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Stericycle, Inc. Reports Results for the Third Quarter and Year to Date 2013



  Stericycle, Inc. Reports Results for the Third Quarter and Year to Date 2013

Business Wire

LAKE FOREST, Ill. -- October 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        $ 534.6   $ 480.5   $ 54.1    11.3 %     $ 1,574.9   $ 1,409.5   $ 165.4    11.7 %
Revenues
(GAAP)
Adjustment
for Foreign       5.3       -         5.3                  13.5        -           13.5    
Exchange
Subtotal          539.9     480.5     59.4    12.4 %       1,588.4     1,409.5     178.9    12.7 %
(non-GAAP):
                                                                                             
Adjustment
for               (38.1 )   (4.0  )   (34.1 )              (113.4  )   (8.2    )   (105.2 )
Acquisitions
Adjustment
for Regulated
Returns and
                  (25.1 )   (28.8 )   3.7                  (71.3   )   (93.5   )   22.2    
Recall
Management
Services
Subtotal        $ 476.7   $ 447.7   $ 29.0    6.5  %     $ 1,403.7   $ 1,307.8   $ 95.9     7.3  %
(non-GAAP):
                                                                                             
Domestic/
International
Breakdown:
Domestic        $ 378.1   $ 348.2   $ 29.9    8.6  %     $ 1,112.0   $ 1,015.3   $ 96.7     9.5  %
Revenues
International     156.5     132.3     24.2    18.3 %       462.9       394.2       68.7     17.4 %
Revenues
Total As
Reported        $ 534.6   $ 480.5   $ 54.1    11.3 %     $ 1,574.9   $ 1,409.5   $ 165.4    11.7 %
Revenues
(GAAP)

(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       0.02      0.03                        0.07      0.07
Expenses
Integration       0.01      0.01                        0.03      0.03
Expenses
Change in         (0.00 )   (0.00 )                     (0.00 )   0.01
Fair Value
Restructuring
and Plant         0.00      0.02                        0.00      0.02
Closure
Loss on Sale      -         0.04                        -         0.04
of Business
Litigation        0.00      -                           0.00      -
Settlement
                                                                               
Non-GAAP EPS    $ 0.96    $ 0.84    $ 0.11 13.2 %     $ 2.76    $ 2.45 $ 0.32 12.9 %
(Adjusted)

(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 23^rd 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        $            % of          $            % of        $            % of
                              Rev                      Rev                        Rev                      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    280,645      52.5  %     253,526      52.8  %       826,703      52.5  %     746,540      53.0  %
depreciation
shown below)
Depreciation -
cost of          12,531       2.3   %     11,404       2.4   %       36,856       2.3   %     32,622       2.3   %
revenues
                                                                                                            
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              92,964       17.4  %     82,176       17.1  %       272,363      17.3  %     240,635      17.1  %
amortization
below)
Depreciation -   2,610        0.5   %     2,480        0.5   %       8,373        0.5   %     6,892        0.5   %
SG&A
Amortization     6,709        1.3   %     5,561        1.2   %       19,884       1.3   %     15,675       1.1   %
Total SG&A       102,283      19.1  %     90,217       18.8  %       300,620      19.1  %     263,202      18.7  %
expense
                                                                                                            
Income from
operations
before
acquisition,
integration,     139,120      26.0  %     125,337      26.1  %       410,729      26.1  %     367,147      26.0  %
and other
expenses
                                                                                                            
Acquisition      2,111        0.4   %     2,467        0.5   %       6,238        0.4   %     6,213        0.4   %
expenses
Integration      1,423        0.3   %     1,217        0.3   %       3,702        0.2   %     3,540        0.3   %
expenses
Change in fair
value of         (185       ) 0.0   %     (11        ) 0.0   %       (307       ) 0.0   %     591          0.0   %
contingent
consideration
Litigation       12           0.0   %     -            0.0   %       116          0.0   %     -            0.0   %
settlement
Loss on sale     -            0.0   %     4,867        1.0   %       -            0.0   %     4,867        0.3   %
of business
Restructuring
and plant        364          0.1   %     2,250        0.5   %       468          0.0   %     3,400        0.2   %
closure costs
                                                                                                            
Income from      135,395      25.3  %     114,547      23.8  %       400,512      25.4  %     348,536      24.7  %
operations
                                                                                                            
Other income
(expense):
Interest         151          0.0   %     117          0.0   %       420          0.0   %     333          0.0   %
income
Interest         (13,467    ) -2.5  %     (13,048    ) -2.7  %       (40,028    ) -2.5  %     (38,597    ) -2.7  %
expense
Other expense,   (1,341     ) -0.3  %     (488       ) -0.1  %       (2,899     ) -0.2  %     (556       ) 0.0   %
net
                                                                                                            
Total other      (14,657    ) -2.7  %     (13,419    ) -2.8  %       (42,507    ) -2.7  %     (38,820    ) -2.8  %
expense
                                                                                                            
Income before    120,738      22.6  %     101,128      21.0  %       358,005      22.7  %     309,716      22.0  %
income taxes
                                                                                                            
Income tax       39,906       7.5   %     35,382       7.4   %       123,508      7.8   %     110,283      7.8   %
expense
                                                                                                            
Net income       80,832       15.1  %     65,746       13.7  %       234,497      14.9  %     199,433      14.1  %
                                                                                                            
Less: net
income
attributable     285          0.1   %     269          0.1   %       1,289        0.1   %     1,506        0.1   %
to
noncontrolling
interests
                                                                                                            
Net income
attributable   $ 80,547       15.1  %   $ 65,477       13.6  %     $ 233,208      14.8  %   $ 197,927      14.0  %
to Stericycle,
Inc.
                                                                                                            
Earnings per
share -        $ 0.92                   $ 0.75                     $ 2.67                   $ 2.28        
diluted
                                                                                                            
Weighted
average number
of
common shares
outstanding -    87,401,565               87,305,779                 87,497,276               86,911,229  
diluted
                                                                                                            

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             45             (49      )
investments
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          5,075          (96,601  )
facility
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            32,256         (6,306   )
equivalents
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
                                                                              

Contact:

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