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Q1 2008Q1 2008
Forward - Looking StatementsForward - Looking Statements
This presentation may contain forward-looking statements that involvea number of risks and uncertainties and our actual results could differsignificantly from expected results.
Potential risks and uncertainties include difficulties in completing theintegration of acquired businesses, changes in governmental regulation of medical waste collection and treatment, and increases in transportation andother operating costs, as well as various other factors described in our public filings with the U.S. Securities and Exchange Commission.
Accordingly, past financial performance should not be considered a reliable indicator of future performance, and historical trends should not be used to anticipate future trends or results.
For a definition of terms used throughout this presentation pleasesee page 21 on our website presentation.
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Competitive StrengthsCompetitive Strengths
Broad range of high quality services• Regulated Medical Waste Services
• Steri-SafeSM OSHA Safety & Compliance Program
• Bio Systems Integrated Sharps Safety Solution
• Regulated Returns Management Services
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Protecting People, Reducing RiskProtecting People, Reducing Risk
We work with our customers to Protect People and Reduce Risk …
… by combining integrated solutions withsuperior customer service to promote safety,compliance and risk management for ourcustomers
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Investment HighlightsInvestment Highlights
Attractive niche services
Emerging global market
Low cost provider
Diverse customer base
Strong financial performance
Demonstrated growth strategy
Proven ability to integrate acquisitions and improvemargins
Proven, experienced management team
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Market LeadershipMarket Leadership
Total Estimated Global Market Size: $10.0 billion*
Note: * Frost & Sullivan Industry Study and Management Estimates (including ancillary services & products)
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Regulated Medical Waste ServicesRegulated Medical Waste Services
Compliant management of potentially infectious material toreduce cross contamination risk and spread of infection
Necessary Regulated ServiceLarge Diverse Customer BaseInt’l Network Premier AssetsLow Cost OperatorAttractive MarginsInternational Expansion
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Loyal Customer BaseLoyal Customer Base
Highly regulated industry(e.g. U.S. Market: EPA, DEA, FDA, OSHA, DOT, State/Local)
Insulated from economic cycles
397,200 accounts (granularity). Revenue retention exceeds 95%Hospitals, Blood banks, Pharmaceutical manufacturers, Medical andDental offices, Offsite and alternate care providers,Biomedical/Biotech companies, Laboratories/Pharmacies, CorporateAmerica, Veterinary offices, Pharmacies
Largest customer less than 2% of revenues
Predictable revenues: over 95% of revenues are under longterm contracts with automatic renewal
Contracts generally include pass through price increaseprovisions
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Network of Premier AssetsNetwork of Premier Assets
Emerging Global Presence North America Network
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Growth StrategyGrowth Strategy
Focus on small account customers
Leverage Steri-SafeSM OSHA Safety & ComplianceProgram
Expand Bio Systems Integrated Sharps SafetySolution
Grow Regulated Return Management Services
Target “tuck-in” strategic acquisitions
International growth and geographic expansion
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Focus on Small CustomersFocus on Small Customers
Small account customers generate gross margins higher than large account customers
Small account customers are more likely to outsource andeasier to up-sell
Q1 2008Q4 1996 % Revenue Mix*
44.6% Gross Margin21.0% Gross Margin
* Note: Domestic SQ and LQ Revenue Mix 10
Steri-SafeSM OSHA Safety & Compliance Program
Steri-SafeSM OSHA Safety & Compliance Program
Promotes a safe, compliantworkplace for healthcare employees
Subscription Safety Tools
Attractive Margins
Significant Penetration andUp-sell Opportunities
International Expansion
Compliance Manual SteriSafe.com Consulting Services Safety Products& Supplies11
Bio Systems Integrated Sharps Safety SolutionBio Systems Integrated Sharps Safety Solution
Promotes a safer workplace by reducing the infection risk from inadvertent needle sticks
Turnkey Integrated Sharps Safety Solution
Synergy with ExistingTransportation & PlantInfrastructure
Use of Product in Hospital Manage & Collect at Point of Use12
Returns Management ServicesReturns Management Services
Remove expired or unsafe products from supply chain to reduce risk
Data-driven notification,recall and returns solutions for pharmaceuticals, medicaldevices & durable goods
Serving manufacturers,hospitals & retail pharmacies,distributors
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AcquisitionsAcquisitions
Proven integrator having successfully completed 137acquisitions since 1993
Current North American acquisition pool represents morethan $50 million in revenues
Deal structures are predominantly asset purchases
Purchase price is based on multiples of EBITDA and dependon the quality of the asset base purchased
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Strong Financial PerformanceRevenues
Strong Financial PerformanceRevenues
Stericycle continues to exhibit steady top-line revenue growth
Fiscal Year Ended December 31
2000- 2007 CAGR: 16.3%($ in millions)
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Growth: 20.7%
Strong Financial PerformanceIncome from Operations (EBIT*)Strong Financial PerformanceIncome from Operations (EBIT*)
Stericycle has effectively leveraged its infrastructure to improve margins
Fiscal Year Ended December 31
2000- 2007 CAGR: 16.9%
($ in millions)
* 2000-2001 Adjusted for Proforma Adoption of FAS 142. Includes acquisition related costs, write-off of fixed assets and other non-GAAP adjustments.* 2006 and onward includes FAS123R expensing of stock compensation
Margin: 9.6% 9.3% 23.2% 23.6% 25.1% 27.9% 28.2% 27.3% 25.6% 24.1% 26.3% 23.3%
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* Q108 includes $5.4M settlement charge
Strong Financial PerformanceEPS**
Strong Financial PerformanceEPS**
Stericycle has met or exceeded EPS estimates since 1996 IPO
Fiscal Year Ended December 31
2000 - 2007 CAGR GAAP EPS: 33%
**Note: Adjusted for 2-for-1 stock split in May 2002 and again in May 2007. Adjustments to GAAP EPS: Acquisition related costs (1999-2000); Bond buyback premium & bank loan financing fees (2001-2005); Tax adjustment to fully taxed (1999); Non cash fixed assets write-offs (2001- 2002 & 2004-2007); FAS142 (2000-2001); Licensing legal settlement refund (2005); Non-cash write-down of investments (2005 & 2007); 3CI legal settlement & insurance proceeds (2005-2007); South African joint venture note receivable write-down (2005); Australian arbitration settlement & related costs (2007-2008); Gain on divestiture of assets (2007); Impairment of intangible assets (2007). FAS 123R expensing of stock compensation is NOT part of the adjustments.
CapitalizationCapitalization
($ in millions) Dec. 31, 2000
Dec. 31, 2007
March 31, 2008
Current Portion of Long Term Debt $5.1 $22.0 $22.4
Revolver (Used/Total Available) $5.0/$50.0 $465.4/$850.0 $495.1/$850.0
Term Loan A 67.5 0.0 0.0
Term Loan B 140.5 0.0 0.0
Other Debt 7.1 148.4 154.8
Senior Subordinated Notes 125.0 0.0 0.0
Total Long Term Debt, Less Current Portion $345.1 $613.8 $649.9
Convertible PIK Preferred Stock 71.4 0.0 0.0
Common Equity 134.7 714.1 671.1
Total Capitalization $556.3 $1,349.9 $1,343.4
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EPS ReconciliationEPS Reconciliation
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1999 2000 2001 2002 2003 2004 2005 2006 2007 Q108
EPS Diluted (as reported in 10K or 10Q) $ 0.23 $ 0.18 $ 0.17 $ 0.51 $ 0.71 $ 0.85 $ 0.74 $ 1.16 $ 1.32 $ 0.35 Acquisition related costs 0.080 0.035
Debt extinguishments/bank fees 0.083 0.018 0.017 0.030 0.003
Tax adjustments for full tax rate (0.155)
Non-cash fixed asset write-offs 0.025 0.020 0.008 0.006 0.002 0.009 Pro forma FAS 142 impact 0.085 0.085 Licensing legal settlement 0.013 Investment write-down 0.018 0.020 3CI legal settlement 0.258 (0.007) (0.023)Arbitration Settlement and related costs 0.096 0.037 STG & Scherer Divestiture (0.014)
Impairment of intangible assets 0.016
EPS after presentation adjustments $ 0.15 $ 0.30 $ 0.37 $ 0.54 $ 0.73 $ 0.88 $ 1.04 $ 1.16 $ 1.42 0.39
Definition of TermsDefinition of Terms
This presentation uses certain abbreviations:CAGR means compound annual growth rate (see, for example,page 15)EBIT means earnings before interest expense and income taxes(see page 16)EPS means earnings per share diluted (see page 17)FAS 142 means Financial Accounting Standard 142, Goodwill andOther Intangible Assets, of the Financial Accounting StandardsBoard (effective for 2003 and later years) (see page 17)FAS 123R means Financial Accounting Standard 123R, accounting forshare based payments (see page 17)GAAP means United States generally accepted accounting principles(see page 17)SQG means small quantity generators (sometimes called “small accountcustomers”) (see page 9)
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