FOR FURTHER INFORMATION CONTACT:
FOR IMMEDIATE RELEASE
Frank ten Brink 847-607-2012
Conference call to be held July 28, 2009 at 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 28th by dialing 800-642-1687, access code 17891684. To hear a live simulcast of the call over the internet on www.earnings.com, or to access an audio archive of the call, go to the Investors page on Stericycle’s website atwww.stericycle.com.
STERICYCLE, INC. REPORTS RESULTS
FOR SECOND QUARTER 2009
Lake Forest, Illinois, July 28, 2009—Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter of 2009.
Revenues for the quarter ending June 30, 2009 were $289.3 million, up 4.1% from $277.8 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $20.5 million to the growth in revenues for the quarter. Revenues increased 9.3% compared to the second quarter of 2008 when adjusted for an unfavorable foreign exchange impact of $14.3 million. Regulated returns management services revenues were $18.3 million versus $26.0 million in 2008. Gross profit was $136.5 million, up 10.9% from $123.2 million in the same quarter last year. Gross profit as a percent of revenue was 47.2% versus 44.3% in the second quarter of 2008.
Net income for the second quarter of 2009 was $43.9 million or $0.51 per diluted share compared with net income of $38.7 million or $0.44 per diluted share for the second quarter of 2008. Net income for the second quarter of 2008 included the effect of $0.1 million of charges related to an arbitration settlement, and net income for the second quarter of 2009 included the effect of $0.8 million of transactional expenses related to acquisitions. Adjusted for these charges, the earnings per diluted share increased from $0.44 in the second quarter of 2008 to $0.52 in the second quarter of 2009 or 17.5% (see table below).
For the six months ending June 30, 2009, revenues were $566 million, up 6.3% from $533 million in the same period last year. The unfavorable foreign exchange impact was $30.5 million and regulated returns management services revenues were $38.0 million versus $42.5 million in
the same period last year. Gross profit was $264 million, up 11.7% from $237 million in the same period last year. Gross profit as a percent of revenues was 46.7% versus 44.5% in the same period in 2008. Earnings per diluted share increased 23.1% to $0.97 from $0.79 per diluted share in the same period last year. Net income for the six months ended 2008 included the effect of $3.4 million of charges related to an arbitration settlement, and net income for the six months of 2009 included the effect of $1.2 million of transactional expenses related to acquisitions. Adjusted for these charges, the earnings per diluted share increased from $0.83 to $0.99, or 19.1% (see table below):
Table to reconcile non-GAAP EPS to GAAP EPS | ||||||||
| Three month ended June 30, | Six months ended June 30, | ||||||
| 2009 | 2008 | Change $ | Change % | 2009 | 2008 | Change $ | Change % |
GAAP EPS | $0.51 | $0.44 | $0.07 | 15.6% | $0.97 | $0.79 | $0.18 | 23.1% |
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Transactional expenses related to acquisitions | 0.01 | - |
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| 0.02 | - |
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Arbitration settlement | - | - |
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| - | 0.04 |
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Non-GAAP EPS (adjusted) | $0.52 | $0.44 | $0.08 | 17.5% | $0.99 | $0.83 | $0.16 | 19.1% |
Cash flow from operations was $126.2 million for the first six months of 2009. Cash flow and increased loan balances were used to strengthen our business by acquisitions, capital expenditures and funding share repurchases.
On June 24, 2009, we entered into a three-year term loan credit agreement. Our initial borrowing under this credit agreement was $50 million and on July 23, 2009, we borrowed an additional $145 million. We also have signed commitments for an additional borrowing of $20 million under the term credit agreement. The proceeds of these loans were used to reduce our borrowings under our revolving credit facility. The interest rate on our loans under the new credit agreement is fluctuating and based on LIBOR plus the applicable margin provided in the credit agreement. The applicable margin is based on our leverage ratio and ranges from 2.75% to 3.5%. We anticipate that our after-tax interest costs for the remainder of 2009 will increase by approximately $1.8 million as a result of our borrowings under the new credit agreement.
For more information about Stericycle, please visit our website atwww.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 changes in governmental regulation of medical
waste collection and treatment and increases in transportation and other operating costs, as well as the 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
CONDENSED CONSOLIDATED BALANCE SHEETS
In thousands, except share and per share data | |||||
|
| June 30, |
|
| December 31, |
|
| 2009 |
|
| 2008 |
|
| (Unaudited) |
|
| (Audited) |
ASSETS |
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Current Assets: |
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|
|
Cash and cash equivalents | $ | 2,682 |
| $ | 9,095 |
Short-term investments |
| 977 |
|
| 1,408 |
Accounts receivable, less allowance for doubtful accounts of $7,357 in 2009 and $6,616 in 2008 |
| 163,263 |
|
| 168,598 |
Deferred income taxes |
| 11,121 |
|
| 16,821 |
Prepaid expenses and other current assets |
| 30,660 |
|
| 28,508 |
Total Current Assets |
| 208,703 |
|
| 224,430 |
Property, Plant and Equipment, net |
| 216,971 |
|
| 207,144 |
Other Assets: |
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|
|
|
Goodwill |
| 1,188,946 |
|
| 1,135,778 |
Intangible assets, less accumulated amortization of $15,633 in 2009 and $14,116 in 2008 |
| 203,995 |
|
| 170,624 |
Other |
| 23,067 |
|
| 21,322 |
Total Other Assets |
| 1,416,008 |
|
| 1,327,724 |
Total Assets | $ | 1,841,682 |
| $ | 1,759,298 |
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LIABILITIES AND SHAREHOLDERS' EQUITY |
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Current liabilities: |
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Current portion of long-term debt | $ | 43,917 |
| $ | 38,880 |
Accounts payable |
| 29,821 |
|
| 33,612 |
Accrued liabilities |
| 77,788 |
|
| 93,487 |
Deferred revenues |
| 14,165 |
|
| 13,663 |
Total Current Liabilities |
| 165,691 |
|
| 179,642 |
Long-term debt, net of current portion |
| 741,641 |
|
| 753,846 |
Deferred income taxes |
| 161,698 |
|
| 147,287 |
Other liabilities |
| 6,033 |
|
| 8,043 |
Shareholders' Equity: |
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|
Common stock (par value $.01 per share, 120,000,000
shares authorized, 85,033,935 issued and outstanding
in 2009, 85,252,879 issued and outstanding in 2008) |
| 850 |
|
| 852 |
Additional paid-in capital |
| 58,092 |
|
| 67,776 |
Accumulated other comprehensive income |
| (10,807) |
|
| (32,075) |
Retained earnings |
| 718,484 |
|
| 633,927 |
Total Shareholders' Equity |
| 766,619 |
|
| 670,480 |
Total Liabilities and Shareholders' Equity | $ | 1,841,682 |
| $ | 1,759,298 |
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In thousands, except share and per share data | |||||||||||
| Three months ended June 30, |
| Six months ended June 30, | ||||||||
| 2009 |
| 2008 |
| 2009 |
| 2008 | ||||
| $ | % of Rev |
| $ | % of Rev |
| $ | % of Rev |
| $ | % of Rev |
Revenues | 289,268 | 100.0 |
| 277,786 | 100.0 |
| 566,358 | 100.0 |
| 532,570 | 100.0 |
Cost of revenues | 152,734 | 52.8 |
| 154,632 | 55.7 |
| 302,021 | 53.3 |
| 295,826 | 55.5 |
Gross profit | 136,534 | 47.2 |
| 123,154 | 44.3 |
| 264,337 | 46.7 |
| 236,744 | 44.5 |
SG&A expenses | 54,215 | 18.7 |
| 50,973 | 18.3 |
| 106,087 | 18.7 |
| 97,958 | 18.4 |
Amortization | 1,376 | 0.5 |
| 792 | 0.3 |
| 2,386 | 0.4 |
| 1,844 | 0.3 |
Total SG&A expense and amortization | 55,591 | 19.2 |
| 51,765 | 18.6 |
| 108,473 | 19.2 |
| 99,802 | 18.7 |
Income from operations before acquisitions and other expenses | 80,943 | 28.0 |
| 71,389 | 25.7 |
| 155,864 | 27.5 |
| 136,942 | 25.7 |
Transactional expenses related to acquisitions | 1,330 | 0.5 |
| -- | 0.0 |
| 1,940 | 0.3 |
| -- | 0.0 |
Arbitration settlement and related costs | -- | 0.0 |
| 147 | 0.1 |
| -- | 0.0 |
| 5,499 | 1.0 |
Acquisition integration expenses | 73 | 0.0 |
| 316 | 0.1 |
| 184 | 0.0 |
| 1,029 | 0.2 |
Income from operations | 79,540 | 27.5 |
| 70,926 | 25.5 |
| 153,740 | 27.1 |
| 130,414 | 24.5 |
Other income (expense): |
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Interest income | 49 | 0.0 |
| 157 | 0.1 |
| 223 | 0.0 |
| 559 | 0.1 |
Interest expense | (8,200) | -2.8 |
| (8,139) | -2.9 |
| (16,299) | -2.9 |
| (16,267) | -3.1 |
Other expense, net | (920) | -0.3 |
| (518) | -0.2 |
| (1,729) | -0.3 |
| (961) | -0.2 |
Total other expense | (9,071) | -3.1 |
| (8,500) | -3.1 |
| (17,805) | -3.1 |
| (16,669) | -3.1 |
Income before income taxes | 70,469 | 24.4 |
| 62,426 | 22.5 |
| 135,935 | 24.0 |
| 113,745 | 21.4 |
Income tax expense | 26,567 | 9.2 |
| 23,741 | 8.5 |
| 51,378 | 9.1 |
| 43,396 | 8.1 |
Net income | 43,902 | 15.2 |
| 38,685 | 13.9 |
| 84,557 | 14.9 |
| 70,349 | 13.2 |
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Earnings per share-diluted | 0.51 |
|
| 0.44 |
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| 0.97 |
|
| 0.79 |
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Weighted average number of common shares outstanding-diluted | 86,843,260 |
|
| 88,484,943 |
|
| 86,843,043 |
|
| 88,944,593 |
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STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In thousands | |||||
|
| Six Months Ended June 30, | |||
|
| 2009 |
|
| 2008 |
OPERATING ACTIVITIES: |
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Net income | $ | 84,557 |
| $ | 70,349 |
Adjustments to reconcile net income to net cash provided by operating activities: |
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Loss on sale of assets |
| 62 |
|
| -- |
Write-off of note receivable related to joint venture |
| -- |
|
| 798 |
Stock compensation expense |
| 7,092 |
|
| 5,987 |
Excess tax benefit of stock options exercised |
| (551) |
|
| (4,523) |
Depreciation |
| 16,118 |
|
| 14,793 |
Amortization |
| 2,386 |
|
| 1,844 |
Deferred income taxes |
| 11,976 |
|
| 11,222 |
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: |
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|
|
|
|
Accounts receivable |
| 12,302 |
|
| (9,304) |
Accounts payable |
| (7,806) |
|
| (9,575) |
Accrued liabilities |
| (1,620) |
|
| 10,748 |
Deferred revenues |
| 181 |
|
| 2,982 |
Other assets |
| 1,505 |
|
| (686) |
Net cash provided by operating activities |
| 126,202 |
|
| 94,635 |
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INVESTING ACTIVITIES: |
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|
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|
|
Payments for acquisitions and international investments, net of cash acquired |
| (60,519) |
|
| (33,399) |
Proceeds from maturity of short-term investments |
| 513 |
|
| 129 |
Proceeds from sale of property and equipment |
| 448 |
|
| -- |
Capital expenditures |
| (17,904) |
|
| (22,977) |
Net cash used in investing activities |
| (77,462) |
|
| (56,247) |
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FINANCING ACTIVITIES: |
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|
|
|
|
Repayment of long-term debt |
| (11,383) |
|
| (3,760) |
Net (borrowings) / proceeds on senior credit facility |
| (71,762) |
|
| (29,700) |
Proceeds from term loan |
| 50,000 |
|
| -- |
Proceeds from private placement of long-term note |
| -- |
|
| 100,000 |
Payments of deferred financing costs |
| (888) |
|
| (236) |
Principal payments on capital lease obligations |
| (122) |
|
| (199) |
Purchase/ cancellation of treasury stock |
| (29,975) |
|
| (121,195) |
Proceeds from other issuance of common stock |
| 9,163 |
|
| 9,737 |
Excess tax benefit of stock options exercised |
| 551 |
|
| 4,523 |
Net cash used in financing activities |
| (54,416) |
|
| (40,830) |
Effect of exchange rate changes on cash |
| (737) |
|
| (2,271) |
Net decrease in cash and cash equivalents |
| (6,413) |
|
| (4,713) |
Cash and cash equivalents at beginning of period |
| 9,095 |
|
| 17,108 |
Cash and cash equivalents at end of period | $ | 2,682 |
| $ | 12,395 |
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NON-CASH ACTIVITIES: |
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Net issuance of notes payable for certain acquisitions | $ | 20,756 |
| $ | 30,544 |