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Stericycle, Inc. Reports Results for the Second Quarter and Year to Date 2015

Conference call to be held July 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 August 23rd by dialing 855-859-2056, access code 39409776. 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., July 23, 2015 (GLOBE NEWSWIRE) -- Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter and year to date 2015.

SECOND QUARTER RESULTS

Revenues for the quarter ended June 30, 2015 were $715.7 million, up $74.9 million or 11.7% from $640.8 million in the second quarter last year. Acquisitions contributed approximately $58.9 million to the current period's growth in revenues. Revenues increased 15.9% compared to the prior period when adjusted for unfavorable foreign exchange impact of $27.3 million.

Gross profit, reported in accordance with U.S. generally accepted accounting principles ("GAAP"), was $304.8 million, up 10.7% from $275.3 million in the second quarter last year. GAAP gross profit as a percent of revenues was 42.6% compared to 43.0% in the second quarter of 2014. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $305.3 million, up 10.5% from $276.4 million in the second quarter last year. Non-GAAP gross profit as a percent of revenues was 42.7% compared to 43.1% in the second quarter of 2014.

GAAP earnings per diluted share decreased 26.4% to $0.70 from $0.95 in the second quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 9.7% to $1.14 from $1.04. See tables below.

FIRST SIX MONTHS RESULTS

Revenues for the six months ended June 30, 2015 were $1.38 billion, up 13.9% from $1.21 billion in the same period last year. Acquisitions contributed approximately $145.2 million to the current year's growth in revenues. Revenues increased 18.1% compared with the prior period when adjusted for unfavorable foreign exchange impact of $50.4 million.

GAAP gross profit was $586.2 million, up 10.4% from $530.8 million in the same period last year. GAAP gross profit as a percent of revenues was 42.5% compared to 43.8% in the same period last year. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $586.7 million, up 10.2% from $532.5 million in the same period as last year. Non-GAAP gross profit as a percent of revenues was 42.5% compared to 44.0% in the same period as last year.

GAAP earnings per diluted share decreased 15.6% to $1.57 from $1.87 in 2014. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 6.7% to $2.22 from $2.08. 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
2015 2014 $ % 2015 2014 $ %
Total As Reported Revenues (GAAP) $715.7 $640.8 $74.9 11.7% $1,379.0 $1,210.8 $168.2 13.9%
Adjustment for Foreign Exchange 27.3 27.3 50.4 50.4
Subtotal (non-GAAP): 743.0 640.8 102.2 15.9% 1,429.4 1,210.8 218.6 18.1%
Adjustment for Acquisitions (109.1) (50.2) (58.9) (195.4) (50.2) (145.2)
Adjustment for Regulated Returns and Recall Management Services (24.4) (24.7) 0.3 (40.6) (47.8) 7.2
Subtotal (non-GAAP): $609.5 $565.9 $43.6 7.7% $1,193.4 $1,112.8 $80.6 7.2%
Domestic/ International Breakdown:
Domestic Revenues $518.2 $452.3 $65.9 14.6% $990.4 $842.1 $148.3 17.6%
International Revenues 197.5 188.5 9.0 4.8% 388.6 368.7 19.9 5.4%
Total As Reported Revenues (GAAP) $715.7 $640.8 $74.9 11.7% $1,379.0 $1,210.8 $168.2 13.9%

(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 June 30, Six Months Ended June 30,
2015 2014 2015 2014
$ % of
Rev
$ % of
Rev
$ % of
Rev
$ % of
Rev
GAAP Gross Profit $304,824 42.6% $275,304 43.0% $586,155 42.5% $530,773 43.8%
Plant Conversion Expenses 514 0.1% 1,115 0.2% 514 0.0% 1,689 0.1%
Non-GAAP Gross Profit $305,338 42.7% $276,419 43.1% $586,669 42.5% $532,462 44.0%

(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 June 30, Six Months Ended June 30,
Change Change
2015 2014 $ % 2015 2014 $ %
GAAP EPS $0.70 $0.95 $(0.25) (26.4)% $1.57 $1.87 $(0.29) (15.6)%
Acquisition Expenses 0.03 0.05 0.06 0.08
Integration Expenses 0.07 0.04 0.13 0.06
Change in Fair Value of Contingent Consideration 0.00 (0.01) (0.01) 0.05
Litigation Expenses 0.32 0.00 0.33 0.01
Plant Conversion and Restructuring Expenses 0.03 0.01 0.12 0.01
Non-GAAP EPS (Adjusted) $1.14 $1.04 $0.10 9.7% $2.22 $2.08 $0.14 6.7%

(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 $178.7 million and $238.3 million for the six months ended June 30, 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)
June 30, December 31,
2015 2014
ASSETS
Current Assets:
Cash and cash equivalents $32,956 $22,236
Short-term investments 103 380
Accounts receivable, net 524,134 465,473
Deferred income taxes 28,327 28,322
Prepaid expenses 33,202 30,632
Other current assets 41,471 33,173
Total Current Assets 660,193 580,216
Property, plant and equipment, net 468,960 460,408
Goodwill 2,454,092 2,418,832
Intangible assets, net 908,176 909,645
Other assets 35,523 32,621
Total Assets $4,526,944 $4,401,722
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt $129,270 $131,969
Accounts payable 143,833 114,596
Accrued liabilities 151,310 131,743
Deferred revenues 18,560 21,624
Other current liabilities 66,762 61,599
Total Current Liabilities 509,735 461,531
Long-term debt, net of current portion 1,538,736 1,527,246
Deferred income taxes 428,392 431,643
Other liabilities 68,060 64,117
Equity:
Common stock 848 849
Additional paid-in capital 354,639 289,211
Accumulated other comprehensive loss (180,907) (138,419)
Retained earnings 1,788,123 1,743,371
Total Stericycle, Inc. Equity 1,962,703 1,895,012
Noncontrolling interests 19,318 22,173
Total Equity 1,982,021 1,917,185
Total Liabilities and Equity $4,526,944 $4,401,722
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,
2015 2014 2015 2014
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $715,689 100.0% $640,822 100.0% $1,379,008 100.0% $1,210,777 100.0%
Cost of revenues ("COR") exclusive of depreciation and adjusting items shown below 396,279 55.4% 349,301 54.5% 763,619 55.4% 650,487 53.7%
Depreciation 14,072 2.0% 15,102 2.4% 28,720 2.1% 27,828 2.3%
Total cost of revenues 410,351 57.3% 364,403 56.9% 792,339 57.5% 678,315 56.0%
Gross profit (non-GAAP) 305,338 42.7% 276,419 43.1% 586,669 42.5% 532,462 44.0%
Selling, general and administrative expenses ("SG&A") exclusive of depreciation, amortization and adjusting items shown below 122,436 17.1% 109,329 17.1% 237,867 17.2% 209,509 17.3%
Depreciation 4,387 0.6% 3,977 0.6% 8,505 0.6% 7,292 0.6%
Amortization 8,921 1.2% 8,402 1.3% 17,718 1.3% 15,717 1.3%
Total SG&A expense 135,744 19.0% 121,708 19.0% 264,090 19.2% 232,518 19.2%
Income from operations (non-GAAP) exclusive of adjusting items shown below 169,594 23.7% 154,711 24.1% 322,579 23.4% 299,944 24.8%
Adjusting items:
Plant conversion expenses (COR) 514 0.1% 1,115 0.2% 514 0.0% 1,689 0.1%
Acquisition expenses (SG&A) 2,986 0.4% 3,979 0.6% 6,282 0.5% 7,200 0.6%
Integration expenses (SG&A) 8,924 1.2% 4,679 0.7% 17,810 1.3% 7,164 0.6%
Change in fair value of contingent consideration (SG&A) 35 0.0% (836) -0.1% (640) 0.0% 3,953 0.3%
Litigation expenses (SG&A) 44,827 6.3% 396 0.1% 46,950 3.4% 1,901 0.2%
Plant conversion and restructuring expenses (SG&A) 2,544 0.4% -- -- 14,846 1.1% -- --
Income from operations (GAAP) 109,764 15.3% 145,378 22.7% 236,817 17.2% 278,037 23.0%
Other income (expense):
Interest expense, net (16,390) -2.3% (16,368) -2.6% (34,988) -2.5% (31,266) -2.6%
Other expense, net (1,604) -0.2% (392) -0.1% (2,202) -0.2% (1,092) -0.1%
Total other expense (17,994) -2.5% (16,760) -2.6% (37,190) -2.7% (32,358) -2.7%
Income before income taxes 91,770 12.8% 128,618 20.1% 199,627 14.5% 245,679 20.3%
Income tax expense 30,874 4.3% 45,941 7.2% 62,921 4.6% 83,232 6.9%
Net income 60,896 8.5% 82,677 12.9% 136,706 9.9% 162,447 13.4%
Less: net income attributable to noncontrolling interests 447 0.1% 741 0.1% 799 0.1% 1,362 0.1%
Net income attributable to Stericycle, Inc. $60,449 8.4% $81,936 12.8% $135,907 9.9% $161,085 13.3%
Earnings per share - diluted $0.70 $0.95 $1.57 $1.87
Weighted average number of common shares outstanding - diluted 86,221,034 85,982,588 86,292,816 86,300,292
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
June 30,
2015 2014
Operating Activities:
Net income $136,706 $162,447
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense 10,904 9,124
Excess tax benefit of stock options exercised (10,899) (7,080)
Depreciation 37,225 35,120
Amortization 17,718 15,717
Deferred income taxes 973 8,929
Change in fair value of contingent consideration (640) 3,953
Other, net 6,326 --
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable (51,041) (9,606)
Accounts payable 21,019 10,646
Accrued liabilities 22,571 (6,809)
Deferred revenue (3,156) 2,332
Other assets and liabilities (9,046) 13,575
Net cash provided by operating activities 178,660 238,348
Investing Activities:
Payments for acquisitions, net of cash acquired (61,766) (304,832)
Proceeds from/ (purchases of) investments 271 (2,052)
Capital expenditures (46,794) (43,668)
Net cash used in investing activities (108,289) (350,552)
Financing Activities:
Repayments of long-term debt and other obligations (39,590) (28,005)
Borrowings on foreign bank debt 18,363 96,828
Repayments on foreign bank debt (43,769) (85,192)
Borrowings on term loan 250,000 --
Borrowings on senior credit facility 879,024 933,101
Repayments on senior credit facility (1,072,468) (732,059)
Payments on capital lease obligations (1,951) (1,993)
Payments of deferred financing costs -- (2,280)
Payment for cash flow hedge (8,833) --
Purchases and cancellations of treasury stock (85,149) (137,186)
Proceeds from issuances of common stock 39,208 21,195
Excess tax benefit of stock options exercised 10,899 7,080
Payments to noncontrolling interests (2,603) (732)
Net cash (used)/ provided by in financing activities (56,869) 70,757
Effect of exchange rate changes on cash (2,782) (394)
Net increase/ (decrease) in cash and cash equivalents 10,720 (41,841)
Cash and cash equivalents at beginning of period 22,236 67,167
Cash and cash equivalents at end of period $32,956 $25,326
Non-cash activities:
Net issuance of obligations for acquisitions $47,827 $83,864

CONTACT: FOR FURTHER INFORMATION CONTACT: Investor Relations 847-607-2012

Source:Stericycle, Inc.