Organizational changes by Republic Services Inc. in both the field and at corporate headquarters are expected to save the company more than $20 million a year, but not impact management closest to the customers.
The Phoenix-based solid waste management company consolidated its management structure at two higher levels, eliminating one of four regional offices and eight of 28 lower-area offices around the country.
Those moves, along with job cuts at its headquarters, will cost about $30 million to implement, but then save $23 million each year. The company did not provide the number of job cuts.
A regional office in the San Francisco Bay area is closing and being replaced by one in Phoenix. The company's Indianapolis office is remaining open, and the company's regional office in the East is moving from Centerville, Va., to Charlotte, N.C. A regional office in Houston is closing and not being replaced.
"I think it makes sense now because we've continued to develop, strengthen our team. We continue to build our team," CEO Donald W. Slager said on a conference call to discuss third-quarter earnings. "Our people continue to grow. And we have high confidence in our regional and area leaders that they can operate and lead larger geographies.
"What's important to note is our general manager, business-unit level has not been impacted. We have not spread or expanded the span of control at the business level. Those 170 or so general managers still exist. Those positions haven't been impacted," Slager said of the level closest to customers.
Republic Services' decision to reorganize and cut costs comes after Waste Management Inc., the nation's largest solid waste management company, undertook a similar strategy earlier this year.
In July, Waste Management eliminated an entire layer of management at what it calls the group, or regional level. The company also cut the number of areas, which were previously below the group level, from 22 to 17. Counting cuts at the corporate office, Waste Management said at the time it was eliminating about 700 jobs.
That company, on its recent quarterly earnings call, said it expects to save the full $130 million it anticipated in annual savings, starting next year.
News of the reorganization came as Republic Services also reported that earnings and revenue fell during the third quarter compared to the same period last year.
The company earned $152.7 million, or 42 cents per diluted share, on revenue of $2.05 billion. That compares with earnings of $193.5 million, or 52 cents per diluted share, on revenue of $2.12 billion last third quarter.
A "number of charges and other expenses" impacted results, which would have yielded earnings of $170.7 million, or 47 cents per diluted share, this third quarter, and $198.5 million, or 53 cents per diluted share, last third quarter, the company said.
Republic Services also lowered its earnings guidance for the year to $1.85 to $1.87 per diluted share, down from $1.91 to $1.93 per diluted share.