FOR FURTHER INFORMATION CONTACT:
FOR IMMEDIATE RELEASE
Frank ten Brink 847-607-2012
Conference call to be held October 27, 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 November 27th by dialing 800-642-1687, access code 30587273. 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 THIRD QUARTER 2009
Lake Forest, Illinois, October 27, 2009—Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third quarter of 2009.
Revenues for the quarter ending September 30, 2009 were $297.8 million, up 7.5% from $277.1 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $19.3 million to the growth in revenues for the quarter. Revenues increased 11.1% compared to the third quarter of 2008 when adjusted for unfavorable foreign exchange impacts of $10.1 million. Regulated returns management services revenues for the quarter were $16.0 million compared with $16.1 million for the third quarter of 2008. Gross profit was $140.9 million, up 14.5% from $123.0 million in the same quarter last year. Gross profit as a percent of revenue was 47.3% compared with 44.4% in the third quarter of 2008.
Net income for the third quarter of 2009 was $46.5 million or $0.54 per diluted share compared with net income of $39.2 million or $0.45 per diluted share for the third quarter of 2008. Net income for the third quarter of 2008 included the effect of $0.1 million of charges related to an arbitration settlement, and net income for the third quarter of 2009 included the effect of $3.3 million of transactional expenses related to acquisitions offset by $1.8 million net release of prior years’ tax reserves. Adjusted for these charges, earnings per diluted share increased from $0.45 in the third quarter of 2008 to $0.55 in the third quarter of 2009 or up 23.6% (see table below).
For the nine months ending September 30, 2009, revenues were $864.2 million, up 6.7% from $809.7 million in the same period last year. Revenues
increased 11.7% compared with the prior year-to-date when adjusted for unfavorable foreign exchange impacts of $40.6 million. Regulated returns management services revenues were $54.0 million compared with $58.6 million in the same period last year. Gross profit was $405.3 million, up 12.6% from $359.8 million in the same period last year. Gross profit as a percent of revenues was 46.9% versus 44.4% in the same period in 2008. Earnings per diluted share increased 22.0% to $1.51 from $1.24 per diluted share in the same period last year. Net income for the nine months of 2008 included the effect of $3.5 million of charges related to an arbitration settlement, and net income for the nine months of 2009 included the effect of $4.8 million of transactional expenses related to acquisitions offset by $1.8 million net release of prior years’ tax reserves. Adjusted for these charges, the earnings per diluted s hare increased from $1.28 to $1.54, or 21.0% (see table below):
Table to reconcile GAAP EPS to non-GAAP EPS | ||||||||
| Three month ended September 30, | Nine months ended September 30, | ||||||
| 2009 | 2008 | Change $ | Change % | 2009 | 2008 | Change $ | Change % |
GAAP EPS | $0.54 | $0.45 | $0.09 | 20.1% | $1.51 | $1.24 | $0.27 | 22.0% |
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Transactional expenses related to acquisitions | 0.04 | - |
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| 0.06 | - |
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Arbitration settlement | - | - |
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| - | 0.04 |
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Net release of prior years’ tax reserves | (0.02) | - |
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| (0.02) | - |
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Non-GAAP EPS (adjusted) | $0.55 | $0.45 | $0.09 | 23.6% | $1.54 | $1.28 | $0.27 | 21.0% |
Cash flow from operations was $213.9 million for the first nine months of 2009. Cash flow and increased loan balances were used to strengthen our business by acquisitions, to fund share repurchases and capital expenditures.
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 | |||||
|
| September 30, |
|
| December 31, |
|
| 2009 |
|
| 2008 |
|
| (Unaudited) |
|
| (Audited) |
ASSETS |
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Current Assets: |
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Cash and cash equivalents | $ | 14,286 |
| $ | 9,095 |
Short-term investments |
| 1,519 |
|
| 1,408 |
Accounts receivable, less allowance for doubtful accounts of $7,358 in 2009 and $6,616 in 2008 |
| 167,946 |
|
| 168,598 |
Deferred income taxes |
| 10,482 |
|
| 16,821 |
Prepaid expenses and other current assets |
| 29,101 |
|
| 28,508 |
Total Current Assets |
| 223,334 |
|
| 224,430 |
Property, Plant and Equipment, net |
| 227,327 |
|
| 207,144 |
Other Assets: |
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Goodwill |
| 1,222,025 |
|
| 1,135,778 |
Intangible assets, less accumulated amortization of $16,923 in 2009 and $14,116 in 2008 |
| 227,718 |
|
| 170,624 |
Other |
| 29,063 |
|
| 21,322 |
Total Other Assets |
| 1,478,806 |
|
| 1,327,724 |
Total Assets | $ | 1,929,467 |
| $ | 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 | $ | 58,001 |
| $ | 38,880 |
Accounts payable |
| 33,412 |
|
| 33,612 |
Accrued liabilities |
| 99,464 |
|
| 93,487 |
Deferred revenues |
| 14,202 |
|
| 13,663 |
Total Current Liabilities |
| 205,079 |
|
| 179,642 |
Long-term debt, net of current portion |
| 768,041 |
|
| 753,846 |
Deferred income taxes |
| 165,373 |
|
| 147,287 |
Other liabilities |
| 4,179 |
|
| 7,885 |
Shareholders' Equity: |
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Common stock (par value $.01 per share, 120,000,000
shares authorized, 84,297,521 issued and outstanding
in 2009, 85,252,879 issued and outstanding in 2008) |
| 843 |
|
| 852 |
Additional paid-in capital |
| 23,011 |
|
| 67,776 |
Accumulated other comprehensive income |
| (13,696) |
|
| (32,075) |
Retained earnings |
| 765,010 |
|
| 633,927 |
Total Stericycle, Inc. Shareholders’ Equity |
| 775,168 |
|
| 670,480 |
Noncontrolling interest |
| 11,627 |
|
| 158 |
Total Shareholders' Equity |
| 786,795 |
|
| 670,638 |
Total Liabilities and Shareholders' Equity | $ | 1,929,467 |
| $ | 1,759,298 |
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
In thousands, except share and per share data | |||||||||||
| Three months ended September 30, |
| Nine months ended September 30, | ||||||||
| 2009 |
| 2008 |
| 2009 |
| 2008 | ||||
| $ | % of Rev |
| $ | % of Rev |
| $ | % of Rev |
| $ | % of Rev |
Revenues | 297,836 | 100.0 |
| 277,098 | 100.0 |
| 864,194 | 100.0 |
| 809,668 | 100.0 |
Cost of revenues | 156,919 | 52.7 |
| 154,069 | 55.6 |
| 458,940 | 53.1 |
| 449,895 | 55.6 |
Gross profit | 140,917 | 47.3 |
| 123,029 | 44.4 |
| 405,254 | 46.9 |
| 359,773 | 44.4 |
SG&A expenses | 56,190 | 18.9 |
| 50,115 | 18.1 |
| 162,277 | 18.8 |
| 148,073 | 18.3 |
Amortization | 1,434 | 0.5 |
| 1,100 | 0.4 |
| 3,820 | 0.4 |
| 2,944 | 0.4 |
Total SG&A expense and amortization | 57,624 | 19.3 |
| 51,215 | 18.5 |
| 166,097 | 19.2 |
| 151,017 | 18.7 |
Income from operations before acquisitions and other expenses | 83,293 | 28.0 |
| 71,814 | 25.9 |
| 239,157 | 27.7 |
| 208,756 | 25.8 |
Transactional expenses related to acquisitions | 3,478 | 1.2 |
| -- | 0.0 |
| 5,418 | 0.6 |
| -- | 0.0 |
Arbitration settlement and related costs | -- | 0.0 |
| 96 | 0.0 |
| -- | 0.0 |
| 5,595 | 0.7 |
Acquisition integration expenses | 282 | 0.1 |
| 210 | 0.1 |
| 466 | 0.1 |
| 1,239 | 0.2 |
Income from operations | 79,533 | 26.7 |
| 71,508 | 25.8 |
| 233,273 | 27.0 |
| 201,922 | 24.9 |
Other income (expense): |
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Interest income | 48 | 0.0 |
| 185 | 0.1 |
| 271 | 0.0 |
| 744 | 0.1 |
Interest expense | (9,262) | -3.1 |
| (8,618) | -3.1 |
| (25,561) | -3.0 |
| (24,885) | -3.1 |
Other expense, net | (683) | -0.2 |
| (611) | -0.2 |
| (2,412) | -0.3 |
| (1,572) | -0.2 |
Total other expense | (9,897) | -3.3 |
| (9,044) | -3.3 |
| (27,702) | -3.2 |
| (25,713) | -3.2 |
Income before income taxes | 69,636 | 23.4 |
| 62,464 | 22.5 |
| 205,571 | 23.8 |
| 176,209 | 21.8 |
Income tax expense | 23,110 | 7.8 |
| 23,237 | 8.4 |
| 74,488 | 8.6 |
| 66,633 | 8.2 |
Net income | 46,526 | 15.6 |
| 39,227 | 14.2 |
| 131,083 | 15.2 |
| 109,576 | 13.5 |
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Earnings per share-diluted | 0.54 |
|
| 0.45 |
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| 1.51 |
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| 1.24 |
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Weighted average number of common shares outstanding-diluted | 86,794,118 |
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| 87,864,210 |
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| 86,827,626 |
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| 88,578,506 |
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STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
In thousands | |||||
|
| Nine Months Ended September 30, | |||
|
| 2009 |
|
| 2008 |
OPERATING ACTIVITIES: |
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Net income | $ | 131,083 |
| $ | 109,576 |
Adjustments to reconcile net income to net cash provided by operating activities: |
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Write-off of note receivable related to joint venture |
| -- |
|
| 798 |
Stock compensation expense |
| 10,861 |
|
| 8,880 |
Excess tax benefit of stock options exercised |
| (357) |
|
| (6,165) |
Depreciation |
| 24,643 |
|
| 22,344 |
Amortization |
| 3,820 |
|
| 2,944 |
Deferred income taxes |
| 20,718 |
|
| 18,729 |
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: |
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|
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Accounts receivable |
| 8,115 |
|
| (13,976) |
Accounts payable |
| (4,502) |
|
| (10,205) |
Accrued liabilities |
| 20,452 |
|
| 24,451 |
Deferred revenues |
| 252 |
|
| 2,299 |
Other assets |
| (1,158) |
|
| (3,398) |
Net cash provided by operating activities |
| 213,927 |
|
| 156,277 |
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INVESTING ACTIVITIES: |
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Payments for acquisitions and international investments, net of cash acquired |
| (107,079) |
|
| (46,564) |
Proceeds from maturity of short-term investments |
| (58) |
|
| 37 |
Proceeds from sale of property and equipment |
| 640 |
|
| -- |
Capital expenditures |
| (29,644) |
|
| (35,729) |
Net cash used in investing activities |
| (136,141) |
|
| (82,256) |
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FINANCING ACTIVITIES: |
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Repayment of long-term debt |
| (10,443) |
|
| (7,868) |
Net repayments on senior credit facility |
| (213,027) |
|
| (52,184) |
Proceeds from term loan |
| 215,000 |
|
| -- |
Proceeds from private placement of long-term note |
| -- |
|
| 100,000 |
Payments of deferred financing costs |
| (3,620) |
|
| (236) |
Principal payments on capital lease obligations |
| (255) |
|
| (130) |
Purchase / cancellation of treasury stock |
| (69,986) |
|
| (140,306) |
Proceeds from other issuance of common stock |
| 11,726 |
|
| 14,688 |
Excess tax benefit of stock options exercised |
| 357 |
|
| 6,165 |
Net cash used in financing activities |
| (70,248) |
|
| (79,871) |
Effect of exchange rate changes on cash |
| (2,347) |
|
| (4,215) |
Net increase/ (decrease) in cash and cash equivalents |
| 5,191 |
|
| (10,065) |
Cash and cash equivalents at beginning of period |
| 9,095 |
|
| 17,108 |
Cash and cash equivalents at end of period | $ | 14,286 |
| $ | 7,043 |
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NON-CASH ACTIVITIES: |
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Net issuance of notes payable for certain acquisitions | $ | 32,116 |
| $ | 58,977 |