Stericycle (SRCL) 8-K Results of Operations and Financial Condition

EXHIBIT 99.1

FOR FURTHER INFORMATION CONTACT:        

Investor Relations 847-607-2012

Conference call to be held July 23, 2015 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 23rd by dialing 855-859-2056, access code 39409776. To hear a live simulcast of the call or access the audio archive, visit the investor relations page on www.stericycle.com.

STERICYCLE, INC. REPORTS RESULTS

FOR THE SECOND QUARTER AND YEAR TO DATE 2015

Lake Forest, Illinois, July 23, 2015—Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter and year to date 2015.

SECOND QUARTER RESULTS

Revenues for the quarter ended June 30, 2015 were $715.7 million, up $74.9 million or 11.7% from $640.8 million in the second quarter last year. Acquisitions contributed approximately $58.9 million to the current period’s growth in revenues. Revenues increased 15.9% compared to the prior period when adjusted for unfavorable foreign exchange impact of $27.3 million.

Gross profit, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), was $304.8 million, up 10.7% from $275.3 million in the second quarter last year. GAAP gross profit as a percent of revenues was 42.6% compared to 43.0% in the second quarter of 2014. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $305.3 million, up 10.5% from $276.4 million in the second quarter last year. Non-GAAP gross profit as a percent of revenues was 42.7% compared to 43.1% in the second quarter of 2014.

GAAP earnings per diluted share decreased 26.4% to $0.70 from $0.95 in the second quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 9.7% to $1.14 from $1.04. See tables below.

FIRST SIX MONTHS RESULTS

Revenues for the six months ended June 30, 2015 were $1.38 billion, up 13.9% from $1.21 billion in the same period last year. Acquisitions contributed approximately $145.2 million to the current year’s growth in revenues. Revenues increased 18.1% compared with the prior period when adjusted for unfavorable foreign exchange impact of $50.4 million.

GAAP gross profit was $586.2 million, up 10.4% from $530.8 million in the same period last year. GAAP gross profit as a percent of revenues was 42.5% compared to 43.8% in the same period last year. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $586.7 million, up 10.2% from $532.5 million in the same period as last year. Non-GAAP gross profit as a percent of revenues was 42.5% compared to 44.0% in the same period as last year.

GAAP earnings per diluted share decreased 15.6% to $1.57 from $1.87 in 2014. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 6.7% to $2.22 from $2.08. See tables below.

The following table shows our calculations of organic revenue growth (in millions)⁽¹⁾ 

	Three Months Ended June 30,								Six Months Ended June 30,
					Change								Change
	2015		2014		$		%		2015		2014		$		%
Total As Reported Revenues (GAAP)	$	715.7	$	640.8	$	74.9	11.7	%	$	1,379.0	$	1,210.8	$	168.2	13.9	%
Adjustment for Foreign Exchange	27.3				27.3				50.4				50.4
Subtotal (non-GAAP):	743.0		640.8		102.2		15.9	%	1,429.4		1,210.8		218.6		18.1	%
Adjustment for Acquisitions	(109.10)		(50.20)		(58.90)				(195.40)		(50.20)		(145.20)
Adjustment for Regulated Returns and Recall Management Services	(24.40)		(24.70)		0.3				(40.60)		(47.80)		7.2
Subtotal (non-GAAP):	$	609.5	$	565.9	$	43.6	7.7	%	$	1,193.4	$	1,112.8	$	80.6	7.2	%
Domestic/ International Breakdown:
Domestic Revenues	$	518.2	$	452.3	$	65.9	14.6	%	$	990.4	$	842.1	$	148.3	17.6	%
International Revenues	197.5		188.5		9.0		4.8	%	388.6		368.7		19.9		5.4	%
Total As Reported Revenues (GAAP)	$	715.7	$	640.8	$	74.9	11.7	%	$	1,379.0	$	1,210.8	$	168.2	13.9	%

(1) For internal purposes, we exclude the impact of foreign exchange, revenues attributed to acquisitions closed within the preceding 12 months, and revenue 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 Gross Profit to Non-GAAP Gross Profit (in thousands)⁽²⁾ 

	Three Months Ended June 30,								Six Months Ended June 30,
	2015				2014				2015				2014
	$		% of Rev		$		% of Rev		$		% of Rev		$		% of Rev
GAAP Gross Profit		$304,824	42.6	%		$275,304	43.0	%		$586,155	42.5	%		$530,773	43.8	%
Plant Conversion Expenses	514		0.1	%	1,115		0.2	%	514		0.0	%	1,689		0.1	%
Non-GAAP Gross Profit		$305,338	42.7	%		$276,419	43.1	%		$586,669	42.5	%		$532,462	44.0	%

(2) In accordance with GAAP, reported Gross Profit includes the 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 Gross Profit are not intended to imply, and should not be interpreted as implying, that non-GAAP Gross Profit is a better measure of performance than GAAP Gross Profit.

Table to reconcile GAAP EPS to Non-GAAP EPS⁽³⁾ 

	Three Months Ended June 30,									Six Months Ended June 30,
					Change									Change
	2015		2014		$			%		2015		2014		$			%
GAAP EPS	$	0.70	$	0.95	$	(0.250	)	(26.40	)%	$	1.57	$	1.87	$	(0.290	)	(15.60	)%
Acquisition Expenses	0.03		0.05							0.06		0.08
Integration Expenses	0.07		0.04							0.13		0.06
Change in Fair Value of Contingent   Consideration	0.00		(0.010)							(0.010)		0.05
Litigation Expenses	0.32		0.00							0.33		0.01
Plant Conversion and Restructuring   Expenses	0.03		0.01							0.12		0.01
Non-GAAP EPS (Adjusted)	$	1.14	$	1.04	$	0.10		9.7	%		$2.22	$	2.08	$	0.14		6.7	%

(3) 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 $178.7 million and $238.3 million for the six months ended June 30, 2015 and 2014, respectively.

For more information about Stericycle, please visit our website at www.stericycle.com.

Safe Harbor Statement: This press release may contain forward-looking statements that involve risks and uncertainties, some of which are beyond our control (for example, general economic and market 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 the collection, transportation, treatment and disposal of regulated waste, increases in transportation and other operating costs, the level of governmental enforcement of regulations governing regulated waste collection and treatment, our ability to execute our acquisition strategy and to integrate acquired businesses, competition and demand for services in the regulated waste industry, political, economic and currency risks related to our foreign operations, impairments of goodwill or other indefinite-lived intangibles, exposure to environmental liabilities, compliance with existing and future legal and regulatory requirements, as well as other factors described in our filings with the U.S. Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K. 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)

	June 30,			December 31,
	2015			2014
ASSETS
Current Assets:
Cash and cash equivalents	$	32,956		$	22,236
Short-term investments	103			380
Accounts receivable, net	524,134			465,473
Deferred income taxes	28,327			28,322
Prepaid expenses	33,202			30,632
Other current assets	41,471			33,173
Total Current Assets	660,193			580,216
Property, plant and equipment, net	468,960			460,408
Goodwill	2,454,092			2,418,832
Intangible assets, net	908,176			909,645
Other assets	35,523			32,621
Total Assets	$	4,526,944		$	4,401,722
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	129,270		$	131,969
Accounts payable	143,833			114,596
Accrued liabilities	151,310			131,743
Deferred revenues	18,560			21,624
Other current liabilities	66,762			61,599
Total Current Liabilities	509,735			461,531
Long-term debt, net of current portion	1,538,736			1,527,246
Deferred income taxes	428,392			431,643
Other liabilities	68,060			64,117
Equity:
Common stock	848			849
Additional paid-in capital	354,639			289,211
Accumulated other comprehensive loss	(180,907		)	(138,419		)
Retained earnings	1,788,123			1,743,371
Total Stericycle, Inc. Equity	1,962,703			1,895,012
Noncontrolling interest	19,318			22,173
Total Equity	1,982,021			1,917,185
Total Liabilities and Equity	$	4,526,944		$	4,401,722

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

	Three Months Ended June 30,										Six Months Ended June 30,
	2015					2014					2015					2014
	$			% of Rev		$			% of Rev		$			% of Rev		$			% of Rev
Revenues	$	715,689		100.0	%	$	640,822		100.0	%	$	1,379,008		100.0	%	$	1,210,777		100.0	%
Cost of revenues ("COR") - exclusive of depreciation and adjusting items shown below	396,279			55.4	%	349,301			54.5	%	763,619			55.4	%	650,487			53.7	%
Depreciation	14,072			2.0	%	15,102			2.4	%	28,720			2.1	%	27,828			2.3	%
Total cost of revenues	410,351			57.3	%	364,403			56.9	%	792,339			57.5	%	678,315			56.0	%
Gross profit (non-GAAP)	305,338			42.7	%	276,419			43.1	%	586,669			42.5	%	532,462			44.0	%
Selling, general and administrative expenses ("SG&A") - exclusive of depreciation, amortization, and adjusting items shown below	122,436			17.1	%	109,329			17.1	%	237,867			17.2	%	209,509			17.3	%
Depreciation	4,387			0.6	%	3,977			0.6	%	8,505			0.6	%	7,292			0.6	%
Amortization	8,921			1.2	%	8,402			1.3	%	17,718			1.3	%	15,717			1.3	%
Total SG&A expense	135,744			19.0	%	121,708			19.0	%	264,090			19.2	%	232,518			19.2	%
Income from operations (non-GAAP) - exclusive of adjusting items shown below	169,594			23.7	%	154,711			24.1	%	322,579			23.4	%	299,944			24.8	%
Adjusting items:
Plant conversion expenses (COR)	514			0.1	%	1,115			0.2	%	514			0.0	%	1,689			0.1	%
Acquisition expenses (SG&A)	2,986			0.4	%	3,979			0.6	%	6,282			0.5	%	7,200			0.6	%
Integration expenses (SG&A)	8,924			1.2	%	4,679			0.7	%	17,810			1.3	%	7,164			0.6	%
Change in fair value of contingent consideration (SG&A)	35			0.0	%	(836		)	-0.1	%	(640		)	0.0	%	3,953			0.3	%
Litigation expenses (SG&A)	44,827			6.3	%	396			0.1	%	46,950			3.4	%	1,901			0.2	%
Plant conversion and restructuring expenses (SG&A)	2,544			0.4	%	—			—	%	14,846			1.1	%	—			—	%
Income from operations (GAAP)	109,764			15.3	%	145,378			22.7	%	236,817			17.2	%	278,037			23.0	%
Other income (expense):
Interest expense, net	(16,390		)	-2.3	%	(16,368		)	-2.6	%	(34,988		)	-2.5	%	(31,266		)	-2.6	%
Other expense, net	(1,604		)	-0.2	%	(392		)	-0.1	%	(2,202		)	-0.2	%	(1,092		)	-0.1	%
Total other expense	(17,994		)	-2.5	%	(16,760		)	-2.6	%	(37,190		)	-2.7	%	(32,358		)	-2.7	%
Income before income taxes	91,770			12.8	%	128,618			20.1	%	199,627			14.5	%	245,679			20.3	%
Income tax expense	30,874			4.3	%	45,941			7.2	%	62,921			4.6	%	83,232			6.9	%
Net income	60,896			8.5	%	82,677			12.9	%	136,706			9.9	%	162,447			13.4	%
Less: net income attributable to noncontrolling interests	447			0.1	%	741			0.1	%	799			0.1	%	1,362			0.1	%
Net income attributable to Stericycle, Inc.	$	60,449		8.4	%	$	81,936		12.8	%	$	135,907		9.9	%	$	161,085		13.3	%
Earnings per share- diluted	$	0.70				$	0.95				$	1.57				$	1.87
Weighted average number of common shares outstanding - diluted	86,221,034					85,982,588					86,292,816					86,300,292

STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

	Six Months Ended June 30,
	2015			2014
OPERATING ACTIVITIES:
Net income	$	136,706		$	162,447
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense	10,904			9,124
Excess tax benefit of stock options exercised	(10,899		)	(7,080		)
Depreciation	37,225			35,120
Amortization	17,718			15,717
Deferred income taxes	973			8,929
Change in fair value of contingent consideration	(640		)	3,953
Other, net	6,326			—
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(51,041		)	(9,606		)
Accounts payable	21,019			10,646
Accrued liabilities	22,571			(6,809		)
Deferred revenues	(3,156		)	2,332
Other assets and liabilities	(9,046		)	13,575
Net cash provided by operating activities	178,660			238,348
INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired	(61,766		)	(304,832		)
Proceeds from/ (purchases of) investments	271			(2,052		)
Capital expenditures	(46,794		)	(43,668		)
Net cash used in investing activities	(108,289		)	(350,552		)
FINANCING ACTIVITIES:
Repayments of long-term debt and other obligations	(39,590		)	(28,005		)
Borrowings on foreign bank debt	18,363			96,828
Repayments on foreign bank debt	(43,769		)	(85,192		)
Borrowings on term loan	250,000			—
Borrowings on senior credit facility	879,024			933,101
Repayments on senior credit facility	(1,072,468		)	(732,059		)
Payments on capital lease obligations	(1,951		)	(1,993		)
Payments of deferred financing costs	—			(2,280		)
Payment for cash flow hedge	(8,833		)	—
Purchases and cancellations of treasury stock	(85,149		)	(137,186		)
Proceeds from issuances of common stock	39,208			21,195
Excess tax benefit of stock options exercised	10,899			7,080
Payments to noncontrolling interests	(2,603		)	(732		)
Net cash (used)/ provided by in financing activities	(56,869		)	70,757
Effect of exchange rate changes on cash and cash equivalents	(2,782		)	(394		)
Net increase/ (decrease) in cash and cash equivalents	10,720			(41,841		)
Cash and cash equivalents at beginning of period	22,236			67,167
Cash and cash equivalents at end of period	$	32,956		$	25,326
NON-CASH ACTIVITIES:
Issuances of obligations for acquisitions	$	47,827		$	83,864