Date: April 28, 2010
Source: Stericycle, Inc.
Stericycle, Inc. (NASDAQ: SRCL), today reported financial results for the first quarter of 2010.
Revenues for the quarter ended March 31, 2010 were $335.2 million, up 21.0% from $277.1 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $28.9 million to the growth in revenues for the quarter. Revenues increased 19.1% compared to the first quarter of 2009 when adjusted for favorable foreign exchange impacts in the first quarter of 2010 of $5.2 million. Gross profit was $155.3 million, up 21.5% from $127.8 million in the first quarter last year. Gross profit as a percent of revenue was 46.3% compared with 46.1% in the first quarter of 2009. Gross profit for the first quarter of 2010 was unfavorably impacted by $0.4 million of restructuring costs for our regulated returns management services business.
Net income attributable to Stericycle for the first quarter of 2010 was $48.1 million or $0.56 per diluted share compared with $40.7 million or $0.47 per diluted share for the first quarter of 2009. Net income attributable to Stericycle for the first quarter of 2009 included the effect of $0.4 million of after-tax transaction expenses related to acquisitions, and net income for the first quarter of 2010 included the effect of $0.7 million of after-tax transaction expenses related to acquisitions and $0.4 million of after-tax restructuring costs for our regulated returns management services business. Adjusted for these charges, non-GAAP earnings per diluted share increased from $0.47 in the first quarter of 2009 to $0.57 in the first quarter of 2010 or up 20.2% (see table below).
| Table to reconcile GAAP EPS to non-GAAP EPS* | |||||||||
| Three months ended March 31, | |||||||||
| 2010 | 2009 | Change $ | Change $ | ||||||
| GAAP EPS | $0.56 | $0.47 | $0.09 | 18.7 | % | ||||
| Transaction expenses related to acquisitions/Restructuring costs | 0.01 | 0.01 | |||||||
| Non-GAAP EPS (adjusted) | $0.57 | $0.47 | $0.10 | 20.2 | % | ||||
* In accordance with U.S. generally accepted accounting principles (GAAP), reported earnings per share 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 $81.1 million for the first quarter of 2010. Cash flow and increased loan balances were used to strengthen our business by acquisitions, capital expenditures and share repurchases.
For more information about Stericycle, please visit our website at www.stericycle.com.
Conference call to be held April 28, 2010 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 May 28th by dialing 800-642-1687, access code 63224499. 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) | ||||||||
| March 31, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | 22,886 | $ | 15,767 | ||||
| Short-term investments | 1,786 | 1,131 | ||||||
| Accounts receivable, less allowance for doubtful accounts of $9,370 in 2010 and $8,709 in 2009 |
192,296 | 179,770 | ||||||
| Deferred income taxes | 9,746 | 14,087 | ||||||
| Prepaid expenses | 19,296 | 12,421 | ||||||
| Other current assets | 25,804 | 23,364 | ||||||
| Total Current Assets | 271,814 | 246,540 | ||||||
| Property, plant and equipment, net | 253,830 | 246,154 | ||||||
| Other assets: | ||||||||
| Goodwill | 1,428,348 | 1,394,091 | ||||||
| Intangible assets, less accumulated amortization
of $20,364 in 2010 and $18,546 in 2009 |
304,783 | 269,454 | ||||||
| Other | 28,236 | 26,564 | ||||||
| Total other assets | 1,761,367 | 1,690,109 | ||||||
| Total Assets | $ | 2,287,011 | $ | 2,182,803 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Current portion of long-term debt | $ | 67,680 | $ | 65,932 | ||||
| Accounts payable | 45,922 | 47,608 | ||||||
| Accrued liabilities | 113,824 | 92,226 | ||||||
| Deferred revenues | 16,377 | 14,954 | ||||||
| Total Current Liabilities | 243,803 | 220,720 | ||||||
| Long-term debt, net of current portion | 929,039 | 922,919 | ||||||
| Deferred income taxes | 187,797 | 171,744 | ||||||
| Other liabilities | 14,482 | 10,247 | ||||||
| Shareholders' Equity: | ||||||||
| Common stock (par value $0.01 per share, 120,000,000
shares authorized, 84,652,064 in 2010 and 84,715,005 issued and outstanding in 2009) |
847 | 847 | ||||||
| Additional paid-in capital | 46,290 | 47,522 | ||||||
| Accumulated other comprehensive loss | (22,562 | ) | (12,292 | ) | ||||
| Retained earnings | 857,737 | 809,618 | ||||||
| Total Stericycle, Inc. Shareholders' Equity | 882,312 | 845,695 | ||||||
| Noncontrolling interest | 29,578 | 11,478 | ||||||
| Total Shareholders' Equity | 911,890 | 857,173 | ||||||
| Total Liabilities and Shareholders' Equity | $ | 2,287,011 | $ | 2,182,803 | ||||
| STERICYCLE, INC. AND SUBSIDIARIES | ||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2010 | 2009 | |||||||||
| (unaudited) | ||||||||||
| $ | % of Rev | $ | % of Rev | |||||||
| Revenues | $ | 335,177 | 100.0% | $ | 277,090 | 100.0% | ||||
| Cost of revenues | 179,432 | 53.5% | 149,287 | 53.9% | ||||||
| Restructuring Costs | 428 | 0.1% | - | 0.0% | ||||||
| Gross profit | 155,317 | 46.3% | 127,803 | 46.1% | ||||||
| Selling, general and administrative expenses | 64,022 | 19.1% | 51,872 | 18.7% | ||||||
| Amortization | 1,975 | 0.6% | 1,010 | 0.4% | ||||||
| Total SG&A expense and amortization | 65,997 | 19.7% | 52,882 | 19.1% | ||||||
| Income from operations before | ||||||||||
| acquisition, integration, and other expenses | 89,320 | 26.6% | 74,921 | 27.0% | ||||||
| Transactional expenses related to acquisitions | 800 | 0.2% | 610 | 0.2% | ||||||
| Restructuring costs and | ||||||||||
| impairment of fixed assets | 239 | 0.1% | - | 0.0% | ||||||
| Acquisition integration expenses | 1,149 | 0.3% | 111 | 0.0% | ||||||
| Income from operations | 87,132 | 26.0% | 74,200 | 26.8% | ||||||
| Other income (expense): | ||||||||||
| Interest income | 80 | 0.0% | 174 | 0.1% | ||||||
| Interest expense | (8,963) | -2.7% | (8,099) | -2.9% | ||||||
| Other expense, net | (1,003) | -0.3% | (790) | -0.3% | ||||||
| Total other income (expense) | (9,886) | -2.9% | (8,715) | -3.1% | ||||||
| Income before income taxes | 77,246 | 23.0% | 65,485 | 23.6% | ||||||
| Income tax expense | 28,612 | 8.5% | 24,811 | 9.0% | ||||||
| Net income | 48,634 | 14.5% | 40,674 | 14.7% | ||||||
| Net income attributable to | ||||||||||
| noncontrolling interests | 515 | 0.2% | 19 | 0.0% | ||||||
| Net income attributable to Stericycle, Inc. | $ | 48,119 | 14.4% | $ | 40,655 | 14.7% | ||||
| Earnings per share-diluted | $ | 0.56 | $ | 0.47 | ||||||
| Weighted average number of | ||||||||||
| common shares outstanding-diluted | 86,573,237 | 86,841,903 | ||||||||
| STERICYCLE, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (IN THOUSANDS) | ||||||||
| Three Months Ended | ||||||||
| March 31, | ||||||||
| 2010 | 2009 | |||||||
| (unaudited) | (unaudited) | |||||||
| Operating Activities: | ||||||||
| Net income | $ | 48,634 | $ | 40,655 | ||||
| Adjustments to reconcile net income to net cash | ||||||||
| provided by operating activities: | ||||||||
| Restructuring costs and impairment of fixed assets | 667 | - | ||||||
| Stock compensation expense | 3,874 | 3,461 | ||||||
| Excess tax benefit of stock options exercised | (1,163 | ) | (264 | ) | ||||
| Depreciation | 10,414 | 7,834 | ||||||
| Amortization | 1,975 | 1,010 | ||||||
| Deferred income taxes | 13,784 | 7,858 | ||||||
| Changes in operating assets and liabilities, net of | ||||||||
| effect of acquisitions: | ||||||||
| Accounts receivable | (7,932 | ) | 7,882 | |||||
| Accounts payable | (3,522 | ) | (3,715 | ) | ||||
| Accrued liabilities | 14,934 | 13,527 | ||||||
| Deferred revenues | 1,611 | 1,096 | ||||||
| Other assets | (2,221 | ) | (3,068 | ) | ||||
| Net cash provided by operating activities | 81,055 | 76,276 | ||||||
| Investing Activities: | ||||||||
| Payments for acquisitions and international | ||||||||
| investments, net of cash acquired | (50,459 | ) | (16,296 | ) | ||||
| Purchases of short-term investments | (423 | ) | (1,664 | ) | ||||
| Proceeds from sale of property and equipment | - | 244 | ||||||
| Capital expenditures | (12,804 | ) | (8,389 | ) | ||||
| Net cash used in investing activities | (63,686 | ) | (26,105 | ) | ||||
| Financing Activities: | ||||||||
| Repayment of long-term debt | (27,533 | ) | (2,908 | ) | ||||
| Net borrowings/(repayments) on senior credit facility | 24,873 | (25,112 | ) | |||||
| Purchase/cancellation of treasury stock | (10,616 | ) | (27,482 | ) | ||||
| Proceeds from other issuances of common stock | 4,195 | 3,229 | ||||||
| Excess tax benefit of stock options exercised | 1,163 | 264 | ||||||
| Net cash used in financing activities | (7,918 | ) | (52,009 | ) | ||||
| Effect of exchange rate changes on cash | (2,332 | ) | 1,839 | |||||
| Net increase in cash and cash equivalents | 7,119 | 1 | ||||||
| Cash and cash equivalents at beginning of period | 15,767 | 9,095 | ||||||
| Cash and cash equivalents at end of period | $ | 22,886 | $ | 9,096 | ||||
| Non-cash activities: | ||||||||
| Net issuances of notes payable for certain acquisitions | $ | 10,038 | $ | 1,900 | ||||
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