Stericycle, Inc. (Nasdaq: SRCL) today reported results for the
first quarter ended March 31, 2023.
Revenues for the first quarter were $684.3
million, an increase of 3.0% compared to $664.2 million in the
first quarter of 2022, with organic revenues1 growing 7.2%. Income
from operations was $40.0 million, compared to $5.9 million in the
first quarter of 2022. Net income was $11.2 million, or $0.12
diluted earnings per share, compared to net loss of $14.2 million,
or $0.15 diluted loss per share in the first quarter of 2022.
Adjusted income from operations1 was $84.7 million, compared to
$59.0 million in the first quarter of 2022. Adjusted diluted
earnings per share1 was $0.49, compared to $0.32 in the first
quarter of last year. Cash flow from operations for the three
months ended March 31, 2023 was an inflow of $49.5 million,
compared to an outflow of $38.8 million in the same period of 2022.
Free cash flow2 was an inflow of $13.1 million for the three months
ended March 31, 2023, compared to an outflow of $76.3 million
in the same period of 2022.
KEY BUSINESS HIGHLIGHTS:
-
Grew organic revenues1 7.2% compared to the first quarter of 2022
with Secure Information Destruction (“SID”) growing 11.8% and
Regulated Waste and Compliance Services (“RWCS”) growing 5.0%.
- Improved adjusted
income from operations1 350 basis points as a percentage of revenue
compared to the first quarter of 2022.
- Achieved adjusted
diluted earnings per share1 of $0.49, an increase of $0.17 compared
to the first quarter of 2022.
- Improved free cash
flow2 by $89.4 million compared to the first quarter of 2022.
- Reduced our credit
agreement defined debt leverage ratio to 3.05X, down 0.23X since
December 31, 2022.
- Divested our Brazil
operations in April 2023, which was our last remaining Latin
America business, for an investing cash outflow of approximately
$28 million.
“Our first quarter performance is in line with
achieving our 2023 guidance as we saw solid performance and
improvement across all of our key business priorities,” said Cindy
J. Miller, President and Chief Executive Officer.
FIRST QUARTER FINANCIAL
RESULTS
U.S. Generally Accepted Accounting Principles (GAAP)
Results
- Revenues in the
first quarter were $684.3 million, compared to $664.2 million in
the first quarter of 2022. The $20.1 million increase was primarily
due to organic revenue growth of $24.9 million in SID and $21.8
million in RWCS. Partially offsetting these increases were
unfavorable impacts of divestitures of $16.6 million and foreign
exchange rates of $10.0 million.
- Income from
operations in the first quarter was $40.0 million compared to $5.9
million in the first quarter of 2022. The $34.1 million increase
was primarily due to gross profit improvement of $16.5 million,
primarily driven by revenue flow through and lower selling, general
and administrative expenses (SG&A) of $22.6 million, mainly due
to lower adjusted items1 and bad debt expense. These were partially
offset by divestiture losses, net of $5.0 million.
- Net income in the
first quarter was $11.2 million, or $0.12 diluted earnings per
share, compared to a net loss of $14.2 million, or $0.15 diluted
loss per share in the first quarter of 2022. The $25.4 million
increase was primarily attributable to higher income from
operations of $34.1 million, as explained above, partially offset
by higher income tax expense of $5.6 million and interest expense
of $4.1 million.
- Cash flow from
operations for the three months ended March 31, 2023 was an
inflow of $49.5 million, compared to an outflow of $38.8 million in
the same period of 2022. The year-over-year increase of $88.3
million was primarily driven by Accounts Receivable of $32.9
million, primarily due to an improvement in Days Sales Outstanding
(DSO); higher operating income of $30.8 million; lower annual
incentive compensation payments of $22.3 million; and other net
working capital improvements of $2.3 million.
- Cash paid for
capital expenditures for the three months ended March 31, 2023
was $36.4 million, compared to $37.5 million in the same
period of 2022.
Non-GAAP
Results1,2
- For the first
quarter of 2023, organic revenues1 increased 7.2%, which excludes
the impacts of divestitures and foreign exchange rates. In the
first quarter 2023, organic revenues1 for SID increased 11.8% and
RWCS increased 5.0%.
- Adjusted income
from operations1 was $84.7 million compared to
$59.0 million in the first quarter of 2022. As a
percentage of revenues, the 350 basis points increase was primarily
driven by gross profit improvement of approximately 130 basis
points, driven by pricing flow through, and lower SG&A of
approximately 210 basis points, mainly due to improved leverage
against higher revenues and lower bad debt expense.
- Adjusted diluted
earnings per share1 was $0.49 compared to $0.32 in the first
quarter of 2022. Excluding the impacts of divestitures and foreign
exchange rates of $0.02, the remaining $0.19 increase was driven by
gross profit flow through of $0.20, lower SG&A of $0.01 and
lower income tax expense of $0.01. These were partially offset by
higher interest expense of $0.03.
- Free cash flow2 for
the three months ended March 31, 2023 was an inflow of
$13.1 million, compared to an outflow of $76.3 million in
the same period of 2022. The $89.4 million increase was
primarily due to higher cash flow from operations of $88.3 million,
as explained above, compared to the first quarter of 2022.
CONFERENCE CALL INFORMATION
Stericycle is holding its first quarter earnings
conference call on Thursday, April 27, 2023, at 8:00 a.m.
central time. Dial (833) 470-1428 in the U.S., (833) 950-0062 in
Canada, or visit investors.stericycle.com for global dial-in
numbers. Upon dialing the number, you will be prompted to enter the
Access Code: 197258. To access presentation materials or listen to
the call via an internet webcast, visit
investors.stericycle.com.
The first quarter earnings call is being
recorded and a replay will be available approximately one hour
after the end of the conference call until May 25, 2023. To access
a replay of the call, dial (866) 813-9403 and enter the Replay
Access Code: 395972. A replay of the webcast will also be available
at investors.stericycle.com.
NON-GAAP FINANCIAL MEASURES
Non-GAAP financial measures are reconciled to
the most comparable U.S. GAAP measures in the schedules attached
hereto.
ABOUT STERICYCLE
Stericycle, Inc., is a U.S. based
business-to-business services company and leading provider of
compliance-based solutions that protects people and brands,
promotes health and well-being and safeguards the environment.
Stericycle serves customers in the U.S. and 15 countries with
solutions for regulated waste and compliance services and secure
information destruction. For more information about Stericycle,
please visit stericycle.com.
FOR FURTHER INFORMATION
CONTACT:Stericycle Investor Relations
847-607-2012Stericycle Media Relations 847-964-2288
- Adjusted financial
measures are Non-GAAP measures and exclude adjusting items as
described and reconciled to comparable U.S. GAAP financial measures
in the Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
contained in this Press Release.
- Free cash flow is
calculated as Net cash from operating activities less Capital
expenditures.
SAFE HARBOR STATEMENT
This document may contain forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. When we use words such as “believes”, “expects”,
“anticipates”, “estimates”, “may”, “plan”, “will”, “goal”, or
similar expressions, we are making forward-looking statements.
Forward-looking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and
projections of our management about future events and are therefore
subject to risks and uncertainties, which could cause actual
results to differ materially from the future results expressed or
implied by the forward-looking statements. Factors that could cause
such differences include, among others, inflationary cost pressure
in labor, supply chain, energy, and other expenses, decreases in
the volume of regulated wastes or personal and confidential
information collected from customers, the ability to implement the
remaining phases of our ERP system, and disruptions resulting from
deployment of our ERP system, disruptions in our supply chain,
disruptions in or attacks on information technology systems, labor
shortages, a recession or economic disruption in the U.S. and other
countries, SOP pricing volatility or pricing volatility in other
commodities, rising interest rates or a downgrade in our credit
rating resulting in an increase in interest expense, changing
market conditions in the healthcare industry, competition and
demand for services in the regulated waste and secure information
destruction industries, foreign exchange rate volatility in the
jurisdictions in which we operate, changes in governmental
regulation of the collection, transportation, treatment and
disposal of regulated waste or the proper handling and protection
of personal and confidential information, the level of government
enforcement of regulations governing regulated waste collection and
treatment or the proper handling and protection of personal and
confidential information, charges related to portfolio optimization
or the failure of acquisitions or divestitures to achieve the
desired results, failure to consummate transactions with respect to
non-core businesses, the obligations to service substantial
indebtedness and comply with the covenants and restrictions
contained in our credit agreements and notes, political, economic,
and other risks related to our foreign operations, pandemics and
the resulting impact on the results of operations, long-term remote
work arrangements which may adversely affect our business, supply
chain disruptions, disruptions in transportation services,
restrictions on the ability of our team members to travel, closures
of our facilities or the facilities of our customers and suppliers,
changes in the volume of paper processed by our secure information
destruction business and the revenue generated from the sale of
SOP, weather and environmental changes related to climate change,
requirements of customers and investors for net carbon zero
emissions strategies, and the introduction of regulations for
greenhouse gases, which could negatively affect our costs to
operate, the outcome of pending, future or settled litigation or
investigations including with respect to the U.S. Foreign Corrupt
Practices Act and foreign anti-corruption laws, failure to maintain
an effective system of internal control over financial reporting,
as well as other factors described in our filings with the SEC,
including our Annual Report on Form 10-K and subsequent Quarterly
Reports on Form 10-Q. 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 disclaim any obligation to
update or revise any forward-looking or other statements contained
herein other than in accordance with legal and regulatory
obligations.
STERICYCLE, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(LOSS) |
(Unaudited) |
In
millions, except per share data |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
%Revenues |
|
|
2022 |
|
|
|
%Revenues |
|
% Change |
Revenues |
$ |
684.3 |
|
|
100.0 |
% |
|
$ |
664.2 |
|
|
|
100.0 |
% |
|
3.0 |
% |
Cost of revenues |
|
423.3 |
|
|
61.9 |
% |
|
|
419.7 |
|
|
|
63.2 |
% |
|
0.9 |
% |
Gross
profit |
|
261.0 |
|
|
38.1 |
% |
|
|
244.5 |
|
|
|
36.8 |
% |
|
6.7 |
% |
Selling, general and
administrative expenses |
|
216.0 |
|
|
31.6 |
% |
|
|
238.6 |
|
|
|
35.9 |
% |
|
(9.5) |
% |
Divestiture losses, net |
|
5.0 |
|
|
0.7 |
% |
|
|
— |
|
|
|
— |
% |
|
nm |
|
Income from
operations |
|
40.0 |
|
|
5.8 |
% |
|
|
5.9 |
|
|
|
0.9 |
% |
|
nm |
|
Interest expense, net |
|
(20.4 |
) |
|
(3.0) |
% |
|
|
(16.3 |
) |
|
|
(2.5) |
% |
|
(25.2) |
% |
Other income (expense),
net |
|
0.2 |
|
|
— |
% |
|
|
(0.8 |
) |
|
|
(0.1) |
% |
|
125.0 |
% |
Income (Loss) before
income taxes |
|
19.8 |
|
|
2.9 |
% |
|
|
(11.2 |
) |
|
|
(1.7) |
% |
|
276.8 |
% |
Income tax expense |
|
(8.5 |
) |
|
(1.2) |
% |
|
|
(2.9 |
) |
|
|
(0.4) |
% |
|
193.1 |
% |
Net income
(loss) |
|
11.3 |
|
|
1.7 |
% |
|
|
(14.1 |
) |
|
|
(2.1) |
% |
|
180.1 |
% |
Net income attributable to
noncontrolling interests |
|
(0.1 |
) |
|
— |
% |
|
|
(0.1 |
) |
|
|
— |
% |
|
— |
% |
Net income (loss)
attributable to Stericycle, Inc. common shareholders |
$ |
11.2 |
|
|
1.6 |
% |
|
$ |
(14.2 |
) |
|
|
(2.1) |
% |
|
178.9 |
% |
Income (Loss) per
common share attributable to Stericycle, Inc. common
shareholders: |
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.12 |
|
|
|
|
$ |
(0.15 |
) |
|
|
|
|
180.0 |
% |
Diluted |
$ |
0.12 |
|
|
|
|
$ |
(0.15 |
) |
|
|
|
|
180.0 |
% |
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
92.3 |
|
|
|
|
|
92.0 |
|
|
|
|
|
|
Diluted |
|
92.7 |
|
|
|
|
|
92.0 |
|
|
|
|
|
|
nm - percentage change not meaningful
STATISTICS - U.S. GAAP AND NON-GAAP ADJUSTED FINANCIAL
MEASURES |
(Unaudited) |
In millions, except per share data |
|
|
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
%Revenues |
|
|
2022 |
|
|
%Revenues |
Statistics - U.S.
GAAP |
|
|
|
|
|
|
|
Effective tax rate |
|
42.9 |
% |
|
|
|
|
(25.9) |
% |
|
|
Statistics -
Adjusted (1) |
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses |
$ |
176.3 |
|
|
25.8 |
% |
|
$ |
185.5 |
|
|
27.9 |
% |
Adjusted income from
operations |
$ |
84.7 |
|
|
12.4 |
% |
|
$ |
59.0 |
|
|
8.9 |
% |
Adjusted EBITDA |
$ |
111.3 |
|
|
16.3 |
% |
|
$ |
86.3 |
|
|
13.0 |
% |
Adjusted net income
attributable to common shareholders |
$ |
45.5 |
|
|
6.6 |
% |
|
$ |
29.1 |
|
|
4.4 |
% |
Adjusted effective tax
rate |
|
29.5 |
% |
|
|
|
|
30.3 |
% |
|
|
Adjusted diluted earnings per
share |
$ |
0.49 |
|
|
|
|
$ |
0.32 |
|
|
|
Adjusted diluted shares
outstanding |
|
92.7 |
|
|
|
|
|
92.3 |
|
|
|
(1) Adjusted financial measures are
Non-GAAP measures and exclude adjusting items as described and
reconciled to comparable U.S. GAAP financial measures in the
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
contained in this Press Release.
STATISTICS - U.S. GAAP AND NON-GAAP ADJUSTED FINANCIAL
MEASURES |
(Unaudited) |
In millions |
|
Three Months EndedMarch 31, |
|
Three Months EndedDecember 31, |
|
Change |
|
|
2023 |
|
% Revenues |
|
|
2022 |
|
% Revenues |
|
$ |
|
% Revenues |
Statistics -
Adjusted (1) |
|
|
|
|
|
|
|
|
|
|
|
Adjusted selling, general and administrative expenses |
$ |
176.3 |
|
25.8 |
% |
|
$ |
163.8 |
|
24.4 |
% |
|
$ |
12.5 |
|
1.3 |
% |
(1) Adjusted financial measures are
Non-GAAP measures and exclude adjusting items as described and
reconciled to comparable U.S. GAAP financial measures in the
Reconciliation of U.S. GAAP to Non-GAAP Financial Measures
contained in this Press Release.
STERICYCLE, INC. |
CONDENSED CONSOLIDATED BALANCE SHEETS |
(Unaudited) |
In millions, except per share data |
|
|
|
|
March 31,2023 |
|
December 31,2022 |
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
60.0 |
|
|
$ |
56.0 |
|
Accounts receivable, less
allowance for doubtful accounts of $50.2 in 2023 and $53.3 in
2022 |
|
419.5 |
|
|
|
414.5 |
|
Prepaid expenses |
|
34.7 |
|
|
|
33.2 |
|
Other current assets |
|
49.5 |
|
|
|
55.0 |
|
Total Current Assets |
|
563.7 |
|
|
|
558.7 |
|
Property, plant and equipment,
less accumulated depreciation of $677.1 in 2023 and $657.7 in
2022 |
|
713.0 |
|
|
|
715.7 |
|
Operating lease right-of-use
assets |
|
414.7 |
|
|
|
398.9 |
|
Goodwill |
|
2,787.8 |
|
|
|
2,784.9 |
|
Intangible assets, less
accumulated amortization of $853.1 in 2023 and $823.3 in 2022 |
|
784.8 |
|
|
|
811.1 |
|
Other assets |
|
68.0 |
|
|
|
64.8 |
|
Total
Assets |
$ |
5,332.0 |
|
|
$ |
5,334.1 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Current portion of long-term
debt |
$ |
16.2 |
|
|
$ |
22.3 |
|
Bank overdrafts |
|
2.4 |
|
|
|
2.9 |
|
Accounts payable |
|
195.3 |
|
|
|
213.5 |
|
Accrued liabilities |
|
220.7 |
|
|
|
244.1 |
|
Operating lease
liabilities |
|
95.4 |
|
|
|
91.2 |
|
Other current liabilities |
|
50.5 |
|
|
|
47.9 |
|
Total Current Liabilities |
|
580.5 |
|
|
|
621.9 |
|
Long-term debt, net |
|
1,486.5 |
|
|
|
1,484.0 |
|
Long-term operating lease
liabilities |
|
340.2 |
|
|
|
329.0 |
|
Deferred income taxes |
|
431.8 |
|
|
|
427.0 |
|
Long-term income taxes
payable |
|
11.4 |
|
|
|
11.8 |
|
Other liabilities |
|
35.6 |
|
|
|
35.9 |
|
Total
Liabilities |
|
2,886.0 |
|
|
|
2,909.6 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
EQUITY |
|
|
|
Common stock (par value $0.01
per share, 120.0 shares authorized, 92.4 and 92.2 issued and
outstanding in 2023 and 2022, respectively) |
|
0.9 |
|
|
|
0.9 |
|
Additional paid-in
capital |
|
1,289.2 |
|
|
|
1,285.4 |
|
Retained earnings |
|
1,422.0 |
|
|
|
1,410.8 |
|
Accumulated other
comprehensive loss |
|
(266.7 |
) |
|
|
(276.9 |
) |
Total Stericycle, Inc.’s Equity |
|
2,445.4 |
|
|
|
2,420.2 |
|
Noncontrolling interests |
|
0.6 |
|
|
|
4.3 |
|
Total Equity |
|
2,446.0 |
|
|
|
2,424.5 |
|
Total Liabilities and
Equity |
$ |
5,332.0 |
|
|
$ |
5,334.1 |
|
STERICYCLE, INC. |
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
In millions |
|
|
|
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING
ACTIVITIES: |
|
|
|
Net income (loss) |
$ |
11.3 |
|
|
$ |
(14.1 |
) |
Adjustments to reconcile net
income (loss) to net cash from operating activities: |
|
|
|
Depreciation |
|
26.6 |
|
|
|
27.3 |
|
Intangible amortization |
|
28.2 |
|
|
|
32.4 |
|
Stock-based compensation expense |
|
6.9 |
|
|
|
4.8 |
|
Deferred income taxes |
|
4.7 |
|
|
|
0.7 |
|
Divestiture losses, net |
|
5.0 |
|
|
|
— |
|
Asset impairments, (gain) loss on disposal of property plant and
equipment and other charges |
|
(0.4 |
) |
|
|
0.3 |
|
Other, net |
|
0.5 |
|
|
|
0.6 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(4.4 |
) |
|
|
(37.3 |
) |
Prepaid expenses |
|
(1.4 |
) |
|
|
2.9 |
|
Accounts payable |
|
(6.3 |
) |
|
|
(2.1 |
) |
Accrued liabilities |
|
(17.4 |
) |
|
|
(40.9 |
) |
Other assets and liabilities |
|
(3.8 |
) |
|
|
(13.4 |
) |
Net cash from
operating activities |
|
49.5 |
|
|
|
(38.8 |
) |
INVESTING
ACTIVITIES: |
|
|
|
Capital expenditures |
|
(36.4 |
) |
|
|
(37.5 |
) |
Proceeds from divestiture of
businesses, net |
|
0.9 |
|
|
|
— |
|
Other, net |
|
1.0 |
|
|
|
0.7 |
|
Net cash from
investing activities |
|
(34.5 |
) |
|
|
(36.8 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Repayments of long-term debt
and other obligations |
|
(7.8 |
) |
|
|
(5.6 |
) |
Repayments of foreign bank
debt |
|
(0.1 |
) |
|
|
(0.1 |
) |
Proceeds from credit
facility |
|
286.9 |
|
|
|
364.4 |
|
Repayments of credit
facility |
|
(283.0 |
) |
|
|
(272.5 |
) |
Repayment of bank
overdrafts |
|
(0.5 |
) |
|
|
(0.7 |
) |
Payments of finance lease
obligations |
|
(0.7 |
) |
|
|
(0.9 |
) |
Proceeds from issuance of
common stock, net of (payments of) taxes from withheld shares |
|
(4.9 |
) |
|
|
(5.2 |
) |
Payments to noncontrolling
interest |
|
(1.5 |
) |
|
|
— |
|
Net cash from
financing activities |
|
(11.6 |
) |
|
|
79.4 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
0.6 |
|
|
|
0.2 |
|
Net change in cash and cash
equivalents |
|
4.0 |
|
|
|
4.0 |
|
Cash and cash equivalents at
beginning of period |
|
56.0 |
|
|
|
55.6 |
|
Cash and cash
equivalents at end of period |
$ |
60.0 |
|
|
$ |
59.6 |
|
|
|
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION: |
|
|
|
Interest paid, net of
capitalized interest |
$ |
32.8 |
|
|
$ |
28.0 |
|
Income taxes paid, net |
$ |
0.4 |
|
|
$ |
1.4 |
|
Capital expenditures in
Accounts payable |
$ |
18.8 |
|
|
$ |
17.5 |
|
Free Cash Flow (1) |
$ |
13.1 |
|
|
$ |
(76.3 |
) |
(1) Free Cash Flow is calculated as Net
cash from operating activities less Capital expenditures.
Table 1–A: REVENUE CHANGES BY SERVICE
AND SEGMENT (UNAUDITED) – |
THREE MONTHS ENDED MARCH 31, 2023
and 2022 |
|
Three Months Ended March 31, |
|
In millions |
|
|
|
Components of Change (%) (1) |
|
|
2023 |
|
|
2022 |
|
Change ($) |
|
Change (%) |
|
Organic Growth (2) |
|
Divestitures |
|
Foreign Exchange (3) |
|
Revenue by Service |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
451.3 |
|
$ |
452.6 |
|
$ |
(1.3 |
) |
|
(0.3) |
% |
|
5.0 |
% |
|
(3.7) |
% |
|
(1.4) |
% |
Secure Information Destruction Services |
|
233.0 |
|
|
211.6 |
|
|
21.4 |
|
|
10.1 |
% |
|
11.8 |
% |
|
— |
% |
|
(1.7) |
% |
Total Revenues |
$ |
684.3 |
|
$ |
664.2 |
|
$ |
20.1 |
|
|
3.0 |
% |
|
7.2 |
% |
|
(2.5) |
% |
|
(1.5) |
% |
North America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
368.7 |
|
$ |
362.1 |
|
$ |
6.6 |
|
|
1.8 |
% |
|
6.5 |
% |
|
(4.1) |
% |
|
(0.3) |
% |
Secure Information Destruction Services |
|
204.7 |
|
|
181.6 |
|
|
23.1 |
|
|
12.7 |
% |
|
13.4 |
% |
|
— |
% |
|
(0.7) |
% |
Total North America Segment |
$ |
573.4 |
|
$ |
543.7 |
|
$ |
29.7 |
|
|
5.5 |
% |
|
8.8 |
% |
|
(2.7) |
% |
|
(0.4) |
% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
82.6 |
|
$ |
90.5 |
|
$ |
(7.9 |
) |
|
(8.8) |
% |
|
(0.7) |
% |
|
(1.9) |
% |
|
(6.2) |
% |
Secure Information Destruction Services |
|
28.3 |
|
|
30.0 |
|
|
(1.7 |
) |
|
(5.6) |
% |
|
2.1 |
% |
|
— |
% |
|
(7.7) |
% |
Total International Segment |
$ |
110.9 |
|
$ |
120.5 |
|
$ |
(9.6 |
) |
|
(8.0) |
% |
|
— |
% |
|
(1.5) |
% |
|
(6.5) |
% |
See footnote descriptions below Table 1 – B
Table 1–B: COMPONENTS OF REVENUE CHANGE IN
DOLLARS (UNAUDITED) |
(In millions) |
|
Three Months EndedMarch 31,
2023 |
Organic Growth (2) |
$ |
46.7 |
|
Divestitures |
|
(16.6 |
) |
Foreign exchange (3) |
|
(10.0 |
) |
Total Change |
$ |
20.1 |
|
(1) Components of Change (%) in summation
may not crossfoot to the total Change (%) due to rounding.
(2) Organic growth is the change in
revenues which includes SOP (sorted office paper) pricing and
volume and excludes the impact of divestitures and foreign
exchange.
(3) The comparisons at constant currency
rates (foreign exchange) reflect comparative local currency
balances at prior period’s foreign exchange rates. Stericycle
calculated these percentages by taking current period reported
Revenues less the respective prior period reported Revenues,
divided by the prior period reported Revenues, all at the
respective prior period’s foreign exchange rates. This measure
provides information on the change in Revenues assuming that
foreign currency exchange rates have not changed between the prior
and the current period. Management believes the use of this measure
aids in the understanding of changes in Revenues without the impact
of foreign currency.
RECONCILIATION OF U.S. GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED) |
Table 2-A: THREE MONTHS
ENDED MARCH 31, 2023 and
2022 |
(In millions, except per share data) |
|
Three Months Ended March 31, 2023 |
|
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net IncomeAttributable to Common
Shareholders c |
|
Diluted Earnings Per Share |
U.S. GAAP Financial Measures |
|
$ |
216.0 |
|
|
$ |
40.0 |
|
|
$ |
11.2 |
|
|
$ |
0.12 |
|
Adjustments: |
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
|
(2.7 |
) |
|
|
2.7 |
|
|
|
2.1 |
|
|
|
0.02 |
|
Intangible Amortization 2 |
|
|
(28.2 |
) |
|
|
28.2 |
|
|
|
21.9 |
|
|
|
0.24 |
|
Portfolio Optimization 3 |
|
|
(0.6 |
) |
|
|
5.6 |
|
|
|
5.4 |
|
|
|
0.06 |
|
Litigation, Settlements and Regulatory Compliance 4 |
|
|
(8.2 |
) |
|
|
8.2 |
|
|
|
4.9 |
|
|
|
0.05 |
|
Total Adjustments |
|
|
(39.7 |
) |
|
|
44.7 |
|
|
|
34.3 |
|
|
|
0.37 |
|
Adjusted Financial
Measures a |
|
$ |
176.3 |
|
|
$ |
84.7 |
|
|
$ |
45.5 |
|
|
$ |
0.49 |
|
Depreciation |
|
|
|
|
26.6 |
|
|
|
|
|
Adjusted
EBITDA b |
|
|
|
$ |
111.3 |
|
|
|
|
|
(In millions, except per share data) |
|
Three Months Ended March 31, 2022 |
|
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net (Loss) IncomeAttributable to Common
Shareholders c |
|
Diluted (Loss) EarningsPer
Share |
U.S. GAAP Financial Measures |
|
$ |
238.6 |
|
|
$ |
5.9 |
|
|
$ |
(14.2 |
) |
|
$ |
(0.15 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
|
(5.6 |
) |
|
|
5.6 |
|
|
|
4.2 |
|
|
|
0.05 |
|
Intangible Amortization 2 |
|
|
(32.4 |
) |
|
|
32.4 |
|
|
|
25.2 |
|
|
|
0.27 |
|
Portfolio Optimization 3 |
|
|
(1.3 |
) |
|
|
1.3 |
|
|
|
1.0 |
|
|
|
0.01 |
|
Litigation, Settlements and Regulatory Compliance 4 |
|
|
(13.8 |
) |
|
|
13.8 |
|
|
|
12.9 |
|
|
|
0.14 |
|
Total Adjustments |
|
|
(53.1 |
) |
|
|
53.1 |
|
|
|
43.3 |
|
|
|
0.47 |
|
Adjusted Financial
Measures a |
|
$ |
185.5 |
|
|
$ |
59.0 |
|
|
$ |
29.1 |
|
|
$ |
0.32 |
|
Depreciation |
|
|
|
|
27.3 |
|
|
|
|
|
Adjusted
EBITDA b |
|
|
|
$ |
86.3 |
|
|
|
|
|
(In millions, except per share data) |
|
First Quarter 2023 Change Compared to First Quarter
2022 |
|
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net Income (Loss)Attributable to Common
Shareholders |
|
Diluted Earnings (Loss) Per Share |
U.S. GAAP Financial Measures |
|
$ |
(22.6 |
) |
|
$ |
34.1 |
|
|
$ |
25.4 |
|
|
$ |
0.27 |
|
Adjustments: |
|
|
|
|
|
|
|
|
ERP and System Modernization |
|
|
2.9 |
|
|
|
(2.9 |
) |
|
|
(2.1 |
) |
|
|
(0.03 |
) |
Intangible Amortization |
|
|
4.2 |
|
|
|
(4.2 |
) |
|
|
(3.3 |
) |
|
|
(0.03 |
) |
Portfolio Optimization |
|
|
0.7 |
|
|
|
4.3 |
|
|
|
4.4 |
|
|
|
0.05 |
|
Litigation, Settlements and Regulatory Compliance |
|
|
5.6 |
|
|
|
(5.6 |
) |
|
|
(8.0 |
) |
|
|
(0.09 |
) |
Total Adjustments |
|
|
13.4 |
|
|
|
(8.4 |
) |
|
|
(9.0 |
) |
|
|
(0.10 |
) |
Adjusted Financial
Measures |
|
$ |
(9.2 |
) |
|
$ |
25.7 |
|
|
$ |
16.4 |
|
|
$ |
0.17 |
|
Depreciation |
|
|
|
|
(0.7 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
$ |
25.0 |
|
|
|
|
|
The following table provides adjustments to Income from
operations categorized as follows:
(In millions) |
|
Three Months Ended March 31, |
|
|
2023 |
|
|
|
2022 |
|
Non-Cash Related 5 |
$ |
33.1 |
|
|
$ |
32.4 |
|
Cash Related |
|
11.6 |
|
|
|
20.7 |
|
Total |
$ |
44.7 |
|
|
$ |
53.1 |
|
U.S. GAAP results for the three months ended
March 31, 2023 and 2022 include:
- ERP and System
Modernization: In 2023 and 2022, SG&A includes $2.7
million and $5.6 million, respectively, of consulting and
professional fees related to our ERP and system modernization.
- Intangible
Amortization: Intangible amortization expense from
acquisitions.
- Portfolio
Optimization: Divestitures losses, net for the three months ended
March 31, 2023 includes a $5.0 million loss (inclusive of $0.1
million related to deal costs) related to the divestiture of our
International container manufacturing operations. In 2023 and 2022,
SG&A includes $0.6 million and $1.3 million, respectively,
primarily of consulting and professional fees associated with our
portfolio optimization efforts.
- Litigation,
Settlements, and Regulatory Compliance: In 2023 and 2022,
SG&A includes $14.2 million and $4.6 million,
respectively, of primarily consulting and professional fees and
estimated contingent liability provisions related to certain
litigation, settlement and regulatory compliance matters.
Additionally, 2023 includes a value-added tax reclaim credit of
$6.0 million. 2022 includes an additional FCPA settlement
expense of $9.2 million.
- Non-Cash Related
Adjustments: In 2023 and 2022, non-cash related adjustments include
$33.1 million and $32.4 million, respectively, consisting
of intangible amortization and portfolio optimization items.
- The Non-GAAP financial measures contained in this press release
are reconciled to the most comparable measures calculated in
accordance with U.S. GAAP in the schedules attached to this
release. Management believes the Non-GAAP financial measures are
useful measures of Stericycle’s performance because they provide
additional information about Stericycle’s operations and exclude
certain adjusting items, allowing better evaluation of
underlying business performance and better period-to-period
comparability. The Non-GAAP financial measures contained in this
press release may not be calculated in the same manner as certain
other Non-GAAP financial measures and are used solely to evaluate
management’s performance for incentive compensation purposes. All
Non-GAAP financial measures are intended to supplement the
applicable U.S. GAAP measures and should not be considered in
isolation from, or a replacement for, financial measures prepared
in accordance with U.S. GAAP and may not be comparable to or
calculated in the same manner as Non-GAAP financial measures
published by other companies.
- Adjusted Earnings Before Interest, Tax, Depreciation and
Amortization (Adjusted EBITDA) is Income from operations excluding
certain adjusting items, depreciation and intangible
amortization.
- Under the Net Income (Loss) Attributable to Common Shareholders
column, adjustments are shown net of tax in aggregate of
$10.4 million and $9.8 million for the three months
ended March 31, 2023 and 2022, respectively, based on applying
the statutory tax rate for the jurisdictions in which the
adjustment occurred or, by adjusting the tax effect to consider the
impact of applying an annual effective tax rate on an interim
basis. For purposes of reconciling adjusted diluted earnings per
share with respect to taxes period-over-period, the company
utilizes a “rate approach” to highlight the impact of the adjusted
tax rate. It is computed by multiplying the prior period adjusted
rate by the current period adjusted income before taxes to
determine the expected tax expense. Such expected tax expense is
then compared to actual tax expense. Expected tax in excess of
actual tax variance is favorable; actual tax in excess of expected
tax variance is unfavorable. The variance divided by diluted shares
outstanding at the end of the period yields the impact on earnings
per share. Management believes the use of this measure best aids in
explaining the impact of a changing tax rate.
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