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Press release from Business Wire

Stericycle, Inc. Reports Results for the Second Quarter and Year to Date 2013

Wednesday, July 24, 2013

Stericycle, Inc. Reports Results for the Second Quarter and Year to Date 2013

16:02 EDT Wednesday, July 24, 2013

LAKE FOREST, Ill. (Business Wire) -- Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter of 2013.

SECOND QUARTER RESULTS

Revenues for the quarter ended June 30, 2013 were $526.5 million, up $57.6 million or 12.3% from $468.9 million in the second quarter last year. Acquisitions contributed approximately $34.1 million to the current period's growth in revenues. Revenues increased 13.1% compared to the prior period when adjusted for unfavorable foreign exchange impact of $4.1 million. Gross profit was $237.9 million, up 13.5% from $209.5 million in the second quarter last year. Gross profit as a percent of revenue was 45.2% compared with 44.7% in the second quarter of 2012. Earnings per diluted share, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), increased 14.4% to $0.89 from $0.78 in the second quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 14.2% to $0.93 from $0.81. See tables below.

FIRST SIX MONTHS' RESULTS

Revenues for the six months ending June 30, 2013 were $1,040.3 million, up $111.3 million or 12.0% from $929.0 million in the same period last year. Revenues increased 12.9% compared with the prior period when adjusted for unfavorable foreign exchange impact of $8.3 million. Gross profit was $469.9 million, up 13.3% from $414.8 million in the same period last year. Gross profit as a percent of revenue was 45.2% compared with 44.6% in 2012. GAAP earnings per diluted share increased 14.2% to $1.74 from $1.53 in the same period last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 12.8% to $1.81 from $1.60. See tables below.

The following table shows our calculations of organic revenue growth (in millions)(1):

  Three Months Ended June 30,   Six Months Ended June 30,
Change Change
  2013     2012   $   %   2013     2012   $   %
Total As Reported Revenues (GAAP) $ 526.5 $ 468.9 $ 57.6 12.3 % $ 1,040.3 $ 929.0 $ 111.3 12.0 %
Adjustment for Foreign Exchange   4.1     -     4.1  

 

  8.3     -     8.3  
Subtotal (non-GAAP): 530.6 468.9 61.7 13.1 % 1,048.6 929.0 119.6 12.9 %
 
Adjustment for Acquisitions (37.7 ) (3.6 ) (34.1 ) (75.3 ) (4.2 ) (71.1 )
Adjustment for Regulated Returns and

Recall Management Services

  (23.7 )   (29.0 )   5.3     (46.3 )   (64.7 )   18.4  
Subtotal (non-GAAP): $ 469.2 $ 436.3 $ 32.9 7.5 % $ 927.0 $ 860.1 $ 66.9 7.8 %
 
Domestic/ International Breakdown:
Domestic Revenues $ 370.2 $ 337.8 $ 32.4 9.6 % $ 733.8 $ 667.0 $ 66.8 10.0 %
International Revenues   156.3     131.1     25.2   19.2 %   306.5     262.0     44.5   17.0 %
Total As Reported Revenues (GAAP) $ 526.5   $ 468.9   $ 57.6   12.3 % $ 1,040.3   $ 929.0   $ 111.3   12.0 %

(1) For internal purposes, we exclude the impact of foreign exchange and revenues attributed to acquisitions closed within the preceding 12 months and from our regulated returns and recall management services when we evaluate organic revenue growth. This table and the Company's internal use of non-GAAP adjusted revenues are not intended to imply, and should not be interpreted as implying, that non-GAAP adjusted revenues are a better measure of internal growth or the Company's performance, as compared to GAAP revenues.

Table to reconcile GAAP EPS to Non-GAAP EPS(2):

 
  Three Months Ended June 30,   Six Months Ended June 30,
Change   Change
      2013     2012   $   %   2013     2012   $   %
GAAP EPS $ 0.89 $ 0.78 $ 0.11   14.4 % $ 1.74 $ 1.53 $ 0.22   14.2 %
 
Acquisition Expenses 0.03 0.03 0.05 0.04
Integration Expenses 0.01 0.01 0.02 0.02
Change in Fair Value (0.00 ) (0.01 ) (0.00 ) 0.01
Restructuring and Plant Closure 0.00 0.01 0.00 0.01
Litigation Settlement (0.00 ) - 0.00 -
 
Non-GAAP EPS (Adjusted) $ 0.93 $ 0.81 $ 0.11 14.2 % $ 1.81 $ 1.60 $ 0.21 12.8 %

(2) In accordance with GAAP, reported earnings per share (EPS) 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 $176.5 million and $188.8 million for the six months ended June 30, 2013 and 2012, respectively.

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 July 24, 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 August 24th by dialing 855-859-2056, access code 86466843. 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 SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
 
June 30, December 31,
2013 2012
ASSETS
Current Assets:
Cash and cash equivalents $ 18,001 $ 31,324
Short-term investments 460 503
Accounts receivable, net 361,894 322,246
Deferred income taxes 19,998 22,995
Prepaid expenses 27,691 27,042
Other current assets 39,721   37,176  
Total Current Assets 467,765 441,286
Property, plant and equipment, net 345,743 335,870
Goodwill 2,094,459 2,065,103
Intangible assets, net 673,222 667,471
Other assets 37,236   37,008  
Total Assets $ 3,618,425   $ 3,546,738  
 
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt $ 72,430 $ 87,781
Accounts payable 88,420 74,225
Accrued liabilities 122,430 135,321
Deferred revenues 18,183 18,095
Other current liabilities 12,497   15,638  
Total Current Liabilities 313,960 331,060
Long-term debt, net of current portion 1,246,203 1,268,303
Deferred income taxes 371,467 359,780
Other liabilities 37,352 30,272
Equity:
Common stock 859 860
Additional paid-in capital 159,961 116,720
Accumulated other comprehensive loss (78,564 ) (39,064 )
Retained earnings 1,549,769   1,463,277  
Total Stericycle, Inc. Equity 1,632,025 1,541,793
Noncontrolling interests 17,418   15,530  
Total Equity 1,649,443   1,557,323  
Total Liabilities and Equity $ 3,618,425   $ 3,546,738  
 
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
     
Three Months Ended Six Months Ended
June 30, June 30,
2013 2012 2013 2012
$   % of Rev $   % of Rev $   % of Rev $   % of Rev
 
Revenues $ 526,525 100.0 % $ 468,950 100.0 % $ 1,040,329 100.0 % $ 929,027 100.0 %
 
Cost of revenues (exclusive of depreciation shown below) 276,385 52.5 % 248,832 53.1 % 546,058 52.5 % 493,014 53.1 %
Depreciation - cost of revenues 12,288   2.3 % 10,630   2.3 % 24,325   2.3 % 21,218   2.3 %
 
Gross profit 237,852 45.2 % 209,488 44.7 % 469,946 45.2 % 414,795 44.6 %
 
Selling, general and administrative expenses
(exclusive of depreciation and amortization below) 91,158 17.3 % 80,652 17.2 % 179,399 17.2 % 158,459 17.1 %
Depreciation - SG&A 2,954 0.6 % 2,261 0.5 % 5,763 0.6 % 4,412 0.5 %
Amortization 6,533   1.2 % 5,135   1.1 % 13,175   1.3 % 10,114   1.1 %
Total SG&A expense and amortization 100,645 19.1 % 88,048 18.8 % 198,337 19.1 % 172,985 18.6 %
 
Income from operations before
acquisition, integration, and other expenses 137,207 26.1 % 121,440 25.9 % 271,609 26.1 % 241,810 26.0 %
 
Acquisition expenses 2,324 0.4 % 2,207 0.5 % 4,127 0.4 % 3,746 0.4 %
Integration expenses 1,383 0.3 % 1,044 0.2 % 2,279 0.2 % 2,323 0.3 %
Change in fair value of contingent consideration (122 ) 0.0 % (602 ) -0.1 % (122 ) 0.0 % 602 0.1 %
Litigation settlement (2 ) 0.0 % - 0.0 % 104 0.0 % - 0.0 %
Restructuring and plant closure costs 104   0.0 % 1,064   0.2 % 104   0.0 % 1,150   0.1 %
 
Income from operations 133,520 25.4 % 117,727 25.1 % 265,117 25.5 % 233,989 25.2 %
 
Other income (expense):
Interest income 102 0.0 % 124 0.0 % 269 0.0 % 216 0.0 %
Interest expense (13,015 ) -2.5 % (12,783 ) -2.7 % (26,561 ) -2.6 % (25,549 ) -2.8 %
Other expense, net (545 ) -0.1 % 490   0.1 % (1,558 ) -0.1 % (68 ) 0.0 %
 
Total other expense (13,458 ) -2.6 % (12,169 ) -2.6 % (27,850 ) -2.7 % (25,401 ) -2.7 %
 
Income before income taxes 120,062 22.8 % 105,558 22.5 % 237,267 22.8 % 208,588 22.5 %
 
Income tax expense 41,619   7.9 % 37,186   7.9 % 83,602   8.0 % 74,901   8.1 %
 
Net income 78,443   14.9 % 68,372   14.6 % 153,665   14.8 % 133,687   14.4 %
 
Less: net income attributable to noncontrolling interests 399   0.1 % 779   0.2 % 1,004   0.1 % 1,237   0.1 %
 
Net income attributable to Stericycle, Inc. $ 78,044   14.8 % $ 67,593   14.4 % $ 152,661   14.7 % $ 132,450   14.3 %
 
Earnings per share - diluted $ 0.89   $ 0.78   $ 1.74   $ 1.53  
 
Weighted average number of
common shares outstanding - diluted 87,614,953   86,835,615   87,545,641   86,714,407  
 
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
   
Six Months Ended
June 30,
2013 2012
Operating Activities:
Net income $ 153,665 $ 133,687
Adjustments to reconcile net income to net cash
provided by operating activities:
Change in fair value of contingent consideration (122 ) 602
Stock compensation expense 7,943 8,217
Excess tax benefit of stock options exercised (8,373 ) (11,523 )
Depreciation 30,088 25,630
Amortization 13,175 10,114
Deferred income taxes 13,101 14,546
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable (42,871 ) 5,368
Accounts payable 9,619 7,252
Accrued liabilities (2,231 ) (6,409 )
Deferred revenue (548 ) 2,111
Other assets and liabilities 3,037   (797 )
 
Net cash provided by operating activities 176,483   188,798  
 
Investing Activities:
Payments for acquisitions, net of cash acquired (63,401 ) (111,716 )
Proceeds from/ (purchases of) short-term investments 33 (2 )
Capital expenditures (37,441 ) (33,819 )
 
Net cash used in investing activities (100,809 ) (145,537 )
 
Financing Activities:
Net repayment of long-term debt (35,795 ) (38,323 )
Net repayments on senior credit facility (16,714 ) (10,074 )
Payments of deferred financing costs - (148 )
Payments on capital lease obligations (1,825 ) (1,278 )
Purchase and cancellation of treasury stock (66,175 ) (2,945 )
Payments to noncontrolling interests - (10 )
Proceeds from other issuances of common stock 23,667 28,450
Excess tax benefit of stock options exercised 8,373   11,523  
 
Net cash used in financing activities (88,469 ) (12,805 )
Effect of exchange rate changes on cash (528 ) 1,246  
Net (decrease)/ increase in cash and cash equivalents (13,323 ) 31,702
Cash and cash equivalents at beginning of period 31,324   22,511  
 
Cash and cash equivalents at end of period $ 18,001   $ 54,213  
 
Non-cash activities:
Net issuances of obligations for acquisitions $ 22,906 $ 34,328

Stericycle, Inc.
Frank ten Brink 847-607-2012

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