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Section 1: 8-K (8-K)

srcl-8k_20191031.htm
false STERICYCLE INC 0000861878 0000861878 2019-10-31 2019-10-31

 

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): October 31, 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)

2355 Waukegan Road

Bannockburn, Illinois 60015

(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))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, par value $0.01 per share

SRCL

Nasdaq Global Select Market

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 October 31, 2019 Stericycle, Inc. issued a press release announcing its financial results for the quarter ended September 30, 2019.  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 October 31, 2019

104

Cover Page Interactive Data File (embedded within the Inline XBLR document)


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: October 31, 2019

 

Stericycle, Inc.

 

 

 

 

By:

/s/ Janet H. Zelenka

 

 

 

 

 

Janet H. Zelenka

 

 

Executive Vice President and Chief Financial Officer

 

 

 

 

 

 

(Back To Top)

Section 2: EX-99.1 (EX-99.1)

srcl-ex991_6.htm

EXHIBIT 99.1

FOR FURTHER INFORMATION CONTACT:

Stericycle Investor Relations 847-607-2012

 

Stericycle, Inc. Reports Results

For the Third Quarter 2019

 

BANNOCKBURN, Ill., October 31, 2019 - Stericycle, Inc. (Nasdaq: SRCL) today reported results for the third quarter ended September 30, 2019.

 

Revenues for the quarter were $833.1 million, a decrease of 2.6% from $854.9 million in the third quarter of last year.  Loss from operations in the quarter was $34.5 million, inclusive of non-cash impairment charges of $82.4 million associated with classifying certain assets and liabilities as held-for-sale as part of the Company’s portfolio rationalization, compared to income from operations of $68.3 million in the third quarter of last year. Net loss was $59.2 million, or $0.65 diluted loss per share, compared with net income of $17.5 million, or $0.20 diluted earnings per share, in the third quarter of last year.  Adjusted EBITDA was $150.5 million, or 18.1% of revenues, compared with $183.9 million, or 21.5% of revenues in the third quarter of last year.  Adjusted diluted earnings per share was $0.80, compared to $1.03 in the 2018 comparable period.

 

KEY BUSINESS HIGHLIGHTS:

 

Stericycle announced important progress on its portfolio rationalization as it divested of non-core operations in Mexico and two service lines within Communication and Related Services (“CRS”) during October.

 

Organic revenue in core businesses showed continued strength with 6.1% organic growth in Secure Information Destruction, excluding the impact of sorted office paper (“SOP”) pricing, and 1.6% organic growth in Regulated Waste and Compliance Services (“RWCS”).

 

Positive free cash flow for the quarter was $77.2 million, bringing the year to date total to $40.0 million. This enabled a net debt reduction of approximately $83.0 million, the largest decrease since the third quarter of 2017.

 

“Our third quarter results reflect the early and positive impact from the execution of our key business priorities,” said Cindy J. Miller, Chief Executive Officer.  “We saw the benefit of our revenue quality initiatives with another quarter of organic revenue growth within our core businesses, and we delivered Adjusted EBITDA improvement over the prior two quarters.  We generated strong free cash flow in the quarter, enabling us to make the largest quarterly net debt reduction since the third quarter of 2017. Additionally, we divested of three non-core businesses during October, progressing our portfolio rationalization efforts.”



THIRD QUARTER FINANCIAL RESULTS

U.S. Generally Accepted Accounting Principles (GAAP) Results

 

Revenues for the quarter ended September 30, 2019 were $833.1 million, compared to $854.9 million in the third quarter of last year.  The decline was due to macroeconomic factors of SOP pricing and foreign exchange rates, which reduced revenues by $18.4 million and $13.3 million, respectively, and a $12.7 million decline in CRS primarily due to fewer recall events. Revenues in core businesses continued their positive trend with $14.0 million organic growth excluding paper pricing in Secure Information Destruction and $7.4 million organic growth in RWCS.

 

Loss from operations in the quarter was $34.5 million, compared to income from operations of $68.3 million in the third quarter of last year. Excluding non-cash impairment charges of $82.4 million related to the three divestitures, income from operations was $47.9 million, a decrease of $20.4 million from 2018.  The decrease was driven by $20.5 million from SOP pricing and foreign exchange and $11.0 million in higher hazardous waste operating costs partially offset by $8.0 million related to a favorable litigation settlement and lower incentive compensation.

 

Net loss was $59.2 million, or $0.65 diluted loss per share, compared with net income of $17.5 million, or $0.20 diluted earnings per share, in the third quarter of last year, primarily due to operational items previously highlighted, a lower effective tax rate on a loss from operations, and the absence of gains on share repurchases this quarter as compared to the third quarter of 2018.

 

Cash flow from operations year to date was $201.2 million, compared to $89.9 million during the comparable period last year. In 2018, cash flow from operations was reduced by the Small Quantity customer class action settlement payment of $295.0 million.  Excluding the settlement payment, cash flow from operations decreased by $183.7 million primarily due to lower operating performance in 2019 as previously highlighted and payments for annual incentive compensation and prepaid software.

 

Capital expenditures year to date were $161.2 million, including $70.8 million for the ERP implementation, compared to $96.9 million for the comparable period in 2018, including $8.2 million for the ERP implementation.

Non-GAAP Results

 

Adjusted EBITDA was $150.5 million, compared to $183.9 million in the third quarter of last year.  The decrease was primarily driven by $20.5 million from SOP pricing and foreign exchange impact and $11.0 million in higher operating costs related to hazardous waste operations.

 

Adjusted diluted earnings per share was $0.80, compared to $1.03 in the third quarter of last year, primarily due to SOP pricing, foreign exchange impacts, higher operating costs, higher interest expense, and the absence of gains on share repurchases this quarter as compared to the third quarter of 2018, partially offset by a tax benefit.

 

Positive free cash flow for the quarter was $77.2 million, bringing the year to date total to $40.0 million. This enabled a net debt reduction of approximately $83.0 million, the largest decrease since the third quarter of 2017.

2

 


 

NON-GAAP FINANCIAL MEASURES

Non-GAAP financial measures are reconciled to the most comparable GAAP measures in the schedules attached hereto.

 

RECENT EVENTS

During October 2019, Stericycle made important progress on portfolio rationalization and closed on three divestitures.  The divestitures included the North American telephone answering services business and a retail pharmaceutical returns business, both of which report sales in our CRS service lines, and substantially all operations in Mexico, for which revenue is reported in RWCS and Manufacturing and Industrial (“M&I”).  Gross proceeds of $38.1 million from the three transactions will be used to reduce net debt in the fourth quarter.  During September 2019, the Company approved plans to sell these businesses. Accordingly, as of September 30, 2019, the related assets and liabilities were classified as held-for-sale which resulted in non-cash impairment charges of $82.4 million in the third quarter of 2019.

 

In a separate press release issued on October 1, Stericycle announced S. Cory White was appointed Executive Vice President and Chief Commercial Officer.  Mr. White joined Stericycle in April 2019 as Executive Vice President of CRS and brings more than 20 years of commercial experience, including expertise in both healthcare and business transformations.  The Company’s former Chief Commercial Officer, William J. Seward, departed the company to pursue a senior level commercial role with his former employer.

 

FINANCIAL GUIDANCE

Stericycle updated its financial guidance for the full-year 2019 to reflect the impact of divestitures closed through October 31, as summarized in the table below.  The Company’s guidance is based on currently known items and certain business assumptions including current foreign exchange rates and estimates for SOP pricing. 

Guidance for Full-Year 2019

(In millions, except per share data)

Revenues

$3,300 - $3,335

Adjusted EBITDA(1) (2)

$575 -$595

Adjusted diluted earnings per share (2)

$2.55 to $2.70

Capital expenditures

$180 - $200

Minimum free cash flow

$50

(1)

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

(2)

Guidance presented is on an Adjusted (Non-GAAP) basis, and 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 (U.S. GAAP) results and could be material.

3

 


 

CONFERENCE CALL INFORMATION

The Company is holding a conference call today, October 31, 2019, at 8:00 a.m. central time.  Dial (888) 317-6003 in the U.S., (866) 605-3851 in Canada, or (412) 317-6061, if outside the U.S./Canada at least 10 minutes before the call begins.  Upon dialing the number, you will be prompted to enter the Elite Entry number 5351870.  Presentation materials will be posted prior to the conference call at http://investors.stericycle.com.  To listen to the webcast via the Internet or access an audio replay of the call, visit the Company’s investor relations site at http://investors.stericycle.com.

 

ABOUT STERICYCLE

Stericycle, Inc., (Nasdaq: SRCL) 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 safeguard the environment.  Stericycle serves more than one million customers in all 50 U.S. states and 20 countries worldwide with solutions for regulated waste management, secure information destruction, compliance, customer contact, and brand protection.  For more information about Stericycle, please visit www.stericycle.com.

 

4

 


SAFE HARBOR STATEMENT

This document may contain forward-looking statements.  When we use words such as "believes," "expects," "anticipates," "estimates" 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, SOP pricing volatility, foreign exchange rate volatility in the jurisdictions in which we operate, the volume and size of any recall events, 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 system 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 strategic alternative 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, a downgrade in our credit rating resulting in an increase in interest expense, political, economic, inflationary and other risks related to our foreign operations, the outcome of pending or future litigation or investigations including 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, failure to maintain an effective system of internal control over financial reporting, delays or failures in implementing remediation efforts with respect to existing or future material weaknesses, disruptions in or attacks on information technology systems, as well as other factors described in our 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.  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.


5

 


STERICYCLE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME

 

(In millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended

September 30,

 

 

2019

 

2018

 

% Change

 

 

2019

 

2018

 

% Change

 

Revenues

$

833.1

 

$

854.9

 

 

(2.6

%)

 

$

2,509.0

 

$

2,633.2

 

 

(4.7

%)

Cost of revenues

 

537.8

 

 

519.4

 

 

3.5

%

 

 

1,614.0

 

 

1,585.9

 

 

1.8

%

Gross profit

 

295.3

 

 

335.5

 

 

(12.0

%)

 

 

895.0

 

 

1,047.3

 

 

(14.5

%)

Selling, general and administrative expenses

 

247.4

 

 

267.2

 

 

(7.4

%)

 

 

805.1

 

 

851.1

 

 

(5.4

%)

Held-for-sale impairments

 

82.4

 

 

-

 

nm

 

 

 

82.4

 

 

11.4

 

nm

 

Goodwill impairment

 

-

 

 

-

 

nm

 

 

 

20.9

 

 

-

 

nm

 

(Loss) income from operations

 

(34.5

)

 

68.3

 

 

(150.5

%)

 

 

(13.4

)

 

184.8

 

 

(107.3

%)

Interest expense, net

 

(29.9

)

 

(27.7

)

 

7.9

%

 

 

(91.1

)

 

(77.3

)

 

17.9

%

Loss on early extinguishment of debt

 

-

 

 

-

 

nm

 

 

 

(23.1

)

 

-

 

nm

 

Other expense, net

 

(3.2

)

 

(6.2

)

 

(48.4

%)

 

 

(7.2

)

 

(6.8

)

 

5.9

%

(Loss) income before income taxes

 

(67.6

)

 

34.4

 

 

(296.5

%)

 

 

(134.8

)

 

100.7

 

 

(233.9

%)

Income tax benefit (expense)

 

8.6

 

 

(10.9

)

 

(178.9

%)

 

 

8.0

 

 

(27.1

)

 

(129.5

%)

Net (loss) income

 

(59.0

)

 

23.5

 

 

(351.1

%)

 

 

(126.8

)

 

73.6

 

 

(272.3

%)

Net (income) loss attributable to noncontrolling interests

 

(0.2

)

 

-

 

nm

 

 

 

(0.7

)

 

0.1

 

nm

 

Net (loss) income attributable to Stericycle, Inc.

 

(59.2

)

 

23.5

 

 

(351.9

%)

 

 

(127.5

)

 

73.7

 

 

(273.0

%)

Mandatory convertible preferred stock dividend

 

-

 

 

(8.4

)

 

(100.0

%)

 

 

-

 

 

(25.5

)

 

(100.0

%)

Gain on repurchase of preferred stock

 

-

 

 

2.4

 

 

(100.0

%)

 

 

-

 

 

16.9

 

 

(100.0

%)

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

$

(59.2

)

$

17.5

 

 

(438.3

%)

 

$

(127.5

)

$

65.1

 

 

(295.9

%)

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

(0.65

)

$

0.20

 

 

(424.9

%)

 

$

(1.40

)

$

0.76

 

 

(284.4

%)

Diluted

$

(0.65

)

$

0.20

 

 

(424.9

%)

 

$

(1.40

)

$

0.76

 

 

(284.4

%)

Weighted average number of common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

91.1

 

 

86.7

 

 

 

 

 

 

91.0

 

 

85.9

 

 

 

 

Diluted

 

91.1

 

 

86.8

 

 

 

 

 

 

91.0

 

 

86.1

 

 

 

 

 

 

 

nm - percentage change not meaningful

 

 

6

 


UNAUDITED STATISTICS - U.S. GAAP AND ADJUSTED MEASURES

(In millions, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

 

 

 

 

% of Revenue

 

 

 

 

 

% of Revenue

 

 

 

 

 

% of Revenue

 

 

 

 

 

% of Revenue

 

Statistics  - U.S. GAAP

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

295.3

 

 

35.4

%

 

$

335.5

 

 

39.2

%

 

$

895.0

 

 

35.7

%

 

$

1,047.3

 

 

39.8

%

Selling, general and administrative expenses

$

247.4

 

 

29.7

%

 

$

267.2

 

 

31.3

%

 

$

805.1

 

 

32.1

%

 

$

851.1

 

 

32.3

%

Held-for-sale impairments

$

82.4

 

 

9.9

%

 

$

-

 

 

-

 

 

$

82.4

 

 

3.3

%

 

$

11.4

 

 

0.4

%

Goodwill impairment

$

-

 

 

-

 

 

$

-

 

 

-

 

 

$

20.9

 

 

0.8

%

 

$

-

 

 

-

 

(Loss) income from operations

$

(34.5

)

 

(4.1

%)

 

$

68.3

 

 

8.0

%

 

$

(13.4

)

 

(0.5

%)

 

$

184.8

 

 

7.0

%

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

$

(59.2

)

 

(7.1

%)

 

$

23.5

 

 

2.7

%

 

$

(127.5

)

 

(5.1

%)

 

$

65.1

 

 

2.5

%

Diluted (loss) earnings per share

$

(0.65

)

 

 

 

 

$

0.20

 

 

 

 

 

$

(1.40

)

 

 

 

 

$

0.76

 

 

 

 

Diluted shares outstanding

 

91.1

 

 

 

 

 

 

91.0

 

 

 

 

 

 

91.0

 

 

 

 

 

 

86.1

 

 

 

 

Effective tax rate

 

12.7

%

 

 

 

 

 

31.7

%

 

 

 

 

 

5.9

%

 

 

 

 

 

26.9

%

 

 

 

Statistics - Adjusted (1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted gross profit

$

299.2

 

 

35.9

%

 

$

343.3

 

 

40.2

%

 

$

904.7

 

 

36.1

%

 

$

1,055.1

 

 

40.1

%

Adjusted selling, general and administrative expenses

$

180.4

 

 

21.7

%

 

$

191.5

 

 

22.4

%

 

$

575.3

 

 

22.9

%

 

$

586.6

 

 

22.3

%

Adjusted income from operations

$

118.8

 

 

14.3

%

 

$

151.8

 

 

17.8

%

 

$

329.4

 

 

13.1

%

 

$

468.5

 

 

17.8

%

Depreciation - cost of revenues

$

25.5

 

 

3.1

%

 

$

24.8

 

 

2.9

%

 

$

77.8

 

 

3.1

%

 

$

75.0

 

 

2.8

%

Depreciation - selling, general and administrative expenses

$

6.2

 

 

0.7

%

 

$

7.3

 

 

0.9

%

 

$

17.8

 

 

0.7

%

 

$

20.6

 

 

0.8

%

Depreciation - Business Transformation

$

0.2

 

 

-

 

 

$

-

 

 

-

 

 

$

1.0

 

 

-

 

 

$

-

 

 

-

 

Intangible amortization

$

35.8

 

 

4.3

%

 

$

31.8

 

 

3.7

%

 

$

110.5

 

 

4.4

%

 

$

96.6

 

 

3.7

%

EBITDA

$

33.0

 

 

4.0

%

 

$

132.2

 

 

15.5

%

 

$

192.7

 

 

7.7

%

 

$

377.0

 

 

14.3

%

Adjusted EBITDA

$

150.5

 

 

18.1

%

 

$

183.9

 

 

21.5

%

 

$

425.0

 

 

16.9

%

 

$

564.1

 

 

21.4

%

Adjusted net income attributable to common shareholders

$

72.5

 

 

8.7

%

 

$

93.5

 

 

10.9

%

 

$

175.3

 

 

7.0

%

 

$

309.7

 

 

11.8

%

Adjusted effective tax rate

 

16.9

%

 

 

 

 

 

26.0

%

 

 

 

 

 

26.0

%

 

 

 

 

 

25.4

%

 

 

 

Adjusted diluted earnings per share

$

0.80

 

 

 

 

 

$

1.03

 

 

 

 

 

$

1.93

 

 

 

 

 

$

3.42

 

 

 

 

Adjusted diluted shares outstanding (2018 using if-converted method)

 

91.2

 

 

 

 

 

 

90.7

 

 

 

 

 

 

91.0

 

 

 

 

 

 

90.6

 

 

 

 

 

(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.

 

 

7

 


STERICYCLE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In millions)

 

 

 

 

 

 

 

 

 

 

September 30,

 

 

December 31,

 

 

2019

 

 

2018

 

ASSETS

 

 

 

 

 

 

 

Current Assets:

 

 

 

 

 

 

 

Cash and cash equivalents

$

30.8

 

 

$

34.3

 

Accounts receivable, net

 

562.8

 

 

 

599.6

 

Prepaid expenses

 

72.6

 

 

 

50.0

 

Other current assets

 

54.1

 

 

 

63.4

 

Assets held for sale

 

30.2

 

 

 

-

 

Total Current Assets

 

750.5

 

 

 

747.3

 

Property, plant and equipment, net

 

785.7

 

 

 

743.5

 

Operating lease right-of-use assets

 

391.5

 

 

 

-

 

Goodwill

 

3,178.4

 

 

 

3,222.2

 

Intangible assets, net

 

1,466.8

 

 

 

1,637.7

 

Other assets

 

103.4

 

 

 

104.8

 

Total Assets

$

6,676.3

 

 

$

6,455.5

 

 

 

 

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

Current portion of long-term debt

$

111.9

 

 

$

104.3

 

Bank overdrafts

 

4.1

 

 

 

14.8

 

Accounts payable

 

216.9

 

 

 

225.8

 

Accrued liabilities

 

319.8

 

 

 

340.8

 

Operating lease liabilities

 

88.4

 

 

 

-

 

Other current liabilities

 

37.2

 

 

 

47.5

 

Liabilities held for sale

 

17.4

 

 

 

-

 

Total Current Liabilities

 

795.7

 

 

 

733.2

 

 

 

 

 

 

 

 

 

Long-term debt, net

 

2,617.0

 

 

 

2,663.9

 

Long-term operating lease liabilities

 

320.7

 

 

 

-

 

Deferred income taxes

 

330.5

 

 

 

307.3

 

Long-term taxes payable

 

66.4

 

 

 

83.3

 

Other liabilities

 

68.7

 

 

 

70.7

 

Total Liabilities

 

4,199.0

 

 

 

3,858.4

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity:

 

 

 

 

 

 

 

Common stock

 

0.9

 

 

 

0.9

 

Additional paid-in capital

 

1,196.5

 

 

 

1,162.6

 

Retained earnings

 

1,661.7

 

 

 

1,789.2

 

Accumulated other comprehensive loss

 

(385.4

)

 

 

(365.3

)

Total Stericycle, Inc.’s Equity

 

2,473.7

 

 

 

2,587.4

 

Noncontrolling interests

 

3.6

 

 

 

9.7

 

Total Equity

 

2,477.3

 

 

 

2,597.1

 

Total Liabilities and Equity

$

6,676.3

 

 

$

6,455.5

 

 

 

8

 


STERICYCLE, INC.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(In millions)

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2019

 

 

2018

 

OPERATING ACTIVITIES:

 

 

 

 

 

 

 

Net (loss) income

$

(126.8

)

 

$

73.6

 

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

 

 

 

 

 

 

 

Depreciation

 

96.6

 

 

 

95.6

 

Intangible amortization

 

110.5

 

 

 

96.6

 

Loss on early extinguishment of debt and related charges

 

26.5

 

 

 

-

 

Stock-based compensation expense

 

13.7

 

 

 

19.5

 

Deferred income taxes

 

18.7

 

 

 

9.5

 

Goodwill and other impairment charges and losses (gains) on divestiture of businesses, net

 

108.1

 

 

 

26.8

 

Other, net

 

0.6

 

 

 

(2.9

)

Changes in operating assets and liabilities, net of the effects of acquisitions, held-for-sale impairments, and divestitures:

 

 

 

 

 

 

 

Accounts receivable

 

6.3

 

 

 

(1.8

)

Prepaid expenses

 

(28.3

)

 

 

(22.5

)

Accounts payable

 

4.4

 

 

 

17.8

 

Accrued liabilities

 

(30.5

)

 

 

(226.2

)

Other assets and liabilities

 

1.4

 

 

 

3.9

 

Net cash from operating activities

 

201.2

 

 

 

89.9

 

INVESTING ACTIVITIES:

 

 

 

 

 

 

 

Capital expenditures

 

(161.2

)

 

 

(96.9

)

Payments for acquisitions, net of cash acquired

 

(0.2

)

 

 

(39.6

)

Proceeds from divestiture of businesses

 

17.8

 

 

 

25.2

 

Other, net

 

2.3

 

 

 

1.9

 

Net cash from investing activities

 

(141.3

)

 

 

(109.4

)

FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Repayments of long-term debt and other obligations

 

(38.2

)

 

 

(44.9

)

Net proceeds from (repayments of) foreign bank debt

 

3.5

 

 

 

(6.2

)

Proceeds from Term Loan

 

365.0

 

 

 

-

 

Repayments of Term Loan

 

(40.2

)

 

 

(35.6

)

Proceeds from issuance of Senior Notes

 

600.0

 

 

 

-

 

Net proceeds from Senior Credit Facility

 

150.8

 

 

 

145.1

 

Repayments of private placement notes

 

(1,075.0

)

 

 

-

 

Payments on early extinguishment of debt

 

(20.4

)

 

 

-

 

(Repayments of) proceeds from bank overdrafts, net

 

(9.8

)

 

 

0.9

 

Payments of capital lease obligations

 

(2.4

)

 

 

(5.1

)

Payments of debt issuance costs

 

(8.8

)

 

 

-

 

Proceeds from issuance of common stock, net of shares withheld for tax

 

16.2

 

 

 

20.1

 

Payments for repurchase of mandatory convertible preferred stock

 

-

 

 

 

(17.2

)

Dividends paid on mandatory convertible preferred stock

 

-

 

 

 

(25.5

)

Payments to noncontrolling interest

 

(0.7

)

 

 

(0.2

)

Net cash from financing activities

 

(60.0

)

 

 

31.4

 

Effect of exchange rate changes on cash and cash equivalents

 

(3.4

)

 

 

(2.1

)

Net change in cash and cash equivalents

 

(3.5

)

 

 

9.8

 

Cash and cash equivalents at beginning of period

 

34.3

 

 

 

42.2

 

Cash and cash equivalents at end of period

$

30.8

 

 

$

52.0

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL CASH FLOW INFORMATION:

 

 

 

 

 

 

 

Net issuances of obligations for acquisitions

$

0.3

 

 

$

27.7

 

Capital expenditures in accounts payable

$

22.3

 

 

$

18.2

 

Interest paid during the period, net of capitalized interest

$

69.7

 

 

$

62.2

 

Income taxes paid during the period, net of refunds

$

7.3

 

 

$

21.5

 

Free cash flow (1)

$

40.0

 

 

$

(7.0

)

(1)

Free cash flow is calculated as Net cash flow from operating activities less Capital expenditures.

9

 


Table 1 – A: REVENUES CHANGES BY SERVICE AND GEOGRAPHY (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2019

  

Three Months Ended September 30,

 

 

In millions

 

 

 

 

Components of Change (%)

 

 

2019

 

2018

 

Change ($)

 

Change (%)

 

Organic

 

 

Acquisitions

 

Divestitures

 

Foreign Exchange(3)

 

Revenues by Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated Waste and Compliance Services (1) (4)

$

474.9

 

$

476.6

 

$

(1.7

)

 

(0.4

%)

 

1.6

%

 

 

 

 

(0.2

%)

 

(1.8

%)

Secure Information Destruction Services

 

222.6

 

 

227.6

 

 

(5.0

)

 

(2.2

%)

 

(2.0

%)

(8)

 

0.6

%

 

 

 

(0.8

%)

Communication and Related Services (2) (5)

 

58.9

 

 

71.6

 

 

(12.7

)

 

(17.7

%)

 

(12.4

%)

 

 

 

 

(5.0

%)

 

(0.3

%)

Manufacturing and Industrial Services(4)

 

76.7

 

 

79.1

 

 

(2.4

)

 

(3.0

%)

 

0.4

%

 

 

 

 

 

 

(3.4

%)

Total Revenues

$

833.1

 

$

854.9

 

$

(21.8

)

 

(2.6

%)

 

(0.7

%)

 

 

0.2

%

 

(0.5

%)

 

(1.6

%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues by Geography

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Domestic and Canada (5)

$

689.6

 

$

703.8

 

$

(14.2

)

 

(2.0

%)

 

(2.1

%)

(9)

 

0.2

%

 

(0.1

%)

 

(0.0

%)

International (4)

 

143.5

 

 

151.1

 

 

(7.6

)

 

(5.0

%)

 

5.9

%

 

 

 

 

(2.4

%)

 

(8.5

%)

Total Revenues

$

833.1

 

$

854.9

 

$

(21.8

)

 

(2.6

%)

 

(0.7

%)

(9)

 

0.2

%

 

(0.5

%)

 

(1.6

%)

See footnote descriptions below Table 1 – C.

Table 1 – B: REVENUES CHANGES BY SERVICE AND GEOGRAPHY (UNAUDITED) –

NINE MONTHS ENDED SEPTEMBER 30, 2019

  

Nine Months Ended September 30,

 

 

In millions

 

 

 

 

Components of Change (%)

 

 

2019

 

2018

 

Change ($)

 

Change (%)

 

Organic

 

 

Acquisitions

 

Divestitures

 

Foreign Exchange(3)

 

Revenues by Service

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Regulated Waste and Compliance Services (1) (6)

$

1,419.1

 

$

1,457.8

 

$

(38.7

)

 

(2.7

%)

 

0.3