scl-20220630

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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[Mark One]

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 1-37556

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Delaware			36-3640402
(State or other jurisdiction of incorporation or organization)			(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)

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: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒

Smaller reporting company ☐

Accelerated filer ☐

Emerging growth company ☐

Non-accelerated filer ☐

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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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

On August 2, 2022, there were 92,180,327 shares of the Registrant’s Common Stock outstanding.

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Table of Contents


		Page No.
PART I. FINANCIAL INFORMATION

	Item 1. Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income (Loss)	5

	Condensed Consolidated Statements of Comprehensive (Loss) I ncome	6

	Condensed Consolidated Balance Sheets	7

	Condensed Consolidated Statements of Cash Flows	8

	Condensed Consolidated Statements of Changes in Equity	9

	Notes to Condensed Consolidated Financial Statements	11

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

	Item 3. Quantitative and Qualitative Disclosure About Market Risk	30

	Item 4. Controls and Procedures	30

PART II. OTHER INFORMATION

	Item 1. Legal Proceedings	31

	Item 1A. Risk Factors	31

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31



	Item 6. Exhibits	32

	SIGNATURES	33


2022 Q2 10-Q Report			Stericycle, Inc. ●			3

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Glossary of Defined Terms

Unless the context requires otherwise, the “Company”, “Stericycle”, “we”, “us” or “our” refers to Stericycle, Inc. on a consolidated basis. The Company also uses several other terms in this Quarterly Report on Form 10-Q, most of which are explained or defined below:


Abbreviation			Description
2021 Form 10-K			Annual report on Form 10-K for the year ended December 31, 2021
Adjusted Income from Operations			Income from Operations adjusted for certain items discussed in Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
AICPA			American Institute of Certified Public Accountants
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
CDC			U.S. Centers for Disease Control and Prevention
Credit Agreement Defined Debt Leverage Ratio			As of any date of determination, the ratio of (a) (i) Consolidated Funded Indebtedness as of such date minus (ii) Unrestricted Cash as of such date to (b) Consolidated EBITDA for the period of four fiscal quarters most recently ended on or prior to such date
COR			Cost of Revenues
COVID-19			The global novel coronavirus disease 2019 outbreak, which the World Health Organization declared as to be a pandemic
Credit Agreement			Credit Agreement dated as of September 30, 2022 and First Amendment dated April 26, 2022, among the Company and certain subsidiaries as borrowers. Bank of America, N.A., as administrative agent, swing line lender, a lender and a letter of credit issuer and the other lenders party thereto, as amended
Credit Facility			The Company's $1.2 billion credit facility due in September of 2026 granted under the terms of the Credit Agreement
DEA			U.S. Drug Enforcement Administration. The DEA is a division of the U.S. Department of Justice. It is the federal agency which regulates the manufacture, dispensing, storage, and shipment of controlled substances including medications with human abuse potential
DOJ			U.S. Department of Justice
Domestic Environmental Solutions			Hazardous Waste Solutions and Manufacturing and Industrial Services
DOT			U.S. Department of Transportation
DSO			Days Sales Outstanding, defined as the average number of days that it takes a company to collect payment after revenue has been recorded, computed as the trailing twelve months of Revenues for the period ended DSO, divided by the Accounts Receivable balance at the end of the period
DTSC			U.S. Department of Toxic Substances Control
EBITDA			Earnings Before Interest, Taxes, Depreciation & Amortization. Another common financial term utilized by Stericycle to analyze the core profitability of the business before interest, tax, depreciation and amortization
EPA			U.S. Environmental Protection Agency
ERP			Enterprise Resource Planning
Exchange Act			U.S. Securities Exchange Act of 1934
FASB			Financial Accounting Standards Board
FCPA			U.S. Foreign Corrupt Practices Act
FCPA Settlement			FCPA Settlement with the Securities and Exchange Commission, the Department of Justice and Brazilian authorities of approximately $90.0 million
International			Operating segment including Europe, Middle East, Asia Pacific and Latin America Business operations outside of North America
IRS			U.S. Internal Revenue Service
North America			Operating segment in North America, including U.S., Canada and Puerto Rico
OSHA			U.S. Occupational Safety and Health Act of 1970
Other Costs			Represents corporate enabling and shared services costs, annual incentive and stock-based compensation
PFA			Pre-filing agreement with the U.S. Internal Revenue Service
Purchase Agreement			Stock Purchase Agreement, dated as of February 6, 2020, by and between Stericycle, Inc., and the Harsco Corporation and CEI Holding LLC, a Delaware limited liability company and subsidiary of Harsco Corporation
PSU			Performance-based Restricted Stock Unit
RSU			Restricted Stock Unit
RTO			Return to Office
RWCS			Regulated Waste and Compliance Services, a business unit that provides regulated medical waste services and patient engagement
SEC			U.S. Securities and Exchanges Commission
Senior Notes			5.375% ($600.0 million) Senior Notes due July 2024 and 3.875% ($500.0 million) Senior Notes due January 2029
SG&A			Selling, General and Administrative expenses
SID			Secure Information Destruction Services, a business unit that provides confidential customer material shredding services and recycling of shredded paper
SOP			Sorted Office Paper
SQ Settlement			Small quantity medical waste customers class action settlement of $295.0 million
Term Facility			Aggregate amount of commitments made by any lender under the terms of the Credit Agreement
Term Loans			Advances made by any lender under the Term Facility
U.S.			United States of America
U.S. GAAP			U.S. Generally Accepted Accounting Principles


2022 Q2 10-Q Report			Stericycle, Inc. ●			4

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PART I – FINANCIAL INFORMATION


Item 1. Financial Statements (Unaudited)

STERICYCLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

(Unaudited)


In millions, except per share data
	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	679.8	$	672.7	$	1,344.0	$	1,340.7
Cost of revenues	419.3		403.6		839.0		810.2
Gross profit	260.5		269.1		505.0		530.5
Selling, general and administrative expenses	222.4		213.5		461.0		415.8


Income from operations	38.1		55.6		44.0		114.7
Interest expense, net	(18.5)		(17.9)		(34.8)		(36.3)

Other (expense) income, net	(0.7)		0.7		(1.5)		—
Income before income taxes	18.9		38.4		7.7		78.4
Income tax expense	(8.4)		(9.1)		(11.3)		(22.9)
Net income (loss)	10.5

SEC Form 10-Q filed by Stericycle Inc.