Date: October 25, 2007
Source: Stericycle, Inc.
Stericycle, Inc. (NASDAQ: SRCL), today reported financial results for the third quarter of 2007.
THIRD QUARTER AND YEAR-TO-DATE RESULTS
Revenues for the quarter ended September 30, 2007 were $237.3 million, up 16.8% from $203.3 million in the third quarter of 2006. Acquisitions less than 12 months old contributed $12.3 million to the $34.0 million revenue growth in the third quarter of 2007. Gross profit was $106.8 million, up 18.0% from $90.5 million in the third quarter last year. Gross profit as a percent of revenues was 45.0% versus 44.5% in the third quarter of 2006.
Net income for the third quarter of 2007 was $32.9 million or $0.37 per diluted share compared with net income of $27.5 million or $0.30 per diluted share for the third quarter of 2006. During the second quarter of 2007 we completed a 2-for-1 stock split. All historical per share numbers have been adjusted for the split.
For the nine months ended September 30, 2007, revenues increased to $681.2 million, up 17.3% from $580.9 million in the same period a year ago. Gross profit was $305.6 million, up 19.0% from $256.8 million in the same period a year ago. Gross profit as a percent of revenues was 44.9% versus 44.2% in the same period in 2006. Earnings per diluted share increased 24.3% to $1.05 from $0.84 per diluted share in the same period a year ago.
Cash flow from operations was $128.1 million for the first nine months of 2007. Cash flow and increased loan balances funded $95.2 million in stock repurchases, $79.0 million in acquisitions and international investments and $37.6 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 October 25, 2007 at 4:00 p.m. Central time – Dial 866-814-8448 at least 5 minutes before start time. If you are unable to participate on the call, a replay will be available through November 22nd by dialing 888-266-2081, access code 1137831. 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) | ||||||
| September 30, | December 31, | |||||
| 2007 | 2006 | |||||
| (unaudited) | (audited) | |||||
| ASSETS | ||||||
| Current assets: | ||||||
| Cash and cash equivalents | $ | 7,703 | $ | 13,492 | ||
| Short-term investments | 812 | 2,548 | ||||
| Accounts receivable, less allowance for doubtful accounts of $5,985 in 2007 and $5,411 in 2006 | ||||||
| 154,763 | 130,354 | |||||
| Deferred tax asset | 14,431 | 16,072 | ||||
| Asset group held for sale | - | 33,674 | ||||
| Other current assets | 26,514 | 22,462 | ||||
| Total current assets | 204,223 | 218,602 | ||||
| Property, plant and equipment, net | 185,327 | 156,953 | ||||
| Other assets: | ||||||
| Goodwill | 920,848 | 813,973 | ||||
| Intangible assets, less accumulated amortization of $14,068 in 2007 and $11,454 in 2006 | ||||||
| 143,664 | 115,879 | |||||
| Other | 20,235 | 22,499 | ||||
| Total other assets | 1,084,747 | 952,351 | ||||
| Total assets | $ | 1,474,297 | $ | 1,327,906 | ||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Current liabilities: | ||||||
| Current portion of long-term debt | $ | 16,440 | $ | 22,681 | ||
| Accounts payable | 35,597 | 25,033 | ||||
| Accrued liabilities | 75,064 | 75,434 | ||||
| Deferred revenue | 13,507 | 11,662 | ||||
| Liability group held for sale | - | 7,221 | ||||
| Total current liabilities | 140,608 | 142,031 | ||||
| Long-term debt, net of current portion | 545,146 | 443,115 | ||||
| Deferred income taxes | 119,009 | 105,521 | ||||
| Other liabilities | 13,468 | 12,158 | ||||
| Common shareholders' equity: | ||||||
| Common stock (par value $0.01 per share, 120,000,000 shares authorized, 86,971,032 issued and outstanding in 2007, 88,503,930 issued and outstanding in 2006) | ||||||
| 870 | 443 | |||||
| Additional paid in capital | 180,042 | 252,568 | ||||
| Accumulated other comprehensive income | 14,033 | 5,229 | ||||
| Retained earnings | 461,121 | 366,841 | ||||
| Total shareholders' equity | 656,066 | 625,081 | ||||
| Total liabilities and shareholders' equity | $ | 1,474,297 | $ | 1,327,906 | ||
| Total debt to capitalization percentage ratio | 46.1% | 42.7% | ||||
| Calculation of total debt to capitalization percentage ratio: | ||||||
| Total debt | $ | 561,586 | $ | 465,796 | ||
| Shareholders' equity | 656,066 | 625,081 | ||||
| Capitalization | $ | 1,217,652 | $ | 1,090,877 | ||
| STERICYCLE, INC. AND SUBSIDIARIES | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||||||
| (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) | ||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| (unaudited) | (unaudited) | |||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||||||
| $ | % of Rev | $ | % of Rev | $ | % of Rev | $ | % of Rev | |||||||||||||
| Revenues | $ | 237,323 | 100.0% | $ | 203,267 | 100.0% | $ | 681,217 | 100.0% | $ | 580,940 | 100.0% | ||||||||
| Cost of revenues | 130,509 | 55.0% | 112,744 | 55.5% | 375,650 | 55.1% | 324,103 | 55.8% | ||||||||||||
| Gross profit | 106,814 | 45.0% | 90,523 | 44.5% | 305,567 | 44.9% | 256,837 | 44.2% | ||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||
| 43,665 | 18.4% | 35,791 | 17.6% | 124,711 | 18.3% | 104,508 | 18.0% | |||||||||||||
| Amortization | 929 | 0.4% | 1,178 | 0.6% | 2,679 | 0.4% | 2,473 | 0.4% | ||||||||||||
| Total SG&A expense and amortization | 44,594 | 18.8% | 36,969 | 18.2% | 127,390 | 18.7% | 106,981 | 18.4% | ||||||||||||
| Income from operations before acquisition integration and other expenses | ||||||||||||||||||||
| 62,220 | 26.2% | 53,554 | 26.3% | 178,177 | 26.2% | 149,856 | 25.8% | |||||||||||||
| Gain on sale of assets | - | 0.0% | - | 0.0% | (1,898) | -0.3% | - | 0.0% | ||||||||||||
| Impairment of intangible asset | - | 0.0% | - | 0.0% | 228 | 0.0% | - | 0.0% | ||||||||||||
| Impairment of fixed assets | - | 0.0% | - | 0.0% | 1,261 | 0.2% | 300 | 0.1% | ||||||||||||
| Acquisition integration expenses | 360 | 0.2% | 519 | 0.3% | 1,279 | 0.2% | 1,814 | 0.3% | ||||||||||||
| Income from operations | 61,860 | 26.1% | 53,035 | 26.1% | 177,307 | 26.0% | 147,742 | 25.4% | ||||||||||||
| Other income (expense): | ||||||||||||||||||||
| Interest Income | 307 | 0.1% | 490 | 0.2% | 1,245 | 0.2% | 997 | 0.2% | ||||||||||||
| Interest expense | (8,864) | -3.7% | (7,810) | -3.8% | (24,840) | -3.6% | (20,969) | -3.6% | ||||||||||||
| Investment in security write down | - | 0.0% | - | 0.0% | - | 0.0% | (1,000) | -0.2% | ||||||||||||
| Insurance proceeds | - | 0.0% | - | 0.0% | 500 | 0.1% | - | 0.0% | ||||||||||||
| Other expense, net | (247) | -0.1% | (580) | -0.3% | (1,030) | -0.2% | (1,810) | -0.3% | ||||||||||||
| Total other income (expense) | (8,804) | -3.7% | (7,900) | -3.9% | (24,125) | -3.5% | (22,782) | -3.9% | ||||||||||||
| Income before income taxes | 53,056 | 22.4% | 45,135 | 22.2% | 153,182 | 22.5% | 124,960 | 21.5% | ||||||||||||
| Income tax expense | 20,161 | 8.5% | 17,603 | 8.7% | 58,902 | 8.6% | 48,735 | 8.4% | ||||||||||||
| Net income | $ | 32,895 | 13.9% | $ | 27,532 | 13.5% | $ | 94,280 | 13.8% | $ | 76,225 | 13.1% | ||||||||
| Earnings per share-diluted | $ | 0.37 | $ | 0.30 | $ | 1.05 | $ | 0.84 | ||||||||||||
| Weighted average number of common shares outstanding-diluted | ||||||||||||||||||||
| 89,794,892 | 90,495,268 | 90,068,563 | 90,485,544 | |||||||||||||||||
| STERICYCLE, INC. AND SUBSIDIARIES | |||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
| (IN THOUSANDS) | |||||||
| For the nine months ended | |||||||
| September 30, | |||||||
| 2007 | 2006 | ||||||
|
|
(unaudited) |
||||||
| Operating Activities: | |||||||
| Net income | $ | 94,280 | $ | 76,225 | |||
| 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 | 7,855 | 7,927 | |||||
| Excess tax benefit of disqualifying dispositions of stock options and exercise of non-qualified stock options | |||||||
| (3,414 | ) | (7,783 | ) | ||||
| Depreciation | 19,975 | 17,636 | |||||
| Amortization | 2,679 | 2,473 | |||||
| Deferred income taxes | 11,958 | 7,814 | |||||
| Changes in operating assets and liabilities, net of effect of acquisitions | |||||||
| Accounts receivable | (13,931 | ) | (18,131 | ) | |||
| Other assets | 1,845 | (1,723 | ) | ||||
| Accounts payable | 6,044 | (6,466 | ) | ||||
| Accrued liabilities | (445 | ) | 34,430 | ||||
| Deferred revenue | 1,706 | 1,015 | |||||
| Net cash provided by operating activities | 128,143 | 114,717 | |||||
| Investing Activities: | |||||||
| Payments for acquisitions and international investments, net of cash acquired | |||||||
| (78,966 | ) | (142,922 | ) | ||||
| Proceeds from maturity/(purchases) of short-term investments | 1,763 | (2,901 | ) | ||||
| Proceeds from sale of assets | 26,453 | - | |||||
| Proceeds from sale of property and equipment | - | 601 | |||||
| Capital expenditures | (37,602 | ) | (25,556 | ) | |||
| Net cash used in investing activities | (88,352 | ) | (170,778 | ) | |||
| Financing Activities: | |||||||
| Proceeds from issuance of note payable | - | 5,953 | |||||
| Repayment of long-term debt | (32,374 | ) | (13,936 | ) | |||
| Net borrowings on senior credit facility | 68,623 | 69,139 | |||||
| Principal payments on capital lease obligations | (49 | ) | (669 | ) | |||
| Excess tax benefit of stock options exercised | 3,414 | 7,783 | |||||
| Purchase/cancellation of treasury stock | (95,174 | ) | (26,060 | ) | |||
| Proceeds from other issuances of common stock | 11,441 | 13,122 | |||||
| Net cash (used in) provided by financing activities | (44,119 | ) | 55,332 | ||||
| Effect of exchange rate changes on cash | (1,461 | ) | (2,916 | ) | |||
| Net decrease in cash and cash equivalents | (5,789 | ) | (3,645 | ) | |||
| Cash and cash equivalents at beginning of period | 13,492 | 7,825 | |||||
| Cash and cash equivalents at end of period | $ | 7,703 | $ | 4,180 | |||
| Non-cash activities: | |||||||
| Net issuances of notes payable for certain acquisitions | $ | 54,108 | $ | 27,957 | |||
| Net issuances of common stock for certain acquisitions | $ | 365 | $ | 750 | |||
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