Stericycle, Inc. Reports Results for Fourth Quarter 2010 and Full Year

LAKE FOREST, Ill.--(BUSINESS WIRE)--Stericycle, Inc. (NASDAQ:SRCL), today reported financial results for the fourth quarter of 2010.

Revenues for the quarter ended December 31, 2010 were $393.5 million, up 25.5% from $313.5 million from the same quarter last year. Acquisitions less than 12 months old contributed approximately $32.5 million to the growth in revenues. Impact from unfavorable foreign exchange in the quarter was $1.0 million. Gross profit was $182.5 million, up 24.0% from $147.1 million in the fourth quarter last year. Gross profit as a percent of revenue was 46.4% compared with 46.9% in the fourth quarter of 2009.

Net income attributable to Stericycle for the fourth quarter of 2010 was $50.0 million or $0.57 per diluted share compared with $44.6 million or $0.52 per diluted share for the fourth quarter of 2009. GAAP net income attributable to Stericycle for the fourth quarter of 2010 reflected various adjustments which, taken together, resulted in non-GAAP earnings per diluted share of $0.69 (see table below). This was a 25.1% increase from our non-GAAP earnings per share of $0.55 in the fourth quarter of 2009.

FULL YEAR RESULTS

For the year ending December 31, 2010, revenues were $1.44 billion, up 22.2% from $1.18 billion in the same period last year. Impact from favorable foreign exchange compared with the same period last year was $2.5 million. Gross profit was $667.4 million, up 20.8% from $552.4 million in the same period last year. Gross profit as a percent of revenue was 46.4% compared with 46.9% in 2009. GAAP earnings per diluted share increased 18.0% to $2.39 from $2.03 per diluted share in the same period last year. Non-GAAP earnings per diluted share, when adjusted for various adjustments, increased to $2.52 from $2.09, or 20.3% (see table below):

Table to reconcile non-GAAP EPS to GAAP EPS
	Three months ended December 31,					Years ending December 31,
			Change							Change
	2010	2009	$	%		2010		2009		$	%
GAAP EPS	$0.57	$0.52	$0.06	10.9	%	$2.39		$2.03		$0.37	18.0	%
Expenses related to acquisitions	0.07	0.02				0.10		0.08
Restructuring costs/ gain on sale of assets/ other	0.04	0.01				0.04		0.01
Release of prior years’ tax reserves	--	--				(0.01	)	(0.02	)
Non-GAAP EPS (adjusted)	$0.69	$0.55	$0.14	25.1	%	$2.52		$2.09		$0.42	20.3	%

* In accordance with U.S. generally accepted accounting principles (GAAP), reported earnings per share 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 $325.7 million for the full year of 2010, which includes $23 million of cash to be used for recalled product reimbursement.

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

Conference call to be held February 3, 2011 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 March 3rd by dialing 800-642-1687, access code 34569946. 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)
		December 31,
		2010			2009
		(unaudited)			(audited)
ASSETS
Current Assets:
Cash and cash equivalents *	$	77,053		$	15,767
Short-term investments		18,471			1,131
Accounts receivable, less allowance for doubtful
accounts of $10,845 in 2010 and $8,709 in 2009		215,420			179,770
Deferred income taxes		15,822			14,087
Prepaid expenses		16,038			12,421
Other current assets		24,882			23,364
Total Current Assets		367,686			246,540
Property, plant and equipment, net		267,971			246,154
Other assets:
Goodwill		1,595,764			1,394,091
Intangible assets, less accumulated amortization of
$28,394 in 2010 and $18,546 in 2009		375,174			269,454
Other		35,918			26,564
Total Other Assets		2,006,856			1,690,109
Total Assets	$	2,642,513		$	2,182,803
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt	$	88,899		$	78,026
Accounts payable		54,777			47,608
Accrued liabilities		149,355			92,226
Deferred revenues		14,455			14,954
Total Current Liabilities		307,486			232,814
Long-term debt, net of current portion		1,014,222			910,825
Deferred income taxes		224,399			171,744
Other liabilities		13,315			10,247
Shareholders' Equity:
Common stock
(par value $0.01 per share, 120,000,000 shares authorized,
85,242,387 issued and outstanding in 2010 and 84,715,005
issued and outstanding in 2009)		852			847
Additional paid-in capital		46,945			47,522
Accumulated other comprehensive loss		(14,128	)		(12,292	)
Retained earnings		1,017,497			809,618
Total Stericycle, Inc. Shareholders' Equity		1,051,166			845,695
Noncontrolling interests		31,925			11,478
Total Shareholders' Equity		1,083,091			857,173
Total Liabilities and Shareholders' Equity	$	2,642,513		$	2,182,803
* In 2010 Cash and Cash equivalents includes $23 million to be used for recalled product reimbursement, offset by an equivalent amount in accrued liabilities.

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
	Three Months Ended										Years Ended
	December 31,										December 31,
	(unaudited)										(unaudited)						(audited)
		2010					2009					2010					2009
		$		% of Rev			$		% of Rev			$		% of Rev			$		% of Rev
Revenues	$	393,489		100.0	%	$	313,542		100.0	%	$	1,439,388		100.0	%	$	1,177,736		100.0	%
Cost of revenues		210,833		53.6	%		165,696		52.8	%		770,441		53.5	%		624,636		53.0	%
Restructuring Costs		181		0.0	%		704		0.2	%		1,520		0.1	%		704		0.1	%
Gross profit		182,475		46.4	%		147,142		46.9	%		667,427		46.4	%		552,396		46.9	%
Selling, general and administrative expenses		72,419		18.4	%		60,206		19.2	%		268,401		18.6	%		222,483		18.9	%
Amortization		3,267		0.8	%		1,570		0.5	%		9,919		0.7	%		5,390		0.5	%
Total SG&A expense and amortization		75,686		19.2	%		61,776		19.7	%		278,320		19.3	%		227,873		19.3	%
Income from operations before
acquisition integration and other expenses		106,789		27.1	%		85,366		27.2	%		389,107		27.0	%		324,523		27.6	%
Transactional expenses related to acquisitions		6,272		1.6	%		1,915		0.6	%		9,519		0.7	%		7,333		0.6	%
Restructuring costs and plant closure expense		5,744		1.5	%		905		0.3	%		6,851		0.5	%		905		0.1	%
Litigation settlement		-		0.0	%		-		0.0	%		897		0.1	%		-		0.0	%
Gain on sale of assets		-		0.0	%		-		0.0	%		(2,955	)	-0.2	%		-		0.0	%
Acquisition integration expenses		859		0.2	%		630		0.2	%		4,112		0.3	%		1,096		0.1	%
Income from operations		93,914		23.9	%		81,916		26.1	%		370,683		25.8	%		315,189		26.8	%
Other income (expense):
Interest income		72		0.0	%		42		0.0	%		266		0.0	%		201		0.0	%
Interest expense		(10,739	)	-2.7	%		(8,884	)	-2.8	%		(37,081	)	-2.6	%		(34,333	)	-2.9	%
Other income (expense), net		(453	)	-0.1	%		(1,105	)	-0.4	%		(2,015	)	-0.1	%		(3,369	)	-0.3	%
Total other income (expense)		(11,120	)	-2.8	%		(9,947	)	-3.2	%		(38,830	)	-2.7	%		(37,501	)	-3.2	%
Income before income taxes		82,794		21.0	%		71,969		23.0	%		331,853		23.1	%		277,688		23.6	%
Income tax expense		32,037		8.1	%		26,811		8.6	%		121,396		8.4	%		101,299		8.6	%
Net income		50,757		12.9	%		45,158		14.4	%		210,457		14.6	%		176,389		15.0	%
Net income attributable to noncontrolling interests		777		0.2	%		550		0.2	%		2,578		0.2	%		698		0.1	%
Net income attributable to Stericycle, Inc.	$	49,980		12.7	%	$	44,608		14.2	%	$	207,879		14.4	%	$	175,691		14.9	%
Earnings per share-diluted	$	0.57				$	0.52				$	2.39				$	2.03
Weighted average number of
common shares outstanding-diluted		87,279,853					86,353,095					86,962,651					86,744,003

STERICYCLE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
		For the Years Ended
		December 31,
		2010			2009
		(unaudited)			(audited)
Operating Activities:
Net income	$	210,457		$	176,389
Adjustments to reconcile net income to net cash
provided by operating activities:
Gain on sale of assets		(2,955	)		-
Stock compensation expense		18,564			14,638
Excess tax benefit of stock options exercised		(24,687	)		(10,905	)
Depreciation		43,966			34,600
Amortization		9,919			5,390
Deferred income taxes		27,261			22,253
Changes in operating assets and liabilities, net of
effect of acquisitions and divestitures:
Accounts receivable		(20,791	)		12,567
Accounts payable		(165	)		2,420
Accrued liabilities		57,509			21,464
Deferred revenue		(878	)		89
Other assets		7,470			(1,659	)
Net cash provided by operating activities		325,670			277,246
Investing Activities:
Payments for acquisitions and international
investments, net of cash acquired		(190,430	)		(311,891	)
Purchases of short-term investments		(16,955	)		385
Proceeds from sale of assets		8,000			1,227
Capital expenditures		(48,320	)		(39,910	)
Net cash used in investing activities		(247,705	)		(350,189	)
Financing Activities:
Repayment of long-term debt		(42,377	)		(19,023	)
Net payments on senior credit facility		(342,796	)		(59,605	)
Proceeds from term loan		400,000			215,000
Payments of deferred financing costs		(5,757	)		(3,635	)
Payments on capital lease obligations		(2,894	)		(1,106	)
Purchase/ cancellation of treasury stock		(94,335	)		(75,686	)
Proceeds from other issuances of common stock		49,907			14,922
Excess tax benefit of stock options exercised		24,687			10,905
Net cash (used in)/ provided by financing activities		(13,565	)		81,772
Effect of exchange rate changes on cash		(3,114	)		(2,157	)
Net increase in cash and cash equivalents		61,286			6,672
Cash and cash equivalents at beginning of period		15,767			9,095
Cash and cash equivalents at end of period	$	77,053		$	15,767
Non-cash activities:
Net issuances of notes payable for certain acquisitions	$	77,760		$	38,090