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Stericycle 2Q Revenue Up 18% on New Business

Date: July 28, 2011

Source: Stericycle, Inc.

Stericycle, Inc. Reports Results for Second Quarter 2011

Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter of 2011.

Revenues for the quarter ended June 30, 2011 were $410.4 million, up 18.0% from $347.7 million from the same quarter last year. Acquisitions less than 12 months old contributed approximately $34.9 million to the growth in revenues. The impact on revenues from foreign exchange in the quarter was $7.4 million favorable. Gross profit was $186.7 million, up 15.6% from $161.5 million in the second quarter last year. Gross profit as a percent of revenue was 45.5% compared with 46.5% in the second quarter of 2010.

Net income attributable to Stericycle for the second quarter of 2011 was $55.5 million or $0.63 per diluted share compared with $53.1 million or $0.61 per diluted share for the second quarter of 2010. Net income attributable to Stericycle for the second quarter of 2011 reflected various non-operational items, which taken together, resulted in non-GAAP earnings per diluted share of $0.69 (see table below). Our non-GAAP earnings per diluted share increased 11.9% from our non-GAAP earnings per share of $0.62 in the second quarter of 2010.

FIRST SIX MONTHS' RESULTS

For the six months ending June 30, 2011, revenues were $808.6 million, up 18.4% from $682.9 million in the same period last year. Revenues increased 17.0% compared with the prior period when adjusted for favorable foreign exchange impacts of $9.7 million. Gross profit was $369.2 million, up 16.5% from $316.9 million in the same period last year. Gross profit as a percent of revenue was 45.7% compared with 46.4% in 2010. Earnings per diluted share increased to $1.27 from $1.17 per diluted share in the same period last year. Non-GAAP earnings per diluted share, when adjusted for various non-operational items, increased from $1.18 to $1.37, or 15.7% (see table below):

 

Table to reconcile non-GAAP EPS to GAAP EPS:
Three months ended June 30, Six months ended June 30,
2011 2010 Change $ Change % 2011 2010 Change $ Change %
GAAP EPS $0.63 $0.61 $0.02 3.1% $1.27 $1.17 $0.10 8.5%
Acquisition expenses/Restructuring costs 0.05 0.01 0.09 0.02
Acceleration of 0.01 - 0.01 -
Term Loan Fees
Non-GAAP EPS (adjusted) $0.69 $0.62 $0.07 11.9% $1.37 $1.18 $0.19 15.7%

 

* 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 $119.7 million for the six months ended June 30, 2011.

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 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.

Conference call to be held July 27, 2011 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 August 27th by dialing 855-859-2056, access code 79538389. 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.

 

June 30,
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
December 31,
2011 2010
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 38,199 $ 77,053
Short-term investments 19,063 18,471
Accounts receivable, less allowance for doubtful
accounts of $10,376 in 2011 and $10,845 in 2010 252,462 215,420
Deferred income taxes 15,352 16,824
Prepaid expenses 19,853 16,038
Other current assets 26,718 24,882
Total Current Assets 371,647 368,688
Property, plant and equipment, net 276,770 267,971
Other assets:
Goodwill 1,839,599 1,595,764
Intangible assets, less accumulated amortization of
$35,630 in 2011 and $28,394 in 2010 446,377 375,174
Other 31,203 31,426
Total other assets 2,317,179 2,002,364
Total Assets $ 2,965,596 $ 2,639,023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 67,879 $ 88,899
Accounts payable 58,346 54,777
Accrued liabilities 114,221 134,712
Deferred revenues 14,171 14,455
Other current liabilities 13,718 15,646
Total Current Liabilities 268,335 308,489
Long-term debt, net of current portion 1,165,395 1,014,222
Deferred income taxes 269,218 222,647
Other liabilities - long-term 11,616 13,315
Shareholders' Equity:
Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 86,047,759 issued and outstanding in 2011,
and 85,242,387 issued and outstanding in 2010) 860 852
Additional paid-in capital 94,365 46,945
Accumulated other comprehensive loss (287 ) (16,869 )
Retained earnings 1,128,713 1,017,497
Total Stericycle, Inc. Shareholders' Equity 1,223,651 1,048,425
Noncontrolling interest 27,381 31,925
Total Shareholders' Equity 1,251,032 1,080,350
Total Liabilities and Shareholders' Equity $ 2,965,596 $ 2,639,023

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
Three Months Ended Six Months Ended
June 30, June 30,
2011 2010 2011 2010
(unaudited) (unaudited)
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 410,441 100.0 % $ 347,734 100.0 % $ 808,567 100.0 % $ 682,911 100.0 %
Cost of revenues 223,708 54.5 % 185,471 53.3 % 439,342 54.3 % 364,903 53.4 %
Restructuring Costs (8 ) 0.0 % 726 0.2 % 54 0.0 % 1,154 0.2 %
Gross profit 186,741 45.5 % 161,537 46.5 % 369,171 45.7 % 316,854 46.4 %
Selling, general and administrative expenses 74,496 18.2 % 65,091 18.7 % 146,406 18.1 % 129,113 18.9 %
Amortization 3,546 0.9 % 2,159 0.6 % 6,893 0.9 % 4,134 0.6 %
Total SG&A expense and amortization 78,042 19.0 % 67,250 19.3 % 153,299 19.0 % 133,247 19.5 %
Income from operations before
acquisition, integration, and other expenses 108,699 26.5 % 94,287 27.1 % 215,872 26.7 % 183,607 26.9 %
Acquisition expenses 5,261 1.3 % 556 0.2 % 9,059 1.1 % 1,356 0.2 %
Restructuring costs and
plant closure expense 203 0.0 % 837 0.2 % 399 0.0 % 1,076 0.2 %
Litigation settlement - 0.0 % 937 0.3 % - 0.0 % 937 0.1 %
Gain on sale of assets - 0.0 % (2,955 ) -0.8 % - 0.0 % (2,955 ) -0.4 %
Integration expenses 1,287 0.3 % 1,314 0.4 % 2,053 0.3 % 2,463 0.4 %
Income from operations 101,948 24.8 % 93,598 26.9 % 204,361 25.3 % 180,730 26.5 %
Other income (expense):
Interest income 63 0.0 % 32 0.0 % 247 0.0 % 112 0.0 %
Interest expense (13,007 ) -3.2 % (8,870 ) -2.6 % (24,379 ) -3.0 % (17,833 ) -2.6 %
Other expense, net (819 ) -0.2 % (892 ) -0.3 % (1,082 ) -0.1 % (1,895 ) -0.3 %
Total other income (expense) (13,763 ) -3.4 % (9,730 ) -2.8 % (25,214 ) -3.1 % (19,616 ) -2.9 %
Income before income taxes 88,185 21.5 % 83,868 24.1 % 179,147 22.2 % 161,114 23.6 %
Income tax expense 32,295 7.9 % 30,102 8.7 % 66,671 8.2 % 58,714 8.6 %
Net income 55,890 13.6 % 53,766 15.5 % 112,476 13.9 % 102,400 15.0 %
Net income attributable to
noncontrolling interests 348 0.1 % 672 0.2 % 1,260 0.2 % 1,187 0.2 %
Net income attributable to Stericycle, Inc. $ 55,542 13.5 % $ 53,094 15.3 % $ 111,216 13.8 % $ 101,213 14.8 %
Earnings per share-diluted $ 0.63 $ 0.61 $ 1.27 $ 1.17
Weighted average number of
common shares outstanding-diluted 87,935,310 86,694,239 87,738,638 86,646,109

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the six months ended
June 30,
2011 2010
(unaudited) (unaudited)
Operating Activities:
Net income $ 112,476 $ 102,400
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of assets - (2,955 )
Change in fair value of contingent consideration (2,140 ) -
Accelerated amortization of term loan financing fees 1,241 -
Stock compensation expense 7,718 7,741
Excess tax benefit of stock options exercised (14,549 ) (13,430 )
Depreciation 24,161 20,872
Amortization 6,893 4,134
Deferred income taxes 18,734 12,110
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable (22,584 ) (11,688 )
Accounts payable (5,531 ) (5,436 )
Accrued liabilities (4,987 ) 9,042
Deferred revenue (566 ) 1,826
Other assets and liabilities (1,172 ) 4,689
Net cash provided by operating activities 119,694 129,305
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (280,823 ) (67,826 )
Purchases of short-term investments (403 ) (911 )
Proceeds from sale of assets 389 8,000
Capital expenditures (23,652 ) (25,017 )
Net cash used by investing activities (304,489 ) (85,754 )
Financing Activities:
Repayment of long-term debt (5,260 ) (44,126 )
Net borrowings/ (repayments) on senior credit facility 126,600 (18,249 )
Payments of deferred consideration (12,834 ) -
Payments on capital lease obligations (1,456 ) (1,829 )
Purchase/cancellation of treasury stock (4,302 ) (24,260 )
Proceeds from other issuances of common stock 27,069 25,334
Excess tax benefit of stock options exercised 14,549 13,430
Net cash provided by/ (used in) financing activities 144,366 (49,700 )
Effect of exchange rate changes on cash 1,575 (1,367 )
Net decrease in cash and cash equivalents (38,854 ) (7,516 )
Cash and cash equivalents at beginning of period 77,053 15,767
Cash and cash equivalents at end of period $ 38,199 $ 8,251
Non-cash activities:
Net issuances of notes payable for certain acquisitions $ 4,922 $ 31,042

 

For more information, contact:
Stericycle, Inc.
Frank ten Brink
847-607-2012

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