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Stericycle Reports Stellar Second Quarter Results

Date: July 26, 2007

Source: Stericycle Inc.

Stericycle, Inc. (NASDAQ: SRCL), today reported financial results for the second quarter of 2007.

SECOND QUARTER AND YEAR-TO-DATE RESULTS

Revenues for the quarter ended June 30, 2007 were $232.8 million, up 17.3% from $198.4 million in the second quarter of 2006. Acquisitions less than 12 months old contributed $11.0 million to the $34.4 million revenue growth in the second quarter of 2007. Gross profit was $104.5 million, up 19.4% from $87.6 million in the second quarter last year. Gross profit as a percent of revenues was 44.9% versus 44.1% in the second quarter of 2006.

Net income for the second quarter of 2007 was $32.0 million or $0.36 per diluted share compared with net income of $25.2 million or $0.28 per diluted share for the second quarter of 2006. During the quarter we completed a 2-for-1 stock split. All historical per share numbers have been adjusted for the split.

For the six months ended June 30, 2007, revenues increased to $443.9 million, up 17.5% from $377.7 million in the same period a year ago. Gross profit was $198.8 million, up 19.5% from $166.3 million in the same period a year ago. Gross profit as a percent of revenues was 44.8% versus 44.0% in the same period in 2006. Earnings per diluted share increased 25.9% to $0.68 from $0.54 per diluted share in the same period a year ago.

Cash flow from operations was $70.5 million for the first six months of 2007. Cash flow and increased loan balances funded $59.0 million in stock repurchases, $51.0 million in acquisitions and international investments and $23.0 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 July 26, 2007 at 4:00 p.m. Central time – Dial 866-793-1343 at least5 minutes before start time. If you are unable to participate on the call, a replay will be available through Aug 2nd by dialing 888-266-2081, access code 1109249. 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)
 
 
June 30, December 31,
2007 2006
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 1,707 $ 13,492
Short-term investments 600 2,548
Accounts receivable, less allowance for
doubtful accounts of $6,017 in 2007 and $5,411 in 2006 		154,293 130,354
Deferred tax asset 14,674 16,072
Asset group held for sale - 33,674
Other current assets 23,843 22,462
Total current assets 195,117 218,602
Property, plant and equipment, net 177,182 156,953
Other assets:
Goodwill 887,014 813,973
Intangible assets, less accumulated
amortization of $13,098 in 2007 and $11,454 in 2006 		134,160 115,879
Other 21,342 22,499
Total other assets 1,042,516 952,351
Total assets $ 1,414,815 $ 1,327,906
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 14,219 $ 22,681
Accounts payable 32,207 25,033
Accrued liabilities 69,144 75,434
Deferred revenue 14,021 11,662
Liability group held for sale - 7,221
Total current liabilities 129,591 142,031
Long-term debt, net of current portion 508,746 443,115
Deferred income taxes 114,932 105,521
Other liabilities 12,637 12,158
Common shareholders' equity:
Common stock (par value $0.01 per share,
120,000,000 shares authorized, 87,534,190
issued and outstanding in 2007, 88,503,930
    
issued and outstanding in 2006) 876 443
Additional paid in capital 210,465 252,568
Accumulated other comprehensive income 9,343 5,229
Retained earnings 428,225 366,841
Total shareholders' equity 648,909 625,081
Total liabilities and shareholders' equity $ 1,414,815 $ 1,327,906
 
 
Total debt to capitalization percentage ratio 44.6% 42.7%
Calculation of total debt to capitalization percentage ratio:
Total debt $ 522,965 $ 465,796
Shareholders' equity 648,909 625,081
Capitalization $ 1,171,874 $ 1,090,877
 
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
 
 
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
2007 2006 2007 2006
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
 
Revenues $ 232,845 100.0% $ 198,424 100.0% $ 443,894 100.0% $ 377,673 100.0%
 
Cost of revenues 128,328 55.1% 110,863 55.9% 245,141 55.2% 211,359 56.0%
 
Gross profit 104,517 44.9% 87,561 44.1% 198,753 44.8% 166,314 44.0%
 
Selling, general and
administrative expenses 43,267 18.6% 35,852 18.1% 81,046 18.3% 68,717 18.2%
Amortization 882 0.4% 784 0.4% 1,750 0.4% 1,295 0.3%
 
Total SG&A expense and amortization 44,149 19.0% 36,636 18.5% 82,796 18.7% 70,012 18.5%
 
Income from operations before
acquisition integration and other expenses 60,368 25.9% 50,925 25.7% 115,957 26.1% 96,302 25.5%
 
Gain on sale of assets (1,075) -0.5% - 0.0% (1,898) -0.4% - 0.0%
Impairment of intangible asset 228 0.1% - 0.0% 228 0.1% - 0.0%
Impairment of fixed assets 611 0.3% 300 0.2% 1,261 0.3% 300 0.1%
Acquisition integration expenses 606 0.3% 664 0.3% 919 0.2% 1,295 0.3%
 
Income from operations 59,998 25.8% 49,961 25.2% 115,447 26.0% 94,707 25.1%
 
Other income (expense):
Interest Income 537 0.2% 251 0.1% 938 0.2% 507 0.1%
Interest expense (8,276) -3.6% (7,253) -3.7% (15,976) -3.6% (13,159) -3.5%
Investment in security write down - 0.0% (1,000) -0.5% - 0.0% (1,000) -0.3%
Insurance proceeds - 0.0% - 0.0% 500 0.1% - 0.0%
Other expense, net (230) -0.1% (700) -0.4% (783) -0.2% (1,230) -0.3%
 
Total other income (expense) (7,969) -3.4% (8,702) -4.4% (15,321) -3.5% (14,882) -3.9%
 
Income before income taxes 52,029 22.3% 41,259 20.8% 100,126 22.6% 79,825 21.1%
 
Income tax expense 20,031 8.6% 16,091 8.1% 38,741 8.7% 31,132 8.2%
 
Net income $ 31,998 13.7% $ 25,168 12.7% $ 61,385 13.8% $ 48,693 12.9%
 
Earnings per share-diluted $ 0.36 $ 0.28 $ 0.68 $ 0.54
 
Weighted average number of
common shares outstanding-diluted 89,956,734 90,621,330 90,203,818 90,474,400
 
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
 
For the six months ended
June 30,
2007 2006
(unaudited)
Operating Activities:
Net income $ 61,385 $ 48,693
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on sale of assets (1,898) -
Impairment of fixed assets 1,261 300
Impairment of permit intangible 228 -
Write down of investment in securities - 1,000
Stock compensation expense 5,074 5,274
Excess tax benefit of disqualifying dispositions of stock options and
exercise of non-qualified stock options (2,444) (3,141)
Depreciation 13,096 11,713
Amortization 1,750 1,295
Deferred income taxes 8,189 3,716
Changes in operating assets and liabilities, net of effect of acquisitions
Accounts receivable (18,613) (12,181)
Other assets 1,913 1,216
Accounts payable 4,755 (4,999)
Accrued liabilities (6,584) 9,540
Deferred revenue 2,359 1,923
 
Net cash provided by operating activities 70,471 64,349
 
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (50,979) (126,091)
Proceeds from maturity/(purchases) of short-term investments 1,948 (1,964)
Proceeds from sale of assets 26,453 -
Proceeds from sale of property and equipment 124 215
Capital expenditures (23,031) (15,720)
 
Net cash used in investing activities (45,485) (143,560)
 
Financing Activities:
Proceeds from issuance of note payable - 4,572
Repayment of long-term debt (32,856) (12,452)
Net borrowings on senior credit facility 49,142 89,120
Principal payments on capital lease obligations (341) (749)
Excess tax benefit of stock options exercised 2,444 3,141
Purchase/cancellation of treasury stock (59,023) (13,866)
Proceeds from other issuances of common stock 9,470 7,925
 
Net cash (used in) provided by financing activities (31,164) 77,691
Effect of exchange rate changes on cash (5,607) (1,697)
Net decrease in cash and cash equivalents (11,785) (3,217)
Cash and cash equivalents at beginning of period 13,492 7,825
 
Cash and cash equivalents at end of period $ 1,707 $ 4,608
Non-cash activities:
Net issuances of notes payable for certain acquisitions $ 37,215 $ 27,245
Net issuances of common stock for certain acquisitions $ 365 $ -

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