Exhibit 99.1
July 27, 2006
STERICYCLE, INC. REPORTS RESULTS
FOR SECOND QUARTER 2006
Lake Forest, Illinois, July 27, 2006 -Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter of 2006.
SECOND QUARTER AND YEAR TO DATE RESULTS
Revenues for the quarter ended June 30, 2006 were $198.4 million, up 33.0% from $149.1 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $32.6 million in revenues for the quarter. Gross profit was $87.6 million, up 34.1% from $65.3 million in the same quarter last year. Gross profit as a percent of revenues was 44.1% versus 43.8% in the second quarter of 2005.
Net income for the second quarter of 2006 was $25.2 million or $0.56 per diluted share compared with net income of $23.0 million or $0.51 per diluted share for the same quarter last year. During the quarter we wrote off a $1.0 million investment ($0.6 million net of tax or $0.014 per share).
For the six months ended June 30, 2006, revenues increased to $377.7 million, up 30.4% from $289.7 million in the same period a year ago. Gross profit was $166.3 million, up 31.8% from $126.2 million in the same period a year ago. Gross profit as a percentage of revenues was 44.0% versus 43.6% in in the same period in 2005. Earnings per diluted share increased 8.8% to $1.08 from $0.99 per diluted share in the same period a year ago.
Net income in the second quarter of 2006 included $1.6 million of stock compensation expense ($2.7 million pre-tax) or $0.04 per diluted share recorded as a result of the adoption of FASB Statement No. 123R on January 1, 2006. Net income for the first six months of 2006 included $3.2 million of stock compensation ($5.3 million pre-tax) or $0.07 per diluted share.
Debt increased in the first six months due to acquisitions resulting in our total debt to capitalization percentage ratio at June 30, 2006 increasing to 45.0% from 40.9% at December 31, 2005.
Cash flow from operations was $64.3 million for the first six months of 2006. Cash flow and increased loan balances were used to strenghten our business and funded $126.1 million in acquisitions and international investments, $13.9 million in stock repurchases and $15.7 million in capital spending.
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 difficulties in completing the integration of acquired businesses, changes in governmental regulation of medical waste collection and treatment, and increases in transportation and other operating costs, as well as the various other factors identified 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, EXCEPT SHARE AND PER SHARE DATA)
June 30, December 31,
2006 2005
------------ ------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 4,608 $ 7,825
Short-term investments................................. 2,684 720
Accounts receivable, less allowance for doubtful
accounts of $4,350 in 2006 and $4,810 in 2005........ 130,035 103,703
Parts and supplies..................................... 6,985 5,263
Prepaid expenses....................................... 7,350 6,523
Notes receivable....................................... 3,111 3,164
Deferred tax asset..................................... 14,899 13,452
Other current assets................................... 4,431 3,392
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Total current assets............................ 174,103 144,042
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Property, plant and equipment, net....................... 150,730 136,220
Other assets:
Goodwill,net........................................... 792,961 685,169
Intangible assets, less accumulated amortization of
$10,133 in 2006 and $8,965 in 2005.................... 97,344 61,641
Notes receivable....................................... 11,807 10,672
Other.................................................. 8,460 9,916
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Total other assets.............................. 910,572 767,398
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Total assets.......................................... $ 1,235,405 $ 1,047,660
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt...................... $ 13,976 $ 12,044
Accounts payable....................................... 28,393 27,872
Accrued liabilities.................................... 61,034 48,450
Deferred revenue....................................... 13,287 10,394
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Total current liabilities....................... 116,690 98,760
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Long-term debt, net of current portion................... 456,825 348,841
Deferred income taxes.................................... 78,095 71,549
Other liabilities........................................ 9,387 6,876
Common shareholders' equity:
Common stock (par value $.01 per share, 80,000,000
shares authorized, 44,230,875 issued and outstanding
in 2006, 44,149,722 issued and outstanding in 2005).... 444 442
Additional paid-in capital............................... 260,662 259,075
Accumulated other comprehensive income................... 3,039 546
Retained earnings........................................ 310,263 261,571
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Total shareholders' equity...................... 574,408 521,634
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Total liabilities and shareholders' equity............. $ 1,235,405 $ 1,047,660
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Total debt to capitalization percentage ratio............ 45.0 % 40.9 %
Calculation of total debt to capitalization percentage ratio:
Total debt............................................... $ 470,801 $ 360,885
Shareholders' equity..................................... 574,408 521,634
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Capitalization........................................... $ 1,045,209 $ 882,519
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended June 30, Six Months Ended June 30,
-------------------------------------------- ---------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
2006 2005 2006 2005
-------------------- --------------------- --------------------- ---------------------
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Revenues.................................. $ 198,424 100.0 % $ 149,148 100.0 % $ 377,673 100.0 % $ 289,726 100.0
Cost of revenues*....................... 110,863 55.9 83,869 56.2 211,359 56.0 163,514 56.4
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Gross profit 87,561 44.1 65,279 43.8 166,314 44.0 126,212 43.6
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Selling, general and
administrative expenses*.............. 35,852 18.1 22,740 15.2 68,717 18.2 44,192 15.3
Amortization............................ 784 0.4 376 0.3 1,295 0.3 672 0.2
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Total SG&A expenses and amortization. 36,636 18.5 23,116 15.5 70,012 18.5 44,864 15.5
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income from operations before
acquisition related expenses.......... 50,925 25.7 42,163 28.3 96,302 25.5 81,348 28.1
Write-down of fixed assets.............. 300 0.2 --- 0.0 300 0.1 --- 0.0
Acquisition related expenses............ 664 0.3 180 0.1 1,295 0.3 270 0.1
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income from operations.................... 49,961 25.2 41,983 28.1 94,707 25.1 81,078 28.0
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Other income (expense):
Interest income......................... 251 0.1 133 0.1 507 0.1 200 0.1
Interest expense........................ (7,253) (3.7) (3,254) (2.2) (13,159) (3.5) (5,597) (1.9)
Write-off deferred finance fees (2005).. --- 0.0 (197) (0.1) --- 0.0 (197) (0.1)
Write-down of investment in securities.. (1,000) (0.5) --- 0.0 (1,000) (0.3) --- 0.0
Other expense, net...................... (700) (0.4) (909) (0.6) (1,230) (0.3) (1,807) (0.6)
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Total other income (expense)......... (8,702) (4.4) (4,227) (2.8) (14,882) (3.9) (7,401) (2.6)
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income before income taxes................ 41,259 20.8 37,756 25.3 79,825 21.1 73,677 25.4
Income tax expense........................ 16,091 8.1 14,774 9.9 31,132 8.2 28,880 10.0
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Net income................................ $ 25,168 12.7 % $ 22,982 15.4 % $ 48,693 12.9 % $ 44,797 15.5
=========== ======== =========== ========= =========== ========= =========== =========
Earnings per share - diluted.............. $ 0.56 $ 0.51 $ 1.08 $ 0.99
=========== =========== =========== ===========
Weighted average number of common
shares outstanding - diluted............ 45,310,665 45,064,080 45,237,200 45,285,644
=========== =========== =========== ===========
*Stericycle adopted FAS123R on a modified prospective basis on January 1, 2006 therefore 2006 balances include stock compensation expense.
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the six months
ended June 30,
----------------------
2006 2005
---------- ----------
(unaudited)
OPERATING ACTIVITIES:
Net income..................................................... $ 48,693 $ 44,797
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock compensation expense................................. 5,274 18
Write-off deferred financing fees.......................... -- 197
Write-down of investment in securities..................... 1,000 --
Write-down of fixed assets................................. 300 --
Excess tax benefit of stock options exercised*............. -- 3,291
Depreciation............................................... 11,713 9,698
Amortization............................................... 1,295 672
Deferred income taxes...................................... 3,716 7,432
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable........................................ (12,181) (8,496)
Parts and supplies......................................... (996) (419)
Prepaid expenses and other assets.......................... 2,212 (6,166)
Accounts payable........................................... (4,999) 1,174
Accrued liabilities........................................ 6,399 1,093
Deferred revenue........................................... 1,923 3,837
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Net cash provided by operating activities...................... 64,349 57,128
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INVESTING ACTIVITIES:
Payments for acquisitions and international
investments, net of cash acquired.......................... (126,091) (34,390)
Purchases of short-term investments.......................... (1,964) (275)
Proceeds from sale of equipment.............................. 215 79
Capital expenditures......................................... (15,720) (13,816)
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Net cash used in investing activities.......................... (143,560) (48,402)
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FINANCING ACTIVITIES:
Proceeds from issuance of note payable....................... 4,572 642
Repayment of long-term debt.................................. (12,452) (1,739)
Net repayments on 2001 senior credit facility................ -- (171,353)
Net borrowings on 2005 senior credit facility................ 89,120 198,853
Payments of deferred financing fees.......................... -- (97)
Principal payments on capital lease obligations.............. (749) (425)
Excess tax benefit of stock options exercised*............... 3,141 --
Purchase/cancellation of treasury stock...................... (13,866) (39,243)
Proceeds from other issuances of common stock................ 7,925 6,535
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Net cash provided by (used in) financing activities............ 77,961 (6,827)
---------- ----------
Effect of exchange rate changes on cash........................ (1,697) 1,044
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Net (decrease) increase in cash and cash equivalents........... (3,217) 2,943
Cash and cash equivalents at beginning of period............... 7,825 7,850
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Cash and cash equivalents at end of period..................... $ 4,608 $ 10,793
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Non-cash activities:
Net issuances of notes payable for certain acquisitions........ $ 27,245 $ 24,650
*Stericycle adopted FAS123R on a modified prospective basis January 1, 2006 therefore the presentation of the tax benefit of stock options exercised is presented differently in 2006 versus 2005.
