Stericycle, Inc. Reports Results for the First Quarter in 2015


Conference call to be held April 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 May 23rd by dialing 855-859-2056, access code 39406157. To hear a live simulcast of the call or access the audio archive, visit the investor relations page on www.stericycle.com.

LAKE FOREST, Ill., April 23, 2015 (GLOBE NEWSWIRE) -- Stericycle, Inc. (Nasdaq:SRCL), today reported financial results for the first quarter of 2015.

Revenues for the quarter ended March 31, 2015 were $663.3 million, up 16.4% from $570.0 million in the first quarter last year. Acquisitions contributed approximately $86.3 million to the current period's growth in revenues. Revenues increased 20.4% compared to the prior period when adjusted for unfavorable foreign exchange impacts of $23.1 million.

Gross profit, reported in accordance with U.S. generally accepted accounting principles ("GAAP"), was $281.3 million, up 10.1% from $255.5 million in the first quarter last year. GAAP gross profit as a percent of revenue was 42.4% compared with 44.8% in the first quarter of 2014. Non-GAAP gross profit, when adjusted as identified in the second of the following tables, was $281.3 million, up 9.9% from $256.0 million in the first quarter last year. Non-GAAP gross profit as a percent of revenues was 42.4% compared to 44.9% in the first quarter of 2014.

GAAP earnings per diluted share decreased 4.4% to $0.87 from $0.91 in the first quarter of 2014. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 3.7% to $1.08 from $1.04. See tables below.

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

  Three Months Ended March 31,
      Change
  2015 2014 $ %
Total As Reported Revenues (GAAP) $663.3 $570.0 $93.4 16.4%
Adjustment for Foreign Exchange 23.1   23.1  
Subtotal (non-GAAP): 686.4 570.0 116.4 20.4%
Adjustment for Acquisitions (86.3) -- (86.3)  
Adjustment for Regulated Returns and Recall Management Services (16.1) (23.1) (6.9)  
Subtotal (non-GAAP): $584.0 $546.9 $37.1 6.8%
         
Domestic/ International Breakdown:        
Domestic Revenues $472.2 $389.8 $82.5 21.2%
International Revenues 191.1 180.2 10.9 6.0%
Total As Reported Revenues (GAAP) $663.3 $570.0 $93.4 16.4%

(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 March 31,
  2015 2014
    % of   % of
  $ Rev $ Rev
GAAP Gross Profit $281,331 42.4% $255,469 44.8%
Plant Conversion Expenses -- -- 574 0.1%
Non-GAAP Gross Profit $281,331 42.4% $256,043 44.9%

(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 March 31,
      Change
  2015 2014 $ %
GAAP EPS $0.87 $0.91  $(0.04) -4.4%
Acquisition Expenses 0.04 0.04    
Integration Expenses 0.07 0.02    
Change in Fair Value of Contingent Consideration (0.01) 0.06    
Litigation Expenses 0.01 0.01    
Plant Conversion and Restructuring Expenses 0.10 0.00    
Non-GAAP EPS (Adjusted) $1.08 $1.04 $0.04 3.7%

(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 $132.6 million and $145.8 million for the three months ended March 31, 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)
     
  March 31, December 31,
  2015 2014
ASSETS    
Current Assets:    
Cash and cash equivalents  $ 38,283  $ 22,236
Short-term investments  116  380
Accounts receivable, net  467,094  465,473
Deferred income taxes  27,331  28,322
Prepaid expenses  29,847  30,632
Other current assets  33,392  33,173
Total Current Assets  596,063  580,216
Property, plant and equipment, net  446,831  460,408
Goodwill  2,419,284  2,418,832
Intangible assets, net  889,360  909,645
Other assets  31,976  32,621
Total Assets  $ 4,383,514  $ 4,401,722
     
LIABILITIES AND EQUITY    
Current Liabilities:    
Current portion of long-term debt  $ 113,212  $ 131,969
Accounts payable  120,198  114,596
Accrued liabilities  157,047  131,743
Deferred revenues  20,313  21,624
Other current liabilities  71,630  61,599
Total Current Liabilities  482,400  461,531
     
Long-term debt, net of current portion  1,462,177  1,527,246
Deferred income taxes  422,971  431,643
Other liabilities  65,959  64,117
Equity:    
Common stock  852  849
Additional paid-in capital  331,428  289,211
Accumulated other comprehensive loss  (206,434)  (138,419)
Retained earnings  1,805,059  1,743,371
Total Stericycle, Inc. Equity  1,930,905  1,895,012
Noncontrolling interests  19,102  22,173
Total Equity  1,950,007  1,917,185
Total Liabilities and Equity  $ 4,383,514  $ 4,401,722
     
     
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
         
  Three Months Ended
  March 31,
  2015 2014
  $ % of Rev $ % of Rev
         
Revenues  $ 663,319 100.0%  $ 569,955 100.0%
Cost of revenues ("COR") - exclusive of depreciation, and adjusting items shown below  367,340 55.4%  301,186 52.8%
Depreciation  14,648 2.2%  12,726 2.2%
Total cost of revenues  381,988 57.6%  313,912 55.1%
         
Gross profit (non-GAAP)  281,331 42.4%  256,043 44.9%
         
Selling, general and administrative expenses ("SG&A") -- exclusive of depreciation, amortization, and adjusting items shown below  115,431 17.4%  100,180 17.6%
Depreciation  4,118 0.6%  3,315 0.6%
Amortization  8,797 1.3%  7,315 1.3%
Total SG&A expense  128,346 19.3%  110,810 19.4%
         
Income from operations (non-GAAP) - exclusive of adjusting items shown below  152,985 23.1%  145,233 25.5%
         
Adjusting items:        
Plant conversion expenses (COR)  --  0.0%  574 0.1%
Acquisition expenses (SG&A)  3,296 0.5%  3,221 0.6%
Integration expenses (SG&A)  8,886 1.3%  2,485 0.4%
Change in fair value of contingent consideration (SG&A)  (675) -0.1%  4,789 0.8%
Litigation expenses (SG&A)  2,123 0.3%  1,505 0.3%
Plant conversion and restructuring expenses (SG&A)  12,302 1.9%  --  0.0%
         
Income from operations (GAAP)  127,053 19.2%  132,659 23.3%
         
Other income (expense):        
Interest expense, net  (18,598) -2.8%  (14,898) -2.6%
Other expense, net  (598) -0.1%  (700) -0.1%
         
Total other expense  (19,196) -2.9%  (15,598) -2.7%
         
Income before income taxes  107,857 16.3%  117,061 20.5%
         
Income tax expense  32,047 4.8%  37,291 6.5%
         
Net income  75,810 11.4%  79,770 14.0%
         
Less: net income attributable to noncontrolling interests  352 0.1%  621 0.1%
         
Net income attributable to Stericycle, Inc.  $ 75,458 11.4%  $ 79,149 13.9%
         
Earnings per share - diluted  $ 0.87    $ 0.91  
         
Weighted average number of common shares outstanding - diluted  86,357,006    86,613,843  
         
         
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
     
  Three Months Ended
  March 31,
  2015 2014
Operating Activities:    
Net income  $ 75,810  $ 79,770
Adjustments to reconcile net income to net cash provided by operating activities:    
Stock compensation expense  5,487  4,672
Excess tax benefit of stock options exercised  (8,222)  (3,734)
Depreciation  18,766  16,041
Amortization  8,797  7,315
Deferred income taxes  (2,957)  6,175
Change in fair value of contingent consideration  (675)  4,789
Plant conversion and restructuring  5,988  -- 
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:    
Accounts receivable  (14,491)  4,529
Accounts payable  5,443  5,279
Accrued liabilities  35,924  14,189
Deferred revenue  (628)  2,642
Other assets and liabilities  3,312  4,182
     
Net cash provided by operating activities  132,554  145,849
     
Investing Activities:    
Payments for acquisitions, net of cash acquired  (34,210)  (12,262)
Proceeds from/ (purchases of) investments  257  (1,947)
Capital expenditures  (21,356)  (16,420)
     
Net cash used in investing activities  (55,309)  (30,629)
     
Financing Activities:    
Repayments of long-term debt and other obligations  (9,780)  (12,430)
Borrowings on foreign bank debt  4,851  36,640
Repayments on foreign bank debt  (38,252)  (37,157)
Borrowings on term loan  250,000  -- 
Borrowings on senior credit facility  394,097  149,000
Repayments on senior credit facility  (670,254)  (203,377)
Payments on capital lease obligations  (988)  (876)
Purchases and cancellations of treasury stock  (11,516)  (76,914)
Payment for cash flow hedge  (8,833)  -- 
Proceeds from issuances of common stock  27,452  8,655
Excess tax benefit of stock options exercised  8,222  3,734
Payments to noncontrolling interests  (2,603)  (97)
     
Net cash used in financing activities  (57,604)  (132,822)
Effect of exchange rate changes on cash and cash equivalents  (3,594)  43
Net increase/ (decrease) in cash and cash equivalents  16,047  (17,559)
Cash and cash equivalents at beginning of period  22,236  67,167
     
Cash and cash equivalents at end of period  $ 38,283  $ 49,608
     
Non-cash activities:    
Issuances of obligations for acquisitions  $ 21,543  $ 13,095
     


            

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