Date: February 4, 2010
Source: Stericycle, Inc.
Stericycle, Inc. (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):
Table to reconcile GAAP EPS to non-GAAP EPS*
Three months ended December 31, Years ended December 31,
2009 2008 Change $ Change% 2009 2008 Change $ Change%
GAAP EPS $0.52 $0.45 $0.07 15.6 % $2.03 $1.68 $0.34 20.3 %
Transactional expenses related to acquisitions 0.02 - 0.08 -
Arbitration settlement - - - 0.04
Impairment of fixed assets - 0.00 - 0.00
Restructuring costs 0.01 - 0.01 -
Net release of prior years' tax reserve - - (0.02) -
Non-GAAP EPS (adjusted) $0.55 $0.45 $0.10 22.0 % $2.09 $1.73 $0.37 21.3 %
* 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 at www.stericycle.com.
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 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 EXCEPT FOR SHARE AND PER SHARE DATA)
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 $0.01 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 loss (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 FOR SHARE AND PER SHARE DATA)
Three Months Ended December 31, Years Ended December 31,
(unaudited) (unaudited) (audited)
2009 2008 2009 2008
$ % 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 %
Selling, general and administrative 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
acquisition, integration, 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 income (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 % 23,663 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)
For the 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:
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/(purchases) 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 notes - 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 issuances 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 issuances of notes payable for certain acquisitions $ 38,090 $ 106,074
For more information, contact:
Stericycle, Inc.
Frank ten Brink, 847-607-2012
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