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Stericycle Posts Solid Fourth Quarter Sales and Profit Increase

Date: February 5, 2009

Source: Stericycle Inc.

Stericycle, Inc. Reports Results for Fourth Quarter and Full Year 2008

Stericycle, Inc. (NASDAQ: SRCL), today reported financial results for the fourth quarter of 2008.

Revenues for the quarter ended December 31, 2008 were $274.0 million, up 8.9% from $251.6 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $14.2 million to the growth in revenues for the quarter. Gross profit was $125.3 million, up 11.5% from $112.4 million in the same quarter last year. Gross profit as a percent of revenue was 45.7% versus 44.7% in the fourth quarter of 2007.

Net income for the fourth quarter of 2008 was $39.1 million or $0.45 per diluted share compared with net income of $24.1 million or $0.27 per diluted share for the fourth quarter of 2007. Net income for the fourth quarter of 2007 included the effect of $9.8 million of charges or $0.11 per diluted share related to an arbitration settlement, trade name write-down and foreign investment write-down. These charges were partially offset by receipt of insurance proceeds and a gain on sale of assets.

FULL YEAR RESULTS

For the full year ended December 31, 2008, revenues were $1.1 billion, up 16.2% from $932.8 million in the same period last year. Gross profit was $485.0 million, up 16.1% from $417.9 million in the same period last year. Gross profit as a percent of revenues was 44.8% in both 2008 and 2007. Earnings per diluted share for 2008 increased 27.9% to $1.68 from $1.32 per diluted share for 2007. Earnings per diluted share for 2008 were negatively impacted by $0.05 per diluted share related to the arbitration settlement recorded in the first quarter of 2008 and impairment of fixed assets. Earnings per diluted share for 2007 were negatively impacted by $9.3 million of charges or $0.10 per diluted share for the impairment of permit, fixed assets write-offs and the charges described in the quarterly results paragraph above, partially offset by the receipt of insurance proceed and gains from sale of assets.

Cash flow from operations was $210.6 million for the full year of 2008. Cash flow and increased loan balances were used to strengthen our business by acquisitions, international investments, capital expenditures and funding share repurchases.

For more information about Stericycle, please visit our website at www.stericycle.com.

Conference call to be held February 5, 2009 at 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 800-642-1687, access code 79888607. 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.

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.

 

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
   
 
December 31, December 31,
2008 2007
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 9,095 $ 17,108
Short-term investments 1,408 1,256
Accounts receivable, less allowance for doubtful
accounts of $6,616 in 2008 and $6,157 in 2007 168,598 157,435
Deferred income taxes 16,821 13,510
Other current assets 28,508   20,967
Total current assets 224,430 210,276
Property, plant and equipment, net 207,144 193,039
Other assets:
Goodwill 1,136,843 1,033,333
Intangible assets, less accumulated amortization of
$14,116 in 2008 and $12,230 in 2007 168,849 152,689
Other 21,322   18,822
Total other assets 1,327,014   1,204,844
Total assets $ 1,758,588   $ 1,608,159
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 38,880 $ 22,003
Accounts payable 33,612 40,049
Accrued liabilities 93,487 75,571
Deferred revenues 13,663   12,095
Total current liabilities 179,642   149,718
Long-term debt, net of current portion 753,846 613,781
Deferred income taxes 146,577 125,041
Other liabilities 8,043 5,544
Shareholders' equity:
Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 85,252,879 issued and outstanding in 2008,
87,410,653 issued and outstanding in 2007) 852 874
Additional paid-in capital 67,776 197,462
Accumulated other comprehensive income (32,075 ) 30,520
Retained earnings 633,927   485,219
Total shareholders' equity 670,480   714,075
Total liabilities and shareholders' equity $ 1,758,588   $ 1,608,159

 

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
       
 
Three Months Ended Year Ended
December 31, December 31,
(unaudited) (unaudited)   (audited)
2008 2007 2008 2007
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
 
Revenues $ 274,011 100.0 % $ 251,550 100.0 % $ 1,083,679 100.0 % $ 932,767 100.0 %
 
Cost of revenues 148,755   54.3 % 139,196   55.3 % 598,650   55.2 % 514,846   55.2 %
 
Gross profit 125,256 45.7 % 112,354 44.7 % 485,029 44.8 % 417,921 44.8 %
 
Selling, general and
administrative expenses 51,098 18.6 % 48,369 19.2 % 199,171 18.4 % 173,080 18.6 %
Amortization 1,095   0.4 % 978   0.4 % 4,039   0.4 % 3,657   0.4 %
 
Total SG&A expense and amortization 52,193   19.0 % 49,347   19.6 % 203,210   18.8 % 176,737   18.9 %
 
Income from operations before acquisition integration and other expenses 73,063 26.7 % 63,007 25.0 % 281,819 26.0 % 241,184 25.9 %
 
Gain on sale of assets - 0.0 % (201 ) -0.1 % - 0.0 % (2,099 ) -0.2 %
Impairment of intangible assets - 0.0 % 2,041 0.8 % - 0.0 % 2,269 0.2 %
Impairment of fixed assets 472 0.2 % - 0.0 % 472 0.0 % 1,261 0.1 %
Arbitration settlement and related costs - 0.0 % 13,904 5.5 % 5,595 0.5 % 13,904 1.5 %
Acquisition integration expenses 274   0.1 % 26   0.0 % 1,513   0.1 % 1,305   0.1 %
 
Income from operations 72,317 26.4 % 47,237 18.8 % 274,239 25.3 % 224,544 24.1 %
 
Other income (expense):
Interest Income 186 0.1 % 345 0.1 % 930 0.1 % 1,590 0.2 %
Interest expense (8,219 ) -3.0 % (9,125 ) -3.6 % (33,104 ) -3.1 % (33,965 ) -3.6 %
Write-down of investment - 0.0 % (2,930 ) -1.2 % - 0.0 % (2,930 ) -0.3 %
Insurance proceeds - 0.0 % 2,800 1.1 % - 0.0 % 3,300 0.4 %
Other expense, net (1,489 ) -0.5 % (269 ) -0.1 % (3,061 ) -0.3 % (1,299 ) -0.1 %
 
Total other income (expense) (9,522 ) -3.5 % (9,179 ) -3.6 % (35,235 ) -3.3 % (33,304 ) -3.6 %
 
Income before income taxes 62,795 22.9 % 38,058 15.1 % 239,004 22.1 % 191,240 20.5 %
 
Income tax expense 23,663   8.6 % 13,960   5.5 % 90,296   8.3 % 72,862   7.8 %
 
Net income $ 39,132   14.3 % $ 24,098   9.6 % $ 148,708   13.7 % $ 118,378   12.7 %
 
Earnings per share-diluted $ 0.45   $ 0.27   $ 1.68   $ 1.32  
 
Weighted average number of
common shares outstanding-diluted 87,634,578   89,801,677   88,347,421   89,933,242  

 

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
   
For the Year Ended
December 31,
2008 2007
(unaudited) (audited)
Operating Activities:
Net income $ 148,708 $ 118,378
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of assets - (2,099 )
Loss on sale and impairment of fixed assets 472 1,261
Impairment of intangibles - 2,269
Write-down of investment - 2,930
Write-off of note receivable related to joint venture 798 -
Stock compensation expense 11,755 10,714
Excess tax benefit of stock options exercised (9,319 ) (8,054 )
Depreciation 30,109 27,480
Amortization 4,039 3,657
Deferred income taxes 26,522 17,265
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable (12,998 ) (11,400 )
Accounts payable (7,041 ) 6,987
Accrued liabilities 19,517 1,566
Deferred revenues 1,597 537
Other assets (3,604 ) 2,551  
 
Net cash provided by operating activities 210,555   174,042  
 
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (84,947 ) (114,781 )
Proceeds from maturity of short-term investments (463 ) 1,301
Proceeds from sale of assets - 26,616
Capital expenditures (47,520 ) (48,397 )
 
Net cash used in investing activities (132,930 ) (135,261 )
 
Financing Activities:
Repayment of long-term debt (13,866 ) (30,447 )
Net (payments)/ proceeds on senior credit facility (23,073 ) 77,686
Proceeds from private placement of long-term note 100,000 -
Payments of deferred financing costs (236 ) (606 )
Net payments on capital lease obligations (527 ) (212 )
Purchase/ cancellation of treasury stock (167,338 ) (103,679 )
Proceeds from other issuances of common stock 17,839 16,569
Excess tax benefit of stock options exercised 9,319   8,054  
 
Net cash used in financing activities (77,882 ) (32,635 )
Effect of exchange rate changes on cash (7,756 ) (2,530 )
Net (decrease)/ increase in cash and cash equivalents (8,013 ) 3,616
Cash and cash equivalents at beginning of period 17,108   13,492  
 
Cash and cash equivalents at end of period $ 9,095   $ 17,108  
Non-cash activities:
Net issuances of notes payable for certain acquisitions $ 106,074 $ 112,509
Net issuances of common stock for certain acquisitions - 13,667

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