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Stericycle Management Discusses Q2 2012 Results - Earnings Call Transcript

I will now turn it over to Frank.

Frank J. M. Ten Brink

Thanks, Laura. The results for the second quarter are as follows: Revenues were $468.9 million, up 14.3% from $410.4 million. In Q2 of 2011, an internal growth excluding returns and recall revenues was up 8%. Domestic revenues were $337.9 million of which $308.9 million was domestic regulated waste and compliance services revenues, and $29 million was returns and recalls. Domestic internal growth, excluding returns and recall revenues was up 9%, consisting of SQ, up 10%, and LQ, up 8%; International revenues were $131.1 million and internal growth, adjusted for unfavorable exchange impact of $8.1 million, was up 5%. Acquisitions contributed $36.6 million to the growth in the quarter, of which $2.7 million related to the Recalls and Returns business.

Gross profit was $209.5 million, or 44.7% of revenues. SG&A expense was $88 million or 18.8% of revenues. Net interest expense was $12.7 million, and net income attributable to Stericycle was $67.6 million or $0.78 per share on an as-reported basis, and 81% adjusted for acquisition and other non-recurring expenses.

Now the balance sheet. At the end of the quarter, the revolver borrowings were approximately $516 million. The unused portion of the revolver debt at the end of the quarter was approximately $328 million. Our capital spend in the quarter was $16.8 million. And our DSO was 58 days. Q2 year-to-date, the cash provided from operations was $188.8 million, which includes $9 million of cash received in the second quarter from a customer to be used for recall product reimbursement. I will now turn it over to Rich.

Richard T. Kogler

Thanks, Frank. Worldwide, we continue to use our strong free cash flow to drive our grow-through acquisitions. In the quarter, we closed 8 transactions, 3 domestic and 5 international. Our worldwide acquisition pool remains robust with over $100 million in annualized revenues in multiple geographies and lines of business. At the end of the quarter, we had approximately 535,000 accounts, of which over 519,000 were Small and the remainder were Large. Our customers continue to be excited about our expanding portfolio of services. For our SQ customers, these services include Steri-Safe and clinical compliance offerings. And for our LQ customers, the growth drivers are Sharps Management, Pharma Waste and Integrated Waste Services. The strong growth we experienced in the quarter was fueled by the continued adoption of these additional service offerings.

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