that equal that 50 basis points.

Got it. Okay. And then maybe as my follow-up, just to kind of understand this and really reconcile the change in guidance with the business environment that you're seeing. So it sounds like most of the revision is internal and programmatic as opposed to the business climate being what it is. But maybe if you could separate the business climate then from the program spending and talk a little bit about -- it sounds like, frankly, you've gotten more guarded on the business environment as the quarter's progressed. Is that an accurate interpretation? How conservative should we think of your guidance's being with regard to the business environment, which, from a macro perspective, seems to be stable, if not improving a little bit?

Yes, I would say, we got $0.38 of earnings in the first quarter. And we think our guidance is realistic. Again, as Don indicated, and we said this repeatedly, our business is fairly predictable and we get about 46% to 48% of the earnings in the first half of the year, and 52% to 54% in the second half of the year. So early April, as we were closing out the first quarter, what we were seeing there plus what we were seeing in the competitive environment here in April as well is kind of a flatter economy than what we were expecting, led us to conclude that we weren't going to get the lift from the economy and that the competitive landscape was remaining maybe a little bit more competitive than we originally thought, whether it's in volume or in price, both those categories.

And our next question comes from Corey Greendale with First Analysis.

So the first question, I guess, just a little bit more on the competitive environment. So is there any change on how you would describe your behavior as far as how you're viewing price competitively?

No. I think -- I mean, we've talked about this a lot. I know I mentioned it in my earlier comment. Our price to customers is running about 2.7%. There's always churn in the business. It's always a competitive business. Through all that churn and mix and service increase, decrease, new account, lost account, we end up posting this 0.6% price. So we're still actively pricing in the marketplace. If you look at our landfill pricing, price in the open market MSW is 4% to 5%. So for those people using our landfills in the open market, they're seeing continuously a 4% to 5% increase. So that's continuing. Having said that, we're not really gaining new accounts in the landfill, and we probably lost more open market landfill accounts than we've gained because we're not willing to subsidize competition. We're going to continue to raise landfill prices because the cost of owning people's trash infinito, you can't solve that by volume. You've got to charge a certain amount to get that return. So we've continued that consistent strategy and we're not going to change. Open market, we have our RPM pricing program. As we've talked about, in the open market about 1/12 of our customers receive a price increase a month in the open market. We work through a review of the cost and we look at what we think price elasticity is and we price our business. We also then have to go through a continuous effort of defending business. We got a good business, high margin business, so we got to defend, then we use our ROI tools and we have what we call a walk-away price. At some point, we won't keep a customer for less than what we think is a reasonable return. But we do…

Okay. So I appreciate all that detail and on -- I also appreciate detail on the cost side. Can you just, on the cost side, help us think through a little bit more specifically about what portion of the lower margin guidance is really attributable to nonrecurring costs or things that won't be there at least in 2013?

Well, I think that the majority of it is, I would say the fuel and fuel-related, which is maybe about 1/3 of that 90 basis points, could be with us on an ongoing basis. The other items, which are about 60 basis points, would be either dropping off this year, or in the case of our fleet initiative, that's probably about -- that's like a '13 and '14 type of timeframe for us with -- that will continue on as we roll through our larger shops into our medium-sized and smaller shops across the country. So that's a multi-year situation. But again, we should be harvesting the value out of that here through fewer road calls and a more efficient fleet in the future.

And our next question comes from Vance Edelson with Morgan Stanley.

The predators that you referred to, Don, could you give us a feel -- are they becoming more predatory, more competitive, recently? And if so, is it your expectation that, that's going to continue or do you think they're eventually going to have to get more disciplined given their own cost pressures?

Well, I can't speak for them, right? I don't think necessarily the small haulers have gotten more competitive or more active. Again, the whole pie really isn't growing, so they want to keep their trucks on the street. We're-- one of the things we're adjusting our guidance off of is fuel, right? We're paying $4.16 a gallon for fuel today. Some of these small haulers like to sell no fees, and I don't know how they adjust their pricing and make any money if they're not raising prices at some point with this high fuel cost. So we'd like to think that we'd see a little more price activity there, but again, I can't speak on their behalf. So -- and we have seen some spots in some markets where things have gotten more competitive by, I would say, across the board, both large and small, even a couple of national companies that have been maybe overly opportunistic in a couple of spots. I mentioned those couple of big MSW disposal contracts we lost. We were a little surprised that -- at the rates that those contracts were let for. So the national account I spoke of, our margins were very, very thin there. We enjoyed a 7-year relationship with that national account. We did a lot of good work for them, continued to reduce their price, build their efficiency, recycle more waste, and we were a little surprised by what happened there. And when we met with them, it was just strictly a price issue. And we just weren't willing to lower price any further. So we're going to continue to be diligent raising prices, as I said before. We're going to safeguard our infrastructure. We're not going to give it away to undercapitalized competitors and we're going to continue to fight hard in the marketplace. So that's the state of the business. And obviously, I think a lot of this is resolved if the economy does take off and some of the things you read about actually come true, but we don't have that crystal ball. So if the economy improves, we think market behavior improves, and then we think -- I think we all win from that.

Okay, got it. And then another question that's also related to the competitive landscape. Is the M&A pipeline robust because smaller players are putting their hands up more than they used to? Or is it because you've gotten more aggressive in pursuing these targets? Or is it a little of both?

Yes, I don't know, I think it's tax planning. I think it's succession planning. And we've got many, many stories from some of our sellers. They want to move on to a different part of their life. They're concerned about taxes and the change in tax law. There's a lot of different stores there. But we think it's a robust pipeline. And as we said before, we think we can take advantage of kind of a steady diet of acquisitions over the next several years in and around the $100 million a year range at a very good multiple. It's a very good use of our cash and there are some very nice businesses out there that we're going to be looking at over that period of time. So we've had a lot of good success and we'll continue that.

And our next question comes from Michael Hoffman with Wunderlich.

Can we talk a little bit about the sort of things that are happening in the macro marketplace? And I'm probably going to exceed my 2 question thing as we do this, but let's try. We're hearing special waste activity has now settled into normal routine special waste ex stimulus-driven. If you're in the right geographies, there is oil field waste activity. MSW has kind of found a level, but it's not really recovering, it's just kind of hanging. When you listen to other calls and talk to private players and what have you, what's your view of that kind of environment?

Yes, Michael. Special waste is good for us. It's relatively flat to last year. We are getting our fair share of the natural gas drilling waste. Again, 2 or 3 years ago, we had none, we had no revenue from that business. Today, it's a nice little business for us, we focus on it. But as you said, we're not in all geographies. So what's going on in North Dakota is kind of a neat story and a headline, but we're not in North Dakota so we don't get to take advantage of that volume. The rolloff business has been decent for us. We've talked about the industrial strengths we saw last year in coming through Q4. We just haven't necessarily seen it get stronger. People ask me, what about automotive? And frankly, we're not a big player in automotive. The margins in that business tend to be very small, automotive companies tend to be sort of very aggressive purchasers of services, and it's not been a big segment for us. So I can't really speak to that. Construction, we had a good seasonal -- I mean, more than expected seasonal activity and temp rolloff in Q1, but we also had no winter. So we're not going to hang our hat on that thinking that's the baseline to go forward from. We have -- we think some belief that some of that was pull forward, roofing jobs, slight constructions for some early spring cleanup. So we're not so sure about what that means yet for the year. And as you know, we don't really see true seasonality until May and June, and that's when we can really tell you what's happening there. Commercial is kind of flattish, still a little bit down, and we've had improving volume for a lot of sequential quarters in the collection business. We just haven't been able to come over the top and turn positive yet. So I don't think -- I don't know if the economy is getting worse, but it's not -- I don't really see it getting too much better and it's certainly not getting as when we posted original guidance. We thought it was getting a little better at more of a rapid rate. So some of this is about velocity of change. And we're just -- we're not willing to go further in the year with our former guidance based on what we're seeing today.

Okay. And then understanding the 150 basis point impact in EBITDA on the revised guidance...

It's 100 basis points. It's [indiscernible] 30.5 to 29.5, with 19 basis points of that coming out of cost. Commodities is a positive 20 basis points. And then dropping the price is probably a negative 30 basis points from, say, 1.5% down to about 1%. That's kind of how we get to 100 basis points. And the first quarter's margin is obviously driven very much by the normal seasonal makeup of the business as we described earlier.

Right. So I guess part of the question I was going to -- and thank you for that information, to ask about the maintenance -- the 4 items you identified earlier, the maintenance, fuel, work day and SG&A, the maintenance and the work day would have seemed to have been known back on February 9, where I get the fuel and the SG&A were maybe things that can happen later in the quarter, but...

Well, the maintenance wasn't really known. I think that this is something that has continued to evolve as we've gone from a few pilot locations to a broader rollout.

Yes, that's a thing you've got to understand, Michael, we fanned out here, right? So we've gained speed and traction. So we went from a handful of facilities, and now, we're multiplying them with facilities we're touching, and that's where we started to see this thing ramp up. And again, we could've -- we could make 2 choices, right? We could say, hey, stop, slow down. But again, as I said earlier, we believe we've got to get through this. We believe -- as you know, I mean, look at our operating cost, we're -- we've got strong margins, we're good operators. To get to the next level of efficiency and customer experience, we need to have better fleet reliability. And then that part of that is moving to, as I said, more programmatic maintenance and planned maintenance versus reactive maintenance. And what that means is you've got to sort of move through that phase. And so there's a little bit of sort of maintenance catch up to get you to that point where your fleet availability and uptime improves, your road calls decrease and you're really doing planned maintenance. And so that's -- it's a lot of work, it's a real high touch, real high change, change management process, but we don't think we can put it off. We think we need to move through it and I think it's going to pay dividends in a lot of ways: customer experience, productivity, driver morale, even frankly, mechanic retention. Mechanics are hard to come by. Good mechanics want to work for a company that takes maintenance seriously the way we are, and it's all going to pay dividends. Just it's going to take some time and we've got to make the investment. So I mean it's the right thing to do and we didn't feel it was a good thing to say, "Hey, this is harder than we thought, a little more expensive, let's stop." And we think that, frankly, would've negatively impacted the morale of the business and the future of the business.

Michael, I mean you have a good question there in terms of our visibility, I guess, a couple of months ago. And again, when you look at this, we've got an impact of about $0.06 in price. And that's something that has really just emerged here, I would say, in the last 30 days to 45 days at the most. And then the volume is the same sort of thing. I mean, that's just a very current thing that we're realizing. The commodity is, obviously, a positive. That's about $0.03. And then when you look at this $0.12 of cost increase. The fuel, we didn't anticipate. We were very explicit in the guidance there. I think the maintenance for containers was something, as Don indicated, is something that has evolved recently, and the container maintenance is just a smart thing to do from a cash standpoint. So a lot of these costs are things that are more current in nature. Now we also have some positive things. Our original tax guidance was 39%. And in interest also, I think the credit markets are probably a little bit more favorable. So we've got a little bit of a benefit, we think, on taxes and also on interest. And in fact, as -- we've got a number of open tax years. We got 3 cycles, we've got some other planning issues and opportunities. So we may do a little bit better than that. But again, these are things that have recently unfolded. And we, frankly, Don and I talked about, should we adjust the guidance now or should we wait until mid-summer, which is our traditional practice. And our feeling was with the $0.38 first quarter and our knowledge that something dramatic would have to change in the second half of the year to meet the guidance, and the fact is, there's a rhythm to the quarterly earnings in this business, absent some external influence. We felt that it was appropriate to be upfront and direct there with the guidance rather than waiting until July.

Yes, again, historically, and as we said, we're going to earn 47%, 48% in the first half and the remainder in the second half. And there's not enough change in the macro situation to generate that additional earning. There has been these couple of big volume losses that we've experienced here just recently that we have to sort of admit to ourselves. And then there's a couple of decisions that we made to continue to spend appropriately on these other initiatives.

And then one other thing I'd say on the cost side is the landfill costs are up. We saw a lot of leachate in the Midwest and the Northeast. And one of the questions is "Well, gee, does that mean that leachate in the second quarter is going to be less?" Well, it continues to rain in the second quarter and we felt that while that's a onetime item, it doesn't necessarily mean that it's going to be lower later on. So that's in our guidance also.

Michael, I would just tell you, we tell you what we know when we know it. And that's what we did when we did guidance. We do every year, that's what we're doing now. And then we'll work through it and then we'll keep you informed.

And our next question comes from Bill Fisher with Raymond James.

I'll just echo Michael's comments. And I just -- to totally beat the maintenance to death, but I just want to understand the rollout to the facilities, to your major facilities, does that kind of continue to ramp up through the year? I was just trying to understand kind of when that might inflect down. And are you -- will you still be ramping up next year?

Okay. You know what, great question. So the plan as we have it today is that we would impact 40% of our fleet this year, right? It would be landing in the divisions that represent 40% of our trucks, another 30% in '13, another 30% in '14. We may ebb and flow that sort of depending on progress, but that's rough numbers, right? So what we're seeing is kind of a 9-month hill decline there of some additional expense to get to that promised land of scheduled maintenance and so on. And so that's what we're experiencing. And we're seeing that in Q1 and we think that's how it's going to progress throughout the year. So we -- that's it. Within 3 years, we'll be through it. And then we'll be gaining benefit throughout the rollout at some point as these divisions get certified and are operating at a new level of performance, we'll begin to benefit from the productivity gains and so on and so forth. Some of our test divisions that have been through it last year, we've seen the improvement in things like inventory, driver morale, turnover where's a lot of good benefits. Some of them a little softer than others, but that's the cadence we're on.

And the other thing I would say, Bill, is we're managing the business for the long-term. We know this is the right thing to do. And while it's difficult to swallow, this additional $18 million, $19 million of cost this year, it's important that we stay the course. And we're committed to that.

Okay. And just unrelated though and kind of a minor thing, but on that -- the 60 basis points of price on that collection side, were you still negative on the residential side?

$0.06. Price was 30 basis points on the margin. $0.06 of earnings.

I think he's talking about reported [indiscernible].

Oh, I'm sorry.

Reported price, yes.

E. Reported, okay.

So a little color on, like, was residential still negative, just how that was kind of comprised?

Well, a little color, I guess, collection -- total collection's positive. Commercial is still a little negative. Industrial is positive. Residential is actually positive this quarter. So again, landfill again was a bright spot. I know you didn't ask me that, but I'll tell you again, landfill was the 2.6% total or 3.4% for the quarter. So 3.4% total, and MSW was 2.6%. So we had good special waste pricing as well. We had -- not only did we maintain our special waste volumes, but we saw price go up in special waste for the quarter. So that was nice to have.

And our next question comes from Al Kaschalk with Wedbush Securities.

On the -- related to the maintenance, I saw there was a small acquisition in the quarter, or at least $20 million, I think, was the cash acquisition price. Is that related to the recycling initiatives? Or what type of -- could you just shed a little color on what are the minor acquisitions?

No, that was tuck-in acquisitions. We did talk about $65 million of acquisition price and $40 million of revenue through April because we had probably the largest single transaction that we've done this year close on -- it was on, I think, April 2. So what we've been buying this year are tuck-in acquisitions on the hauling side.

Yes, that's right. Again, just to say, we're not -- not to say that all of our acquisitions will be collection or hauling. I mean, we are looking at some other recycling-based infrastructure, et cetera. But so far this year, it's been in collection.

And we've got a strong pipeline there. So we are -- again, our original guidance there was $50 million to $100 million of purchase price. We're at about $65 million with a strong pipeline ahead of us.

Is there any pullback from the recycling, multiyear, top 25 market initiatives? Or where are you at in that thought process?

No pullback. Again, we do believe that the waste stream is changing, that customer demand is changing. And I'll just use a minute here to remind everybody. There are some very interesting things that we look at that are very global macro across the whole company. But when we look at investing in the business and recycling, we look very distinctly at the marketplace. And we have 240 distinct, unique markets across Republic Services. And those markets are changing at different speeds. And we're -- it's our job to understand what's changing and the velocity to change. So we have, earmarked again, about 10% of those markets, or 25 markets, that we think we'll invest in over the next 5 years. And it's kind of a dynamic list. There are some things moving up and down in that list of 25. But we're on track to make investments in about 5 markets this year. As I said, we just completed in Q1 the renovation of our Anaheim facility, which will increase our recycling capacity there. Our recycling tons in total are up in Q1, 5% same-store, right? So that is part of the business that's growing. And we can't deny that customer demand is changing, and we need to be in that space so we can provide all those solutions in or around the waste stream that our customers need, and we're committed to doing that.

On the large national account. I guess when your competitor made the announcement on the acquisition, there was some value or amount that was a so-called potentially-at-risk on revenue. Are we -- have you cleared all of that, what you view at-risk with the definition of value-at-risk as maybe something you know about or something that's coming up for contract negotiation?

Yes, Al, we've disclosed everything that we know about as far as all these contracts.

Right. As you can appreciate, Al, every year, we enter in a business plan and we have contracts that are being renewed. And we have to look at trends in the business. We've got to look at how far we think we are along in extension negotiations. And we've got to then sort of budget an amount. And we think we're going to retain x% of these customers. We already know we're on the -- well down the path to retain certain ones. Some are more at-risk, and we budget for a certain amount of business loss, business gains, service reduction. We have to obviously take a stab at that. In the case of this large national store, again, we -- as I said, we had a 7-year relationship that we thought was very strong. We've done a lot of good work for the client. And when we put our budget together, we were convinced, frankly, that we're going to extend the business based on the work we've done, and we were wrong. There was something else afoot, and there was somebody with a dramatically different price structure, apparently, than we had. That happens, and that's the nature of that.

Yes. And the only thing I would say is we've got a very strong pro forma discipline for either bids or acquisitions, which we've applied to this large account. We know what our investment is, we know what the returns are. And with an existing customer, we would want to retain it, so we might stretch there because we know the risks. We know what the waste stream is. But when you get to the point where it becomes a little bit irrational, we have to have a walk away. And that's what we did.

When you're an incumbent, you tend to know all the costs. And so, we still believe in the national accounts' business. We've got a decent pipeline of opportunities, both nationally and regionally, that we're working on. And we've got many, many national account clients that we're working very diligent with on managing their waste stream and so forth. So we're continuing to do the work and it's just, again, as we've said before, it's a competitive business. It always has been, it always will be. And sometimes, a couple of these things take you by surprise.

Then if I may, finally -- sorry for the multiple question part. But on the margin front, EBITDA in particular, given some of these falloffs and walk away from and contract issues, it would suggest given that they were multiyear contracts or relationships, that -- and the lack of volume in the market, that the opportunity for margin expansion beyond even '12 at the moment is going to be something you got your work cut out for you.

Well, we thought -- remember what Don said earlier. We have a whole series of other initiatives that will give us multiyear margin expansion. So when you look at automation, when you look at CNG, when we look at this maintenance initiative, which -- well, it’s a little bit of a headwind, that we'll get over that hurdle. So there are some productivity operating opportunities there and we are continuing to price increase. So some of what we're seeing on the margin is kind of short term in the quarter, which affects the full year. Some are kind of annual in basis or in the maintenance situation, in fuel, it's a little bit longer term. But there are opportunities to expand the margin.

Sure. Al, I mentioned in my comments, our safety frequency improved by 4.4% again in the quarter. We've deployed more automation. We ended last year at 59% of our resi fleet was automated. Our goal this year is to get it to 63%, I think. Ultimately, we'll get it over 80%. We're going to continue to invest accordingly and that CNG is a good investment for us. Our overall headcount in Q1 was less than it was in Q4. So we are obviously good cost managers. We're tracking those kind of metrics across the business, and the strategy, really, the company hasn't changed, and that's it in a nutshell.

And that's all the time we have for questions today and we'll now turn the call back to Mr. Slager for his closing remarks.

Well, thank you, Gabby. In closing, I'd like to thank the entire Republic team for their continued hard work and dedication in the first quarter. We remain focused on the business fundamentals required to improve our return on invested capital and further position our company to grow across all lines of business. As a reminder, a recording of this call will be available through May 3, 2012, by calling (203) 369-1833 and using a passcode of 4589. Additionally, I want to point out that our SEC filings, our earnings press release, which includes GAAP reconciliation tables and a discussion of business activities, along with a recording of this call, are all available on Republic's website at republicservices.com. And finally, I want to remind you that Republic's management team routinely participates in investor conferences. When presentations are scheduled, the dates and times are posted on our website, along with instructions for listening to the live web. Thank you for spending time with us today. Have a good evening.

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