FOR FURTHER INFORMATION CONTACT:
FOR IMMEDIATE RELEASE
Frank ten Brink 847-607-2012
Conference call to be held February 4, 2010 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 March 4th by dialing 800-642-1687, access code 46903856. 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 FOURTH QUARTER and FULL YEAR 2009
Lake Forest, Illinois, February 4, 2010—Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the fourth quarter and the full year 2009.
Revenues for the quarter ended December 31, 2009 were $313.5 million, up 14.4% from $274.0 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $25.9 million to the growth in revenues for the quarter. Revenues increased 13.5% compared to the fourth quarter of 2008 when adjusted for favorable foreign exchange impacts of $2.6 million. Gross profit was $147.1 million, up 17.5% from $125.3 million in the fourth quarter last year. Gross profit as a percent of revenue was 46.9% compared with 45.7% in the fourth quarter of 2008. Gross profit for the fourth quarter of 2009 was unfavorably impacted by $0.7 million of restructuring costs for our regulated returns management services business.
Net income attributable to Stericycle for the fourth quarter of 2009 was $44.6 million or $0.52 per diluted share compared with net income of $39.1 million or $0.45 per diluted share for the fourth quarter of 2008. Net income attributable to Stericycle for the fourth quarter of 2008 included the effect of $0.3 million of charges related to foreign investment write-down, and net income for the fourth quarter of 2009 included the effects of $1.8 million of after-tax transactional expenses related to acquisitions and $1.0 million of after-tax restructuring costs for our regulated returns management services business. Adjusted for these charges, non-GAAP earnings per diluted share increased from $0.45 in the fourth quarter of 2008 to $0.55 in the fourth quarter of 2009 or up 22.0% (see table below).
FULL YEAR RESULTS
For the full year ended December 31, 2009, revenues were $1.18 billion, up 8.7% from $1.08 billion in 2008. Revenues increased 12.2% compared with prior year when adjusted for unfavorable foreign exchange impacts of $38.1 million. Gross profit was $552.4 million, up 13.9% from $485.0 million last year. Gross profit as a percent of revenues was 46.9%, up from 44.8% in 2008. Gross profit for 2009 was unfavorably impacted by $0.7 million of restructuring costs for our regulated returns management services business.
Earnings per diluted share for 2009 increased to $2.03 from $1.68 per diluted share for 2008. Earnings per diluted share for 2008 were unfavorably impacted by an arbitration settlement and an impairment of fixed assets. Earnings per diluted share for 2009 were unfavorably impacted by transactional expenses related to acquisitions and restructuring costs for our regulated returns management services business, which were offset partially by the net release of prior years’ tax reserves. Adjusted for these charges, non-GAAP earnings per diluted share increased from $1.73 in 2008 to $2.09 in 2009, or 21.3% (see table below):
* In accordance with generally accepted accounting principles (GAAP), reported earnings per share include the after-tax impact of the items identified in the table. The Company's management believes that by adjusting reported earnings per share to exclude the effect of these non-operational items, the resulting earnings per share presents a more meaningful, operationally-oriented depiction of company performance. The Company's management excludes these items from its results when evaluating operating performance and, along with other factors, in determining management compensation.
Cash flow from operations was $277.2 million for the full year of 2009. Cash flow and increased loan balances were used to strengthen our business by acquisitions, capital expenditures and share repurchases.
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 | |||||
|
| December 31, |
|
| December 31, |
|
| 2009 |
|
| 2008 |
|
| (Unaudited) |
|
| (Audited) |
ASSETS |
|
|
|
|
|
Current Assets: |
|
|
|
|
|
Cash and cash equivalents | $ | 15,767 |
| $ | 9,095 |
Short-term investments |
| 1,131 |
|
| 1,408 |
Accounts receivable, less allowance for doubtful accounts of $8,709 in 2009 and $6,616 in 2008 |
| 179,770 |
|
| 168,598 |
Deferred income taxes |
| 14,087 |
|
| 16,821 |
Prepaid expenses |
| 12,421 |
|
| 11,273 |
Other current assets |
| 23,364 |
|
| 17,235 |
Total Current Assets |
| 246,540 |
|
| 224,430 |
Property, Plant and Equipment, net |
| 246,154 |
|
| 207,144 |
Other Assets: |
|
|
|
|
|
Goodwill |
| 1,394,091 |
|
| 1,135,778 |
Intangible assets, less accumulated amortization of $18,546 in 2009 and $14,116 in 2008 |
| 269,454 |
|
| 170,624 |
Other |
| 26,564 |
|
| 21,322 |
Total Other Assets |
| 1,690,109 |
|
| 1,327,724 |
Total Assets | $ | 2,182,803 |
| $ | 1,759,298 |
|
|
|
|
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Current portion of long-term debt | $ | 65,932 |
| $ | 38,880 |
Accounts payable |
| 47,608 |
|
| 33,612 |
Accrued liabilities |
| 90,078 |
|
| 93,487 |
Deferred revenues |
| 14,954 |
|
| 13,663 |
Total Current Liabilities |
| 218,572 |
|
| 179,642 |
Long-term debt, net of current portion |
| 922,919 |
|
| 753,846 |
Deferred income taxes |
| 173,892 |
|
| 147,287 |
Other liabilities |
| 10,247 |
|
| 7,885 |
Shareholders' Equity: |
|
|
|
|
|
Common stock (par value $.01 per share, 120,000,000
shares authorized, 84,715,005 issued and outstanding
in 2009, 85,252,879 issued and outstanding in 2008) |
| 847 |
|
| 852 |
Additional paid-in capital |
| 47,522 |
|
| 67,776 |
Accumulated other comprehensive income |
| (12,292) |
|
| (32,075) |
Retained earnings |
| 809,618 |
|
| 633,927 |
Total Stericycle, Inc. Shareholders’ Equity |
| 845,695 |
|
| 670,480 |
Noncontrolling interest |
| 11,478 |
|
| 158 |
Total Shareholders' Equity |
| 857,173 |
|
| 670,638 |
Total Liabilities and Shareholders' Equity | $ | 2,182,803 |
| $ | 1,759,298 |
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
In thousands, except share and per share data | |||||||||||
| Three months ended December 31, |
| Years ended December 31, | ||||||||
| 2009 |
| 2008 |
| 2009 |
| 2008 | ||||
| (Unaudited) |
| (Unaudited) |
| (Audited) | ||||||
| $ | % of Rev |
| $ | % of Rev |
| $ | % of Rev |
| $ | % of Rev |
Revenues | 313,542 | 100.0 |
| 274,011 | 100.0 |
| 1,177,736 | 100.0 |
| 1,083,679 | 100.0 |
Cost of revenues | 165,696 | 52.8 |
| 148,755 | 54.3 |
| 624,636 | 53.0 |
| 598,650 | 55.2 |
Restructuring costs | 704 | 0.2 |
| -- | 0.0 |
| 704 | 0.2 |
| -- | 0.0 |
Gross profit | 147,142 | 46.9 |
| 125,256 | 45.7 |
| 552,396 | 46.9 |
| 485,029 | 44.8 |
SG&A expenses | 60,206 | 19.2 |
| 51,098 | 18.6 |
| 222,483 | 18.9 |
| 199,171 | 18.4 |
Amortization | 1,570 | 0.5 |
| 1,095 | 0.4 |
| 5,390 | 0.5 |
| 4,039 | 0.4 |
Total SG&A expense and amortization | 61,776 | 19.7 |
| 52,193 | 19.0 |
| 227,873 | 19.3 |
| 203,210 | 18.8 |
Income from operations before acquisitions, and other expenses | 85,366 | 27.2 |
| 73,063 | 26.7 |
| 324,523 | 27.6 |
| 281,819 | 26.0 |
Transactional expenses related to acquisitions | 1,915 | 0.6 |
| -- | 0.0 |
| 7,333 | 0.6 |
| -- | 0.0 |
Restructuring costs and impairment of fixed assets | 905 | 0.3 |
| 472 | 0.2 |
| 905 | 0.1 |
| 472 | 0.0 |
Arbitration settlement and related costs | -- | 0.0 |
| -- | 0.0 |
| -- | 0.0 |
| 5,595 | 0.5 |
Acquisition integration expenses | 630 | 0.2 |
| 274 | 0.1 |
| 1,096 | 0.1 |
| 1,513 | 0.1 |
Income from operations | 81,916 | 26.1 |
| 72,317 | 26.4 |
| 315,189 | 26.8 |
| 274,239 | 25.3 |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
Interest income | 42 | 0.0 |
| 186 | 0.1 |
| 313 | 0.0 |
| 930 | 0.1 |
Interest expense | (8,884) | -2.8 |
| (8,219) | -3.0 |
| (34,445) | -2.9 |
| (33,104) | -3.1 |
Other expense, net | (1,105) | -0.4 |
| (1,433) | -0.5 |
| (3,369) | -0.3 |
| (2,998) | -0.3 |
Total other expense | (9,947) | -3.2 |
| (9,466) | -3.5 |
| (37,501) | -3.2 |
| (35,172) | -3.2 |
Income before income taxes | 71,969 | 23.0 |
| 62,851 | 22.9 |
| 277,688 | 23.6 |
| 239,067 | 22.1 |
Income tax expense | 26,811 | 8.6 |
| 23,633 | 8.6 |
| 101,299 | 8.6 |
| 90,296 | 8.3 |
Net income | 45,158 | 14.4 |
| 39,188 | 14.3 |
| 176,389 | 15.0 |
| 148,771 | 13.7 |
Net income attributable to noncontrolling interests | 550 | 0.2 |
| 56 | 0.0 |
| 698 | 0.1 |
| 63 | 0.0 |
Net income attributable to Stericycle, Inc. | 44,608 | 14.2 |
| 39,132 | 14.3 |
| 175,691 | 14.9 |
| 148,708 | 13.7 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share-diluted | 0.52 |
|
| 0.45 |
|
| 2.03 |
|
| 1.68 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding-diluted | 86,353,095 |
|
| 87,614,558 |
|
| 86,744,003 |
|
| 88,335,832 |
|
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands | |||||
|
| Years Ended December 31, | |||
|
| 2009 |
|
| 2008 |
|
| (Unaudited) |
|
| (Audited) |
OPERATING ACTIVITIES: |
|
|
|
|
|
Net income | $ | 176,389 |
| $ | 148,771 |
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
Restructuring costs and impairment of fixed assets |
| 1,609 |
|
| 472 |
Write-off of note receivable related to joint venture |
| -- |
|
| 798 |
Stock compensation expense |
| 14,638 |
|
| 11,755 |
Excess tax benefit of stock options exercised |
| (10,905) |
|
| (9,319) |
Depreciation |
| 34,600 |
|
| 30,109 |
Amortization |
| 5,390 |
|
| 4,039 |
Deferred income taxes |
| 24,401 |
|
| 26,522 |
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: |
|
|
|
|
|
Accounts receivable |
| 12,567 |
|
| (12,998) |
Accounts payable |
| 2,420 |
|
| (7,041) |
Accrued liabilities |
| 19,316 |
|
| 19,517 |
Deferred revenues |
| 89 |
|
| 1,597 |
Other assets |
| (3,268) |
|
| (3,667) |
Net cash provided by operating activities |
| 277,246 |
|
| 210,555 |
|
|
|
|
|
|
INVESTING ACTIVITIES: |
|
|
|
|
|
Payments for acquisitions and international investments, net of cash acquired |
| (311,891) |
|
| (84,947) |
Proceeds from maturity of short-term investments |
| 385 |
|
| (463) |
Proceeds from sale of property and equipment |
| 1,227 |
|
| -- |
Capital expenditures |
| (39,910) |
|
| (47,520) |
Net cash used in investing activities |
| (350,189) |
|
| (132,930) |
|
|
|
|
|
|
FINANCING ACTIVITIES: |
|
|
|
|
|
Repayment of long-term debt |
| (19,023) |
|
| (13,866) |
Net repayments on senior credit facility |
| (59,605) |
|
| (23,073) |
Proceeds from term loan |
| 215,000 |
|
| -- |
Proceeds from private placement of long-term note |
| -- |
|
| 100,000 |
Payments of deferred financing costs |
| (3,635) |
|
| (236) |
Principal payments on capital lease obligations |
| (1,106) |
|
| (527) |
Purchase / cancellation of treasury stock |
| (75,686) |
|
| (167,338) |
Proceeds from other issuance of common stock |
| 14,922 |
|
| 17,839 |
Excess tax benefit of stock options exercised |
| 10,905 |
|
| 9,319 |
Net cash provided by/(used in) financing activities |
| 81,772 |
|
| (77,882) |
Effect of exchange rate changes on cash |
| (2,157) |
|
| (7,756) |
Net increase/ (decrease) in cash and cash equivalents |
| 6,672 |
|
| (8,013) |
Cash and cash equivalents at beginning of period |
| 9,095 |
|
| 17,108 |
Cash and cash equivalents at end of period | $ | 15,767 |
| $ | 9,095 |
|
|
|
|
|
|
NON-CASH ACTIVITIES: |
|
|
|
|
|
Net issuance of notes payable for certain acquisitions | $ | 38,090 |
| $ | 106,074 |