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Stericycle, Inc. Reports Results for the First Quarter in 2015

Conference call to be held April 23, 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 May 23rd by dialing 855-859-2056, access code 39406157. 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., April 23, 2015 (GLOBE NEWSWIRE) -- Stericycle, Inc. (Nasdaq:SRCL), today reported financial results for the first quarter of 2015.

Revenues for the quarter ended March 31, 2015 were $663.3 million, up 16.4% from $570.0 million in the first quarter last year. Acquisitions contributed approximately $86.3 million to the current period's growth in revenues. Revenues increased 20.4% compared to the prior period when adjusted for unfavorable foreign exchange impacts of $23.1 million.

Gross profit, reported in accordance with U.S. generally accepted accounting principles ("GAAP"), was $281.3 million, up 10.1% from $255.5 million in the first quarter last year. GAAP gross profit as a percent of revenue was 42.4% compared with 44.8% in the first quarter of 2014. Non-GAAP gross profit, when adjusted as identified in the second of the following tables, was $281.3 million, up 9.9% from $256.0 million in the first quarter last year. Non-GAAP gross profit as a percent of revenues was 42.4% compared to 44.9% in the first quarter of 2014.

GAAP earnings per diluted share decreased 4.4% to $0.87 from $0.91 in the first quarter of 2014. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 3.7% to $1.08 from $1.04. See tables below.

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

Three Months Ended March 31,
Change
2015 2014 $ %
Total As Reported Revenues (GAAP) $663.3 $570.0 $93.4 16.4%
Adjustment for Foreign Exchange 23.1 23.1
Subtotal (non-GAAP): 686.4 570.0 116.4 20.4%
Adjustment for Acquisitions (86.3) -- (86.3)
Adjustment for Regulated Returns and Recall Management Services (16.1) (23.1) (6.9)
Subtotal (non-GAAP): $584.0 $546.9 $37.1 6.8%
Domestic/ International Breakdown:
Domestic Revenues $472.2 $389.8 $82.5 21.2%
International Revenues 191.1 180.2 10.9 6.0%
Total As Reported Revenues (GAAP) $663.3 $570.0 $93.4 16.4%

(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 March 31,
2015 2014
% of % of
$ Rev $ Rev
GAAP Gross Profit $281,331 42.4% $255,469 44.8%
Plant Conversion Expenses -- -- 574 0.1%
Non-GAAP Gross Profit $281,331 42.4% $256,043 44.9%

(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 March 31,
Change
2015 2014 $ %
GAAP EPS $0.87 $0.91 $(0.04) -4.4%
Acquisition Expenses 0.04 0.04
Integration Expenses 0.07 0.02
Change in Fair Value of Contingent Consideration (0.01) 0.06
Litigation Expenses 0.01 0.01
Plant Conversion and Restructuring Expenses 0.10 0.00
Non-GAAP EPS (Adjusted) $1.08 $1.04 $0.04 3.7%

(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 $132.6 million and $145.8 million for the three months ended March 31, 2015 and 2014, 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)
March 31, December 31,
2015 2014
ASSETS
Current Assets:
Cash and cash equivalents $ 38,283 $ 22,236
Short-term investments 116 380
Accounts receivable, net 467,094 465,473
Deferred income taxes 27,331 28,322
Prepaid expenses 29,847 30,632
Other current assets 33,392 33,173
Total Current Assets 596,063 580,216
Property, plant and equipment, net 446,831 460,408
Goodwill 2,419,284 2,418,832
Intangible assets, net 889,360 909,645
Other assets 31,976 32,621
Total Assets $ 4,383,514 $ 4,401,722
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt $ 113,212 $ 131,969
Accounts payable 120,198 114,596
Accrued liabilities 157,047 131,743
Deferred revenues 20,313 21,624
Other current liabilities 71,630 61,599
Total Current Liabilities 482,400 461,531
Long-term debt, net of current portion 1,462,177 1,527,246
Deferred income taxes 422,971 431,643
Other liabilities 65,959 64,117
Equity:
Common stock 852 849
Additional paid-in capital 331,428 289,211
Accumulated other comprehensive loss (206,434) (138,419)
Retained earnings 1,805,059 1,743,371
Total Stericycle, Inc. Equity 1,930,905 1,895,012
Noncontrolling interests 19,102 22,173
Total Equity 1,950,007 1,917,185
Total Liabilities and Equity $ 4,383,514 $ 4,401,722
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended
March 31,
2015 2014
$ % of Rev $ % of Rev
Revenues $ 663,319 100.0% $ 569,955 100.0%
Cost of revenues ("COR") - exclusive of depreciation, and adjusting items shown below 367,340 55.4% 301,186 52.8%
Depreciation 14,648 2.2% 12,726 2.2%
Total cost of revenues 381,988 57.6% 313,912 55.1%
Gross profit (non-GAAP) 281,331 42.4% 256,043 44.9%
Selling, general and administrative expenses ("SG&A") -- exclusive of depreciation, amortization, and adjusting items shown below 115,431 17.4% 100,180 17.6%
Depreciation 4,118 0.6% 3,315 0.6%
Amortization 8,797 1.3% 7,315 1.3%
Total SG&A expense 128,346 19.3% 110,810 19.4%
Income from operations (non-GAAP) - exclusive of adjusting items shown below 152,985 23.1% 145,233 25.5%
Adjusting items:
Plant conversion expenses (COR) -- 0.0% 574 0.1%
Acquisition expenses (SG&A) 3,296 0.5% 3,221 0.6%
Integration expenses (SG&A) 8,886 1.3% 2,485 0.4%
Change in fair value of contingent consideration (SG&A) (675) -0.1% 4,789 0.8%
Litigation expenses (SG&A) 2,123 0.3% 1,505 0.3%
Plant conversion and restructuring expenses (SG&A) 12,302 1.9% -- 0.0%
Income from operations (GAAP) 127,053 19.2% 132,659 23.3%
Other income (expense):
Interest expense, net (18,598) -2.8% (14,898) -2.6%
Other expense, net (598) -0.1% (700) -0.1%
Total other expense (19,196) -2.9% (15,598) -2.7%
Income before income taxes 107,857 16.3% 117,061 20.5%
Income tax expense 32,047 4.8% 37,291 6.5%
Net income 75,810 11.4% 79,770 14.0%
Less: net income attributable to noncontrolling interests 352 0.1% 621 0.1%
Net income attributable to Stericycle, Inc. $ 75,458 11.4% $ 79,149 13.9%
Earnings per share - diluted $ 0.87 $ 0.91
Weighted average number of common shares outstanding - diluted 86,357,006 86,613,843
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Three Months Ended
March 31,
2015 2014
Operating Activities:
Net income $ 75,810 $ 79,770
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense 5,487 4,672
Excess tax benefit of stock options exercised (8,222) (3,734)
Depreciation 18,766 16,041
Amortization 8,797 7,315
Deferred income taxes (2,957) 6,175
Change in fair value of contingent consideration (675) 4,789
Plant conversion and restructuring 5,988 --
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable (14,491) 4,529
Accounts payable 5,443 5,279
Accrued liabilities 35,924 14,189
Deferred revenue (628) 2,642
Other assets and liabilities 3,312 4,182
Net cash provided by operating activities 132,554 145,849
Investing Activities:
Payments for acquisitions, net of cash acquired (34,210) (12,262)
Proceeds from/ (purchases of) investments 257 (1,947)
Capital expenditures (21,356) (16,420)
Net cash used in investing activities (55,309) (30,629)
Financing Activities:
Repayments of long-term debt and other obligations (9,780) (12,430)
Borrowings on foreign bank debt 4,851 36,640
Repayments on foreign bank debt (38,252) (37,157)
Borrowings on term loan 250,000 --
Borrowings on senior credit facility 394,097 149,000
Repayments on senior credit facility (670,254) (203,377)
Payments on capital lease obligations (988) (876)
Purchases and cancellations of treasury stock (11,516) (76,914)
Payment for cash flow hedge (8,833) --
Proceeds from issuances of common stock 27,452 8,655
Excess tax benefit of stock options exercised 8,222 3,734
Payments to noncontrolling interests (2,603) (97)
Net cash used in financing activities (57,604) (132,822)
Effect of exchange rate changes on cash and cash equivalents (3,594) 43
Net increase/ (decrease) in cash and cash equivalents 16,047 (17,559)
Cash and cash equivalents at beginning of period 22,236 67,167
Cash and cash equivalents at end of period $ 38,283 $ 49,608
Non-cash activities:
Issuances of obligations for acquisitions $ 21,543 $ 13,095

CONTACT: FOR FURTHER INFORMATION CONTACT: Dan Ginnetti 847-607-2069

Source:Stericycle, Inc.