STERICYCLE INC - FORM 8-K - EX-99.1 - PRESS RELEASE - July 24, 2014

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8-K - 8K BODY - STERICYCLE INCbo8k0614.htm



EXHIBIT 99.1

FOR FURTHER INFORMATION CONTACT:            FOR IMMEDIATE RELEASE
Frank ten Brink 847-607-2012



STERICYCLE, INC. REPORTS RESULTS
FOR THE SECOND QUARTER AND YEAR TO DATE 2014

Lake Forest, Illinois, July 24, 2014-Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter of 2014.


SECOND QUARTER RESULTS
Revenues for the quarter ended June 30, 2014 were $640.8 million, up $114.3 million or 21.7% from $526.5 million in the second quarter last year. Acquisitions contributed approximately $81.7 million to the current period’s growth in revenues. Revenues increased 22.5% compared to the prior period when adjusted for unfavorable foreign exchange impact of $4.4 million. Gross profit was $275.3 million, up 15.7% from $237.9 million in the second quarter last year. Gross profit as a percent of revenues was 43.0% compared with 45.2% in the second quarter of 2013. Earnings per diluted share, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), increased 7.0% to $0.95 from $0.89 in the second quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 10.9% to $1.03 from $0.93. See tables below.


FIRST SIX MONTHS’ RESULTS
Revenues for the six months ending June 30, 2014 were $1,210.8 million, up $170.4 million or 16.4% from $1,040.3 million in the same period last year. Acquisitions contributed approximately $114.6 million to the current year’s growth in revenues. Revenues increased 17.6% compared with the prior period when adjusted for unfavorable foreign exchange impact of $12.4 million. Gross profit was $530.8 million, up 12.9% from $469.9 million in the same period last year. Gross profit as a percent of revenues was 43.8% compared with 45.2% in 2013. GAAP earnings per diluted share increased 7.0% to $1.87 from $1.74 in the same period last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 14.2% to $2.06 from $1.81. See tables below.


1




The following table shows our calculations of organic revenue growth (in millions)(1):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
Change
 
 
 
Change
 
2014
2013
$
%
 
2014
2013
$
%
Total As Reported Revenues (GAAP)
$
640.8

$
526.5

$
114.3

21.7
%
 
$
1,210.8

$
1,040.3

$
170.4

16.4
%
Adjustment for Foreign Exchange
4.4

 
4.4

 
 
12.4

 
12.4

 
Subtotal (non-GAAP):
645.2

526.5

118.7

22.5
%
 
1,223.2

1,040.3

182.9

17.6
%
 
 
 
 
 
 
 
 
 
 
Adjustment for Acquisitions
(84.3
)
(2.6
)
(81.7
)
 
 
(119.5
)
(4.9
)
(114.6
)
 
Adjustment for Regulated Returns and
Recall Management Services
(24.7
)
(23.7
)
(1.0
)
 
 
(47.8
)
(46.3
)
(1.5
)
 
Subtotal (non-GAAP):
$
536.1

$
500.2

$
35.9

7.2
%
 
$
1,055.9

$
989.2

$
66.7

6.7
%
 
 
 
 
 
 
 
 
 
 
Domestic/ International Breakdown:
 
 
 
 
 
 
 
 
 
Domestic Revenues
$
454.5

$
370.2

$
84.3

22.8
%
 
$
846.5

$
733.8

$
112.7

15.4
%
International Revenues
186.3

156.3

30.0

19.2
%
 
364.3

306.5

57.7

18.8
%
Total As Reported Revenues (GAAP)
$
640.8

$
526.5

$
114.3

21.7
%
 
$
1,210.8

$
1,040.3

$
170.4

16.4
%

(1) For internal purposes, we exclude the impact of foreign exchange and revenues attributed to acquisitions closed within the preceding 12 months and from our regulated returns and recall management services when we evaluate organic revenue growth. This table and the Company’s internal use of non-GAAP adjusted revenues are not intended to imply, and should not be interpreted as implying, that non-GAAP adjusted revenues are a better measure of internal growth or the Company’s performance, as compared to GAAP revenues.


Table to reconcile GAAP EPS to Non-GAAP EPS(2):
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
 
Change
 
 
 
Change
 
2014
2013
$
%
 
2014
2013
$
%
GAAP EPS
$
0.95

$
0.89

$
0.06

7.0%
 
$
1.87

$
1.74

$
0.12

7.0%
 
 
 
 
 
 
 
 
 
 
Acquisition Expenses
0.05

0.03

 
 
 
0.08

0.05

 
 
Integration Expenses
0.04

0.01

 
 
 
0.06

0.02

 
 
Change in Fair Value
(0.01
)
—

 
 
 
0.05

—

 
 
Litigation Settlement
0.00

0.00

 
 
 
0.01

0.00

 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP EPS (Adjusted)
$
1.03

$
0.93

$
0.10

10.9%
 
$
2.06

$
1.81

$
0.26

14.2%


(2) In accordance with GAAP, reported earnings per share (EPS) 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 $238.3 million and $176.6 million for the six months ended June 30, 2014 and 2013, respectively.

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




2




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.




3





STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)

 
June 30,
2014
 
December 31,
2013
ASSETS
 
 
 
Current Assets:
 
 
 
Cash and cash equivalents
$
25,326

 
$
67,167

Short-term investments
488

 
413

Accounts receivable, net
451,995

 
388,996

Deferred income taxes
15,727

 
18,031

Prepaid expenses
33,288

 
28,379

Other current assets
40,051

 
37,279

Total Current Assets
566,875

 
540,265

Property, plant and equipment, net
480,419

 
358,967

Goodwill
2,421,348

 
2,231,582

Intangible assets, net
926,538

 
720,035

Other assets
42,101

 
37,124

Total Assets
$
4,437,281

 
$
3,887,973

 
 
 
 
LIABILITIES AND EQUITY
 
 
 
Current liabilities:
 
 
 
Current portion of long-term debt
$
151,289

 
$
150,380

Accounts payable
125,392

 
89,146

Accrued liabilities
121,475

 
107,445

Deferred revenues
22,394

 
18,826

Other current liabilities
68,289

 
50,387

Total Current Liabilities
488,839

 
416,184

Long-term debt, net of current portion
1,563,913

 
1,280,663

Deferred income taxes
462,180

 
396,119

Other liabilities
70,006

 
27,469

Equity:
 
 
 
Common stock
848

 
855

Additional paid-in capital
237,053

 
195,110

Accumulated other comprehensive loss
(45,554
)
 
(56,468
)
Retained earnings
1,634,875

 
1,610,964

Total Stericycle, Inc.’s Equity
1,827,222

 
1,750,461

Noncontrolling interest
25,121

 
17,077

Total Equity
1,852,343

 
1,767,538

Total Liabilities and Equity
$
4,437,281

 
$
3,887,973



4




STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
 
$
 
% of Rev
 
$
 
% of Rev
 
$
 
% of Rev
 
$
 
% of Rev
Revenues
$
640,822

 
100.0
 %
 
$
526,525

 
100.0
 %
 
$
1,210,777

 
100.0
 %
 
$
1,040,329

 
100.0
 %
Cost of revenues (exclusive of depreciation shown below)
350,416

 
54.7
 %
 
276,385

 
52.5
 %
 
652,176

 
53.9
 %
 
546,058

 
52.5
 %
Depreciation - cost of revenues
15,102

 
2.4
 %
 
12,288

 
2.3
 %
 
27,828

 
2.3
 %
 
24,325

 
2.3
 %
Total cost of revenues
365,518

 
57.0
 %
 
288,673

 
54.8
 %
 
680,004

 
56.2
 %
 
570,383

 
54.8
 %
Gross profit
275,304

 
43.0
 %
 
237,852

 
45.2
 %
 
530,773

 
43.8
 %
 
469,946

 
45.2
 %
Selling, general and administrative expenses (exclusive of depreciation and amortization below)
109,329

 
17.1
 %
 
91,158

 
17.3
 %
 
209,509

 
17.3
 %
 
179,399

 
17.2
 %
Depreciation - SG&A
3,977

 
0.6
 %
 
2,954

 
0.6
 %
 
7,292

 
0.6
 %
 
5,763

 
0.6
 %
Amortization
8,402

 
1.3
 %
 
6,533

 
1.2
 %
 
15,717

 
1.3
 %
 
13,175

 
1.3
 %
Total SG&A expense
121,708

 
19.0
 %
 
100,645

 
19.1
 %
 
232,518

 
19.2
 %
 
198,337

 
19.1
 %
Income from operations before acquisition, integration, and other expenses
153,596

 
24.0
 %
 
137,207

 
26.1
 %
 
298,255

 
24.6
 %
 
271,609

 
26.1
 %
Acquisition expenses
3,979

 
0.6
 %
 
2,324

 
0.4
 %
 
7,200

 
0.6
 %
 
4,127

 
0.4
 %
Integration expenses
4,679

 
0.7
 %
 
1,383

 
0.3
 %
 
7,164

 
0.6
 %
 
2,279

 
0.2
 %
Change in fair value of contingent consideration
(836
)
 
(0.1
)%
 
(122
)
 
0.0
 %
 
3,953

 
0.3
 %
 
(122
)
 
0.0
 %
Litigation expenses
396

 
0.1
 %
 
(2
)
 
0.0
 %
 
1,901

 
0.2
 %
 
104

 
0.0
 %
Restructuring and plant closure expenses
—

 
—
 %
 
104

 
0.0
 %
 
—

 
—
 %
 
104

 
0.0
 %
Income from operations
145,378

 
22.7
 %
 
133,520

 
25.4
 %
 
278,037

 
23.0
 %
 
265,117

 
25.5
 %
Other income (expense):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense, net
(16,368
)
 
(2.6
)%
 
(12,913
)
 
(2.5
)%
 
(31,266
)
 
(2.6
)%
 
(26,292
)
 
(2.5
)%
Other expense, net
(392
)
 
(0.1
)%
 
(545
)
 
(0.1
)%
 
(1,092
)
 
(0.1
)%
 
(1,558
)
 
(0.1
)%
Total other expense
(16,760
)
 
(2.6
)%
 
(13,458
)
 
(2.6
)%
 
(32,358
)
 
(2.7
)%
 
(27,850
)
 
(2.7
)%
Income before income taxes
128,618

 
20.1
 %
 
120,062

 
22.8
 %
 
245,679

 
20.3
 %
 
237,267

 
22.8
 %
Income tax expense
45,941

 
7.2
 %
 
41,619

 
7.9
 %
 
83,232

 
6.9
 %
 
83,602

 
8.0
 %
Net income
82,677

 
12.9
 %
 
78,443

 
14.9
 %
 
162,447

 
13.4
 %
 
153,665

 
14.8
 %
Less: net income attributable to noncontrolling interests
741

 
0.1
 %
 
399

 
0.1
 %
 
1,362

 
0.1
 %
 
1,004

 
0.1
 %
Net income attributable to Stericycle, Inc.
$
81,936

 
12.8
 %
 
$
78,044

 
14.8
 %
 
$
161,085

 
13.3
 %
 
$
152,661

 
14.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings per share- diluted
$
0.95

 
 
 
$
0.89

 
 
 
$
1.87

 
 
 
$
1.74

 
 
Weighted average number of common shares outstanding - diluted
85,982,588

 
 
 
87,614,953

 
 
 
86,300,292

 
 
 
87,545,641

 
 

5




STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
  
Six Months Ended June 30,
 
2014
 
2013
OPERATING ACTIVITIES:
 
 
 
Net income
$
162,447

 
$
153,665

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Stock compensation expense
9,124

 
7,943

Excess tax benefit of stock options exercised
(7,080
)
 
(8,373
)
Depreciation
35,120

 
30,088

Amortization
15,717

 
13,175

Deferred income taxes
8,929

 
13,101

Change in fair value of contingent consideration
3,953

 
(122
)
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Accounts receivable
(9,606
)
 
(42,871
)
Accounts payable
10,646

 
10,186

Accrued liabilities
(6,809
)
 
(2,566
)
Deferred revenues
2,332

 
(548
)
Other assets and liabilities
13,575

 
2,903

Net cash provided by operating activities
238,348

 
176,581

INVESTING ACTIVITIES:
 
 
 
Payments for acquisitions, net of cash acquired
(304,832
)
 
(63,401
)
(Purchases of)/ proceeds from investments
(2,052
)
 
33

Capital expenditures
(43,668
)
 
(37,441
)
Net cash used in investing activities
(350,552
)
 
(100,809
)
FINANCING ACTIVITIES:
 
 
 
Repayments of long-term debt and other obligations
(28,005
)
 
(32,016
)
Borrowings on foreign bank debt
96,828

 
92,733

Repayments on foreign bank debt
(85,192
)
 
(96,512
)
Borrowings on senior credit facility
933,101

 
527,469

Repayments on senior credit facility
(732,059
)
 
(544,183
)
Payments on capital lease obligations
(1,993
)
 
(1,825
)
Payments of deferred financing costs
(2,280
)
 
—

Purchases and cancellations of treasury stock
(137,186
)
 
(66,175
)
Proceeds from issuance of common stock
21,195

 
23,667

Excess tax benefit of stock options exercised
7,080

 
8,373

Payments to noncontrolling interests
(732
)
 
—

Net cash provided by/ (used) in financing activities
70,757

 
(88,469
)
Effect of exchange rate changes on cash
(394
)
 
(528
)
Net decrease in cash and cash equivalents
(41,841
)
 
(13,225
)
Cash and cash equivalents at beginning of period
67,167

 
34,659

Cash and cash equivalents at end of period
$
25,326

 
$
21,434

 
 
 
 
NON-CASH ACTIVITIES:
 
 
 
Issuances of obligations for acquisitions
$
83,864

 
$
22,906



6


STERICYCLE INC Reports