Exhibit 99.1
October 25, 2006
STERICYCLE, INC. REPORTS RESULTS
FOR THIRD QUARTER 2006
Lake Forest, Illinois, October 25, 2006 -Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third quarter of 2006.
THIRD QUARTER AND YEAR TO DATE RESULTS
Revenues for the quarter ended September 30, 2006 were $203.3 million, up 32.7% from $153.2 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $30.0 million in revenues for the quarter. Gross profit was $90.5 million, up 33.9% from $67.6 million in the same quarter last year. Gross profit as a percent of revenues was 44.5% versus 44.1% in the third quarter of 2005.
Net income for the third quarter of 2006 was $27.5 million or $0.61 per diluted share compared with net income of $23.4 million or $0.52 per diluted share for the same quarter last year.
For the nine months ended September 30, 2006, revenues increased to $580.9 million, up 31.2% from $442.9 million in the same period a year ago. Gross profit was $256.8 million, up 32.5% from $193.8 million in the same period a year ago. Gross profit as a percentage of revenues was 44.2% versus 43.8% in in the same period in 2005. Earnings per diluted share was $1.68 versus $1.50 per diluted share in the same period a year ago.
Diluted earnings per share in the quarter and nine months ended September 30, 2006 included $0.04 and $0.12 per share, respectively, recorded as a result of the adoption of FASB Statement No. 123R on January 1, 2006.
Cash flow from operations was $114.7 million for the first nine months of 2006. Cash flow and increased loan balances were used to strengthen our business and funded $142.9 million in acquisitions and international investments, $26.1 million in stock repurchases and $25.6 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)
September 30, December 31,
2006 2005
------------ ------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 4,180 $ 7,825
Short-term investments................................. 3,621 720
Accounts receivable, less allowance for doubtful
accounts of $4,952 in 2006 and $4,810 in 2005........ 136,414 103,703
Parts and supplies..................................... 7,255 5,263
Prepaid expenses....................................... 9,404 6,523
Notes receivable....................................... 2,942 3,164
Deferred tax asset..................................... 15,899 13,452
Other current assets................................... 3,857 3,392
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Total current assets............................ 183,572 144,042
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Property, plant and equipment, net....................... 154,287 136,220
Other assets:
Goodwill,net........................................... 780,719 685,169
Intangible assets, less accumulated amortization of
$11,071 in 2006 and $8,965 in 2005................... 129,272 61,641
Notes receivable....................................... 12,596 10,672
Other.................................................. 9,580 9,916
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Total other assets.............................. 932,167 767,398
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Total assets.......................................... $ 1,270,026 $ 1,047,660
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt...................... $ 29,041 $ 12,044
Accounts payable....................................... 26,926 27,872
Accrued liabilities.................................... 82,439 48,450
Deferred revenue....................................... 12,397 10,394
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Total current liabilities....................... 150,803 98,760
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Long-term debt, net of current portion................... 422,526 348,841
Deferred income taxes.................................... 82,308 71,549
Other liabilities........................................ 9,116 6,876
Common shareholders' equity:
Common stock (par value $.01 per share, 80,000,000
shares authorized, 44,404,559 issued and outstanding
in 2006, 44,149,722 issued and outstanding in 2005).... 444 442
Additional paid-in capital............................... 262,595 259,075
Accumulated other comprehensive income................... 4,439 546
Retained earnings........................................ 337,795 261,571
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Total shareholders' equity...................... 605,273 521,634
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Total liabilities and shareholders' equity............. $ 1,270,026 $ 1,047,660
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Total debt to capitalization percentage ratio............ 42.7 % 40.9 %
Calculation of total debt to capitalization percentage ratio:
Total debt............................................... $ 451,567 $ 360,885
Shareholders' equity..................................... 605,273 521,634
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Capitalization........................................... $ 1,056,840 $ 882,519
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended September 30, Nine Months Ended September 30,
-------------------------------------------- ---------------------------------------------
(unaudited) (unaudited) (unaudited) (unaudited)
2006 2005 2006 2005
-------------------- --------------------- --------------------- ---------------------
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Revenues.................................. $ 203,267 100.0 % $ 153,176 100.0 % $ 580,940 100.0 % $ 442,902 100.0
Cost of revenues*....................... 112,744 55.5 85,588 55.9 324,103 55.8 249,102 56.2
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Gross profit 90,523 44.5 67,588 44.1 256,837 44.2 193,800 43.8
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Selling, general and
administrative expenses*.............. 35,791 17.6 24,091 15.7 104,508 18.0 68,283 15.4
Amortization............................ 1,178 0.6 499 0.3 2,473 0.4 1,171 0.3
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Total SG&A expenses and amortization. 36,969 18.2 24,590 16.1 106,981 18.4 69,454 15.7
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income from operations before
acquisition related expenses.......... 53,554 26.3 42,998 28.1 149,856 25.8 124,346 28.1
Write-down of fixed assets.............. --- 0.0 872 0.6 300 0.1 872 0.2
Acquisition related expenses............ 519 0.3 174 0.1 1,814 0.3 444 0.1
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income from operations.................... 53,035 26.1 41,952 27.4 147,742 25.4 123,030 27.8
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Other income (expense):
Interest income......................... 490 0.2 228 0.1 997 0.2 428 0.1
Interest expense........................ (7,810) (3.8) (3,251) (2.1) (20,969) (3.6) (8,848) (2.0)
Write-off deferred finance fees (2005).. --- 0.0 --- 0.0 --- 0.0 (197) (0.0)
Write-down of investment in securities.. --- 0.0 --- 0.0 (1,000) (0.2) --- 0.0
Other expense, net...................... (580) (0.3) (489) (0.3) (1,810) (0.3) (2,296) (0.5)
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Total other income (expense)......... (7,900) (3.9) (3,512) (2.3) (22,782) (3.9) (10,913) (2.5)
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income before income taxes................ 45,135 22.2 38,440 25.1 124,960 21.5 112,117 25.3
Income tax expense........................ 17,603 8.7 15,057 9.8 48,735 8.4 43,937 9.9
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Net income................................ $ 27,532 13.5 % $ 23,383 15.3 % $ 76,225 13.1 % $ 68,180 15.4
=========== ======== =========== ========= =========== ========= =========== =========
Earnings per share - diluted.............. $ 0.61 $ 0.52 $ 1.68 $ 1.50
=========== =========== =========== ===========
Weighted average number of common
shares outstanding - diluted............ 45,247,634 45,401,778 45,242,772 45,332,089
=========== =========== =========== ===========
*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 nine months
ended September 30,
----------------------
2006 2005
---------- ----------
(unaudited)
OPERATING ACTIVITIES:
Net income..................................................... $ 76,225 $ 68,180
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock compensation expense................................. 7,927 18
Write-off deferred financing fees.......................... -- 197
Write-down of investment in securities..................... 1,000 --
Write-down of fixed assets................................. 300 872
Excess tax benefit of stock options exercised*............. (7,783) 6,098
Depreciation............................................... 17,636 14,564
Amortization............................................... 2,473 1,171
Deferred income taxes...................................... 7,814 11,172
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable........................................ (18,131) (12,249)
Parts and supplies......................................... (1,266) (234)
Prepaid expenses and other assets.......................... (457) (7,805)
Accounts payable........................................... (6,466) 6,614
Accrued liabilities........................................ 34,430 (1,272)
Deferred revenue........................................... 1,015 3,595
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Net cash provided by operating activities...................... 114,717 90,921
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INVESTING ACTIVITIES:
Payments for acquisitions and international
investments, net of cash acquired.......................... (142,922) (46,888)
Purchases of short-term investments.......................... (2,901) (191)
Proceeds from sale of equipment.............................. 601 206
Capital expenditures......................................... (25,556) (20,140)
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Net cash used in investing activities.......................... (170,778) (67,013)
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FINANCING ACTIVITIES:
Proceeds from issuance of note payable....................... 5,953 735
Repayment of long-term debt.................................. (13,936) (4,515)
Net repayments on 2001 senior credit facility................ -- (171,353)
Net borrowings on 2005 senior credit facility................ 69,592 182,000
Payments of deferred financing fees.......................... (453) (97)
Principal payments on capital lease obligations.............. (669) (608)
Excess tax benefit of stock options exercised*............... 7,783 --
Purchase/cancellation of treasury stock...................... (26,060) (47,326)
Proceeds from other issuances of common stock................ 13,122 11,097
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Net cash provided by (used in) financing activities............ 55,332 (30,067)
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Effect of exchange rate changes on cash........................ (2,916) 2,104
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Net (decrease) increase in cash and cash equivalents........... (3,645) (4,055)
Cash and cash equivalents at beginning of period............... 7,825 7,850
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Cash and cash equivalents at end of period..................... $ 4,180 $ 3,795
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Non-cash activities:
Net issuances of common stock for certain acquisitions......... $ 750 $ --
Net issuances of notes payable for certain acquisitions........ $ 28,670 $ 37,205
*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.