EX-99.1 2 ex99093015.htm PRESS RELEASE Exhibit
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.


1


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.



2



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.

3



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


4


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

 
 

5


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


6