EXHIBIT 99.1
FOR FURTHER INFORMATION CONTACT: FOR IMMEDIATE RELEASE
Dan Ginnetti 847-607-2069
STERICYCLE, INC. REPORTS RESULTS
FOR THE THIRD QUARTER AND YEAR TO DATE 2014
Lake Forest, Illinois, October 23, 2014-Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third quarter of 2014.
THIRD QUARTER RESULTS
Revenues for the quarter ended September 30, 2014 were $667.9 million, up $133.3 million or 24.9% from $534.6 million in the third quarter last year. Acquisitions contributed approximately $93.8 million to the current period’s growth in revenues. Revenues increased 25.7% compared to the prior period when adjusted for unfavorable foreign exchange impact of $4.1 million. Gross profit, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), was $278.7 million, up 15.4% from $241.4 million in the third quarter last year. Gross profit as a percent of revenues was 41.7% compared with 45.2% in the third quarter of 2013. Non-GAAP gross profit was $279.5 million, up 15.6% from $241.8 million in the third quarter last year. Non-GAAP gross profit as a percent of revenues was 41.9% compared with 45.2% in the third quarter of 2013. GAAP earnings per diluted share increased 4.4% to $0.96 from $0.92 in the third quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 12.4% to $1.08 from $0.96. See tables below.
FIRST NINE MONTHS’ RESULTS
Revenues for the nine months ending September 30, 2014 were $1,878.7 million, up $303.7 million or 19.3% from $1,574.9 million in the same period last year. Acquisitions contributed approximately $208.5 million to the current year’s growth in revenues. Revenues increased 20.3% compared with the prior period when adjusted for unfavorable foreign exchange impact of $16.5 million. GAAP gross profit was $809.4 million, up 13.8% from $711.3 million in the same period last year. Gross profit as a percent of revenues was 43.1% compared with 45.2% in 2013. Non-GAAP gross profit was $812.0 million, up 14.1% from $711.8 million in the same period last year. Non-GAAP gross profit as a percent of revenues was 43.2% compared with 45.2% in the 2013. GAAP earnings per diluted share increased 6.1% to $2.83 from $2.67 in the same period last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the second of the following tables, increased 14.0% to $3.15 from $2.77. See tables below.
The following table shows our calculations of organic revenue growth (in millions)(1):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | | Change | | | | Change |
| | 2014 | 2013 | $ | % | | 2014 | 2013 | $ | % |
| Total As Reported Revenues (GAAP) | $ | 667.9 |
| $ | 534.6 |
| $ | 133.3 |
| 24.9 | % | | $ | 1,878.7 |
| $ | 1,574.9 |
| $ | 303.7 |
| 19.3 | % |
| Adjustment for Foreign Exchange | 4.1 |
| | 4.1 |
| | | 16.5 |
| | 16.5 |
| |
| Subtotal (non-GAAP): | 672.0 |
| 534.6 |
| 137.4 |
| 25.7 | % | | 1,895.2 |
| 1,574.9 |
| 320.3 |
| 20.3 | % |
| | | | | | | | | | |
| Adjustment for Acquisitions | (98.2 | ) | (4.4 | ) | (93.8 | ) | | | (217.7 | ) | (9.3 | ) | (208.5 | ) | |
Adjustment for Regulated Returns and Recall Management Services | (16.6 | ) | (25.1 | ) | 8.5 |
| | | (64.4 | ) | (71.3 | ) | 6.9 |
| |
| Subtotal (non-GAAP): | $ | 557.2 |
| $ | 505.1 |
| $ | 52.1 |
| 10.3 | % | | $ | 1,613.1 |
| $ | 1,494.3 |
| $ | 118.7 |
| 7.9 | % |
| | | | | | | | | | |
| Domestic/ International Breakdown: | | | | | | | | | |
| Domestic Revenues | $ | 470.7 |
| $ | 378.1 |
| $ | 92.5 |
| 24.5 | % | | $ | 1,317.1 |
| $ | 1,112.0 |
| $ | 205.1 |
| 18.4 | % |
| International Revenues | 197.2 |
| 156.5 |
| 40.8 |
| 26.1 | % | | 561.6 |
| 462.9 |
| 98.6 |
| 21.3 | % |
| Total As Reported Revenues (GAAP) | $ | 667.9 |
| $ | 534.6 |
| $ | 133.3 |
| 24.9 | % | | $ | 1,878.7 |
| $ | 1,574.9 |
| $ | 303.7 |
| 19.3 | % |
(1) For internal purposes, we exclude the impact of foreign exchange and revenues attributed to acquisitions closed within the preceding 12 months and from our regulated returns and recall management services when we evaluate organic revenue growth. This table and the Company’s internal use of non-GAAP adjusted revenues are not intended to imply, and should not be interpreted as implying, that non-GAAP adjusted revenues are a better measure of internal growth or the Company’s performance, as compared to GAAP revenues.
Table to reconcile GAAP EPS to Non-GAAP EPS(2):
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | | | Change | | | | Change |
| | 2014 | 2013 | $ | % | | 2014 | 2013 | $ | % |
| GAAP EPS | $ | 0.96 |
| $ | 0.92 |
| $ | 0.04 |
| 4.4 | % | | $ | 2.83 |
| $ | 2.67 |
| $ | 0.16 |
| 6.1 | % |
| | | | | | | | | | |
| Acquisition Expenses | 0.03 |
| 0.02 |
| | | | 0.12 |
| 0.07 |
| | |
| Integration Expenses | 0.05 |
| 0.01 |
| | | | 0.11 |
| 0.03 |
| | |
| Plant Conversion and Restructuring | 0.02 |
| 0.00 |
| | | | 0.03 |
| 0.00 |
| | |
| Change in Fair Value | — |
| — |
| | | | 0.05 |
| — |
| | |
| Litigation Settlement | 0.01 |
| 0.00 |
| | | | 0.02 |
| 0.00 |
| | |
| | | | | | | | | | |
| Non-GAAP EPS (Adjusted) | $ | 1.08 |
| $ | 0.96 |
| $ | 0.12 |
| 12.4 | % | | $ | 3.15 |
| $ | 2.77 |
| $ | 0.39 |
| 14 | % |
(2) In accordance with GAAP, reported earnings per share (EPS) include the after-tax impact of the items identified in this table. For internal purposes, including the determination of management compensation, the Company excludes these items from results when evaluating operating performance. This table and the Company’s internal use of non-GAAP earnings per share are not intended to imply, and should not be interpreted as implying, that non-GAAP earnings per share is a better measure of performance than GAAP earnings per share.
Cash flow from operations was $345.0 million and $336.1 million for the nine months ended September 30, 2014 and 2013, respectively.
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 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)
(UNAUDITED)
|
| | | | | | | |
| | September 30,
2014 | | December 31,
2013 |
| ASSETS | | | |
| Current Assets: | | | |
| Cash and cash equivalents | $ | 41,985 |
| | $ | 67,167 |
|
| Short-term investments | 479 |
| | 413 |
|
| Accounts receivable, net | 456,461 |
| | 388,996 |
|
| Deferred income taxes | 18,185 |
| | 18,031 |
|
| Prepaid expenses | 37,929 |
| | 28,379 |
|
| Other current assets | 37,638 |
| | 37,279 |
|
| Total Current Assets | 592,677 |
| | 540,265 |
|
| Property, plant and equipment, net | 498,577 |
| | 358,967 |
|
| Goodwill | 2,415,210 |
| | 2,231,582 |
|
| Intangible assets, net | 910,928 |
| | 720,035 |
|
| Other assets | 28,242 |
| | 37,124 |
|
| Total Assets | $ | 4,445,634 |
| | $ | 3,887,973 |
|
| | | | |
| LIABILITIES AND EQUITY | | | |
| Current liabilities: | | | |
| Current portion of long-term debt | $ | 165,074 |
| | $ | 150,380 |
|
| Accounts payable | 131,617 |
| | 89,146 |
|
| Accrued liabilities | 139,025 |
| | 107,445 |
|
| Deferred revenues | 22,406 |
| | 18,826 |
|
| Other current liabilities | 57,183 |
| | 50,387 |
|
| Total Current Liabilities | 515,305 |
| | 416,184 |
|
| Long-term debt, net of current portion | 1,512,333 |
| | 1,280,663 |
|
| Deferred income taxes | 470,383 |
| | 396,119 |
|
| Other liabilities | 67,426 |
| | 27,469 |
|
| Equity: | | | |
| Common stock | 848 |
| | 855 |
|
| Additional paid-in capital | 253,286 |
| | 195,110 |
|
| Accumulated other comprehensive loss | (95,350 | ) | | (56,468 | ) |
| Retained earnings | 1,697,903 |
| | 1,610,964 |
|
| Total Stericycle, Inc. Equity | 1,856,687 |
| | 1,750,461 |
|
| Noncontrolling interest | 23,500 |
| | 17,077 |
|
| Total Equity | 1,880,187 |
| | 1,767,538 |
|
| Total Liabilities and Equity | $ | 4,445,634 |
| | $ | 3,887,973 |
|
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 30, | | Nine Months Ended September 30, |
| | 2014 | | 2013 | | 2014 | | 2013 |
| | $ | | % of Rev | | $ | | % of Rev | | $ | | % of Rev | | $ | | % of Rev |
| Revenues | $ | 667,877 |
| | 100.0 | % | | $ | 534,579 |
| | 100.0 | % | | $ | 1,878,654 |
| | 100.0 | % | | $ | 1,574,908 |
| | 100.0 | % |
| Cost of revenues ("COR") - exclusive of depreciation, and adjusting items shown below | 373,128 |
| | 55.9 | % | | 280,222 |
| | 52.4 | % | | 1,023,615 |
| | 54.5 | % | | 826,280 |
| | 52.5 | % |
| Depreciation | 15,235 |
| | 2.3 | % | | 12,531 |
| | 2.3 | % | | 43,063 |
| | 2.3 | % | | 36,856 |
| | 2.3 | % |
| Total cost of revenues | 388,363 |
| | 58.1 | % | | 292,753 |
| | 54.8 | % | | 1,066,678 |
| | 56.8 | % | | 863,136 |
| | 54.8 | % |
| Gross profit (non-GAAP) | 279,514 |
| | 41.9 | % | | 241,826 |
| | 45.2 | % | | 811,976 |
| | 43.2 | % | | 711,772 |
| | 45.2 | % |
| Selling, general and administrative expenses ("SG&A") - exclusive of depreciation, amortization, and adjusting items shown below | 111,793 |
| | 16.7 | % | | 92,964 |
| | 17.4 | % | | 321,302 |
| | 17.1 | % | | 272,363 |
| | 17.3 | % |
| Depreciation | 5,033 |
| | 0.8 | % | | 2,610 |
| | 0.5 | % | | 12,325 |
| | 0.7 | % | | 8,373 |
| | 0.5 | % |
| Amortization | 8,497 |
| | 1.3 | % | | 6,709 |
| | 1.3 | % | | 24,214 |
| | 1.3 | % | | 19,884 |
| | 1.3 | % |
| Total SG&A expense | 125,323 |
| | 18.8 | % | | 102,283 |
| | 19.1 | % | | 357,841 |
| | 19.0 | % | | 300,620 |
| | 19.1 | % |
| Income from operations (non-GAAP) - exclusive of adjusting items shown below | 154,191 |
| | 23.1 | % | | 139,543 |
| | 26.1 | % | | 454,135 |
| | 24.2 | % | | 411,152 |
| | 26.1 | % |
| Adjusting items: | | | | | | | | | | | | | | | |
| Plant conversion expenses (COR) | 845 |
| | 0.1 | % | | 423 |
| | 0.1 | % | | 2,534 |
| | 0.1 | % | | 423 |
| | — | % |
| Acquisition expenses (SG&A) | 3,472 |
| | 0.5 | % | | 2,111 |
| | 0.4 | % | | 10,672 |
| | 0.6 | % | | 6,238 |
| | 0.4 | % |
| Integration expenses (SG&A) | 7,461 |
| | 1.1 | % | | 1,423 |
| | 0.3 | % | | 14,625 |
| | 0.8 | % | | 3,702 |
| | 0.2 | % |
| Change in fair value of contingent consideration (SG&A) | — |
| | — | % | | (185 | ) | | 0.0 | % | | 3,953 |
| | 0.2 | % | | (307 | ) | | 0.0 | % |
| Litigation expenses (SG&A) | 1,342 |
| | 0.2 | % | | 12 |
| | 0.0 | % | | 3,243 |
| | 0.2 | % | | 116 |
| | 0.0 | % |
| Plant conversion and restructuring expenses (SG&A) | 1,535 |
| | 0.2 | % | | 364 |
| | 0.1 | % | | 1,535 |
| | 0.1 | % | | 468 |
| | 0.0 | % |
| Income from operations | 139,536 |
| | 20.9 | % | | 135,395 |
| | 25.3 | % | | 417,573 |
| | 22.2 | % | | 400,512 |
| | 25.4 | % |
| Other income (expense): | | | | | | | | | | | | | | | |
| Interest expense, net | (16,617 | ) | | (2.5 | )% | | (13,316 | ) | | (2.5 | )% | | (47,883 | ) | | (2.5 | )% | | (39,608 | ) | | (2.5 | )% |
| Other expense, net | (477 | ) | | (0.1 | )% | | (1,341 | ) | | (0.3 | )% | | (1,569 | ) | | (0.1 | )% | | (2,899 | ) | | (0.2 | )% |
| Total other expense | (17,094 | ) | | (2.6 | )% | | (14,657 | ) | | (2.7 | )% | | (49,452 | ) | | (2.6 | )% | | (42,507 | ) | | (2.7 | )% |
| Income before income taxes | 122,442 |
| | 18.3 | % | | 120,738 |
| | 22.6 | % | | 368,121 |
| | 19.6 | % | | 358,005 |
| | 22.7 | % |
| Income tax expense | 39,401 |
| | 5.9 | % | | 39,906 |
| | 7.5 | % | | 122,633 |
| | 6.5 | % | | 123,508 |
| | 7.8 | % |
| Net income | 83,041 |
| | 12.4 | % | | 80,832 |
| | 15.1 | % | | 245,488 |
| | 13.1 | % | | 234,497 |
| | 14.9 | % |
| Less: net income attributable to noncontrolling interests | 196 |
| | — | % | | 285 |
| | 0.1 | % | | 1,558 |
| | 0.1 | % | | 1,289 |
| | 0.1 | % |
| Net income attributable to Stericycle, Inc. | $ | 82,845 |
| | 12.4 | % | | $ | 80,547 |
| | 15.1 | % | | $ | 243,930 |
| | 13.0 | % | | $ | 233,208 |
| | 14.8 | % |
| Earnings per share - diluted | $ | 0.96 |
| | | | $ | 0.92 |
| | | | $ | 2.83 |
| | | | $ | 2.67 |
| | |
| Weighted average number of common shares outstanding - diluted | 86,116,455 |
| | | | 87,401,565 |
| | | | 86,237,202 |
| | | | 87,497,276 |
| | |
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
|
| | | | | | | |
| Nine Months Ended September 30, |
| | 2014 | | 2013 |
| OPERATING ACTIVITIES: | | | |
| Net income | $ | 245,488 |
| | $ | 234,497 |
|
| Adjustments to reconcile net income to net cash provided by operating activities: | | | |
| Stock compensation expense | 13,365 |
| | 12,088 |
|
| Excess tax benefit of stock options exercised | (10,747 | ) | | (12,354 | ) |
| Depreciation | 55,388 |
| | 45,229 |
|
| Amortization | 24,214 |
| | 19,884 |
|
| Deferred income taxes | 8,833 |
| | 15,623 |
|
| Change in fair value of contingent consideration | 3,953 |
| | (307 | ) |
| Plant conversion expenses | 1,379 |
| | — |
|
| Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | | | |
| Accounts receivable | (25,420 | ) | | (43,816 | ) |
| Accounts payable | 13,383 |
| | 3,258 |
|
| Accrued liabilities | 17,640 |
| | 21,420 |
|
| Deferred revenues | 2,326 |
| | (614 | ) |
| Other assets and liabilities | (4,830 | ) | | 41,181 |
|
| Net cash provided by operating activities | 344,972 |
| | 336,089 |
|
| INVESTING ACTIVITIES: | | | |
| Payments for acquisitions, net of cash acquired | (333,541 | ) | | (131,902 | ) |
| (Purchases of)/ proceeds from investments | (2,051 | ) | | 45 |
|
| Capital expenditures | (66,262 | ) | | (54,329 | ) |
| Net cash used in investing activities | (401,854 | ) | | (186,186 | ) |
| FINANCING ACTIVITIES: | | | |
| Repayments of long-term debt and other obligations | (45,031 | ) | | (48,858 | ) |
| Borrowings on foreign bank debt | 151,605 |
| | 164,669 |
|
| Repayments on foreign bank debt | (131,295 | ) | | (163,941 | ) |
| Borrowings on senior credit facility | 1,154,100 |
| | 731,015 |
|
| Repayments on senior credit facility | (979,059 | ) | | (725,940 | ) |
| Payments on capital lease obligations | (4,014 | ) | | (2,623 | ) |
| Payments of deferred financing costs | (2,280 | ) | | — |
|
| Purchases and cancellations of treasury stock | (157,004 | ) | | (114,531 | ) |
| Proceeds from issuance of common stock | 33,904 |
| | 33,827 |
|
| Excess tax benefit of stock options exercised | 10,747 |
| | 12,354 |
|
| Payments to noncontrolling interests | (732 | ) | | (1,018 | ) |
| Net cash provided by/ (used) in financing activities | 30,941 |
| | (115,046 | ) |
| Effect of exchange rate changes on cash | 759 |
| | (1,795 | ) |
| Net (decrease)/ increase in cash and cash equivalents | (25,182 | ) | | 33,062 |
|
| Cash and cash equivalents at beginning of period | 67,167 |
| | 34,659 |
|
| Cash and cash equivalents at end of period | $ | 41,985 |
| | $ | 67,721 |
|
| | | | |
| NON-CASH ACTIVITIES: | | | |
| Issuances of obligations for acquisitions | $ | 100,944 |
| | $ | 88,530 |
|
| Issuance of obligations for noncontrolling interests | — |
| | 2,113 |
|
