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Revenues for the quarter ending September 30, 2009 were $297.8 million, up 7.5% from $277.1 million in the same quarter last year. Acquisitions less than 12 months old contributed approximately $19.3 million to the growth in revenues for the quarter. Revenues increased 11.1% compared to the third quarter of 2008 when adjusted for unfavorable foreign exchange impacts of $10.1 million. Regulated returns management services revenues for the quarter were $16.0 million compared with $16.1 million for the third quarter of 2008. Gross profit was $140.9 million, up 14.5% from $123.0 million in the same quarter last year. Gross profit as a percent of revenue was 47.3% compared with 44.4% in the third quarter of 2008.
Net income for the third quarter of 2009 was $46.5 million or $0.54 per diluted share compared with net income of $39.2 million or $0.45 per diluted share for the third quarter of 2008. Net income for the third quarter of 2008 included the effect of $0.1 million of charges related to an arbitration settlement, and net income for the third quarter of 2009 included the effect of $3.3 million of transactional expenses related to acquisitions offset by $1.8 million net release of prior years' tax reserves. Adjusted for these charges, earnings per diluted share increased from $0.45 in the third quarter of 2008 to $0.55 in the third quarter of 2009 or up 23.6% (see table below).
For the nine months ending September 30, 2009, revenues were $864.2 million, up 6.7% from $809.7 million in the same period last year. Revenues increased 11.7% compared with the prior year-to-date when adjusted for unfavorable foreign exchange impacts of $40.6 million. Regulated returns management services revenues were $54.0 million compared with $58.6 million in the same period last year. Gross profit was $405.3 million, up 12.6% from $359.8 million in the same period last year. Gross profit as a percent of revenues was 46.9% versus 44.4% in the same period in 2008. Earnings per diluted share increased 22.0% to $1.51 from $1.24 per diluted share in the same period last year. Net income for the nine months of 2008 included the effect of $3.5 million of charges related to an arbitration settlement, and net income for the nine months of 2009 included the effect of $4.8 million of transactional expenses related to acquisitions offset by $1.8 million net release of prior years' tax reserves. Adjusted for these charges, the earnings per diluted share increased from $1.28 to $1.54, or 21.0% (see table below):
Table to reconcile GAAP EPS to non-GAAP EPS
Three month ended September 30, Nine months ended September 30,
2009 2008 Change Change 2009 2008 Change Change
$ % $ %
GAAP EPS $0.54 $0.45 $0.09 20.1 % $1.51 $1.24 $0.27 22.0 %
Transactional expenses related to acquisitions 0.04 - 0.06 -
Arbitration settlement - - - 0.04
Net release of prior years' tax reserves (0.02 ) - (0.02 ) -
Non-GAAP EPS (adjusted) $0.55 $0.45 $0.09 23.6 % $1.54 $1.28 $0.27 21.0 %
Cash flow from operations was $213.9 million for the first nine months of 2009. Cash flow and increased loan balances were used to strengthen our business by acquisitions, to fund share repurchases and capital expenditures.
For more information about Stericycle, please visit our website at www.stericycle.com.
Conference call to be held October 27, 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 November 27th by dialing 800-642-1687, access code 30587273. 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)
September 30, December 31,
2009 2008
(unaudited) (audited)
ASSETS
Current Assets:
Cash and cash equivalents $ 14,286 $ 9,095
Short-term investments 1,519 1,408
Accounts receivable, less allowance for doubtful
accounts of $7,358 in 2009 and $6,616 in 2008 167,946 168,598
Deferred income taxes 10,482 16,821
Other current assets 29,101 28,508
Total Current Assets 223,334 224,430
Property, plant and equipment, net 227,327 207,144
Other assets:
Goodwill 1,222,025 1,135,778
Intangible assets, less accumulated amortization of
$16,923 in 2009 and $14,116 in 2008 227,718 170,624
Other 29,063 21,322
Total other assets 1,478,806 1,327,724
Total Assets $ 1,929,467 $ 1,759,298
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt $ 58,001 $ 38,880
Accounts payable 33,412 33,612
Accrued liabilities 99,464 93,487
Deferred revenues 14,202 13,663
Total Current Liabilities 205,079 179,642
Long-term debt, net of current portion 768,041 753,846
Deferred income taxes 165,373 147,287
Other liabilities 4,179 7,885
Shareholders' Equity:
Common stock (par value $0.01 per share, 120,000,000 shares
authorized, 84,297,521 issued and outstanding in 2009,
85,252,879 issued and outstanding in 2008) 843 852
Additional paid-in capital 23,011 67,776
Treasury stock - -
Accumulated other comprehensive income (13,696 ) (32,075 )
Retained earnings 765,010 633,927
Total Stericycle, Inc. Shareholders' Equity 775,168 670,480
Noncontrolling Interest 11,627 158
Total Shareholders' Equity 786,795 670,638
Total Liabilities and Shareholders' Equity $ 1,929,467 $ 1,759,298
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
Three Months Ended Nine Months Ended
September 30, September 30,
(unaudited) (unaudited)
2009 2008 2009 2008
$ % of Rev $ % of Rev $ % of Rev $ % of Rev
Revenues $ 297,836 100.0 % $ 277,098 100.0 % $ 864,194 100.0 % $ 809,668 100.0 %
Cost of revenues 156,919 52.7 % 154,069 55.6 % 458,940 53.1 % 449,895 55.6 %
Gross profit 140,917 47.3 % 123,029 44.4 % 405,254 46.9 % 359,773 44.4 %
Selling, general and administrative expenses 56,190 18.9 % 50,115 18.1 % 162,277 18.8 % 148,073 18.3 %
Amortization 1,434 0.5 % 1,100 0.4 % 3,820 0.4 % 2,944 0.4 %
Total SG&A expense and amortization 57,624 19.3 % 51,215 18.5 % 166,097 19.2 % 151,017 18.7 %
Income from operations before acquisition integration and other 83,293 28.0 % 71,814 25.9 % 239,157 27.7 % 208,756 25.8 %
expenses
Transactional expenses related to acquisitions 3,478 1.2 % - 0.0 % 5,418 0.6 % - 0.0 %
Arbitration settlement and related costs - 0.0 % 96 0.0 % - 0.0 % 5,595 0.7 %
Acquisition integration expenses 282 0.1 % 210 0.1 % 466 0.1 % 1,239 0.2 %
Income from operations 79,533 26.7 % 71,508 25.8 % 233,273 27.0 % 201,922 24.9 %
Other income (expense):
Interest income 48 0.0 % 185 0.1 % 271 0.0 % 744 0.1 %
Interest expense (9,262 ) -3.1 % (8,618 ) -3.1 % (25,561 ) -3.0 % (24,885 ) -3.1 %
Other expense, net (683 ) -0.2 % (611 ) -0.2 % (2,412 ) -0.3 % (1,572 ) -0.2 %
Total other income (expense) (9,897 ) -3.3 % (9,044 ) -3.3 % (27,702 ) -3.2 % (25,713 ) -3.2 %
Income before income taxes 69,636 23.4 % 62,464 22.5 % 205,571 23.8 % 176,209 21.8 %
Income tax expense 23,110 7.8 % 23,237 8.4 % 74,488 8.6 % 66,633 8.2 %
Net income $ 46,526 15.6 % $ 39,227 14.2 % $ 131,083 15.2 % $ 109,576 13.5 %
Earnings per share-diluted $ 0.54 $ 0.45 $ 1.51 $ 1.24
Weighted average number of common shares outstanding-diluted 86,794,118 87,864,210 86,827,626 88,578,506
STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the nine months ended
September 30,
2009 2008
(unaudited) (unaudited)
Operating Activities:
Net income $ 131,083 $ 109,576
Adjustments to reconcile net income to net cash
provided by operating activities:
Write-off of note receivable related to joint venture - 798
Stock compensation expense 10,861 8,880
Excess tax benefit of stock options exercised (357 ) (6,165 )
Depreciation 24,643 22,344
Amortization 3,820 2,944
Deferred income taxes 20,718 18,729
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable 8,115 (13,976 )
Accounts payable (4,502 ) (10,205 )
Accrued liabilities 20,452 24,451
Deferred revenues 252 2,299
Other assets (1,158 ) (3,398 )
Net cash provided by operating activities 213,927 156,277
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired (107,079 ) (46,564 )
(Purchases)/proceeds from maturity of short-term investments (58 ) 37
Proceeds from sale of property and equipment 640 -
Capital expenditures (29,644 ) (35,729 )
Net cash used in investing activities (136,141 ) (82,256 )
Financing Activities:
Repayment of long-term debt (10,443 ) (7,868 )
Net repayments on senior credit facility (213,027 ) (52,184 )
Proceeds from term loan 215,000 -
Proceeds from private placement of long-term notes - 100,000
Payments of deferred financing costs (3,620 ) (236 )
Principal payments on capital lease obligations (255 ) (130 )
Purchase/cancellation of treasury stock (69,986 ) (140,306 )
Proceeds from other issuances of common stock 11,726 14,688
Excess tax benefit of stock options exercised 357 6,165
Net cash used in financing activities (70,248 ) (79,871 )
Effect of exchange rate changes on cash (2,347 ) (4,215 )
Net increase/(decrease) in cash and cash equivalents 5,191 (10,065 )
Cash and cash equivalents at beginning of period 9,095 17,108
Cash and cash equivalents at end of period $ 14,286 $ 7,043
Non-cash activities:
Net issuances of notes payable for certain acquisitions $ 32,116 $ 58,977
SOURCE: Stericycle, Inc.
Stericycle, Inc. Frank ten Brink, 847-607-2012
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