http://www.morningstar.com/earnings/51357963-stericycle-inc-srcl-q1-2013.aspx

Stericycle Inc SRCL
Q1 2013 Earnings Call Transcript

Transcript Call Date 04/24/2013

Operator: Good afternoon. My name is Jay, and I will be your conference operator today. At this time, I would like to welcome everyone to the Stericycle First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you.

Ms. (Laura Murphy), Vice President of Finance, please go ahead

Laura Murphy - VP, Corporate Finance: Welcome to Stericycle's quarterly conference call. Joining me on today's call will be Frank ten Brink, CFO; Rich Kogler, COO; and Charlie Alutto, CEO. I will now read the Safe Harbor statement.

Statements made by Stericycle in this conference call that are not strictly historical are forward-looking. Forward-looking statements involve known and unknown risks, and should be viewed with caution. Factors described in the Company's Form 10-K, 10-Qs as well as its other filings with the SEC could affect the Company's actual results and could cause the Company's actual results to differ materially from expected results. The Company makes no commitment to disclose any revisions to forward-looking statements or any facts, events, or circumstances after this date that may bear upon forward-looking statements.

I will now turn it over to Frank.

Frank J.M. ten Brink - EVP, CFO and Chief Administrative Officer: Thank you, Laura. The results for the first quarter are as follows. Revenues were $513.8 million, up 11.7% from $460.1 million in Q1 of '12 and internal growth excluding returns and recall revenues was up 8.1%. Domestic revenues were $363.6 million of which $341.1 million was domestic regulated waste and compliance services and $22.5 million with recalls and returns.

Domestic internal growth, excluding recalls and returns revenues, was up over 9% consisting of SQ up 10% and LQ up 8%. International revenues were $150.2 million and internal growth adjusted for unfavorable exchange impact of $4.2 million was up 5.4%. Acquisitions contributed $37.1 million to the growth in the quarter. Gross profit was $232.1 million or 45.2% of revenues.

SG&A expense including amortization was $97.7 million or 19% of revenues. Net interest expense was $13.4 million. Net income attributable to Stericycle was $74.6 million or $0.85 per share on an as reported basis and $0.88 adjusted for acquisition and other nonrecurring expenses.

Now to balance sheet; our covenant debt to EBITDA ratio was 2.1 at the end of the quarter. The unused portion of the revolver debt at the end of the quarter was approximately $675 million. In the quarter, we repurchased 79,602 shares of common stock in the open market in an amount of $7.6 million and we have authorization to purchase an additional 3.7 million shares. Our capital spend was $16.5 million and our DSO was 61 days. Q1 year-to-date cash provided from operations was $98.2 million.

I will now turn it over to Rich.

Richard T. Kogler - EVP and COO: Thanks Frank. Worldwide, we continue to use our strong free cash flow to drive our growth through acquisitions. In the quarter, we closed 12 transactions, 11 international and one domestic. The international acquisitions consisted of one in Spain, two in Japan, four in the U.K., one in Canada, one in Romania, one in Portugal and one in Chile. Our worldwide acquisition pool remains robust with well over $100 million in annualized revenues in multiple geographies and lines of business. At the end of the quarter, we had approximately 544,000 accounts of which approximately 527,000 were small, the remainder were large.

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