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Stericycle, Inc. Reports Results for the Fourth Quarter and Full Year Ended 2014

Conference call to be held February 5, 2015 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 March 5th by dialing 855-859-2056, access code 39404156. To hear a live simulcast of the call or access the audio archive, visit the investor relations page on www.stericycle.com.

LAKE FOREST, Ill., Feb. 5, 2015 (GLOBE NEWSWIRE) -- Stericycle, Inc. (Nasdaq:SRCL), today reported financial results for the fourth quarter and full year of 2014.

FOURTH QUARTER RESULTS

Revenues for the quarter ended December 31, 2014 were $676.9 million, up $109.0 million or 19.2% from $567.9 million in the fourth quarter last year. Acquisitions contributed approximately $93.1 million to the current period's growth in revenues. Revenues increased 22.2% compared to the prior period when adjusted for unfavorable foreign exchange impact of $17.0 million. Gross profit, reported in accordance with U.S. generally accepted accounting principles ("GAAP"), was $285.0 million, up 12.5% from $253.3 million in the fourth quarter last year. GAAP gross profit as a percent of revenues was 42.1% compared to 44.6% in the fourth quarter of 2013. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $285.4 million, up 11.7% from $255.4 million in the fourth quarter last year. Non-GAAP gross profit as a percent of revenues was 42.2% compared to 45.0% in the fourth quarter of 2013. GAAP earnings per diluted share increased 6.7% to $0.96 from $0.90 in the fourth quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 13.2% to $1.12 from $0.99. See tables below.

FULL-YEAR RESULTS

Revenues for the full year 2014 were $2.56 billion, up 19.3% from $2.14 billion in 2013. Acquisitions contributed approximately $301.6 million to the current year's growth in revenues. Revenues increased 20.8% compared with the prior period when adjusted for unfavorable foreign exchange impact of $33.6 million. GAAP gross profit was $1.09 billion, up 13.5% from $964.6 million in 2013. GAAP gross profit as a percent of revenues was 42.8% compared to 45.0% in 2013. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $1.10 billion, up 13.5% from $967.2 million in 2013. Non-GAAP gross profit as a percent of revenues was 42.9% compared to 45.1% in 2013. GAAP earnings per diluted share increased 6.3% to $3.79 from $3.56 in 2013. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 13.8% to $4.27 from $3.75. See tables below.

The following table shows our calculations of organic revenue growth (in millions)(1)
Three Months Ended December 31, Years Ended December 31,
Change Change
2014 2013 $ % 2014 2013 $ %
Total As Reported Revenues (GAAP) $676.9 $567.9 $109.0 19.2% $2,555.6 $2,142.8 $412.8 19.3%
Adjustment for Foreign Exchange 17.0 17.0 33.6 33.6
Subtotal (non-GAAP): 693.9 567.9 126.0 22.2% 2,589.2 2,142.8 446.4 20.8%
Adjustment for Acquisitions (93.7) (0.6) (93.1) (311.5) (9.9) (301.6)
Adjustment for Regulated Returns and (16.1) (26.5) (10.4) (80.5) (97.8) 17.3
Recall Management Services
Subtotal (non-GAAP): $584.1 $540.8 $43.3 8.0% $2,197.2 $2,035.1 $162.1 8.0%
Domestic/ International Breakdown:
Domestic Revenues $479.7 $394.6 $85.1 21.6% $1,796.8 $1,506.6 $290.2 19.3%
International Revenues 197.2 173.3 23.9 13.8% 758.8 636.2 122.6 19.3%
Total As Reported Revenues (GAAP) $676.9 $567.9 $109.0 19.2% $2,555.6 $2,142.8 $412.8 19.3%
(1) For internal purposes, we exclude the impact of foreign exchange, revenues attributed to acquisitions closed within the preceding 12 months, and revenue 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 Gross Profit to Non-GAAP Gross Profit (in thousands)(2)
Three Months Ended December 31, Years Ended December 31,
2014 2013 2014 2013
$ % of
Rev
$ % of
Rev
$ % of
Rev
$ % of
Rev
GAAP Gross Profit $284,969 42.1% $253,285 44.6% $1,094,411 42.8% $964,634 45.0%
Plant Conversion Expenses 381 0.1% -- -- 2,915 0.1% 423 0.0%
Litigation Expenses -- -- 2,120 0.4% -- -- 2,120 0.1%
Non-GAAP Gross Profit $285,350 42.2% $255,405 45.0% $1,097,326 42.9% $967,177 45.1%
(2) In accordance with GAAP, reported Gross Profit includes the 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 Gross Profit are not intended to imply, and should not be interpreted as implying, that non-GAAP Gross Profit is a better measure of performance than GAAP Gross Profit.
Table to reconcile GAAP EPS to Non-GAAP EPS(3)
Three Months Ended December 31, Years Ended December 31,
Change Change
2014 2013 $ % 2014 2013 $ %
GAAP EPS $0.96 $ 0.90 $0.06 6.7% $3.79 $3.56 $0.22 6.3%
Acquisition Expenses 0.03 0.05 0.14 0.12
Integration Expenses 0.08 0.02 0.19 0.05
Change in Fair Value of Contingent (0.06) (0.2) (0.02) (0.03)
Consideration
Litigation Expenses 0.02 0.01 0.05 0.02
Plant Conversion and Restructuring 0.09 0.01 0.12 0.02
Expenses
Impairment of Intangible Assets -- 0.02 -- 0.01
Non-GAAP EPS (Adjusted) $1.12 $0.99 $0.13 13.2% $4.27 $3.75 $0.52 13.8%
(3) 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 $448.5 million and $405.3 million for the full years of 2014 and 2013, respectively.

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

Safe Harbor Statement: This press release may contain forward-looking statements that involve risks and uncertainties, some of which are beyond our control (for example, general economic and market 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 the collection, transportation, treatment and disposal of regulated waste, increases in transportation and other operating costs, the level of governmental enforcement of regulations governing regulated waste collection and treatment, our ability to execute our acquisition strategy and to integrate acquired businesses, competition and demand for services in the regulated waste industry, political, economic and currency risks related to our foreign operations, impairments of goodwill or other indefinite-lived intangibles, exposure to environmental liabilities, compliance with existing and future legal and regulatory requirements, as well as other factors described in our filings with the U.S. Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K. 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)
December 31,
2014 2013
ASSETS
Current Assets:
Cash and cash equivalents $ 22,236 $ 67,167
Short-term investments 380 413
Accounts receivable, net 465,473 388,996
Deferred income taxes 28,322 18,031
Prepaid expenses 33,498 28,379
Other current assets 31,572 37,279
Total Current Assets 581,481 540,265
Property, plant and equipment, net 460,408 358,967
Goodwill 2,418,832 2,231,582
Intangible assets, net 909,645 720,035
Other assets 30,840 37,124
Total Assets $ 4,401,206 $ 3,887,973
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt $ 131,969 $ 150,380
Accounts payable 114,596 89,146
Accrued liabilities 131,743 107,445
Deferred revenues 21,624 18,826
Other current liabilities 59,190 50,387
Total Current Liabilities 459,122 416,184
Long-term debt, net of current portion 1,527,246 1,280,663
Deferred income taxes 431,643 396,119
Other liabilities 66,010 27,469
Equity:
Common stock 849 855
Additional paid-in capital 289,211 195,110
Accumulated other comprehensive loss (138,419) (56,468)
Retained earnings 1,743,371 1,610,964
Total Stericycle, Inc. Equity 1,895,012 1,750,461
Noncontrolling interests 22,173 17,077
Total Equity 1,917,185 1,767,538
Total Liabilities and Equity $ 4,401,206 $ 3,887,973
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended Years Ended
December 31, December 31,
2014 2013 2014 2013
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 676,947 100.0% $ 567,899 100.0% $2,555,601 100.0% $2,142,807 100.0%
Cost of revenues ("COR") - exclusive of depreciation, and adjusting items shown below 378,182 55.9% 299,347 52.7% 1,401,797 54.9% 1,125,627 52.5%
Depreciation 13,415 2.0% 13,147 2.3% 56,478 2.2% 50,003 2.3%
Total cost of revenues 391,597 57.8% 312,494 55.0% 1,458,275 57.1% 1,175,630 54.9%
Gross profit (non-GAAP) 285,350 42.2% 255,405 45.0% 1,097,326 42.9% 967,177 45.1%
Selling, general and administrative expenses ("SG&A") - exclusive of depreciation, amortization, and adjusting items shown below 112,563 16.6% 99,728 17.6% 433,865 17.0% 372,091 17.4%
Depreciation 3,121 0.5% 2,965 0.5% 15,446 0.6% 11,338 0.5%
Amortization 8,478 1.3% 7,183 1.3% 32,692 1.3% 27,067 1.3%
Total SG&A expense 124,162 18.3% 109,876 19.3% 482,003 18.9% 410,496 19.2%
Income from operations (non-GAAP) - exclusive of adjusting items shown below 161,188 23.8% 145,529 25.6% 615,323 24.1% 556,681 26.0%
Adjusting items:
Plant conversion expenses (COR) 381 0.1% -- 0.0% 2,915 0.1% 423 0.0%
Litigation expenses (COR) -- 0.0% 2,120 0.4% -- 0.0% 2,120 0.1%
Acquisition expenses (SG&A) 2,661 0.4% 4,037 0.7% 13,333 0.5% 10,275 0.5%
Integration expenses (SG&A) 11,343 1.7% 2,819 0.5% 25,968 1.0% 6,521 0.3%
Change in fair value of contingent consideration (SG&A) (5,405) -0.8% (1,971) -0.3% (1,452) -0.1% (2,278) -0.1%
Litigation expenses (SG&A) 3,331 0.5% -- 0.0% 6,574 0.3% 116 0.0%
Plant conversion and restructuring expenses (SG&A) 10,114 1.5% 2,012 0.4% 11,649 0.5% 2,480 0.1%
Impairment of intangible assets (SG&A) -- 0.0% 1,405 0.2% -- 0.0% 1,405 0.1%
Income from operations (GAAP) 138,763 20.5% 135,107 23.8% 556,336 21.8% 535,619 25.0%
Other income (expense):
Interest expense, net (18,139) -2.7% (15,341) -2.7% (66,022) -2.6% (54,949) -2.6%
Other expense, net (1,177) -0.2% (25) 0.0% (2,746) -0.1% (2,924) -0.1%
Total other expense (19,316) -2.9% (15,366) -2.7% (68,768) -2.7% (57,873) -2.7%
Income before income taxes 119,447 17.6% 119,741 21.1% 487,568 19.1% 477,746 22.3%
Income tax expense 36,789 5.4% 41,154 7.2% 159,422 6.2% 164,662 7.7%
Net income 82,658 12.2% 78,587 13.8% 328,146 12.8% 313,084 14.6%
Less: net income attributable to noncontrolling interests 132 0.0% 423 0.1% 1,690 0.1% 1,712 0.1%
Net income attributable to Stericycle, Inc. $ 82,526 12.2% $ 78,164 13.8% $ 326,456 12.8% $ 311,372 14.5%
Earnings per share - diluted $ 0.96 $ 0.90 $ 3.79 $ 3.56
Weighted average number of common shares outstanding - diluted 86,194,513 87,107,437 86,233,612 87,391,988
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Years Ended December 31,
2014 2013
Operating Activities:
Net income $ 328,146 $ 313,084
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense 17,773 17,457
Excess tax benefit of stock options exercised (17,906) (17,153)
Depreciation 71,924 61,341
Amortization 32,692 27,067
Deferred income taxes 16,550 30,930
Change in fair value of contingent consideration (1,452) (2,278)
Other 10,384 3,381
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable (34,116) (54,767)
Accounts payable (5,712) 7
Accrued liabilities 21,279 4,547
Deferred revenue 1,017 (1,319)
Other assets and liabilities 7,921 23,010
Net cash provided by operating activities 448,500 405,307
Investing Activities:
Payments for acquisitions, net of cash acquired (374,321) (161,936)
(Purchases of)/ proceeds from investments (1,957) 73
Capital expenditures (86,496) (73,109)
Net cash used in investing activities (462,774) (234,972)
Financing Activities:
Repayments of long-term debt and other obligations (101,231) (88,507)
Borrowings on foreign bank debt 205,086 218,968
Repayments on foreign bank debt (193,284) (201,967)
Borrowings on senior credit facility 1,413,026 1,029,718
Repayments on senior credit facility (1,216,031) (984,979)
Payments on capital lease obligations (5,826) (4,024)
Payments of deferred financing costs (2,280) --
Purchases and cancellations of treasury stock (194,066) (163,700)
Proceeds from issuances of common stock 51,852 42,345
Excess tax benefit of stock options exercised 17,906 17,153
Payments to noncontrolling interests (5,201) (1,026)
Net cash used in financing activities (30,049) (136,019)
Effect of exchange rate changes on cash and cash equivalents (608) (1,809)
Net (decrease)/ increase in cash and cash equivalents (44,931) 32,507
Cash and cash equivalents at beginning of period 67,167 34,660
Cash and cash equivalents at end of period $ 22,236 $ 67,167
Non-cash activities:
Issuances of obligations for acquisitions $ 145,938 $ 100,101
Issuance of obligations for noncontrolling interests -- 6,119

CONTACT: Dan Ginnetti 847-607-2069

Source:Stericycle, Inc.