Stericycle, Inc. (Nasdaq: SRCL) today reported results for the
fourth quarter ended December 31, 2023.
Revenues for the fourth quarter were $652.0
million, a decrease of 2.7% compared to $670.4 million in the
fourth quarter of 2022. Income from operations was $37.1
million, compared to $59.1 million in the fourth quarter of
2022. Net income in the fourth quarter was $14.9 million, or
$0.16 diluted earnings per share, compared to $31.8 million, or
$0.35 in the fourth quarter of 2022. Adjusted income from
operations1 was $84.5 million, compared to $90.6 million in the
fourth quarter of 2022. Adjusted diluted earnings per share1
was $0.54, compared to $0.60 in the fourth quarter of
2022. Cash flow from operations for the year ended
December 31, 2023 was $243.3 million, compared to $200.2
million in 2022. Free cash flow2 for the year ended
December 31, 2023 was $112.0 million, compared to $68.0
million in 2022.
KEY BUSINESS HIGHLIGHTS:
- Grew Regulated
Waste and Compliance Services (“RWCS”) organic revenues1 3.1%
compared to the fourth quarter of 2022.
- Improved gross
profit 150 basis points compared to the fourth quarter of
2022.
- Acquired a U.S.
regulated waste tuck-in business in January 2024.
- Continued to
implement workforce management actions in the first quarter of
2024, which are expected to generate over $35 million in cost
savings in 2024.
“Throughout 2023, we made strong progress
executing across all of our key business priorities, most notably
the ERP deployment for our U.S. Regulated Waste and Compliance
Services business and portfolio optimization, as we completed eight
divestitures in the year. 2023 organic revenue and Adjusted EPS(3)
performance came in line with our expectations. We continued to
drive efficiency improvements in cost of revenues that helped
mitigate headwinds of approximately $50 million in commodity
indexed revenues in 2023,” said Cindy J. Miller, President and
Chief Executive Officer. “We look forward to building on the
strength of the foundation we have established, leveraging our next
generation of key business priorities to drive growth. We plan to
harness a streamlined workforce, modern technology, updated
facilities, and a refreshed fleet, which we expect will drive
growth in top line and profitability.”
- 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).
- Foreign Corrupt Practices Act
(FCPA).
FOURTH QUARTER FINANCIAL RESULTS
U.S. Generally Accepted Accounting Principles (GAAP)
Results
- Revenues in the
fourth quarter were $652.0 million compared to $670.4 million in
the fourth quarter of 2022. The decrease was primarily due to
divestitures of $28.6 million, which was partially offset by
favorable foreign exchange rates of $5.0 million. Organic revenues
grew $5.2 million, with RWCS growing $13.2 million and Secure
Information Destruction (“SID”) organic revenues declining $8.0
million. The decline in SID was mainly a result of lower SID
commodity indexed revenues due to lower recycling revenue and lower
fuel and environmental surcharges of $18.0 million.
- Income from
operations in the fourth quarter was $37.1 million compared to
$59.1 million in the fourth quarter of 2022. The $22.0 million
decrease was mainly due to a gain on divestitures in 2022 of $15.6
million; lower SID commodity indexed revenue margin flow-through of
$10.2 million; higher bad debt expense of $8.1 million, primarily
due to a lower fourth quarter of 2022 bad debt expense level as a
result of improved North America SID collections; and higher
incentive and stock based compensation of $7.1 million. These were
partially offset by margin flow-through of $18.9 million, including
cost savings from productivity initiatives.
- Net income in the
fourth quarter was $14.9 million, or $0.16 diluted earnings per
share, compared to $31.8 million, or $0.35 in the fourth quarter of
2022. The decrease was primarily attributable to lower Income
from operations of $22.0 million, as explained above.
- Cash flow from
operations for the year ended December 31, 2023, was $243.3
million, compared to $200.2 million in 2022. The
year-over-year increase of $43.1 million was primarily driven by
lower FCPA4 settlement payments of $72.8 million and lower annual
incentive compensation payments of $22.3 million, partially offset
by increased accounts receivable, net of deferred revenues of $68.5
million.
- Cash paid for
capital expenditures for the year ended December 31, 2023 was
$131.3 million, compared to $132.2 million in 2022.
Non-GAAP Results
- For the fourth
quarter of 2023, organic revenues1 increased 0.9%, which excludes
the impacts of divestitures and foreign exchange rates. RWCS
organic revenues1 increased 3.1% while SID organic revenues1
decreased 3.6%, mainly due to lower SID commodity indexed revenues,
as explained above.
- Adjusted income
from operations1 was $84.5 million compared to $90.6 million in the
fourth quarter of 2022. As a percentage of revenues, the 50
basis points decrease was mainly due to lower commodity indexed
revenue margin flow-through of 160 basis points; higher bad debt
expense of 120 basis points, as explained above; and higher
incentive and stock based compensation of 110 basis points. These
were partially offset by margin flow-through of 340 basis points,
including cost savings and portfolio optimization.
- Adjusted diluted
earnings per share1 was $0.54, compared to $0.60 in the fourth
quarter of 2022. The $0.06 decrease was mainly driven by lower SID
commodity indexed revenue margin flow-through of $0.09; higher bad
debt expense of $0.07, as explained above, and higher incentive
compensation of $0.06. These were partially offset by margin
flow-through of $0.16.
- Free cash flow2 for
the year ended December 31, 2023 was $112.0 million, compared
to $68.0 million in 2022. The $44.0 million increase was
primarily due to higher cash flow from operations of
$43.1 million, as explained above.
- 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).
- Foreign Corrupt Practices Act
(FCPA).
CONFERENCE CALL INFORMATION
Stericycle is holding its fourth quarter
earnings conference call on Wednesday, February 28, 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 fourth quarter earnings call is being
recorded and a replay will be available approximately one hour
after the end of the conference call until March 28, 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, inflationary cost pressure
in labor, supply chain, energy, and other expenses, decreases in
the volume of regulated wastes or personal and confidential
information collected from customers, and 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 (Sorted
Office Paper) 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, 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, 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 the 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
(LOSS)(Unaudited) |
In millions, except per share data |
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2023 |
|
|
% of Revenues |
|
|
2022 |
|
|
% of Revenues |
|
% Change |
|
|
2023 |
|
|
% of Revenues |
|
|
2022 |
|
|
% of Revenues |
|
% Change |
Revenues |
$ |
652.0 |
|
|
100.0 |
% |
|
$ |
670.4 |
|
|
100.0 |
% |
|
(2.7 |
)% |
|
$ |
2,659.3 |
|
|
100.0 |
% |
|
$ |
2,704.7 |
|
|
100.0 |
% |
|
(1.7 |
)% |
Cost of revenues |
|
395.2 |
|
|
60.6 |
% |
|
|
416.0 |
|
|
62.1 |
% |
|
(5.0 |
)% |
|
|
1,644.7 |
|
|
61.8 |
% |
|
|
1,679.1 |
|
|
62.1 |
% |
|
(2.0 |
)% |
Gross
profit |
|
256.8 |
|
|
39.4 |
% |
|
|
254.4 |
|
|
37.9 |
% |
|
0.9 |
% |
|
|
1,014.6 |
|
|
38.2 |
% |
|
|
1,025.6 |
|
|
37.9 |
% |
|
(1.1 |
)% |
Selling, general and
administrative expenses |
|
219.7 |
|
|
33.7 |
% |
|
|
210.9 |
|
|
31.5 |
% |
|
4.2 |
% |
|
|
873.9 |
|
|
32.9 |
% |
|
|
887.5 |
|
|
32.8 |
% |
|
(1.5 |
)% |
Divestiture (gains) losses,
net |
|
— |
|
|
— |
% |
|
|
(15.6 |
) |
|
(2.3 |
)% |
|
(100.0 |
)% |
|
|
63.4 |
|
|
2.4 |
% |
|
|
(15.6 |
) |
|
(0.6 |
)% |
|
nm |
Income from
operations |
|
37.1 |
|
|
5.7 |
% |
|
|
59.1 |
|
|
8.8 |
% |
|
(37.2 |
)% |
|
|
77.3 |
|
|
2.9 |
% |
|
|
153.7 |
|
|
5.7 |
% |
|
(49.7 |
)% |
Interest expense, net |
|
(17.0 |
) |
|
(2.6 |
)% |
|
|
(20.9 |
) |
|
(3.1 |
)% |
|
(18.7 |
)% |
|
|
(73.9 |
) |
|
(2.8 |
)% |
|
|
(75.5 |
) |
|
(2.8 |
)% |
|
(2.1 |
)% |
Other income (expense),
net |
|
0.2 |
|
|
0.0 |
% |
|
|
(0.1 |
) |
|
— |
% |
|
(300.0 |
)% |
|
|
(0.1 |
) |
|
— |
% |
|
|
0.7 |
|
|
— |
% |
|
(114.3 |
)% |
Income before income
taxes |
|
20.3 |
|
|
3.1 |
% |
|
|
38.1 |
|
|
5.7 |
% |
|
(46.7 |
)% |
|
|
3.3 |
|
|
0.1 |
% |
|
|
78.9 |
|
|
2.9 |
% |
|
(95.8 |
)% |
Income tax expense |
|
(5.5 |
) |
|
(0.8 |
)% |
|
|
(6.0 |
) |
|
(0.9 |
)% |
|
(8.3 |
)% |
|
|
(24.6 |
) |
|
(0.9 |
)% |
|
|
(22.4 |
) |
|
(0.8 |
)% |
|
9.8 |
% |
Net income
(loss) |
|
14.8 |
|
|
2.3 |
% |
|
|
32.1 |
|
|
4.8 |
% |
|
(53.9 |
)% |
|
|
(21.3 |
) |
|
(0.8 |
)% |
|
|
56.5 |
|
|
2.1 |
% |
|
(137.7 |
)% |
Net income (loss) attributable
to noncontrolling interests |
|
0.1 |
|
|
— |
% |
|
|
(0.3 |
) |
|
— |
% |
|
(133.3 |
)% |
|
|
(0.1 |
) |
|
— |
% |
|
|
(0.5 |
) |
|
— |
% |
|
(80.0 |
)% |
Net income (loss)
attributable to Stericycle, Inc. common shareholders |
$ |
14.9 |
|
|
2.3 |
% |
|
$ |
31.8 |
|
|
4.7 |
% |
|
(53.1 |
)% |
|
$ |
(21.4 |
) |
|
(0.8 |
)% |
|
$ |
56.0 |
|
|
2.1 |
% |
|
(138.2 |
)% |
Earnings (loss) per
common share attributable to Stericycle, Inc. common
shareholders: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
$ |
0.16 |
|
|
|
|
$ |
0.35 |
|
|
|
|
(54.8 |
)% |
|
$ |
(0.23 |
) |
|
|
|
$ |
0.61 |
|
|
|
|
(138.0 |
)% |
Diluted |
$ |
0.16 |
|
|
|
|
$ |
0.35 |
|
|
|
|
(54.5 |
)% |
|
$ |
(0.23 |
) |
|
|
|
$ |
0.61 |
|
|
|
|
(137.8 |
)% |
Weighted average
number of common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
92.5 |
|
|
|
|
|
92.2 |
|
|
|
|
|
|
|
92.4 |
|
|
|
|
|
92.1 |
|
|
|
|
|
Diluted |
|
92.8 |
|
|
|
|
|
92.5 |
|
|
|
|
|
|
|
92.4 |
|
|
|
|
|
92.4 |
|
|
|
|
|
nm - percentage change not meaningful
STATISTICS - U.S. GAAP AND ADJUSTED
MEASURES(Unaudited) |
In millions, except per share data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
2023 |
|
% of Revenues |
|
2022 |
|
% of Revenues |
|
2023 |
|
% of Revenues |
|
2022 |
|
% of Revenues |
Statistics - U.S.
GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate |
|
27.1 |
% |
|
|
|
|
15.7 |
% |
|
|
|
|
745.5 |
% |
|
|
|
|
28.4 |
% |
|
|
Statistics -
Adjusted (1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted gross profit |
$ |
259.2 |
|
|
39.8 |
% |
|
$ |
254.4 |
|
|
37.9 |
% |
|
$ |
1,020.4 |
|
|
38.4 |
% |
|
$ |
1,025.6 |
|
|
37.9 |
% |
Adjusted selling, general and
administrative expenses |
$ |
174.7 |
|
|
26.8 |
% |
|
$ |
163.8 |
|
|
24.4 |
% |
|
$ |
704.9 |
|
|
26.5 |
% |
|
$ |
701.9 |
|
|
26.0 |
% |
Adjusted income from
operations |
$ |
84.5 |
|
|
13.0 |
% |
|
$ |
90.6 |
|
|
13.5 |
% |
|
$ |
315.5 |
|
|
11.9 |
% |
|
$ |
323.7 |
|
|
12.0 |
% |
Adjusted EBITDA (2) |
$ |
110.3 |
|
|
16.9 |
% |
|
$ |
117.6 |
|
|
17.5 |
% |
|
$ |
420.0 |
|
|
15.8 |
% |
|
$ |
432.2 |
|
|
16.0 |
% |
Adjusted net income
attributable to common shareholders |
$ |
49.9 |
|
|
7.7 |
% |
|
$ |
55.5 |
|
|
8.3 |
% |
|
$ |
175.1 |
|
|
6.6 |
% |
|
$ |
188.4 |
|
|
7.0 |
% |
Adjusted effective tax
rate |
|
26.4 |
% |
|
|
|
|
19.8 |
% |
|
|
|
|
27.4 |
% |
|
|
|
|
24.1 |
% |
|
|
Adjusted diluted earnings per
share |
$ |
0.54 |
|
|
|
|
$ |
0.60 |
|
|
|
|
$ |
1.89 |
|
|
|
|
$ |
2.04 |
|
|
|
Adjusted diluted shares
outstanding |
|
92.8 |
|
|
|
|
|
92.5 |
|
|
|
|
|
92.8 |
|
|
|
|
|
92.4 |
|
|
|
(1) Adjusted financial measures are Non-GAAP
measures and exclude adjusting items as described and reconciled to
comparable U.S. GAAP financial measures in the Reconciliation of
U.S. GAAP to Non-GAAP Financial Measures contained in this Press
Release.
(2) Adjusted Earnings Before Interest, Tax,
Depreciation and Amortization (Adjusted EBITDA) is Income from
operations excluding certain adjusting items, depreciation and
intangible amortization.
STERICYCLE, INC.CONDENSED CONSOLIDATED BALANCE
SHEETS(Unaudited) |
In millions, except per share data |
|
|
|
|
December 31, |
|
|
2023 |
|
|
|
2022 |
|
ASSETS |
|
|
|
Current
Assets: |
|
|
|
Cash and cash equivalents |
$ |
35.3 |
|
|
$ |
56.0 |
|
Accounts receivable, less
allowance for doubtful accounts of $44.7 in 2023 and $53.3 in
2022 |
|
553.9 |
|
|
|
414.5 |
|
Prepaid expenses |
|
31.6 |
|
|
|
33.2 |
|
Other current assets |
|
50.7 |
|
|
|
55.0 |
|
Total Current Assets |
|
671.5 |
|
|
|
558.7 |
|
Property, plant and equipment,
less accumulated depreciation of $675.4 in 2023 and $657.7 in
2022 |
|
708.3 |
|
|
|
715.7 |
|
Operating lease right-of-use
assets |
|
464.3 |
|
|
|
398.9 |
|
Goodwill |
|
2,755.6 |
|
|
|
2,784.9 |
|
Intangible assets, less
accumulated amortization of $925.8 in 2023 and $823.3 in 2022 |
|
686.5 |
|
|
|
811.1 |
|
Other assets |
|
66.4 |
|
|
|
64.8 |
|
Total
Assets |
$ |
5,352.6 |
|
|
$ |
5,334.1 |
|
LIABILITIES AND
EQUITY |
|
|
|
Current
Liabilities: |
|
|
|
Current portion of long-term
debt |
$ |
19.6 |
|
|
$ |
22.3 |
|
Bank overdraft |
|
1.0 |
|
|
|
2.9 |
|
Accounts payable |
|
212.1 |
|
|
|
213.5 |
|
Accrued liabilities |
|
259.5 |
|
|
|
244.1 |
|
Operating lease
liabilities |
|
105.4 |
|
|
|
91.2 |
|
Deferred revenues |
|
72.6 |
|
|
|
7.9 |
|
Other current liabilities |
|
47.8 |
|
|
|
40.0 |
|
Total Current Liabilities |
|
718.0 |
|
|
|
621.9 |
|
Long-term debt, net |
|
1,277.8 |
|
|
|
1,484.0 |
|
Long-term operating lease
liabilities |
|
378.9 |
|
|
|
329.0 |
|
Deferred income taxes |
|
420.5 |
|
|
|
427.0 |
|
Long-term tax payable |
|
6.4 |
|
|
|
11.8 |
|
Other liabilities |
|
28.1 |
|
|
|
35.9 |
|
Total
Liabilities |
|
2,829.7 |
|
|
|
2,909.6 |
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
EQUITY |
|
|
|
Common stock (par value $0.01
per share, 120.0 shares authorized, 92.6 and 92.2 issued and
outstanding in 2023 and 2022, respectively) |
|
0.9 |
|
|
|
0.9 |
|
Additional paid-in
capital |
|
1,316.7 |
|
|
|
1,285.4 |
|
Retained earnings |
|
1,389.4 |
|
|
|
1,410.8 |
|
Accumulated other
comprehensive loss |
|
(184.5 |
) |
|
|
(276.9 |
) |
Total Stericycle, Inc.’s Equity |
|
2,522.5 |
|
|
|
2,420.2 |
|
Noncontrolling interests |
|
0.4 |
|
|
|
4.3 |
|
Total Equity |
|
2,522.9 |
|
|
|
2,424.5 |
|
Total Liabilities and
Equity |
$ |
5,352.6 |
|
|
$ |
5,334.1 |
|
STERICYCLE, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS(Unaudited) |
In millions |
|
|
|
|
Year Ended December 31, |
|
|
2023 |
|
|
|
2022 |
|
OPERATING
ACTIVITIES: |
|
|
|
Net (loss) income |
$ |
(21.3 |
) |
|
$ |
56.5 |
|
Adjustments to reconcile net
(loss) income to net cash from operating activities: |
|
|
|
Depreciation |
|
104.5 |
|
|
|
108.5 |
|
Intangible amortization |
|
112.0 |
|
|
|
124.0 |
|
Stock-based compensation expense |
|
33.4 |
|
|
|
25.1 |
|
Deferred income taxes |
|
(2.5 |
) |
|
|
20.6 |
|
Divestiture losses (gains), net |
|
63.4 |
|
|
|
(15.6 |
) |
Asset impairments, loss on disposal of property plant and equipment
and other charges |
|
6.8 |
|
|
|
5.7 |
|
Other, net |
|
3.6 |
|
|
|
7.5 |
|
Changes in operating assets
and liabilities: |
|
|
|
Accounts receivable |
|
(146.8 |
) |
|
|
(12.9 |
) |
Prepaid expenses |
|
0.2 |
|
|
|
12.0 |
|
Accounts payable |
|
4.9 |
|
|
|
(2.6 |
) |
Accrued liabilities |
|
25.6 |
|
|
|
(92.7 |
) |
Deferred revenues |
|
64.9 |
|
|
|
(0.5 |
) |
Other assets and liabilities |
|
(5.4 |
) |
|
|
(35.4 |
) |
Net cash from
operating activities |
|
243.3 |
|
|
|
200.2 |
|
INVESTING
ACTIVITIES: |
|
|
|
Capital expenditures |
|
(131.3 |
) |
|
|
(132.2 |
) |
Proceeds from divestitures of
businesses, net |
|
84.6 |
|
|
|
46.7 |
|
Other, net |
|
2.9 |
|
|
|
0.9 |
|
Net cash from
investing activities |
|
(43.8 |
) |
|
|
(84.6 |
) |
FINANCING
ACTIVITIES: |
|
|
|
Repayments of long-term debt
and other obligations |
|
(11.8 |
) |
|
|
(12.0 |
) |
Proceeds from foreign bank
debt |
|
1.2 |
|
|
|
1.6 |
|
Repayments of foreign bank
debt |
|
(0.3 |
) |
|
|
(1.8 |
) |
Repayments of term loan |
|
(75.0 |
) |
|
|
— |
|
Proceeds from credit
facility |
|
1,068.3 |
|
|
|
1,368.8 |
|
Repayments of credit
facility |
|
(1,191.3 |
) |
|
|
(1,459.6 |
) |
(Repayments) proceeds from
bank overdrafts, net |
|
(2.1 |
) |
|
|
1.4 |
|
Payments of finance lease
obligations |
|
(2.7 |
) |
|
|
(3.1 |
) |
Payments of debt issuance
costs |
|
— |
|
|
|
(0.4 |
) |
Proceeds from issuance of
common stock, net of (payments of) taxes from withheld shares |
|
(5.2 |
) |
|
|
(5.6 |
) |
Payments to noncontrolling
interests |
|
(1.5 |
) |
|
|
(0.3 |
) |
Net cash from
financing activities |
|
(220.4 |
) |
|
|
(111.0 |
) |
Effect of exchange rate
changes on cash and cash equivalents |
|
0.2 |
|
|
|
(4.2 |
) |
Net change in cash and cash
equivalents |
|
(20.7 |
) |
|
|
0.4 |
|
Cash and cash equivalents at
beginning of year |
|
56.0 |
|
|
|
55.6 |
|
Cash and cash
equivalents at end of year |
$ |
35.3 |
|
|
$ |
56.0 |
|
|
|
|
|
SUPPLEMENTAL CASH FLOW
INFORMATION: |
|
|
|
Capital expenditures in
accounts payable |
$ |
24.0 |
|
|
$ |
30.2 |
|
Interest paid, net of
capitalized interest |
$ |
70.1 |
|
|
$ |
72.6 |
|
Income taxes paid
(refunded) |
$ |
19.5 |
|
|
$ |
(1.1 |
) |
Free cash flow (1) |
$ |
112.0 |
|
|
$ |
68.0 |
|
(1) Free cash flow is calculated as Net
cash from operating activities less Capital expenditures.
Table 1–A: REVENUES CHANGES BY SERVICE
AND SEGMENT (UNAUDITED) –THREE MONTHS ENDED
DECEMBER 31, 2023 AND 2022 |
|
Three Months Ended December 31, |
|
In millions |
|
|
|
Components of Change (%) (1) |
|
2023 |
|
2022 |
|
Change ($) |
|
Change (%) |
|
Organic Growth (2) |
|
Divestitures |
|
Foreign Exchange(3) |
Revenue by Service |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
439.9 |
|
$ |
449.3 |
|
$ |
(9.4 |
) |
|
(2.1 |
)% |
|
3.1 |
% |
|
(5.8 |
)% |
|
0.8 |
% |
Secure Information Destruction
Services |
|
212.1 |
|
|
221.1 |
|
|
(9.0 |
) |
|
(4.1 |
)% |
|
(3.6 |
)% |
|
(1.1 |
)% |
|
0.6 |
% |
Total Revenues |
$ |
652.0 |
|
$ |
670.4 |
|
$ |
(18.4 |
) |
|
(2.7 |
)% |
|
0.9 |
% |
|
(4.3 |
)% |
|
0.7 |
% |
North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
371.3 |
|
$ |
371.3 |
|
$ |
— |
|
|
— |
% |
|
2.8 |
% |
|
(2.7 |
)% |
|
— |
% |
Secure Information Destruction
Services |
|
188.8 |
|
|
194.6 |
|
|
(5.8 |
) |
|
(3.0 |
)% |
|
(3.0 |
)% |
|
— |
% |
|
— |
% |
Total North America Segment |
$ |
560.1 |
|
$ |
565.9 |
|
$ |
(5.8 |
) |
|
(1.0 |
)% |
|
0.8 |
% |
|
(1.8 |
)% |
|
— |
% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
68.6 |
|
$ |
78.0 |
|
$ |
(9.4 |
) |
|
(12.1 |
)% |
|
5.1 |
% |
|
(20.8 |
)% |
|
4.7 |
% |
Secure Information Destruction
Services |
|
23.3 |
|
|
26.5 |
|
|
(3.2 |
) |
|
(12.1 |
)% |
|
(8.4 |
)% |
|
(9.0 |
)% |
|
4.8 |
% |
Total International Segment |
$ |
91.9 |
|
$ |
104.5 |
|
$ |
(12.6 |
) |
|
(12.1 |
)% |
|
1.3 |
% |
|
(17.8 |
)% |
|
4.8 |
% |
See footnote descriptions below Table 1 – C.
Table 1–B: REVENUES CHANGES BY SERVICE AND SEGMENT
(UNAUDITED) –YEAR ENDED DECEMBER 31, 2023 AND
2022 |
|
Year Ended December 31, |
|
In millions |
|
|
|
Components of Change (%) (1) |
|
2023 |
|
2022 |
|
Change ($) |
|
Change (%) |
|
Organic Growth (2) |
|
Divestitures |
|
Foreign Exchange(3) |
Revenue by Service |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance Services |
$ |
1,775.8 |
|
$ |
1,798.2 |
|
$ |
(22.4 |
) |
|
(1.2 |
)% |
|
4.2 |
% |
|
(5.3 |
)% |
|
0.1 |
% |
Secure Information Destruction
Services |
|
883.5 |
|
|
906.5 |
|
|
(23.0 |
) |
|
(2.5 |
)% |
|
(1.7 |
)% |
|
(0.6 |
)% |
|
(0.2 |
)% |
Total Revenues |
$ |
2,659.3 |
|
$ |
2,704.7 |
|
$ |
(45.4 |
) |
|
(1.7 |
)% |
|
2.2 |
% |
|
(3.8 |
)% |
|
— |
% |
North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
1,474.4 |
|
$ |
1,468.8 |
|
$ |
5.6 |
|
|
0.4 |
% |
|
4.5 |
% |
|
(3.8 |
)% |
|
(0.1 |
)% |
Secure Information Destruction
Services |
|
781.4 |
|
|
794.3 |
|
|
(12.9 |
) |
|
(1.6 |
)% |
|
(1.3 |
)% |
|
— |
% |
|
(0.3 |
)% |
Total North America Segment |
$ |
2,255.8 |
|
$ |
2,263.1 |
|
$ |
(7.3 |
) |
|
(0.3 |
)% |
|
2.4 |
% |
|
(2.4 |
)% |
|
(0.2 |
)% |
International |
|
|
|
|
|
|
|
|
|
|
|
|
|
Regulated Waste and Compliance
Services |
$ |
301.4 |
|
$ |
329.4 |
|
$ |
(28.0 |
) |
|
(8.5 |
)% |
|
3.1 |
% |
|
(12.3 |
)% |
|
1.1 |
% |
Secure Information Destruction
Services |
|
102.1 |
|
|
112.2 |
|
|
(10.1 |
) |
|
(9.0 |
)% |
|
(4.9 |
)% |
|
(5.1 |
)% |
|
0.7 |
% |
Total International Segment |
$ |
403.5 |
|
$ |
441.6 |
|
$ |
(38.1 |
) |
|
(8.6 |
)% |
|
0.9 |
% |
|
(10.5 |
)% |
|
1.0 |
% |
See footnote descriptions below Table 1 – C.
Table 1–C: COMPONENTS OF REVENUES CHANGE IN
DOLLARS (UNAUDITED) |
(In millions) |
|
Three Months Ended December 31, 2023 |
|
Year Ended December 31, 2023 |
Organic Growth (2) |
$ |
5.2 |
|
|
$ |
56.3 |
|
Divestitures |
|
(28.6 |
) |
|
|
(101.6 |
) |
Foreign Exchange (3) |
|
5.0 |
|
|
|
(0.1 |
) |
Total Change |
$ |
(18.4 |
) |
|
$ |
(45.4 |
) |
(1) Components of Change (%) in summation may
not crossfoot to the total Change (%) due to rounding.
(2) Organic growth is the change in revenues
which includes SOP (sorted office paper) pricing and volume and
excludes the impact of an acquisition, divestitures, and foreign
exchange.
(3) The comparisons at constant
currency rates (foreign exchange) reflect comparative local
currency balances at prior period’s foreign exchange rates.
Stericycle calculated these percentages by taking current period
reported Revenues less the respective prior period reported
Revenues, divided by the prior period reported Revenues, all at the
respective prior period’s foreign exchange rates. This measure
provides information on the change in Revenues assuming that
foreign currency exchange rates have not changed between the prior
and the current period. Management believes the use of this measure
aids in the understanding of changes in Revenues without the impact
of foreign currency.
RECONCILIATION OF U.S. GAAP TO NON-GAAP FINANCIAL MEASURES
(UNAUDITED) Table 2-A: THREE MONTHS ENDED DECEMBER 31, 2023
AND 2022 |
(In millions, except per share data) |
|
Three Months Ended December 31, 2023 |
|
Gross Profit |
|
Selling,General and
AdministrativeExpenses |
|
Income from Operations |
|
Net IncomeAttributable to
CommonShareholders (c) |
|
Diluted EarningsPer Share |
U.S. GAAP Financial Measures |
$ |
256.8 |
|
$ |
219.7 |
|
|
$ |
37.1 |
|
$ |
14.9 |
|
|
$ |
0.16 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(6.3 |
) |
|
|
6.3 |
|
|
4.9 |
|
|
|
0.05 |
|
Intangible Amortization 2 |
|
— |
|
|
(27.8 |
) |
|
|
27.8 |
|
|
21.5 |
|
|
|
0.23 |
|
Operational Optimization 3 |
|
2.4 |
|
|
(1.7 |
) |
|
|
4.1 |
|
|
3.7 |
|
|
|
0.04 |
|
Portfolio Optimization 4 |
|
— |
|
|
(0.8 |
) |
|
|
0.8 |
|
|
0.6 |
|
|
|
0.01 |
|
Litigation, Settlements and Regulatory Compliance 5 |
|
— |
|
|
(8.4 |
) |
|
|
8.4 |
|
|
6.3 |
|
|
|
0.07 |
|
Asset Impairments 6 |
|
— |
|
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
Other Tax Matters 7 |
|
— |
|
|
— |
|
|
|
— |
|
|
(2.0 |
) |
|
|
(0.02 |
) |
Total Adjustments |
|
2.4 |
|
|
(45.0 |
) |
|
|
47.4 |
|
|
35.0 |
|
|
|
0.38 |
|
Adjusted Financial
Measures (a) |
$ |
259.2 |
|
$ |
174.7 |
|
|
$ |
84.5 |
|
$ |
49.9 |
|
|
$ |
0.54 |
|
Depreciation |
|
|
|
|
|
25.8 |
|
|
|
|
Adjusted
EBITDA (b) |
|
|
|
|
$ |
110.3 |
|
|
|
|
(In millions, except per share data) |
|
Three Months Ended December 31, 2022 |
|
Gross Profit |
|
Selling,General and
AdministrativeExpenses |
|
Income from Operations |
|
Net IncomeAttributable to
CommonShareholders (c) |
|
Diluted EarningsPer Share |
U.S. GAAP Financial Measures |
$ |
254.4 |
|
$ |
210.9 |
|
|
$ |
59.1 |
|
|
$ |
31.8 |
|
|
$ |
0.35 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(6.1 |
) |
|
|
6.1 |
|
|
|
4.7 |
|
|
|
0.05 |
|
Intangible Amortization 2 |
|
— |
|
|
(29.3 |
) |
|
|
29.3 |
|
|
|
22.7 |
|
|
|
0.25 |
|
Operational Optimization 3 |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Portfolio Optimization 4 |
|
— |
|
|
(4.2 |
) |
|
|
(11.4 |
) |
|
|
(9.4 |
) |
|
|
(0.10 |
) |
Litigation, Settlements and Regulatory Compliance 5 |
|
— |
|
|
(4.0 |
) |
|
|
4.0 |
|
|
|
3.1 |
|
|
|
0.03 |
|
Asset Impairments 6 |
|
— |
|
|
(3.5 |
) |
|
|
3.5 |
|
|
|
2.6 |
|
|
|
0.02 |
|
Other Tax Matters 7 |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total Adjustments |
|
— |
|
|
(47.1 |
) |
|
|
31.5 |
|
|
|
23.7 |
|
|
|
0.25 |
|
Adjusted Financial
Measures (a) |
$ |
254.4 |
|
$ |
163.8 |
|
|
$ |
90.6 |
|
|
$ |
55.5 |
|
|
$ |
0.60 |
|
Depreciation |
|
|
|
|
|
27.0 |
|
|
|
|
|
Adjusted
EBITDA (b) |
|
|
|
|
$ |
117.6 |
|
|
|
|
|
(In millions, except per share data) |
|
Fourth Quarter 2023 Change Compared to Fourth Quarter
2022 |
|
Gross Profit |
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net Income Attributable to
CommonShareholders (c) |
|
Diluted Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
2.4 |
|
$ |
8.8 |
|
|
$ |
(22.0 |
) |
|
$ |
(16.9 |
) |
|
$ |
(0.19 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization |
|
— |
|
|
(0.2 |
) |
|
|
0.2 |
|
|
|
0.2 |
|
|
|
— |
|
Intangible Amortization |
|
— |
|
|
1.5 |
|
|
|
(1.5 |
) |
|
|
(1.2 |
) |
|
|
(0.02 |
) |
Operational Optimization |
|
2.4 |
|
|
(1.7 |
) |
|
|
4.1 |
|
|
|
3.7 |
|
|
|
0.04 |
|
Portfolio Optimization |
|
— |
|
|
3.4 |
|
|
|
12.2 |
|
|
|
10.0 |
|
|
|
0.1 |
|
Litigation, Settlements and Regulatory Compliance |
|
— |
|
|
(4.4 |
) |
|
|
4.4 |
|
|
|
3.2 |
|
|
|
0.04 |
|
Asset Impairments |
|
— |
|
|
3.5 |
|
|
|
(3.5 |
) |
|
|
(2.6 |
) |
|
|
(0.02 |
) |
Other Tax Matter |
|
— |
|
|
— |
|
|
|
— |
|
|
|
(2.0 |
) |
|
|
(0.02 |
) |
Total Adjustments |
|
2.4 |
|
|
2.1 |
|
|
|
15.9 |
|
|
|
11.3 |
|
|
|
0.13 |
|
Adjusted Financial
Measures |
$ |
4.8 |
|
$ |
10.9 |
|
|
$ |
(6.1 |
) |
|
$ |
(5.6 |
) |
|
$ |
(0.06 |
) |
Depreciation |
|
|
|
|
|
(1.2 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
$ |
(7.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides adjustments to Income from
Operations categorized as follows:
(In
millions) |
|
Three Months Ended December 31, |
|
2023 |
|
2022 |
Non-Cash Related 8 |
$ |
28.4 |
|
$ |
17.3 |
Cash Related |
|
19.0 |
|
|
14.2 |
Total |
$ |
47.4 |
|
$ |
31.5 |
|
|
|
|
|
|
U.S. GAAP results for the three months ended
December 31, 2023 and 2022 include:
- ERP and System
Modernization: In 2023 and 2022, Selling, General, and
Administrative expenses (“SG&A”) includes consulting and
professional fees related to our ERP and system modernization.
- Intangible
Amortization: Intangible amortization expense from
acquisitions.
- Operational Optimization: 2023
includes $2.4 million of operational optimization in Cost of
Revenues (“COR”) and $1.7 million of operational optimization in
SG&A primarily related to severance associated with headcount
reduction, split between North America and International segments,
and closure of an International facility.
- Portfolio Optimization:
Divestitures (Gains) Losses, net in 2022 includes a $15.6 million
gain (inclusive of $1.4 million of deal costs) related to the
divestiture of our Communications Solutions business. In 2023 and
2022, SG&A includes consulting and professional fees associated
with our Portfolio Optimization efforts of $0.8 million and
$1.5 million, respectively. In 2022, SG&A also includes an
acquisition related charge of $2.7 million.
- Litigation, Settlements, and
Regulatory Compliance: In 2023 and 2022, SG&A includes
$8.4 million (which includes FCPA monitor related fees of $2.9
million) and $4.0 million, respectively, of primarily consulting
and professional fees and estimated contingent liability provisions
related to certain litigation, settlement and regulatory compliance
matters.
- Asset Impairments: In 2022,
SG&A includes an impairment of $3.5 million associated with
exiting a North America office facility.
- Other Tax Matter: In 2023, we
recognized a $2.0 million tax benefit associated with the
conclusion of an examination of pre-acquisition tax years of an
acquired business.
- Non-Cash Related Adjustments: In
2023 and 2022, non-cash related adjustments included intangible
amortization, portfolio optimization, operational 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 (Loss) Attributable to Common Shareholders column,
adjustments are shown net of tax in aggregate of $12.4 million and
$7.8 million for the three months ended December 31,
2023 and 2022, respectively, based on applying the statutory tax
rate for the jurisdictions in which the adjustment occurred or, by
adjusting the tax effect to consider the impact of applying an
annual effective tax rate on an interim basis. For purposes of
reconciling adjusted diluted earnings per share with respect to
taxes period-over-period, the company utilizes a “rate approach” to
highlight the impact of the adjusted tax rate. It is computed by
multiplying the prior period adjusted rate by the current period
adjusted income before taxes to determine the expected tax expense.
Such expected tax expense is then compared to actual tax expense.
Expected tax in excess of actual tax variance is favorable; actual
tax in excess of expected tax variance is unfavorable. The variance
divided by diluted shares outstanding at the end of the period
yields the impact on earnings per share. Management believes the
use of this measure best aids in explaining the impact of a
changing tax rate.
Table 2-B: YEAR ENDED DECEMBER 31, 2023 AND
2022 |
(In
millions, except per share data) |
|
Year Ended December 31, 2023 |
|
Gross Profit |
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net (Loss) IncomeAttributable to
CommonShareholders (c) |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
1,014.6 |
|
$ |
873.9 |
|
|
$ |
77.3 |
|
$ |
(21.4 |
) |
|
$ |
(0.23 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(19.2 |
) |
|
|
19.2 |
|
|
14.9 |
|
|
|
0.16 |
|
Intangible Amortization 2 |
|
— |
|
|
(112.0 |
) |
|
|
112.0 |
|
|
86.8 |
|
|
|
0.94 |
|
Operational Optimization 3 |
|
2.4 |
|
|
(1.7 |
) |
|
|
4.1 |
|
|
3.7 |
|
|
|
0.04 |
|
Portfolio Optimization 4 |
|
— |
|
|
(2.2 |
) |
|
|
65.6 |
|
|
64.5 |
|
|
|
0.69 |
|
Litigation, Settlements and Regulatory Compliance 5 |
|
— |
|
|
(30.8 |
) |
|
|
30.8 |
|
|
22.1 |
|
|
|
0.24 |
|
Asset Impairments 6 |
|
3.4 |
|
|
(3.1 |
) |
|
|
6.5 |
|
|
6.5 |
|
|
|
0.07 |
|
Other Tax Matter 7 |
|
— |
|
|
— |
|
|
|
— |
|
|
(2.0 |
) |
|
|
(0.02 |
) |
Total Adjustments |
|
5.8 |
|
|
(169.0 |
) |
|
|
238.2 |
|
|
196.5 |
|
|
|
2.12 |
|
Adjusted Financial
Measures (a) |
$ |
1,020.4 |
|
$ |
704.9 |
|
|
$ |
315.5 |
|
$ |
175.1 |
|
|
$ |
1.89 |
|
Depreciation |
|
|
|
|
|
104.5 |
|
|
|
|
Adjusted
EBITDA (c) |
|
|
|
|
$ |
420.0 |
|
|
|
|
(In
millions, except per share data) |
|
Year Ended December 31, 2022 |
|
Gross Profit |
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net IncomeAttributable to
CommonShareholders (c) |
|
Diluted EarningsPer Share |
U.S. GAAP Financial Measures |
$ |
1,025.6 |
|
$ |
887.5 |
|
|
$ |
153.7 |
|
|
$ |
56.0 |
|
|
$ |
0.61 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization 1 |
|
— |
|
|
(19.2 |
) |
|
|
19.2 |
|
|
|
14.5 |
|
|
|
0.16 |
|
Intangible Amortization 2 |
|
— |
|
|
(124.0 |
) |
|
|
124.0 |
|
|
|
96.1 |
|
|
|
1.04 |
|
Operational Optimization 3 |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Portfolio Optimization 4 |
|
— |
|
|
(6.9 |
) |
|
|
(8.7 |
) |
|
|
(7.4 |
) |
|
|
(0.08 |
) |
Litigation, Settlements and Regulatory Compliance 5 |
|
— |
|
|
(30.0 |
) |
|
|
30.0 |
|
|
|
25.1 |
|
|
|
0.27 |
|
Asset Impairments 6 |
|
— |
|
|
(5.5 |
) |
|
|
5.5 |
|
|
|
4.1 |
|
|
|
0.04 |
|
Other Tax Matter 7 |
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total Adjustments |
|
— |
|
|
(185.6 |
) |
|
|
170.0 |
|
|
|
132.4 |
|
|
|
1.43 |
|
Adjusted Financial
Measures (a) |
$ |
1,025.6 |
|
$ |
701.9 |
|
|
$ |
323.7 |
|
|
$ |
188.4 |
|
|
$ |
2.04 |
|
Depreciation |
|
|
|
|
|
108.5 |
|
|
|
|
|
Adjusted
EBITDA (c) |
|
|
|
|
$ |
432.2 |
|
|
|
|
|
(In millions, except per share data) |
|
Year Ended 2023 Change Compared to Year Ended
2022 |
|
Gross Profit |
|
Selling,General and Administrative
Expenses |
|
Income from Operations |
|
Net (Loss) Earnings Attributable to Common
Shareholders (d) |
|
Diluted (Loss) Earnings Per Share |
U.S. GAAP Financial Measures |
$ |
(11.0 |
) |
|
$ |
(13.6 |
) |
|
$ |
(76.4 |
) |
|
$ |
(77.4 |
) |
|
$ |
(0.84 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
ERP and System Modernization |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
Intangible Amortization |
|
— |
|
|
|
12.0 |
|
|
|
(12.0 |
) |
|
|
(9.3 |
) |
|
|
(0.10 |
) |
Operational Optimization |
|
2.4 |
|
|
|
(1.7 |
) |
|
|
4.1 |
|
|
|
3.7 |
|
|
|
0.04 |
|
Portfolio Optimization |
|
— |
|
|
|
4.7 |
|
|
|
74.3 |
|
|
|
71.9 |
|
|
|
0.77 |
|
Litigation, Settlements and Regulatory Compliance |
|
— |
|
|
|
(0.8 |
) |
|
|
0.8 |
|
|
|
(3.0 |
) |
|
|
(0.03 |
) |
Asset Impairments |
|
3.4 |
|
|
|
2.4 |
|
|
|
1.0 |
|
|
|
2.4 |
|
|
|
0.03 |
|
Other Tax Matter |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2.0 |
) |
|
|
(0.02 |
) |
Total Adjustments |
|
5.8 |
|
|
|
16.6 |
|
|
|
68.2 |
|
|
|
64.1 |
|
|
|
0.69 |
|
Adjusted Financial
Measures |
$ |
(5.2 |
) |
|
$ |
3.0 |
|
|
$ |
(8.2 |
) |
|
$ |
(13.3 |
) |
|
$ |
(0.15 |
) |
Depreciation |
|
|
|
|
|
(4.0 |
) |
|
|
|
|
Adjusted
EBITDA |
|
|
|
|
$ |
(12.2 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The following table provides adjustments to Income from
Operations categorized as follows:
(In millions) |
|
Year Ended December 31, |
|
2023 |
|
2022 |
Non-Cash Related 8 |
$ |
180.4 |
|
$ |
114.0 |
Cash Related |
|
57.8 |
|
|
56.0 |
Total |
$ |
238.2 |
|
$ |
170.0 |
|
|
|
|
|
|
U.S. GAAP results for the year ended December 31, 2023 and
2022 include:
- ERP and System
Modernization: In 2023 and 2022, SG&A includes consulting
and professional fees related to our ERP and system
modernization.
- Intangible
Amortization: Intangible amortization expense from
acquisitions.
- Operational
Optimization: 2023 includes $2.4 million of operational
optimization in COR and $1.7 million of operational
optimization in SG&A primarily related to severance associated
with headcount reduction, split between North America and
International segments, and closure of an International
facility.
- Portfolio
Optimization: In 2023 Divestitures losses, net includes aggregate
net losses of $63.4 million (inclusive of $2.2 million
related to deal costs) related to International divestitures of
Romania, UAE joint-venture, Netherlands, Republic of Korea,
Australia, Singapore, Brazil, and a container manufacturing
operation. 2022 includes a $15.6 million gain (inclusive of $1.4
million related to deal costs) related to the divestiture of the
Communication Solutions business. In 2023 and 2022, SG&A
includes consulting and professional fees associated with our
Portfolio Optimization efforts of $2.2 million and $4.2 million,
respectively. Additionally, in 2022, SG&A includes an
acquisition related charge of $2.7 million.
- Litigation,
Settlements, and Regulatory Compliance: In 2023 and 2022,
SG&A includes $26.1 million (which includes FCPA monitor
related fees of $9.9 million) and $16.9 million,
respectively, of primarily consulting and professional fees and
estimated contingent liability provisions net of releases related
to certain litigation, settlement and regulatory compliance
matters. Additionally in 2023, SG&A includes a value-added tax
reclaim credit of $6.0 million, a settlement charge associated
with a vendor dispute of $6.0 million, other settlement
charges of $5.6 million, and a FCPA settlement release of
$0.9 million. Additionally in 2022, SG&A includes FCPA
settlement expense of $9.6 million and a settlement charge
related to a multi-year indirect tax related IRS examination of
$3.5 million.
- Asset
Impairments: In 2023, COR includes an impairment of $3.4
million in International associated with certain long-lived assets,
primarily property, plant and equipment, in Romania, and SG&A
includes an impairment of $3.1 million associated with certain
intangible assets in Spain. In 2022, SG&A includes an
impairment of $5.5 million associated with exiting certain North
American office facilities.
- Other Tax
Matter: In 2023, we recognized a $2.0 million tax benefit
associated with the conclusion of an examination of pre-acquisition
tax years of an acquired business.
- Non-Cash Related
Adjustments: In 2023 and 2022, non-cash related adjustments
included intangible amortization, portfolio optimization,
operational 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 (Loss) Attributable to Common Shareholders column,
adjustments are shown net of tax in aggregate of $41.7 million
and $37.6 million for the years ended December 31,
2023 and 2022, respectively, based on applying the statutory tax
rate for the jurisdictions in which the adjustment occurred or, by
adjusting the tax effect to consider the impact of applying an
annual effective tax rate on an interim basis. For purposes of
reconciling adjusted diluted earnings per share with respect to
taxes period-over-period, the company utilizes a “rate approach” to
highlight the impact of the adjusted tax rate. It is computed by
multiplying the prior period adjusted rate by the current period
adjusted income before taxes to determine the expected tax expense.
Such expected tax expense is then compared to actual tax expense.
Expected tax in excess of actual tax variance is favorable; actual
tax in excess of expected tax variance is unfavorable. The variance
divided by diluted shares outstanding at the end of the period
yields the impact on earnings per share. Management believes the
use of this measure best aids in explaining the impact of a
changing tax rate.
FOR FURTHER INFORMATION CONTACT:Stericycle
Investor Relations 847-607-2012Stericycle Media Relations
847-964-2288
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