Conference call to be held July 23, 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 August 23rd by dialing 855-859-2056, access code 39409776. To hear a live simulcast of the call or access the audio archive, visit the investor relations page on www.stericycle.com.
LAKE FOREST, Ill., July 23, 2015 (GLOBE NEWSWIRE) -- Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the second quarter and year to date 2015.
SECOND QUARTER RESULTS
Revenues for the quarter ended June 30, 2015 were $715.7 million, up $74.9 million or 11.7% from $640.8 million in the second quarter last year. Acquisitions contributed approximately $58.9 million to the current period's growth in revenues. Revenues increased 15.9% compared to the prior period when adjusted for unfavorable foreign exchange impact of $27.3 million.
Gross profit, reported in accordance with U.S. generally accepted accounting principles ("GAAP"), was $304.8 million, up 10.7% from $275.3 million in the second quarter last year. GAAP gross profit as a percent of revenues was 42.6% compared to 43.0% in the second quarter of 2014. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $305.3 million, up 10.5% from $276.4 million in the second quarter last year. Non-GAAP gross profit as a percent of revenues was 42.7% compared to 43.1% in the second quarter of 2014.
GAAP earnings per diluted share decreased 26.4% to $0.70 from $0.95 in the second quarter last year. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 9.7% to $1.14 from $1.04. See tables below.
FIRST SIX MONTHS RESULTS
Revenues for the six months ended June 30, 2015 were $1.38 billion, up 13.9% from $1.21 billion in the same period last year. Acquisitions contributed approximately $145.2 million to the current year's growth in revenues. Revenues increased 18.1% compared with the prior period when adjusted for unfavorable foreign exchange impact of $50.4 million.
GAAP gross profit was $586.2 million, up 10.4% from $530.8 million in the same period last year. GAAP gross profit as a percent of revenues was 42.5% compared to 43.8% in the same period last year. Non-GAAP gross profit, when adjusted for various items identified in the second of the following tables, was $586.7 million, up 10.2% from $532.5 million in the same period as last year. Non-GAAP gross profit as a percent of revenues was 42.5% compared to 44.0% in the same period as last year.
GAAP earnings per diluted share decreased 15.6% to $1.57 from $1.87 in 2014. Non-GAAP earnings per diluted share, when adjusted for various items identified in the third of the following tables, increased 6.7% to $2.22 from $2.08. See tables below.
The following table shows our calculations of organic revenue growth (in millions)(1)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| Change | Change | |||||||
| 2015 | 2014 | $ | % | 2015 | 2014 | $ | % | |
| Total As Reported Revenues (GAAP) | $715.7 | $640.8 | $74.9 | 11.7% | $1,379.0 | $1,210.8 | $168.2 | 13.9% |
| Adjustment for Foreign Exchange | 27.3 | 27.3 | 50.4 | 50.4 | ||||
| Subtotal (non-GAAP): | 743.0 | 640.8 | 102.2 | 15.9% | 1,429.4 | 1,210.8 | 218.6 | 18.1% |
| Adjustment for Acquisitions | (109.1) | (50.2) | (58.9) | (195.4) | (50.2) | (145.2) | ||
| Adjustment for Regulated Returns and Recall Management Services | (24.4) | (24.7) | 0.3 | (40.6) | (47.8) | 7.2 | ||
| Subtotal (non-GAAP): | $609.5 | $565.9 | $43.6 | 7.7% | $1,193.4 | $1,112.8 | $80.6 | 7.2% |
| Domestic/ International Breakdown: | ||||||||
| Domestic Revenues | $518.2 | $452.3 | $65.9 | 14.6% | $990.4 | $842.1 | $148.3 | 17.6% |
| International Revenues | 197.5 | 188.5 | 9.0 | 4.8% | 388.6 | 368.7 | 19.9 | 5.4% |
| Total As Reported Revenues (GAAP) | $715.7 | $640.8 | $74.9 | 11.7% | $1,379.0 | $1,210.8 | $168.2 | 13.9% |
(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 June 30, | Six Months Ended June 30, | |||||||
| 2015 | 2014 | 2015 | 2014 | |||||
| $ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
$ |
% of Rev |
|
| GAAP Gross Profit | $304,824 | 42.6% | $275,304 | 43.0% | $586,155 | 42.5% | $530,773 | 43.8% |
| Plant Conversion Expenses | 514 | 0.1% | 1,115 | 0.2% | 514 | 0.0% | 1,689 | 0.1% |
| Non-GAAP Gross Profit | $305,338 | 42.7% | $276,419 | 43.1% | $586,669 | 42.5% | $532,462 | 44.0% |
(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.
Table to reconcile GAAP EPS to Non-GAAP EPS(3)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||
| Change | Change | |||||||
| 2015 | 2014 | $ | % | 2015 | 2014 | $ | % | |
| GAAP EPS | $0.70 | $0.95 | $(0.25) | (26.4)% | $1.57 | $1.87 | $(0.29) | (15.6)% |
| Acquisition Expenses | 0.03 | 0.05 | 0.06 | 0.08 | ||||
| Integration Expenses | 0.07 | 0.04 | 0.13 | 0.06 | ||||
| Change in Fair Value of Contingent Consideration | 0.00 | (0.01) | (0.01) | 0.05 | ||||
| Litigation Expenses | 0.32 | 0.00 | 0.33 | 0.01 | ||||
| Plant Conversion and Restructuring Expenses | 0.03 | 0.01 | 0.12 | 0.01 | ||||
| Non-GAAP EPS (Adjusted) | $1.14 | $1.04 | $0.10 | 9.7% | $2.22 | $2.08 | $0.14 | 6.7% |
(3) 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 $178.7 million and $238.3 million for the six months ended June 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.
| STERICYCLE, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||
| (IN THOUSANDS) | ||
| (UNAUDITED) | ||
| June 30, | December 31, | |
| 2015 | 2014 | |
| ASSETS | ||
| Current Assets: | ||
| Cash and cash equivalents | $32,956 | $22,236 |
| Short-term investments | 103 | 380 |
| Accounts receivable, net | 524,134 | 465,473 |
| Deferred income taxes | 28,327 | 28,322 |
| Prepaid expenses | 33,202 | 30,632 |
| Other current assets | 41,471 | 33,173 |
| Total Current Assets | 660,193 | 580,216 |
| Property, plant and equipment, net | 468,960 | 460,408 |
| Goodwill | 2,454,092 | 2,418,832 |
| Intangible assets, net | 908,176 | 909,645 |
| Other assets | 35,523 | 32,621 |
| Total Assets | $4,526,944 | $4,401,722 |
| LIABILITIES AND EQUITY | ||
| Current Liabilities: | ||
| Current portion of long-term debt | $129,270 | $131,969 |
| Accounts payable | 143,833 | 114,596 |
| Accrued liabilities | 151,310 | 131,743 |
| Deferred revenues | 18,560 | 21,624 |
| Other current liabilities | 66,762 | 61,599 |
| Total Current Liabilities | 509,735 | 461,531 |
| Long-term debt, net of current portion | 1,538,736 | 1,527,246 |
| Deferred income taxes | 428,392 | 431,643 |
| Other liabilities | 68,060 | 64,117 |
| Equity: | ||
| Common stock | 848 | 849 |
| Additional paid-in capital | 354,639 | 289,211 |
| Accumulated other comprehensive loss | (180,907) | (138,419) |
| Retained earnings | 1,788,123 | 1,743,371 |
| Total Stericycle, Inc. Equity | 1,962,703 | 1,895,012 |
| Noncontrolling interests | 19,318 | 22,173 |
| Total Equity | 1,982,021 | 1,917,185 |
| Total Liabilities and Equity | $4,526,944 | $4,401,722 |
| STERICYCLE, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||||||
| (IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA) | ||||||||
| (UNAUDITED) | ||||||||
| Three Months Ended | Six Months Ended | |||||||
| June 30, | June 30, | |||||||
| 2015 | 2014 | 2015 | 2014 | |||||
| $ | % of Rev | $ | % of Rev | $ | % of Rev | $ | % of Rev | |
| Revenues | $715,689 | 100.0% | $640,822 | 100.0% | $1,379,008 | 100.0% | $1,210,777 | 100.0% |
| Cost of revenues ("COR") exclusive of depreciation and adjusting items shown below | 396,279 | 55.4% | 349,301 | 54.5% | 763,619 | 55.4% | 650,487 | 53.7% |
| Depreciation | 14,072 | 2.0% | 15,102 | 2.4% | 28,720 | 2.1% | 27,828 | 2.3% |
| Total cost of revenues | 410,351 | 57.3% | 364,403 | 56.9% | 792,339 | 57.5% | 678,315 | 56.0% |
| Gross profit (non-GAAP) | 305,338 | 42.7% | 276,419 | 43.1% | 586,669 | 42.5% | 532,462 | 44.0% |
| Selling, general and administrative expenses ("SG&A") exclusive of depreciation, amortization and adjusting items shown below | 122,436 | 17.1% | 109,329 | 17.1% | 237,867 | 17.2% | 209,509 | 17.3% |
| Depreciation | 4,387 | 0.6% | 3,977 | 0.6% | 8,505 | 0.6% | 7,292 | 0.6% |
| Amortization | 8,921 | 1.2% | 8,402 | 1.3% | 17,718 | 1.3% | 15,717 | 1.3% |
| Total SG&A expense | 135,744 | 19.0% | 121,708 | 19.0% | 264,090 | 19.2% | 232,518 | 19.2% |
| Income from operations (non-GAAP) exclusive of adjusting items shown below | 169,594 | 23.7% | 154,711 | 24.1% | 322,579 | 23.4% | 299,944 | 24.8% |
| Adjusting items: | ||||||||
| Plant conversion expenses (COR) | 514 | 0.1% | 1,115 | 0.2% | 514 | 0.0% | 1,689 | 0.1% |
| Acquisition expenses (SG&A) | 2,986 | 0.4% | 3,979 | 0.6% | 6,282 | 0.5% | 7,200 | 0.6% |
| Integration expenses (SG&A) | 8,924 | 1.2% | 4,679 | 0.7% | 17,810 | 1.3% | 7,164 | 0.6% |
| Change in fair value of contingent consideration (SG&A) | 35 | 0.0% | (836) | -0.1% | (640) | 0.0% | 3,953 | 0.3% |
| Litigation expenses (SG&A) | 44,827 | 6.3% | 396 | 0.1% | 46,950 | 3.4% | 1,901 | 0.2% |
| Plant conversion and restructuring expenses (SG&A) | 2,544 | 0.4% | -- | -- | 14,846 | 1.1% | -- | -- |
| Income from operations (GAAP) | 109,764 | 15.3% | 145,378 | 22.7% | 236,817 | 17.2% | 278,037 | 23.0% |
| Other income (expense): | ||||||||
| Interest expense, net | (16,390) | -2.3% | (16,368) | -2.6% | (34,988) | -2.5% | (31,266) | -2.6% |
| Other expense, net | (1,604) | -0.2% | (392) | -0.1% | (2,202) | -0.2% | (1,092) | -0.1% |
| Total other expense | (17,994) | -2.5% | (16,760) | -2.6% | (37,190) | -2.7% | (32,358) | -2.7% |
| Income before income taxes | 91,770 | 12.8% | 128,618 | 20.1% | 199,627 | 14.5% | 245,679 | 20.3% |
| Income tax expense | 30,874 | 4.3% | 45,941 | 7.2% | 62,921 | 4.6% | 83,232 | 6.9% |
| Net income | 60,896 | 8.5% | 82,677 | 12.9% | 136,706 | 9.9% | 162,447 | 13.4% |
| Less: net income attributable to noncontrolling interests | 447 | 0.1% | 741 | 0.1% | 799 | 0.1% | 1,362 | 0.1% |
| Net income attributable to Stericycle, Inc. | $60,449 | 8.4% | $81,936 | 12.8% | $135,907 | 9.9% | $161,085 | 13.3% |
| Earnings per share - diluted | $0.70 | $0.95 | $1.57 | $1.87 | ||||
| Weighted average number of common shares outstanding - diluted | 86,221,034 | 85,982,588 | 86,292,816 | 86,300,292 | ||||
| STERICYCLE, INC. AND SUBSIDIARIES | ||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||
| (IN THOUSANDS) | ||
| (UNAUDITED) | ||
| Six Months Ended | ||
| June 30, | ||
| 2015 | 2014 | |
| Operating Activities: | ||
| Net income | $136,706 | $162,447 |
| Adjustments to reconcile net income to net cash provided by operating activities: | ||
| Stock compensation expense | 10,904 | 9,124 |
| Excess tax benefit of stock options exercised | (10,899) | (7,080) |
| Depreciation | 37,225 | 35,120 |
| Amortization | 17,718 | 15,717 |
| Deferred income taxes | 973 | 8,929 |
| Change in fair value of contingent consideration | (640) | 3,953 |
| Other, net | 6,326 | -- |
| Changes in operating assets and liabilities, net of effect of acquisitions: | ||
| Accounts receivable | (51,041) | (9,606) |
| Accounts payable | 21,019 | 10,646 |
| Accrued liabilities | 22,571 | (6,809) |
| Deferred revenue | (3,156) | 2,332 |
| Other assets and liabilities | (9,046) | 13,575 |
| Net cash provided by operating activities | 178,660 | 238,348 |
| Investing Activities: | ||
| Payments for acquisitions, net of cash acquired | (61,766) | (304,832) |
| Proceeds from/ (purchases of) investments | 271 | (2,052) |
| Capital expenditures | (46,794) | (43,668) |
| Net cash used in investing activities | (108,289) | (350,552) |
| Financing Activities: | ||
| Repayments of long-term debt and other obligations | (39,590) | (28,005) |
| Borrowings on foreign bank debt | 18,363 | 96,828 |
| Repayments on foreign bank debt | (43,769) | (85,192) |
| Borrowings on term loan | 250,000 | -- |
| Borrowings on senior credit facility | 879,024 | 933,101 |
| Repayments on senior credit facility | (1,072,468) | (732,059) |
| Payments on capital lease obligations | (1,951) | (1,993) |
| Payments of deferred financing costs | -- | (2,280) |
| Payment for cash flow hedge | (8,833) | -- |
| Purchases and cancellations of treasury stock | (85,149) | (137,186) |
| Proceeds from issuances of common stock | 39,208 | 21,195 |
| Excess tax benefit of stock options exercised | 10,899 | 7,080 |
| Payments to noncontrolling interests | (2,603) | (732) |
| Net cash (used)/ provided by in financing activities | (56,869) | 70,757 |
| Effect of exchange rate changes on cash | (2,782) | (394) |
| Net increase/ (decrease) in cash and cash equivalents | 10,720 | (41,841) |
| Cash and cash equivalents at beginning of period | 22,236 | 67,167 |
| Cash and cash equivalents at end of period | $32,956 | $25,326 |
| Non-cash activities: | ||
| Net issuance of obligations for acquisitions | $47,827 | $83,864 |