Stericycle, Inc. (Nasdaq: SRCL) today reported results for the
first quarter ended March 31, 2024.
Revenues for the first quarter were $664.9
million, a decrease of 2.8% compared to $684.3 million in the first
quarter of 2023. Income from operations was $38.9 million compared
to $40.0 million in the first quarter of 2023. Net income was $13.1
million, or $0.14 diluted earnings per share, compared to $11.2
million, or $0.12 in the first quarter of 2023. Adjusted income
from operations1 was $90.5 million, compared to $84.7 million in
the first quarter of 2023. Adjusted diluted earnings per
share1 was $0.57 compared to $0.49 in the first quarter of
2023. Cash from operations for the three months ended
March 31, 2024 was an outflow of $54.5 million compared to an
inflow of $49.5 million in the same period of 2023. Free cash flow2
was an outflow of $97.6 million for the three months ended
March 31, 2024, compared to an inflow of $13.1 million in the
same period of 2023.
KEY BUSINESS HIGHLIGHTS:
- Achieved adjusted
diluted EPS3 of $0.57, an improvement of $0.08 compared to the
first quarter of 2023.
- Expanded adjusted
EBITDA4 to $116.2 million, an improvement of $4.9 million compared
to the first quarter of 2023.
- Grew Regulated
Waste and Compliance Services (“RWCS”) organic revenues1 2.1%
compared to the first quarter of 2023.
- Completed our
previously disclosed workforce reduction in the first quarter of
2024 and are on track to realize an estimated $40-$45 million of
in-year cost savings.
“We are pleased with our first quarter results,
which reflect improvement in adjusted EBITDA and adjusted EPS,
driven by disciplined execution across our key priorities,” said
Cindy J. Miller, President and Chief Executive Officer. “We remain
on track to achieve our full-year 2024 guidance and long-term
outlook.”
FIRST QUARTER FINANCIAL
RESULTS
U.S. Generally Accepted Accounting Principles (GAAP)
Results
- Revenues in the
first quarter were $664.9 million compared to $684.3 million in the
first quarter of 2023. The decrease was primarily due to
divestitures of $17.7 million, which was partially offset by
favorable foreign exchange rates of $2.8 million and an acquisition
of $0.9 million. Organic revenues in RWCS grew $9.0 million, while
Secure Information Destruction (“SID”) organic revenues were lower
by $14.4 million. The decline in SID was mainly due to lower
commodity-indexed revenues of $19.8 million, which was partially
offset by higher SID service revenues of $5.4 million, excluding
the impact of fuel and environmental surcharges.
- Income from
operations in the first quarter was $38.9 million compared to $40.0
million in the first quarter of 2023. The $1.1 million decrease was
mainly due to lower SID commodity-indexed revenues and the
corresponding margin flow through impact of $11.9 million, higher
adjusting items of $6.9 million, and higher bad debt expense of
$3.8 million, primarily due to a lower first quarter of 2023 bad
debt expense level as a result of improved North America SID
collections. These decreases were mostly offset by cost savings and
margin flow through of $14.8 million and lower incentive and
stock-based compensation of $5.5 million.
- Net income in the
first quarter was $13.1 million, or $0.14 diluted earnings per
share, compared to $11.2 million, or $0.12 in the first quarter of
2023. The $1.9 million increase was primarily attributable to
lower interest expense of $2.0 million, partially offset by lower
income from operations, as explained above.
- Cash from
operations for the three months ended March 31, 2024 was an
outflow of $54.5 million, compared to an inflow of $49.5 million in
the same period of 2023. The year-over-year decrease of $104.0
million was mainly due to an increase in accounts receivable, net
of deferred revenues of $63.1 million due to expected billing and
collection delays from the prior U.S. RWCS ERP launch in September
2023; higher annual incentive plan payments of $17.1 million; and
other net working capital changes of $23.8 million.
- Cash paid for
capital expenditures for the three months ended March 31, 2024
was $43.1 million, compared to $36.4 million in the same
period of 2023.
Non-GAAP
Results1,2
- For the first
quarter of 2024, organic revenues1 decreased 0.8%, which excludes
the impacts of divestitures, an acquisition, and foreign exchange
rates. RWCS organic revenues1 increased 2.1% while SID organic
revenues1 decreased 6.3%. The decline in SID was mainly due to
lower commodity-indexed revenues of 8.6%, which was partially
offset by higher SID service revenues of 2.3%, excluding the impact
of fuel and environmental surcharges.
- Adjusted income
from operations1 was $90.5 million compared to
$84.7 million in the first quarter of 2023. As a
percentage of revenues, the 120 basis point increase was mainly due
to cost savings and margin flow through of 230 basis points, lower
incentive and stock-based compensation of 80 basis points, and the
impact of divesting lower margin businesses of 40 basis points.
This increase was partially offset by lower SID commodity-indexed
revenues and the corresponding margin flow through impact of 180
basis points and higher bad debt expense of 60 basis points, as
explained above.
- Adjusted diluted
earnings per share1 was $0.57, compared to $0.49 in the first
quarter of 2023. Excluding the impacts of divesting lower margin
businesses of $0.01, the remaining $0.07 increase was mainly due to
cost savings and margin flow through of $0.11; lower taxes,
interest, and other of $0.04; and lower incentive and stock-based
compensation of $0.04. This increase was partially offset by lower
SID commodity indexed revenues and the corresponding margin flow
through impact of $0.09 and higher bad debt expense of $0.03, as
explained above.
- Free cash flow2 for
the three months ended March 31, 2024 was an outflow of
$97.6 million compared to an inflow of $13.1 million in
the same period of 2023. The $110.7 million decrease was
primarily due to lower cash flow from operations of $104.0 million,
as explained above, and increased cash paid for capital
expenditures of $6.7 million.
- 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.
- Earnings per Share (EPS).
- Adjusted Earnings Before Interest,
Taxes, Depreciation and Amortization (Adjusted EBITDA or
AEBITDA).
CONFERENCE CALL INFORMATION
Stericycle is holding its first quarter earnings
conference call on Thursday, April 25, 2024, at 8:00 a.m.
central time. To access presentation materials, conference call
numbers, 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, 2024. To
access a replay of the call, visit 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 protect people and brands, promote
health and well-being and safeguard the environment. Stericycle
serves customers in North America and Europe with solutions for
regulated waste and compliance services and secure information
destruction. For more information about Stericycle, please
visit stericycle.com.
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, decreases in the volume of
regulated wastes or personal and confidential information collected
from customers, disruptions resulting from deployment of systems,
disruptions in our supply chain, disruptions in or attacks on data
information technology systems, labor shortages, a recession or
economic disruption in the U.S. and other countries, changing
market conditions in the healthcare industry, competition and
demand for services in the regulated waste and secure information
destruction industries, SOP pricing volatility or pricing
volatility in other commodities, changes in the volume of paper
processed by our secure information destruction business and the
revenue generated from the sale of SOP, inflationary cost pressure
in labor, supply chain, energy, and other expenses, 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,
the outcome of pending, future or settled litigation or
investigations, self-insurance claims and settlements, charges
related to portfolio optimization or the failure of acquisitions or
divestitures to achieve the desired results, the obligations to
service substantial indebtedness and comply with the covenants and
restrictions contained in our credit agreements and Senior Notes,
rising interest rates or a downgrade in our credit rating resulting
in an increase in interest expense, political, economic, war, 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,
restrictions on the ability of our team members to travel, closures
of our facilities or the facilities of our customers and suppliers,
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, 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 2023 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
(Unaudited) |
In millions, except per share data |
|
Three months ended March 31, |
|
|
2024 |
|
|
% Revenues |
|
|
2023 |
|
|
% Revenues |
|
% Change |
Revenues |
$ |
664.9 |
|
|
100.0 |
|
% |
|
$ |
684.3 |
|
|
100.0 |
|
% |
|
(2.8 |
) |
% |
Cost of revenues |
|
410.0 |
|
|
61.7 |
|
% |
|
|
423.3 |
|
|
61.9 |
|
% |
|
(3.1 |
) |
% |
Gross
profit |
|
254.9 |
|
|
38.3 |
|
% |
|
|
261.0 |
|
|
38.1 |
|
% |
|
(2.3 |
) |
% |
Selling, general and administrative expenses |
|
216.0 |
|
|
32.5 |
|
% |
|
|
216.0 |
|
|
31.6 |
|
% |
|
— |
|
% |
Divestiture losses, net |
|
— |
|
|
— |
|
% |
|
|
5.0 |
|
|
0.7 |
|
% |
|
(100.0 |
) |
% |
Income from
operations |
|
38.9 |
|
|
5.9 |
|
% |
|
|
40.0 |
|
|
5.8 |
|
% |
|
(2.8 |
) |
% |
Interest expense, net |
|
(18.4 |
) |
|
(2.8 |
) |
% |
|
|
(20.4 |
) |
|
(3.0 |
) |
% |
|
(9.8 |
) |
% |
Other income, net |
|
— |
|
|
— |
|
% |
|
|
0.2 |
|
|
— |
|
% |
|
(100.0 |
) |
% |
Income before income
taxes |
|
20.5 |
|
|
3.1 |
|
% |
|
|
19.8 |
|
|
2.9 |
|
% |
|
3.5 |
|
% |
Income tax expense |
|
(7.4 |
) |
|
(1.1 |
) |
% |
|
|
(8.5 |
) |
|
(1.2 |
) |
% |
|
(12.9 |
) |
% |
Net
income |
|
13.1 |
|
|
2.0 |
|
% |
|
|
11.3 |
|
|
1.7 |
|
% |
|
15.9 |
|
% |
Net income attributable to
noncontrolling interests |
|
— |
|
|
— |
|
% |
|
|
(0.1 |
) |
|
— |
|
% |
|
(100.0 |
) |
% |
Net income
attributable to Stericycle, Inc. common shareholders |
$ |
13.1 |
|
|
2.0 |
|
% |
|
$ |
11.2 |
|
|
1.6 |
|
% |
|
17.0 |
|
% |
Income per common
share attributable to Stericycle, Inc. common
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.14 |
|
|
|
|
$ |
0.12 |
|
|
|
|
16.7 |
|
% |
Diluted |
$ |
0.14 |
|
|
|
|
$ |
0.12 |
|
|
|
|
16.7 |
|
% |
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
92.6 |
|
|
|
|
|
92.3 |
|
|
|
|
|
|
|
Diluted |
|
93.0 |
|
|
|
|
|
92.7 |
|
|
|
|
|
|
|
STATISTICS - U.S. GAAP AND NON-GAAP ADJUSTED
FINANCIAL
MEASURES(Unaudited) |
In millions, except per share data |
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
2024 |
|
|
% Revenues |
|
|
2023 |
|
|
% Revenues |
Statistics - U.S.
GAAP |
|
|
|
|
|
|
|
Effective tax rate |
|
36.1 |
% |
|
|
|
|
42.9 |
% |
|
|
Statistics -
Adjusted (1) |
|
|
|
|
|
|
|
Adjusted gross profit |
$ |
257.1 |
|
|
38.7 |
% |
|
$ |
261.0 |
|
|
38.1 |
% |
Adjusted selling, general and
administrative expenses |
$ |
166.6 |
|
|
25.1 |
% |
|
$ |
176.3 |
|
|
25.8 |
% |
Adjusted income from
operations |
$ |
90.5 |
|
|
13.6 |
% |
|
$ |
84.7 |
|
|
12.4 |
% |
Adjusted EBITDA |
$ |
116.2 |
|
|
17.5 |
% |
|
$ |
111.3 |
|
|
16.3 |
% |
Adjusted net income
attributable to common shareholders |
$ |
53.1 |
|
|
8.0 |
% |
|
$ |
45.5 |
|
|
6.6 |
% |
Adjusted effective tax
rate |
|
26.4 |
% |
|
|
|
|
29.5 |
% |
|
|
Adjusted diluted earnings per
share |
$ |
0.57 |
|
|
|
|
$ |
0.49 |
|
|
|
Adjusted diluted shares
outstanding |
|
93.0 |
|
|
|
|
|
92.7 |
|
|
|
(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, 2024 |
|
December 31, 2023 |
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
31.0 |
|
|
$ |
35.3 |
|
Accounts receivable, less
allowance for doubtful accounts of $47.2 in 2024 and $44.7 in
2023 |
|
616.4 |
|
|
|
553.9 |
|
Prepaid expenses |
|
33.6 |
|
|
|
31.6 |
|
Other current assets |
|
47.8 |
|
|
|
50.7 |
|
Total Current Assets |
|
728.8 |
|
|
|
671.5 |
|
Property, plant and equipment,
less accumulated depreciation of $680.2 in 2024 and $675.4 in
2023 |
|
722.6 |
|
|
|
708.3 |
|
Operating lease right-of-use
assets |
|
497.2 |
|
|
|
464.3 |
|
Goodwill |
|
2,758.0 |
|
|
|
2,755.6 |
|
Intangible assets, less
accumulated amortization of $948.8 in 2024 and $925.8 in 2023 |
|
661.3 |
|
|
|
686.5 |
|
Other assets |
|
67.8 |
|
|
|
66.4 |
|
Total
Assets |
$ |
5,435.7 |
|
|
$ |
5,352.6 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Current portion of long-term
debt |
$ |
17.3 |
|
|
$ |
19.6 |
|
Bank overdrafts |
|
— |
|
|
|
1.0 |
|
Accounts payable |
|
198.3 |
|
|
|
212.1 |
|
Accrued liabilities |
|
210.9 |
|
|
|
259.5 |
|
Operating lease
liabilities |
|
109.1 |
|
|
|
105.4 |
|
Deferred revenues |
|
70.1 |
|
|
|
72.6 |
|
Other current liabilities |
|
49.2 |
|
|
|
47.8 |
|
Total Current Liabilities |
|
654.9 |
|
|
|
718.0 |
|
Long-term debt, net |
|
1,398.6 |
|
|
|
1,277.8 |
|
Long-term operating lease
liabilities |
|
407.8 |
|
|
|
378.9 |
|
Deferred income taxes |
|
417.0 |
|
|
|
420.5 |
|
Other liabilities |
|
34.3 |
|
|
|
34.5 |
|
Total
Liabilities |
|
2,912.6 |
|
|
|
2,829.7 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
EQUITY |
|
|
|
Common stock (par value $0.01
per share, 120.0 shares authorized, 92.8 and 92.6 issued and
outstanding in 2024 and 2023, respectively) |
|
0.9 |
|
|
|
0.9 |
|
Additional paid-in
capital |
|
1,315.3 |
|
|
|
1,316.7 |
|
Retained earnings |
|
1,402.5 |
|
|
|
1,389.4 |
|
Accumulated other
comprehensive loss |
|
(196.0 |
) |
|
|
(184.5 |
) |
Total Stericycle, Inc.’s Equity |
|
2,522.7 |
|
|
|
2,522.5 |
|
Noncontrolling interests |
|
0.4 |
|
|
|
0.4 |
|
Total Equity |
|
2,523.1 |
|
|
|
2,522.9 |
|
Total Liabilities and
Equity |
$ |
5,435.7 |
|
|
$ |
5,352.6 |
|
STERICYCLE, INC.CONDENSED
CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited) |
In millions |
|
|
|
|
Three Months Ended March 31, |
|
|
2024 |
|
|
|
2023 |
|
OPERATING
ACTIVITIES: |
|
|
|
Net income |
$ |
13.1 |
|
|
$ |
11.3 |
|
Adjustments to reconcile net
income to net cash from operating activities: |
|
|
|
Depreciation |
|
25.7 |
|
|
|
26.6 |
|
Intangible amortization |
|
27.8 |
|
|
|
28.2 |
|
Stock-based compensation expense |
|
2.7 |
|
|
|
6.9 |
|
Deferred income taxes |
|
(2.7 |
) |
|
|
4.7 |
|
Divestiture losses, net |
|
— |
|
|
|
5.0 |
|
Asset impairments, loss (gain) on disposal of property plant and
equipment and other charges |
|
1.0 |
|
|
|
(0.4 |
) |
Other, net |
|
1.3 |
|
|
|
0.5 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(64.4 |
) |
|
|
(4.4 |
) |
Prepaid expenses |
|
(2.1 |
) |
|
|
(1.4 |
) |
Accounts payable |
|
(12.5 |
) |
|
|
(6.3 |
) |
Accrued liabilities |
|
(41.1 |
) |
|
|
(17.4 |
) |
Deferred revenues |
|
(2.4 |
) |
|
|
0.7 |
|
Other assets and liabilities |
|
(0.9 |
) |
|
|
(4.5 |
) |
Net cash from
operating activities |
|
(54.5 |
) |
|
|
49.5 |
|
INVESTING
ACTIVITIES: |
|
|
|
Capital expenditures |
|
(43.1 |
) |
|
|
(36.4 |
) |
(Payments) proceeds from
(acquisition) divestiture of businesses, net |
|
(14.0 |
) |
|
|
0.9 |
|
Other, net |
|
0.3 |
|
|
|
1.0 |
|
Net cash from
investing activities |
|
(56.8 |
) |
|
|
(34.5 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Repayments of long-term debt
and other obligations |
|
(5.7 |
) |
|
|
(7.8 |
) |
Repayments of foreign bank
debt |
|
— |
|
|
|
(0.1 |
) |
Repayments of senior
notes |
|
(600.0 |
) |
|
|
— |
|
Proceeds from credit
facility |
|
951.0 |
|
|
|
286.9 |
|
Repayments of credit
facility |
|
(228.1 |
) |
|
|
(283.0 |
) |
Repayments of bank overdrafts,
net |
|
(0.9 |
) |
|
|
(0.5 |
) |
Payments of finance lease
obligations |
|
(0.6 |
) |
|
|
(0.7 |
) |
Proceeds from issuance of
common stock, net of (payments of) taxes from withheld shares |
|
(6.4 |
) |
|
|
(4.9 |
) |
Payments to noncontrolling
interest |
|
— |
|
|
|
(1.5 |
) |
Net cash from
financing activities |
|
109.3 |
|
|
|
(11.6 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
(2.3 |
) |
|
|
0.6 |
|
Net change in cash and cash
equivalents |
|
(4.3 |
) |
|
|
4.0 |
|
Cash and cash equivalents at
beginning of period |
|
35.3 |
|
|
|
56.0 |
|
Cash and cash
equivalents at end of period |
$ |
31.0 |
|
|
$ |
60.0 |
|
|
|
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION: |
|
|
|
Interest paid, net of
capitalized interest |
$ |
35.1 |
|
|
$ |
32.8 |
|
Income taxes paid, net |
$ |
4.9 |
|
|
$ |
0.4 |
|
Capital expenditures in
Accounts payable |
$ |
22.7 |
|
|
$ |
18.8 |
|
Free Cash Flow (1) |
$ |
(97.6 |
) |
|
$ |
13.1 |
|
(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, 2024
and 2023 |
|
|
|
Three months ended March 31, |
|
In millions |
|
|
|
Components of Change (%)(1) |
|
|
2024 |
|
|
2023 |
|
Change ($) |
|
Change (%) |
|
Organic Growth(2) |
|
Acquisition |
|
Divestitures |
|
Foreign Exchange(3) |
Revenue by
Service |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
447.8 |
|
$ |
451.3 |
|
$ |
(3.5 |
) |
|
(0.8 |
) |
% |
|
2.1 |
|
% |
|
0.2 |
% |
|
(3.5 |
) |
% |
|
0.5 |
% |
Secure Information Destruction
Services |
|
217.1 |
|
|
233.0 |
|
|
(15.9 |
) |
|
(6.8 |
) |
% |
|
(6.3 |
) |
% |
|
0.1 |
% |
|
(1.1 |
) |
% |
|
0.3 |
% |
Total Revenues |
$ |
664.9 |
|
$ |
684.3 |
|
$ |
(19.4 |
) |
|
(2.8 |
) |
% |
|
(0.8 |
) |
% |
|
0.1 |
% |
|
(2.7 |
) |
% |
|
0.4 |
% |
North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
376.5 |
|
$ |
368.7 |
|
$ |
7.8 |
|
|
2.1 |
|
% |
|
1.9 |
|
% |
|
0.2 |
% |
|
— |
|
% |
|
— |
% |
Secure Information Destruction
Services |
|
192.7 |
|
|
204.7 |
|
|
(12.0 |
) |
|
(5.9 |
) |
% |
|
(6.0 |
) |
% |
|
0.1 |
% |
|
— |
|
% |
|
— |
% |
Total North America Segment |
$ |
569.2 |
|
$ |
573.4 |
|
$ |
(4.2 |
) |
|
(0.7 |
) |
% |
|
(0.9 |
) |
% |
|
0.2 |
% |
|
— |
|
% |
|
— |
% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
71.3 |
|
$ |
82.6 |
|
$ |
(11.3 |
) |
|
(13.7 |
) |
% |
|
3.0 |
|
% |
|
— |
% |
|
(18.5 |
) |
% |
|
2.3 |
% |
Secure Information Destruction
Services |
|
24.4 |
|
|
28.3 |
|
|
(3.9 |
) |
|
(13.8 |
) |
% |
|
(8.4 |
) |
% |
|
— |
% |
|
(8.7 |
) |
% |
|
2.7 |
% |
Total International Segment |
$ |
95.7 |
|
$ |
110.9 |
|
$ |
(15.2 |
) |
|
(13.7 |
) |
% |
|
(0.2 |
) |
% |
|
— |
% |
|
(16.0 |
) |
% |
|
2.4 |
% |
See footnote descriptions below Table 1 – B
Table 1–B: COMPONENTS OF REVENUE CHANGE IN
DOLLARS (UNAUDITED) |
(In millions) |
|
Three Months Ended March 31, 2024 |
Organic Growth (2) |
$ |
(5.4 |
) |
Acquisition |
|
0.9 |
|
Divestitures |
|
(17.7 |
) |
Foreign exchange (3) |
|
2.8 |
|
Total Change |
$ |
(19.4 |
) |
(1) |
Components of Change (%) in summation may not crossfoot to the
total Change (%) due to rounding. |
(2) |
Organic growth is change in Revenues which includes SOP pricing and
volume and excludes impacts of divestitures, an acquisition, and
foreign exchange rates. |
(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 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, 2024 and 2023 |
(In millions, except per share data) |
|
Three Months Ended March 31, 2024 |
|
Gross Profit |
|
Selling,General and
AdministrativeExpenses |
|
Income from Operations |
|
Net Income Attributable to Common
Shareholders c |
|
Diluted Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
254.9 |
|
$ |
216.0 |
|
|
$ |
38.9 |
|
$ |
13.1 |
|
$ |
0.14 |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(4.4 |
) |
|
|
4.4 |
|
|
3.7 |
|
|
0.04 |
Intangible Amortization 2 |
|
— |
|
|
(27.8 |
) |
|
|
27.8 |
|
|
21.5 |
|
|
0.23 |
Operational Optimization 3 |
|
2.2 |
|
|
(3.4 |
) |
|
|
5.6 |
|
|
4.2 |
|
|
0.05 |
Portfolio Optimization 4 |
|
— |
|
|
(1.6 |
) |
|
|
1.6 |
|
|
1.2 |
|
|
0.01 |
Litigation, Settlements and Regulatory Compliance 5 |
|
— |
|
|
(12.2 |
) |
|
|
12.2 |
|
|
9.4 |
|
|
0.10 |
Total Adjustments |
|
2.2 |
|
|
(49.4 |
) |
|
|
51.6 |
|
|
40.0 |
|
|
0.43 |
Adjusted Financial
Measures a |
$ |
257.1 |
|
$ |
166.6 |
|
|
$ |
90.5 |
|
$ |
53.1 |
|
$ |
0.57 |
Depreciation |
|
|
|
|
|
25.7 |
|
|
|
|
Adjusted
EBITDA b |
|
|
|
|
$ |
116.2 |
|
|
|
|
(In millions, except per share data) |
|
Three Months Ended March 31, 2023 |
|
Gross Profit |
|
Selling,General and
AdministrativeExpenses |
|
Income from Operations |
|
Net IncomeAttributable to Common
Shareholders c |
|
Diluted Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
261.0 |
|
$ |
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 |
Operational Optimization 3 |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
— |
Portfolio Optimization 4 |
|
— |
|
|
(0.6 |
) |
|
|
5.6 |
|
|
5.4 |
|
|
0.06 |
Litigation, Settlements and Regulatory Compliance 5 |
|
— |
|
|
(8.2 |
) |
|
|
8.2 |
|
|
4.9 |
|
|
0.05 |
Total Adjustments |
|
— |
|
|
(39.7 |
) |
|
|
44.7 |
|
|
34.3 |
|
|
0.37 |
Adjusted Financial
Measures a |
$ |
261.0 |
|
$ |
176.3 |
|
|
$ |
84.7 |
|
$ |
45.5 |
|
$ |
0.49 |
Depreciation |
|
|
|
|
|
26.6 |
|
|
|
|
Adjusted
EBITDA b |
|
|
|
|
$ |
111.3 |
|
|
|
|
(In millions, except per share data) |
|
First Quarter
2024 Change Compared to
First Quarter
2023 |
|
Gross Profit |
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net IncomeAttributable to Common
Shareholders |
|
Diluted Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
(6.1 |
) |
|
$ |
— |
|
|
$ |
(1.1 |
) |
|
$ |
1.9 |
|
|
$ |
0.02 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization |
|
— |
|
|
|
(1.7 |
) |
|
|
1.7 |
|
|
|
1.6 |
|
|
|
0.02 |
|
Intangible Amortization |
|
— |
|
|
|
0.4 |
|
|
|
(0.4 |
) |
|
|
(0.4 |
) |
|
|
(0.01 |
) |
Operational Optimization |
|
2.2 |
|
|
|
(3.4 |
) |
|
|
5.6 |
|
|
|
4.2 |
|
|
|
0.05 |
|
Portfolio Optimization |
|
— |
|
|
|
(1.0 |
) |
|
|
(4.0 |
) |
|
|
(4.2 |
) |
|
|
(0.05 |
) |
Litigation, Settlements and Regulatory Compliance |
|
— |
|
|
|
(4.0 |
) |
|
|
4.0 |
|
|
|
4.5 |
|
|
|
0.05 |
|
Total Adjustments |
|
2.2 |
|
|
|
(9.7 |
) |
|
|
6.9 |
|
|
|
5.7 |
|
|
|
0.06 |
|
Adjusted Financial
Measures |
$ |
(3.9 |
) |
|
$ |
(9.7 |
) |
|
$ |
5.8 |
|
|
$ |
7.6 |
|
|
$ |
0.08 |
|
Depreciation |
|
|
|
|
|
(0.9 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
$ |
4.9 |
|
|
|
|
|
The following table provides adjustments to Income from
operations categorized as follows:
(In
millions) |
|
Three Months Ended March 31, |
|
|
2024 |
|
|
2023 |
Non-Cash Related 6 |
$ |
28.7 |
|
$ |
33.1 |
Cash Related |
|
22.9 |
|
|
11.6 |
Total |
$ |
51.6 |
|
$ |
44.7 |
U.S. GAAP results for the three months ended
March 31, 2024 and 2023 include:
- ERP and System
Modernization: In 2024 and 2023, 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.
- Operational
Optimization: 2024 includes $2.2 million of operational
optimization in Cost of Revenues (“COR”) and $3.4 million of
operational optimization in SG&A primarily related to severance
associated with headcount reduction, split between North America
and International segments.
- 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 2024 and
2023, SG&A includes primarily consulting and professional fees
associated with our Portfolio Optimization efforts of $1.6 million
and $0.6 million, respectively.
- Litigation,
Settlements, and Regulatory Compliance: In 2024 and 2023,
SG&A includes $9.3 million (which includes FCPA monitor related
fees of $0.7 million) and $14.2 million (which includes FCPA
monitor related fees of $3.4 million), respectively, of primarily
consulting and professional fees and estimated contingent liability
provisions related to certain litigation, settlement and regulatory
compliance matters. Additionally, 2024 includes an estimated
aggregate provision of $2.9 million associated with multi-year
state unemployment tax matters. Additionally, 2023 includes a
value-added tax reclaim credit of $6.0 million.
- Non-Cash Related
Adjustments: In 2024 and 2023, non-cash related adjustments include
$28.7 million and $33.1 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
Income Attributable to Common Shareholders column, adjustments are
shown net of tax in aggregate of $11.6 million and
$10.4 million for the three months ended March 31,
2024 and 2023, 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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