Stericycle(US:SRCL)2022-08-05 11:00Financial Performance - Revenues for Q2 2022 were $679.8 million, a slight increase from $672.7 million in Q2 2021, while revenues for the first half of 2022 totaled $1,344.0 million compared to $1,340.7 million in the same period of 2021[10]. - Net income for Q2 2022 was $10.5 million, down from $29.3 million in Q2 2021, and the net loss for the first half of 2022 was $3.6 million compared to a net income of $55.5 million in the first half of 2021[10]. - The company reported a comprehensive loss of $35.5 million for Q2 2022, compared to a comprehensive income of $36.0 million in Q2 2021, primarily due to currency translation adjustments[12]. - For the six months ended June 30, 2022, total revenues were $1,344.0 million, compared to $1,340.7 million in the same period of 2021, showing a marginal increase of about 0.3%[36]. - The company reported a net loss of $3.8 million for the six months ended June 30, 2022, compared to a net income of $55.4 million for the same period in 2021[25]. Cost and Expenses - The gross profit margin decreased to 38.3% in Q2 2022 from 39.9% in Q2 2021, reflecting an increase in the cost of revenues which rose to $419.3 million from $403.6 million year-over-year[10]. - Selling, general and administrative expenses increased to $222.4 million in Q2 2022 from $213.5 million in Q2 2021, indicating a rise of approximately 5.5%[10]. - The company's Adjusted Income from Operations for the three months ended June 30, 2022, was $82.0 million, down from $105.7 million in the same period of 2021, a decrease of 22.4%[55]. - Adjusted Income from Operations for North America decreased by $10.7 million, or 6.7%, to $148.9 million in Q2 2022[9]. Assets and Liabilities - Cash and cash equivalents decreased to $45.9 million as of June 30, 2022, down from $55.6 million at the end of 2021[15]. - Total assets decreased to $5,408.0 million as of June 30, 2022, compared to $5,473.1 million at the end of 2021[15]. - Total liabilities decreased slightly to $3,054.3 million as of June 30, 2022, from $3,070.3 million at the end of 2021[15]. - As of June 30, 2022, the company's total debt was $1.7056 billion, an increase from $1.6237 billion as of December 31, 2021[46]. Revenue Segmentation - Regulated Waste and Compliance Services generated revenues of $448.4 million in Q2 2022, down from $463.0 million in Q2 2021, indicating a decline of about 3.0%[36]. - Secure Information Destruction Services saw an increase in revenues to $231.4 million in Q2 2022, up from $209.7 million in Q2 2021, reflecting a growth of approximately 10.0%[36]. - The North America segment reported total revenues of $568.6 million in Q2 2022, compared to $542.6 million in Q2 2021, marking an increase of approximately 4.8%[36]. - International segment revenues decreased to $111.2 million in Q2 2022 from $130.1 million in Q2 2021, representing a decline of about 14.5%[36]. Cash Flow - The company reported net cash used in operating activities of $18.4 million for the first half of 2022, a significant decline from $149.8 million in the same period of 2021[18]. - Net cash from operating activities increased to $20.4 million in Q2 2022, compared to a use of funds of $38.8 million in Q1 2022[93]. - Net cash used from investing activities increased by $9.2 million in the first six months of 2022, totaling $67.6 million compared to $58.4 million in the same period of 2021[143]. - Net cash provided from financing activities increased by $161.6 million in the first six months of 2022, resulting in a source of funds of $79.0 million compared to a use of funds of $82.6 million in 2021[144]. Strategic Initiatives - The company completed the acquisition of a midwest-based regulated waste business on December 31, 2021, as part of its portfolio optimization strategy[43]. - The total purchase price consideration for the acquisition was $42.8 million, including $10.5 million in cash, $21.3 million in promissory notes, and $11.0 million in deferred consideration[44]. - The company plans to continue evaluating opportunities for portfolio optimization through asset rationalizations and strategic acquisitions[97]. - New RWCS facilities were opened in the Northeast U.S. and Romania, and a new incineration facility is under construction on the U.S. west coast[97]. Compliance and Legal Matters - The Company agreed to pay $52.5 million in criminal fines to the DOJ, with potential offsets of up to $17.5 million based on fines paid to Brazilian authorities[63]. - Under the settlement with the SEC, the Company will disgorge $22.2 million and pay pre-judgment interest of $6.0 million[63]. - The Company accrued an additional $9.6 million in the first half of 2022 for the FCPA Settlement, in addition to the $80.7 million accrued in 2021[66]. - The Company is cooperating with ongoing investigations by the SEC and DOJ regarding compliance with anti-corruption laws[62]. Market and Economic Conditions - The strengthening U.S. Dollar negatively impacted revenues by $13.7 million in Q2 2022 due to foreign exchange rate changes[90]. - The Company is experiencing inflationary cost increases in labor, supply chain, and other expenses, affecting operational costs[89]. - The impact of unfavorable foreign exchange rates reduced revenues by $19.6 million, or 1.5%, for the six months ended June 30, 2022[10]. Workforce and Operations - The Company has implemented a global return-to-office hybrid work schedule for office workers to promote team collaboration while maintaining health standards[87]. - The Company is addressing workforce shortages through recruitment, competitive compensation, and employee engagement initiatives[88]. - Research and development investments increased by 20% year-over-year, totaling $10 million, aimed at improving operational efficiency and service delivery[159].