Date: February 7, 2007
Source: Stericycle, Inc.
FOURTH QUARTER AND FULL YEAR RESULTS
Revenues for the quarter ended December 31, 2006 were $208.7 million, up 25.3% from $166.6 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $28.5 million in revenues for the quarter. Gross profit was $93.0 million, up 25.3% from $74.2 million in the same quarter last year. Gross profit as a percent of revenues was 44.6% for the quarter, which is consistent with the fourth quarter of 2005.
Net income for the fourth quarter of 2006 was $29.0 million or $0.64 per diluted share compared with a net loss of $1.0 million or $0.02 per diluted share for the same quarter last year.
For the year ended December 31, 2006, revenues increased to $789.6 million, up 29.6% from $609.5 million in 2005. Gross profit was $349.9 million, up 30.5% from $268.0 million in the same period a year ago. Gross profit as a percent of revenues was 44.3% versus 44.0% in 2005. Earnings per diluted share were $2.33 versus $1.48 per diluted share in 2005.
In the fourth quarter of 2006, acquisition integration related expenses were $1.0 million, net of tax, primarily related to facility closure costs. Both the quarterly and annual results from 2005 include the effect of the charges for the settlement and related legal expenses of the 3CI class action litigation, the write-down of a note receivable with our former South African joint venture, a licensing legal settlement and loan refinancing expenses, which together reduced net income by $26.3 million or $0.58 per diluted share. In the fourth quarter of 2006, we were reimbursed for $0.6 million, net of tax, of legal expenses related to the 3CI class action litigation.
Diluted earnings per share in the quarter and year ended December 31, 2006 included $0.04 and $0.14 per share, respectively, recorded as a result of the adoption of FASB Statement No. 123R on January 1, 2006.
Cash flow from operations was $160.2 million for the year ended December 31, 2006. Cash flow and increased loan balances were used to strengthen our business and fund $164.0 million in acquisitions and international investments, $42.8 million in stock repurchases and $36.4 million in capital spending.
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 difficulties in completing the integration of acquired businesses, changes in governmental regulation of medical waste collection and treatment, and increases in transportation and other operating costs, as well as the various 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 7, 2007 at 4:00 p.m. Central time - Dial 866-206-5917 at least 5 minutes before start time. If you are unable to participate on the call, a replay will be available through February 14th by dialing 888-266-2081, access code 1021702. To hear a simulcast of the call over the internet, or to access an audio archive of the call, go to the Investor Relations page on Stericycle's website at www.stericycle.com.
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
December 31, December 31,
2006 2005
------------- -------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 13,492 $ 7,825
Short-term investments 2,548 720
Accounts receivable, less allowance for
doubtful
accounts of $5,411 in 2006 and $4,810 in
2005 133,355 103,703
Parts and supplies 6,733 5,263
Prepaid expenses 9,152 6,523
Notes receivable 2,773 3,164
Deferred income tax 16,072 13,452
Other current assets 4,171 3,392
------------- -------------
Total current assets 188,296 144,042
------------- -------------
Property, plant and equipment, net 159,164 136,220
Other assets:
Goodwill 807,134 685,169
Intangible assets, less accumulated
amortization of
$11,454 in 2006 and $8,965 in 2005 128,396 61,641
Notes receivable 12,596 10,672
Other 9,903 9,916
------------- -------------
Total other assets 958,029 767,398
------------- -------------
Total assets $ 1,305,489 $ 1,047,660
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 22,649 $ 12,044
Accounts payable 27,741 27,872
Accrued liabilities 75,434 48,450
Deferred revenue 11,662 10,394
------------- -------------
Total current liabilities 137,486 98,760
------------- -------------
Long-term debt, net of current portion 443,147 348,841
Deferred income taxes 87,617 71,549
Other liabilities 12,158 6,876
Common shareholders' equity:
Common stock (par value $0.01 per share,
80,000,000
shares authorized, 44,251,965 issued
and outstanding
in 2006, 44,149,722 issued and
outstanding in 2005) 443 442
Additional paid in capital 252,568 259,075
Accumulated other comprehensive income 5,229 546
Retained earnings 366,841 261,571
------------- -------------
Total shareholders' equity 625,081 521,634
------------- -------------
Total liabilities and shareholders'
equity $ 1,305,489 $ 1,047,660
============= =============
Total debt to capitalization percentage
ratio 42.7% 40.9%
Calculation of total debt to
capitalization percentage ratio:
Total debt $ 465,796 $ 360,885
Shareholders' equity 625,081 521,634
------------- -------------
Capitalization $ 1,090,877 $ 882,519
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
Three Months Ended
December 31,
--------------------------------------
(unaudited)
--------------------------------------
2006 2005
% of % of
$ Rev $ Rev
------------------ ------------------
Revenues $ 208,697 100.0% $ 166,555 100.0%
Cost of revenues(1) 115,667 55.4% 92,318 55.4%
Gross profit 93,030 44.6% 74,237 44.6%
Selling, general and
administrative expenses(1) 36,892 17.7% 28,153 16.9%
Amortization 493 0.2% 425 0.3%
----------------- ------------------
Total SG&A expense and
amortization 37,385 17.9% 28,578 17.2%
Income from operations before
excluded items 55,645 26.7% 45,659 27.4%
Licensing legal settlement 0 0.0% 1,823 1.1%
Write-down fixed assets - 0.0% - 0.0%
Acquisition integration related
expenses 1,625 0.8% 334 0.2%
----------------- ------------------
Income from operations 54,020 25.9% 43,502 26.1%
Other income (expense):
Interest income 361 0.2% 336 0.2%
Interest expense (7,450) -3.6% (4,163) -2.5%
3CI legal settlement (2005)
and proceeds from insurance
(2006) 1,025 0.5% (36,481)-21.9%
Write-down of note receivable
with former joint venture - 0.0% (2,495) -1.5%
Write-off deferred finance
fees - 0.0% (250) -0.2%
Write-down of investment in
securities - 0.0% - 0.0%
Other expense, net (342) -0.2% (586) -0.4%
----------------- ------------------
Total other income (expense) (6,406) -3.1% (43,639)-26.2%
----------------- ------------------
Income before income taxes 47,614 22.8% (137) -0.1%
Income tax expense 18,569 8.9% 889 0.5%
----------------- ------------------
Net income/(loss) $ 29,045 13.9% $ (1,026) -0.6%
===========------ ==================
Earnings/(loss) per share-
diluted $ 0.64 $ (0.02)
=========== ===========
Weighted average number of
common shares outstanding-
diluted 45,332,890 45,225,135
=========== ===========
(1) Stericycle adopted FAS123R on a modified prospective basis on
January 1, 2006 therefore 2006 balances include stock compensation
expense
Year Ended
December 31,
--------------------------------------
(unaudited) (audited)
-------------------------------------
2006 2005
% of % of
$ Rev $ Rev
------------------ -----------------
Revenues $ 789,637 100.0% $ 609,457 100.0%
Cost of revenues(1) 439,770 55.7% 341,420 56.0%
Gross profit 349,867 44.3% 268,037 44.0%
Selling, general and
administrative expenses(1) 141,400 17.9% 96,436 15.8%
Amortization 2,966 0.4% 1,596 0.3%
----------------- -----------------
Total SG&A expense and
amortization 144,366 18.3% 98,032 16.1%
Income from operations before
excluded items 205,501 26.0% 170,005 27.9%
Licensing legal settlement 0 0.0% 1,823 0.3%
Write-down fixed assets 300 0.0% 872 0.1%
Acquisition integration related
expenses 3,439 0.4% 778 0.1%
----------------- -----------------
Income from operations 201,762 25.6% 166,532 27.3%
Other income (expense):
Interest income 1,358 0.2% 764 0.1%
Interest expense (28,419) -3.6% (13,011) -2.1%
3CI legal settlement (2005)
and proceeds from insurance
(2006) 1,025 0.1% (36,481) -6.0%
Write-down of note
receivable with former
joint venture - 0.0% (2,495) -0.4%
Write-off deferred finance
fees - 0.0% (447) -0.1%
Write-down of investment in
securities (1,000) -0.1% - 0.0%
Other expense, net (2,152) -0.3% (2,882) -0.5%
----------------- -----------------
Total other income
(expense) (29,188) -3.7% (54,552) -9.0%
----------------- -----------------
Income before income taxes 172,574 21.9% 111,980 18.4%
Income tax expense 67,304 8.5% 44,826 7.4%
----------------- -----------------
Net income/(loss) $ 105,270 13.3% $ 67,154 11.0%
===========------ =================
Earnings/(loss) per share-
diluted $ 2.33 $ 1.48
=========== ===========
Weighted average number of
common shares outstanding-
diluted 45,106,540 45,310,509
=========== ===========
(1) Stericycle adopted FAS123R on a modified prospective basis on
January 1, 2006 therefore 2006 balances include stock compensation
expense
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year ended
December 31,
2006 2005
----------- ---------
(unaudited) (audited)
Operating Activities:
Net income $ 105,270 $ 67,154
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock compensation expense 10,610 27
Write-off deferred financing fees - 447
Write-down of note receivable with former
joint venture - 2,495
Write-down of investment in securities 1,000 -
Write-off of licensing intangible - 1,431
Loss on sale and impairment of fixed
assets 300 872
Excess tax benefit of stock options
exercised(1) (8,427) 7,432
Depreciation 24,070 19,835
Amortization 2,966 1,596
Deferred income taxes 12,937 13,514
Changes in operating assets and liabilities,
net of
effect of acquisitions
Accounts receivable (14,742) (19,679)
Parts and supplies (744) (962)
Prepaid expenses and other assets 4,538 (1,909)
Accounts payable (6,003) 7,393
Accrued liabilities 28,107 (8,056)
Deferred revenue 280 2,737
----------- ---------
Net cash provided by operating activities 160,162 94,327
----------- ---------
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (164,015) (139,696)
Purchases of short-term investments, net of
proceeds from maturities (1,828) (621)
Net proceeds from sale of assets from
acquisition - 10,328
Proceeds from sale of equipment 832 302
Capital expenditures (36,414) (26,314)
----------- ---------
Net cash used in investing activities (201,425) (156,001)
----------- ---------
Financing Activities:
Proceeds from issuance of note payable 5,953 735
Repayment of long-term debt (30,735) (12,845)
Net repayments on 2001 senior credit facility - (171,353)
Net borrowings on 2005 senior credit facility 96,464 291,669
Payments of deferred financing fees (453) (1,484)
Net principal payments on capital lease
obligations (816) (795)
Excess tax benefit of stock options
exercised(1) 8,427 -
Purchase/cancellation of treasury stock (42,757) (60,657)
Proceeds from other issuances of common stock 16,464 14,230
----------- ---------
Net cash provided by financing activities 52,547 59,500
----------- ---------
Effect of exchange rate changes on cash (5,617) 2,149
----------- ---------
Net increase (decrease) in cash and cash
equivalents 5,667 (25)
Cash and cash equivalents at beginning of year 7,825 7,850
----------- ---------
Cash and cash equivalents at end of year $ 13,492 $ 7,825
=========== =========
Non-cash activities:
Net issuances of common stock for certain
acquisitions $ 750 $ -
Net issuances of notes payable for certain
acquisitions $ 30,157 $ 49,736
(1) Stericycle adopted FAS123R on a modified prospective basis January
1, 2006 therefore the presentation of the tax benefit of stock
options exercised is presented differently in 2006 versus 2005.
For more information, contact:
Frank ten Brink
Stericycle, Inc.
847-607-2012
Sign up to receive our free Weekly News Bulletin