Exhibit 99.1
February 7, 2007
STERICYCLE, INC. REPORTS RESULTS
FOR FOURTH QUARTER AND FULL YEAR 2006
Lake Forest, Illinois, February 7, 2007 -Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the fourth quarter and full year of 2006.
FOURTH QUARTER AND FULL YEAR RESULTS
Revenues for the quarter ended December 31, 2006 were $208.7 million, up 25.3% from $166.6 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $28.5 million in revenues for the quarter. Gross profit was $93.0 million, up 25.3% from $74.2 million in the same quarter last year. Gross profit as a percent of revenues was 44.6% for the quarter, which is consistent with the fourth quarter of 2005.
Net income for the fourth quarter of 2006 was $29.0 million or $0.64 per diluted share compared with a net loss of $1.0 million or $0.02 per diluted share for the same quarter last year.
For the year ended December 31, 2006, revenues increased to $789.6 million, up 29.6% from $609.5 million in 2005. Gross profit was $349.9 million, up 30.5% from $268.0 million in the same period a year ago. Gross profit as a percent of revenues was 44.3% versus 44.0% in 2005. Earnings per diluted share were $2.33 versus $1.48 per diluted share in 2005.
In the fourth quarter of 2006, acquisition integration related expenses were $1.0 million, net of tax, primarily related to facility closure costs. Both the quarterly and annual results from 2005 include the effect of the charges for the settlement and related legal expenses of the 3CI class action litigation, the write-down of a note receivable with our former South African joint venture, a licensing legal settlement and loan refinancing expenses, which together reduced net income by $26.3 million or $0.58 per diluted share. In the fourth quarter of 2006 we were reimbursed for $0.6 million, net of tax, of legal expenses related to the 3CI class action litigation.
Diluted earnings per share in the quarter and year ended December 31, 2006 included $0.04 and $0.14 per share, respectively, recorded as a result of the adoption of FASB Statement No. 123R on January 1, 2006.
Cash flow from operations was $160.2 million for the year ended December 31, 2006. Cash flow and increased loan balances were used to strengthen our business and funded $164.0 million in acquisitions and international investments, $42.8 million in stock repurchases and $36.4 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 described 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
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
December 31, December 31,
2006 2005
------------ ------------
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents.............................. $ 13,492 $ 7,825
Short-term investments................................. 2,548 720
Accounts receivable, less allowance for doubtful
accounts of $5,411 in 2006 and $4,810 in 2005........ 133,355 103,703
Parts and supplies..................................... 6,733 5,263
Prepaid expenses....................................... 9,152 6,523
Notes receivable....................................... 2,773 3,164
Deferred income tax.................................... 16,072 13,452
Other current assets................................... 4,171 3,392
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Total current assets............................ 188,296 144,042
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Property, plant and equipment, net....................... 159,164 136,220
Other assets:
Goodwill............................................... 807,134 685,169
Intangible assets, less accumulated amortization of
$11,454 in 2006 and $8,965 in 2005................... 128,396 61,641
Notes receivable....................................... 12,596 10,672
Other.................................................. 9,903 9,916
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Total other assets.............................. 958,029 767,398
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Total assets.......................................... $ 1,305,489 $ 1,047,660
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt...................... $ 22,649 $ 12,044
Accounts payable....................................... 27,741 27,872
Accrued liabilities.................................... 75,434 48,450
Deferred revenue....................................... 11,662 10,394
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Total current liabilities....................... 137,486 98,760
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Long-term debt, net of current portion................... 443,147 348,841
Deferred income taxes.................................... 87,617 71,549
Other liabilities........................................ 12,158 6,876
Common shareholders' equity:
Common stock (par value $.01 per share, 80,000,000
shares authorized, 44,251,965 issued and outstanding
in 2006, 44,149,722 issued and outstanding in 2005).... 443 442
Additional paid-in capital............................... 252,568 259,075
Accumulated other comprehensive income................... 5,229 546
Retained earnings........................................ 366,841 261,571
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Total shareholders' equity...................... 625,081 521,634
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Total liabilities and shareholders' equity............. $ 1,305,489 $ 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............................................... $ 465,796 $ 360,885
Shareholders' equity..................................... 625,081 521,634
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Capitalization........................................... $ 1,090,877 $ 882,519
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
Three Months Ended December 31, Year Ended December 31,
-------------------------------------------- ---------------------------------------------
(unaudited) (unaudited) (unaudited) (audited)
2006 2005 2006 2005
-------------------- --------------------- --------------------- ---------------------
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Revenues............................................................ $ 208,697 100.0 % $ 166,555 100.0 % $ 789,637 100.0 % $ 609,457 100.0 %
Cost of revenues*................................................. 115,667 55.4 92,318 55.4 439,770 55.7 341,420 56.0
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Gross profit 93,030 44.6 74,237 44.6 349,867 44.3 268,037 44.0
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Selling, general and
administrative expenses*........................................ 36,892 17.7 28,153 16.9 141,400 17.9 96,436 15.8
Amortization...................................................... 493 0.2 425 0.3 2,966 0.4 1,596 0.3
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Total SG&A expenses and amortization. 37,385 17.9 28,578 17.2 144,366 18.3 98,032 16.1
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income from operations before
excluded items.................................................. 55,645 26.7 45,659 27.4 205,501 26.0 170,005 27.9
Licensing legal settlement........................................ --- 0.0 1,823 1.1 --- 0.0 1,823 0.3
Write-down fixed assets........................................... --- 0.0 --- 0.0 300 0.0 872 0.1
Acquisition integration related expenses.......................... 1,625 0.8 334 0.2 3,439 0.4 778 0.1
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income from operations.............................................. 54,020 25.9 43,502 26.1 201,762 25.6 166,532 27.3
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Other income (expense):
Interest income................................................... 361 0.2 336 0.2 1,358 0.2 764 0.1
Interest expense.................................................. (7,450) (3.6) (4,163) (2.5) (28,419) (3.6) (13,011) (2.1)
3CI legal settlement (2005) and proceeds from insurance (2006).... 1,025 0.5 (36,481) (21.9) 1,025 0.1 (36,481) (6.0)
Write-down of note receivable with former joint venture........... --- 0.0 (2,495) (1.5) --- 0.0 (2,495) (0.4)
Write-off deferred finance fees................................... --- 0.0 (250) (0.2) --- 0.0 (447) (0.1)
Write-down of investment in securities............................ --- 0.0 --- 0.0 (1,000) (0.1) --- 0.0
Other expense, net................................................ (342) (0.2) (586) (0.4) (2,152) (0.3) (2,882) (0.5)
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Total other income (expense)................................... (6,406) (3.1) (43,639) (26.2) (29,188) (3.7) (54,552) (9.0)
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Income before income taxes.......................................... 47,614 22.8 (137) (0.1) 172,574 21.9 111,980 18.4
Income tax expense.................................................. 18,569 8.9 889 0.5 67,304 8.5 44,826 7.4
----------- -------- ----------- --------- ----------- --------- ----------- ---------
Net income/(loss)................................................... $ 29,405 13.9 % $ (1,026) (0.6)% $ 105,270 13.3 % $ 67,154 11.0
=========== ======== =========== ========= =========== ========= =========== =========
Earnings/(loss) per share - diluted................................. $ 0.64 $ (0.02) $ 2.33 $ 1.48
=========== =========== =========== ===========
Weighted average number of common
shares outstanding - diluted...................................... 45,332,890 45,225,135 45,106,540 45,310,509
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*Stericycle adopted FAS123R on a modified prospective basis on January 1, 2006 therefore 2006 balances include stock compensation expense.
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Year ended
December 31,
----------------------
2006 2005
---------- ----------
(unaudited) (audited)
OPERATING ACTIVITIES:
Net income................................................................. $ 105,270 $ 67,154
Adjustments to reconcile net income to net cash
provided by operating activities:
Stock compensation expense............................................. 10,610 27
Write-off deferred financing fees...................................... -- 447
Write-down of note receivable with former joint venture................ -- 2,495
Write-down of investment in securities................................. 1,000 --
Write-down of licensing intangible..................................... -- 1,431
Loss on sale and impairment of fixed assets............................ 300 872
Excess tax benefit of stock options exercised*......................... (8,427) 7,432
Depreciation........................................................... 24,070 19,835
Amortization........................................................... 2,966 1,596
Deferred income taxes.................................................. 12,937 13,514
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable.................................................... (14,742) (19,679)
Parts and supplies..................................................... (744) (962)
Prepaid expenses and other assets...................................... 4,538 (1,909)
Accounts payable....................................................... (6,003) 7,393
Accrued liabilities.................................................... 28,107 (8,056)
Deferred revenue....................................................... 280 2,737
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Net cash provided by operating activities.................................. 160,162 94,327
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INVESTING ACTIVITIES:
Payments for acquisitions and international
investments, net of cash acquired...................................... (164,015) (139,696)
Purchases of short-term investments, net of proceeds from maturities..... (1,828) (621)
Net proceeds from sale of assets from acquisition........................ -- 10,328
Proceeds from sale of equipment.......................................... 832 302
Capital expenditures..................................................... (36,414) (26,314)
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Net cash used in investing activities...................................... (201,425) (156,001)
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FINANCING ACTIVITIES:
Proceeds from issuance of note payable................................... 5,953 735
Repayment of long-term debt.............................................. (30,735) (12,845)
Net repayments on 2001 senior credit facility............................ -- (171,353)
Net borrowings on 2005 senior credit facility............................ 96,464 291,669
Payments of deferred financing fees...................................... (453) (1,484)
Net principal payments on capital lease obligations...................... (816) (795)
Excess tax benefit of stock options exercised*........................... 8,427 --
Purchase/cancellation of treasury stock.................................. (42,757) (60,657)
Proceeds from other issuances of common stock............................ 16,464 14,230
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Net cash provided by financing activities.................................. 52,547 59,500
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Effect of exchange rate changes on cash.................................... (5,617) 2,149
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Net increase (decrease) in cash and cash equivalents....................... 5,667 (25)
Cash and cash equivalents at beginning of year............................. 7,825 7,850
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Cash and cash equivalents at end of year................................... $ 13,492 $ 7,825
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Non-cash activities:
Net issuances of common stock for certain acquisitions..................... $ 750 $ --
Net issuances of notes payable for certain acquisitions.................... $ 30,157 $ 49,736
*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.