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Press release from Business Wire

Stericycle, Inc. Reports Results for Fourth Quarter and Full Year Ended 2012

Wednesday, February 06, 2013

Stericycle, Inc. Reports Results for Fourth Quarter and Full Year Ended 201216:02 EST Wednesday, February 06, 2013 LAKE FOREST, Ill. (Business Wire) -- Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the fourth quarter and full year of 2012. Revenues for the quarter ended December 31, 2012 were $503.6 million, up 12.8% from $446.6 million in the fourth quarter last year. Acquisitions contributed approximately $31.1 million to the current period's growth in revenues. Revenues increased 13.3% compared to the prior period when adjusted for unfavorable foreign exchange impacts of $2.3 million. Gross profit was $227.0 million, up 12.6% from $201.5 million in the fourth quarter last year. Gross profit as a percent of revenue was 45.1% compared with 45.1% in the fourth quarter of 2011. Net income attributable to Stericycle for the fourth quarter of 2012 was $70.1 million or $0.80 per diluted share compared with $64.3 million or $0.74 per diluted share for the fourth quarter of 2011. Net income attributable to Stericycle for the fourth quarters of 2012 and 2011 includes acquisition expenses, adjustments of contingent consideration to fair value, restructuring and plant closure costs, loss on the sale of business, litigation settlement expense, and other items. Excluding the effect of these items, non-GAAP earnings per diluted share were $0.88 for the current quarter (see table below). Non-GAAP earnings per diluted share increased 15.1% from non-GAAP earnings per diluted share of $0.76 in the fourth quarter of 2011. FULL-YEAR RESULTS Revenues for the full year 2012 were $1.91 billion, up 14.1% from $1.68 billion in 2011. Acquisitions contributed approximately $140.3 million to the current year's growth in revenues. Revenues increased 15.4% compared to the prior year when adjusted for unfavorable foreign exchange impacts of $21.8 million. Gross profit was $857.3 million, up 12.7% from $760.7 million in 2011. Gross profit as a percent of revenue was 44.8% compared with 45.4% in 2011. Earnings per diluted share increased 14.6% to $3.08 in 2012 from $2.69 in 2011. Non-GAAP earnings per diluted share, when adjusted for various items, increased 15.4% to $3.30 from $2.86 (see table below).   Table to reconcile non-GAAP EPS to GAAP EPS:       Three months ended December 31,Year ended December 31,     Change   Change     Change Change     2012   2011   $   %   2012   2011   $   % GAAP EPS $0.80 $0.74 $0.06 8.2 % $3.08 $2.69 $0.39 14.6 %   Acquisition expenses/Fair Value 0.02 (0.01 ) 0.10 0.12   Restructuring/Plant Closure 0.01 0.03 0.04 0.04   Loss/(Gain) on Sale 0.04 0.00   Litigation Expense 0.04 0.01 0.04 0.01   Acceleration of Term Loan Fees 0.00 0.01   Non-GAAP EPS (adjusted) $0.88 $0.76 $0.12 15.1 % $3.30 $2.86 $0.44 15.4 % * In accordance with U.S. generally accepted accounting principles (GAAP), reported earnings per share include the after-tax impact of the items identified in this table. For internal purposes, including the determination of management compensation, the Company excludes these items from results when evaluating operating performance. This table and the Company's internal use of non-GAAP earnings per share are not intended to imply, and should not be interpreted as implying, that non-GAAP earnings per share is a better measure of performance than GAAP earnings per share.   Cash flow from operations was $387.4 million for the full year of 2012. For more information about Stericycle, please visit our website at www.stericycle.com. Safe Harbor Statement: Statements in this press release may contain forward-looking statements that involve risks and uncertainties, some of which are beyond our control (for example, general economic conditions). Our actual results could differ significantly from the results described in the forward-looking statements. Factors that could cause such differences include changes in governmental regulation of medical waste collection and treatment and increases in transportation and other operating costs, as well as the other factors described in our filings with the U.S. Securities and Exchange Commission. As a result, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate future results or trends. We make no commitment to disclose any subsequent revisions to forward-looking statements. Conference call to be held February 6, 2013 4:00 p.m. Central time – Dial 866-516-6872 at least 5 minutes before start time. If you are unable to participate on the call, a replay will be available through March 5th by dialing 855-859-2056, access code 86463685. To hear a live simulcast of the call over the internet on www.earnings.com, or to access an audio archive of the call, go to the Investors page on Stericycle's website at www.stericycle.com.                   STERICYCLE, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)   Three Months EndedYears EndedDecember 31,December 31,2012201120122011 (Unaudited) (Unaudited) (Audited) $   % of Rev $   % of Rev $   % of Rev   $   % of Rev   Revenues $ 503,638 100.0 % $ 446,557 100.0 % $ 1,913,149 100.0 % $ 1,676,048 100.0 %   Cost of revenues 264,541 52.5 % 234,342 52.5 % 1,011,081 52.8 % 874,115 52.2 % Depreciation - cost of revenues 12,009 2.4 % 10,697 2.4 % 44,631 2.3 % 41,135 2.5 % Restructuring costs 132     0.0 % -     0.0 % 132     0.0 % 54     0.0 %   Gross profit 226,956 45.1 % 201,518 45.1 % 857,305 44.8 % 760,744 45.4 %   Selling, general and administrative expenses 86,496 17.2 % 76,653 17.2 % 327,131 17.1 % 291,468 17.4 % Depreciation - SG&A 2,706 0.5 % 2,195 0.5 % 9,598 0.5 % 8,642 0.5 % Amortization 6,379     1.3 % 5,167     1.2 % 22,054     1.2 % 16,269     1.0 %   Total SG&A expense and amortization 95,581     19.0 % 84,015     18.8 % 358,783     18.8 % 316,379     18.9 %   Income from operations before acquisition, integration, and other expenses 131,375 26.1 % 117,503 26.3 % 498,522 26.1 % 444,365 26.5 %   Acquisition expenses 1,707 0.3 % 2,310 0.5 % 7,920 0.4 % 16,704 1.0 % Restructuring costs and plant closure expense 1,801 0.4 % 3,989 0.9 % 5,201 0.3 % 5,021 0.3 % Litigation settlement 6,050 1.2 % 725 0.2 % 6,050 0.3 % 1,185 0.1 % Loss/ (gain) on sale of businesses - 0.0 % (304 ) -0.1 % 4,867 0.3 % 19 0.0 % Change in fair value of contingent consideration 161 0.0 % (5,081 ) -1.1 % 752 0.0 % (7,221 ) -0.4 % Integration expenses 1,356     0.3 % 480     0.1 % 4,896     0.3 % 4,346     0.3 %   Income from operations 120,300 23.9 % 115,384 25.8 % 468,836 24.5 % 424,311 25.3 %   Other income (expense): Interest income 71 0.0 % 315 0.1 % 404 0.0 % 799 0.0 % Interest expense (13,077 ) -2.6 % (13,018 ) -2.9 % (51,674 ) -2.7 % (49,431 ) -2.9 % Other expense, net 187     0.0 % (1,696 )   -0.4 % (369 )   0.0 % (3,355 )   -0.2 %   Total other income (expense) (12,819 )   -2.5 % (14,399 )   -3.2 % (51,639 )   -2.7 % (51,987 )   -3.1 %   Income before income taxes 107,481 21.3 % 100,985 22.6 % 417,197 21.8 % 372,324 22.2 %   Income tax expense 36,973     7.3 % 35,862     8.0 % 147,256     7.7 % 134,981     8.1 %   Net income 70,508     14.0 % 65,123     14.6 % 269,941     14.1 % 237,343     14.2 %   Less: net income attributable to noncontrolling interests 439     0.1 % 835     0.2 % 1,945     0.1 % 2,592     0.2 %   Net income attributable to Stericycle, Inc. $ 70,069     13.9 % $ 64,288     14.4 % $ 267,996     14.0 % $ 234,751     14.0 %   Earnings per share-diluted $ 0.80   $ 0.74   $ 3.08   $ 2.69     Weighted average number of common shares outstanding-diluted 87,281,680   86,635,383   87,018,473   87,367,712       STERICYCLE, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)   December 31,20122011 (Unaudited) (Audited) ASSETS Current Assets: Cash and cash equivalents $ 31,324 $ 22,511 Short-term investments 503 416 Accounts receivable, less allowance for doubtful accounts of $19,443 in 2012 and $18,905 in 2011 322,246 290,854 Deferred income taxes 22,995 19,314 Prepaid expenses 27,042 22,466 Other current assets 37,176   35,035   Total Current Assets 441,286 390,596 Property, plant and equipment, net 335,870 293,912 Other assets: Goodwill 2,065,103 1,913,703 Intangible assets, less accumulated amortization of $64,215 in 2012 and $42,050 in 2011 667,471 546,618 Other 37,008   32,261   Total other assets 2,769,582   2,492,582   Total Assets $ 3,546,738   $ 3,177,090     LIABILITIES AND EQUITY Current Liabilities: Current portion of long-term debt $ 87,781 $ 100,526 Accounts payable 74,225 66,635 Accrued liabilities 135,321 140,521 Deferred revenues 18,095 12,855 Other current liabilities 15,638   6,377   Total Current Liabilities 331,060 326,914 Long-term debt, net of current portion 1,268,303 1,284,113 Deferred income taxes 362,643 313,733 Other liabilities 27,409 25,079 Equity: Common stock (par value $0.01 per share, 120,000,000 shares authorized, 85,987,883 issued and outstanding in 2012, and 84,696,227 issued and outstanding in 2011) 860 847 Additional paid-in capital 116,720 - Accumulated other comprehensive loss (39,064 ) (45,984 ) Retained earnings 1,463,277   1,243,303   Total Stericycle, Inc. Equity 1,541,793 1,198,166 Noncontrolling interest 15,530   29,085   Total Equity 1,557,323   1,227,251   Total Liabilities and Equity $ 3,546,738   $ 3,177,090       STERICYCLE, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(IN THOUSANDS)   Years Ended December 31,20122011 (Unaudited) (Audited) Operating Activities: Net income $ 269,941 $ 237,343 Adjustments to reconcile net income to net cash provided by operating activities: Loss on sale of business 4,867 19 Restructuring and plant closure costs 1,677 2,756 Write down of other assets 1,256 Change in fair value of contingent consideration 752 (7,221 ) Accelerated amortization of term loan financing fees - 1,241 Stock compensation expense 16,339 15,367 Excess tax benefit of stock options exercised (30,161 ) (17,410 ) Depreciation 54,229 49,777 Amortization 22,054 16,269 Deferred income taxes 25,541 31,837 Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: Accounts receivable (4,329 ) (31,821 ) Accounts payable (107 ) (12,539 ) Accrued liabilities 26,201 21,656 Deferred revenue 931 (1,997 ) Other assets and liabilities (487 ) (429 )   Net cash provided by operating activities 387,448   306,104     Investing Activities: Payments for acquisitions, net of cash acquired (229,684 ) (479,661 ) (Purchases of) / proceeds from short-term investments (89 ) 15,942 Proceeds from sale of businesses and other assets 764 2,371 Capital expenditures (65,236 ) (53,301 )   Net cash used by investing activities (294,245 ) (514,649 )   Financing Activities: Repayments of long-term debt and other obligations (73,766 ) (39,536 ) Net (repayments)/ borrowings on senior credit facility (304,309 ) 270,827 Proceeds from private placement of long-term note 250,000 - Payments of deferred financing costs (956 ) (3,740 ) Payments on capital lease obligations (3,192 ) (3,333 ) Purchase and cancellation of treasury stock (48,028 ) (124,056 ) Payments to noncontrolling interests (580 ) (534 ) Proceeds from other issuances of common stock 64,461 31,286 Excess tax benefit of stock options exercised 30,161   17,410     Net cash (used in)/ provided by financing activities (86,209 ) 148,324 Effect of exchange rate changes on cash 1,819   3,456   Net increase/ (decrease) in cash and cash equivalents 8,813 (56,765 ) Cash and cash equivalents at beginning of period 22,511   79,276     Cash and cash equivalents at end of period $ 31,324   $ 22,511     Non-cash activities: Net issuances of obligations for certain acquisitions $ 105,738 $ 58,338   Stericycle, Inc.Frank ten Brink, 847-607-2012