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Section 1: 8-K (8-K)

srcl-8k_20190228.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

Current Report

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 28, 2019

 

Stericycle, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Delaware

 

1-37556

 

36-3640402

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification Number)

28161 North Keith Drive

Lake Forest, Illinois 60045

(Address of principal executive offices including zip code)

(847) 367-5910

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

    Written communications pursuant to Rule 425 under the Securities Act (17 CR 230.425)

    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 


Item 2.02    Results of Operations and Financial Condition

On February 28, 2019 Stericycle, Inc. issued a press release announcing its financial results for the quarter and year ended December 31, 2018.  A copy of this press release is attached hereto as Exhibit 99.1 and incorporated by reference.

This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Stericycle is making reference to non-GAAP financial measures in both the press release and the conference call.  A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

Item 9.01    Financial Statements and Exhibits

(d)

Exhibits

99.1

Press release issued by Stericycle, Inc. dated February 28, 2019


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

 

 

 

 Dated: February 28, 2019

 

Stericycle, Inc.

 

 

 

 

By:

/s/ DANIEL V. GINNETTI

 

 

 

 

 

Daniel V. Ginnetti

 

 

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

srcl-ex991_8.htm

EXHIBIT 99.1

FOR FURTHER INFORMATION CONTACT:

Investor Relations 847-607-2012

 

Stericycle, Inc. Reports Results

for the Fourth Quarter 2018

 

LAKE FOREST, Ill., February 28, 2019 - Stericycle, Inc. (Nasdaq: SRCL) today reported results for the fourth quarter 2018.

FOURTH QUARTER HIGHLIGHTS COMPARED TO PRIOR YEAR:

 

 

Revenues were $852.7 million, a decrease of 4.0%; organic revenues decreased 1.1%, reflecting 13.8% organic growth in Secure Information Destruction, offset by the expected declines in the small quantity (“SQ”) medical waste business and Communication and Related Services (“CRS”).

 

 

Gross profit was $328.7 million, a decrease of 4.4%, due to non-cash impairment charges; Adjusted gross profit was $346.6 million, a 0.4% increase, in part due to growth in Secure Information Destruction.

 

 

Loss per share (“EPS”) was $3.51, due to non-cash goodwill impairment charges and other adjusting items; Adjusted diluted earnings per share (“Adjusted EPS”) was $1.03, an increase of 3.0%, primarily driven by tax reform favorability offset by higher interest expense.

 

 

The Business Transformation remains on track for the planned 2020 ERP implementation in the U.S. and Canada, with 2019 focused on the building, testing and training phases; the Company continues to make progress on portfolio rationalization.  


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FOURTH QUARTER RESULTS

Revenues for the quarter ended December 31, 2018 were $852.7 million, a decrease of 4.0% from $887.8 million in the fourth quarter of last year.  The effect of foreign exchange rates reduced revenues by $21.4 million.  Acquisitions contributed $6.8 million to revenues, and divestitures reduced revenues by $10.4 million.  Organic revenues decreased 1.1%, driven by the expected declines in the SQ medical waste business and CRS, partially offset by strong organic growth in Secure Information Destruction.  See Tables 1-A and 1-C.

“Our performance in the quarter was in line with our expectations, with strength in our core Secure Information Destruction business and positive momentum in the regulated medical waste business,” said Charles A. Alutto, Chief Executive Officer.

Gross profit was $328.7 million, a decrease of 4.4% from $344.0 million in the fourth quarter of last year.  Gross profit as a percentage of revenues was 38.5% compared to 38.7% in the fourth quarter of last year, which decreased primarily due to non-cash impairment charges.  Adjusted gross profit was $346.6 million, a 0.4% increase.  Adjusted gross profit as a percentage of revenues increased to 40.6% compared to 38.9% in the fourth quarter of last year, in part due to Secure Information Destruction growth and depreciation. See Unaudited Condensed Consolidated Statements of (Loss) Income and Table 2-A.

Loss per share was $3.51 compared to diluted earnings per share of $0.97 in the fourth quarter of last year, predominately due to non-cash goodwill impairment charges related to CRS and Latin America, and other adjusting items.  Adjusted EPS increased 3.0% to $1.03 from $1.00 in the fourth quarter of last year, primarily driven by tax reform favorability offset by higher interest expense.  See Unaudited Condensed Consolidated Statements of (Loss) Income and Table 2-A.

 

2

 


CASH FLOW

Cash flow from operations for the year ended 2018 was $165.7 million, down 67.4% from $508.6 million last year, primarily as a result of the $295.0 million SQ customer class action settlement payment in the third quarter of 2018.  The Company made net repayments on its borrowings of $9.7 million and generated $25.2 million from divestitures of businesses for the year ended December 31, 2018.  Cash from operations and divestitures of businesses was primarily allocated as follows: $130.8 million for capital expenditures, $44.7 million for acquisitions, and $17.2 million for repurchases of preferred stock.

BUSINESS TRANSFORMATION

During the fourth quarter, Stericycle continued to execute its Business Transformation to improve long-term operational and financial performance.  The Company is now in the build phase of the ERP system, which will continue through the first half of 2019.

Portfolio Rationalization remains a core tenet of the Business Transformation, and the Company continues to pursue strategic alternatives for the CRS business and other non-core assets and geographies.  Today, the Company announced that it has closed on the divesture of the U.K.-based texting business, which had been part of CRS.

“Our Business Transformation, including portfolio rationalization, continues to be a priority for 2019.    Throughout the year, our team will be focused on the build, test and train phases of the ERP to ensure a successful implementation in the U.S. and Canada in 2020, followed by the international rollout beginning in 2021,” said Cindy J. Miller, President and Chief Operating Officer.

In 2018, Stericycle realized Adjusted EBITDA benefits from Business Transformation initiatives of $64.0 million, in line with its 2018 target of $60-$65 million.

In the fourth quarter, the Company recorded Business Transformation charges of $17.7 million, including $2.0 million of non-cash impairment charges, and capital expenditure payments of $9.8

3

 


million.  For the full year, the Company has recorded charges of $82.6 million, inclusive of $9.1 million in non-cash impairment charges, and capital expenditure payments of $18.0 million.  The aggregate annual cash spend was $91.5 million, below the Company’s estimate of $95-$105 million for 2018.

LEADERSHIP UPDATES

In a separate press release issued today, the Company announced that Ms. Miller has been named President and CEO, effective May 2, 2019, and that Mr. Alutto will retire as CEO, also effective at that time. In addition, Daniel V. Ginnetti, the Company’s CFO, will transition to the role of Executive Vice President of International following the appointment of a new CFO.

Additionally, as part of its ongoing efforts to ensure the Company has the skills and expertise necessary to drive performance and execute the Business Transformation, Stericycle has recently added three new executives to its leadership team.

William J. Seward joined the executive team in the newly created role of Chief Commercial Officer.  Mr. Seward brings more than 28 years of sales and marketing expertise to the Company, including extensive international experience growing multibillion service lines.  He will lead global strategic planning and bring additional focus and discipline to revenue growth, marketing and brand management, and sales execution.

Richard M. Moore joined Stericycle as Executive Vice President, North American Operations. Mr. Moore has 30 years of domestic and international experience executing on strategic plans, driving operational and productivity improvements, and improving safety and service results.  Leading North American Operations, he will have responsibility for the development and execution of operational strategies that will optimize the network and facility operations and increase efficiencies.

Joseph A. Reuter joined Stericycle as Chief People Officer.  Mr. Reuter has nearly 30 years of experience in the human resources field including international assignments and management of global human resources.  He brings a comprehensive set of skills and experiences to our

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organization, including implementation of human capital processes and technology, and will play a critical role in advancing the Company’s human resource management and safety culture during the Company’s Business Transformation.

FINANCIAL GUIDANCE

Recently, the Stericycle leadership team reevaluated its guidance practices and how the Company will provide key performance indicators that can be more accurately predicted, enhancing the quality of our guidance estimates. The Company considered a variety of factors including its long-term strategy, ongoing Business Transformation, portfolio rationalization efforts, planned ERP implementation, and leadership changes. The Company believes the metrics selected most appropriately reflect its measurement of financial performance.

Quarter to quarter, the Company will continue to provide quantitative updates on the performance of its service lines as well as qualitative insights on how various scenarios may impact future earnings so that stakeholders have appropriate information with which to measure progress.

Stericycle today provided financial guidance for the full-year 2019, as summarized in the following table:

(In millions, except per share data)

 

Revenues

$3,408 - $3,533

 

Adjusted EBITDA percentage of revenues (a) (b)

19.4% - 20.1%

 

Adjusted tax rate (b)

25.5% - 26.5%

 

Adjusted diluted earnings per share (b)

$3.32 - $3.72

 

Shares outstanding

 

90.7

 

Capital expenditures

$180 - $200

 

(a) Adjusted Earnings Before Interest, Tax, Depreciation and Amortization (Adjusted EBITDA) is Income from operations excluding certain adjusting items, Depreciation and Intangible Amortization.

(b) Guidance presented is on an adjusted (non-GAAP) basis because it is not possible to predict or provide without unreasonable effort a reconciliation reflecting the impact of future acquisitions, divestitures, certain litigation, settlements and regulatory compliance matters, business transformation, intangible amortization, operational optimization, certain other items or the impact of highly inflationary accounting on operations in Argentina or other unanticipated events, which would be included in reported (GAAP) results and could be material.

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The Company’s guidance is based on currently known items and certain business assumptions including using current foreign exchange rates.  The guidance only includes acquisitions and divestitures completed through year end 2018.

CONFERENCE CALL INFORMATION

The Company is holding a conference call today, February 28, 2019, at 4:00 p.m. central time. Dial 866-516-6872 at least 5 minutes before start time.  Presentation materials will be posted prior to the conference call at http://investors.stericycle.com.  If you are unable to participate on the call, a replay will be available for 30 days by dialing 855-859-2056 or 404-537-3406, access code 6590507.  To hear a live simulcast of the call or access the audio archive, visit the Company’s investor relations page on http://investors.stericycle.com.

SAFE HARBOR STATEMENT

This document may contain forward-looking statements that involve risks and uncertainties, some of which are beyond our control (for example, general economic and market conditions).  In particular, statements pertaining to our acquisition activity, business transformation, future dividend policy, capital expenditures, cost savings initiatives and remediation efforts with respect to identified material weaknesses contain forward-looking statements.   When we use words such as "believes," "expects," "anticipates," "estimates" or similar expressions, we are making forward-looking statements.  Actual results could differ significantly from the results described here.  Factors that could cause such differences include 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, decreases in the volume of regulated wastes or personal and confidential information collected from customers, the ability to implement our ERP or execute on Business Transformation initiatives and achieve the anticipated benefits and cost savings, charges related to the portfolio rationalization strategy or the failure of this strategy to achieve the desired results, failure to consummate a strategic alternative transaction with respect to Communication and Related Services or other non-core businesses, potential charges related to a strategic alternative transaction with respect to Communication and Related Services, or the failure of any such transaction to achieve desired results, the obligations to service substantial indebtedness and comply with the covenants and restrictions contained in private placement notes and credit agreements, political, economic, inflationary, currency and other risks related to our foreign operations, the outcome of pending or future litigation including litigation with respect to the U.S. Foreign Corrupt Practices Act, changing market conditions in the healthcare industry, competition and demand for services in the regulated waste and secure information destruction industries, changes in the demand and price for recycled paper, failure to maintain an effective system of internal control over financial reporting, delays in implementing remediation efforts with respect to existing material weakness, identification of additional material weaknesses, failure of current remediation efforts to address existing material weaknesses, disruptions in or attacks on information technology systems, as well as other factors described in filings with the U.S. Securities and Exchange Commission, including our Annual  Report on Form 10-K and subsequent Quarterly Reports on Forms 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.  To the extent permitted under applicable law, we make no commitment to disclose any subsequent revisions to forward-looking statements.

 

6

 


STERICYCLE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

 

(In millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

 

Years Ended

December 31,

 

 

2018

 

2017

 

% Change

 

 

2018

 

2017

 

% Change

 

Revenues

$

852.7

 

$

887.8

 

 

(4.0

%)

 

$

3,485.9

 

$

3,580.7

 

 

(2.6

%)

Cost of revenues

 

524.0

 

 

543.8

 

 

(3.6

%)

 

 

2,109.9

 

 

2,118.2

 

 

(0.4

%)

Gross profit

 

328.7

 

 

344.0

 

 

(4.4

%)

 

 

1,376.0

 

 

1,462.5

 

 

(5.9

%)

Selling, general and administrative expenses

 

315.9

 

 

302.4

 

 

4.5

%

 

 

1,178.4

 

 

1,405.1

 

 

(16.1

%)

Goodwill impairment

 

358.7

 

 

65.0

 

 

451.8

%

 

 

358.7

 

 

65.0

 

 

451.8

%

Loss from operations

 

(345.9

)

 

(23.4

)

nm

 

 

 

(161.1

)

 

(7.6

)

nm

 

Interest expense, net

 

(28.7

)

 

(22.2

)

 

29.3

%

 

 

(106.0

)

 

(93.7

)

 

13.1

%

Other expense, net

 

(1.5

)

 

(1.1

)

 

36.4

%

 

 

(8.3

)

 

(6.6

)

 

25.8

%

Loss before income taxes

 

(376.1

)

 

(46.7

)

nm

 

 

 

(275.4

)

 

(107.9

)

 

155.2

%

Income tax benefit

 

56.9

 

 

136.3

 

 

(58.3

%)

 

 

29.8

 

 

150.9

 

 

(80.3

%)

Net (loss) income

 

(319.2

)

 

89.6

 

 

(456.2

%)

 

 

(245.6

)

 

43.0

 

nm

 

Net loss (income) attributable to noncontrolling interests

 

0.8

 

 

(0.4

)

 

(300.0

%)

 

 

0.9

 

 

(0.6

)

 

(250.0

%)

Net (loss) income attributable to Stericycle, Inc.

 

(318.4

)

 

89.2

 

 

(457.0

%)

 

 

(244.7

)

 

42.4

 

nm

 

Mandatory convertible preferred stock dividend

 

-

 

 

(8.8

)

 

(100.0

%)

 

 

(25.5

)

 

(36.3

)

 

(29.8

%)

Gain on repurchase of preferred stock

 

-

 

 

2.9

 

 

(100.0

%)

 

 

16.9

 

 

17.3

 

 

(2.3

%)

Net (loss) income attributable to Stericycle, Inc. common shareholders

$

(318.4

)

$

83.3

 

 

(482.2

%)

 

$

(253.3

)

$

23.4

 

nm

 

(Loss) earnings per common share attributable to Stericycle, Inc. common shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(3.51

)

$

0.98

 

 

(458.2

%)

 

$

(2.91

)

$

0.27

 

nm

 

Diluted

$

(3.51

)

$

0.97

 

 

(461.9

%)

 

$

(2.91

)

$

0.27

 

nm

 

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

90.7

 

 

85.4

 

 

 

 

 

 

87.1

 

 

85.3

 

 

 

 

Diluted

 

90.7

 

 

85.6

 

 

 

 

 

 

87.1

 

 

85.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Statistics (as a % of Revenues) - U.S. GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

38.5

%

 

38.7

%

 

 

 

 

 

39.5

%

 

40.8

%

 

 

 

Selling, general and administrative expenses

 

37.0

%

 

34.1

%

 

 

 

 

 

33.8

%

 

39.2

%

 

 

 

Loss from operations

 

(40.6

%)

 

(2.6

%)

 

 

 

 

 

(4.6

%)

 

(0.2

%)

 

 

 

Effective tax rate

 

15.1

%

 

(291.9

%)

 

 

 

 

 

10.8

%

 

(139.9

%)

 

 

 

Statistics (as a % of Revenues) - Adjusted (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted gross profit

 

40.6

%

 

38.9

%

 

 

 

 

 

40.2

%

 

40.9

%

 

 

 

Adjusted selling, general and administrative expenses

 

23.0

%

 

21.8

%

 

 

 

 

 

22.5

%

 

21.9

%

 

 

 

Adjusted income from operations

 

17.6

%

 

17.1

%

 

 

 

 

 

17.8

%

 

19.0

%

 

 

 

Adjusted EBITDA

 

21.2

%

 

21.8

%

 

 

 

 

 

21.4

%

 

22.7

%

 

 

 

Adjusted effective tax rate

 

23.8

%

 

42.8

%

 

 

 

 

 

25.1

%

 

35.2

%

 

 

 

Other Adjusted and Financial Measures (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted gross profit

$

346.6

 

$

345.1

 

 

0.4

%

 

$

1,401.7

 

$

1,463.6

 

 

(4.2

%)

Adjusted selling, general and administrative expenses

$

196.1

 

$

193.6

 

 

1.3

%

 

$

782.7

 

$

782.7

 

 

(0.0

%)

Adjusted income from operations

$

150.5

 

$

151.5

 

 

(0.7

%)

 

$

619.0

 

$

680.9

 

 

(9.1

%)

EBITDA

$

(282.2

)

$

48.9

 

nm

 

 

$

94.8

 

$

241.9

 

 

(60.8

%)

Adjusted EBITDA

$

180.5

 

$

193.9

 

 

(6.9

%)

 

$

744.6

 

$

812.0

 

 

(8.3

%)

Adjusted net income attributable to common shareholders

$

93.2

 

$

90.9

 

 

2.5

%

 

$

402.9

 

$

393.4

 

 

2.4

%

Adjusted diluted earnings per share

$

1.03

 

$

1.00

 

 

3.0

%

 

$

4.45

 

$

4.34

 

 

2.5

%

Diluted shares outstanding, under if-converted method

 

90.7

 

 

90.6

 

 

0.1

%

 

 

90.6

 

 

90.7

 

 

(0.1

%)

Depreciation - cost of revenues

$

25.3

 

$

36.7

 

 

(31.1

%)

 

$

100.3

 

$

106.0

 

 

(5.4

%)

Depreciation - selling, general and administrative expenses

$

4.7

 

$

5.7

 

 

(17.5

%)

 

$

25.3

 

$

25.1

 

 

0.8

%

Intangible amortization

$

33.7

 

$

29.9

 

 

12.7

%

 

$

130.3

 

$

118.4

 

 

10.1

%

 

 

(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.

 

nm - percentage change not meaningful.

7

 


STERICYCLE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In millions)

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2018

 

 

2017

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

34.3

 

 

$

42.2

 

Accounts receivable, net

 

599.6

 

 

 

624.1

 

Prepaid expenses

 

50.0

 

 

 

76.5

 

Other current assets

 

63.4

 

 

 

49.8

 

Assets held for sale

 

-

 

 

 

20.8

 

Total Current Assets

 

747.3

 

 

 

813.4

 

Property, plant and equipment, net

 

743.5

 

 

 

741.0

 

Goodwill

 

3,222.2

 

 

 

3,604.0

 

Intangible assets, net

 

1,637.7

 

 

 

1,791.5

 

Other assets

 

104.8

 

 

 

38.4

 

Total Assets

$

6,455.5

 

 

$

6,988.3

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt

$

104.3

 

 

$

119.5

 

Bank overdrafts

 

14.8

 

 

 

7.0

 

Accounts payable

 

225.8

 

 

 

195.2

 

Accrued liabilities

 

340.8

 

 

 

588.1

 

Other current liabilities

 

47.5

 

 

 

54.5

 

Liabilities held for sale

 

-

 

 

 

5.1

 

Total Current Liabilities

 

733.2

 

 

 

969.4

 

 

 

 

 

 

 

 

 

Long-term debt, net

 

2,663.9

 

 

 

2,615.3

 

Deferred income taxes

 

307.3

 

 

 

371.1

 

Long-term taxes payable

 

83.3

 

 

 

55.8

 

Other liabilities

 

70.7

 

 

 

68.1

 

Total Liabilities

 

3,858.4

 

 

 

4,079.7

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Preferred stock

 

-

 

 

 

-

 

Common stock

 

0.9

 

 

 

0.9

 

Additional paid-in capital

 

1,162.6

 

 

 

1,153.2

 

Retained earnings

 

1,789.2

 

 

 

2,029.5

 

Accumulated other comprehensive loss

 

(365.3

)

 

 

(287.0

)

Total Stericycle, Inc.’s Equity

 

2,587.4

 

 

 

2,896.6

 

Noncontrolling interests

 

9.7

 

 

 

12.0

 

Total Equity

 

2,597.1

 

 

 

2,908.6

 

Total Liabilities and Equity

$

6,455.5

 

 

$

6,988.3

 

8

 


STERICYCLE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In millions)

 

 

 

 

 

 

 

 

 

 

Years Ended December 31,

 

 

2018

 

 

2017

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net (loss) income

$

(245.6

)

 

$

43.0

 

Adjustments to reconcile net (loss) income to net cash from operating activities:

 

 

 

 

 

 

 

Depreciation

 

125.6

 

 

 

131.1

 

Intangible amortization

 

130.3

 

 

 

118.4

 

Stock-based compensation expense

 

24.1

 

 

 

21.3

 

Deferred income taxes

 

(34.1

)

 

 

(290.2

)

Asset impairment charges and loss on disposal of assets held for sale

 

418.9

 

 

 

112.2

 

Other, net

 

3.8

 

 

 

(6.7

)

Changes in operating assets and liabilities, net of the effect of acquisitions and divestitures:

 

 

 

 

 

 

 

Accounts receivable

 

3.6

 

 

 

17.1

 

Prepaid expenses

 

(15.6

)

 

 

(33.9

)

Accounts payable

 

9.3

 

 

 

22.9

 

Accrued liabilities

 

(238.5

)

 

 

363.0

 

Other assets and liabilities

 

(16.1

)

 

 

10.4

 

Net cash from operating activities

 

165.7

 

 

 

508.6

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Capital expenditures

 

(130.8

)

 

 

(143.0

)

Payments for acquisitions, net of cash acquired

 

(44.7

)

 

 

(52.5

)

Proceeds from divestitures of businesses

 

25.2

 

 

 

1.2

 

Other, net

 

2.8

 

 

 

1.3

 

Net cash from investing activities

 

(147.5

)

 

 

(193.0

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Repayments of long-term debt and other obligations

 

(64.5

)

 

 

(62.1

)

Proceeds from foreign bank debt

 

12.1

 

 

 

13.3

 

Repayments of foreign bank debt

 

(17.8

)

 

 

(31.9

)

Proceeds from term loan

 

-

 

 

 

50.0

 

Repayments of term loan

 

(47.5

)

 

 

(100.0

)

Repayment of private placement long-term note

 

-

 

 

 

(175.0

)

Proceeds from senior credit facility

 

1,657.2

 

 

 

1,739.1

 

Repayments of senior credit facility

 

(1,541.0

)

 

 

(1,689.7

)

Proceeds from bank overdrafts, net

 

8.7

 

 

 

2.4

 

Payments of capital lease obligations

 

(8.2

)

 

 

(3.6

)

Payments of deferred financing costs

 

(1.7

)

 

 

(2.7

)

Proceeds from issuance of common stock, net

 

20.1

 

 

 

10.2

 

Payments for repurchase of mandatory convertible preferred stock

 

(17.2

)

 

 

(34.2

)

Dividends paid on mandatory convertible preferred stock

 

(25.5

)

 

 

(36.3

)

Payments to noncontrolling interest

 

(0.4

)

 

 

(0.7

)

Net cash from financing activities

 

(25.7

)

 

 

(321.2

)

Effect of exchange rate changes on cash and cash equivalents

 

(0.4

)

 

 

3.6

 

Net change in cash and cash equivalents

 

(7.9

)

 

 

(2.0

)

Cash and cash equivalents at beginning of year

 

42.2

 

 

 

44.2

 

Cash and cash equivalents at end of year

$

34.3

 

 

$

42.2

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Net issuances of obligations for acquisitions

$

30.1

 

 

$

16.5

 

Capital expenditures in accounts payable

$

30.8

 

 

$

5.0

 

Interest paid during the year, net of capitalized interest

$

93.7

 

 

$

84.2

 

Income taxes paid during the year, net of refunds

$

26.4

 

 

$

128.9

 

 

9

 


RECONCILIATION OF U.S. GAAP TO NON-GAAP FINANCIAL MEASURES (UNAUDITED)

Table 1 – A: RECONCILIATION OF REVENUES TO ADJUSTED REVENUES –

THREE MONTHS ENDED DECEMBER 31, 2018

 

 

Three Months Ended December 31,

 

 

 

In millions

 

Percentage Change (%)

 

 

 

2018

 

2017

 

Change

 

Organic

 

Acquisitions

 

Divestitures

 

Foreign Exchange(a)

 

Change

 

Revenues by Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated Waste and Compliance Services

 

$

474.8

 

$

497.7

 

$

(22.9

)

 

(1.7

%)

 

0.2

%

 

(0.4

%)

 

(2.8

%)

 

(4.6

%)

Secure Information Destruction Services

 

 

233.5

 

 

202.2

 

 

31.3

 

 

13.8

%

 

2.8

%

 

(0.3

%)

 

(0.8

%)

 

15.4

%

Communication and Related Services

 

 

68.3

 

 

97.2

 

 

(28.9

)

 

(29.1

%)

 

 

 

 

 

(0.5

%)

 

(29.7

%)

Manufacturing and Industrial Services

 

 

76.1

 

 

90.7

 

 

(14.6

)

 

(1.5

%)

 

 

 

(8.5

%)

 

(6.0

%)

 

(16.1

%)

Total Revenues, as Reported

 

 

852.7

 

 

887.8

 

 

(35.1

)

 

(1.1

%)

 

0.8

%

 

(1.2

%)

 

(2.4

%)

 

(4.0

%)

Less: Manufacturing and Industrial Services (b)

 

 

(76.1

)

 

(90.7

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues, as Adjusted

 

$

776.6

 

$

797.1

 

$

(20.5

)

 

(1.1

%)

 

0.9

%

 

(0.3

%)

 

(2.0

%)

 

(2.6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues by Geography

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic and Canada

 

$

700.6

 

$

716.4

 

$

(15.8

)

 

(2.6

%)

 

0.9

%

 

(0.3

%)

 

(0.2

%)

 

(2.2

%)

International

 

 

152.1

 

 

171.4

 

 

(19.3

)

 

5.1

%

 

0.0

%

 

(4.9

%)

 

(11.5

%)

 

(11.2

%)

Total Revenues

 

$

852.7

 

$

887.8

 

$

(35.1

)

 

(1.1

%)

 

0.8

%

 

(1.2

%)

 

(2.4

%)

 

(4.0

%)

 

Table 1 – B: RECONCILIATION OF REVENUES TO ADJUSTED REVENUES –

YEAR ENDED DECEMBER 31, 2018

 

 

Years Ended December 31,

 

 

 

In millions

 

Percentage Change (%)

 

 

 

2018

 

2017

 

Change

 

Organic

 

Acquisitions

 

Divestitures

 

Foreign Exchange(a)

 

Change

 

Revenues by Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated Waste and Compliance Services

 

$

1,932.6

 

$

2,023.6

 

$

(91.0

)

 

(2.8

%)

 

0.3

%

 

(1.1

%)

 

(0.9

%)

 

(4.5

%)

Secure Information Destruction Services

 

 

911.0

 

 

823.4

 

 

87.6

 

 

7.8

%

 

2.7

%

 

(0.4

%)

 

0.5

%

 

10.6

%

Communication and Related Services

 

 

313.1

 

 

382.6

 

 

(69.5

)

 

(18.2

%)

 

0.1

%

 

 

 

(0.1

%)

 

(18.2

%)

Manufacturing and Industrial Services

 

 

329.2

 

 

351.1

 

 

(21.9

)

 

2.8

%

 

0.2

%

 

(5.4

%)

 

(3.8

%)

 

(6.2

%)

Total Revenues, as Reported

 

 

3,485.9

 

 

3,580.7

 

 

(94.8

)

 

(1.5

%)

 

0.8

%

 

(1.3

%)

 

(0.7

%)

 

(2.6

%)

Less: Manufacturing and Industrial Services (b)

 

 

(329.2

)

 

(351.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenues, as Adjusted

 

$

3,156.7

 

$

3,229.6

 

$

(72.9

)

 

(1.9

%)

 

0.9

%

 

(0.8

%)

 

(0.4

%)

 

(2.3

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues by Geography

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic and Canada

 

$

2,830.8

 

$

2,873.1

 

$

(42.3

)

 

(2.3

%)

 

0.9

%

 

(0.1

%)

 

(0.0

%)

 

(1.5

%)

International

 

 

655.1

 

 

707.6

 

 

(52.5

)

 

1.9

%

 

0.4

%

 

(5.9

%)

 

(3.8

%)

 

(7.4

%)

Total Revenues

 

$

3,485.9

 

$

3,580.7

 

$

(94.8

)

 

(1.5

%)

 

0.8

%

 

(1.3

%)

 

(0.7

%)

 

(2.6

%)

 

10

 


Table 1 – C: DISAGGREGATED REVENUES CHANGE

(In millions)

 

 

Three Months Ended

December 31, 2018

 

 

Year Ended

December 31, 2018

 

Organic