2013-12-18 10:49:31
Stericycle, Inc. Reports Results for the Third Quarter and Year to Date 2013
LAKE FOREST, Ill.--(BUSINESS WIRE)--Oct. 23, 2013-- Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third quarter of 2013.
THIRD QUARTER RESULTS
Revenues for the quarter ended September 30, 2013 were $534.6 million, up $54.1 million or 11.3% from $480.5 million in the third quarter last year. Acquisitions contributed approximately $34.1 million to the current period’s growth in revenues. Revenues increased 12.4% compared to the prior period when adjusted for unfavorable foreign exchange impact of $5.3 million. Gross profit was $241.4 million, up 12.0% from $215.6 million in the third quarter last year. Gross profit as a percent of revenue was 45.2% compared with 44.9% in the third quarter of 2012. Earnings per diluted share, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), increased 22.9% to $0.92 from $0.75 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 13.2% to $0.96 from $0.84. See tables below.
FIRST NINE MONTHS’ RESULTS
Revenues for the nine months ending September 30, 2013 were $1,574.9 million, up $165.4 million or 11.7% from $1,409.5 million in the same period last year. Revenues increased 12.7% compared with the prior period when adjusted for unfavorable foreign exchange impact of $13.5 million. Gross profit was $711.3 million, up 12.9% from $630.3 million in the same period last year. Gross profit as a percent of revenue was 45.2% compared with 44.7% in 2012. GAAP earnings per diluted share increased 17.0% to $2.67 from $2.28 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 12.9% to $2.76 from $2.45. 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
2013 2012 $ % 2013 2012 $ %
Total As Reported Revenues (GAAP) $ 534.6 $ 480.5 $ 54.1 11.3 % $ 1,574.9 $ 1,409.5 $ 165.4 11.7 %
Adjustment for Foreign Exchange 5.3 - 5.3 13.5 - 13.5
Subtotal (non-GAAP): 539.9 480.5 59.4 12.4 % 1,588.4 1,409.5 178.9 12.7 %
Adjustment for Acquisitions (38.1 ) (4.0 ) (34.1 ) (113.4 ) (8.2 ) (105.2 )
Adjustment for Regulated Returns and
Recall Management Services
(25.1 ) (28.8 ) 3.7 (71.3 ) (93.5 ) 22.2
Subtotal (non-GAAP): $ 476.7 $ 447.7 $ 29.0 6.5 % $ 1,403.7 $ 1,307.8 $ 95.9 7.3 %
Domestic/ International Breakdown:
Domestic Revenues $ 378.1 $ 348.2 $ 29.9 8.6 % $ 1,112.0 $ 1,015.3 $ 96.7 9.5 %
International Revenues 156.5 132.3 24.2 18.3 % 462.9 394.2 68.7 17.4 %
Total As Reported Revenues (GAAP) $ 534.6 $ 480.5 $ 54.1 11.3 % $ 1,574.9 $ 1,409.5 $ 165.4 11.7 %
(1) When evaluating organic revenue growth for internal purposes, we exclude (i) the impact of foreign exchange, (ii) revenues attributed to acquisitions closed within the preceding 12 months and (iii) revenues from our regulated returns and recall management services. 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 than GAAP revenues.
Table to reconcile GAAP EPS to Non-GAAP EPS(2):
Three Months Ended September 30, Nine Months Ended September 30,
Change Change
2013 2012 $ % 2013 2012 $ %
GAAP EPS $ 0.92 $ 0.75 $ 0.17 22.9 % $ 2.67 $ 2.28 $ 0.39 17.0 %
Acquisition Expenses 0.02 0.03 0.07 0.07
Integration Expenses 0.01 0.01 0.03 0.03
Change in Fair Value (0.00 ) (0.00 ) (0.00 ) 0.01
Restructuring and Plant Closure 0.00 0.02 0.00 0.02
Loss on Sale of Business - 0.04 - 0.04
Litigation Settlement 0.00 - 0.00 -
Non-GAAP EPS (Adjusted) $ 0.96 $ 0.84 $ 0.11 13.2 % $ 2.76 $ 2.45 $ 0.32 12.9 %
(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 $335.3 million and $277.1 million for the nine months ended September 30, 2013 and 2012, 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.
Conference call to be held October 23, 2013 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 23rd by dialing 855-859-2056, access code 86467200. 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 at www.stericycle.com.
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
September 30, December 31,
2013 2012
ASSETS
Current Assets:
Cash and cash equivalents $ 63,580 $ 31,324
Short-term investments 447 503
Accounts receivable, net 370,077 322,246
Deferred income taxes 22,181 22,995
Prepaid expenses 30,909 27,042
Other current assets 40,778 37,176
Total Current Assets 527,972 441,286
Property, plant and equipment, net 352,368 335,870
Goodwill 2,207,845 2,065,103
Intangible assets, net 720,811 667,471
Other assets 36,133 37,008
Total Assets $ 3,845,129 $ 3,546,738
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt $ 107,577 $ 87,781
Accounts payable 82,552 74,225
Accrued liabilities 135,472 125,096
Deferred revenues 19,491 18,095
Other current liabilities 66,512 25,863
Total Current Liabilities 411,604 331,060
Long-term debt, net of current portion 1,295,592 1,268,303
Deferred income taxes 384,110 359,780
Other liabilities 31,090 30,272
Equity:
Common stock 857 860
Additional paid-in capital 177,706 116,720
Accumulated other comprehensive loss (54,998 ) (39,064 )
Retained earnings 1,581,964 1,463,277
Total Stericycle, Inc. Equity 1,705,529 1,541,793
Noncontrolling interests 17,204 15,530
Total Equity 1,722,733 1,557,323
Total Liabilities and Equity $ 3,845,129 $ 3,546,738
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT SHARES AND PER SHARE DATA)
(UNAUDITED)
Three Months Ended Nine Months Ended
September 30, September 30,
2013 2012 2013 2012
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 534,579 100.0 % $ 480,484 100.0 % $ 1,574,908 100.0 % $ 1,409,511 100.0 %
Cost of revenues (exclusive of depreciation shown below) 280,645 52.5 % 253,526 52.8 % 826,703 52.5 % 746,540 53.0 %
Depreciation - cost of revenues 12,531 2.3 % 11,404 2.4 % 36,856 2.3 % 32,622 2.3 %
Gross profit 241,403 45.2 % 215,554 44.9 % 711,349 45.2 % 630,349 44.7 %
Selling, general and administrative expenses
(exclusive of depreciation and amortization below) 92,964 17.4 % 82,176 17.1 % 272,363 17.3 % 240,635 17.1 %
Depreciation - SG&A 2,610 0.5 % 2,480 0.5 % 8,373 0.5 % 6,892 0.5 %
Amortization 6,709 1.3 % 5,561 1.2 % 19,884 1.3 % 15,675 1.1 %
Total SG&A expense 102,283 19.1 % 90,217 18.8 % 300,620 19.1 % 263,202 18.7 %
Income from operations before
acquisition, integration, and other expenses 139,120 26.0 % 125,337 26.1 % 410,729 26.1 % 367,147 26.0 %
Acquisition expenses 2,111 0.4 % 2,467 0.5 % 6,238 0.4 % 6,213 0.4 %
Integration expenses 1,423 0.3 % 1,217 0.3 % 3,702 0.2 % 3,540 0.3 %
Change in fair value of contingent consideration (185 ) 0.0 % (11 ) 0.0 % (307 ) 0.0 % 591 0.0 %
Litigation settlement 12 0.0 % - 0.0 % 116 0.0 % - 0.0 %
Loss on sale of business - 0.0 % 4,867 1.0 % - 0.0 % 4,867 0.3 %
Restructuring and plant closure costs 364 0.1 % 2,250 0.5 % 468 0.0 % 3,400 0.2 %
Income from operations 135,395 25.3 % 114,547 23.8 % 400,512 25.4 % 348,536 24.7 %
Other income (expense):
Interest income 151 0.0 % 117 0.0 % 420 0.0 % 333 0.0 %
Interest expense (13,467 ) -2.5 % (13,048 ) -2.7 % (40,028 ) -2.5 % (38,597 ) -2.7 %
Other expense, net (1,341 ) -0.3 % (488 ) -0.1 % (2,899 ) -0.2 % (556 ) 0.0 %
Total other expense (14,657 ) -2.7 % (13,419 ) -2.8 % (42,507 ) -2.7 % (38,820 ) -2.8 %
Income before income taxes 120,738 22.6 % 101,128 21.0 % 358,005 22.7 % 309,716 22.0 %
Income tax expense 39,906 7.5 % 35,382 7.4 % 123,508 7.8 % 110,283 7.8 %
Net income 80,832 15.1 % 65,746 13.7 % 234,497 14.9 % 199,433 14.1 %
Less: net income attributable to noncontrolling interests 285 0.1 % 269 0.1 % 1,289 0.1 % 1,506 0.1 %
Net income attributable to Stericycle, Inc. $ 80,547 15.1 % $ 65,477 13.6 % $ 233,208 14.8 % $ 197,927 14.0 %
Earnings per share - diluted $ 0.92 $ 0.75 $ 2.67 $ 2.28
Weighted average number of
common shares outstanding - diluted 87,401,565 87,305,779 87,497,276 86,911,229
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Nine Months Ended
September 30,
2013 2012
Operating Activities:
Net income $ 234,497 $ 199,433
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on sale of business - 4,867
Change in fair value of contingent consideration (307 ) 591
Stock compensation expense 12,088 12,346
Excess tax benefit of stock options exercised (12,354 ) (20,994 )
Depreciation 45,229 39,514
Amortization 19,884 15,675
Deferred income taxes 15,623 25,462
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable (43,816 ) (4,657 )
Accounts payable 2,647 7,246
Accrued liabilities 20,486 (14,995 )
Deferred revenue (614 ) 615
Other assets and liabilities 41,920 12,044
Net cash provided by operating activities 335,283 277,147
Investing Activities:
Payments for acquisitions, net of cash acquired (132,920 ) (153,390 )
Proceeds from/ (purchases of) short-term investments 45 (49 )
Proceeds from sale of business and other assets - 764
Capital expenditures (54,329 ) (51,658 )
Net cash used in investing activities (187,204 ) (204,333 )
Financing Activities:
Net repayment of long-term debt (48,130 ) (43,916 )
Net borrowing/ (repayment) on senior credit facility 5,075 (96,601 )
Payments of deferred financing costs - (148 )
Payments on capital lease obligations (2,623 ) (2,559 )
Purchase and cancellation of treasury stock (114,532 ) (2,945 )
Payments to noncontrolling interests - (398 )
Proceeds from issuances of common stock 33,828 44,879
Excess tax benefit of stock options exercised 12,354 20,994
Net cash used in financing activities (114,028 ) (80,694 )
Effect of exchange rate changes on cash (1,795 ) 1,574
Net increase/ (decrease) in cash and cash equivalents 32,256 (6,306 )
Cash and cash equivalents at beginning of period 31,324 22,511
Cash and cash equivalents at end of period $ 63,580 $ 16,205
Non-cash activities:
Net issuances of obligations for acquisitions $ 90,643 $ 62,262
Source: Stericycle, Inc.
Stericycle, Inc.
Frank ten Brink, 847-607-2012
