Stericycle, Inc.: Results for First Quarter 2010

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Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the first quarter of 2010.

Revenues for the quarter ended March 31, 2010 were $335.2 million, up 21.0% from $277.1 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $28.9 million to the growth in revenues for the quarter. Revenues increased 19.1% compared to the first quarter of 2009 when adjusted for favorable foreign exchange impacts in the first quarter of 2010 of $5.2 million. Gross profit was $155.3 million, up 21.5% from $127.8 million in the first quarter last year. Gross profit as a percent of revenue was 46.3% compared with 46.1% in the first quarter of 2009. Gross profit for the first quarter of 2010 was unfavorably impacted by $0.4 million of restructuring costs for our regulated returns management services business.

Net income attributable to Stericycle for the first quarter of 2010 was $48.1 million or $0.56 per diluted share compared with $40.7 million or $0.47 per diluted share for the first quarter of 2009. Net income attributable to Stericycle for the first quarter of 2009 included the effect of $0.4 million of after-tax transaction expenses related to acquisitions, and net income for the first quarter of 2010 included the effect of $0.7 million of after-tax transaction expenses related to acquisitions and $0.4 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 $0.47 in the first quarter of 2009 to $0.57 in the first quarter of 2010 or up 20.2% (see table below).
Table to reconcile GAAP EPS to non-GAAP EPS*
          Three months ended March 31,
        2010           2009           

Change

$


Change

%
GAAP EPS         $0.56         $0.47         $0.09         18.7     %


Transaction expenses related to acquisitions/Restructuring costs
        0.01         0.01                 

Non-GAAP EPS (adjusted)         $0.57         $0.47         $0.10         20.2     %

* 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 $81.1 million for the first quarter of 2010. 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 April 28, 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 May 28th by dialing 800-642-1687, access code 63224499. 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)


            March 31,             December 31,
            2010             2009
            (unaudited)             (audited)
ASSETS                         
Current Assets:                         
Cash and cash equivalents         $ 22,886             $ 15,767     
Short-term investments             1,786                 1,131     

Accounts receivable, less allowance for doubtful
accounts of $9,370 in 2010 and $8,709 in 2009
            192,296                 179,770     
Deferred income taxes             9,746                 14,087     
Prepaid expenses             19,296                 12,421     
Other current assets             25,804                   23,364     
Total Current Assets             271,814                 246,540     
Property, plant and equipment, net             253,830                 246,154     
Other assets:                         
Goodwill             1,428,348                 1,394,091     

Intangible assets, less accumulated amortization of
$20,364 in 2010 and $18,546 in 2009
            304,783                 269,454     
Other             28,236                   26,564     
Total other assets             1,761,367                   1,690,109     
Total Assets         $     2,287,011               $     2,182,803     

LIABILITIES AND SHAREHOLDERS' EQUITY                         
Current Liabilities:                         
Current portion of long-term debt         $     67,680             $     65,932     
Accounts payable             45,922                 47,608     
Accrued liabilities             113,824                 92,226     
Deferred revenues             16,377                   14,954     
Total Current Liabilities             243,803                   220,720     
Long-term debt, net of current portion             929,039                 922,919     
Deferred income taxes             187,797                 171,744     
Other liabilities             14,482                 10,247     
Shareholders' Equity:                         

Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 84,652,064 in 2010 and 84,715,005 issued and outstanding in 2009)
            847                 847     
Additional paid-in capital             46,290                 47,522     
Accumulated other comprehensive loss             (22,562     )             (12,292     )
Retained earnings             857,737                   809,618     
Total Stericycle, Inc. Shareholders' Equity             882,312                 845,695     
Noncontrolling interest             29,578                 11,478     
Total Shareholders' Equity             911,890                   857,173     
Total Liabilities and Shareholders' Equity         $     2,287,011               $     2,182,803     
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)


            Three Months Ended
            March 31,
            2010             2009
            (unaudited)
            $           % of Rev             $           % of Rev

Revenues         $     335,177         100.0%         $     277,090         100.0%

Cost of revenues             179,432         53.5%             149,287         53.9%
Restructuring Costs             428           0.1%             -           0.0%

Gross profit             155,317         46.3%             127,803         46.1%

Selling, general and administrative expenses             64,022         19.1%             51,872         18.7%
Amortization             1,975           0.6%             1,010           0.4%

Total SG&A expense and amortization             65,997           19.7%             52,882           19.1%

Income from operations before                                         
acquisition, integration, and other expenses             89,320         26.6%             74,921         27.0%

Transactional expenses related to acquisitions             800         0.2%             610         0.2%
Restructuring costs and                                         
impairment of fixed assets             239         0.1%             -         0.0%
Acquisition integration expenses             1,149           0.3%             111           0.0%

Income from operations             87,132         26.0%             74,200         26.8%

Other income (expense):                                         
Interest income             80         0.0%             174         0.1%
Interest expense             (8,963)         -2.7%             (8,099)         -2.9%
Other expense, net             (1,003)           -0.3%             (790)           -0.3%

Total other income (expense)             (9,886)           -2.9%             (8,715)           -3.1%

Income before income taxes             77,246         23.0%             65,485         23.6%

Income tax expense             28,612           8.5%             24,811           9.0%

Net income             48,634           14.5%             40,674           14.7%

Net income attributable to                                         
noncontrolling interests             515         0.2%             19         0.0%

Net income attributable to Stericycle, Inc.         $     48,119           14.4%         $     40,655           14.7%

Earnings per share-diluted         $     0.56                 $     0.47         

Weighted average number of                                         
common shares outstanding-diluted             86,573,237                     86,841,903         
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

            Three Months Ended
            March 31,
            2010             2009
            (unaudited)             (unaudited)
Operating Activities:                         
Net income         $     48,634             $     40,655     
Adjustments to reconcile net income to net cash                         
provided by operating activities:                         
Restructuring costs and impairment of fixed assets             667                 -     
Stock compensation expense             3,874                 3,461     
Excess tax benefit of stock options exercised             (1,163     )             (264     )
Depreciation             10,414                 7,834     
Amortization             1,975                 1,010     
Deferred income taxes             13,784                 7,858     
Changes in operating assets and liabilities, net of                         
effect of acquisitions:                         
Accounts receivable             (7,932     )             7,882     
Accounts payable             (3,522     )             (3,715     )
Accrued liabilities             14,934                 13,527     
Deferred revenues             1,611                 1,096     
Other assets             (2,221     )             (3,068     )

Net cash provided by operating activities             81,055                   76,276     

Investing Activities:                         
Payments for acquisitions and international                         
investments, net of cash acquired             (50,459     )             (16,296     )
Purchases of short-term investments             (423     )             (1,664     )
Proceeds from sale of property and equipment             -                 244     
Capital expenditures             (12,804 )             (8,389)

Net cash used in investing activities     (63,686 )             (26,105 )

Financing Activities:                         
Repayment of long-term debt         (27,533 )             (2,908)
Net borrowings/(repayments) on senior credit facility             24,873             (25,112 )
Purchase/cancellation of treasury stock             (10,616 )             (27,482 )
Proceeds from other issuances of common stock             4,195                 3,229     
Excess tax benefit of stock options exercised             1,163                   264     

Net cash used in financing activities             (7,918)             (52,009     )
Effect of exchange rate changes on cash             (2,332)             1,839     
Net increase in cash and cash equivalents             7,119                 1     
Cash and cash equivalents at beginning of period             15,767               9,095     

Cash and cash equivalents at end of period  $ 22,886               $ 9,096     
Non-cash activities:                         
Net issuances of notes payable for certain acquisitions         $ 10,038 $ 1,900     

Contacts:

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