Good afternoon, and welcome to the First Quarter 2013 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; Glenn Culpepper, CFO; and Ed Lang, Senior Vice President and Treasurer. Today's call is being recorded. [Operator Instructions] I would now like to turn the call over to Mr. Lang. Good afternoon, Mr. Lang.

Thank you, Bryan. Welcome, good afternoon, and thank you for joining us. This is Ed Lang, and I'd like to welcome everyone to Republic Services First Quarter 2013 Conference Call. Don Slager, our CEO; and Glenn Culpepper, our CFO, are joining me as we discuss our first quarter 2013 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 would cause actual results to differ materially from expectations. 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 25, 2013. 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. 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 webcast of the event. With that, I'd 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 2013 performance. I am pleased with our first quarter performance, which reflects an overall improvement in business conditions. We saw sequential increases in core pricing, volume and margins, which drove our strong Q1 results. We continue to profitably grow our core business as evidenced by year-over-year increases in revenue, earnings and free cash flow. Some of the financial and operational highlights during the quarter include: adjusted earnings per share of $0.46, this represents an increase of $0.08 or approximately 21% versus the prior year; adjusted free cash flow of $213 million, which was in line with our expectations; adjusted EBITDA margin expanded 40 basis points, reflecting the benefit of our field and corporate office reorganization completed in the fourth quarter of 2012; Q1 core price was 1.2%, this represents the third straight quarter of core price improvement; net price-to-customer, defined as price increases less rollbacks, was 3.2% in the first quarter. Based on Q1 industry results reported to date, our net price-to-customer performance is the highest in the industry. Q1 volumes declined 50 basis points. This represents a sequential improvement of 60 basis points after adjusting for the change in workdays. Consistent with our guidance, we expect to see positive volume performance in the second half 2013. We continue to see growth in construction and demolition volumes with temporary roll-off hauls up 2.4% over the prior year. And if you remember, 2012 had a very mild winter, which creates a tough comp for this portion of our business. We continue to see growth in our recycling business. Q1 recycling facility tons increased approximately 8% over the prior year. Additionally, we completed an upgrade to a single-stream recycling facility in St. Louis, which will add about 70,000 annual recycling tons into our system. We completed 7 acquisitions for approximately $12 million. These transactions were consistent with our strategy of purchasing tuck-in acquisitions in existing markets. This level of investment was expected in the first quarter, and we anticipate completing our goal of spending $100 million by the end of the year. We returned approximately $161 million to stockholders through share repurchase and dividends. We repurchased 2.4 million shares for $76 million, which was consistent with our plan. We have $248 million remaining on our share repurchase authorization, which we expect to complete in 2013. In summary, our strong performance in the first quarter was in line with our expectations and keeps us on track to achieve the full year guidance we provided in February. Consistent with prior practice, we will update our full year guidance on our Q2 earnings call in July. Glenn and Ed will now discuss our financial performance. Glenn?

Thanks, Don. First quarter 2013 revenue was approximately $2 billion and reflects the following 3 components of internal growth: pricing, volume and recycled commodities. First on pricing. We had core price growth of 1.2% with positive price in all lines of business. Core price increased 10 basis points sequentially from 1.1% in the fourth quarter of 2012. This level of pricing was in line with our expectations for the first quarter and we remain comfortable with our full year guidance of 1% to 1.5%. In addition, fuel recovery fees increased 0.3%. The average price per gallon of diesel increased to $4.03 in the quarter from $3.97 in the prior year, an increase of 2%. Second, first quarter volumes decreased 5 -- 0.5% year-over-year, excluding a 50-basis-point decline due to 1 less work day. The collection business was positive, 0.4%, including growth in commercial and industrial volumes. Growth in the industrial line of business was driven by temporary hauls, which as Don indicated earlier, were up 2.4% over the prior year. The growth in collection was offset by a decline in municipal solid waste landfill volumes of approximately 4%. Most of the decline in MSW relates to volumes lost in 2012 that have not yet anniversary-ed and the impact of weather. Third, a decrease in commodity sales resulted in a 0.2% decrease in revenue. Commodity prices decreased approximately 9% to an average price of $112 per ton in the first quarter from $123 per ton in the prior year. This represents the average price for all commodity types for all regions. Q1 recycling facility commodity volume of 539,000 tons was up 8% from the prior year. Our 2013 guidance was based on an average commodity price of $112 per ton. For reference purposes, a $10 per ton change in commodity values…

Thanks, Glenn. First quarter 2013 interest expense was $89 million, which included $12 million of noncash amortization. First quarter adjusted EPS had an effective tax rate of 33.4%, which included a benefit from favorably settling open tax years with the IRS. This benefit was included in our guidance, which we provided in February. We still expect a full year effective tax rate of approximately 38%. And therefore, our effective tax rate will be approximately 39.5% for the remainder of the year. I will now discuss free cash flow. Adjusted free cash flow was $213 million and in line with our expectations. Adjusted free cash flow included capital expenditures of $214 million or approximately 1/4 of our projected full year spend. Cash flow can vary quarter-to-quarter based on the timing of working capital. Now I'll discuss the balance sheet. At March 31, our accounts receivable balance was $822 million and our days sales outstanding was 37 days, or 23 days net of deferred revenue. Reported debt was approximately $7 billion at March 31. And excess availability under our bank facility was approximately $1.6 billion. I'll now turn the call back to Don.

Thanks, Ed. To conclude, our first quarter results put us right where we thought we would be. I'm proud that the Republic team continued to execute our strategy, and our strong performance reflects our hard work. We built a strong vertically integrated national platform and remained well positioned to take advantage of improving business conditions. We will continue to focus on generating consistent earnings and cash flow growth and remain committed to an efficient cash utilization strategy that increases returns to our stockholders. At this time, operator, I'd like to open the call to questions.

[Operator Instructions] Hamzah Mazari, Credit Suisse.

The first question is just on pricing. Don, maybe you could talk about any change to how you're approaching pricing this year? One of your competitors is obviously out with a more aggressive pricing strategy. And your pricing strategy, maybe you could talk about how you're approaching pricing this year relative to last year and the year before, given that volumes appear to be more stable.

Well, I mean, we're going to adjust or approach pricing the same way we always have, Hamzah, and we've got a good system in place, a good central control over our pricing structure. We talk a lot about our ratable pricing method and how we oversee pricing with our post-collection side of the business. I've said very consistently that I think as the economy returns, as some organic growth comes back into the business that pricing dynamics will improve, I think consumer sentiment improves and sensitivity gets better. I think all of that paves the way for stronger pricing.

Okay. And then just on salaries and allowances for doubtful accounts, that went down, and you mentioned the restructuring. Maybe you could talk about how sustainable that is going forward, and what you have baked into your current guidance?

Well, okay. Well, we've said very clearly, we think our SG&A is going to be right at around 10% and that's been a pretty consistent number for us. Obviously, the more growth we get over time, we can maybe get a little bit of leverage there. But 10% is our number for the year and we -- as far as sustainability goes, the actions we took in the restructuring are very, very sustainable and the organization is functioning very well as a result of restructuring.

Al Kaschalk with Wedbush Securities.

Don, this is sort of a broader question, and I'll let you decide how to explain it or answer it. But if I look just at the top line and I look at cost of goods sold, growth rate in sales is below the cost, the full cost of doing business. And you're not alone in that and that several other companies have done that. But specifically, are there things that you're seeing that we should start to expect that sort of relationship to flip around going forward?

Yes. I think, first of all, when we talk about the negative growth or the negative volume in the first half. Remember, we've got some anniversary-ing of some key contracts that were lost or large contracts that were lost last year. So we still believe that we're going to be positive growth in the second half, which sort of nets us to sort of flat, flattish, by the end of the year, but we think the business is growing. We talked about sequential improvement in pricing now for several quarters. We got a pretty positive story on the collection side of the business and we've got -- our landfill business is negative. But again, that's coming from a couple of large contracts and maybe a little bit of weather that we're facing. Overall, we think the trends are positive. So sequential pricing improvement is a good thing. As I just answered Hamzah's question, as some organic growth comes back into the business, we think those dynamics around pricing and our ability to improve or recover, if you will, the inflationary cost get better as we go through time.

And Al, this is Ed. Also keep in mind that as you start to see positive volume growth that does lead to better density, better asset utilization, which means you're just simply getting better return on the existing asset base so -- and as Don mentioned, that's something we've been talking about quite a while, due to the late cycle nature of the business, that as we start to see the volume improvement, we get the better asset utilization, which will lead to expanding margins and a less competitive pricing environment as the industry continues to grow.

And then my follow-up would be -- we've talked a little bit about this previously, but just to be clear, the number of strikes or labor issues that have been popping up in the press, I think you called out in the reconciliation some of that. Maybe it would be good idea to just to clarify for folks sort of where you're at in terms of the frequency of these that are showing up in the press. I'd like to refer to it as sort of drive-by strikes because they're not very long duration, but they're certainly a headwind.

Right, sure. Well, the issue we're facing right now is primarily related to the Central States Pension issue. And so we've got a portion of our business, a number of our drivers that are covered by the Central States Pension, which is headed for insolvency. There's no way mathematically for that fund to save itself. And so we are in the process of negotiating our way out of the Central States Pension. We have every intention of getting out of the pension. We have a very strong feeling that we want all of our employees to be covered by a high quality retirement vehicle. And being part of a pension plan that's going to be insolvent in the future is not that. So we're working hard for our employees to get them into something that makes sense for them. We're about halfway through the number of CBAs that are affected by Central States, and we're working through the second half. So we hope to be through that by the end of the year. Having said all that, we historically have had a very good relationship, a very constructive relationship, with the local unions and their leadership. We intend to continue to have that and we continue to bargain in good faith to get through this.

Corey Greendale, First Analysis.

A question on -- I think Don, you gave a statistic net price, net of rollbacks, where you said you're leading the industry. And I'm not sure I exactly know how you're calculating that. But if you are leading the industry, I think it was about a year ago, you were talking about fiercely defending your business. So it seems like kind of things have shifted from then. To what do you attribute that kind of industry-leading metric?

Well, again, price-to-customer, if you will, really measures the pricing activity of your business. So what do you think price elasticity is in the market and how much price increase do you think you can capture in the marketplace. So that metric of price-to-customer, less rollbacks kind of measures that activity. There's a lot of noise in the market about yield versus -- so I think all of the companies sort of measure price differently. And so we just tried to bring a clearer view to that so that you can compare pricing effectiveness of the different organizations. So we've introduced this price-to-customer metric to help me [ph] clear that up. So again, we think -- again, our pricing activity is pretty consistent. We cannot completely make up for inflationary increases just through cost controls and productivity gains. So we have to have price increasing to offset that. We've never gone price negative even through the darkest times of recent economic downturn. And we've said that as the economy gets better, as organic growth improves, as other competitors have an opportunity to grow their business organically, we think competition regulates or moderates a little bit. It's always been a competitive business, it always will be a competitive business. We think it just softens a little bit and customer sentiment, as I said before, just improves. So we think a lot of that is happening and we're going to continue doing what we have to do because we cannot simply, again, offset our cost inflation through our productivity gains. So pricing has to happen in our company and I think in the industry to continue to hold up margins and grow the business profitably.

And on the productivity gains side, Don, you -- at one time you talked about kind of a parking lot of opportunities to improve efficiencies after some of the big ticket items after the Republic-Allied merger. Could you just give us visibility on kind of where you're at -- how big is that parking lot now? And is there anything kind of meaningfully you're working on that we could be seeing in the near-term?

That's a good question. Corey, we're working on the same things we were working last year. Again, we've got 30,000 employees, 15,000 trucks, 800 dots on the map, right? So when we take on some kind of a change initiative across the enterprise, it's a pretty big deal. And a change in management is a pretty tough thing for people. So things like the One Fleet initiative, we'll be halfway through that by the end of this year. We'll have affected half of our fleet, so we've got another couple years ago. Again, when we get into next year, we'll start seeing more benefits accrue from the One Fleet initiative. We'll start to offset some of the costs of implementing One Fleet. One Fleet is going to drive better productivity, better employee engagement, ultimately, I think better customer experience. So we'll start to see the benefits from that in -- the benefits from that in '14. And then we'll build as we complete the initiative. We've talked about CNG. We're continuing to spend, I think, this year 40-plus percent of our fleet spend is on CNG trucks. We're -- we've talked about building our fleet up to, maybe, 25% or 30% CNG over the future years. That's going to be, again, a multiyear initiative. So we've got a number of those things that were in the parking lot at the time of the merger that we've undertaken that are multiyear initiatives. So none of these things happen fast. When we get through these couple of big items, then we'll be talking about what we conquer next. But we're going to do these things really well, we're do them across the enterprise and we're going to do them with results that we can count.

Next question, Adam Thalhimer, BB&T.

In terms of the C&D volumes, you said they were up a little over 2% year-over-year in the quarter and that maybe weather held that growth back a little bit. I mean as this housing recovery matures, what kind of growth rates do you think you might see in that line of business?

Well, you kind of look at what we saw starting the third quarter of last year. In Q3 of last year we saw the temporary roll-off business grow by 3.8% and it was 5.7% in Q4, 2.4% in Q1. And as we mentioned in the comments, 2 things, one, we had some real winter weather this year and I think, when you look at our business regionally, we did see a strong performance in that temporary roll-off business on the Western states, Texas, in the southeastern U.S., which obviously are the geographic locations that were less impacted by the severe winter weather that we saw in the Midwest and Mid-Atlantic and the Northeast. So we don't really provide detailed guidance as to percentage quarterly gain, but we believe it is tracking in the right direction. And then the other thing is just as a comparison issue, if you look at Q1 of '12, it was an exceptionally warm winter. And I think if you go back and you look at the industry's performance in Q1 of '12, you saw a fairly, let's call it, elevated levels of C&D activity, which actually turned out to be just a pull forward of the normal Q2 activity in 2012. And so the fact that we did have that 2.4%, given the weather conditions in the Midwest and the Eastern states, plus the tough comp, we think the 2.4% is good-to-strong performance. And we expect the C&D business to continue to grow with the relative economies where we do business. And obviously, you look at all the housing stats and the architects’ index, all those type of leading indicators are pointing in the right direction.

Yes, 3 quarters in a row, I think that's a real trend and we'll build on that from here.

Yes, I mean, what does that feel like on the ground? I mean, is there less capacity in that business? Are you -- are people -- are you getting more calls for containers? I mean, does it feel more active to you?

Yes, it's more active. I mean, these -- the 2.4%, those are measured in hauls, right? So those are actual hauls being serviced by our fleets in the various markets that I talked about. A little more active the west, southeast, Florida specifically. A little less active in some of the markets where we have winter. And as we get into May and June, that's where we start to see seasonality in the business and that's going to be the telltale sign for us, to see how the year comes in.

Okay. And then just as a follow-up here, I mean, the expectation that volumes turn positive in the back half of the year, is that all easier comps or are there some leading indicators in the business that would support that?

That's mostly easier comps. We anniversary a couple of big contracts that we lost that we had to talk about a year ago. And we haven't had any continued contract loss of that size. So we're going to anniversary those biggies and then we're going to get into a better comp in the last half of the year. But then as Ed said, these other trends are improving. So we're pretty confident in the guidance we've given you.

Next question, Michael Hoffman, Wunderlich.

Can we talk a little bit about sort of maybe putting a little sort of direction around the productivity? And I get the One Fleet, the CNG conversion, probably could be added to that is automation. If you thought about natural inflation in the business is sort of 1.5% to 2%, and we're living in this economy, whatever this is, this is the economy for a while. What do you think you can do in productivity to help offset that natural inflation, plus sort of that continual turning the screw on cost? What's the basis point kind of range to think about, so that when we think about your pricing at 1.5%, how that sort of plays out?

Yes, I think historically, we've said it's kind of 20 to 30 basis points, right, a year. So less than 1%, certainly, right? So we've been at this a long time, Michael, we're pretty productive and so we're working at the harder things now. Again, CNG makes sense to us because we're replacing trucks that are going to be otherwise disposed of. So we're pacing ourselves there. The One Fleet, we're in the process now wherein where that's still costing us a little bit of money and we start to come over the top of that hill on that next year. Things like single operator vehicles, the automation, we continue to reduce our workforce in that residential system, become more efficient with fewer accidents, so all of that stuff helps productivity so -- but we're pretty good at what we do and it's not like there's a lot of low-hanging fruit out there. So if we get back to, again, 1.5% or 2% pricing, and we have 1.5% inflation less, call it 20 or 30 basis points of productivity, we can start to see a little bit of margin expansion again as it relates to that pricing environment.

Okay. And then on the household formation sort of the construction, I mean, we all love the C&D, but the real play is, not only do they build it, but they sell it and you get a residential contract. And if they build enough of them and sell enough of them, maybe somebody builds a restaurant or a strip mall. So can you frame 2 things here, one, what are you seeing as far as that starting -- is there a light at the end of that tunnel? What's the sort of thoughts about that? And if it got to 1.2 million starts a year and lapped ourselves at 1.2 million, what's that mean in volume in your mind?

Well, we're talking about 2013. So I think we'd rather kind of stick with the guidance that we're talking about for this year. Again, as you know, Michael, we're late cycle in this. So it's too early, I think, to tell or talk about business formation. We're not really seeing a lot there yet. So we're in the front end of this thing, starting to see more temporary roll-off hauls. We'll see more construction. You hear the homebuilders talking about what they're going to do. So we'll make those hauls, to your point, then we'll haul that house every month for the recurring revenue and we'll take our part of the -- our share of new organic growth in business formation. That's our bread and butter. So I think after a very sort of long dark period in the industry, where we've seen a pretty tough volume situation and a pretty low pricing environment, I think the trends are that we're coming out of this thing and we've got some real trends sequentially to be happy with and celebrate. And we've got to pace ourselves because I don't things are going to come back quickly, we just want it to come back steadily. And I think that's what's going to happen.

Next question, Alex Ovshey, Goldman Sachs.

A couple of questions. First, can you talk about how the business is trending so far in April and any notable tidbits to highlight for us thus far in April?

Yes, Alex, we're kind of trying to stick to Q1. And talk about what we've done in the quarter and again, be consistent with our practice of reiterating our guidance for the full year. We think, as I just got done saying with -- to Michael, the trends are good. We think they're sustainable and we're on track to meet our guidance and have a good year. So I think you can read between all that and kind of come to your own conclusion.

All right, that's all right. And then on the commodity side, do you have any incremental insight on OCC pricing, recycled paper pricing and thoughts on the Green Fence initiative and the implications from that on the commodity price environment?

Well, as far as operation Green Fence, I think what we've tried to do there is work with our various buyers so that they can conduct inspections in the U.S. so -- that doesn't get held up at port. But there is a bit of a bottleneck. It's hard to forecast as to exactly how that will impact OCC pricing during the course of the full year. But I would tell you, we're doing whatever we can to, let's call it, expedite the shipment of the materials which we're sending to the export markets. If you just look at the blended OCC price during the first quarter, it was trending up slightly month-to-month, averaged about $122 for the full quarter. So I think it's a good pricing environment for OCC. But, yes, we're not really at the type of levels we saw in 2010 or for the first few quarters of 2011. But it's an improving market, but we'll just continue to work with our buyers to minimize some of the delays with operation Green Fence.

And just one more quick question, did you guys tell us what your C&D volume to landfill was in the quarter? What that change was?

It was down slightly in the year-over-year kind of mid-single digits. Right, and the reason for the variance was, we had 2 significant C&D landfill jobs in the first quarter of 2012 that obviously didn't occur. So really most of the negative variance was the comp related to those 2 jobs.

Next question, Stewart Scharf, S&P Capital.

Can you talk a little bit about where you are with shale waste?

Well, sure. We're in the solid waste landfill business and so we do accept material E&P, drilling mud, et cetera, as part of our special waste stream in the landfills that are situated in and around where that drilling activity is occurring. And our E&P business, if you will, is really related just to that activity alone. We don't have other site services along that business like other companies in our space have. So on a year-over-year comp basis, that business, relatively flat for us, consistent but flat.

Okay. And now regarding your guidance, you kept it the same. First quarter was strong, you're looking for well-controlled costs and sequential growth and pick-up in volume, are you being just a little conservative at this point or do you think that you might be closer to the high-end?

No, just as I said, we're reiterating our guidance and it's 1 quarter in. Our Q2s and Q3 are the strongest quarters of the year. So as I said previously, as we start to see what seasonality does for us in the months of May and June, we'll be able to tell a little bit more in July. But we feel good about the trends, we feel really good about the conditions we're seeing in the markets. We feel good about what our people are doing to move the business forward and we'll talk more about where we think we're going to be at the end of June when we talk to you in July.

Barbara Noverini, Morningstar.

I just wanted to ask about the recycling rebate COGS coming down. Is this mainly a function of the commodity values themselves being lower recently? Or have you also been able to negotiate more favorable terms with your customers as contracts come up for renewal? I'd assume that as you've grown recycling capability over time, you've also learned about the most optimal way to structure these arrangements?

Yes. It's mostly just what you said, it's the rates adjusting. We -- as we get size, as we get scale, we get a little better at running the business, but we already have some pretty good contractual arrangements with selling the material to the right end markets. We've got a pretty good core competency here and in doing that. So it's just really mostly related to the rates going up and down.

Jeff Osborne, Stifel.

A couple of questions from my end. I was just wondering, in the past call or 2, you've talked about the potential privatization of municipal landfills and taking those over. Just given the challenging municipal backdrop, was that a part of any of the M&A you did this quarter or something that's still on the potential radar for you folks?

It's on our radar. We are focusing on it. We recently announced the Flint, Michigan, contract that we privatized -- or that the city chose to outsource. So we announced that earlier in the year, I think February. So we're going to continue to look at that. We do believe that again the general fund in many cities is under duress and the same situation there that's creating pricing pressure for us is also creating some opportunity for us to talk to cities about the possibility and the opportunity, frankly, to outsource that service to us. So we're going to continue to focus on it. As I've said in the past, we've got a pipeline of opportunity there, but these are very long sales cycles and they're very complex sales and they're very sort of political in nature. So it takes a while to get that done.

Understand. And then 2 other quick ones here. Is there kind of a magic price of natural gas in your mind where you would slow down or stop altogether your CNG conversion? Or are you just committed to it despite some of the higher prices that we've seen in recent months?

Well, yes, I'll let Ed talk a little bit more about the specifics but we would -- we believe that right now, it's a very economical alternative for us, as well being good for the environment. But to stop altogether, that would be a pretty dramatic change in, I think, the pricing situation there. So Ed, why don't you give us some color on that?

Sure. If you kind of look at what we're paying for natural gas versus diesel today, and looking at our actual performance in the first quarter, what we're benefiting today on the CNG conversion is a gallon cost differential of $2.13. And that benefit of $2.13 cost savings does not include the $0.50 per gallon tax credit, which we'll receive in 2013. Now that was a one-time item as far as the tax credit. So obviously we look at that separately and don't include it in the net cost differential between diesel and CNG.

Got you, Ed. And then the last question just bigger picture with the discipline that the industry has had over the past 2 to 3 quarters on the pricing front, and with volumes starting to improve, is churn getting better, worse, how do we think about that for maybe either yourselves or your perception of the industry would be helpful?

Well, a couple of things, just definition, all right? When we talk about churn, we're talking about the difference between what we sell a new unit of service at versus what we lose when we lose a customer, what is that price per unit of service? So that churn, that difference in price is pretty consistent, pretty flat, okay? We talk about defection, that's a separate matter. That's how much business we lose and that's pretty flat and that's about 7%. So it's about 7% of our business, we lose on an annual basis. A little more than half of that is competitive and some of that is structural, call it, bankruptcies. It's been a pretty consistent number for us for several years. We think, overall, the business is stable. But as I said before, it's always been a competitive business, it always will be, it's a very local business in that way. But as organic growth improves, we think all competitors just feel better about their business and become sort of less or more rational, if you will, in their practices. And we think customers, frankly, just are less sensitive to an extra percent of price. So we think just the overall improving economy is going to drive that for us.

[Operator Instructions] Next question, Joe Box, KeyBanc Capital Markets.

Just a question on the CapEx front. I know you said earlier that it came in line with expectations. But with it being down year-over-year, can you maybe give us a flavor of where you cut back and how we should think about it trending over the next couple of quarters?

Yes. We really haven't cut back. I mean, it's -- the only thing that I think is different this year over last year is we've reduced our overall spending in a recycling development, and that is because it's a little bit lumpy. We did some bigger projects last year in total than we did this year. So we're doing the same sort of number of projects, last year's were bigger. And we said we're going to spend -- or we're going to do 3 to 5 markets per year as far as our infrastructure build-out or enhancements in recycling. We've stayed true to that, we're going to continue to do it. Again as you can see -- or as you can understand, it's a little bit lumpy. As far as truck spending, it's very consistent. We've got a very young fleet. We replace a very consistent number of trucks every year. About 30% of our total CapEx goes to sell [ph] development. We've got to dig those landfills to fill them up, and so that's pretty consistent. We manage our CapEx generally in line with about 10% of our revenues and we've historically done that as I -- consistently as far back as I can remember. So I don't see that really changing much.

And Joe, just to reiterate the guidance, the net CapEx, which is gross CapEx of $860 million, less $25 million of proceeds from asset sales, that number is $835 million. The guidance for net CapEx for the full year is $835 million and we did spend $214 million in Q1. So I would say, we're just simply tracking right on our plan with almost exactly 25% of the spend occurring in Q1.

Yes, and Joe, sometimes there are timing differences with when we get the trucks in or when -- depending on when contracts start. So that ebbs and flows a little bit. But we're really right where we thought we'd be.

Perfect. That's helpful. And then, Don, you mentioned earlier that you guys are out doing all you can to basically drive pricing. One of your peers is out basically looking to introduce a regulation fee and some other fees out there to maintain the price cost breakdown. Can you just give us some historical context. When a waste player comes out and introduces a one-time true-up fee, is that something that typically other peers come out and follow suit with or is it more of a one-off thing?

Okay, here's what I would say, Joe, we are constantly reviewing our costs, constantly reviewing the market and looking to recover cost increases through pricing. So we've recently reviewed our fee recovery fee and made sure that, that made sense for the company and was fair to our customers. We think it's the right amount for us today. We, from time to time, look at our environmental fees and look at what it takes to run these landfills. A number of years ago, the EPA passed some legislation that drove our air quality testing cost of about $3 million, and we chose to pass it along to our customers through an environmental fee. So that's how we look at our business. This is a very capital-intensive business. These landfills are very, very expensive to own and to operate and they're long-life assets with lots of liability. And we've always got to make sure that we're getting the right price for those assets and we look at that on an ongoing basis, really, year in and year out.

Understood. Just a housekeeping item for you then. If you look at the repurchase versus the option issuance this quarter, it looks like it was about a push. Should we think about the buyback having more of an effect in the share count in the coming quarters? How should we think about that?

Well, obviously, Joe, we have a plan for share repurchase this year. Coming into the year, we had about $325 million. Obviously, we used probably about 1/4 of that in Q1. So again, we're tracking right on plan with the use of cash for repurchase. When you talk about option dilution, that's a little bit hard to forecast, and so we really don't have that in the number. There was some option exercise in Q1 that did impact the share count, which we did offset with share repurchase. But I don't think you can really forecast option exercise during the course of the year.

I mean, no commentary on how that could trend directionally?

No. Because, again, we don't really forecast the -- that's an individual decision as to when to do that.

That's all the time we do have for questions today. I will now turn the call back to Mr. Slager for his closing remarks.

Thank you, operator. I would like to thank all Republic employees for their hard work, commitment and dedication to operational excellence in creating the Republic way. Thank you for spending time with us today and have a good evening.

Okay, thank you. That concludes the Republic Services conference call for today. Thank you for participating. You may disconnect at this time.