STERICYCLE INC - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

file	filename
8-K - 8K BODY - STERICYCLE INC	bo8k0914.htm

EXHIBIT 99.1

FOR FURTHER INFORMATION CONTACT: FOR IMMEDIATE RELEASE

Dan Ginnetti 847-607-2069

STERICYCLE, INC. REPORTS RESULTS

FOR THE THIRD QUARTER AND YEAR TO DATE 2014

Lake Forest, Illinois, October 23, 2014-Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third quarter of 2014.

THIRD QUARTER RESULTS

Revenues for the quarter ended September 30, 2014 were $667.9 million, up $133.3 million or 24.9% from $534.6 million in the third quarter last year. Acquisitions contributed approximately $93.8 million to the current period’s growth in revenues. Revenues increased 25.7% compared to the prior period when adjusted for unfavorable foreign exchange impact of $4.1 million. Gross profit, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), was $278.7 million, up 15.4% from $241.4 million in the third quarter last year. Gross profit as a percent of revenues was 41.7% compared with 45.2% in the third quarter of 2013. Non-GAAP gross profit was $279.5 million, up 15.6% from $241.8 million in the third quarter last year. Non-GAAP gross profit as a percent of revenues was 41.9% compared with 45.2% in the third quarter of 2013. GAAP earnings per diluted share increased 4.4% to $0.96 from $0.92 in the third quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 12.4% to $1.08 from $0.96. See tables below.

FIRST NINE MONTHS’ RESULTS

Revenues for the nine months ending September 30, 2014 were $1,878.7 million, up $303.7 million or 19.3% from $1,574.9 million in the same period last year. Acquisitions contributed approximately $208.5 million to the current year’s growth in revenues. Revenues increased 20.3% compared with the prior period when adjusted for unfavorable foreign exchange impact of $16.5 million. GAAP gross profit was $809.4 million, up 13.8% from $711.3 million in the same period last year. Gross profit as a percent of revenues was 43.1% compared with 45.2% in 2013. Non-GAAP gross profit was $812.0 million, up 14.1% from $711.8 million in the same period last year. Non-GAAP gross profit as a percent of revenues was 43.2% compared with 45.2% in the 2013. GAAP earnings per diluted share increased 6.1% to $2.83 from $2.67 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 14.0% to $3.15 from $2.77. See tables below.

The following table shows our calculations of organic revenue growth (in millions)⁽¹⁾:



	Three Months Ended September 30,											Nine Months Ended September 30,
							Change											Change
	2014			2013			$			%		2014			2013			$			%
Total As Reported Revenues (GAAP)	$	667.9		$	534.6		$	133.3		24.9	%	$	1,878.7		$	1,574.9		$	303.7		19.3	%
Adjustment for Foreign Exchange	4.1						4.1					16.5						16.5
Subtotal (non-GAAP):	672.0			534.6			137.4			25.7	%	1,895.2			1,574.9			320.3			20.3	%

Adjustment for Acquisitions	(98.2		)	(4.4		)	(93.8		)			(217.7		)	(9.3		)	(208.5		)
Adjustment for Regulated Returns and Recall Management Services	(16.6		)	(25.1		)	8.5					(64.4		)	(71.3		)	6.9
Subtotal (non-GAAP):	$	557.2		$	505.1		$	52.1		10.3	%	$	1,613.1		$	1,494.3		$	118.7		7.9	%

Domestic/ International Breakdown:
Domestic Revenues	$	470.7		$	378.1		$	92.5		24.5	%	$	1,317.1		$	1,112.0		$	205.1		18.4	%
International Revenues	197.2			156.5			40.8			26.1	%	561.6			462.9			98.6			21.3	%
Total As Reported Revenues (GAAP)	$	667.9		$	534.6		$	133.3		24.9	%	$	1,878.7		$	1,574.9		$	303.7		19.3	%

(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 September 30,								Nine Months Ended September 30,
					Change								Change
	2014		2013		$		%		2014		2013		$		%
GAAP EPS	$	0.96	$	0.92	$	0.04	4.4	%	$	2.83	$	2.67	$	0.16	6.1	%

Acquisition Expenses	0.03		0.02						0.12		0.07
Integration Expenses	0.05		0.01						0.11		0.03
Plant Conversion and Restructuring	0.02		0.00						0.03		0.00
Change in Fair Value	—		—						0.05		—
Litigation Settlement	0.01		0.00						0.02		0.00

Non-GAAP EPS (Adjusted)	$	1.08	$	0.96	$	0.12	12.4	%	$	3.15	$	2.77	$	0.39	14	%

(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 $345.0 million and $336.1 million for the nine months ended September 30, 2014 and 2013, respectively.

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.

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)



	September 30, 2014			December 31, 2013
ASSETS
Current Assets:
Cash and cash equivalents	$	41,985		$	67,167
Short-term investments	479			413
Accounts receivable, net	456,461			388,996
Deferred income taxes	18,185			18,031
Prepaid expenses	37,929			28,379
Other current assets	37,638			37,279
Total Current Assets	592,677			540,265
Property, plant and equipment, net	498,577			358,967
Goodwill	2,415,210			2,231,582
Intangible assets, net	910,928			720,035
Other assets	28,242			37,124
Total Assets	$	4,445,634		$	3,887,973

LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	165,074		$	150,380
Accounts payable	131,617			89,146
Accrued liabilities	139,025			107,445
Deferred revenues	22,406			18,826
Other current liabilities	57,183			50,387
Total Current Liabilities	515,305			416,184
Long-term debt, net of current portion	1,512,333			1,280,663
Deferred income taxes	470,383			396,119
Other liabilities	67,426			27,469
Equity:
Common stock	848			855
Additional paid-in capital	253,286			195,110
Accumulated other comprehensive loss	(95,350		)	(56,468		)
Retained earnings	1,697,903			1,610,964
Total Stericycle, Inc. Equity	1,856,687			1,750,461
Noncontrolling interest	23,500			17,077
Total Equity	1,880,187			1,767,538
Total Liabilities and Equity	$	4,445,634		$	3,887,973

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)



	Three Months Ended September 30,										Nine Months Ended September 30,
	2014					2013					2014					2013
	$			% of Rev		$			% of Rev		$			% of Rev		$			% of Rev
Revenues	$	667,877		100.0	%	$	534,579		100.0	%	$	1,878,654		100.0	%	$	1,574,908		100.0	%
Cost of revenues ("COR") - exclusive of depreciation, and adjusting items shown below	373,128			55.9	%	280,222			52.4	%	1,023,615			54.5	%	826,280			52.5	%
Depreciation	15,235			2.3	%	12,531			2.3	%	43,063			2.3	%	36,856			2.3	%
Total cost of revenues	388,363			58.1	%	292,753			54.8	%	1,066,678			56.8	%	863,136			54.8	%
Gross profit (non-GAAP)	279,514			41.9	%	241,826			45.2	%	811,976			43.2	%	711,772			45.2	%
Selling, general and administrative expenses ("SG&A") - exclusive of depreciation, amortization, and adjusting items shown below	111,793			16.7	%	92,964			17.4	%	321,302			17.1	%	272,363			17.3	%
Depreciation	5,033			0.8	%	2,610			0.5	%	12,325			0.7	%	8,373			0.5	%
Amortization	8,497			1.3	%	6,709			1.3	%	24,214			1.3	%	19,884			1.3	%
Total SG&A expense	125,323			18.8	%	102,283			19.1	%	357,841			19.0	%	300,620			19.1	%
Income from operations (non-GAAP) - exclusive of adjusting items shown below	154,191			23.1	%	139,543			26.1	%	454,135			24.2	%	411,152			26.1	%
Adjusting items:
Plant conversion expenses (COR)	845			0.1	%	423			0.1	%	2,534			0.1	%	423			—	%
Acquisition expenses (SG&A)	3,472			0.5	%	2,111			0.4	%	10,672			0.6	%	6,238			0.4	%
Integration expenses (SG&A)	7,461			1.1	%	1,423			0.3	%	14,625			0.8	%	3,702			0.2	%
Change in fair value of contingent consideration (SG&A)	—			—	%	(185		)	0.0	%	3,953			0.2	%	(307		)	0.0	%
Litigation expenses (SG&A)	1,342			0.2	%	12			0.0	%	3,243			0.2	%	116			0.0	%
Plant conversion and restructuring expenses (SG&A)	1,535			0.2	%	364			0.1	%	1,535			0.1	%	468			0.0	%
Income from operations	139,536			20.9	%	135,395			25.3	%	417,573			22.2	%	400,512			25.4	%
Other income (expense):
Interest expense, net	(16,617		)	(2.5	)%	(13,316		)	(2.5	)%	(47,883		)	(2.5	)%	(39,608		)	(2.5	)%
Other expense, net	(477		)	(0.1	)%	(1,341		)	(0.3	)%	(1,569		)	(0.1	)%	(2,899		)	(0.2	)%
Total other expense	(17,094		)	(2.6	)%	(14,657		)	(2.7	)%	(49,452		)	(2.6	)%	(42,507		)	(2.7	)%
Income before income taxes	122,442			18.3	%	120,738			22.6	%	368,121			19.6	%	358,005			22.7	%
Income tax expense	39,401			5.9	%	39,906			7.5	%	122,633			6.5	%	123,508			7.8	%
Net income	83,041			12.4	%	80,832			15.1	%	245,488			13.1	%	234,497			14.9	%
Less: net income attributable to noncontrolling interests	196			—	%	285			0.1	%	1,558			0.1	%	1,289			0.1	%
Net income attributable to Stericycle, Inc.	$	82,845		12.4	%	$	80,547		15.1	%	$	243,930		13.0	%	$	233,208		14.8	%
Earnings per share - diluted	$	0.96				$	0.92				$	2.83				$	2.67
Weighted average number of common shares outstanding - diluted	86,116,455					87,401,565					86,237,202					87,497,276

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)



	Nine Months Ended September 30,
	2014			2013
OPERATING ACTIVITIES:
Net income	$	245,488		$	234,497
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense	13,365			12,088
Excess tax benefit of stock options exercised	(10,747		)	(12,354		)
Depreciation	55,388			45,229
Amortization	24,214			19,884
Deferred income taxes	8,833			15,623
Change in fair value of contingent consideration	3,953			(307		)
Plant conversion expenses	1,379			—
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable	(25,420		)	(43,816		)
Accounts payable	13,383			3,258
Accrued liabilities	17,640			21,420
Deferred revenues	2,326			(614		)
Other assets and liabilities	(4,830		)	41,181
Net cash provided by operating activities	344,972			336,089
INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired	(333,541		)	(131,902		)
(Purchases of)/ proceeds from investments	(2,051		)	45
Capital expenditures	(66,262		)	(54,329		)
Net cash used in investing activities	(401,854		)	(186,186		)
FINANCING ACTIVITIES:
Repayments of long-term debt and other obligations	(45,031		)	(48,858		)
Borrowings on foreign bank debt	151,605			164,669
Repayments on foreign bank debt	(131,295		)	(163,941		)
Borrowings on senior credit facility	1,154,100			731,015
Repayments on senior credit facility	(979,059		)	(725,940		)
Payments on capital lease obligations	(4,014		)	(2,623		)
Payments of deferred financing costs	(2,280		)	—
Purchases and cancellations of treasury stock	(157,004		)	(114,531		)
Proceeds from issuance of common stock	33,904			33,827
Excess tax benefit of stock options exercised	10,747			12,354
Payments to noncontrolling interests	(732		)	(1,018		)
Net cash provided by/ (used) in financing activities	30,941			(115,046		)
Effect of exchange rate changes on cash	759			(1,795		)
Net (decrease)/ increase in cash and cash equivalents	(25,182		)	33,062
Cash and cash equivalents at beginning of period	67,167			34,659
Cash and cash equivalents at end of period	$	41,985		$	67,721

NON-CASH ACTIVITIES:
Issuances of obligations for acquisitions	$	100,944		$	88,530
Issuance of obligations for noncontrolling interests	—			2,113

Attached files

STERICYCLE INC Reports

Also read