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Stericycle Q3 Income and Revenue Higher, Helped by Acquisitions

Date: October 26, 2011

Source: Stericycle, Inc.

Stericycle, Inc. Reports Results for Third Quarter 2011

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

Revenues for the quarter ended September 30, 2011 were $420.9 million, up 16.0% from $363.0 million from the same quarter last year. Acquisitions less than 12 months old contributed approximately $43.9 million to the growth in revenues. The impact on revenues from foreign exchange in the quarter was $4.1 million favorable. Gross profit was $190.1 million, up 13.1% from $168.1 million in the third quarter last year. Gross profit as a percent of revenue was 45.2% compared with 46.3% in the third quarter of 2010.

Net income attributable to Stericycle for the third quarter of 2011 was $59.2 million or $0.68 per diluted share compared with $56.7 million or $0.65 per diluted share for the third quarter of 2010. Net income attributable to Stericycle for the third quarter of 2011 includes acquisition expenses, restructuring costs, and other items. Excluding the effects of these items, non-GAAP earnings per diluted share was $0.71 for the quarter (see table below). Our non-GAAP earnings per diluted share increased 9.6% from our non-GAAP earnings per share of $0.65 in the third quarter of 2010.

FIRST NINE MONTHS' RESULTS

For the nine months ending September 30, 2011, revenues were $1.229 billion, up 17.6% from $1.046 billion in the same period last year. Revenues increased 16.2% compared with the prior period when adjusted for favorable foreign exchange impacts of $13.7 million. Gross profit was $559.2 million, up 15.3% from $485.0 million in the same period last year. Gross profit as a percent of revenue was 45.5% compared with 46.4% in 2010. Earnings per diluted share increased to $1.95 from $1.82 per diluted share in the same period last year. Non-GAAP earnings per diluted share, when adjusted for various items, increased from $1.83 in the prior year period to $2.08, or 13.6% (see table below):

 

Table to reconcile non-GAAP EPS to GAAP EPS:
Three months ended
September 30,		 Nine months ended
September 30,
2011 2010 Change
$ 		Change
% 		2011 2010 Change
$ 		Change
%
GAAP EPS $0.68 $0.65 $0.03 4.3 % $1.95 $1.82 $0.13 7.0 %
Acquisition expenses/Restructuring costs/Other 0.05 0.02 0.15 0.03
Net Release of Prior Years' (0.01 ) (0.01 ) (0.01 ) (0.01 )
Tax Reserves
Non-GAAP EPS (adjusted) $0.71 $0.65 $0.06 9.6 % $2.08 $1.83 $0.25 13.6 %

 

* 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 $215.2 million for the nine months ended September 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 October 26, 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 November 26th by dialing 855-859-2056, access code 13876685. 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.

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
(unaudited) (unaudited)
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 420,924 100.0 % $ 362,988 100.0 % $ 1,229,491 100.0 % $ 1,045,899 100.0 %
Cost of revenues 230,869 54.8 % 194,705 53.6 % 670,211 54.5 % 559,608 53.5 %
Restructuring Costs - 0.0 % 185 0.1 % 54 0.0 % 1,339 0.1 %
Gross profit 190,055 45.2 % 168,098 46.3 % 559,226 45.5 % 484,952 46.4 %
Selling, general and administrative expenses 74,856 17.8 % 66,829 18.4 % 221,262 18.0 % 195,942 18.7 %
Amortization 4,209 1.0 % 2,518 0.7 % 11,102 0.9 % 6,652 0.6 %
Total SG&A expense and amortization 79,065 18.8 % 69,347 19.1 % 232,364 18.9 % 202,594 19.4 %
Income from operations before
acquisition, integration, and other expenses 110,990 26.4 % 98,751 27.2 % 326,862 26.6 % 282,358 27.0 %
Acquisition expenses 3,195 0.8 % 1,891 0.5 % 12,254 1.0 % 3,247 0.3 %
Restructuring costs and
plant closure expense 633 0.2 % 31 0.0 % 1,032 0.1 % 1,107 0.1 %
Litigation settlement 460 0.1 % - 0.0 % 460 0.0 % 937 0.1 %
Loss/(Gain) on sale of assets 323 0.1 % - 0.0 % 323 0.0 % (2,955 ) -0.3 %
Integration expenses 1,813 0.4 % 790 0.2 % 3,866 0.3 % 3,253 0.3 %
Income from operations 104,566 24.8 % 96,039 26.5 % 308,927 25.1 % 276,769 26.5 %
Other income (expense):
Interest income 237 0.1 % 82 0.0 % 484 0.0 % 194 0.0 %
Interest expense (12,034 ) -2.9 % (8,509 ) -2.3 % (36,413 ) -3.0 % (26,342 ) -2.5 %
Other expense, net (577 ) -0.1 % 333 0.1 % (1,659 ) -0.1 % (1,562 ) -0.1 %
Total other income (expense) (12,374 ) -2.9 % (8,094 ) -2.2 % (37,588 ) -3.1 % (27,710 ) -2.6 %
Income before income taxes 92,192 21.9 % 87,945 24.2 % 271,339 22.1 % 249,059 23.8 %
Income tax expense 32,448 7.7 % 30,645 8.4 % 99,119 8.1 % 89,359 8.5 %
Net income 59,744 14.2 % 57,300 15.8 % 172,220 14.0 % 159,700 15.3 %
Net income attributable to
noncontrolling interests 497 0.1 % 614 0.2 % 1,757 0.1 % 1,801 0.2 %
Net income attributable to Stericycle, Inc. $ 59,247 14.1 % $ 56,686 15.6 % $ 170,463 13.9 % $ 157,899 15.1 %
Earnings per share-diluted $ 0.68 $ 0.65 $ 1.95 $ 1.82
Weighted average number of
common shares outstanding-diluted 87,385,121 87,179,057 87,620,867 86,830,761

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
September 30, December 31,
2011 2010
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 23,395 $ 77,053
Short-term investments 416 18,471
Accounts receivable, less allowance for doubtful
accounts of $18,546 in 2011 and $10,845 in 2010 283,710 215,420
Deferred income taxes 15,696 16,824
Prepaid expenses 22,160 16,038
Other current assets 39,465 24,882
Total Current Assets 384,842 368,688
Property, plant and equipment, net 290,721 267,971
Other assets:
Goodwill 1,924,989 1,595,764
Intangible assets, less accumulated amortization of
$38,881 in 2011 and $28,394 in 2010 524,229 375,174
Other 30,727 31,426
Total other assets 2,479,945 2,002,364
Total Assets $ 3,155,508 $ 2,639,023
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 95,149 $ 91,406
Accounts payable 70,285 54,777
Accrued liabilities 140,975 134,355
Deferred revenues 13,662 14,455
Other current liabilities 9,842 13,496
Total Current Liabilities 329,913 308,489
Long-term debt, net of current portion 1,304,628 1,014,222
Deferred income taxes 301,115 222,647
Other liabilities - long-term 8,127 13,315
Shareholders' Equity:
Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 85,196,102 issued and outstanding in 2011,
and 85,242,387 issued and outstanding in 2010) 852 852
Additional paid-in capital 26,721 46,945
Accumulated other comprehensive loss (32,870 ) (16,869 )
Retained earnings 1,187,960 1,017,497
Total Stericycle, Inc. Shareholders' Equity 1,182,663 1,048,425
Noncontrolling interest 29,062 31,925
Total Shareholders' Equity 1,211,725 1,080,350
Total Liabilities and Shareholders' Equity $ 3,155,508 $ 2,639,023

 

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the nine months ended
September 30,
2011 2010
(unaudited) (unaudited)
Operating Activities:
Net income $ 172,220 $ 159,700
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss/ (gain) on sale of assets 323 (2,955 )
Change in fair value of contingent consideration (2,140 )
Accelerated amortization of term loan financing fees 1,241 -
Stock compensation expense 11,563 11,441
Excess tax benefit of stock options exercised (16,614 ) (17,951 )
Depreciation 36,885 31,858
Amortization 11,102 6,652
Deferred income taxes 27,685 20,307
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable (20,288 ) (26,366 )
Accounts payable (11,239 ) (3,477 )
Accrued liabilities 16,694 19,214
Deferred revenue (1,241 ) 1,942
Other assets and liabilities (11,015 ) 5,061
Net cash provided by operating activities 215,176 205,426
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (467,430 ) (95,615 )
Purchases of short-term investments 18,164 (17,172 )
Proceeds from sale of assets 2,371 8,000
Capital expenditures (36,981 ) (35,937 )
Net cash used by investing activities (483,876 ) (140,724 )
Financing Activities:
Repayment of long-term debt (17,294 ) (45,292 )
Net borrowings/ (repayments) on senior credit facility 269,792 (13,072 )
Payments of deferred financing costs (3,740 ) (5,757 )
Payments on capital lease obligations (2,703 ) (2,172 )
Purchase/cancellation of treasury stock (81,201 ) (43,589 )
Proceeds from other issuances of common stock 30,487 38,224
Excess tax benefit of stock options exercised 16,614 17,951
Net cash provided by/ (used in) financing activities 211,955 (53,707 )
Effect of exchange rate changes on cash 3,087 (6,135 )
Net decrease/ (increase) in cash and cash equivalents (53,658 ) 4,860
Cash and cash equivalents at beginning of period 77,053 15,767
Cash and cash equivalents at end of period $ 23,395 $ 20,627
Non-cash activities:
Net issuances of obligations for certain acquisitions $ 37,464 $ 32,353

 

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

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