Stericycle, Inc. (Nasdaq: SRCL) today reported results for the
second quarter ended June 30, 2023.
Revenues for the second quarter were $669.5
million, a decrease of 1.5% compared to $679.8 million in the
second quarter of 2022. Loss from operations was $24.0 million,
primarily due to 2023 net divestiture losses of $54.2 million,
compared to income from operations of $38.1 million in the second
quarter of 2022. Net loss was $49.5 million, or $0.54 diluted loss
per share, compared to Net income of $10.5 million, or $0.11
diluted earnings per share in the second quarter of 2022. Adjusted
income from operations1 was $76.0 million, compared to $82.0
million in the second quarter of 2022. Adjusted diluted
earnings per share1 was $0.43, compared to $0.48 in the second
quarter of last year. Cash flow from operations for the six
months ended June 30, 2023 was an inflow of $154.9 million,
compared to an outflow of $18.4 million in the same period of 2022.
Free cash flow2 was an inflow of $91.2 million for the six months
ended June 30, 2023, compared to an outflow of $88.4 million,
primarily due to FCPA payments of $75.8 million in 2022.
KEY BUSINESS
HIGHLIGHTS:
- Grew organic
revenues1 2.3% compared to the second quarter of 2022 with
Regulated Waste and Compliance Services (“RWCS”) growing 4.7%.
- Reduced our Credit
Agreement defined debt leverage ratio to 2.70X.
- Improved free cash
flow2 in the first half of 2023 by $179.6 million compared to
2022.
- Divested our
businesses in Brazil, Republic of Korea, Australia, and Singapore
for net proceeds of approximately $84 million.
“In the second quarter, we achieved our key
business priority of lowering our debt leverage ratio below 3.0X
and to the lowest level since 2015. We also made significant
progress in executing our portfolio optimization by exiting
businesses in four countries and we remain on track to deploy the
ERP to U.S. RWCS in the third quarter,” said Cindy J. Miller,
President and Chief Executive Officer. “Our first half financial
performance came in line with our full-year 2023 guidance, which we
are reaffirming.”
SECOND QUARTER FINANCIAL
RESULTS
U.S. Generally Accepted Accounting Principles (GAAP)
Results
- Revenues in the
second quarter were $669.5 million, compared to $679.8 million in
the second quarter of 2022. The decrease was primarily due to
impacts of divestitures of $24.0 million and unfavorable foreign
exchange rates of $1.2 million, partially offset by organic revenue
growth of $14.9 million. Organic revenues in RWCS grew $19.7
million, while Secure Information Destruction (“SID”) organic
revenues were lower by $4.8 million.
- Loss from
operations in the second quarter was $24.0 million compared to
Income from operations of $38.1 million in the second quarter of
2022. The $62.1 million decrease was primarily due to 2023 net
divestiture losses of $54.2 million, higher incentive and
stock-based compensation of $9.7 million, and higher fleet costs of
$4.9 million, partially offset by lower bad debt expense of $8.9
million.
- Net loss in the
second quarter was $49.5 million, or $0.54 diluted loss per share,
compared to Net income of $10.5 million, or $0.11 diluted earnings
per share in the second quarter of 2022. The $60.0 million
decrease was primarily attributable to lower Income from operations
of $62.1 million, as explained above.
- Cash flow from
operations for the six months ended June 30, 2023 was an
inflow of $154.9 million, compared to an outflow of $18.4 million
in the same period of 2022. The year-over-year increase of
$173.3 million was primarily driven by lower FCPA settlement
payments of $67.6 million; accounts receivable improvements of
$52.1 million, primarily due to an improvement in Days Sales
Outstanding; higher cash generated from operating income of $23.3
million; lower annual incentive compensation payments of $22.3
million; and other working capital improvements of $8.0
million.
- Cash paid for
capital expenditures for the six months ended June 30, 2023
was $63.7 million, compared to $70.0 million in the same
period of 2022.
Non-GAAP
Results1,2
- For the second
quarter of 2023, organic revenues1 increased 2.3%, which excludes
the impacts of divestitures and foreign exchange rates. RWCS
organic revenues1 increased 4.7% while SID decreased 2.1%.
- Adjusted income
from operations1 was $76.0 million, compared to
$82.0 million in the second quarter of 2022. As a
percentage of revenues, the 70 basis points decrease was mainly due
to higher incentive and stock-based compensation of 150 basis
points and higher fleet costs of 70 basis points, partially offset
by lower bad debt expense of 130 basis points.
- Adjusted diluted
earnings per share1 was $0.43, compared to $0.48 in the second
quarter of 2022. Excluding the impacts of divestitures and foreign
exchange rates of $0.01, the remaining $0.04 decrease was driven by
higher incentive and stock-based compensation of $0.08 and higher
fleet costs of $0.04. These were partially offset by lower bad debt
expense of $0.07 and lower tax expense of $0.01.
- Free cash flow2 for
the six months ended June 30, 2023 was an inflow of
$91.2 million, compared to an outflow of $88.4 million in
the same period of 2022. The $179.6 million increase was
primarily due to higher cash flow from operations of $173.3
million, as explained above, and lower cash paid for capital
expenditures of $6.3 million.
CONFERENCE CALL INFORMATION
Stericycle is holding its second quarter
earnings conference call on Thursday, July 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: 119356. To access presentation materials or
listen to the call via an internet webcast, visit
investors.stericycle.com.
The second quarter earnings call is being
recorded and a replay will be available approximately one hour
after the end of the conference call until August 24, 2023. To
access a replay of the call, dial (866) 813-9403 and enter the
Replay Access Code: 979851. 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 12 countries with
solutions for regulated waste and compliance services and secure
information destruction. For more information about Stericycle,
please visit stericycle.com.
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.
2. 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 the investigation by the DEA discussed in
our SEC reports and litigation or investigations 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 (LOSS) INCOME
(Unaudited) |
|
In
millions, except per share data |
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
2023 |
|
% Revenues |
|
|
|
2022 |
|
% Revenues |
|
|
% Change |
|
|
|
2023 |
|
|
% Revenues |
|
|
2022 |
|
% Revenues |
|
% Change |
Revenues |
$ |
669.5 |
|
|
100.0 |
|
% |
|
$ |
679.8 |
|
|
100.0 |
|
% |
|
(1.5 |
) |
% |
|
$ |
1,353.8 |
|
|
100.0 |
|
% |
|
$ |
1,344.0 |
|
|
100.0 |
|
% |
|
0.7 |
|
% |
Cost of revenues |
|
418.4 |
|
|
62.5 |
|
% |
|
|
419.3 |
|
|
61.7 |
|
% |
|
(0.2 |
) |
% |
|
|
841.7 |
|
|
62.2 |
|
% |
|
|
839.0 |
|
|
62.4 |
|
% |
|
0.3 |
|
% |
Gross
profit |
|
251.1 |
|
|
37.5 |
|
% |
|
|
260.5 |
|
|
38.3 |
|
% |
|
(3.6 |
) |
% |
|
|
512.1 |
|
|
37.8 |
|
% |
|
|
505.0 |
|
|
37.6 |
|
% |
|
1.4 |
|
% |
Selling, general and
administrative expenses |
|
220.9 |
|
|
33.0 |
|
% |
|
|
222.4 |
|
|
32.7 |
|
% |
|
(0.7 |
) |
% |
|
|
436.9 |
|
|
32.3 |
|
% |
|
|
461.0 |
|
|
34.3 |
|
% |
|
(5.2 |
) |
% |
Divestiture losses, net |
|
54.2 |
|
|
8.1 |
|
% |
|
|
— |
|
|
— |
|
% |
|
nm |
|
|
59.2 |
|
|
4.4 |
|
% |
|
|
— |
|
|
— |
|
% |
|
nm |
(Loss) income from
operations |
|
(24.0 |
) |
|
(3.6 |
) |
% |
|
|
38.1 |
|
|
5.6 |
|
% |
|
(163.0 |
) |
% |
|
|
16.0 |
|
|
1.2 |
|
% |
|
|
44.0 |
|
|
3.3 |
|
% |
|
(63.6 |
) |
% |
Interest expense, net |
|
(19.1 |
) |
|
(2.9 |
) |
% |
|
|
(18.5 |
) |
|
(2.7 |
) |
% |
|
3.2 |
|
% |
|
|
(39.5 |
) |
|
(2.9 |
) |
% |
|
|
(34.8 |
) |
|
(2.6 |
) |
% |
|
13.5 |
|
% |
Other expense, net |
|
(0.6 |
) |
|
(0.1 |
) |
% |
|
|
(0.7 |
) |
|
(0.1 |
) |
% |
|
(14.3 |
) |
% |
|
|
(0.4 |
) |
|
— |
|
% |
|
|
(1.5 |
) |
|
(0.1 |
) |
% |
|
(73.3 |
) |
% |
(Loss) income before
income taxes |
|
(43.7 |
) |
|
(6.5 |
) |
% |
|
|
18.9 |
|
|
2.8 |
|
% |
|
(331.2 |
) |
% |
|
|
(23.9 |
) |
|
(1.8 |
) |
% |
|
|
7.7 |
|
|
0.6 |
|
% |
|
(410.4 |
) |
% |
Income tax expense |
|
(5.8 |
) |
|
(0.9 |
) |
% |
|
|
(8.4 |
) |
|
(1.2 |
) |
% |
|
(31.0 |
) |
% |
|
|
(14.3 |
) |
|
(1.1 |
) |
% |
|
|
(11.3 |
) |
|
(0.8 |
) |
% |
|
26.5 |
|
% |
Net (loss)
income |
|
(49.5 |
) |
|
(7.4 |
) |
% |
|
|
10.5 |
|
|
1.5 |
|
% |
|
nm |
|
|
(38.2 |
) |
|
(2.8 |
) |
% |
|
|
(3.6 |
) |
|
(0.3 |
) |
% |
|
nm |
Net (loss) income attributable
to noncontrolling interests |
|
— |
|
|
— |
|
% |
|
|
— |
|
|
— |
|
% |
|
nm |
|
|
(0.1 |
) |
|
— |
|
% |
|
|
(0.2 |
) |
|
— |
|
% |
|
(50.0 |
) |
% |
Net (loss) income
attributable to Stericycle, Inc. common shareholders |
$ |
(49.5 |
) |
|
(7.4 |
) |
% |
|
$ |
10.5 |
|
|
1.5 |
|
% |
|
nm |
|
$ |
(38.3 |
) |
|
(2.8 |
) |
% |
|
$ |
(3.8 |
) |
|
(0.3 |
) |
% |
|
nm |
(Loss) income per
common share attributable to Stericycle, Inc. common
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
(0.54 |
) |
|
|
|
|
$ |
0.11 |
|
|
|
|
|
nm |
|
$ |
(0.41 |
) |
|
|
|
|
$ |
(0.04 |
) |
|
|
|
|
nm |
Diluted |
$ |
(0.54 |
) |
|
|
|
|
$ |
0.11 |
|
|
|
|
|
nm |
|
$ |
(0.41 |
) |
|
|
|
|
$ |
(0.04 |
) |
|
|
|
|
nm |
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
92.5 |
|
|
|
|
|
|
92.1 |
|
|
|
|
|
|
|
|
|
92.3 |
|
|
|
|
|
|
92.0 |
|
|
|
|
|
|
|
Diluted |
|
92.5 |
|
|
|
|
|
|
92.2 |
|
|
|
|
|
|
|
|
|
92.3 |
|
|
|
|
|
|
92.0 |
|
|
|
|
|
|
|
nm
- percentage change not meaningful for comparison |
|
STATISTICS - U.S. GAAP AND NON-GAAP ADJUSTED FINANCIAL
MEASURES(Unaudited) |
|
In millions, except per share data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
% Revenues |
|
|
2022 |
|
|
% Revenues |
|
|
2023 |
|
|
% Revenues |
|
|
2022 |
|
|
% Revenues |
Statistics - U.S.
GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
(13.3) |
% |
|
|
|
|
44.4 |
% |
|
|
|
(59.8) |
% |
|
|
|
|
146.8 |
% |
|
|
Statistics -
Adjusted (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit |
$ |
254.5 |
|
|
38.0 |
% |
|
$ |
260.5 |
|
|
38.3 |
% |
|
$ |
515.5 |
|
|
38.1 |
% |
|
$ |
505.0 |
|
|
37.6 |
% |
Adjusted selling, general and
administrative expenses |
$ |
178.5 |
|
|
26.7 |
% |
|
$ |
178.5 |
|
|
26.3 |
% |
|
$ |
354.8 |
|
|
26.2 |
% |
|
$ |
364.0 |
|
|
27.1 |
% |
Adjusted income from
operations |
$ |
76.0 |
|
|
11.4 |
% |
|
$ |
82.0 |
|
|
12.1 |
% |
|
$ |
160.7 |
|
|
11.9 |
% |
|
$ |
141.0 |
|
|
10.5 |
% |
Adjusted EBITDA |
$ |
102.0 |
|
|
15.2 |
% |
|
$ |
109.0 |
|
|
16.0 |
% |
|
$ |
213.3 |
|
|
15.8 |
% |
|
$ |
195.3 |
|
|
14.5 |
% |
Adjusted net income
attributable to common shareholders |
$ |
40.3 |
|
|
6.0 |
% |
|
$ |
44.1 |
|
|
6.5 |
% |
|
$ |
85.5 |
|
|
6.3 |
% |
|
$ |
73.1 |
|
|
5.4 |
% |
Adjusted effective tax
rate |
|
28.5 |
% |
|
|
|
|
29.8 |
% |
|
|
|
|
29.1 |
% |
|
|
|
|
30.0 |
% |
|
|
Adjusted diluted earnings per
share |
$ |
0.43 |
|
|
|
|
$ |
0.48 |
|
|
|
|
$ |
0.93 |
|
|
|
|
$ |
0.79 |
|
|
|
Adjusted diluted shares
outstanding |
|
92.7 |
|
|
|
|
|
92.2 |
|
|
|
|
|
92.7 |
|
|
|
|
|
92.2 |
|
|
|
(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 |
|
|
|
|
June 30, 2023 |
|
December 31, 2022 |
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
30.7 |
|
|
$ |
56.0 |
|
Accounts receivable, less
allowance for doubtful accounts of $44.1 in 2023 and $53.3 in
2022 |
|
410.3 |
|
|
|
414.5 |
|
Prepaid expenses |
|
33.5 |
|
|
|
33.2 |
|
Other current assets |
|
52.7 |
|
|
|
55.0 |
|
Total Current Assets |
|
527.2 |
|
|
|
558.7 |
|
Property, plant and equipment,
less accumulated depreciation of $662.0 in 2023 and $657.7 in
2022 |
|
692.5 |
|
|
|
715.7 |
|
Operating lease right-of-use
assets |
|
431.1 |
|
|
|
398.9 |
|
Goodwill |
|
2,751.9 |
|
|
|
2,784.9 |
|
Intangible assets, less
accumulated amortization of $873.2 in 2023 and $823.3 in 2022 |
|
743.8 |
|
|
|
811.1 |
|
Other assets |
|
66.6 |
|
|
|
64.8 |
|
Total
Assets |
$ |
5,213.1 |
|
|
$ |
5,334.1 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Current portion of long-term
debt |
$ |
15.6 |
|
|
$ |
22.3 |
|
Bank overdrafts |
|
— |
|
|
|
2.9 |
|
Accounts payable |
|
207.0 |
|
|
|
213.5 |
|
Accrued liabilities |
|
243.2 |
|
|
|
244.1 |
|
Operating lease
liabilities |
|
99.6 |
|
|
|
91.2 |
|
Other current liabilities |
|
53.7 |
|
|
|
47.9 |
|
Total Current Liabilities |
|
619.1 |
|
|
|
621.9 |
|
Long-term debt, net |
|
1,293.7 |
|
|
|
1,484.0 |
|
Long-term operating lease
liabilities |
|
352.4 |
|
|
|
329.0 |
|
Deferred income taxes |
|
429.0 |
|
|
|
427.0 |
|
Long-term income taxes
payable |
|
9.3 |
|
|
|
11.8 |
|
Other liabilities |
|
26.8 |
|
|
|
35.9 |
|
Total
Liabilities |
|
2,730.3 |
|
|
|
2,909.6 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
EQUITY |
|
|
|
Common stock (par value $0.01
per share, 120.0 shares authorized, 92.5 and 92.2 issued and
outstanding in 2023 and 2022, respectively) |
|
0.9 |
|
|
|
0.9 |
|
Additional paid-in
capital |
|
1,299.8 |
|
|
|
1,285.4 |
|
Retained earnings |
|
1,372.5 |
|
|
|
1,410.8 |
|
Accumulated other
comprehensive loss |
|
(191.0 |
) |
|
|
(276.9 |
) |
Total Stericycle, Inc.’s Equity |
|
2,482.2 |
|
|
|
2,420.2 |
|
Noncontrolling interests |
|
0.6 |
|
|
|
4.3 |
|
Total Equity |
|
2,482.8 |
|
|
|
2,424.5 |
|
Total Liabilities and
Equity |
$ |
5,213.1 |
|
|
$ |
5,334.1 |
|
|
STERICYCLE, INC.CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS(Unaudited) |
|
In millions |
|
|
|
|
Six Months Ended June 30, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING
ACTIVITIES: |
|
|
|
Net loss |
$ |
(38.2 |
) |
|
$ |
(3.6 |
) |
Adjustments to reconcile net
loss to net cash from operating activities: |
|
|
|
Depreciation |
|
52.6 |
|
|
|
54.3 |
|
Intangible amortization |
|
56.3 |
|
|
|
63.2 |
|
Stock-based compensation expense |
|
17.8 |
|
|
|
12.6 |
|
Deferred income taxes |
|
4.9 |
|
|
|
5.2 |
|
Divestiture losses, net |
|
59.2 |
|
|
|
— |
|
Asset impairments, (gain) loss on disposal of property plant and
equipment and other charges |
|
3.1 |
|
|
|
0.3 |
|
Other, net |
|
1.2 |
|
|
|
1.6 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(1.3 |
) |
|
|
(53.4 |
) |
Prepaid expenses |
|
(1.6 |
) |
|
|
10.0 |
|
Accounts payable |
|
(1.5 |
) |
|
|
(12.5 |
) |
Accrued liabilities |
|
8.4 |
|
|
|
(91.6 |
) |
Other assets and liabilities |
|
(6.0 |
) |
|
|
(4.5 |
) |
Net cash from
operating activities |
|
154.9 |
|
|
|
(18.4 |
) |
INVESTING
ACTIVITIES: |
|
|
|
Capital expenditures |
|
(63.7 |
) |
|
|
(70.0 |
) |
Proceeds from divestiture of
businesses, net |
|
88.9 |
|
|
|
1.6 |
|
Other, net |
|
1.2 |
|
|
|
0.8 |
|
Net cash from
investing activities |
|
26.4 |
|
|
|
(67.6 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Repayments of long-term debt
and other obligations |
|
(10.0 |
) |
|
|
(8.4 |
) |
Proceeds from foreign bank
debt |
|
0.1 |
|
|
|
— |
|
Repayments of foreign bank
debt |
|
(0.3 |
) |
|
|
(0.1 |
) |
Repayments of term loan |
|
(50.0 |
) |
|
|
— |
|
Proceeds from credit
facility |
|
601.0 |
|
|
|
732.5 |
|
Repayments of credit
facility |
|
(737.7 |
) |
|
|
(637.9 |
) |
Repayment of bank
overdrafts |
|
(2.9 |
) |
|
|
(0.6 |
) |
Payments of finance lease
obligations |
|
(1.4 |
) |
|
|
(1.3 |
) |
Proceeds from issuance of
common stock, net of (payments of) taxes from withheld shares |
|
(5.2 |
) |
|
|
(5.2 |
) |
Payments to noncontrolling
interest |
|
(1.5 |
) |
|
|
— |
|
Net cash from
financing activities |
|
(207.9 |
) |
|
|
79.0 |
|
Effect of exchange rate
changes on cash and cash equivalents |
|
1.3 |
|
|
|
(2.7 |
) |
Net change in cash and cash
equivalents |
|
(25.3 |
) |
|
|
(9.7 |
) |
Cash and cash equivalents at
beginning of period |
|
56.0 |
|
|
|
55.6 |
|
Cash and cash
equivalents at end of period |
$ |
30.7 |
|
|
$ |
45.9 |
|
|
|
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION: |
|
|
|
Interest paid, net of
capitalized interest |
$ |
38.0 |
|
|
$ |
31.9 |
|
Income taxes paid, net |
$ |
13.7 |
|
|
$ |
4.0 |
|
Capital expenditures in
Accounts payable |
$ |
21.9 |
|
|
$ |
30.8 |
|
Free Cash Flow (1) |
$ |
91.2 |
|
|
$ |
(88.4 |
) |
(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 JUNE 30, 2023
and 2022
|
|
Three Months Ended June 30, |
|
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 |
$ |
444.7 |
|
$ |
448.4 |
|
$ |
(3.7 |
) |
|
(0.8) |
% |
|
4.7 |
% |
|
(5.1) |
% |
|
(0.1) |
% |
Secure Information Destruction
Services |
|
224.8 |
|
|
231.4 |
|
|
(6.6 |
) |
|
(2.9) |
% |
|
(2.1) |
% |
|
(0.4) |
% |
|
(0.4) |
% |
Total Revenues |
$ |
669.5 |
|
$ |
679.8 |
|
$ |
(10.3 |
) |
|
(1.5) |
% |
|
2.3 |
% |
|
(3.5) |
% |
|
(0.2) |
% |
North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
366.4 |
|
$ |
365.6 |
|
$ |
0.8 |
|
|
0.2 |
% |
|
4.8 |
% |
|
(4.2) |
% |
|
(0.2) |
% |
Secure Information Destruction
Services |
|
198.8 |
|
|
203.0 |
|
|
(4.2 |
) |
|
(2.1) |
% |
|
(1.6) |
% |
|
— |
% |
|
(0.4) |
% |
Total North America Segment |
$ |
565.2 |
|
$ |
568.6 |
|
$ |
(3.4 |
) |
|
(0.6) |
% |
|
2.4 |
% |
|
(2.7) |
% |
|
(0.3) |
% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
78.3 |
|
$ |
82.8 |
|
$ |
(4.5 |
) |
|
(5.4) |
% |
|
3.9 |
% |
|
(9.4) |
% |
|
0.5 |
% |
Secure Information Destruction
Services |
|
26.0 |
|
|
28.4 |
|
|
(2.4 |
) |
|
(8.5) |
% |
|
(5.4) |
% |
|
(3.3) |
% |
|
0.1 |
% |
Total International Segment |
$ |
104.3 |
|
$ |
111.2 |
|
$ |
(6.9 |
) |
|
(6.2) |
% |
|
1.4 |
% |
|
(7.9) |
% |
|
0.4 |
% |
See footnote
descriptions below Table 1 – C |
|
Table 1–B: REVENUE CHANGES BY SERVICE
AND SEGMENT (UNAUDITED) –SIX
MONTHS ENDED JUNE 30, 2023
and 2022 |
|
|
|
|
Six Months Ended June 30, |
|
|
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 |
$ |
896.0 |
|
$ |
901.2 |
|
$ |
(5.2 |
) |
|
(0.6) |
% |
|
4.6 |
% |
|
(4.4) |
% |
|
(0.8) |
% |
Secure Information Destruction
Services |
|
457.8 |
|
|
442.8 |
|
|
15.0 |
|
|
3.4 |
% |
|
4.6 |
% |
|
(0.2) |
% |
|
(1.0) |
% |
Total Revenues |
$ |
1,353.8 |
|
$ |
1,344.0 |
|
$ |
9.8 |
|
|
0.7 |
% |
|
4.6 |
% |
|
(3.0) |
% |
|
(0.8) |
% |
North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
735.1 |
|
$ |
727.8 |
|
$ |
7.3 |
|
|
1.0 |
% |
|
5.4 |
% |
|
(4.1) |
% |
|
(0.2) |
% |
Secure Information Destruction
Services |
|
403.5 |
|
|
384.5 |
|
|
19.0 |
|
|
4.9 |
% |
|
5.5 |
% |
|
— |
% |
|
(0.6) |
% |
Total North America Segment |
$ |
1,138.6 |
|
$ |
1,112.3 |
|
$ |
26.3 |
|
|
2.4 |
% |
|
5.4 |
% |
|
(2.7) |
% |
|
(0.3) |
% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
160.9 |
|
$ |
173.4 |
|
$ |
(12.5 |
) |
|
(7.2) |
% |
|
1.3 |
% |
|
(5.5) |
% |
|
(3.0) |
% |
Secure Information Destruction
Services |
|
54.3 |
|
|
58.3 |
|
|
(4.0 |
) |
|
(6.9) |
% |
|
(1.4) |
% |
|
(1.6) |
% |
|
(3.9) |
% |
Total International Segment |
$ |
215.2 |
|
$ |
231.7 |
|
$ |
(16.5 |
) |
|
(7.1) |
% |
|
0.6 |
% |
|
(4.5) |
% |
|
(3.2) |
% |
See footnote
descriptions below Table 1 – C |
|
|
|
Table 1–C: COMPONENTS OF REVENUE CHANGE IN
DOLLARS (UNAUDITED) |
|
(In millions) |
|
Three Months EndedJune 30,
2023 |
|
Six Months EndedJune 30,
2023 |
Organic Growth (2) |
$ |
14.9 |
|
|
$ |
61.7 |
|
Divestitures |
|
(24.0 |
) |
|
|
(40.6 |
) |
Foreign exchange (3) |
|
(1.2 |
) |
|
|
(11.3 |
) |
Total Change |
$ |
(10.3 |
) |
|
$ |
9.8 |
|
(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 JUNE
30, 2023 and 2022 |
(In millions, except per share data) |
|
Three Months Ended June 30, 2023 |
|
Gross Profit |
|
Selling,General and
AdministrativeExpenses |
|
(Loss) Income from Operations |
|
Net (Loss) Income Attributable to Common
Shareholders c |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
251.1 |
|
$ |
220.9 |
|
|
$ |
(24.0 |
) |
|
$ |
(49.5 |
) |
|
$ |
(0.54 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(5.4 |
) |
|
|
5.4 |
|
|
|
4.1 |
|
|
|
0.04 |
|
Intangible Amortization 2 |
|
— |
|
|
(28.1 |
) |
|
|
28.1 |
|
|
|
21.8 |
|
|
|
0.24 |
|
Portfolio Optimization 3 |
|
— |
|
|
— |
|
|
|
54.2 |
|
|
|
53.8 |
|
|
|
0.58 |
|
Litigation, Settlements and Regulatory Compliance 4 |
|
— |
|
|
(8.9 |
) |
|
|
8.9 |
|
|
|
6.7 |
|
|
|
0.07 |
|
Asset Impairments 5 |
|
3.4 |
|
|
— |
|
|
|
3.4 |
|
|
|
3.4 |
|
|
|
0.04 |
|
Total Adjustments |
|
3.4 |
|
|
(42.4 |
) |
|
|
100.0 |
|
|
|
89.8 |
|
|
|
0.97 |
|
Adjusted Financial
Measures a |
$ |
254.5 |
|
$ |
178.5 |
|
|
$ |
76.0 |
|
|
$ |
40.3 |
|
|
$ |
0.43 |
|
Depreciation |
|
|
|
|
|
26.0 |
|
|
|
|
|
Adjusted
EBITDA b |
|
|
|
|
$ |
102.0 |
|
|
|
|
|
|
(In millions, except per share data) |
|
Three Months Ended June 30, 2022 |
|
Gross Profit |
|
Selling,General and
AdministrativeExpenses |
|
Income from Operations |
|
Net IncomeAttributable to Common
Shareholders c |
|
Diluted Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
260.5 |
|
$ |
222.4 |
|
|
$ |
38.1 |
|
$ |
10.5 |
|
$ |
0.11 |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(3.5 |
) |
|
|
3.5 |
|
|
2.6 |
|
|
0.03 |
Intangible Amortization 2 |
|
— |
|
|
(30.8 |
) |
|
|
30.8 |
|
|
23.9 |
|
|
0.26 |
Portfolio Optimization 3 |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Litigation, Settlements and Regulatory Compliance 4 |
|
— |
|
|
(9.6 |
) |
|
|
9.6 |
|
|
7.1 |
|
|
0.08 |
Asset Impairments 5 |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Total Adjustments |
|
— |
|
|
(43.9 |
) |
|
|
43.9 |
|
|
33.6 |
|
|
0.37 |
Adjusted Financial
Measures a |
$ |
260.5 |
|
$ |
178.5 |
|
|
$ |
82.0 |
|
$ |
44.1 |
|
$ |
0.48 |
Depreciation |
|
|
|
|
|
27.0 |
|
|
|
|
Adjusted
EBITDA b |
|
|
|
|
$ |
109.0 |
|
|
|
|
|
(In millions, except per share data) |
|
Second Quarter
2023 Change Compared to
Second Quarter
2022 |
|
Gross Profit |
|
Selling,General and Administrative
Expenses |
|
(Loss) Income from Operations |
|
Net (Loss) IncomeAttributable to Common
Shareholders |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
(9.4 |
) |
|
$ |
(1.5 |
) |
|
$ |
(62.1 |
) |
|
$ |
(60.0 |
) |
|
$ |
(0.65 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization |
|
— |
|
|
|
(1.9 |
) |
|
|
1.9 |
|
|
|
1.5 |
|
|
|
0.01 |
|
Intangible Amortization |
|
— |
|
|
|
2.7 |
|
|
|
(2.7 |
) |
|
|
(2.1 |
) |
|
|
(0.02 |
) |
Portfolio Optimization |
|
— |
|
|
|
— |
|
|
|
54.2 |
|
|
|
53.8 |
|
|
|
0.58 |
|
Litigation, Settlements and Regulatory Compliance |
|
— |
|
|
|
0.7 |
|
|
|
(0.7 |
) |
|
|
(0.4 |
) |
|
|
(0.01 |
) |
Asset Impairments |
|
3.4 |
|
|
|
— |
|
|
|
3.4 |
|
|
|
3.4 |
|
|
|
0.04 |
|
Total Adjustments |
|
3.4 |
|
|
|
1.5 |
|
|
|
56.1 |
|
|
|
56.2 |
|
|
|
0.60 |
|
Adjusted Financial
Measures |
$ |
(6.0 |
) |
|
$ |
— |
|
|
$ |
(6.0 |
) |
|
$ |
(3.8 |
) |
|
$ |
(0.05 |
) |
Depreciation |
|
|
|
|
|
(1.0 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
$ |
(7.0 |
) |
|
|
|
|
|
The following table provides adjustments to Income from
operations categorized as follows:
(In
millions) |
|
Three Months Ended June 30, |
|
2023 |
|
2022 |
Non-Cash Related 6 |
$ |
83.8 |
|
$ |
30.8 |
Cash Related |
|
16.2 |
|
|
13.1 |
Total |
$ |
100.0 |
|
$ |
43.9 |
|
Non-cash related adjustments include the
following:
(In millions) |
|
Three Months Ended June 30, 2023 |
|
Depreciation and Impairments of Property, Plant and
Equipment |
|
Amortization of Intangibles |
|
Divestiture Losses (Gains), net |
|
Total |
Adjustments: |
|
|
|
|
|
|
|
Intangible Amortization2 |
$ |
— |
|
$ |
28.1 |
|
$ |
— |
|
$ |
28.1 |
Portfolio Optimization3 |
|
— |
|
|
— |
|
|
52.3 |
|
|
52.3 |
Asset Impairments5 |
|
3.4 |
|
|
— |
|
|
— |
|
|
3.4 |
Total Non-Cash
Charges |
$ |
3.4 |
|
$ |
28.1 |
|
$ |
52.3 |
|
$ |
83.8 |
|
(In millions) |
|
Three Months Ended June 30, 2022 |
|
Depreciation and Impairments of Property, Plant and
Equipment |
|
Amortization of Intangibles |
|
Divestiture Losses (Gains), net |
|
Total |
Adjustments: |
|
|
|
|
|
|
|
Intangible Amortization2 |
$ |
— |
|
$ |
30.8 |
|
$ |
— |
|
$ |
30.8 |
Total Non-Cash
Charges |
$ |
— |
|
$ |
30.8 |
|
$ |
— |
|
$ |
30.8 |
U.S. GAAP results for the three months ended June 30, 2023 and
2022 include: |
- ERP and System Modernization: In 2023 and 2022, Selling,
General, and Administrative expenses (“SG&A”) includes
consulting and professional fees related to our ERP and system
modernization.
- Intangible Amortization: Intangible amortization expense
from acquisitions.
- Portfolio Optimization: In 2023, Divestitures losses, net
includes aggregate net losses of $54.2 million (inclusive of $1.9
million related to deal costs) related to International
divestitures of Brazil, Republic of Korea, Australia, Singapore,
and other businesses.
- Litigation, Settlements, and Regulatory Compliance: In
2023 and 2022, SG&A includes $5.2 million (which includes FCPA
monitor related fees of $2.4 million) and $3.5 million,
respectively, of primarily consulting and professional fees and
estimated contingent liability provisions related to certain
litigation, settlement and regulatory compliance matters.
Additionally in 2023, SG&A includes a settlement charge
associated with a vendor dispute of $4.0 million, other settlement
charges of $0.6 million, and a FCPA settlement release of $0.9
million. Additionally in 2022, SG&A includes a $3.5 million
settlement charge related to a multi-year indirect tax related
Internal Revenue Service (“IRS”) examination and FCPA settlement
expense of $0.4 million.
- Asset Impairments: In 2023, Cost of Revenues (“COR”) includes
an impairment of $3.4 million in International associated with
certain long-lived assets, primarily property, plant and equipment,
in Romania.
- Non-Cash Related Adjustments: In 2023 and 2022, non-cash
related adjustments include $83.8 million and $30.8 million,
respectively, consisting of intangible amortization, portfolio
optimization, and asset impairment 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 (Loss) income from operations
excluding certain adjusting items, depreciation and intangible
amortization.
- Under the Net (Loss) Income Attributable to Common Shareholders
column, adjustments are shown net of tax in aggregate of
$10.2 million and $10.3 million for the three months
ended June 30, 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.
|
|
Table 2-B: SIX MONTHS
ENDED JUNE 30, 2023 and
2022 |
|
(In millions, except per share data) |
|
Six Months Ended June 30, 2023 |
|
Gross Profit |
|
Selling, General and Administrative
Expenses |
|
Income from Operations |
|
Net (Loss) Income Attributable to
Common
Shareholders c |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
512.1 |
|
$ |
436.9 |
|
|
$ |
16.0 |
|
$ |
(38.3 |
) |
|
$ |
(0.41 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(8.1 |
) |
|
|
8.1 |
|
|
6.1 |
|
|
|
0.07 |
|
Intangible Amortization 2 |
|
— |
|
|
(56.3 |
) |
|
|
56.3 |
|
|
43.7 |
|
|
|
0.47 |
|
Portfolio Optimization 3 |
|
— |
|
|
(0.6 |
) |
|
|
59.8 |
|
|
59.1 |
|
|
|
0.64 |
|
Litigation, Settlements and Regulatory Compliance 4 |
|
— |
|
|
(17.1 |
) |
|
|
17.1 |
|
|
11.5 |
|
|
|
0.12 |
|
Asset Impairments 5 |
|
3.4 |
|
|
— |
|
|
|
3.4 |
|
|
3.4 |
|
|
|
0.04 |
|
Total Adjustments |
|
3.4 |
|
|
(82.1 |
) |
|
|
144.7 |
|
|
123.8 |
|
|
|
1.34 |
|
Adjusted Financial
Measures a |
$ |
515.5 |
|
$ |
354.8 |
|
|
$ |
160.7 |
|
$ |
85.5 |
|
|
$ |
0.93 |
|
Depreciation |
|
|
|
|
|
52.6 |
|
|
|
|
Adjusted
EBITDA b |
|
|
|
|
$ |
213.3 |
|
|
|
|
|
(In millions, except per share data) |
|
Six Months Ended June 30, 2022 |
|
Gross Profit |
|
Selling, General and Administrative
Expenses |
|
Income from Operations |
|
Net (Loss) Income Attributable to
Common Shareholders c |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
505.0 |
|
$ |
461.0 |
|
|
$ |
44.0 |
|
$ |
(3.8 |
) |
|
$ |
(0.04 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(9.1 |
) |
|
|
9.1 |
|
|
6.8 |
|
|
|
0.07 |
|
Intangible Amortization 2 |
|
— |
|
|
(63.2 |
) |
|
|
63.2 |
|
|
49.1 |
|
|
|
0.53 |
|
Portfolio Optimization 3 |
|
— |
|
|
(1.3 |
) |
|
|
1.3 |
|
|
1.0 |
|
|
|
0.01 |
|
Litigation, Settlements and Regulatory Compliance 4 |
|
— |
|
|
(23.4 |
) |
|
|
23.4 |
|
|
20.0 |
|
|
|
0.22 |
|
Asset Impairments 5 |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Total Adjustments |
|
— |
|
|
(97.0 |
) |
|
|
97.0 |
|
|
76.9 |
|
|
|
0.83 |
|
Adjusted Financial
Measures a |
$ |
505.0 |
|
$ |
364.0 |
|
|
$ |
141.0 |
|
$ |
73.1 |
|
|
$ |
0.79 |
|
Depreciation |
|
|
|
|
|
54.3 |
|
|
|
|
Adjusted
EBITDA b |
|
|
|
|
$ |
195.3 |
|
|
|
|
|
(In millions, except per share data) |
|
Year-to-Date 2023 Change
Compared to 2022 |
|
Gross Profit |
|
Selling, General and Administrative
Expenses |
|
Income from Operations |
|
Net (Loss) Income Attributable to
Common Shareholders |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
7.1 |
|
$ |
(24.1 |
) |
|
$ |
(28.0 |
) |
|
$ |
(34.5 |
) |
|
$ |
(0.37 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization |
|
— |
|
|
1.0 |
|
|
|
(1.0 |
) |
|
|
(0.7 |
) |
|
|
— |
|
Intangible Amortization |
|
— |
|
|
6.9 |
|
|
|
(6.9 |
) |
|
|
(5.4 |
) |
|
|
(0.06 |
) |
Portfolio Optimization |
|
— |
|
|
0.7 |
|
|
|
58.5 |
|
|
|
58.1 |
|
|
|
0.63 |
|
Litigation, Settlements and Regulatory Compliance |
|
— |
|
|
6.3 |
|
|
|
(6.3 |
) |
|
|
(8.5 |
) |
|
|
(0.10 |
) |
Asset Impairments |
|
3.4 |
|
|
— |
|
|
|
3.4 |
|
|
|
3.4 |
|
|
|
0.04 |
|
Total Adjustments |
|
3.4 |
|
|
14.9 |
|
|
|
47.7 |
|
|
|
46.9 |
|
|
|
0.51 |
|
Adjusted Financial
Measures |
$ |
10.5 |
|
$ |
(9.2 |
) |
|
$ |
19.7 |
|
|
$ |
12.4 |
|
|
$ |
0.14 |
|
Depreciation |
|
|
|
|
|
(1.7 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
$ |
18.0 |
|
|
|
|
|
|
The following table provides adjustments to Income from
operations categorized as follows:
(In millions) |
|
Six Months Ended June 30, |
|
|
2023 |
|
|
2022 |
Non-Cash Related6 |
$ |
116.9 |
|
$ |
63.2 |
Cash Related |
|
27.8 |
|
|
33.8 |
Total |
$ |
144.7 |
|
$ |
97.0 |
|
Non-cash related adjustments include the following:
(In millions) |
|
Six Months Ended June 30, 2023 |
|
Depreciation and Impairments of Property, Plant and
Equipment |
|
Amortization of Intangibles |
|
Divestiture Losses (Gains), net |
|
Total |
Adjustments: |
|
|
|
|
|
|
|
Intangible Amortization 2 |
$ |
— |
|
$ |
56.3 |
|
|
— |
|
$ |
56.3 |
Portfolio Optimization3 |
|
— |
|
|
— |
|
|
57.2 |
|
|
57.2 |
Asset Impairments 5 |
|
3.4 |
|
|
— |
|
|
— |
|
|
3.4 |
Total Non-Cash
Charges |
$ |
3.4 |
|
$ |
56.3 |
|
$ |
57.2 |
|
$ |
116.9 |
|
(In millions) |
|
Six Months Ended June 30, 2022 |
|
Depreciation and Impairments of Property, Plant and
Equipment |
|
Amortization of Intangibles |
|
Divestiture Losses (Gains), net |
|
Total |
Adjustments: |
|
|
|
|
|
|
|
Intangible Amortization 2 |
$ |
— |
|
$ |
63.2 |
|
|
— |
|
$ |
63.2 |
Total Non-Cash
Charges |
$ |
— |
|
$ |
63.2 |
|
$ |
— |
|
$ |
63.2 |
U.S. GAAP results for the six months ended June 30, 2023 and 2022
include: |
- ERP and System
Modernization: In 2023 and 2022, SG&A includes consulting
and professional fees related to our ERP and system
modernization.
- Intangible
Amortization: Intangible amortization expense from
acquisitions.
- Portfolio
Optimization: In 2023 Divestitures losses, net includes aggregate
net losses of $59.2 million (inclusive of $2.0 million related to
deal costs) related to International divestitures of Brazil,
Republic of Korea, Australia, Singapore, a container manufacturing
operation, and other businesses. In 2023 and 2022, SG&A
includes consulting and professional fees associated with our
Portfolio Optimization efforts of $0.6 million and $1.3 million,
respectively.
- Litigation,
Settlements, and Regulatory Compliance: In 2023 and 2022,
SG&A includes $12.4 million (which includes FCPA monitor
related fees of $5.8 million) and $10.3 million,
respectively, of primarily consulting and professional fees and
estimated contingent liability provisions net of releases related
to certain litigation, settlement and regulatory compliance
matters. Additionally in 2023, SG&A includes a value-added tax
reclaim credit of $6.0 million, a settlement charge associated
with a vendor dispute of $6.0 million, other settlement
charges of $5.6 million, and a FCPA settlement release of
$0.9 million. Additionally in 2022, SG&A includes FCPA
settlement expense of $9.6 million and a settlement charge
related to a multi-year indirect tax related IRS examination of
$3.5 million.
- Asset Impairments:
In 2023, COR includes an impairment of $3.4 million in
International associated with certain long-lived assets, primarily
property, plant and equipment, in Romania.
- Non-Cash Related
Adjustments: In 2023 and 2022, non-cash related adjustments include
$116.9 million and $63.2 million, respectively,
consisting of intangible amortization, portfolio optimization, and
asset impairment 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 Loss
Attributable to Common Shareholders column, adjustments are shown
net of tax in aggregate of $20.9 million and
$20.1 million for the six months ended June 30, 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.
|
FOR FURTHER INFORMATION
CONTACT:Stericycle Investor Relations
847-607-2012Stericycle Media Relations 847-964-2288
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