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Stericycle: Results for Q2 2009
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Stericycle, Inc. eported financial results for the second quarter of 2009.
Revenues for the quarter ending June 30, 2009 were $289.3 million, up 4.1% from $277.8 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $20.5 million to the growth in revenues for the quarter. Revenues increased 9.3% compared to the second quarter of 2008 when adjusted for an unfavorable foreign exchange impact of $14.3 million. Regulated returns management services revenues were $18.3 million versus $26.0 million in 2008. Gross profit was $136.5 million, up 10.9% from $123.2 million in the same quarter last year. Gross profit as a percent of revenue was 47.2% versus 44.3% in the second quarter of 2008.
Net income for the second quarter of 2009 was $43.9 million or $0.51 per diluted share compared with net income of $38.7 million or $0.44 per diluted share for the second quarter of 2008. Net income for the second quarter of 2008 included the effect of $0.1 million of charges related to an arbitration settlement, and net income for the second quarter of 2009 included the effect of $0.8 million of transactional expenses related to acquisitions. Adjusted for these charges, the earnings per diluted share increased from $0.44 in the second quarter of 2008 to $0.52 in the second quarter of 2009 or 17.5% (see table below).
For the six months ending June 30, 2009, revenues were $566 million, up 6.3% from $533 million in the same period last year. The unfavorable foreign exchange impact was $30.5 million and regulated returns management services revenues were $38.0 million versus $42.5 million in the same period last year. Gross profit was $264 million, up 11.7% from $237 million in the same period last year. Gross profit as a percent of revenues was 46.7% versus 44.5% in the same period in 2008. Earnings per diluted share increased 23.1% to $0.97 from $0.79 per diluted share in the same period last year. Net income for the six months ended 2008 included the effect of $3.4 million of charges related to an arbitration settlement, and net income for the six months of 2009 included the effect of $1.2 million of transactional expenses related to acquisitions. Adjusted for these charges, the earnings per diluted share increased from $0.83 to $0.99, or 19.1% (see table below):
Table to reconcile non-GAAP EPS to GAAP EPS
Three month ended June 30, Six months ended June 30,
2009 2008 Change $ Change % 2009 2008 Change $ Change %
GAAP EPS $0.51 $0.44 $0.07 15.6% $0.97 $0.79 $0.18 23.1%
Transactional expenses related to acquisitions 0.01 - 0.02 -
Arbitration settlement - - - 0.04
Non-GAAP EPS (adjusted) $0.52 $0.44 $0.08 17.5% $0.99 $0.83 $0.16 19.1%
Cash flow from operations was $126.2 million for the first six months of 2009. Cash flow and increased loan balances were used to strengthen our business by acquisitions, capital expenditures and funding share repurchases.
On June 24, 2009, we entered into a three-year term loan credit agreement. Our initial borrowing under this credit agreement was $50 million and on July 23, 2009, we borrowed an additional $145 million. We also have signed commitments for an additional borrowing of $20 million under the term credit agreement. The proceeds of these loans were used to reduce our borrowings under our revolving credit facility. The interest rate on our loans under the new credit agreement is fluctuating and based on LIBOR plus the applicable margin provided in the credit agreement. The applicable margin is based on our leverage ratio and ranges from 2.75% to 3.5%. We anticipate that our after-tax interest costs for the remainder of 2009 will increase by approximately $1.8 million as a result of our borrowings under the new credit agreement.
For more information about Stericycle, please visit our website at www.stericycle.com.
Conference call to be held July 28, 2009 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 August 28th by dialing 800-642-1687, access code 17891684. 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
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
June 30, December 31,
2009 2008
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,682 $ 9,095
Short-term investments 977 1,408
Accounts receivable, less allowance for doubtful
accounts of $7,357 in 2009 and $6,616 in 2008 163,263 168,598
Deferred income taxes 11,121 16,821
Other current assets 30,660 28,508
Total current assets 208,703 224,430
Property, plant and equipment, net 216,971 207,144
Other assets:
Goodwill 1,188,946 1,135,778
Intangible assets, less accumulated amortization of
$15,633 in 2009 and $14,116 in 2008 203,995 170,624
Other 23,067 21,322
Total other assets 1,416,008 1,327,724
Total assets $ 1,841,682 $ 1,759,298
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 43,917 $ 38,880
Accounts payable 29,821 33,612
Accrued liabilities 77,788 93,487
Deferred revenue 14,165 13,663
Total current liabilities 165,691 179,642
Long-term debt, net of current portion 741,641 753,846
Deferred income taxes 161,698 147,287
Other liabilities 6,033 8,043
Shareholders' equity:
Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 85,033,935 issued and outstanding in 2009,
85,252,879 issued and outstanding in 2008) 850 852
Additional paid in capital 58,092 67,776
Accumulated other comprehensive loss (10,807 ) (32,075 )
Retained earnings 718,484 633,927
Total shareholders' equity 766,619 670,480
Total liabilities and shareholders' equity $ 1,841,682 $ 1,759,298
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
2009 2008 2009 2008
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 289,268 100.0 % $ 277,786 100.0 % $ 566,358 100.0 % $ 532,570 100.0 %
Cost of revenues 152,734 52.8 % 154,632 55.7 % 302,021 53.3 % 295,826 55.5 %
Gross profit 136,534 47.2 % 123,154 44.3 % 264,337 46.7 % 236,744 44.5 %
Selling, general and
administrative expenses 54,215 18.7 % 50,973 18.3 % 106,087 18.7 % 97,958 18.4 %
Amortization 1,376 0.5 % 792 0.3 % 2,386 0.4 % 1,844 0.3 %
Total SG&A expense and amortization 55,591 19.2 % 51,765 18.6 % 108,473 19.2 % 99,802 18.7 %
Income from operations before
acquisition and other expenses 80,943 28.0 % 71,389 25.7 % 155,864 27.5 % 136,942 25.7 %
Transactional expenses related to acquisitions 1,330 0.5 % - 0.0 % 1,940 0.3 % - 0.0 %
Arbitration settlement and related costs - 0.0 % 147 0.1 % - 0.0 % 5,499 1.0 %
Acquisition integration expenses 73 0.0 % 316 0.1 % 184 0.0 % 1,029 0.2 %
Income from operations 79,540 27.5 % 70,926 25.5 % 153,740 27.1 % 130,414 24.5 %
Other income (expense):
Interest Income 49 0.0 % 157 0.1 % 223 0.0 % 559 0.1 %
Interest expense (8,200 ) -2.8 % (8,139 ) -2.9 % (16,299 ) -2.9 % (16,267 ) -3.1 %
Other expense, net (920 ) -0.3 % (518 ) -0.2 % (1,729 ) -0.3 % (961 ) -0.2 %
Total other income (expense) (9,071 ) -3.1 % (8,500 ) -3.1 % (17,805 ) -3.1 % (16,669 ) -3.1 %
Income before income taxes 70,469 24.4 % 62,426 22.5 % 135,935 24.0 % 113,745 21.4 %
Income tax expense 26,567 9.2 % 23,741 8.5 % 51,378 9.1 % 43,396 8.1 %
Net income $ 43,902 15.2 % $ 38,685 13.9 % $ 84,557 14.9 % $ 70,349 13.2 %
Earnings per share-diluted $ 0.51 $ 0.44 $ 0.97 $ 0.79
Weighted average number of
common shares outstanding-diluted 86,843,260 88,484,943 86,843,043 88,944,593
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the six months ended
June 30,
2009 2008
(unaudited) (unaudited)
Operating Activities:
Net income $ 84,557 $ 70,349
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on sale of assets 62 -
Write-off of note receivable related to joint venture 798
Stock compensation expense 7,092 5,987
Excess tax benefit from exercise of stock options (551 ) (4,523 )
Depreciation 16,118 14,793
Amortization 2,386 1,844
Deferred income taxes 11,976 11,222
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable 12,302 (9,304 )
Other assets 1,505 (686 )
Accounts payable (7,806 ) (9,575 )
Accrued liabilities (1,620 ) 10,748
Deferred revenues 181 2,982
Net cash provided by operating activities 126,202 94,635
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (60,519 ) (33,399 )
Proceeds from maturity of short-term investments 513 129
Proceeds from sale of property and equipment 448 -
Capital expenditures (17,904 ) (22,977 )
Net cash used in investing activities (77,462 ) (56,247 )
Financing Activities:
Repayment of long-term debt (11,383 ) (3,760 )
Net borrowings on senior credit facility (71,762 ) (29,700 )
Proceeds from term loan 50,000 -
Proceeds from private placement of long-term note - 100,000
Payments of deferred financing costs (888 ) (236 )
Net payments on capital lease obligations (122 ) (199 )
Excess tax benefit from exercise of stock options 551 4,523
Purchase/cancellation of treasury stock (29,975 ) (121,195 )
Proceeds from other issuances of common stock 9,163 9,737
Net cash used in financing activities (54,416 ) (40,830 )
Effect of exchange rate changes on cash (737 ) (2,271 )
Net decrease in cash and cash equivalents (6,413 ) (4,713 )
Cash and cash equivalents at beginning of period 9,095 17,108
Cash and cash equivalents at end of period $ 2,682 $ 12,395
Non-cash activities:
Net issuances of notes payable for certain acquisitions $ 20,756 $ 30,544
Contact:
Stericycle, Inc.
Frank ten Brink 847-607-2012
Stericycle, Inc. eported financial results for the second quarter of 2009.
Revenues for the quarter ending June 30, 2009 were $289.3 million, up 4.1% from $277.8 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $20.5 million to the growth in revenues for the quarter. Revenues increased 9.3% compared to the second quarter of 2008 when adjusted for an unfavorable foreign exchange impact of $14.3 million. Regulated returns management services revenues were $18.3 million versus $26.0 million in 2008. Gross profit was $136.5 million, up 10.9% from $123.2 million in the same quarter last year. Gross profit as a percent of revenue was 47.2% versus 44.3% in the second quarter of 2008.
Net income for the second quarter of 2009 was $43.9 million or $0.51 per diluted share compared with net income of $38.7 million or $0.44 per diluted share for the second quarter of 2008. Net income for the second quarter of 2008 included the effect of $0.1 million of charges related to an arbitration settlement, and net income for the second quarter of 2009 included the effect of $0.8 million of transactional expenses related to acquisitions. Adjusted for these charges, the earnings per diluted share increased from $0.44 in the second quarter of 2008 to $0.52 in the second quarter of 2009 or 17.5% (see table below).
For the six months ending June 30, 2009, revenues were $566 million, up 6.3% from $533 million in the same period last year. The unfavorable foreign exchange impact was $30.5 million and regulated returns management services revenues were $38.0 million versus $42.5 million in the same period last year. Gross profit was $264 million, up 11.7% from $237 million in the same period last year. Gross profit as a percent of revenues was 46.7% versus 44.5% in the same period in 2008. Earnings per diluted share increased 23.1% to $0.97 from $0.79 per diluted share in the same period last year. Net income for the six months ended 2008 included the effect of $3.4 million of charges related to an arbitration settlement, and net income for the six months of 2009 included the effect of $1.2 million of transactional expenses related to acquisitions. Adjusted for these charges, the earnings per diluted share increased from $0.83 to $0.99, or 19.1% (see table below):
Table to reconcile non-GAAP EPS to GAAP EPS
Three month ended June 30, Six months ended June 30,
2009 2008 Change $ Change % 2009 2008 Change $ Change %
GAAP EPS $0.51 $0.44 $0.07 15.6% $0.97 $0.79 $0.18 23.1%
Transactional expenses related to acquisitions 0.01 - 0.02 -
Arbitration settlement - - - 0.04
Non-GAAP EPS (adjusted) $0.52 $0.44 $0.08 17.5% $0.99 $0.83 $0.16 19.1%
Cash flow from operations was $126.2 million for the first six months of 2009. Cash flow and increased loan balances were used to strengthen our business by acquisitions, capital expenditures and funding share repurchases.
On June 24, 2009, we entered into a three-year term loan credit agreement. Our initial borrowing under this credit agreement was $50 million and on July 23, 2009, we borrowed an additional $145 million. We also have signed commitments for an additional borrowing of $20 million under the term credit agreement. The proceeds of these loans were used to reduce our borrowings under our revolving credit facility. The interest rate on our loans under the new credit agreement is fluctuating and based on LIBOR plus the applicable margin provided in the credit agreement. The applicable margin is based on our leverage ratio and ranges from 2.75% to 3.5%. We anticipate that our after-tax interest costs for the remainder of 2009 will increase by approximately $1.8 million as a result of our borrowings under the new credit agreement.
For more information about Stericycle, please visit our website at www.stericycle.com.
Conference call to be held July 28, 2009 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 August 28th by dialing 800-642-1687, access code 17891684. 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
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
June 30, December 31,
2009 2008
(unaudited) (audited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,682 $ 9,095
Short-term investments 977 1,408
Accounts receivable, less allowance for doubtful
accounts of $7,357 in 2009 and $6,616 in 2008 163,263 168,598
Deferred income taxes 11,121 16,821
Other current assets 30,660 28,508
Total current assets 208,703 224,430
Property, plant and equipment, net 216,971 207,144
Other assets:
Goodwill 1,188,946 1,135,778
Intangible assets, less accumulated amortization of
$15,633 in 2009 and $14,116 in 2008 203,995 170,624
Other 23,067 21,322
Total other assets 1,416,008 1,327,724
Total assets $ 1,841,682 $ 1,759,298
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 43,917 $ 38,880
Accounts payable 29,821 33,612
Accrued liabilities 77,788 93,487
Deferred revenue 14,165 13,663
Total current liabilities 165,691 179,642
Long-term debt, net of current portion 741,641 753,846
Deferred income taxes 161,698 147,287
Other liabilities 6,033 8,043
Shareholders' equity:
Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 85,033,935 issued and outstanding in 2009,
85,252,879 issued and outstanding in 2008) 850 852
Additional paid in capital 58,092 67,776
Accumulated other comprehensive loss (10,807 ) (32,075 )
Retained earnings 718,484 633,927
Total shareholders' equity 766,619 670,480
Total liabilities and shareholders' equity $ 1,841,682 $ 1,759,298
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
Three Months Ended Six Months Ended
June 30, June 30,
(unaudited) (unaudited)
2009 2008 2009 2008
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 289,268 100.0 % $ 277,786 100.0 % $ 566,358 100.0 % $ 532,570 100.0 %
Cost of revenues 152,734 52.8 % 154,632 55.7 % 302,021 53.3 % 295,826 55.5 %
Gross profit 136,534 47.2 % 123,154 44.3 % 264,337 46.7 % 236,744 44.5 %
Selling, general and
administrative expenses 54,215 18.7 % 50,973 18.3 % 106,087 18.7 % 97,958 18.4 %
Amortization 1,376 0.5 % 792 0.3 % 2,386 0.4 % 1,844 0.3 %
Total SG&A expense and amortization 55,591 19.2 % 51,765 18.6 % 108,473 19.2 % 99,802 18.7 %
Income from operations before
acquisition and other expenses 80,943 28.0 % 71,389 25.7 % 155,864 27.5 % 136,942 25.7 %
Transactional expenses related to acquisitions 1,330 0.5 % - 0.0 % 1,940 0.3 % - 0.0 %
Arbitration settlement and related costs - 0.0 % 147 0.1 % - 0.0 % 5,499 1.0 %
Acquisition integration expenses 73 0.0 % 316 0.1 % 184 0.0 % 1,029 0.2 %
Income from operations 79,540 27.5 % 70,926 25.5 % 153,740 27.1 % 130,414 24.5 %
Other income (expense):
Interest Income 49 0.0 % 157 0.1 % 223 0.0 % 559 0.1 %
Interest expense (8,200 ) -2.8 % (8,139 ) -2.9 % (16,299 ) -2.9 % (16,267 ) -3.1 %
Other expense, net (920 ) -0.3 % (518 ) -0.2 % (1,729 ) -0.3 % (961 ) -0.2 %
Total other income (expense) (9,071 ) -3.1 % (8,500 ) -3.1 % (17,805 ) -3.1 % (16,669 ) -3.1 %
Income before income taxes 70,469 24.4 % 62,426 22.5 % 135,935 24.0 % 113,745 21.4 %
Income tax expense 26,567 9.2 % 23,741 8.5 % 51,378 9.1 % 43,396 8.1 %
Net income $ 43,902 15.2 % $ 38,685 13.9 % $ 84,557 14.9 % $ 70,349 13.2 %
Earnings per share-diluted $ 0.51 $ 0.44 $ 0.97 $ 0.79
Weighted average number of
common shares outstanding-diluted 86,843,260 88,484,943 86,843,043 88,944,593
STERICYCLE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the six months ended
June 30,
2009 2008
(unaudited) (unaudited)
Operating Activities:
Net income $ 84,557 $ 70,349
Adjustments to reconcile net income to net cash
provided by operating activities:
Loss on sale of assets 62 -
Write-off of note receivable related to joint venture 798
Stock compensation expense 7,092 5,987
Excess tax benefit from exercise of stock options (551 ) (4,523 )
Depreciation 16,118 14,793
Amortization 2,386 1,844
Deferred income taxes 11,976 11,222
Changes in operating assets and liabilities, net of
effect of acquisitions:
Accounts receivable 12,302 (9,304 )
Other assets 1,505 (686 )
Accounts payable (7,806 ) (9,575 )
Accrued liabilities (1,620 ) 10,748
Deferred revenues 181 2,982
Net cash provided by operating activities 126,202 94,635
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (60,519 ) (33,399 )
Proceeds from maturity of short-term investments 513 129
Proceeds from sale of property and equipment 448 -
Capital expenditures (17,904 ) (22,977 )
Net cash used in investing activities (77,462 ) (56,247 )
Financing Activities:
Repayment of long-term debt (11,383 ) (3,760 )
Net borrowings on senior credit facility (71,762 ) (29,700 )
Proceeds from term loan 50,000 -
Proceeds from private placement of long-term note - 100,000
Payments of deferred financing costs (888 ) (236 )
Net payments on capital lease obligations (122 ) (199 )
Excess tax benefit from exercise of stock options 551 4,523
Purchase/cancellation of treasury stock (29,975 ) (121,195 )
Proceeds from other issuances of common stock 9,163 9,737
Net cash used in financing activities (54,416 ) (40,830 )
Effect of exchange rate changes on cash (737 ) (2,271 )
Net decrease in cash and cash equivalents (6,413 ) (4,713 )
Cash and cash equivalents at beginning of period 9,095 17,108
Cash and cash equivalents at end of period $ 2,682 $ 12,395
Non-cash activities:
Net issuances of notes payable for certain acquisitions $ 20,756 $ 30,544
Contact:
Stericycle, Inc.
Frank ten Brink 847-607-2012