Stericycle, Inc. Reports Results for the Third Quarter of 2012

  Stericycle, Inc. Reports Results for the Third Quarter of 2012

Business Wire

LAKE FOREST, Ill. -- October 24, 2012

Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third
quarter of 2012.

Revenues for the quarter ended September 30, 2012 were $480.5 million, up
14.2% from $420.9 million from the third quarter last year. Acquisitions less
than 12 months old contributed approximately $31.5 million to the current
period’s growth in revenues. Revenues increased 16.0% compared with the prior
period when adjusted for an unfavorable foreign exchange impact of $8.0
million. Gross profit was $215.6 million, up 13.4% from $190.1 million in the
third quarter last year. Gross profit as a percent of revenue was 44.9%
compared with 45.2% in the third quarter of 2011.

Net income attributable to Stericycle for the third quarter of 2012 was $65.5
million or $0.75 per diluted share compared with $59.2 million or $0.68 per
diluted share for the third quarter of 2011. Net income attributable to
Stericycle for the third quarter of 2012 and third quarter of 2011 includes
acquisition expenses, restructuring costs, loss on sale of business, and other
items. Excluding the effect of these items, non-GAAP earnings per diluted
share were $0.84 for the current quarter (see table below). Non-GAAP earnings
per diluted share increased 15.3% from non-GAAP earnings per diluted share of
$0.72 in the third quarter of 2011.

FIRST NINE MONTHS’ RESULTS

Revenues for the nine months ending September 30, 2012 were $1.41 billion, up
14.6% from $1.23 billion in the same period last year. Revenues increased
16.2% compared with the prior period when adjusted for an unfavorable foreign
exchange impact of $19.5 million. Gross profit was $630.3 million, up 12.7%
from $559.2 million in the same period last year. Gross profit as a percent of
revenue was 44.7% compared with 45.5% in 2011. Non-GAAP earnings per diluted
share, when adjusted for various items, increased 15.5% to $2.42 in 2012 from
$2.10 in 2011 (see table below).


Table to reconcile non-GAAP EPS to GAAP EPS:

                Three months ended September 30,    Nine months ended September 30,
                                 Change                              Change
                 2012    2011     $       %          2012    2011     $       %
GAAP EPS         $ 0.75   $ 0.68   $ 0.07  10.6 %     $ 2.28   $ 1.95   $ 0.33  17.1 %
                                                                                  
Acquisition
expenses/
Adjustment to      0.03     0.04                         0.08     0.13
Fair Value
                                                                                  
Restructuring/     0.02     0.00                         0.02     0.01
Plant Closure
                                                                                  
Loss on Sale       0.04     0.00                         0.04     0.00
of Business
                                                                                  
Other              0.00     0.00                         0.00     0.01
                                                                                  
Non-GAAP EPS     $ 0.84   $ 0.72   $ 0.11   15.3 %     $ 2.42   $ 2.10   $ 0.32   15.5 %
(adjusted)

* In accordance with U.S. generally accepted accounting principles (GAAP),
reported earnings per share 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 $277.1 million and $215.2 million for the nine
months ended September 30, 2012 and 2011, 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 24, 2012 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 24th,
2012 by dialing 855-859-2056, access code 94523356. 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 STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

                  Three Months Ended                                    Nine Months Ended
                   September 30,                                           September 30,
                   2012                      2011                         2012                      2011
                   (unaudited)                                             (unaudited)
                   $             % of        $             % of          $             % of        $             % of
                                  Rev                        Rev                          Rev                        Rev
                                                                                                                
Revenues         $ 480,484        100.0 %   $ 420,924        100.0 %     $ 1,409,511      100.0 %   $ 1,229,491      100.0 %
                                                                                                                     
Cost of            253,526        52.8  %     220,419        52.4  %       746,540        53.0  %     639,773        52.0  %
revenues
Depreciation -
cost of            11,404         2.4   %     10,450         2.5   %       32,622         2.3   %     30,438         2.5   %
revenues
Restructuring      -            0.0   %     -            0.0   %       -            0.0   %     54           0.0   %
costs
                                                                                                                     
Gross profit       215,554        44.9  %     190,055        45.2  %       630,349        44.7  %     559,226        45.5  %
                                                                                                                     
Selling,
general and        82,176         17.1  %     72,582         17.2  %       240,635        17.1  %     214,815        17.5  %
administrative
expenses
Depreciation -     2,480          0.5   %     2,274          0.5   %       6,892          0.5   %     6,447          0.5   %
SG&A
Amortization       5,561        1.2   %     4,209        1.0   %       15,675       1.1   %     11,102       0.9   %
                                                                                                                     
Total SG&A
expense and        90,217       18.8  %     79,065       18.8  %       263,202      18.7  %     232,364      18.9  %
amortization
                                                                                                                     
Income from
operations
before
acquisition,
integration,       125,337        26.1  %     110,990        26.4  %       367,147        26.0  %     326,862        26.6  %
and other
expenses
                                                                                                                     
Acquisition        2,467          0.5   %     3,195          0.8   %       6,213          0.4   %     14,394         1.2   %
expenses
Restructuring
costs and          2,250          0.5   %     633            0.2   %       3,400          0.2   %     1,032          0.1   %
plant closure
expense
Litigation         -              0.0   %     460            0.1   %       -              0.0   %     460            0.0   %
settlement
Loss on sale       4,867          1.0   %     323            0.1   %       4,867          0.3   %     323            0.0   %
of business
Change in fair
value of           (11        )   0.0   %     -              0.0   %       591            0.0   %     (2,140     )   -0.2  %
contingent
consideration
Integration        1,217        0.3   %     1,813        0.4   %       3,540        0.3   %     3,866        0.3   %
expenses
                                                                                                                     
Income from        114,547        23.8  %     104,566        24.8  %       348,536        24.7  %     308,927        25.1  %
operations
                                                                                                                     
Other income
(expense):
Interest           117            0.0   %     237            0.1   %       333            0.0   %     484            0.0   %
income
Interest           (13,048    )   -2.7  %     (12,034    )   -2.9  %       (38,597    )   -2.7  %     (36,413    )   -3.0  %
expense
Other expense,     (488       )  -0.1  %     (577       )  -0.1  %       (556       )  0.0   %     (1,659     )  -0.1  %
net
                                                                                                                     
Total other
income             (13,419    )  -2.8  %     (12,374    )  -2.9  %       (38,820    )  -2.8  %     (37,588    )  -3.1  %
(expense)
                                                                                                                     
Income before      101,128        21.0  %     92,192         21.9  %       309,716        22.0  %     271,339        22.1  %
income taxes
                                                                                                                     
Income tax         35,382       7.4   %     32,448       7.7   %       110,283      7.8   %     99,119       8.1   %
expense
                                                                                                                     
Net income         65,746       13.7  %     59,744       14.2  %       199,433      14.1  %     172,220      14.0  %
                                                                                                                     
Net income
attributable
to
noncontrolling     269          0.1   %     497          0.1   %       1,506        0.1   %     1,757        0.1   %
interests
                                                                                                                     
Net income
attributable     $ 65,477       13.6  %   $ 59,247       14.1  %     $ 197,927      14.0  %   $ 170,463      13.9  %
to Stericycle,
Inc.
                                                                                                                     
Earnings per
share -          $ 0.75                    $ 0.68                      $ 2.28                    $ 1.95       
diluted
                                                                                                                     
Weighted
average number
of
common shares
outstanding -      87,305,779                87,385,121                  86,911,229                87,620,867 
diluted
                                                                                                                     

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)

                                            September 30,     December 31,
                                              2012                2011
                                              (unaudited)         (audited)
ASSETS
Current Assets:
Cash and cash equivalents                   $ 16,205            $ 22,511
Short-term investments                        466                 416
Accounts receivable, less allowance for
doubtful
accounts of $18,711 in 2012 and $18,905       314,577             290,854
in 2011
Deferred income taxes                         19,712              19,314
Prepaid expenses                              26,092              22,466
Other current assets                          40,333             35,035     
Total Current Assets                          417,385             390,596
Property, plant and equipment, net            328,222             293,912
Goodwill                                      2,005,698           1,913,703
Intangible assets, less accumulated
amortization of
$57,855 in 2012 and $42,050 in 2011           623,418             546,618
Other assets                                  36,873             32,261     
Total Assets                                $ 3,411,596        $ 3,177,090  
                                                                  
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of long-term debt           $ 286,636           $ 100,526
Accounts payable                              80,213              66,635
Accrued liabilities                           122,010             140,521
Deferred revenues                             15,248              12,855
Other current liabilities                     17,216             6,377      
Total Current Liabilities                     521,323             326,914
Long-term debt, net of current portion        1,010,514           1,284,113
Deferred income taxes                         356,196             313,733
Other liabilities                             30,705              25,079
Equity:
Common stock (par value $0.01 per
share, 120,000,000 shares
authorized, 85,924,721 issued and
outstanding in 2012,
and 84,696,227 issued and outstanding         859                 847
in 2011)
Additional paid-in capital                    84,046              -
Accumulated other comprehensive loss          (41,602    )        (45,984    )
Retained earnings                             1,434,373          1,243,303  
Total Stericycle, Inc.'s Equity               1,477,676           1,198,166
Noncontrolling interest                       15,182             29,085     
Total Equity                                  1,492,858          1,227,251  
Total Liabilities and Equity                $ 3,411,596        $ 3,177,090  
                                                                             

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

                                               Nine Months Ended
                                                 September 30,
                                                 2012            2011
                                                 (unaudited)       (unaudited)
Operating Activities:
Net income                                     $ 199,433         $ 172,220
Adjustments to reconcile net income to net
cash
provided by operating activities:
Loss on sale of business                         4,867             323
Change in fair value of contingent               591               (2,140    )
consideration
Accelerated amortization of term loan            -                 1,241
financing fees
Stock compensation expense                       12,346            11,563
Excess tax benefit of stock options              (20,994   )       (16,614   )
exercised
Depreciation                                     39,514            36,885
Amortization                                     15,675            11,102
Deferred income taxes                            25,462            27,685
Changes in operating assets and
liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable                              (4,657    )       (20,288   )
Accounts payable                                 7,246             (11,239   )
Accrued liabilities                              (972      )       16,694
Deferred revenues                                615               (1,241    )
Other assets and liabilities                     (1,979    )       (11,015   )
                                                                   
Net cash provided by operating activities        277,147          215,176   
                                                                   
Investing Activities:
Payments for acquisitions, net of cash           (153,390  )       (467,430  )
acquired
(Purchases of)/ proceeds from short-term         (49       )       15,941
investments
Proceeds from sale of business and other         764               2,371
assets
Capital expenditures                             (51,658   )       (36,981   )
                                                                   
Net cash used in investing activities            (204,333  )       (486,099  )
                                                                   
Financing Activities:
Net repayment of long-term debt                  (43,916   )       (17,294   )
Net (repayments)/ borrowings on senior           (96,601   )       269,792
credit facility
Payments of deferred financing costs             (148      )       (3,740    )
Payments on capital lease obligations            (2,559    )       (2,703    )
Purchase and cancellation of treasury            (2,945    )       (81,201   )
stock
Proceeds from other issuances of common          44,879            30,487
stock
Excess tax benefit of stock options              20,994            16,614
exercised
Payments to noncontrolling interests             (398      )       -         
                                                                   
Net cash (used in)/ provided by financing        (80,694   )       211,955
activities
Effect of exchange rate changes on cash          1,574            3,087     
Net decrease in cash and cash equivalents        (6,306    )       (55,881   )
Cash and cash equivalents at beginning of        22,511           79,276    
period
                                                                   
Cash and cash equivalents at end of period     $ 16,205         $ 23,395    
                                                                   
Non-cash activities:
Net issuances of obligations for               $ 62,262          $ 41,847
acquisitions
                                                                             

Contact:

Stericycle, Inc.
Frank ten Brink, 847-607-2012
 
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