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Stericycle, Inc. Reports Results for the Second Quarter and Year to Date 2014

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LAKE FOREST, Ill., July 24, 2014 (GLOBE NEWSWIRE) -- 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.

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.

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)
June 30, December 31,
2014 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. Equity 1,827,222 1,750,461
Noncontrolling interests 25,121 17,077
Total Equity 1,852,343 1,767,538
Total Liabilities and Equity $ 4,437,281 $ 3,887,973
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, 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 -- 0.0% 104 0.0% -- 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
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 revenue 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 issuances 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

CONTACT: Frank ten Brink 847-607-2012

Source:Stericycle, Inc.