8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 22, 2015

Stericycle, Inc.

(Exact name of registrant as specified in its charter)

Delaware	0-21229	36-3640402
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification Number)

28161 North Keith Drive

Lake Forest, Illinois 60045

(Address of principal executive offices including zip code)

(847) 367-5910

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[ ]    Written communications pursuant to Rule 425 under the Securities Act (17 CR 230.425)

[ ]    Soliciting material pursuant to Rule 425 under the Securities Act (17 CFR 240.14a-12)

[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02    Results of Operations and Financial Condition

On October 22, 2015 Stericycle, Inc. issued a press release announcing its financial results for the the quarter and nine months ended September 30, 2015. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated by reference.

Item 9.01    Financial Statements and Exhibits

(d)    Exhibits

99.1    Press release issued by Stericycle, Inc. dated October 22, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: October 22, 2015		Stericycle, Inc.
	By:	/s/ DANIEL V. GINNETTI
		Daniel V. Ginnetti
		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit NumberDescription

99.1            Press Release issued by Stericycle, Inc. dated October 22, 2015.

EX-99.1

EXHIBIT 99.1

FOR FURTHER INFORMATION CONTACT:        

Investor Relations 847-607-2012

Conference call to be held October 22, 2015 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 22nd by dialing 855-859-2056, access code 39410916. To hear a live simulcast of the call or access the audio archive, visit the investor relations page on www.stericycle.com.

STERICYCLE, INC. REPORTS RESULTS

FOR THE THIRD QUARTER AND YEAR TO DATE 2015

Lake Forest, Illinois, October 22, 2015—Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the third quarter and year to date 2015.

THIRD QUARTER RESULTS

Revenues for the quarter ended September 30, 2015 were $718.6 million, up $50.7 million or 7.6%, from $667.9 million in the third quarter last year. Acquisitions contributed approximately $33.3 million in revenues to the current period’s growth. Revenues increased 12.5% compared to the prior period when adjusted for unfavorable foreign exchange impact of $33.0 million.

Gross profit, reported in accordance with U.S. generally accepted accounting principles (“GAAP”), was $299.7 million, up 7.5% from $278.7 million in the third quarter last year. GAAP gross profit as a percent of revenues was 41.7% for both the third quarters of 2015 and 2014. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $300.2 million, up 7.4% from $279.5 million in the third quarter last year. Non-GAAP gross profit as a percent of revenues was 41.8% compared to 41.9% in the third quarter of 2014.

GAAP earnings per diluted share decreased 51.6% to $0.47 from $0.96 in the third quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, remained at $1.08. See tables below.

FIRST NINE MONTHS RESULTS

Revenues for the nine months ended September 30, 2015 were $2.10 billion, up $219.0 million or 11.7%, from $1.88 billion in the same period last year. Acquisitions contributed approximately $178.5 million in revenues to the current year’s growth. Revenues increased 16.1% compared with the prior period when adjusted for unfavorable foreign exchange impact of $83.3 million.

GAAP gross profit was $885.8 million, up 9.4% from $809.4 million in the same period last year. GAAP gross profit as a percent of revenues was 42.2% compared to 43.1% in the same period last year. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $886.8 million, up 9.2% from $812.0 million in the same period as last year. Non-GAAP gross profit as a percent of revenues was 42.3% compared to 43.2% in the same period as last year.

GAAP earnings per diluted share decreased 27.8% to $2.04 from $2.83 in 2014. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 4.5% to $3.30 from $3.15. See tables below.

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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
	2015		2014		$		%		2015		2014		$		%
Total As Reported Revenues (GAAP)	$	718.6	$	667.9	$	50.7	7.6	%	$	2,097.6	$	1,878.7	$	219.0	11.7	%
Adjustment for Foreign Exchange	33.0				33.0				83.3				83.3
Subtotal (non-GAAP):	751.6		667.9		83.7		12.5	%	2,181.0		1,878.7		302.3		16.1	%
Adjustment for Acquisitions	(37.0)		(3.7)		(33.3)				(232.5)		(54.0)		(178.5)
Adjustment for Regulated Returns and Recall Management Services	(26.4)		(16.6)		(9.8)				(67.0)		(64.4)		(2.6)
Total revenues, as adjusted (non-GAAP):	$	688.2	$	647.6	$	40.6	6.3	%	$	1,881.5	$	1,760.3	$	121.2	6.9	%
Domestic/ International Breakdown:
Domestic Revenues	$	523.5	$	468.7	$	54.8	11.7	%	$	1,513.9	$	1,310.8	$	203.2	15.5	%
International Revenues	195.1		199.2		(4.1)		(2.1	)%	583.7		567.9		15.8		2.8	%
Total As Reported Revenues (GAAP)	$	718.6	$	667.9	$	50.7	7.6	%	$	2,097.6	$	1,878.7	$	219.0	11.7	%

(1) For internal purposes, we exclude the impact of foreign exchange, revenues attributed to acquisitions closed within the preceding 12 months, and revenue from our regulated returns and recall management services when we evaluate organic revenue growth. 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, as compared to GAAP revenues.

Table to reconcile GAAP Gross Profit to Non-GAAP Gross Profit (in thousands)⁽²⁾ 

	Three Months Ended September 30,								Nine Months Ended September 30,
	2015				2014				2015				2014
	$		% of Rev		$		% of Rev		$		% of Rev		$		% of Rev
GAAP Gross Profit		$299,675	41.7	%		$278,669	41.7	%		$885,830	42.2	%		$809,442	43.1	%
Plant Conversion Expenses	487		0.1	%	845		0.1	%	1,001		0.0	%	2,534		0.1	%
Non-GAAP Gross Profit		$300,162	41.8	%		$279,514	41.9	%		$886,831	42.3	%		$811,976	43.2	%

(2) In accordance with GAAP, reported Gross Profit includes the 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 Gross Profit are not intended to imply, and should not be interpreted as implying, that non-GAAP Gross Profit is a better measure of performance than GAAP Gross Profit.

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Table to reconcile GAAP EPS to Non-GAAP EPS⁽³⁾ 

	Three Months Ended September 30,									Nine Months Ended September 30,
					Change									Change
	2015		2014		$			%		2015		2014		$			%
GAAP EPS	$	0.47	$	0.96	$	(0.50	)	(51.60	)%	$	2.04	$	2.83	$	(0.79	)	(27.80	)%
Acquisition Expenses a	0.27		0.03							0.34		0.12
Integration Expenses a	0.10		0.05							0.23		0.11
Change in Fair Value of Contingent   Consideration a	--		--							(0.01)		0.05
Litigation Expenses a	0.21		0.01							0.54		0.02
Plant Conversion and Restructuring   Expenses a	0.02		0.02							0.15		0.03
Add Back Convertible Preferred Stock Dividend Method b	0.02		--							0.02		--
Reallocation of EPS Related to Convertible Preferred Stock If-Converted Method b	(0.01)		--							(0.01)		--
Non-GAAP EPS (Adjusted)	$	1.08	$	1.08	$	0.00		(0.10	)%		$3.30	$	3.15	$	0.14		4.5	%

(3a) In accordance with GAAP, reported earnings per share (EPS) include the after-tax impact of the items identified. For internal purposes, including the determination of management compensation, the Company excludes these items from results when evaluating operating performance.

(3b) In accordance with GAAP, the issue of the Mandatory Convertible Preferred Stock requires that EPS for GAAP purposes be stated using the more dilutive of the dividend method or the if-converted method. Under the dividend method, the net income is reduced by the amount of the accrued dividend related to Mandatory Convertible Preferred Stock. Under the if-converted method, the dividend is ignored in favor of the diluted share count that would occur under the assumption that the Mandatory Convertible Preferred shares were converted to common shares at the closing share price of the last day in the quarter. In order to align the EPS calculation with the reporting method that will prevail when the preferred stock converts to common stock, the EPS related to the dividend is added back, then reduced by the amount that the if-converted method exceeds the dividend method.

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 $293.3 million and $345.0 million for the nine months ended September 30, 2015 and 2014, respectively.

For more information about Stericycle, please visit our website at www.stericycle.com.

Safe Harbor Statement: This press release may contain forward-looking statements that involve risks and uncertainties, some of which are beyond our control (for example, general economic and market 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 the collection, transportation, treatment and disposal of regulated waste, increases in transportation and other operating costs, the level of governmental enforcement of regulations governing regulated waste collection and treatment, our ability to execute our acquisition strategy and to integrate acquired businesses, competition and demand for services in the regulated waste industry, political, economic and currency risks related to our foreign operations, impairments of goodwill or other indefinite-lived intangibles, exposure to environmental liabilities, compliance with existing and future legal and regulatory requirements, as well as other factors described in our filings with the U.S. Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K. 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.

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STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

(UNAUDITED)

	September 30,			December 31,
	2015			2014
ASSETS
Current Assets:
Cash and cash equivalents	$	32,883		$	22,236
Short-term investments	636,288			380
Accounts receivable, net	524,503			465,473
Deferred income taxes	51,094			28,322
Prepaid expenses	34,197			30,632
Other current assets	40,500			33,173
Total Current Assets	1,319,465			580,216
Property, plant and equipment, net	464,898			460,408
Goodwill	2,447,454			2,418,832
Intangible assets, net	909,503			909,645
Other assets	35,137			32,621
Total Assets	$	5,176,457		$	4,401,722
LIABILITIES AND EQUITY
Current liabilities:
Current portion of long-term debt	$	106,405		$	131,969
Accounts payable	150,213			114,596
Accrued liabilities	203,000			131,743
Deferred revenues	18,223			21,624
Other current liabilities	64,903			61,599
Total Current Liabilities	542,744			461,531
Long-term debt, net of current portion	1,409,687			1,527,246
Deferred income taxes	430,203			431,643
Other liabilities	68,191			64,117
Equity:
Mandatory convertible preferred stock	8			—
Common stock	849			849
Additional paid-in capital	1,125,667			289,211
Accumulated other comprehensive loss	(237,246		)	(138,419		)
Retained earnings	1,818,025			1,743,371
Total Stericycle, Inc. Equity	2,707,303			1,895,012
Noncontrolling interest	18,329			22,173
Total Equity	2,725,632			1,917,185
Total Liabilities and Equity	$	5,176,457		$	4,401,722

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STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

(UNAUDITED)

	Three Months Ended September 30,										Nine Months Ended September 30,
	2015					2014					2015					2014
	$			% of Rev		$			% of Rev		$			% of Rev		$			% of Rev
Revenues	$	718,596		100.0	%	$	667,877		100.0	%	$	2,097,604		100.0	%	$	1,878,654		100.0	%
Cost of revenues ("COR") - exclusive of depreciation and adjusting items shown below	404,431			56.3	%	373,128			55.9	%	1,168,050			55.7	%	1,023,615			54.5	%
Depreciation	14,003			1.9	%	15,235			2.3	%	42,723			2.0	%	43,063			2.3	%
Total cost of revenues	418,434			58.2	%	388,363			58.1	%	1,210,773			57.7	%	1,066,678			56.8	%
Gross profit (non-GAAP)	300,162			41.8	%	279,514			41.9	%	886,831			42.3	%	811,976			43.2	%
Selling, general and administrative expenses ("SG&A") - exclusive of depreciation, amortization, and adjusting items shown below	124,521			17.3	%	111,793			16.7	%	362,388			17.3	%	321,302			17.1	%
Depreciation	4,248			0.6	%	5,033			0.8	%	12,753			0.6	%	12,325			0.7	%
Amortization	9,239			1.3	%	8,497			1.3	%	26,957			1.3	%	24,214			1.3	%
Total SG&A expense	138,008			19.2	%	125,323			18.8	%	402,098			19.2	%	357,841			19.0	%
Income from operations (non-GAAP) - exclusive of adjusting items shown below	162,154			22.6	%	154,191			23.1	%	484,733			23.1	%	454,135			24.2	%
Adjusting items:
Plant conversion expenses (COR)	487			0.1	%	845			0.1	%	1,001			0.0	%	2,534			0.1	%
Acquisition expenses (SG&A)	33,674			4.7	%	3,472			0.5	%	39,956			1.9	%	10,672			0.6	%
Integration expenses (SG&A)	13,447			1.9	%	7,461			1.1	%	31,257			1.5	%	14,625			0.8	%
Change in fair value of contingent consideration (SG&A)	—			0.0	%	—			0.0	%	(640		)	0.0	%	3,953			0.2	%
Restructuring and plant conversion expenses (SG&A)	2,234			0.3	%	1,535			0.2	%	17,080			0.8	%	1,535			0.1	%
Litigation expenses (SG&A)	29,062			4.0	%	1,342			0.2	%	76,012			3.6	%	3,243			0.2	%
Income from operations (GAAP)	83,250			11.6	%	139,536			20.9	%	320,067			15.3	%	417,573			22.2	%
Other income (expense):
Interest expense, net	(17,378		)	-2.4	%	(16,617		)	-2.5	%	(52,366		)	-2.5	%	(47,883		)	-2.5	%
Other expense, net	(1,754		)	-0.2	%	(477		)	-0.1	%	(3,956		)	-0.2	%	(1,569		)	-0.1	%
Total other expense	(19,132		)	-2.7	%	(17,094		)	-2.6	%	(56,322		)	-2.7	%	(49,452		)	-2.6	%
Income before income taxes	64,118			8.9	%	122,442			18.3	%	263,745			12.6	%	368,121			19.6	%
Income tax expense	21,892			3.0	%	39,401			5.9	%	84,813			4.0	%	122,633			6.5	%
Net income	42,226			5.9	%	83,041			12.4	%	178,932			8.5	%	245,488			13.1	%
Less: net income attributable to noncontrolling interests	457			0.1	%	196			0.0	%	1,256			0.1	%	1,558			0.1	%
Net income attributable to Stericycle, Inc.	$	41,769		5.8	%	$	82,845		12.4	%	$	177,676		8.5	%	$	243,930		13.0	%
Earnings per share- diluted	$	0.47				$	0.96				$	2.04				$	2.83
Weighted average number of common shares outstanding - diluted	86,120,810					86,116,455					86,113,130					86,237,202

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STERICYCLE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)

(UNAUDITED)

	Nine Months Ended September 30,
	2015			2014
OPERATING ACTIVITIES:
Net income	$	178,932		$	245,488
Adjustments to reconcile net income to net cash provided by operating activities:
Stock compensation expense	16,158			13,365
Excess tax benefit of stock options exercised	(15,483		)	(10,747		)
Depreciation	55,476			55,388
Amortization	26,957			24,214
Deferred income taxes	(17,169		)	8,833
Change in fair value of contingent consideration	(640		)	3,953
Other, net	6,326			1,379
Changes in operating assets and liabilities, net of effect of acquisitions:
Accounts receivable	(66,352		)	(25,420		)
Accounts payable	29,170			13,383
Accrued liabilities	88,314			17,640
Deferred revenues	(3,412		)	2,326
Other assets and liabilities	(4,986		)	(4,830		)
Net cash provided by operating activities	293,291			344,972
INVESTING ACTIVITIES:
Payments for acquisitions, net of cash acquired	(97,098		)	(328,811		)
Purchases of investments	(635,919		)	(2,051		)
Capital expenditures	(72,566		)	(66,262		)
Net cash used in investing activities	(805,583		)	(397,124		)
FINANCING ACTIVITIES:
Repayments of long-term debt and other obligations	(61,805		)	(45,031		)
Proceeds from foreign bank debt	42,535			151,605
Repayments of foreign bank debt	(76,387		)	(136,025		)
Proceeds from term loan	250,000			—
Repayments of term loan	(250,000		)	—
Proceeds from private placement of long-term note	300,000			—
Repayments of private placement of long-term note	(100,000		)	—
Proceeds from senior credit facility	1,338,140			1,154,100
Repayments of senior credit facility	(1,614,968		)	(979,059		)
Repayments of capital lease obligations	(2,813		)	(4,014		)
Payments of deferred financing costs	—			(2,280		)
Payment for hedge	(8,833		)	—
Purchases and cancellations of treasury stock	(103,029		)	(157,004		)
Proceeds from issuance of mandatory convertible preferred stock	746,900			—
Proceeds from issuances of common stock	53,529			33,904
Excess tax benefit of stock options exercised	15,483			10,747
Payments to noncontrolling interests	(5,236		)	(732		)
Net cash provided by financing activities	523,516			26,211
Effect of exchange rate changes on cash	(577		)	759
Net increase/ (decrease) in cash and cash equivalents	10,647			(25,182		)
Cash and cash equivalents at beginning of period	22,236			67,167
Cash and cash equivalents at end of period	$	32,883		$	41,985
NON-CASH ACTIVITIES:
Issuances of obligations for acquisitions	$	71,905		$	100,944

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